[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]




                   INTERIOR, ENVIRONMENT, AND RELATED 
                    AGENCIES APPROPRIATIONS FOR 2014 
=======================================================================



                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                     ONE HUNDRED THIRTEENTH CONGRESS
                              FIRST SESSION

                                ________

       SUBCOMMITTEE ON INTERIOR, ENVIRONMENT, AND RELATED AGENCIES
                   MICHAEL K. SIMPSON, Idaho, Chairman
 KEN CALVERT, California                   JAMES P. MORAN, Virginia
 TOM COLE, Oklahoma                        BETTY McCOLLUM, Minnesota
 TOM GRAVES, Georgia                       CHELLIE PINGREE, Maine
 JAIME HERRERA BEUTLER, Washington         JOSE E. SERRANO, New York
 DAVID P. JOYCE, Ohio
 DAVID G. VALADAO, California     

 NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full 
Committee, and Mrs. Lowey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
              David LesStrang, Darren Benjamin, Jason Gray,
                     Erica Rhoad, and Colin Vickery,
                            Staff Assistants

                                ________

                                 PART 6
                                                                   Page
 Indian Education Oversight Hearing...............................    1
 Water Infrastructure Oversight Hearing...........................  217
 Indian Health Oversight Hearing..................................  405
 Department of the Interior FY 2014 Budget Oversight Hearing......  551

                                ________

         Printed for the use of the Committee on Appropriations
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
 81-687                     WASHINGTON : 2013




                        COMMITTEE ON APPROPRIATIONS

                    HAROLD ROGERS, Kentucky, Chairman

 C. W. BILL YOUNG, Florida \1\        NITA M. LOWEY, New York
 FRANK R. WOLF, Virginia              MARCY KAPTUR, Ohio
 JACK KINGSTON, Georgia               PETER J. VISCLOSKY, Indiana
 RODNEY P. FRELINGHUYSEN, New Jersey  JOSE E. SERRANO, New York
 TOM LATHAM, Iowa                     ROSA L. DeLAURO, Connecticut
 ROBERT B. ADERHOLT, Alabama          JAMES P. MORAN, Virginia
 KAY GRANGER, Texas                   ED PASTOR, Arizona
 MICHAEL K. SIMPSON, Idaho            DAVID E. PRICE, North Carolina
 JOHN ABNEY CULBERSON, Texas          LUCILLE ROYBAL-ALLARD, California
 ANDER CRENSHAW, Florida              SAM FARR, California
 JOHN R. CARTER, Texas                CHAKA FATTAH, Pennsylvania
 RODNEY ALEXANDER, Louisiana          SANFORD D. BISHOP, Jr., Georgia
 KEN CALVERT, California              BARBARA LEE, California
 JO BONNER, Alabama                   ADAM B. SCHIFF, California
 TOM COLE, Oklahoma                   MICHAEL M. HONDA, California
 MARIO DIAZ-BALART, Florida           BETTY McCOLLUM, Minnesota
 CHARLES W. DENT, Pennsylvania        TIM RYAN, Ohio
 TOM GRAVES, Georgia                  DEBBIE WASSERMAN SCHULTZ, Florida
 KEVIN YODER, Kansas                  HENRY CUELLAR, Texas
 STEVE WOMACK, Arkansas               CHELLIE PINGREE, Maine
 ALAN NUNNELEE, Mississippi           MIKE QUIGLEY, Illinois
 JEFF FORTENBERRY, Nebraska           WILLIAM L. OWENS, New York
 THOMAS J. ROONEY, Florida
 CHARLES J. FLEISCHMANN, Tennessee
 JAIME HERRERA BEUTLER, Washington
 DAVID P. JOYCE, Ohio
 DAVID G. VALADAO, California
 ANDY HARRIS, Maryland
   
 ----------
 1}}Chairman Emeritus    

               William E. Smith, Clerk and Staff Director

                                  (ii)

 
DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES APPROPRIATIONS FOR 2014 

                              ----------                              

                                      Wednesday, February 27, 2013.

                     OVERSIGHT OF INDIAN EDUCATION

                               WITNESSES

HON. KEVIN WASHBURN, ASSISTANT SECRETARY OF INDIAN AFFAIRS, DEPARTMENT 
    OF THE INTERIOR
GEORGE A. SCOTT, DIRECTOR, EDUCATION, WORKFORCE AND INCOME SECURITY 
    ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE
HEATHER SHOTTON, PRESIDENT, NATIONAL INDIAN EDUCATION ASSOCIATION

                  Opening Remarks of Chairman Simpson

    Mr. Simpson. Thank you. Good morning and welcome to the 
first hearing of the House Appropriations Subcommittee on the 
Interior, Environment, and Related Agencies of the 113th 
Congress. Before we get started today, allow me to take a 
moment to welcome our returning members and our many other 
members who hopefully will be here to be welcomed when they get 
here.
    Of the programs within this subcommittee's jurisdiction, I 
think it is fair to say that there is more that Republicans and 
Democrats can agree on than disagree on, and I hope we continue 
to work well together on these things that we value and that we 
strive to find common ground on those things, no matter what is 
happening beyond these doors.
    Almost a year ago today, our subcommittee was sitting here 
with then-Assistant Secretary for Indian Affairs, Mr. Larry 
Echo Hawk, a good friend of mine and Mr. Cole's. Mr. Cole asked 
about per-pupil expenditures at BIE versus non-BIE schools. We 
followed that up with a formal request to the GAO to look into 
the matter--in effect to update and expand upon studies they 
conducted several prior years. At the time, we thought we were 
asking GAO to answer a relatively simple question.
    Fast-forward to January of 2013 when the GAO informed the 
subcommittee that their final report will not be ready until 
July 2013 and that the subcommittee should be aware of 
significant management challenges at both the Bureau of Indian 
Education and the Bureau of Indian Affairs that are affecting 
their ability to deliver quality education.
    The GAO reminds us that these are not new management 
challenges and this is not the first time that problems within 
Indian education have been reported. This is also not the first 
time that this subcommittee has attempted to help turn things 
around, but we must keep at it not only to ensure that things 
do turn around but that they stay that way. It is simply the 
right thing to do.
    Therefore, these management challenges, coupled with recent 
or soon-to-be turnover at key leadership positions within the 
Department of the Interior and the Bureaus, has prompted this 
subcommittee to convene this hearing now before the GAO 
actually completes its finding so that the subcommittee can be 
in a stronger position to take any necessary corrective action 
as part of the fiscal year 2014 budget process. To wait would 
be to miss a narrow window of opportunity and I believe the 
children have waited long enough for this already.
    Some people have wondered why we are doing this now rather 
than waiting for the GAO report. We will probably be writing 
our bill. In fact, we will be writing our bill before the GAO 
report comes out. We wanted some preliminary information from 
them and to talk with you if there are things we need to do in 
our budget that can help turn around the situation.
    The United States Government has a unique and well-
documented moral and legal responsibility to help educate 
American Indian children, a responsibility that goes far beyond 
the $2.5 billion in direct federal spending in fiscal year 
2012, of which this subcommittee's contribution was 35 percent. 
What is happening outside the classroom and outside the BIE has 
just as much impact on student success as what is happening 
inside, if not more. Many complicated factors come into play 
and many more people no doubt are working hard to help students 
succeed.
    But as we step back to evaluate our efforts, when we look 
at the condition of those schools and the roughly 48,000 
students directly under the BIE's responsibility, and when we 
look at measures of progress such as test scores, graduation 
rates, and employment, and we see the disparity that no doubt 
our witnesses will testify to today, one thing is perfectly 
clear to me--that we can and we must do better than this.
    So I am interested in us having a constructive and 
productive discussion today and in the days ahead about how we 
can help the agency succeed. Whether it will be not just 
funding but also legislation, policy, a gentle nudge, a swift 
kick, any of those types of things, I am interested in putting 
all options on the table for consideration of helping in this 
area.
    With that, let me welcome our witnesses here today as well 
as our distinguished guests in the audience and the many tribes 
and tribal organizations around the country who are submitting 
written testimony for the record. Thank you all for your 
commitment and your assistance in helping us help you.
    Our first panelist is Hon. Kevin Washburn, the newest 
Assistant Secretary for Indian Affairs at the Department of the 
Interior. Welcome aboard, Mr. Washburn. You will be supported 
by Acting Director of Bureau of Indian Education, Mr. Brian 
Drapeaux, and Director of Bureau of Indian Affairs, Mr. Michael 
Black. Because Indian education activities are implemented by 
both bureaus, it is helpful to have both of you here today.
    After Mr. Washburn testifies, we thought we would take some 
questions from the committee, but I think what we will probably 
do is have the director of the GAO and Dr. Heather Shotton, the 
President of the National Indian Education Association, 
testify, and then we can have you all sit at the table together 
and answer these questions. And what we really want is a 
discussion about what are we going to do to improve the quality 
of education for our Indian children in this country. And what 
can we do to help?
    So I appreciate your being here. Today's ranking member, 
Mr. Moran, is not here. Betty McCollum from Minnesota is taking 
his place as the ranking member.
    And do you have any opening remarks you would like to make?

               Opening Remarks of Congresswoman McCollum

    Ms. McCollum. Yes, I do, Mr. Chair. And thank you very 
much. And I welcome you, Assistant Secretary Washburn, and the 
other witnesses to the subcommittee this morning as well.
    Education is a cornerstone and the foundation in which we 
build our collective future. Native American parents, like 
parents all across this Nation, look for a good education and 
an investment in a better future for their children. While 
Indian education is a tough responsibility for the Department 
of the Interior, it is a moral responsibility for all of us, as 
the chairman said. This morning, we will review how these 
responsibilities are being carried out and see what we can do 
working together to improve the Indian education system.
    Now, let's face it. There is significant room for 
improvement in Indian test scores and the delivery of the 
Indian educational services. In Minnesota, where I am from, 
where we pride ourselves on the education of our young people, 
only 42 percent of Native Americans graduate high school on 
time. That is a shameful record. That rate is half of what our 
state sees for white students.
    We will hear today about the long-standing problems that 
have existed in Indian education. Some of these are reflection 
of larger social issues; some reflect the inconsistent 
direction and management and the delivery of Indian education 
services. And many are rooted in history of unacceptable low 
funding levels.
    I have appreciated the fact that we approach Native 
American issues in this subcommittee on a bipartisan basis. And 
in this spirit I approach this oversight hearing to see how we 
can work collectively together at this table to facilitate 
improvements in Indian education.
    But as we know, this is a time of restrained funding, and 
it has been a challenge to provide financial resources 
necessary to provide a quality education for Native American 
students. We know that money alone is not the answer, although 
it certainly helps, especially when we see the backlog on 
school construction and the fiscal state of many Indian 
education facilities. The heartbreaking impact of the condition 
of these schools on Indian children can be heard in the words 
of a student from Minnesota's Leech Lake Band: ``All 13 years I 
have been told that education is very important. It is hard for 
me to believe this when I see how my school looks compared to 
other schools.'' Well, the school is a pole barn and the 
temperature back home right now is in the 20 degree range.
    We are just 2 days from implementing the sequestration that 
will cut more than 5 percent of federal spending not only from 
Indian education but a whole host of other programs that serve 
Native Americans. These adverse impacts on these programs are 
the poster child for the senselessness of sequestration.
    And let me quote John Kennedy as I close. He said, ``Our 
progress as a Nation can be no swifter than our progress in 
education.'' Well, therein lies the danger of sequestration. 
There will be no progress under sequestration. And in fact, the 
across-the-board cuts will do real harm to much of the work 
that this committee has done bipartisan in the past.
    So Mr. Chairman, I want to thank you for holding this 
hearing on Indian education, and I want to thank you for the 
way that we work together to make the lives of all children 
across this country, but especially Native American children, 
better. And I look forward to hearing the testimony of our 
witnesses. Thank you.

            Opening Remarks of Assistant Secretary Washburn

    Mr. Simpson. Thank you, Congresswoman.
    Why don't we have George Scott, the Director of Education 
Workforce and Income Security Issues for the Government 
Accountability Office come forward and then we can go from one 
testimony to the next. And also Dr. Heather Shotton, President 
of the National Indian Education Association. We actually have 
nameplates for you.
    Assistant Secretary, again welcome, and thank you for being 
here today to discuss this important topic with us to help us 
get an understanding of what we might be about to do to help 
improve the conditions. The floor is yours.
    Mr. Washburn. Thank you, Chairman, Ranking Member, and 
members of the subcommittee. It is a real honor to be here 
today. It is a real honor to hold this position. I am a member 
of the Chickasaw Nation from Oklahoma. I went to the same high 
school as Tom Cole and was represented by his mother in the 
State Legislature for a while. I am a former resident of Ms. 
McCollum's district as well, and so it is kind of like coming 
home in some ways here.
    Mr. Simpson. I hate to ask this. Have you ever been to 
Idaho?
    Mr. Washburn. I visited Idaho and Maine and wonderful 
places.
    I have actually for the last 10 years or so been a teacher 
and/or a school administrator, mostly in state educational 
institutions. I have a strong personal interest and commitment 
to education. My draw to this particular kind of public service 
is not for the money, and it is also not for altruism purely 
either. It is because it is such a rewarding job. I am sure 
that there are several teachers who will attest to that who are 
in the room.
    No offense to the ladies and gentlemen here, but it is much 
more fun working with students than it is working with 
Washington officials, for example. Not only are they more 
educable, it is more rewarding educating them.
    I also love to learn and I am----
    Mr. Simpson. That is not a good start. Well, you know, we 
are both specializing in legislation.
    Mr. Washburn. That is right. That is right.
    I love to learn, too, and I have been learning a great deal 
in the last few months. Many of you have been the teachers and 
I am grateful to be here learning because that is one of life's 
joys as well.
    I am still very much in learning mode about our activities. 
Like it is serving in Congress, in the Administration, they do 
not give you six months to kind of get up to speed before they 
start making you make important decisions. And so I cannot 
whine about that over here, but I am a deliberative-type 
person. I like to be able to think about things before I have 
to start making important decisions. And there is sometimes not 
a lot of time for that. Just to give you a sense, the budget 
was largely in process before I even arrived--the fiscal year 
2014 budget. The first draft had been done before I arrived at 
the Department. So I am trying to get up to speed quickly and 
make a difference where I can.
    I have been greatly helped by BIA Director Mike Black and 
Acting Director of the BIE, Brian Drapeaux. And they are both 
here with me today. And I may defer a question to them. They 
have tried to educate me and I am a willing learner, but they 
still know a lot more than I do.
    I have seen a lot of things that worry me in Indian 
Country, frankly. One of them is the school construction issue 
that Ms. McCollum raised. Soon after I got on board I sent the 
report over to Congress to talk to you about the challenges 
that we face in school construction. And that is very real to 
me.
    I visited Red Lake High School shortly after the shootings, 
getting close to 10 years ago, and that was a real eye-opening 
experience because I went up there. It was about a year after 
the shootings at Red Lake High School and I was working at the 
University of Minnesota and I went up there to recruit 
students. And so we went up there with our aim to meet with 
juniors because juniors are the students that are kind of now 
starting to think about college. And I think that there were 
something like 60 juniors in the junior class and only 
something--it was in the single digits--like six or seven of 
them were actually in school that day that I was there.
    And when I asked why that was, the teacher said well, the 
parents aren't making their kids come to school. And whenever 
the kids said I do not want to go to school, I am scared, it is 
kind of hard to argue with them a year after a school shooting 
like that. That is tough. These school shooting problems are 
really detrimental. And I worry that we may have lost a 
generation of kids at Red Lake to education because of that 
kind of thing. And those are really serious, serious problems.
    I had been working really hard to get up to speed on the 
issues here in Indian education. The way I have been doing it 
is largely talking to people, the same way that you all learn. 
And one of the teachers that I met with recently said that at 
his school, students just miss more class. It is an Indian 
school and they miss more class than people do at ordinary 
public schools. And there are good reasons for it. In a small 
Indian community, the obligation to attend funerals and wakes 
and that sort of thing is very high. There are all sorts of 
cultural activities that are very important to attend. A lot of 
the schools are in rural areas and weather can be a significant 
factor. If a blizzard comes through in the Dakotas, it may make 
it very hard to get to school.
    And this teacher told me that on average students miss 45 
days of school a year. And if you multiply that times 12 years, 
that comes out to losing about 3 years of education. So it is 
no wonder that some of our Indian students are not reading at 
grade level or not performing at grade level because they have 
actually had 3 years less of schooling by the time they would 
reach graduation age. And that has a huge effect I think. It 
makes it very challenging to be successful in Indian education.
    I am told that our performance, while it does not look good 
objectively, is as good as state public schools that serve 
similar populations with similar challenges. So, we do as good 
a job as anyone does, but it is a very challenging job.
    In the Bureau of Indian Education, the schools that we run 
or that we fund serve about 5 to 10 percent of the Indian 
students in the United States. So more than 90 percent of them 
are in public schools. And so we are not a significant 
participant. We are an important participant, but we cannot 
really claim to own education of Indian students. That is a 
much broader thing than what we do.
    The students in Indian schools often have great needs. 
Poverty is rampant and all the things that go with that, 
learning disabilities and behavioral issues sometimes. And so 
we do have a difficult population. But as I said, our teachers 
perform as well as teachers in public schools.
    I recently got to go visit the Chemawa Indian School, which 
is a boarding school out in Oregon, and it was a very 
heartwarming experience. It is a 9 through 12 boarding school, 
so 9th grade through 12th grade. The students there were 
exceedingly engaged. I was there in the evening and I went to 
the cafeteria and I went to the dorms and I was in meetings all 
day so I did not get there for classroom, but I met with a lot 
of the teachers and then I went to a basketball game at 
Moccasin Square Garden, their gymnasium. And it was really 
neat. They were playing a team from a neighboring town that was 
all white. I mean all the kids were white and their parents 
were white and so the distinction between the communities was 
kind of apparent.
    But the game was started in an interesting way. Instead of 
the Star-Spangled Banner, they did a traditional flag song. And 
it was really neat to see both teams standing at attention 
listening to the flag song while they were looking at the flag. 
And I saw astonishment I guess at first on the faces of the 
team from the neighboring town and their parents and great 
interest. And it was really a nice, heartwarming experience 
because they were obviously very interested. A good flag song 
will run about 10 minutes. So they got the full experience. But 
it was a wonderful game and it was really neat to see. Sports 
are one thing that really engages kids and so it was neat to 
see that they are using sports in such a good way at that 
school.
    We have got a lot of things going in the Bureau of Indian 
Education and I am trying to get up to speed on all of these 
things. My own sort of personal background as a Chickasaw from 
Oklahoma is pursuing self-governance. I think that tribes 
generally do things better than federal employees can when we 
can empower the tribes and provide the underwriting and the 
funding for the tribes to run our responsibilities. In other 
words, I think the tribal employees do very well in enforcing 
the federal trust responsibilities, as long as we give them the 
support they need to carry that out. I do think it is a federal 
responsibility, but it can be executed best with tribal hands.
    We are working on that substantially with the Navajo 
Nation. We have about 183 schools in the BIE system. Most of 
those are now tribal schools. They are funded by us but they 
are run by tribes. And about 60 of them are on the Navajo 
Nation. And we are moving towards a single contract with the 
Navajo Nation so there will be a Navajo school district in 
essence. And that will leave us actually with a very small 
percentage of the number of schools that we actually run. So we 
are making great strides in the area of self-governance. It 
will be soon that we are only running a dozen schools or so 
ourselves and the rest of them are run by tribes directly. And 
I think that that will certainly be an improvement.
    So those are some of the things that we are working on. I 
know you have some questions and I can maybe talk a little bit 
more about those as they come up.
    [The statement of Kevin K. Washburn follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Simpson. I appreciate it. Thank you, Secretary. George.

                 Opening Remarks of Mr. George A. Scott

    Mr. Scott. Thank you, Mr. Chairman and members of the 
subcommittee.
    Mr. Simpson. And thank you for agreeing to come and talk to 
us before your report is completed because, as I said in the 
introduction, there may be things hopefully within this bill 
that we want to do based on some of the findings and so forth. 
So it is a little unusual to have you come and talk before the 
report is done, but I appreciate it.
    Mr. Scott. Now, thank you. Our desire is always to be 
timely and responsive to your needs, so we do appreciate the 
opportunity to discuss the preliminary findings of some of our 
work on the management of the Bureau of Indian Education (BIE).
    In fiscal year 2011, the Federal Government provided over 
$800 million to BIE schools. These schools serve about 41,000 
Indian students living on or near reservations. Given the 
significant gaps in educational outcomes for students in BIE 
schools compared to public schools, questions remain about the 
extent of federal progress in supporting Indian education. My 
testimony today will focus on key management challenges 
hindering efforts to improve the education of Indian children 
and BIE's limited governance of some schools.
    Over the years, there have been a number of efforts within 
Indian Affairs to reorganize administrative functions and 
improve its ability to support schools. However, management 
challenges such as fragmented administrative structures and 
frequent turnover in leadership have continued to hinder 
efforts to improve Indian education. A study commissioned by 
Indian Affairs to evaluate its administrative structure 
concluded that organizations within Indian Affairs do not 
coordinate effectively and that communication among them is 
poor. Long-standing issues such as incompatible procedures and 
the lack of clear roles among various offices can contribute to 
delays in schools obtaining needed resources.
    For example, delays in contracting have occasionally 
affected BIE's ability to provide services for students with 
disabilities in a timely manner. Likewise, the responsibility 
for facilities management is also fragmented and can result in 
delays in addressing critical issues. For instance, one school 
we visited closed for a few days because Indian Affairs 
initially did not respond to their request for funds to replace 
a broken boiler. School officials in another state told us that 
they are unsure whether they should invest in additional 
modular classrooms because they have not been told if or when 
they will receive a new facility.
    Given the seriously poor condition of some schools, it is 
critically important that officials within Indian Affairs 
ensure that facility maintenance and construction issues are 
addressed in a timely, transparent, and consistent manner.
    Leadership turnover in Indian Affairs has exacerbated some 
of the various management challenges. Since the year 2000, 
there have been about 12 acting and permanent assistant 
secretaries for Indian Affairs, six deputy assistant 
secretaries for management, and eight Bureau of Indian 
Education directors or acting directors. These are key 
leadership positions that should play important roles in 
strategic planning, policy development, and ensuring 
accountability for agency performance and program outcomes. We 
have previously reported that frequent changes in leadership 
may complicate efforts to improve student achievement and that 
the lack of leadership negatively affects an organization's 
ability to function effectively and sustain focus on key 
initiatives.
    In addition to the management challenges, school governance 
remains an issue. Although BIE's responsibilities to operate 
Indian schools are in some respects similar to those of a state 
education agency, its influence is limited because most schools 
are tribally operated. BIE administers and provides technical 
support for a number of programs funded by the Department of 
Education and also monitors schools. However, in tribally 
operated schools, tribes retain authority over key policies. 
This means that BIE must seek cooperation from tribal officials 
to implement reforms. For example, they cannot require tribally 
operated schools to adopt teacher and principal evaluation 
systems.
    Further complicating reform efforts, BIE schools, unlike 
public schools, have the responsibilities of both school 
districts and schools. According to BIE and Department of 
Education officials, many of these individual schools are small 
in size and may lack the organizational capacity to function as 
a school district. We have previously reported that smaller 
school districts may lack the resources, knowledge, or 
expertise necessary to provide certain services. This can at 
times further strain BIE's ability to effectively support these 
schools.
    In conclusion, while its mission is clear, significant 
questions remain as to whether the Bureau of Indian education 
has the autonomy, resources, and administrative support within 
Indian Affairs to successfully achieve its goals. Accordingly, 
sustained attention is needed to address the long-standing 
challenges hindering efforts to improve Indian education. This 
includes the commitment to sustain leadership and 
accountability in key positions.
    Additionally, it is imperative that offices within Indian 
Affairs work together more effectively and efficiently to 
support schools. We will continue to monitor these issues as we 
complete our work and we will consider making recommendations 
as appropriate to help address these challenges.
    This concludes my statement. Thank you.
    [The statement of George A. Scott follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                 Opening Remarks of Dr. Heather Shotton

    Mr. Simpson. Thank you, Mr. Scott.
    Dr. Shotton, the floor is yours.
    Ms. Shotton. Thank you, Chairman Simpson.
    Chairman Simpson, members of the subcommittee, I must 
acknowledge Representative Cole, my representative from the 
State of Oklahoma. Thank you for convening this important 
oversight hearing on Indian education. My name is Dr. Heather 
Shotton, and I am the president of the National Indian 
Education Association. I am also a member of the Wichita and 
Affiliated Tribes of Oklahoma, the Kyowa Nation and the 
Cheyenne and Arapahoe Tribes.
    On behalf of NIEA, I am grateful for this opportunity to 
provide testimony and answering questions the subcommittee may 
have.
    NIEA was founded in 1970 and includes a large collective 
membership of American Indian, Alaska Native, and Native 
Hawaiian educators, tribal leaders, school administrators, 
parents, and students. NIEA and our native education partners 
wish to highlight the lack of educational parity currently 
affecting native students. In particular, our students deserve 
the right to attend safe, secure, structurally viable schools 
that provide learning environments conducive to equipping our 
children for college and future endeavors.
    Indian education is currently in nothing less than a state 
of emergency. Native children experience large disparities in 
academic achievement, and our students face some of the lowest 
high school graduation rates. This situation is increasingly 
dire for our students in BIE schools.
    Underlying this issue of low achievement is the issue of 
poor conditions of many of our schools. BIA inspectors recently 
identified a total of 120 safety deficiencies in four BIE 
elementary schools on the Rosebud Sioux Reservation alone. And 
even more alarming is a recent Interior Department report that 
found that the dilapidated condition of BIE schools have the 
potential to seriously injure or kill students and faculty.
    Some of the deficiencies that have been identified for 
schools in poor condition include classroom walls that are 
buckling and separating from their foundation; water leaks near 
electrical outlets and light fixtures; non-operable fire alarm 
systems; exposed asbestos, lead paint, mold, and water damage; 
and regular academic use of condemned buildings.
    Native children should not have to risk their lives on a 
daily basis to access the fundamental right to an education. 
Furthermore, research tells us that the physical condition of a 
school affects our ability to learn. It affects student and 
teacher attendance, teacher retention and recruitment, child 
and teacher health, and the quality of the curriculum.
    There are only two educational systems for which the 
Federal Government is directly responsible, and that is the 
Department of Defense and schools that are federally operated 
and federally funded tribal schools. And while the DOD fiscal 
year 2013 budget request of $2.7 billion includes an aggressive 
construction plan to improve and modernize schools, the BIA 
fiscal year 2013 budget request eliminates new school 
replacement, and this leaves our already vulnerable students 
attending schools in the worst conditions even more vulnerable.
    While BIA has recently focused on smaller projects of 
maintenance and upkeep due to funding constraints, this does 
not address the large-scale needs of many of the decrepit 
schools and continues to place our students and teachers at 
serious risk. While it is important to highlight the dire 
issues facing our native children, I also want to provide on 
behalf of NIEA to the subcommittee some sound solutions for 
moving native education forward.
    First, NIEA would request that the BIA release an updated 
BIA-funded schools in poor condition index and tribal priority 
construction list. One main concern is that the BIA index of 
schools in poor condition was last released in 2009. Further, 
the most recent BIA school construction priority list was 
released in 2004. These outdated lists are unacceptable and we 
request that BIA update and disseminate the lists.
    Secondly, NIEA requests funding for school construction and 
repair. NIEA understands the current fiscal climate. However, 
it is important to note that full funding is needed for 
completing the remaining construction projects and starting new 
construction projects to replace those facilities that are most 
in need. In the NIEA fiscal year 2014 budget request, our 
association requested school construction and repair funding to 
be set at $263.4 million.
    Third, we request interagency and native cooperation. There 
must be a collaboration at the federal level to ensure that 
funding is used efficiently during these times of constrained 
budgets. And additionally, any future Bureau streamlining must 
include direct regional consultations and comment periods with 
native partners. The Department of Interior should also 
establish a Tribal Advisory Committee to advise the Secretary 
of the Interior on policy issues and budget development for the 
BIE school system.
    Finally, NIEA recommends that the BIA continue to upgrade 
the quality of the teaching force in BIE schools. This includes 
research-based professional development practice, including 
collaboration with our tribal colleges and universities.
    Mr. Chairman, subcommittee members, we appreciate your work 
to protect the funding of native programs and your continued 
dedication to improving native communities and protecting 
native education. We hope that Congress will protect and 
strengthen native education programs and funding to ensure 
educational parity for native students with non-native 
students. I look forward to addressing your questions.
    [The statement of Heather Shotton follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                   EXPECTATIONS FOR INDIAN EDUCATION

    Mr. Simpson. Thank you. Thank you all for your testimony. I 
appreciate you all being here today.
    You mentioned, Doctor, that the conditions in schools 
affects the quality of their education and went through a 
variety of reasons why it does that and their ability to learn 
stuff. The one other thing that it does is really tell young 
people and students whether we value them or not.
    Ms. Shotton. Yes.
    Mr. Simpson. Which is probably as important as all the 
other factors put together. I appreciate your testimony and 
look forward to working with you.
    The subcommittee has been out on Rosebud, and while we did 
not go to the school, they gave us a slideshow presentation of 
it. If I can remember correctly, it was pretty ugly and most 
people would not send their kids to that condition. I have been 
up in Lapwai and have looked at the school that they just built 
on the Nez Perce Reservation and the one that they actually had 
to get out of because it was deemed unsafe. The conditions of 
the schools, I mean the physical condition of them, is really 
highly suspect and something needs to be done.
    This committee has focused on Indian health services over 
the last few years to try to make sure that we meet our 
responsibilities there. We are not completely there yet, but we 
are moving in the right direction. We need to do the same thing 
with Indian education. At least I think that is the feeling of 
most members of this subcommittee.
    But let me ask you, there are a lot of people who think the 
Federal Government should not be involved in education at all. 
We ought to get rid of the Department of Education and 
everything else. Obviously, we have a responsibility here just 
as we do with the DOD schools. What should we expect out of our 
Indian education system? We look at the fact that the standards 
or the measurements we use to address quality, whether it is 
buildings or whether it is outcomes or those other things, do 
not match up with other public schools and so forth.
    One of the hard things to do is appropriate money into a 
program that you think is broken. Part of the reason it might 
be broken is because of insufficient funds, but part of it is 
also, as Mr. Scott testified to, is the organizational 
structure and lack of communication between a variety of--
typical Federal Government if you will.
    What should we expect as a committee and how can we hold 
the Department accountable for the dollars that we are giving 
them that are actually improving the quality of education? That 
is kind of a broad question, but is basically what this hearing 
is really all about. Would someone like to take that on?
    Mr. Washburn. Well, we do have a significant responsibility 
to Indian children, and it is a part of our trust 
responsibility. In certain cases, it is actually written into 
treaties. Some tribes have treaties and it is written in there 
that we will provide education, and I presume that means a 
quality education.
    I guess one of the things that strikes me, and being 
somewhat new to this, is in the rest of the world we have sort 
of started looking at uniformity as being overrated. We believe 
in diversity now and we believe in specialization. And so 
outside of the Indian context, there are charter schools that 
are focused on different things. And so I guess I feel like to 
some degree we need to have an education system for Indian 
Nations that recognizes that what is right for one tribe might 
be different than for another tribe or community.
    And so I guess one of my concerns is that we keep 
flexibility in there. And that is one of the reasons I believe 
so strongly in self-governance. And so we have to be moving 
towards a system that recognizes a significant voice for native 
communities about what their education looks like because that 
will mitigate some of the problems that Mr. Scott mentioned 
about leadership at the Bureau of Indian Education or in the 
Assistant Secretary's office.
    I hope he was listening to Dr. Shotton's testimony because 
you can imagine the challenges of leadership in this area. Who 
would want all the responsibilities that she mentions? You are 
crazy to take on this responsibility frankly. And so it makes 
it hard to----
    Mr. Simpson. Is that why we have such high turnover in 
personnel?
    Mr. Washburn. The job is untenable in some respects 
frankly. I mean it is difficult. This is difficult to take 
responsibility for that. I mean, the children could die on your 
watch. That is the kind of thing that she is saying. She is in 
essence saying that I am responsible for and Mr. Drapeaux is 
responsible for. That is high-stakes stuff. They do not pay any 
of us enough to be responsible for that sort of thing.
    Mr. Simpson. It is high-stakes stuff for us, too.
    Mr. Washburn. Well, no. I think we are together.

             CONSIDERATION OF DEPARTMENT OF EDUCATION ROLE

    Mr. Simpson. Let me ask you a question that I get asked by 
officials within the Department of the Interior. They have 
asked why the Department of the Interior deals with Indian 
education. Should that not be in the Department of Education? 
And why do we deal with Indian Health Services? Should not that 
be in--and it is pretty much over in Health and Human Services. 
I have had officials within the Department of the Interior ask 
me that question and I think I know the answer. What is your 
response to that?
    Mr. Washburn. Dr. Shotton.
    Ms. Shotton. Thank you. Well, as a professor of Native 
American studies, I think I have a longer historical response 
to that in terms of why BIE is placed within the Department of 
the Interior, and I think that deals with historically how 
natives and tribes were dealt with in terms of land management 
and resource management and those kind of issues. I think many 
of us ask that question with the education system for our 
tribes and our native students being placed within the BIA 
really speaks to what hopefully is happening more recently and 
more interagency cooperation to effectively deliver a quality 
system of education for native students.
    I think those are the things that we are speaking to, 
making sure that we are having interagency cooperation and also 
consultations and corporation with our tribal leaders and those 
that are charged with actually delivering the system of 
education on our reservations and in our BIA-funded schools.
    Mr. Simpson. Well, Doctor, you talk about interagency 
cooperation and Mr. Scott is talking about interdepartmental 
cooperation and communication and the lack of it. I look at the 
organizational structure in this and I think, yes, this was 
written by the government. It is about as confusing as you 
could get and makes it more and more difficult. Well, it is not 
my responsibility; it is Darren's responsibility. Ultimately, 
do we need an organizational restructure? That is always the 
easy answer, but would that help or something along those 
lines?
    Mr. Scott. Mr. Chairman, I certainly agree with Mr. 
Washburn and Dr. Shotton. This is high-stakes. These are our 
children that we are talking about here, many of whom are in 
unsafe schools and certainly not receiving an education I think 
we would all agree that they are due. That said, it is also 
important to make sure that at the federal level we hold the 
folks accountable who are responsible for running education.
    And I think this hearing is an important step in both 
increasing the transparency around some of the challenges that 
the Bureau of Indian education faces, but also ensuring that 
along the way we build in some accountability and terms of 
moving forward. What is the plan for transforming Indian 
education in this Nation? Have we brought all of the 
stakeholders together to make sure there is an agreement about 
the common vision for doing that? And then having a plan in 
place where we have metrics and measures so that we know are we 
making progress or not. And to the extent we are not, making 
sure we hold the appropriate officials accountable.
    I mean this is challenging. This is a challenging area. You 
know, I have been with the GAO for 25 years. This is one of the 
most challenging areas I have run across. That said, though, 
that is no excuse for not making more progress here than we 
have seen and ensuring moving forward that there is additional 
accountability for ensuring that things are done differently 
going forward.
    Mr. Washburn. Chairman, thank you. It is a very important 
question. And frankly, we have wrestled with this at the 
Department of the Interior. I mean the Secretary has asked me 
the same question that you just posed to us. And I think that 
that means that it is a live question and perhaps always should 
be a live question because we want Indian children served by 
the agency that can serve them best.
    I think it is still true that the BIA and the BIE have the 
closest relationship to tribes in the country. And at times, we 
have lost their trust but we are always working to retain their 
trust. And so, I think it is to some degree a question for 
Indian Country whether BIE should go to the Department of 
Education. And I think that they seem to have answered that 
question in the negative when it has been put to them.
    But I have to tell you that Secretary Arne Duncan over at 
the Department of Education has an enthusiasm for Indian 
education, so I have worked hard to figure out ways that we can 
capture that enthusiasm and make it work to the benefit of 
Indian children. Because if they are raring to go to be 
involved in Indian education, we want to provide them 
opportunities.
    One of the things that we have sort of been looking at is 
revitalization of tribal languages, native languages. And there 
is money in the budget for us, for BIE to do that. There is 
budget money at HHS and the Administration for Native 
Americans, ANA. And there is money at the Department of 
Education for doing that. Three different places with the same 
goal. Money is put in different parts of the budget. And so I 
am not sure that that is wrong because the private sector would 
say that is good to get government agencies competing with one 
another. Who can do better?
    But on the other hand, there needs to be good coordination 
with this because I have been around long enough to see that 
some, tribes that are very successful are going to get the 
money from all three of the agencies. You can imagine that a 
very well-positioned tribe might just sort of take advantage of 
that, and that is not necessarily what is best for Indian 
Country.
    So we have to coordinate together to make sure that those 
monies for that sort of thing are spread properly and in a just 
fashion, not just that the tribe with the best lobbyists, went 
and got all the money. But it makes it harder when it is in 
three different pots. I am not saying that it should all be in 
the BIE pot. I am not sure that that is right. It has been 
interesting.
    I am coming back into government. The last time I was in 
government was in 2002 and being back in government is 
different now because back then, and certainly throughout our 
history, the BIA was the face of the Federal Government in 
Indian Country. It is quite rewarding now to see that HUD and 
HHS and so many other Departments have a real role in Indian 
Country. And I think that that is in part a testament to the 
existing Presidential Administration, but it has also been 
building and developing over time.
    And my position, Assistant Secretary for Indian Affairs, is 
no longer--I am still probably the point of the spear in Indian 
Country, but the spearhead is much broader than it ever was 
before, which puts burdens. There are burdens and benefits. It 
puts a greater onus on us to cooperate very well with them. And 
I know OMB has tried to get us to figure out ways to force us 
to cooperate better--one of the burdens is that we need to 
cooperate to make sure the left hand knows what the right hand 
is doing. But it is a benefit to Indian Country to have the 
whole Administration focused on Indian Country rather than just 
one agency.
    Mr. Simpson. Yeah.
    Mr. Washburn. So difficult questions.

                   SEQUESTRATION AND INDIAN EDUCATION

    Mr. Simpson. Ms. McCollum.
    Ms. McCollum. Mr. Chair, there are so many questions and so 
many people who can help guide us as we establish policy and we 
talked a little bit about maybe what the future should be and 
we touched on the past, but I am going to focus on the present.
    Right now, with sequestration, we have Impact Aid really 
being cut. Most of our school dollars in the Department of 
Education are forward-funded. Impact Aid is not forward-funded 
so this is real time, real cuts to schools. And for example--I 
know we all have examples and this is the reason why you saw me 
out here with my cell phone here--I have public schools with 
100 percent Indian enrollment, three of them. So that means 
Impact Aid. Nett Lake is one school. In fact, when the boiler 
went out, the State of Minnesota passed a special law to fund 
the boiler because it was in the middle of the winter to get it 
done.
    I have two other public schools with majority Indian 
enrollment, so I have five schools that right now, as we move 
forward, are going to see the Impact Aid, which is not 
sufficient enough for educating students. And we are now, 
because it is not forward-funded. The checks to those districts 
are going to stop.
    So if you could maybe comment a little bit. We have got 
school facilities we can talk about and things like that, but 
the responsibility of getting Impact Aid right for Native 
Americans students who are not in BIE schools as well, too, 
because that is also where, as statistically we know, a lot of 
the students are being educated.
    Ms. Shotton. Thank you, Representative McCollum.
    I think that it is a very important point when we talk 
about the looming threat of sequestration and particularly 
Impact Aid and how that will impact some of our schools, 
particularly when we look in terms of dollars, those schools 
that will immediately be impacted--Red Lake School District in 
Minnesota, $900,000; when we look at Gallup-McKinley School 
District in New Mexico, $2.4 million. So those are some 
examples. Even Mr. Drapeaux mentioned the other day how that 
would affect our tribal colleges and universities, particularly 
Haskell Indian Nations University.
    When we talk about Impact Aid in particular, I think being 
more responsible and making sure and ensuring that those 
dollars actually go to native students is an issue that we have 
to address.
    Ms. McCollum. Mr. Chairman, thank you. And the reason why I 
brought that up is if we are moving forward with any 
possibility of doing the right thing--and I know that all the 
people around this table are trying to come up with a solution 
of how sequestration--there is no doubt in my mind. I know how 
hard some individuals are working particularly. As we come up 
with things, sometimes something like that can get forgotten in 
part of the solution. I just wanted to put it on the radar.

          TRIBAL CONSULTATION, REPLACEMENT SCHOOL CONSTRUCTION

    So briefly, I would like to know, and the chairman touched 
on this, how do we get tribal consultation to help the Bureau 
of Indian Affairs and the Bureau of Indian Schools meet the 
diverse needs of tribal schools? Because one size is not going 
to fit all. So how do we do this to make sure all the different 
voices are heard at the table?
    And then I will just throw my second question in to save 
some time and just do it now. Based on conversations that I 
have had with some tribal leaders, the report that I just 
shared with my colleague, Ms. Pingree, is pretty eye-opening. 
And then, you look at the concerns that I am hearing that the 
Office of Budget and Management has zeroed out requests for 
replacement of school funding. You put that together with the 
GAO report and people are pretty alarmed and pretty concerned.
    Now, you came aboard, as you so rightly put, inheriting 
kind of a process that is in place. Could you maybe share with 
us some ideas that collectively you might have on how we really 
do a path forward for replacing these schools? Because we have 
had different lists come out. We have got this list and this 
school district thinks that they are on this list and then this 
tribal school thinks that they are on this list. Then we come 
up with a third one, and what we create is distrust. What we 
create is conflict. And that is the last thing our children 
should be expecting from any of us to do. So could you maybe 
talk about some ideas you might have on how we work with tribes 
to straighten that out?
    Mr. Washburn. Thank you, Madam Ranking Member. Why don't I 
go first?
    Tribal consultation is one of the most important things we 
do. And the Administration has been very focused on consulting 
with tribes on everything we do. There are two things going on 
with consultation or at least with--tribal consultation is 
designed to get input on what tribes think about how we run 
things. And when the tribes are running themselves, we do not 
have to do consultation. They get to run the programs. And so 
consultation is less important in that kind of context. Getting 
things in control at the tribal level will decrease some of the 
burdens or the pressures on consultation.
    We do actively seek consultation. Those often occur in 
national meetings or regional meetings at least and we do the 
best we can anytime we are making changes to obtain 
consultation.
    And let me pivot into the school construction report 
because we have methods of getting tribal consultation, but the 
school construction report that you are mentioning actually 
came about through a negotiated rulemaking process, which is a 
very, very formal way of getting consultation from Indian 
people about how we should behave. Most of the people on that 
negotiated rulemaking committee were non-federal officials. And 
so that report comes out from non-federal officials. And that 
is a good example of how we consult or at least get input more 
broadly than just talking to ourselves.
    School construction is a challenge. I gather that the 2004 
report was the one we have been working on for the last 10 
years and we have prioritized about 14 schools that were the 
absolute worst for replacement. And we have, over the course of 
9 years or so, replaced 11 of those 14. And there are three 
left on that 2004 list. What this new report does is it creates 
a different set of criteria for us to look at schools with. And 
we need to use those criteria and apply them to all our 
facilities in Indian Country and then come up with a new list. 
We do not want to leave those last three schools on the old 
list hanging, so we have decided that we will continue to 
prioritize those three as we develop our new list.
    These are difficult questions. I will tell you that in 
general the guidance I gather that has come down in our 
Department is we are not taking good enough care of the 
buildings we have now, so why do we want to construct more? 
That is kind of the attitude. And that is the sensible thing, 
right? If you are not doing a good enough job with the 
buildings you have, why would you want to build more buildings? 
That is not the complete answer when you have got kids going to 
schools that are problematic. And so I have heard you loud and 
clear on that. We also got to speak yesterday privately and I 
will take that back and look at that.
    We have asked that the money not be used for school 
construction in our recent budgets but for repair because it is 
easier and quicker to repair a building than to build an 
entirely new one. But I am interested in looking at these 
issues as we continue to develop budgets.
    Ms. McCollum. Thank you, Mr. Chair.
    Mr. Simpson. I will tell you that we did the last 2 years 
put in at least enough money to build the next school on that 
list. OMB zeroed out the fund and we put money into it, and 
then frankly, we got fought in the Senate as we were trying to 
do some things. So I agree with you that the funding limits are 
very important.
    Let me take an opportunity to introduce Congressman Rick 
Nolan, who is in the back of the room, from Minnesota's 8th 
Congressional District. And welcome. I know you have students 
here and interest in the subject. So thanks for coming to the 
hearing this morning.

               INDIAN AND NON-INDIAN EDUCATIONAL SPENDING

    Mr. Cole.
    Mr. Cole. Thank you, Mr. Chairman. And before I start, 
first, thank you for doing this hearing. I appreciate it very 
much and all the work that the staff did. And I want to thank 
the three of you because I know you have spent a lot of time 
preparing for this. I know how passionate you are. The 
testimony was extremely helpful quite frankly.
    Let me start with the very simple question that actually 
led to the hearing, and I will just address this to all of you. 
Mr. Secretary, you might want to take the first shot. But I was 
curious just if you compared the schools that the BIA runs, or 
native schools basically, with schools in surrounding state, 
the same state, where the resource is comparable. In other 
words, do we have as many dollars on a Native American kid 
where we have a federal responsibility as a kid right next door 
who has a mixture of sort of state, local, and a little bit of 
federal help too? If we are in Arizona on a reservation or in 
North or South Dakota, are there at least at the outset as many 
resources per student as the comparable schools that 
surrounding areas have?
    Mr. Washburn. Congressman Cole, thank you. And that sounds 
like a simple question.
    Mr. Cole. I thought it was, but it clearly was not.
    Mr. Simpson. That was the question that started all this.
    Mr. Washburn. Yeah, in government there are no simple 
questions.
    I will say it varies. We have schools in 23 different 
states, and in some of those states, I think it is fair to say 
we spend more per pupil, and in some of those states we spend 
less per pupil. And another question is how do we do compared 
to DOD?
    Mr. Cole. We are headed there?
    Mr. Washburn. Okay. Well, and the answer is it is hard to 
have a uniform answer to that since there are 23 different 
states that we could compare to and far more communities that 
we could compare it to. And so I do not know the answer to the 
per-pupil spending question. This is a situation of liars, damn 
liars, and statistics. You can kind of massage the data I think 
to say different things depending on what you look at. I would 
love to give you a simple answer to a simple question, and I 
cannot do that. I am told that we do well in comparison to 
other schools with similar populations. And I think that that 
is fair. But I do not know at the fine-grain level how we do on 
the per-pupil portion.
    Mr. Cole. Mr. Scott.
    Mr. Scott. Certainly. Thank you for that. When we looked at 
this issue over a decade ago, which is part of the reason you 
asked us to update those numbers, we did find that, on average, 
per-pupil expenditures are a little higher for the BIE schools. 
However, when you look at similarly situated schools, or nearby 
public schools, it was relatively comparable. We are looking 
forward to working with Indian Affairs to make sure we get the 
necessary data to try to update those numbers, because as I 
said, the statistics that I cited were from over a decade ago. 
So I want to have that context around it. We are looking 
forward to being able to provide an update on that analysis.
    If I could just for one second circle back on a couple 
questions Ms. McCollum asked. In terms of tribal consultations, 
one of the things I would encourage folks at Indian Affairs to 
consider is to go beyond holding meetings with folks, and look 
for different opportunities to seek feedback from all the 
stakeholders who are involved in Indian education. This, for 
example, could include focus groups and some surveys because, 
oftentimes folks will tell you one thing face-to-face when in 
fact they may have some different things in mind if you give 
them an opportunity to provide feedback anonymously. So whether 
it is around administrative reorganization or some broader 
issues, I think it would be helpful for Indian Affairs to 
continue to consider a range of mechanisms to obtain feedback 
from affected stakeholders.
    The second issue in terms of the schools' construction and 
moving forward with the new list, I do think as Indian Affairs 
moves forward, it will be very important for them to develop a 
communications strategy so that it is really apparent to all 
stakeholders what the new criteria will be as far as facilities 
going on the list, as well as helping them understand what the 
differences are. While moving forward and developing a new list 
is clearly important and a priority, it is also important that 
there be a clear communication strategy so that all affected 
parties really understand the difference between the old list 
and new list. Short of that, it is likely to create some 
additional questions and mistrust issues.
    I think our work and the work of its own internal study has 
found that consistently communication within the department, as 
well as communication with the stakeholders, has been a key 
challenge for Indian Affairs. And so I think developing some 
long-term communication strategies to help address that issue 
is critically important.
    Mr. Cole. Dr. Shotton.
    Ms. Shotton. Yes, Representative Cole. I think in answering 
this question--and Mr. Washburn alluded to this--it seems very 
simple if we can compare them to other surrounding public 
schools. But it is a little more complex. I think when looking 
at BIE students and their parity in terms of being funded the 
same as surrounding schools, you have to consider the cost of 
running boarding schools within this. And so sometimes the 
comparisons should be more to the cost of a private boarding 
school rather than surrounding public schools. So I think those 
are important considerations to note when you are comparing the 
cost per student in BIE schools.

                     CAPITAL VS. OPERATING BUDGETS

    Mr. Cole. Please.
    Ms. Shotton. No, go ahead.
    Mr. Cole. Well, I was going to say another thing that 
strikes me in terms of the difference here--and I have a lot of 
areas to cover so excuse me for rushing through this. You 
really have two budgets, and when you look at any school 
system, you have an operational budget and you have a capital 
budget. And you clearly have a huge problem in Indian Country 
because we do not work capital budgets the same way. They 
cannot vote bond issues, they cannot tax themselves. Tribes 
that have a source of revenue cannot invest extra revenue on 
top. Our tribe does that in a variety of areas. Tribes that are 
not as fortunate obviously would probably want to do it and 
cannot and do not have any means. So I would ask when you look 
at your statistics if you could give us some idea of capital 
resources versus operating budget as well.
    It seems to me that facilities are the main problem that we 
have. I agree very much. I want perhaps all of you to address 
this quickly. I believe very much, Mr. Secretary, in what you 
had to say about self-governance. I mean my experience in 
healthcare and other areas has been when tribes actually have 
the authority that they do a better job. And if they do not do 
a very good job, well, guess what? Their local tribal members 
know who the councilmen are and they get their fingers right 
around their throat and the job gets better, just like it does 
in government anyplace else.
    But if the people making the decisions are a thousand miles 
away and appointed and you have no means of knowing who they 
are or dealing with them, it is just very difficult to make 
them responsive to you. So I mean pushing the decision-making 
down to the tribal level I think is by and large a good thing. 
If it does not work right the first time, over time it will 
because it has a means of self-correcting.
    Yet, at the same time, Mr. Scott, you seem to suggest--and 
I am sure you are right, particularly when you look at things 
like capital--these decisions are made a long way away. They do 
not decide in a local school district, you know, on the Navajo 
Nation we are going to have a bond issue and we are going to do 
something and we are going to upgrade the school. Somebody a 
long way away is going to make the decision.
    So how do you achieve the self-governance that I think you 
rightly are searching for, Mr. Secretary, and at the same time 
make these larger bureaucracies responsible? Because I am not 
sure centralizing the decision-making is all that good. 
Actually, that is kind of the history of decisions being made 
in Washington, D.C., and not being made by tribal people with 
tribal interests and knowledge immediately available. I do not 
know what kind of structural mechanism you devise to reconcile 
those things.
    Mr. Washburn. I think we have been moving towards--after 
our Bronner report which looked at these issues, we have been 
moving towards a system that puts the decisions out in the 
regions as far as we can, as best we can. It centralizes the 
accountability. And in fact here in Washington, I am 
accountable to you. That is why I am sitting in this chair. And 
I am accountable to Mr. Scott, who is looking at our programs. 
And so our accountability resides in Washington to a great 
degree. So we have got that function. We are putting our audit 
functions and our accountability functions. We have centralized 
those, but we are trying to push the decision-making out 
closest to the tribes and the schools as we can. And that has 
been one of the ways we have tried to restructure things to 
work better.
    Mr. Scott. I certainly want to commend Indian Affairs for 
commissioning the Bronner study, but I also want to make sure 
that they take away the right lessons from the study. Because 
previously, there was a NAPA study that basically said to 
centralize some things even though I am not sure the NAPA study 
said to centralize everything. And so now you have the Bronner 
saying some sort of hybrid approach is really the way to go. 
And so, I am certainly going to defer to Mr. Washburn in terms 
of the ultimate decisions they want to make about this.
    I do think it is critically important that as you 
transition to whatever new structure you have, that you build 
in certain things to ensure that you can measure whether you 
are making adequate progress in terms of having a focus on the 
customer, ensuring you have the right performance metrics in 
place so that you know whether you are meeting the customer's 
needs in a timely manner and that you have assurance that you 
have the right people with the right skills and abilities to 
properly execute your new mission. Absent that, reorganizing 
the administrative structure alone is not going to be 
sufficient to address some of these long-standing problems.

                         BIE SCHOOL GOVERNANCE

    Mr. Cole. Can I ask you a very simple and basic question? 
On most BIA schools, you mentioned there is a lot of tribal 
control. What is the mechanism for government? What is the 
equivalent of the local school board for a BIE school?
    Mr. Washburn. Well, we have tribal school boards. This has 
been a source of a little bit of tension, too, because we have 
got independent school boards for schools that compete for 
power a little bit with the tribal government itself. And so 
this is interesting. We have replicated a great deal of what we 
have in the counties and the cities at the tribal level. And 
that is a good thing in general.
    When we do tribal consultation, we often go to tribal 
leaders. And frankly, in this area, that is not entirely 
adequate because tribal school boards are in control to a great 
degree. But we have kind of replicated all the complications 
that exist in the rest of the world in this area. So the 
mechanism is tribal school boards for a lot of these schools.
    Mr. Cole. Dr. Shotton, you obviously have spent a lot of 
time thinking about this and studying it. What would you see as 
the best form of governance? Recognizing we have boarding 
schools and differences, and there might be a variety of them, 
but if you were sort of getting--how would you empower a local 
school district or a tribe to actually go about the business of 
educating native kids within the BIE system?
    Ms. Shotton. Well, I think that we always need to advocate 
for tribal control of education. I think we are certainly on 
the same page there that when we empower our tribes to employ 
their self-determination and take control of the education of 
their own citizens, of their own tribal members, tribes know 
how to educate their students. However, we must also equip them 
to do that. We cannot continually underfund these schools and 
expect our tribes to be able to run them efficiently.
    I think when we talk about consultations and advisory 
committees and those kinds of things, we must include the voice 
of our tribal leaders. We must also include the voice of our 
national native education leaders on these issues. So I think 
that it requires a continued cooperation and reaching out and 
consultation with our tribes to inform what is happening within 
the BIA and the BIE.
    And I think that we would be interested to know if there is 
a current plan for restructuring and if there is a plan to 
release, how we would do that? And if there is, if there is a 
time frame for that.

                              DOD SCHOOLS

    Mr. Cole. I am going to conclude pretty quickly. You have 
been very generous, Chairman. And I know other people have 
questions.
    DOD, just a little bit of background history, part of that 
happened because our former colleague, Norm Dicks, was 
traveling and he has military schools and he heard complaints. 
I have military schools and I heard complaints, and I visited a 
couple of them and the complaints were very well-founded. And 
brilliant staff came up with the idea to do one big effective 
deal; fix all these schools at once. And then in that case we 
were going to turn them over, after we get them up to 
standards, to the local school systems. They were a part of 
them anyway in many cases. But we made a big capital 
investment. It was a very big bipartisan effort because I think 
everybody wants the children of American service people to have 
the very best education possible.
    I do not know in this budget environment if we could ever 
do something like that, but that model is what worked. And it 
strikes me that what the chairman says is absolutely true. We 
do have a special responsibility. We have a trust 
responsibility that our government has assumed over many years.
    I recognize all the problems that Assistant Secretary 
Washburn has to wrestle with because a lot of these kids are 
coming from awfully challenged environments in terms of 
poverty, distance and isolation. It is pretty tough. On the 
other hand, they ought to go to a good school. And as the 
chairman said, they ought to be able to walk in and know 
somebody someplace cares about me and the kind of education I 
am going to get and wants me to have the best opportunity to do 
whatever I can do and go as far as my skills can take me. And 
that probably relies more on us in these cases, as they do with 
DOD kids, than any others in the country. There is somebody 
else to do that in most states. There is not anybody else but 
the Federal Government in this case. So I would hope we look to 
something like this.
    Last point, probably should not say it, you guys have 
pretty good ties. You have a spectacular necklace. That is a 
wonderful piece of work.
    Mr. Simpson. Ms. Pingree.
    Ms. Pingree. Thank you very much for the fashion 
commentary. No end to what I am going to learn on this 
committee.
    So thank you, Mr. Chair, for holding the hearing. I am very 
excited to be one of the newer members of this committee and 
really appreciate those members who have been working on this 
issue for a long time. What a depth of knowledge you have. You 
are asking some obviously very deeply concerning questions.
    I feel like I am learning a lot today and I am here to 
learn a lot today. So I am focusing most of my efforts on 
seeing how much I can absorb.
    But I do have a couple of specific questions, mostly for 
you, Mr. Secretary.
    I am lucky enough to represent Maine. We have two Members 
of Congress. And we have four tribes in Maine, the Penobscot, 
the Passamaquoddy, the Maliseet, and the Micmac. And because 
most of them are not in my district, I have had very little 
experience with some of the challenges that they have. But of 
course, now that I have this great opportunity to serve on this 
committee and learn more, I have been digging in. And I am 
pleased to hear that you have been to visit Maine.

                        BEATRICE RAFFERTY SCHOOL

    I want to ask specifically about one of our schools. You 
mentioned the 2004 list, and that of the 14, 11 had been done 
and three are left. And one is the Beatrice Rafferty School, 
which is in Perry, Maine, a Passamaquoddy school. They were one 
of those priority question projects. So when we contacted them 
to say give us some more background about what is going on 
there, it was a little shocking to me to realize that they had 
been on the list for so long, that they were only in the 
planning stages, and had not even received any funding for 
design let alone construction.
    And in the time that they have been waiting, in the time 
that they have been one of these schools that was slated for 
replacement, they have needed extensive repairs just to keep 
the building usable for those students. That means hundreds of 
thousands of dollars have been spent on replacing walls that 
fell down, replacing a portion of the roof, and conducting 
ongoing mold inspections, not to see if there was mold in the 
building, but to see if the mold in the building was one of the 
toxic molds that would affect the students.
    So it is hard to hear that in the context of this notion 
that we want kids to feel valued when they go to school and we 
want them to be able to learn. And for the 120 students there 
is just clearly not a good environment. And they had the sense 
in their conversation with me that they are pretty much never 
going to hear from us again, that the school is going to 
continue to fall down around them, that they are going to come 
up with what little they can to just keep it going, but they 
are asking. So what is going to happen here? Will there ever be 
any money for designer funding?
    And I heard you say this morning that you suggested that 
the three schools that had not been completed from that list, 
even though the criteria may be changing, but those three 
schools will be attended to. But I would like to be able to say 
at least to them whether is there any possibility that this 
school is going to be replaced. When will they hear from 
someone again? What is going to happen?
    And I am sorry, too, in a room full of people and stories 
all over that are clear that there are schools in need of help 
and repair. I did not want to single out just my own school for 
concern, but it is a great opportunity for me to learn and to 
be able to at least say, okay, so I am trying to learn. What is 
going to happen here? And I appreciated that you brought this 
problem up and I would love to hear your thoughts about it.
    Mr. Washburn. Thank you, Congresswoman. What I am going to 
do is take back your concerns to the Secretary and the OMB and 
let them know I got an earful yesterday from Ms. Pingree, and 
we have got some friends from the----
    Ms. Pingree. It is those M states.
    Mr. Washburn. Yeah, that is right. I think the people in 
the back of the room from the BUGS school would say that they 
are similarly in dire circumstances. And it is not something I 
relish but I would like to see what the next list holds as far 
as what other schools.
    I would hope that you would not judge us on our worst 
schools, but we have got to solve those problems. The problems 
are very real at the worst schools, the schools with the 
greatest challenges. And I will take this back and again the 
conversation has been we are not taking care of the buildings 
we have well enough, so, we do not want to build new buildings. 
I know that that does not answer all the questions, especially 
around the schools that are in the absolute worst condition. So 
I will take that back and register your concerns about this.
    Ms. Pingree. Great. Well, I will certainly look forward to 
having a further conversation about this.

                        BIE SCHOOL CONSTRUCTION

    Ms. McCollum. If you are taking money for repair and you 
are on a list, either the three-school list or the new list, 
and you start doing repair work, sometimes there is concern 
that that is going to move you down the list.
    Ms. Pingree. Right.
    Ms. McCollum. And I know that that is a concern for people 
out in public schools when they start repairing it that they 
will not get something done. Is that going to have a negative 
impact? Is that something that they should be concerned about?
    Mr. Washburn. Well, I guess when I hear that, what I hear 
is people are trying to game the system. I mean if you have got 
a repair that needs to be done, you should take the money and 
get the repair done. The new criteria that are in that book, 
maybe because the quality of the building is taken into 
account, and that is one of the criteria. You should not 
decline the repair money and put students in jeopardy because 
you are trying to make the worst case for the need.
    So even though it might have a tiny effect on the number of 
points that get scored for the building, that would be my 
thoughts about that.
    Ms. Pingree. Yes, thank you, Congresswoman.
    In our consultations, and our conversations with our 
partners, they highlighted conversations that expressed the 
same concerns that if they began to fund individual maintenance 
projects, rather than replacing the much-needed replacement of 
the facilities, that it could potentially push their facility 
further down the list. And so there is some fear about only 
kind of having this piecemeal approach to address small 
projects rather than the full spectrum of what their issues 
are. And so I think that is a very valid concern from what we 
have heard in conversations with constituents.
    Ms. McCollum. Thank you, Ms. Pingree.
    Ms. Shotton. Well, thank you. I appreciate the additional 
question. And I guess in our further concentration, I mean that 
is an important question for this school. If nothing else, I 
think at some point they want to know--so we were on the list, 
we are one of those three, you know, are we never going to hear 
again? Do we have to find alternative means? Should we keep 
repairing the building? I think all those are very valid 
questions, and my guess is that if this is happening in one of 
our tiny little schools, it is everywhere else.
    So thank you for your consideration.
    Mr. Washburn. Ms. Pingree, that is certainly consistent 
with what we have heard in our work, particularly this issue if 
you go ahead and make some repairs to your school, does that 
affect your place on the list? And I would just encourage the 
folks in Indian Affairs to communicate with schools about 
that----
    Mr. Simpson. Yeah.
    Mr. Washburn [continuing]. In terms of sort of what is 
their long-term strategy here so that everyone is operating 
from the same set of assumptions about what this will mean in 
the long-term. I think at a minimum we owe that communication 
to the folks at the local level so that they really understand 
long-term what this process looks like and to what extent, if 
at all, making some interim repairs to your building will 
affect your long-term capital needs.
    Mr. Simpson. Appreciate that. The gentlelady may be 
interested to know that the money we put in, since it was the 
next list on the school, the school you mentioned was the next 
school on the list, it would have been for that school, which 
ultimately got dropped in negotiations with the Senate when we 
could not get them to go along with that.
    Mr. Joyce.

                         GUNS IN INDIAN SCHOOLS

    Mr. Joyce. Thank you, Mr. Chairman.
    And I appreciate you being here, Dr. Shotton and Director 
Black and Assistant Secretary Washburn, and your testimony here 
today in answering questions. I have a direct question for you, 
Assistant Secretary Washburn.
    And let me preface it by saying for the last 25 years I 
have been a prosecuting attorney who represented school 
districts, and I have the misfortune of a year ago today being 
in one of my high schools which is a crime scene in which six 
kids were shot.
    In looking at the Inspector General's report in preparing 
for today's hearing, I noticed that 6 percent of high school 
students and 37 percent of middle school students are bringing 
guns to schools. And I applaud the efforts taking place up 
there with the drug abuse resistance and anti-bullying programs 
and also doing things as far as anger management training. But 
I was wondering if you could update us on whether or not there 
has been a reduction in the number of guns being brought to 
school? Because I think it is important that kids are given the 
best education that is humanly possible in the safest 
environment humanly possible.
    Mr. Washburn. Congressman, thank you for the question. And 
I do not have the data for how many kids are bringing guns to 
Indian schools. I will tell you we have taken some steps. All 
the schools have continuity of operations plans if God forbid, 
the worst happens that there is a school shooter situation or 
any other emergency for that matter. That is one that has been 
heavy on our hearts lately.
    We have been doing other things that do not cost too much 
but help out a lot, so parking police squad cars in front of 
the school, it does not mean a police officer is there 
necessarily but it provides a visible deterrent so that people 
think that there is an officer there and they see the squad 
car, and that can sometimes be effective. And it does not cost 
as much because that car would be sitting in a parking lot 
somewhere if it was not parked at the school. That cannot be 
the entire strategy to prevent school shootings obviously, but 
we are trying to do the things that do not cost much and that 
might have an effect. And so we are looking to be very creative 
about finding ways to address these serious issues.
    Mr. Joyce. Thank you. No further questions, Mr. Chairman.
    Mr. Simpson. Let me ask kind of a--well, a question I guess 
is what it is. As Congress is demonstrating this week that if 
we enact a law, it is difficult to change that law. The same is 
generally true for appropriations laws even though new bills 
are written each year annually. Things get into appropriation 
bills and then stay there forever and ever and ever, and a lot 
of times we do not know why they went in originally.

                EXPANSION OF GRADES AT EXISTING SCHOOLS

    A tribe recently brought to my attention the real-life 
impacts of language this subcommittee has carried since fiscal 
year 1995 prohibiting the expansion of grades at existing 
schools. The language forces this particular tribe to bus its 
sixth-grade students off reservation to the nearest public 
school for a year before returning them to the school to the 
reservation for seventh through 12th grade. Does this make 
sense?
    Mr. Washburn. I have an answer. No.
    Mr. Simpson. What are the consequences of deleting the 
language that prevents the expansion of grades in existing 
schools? This is an example where clearly it does not make any 
sense to have that. Are there other consequences that we do not 
know about?
    Mr. Washburn. Well, my sense is--and this language has been 
in there a long time, more than----
    Mr. Simpson. 1995.
    Mr. Washburn. Yes, I mean probably the reason that was put 
in there was we do not want schools expanding the grades that 
they are offering. If we cannot keep----
    Mr. Simpson. We cannot afford it.
    Mr. Washburn. Cannot afford it and cannot keep the building 
in shape. I mean the next thing they will want is a new 
building for the additional grades that they have. And so that 
might have been a way to put the cap on Indian education a 
little bit so that we are not expanding at a time when we 
cannot afford to build new buildings. I am just guessing that 
that must have been the purpose of that. In that case, at Sho-
Ban, it is kind of a silly outcome honestly.
    I will take that back to OMB and the Secretary and talk 
about that with them about whether that might be appropriate to 
delete that one.
    Mr. Simpson. Get us an answer to that by the time we write 
our bill because we will either delete the language or probably 
give the Department the ability to waiver that language at 
their discretion. But it is a discussion we need to have 
because it is really one of those simple things that needs to 
get done.

                     LEGISLATIVE LANGUAGE PROPOSALS

    Mr. Cole.
    Mr. Cole. Just a couple more questions. Thank you, Mr. 
Chairman. And along the lines that you just covered, it would 
be very helpful if any of you would give us specific proposals 
about language that could go in the bill that would be helpful. 
You know, again, we have some ideas. I am particularly 
interested in bolstering self-governance and I am particularly 
interested in things that would give local schools some 
understanding or control over their capital budget, which I 
think they really probably do not have now given the way we 
fund Indian education. And I am not sure what that would be but 
your suggestions would be certainly something I would look at 
with a great deal of interest.
    Also, I would ask that as you go forward you think about 
whether or not, again, a large-scale capital program--and that 
is probably something that would not be done this year--but, 
what is the utility of this as opposed to this sort of 
piecemeal approach? I just think we are at the bottom of a 
cliff we are never going to get to the top of. We have to make 
something to sort of get there. Now, as I recall, the Bush 
Administration tried to do something like that early on. I 
think the President actually, when he was a candidate, met with 
tribal leaders back in 2000 or something and made some 
commitment. And I know there was a rather substantial 
investment in 2001 or 2002 or sometime in that area.
    It sounds to me like it either was not enough or we just 
did not get the job done or again we maybe did not have the 
sustained maintenance after that. So looking back on the 
history of that might be somewhat helpful as well.

                COOPERATION BETWEEN BIE SCHOOLS AND TCUS

    And a final point again, and Dr. Shotton, you touched on 
this and might want to elaborate a little bit, I am very 
interested in whether and where cooperation between tribal 
colleges and tribally operated schools within the BIE system--
what kind of relationship can we have? And are there some 
outstanding examples?
    And one last question--and you may want to address this, 
too, Assistant Secretary Washburn--are there any tribes that we 
should look at that are just models? I mean you say, wow, this 
is a tribal school that is really being run really well by the 
tribe. I think the Cherokees Sequoyah School is an awfully good 
school. And that was not the history of that. And they have 
gotten deeply involved in investments and what have you. I have 
been to the facility before. It is extremely impressive. And 
they have clearly made this a point of pride and a point of 
success for their young people. So are there other places we 
should go look and models that we might be able to replicate or 
encourage?
    Ms. Shotton. I think of that when we talk about cooperation 
between BIE schools and our TCUs. I think a great opportunity 
is with regard to professional development. Turning to our TCUs 
to help provide the professional development that our teachers 
need in our BIE schools is a prime opportunity. They understand 
the cultural needs of our students. They understand the 
perspectives. They understand the things that we need for 
tribal students. And I think that we turn to TCUs as ways to 
educate our future leaders. And that was kind of the prime 
reason for starting TCUs, to allow tribes to create the future 
leaders. And so I think that that is a great example to work 
more cooperatively and collaboratively with TCUs to help 
provide that much-needed professional development for our 
teachers and BIE schools.
    Mr. Washburn. Thank you, Congressman. I guess on the model 
question, I am sure that there are wonderful stories out there. 
One that comes to mind is the Southern Ute Tribe in 
southwestern Colorado. They started basically a Montessori 
program years ago. They were troubled because their children 
knew who George Washington was but they did not know who the 
president of the tribe was and that sort of thing. And they 
thought we need to do a better job of educating students about 
our own government and our own culture and our own languages. 
And so that is a really neat example. It also combined early 
childhood education, which we know is exceedingly effective 
very much worthwhile expenditures because it makes long-term 
improvements in people's lives.
    The capital budget question that you mentioned we have put 
about $2 billion into Indian schools in the last 10 years or so 
and going back into the Bush Administration. The report that we 
have recently released shows that the community asserted that 
we needed $1.3 billion more. But that is less than what we have 
put in. There has been a sustained commitment. It has not been 
a single infusion in a couple of years. It has been over the 
course of time.
    But the ARRA funding also, you all spent a lot of money on 
Indian schools with the ARRA funding, too, and that was not a 
complete capital infusion, but it was a significant one.

                             JOINT VENTURES

    Mr. Cole. And one last question. And this is just an idea 
and I do not know if you have any reaction to it or maybe we 
already did this. One of the most successful programs we have 
in healthcare--and this does not always help your tribes--is 
joint venturing where we literally get tribes and the feds 
operating together. We have seen it obviously with the 
Chickasaws and their healthcare program where a lot of the 
capital was done. They had the ability to do that but then a 
lot of the operational was picked up. Do we have any equivalent 
to that in BIE program? And would there be any merit in that 
approach?
    Mr. Washburn. Let me say I do not know the complete answer 
to that question but I saw some really neat joint venturing 
recently with a state public school system and a tribe. The 
Kalispell tribe in Eastern Washington--they are a small tribe, 
380 members or something like that--their kids go to the local 
state public school. They thought about having their own school 
but they have only got 380 members. It would not be a very big 
school and the school is really close. They were very 
comfortable with the school they went to, but they wanted more 
tribal cultural education and tribal language education.
    So what they do is their kids go to the public school. The 
tribe provides the cultural and language teachers and the 
students that want to go--and mostly it is the Indian kids, but 
it is not just the Indian kids--can take those electives and go 
to those classes. And that is kind of a neat example. Obviously 
when, you know, governments can work together, it is a 
beautiful thing. And that seems to be a really successful 
example.
    Mr. Cole. Thank you.
    Thanks, Mr. Chairman.
    Mr. Simpson. Ms. McCollum.
    Ms. McCollum. Thank you, Mr. Chair. I saw a couple of Head 
Start facilities where tribes that, as Mr. Cole pointed out, 
had resources available upgraded and were doing some fabulous 
things with their Head Start facilities. But you know, then 
there is more inequity possibly for students who, through no 
fault of their own, have a tribe that does not have gaming 
usually as a resource.
    One of the things that we run across, whether it's 
reference to sovereignty in statutes, whether it is labor law 
or something like that, they might list states, municipalities, 
but then they do not list tribal nations. And so it is whether 
it was unintended or done deliberate. I was not in the room 
when some of these statutes were written. So there is inequity 
that is out there.

                         FEDERAL COLLABORATION

    There is also an inequity out there when the Department of 
the Interior--and I think it is a good thing that HUD and some 
of the other agencies are reaching out and working in Indian 
Country, still too centralized in my opinion and not enough 
consultation quite often. But here we are charged with the 
overall working cooperatively in a partnership with our tribal 
nations here.
    But there are so many other agencies out there and we are 
just talking about education, for example. We have got the 
Department of Education. I recently found out the Department of 
Agriculture in one of its programs and one of its lines down 
below with rural schools can fund programs in Indian Country. 
So for us as appropriators to kind of have a handle on it to 
know what is really going on, for a tribal organization to know 
what is going on, and then all the grants that keep getting 
added that are in different spots, and then you need to be a 
grant writer is what is happening. One of the things that we 
have been working on here and that I have been requesting for a 
while, and finally, from OMB is a unified budget.
    But I noticed even in the report from GAO, and it is no 
fault of your own, but you just kind of talked about this silo 
of dollars. What do we need to do, to do the right thing in 
managing the federal dollars and working in partnership with 
tribal leaders?
    And let's just take education. I mean healthcare is another 
example where things are all over. Is that something that 
people have been struggling with or thinking about? I mean 
because I feel like now in order for us to do a good job with 
putting more money into schools, we need to watch that line in 
the Ag bill to make sure that they do not zero that out or lose 
it or we might lose broadband or internet or something like 
that. What are some of your struggles with that? How could we 
do a better job together in these dollars that have been 
allocated?
    Mr. Washburn. Let me say a little bit about that.
    Ms. McCollum. I mean we are all struggling with this 
together.
    Mr. Washburn. Sure. Sure.
    Ms. McCollum. This is no one's fault. We are all struggling 
with it together.
    Mr. Washburn. We have got sort of a great example that 
happened in the last decade or so. The Department of Justice 
went out and built a whole lot of correctional facilities in 
Indian Country, and they are beautiful, some of them. And then 
they turned to the BIA and said staff them up. And we did not 
have it in our budget. We did not know it was coming. That was 
not any communication between DOJ and BIA. And so it is a neat 
thing that they were engaged in Indian Country but we were not 
coordinating very well. And so we are doing a lot better at 
doing that.
    One of the great successes of this Administration has been 
the Tribal Nations Conference because once a year, every 
December, all of the Secretaries get together and a lot of 
their staff and tell Indian Country what we have been doing. 
And it forces us to talk to one another, too. And OMB has been 
interested in these. How can we make sure that you are 
coordinating across Departments?
    And so it is a difficult task because there are so many 
different units. But we are convinced that we need to be 
working better at those things. And so we are working on that.
    I have heard complaints from several people. Tribes do not 
want to have to choose which Cabinet-level agency they are 
going to go to. Whatever they need, they need it. Having to go 
search and find the right agency to fund that is not ideal. It 
would be nice if there was one United States interface and this 
is what we need; help us find it. And there is not a help desk 
at the front of the Federal Government that says oh for that 
you need to go to this Department.
    Mr. Simpson. Let me ask. Do you have an employee that is 
employed by the BIE that has an office over in the Department 
of Education or one that has an office over in the Department 
of Justice?
    Mr. Washburn. No, not inside those offices. We meet with 
them fairly often. Around education there is the White House 
Initiative on Indian Education. And that has served as an 
umbrella organization that has really kind of helped bring a 
lot of people together around these issues. But no, we do not 
actually have physical presence within those buildings. We try 
to meet with them regularly.
    Mr. Simpson. The problem is a lot of things go on in the 
Department of Education, and wouldn't it be nice to have 
someone there that you could say, well, this is what is 
happening in Indian Country and this is why this might work or 
might not work or whatever, but be part of a discussion on an 
everyday basis of what the heck is going on. And the same is 
true with the Department of Justice and other areas.
    Mr. Washburn. No, it is true. Energy is an area where the 
Energy Department actually has a lot of things going on, and so 
what we have been endeavoring to do is try to meet very often 
with them to know what are they funding, feasibility studies, 
so that we know that we need to fund the permitting processes 
once the feasibility study is done and that sort of thing. So 
again, enormous coordination problems because we have a lot of 
resources in the Federal Government but they are highly spread 
out.
    Mr. Scott. Ms. McCollum, I think the example you cited 
presents both the challenges and opportunities. Clearly, with 
different agencies doing different things, there is the 
potential to be fragmentation and duplication of efforts. That 
said, though, there is also an opportunity to enhance 
collaboration across these agencies. I spoke earlier about this 
idea of transforming the vision for Indian education in the 
country. And I think having increased collaboration across the 
various federal efforts would provide an opportunity to do 
that. Short of that, though, you do run the risk of different 
agencies doing different things and they may not be 
complementary at times. So I do think it is important for there 
to be some effort to look for opportunities to strengthen 
collaboration across the various agencies.
    Ms. McCollum. Well, Doctor, how good of a dance partner are 
we?
    Ms. Shotton. Fabulous. You know, that was exactly what I 
was going to say. The fragmentation in terms of funding for 
tribes and for native people, particularly around education, is 
an issue. I mean the funding is coming from so many different 
sources and you need all of those different agencies.
    I think another concern that we have from our perspective 
is the increased funding and increase and explosive growth of 
bureaucracy. So the funding that is going to more 
administrative costs is an issue that we are really concerned 
about. And so I think that is also something that we have to 
address when we are talking about some of these funding issues.
    Mr. Simpson. Ms. Pingree, anything else?
    Ms. Pingree. No, thank you.
    Mr. Simpson. Do you have anything else, Tom?
    Mr. Cole. No, I just thank you all.

                      FEDERAL TRUST RESPONSIBILITY

    Mr. Simpson. Well, let me just conclude. Let me ask one 
question. Might as well get a little provocative here. It says, 
Dr. Shotton, in your written testimony you state, ``While DOD 
budgets are often easy to justify for military purposes, it is 
equally as important that Congress defends spending on native 
populations to fulfill its trust responsibilities.'' In your 
opinion, is the problem due to the fact that most Members do 
not understand the trust responsibilities well enough to defend 
it or do you see another reason here?
    And for the record, could you explain what the trust 
responsibilities are pertaining to Indian education?
    Ms. Shotton. I think at the heart of that, Mr. Chairman, is 
that, yes, too many people do not understand the trust 
responsibility that the Federal Government has to tribes. As a 
college professor, I run into this every day. It is not 
something that we teach in our school systems. It is not 
something that we teach in our history courses. And so many of 
the students that I receive do not understand the role of the 
Federal Government and the relationship and the sovereignty of 
tribes and the role of the trust responsibility of the Federal 
Government. And these are people that are going to go on to be 
our future leaders. So absolutely, I think there is a real lack 
of understanding of the trust responsibility.
    So when we talk about explaining the trust responsibility, 
the way that I explain it to my students in very simplified 
terms is it is kind of like rent. The trust responsibility was 
a promise to provide education, to provide healthcare, and for 
the well-being of natives and native children when tribes ceded 
lands to the Federal Government and those lands that now make 
up the United States. And I think in speaking to this 
subcommittee, I think everyone here understands that. But many 
of our leaders do not understand the very basics of our trust 
responsibility.
    So essentially, it is that responsibility that is laid out 
in many of our treaties for the Federal Government to provide 
for the education, the well-being, and for healthcare of tribes 
for the land that they ceded to the United States.
    Mr. Simpson. Appreciate that. Go ahead.
    Mr. Cole. Just for the record and probably inappropriately, 
but the Chickasaws are more than willing to cede back every--if 
we can just have northern Mississippi and parts of Alabama 
back. We will call it even. All is forgiven.
    Mr. Simpson. I knew that was a bad question to ask. No, I 
often hear this. And there are excuses that are made all the 
time for not doing what is our responsibility, not fulfilling 
our responsibilities. And you hear more and more from people 
who say, well, but they got all those casinos. They do not need 
funding from the Federal Government anymore because they are 
making money hand-over-fist, you know? And you go to some 
reservations and some tribes are doing very well with casinos, 
and others, it is not really a benefit.
    It is something we need to be able to explain to more 
Members of Congress so that they understand what our 
responsibilities are and how we are doing in meeting those 
responsibilities and what needs to go on to improve it.
    But I appreciate all of you being here. This is a very 
interesting subject for this subcommittee, and we will continue 
to work on it.

                   COMMUNICATION BETWEEN BIE AND DASM

    Mr. Scott, I look forward to your final report when you get 
it out because there are some things that concern me. And we 
talk about communication between federal agencies. As I was 
reading this last night, it said, ``BIE officials reported 
having difficulty obtaining timely updates from DASM on its 
responsibilities to request for services from schools. 
According to the BIE officials, they used to have regularly 
scheduled meetings at DASM leadership to discuss operations, 
but the meetings were discontinued in September 2012. BIE now 
depends on ad hoc meetings to discuss issues requiring 
resolution. As a result, BIE officials stated there is a 
disjointed approach to serving schools.''
    So it is not just between federal agencies. It is also 
within the Department. And it is something that we want to help 
you work on because all of us in this room, every member of 
this committee, as well as you that testified, as well as 
guests, all have the same goal here, and that is to provide the 
best quality education that our Indian children deserve in this 
country, as well as the other responsibilities we have. So we 
look forward to working with you to address this.
    Thank you for being here today. And again, welcome to the 
new post.
    Mr. Cole. Can I have one last question?
    Mr. Simpson. Yes.
    Mr. Cole. Now that you have read Mr. Scott's turnover 
statistics, we have your guarantee you are going to stay here a 
full year and get this job done for us?
    Mr. Washburn. But I heard Dr. Shotton's testimony, and that 
is a grave responsibility.
    This committee's leadership has been incredible, and the 
Administration does appreciate the incredible leadership of 
this committee on Indian issues. Thank you.
    Mr. Simpson. Thank you all very much.

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                                         Wednesday, March 13, 2013.

            WATER INFRASTRUCTURE FINANCING OVERSIGHT HEARING

                               WITNESSES

MIKE SHAPIRO, ENVIRONMENTAL PROTECTION AGENCY, OFFICE OF WATER, DEPUTY 
    ASSISTANT ADMINISTRATOR
ALFREDO GOMEZ, GOVERNMENT ACCOUNTABILITY OFFICE, DIRECTOR OF NATURAL 
    RESOURCES
AUREL ARNDT, GENERAL MANAGER, LEHIGH COUNTY AUTHORITY, ON BEHALF OF 
    AMERICAN WATER WORKS ASSOCIATION
BEN GRUMBLES, U.S. WATER ALLIANCE, PRESIDENT
HOWARD NEUKRUG, COMMISSIONER, PHILADELPHIA WATER DEPARTMENT, ON BEHALF 
    OF NATIONAL ASSOCIATION OF CLEAN WATER AGENCIES
JEFF STERBA, PRESIDENT, AMERICAN WATER, ON BEHALF OF NATIONAL 
    ASSOCIATION OF WATER COMPANIES
THAD WILSON, M3 CAPITAL PARTNERS, LLC, VICE PRESIDENT

                  Opening Remarks of Chairman Simpson

    Mr. Simpson. Good morning, and welcome to today's hearing 
on water infrastructure financing. We have a number of 
witnesses on two panels, so I will keep my remarks brief so 
that we may hear from everyone, and quickly move into question 
and answer session, where I expect a robust discussion. I would 
like to ask the members and witnesses to do the same thing.
    The intent of today's hearing is to discuss what we on the 
Appropriations Committee have appropriated to date to the Clean 
Water and Drinking Water State Revolving Funds and current 
balances in State Revolving Funds, and what that means for the 
number of loans and projects funded annually. Today's 
discussion is about how do we get from point A to point B, and 
then where are we going, and from where we are to where we need 
to be.
    In 2010, the Congressional Budget Office analyzed public 
spending on transportation and water infrastructure and found 
that state and local governments account for about 75 percent 
of the total public spending on transportation and 
infrastructure, and the federal government accounts for only 
about 25 percent. Since 1987, the first year of the Clean Water 
Revolving Fund, the committee has appropriated a total of $52.3 
billion to the SRFs. This includes last year's appropriation of 
$2.38 billion for the Clean Water and Drinking Water State 
Revolving Funds.
    In 2002, EPA's GAP analysis identified a $533 billion 
shortfall between the assessed need and the level of investment 
over a 20-year period. EPA's most recent clean water needs 
assessment in 2007, and most recent drinking water needs 
assessment in 2008, identified a combined $633 billion in 
infrastructure needs through 2028. And that need is only 
certain to grow as population pressures increase, as chemical 
and other contaminants infiltrate, and as infrastructure 
continues to age.
    This is a nationwide issue that creates very real local 
challenges. States and cities are reviewing their budgets and 
trying to find ways to pay for these infrastructure projects to 
ensure a clean and safe drinking water supply for their 
residents, while also maintaining critical services. Meanwhile, 
rate payers cannot afford to see their water bills increase 
when struggling to make ends meet with their mortgages and 
higher food and gas prices.
    At the federal level, if SRF funding is maintained at the 
fiscal year 2012 mark, we would not meet identified needs using 
federal funds for more than 250 years. That is 250 years.
    Mr. Moran. Repeat that sentence once more, Mr. Chairman.
    Mr. Simpson. At the federal level, if SRF funding is 
maintained at the fiscal year 2012 mark, we would not meet the 
identified means using federal funds for more than 250 years.
    Mr. Moran. I do not know about you, but I may not be 
around.
    Mr. Simpson. I plan on being around. I plan on seeing that 
happen, at the same time I see us finishing our appropriation 
bills by October 1.
    Mr. Moran. And living on the Moon.
    Mr. Simpson. At the same time we have a massive federal 
debt of more than $16 trillion, which demands that we reduce 
federal spending. So we, too, face tough choices.
    Some argue that one cannot find solutions using the options 
currently available to us, and most agree that there is not one 
single approach that will serve as a ``magic bullet''. 
Therefore, we need some out-of-the-box thinking, and all 
options need to be on the table.
    We also need to be thinking about how to use existing funds 
and infrastructure more efficiently. The Congressional Budget 
Office estimates that many urban drinking water systems lose 20 
percent of their water through pipe leakage. The American 
Society of Civil Engineers estimates the resulting loss of 7 
billion gallons of drinking water per day. Further, EPA 
estimates that there are at least 240,000 water main breaks 
each year in the United States. In the Washington DC area, 
there were 2,211 breaks last year, which was the lowest level 
in the past 6 years. So we have significant challenges to 
address both for capital infrastructure and for the operations 
and maintenance. And I reiterate that I hope that we can 
collectively bring some innovative thinking to the discussion 
today.
    EPA serves as the federal manager for the SRF funds. The 
GAO has analyzed various infrastructure financing options and 
implementation challenges from a nationwide perspective. We 
appreciate and look forward to the testimony. We then have a 
second panel of witnesses that represent national, county, and 
city levels that have been thinking about both federal and non-
federal investment opportunities and other innovative 
approaches to paying for water infrastructure projects. We 
appreciate the expertise that they bring to bear along with 
their respective policy and legislative ideas for members of 
this subcommittee to consider.
    Mr. Simpson. Mr. Moran, do you have any opening statement?

                  Opening Remarks of Congressman Moran

    Mr. Moran. Yes, I do, Mr. Chairman, and I want to tell you 
in advance, I have got to go to two more hearings where I am 
giving testimony, but I want you to carry this on. This is an 
oversight hearing, and so it is preferably appropriate for only 
one--oh, you have got Mr. Serrano just in time. So Mr. Serrano 
will represent our side.
    Having said that, I do not think there really is one side 
or the other, and that is one of the reasons for this hearing. 
Because while we may differ to some extent on the way to get 
there, I think we both agree on the objective of making our 
water cleaner and safer for everyone, and making the investment 
that is necessary in the infrastructure to bring that about.
    I want to welcome Mr. Shapiro, who is head of the Office of 
Water at EPA, and Mr. Gomez from the GAO, the director of its 
Natural Resources Division, and the other panelists that will 
be joining us on the second panel.
    This subcommittee's jurisdiction does include the federal 
government's two main programs for financing drinking water and 
wastewater infrastructure. The Drinking Water and Clean Water 
State Revolving Funds combined totaled almost $2.5 billion in 
fiscal year 2012. It was 28 percent of EPA's total 
appropriation. I want to say, Mr. Chairman, that the Senate 
appropriations mark yesterday of these programs was very 
disappointing, and in my view, irresponsible. As difficult as 
it was to make the cuts that this subcommittee did, we made 
them in as responsible a way as possible, but the 
appropriations for EPA and the Interior appropriations bill 
itself is significantly above the Senate mark, and for that, I 
am very disappointed and I think the Senate, at least in that 
respect, did a disservice to the public in terms of water 
safety particularly.
    But given the fiscal environment of austerity in the 
Congress, it will be even more difficult for us in the future 
to adequately fund State Revolving Funds. This is just the 
first year of the implementation of the Budget Control Act. We 
have got another 9 years to go, and the sequester is not going 
away, nor do I think the reduced levels of funding will go 
away, and they will be reflected in the fiscal year 2014 
budget.
    So that is why this hearing is ever more important, because 
I think that the fiscal cliff deal, as it was called, is also 
irresponsible on the part of the Administration to accept 82 
percent of budget cuts that were all deficit financed, and not 
to resolve the sequester and the debt ceiling at the time. But 
there was a Minority that felt that way. But now we are dealing 
with the repercussions of that. I also think we need to address 
entitlement programs, because if we do not, there will be no 
money for any discretionary programs.
    But that is why this hearing is so important to not only 
discuss whether there is an adequate level of federal 
investment, but how much investment is needed in terms of 
public and private sector investment. EPA surveys, as you said, 
Mr. Chairman, indicate that we need about $635 billion over the 
next 20 years. Between the 2009 Recovery Act and the fiscal 
year 2009 and 2010 Interior appropriations bills, we provided 
about $13 billion for State Revolving Funds. Now, they may have 
been historic levels, but they were grossly inadequate levels 
of funding, leaving a $500 billion funding gap that was 
reported by EPA back in 2000, and that EPA recognizes and that 
this country should recognize.
    I do support your efforts, Mr. Chairman, to look at the 
alternative financing, and we are going to hear about that 
today from experts who know more than we do, and we need their 
expertise and insight. But I do think that public-private 
partnerships, which have been around for years, are still 
underused by municipalities, and when they cannot turn to the 
State Revolving Fund anymore because of the reduction in 
federal funding, I think they are going to have to turn to 
other more innovative ways of funding needed infrastructure. We 
are going to hear why they have not done that today, I am sure, 
particularly from the second panel.
    I think the idea of a national infrastructure bank, and 
taxing bottled water--both of those ideas, I think, have some 
merit to meet the need, but the concourse is unsustainable. One 
of the problems is that we are spending billions on the back 
end to correct what is happening on the front end. At one 
point, it was thought if you just let all this fertilizer and 
stuff go into the water that dilution is the solution to 
pollution, people thought. Well, hardly. That stuff washes down 
the Potomac, it gets into the Chesapeake Bay, to use a local 
example, and then it puts the plant life on steroids and when 
it decomposes, sucks all the oxygen out of the water so nothing 
else can live. You have only to look at the District of 
Columbia to highlight our Nation's water ills. I mean, that is 
where we spend most of our time, Members of Congress and the 
federal government, and yet, this highlights the problem.
    Everybody wants to have clean water. It is 75 percent of 
our bodies, but are we willing to pay to stop the sewer 
overflow after rainfalls from going into the Chesapeake Bay? 
DC's Clean Rivers Project would cost $2.6 billion, and The 
Brookings Institution indicated that rate payers are not able 
or willing to pay that, and that is just a typical case of many 
urban, suburban, and rural communities. So how do you finance 
these needed improvements without having sufficient support 
from rate payers. In fact, there is good reason why they could 
not support the kind of increases in rates that would be 
necessary.
    Now we have this tradition of providing a quote that 
sometimes is relevant. There is a guy by the name of Fuller, 
Thomas Fuller. He was 17th century--and I am sure Tom Cole has 
read him extensively--but he said, ``We never know the worth of 
water until the well is dry.'' There is another one that I will 
offer for you all's benefit, Mr. Chairman, which takes a 
somewhat lighter approach. W.C. Fields said, ``You really can't 
trust water because even a straight stick turns crooked in 
it.'' So I am not sure what the relevance of that is, other 
than it is talking about water, but when the staff finds it, I 
have to use it. So yes, a stick turns crooked in water, and so 
W.C. Fields thought that you cannot trust it--it was not meant 
to be particularly deep.
    With that, we can get to the hearing, Mr. Chairman. Again, 
I appreciate you having the hearing. I am going to have to 
leave in a few minutes, but thanks a lot for having such an 
important hearing.
    Mr. Simpson. Thank you, Mr. Moran.
    I would like to ask that Mike Shapiro from the EPA, 
followed by Alfred Gomez from GAO, to offer their testimony, 
and we will expeditiously move into questions for this session. 
Mike.

                  Opening Remarks of Mr. Mike Shapiro

    Mr. Shapiro. Chairman Simpson, Ranking Member Moran, and 
members of the subcommittee, thank you for the opportunity to 
appear before you today to discuss the state of the Nation's 
drinking water and wastewater infrastructure, as well as the 
accomplishments of the Nation's primary sources of low-cost 
infrastructure financing, the Clean Water and Drinking Water 
State Revolving Loan Fund Programs. I have a longer statement 
that I have submitted for the record. I will give you a summary 
here.
    Clean water and safe drinking water contribute to our 
public health and to the welfare and economic well-being of our 
families and communities. We have come a long way in improving 
protection for public health, water quality, and the 
environment under the Clean Water Act and the Safe Drinking 
Water Act. Our Nation's drinking water meets standards as 
protective as any in the world, and we have improved water 
quality and increased public health protection in streams, 
lakes, bays, and other waters nationwide.
    We have achieved this progress in large measure through our 
ability to construct and maintain a robust infrastructure for 
the provision of drinking water and collection and treatment of 
wastewater. Nevertheless, major challenges lie ahead. Our 
Nation needs significant water and wastewater infrastructure 
investment. According to the EPA surveys, America needs $300 
billion in wastewater and $335 billion in drinking water 
infrastructure improvements over the next 20 years. These 
resources are needed to address challenges which include 
repairing and replacing aging facilities, managing increased 
demand from population growth, reducing nutrient pollution, 
controlling pollution from stormwater runoff, controlling 
pathogens, and dealing with the challenges of improving 
infrastructure, security, and resilience.
    Two of the Nation's most important sources of water 
infrastructure financing are the Clean Water and Drinking Water 
State Revolving Loan Fund Programs, the SRFs. These programs 
are low-interest loan programs that give states flexibility in 
financing projects. The EPA provides capitalization grants to 
the state SRF programs. States contribute an additional 20 
percent of what EPA provides, and they are required to make 
loans at below market rates. This results in a substantial 
interest savings for communities, typically providing the 
equivalent to a grant covering approximately 20 percent of the 
cost of the project.
    One of the most important features of the SRFs is that 
repayments are recycled back into the program to provide an 
ongoing funding source for additional water projects. 
Additionally, states have the ability to leverage federal grant 
awards through the sale of bonds. Twenty-eight clean water SRF 
programs and 22 drinking water SRF programs have leveraged by 
issuing bonds.
    The SRFs fund projects based on each state's assessment of 
greatest need, which often includes small systems and those 
serving disadvantaged communities. In other words, systems that 
have few options for financing infrastructure improvements.
    In 2012, the SRF provided $7.7 billion in funding to more 
than 2,600 communities across the country. Total funding 
contributed by federal appropriations and by states over the 
life of the two programs is closing in on $120 billion, with 
only $52.6 billion of these funds having come from federal 
appropriations.
    Under the drinking water SRF authorization, states were 
given the authority to use a portion of their capitalization 
grants for additional subsidization in the form of principal 
forgiveness or grants. Similar authority has been available 
under the Clean Water SRF program since the passage of the 
American Recovery and Reinvestment Act, ARRA. This valuable 
authority has allowed states to provide critical resources to 
our most-needed communities that could not afford SRF loans, 
even at subsidized rates.
    Another important feature of the SRF programs is the Green 
Project Reserve, first introduced under ARRA, which helps 
utilities function in more environmentally sound ways. One of 
the benefits of the Green Project Reserve is the increase in 
funding and visibility for green infrastructure. Green 
infrastructure techniques utilize natural systems or engineered 
systems that mimic natural landscapes to capture, cleanse, and 
reduce discharges using plants, soils, and microbes.
    As Representative Moran pointed out, investment alone is 
not sufficient in managing our infrastructure. In addition, we 
need to plan those investments and operate them in ways that 
are sustainable, and a lot of EPA's efforts in supporting our 
infrastructure programs over the last several years has focused 
on developing tools, techniques, and sharing best practices so 
that the money that we invest is used as wisely and sustainably 
as possible.
    In conclusion, the SRF programs are clearly focused on 
actions and funding to achieve compliance with environmental 
and public health standards, but are confronted with 
significant challenges. Addressing these challenges will take 
effort from the EPA, states, communities, and other partners, 
and will require us to use more innovative and sustainable 
tools to solve significant challenges.
    We look forward to working with members of the 
subcommittee, our federal and state colleagues, and our many 
partners, stakeholders, and citizens to continue progress in 
providing safe and clean water for all Americans. Thank you 
again for inviting me to testify, and I will be happy to 
respond to any questions.
    [The statement of Mike Shapiro follows:]

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    Mr. Simpson. Thank you, Mike. Alfredo.

                  Opening Remarks of Mr. Alfredo Gomez

    Mr. Gomez. Mr. Chairman, Ranking Member Moran, and members 
of the subcommittee, good morning. I am pleased to be here 
today to discuss the infrastructure needs facing the Nation's 
drinking and wastewater systems.
    The U.S. faces costly upgrades to aging water 
infrastructure. The most visible signs of this problem are 
frequent sewer overflows into rivers and streams, and as noted 
earlier, water main breaks in the Nation's largest cities. 
Several approaches have been proposed to help bridge the gap 
between projected infrastructure needs and current funding. My 
statement today summarizes the results of our reports on these 
approaches. I will focus on three main areas: EPA's Clean Water 
and Drinking Water State Revolving Fund Programs--the SRF 
programs, stakeholder views on three alternative financing 
approaches, and three, issues in financing drinking water and 
wastewater infrastructure.
    First, EPA's SRF programs are the largest sources of 
financing. EPA uses federal appropriations to provide grants to 
states, which in turn provide low or no interest loans to local 
communities or utilities to pay for water infrastructure.
    Second, to better understand the three alternative 
approaches, we surveyed industry and government stakeholders. 
So the first approach is a clean water trust fund, which would 
provide a dedicated source of funding for wastewater projects. 
Stakeholders identified key issues that would need to be 
addressed, such as how a trust fund would be administered and 
used, what type of financial assistance should be provided, and 
what activities should be eligible to receive funding. A 
majority of stakeholders said that a trust fund should be 
administered through EPA in partnership with the states, but 
they differed on how a trust fund should be used.
    Another approach mentioned earlier, a national 
infrastructure bank, would use public and/or private funds to 
finance infrastructure projects through a variety of loans, 
loan guarantees, and other mechanisms. A majority of 
stakeholders that we interviewed supporting creating such a 
bank, but also identified several issues that should be 
considered. These are the bank's mission and administrative 
structure, its financing authorities, and project eligibility.
    The last approach is public-private partnerships that 
involve private investment and infrastructure projects. We 
identified seven municipalities that had entered into these 
partnerships for wastewater projects. For example, the city of 
Santa Paula, California, entered into a contract with a private 
company to design, build, finance, and operate a wastewater 
treatment facility. Stakeholders identified advantages for all 
of the partnerships that we reviewed, such as having access to 
other sources of financing. They also identified challenges, 
such as dealing with local opposition that may arise from 
concerns about private companies not being as responsive.
    A third area that we focused on deals with efficiently 
financing water infrastructure. So as the Nation faces limited 
budgets, it is important to target federal funds to communities 
with the greatest need, such as those that are economically 
disadvantaged. EPA's IG and GAO found that EPA has limited 
information about how states target these communities for 
funding. A recent report on rural water infrastructure found 
inefficiencies when state-level programs did not cooperate in 
funding projects. Officials from two USDA state offices had to 
deobligate more than $20 million that they had committed to 
projects because they were not aware that the state SRF 
programs had committed to fully fund the same projects.
    Also, our past work highlights the importance of asset 
management tools to help utilities manage existing and future 
assets more efficiently and effectively. EPA has implemented 
our recommendations to improve its promotion of asset 
management to utilities; however, it is up to utilities to use 
these tools and we have not assessed the extent to which they 
now do.
    In summary, the funding needs for upgrading the Nation's 
water infrastructure require attention. In considering the 
various funding approaches, it is helpful to consider how an 
entity will be administered and funded, how we will finance 
projects, and what projects will be eligible. It would also be 
important to consider how to target funds to those with the 
greatest needs and to spend funds efficiently.
    Mr. Chairman, this completes my statement. I would be 
pleased to respond to any questions.
    [The statement of Alfredo Gomez follows:]

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               CLEAN WATER INFRASTRUCTURE FUNDING BACKLOG

    Mr. Simpson. Thank you, both of you, for your testimony.
    This is a really perplexing problem that we face. In fact, 
I think it is one of the great challenges that we face, not 
only water infrastructure systems, but infrastructure in 
general, and a lot of these systems are meeting their lifespan.
    The concern I have is two-fold. One is being able to 
address this overwhelming need when you look at, what did you 
say, $635 billion in clean water and safe drinking water needs 
assessment out there, and the fact, as I said in my opening 
statement, we are putting $2 to $3 billion in there every year, 
and we can address this in about 250 years. And if nothing gets 
worse over 250 years, then we will have fixed it in 250 years. 
I do not think anybody thinks that is realistic.
    So on the one hand, what we are appropriating is not 
meeting the needs to address the backlog and keep up with this 
infrastructure. Secondly, in an environment of reduced budgets, 
there is more and more pressure being placed on every aspect of 
our budget. We are financing now with appropriated dollars 
going into the revolving loan funds. It puts pressure on all 
the rest of the budget. So we do not do an adequate job there, 
and we do not do an adequate job of addressing the problem.
    And what I have been frustrated with over the years is how 
do we get out of that? You mentioned several different types of 
alternative financing, whether it is the trust fund such as, I 
suspect, the highway system uses, or a national infrastructure 
bank, which was discussed for a number of years when Chairman 
Oberstar was chairman of the Transportation Committee, or the 
public-private partnership arrangements. But certainly, 
Congress needs to take up some way to create a way of financing 
these systems for the future. I do not have the answer for it, 
obviously.
    I think Earl Blumenauer and I introduced a bill a couple of 
years ago that essentially created a trust fund. The question 
is, what do you tax? With the highway trust fund, we can tax 
gasoline or something that is pretty easy to do. Trying to 
address it by creating a tax on clean water is a little more 
difficult. So we looked at the industries that benefit the most 
by having clean water, things like that, and having some tax 
revenue from them going into a trust fund. But it is one of the 
challenges that I think Congress faces in general.
    You mentioned that we have spent, since the life of the 
program, $120 billion, us and local units of government, all 
together.
    Mr. Shapiro. That was the total outlay. The $120 billion is 
total outlays from the State Revolving Fund Programs, so that 
includes the federal capitalization money, the 20 percent state 
match, any of the funds that are recycled into the system 
through repayments, as well as, in some cases, some interest 
that accrues as states manage the resources in their funds. So 
it really emphasizes the power of leveraging the dollar through 
the recycling of those dollars back into the funds as loans are 
paid off.
    In addition, though, you very correctly point out that in 
many cases, especially in larger projects, there are other 
sources of funding that support infrastructure, municipal bonds 
being a principal resource, and that would be in addition to 
the $120 billion.
    Mr. Simpson. As I read the history of all of this, when 
they created the State Revolving Loan Funds, I get the 
impression that the idea was at the time that we would put 
these resources into it as kind of seed money to start these 
revolving loan funds, and that you would build up enough in 
these revolving loan funds that eventually the federal 
government would not be putting any more money into them, that 
they would be self-sustaining with the revenue coming back in 
to fund other projects and so forth. Was that the idea behind 
the revolving loan funds, and if so, how much is the federal 
government going to put into it?
    Mr. Shapiro. Well, I think conceptually, and I was not 
around when these provisions----
    Mr. Simpson. That is why I said reading the history of it.
    Mr. Shapiro. But I think the idea was that they would, over 
time as the funds build up, you would decrease perhaps the 
relative need for federal dollars. I do not know whether the 
thought was ever that they would come to absolute zero. I think 
there are a couple of, you know, issues that we have to address 
first as deciding ultimately what the right level would be for 
revolving funds, and then even in the situation where we reach 
that level, there are certain uses of the funds that would 
deplete the base over time. If states want to continue to 
provide low-interest loans, which is the key, there is going to 
be some erosion. Set-asides for grant or loan forgiveness, 
which is very important to many of the poorer income 
communities, would reduce the size of the funds in the systems.
    So if we are talking about achieving some stable level of 
funding over time, there will always be some erosion that one 
would have to attend to, but again, there is a significant 
public policy question over what level is the right level.
    And just to sort of clarify one point you made, although it 
is easy to compare the $600 billion-plus in total needs over 20 
years, with the small annual federal appropriation, as I 
mentioned, in the most recent year there was about $7.7 billion 
of outlays, and so if you multiply that over 20 years, it is 
very simplistic, but you see that the funds, the revolving 
funds can address a significant, not maybe the majority, but a 
very significant percentage of total projected cost. It is a 
testament, I think, to the design of those funds and their 
management by the states that they are providing such an 
important resource.
    And just one other point, because of the different history 
of when the funds began and how much capital they have 
accumulated over time through annual appropriations, you really 
have to look at the clean water funds and the drinking water 
funds a little bit differently, since their capitalization is 
much different. The clean water fund has had more time and more 
money.
    Mr. Simpson. But as you say, $7.7 billion was invested in 
this over last year, and if you look over the next 20 years if 
the same rate of investment went on, you are talking about $150 
billion, somewhere in that neighborhood. Over the next 20 
years, what do you anticipate, or do you anticipate that 
backlog need would have grown? Would it have grown more than 
the $150 billion we invested?
    Mr. Shapiro. Well as I said, our current 20-year surveys 
suggest that the need we can account for is about $636 billion. 
Now, there are good reasons, and many people will probably 
proffer additional ones, why those numbers could well be low. 
They only account for projects that are fairly certain in terms 
of our ability to survey, so once you get out beyond 5 years, 
it is harder and harder to get accurate estimates, and I think 
a lot of people believe, for that reason, that those might be 
underestimates of the actual ultimate 20-year need.
    Mr. Simpson. Do we have any idea on what the growth rate of 
that needs assessment has been? When is the last time we did 
the GAP analysis?
    Mr. Shapiro. Well, there are two different things. The 
surveys take place roughly every 4 years. The results that I 
cited were from reports generated in 2008 and 2009. We have new 
survey results from the drinking water survey that should be 
coming out this year, and we have another round of survey 
information that will be coming out under the clean water 
survey in the near future. The GAP analysis that people 
referred to was one that was developed, I think, in 2002 and is 
based on a separate set of information and analyses. We have 
not repeated that GAP analysis.
    Mr. Simpson. When I was reading kind of the history of 
this, the first GAP analysis that was done--I do not know if it 
was a GAP analysis or if it was the 4-year survey that went 
on--by the time the next one was done, the need had grown by 
about $100 billion, in spite of the investment that was made 
over that time between the surveys. So I guess the question is, 
is while we can say we are going to put $150 billion into it 
totally over the next 20 years, if the need assessment is going 
to grow by $200 billion, we are losing ground.
    Mr. Shapiro. There is no question that certainly if you 
compare the most recent survey information that I cited with 
the previous survey, there was a significant increase in needs 
reported, and that, you know, we will have to see what the 
results of the next cycle are. But needs have been growing, 
that is correct.

                            ASSET MANAGEMENT

    Mr. Simpson. Are there ways to reduce the cost of the 
infrastructure building that we are doing, and what are those 
and what are the new technologies and so forth that are being 
used to reduce the cost of what these systems cost?
    Mr. Shapiro. Well, as GAO has pointed out, managing assets 
more efficiently and effectively should help reduce the total 
costs needed to provide good service.
    Mr. Simpson. What do you mean by managing assets more 
efficiently?
    Mr. Shapiro. Replacing pipes that are wearing out at the 
right time before they break and destroy streets, managing the 
replacement of infrastructure so that you are replacing it as 
it is needed in an effective way as opposed to either too early 
or too late, by doing a good job of cataloging and inventorying 
the assets in place, and a good process of auditing and 
updating the information so that you have a better sense of 
where the investments are needed more effectively.
    Another tool that we think will have growing importance is, 
especially in dealing with the expenses associated with 
managing stormwater and combined sewer overflows, is the use of 
green infrastructure, as I mentioned, more natural approaches 
to using green space and infrastructure that deals more 
naturally with the flow of water to reduce the size of the gray 
infrastructure, the holding tanks, the storage facilities, that 
might be needed to deal with surge capacities associated with 
storms. That should reduce costs. So there are a number of 
tools that we have at our disposal to help mitigate some of the 
cost increases, and a lot of it comes down to being smart about 
using the best tools that are available, and smart about using 
and planning for a sustainable approach to asset management.
    Mr. Gomez. Mr. Chairman, if I could provide an example 
here.
    So in the work that we did looking at asset management, we 
talked to a lot of utilities and reported benefits from using 
asset management. For example, the improved decision making 
that they had about their capital assets, such as getting 
better understanding of maintenance as was mentioned, 
rehabilitation, and replacement needs. So for example, we heard 
the Seattle Public Utilities used asset management to target 
its maintenance resource. In particular, they used a risk-based 
approach to target pipeline repairs. So for example, they were 
looking at the age of the pipes, they were looking at the 
material, they were looking at the proximity to historic 
landfill, street slopes, to calculate the risk of ruptures.
    And so using that information, they were able to identify 
15 percent of the pipes that were at high risk of rupture, and 
they were able to focus and repair those. So it allows them to 
get a good sense of their inventory, what the condition of that 
inventory is, and then focus their dollars on it.
    Mr. Simpson. Years ago when I sat on city council, I can 
remember we sent some of those monitors down some of our 
wastewater lines and water lines and all of that kind of stuff, 
and I was surprised to see that they were made of brick, a lot 
of them. And Idaho is a relatively new state compared to a lot 
of them. But tree roots had grown in and all of that type of 
thing. And we then went to steel and so forth. Are there other 
types of materials that could hopefully address this problem 
that would be cheaper or last longer or anything like that?
    Mr. Gomez. Not that we have discussed, but it is possible 
from your second panel that folks may have some ideas about 
newest technology. We also learned from using asset management 
that it provided for a more productive relationship with the 
governing authorities, rate payers, and others. So for example, 
the Louisville Water Company was able to use asset information 
to convince its governing board that it needed to increase 
rates because they would not be able to cover the expected 
costs. So I think it gives utilities the information that they 
need to make those cases to either increase rates or to focus 
attention on those areas that need it most.
    Mr. Shapiro. And as I understand, there has been continual 
improvement in the materials that are used for the underground 
infrastructure to improve their strength and durability. There 
has also been some real progress made in what is so-called in 
situ approaches to relining or even fully replacing pipes 
without having to dig up the city streets and incur the huge 
costs and disruptions associated with that. So industry has 
been responding, I think, creatively in figuring out how to do 
these jobs better and more efficiently.

                            REGULATORY COSTS

    Mr. Simpson. Last question. Do you know what the cost of--I 
want to say the cost of regulation, but all of it is due to 
regulation, I suspect, of some sort of another. But as that gap 
or that needs assessment grows, how much of that is growth 
because of increased regulations of new findings or new 
chemicals or the like? I think specifically if we lowered the 
arsenic standards to what is it, 10 parts per billion now, and 
we lowered that from 50 parts per billion, which put increased 
pressure on small communities particularly to reduce that 
arsenic level, which has cost them an awful lot of money. Do we 
know the extent of the cost of the regulations?
    Mr. Shapiro. I do not have the information right in front 
of me, but our needs surveys do provide some estimates 
associated with costs incurred to meet regulations. But I would 
also have to say that typically those are not the majority of 
the costs that we are dealing with. The basic provision of, you 
know, the infrastructure in the case of drinking water to treat 
it to a point where it meets basic standards, get it 
distributed to residences or businesses, and the maintenance 
and continued upgrading of that is a large share of the total 
cost, and likewise in wastewater. The basic infrastructure for 
collecting and providing basic treatment is also a substantial 
cost.
    There is no doubt that as we identify important health-
related reasons to lower our standards or to regulate materials 
that have not previously been regulated, there typically are 
additional costs, which we evaluate in the course of the 
rulemaking and try to be as accurate as possible in 
forecasting.
    Mr. Gomez. Mr. Chairman, I just wanted to add to that 
point.
    So in our work, we did not focus on that particular issue, 
linking it to the regulations; however, what we did find, 
though, is that a good amount of that cost is due to the aging 
and deterioration of the infrastructure.
    Mr. Simpson. I just found out that the EPA and the states 
arrived at an estimate of $52 billion in regulatory costs 
versus the $282 billion in non-regulatory costs.
    Mr. Serrano.

                            DISASTER RELIEF

    Mr. Serrano. Thank you, Mr. Chairman. I had a couple of 
questions myself, and then I inherited Mr. Moran's binder, so I 
will mix and match here, Mr. Chairman, and you tell me when my 
time is up, so I will try to do the best I can here.
    Let me ask you a question that I had in two parts. The 
first part is the waterways and shorelines of my region in New 
York that were severely impacted by Hurricane Sandy. Rebuilding 
efforts are just getting underway and it is important that we 
do it in the smartest and most cost-effective way possible. 
Could you both speak about the ways in which the restoration 
and rebuilding from Hurricane Sandy is an opportunity to use 
green infrastructure projects, not just to filter and cleanse 
runoff but also to protect and secure communities against 
future storms.
    And the second part is what role do you folks play in a 
situation like that? Is it like FEMA where FEMA comes in and 
gets involved, or do you wait for the municipality to call you? 
We have had 9/11--New York years ago went through something 
that it never thought it would see, and we always saw graphics 
on TV about these kinds of storms but never saw them upfront. 
So now it is the issue of water and not just for the beaches 
but the water for drinking. So number one, or number two, you 
go in, what is happening, and what is the best way to deal with 
this as we rebuild?
    Mr. Shapiro. Well, I will answer number two first and then 
I will go back to number one. But EPA has a significant role as 
part of the overall plan for any emergency response situation. 
We are a member of the team and are typically called upon in 
situations which almost always occur in hurricanes, other kinds 
of natural disasters where there may be releases of pollutants 
or toxic chemicals. My own office, the Office of Water, works 
very closely with our emergency response colleagues at EPA as 
well as FEMA and other federal, Corps of Engineers in looking 
at issues of infrastructure damage and assessing responses that 
are needed either during the course of the emergency or in the 
recovery period that follows.
    So again, our exact role varies from emergency to emergency 
but in the case of Hurricane Sandy, we had EPA staff deployed 
to the federal response centers in New Jersey and New York to 
deal with a number of issues, among them assisting in assessing 
the availability and damage to water and wastewater 
infrastructure, so that is a very important part of our role.
    In the case of Hurricane Sandy, we have really been 
involved much more intensively in the recovery efforts than we 
have in the past, and as you know, Congress in its 
appropriations for recovery from Hurricane Sandy appropriated 
$600 million through the revolving loan programs to assist, and 
this is really unique, to assist not in the reconstruction of 
water and wastewater facilities that were damaged, because FEMA 
has resources to do most of that, but actually to look beyond, 
you know, kind of simply building the same things that were 
there before but rather enhancing as appropriate facilities and 
the infrastructure in ways that make them safer against 
hurricanes and flooding and other natural disasters and 
increase their resilience in the event that there is another--
which there will be inevitably--another major hurricane or 
other natural disaster. So we are working closely with the 
states to figure out how to implement that unique piece of 
legislation through the revolving fund programs, and we hope, 
and the plan really is to integrate various federal resources 
so that our money gets used in a way that is appropriate but 
complements resources that would be available from FEMA as well 
as HUD in community development block grants, for example, that 
are being made available.
    Mr. Simpson. Will the gentleman yield?
    Mr. Serrano. Sure.
    Mr. Simpson. So let me get this straight. FEMA pays for the 
construction, if you will, that was done by the hurricane to 
wastewater and water treatment facilities?
    Mr. Shapiro. FEMA has the authority to pay for restoring 
facilities that have been damaged, you know, once there is a 
natural disaster declaration, and the resources have been made 
available through the Hurricane Sandy appropriations to fund a 
substantial portion of that work. My understanding is, now they 
are in the process of assessing the damages and coming up with 
appropriate estimates. I am sorry. Should I continue?
    Mr. Serrano. Sure.

                          GREEN INFRASTRUCTURE

    Mr. Shapiro. So that moves into green infrastructure, and 
we are very much hoping that we will be able to work with the 
states and through EPA's regional office as well as with other 
federal agencies so that the restoration activities that take 
place do provide a model for the use of approaches, green 
infrastructure and other complementary approaches, that enhance 
the resilience and protect the facilities in a more effective 
way than we were able to do in the past, so as my testimony 
points out, green infrastructure allows us to use natural 
features of the landscape as well as engineered structures like 
porous pavement and green roofs to slow down the surge of 
floodwater, to absorb it, to get part of it returned to the 
groundwater, part of it is lost through evapotranspiration so 
that there is less of a surge and a slug of pollutants that 
occurs during the storm.
    There are also aspects of green infrastructure such as use 
of either engineered or natural wetlands that can aid in 
resisting the surge of the ocean during a storm, absorb excess 
runoff and absorb pollutants so in general, to accomplish both 
the protection and resiliency goals in a way that is more 
effective and also as a benefit often provides attractive green 
space that enhances communities at the same time and deals with 
some other problems like helping to clean the air. So it is not 
a panacea for every problem but we see green infrastructure as 
being a major component of our infrastructure vision for the 
future.
    Mr. Serrano. Mr. Gomez.
    Mr. Gomez. So we have some upcoming work that is looking at 
how states and locals and the federal government are adapting 
to these kinds of events, and in particular we are looking at 
how utility efforts are adapting to storm damage. Rebuilding is 
a really good opportunity to see how you can better adapt to 
these events, so it is an excellent opportunity for folks to 
see what they can do to improve on the existing infrastructure.
    In terms of how else GAO can help is, GAO usually is asked 
to go in and look at the progress of the federal rebuilding 
efforts, so we have done that in the past and that is something 
where we could also see in this effort with Superstorm Sandy 
how the federal effort is progressing.
    Mr. Serrano. Well, I thank you both for a very thorough 
answer.
    When I first got involved in politics a long time ago in 
the state assembly in New York, Mr. Chairman, water and so many 
other issues were issues not related to New York City, 
certainly not to the Bronx. Water was something that came 
through the faucet and that was it. We thought meat came from 
the supermarket. And then as you grow up and you understand 
what is going on, you realize how important it is. What has 
really changed is that, number one, people in crowded cities 
have in the last generation, or at least 10, 15 years, and we 
have done with the Bronx River, and the Bronx, as you know, Mr. 
Chairman, just getting much more involved in using what is 
around them for recreation and making very serious statements 
about using that. And secondly, when you see a situation like 
this, more and more the urban centers are dealing with water 
issues, water availability and water pollution and so on and so 
forth. Now, these issues bring us together. They are not issues 
for someplace out West or in the South. They are also for the 
urban centers. So I thank you.

                       CHESAPEAKE BAY RESTORATION

    And Mr. Chairman, with your permission, I will ask one more 
question from Mr. Moran's binder, because it affects us. Around 
here, you always see New York bagels, New York pizza. That is 
to tell you that they are selling a good product. In the Bronx, 
we have Maryland crabs, because if you put Bronx crabs, it may 
not go over that big, so we exploit our pizza and so on.
    So the question, Mr. Shapiro, is, you know that the 
Chesapeake Bay is on a ``pollution diet'' and our State of 
Virginia along with Delaware, D.C., Maryland, New York, West 
Virginia and Pennsylvania have to implement changes to reduce 
pollution into the bay watersheds. How much of the pollution 
problem in the bay is related to issues with wastewater 
treatment? And as Mr. Moran mentioned in his statement, D.C. 
needs to spend $2.6 billion to fix their combined sewer 
overflow problem that affects the bay. So we have a total 
figure for infrastructure needs to get the bay in compliance. 
And before you answer that question, if there is any reporter 
here, please do not get me in trouble in the Bronx. We do have 
other things that we offer other than crabs.
    Mr. Shapiro. Before I begin my response, I just want to 
compliment the work that has been done on the Bronx River. I 
think we really point to that as one of the models in the 
country for how in an urban area communities have come together 
around water and----
    Mr. Serrano. You know, a beaver came back after 200 years 
to New York City.
    Mr. Shapiro. Did he stay?
    Mr. Serrano. He stayed. Ask me the beaver's name.
    Mr. Shapiro. What is the beaver's name?
    Mr. Serrano. Jose.
    Mr. Shapiro. I learned something. Thank you.
    Getting on to the Chesapeake Bay, what we found in looking 
at the sources of pollution in the bay that the large 
wastewater treatment plants including Blue Plains but also 
others in the urban areas of the bay are a substantial source 
of nitrogen and phosphorus. The states at this point have 
stepped forward and put together a comprehensive plan for 
addressing the point sources, the wastewater treatment plants, 
and significantly reducing their loads of both nitrogen and 
phosphorus. At Blue Plains, the investments that are going on 
there as well as in cities across the bay watershed, really are 
testimonies to the willingness of communities to step up to 
help address the problems in the bay. But the wastewater 
treatment plants alone in managing their nutrients will not 
solve the problems, and our pollution diet that you referred to 
really calls for significant reductions from a variety of 
sources including agricultural sources, which have been 
contributing nutrients as well.
    Mr. Serrano. Thank you, Mr. Chairman.
    Ms. Herrera Beutler [presiding]. Madam Chair.
    Mr. Serrano. Madam Chair.
    Ms. Herrera Beutler. That will probably be the only time I 
get to say that. It is pretty exciting.
    Mr. Serrano. It comes sooner than you think.

                      CLEAN WATER ACT REGULATIONS

    Ms. Herrera Beutler. Well, I guess I am the next to ask a 
question.
    There was a couple of thoughts I had as I have been 
listening to this, and you have been sharing your comments 
about the urban water challenges and how you are addressing 
those. I come from a different situation in southwest 
Washington State. On the west side of the state, we actually 
get quite a bit of water, so much water that it is hard for us 
to imagine not having it. And one of the challenges, as you are 
talking about this and talking about the aging infrastructure, 
I was thinking about in one of my counties, we have seven very 
small cities and then a larger city. I do not know if you are 
familiar with the Western Washington Stormwater Manual. It is a 
step well beyond the Clean Water Act and what we have received 
even from the EPA. We have asked, is this under Clean Water 
what we are supposed to be doing, and we have had informal 
confirmation that no, that is the state going beyond. And what 
we are dealing with is, so I have got these small cities who 
have this aging water infrastructure and would like to update 
it, change it. And we have sewer needs just like everybody 
else, but the stormwater fees that are being added to these 
cities, these tremendous amounts of money have more to do with 
meeting a new regulatory standard that is not getting us the 
better, newer infrastructure. It is just more punitive in 
nature.
    So I was very interested in seeing--and the chairman asked 
the question about regulation versus just updating maintenance 
and doing what we need to do. Is there any way I could get some 
specific information about our region or Washington State in 
terms of the regulatory cost versus the aging infrastructure 
and the maintenance? Because that seems to be more where you 
all are focusing. Is that possible to get that information?
    Mr. Shapiro. I do not know how much specific detail we have 
in our surveys concerning just your part of the state because 
they are surveys, especially on the Clean Water side. We can 
check to see.

                          FUNDING ARRANGEMENTS

    Ms. Herrera Beutler. I would be happy with statewide 
information as well. We just have very different parts. I mean, 
the west side is very different than the east side of the 
state. I assume that you keep some sort of information on that. 
Because that would allow us then to move into a place where we 
can put money into the maintenance.
    The other question I had, Mr. Gomez, your testimony was 
talking about different approaches to financing this 
infrastructure, one being some sort of a trust fund, a clean 
water trust fund. Immediately I was thinking about some of the 
infrastructure funds that we currently have--harbor maintenance 
trust fund, highway trust fund--all good, important uses that 
over the course of time and the wisdom of some have diluted 
those uses. I do not know if that is the right way to say it, 
but that money gets spread from its initial intended purpose. 
Do you envision ways or safeguards we can put into place if we 
were to create some sort of a trust fund that would 
specifically target this money so that we are not 10 years from 
now going back and saying well, this money was for--and yet we 
are not meeting our infrastructure needs.
    Mr. Gomez. Certainly. I mean, that was one of the issues 
that we raised in our report with the trust funds, one of the 
issues that stakeholders told us about is how are you going to 
structure it, how are you going to set it up, what are you 
going to finance. So it is all about how Congress sets it up. I 
mean, with the trust fund, you have a dedicated source of 
funding, but as we mentioned earlier too, I believe, the 
chairman noted it, is the difficulty of getting those funds in. 
You know, there are different various financing approaches that 
we looked at for the trust fund and different taxes, you know, 
taxes on bottled water, on pharmaceuticals, flushable items, 
but you raise the key point about what areas do you focus on. 
Some of the stakeholders said that it could complement, for 
example, the Clean Water SRF. Others said that it should be 
separate. So it all depends on how you structure it and how it 
is administered, and that would be one of the key issues.
    Mr. Simpson. Mr. Joyce.
    Mr. Joyce. Thank you very much for being here today. Mr. 
Shapiro, I would like to ask you a question in sort of maybe 
follow-up to what our chairman was asking. You talked about the 
American Recovery and Investment Act and that the states were 
having authorities apportion their capitalization grants for 
additional subsidization, that is, principle--you said loan 
surplus. In these difficult economic times, do you think 
allowing private utility companies to join in and use these 
revolving funds that would be similar to the Safe Water and 
Drinking SRFs would expand programs that otherwise might not be 
expanded due to these tight times?
    Mr. Shapiro. Well, actually, to be clear, again, there are 
two funds. There is the Clean Water State Revolving Fund and 
the Drinking Water State Revolving Fund. Under the Drinking 
Water State Revolving Fund, privately owned community water 
systems can access the SRF money through loans. Under the Clean 
Water, they cannot. That is restricted to municipal wastewater 
utilities. And again, Congress made different judgments 
obviously. The Drinking Water Revolving Fund was created later 
in 1996. The Clean Water Fund was created in 1988, I believe.
    So some of that may reflect different perceptions about the 
nature of drinking water versus wastewater responsibilities on 
the part of government but the experience we have had under the 
drinking water program is that good projects have been put 
forward from both private and public utilities and each state 
makes its own decisions about how to rank and select projects 
but in general, both kinds of entities have been able to access 
funds through that mechanism. Again, I think it is sort of a 
public choice as to how you perceive the role of public sector 
versus the private sector for providing these kinds of 
infrastructure services.
    Mr. Joyce. In follow-up to that question then, sir, you 
said the previous one, that would be the 1988 Clean Water Act, 
do you think that needs to be updated then to allow that to 
occur?
    Mr. Shapiro. I do not have a view on whether it needs to be 
updated. I think if we want to provide the ability for the fund 
to do that, it would clearly need a reauthorization, given the 
way that the statute is currently structured.
    Mr. Joyce. But the latter one is working so it might be 
something to look into?
    Mr. Shapiro. It might be something that you would consider.
    Mr. Joyce. Thank you. I yield back.
    Mr. Simpson. Let me ask one other question. Has the 
Administration or the EPA--I guess they are the same--proposed 
any form of financing this infrastructure differently along the 
lines of what was proposed or what was suggested by the GAO, 
whether it is an infrastructure bank or trust funds or 
whatever?
    Mr. Shapiro. As far as I know, there have been no 
alternative proposals put forward by the Administration for 
financing. I think we may have provided some technical 
assistance on questions that were asked about some of the 
different approaches and some of the legislative vehicles that 
have been explored but the Administration has not taken a 
position on any of them.
    Mr. Gomez. Mr. Chairman, I just wanted to bring attention 
to one of the alternative approaches that actually is being 
used but not as often, and that is what we talked about earlier 
in public-private partnerships, and so as I noted earlier, we 
looked at seven. All of those seven involve private financing 
so it is a private company that is coming in and investing 
resources in a particular part of that infrastructure, and 
generally it is through a lease agreement or some type of 
contract. The communities do get an upfront payment, and so the 
lease terms range anywhere from 20 to 35 years. We are not 
really sure why it is not used as often. I think the last one 
that we noted was used in 2008. All the others were back in the 
1990s, whether it is the need for more education, but it is 
another mechanism that is out there that communities could use.
    Mr. Simpson. Sort of like a toll road. You mentioned during 
your testimony some of the pros and cons or the concerns that 
some people have about the public-private partnership. Of the 
seven that you looked at, are they working well? Are people 
happy with them? I know it is a hard standard to meet.
    Mr. Gomez. Well, one of them we learned actually terminated 
its contract because of difficulties that they were having but 
the others as we know are working at this point. We have not 
gone back to see. I believe this work we issued in 2010. But as 
we know, we talk to the cities, we talk to the folks that are 
doing these, and except for one that terminated, they are 
working. We did note all of the challenges. You know, there 
were some challenges in terms of things that people--there was 
public and political opposition from rate increases. There is 
also the issue of financing challenges, so because you have 
public and private monies coming together, how do you deal with 
tax exemption and IRS rules, so that was one of the challenges. 
One of the municipalities talked about a loss of control, so 
for example, once the lease is over, one of the communities 
that had a facility built and designed was not as familiar with 
the design and so they were just concerned that once the lease 
expires they are going to have to take it over, and they were 
not as comfortable at that point. So those are things that they 
are working through.

                  RURAL COMMUNITY WATER INFRASTRUCTURE

    Mr. Simpson. One of the other challenges we have in Idaho, 
like many other states, there are a lot of small communities. 
It is substantially probably more expensive per unit to deliver 
clean water and wastewater treatment to a town of six or seven 
or five or four or three thousand people than it is to a very 
large community. Are these public-private partnerships mostly 
in larger communities?
    Mr. Gomez. I believe the ones that we looked at, it was a 
mix. There were some smaller communities and----
    Mr. Simpson. What do you mean by small?
    Mr. Gomez. Well, usually the definition, I believe, is 
under 10,000 people.
    Mr. Simpson. I grew up in Idaho, and at the time, the 
eighth largest city in Idaho was just under 10,000. That is a 
challenge.
    Mr. Serrano. I had 10,000 in my apartment building.
    Mr. Simpson. Are there specific--within the SRFs and so 
forth, are there ways to target some of these to smaller rural 
communities? Because I find they have the--especially I dealt 
with several of them trying to deal with the Arsenic Rule where 
it just becomes cost prohibitive for them to do anything with 
it. Do we target resources to some of the smaller rural 
communities?
    Mr. Shapiro. Well, I think there are two points.
    Mr. Simpson. And when I talk about rural communities, I am 
not talking about rural ones in New York.
    Mr. Shapiro. Right. Many states do in fact target smaller 
communities for technical assistance, especially under the Safe 
Drinking Water Act and the revolving fund that supports that. 
They can set aside resources to provide technical assistance to 
help smaller communities figure out what might best meet their 
needs. Often they have a lot of trouble getting to the point 
where they can put forward a good, solid proposal because they 
do not have the history and the in-house expertise to do the 
preliminary work and figure out the best alternatives. So we 
try to--the states try and we try to help through our efforts 
these smaller communities getting access to information and 
tools they need to plan, and then states in their priority-
setting process are able to select communities that have a 
greater need for resources and often rural communities tend to 
both have high per-capita costs of service, as you pointed out, 
and in many cases are also not as wealthy as some of the larger 
communities. So the states have the ability to use the loan 
forgiveness provisions in both SRFs now to help those 
communities as well as select through their prioritization 
process preferences for communities that are more economically 
disadvantaged and have less access to other sources of capital. 
And our records show that--again, I have to use the 10,000 
benchmark, but a substantial portion of the total SRF monies go 
to communities or projects serving communities less than 
10,000.
    Mr. Gomez. So I just wanted to add to my comment earlier 
about public-private partnerships. So from our table in my 
statement, we do have Fairbanks, Alaska, which is probably over 
10,000 people, probably a couple of apartment complexes. The 
PPPs that we looked at, some of them were small communities, 
and the reason being why they would look to these partnerships 
is because they do not have the capacity to manage so they were 
looking for others with that expertise, and that is one thing 
that we also learned is these private companies do have the 
expertise, they invest resources in research and development.
    But another point that I wanted to make in terms of what is 
out there for rural communities or these smaller communities, 
and that is that both EPA, as Mr. Shapiro mentioned, provides 
monies through the existing SRFs but also the U.S. Department 
of Agriculture through their Rural Utility Service targets 
communities under 10,000 people. So that is another area that 
is out there. And we did do work looking at rural utilities. 
And so we found that both EPA and USDA are working together 
now, more to streamline the application process because, 
historically, communities had to do two applications for these 
grants but we want to make sure that it is just one grant 
application so they do not do two engineering reports, two 
environmental analyses; they can just do one. Because that is 
an added cost to these utilities that we do not believe that 
they have to do.
    Mr. Simpson. Other questions for this panel? If not, we 
thank you for your testimony.
    Mr. Serrano. Mr. Chairman.
    Mr. Simpson. Yes.
    Mr. Serrano. If I may, Mr. Chairman, would it be possible, 
with your permission, you know, that this subcommittee has been 
better than any other subcommittee in dealing with the issue of 
the territories, if they could at a later date report to us 
just what involvement the agency has in the territories so that 
we have a better understanding?
    Mr. Simpson. I did look at that in the GAO report because 
it also had the list of the needs in the territories. It also 
had the list of the needs on Indian reservations throughout the 
country and Alaska Native reservations. So we can get that for 
you.
    Mr. Serrano. Okay. Thank you, Mr. Chairman.
    Mr. Simpson. You bet. Thank you very much. We appreciate 
it.
    The second panel is Mr. Aurel Arndt, General Manager of the 
Lehigh County Authority in Pennsylvania. Mr. Arndt is 
testifying on behalf of the American Water Works Association. 
Ben Grumbles, the President of the U.S. Water Alliance. Howard 
Neukrug, Commissioner for the Philadelphia Water Department. 
Mr. Neukrug is testifying on behalf of the National Association 
of Clean Water Agencies. Jeff Sterba, President of American 
Water, New Jersey. Mr. Sterba is testifying on behalf of the 
National Association of Water Companies. And Thad Wilson, Vice 
President of M3 Capital Partners in Chicago. Welcome, and thank 
you for being here today. Mr. Arndt, I guess we will start with 
you.

                   Opening Remarks of Mr. Aurel Arndt

    Mr. Arndt. Thank you, Mr. Chairman. Members of the 
subcommittee, good morning.
    I am here today representing the American Water Works 
Association and its 50,000 members across the United States. I 
am General Manager, as has been announced, of Lehigh County 
Authority, which provides water and wastewater service in the 
Lehigh Valley Region of Pennsylvania, which is about 40 to 50 
miles north of our suburbs to the south in Philadelphia.
    One of the roles that I played over the years is, I have 
been a board member of the Pennsylvania Infrastructure 
Investment Authority, which is Pennsylvania's SRF, also known 
as PennVest, so I can bring you some perspective in that 
regard.
    My comments today are going to focus on three things. I am 
going to talk a little bit about the water infrastructure 
investment need, I am going to talk about some current tools 
that we use to finance that infrastructure, and I am going to 
also introduce a new tool that we are strongly supporting, 
which we believe can help to enhance the pool of capital 
available for water infrastructure. We have all heard about the 
importance of water earlier here today, and not to diminish the 
importance of public health protection, environmental 
protection, public fire protection, but I think there are a 
couple of key economic findings that are also important related 
to water infrastructure.
    The Department of Commerce has estimated that for every 
dollar spent on water infrastructure, $2.62 is created in the 
economy as a result of that investment. In addition, every job 
in the water workforce actually creates 3.6 jobs in the 
national workforce, so it has a significant multiplier effect 
in the economy.
    About a year ago, the American Water Works Association 
produced a report which is called ``Buried No Longer: 
Confronting America's Water Infrastructure Challenge.'' I 
believe we have provided copies of that report to the 
subcommittee. That report reveals that to restore our aging 
infrastructure, the buried infrastructure, which is largely the 
pipes, and to meet the needs of a growing population that we 
will have to spend $1 trillion over the next 25 years, a 
significant sum and certainly greater than the number that you 
heard earlier. It is important to point out, as I mentioned, 
that this is only our buried infrastructure. In addition to 
that, we have our above-ground facilities, we have wastewater 
facilities, we have stormwater facilities and other water 
infrastructure which are at least as great as that. And to 
determine the total magnitude of investment needs, you need to 
add those two numbers to come up with the real scope of what is 
in front of us.
    The American Water Works has had a longstanding position 
that water systems should be financed through customer rates 
and self-sustaining through customer rates and charges. In that 
way, the customers make much better use decisions in terms of 
their water and wastewater usage, and in addition, communities 
make better investment decisions. But the funds that are 
available from those sources are sometimes inadequate. As an 
example, many times it is difficult to finance large regional 
or national-scale water infrastructure projects because of the 
sheer magnitude of those numbers, and the current tools that we 
have are not adequate to address those types of projects, among 
others.
    So the real question is, what tools do we need going 
forward? And our association has supported the development of a 
robust toolkit which includes a variety of different approaches 
that can be used for financing that water infrastructure. Among 
them, the current tools that we have available are the use of 
tax-exempt bonds, Build America bonds, private activity bonds, 
and the state revolving loan funds. I am not going to comment 
on all of these. I believe some of our other panelists are 
going to address some of those items. However, I do want to 
point out that tax-exempt bonds are used by at least 70 percent 
of the water utility systems across the country. The dependence 
on that source of funding, which is the primary source of 
capital to invest in our infrastructure, is critical and we 
need to preserve that. We fully recognize that there are many 
issues considering the economic circumstances that our country 
faces including the issue of availability of tax-exempt bonds, 
but we feel that any change to diminish the availability or 
increase the cost related to tax-exempt bonds can only serve to 
hurt our ability to finance that water infrastructure given 
that dependency that we have based on current circumstances.
    We also urge you to restore the full payment that was 
promised by the federal government to issuers of Build America 
bonds, which have been cut as a result of the sequester. 
Ultimately, the result of that is that the available funding 
for investment in our capital infrastructure is diminished by 
that loss of revenue that was promised by the federal 
government when those bonds were issued.
    Mr. Simpson. If I could ask, how much was that loss of 
revenue?
    Mr. Arndt. I believe it is about 7 or 8 percent, and 
potentially we have been told that could grow going forward.
    Beyond those current tools, the American Water Works 
Association has been advocating the creation of a new program 
called WIFIA, the Water Infrastructure Finance and Innovation 
Act, which is patterned after the highly regarded and 
successful Transportation Infrastructure Finance and Innovation 
Act, or TIFIA, as I am sure you know it. We believe that WIFIA 
can fill a significant gap or void that exists in our financing 
toolbox that we have available to us. As I mentioned earlier, 
large projects typically are unable to tap into the state 
revolving loan funds because a single project or perhaps a few 
large projects could essentially deplete the total funding that 
is available through many of the state SRFs, and they are 
already--most of them are already oversubscribed.
    I would like to talk a little bit about some of the 
features of the WIFIA program as we foresee it. WIFIA would be 
able to provide loan guarantees and other forms of credit 
support to utility systems that are proposing to finance water 
infrastructure, and the two types of recipients that this 
concept envisions is that utilities sponsoring large projects, 
and for purposes of beginning a dialog, we have suggested that 
any utility sponsoring a project greater than $20 million would 
be able to obtain direct funding from the WIFIA program. In 
addition, the SRFs would be able to leverage their programs by 
aggregating smaller loans from those smaller systems that you 
spoke about earlier and aggregating those loans to a pool of 
$20 million and be able to tap into the WIFIA program as well.
    The way the program would work, again, very much like 
TIFIA, is that the Treasury would provide the funding to the 
WIFIA program. In turn, WIFIA would make the loan guarantees or 
issue the credit support to either those large project sponsors 
or to the SRFs, and in turn, the system recipients of those 
loans or other credit support would pay fees and/or interest on 
the loans, which money would be returned to WIFIA over a period 
of time and then in turn WIFIA would return those funds to the 
Treasury. In many ways, it is a self-liquidating program. There 
is certainly an initial outlay but one that is repaid in the 
future.
    One of the most important features of the WIFIA program as 
we see it is that it has minimal cost to the federal 
government. Under the Federal Credit Reform Act, Congress needs 
only to appropriate the subsidy cost or, if you will, the net 
long-term cost of the program. For two reasons, this cost to 
the federal government is actually very minimal. First of all, 
as I mentioned a moment ago, the program is self-liquidating so 
the funds out are repaid over a period of time, in many cases 
with interest or with additional fees that are attached to the 
financing. The second feature is that water debt in general has 
one of the highest credit ratings and best credit histories of 
all types of public indebtedness that is out there. Fitch 
Rating Services, one of the three largest rating agencies, 
determined a few years ago that the default rate on water 
infrastructure financing is four-hundredths of a percent, and 
this was done over several decades. So the likelihood of 
receiving that full repayment back to the federal Treasury is 
very, very strong.
    In addition, the SRFs that exist around the country that 
leverage their programs currently through the issuance of 
additional bonds, there has been no history of default, so they 
of course have, if you will, 1.000 batting average, and so 
again, there is a great assurance of repayment of those funds.
    Last session, last year, as a matter of fact, 
Representative Bob Gibbs from Ohio circulated a draft of this 
legislation for comment and review and actually conducted two 
hearings in that regard approximately a year ago in February 
and March of 2012. We urge Congress to enact Mr. Gibbs' draft 
and move that tool forward so that water utilities will be able 
to access this very important and useful tool to fill the gaps 
that result from the existing tools that are out there and to 
broaden the capabilities of the financing that we currently 
have available.
    In short, we believe WIFIA will allow our Nation to build 
more infrastructure at less cost, and on top of that, we get a 
cleaner environment, better public health and safety, and a 
stronger economy.
    I would like to thank the committee for this opportunity 
again to appear before you. I would like to congratulate you on 
your leadership on this issue, and I found the earlier round of 
questions very intriguing, and you are certainly finding the 
type of complex issues that we have been grappling with on a 
day-to-day basis as water suppliers, and we look forward to 
working with you to address those.
    [The statement of Aurel Arndt follows:]

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    Mr. Simpson. Mr. Grumbles.

                Opening Remarks of Mr. Benjamin Grumbles

    Mr. Grumbles. Thank you, Mr. Chairman and Congressman 
Serrano, I really appreciate the opportunity to appear before 
you. I am Ben Grumbles, President of the U.S. Water Alliance, 
and I too want to commend you and Congressman Moran and the 
staff for putting together a critically important hearing and 
the great discussion so far this morning.
    I think Governor Rendell said it, but he said that you 
cannot sustain a world-class economy with a second-class 
infrastructure system. The bottom line is that as much success 
as we have had in building an enviable around-the-world, an 
enviable water and wastewater infrastructure system, it is 
showing signs of age. The needs are growing. The public funding 
is decreasing, and I cannot think of a more important topic 
today to talk about than shifting that paradigm from water 
being invisible to invaluable, and finding some innovative and 
collaborative ways to fund our Nation's future when it comes to 
water and stormwater and wastewater.
    The U.S. Water Alliance is a truly unique, nonprofit, 
educational organization. We have drinking water, clean water, 
stormwater, agricultural, energy, public and private sector 
individuals coming together, through leaders to collaborate on 
shifting some of the paradigms. Howard Neukrug, who is on the 
panel, is the Vice Chair, and we have had some real thoughtful 
leaders--urban water, rural water--shift the paradigm. And you 
know full well, in fact, you have been displaying it this 
morning, that hope and policy themselves do not treat the water 
and make it clean, do not meet the needs for businesses and 
communities; you need funding as well as vision on policies and 
regulatory strategies.
    So just three points I wanted to make very briefly while I 
still have your attention, and one of those is the most 
fundamental first step in addressing this growing crisis on 
water and wastewater infrastructure is the value proposition, 
valuing water to support people and ecosystems, the value of 
water. I am honored to be part of a coalition. Jeff Sterba, 
sitting to my left, is one of the leaders in a public-private 
coalition that will only grow to increase public awareness 
about the value of water, the worth of water, that will make 
your job easier in the long run because of the understanding at 
the local level and nationally of the critical need to invest 
more. There is a difference between price and cost and value, 
and as a Nation, we cannot afford to keep water so cheap. The 
price is an inherently local matter but it becomes a national 
issue when we are not finding sustainable and dedicated sources 
of funding for infrastructure, and all water is local but also, 
if that thought prevailed, we would not have a Clean Water Act 
or Safe Drinking Water Act. And you are showing some leadership 
by drawing attention to this issue, and the first step is 
really a national effort with Congressional support, with 
support from the private sector, local utility leaders, is 
really getting out the word about the worth of water and the 
need to invest more in it, not just the infrastructure but the 
ecosystems that are provided.
    The other major point is the partnering, and what a great 
discussion this morning about public-private partnerships, and 
you have got real experts on this panel about that. I would 
just simply say, particularly because our organization has a 
perfect blend of public and private sector enthusiasts, you 
need both, and you need to move into the future and more 
innovative approaches. The private activity bond legislation 
that was proposed in the last Administration and also this last 
year moved through the House. I think this is a very important 
step forward. The key part of it, though, is that it is not 
making decisions for communities as to who owns or operates 
their water and wastewater systems; it is removing an 
artificial state volumetric cap on private activity bonds, and 
that could lead to new money to the tune of $5 billion a year 
dedicated to the effort. I do not know, but I know it is one 
positive step and it also signals that Congress cannot just 
rely on the SRFs or one single mechanism and that there needs 
to be federal involvement and help to supplement the 95 or 97 
percent of the funding that comes at the local level for water 
and sewer infrastructure.
    Then the last point, besides the valuing of water and the 
partnering between the public and private sector, is really 
this paradigm shift in greening the infrastructure. It is not 
in lieu of gray infrastructure. There is always going to be a 
need for a hybrid, a mix, but greening the infrastructure and 
also recovering the resources--I would just simply say, 
particularly the U.S. Water Alliance working with other 
organizations, particularly NACWA and WEF and others--the 
leaders in this effort fully believe that there are great 
benefits and energy and money savings through green 
infrastructure, and sometimes it is not about federal dollars, 
it is about federal willingness and support to sometimes 
provide a soft landing for innovative communities like 
Philadelphia, who want to do some innovative work. We may not 
get it right on the first try but if the environmental 
community and the regulators are there with them, we can get 
some amazing progress on that front. And the resource recovery, 
I am impressed by the product that just came out by the Water 
Environment Federation, NACWA, the National Association of 
Clean Water Administrators, and the Water Environment Research 
Foundation on the utility of the future. I know Howard's 
testimony talks about that at length. Mr. Chairman, that is 
really about looking at wastewater facilities, formerly viewed 
as treat-and-discharge facilities, as centers of regeneration, 
as green factories, and that will produce energy and money and 
a more sustainable approach.
    Anyway, Mr. Chairman, Congressman Serrano, thank you so 
much for shining a spotlight on this critical issue of water 
infrastructure financing. I look forward to a good, robust 
discussion.
    [The statement of Benjamin Grumbles follows:]

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    Mr. Simpson. Thank you.
    Mr. Neukrug.

                 Opening Remarks of Mr. Howard Neukrug

    Mr. Neukrug. Thank you both for your leadership. My name is 
Howard Neukrug. I am the Water Commissioner for the City of 
Philadelphia. I also serve on the board of directors of the 
National Association of Clean Water Agencies, also more 
commonly known as NACWA, and we represent over 350 municipal 
wastewater utilities.
    Congressman Serrano, you will not see it on my bio that was 
submitted here, but I did have a little canoe trip down the 
Bronx River a couple of years ago, and I highly recommend it 
for everyone. It really shows everything that is right and 
could be great about America's waterways. At the same time, you 
see the pollution and the problems and the amount of money that 
is needed to make improvements to a river like the Bronx River, 
so I commend you on your work here.
    Modernizing the country's aging infrastructure may be the 
single-most important public works need facing our Nation. 
Nothing less than full attention, focus and support of federal, 
state, local, private sector and public water utility industry 
will be needed to tackle what EPA is estimating at $635 billion 
need over the next 20 years.
    Today, U.S. cities like Philadelphia bear almost the entire 
burden of the costs of clean water. As an industry, we have 
been raising rates by more than double the rate of inflation 
for the last 10 years and probably for the next 20 years up to 
and sometimes beyond the limits of our customers' ability to 
pay, and there is still a backlog today of over $40 billion 
local water infrastructure projects. Given the enormity of 
these numbers and the criticality of water to society, it 
really remains vital that the federal government continue to 
leverage local investments in infrastructure by supporting 
programs like the Clean Water State Revolving Fund. NACWA 
believes that a clean water trust fund modeled after the 
highway trust fund is still the best option to help ensure a 
sustainable, dedicated and reliable revenue stream into the SRF 
system, and Chairman Simpson, thank you very much for your 
support of that concept.
    Outside the jurisdiction of this committee but also needed 
is for Congress to maintain the tax-exempt status of municipal 
bonds. If limited or eliminated, it would increase the costs of 
local borrowing by billions of dollars, effectively reducing 
the capital investment that utilities can make in our cities 
and our towns. With the partnership between the federal 
government and local utilities, we are and we will continue to 
find ways to leverage every dollar. Utility leaders in 
Philadelphia and elsewhere are working to turn waste streams 
into resources that produce energy, recycle clean water and 
recover heat and nutrients. We are driving innovation in green 
infrastructure and adaptive management. Our vision is to meet 
these complex responsibilities and opportunities of our times 
using the most innovative and efficient means that are 
possible.
    Philadelphia is extremely proud of our innovative $50 
million Biogas Cogeneration Facility now under construction 
using a public-private partnership model, all with private 
investment. We will be using the methane gas byproduct of our 
treatment process to safely generate 6 megawatts of 
electricity, which is more than 80 percent of the power and 
heat needed to run this large wastewater plant. Last year, 
using another public-private partnership model, we developed a 
$60 million sludge pelletization facility, and I know that may 
not sound pretty but we are successfully repurposing 
environmental waste into a vital nutrient resource and saving 
millions of dollars in the process. Both of these projects were 
developed using private equity dollars. They are good for the 
environment, they reduce our operating costs, and they leave 
precious public capital dollars available for Philadelphia to 
invest in its aging infrastructure.
    Finally, one of our most celebrated efforts to date has 
been the newly launched Green Cities, Clean Waters partnership, 
which restores local waterways and manages stormwater runoff 
with cost-effective green infrastructure. This massive 
undertaking to green and update our infrastructure for the 21st 
century is absolutely essential and reliant on strong public 
and private sector partners. We are thrilled that we have been 
able to partner with the EPA to overcome financial barriers by 
adding regulatory flexibility without sacrificing water 
quality, and we are proud to be among the Nation's first 
partners with the EPA to use an integrated approach to water 
management.
    We have come a long way in cleaning up our rivers and our 
streams but we still struggle, and as our infrastructure grows 
older, as it has been made very clear here, it does not grow 
any stronger. Significant investment is and will be needed to 
make an update on network of pipes and facilities while the 
costs of operating those aging systems continue to track 
higher. We are investing in innovation, adaptation, flexibility 
and resilience, and are glad to see the federal government at 
the table with us with the same vision and goals.
    There are many ideas floating around Washington on how the 
federal government should support local investment in 
infrastructure, and all have some merits and some pitfalls, but 
there is nothing more dangerous than continuing down a path of 
underfunded and undervalued water infrastructure. We must work 
together to find a solution that works under these times of 
reduced discretionary spending, high unemployment and poverty, 
and the absolute need for a sound water infrastructure system 
in the United States. Utility leaders across the country are 
ready to transform our industry and leverage our ratepayers' 
investments to guarantee water quality and an environment that 
is sustainable and unrivaled, so thank you for this 
opportunity.
    [The statement of Howard Neukrug follows:]

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    Mr. Simpson. Thank you.
    Mr. Sterba.

                  Opening Remarks of Mr. Jeffry Sterba

    Mr. Sterba. Thank you, Mr. Chairman, Mr. Serrano. It is 
great to join you today. We serve about 15 million customers in 
a little over 30 states in the United States plus some 
provinces of Canada. I am here representing our company as well 
as NAWC, the National Association of Water Companies, which 
represents the private water industry made up of a number of 
providers throughout the United States.
    Earlier, Mr. Chairman, you talked about the 250 years. Let 
me give you another angle on the 250 years. At the rate--and 
this is why I believe that the number of what it will cost to 
maintain the kind of infrastructure the United States deserves 
is not $633 billion but much higher than that. The rate at 
which we are replacing the infrastructure that exists today 
underground means that we are expecting that that 
infrastructure will last 250 years. That means that what was 
put into the ground by Thomas Jefferson at Monticello is about 
coming up for replacement. That is a little difficult to 
believe as a viable scenario. So the $633 billion is really 
based on doing what we do today when that is not sufficient to 
provide the level of service that I think customers need in the 
future.
    Let me in the brief time just touch on four aspects that 
can help on the financing front, and it is focused on--there is 
really two pieces. One is, how do we manage the cost of 
financing, which goes to what are interest rates, the use of 
tax-exempt debt, etc. The second is, how do we bring more 
capital into the market because the level of capital that has 
been committed, particularly from the public sector, is not 
sufficient. So let me address those two related things.
    The first item I would raise is an issue that we have run 
into in a number of occasions through our public-private 
partnership work. There is a tax inefficiency if a municipality 
or another public entity wants to lease or sell its system to a 
private entity. So in a public-private partnership, there is a 
lease, and we effectively will lease that system. But if tax-
exempt debt was used to finance those assets, then that tax-
exempt debt must be defeased. Even though the city still 
retains ownership and the city is still accountable for that 
debt, that tax-exempt debt must be defeased. The cost of that 
defeasance is anywhere from a 15 to a 25 percent penalty on top 
of the amount of debt that is outstanding. That does not go to 
the U.S. Treasury, so it is no help to the federal government. 
It does not go to customers. In fact, it is a drain on 
customers because it will increase rates in the longer term and 
it takes capital out of circulation. It is basically sitting in 
an account for the benefit of bondholders. This is an easy 
change to be made administratively, and we have proposed to the 
Administration a change in rules that would relieve this and 
put it back into the way that the regulations were interpreted 
in the pre-1986 window where this issue did not come up. So 
that is a fairly easy one and can provide great benefits to 
communities.
    The second one, which Ben mentioned, is private activity 
bond reform. Right now, water sits under the volume cap and 
that is a significant constraint. So we have supported, NAWC 
has supported and this House has been very supportive of having 
legislation that would remove the volume cap, as is done today 
for solid waste for airports and a number of other elements. 
Now, I will note that there has been some well-founded 
criticism of how private activity bonds have been used. I think 
the classic example is $1.6 billion of PABs being used to build 
a company's headquarters in Manhattan. I want to distinguish 
between that kind of usage of PABs and what happens in the 
water business. In the water business, PABs would be used 
specifically for infrastructure, infrastructure that is going 
to stay in that community, hopefully not 250 years, but let's 
say 100 years, and will be there to serve customers for the 
long term. Also, the benefit of that tax-exempt debt does not 
flow to shareholders, it flows through to customers and rates, 
because as a regulated utility, as all of our private water 
companies are, we operate on cost of service, and so the cost 
of that debt and the savings associated with tax-exempt debt 
flows directly through to customers. So I will make that 
distinction.
    The third area I would touch on is the notion of state 
revolving funds and eligibility, and we are very strongly 
supportive of the state revolving fund mechanism. I would 
clarify something that I think Mike said in his comments in the 
last panel. Under the Drinking Water Act, private companies are 
eligible to receive state revolving fund loans but only if the 
state approves it. So over half the states in the United States 
do not allow private companies to qualify or to apply for state 
revolving fund loans, yet what we find is that the needs of 
those private companies are included in the use surveys that 
are submitted to the EPA. So that seems to be something that 
could be easily fixed. And then as Mike mentioned on the clean 
water side, there are not provisions relative to allowing 
private entities to utilize the state revolving funds.
    The last thing I would mention is on this notion of public-
private partnerships. We have found that they can--they are not 
a panacea but they can be very effective and very useful. 
Howard has the advantage of running a relatively large system 
that has some sophistication to it in terms of the capacity to 
enter into those kinds of agreements. Three-P agreements are 
complex, and for a small community to look at entering into one 
of those with the legal, financial and other ramifications, the 
transaction costs can be very high. Canada, just as an example, 
has done something different where they have created a 
corporation that is originally founded by the government that 
provides the facilitation for communities to develop public-
private partnerships. You have to go through them if you are 
going to use any public monies. It requires that somewhere near 
80 percent of the money must come from private coffers, so that 
is what we are trying to do is, pull more private capital into 
the marketplace, and they are able to help manage those 
transaction costs by creating some standardization to these 
agreements because, no offense meant, but you put five lawyers 
in the room, you are going to get six different agreements, and 
that is what happens in a lot of the PPPs unless you have the 
discipline that Howard or some of the other large communities 
can bring to the table.
    So with that, I want to thank you all very much for your 
time and for taking on this issue. There are major challenges, 
but I got to tell you, from my vantage point, they are all 
resolvable.
    [The statement of Jeffry Sterba follows:]

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    Mr. Simpson. Thank you.
    Mr. Wilson.

                   Opening Remarks of Mr. Thad Wilson

    Mr. Wilson. Thank you, Chairman Simpson and Ms. McCollum. 
It is an honor to be here today to discuss water infrastructure 
financing options. My name is Thad Wilson. I am a Vice 
President with M3 Capital Partners. We are a management-owned 
investment firm based in Chicago. Through an advisory 
affiliate, M3 currently manages equity commitments of over $3.4 
billion on behalf of a U.S. public pension plan.
    M3 is currently forming a North American water 
infrastructure fund that we anticipate will be initially 
capitalized by U.S. public pension plan investors. It is 
expected that the fund will focus primarily on offering an 
innovative design-build-operate-finance approach that we 
believe offers a robust form of public-private partnership, or 
P3, to municipalities to capitalize their water infrastructure 
improvements.
    In the United States today, there is a significant and 
growing need for investment in critical water infrastructure, 
as we have heard this morning, and given current funding 
challenges, accessing private capital through P3 structures may 
be a compelling option for municipalities. At the same time, 
public pension plans need long-term investments that can 
provide stable returns for their beneficiaries--teachers, 
firefighters, police officers and other public employees.
    There are various P3 structures municipalities can consider 
to meet their water infrastructure financing needs including 
structures that utilize an upfront equity investment to 
capitalize projects as part of a long-term concession agreement 
between a municipality and a private investor partner. The 
investor partner may be comprised of a public pension plan or 
an infrastructure fund, which provides most of the upfront 
equity for the project, and a service provider, which provides 
the experience and expertise to implement the project. That 
investor partner typically assumes key risks associated with 
the design, construction, operations, maintenance and/or 
financing of the project. To the extent the investor partner 
meets established performance levels, the upfront investment 
plus an appropriate return is effectively returned to the 
investor partner over the life of the P3 through service fees 
paid by the municipality.
    As was cited early this morning, the city of Santa Paula, 
California, provides a recent P3 example. The city's wastewater 
treatment facility was built in 1939 and was out of compliance 
and needed to be replaced. Facing a tight deadline to avoid 
over $8 million in fines, the city moved that project forward 
under a design-build-operate-finance procurement process. In 
July 2008, just two months after the contract was awarded, the 
investor partners broke ground on that project, and in May 
2010, a new water recycling facility was in full operation 
seven months before the compliance deadline.
    Two examples of P3s for existing water and wastewater 
systems were structured last year in the cities of Bayonne, New 
Jersey, and Rialto, California. In both cases, the investor 
partners made upfront payments to fund initial capital 
improvements and other community needs and assumed 
responsibility for the operations and maintenance of the 
subject water facilities during that P3 term.
    In my view, the primary benefits of water infrastructure 
P3s include the following. Because a P3 is not a sale or 
privatization, municipalities can retain long-term ownership 
and control of their water facilities. Municipalities can 
accelerate the launch of new projects, which may help to meet 
compliance deadlines and may generate near-term employment 
opportunities for the local economy. Municipalities can 
transfer key risks to the investor partner. As a result, the 
investor partner is well assigned with the municipality and is 
putting its capital at risk with a requirement to perform its 
obligations throughout the term of the P3. And finally, 
municipalities can potentially realize lifecycle cost savings 
as a fully integrated team takes on the responsibility to 
design, build, operate and finance their water infrastructure 
projects.
    Potential measures to facilitate more water infrastructure 
P3s include the following: increasing awareness of the 
potential benefits of P3 structures combined with efforts to 
implement regulations that facilitate the use of P3s similar to 
the efforts in Canada that were just mentioned, helping to 
lower the costs of the debt financing for private investor 
partners in water facility P3s, potentially by removing the 
state volume cap on private activity bonds for such projects, 
and by promoting additional policies to facilitate low-cost 
funding for P3, potentially through the SRF program or the 
WIFIA program that was mentioned earlier. With access to low-
cost debt financing, investor partners could deliver such 
projects to municipalities based on a lower overall cost of 
capital, generating cost savings that ultimately could be 
passed onto the community ratepayers.
    Thank you for your time today and for your consideration of 
this important issue.
    [The statement of Thad Wilson follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Simpson. Thank you, and again, thank all of you for 
being here today.

                       STATE PRIVATE EQUITY BONDS

    As I said in my opening statement, I actually think this is 
one of the biggest challenges we face, and there are a lot of 
challenges around this country but we are, as I say in speeches 
a lot, we are the beneficiaries of our forefathers' investment 
in infrastructure, and most people when you say infrastructure 
think of roads and bridges, but you are not only talking roads 
and bridges, you are talking dams, harbors, all of the 
infrastructure we have in this country. You go to foreign 
countries and look at the infrastructure challenges they have 
that have not had this type of investment from their 
forefathers, and we are not keeping up with it, frankly. It is 
an investment that we have to make if we are going to address 
these problems. It is not just addressing the infrastructure, 
it is also being able to address the rest of the parts of the 
budget that deal with it, which makes us not be able to do a 
good job there and not address the problems that we are having 
with water infrastructure.
    Now, three of you mentioned removing the cap on state 
private activity bonds. Have any states tried to exceed that 
cap or add the cap level or anything currently?
    Mr. Arndt. Our association had done an analysis a few years 
ago, and most of the states exceed or max out, they do not have 
available funds, and given the competition for those private 
activity bonds, it is very difficult for water-related 
infrastructure projects to access those monies. So they are 
very limiting in regard to making monies available for water.
    Mr. Sterba. What Aurel said at the end is really important. 
Remember that you have got many other competing needs, which 
frankly are visible. Water is invisible, and so it tends to get 
to the bottom of the rung because of that, and so it is not 
only that it does not get its fair share, it is that it is at 
the bottom of the table.
    Mr. Wilson. It was also pointed out, these are long-term 
projects and take a long time to structure and review and get 
through approval, and a level of certainty around the 
availability of those funds over a period of time would be 
important.
    Mr. Simpson. You are right. One of the real challenges you 
have here is that nobody really thinks about where water comes 
from until it does not come. Nobody thinks about what happens 
when you flush the toilet unless it does not flush, and that 
really is the challenge. When you drive on a road that ruins 
your front-end alignment, people notice that right away. So 
this is the invisible infrastructure that has to be addressed.

                            FINANCING POOLS

    You mentioned creating a trust fund like the highway trust 
fund or the airport trust fund or the harbor maintenance trust 
fund or the inland waterways trust fund. We have a lot of trust 
funds. What do you tax to put in there?
    Mr. Neukrug. Well, I look at these bottles, and there is 
about $15 worth of bottled water here, and the city of 
Washington could supply that to you for less than a penny. I 
think there is room for----
    Mr. Simpson. Is it not amazing that people will complain 
about $3.50 gas but will pay for a bottle of water.
    Mr. Neukrug. It is really incredible, and we have it here 
because it is convenient but it is not a necessity, and I think 
this is a prime example. As a matter of fact, when you look at 
our waterways and you look at the floatables, the trash that is 
in our waterways, whether it comes through the wastewater 
process or just overland, it is predominantly these bottles. So 
I think there is a very good case to be made that is one 
location. Another area, of course, is flushables, what we call 
in Maryland the toilet paper tax, where you will be using 
things that actually have a relationship to the water I think 
are eligible areas for this.
    Mr. Simpson. What about the idea of creating a national 
infrastructure bank, as some people have suggested? How would 
that work? Any ideas? None of you mentioned this, so I hate to 
ask you.
    Mr. Arndt. My presumption is that it would be some form of 
indebtedness that would be necessary to provide the capital, 
the seed capital, for that type of an entity. It was actually 
one of several alternatives that we looked at before we settled 
on this WIFIA approach. The difficulty from our perspective 
with a trust fund or with a water infrastructure bank is that 
essentially you have a dollar in equals a dollar out, whereas 
with WIFIA, because of the Federal Credit Reform Act, every 
dollar that is appropriated for a WIFIA-like program actually 
is leveraged. In TIFIA, for example, there is a ten-to-one 
leveraging ratio, so every dollar that is appropriated actually 
provides $10 in spending authority, and it is because of only 
needing to fund that subsidy cost, and I think we could make 
the case that in the case of water infrastructure, that the 
leveraging ratio should be even higher. So for every dollar you 
appropriate for a WIFIA-type program, you get a much larger 
spending capability and a much larger infrastructure 
investment.
    Mr. Grumbles. Mr. Chairman, so I was, like a few people in 
the room, like Tom Curtis, I was around on Capitol Hill working 
as a staffer when the state revolving fund model for the Safe 
Drinking Water Act was enacted, and also back in 1986 the Clean 
Water State Revolving Fund, a program which the President 
vetoed and then vetoed it again and it was overridden by the 
Congress and put into place with a very clear end date in terms 
of the authorizations but it was also very clear that Congress 
and the American people wanted it to continue because of the 
model. The basic point I would make on this with your question 
about a national infrastructure bank, it is not just a question 
of where the dedicated funding comes from, it is also where the 
fund resides, and that is--I think one of the reasons that the 
Clean Water and Drinking Water State Revolving Fund model has 
been so successful is it is really not a fund, it is 50 funds 
or different funds. They have a designated agency, is this 
case, EPA, being the go-between and overseeing the federal 
dollars through Congressional appropriations but it has 
devolved down into the states, who actually run the programs, 
as the Council of Infrastructure Finance Authorities would tell 
you.
    One big concern that some have about a national 
infrastructure bank, even though it draws needed attention to 
infrastructure, is, there is such a track record of water being 
put at the back of the bus or under the bus, and roads and 
bridges, which are very important, or airports getting most of 
the attention, and so that is part of the concern. And then 
when you create a national infrastructure bank, does that then 
create a vacuum and the support for the state revolving funds 
under clean water and drinking water proven successful 
programs, do they get shortchanged because of a new 
infrastructure bank? So that is some of the concerns or 
perspectives that I think you are already aware of.
    Mr. Sterba. That goes to the issue, just like the PAB 
question, of, if you have everything under one umbrella, how do 
you allocate and get prioritization, and so you have to find a 
way around that, and that is where, I think, these targeted 
mechanisms can be appropriate. The thing that I keep struggling 
with, though, is, if you do not--if you decide to create a 
trust fund and you tax something, that is creating a revenue 
stream that is pulling money out of a private side--and you are 
hoping that that will be multiplied over. Under most of these 
mechanisms, though, the real question for me is, are we really 
creating more money? Are we creating new capital that will 
flow, or are we just changing the price at which that capital 
gets charged? It seems to me that in this situation, we really 
need to find new ways to bring capital to address water and 
wastewater needs, and I look at it fairly simplistically. You 
got the ability to do it through taxation of some form, whether 
it is indirect or direct, and then it is used by the federal 
government and the states to make things happen, or you use 
private capital, and the real answer is, you have got to use 
both.
    One encouragement I would have for the subcommittee is, 
anything that you do, do it in a way that pulls private capital 
in to a greater degree. If you go to TIFIA, the transportation, 
which is a very good model, one of the things when you go on 
that Web site, it says our fundamental purpose is to attract 
other sources of capital from private markets in order to 
leverage federal expenditures. So if we do not pool private 
capital, we might reduce cost but we have not done anything 
more. We have not necessarily addressed the infrastructure 
issue.
    Mr. Simpson. You mentioned the private partnerships are 
not--SRF funds are not available for them in about half the 
states. Restate that.
    Mr. Sterba. I think it is roughly half the states do not 
allow private utilities to make application for state revolving 
fund under the Clean Drinking Water Act. About half do. So, for 
example, two of the big states that we serve are Pennsylvania 
and New Jersey. They have a very robust, and they really think 
about it, particularly Pennsylvania, from an economic 
development side. But other states do not.
    Mr. Simpson. What is the reason those other states do not?
    Mr. Sterba. Well, it can be a lot. It could be that the 
private utilities in that state did not get in line early 
enough and so it has been taken up by other things. It could be 
that the state says, look, I only got so much, I am 
prioritizing things that are visible, I am prioritizing 
economic development, I am prioritizing roads, whatever the 
case may be that they are going to use that state revolving 
fund for.
    Mr. Simpson. But I assume they have the state revolving 
fund for water systems that are publicly owned.
    Mr. Sterba. For the water systems, and that is where it is 
going, you can understand it. The political side says I am a 
mayor, I have a need, that is a private company, they should 
not get any, we need it. There is more than enough demand in 
the public market, in the public water market, to use those 
funds, so we do not want private water companies to get it. But 
the problem is, private water companies pay the same taxes that 
helped create the state revolving funds. Should they not have 
the same access?

                    WATER INFRASTRUCTURE MANAGEMENT

    Mr. Simpson. Well, and your goal is actually to deliver 
clean water.
    Mr. Sterba. Absolutely.
    Mr. Simpson. And that is what you are after.
    Mr. Sterba. A hundred percent.
    Mr. Simpson. And if you are a citizen out there, I really 
do not care whether it is done by the municipality or whether 
it is done by private, as long as I turn on my tap and the 
water comes out and it is clean and it is at a reasonable 
price, and we might have differences of opinion about what a 
reasonable price is, but one of the things I heard in the 
earlier testimony was that citizens, when you have private 
companies, did not like the price increases. I have never seen 
a community upgrade their water system where the prices did not 
go up. We get letters all the time about those things.
    Mr. Sterba. And this goes to what Ben was talking about in 
terms of the value of water, and helping customers understand 
better what the value of water is today, because today people 
do not pay for the molecule of water. They pay to clean it, 
they pay to deliver it, and in many instances, they are not 
paying the full cost of that. So it makes it very difficult 
when you are only replacing your investment as if it was going 
to last 250 years to enhance that reinvestment if you have only 
got rates that are recovering cost for over 250 years.
    Mr. Grumbles. Can I just chime in one basic point, and that 
is, there is plenty of room to advance public-private 
partnerships without ignoring the fundamental principle here, 
and that is that water is a basic human right. It is our most 
precious liquid asset but it is also a human right, and so the 
country, our national water policies really continue to be 
founded perhaps more than other countries in the world on this 
public ownership idea or on public accountability, and the 
magic place to go is always ensure that there is public trust 
and public accountability in water because it is not simply a 
commodity but find ways where the agents of delivering that 
water can bring new money to the table and new ideas, and I 
think that is something the committee should look at 
encouraging just like in Philadelphia, Commissioner Neukrug, 
the Natural Resources Defense Council, which is a member of 
ours, the U.S. Water Alliance, and others are really looking at 
and saying hey, they are tackling one of the most expensive 
infrastructure issues, and that is, stormwater around the 
country, sewer and water, and one way to avoid the costs of the 
public fisc is to bring in the private sector and to create--it 
could be fees, but if you do it in a way that provides market-
based flexibility so that developers, their private money goes 
towards managing stormwater in a more effective way and they 
get credit for it, that fee is decreased because of some of the 
green infrastructure work they are doing that the agencies 
approve of. I think that is a really good model and it is one 
that we are seeing all across the country, communities between 
a rock and a hard place because of the water infrastructure, 
and stormwater is one of the biggest unfunded mandates that 
some communities face. They are looking for innovative 
approaches, and the private sector and land developers have a 
really important role to play. They have to be treated fairly 
too, but it is a perfect example where we have to move beyond 
the older model of, it has got to be publicly funded money 
because water is involved.
    Mr. Arndt. If I could take the conversation one step 
further, I think your question in the prior session really went 
in the direction of what I want to say, and that is, if you 
look across the country, there are some 54,000 community water 
systems, many, many of them small, many of them do not have 
what we call the technical, managerial and financial capability 
to really be sustainable going forward. My organization has 
actually acquired 30 water and wastewater systems over the 
years. I am guessing Jeff's number would dwarf mine. But we 
have integrated those systems into our core service area. We 
have upgraded service. We brought some financial discipline to 
the system, and I think without addressing that element, we 
kind of keep putting a band-aid on the problem and let the 
underlying situation persist, and so I think anything that can 
be done to incentivize the--allowing entities that can provide 
the service, be it a private entity or public entity, that they 
should be incentivized to essentially consolidate those systems 
that cannot survive going forward, and as a result, I think we 
will be able to better manage that investment need in front of 
us and also potentially reduce the costs that would otherwise 
be before us.
    Mr. Simpson. Well, it is interesting that if you look in 
the Teton Valley in Idaho, there are several small communities, 
I am talking real small communities that are spread out 
probably over a 20-mile valley, and it used to be that they 
would each have their wastewater treatment facility and stuff. 
Now they are looking at a common system and they are doing that 
more and more across southern Idaho and these areas, but you 
were going to say something, Thad?
    Mr. Wilson. To your point, Mr. Chairman, about the public-
private partnerships potentially accessing SRF funds, that is 
something we have been exploring with a couple state agencies. 
Under the structure we envision, the municipality would 
continue to own the facility, or if we are building a new or 
replacement facility, they would actually own it, they would 
own title to it, they could access SRF funds and combine that 
with our private equity that we are bringing into that 
partnership, and it would be a way to leverage those SRF funds 
to go farther.
    Mr. Simpson. But in your situation, the municipality does 
not own the system is what you are talking about?
    Mr. Wilson. In the areas where we provide retail service to 
customers, we own the system. We are under regulated rates by 
the state commissions. We also do public-private partnerships 
where we operate systems for others. Most of those are 
operational agreements. Some of them are more of a lease 
arrangement, and that is where we run into the defeasance 
issue, etc. In that instance, we would not be the applicant to 
the state revolving fund because if it is going to be owned by 
the municipality, they are the applicant for the state 
revolving fund. It is the challenge of how you bring those two 
pieces together.
    One of the things you mentioned earlier, Mr. Chairman, 
which I am so glad you did, because like the one that Aurel 
raised, it is one of those that does not always get talked 
about, but it is the efficiency of capital spend. One of the 
things that just shocked me was, we recently did an analysis 
with a municipality. We just looked at supply chain, the cost 
of meters, pipes and vales, those kinds of basic, the 
fundamental building blocks of infrastructure for the water and 
wastewater industry. The difference between what they were 
paying for that equipment versus what it cost through our 
supply chain was about 30 percent. You would leverage that out, 
that is 30 percent more capital that could be available without 
doing anything other than getting more efficient. It is scale 
but it is also expertise.
    I come out of the energy world, and I have only been in the 
water space for two and a half years, but an enormously open 
roadmap for us is on applying technology in this industry. We 
have not done it. There is so much more than can be done from 
leak detection to ways to reduce the energy use. But that is 
very difficult to do at small scale and so this notion of how 
do we bring entities together is important.
    Mr. Simpson. It is. There are a lot of very interesting 
examples that are used. The amount of water we use, when you go 
into airports and you run your hand under it and the water runs 
for a minute, it is amazing how much water that saves. I read a 
study one time of how much water you would save if you turned 
off the tap while you were brushing your teeth. Being a 
dentist, that was always interesting to me.
    Ms. McCollum. Do you?
    Mr. Simpson. Actually, no, and the reason nobody does is 
because the individual savings to me is miniscule, but the 
savings to society as a whole would be large. That is the way 
things work. Ms. McCollum, go ahead.
    Ms. McCollum. Well, being the Girl Scout in the room then, 
I liked what you said about convenience. We do not look at the 
big-picture cost. There is petroleum that went in there and the 
energy on so many different scales that all went in here. I get 
funny looks when I go with people and I am in a restaurant 
here, because in Minnesota, I mean, nobody ever asks if you 
want bottled water unless you are at a really high-end 
restaurant, and then they do not mean flat water, they mean 
sparkling and I go, no, I drink D.C. tap water and everybody 
kind of goes huh. So a lot of it is this false sense of somehow 
this is very great water because, Mr. Chairman, it is carefully 
blended from selected natural springs.
    Mr. Simpson. Exactly.

                   FUTURE WATER INFRASTRUCTURE ISSUES

    Ms. McCollum. Like a fine wine is blended.
    I want to take this maybe up a couple more feet into the 
sky. I just left a defense briefing where we were talking about 
North Africa and Yemen. Big national security there: water. 
International security for us: water. So water comes down to, 
as you so eloquently said, a basic human right. And you touched 
on small cities and townships and then we went into the whole 
thing about states' rights. And the League of Cities is here. I 
was on a city council, so you guys are near and dear. I was in 
the state legislature, city council, so I dealt with water on 
many different levels. So there is modernizing our systems, 
there is maintaining our systems, there is building new 
infrastructure, so there are different roles and different ways 
in which you kind of come in. And going to sewer separation, 
where you are really kind of going in and doing the heavy 
lifting, which is the new modernization of systems in some of 
our municipalities that can be 60, 100 years old. That is not 
cheap work no matter who does it. So if you could maybe kind of 
touch on that a little bit.
    And then you make money building projects. You also make 
money selling water. So let me give you a little story. 
Minnesota, water rich, right? Lake Superior down 4 feet, 
climate change. I have a good-sized lake which we prided 
ourselves--we like to do winter carnivals and do all kinds of 
crazy things when it is cold like fish on the ice and 
everything. The lake where the dock and the chair used to kind 
of be at the end of the table, now the water is here and the 
dock is where that chair is. So we had USGS, and thank you very 
much for this committee funding them and the good work that 
they do, and they said okay, there might be a little puncture 
in White Bear Lake. Yes, climate change is playing a factor in 
it because they looked at other lakes around. It is our 
reservoir. We are going through water faster than we ever 
thought we were going to go through it. So we have a 
metropolitan council and they are looking at it. Now cities are 
fighting over who goes to conservation first, who is most 
important.
    Where do you fit in? Where do you see your responsibility 
in maintaining these systems as to really talking about the 
ethic of how much water we use and using it efficiently, 
whether it is, you know, in airports or watering bans, because 
it would seem to me--and I was in the private sector most of my 
adult life in sales. It would seem to me for a lot of your 
business models, you made money by how much you pump out? What 
do we do to incentivize you as part of our solution here to 
reduce the amount of water we are wasting?
    Mr. Neukrug. That is a great question. I think we are doing 
it. I think it is a really exciting time to be in the water 
industry because there is so much innovation going on, so many 
new things that are happening with leak detection, water 
conservation, this new thing that we are calling stormwater 
conservation, managing the rainwater, and there is so much 
potential here, and the problem is, as we have been talking 
about all along, there is not enough money. In particular, 
there is not enough capital dollars. So we are all in this game 
of prioritizing how do we figure out what is the best way to 
spend that last dollar that we have, and Jeff, you talked about 
level of service. Right now, the level of service that is 
acceptable in the United States is that there will be one 
water-main break every two minutes. That is the level of 
service that the United States is accepting. I am not sure if 
they would accept it if went to one break every minute. I do 
not know. We are kind of making those decisions for the United 
States because of the limitations of how much money we have. 
The same thing with boil-water notices. How many is too much? 
Occasionally you have them. In Philadelphia we have not had 
one--I do not think we ever had a boil-water notice but other 
cities have them every now and then. Is that okay? What about, 
you are talking about storage, if one of our reservoirs dropped 
and we did not have any water for two or three days? Is that 
acceptable? And what do you want us to pay in order to avoid 
that risk?
    So there are a lot of questions that we are all working on 
on a daily basis, thinking about how do we best manage this 
system with the amount of money we have, and for Philly, we 
were working on a $100-million-a-year capital budget. That is 5 
years ago. Now we are up to $250 million a year. So we went 
from looking at $100 million a year and then a 5-year plan that 
is a half a billion dollars to looking at $250 million a year, 
and now we are looking at 25 years out, and that is a $10 
billion program. So our whole perspective has changed, and it 
is not just Philadelphia, I think it is the entire industry is 
looking further out, understanding the issues.
    Asset management was brought up earlier, prioritizing our--
you know, what are we going to do with our money, and, you 
know, I am here because I need some support from the federal 
government because right now I get very little. So most of 
every penny that I have, which is all the money that I have, is 
coming from my ratepayers, and that is fine. I think that is 
appropriate. But there is no way that I can raise the rates 
sufficiently to cover everything that I want to do and need to 
do. So I am making decisions and so is every utility manager in 
the country about what level of service is acceptable to 
America in 2013. We are not even considering what is acceptable 
in 2023.
    Mr. Arndt. And I think Howard's latter point goes to, given 
the fact that we do not have a bottomless bucket of funds to do 
everything we would like to do, a big part of what we are doing 
and growing annually is consumer education, customer education, 
so that they are better consumers of the water and they 
understand what goes into the service that they receive. I 
guess in many ways, I look at it somewhat differently than you 
characterize it. The water is the vehicle for the services that 
we provide in many ways, and it represents a relatively small 
cost if you just took the value of the raw material itself. But 
it has significant societal implications in terms of 
environmental issues and that sort of thing, and so our 
educational efforts are very heavily focused on youth 
education, really educating the consumers of the future or 
letting those kids go home and tell their parents they should 
not be letting the water run while they are brushing their 
teeth, and I think that is one of the things that we think is 
very, very important.
    Another piece of it is what we call full cost pricing, that 
what we charge for the service should be reflective of the full 
cost of providing that, and in many ways, it does not, and I 
think simple economic theory says that if you charge something 
that is reflective of its full cost, you will get better 
management and utilization of that resource or that asset, and 
I think that is one of the things where there has been this, we 
cannot raise our water rates because, and in the political 
arena, that rings true many times, and as a result, something 
gets chopped out of the water budget that is really important.
    Ms. McCollum. Mr. Chair, could I ask a question? Could you 
set up a meter that would watch how much I am using to consume 
for my basic needs versus my lawn care? I mean, because if you 
are going to charge me, then based on my ability to pay, being 
a retired worker, you know. And then the other question, 
because we are going to wrap this up, is, where are you with 
working with--I just was out to Simon Properties Managers out 
in Maplewood, Minnesota. They have this big stormwater thing. 
They are watering their trees off of it. They are going to have 
less--because we have the frost, so they are going to have less 
potholes and all this other stuff because of what they are 
doing in their parking lot. And brown water technology. When 
you go in, are you a full-service provider? Can you lay 
everything out? Do you work with the other contractors on how 
to look at a big picture or do you just come in and look at 
this part of the picture?
    Mr. Sterba. You have raised a very critical issue. It is 
the notion of thinking about one water. This industry has a 
tendency to think about drinking water, wastewater, stormwater, 
or traditionally. More and more, though, you are finding 
thinking about one water. So you think about--I know Howard is 
doing a lot of things on how do you get property owners to take 
the responsibility for the amount of runoff so that water is 
used and not flooding the sewer system. We do--in New York 
City, we have six high-rise buildings where we do 100 percent 
reuse. The city of Fillmore, California, we have a-million-
gallon-a-day reuse system so we are taking brown water, if you 
will, and we use it for irrigation, for flush, for cooling 
purposes.
    You also raised an issue, though, that is a troubling one 
for the industry, which is this notion that--as I said, we 
serve all across the country, so if you go to California, our 
average use per customer is about 110, 115 gallons a day. You 
go to New Jersey, it is 300-plus gallons a day. Why? Well, 
because Californians understand water is scarce. New Jersey 
does not have that mindset yet. They have not realized what is 
changing in the marketplace and what is going to happen to 
water. But what we are seeing across our systems is a decline 
in use per customer. So as people use less water, what happens, 
and this is true whether you are a public company like we are, 
a private company that is publicly traded or you are a 
municipality, you have rates that are not going to recover your 
costs because you are 80 percent fixed costs, 20 percent 
variable, but your revenues are 20 percent fixed, 80 percent 
variable. So you will always--you are in this catch-up mode. 
That is--you know, we have got to find a way, and this is 
probably not legislatively, but it is regulatorily-wise or it 
is imposing some mandates potentially for funding where you 
build the kind of appropriate price structures so that you 
incentivize efficiency as oppose to penalize efficiency. And 
then you can do things like provide an amount of water at a 
fixed price that is what people need to live on, but if they 
choose to take 20-minute showers or they choose to have ultra-
green lawns, whatever the case may be, where they do something 
more, well, then they pay for that.
    Mr. Grumbles. Our organization, which is not a trade 
association, we are a national--it is like a think tank, 
convener of collaborations, policy thinkers and doers. We were 
formed because of the need for a one-water, integrated water 
holistic approach. The question you asked about sewer 
separation is a perfect example of how all of us need to work 
together, the regulators, the environmental community, the 
utilities, the private sector, to not back away from the goals 
for, in this case, the Clean Water Act, but to find ways that 
recognize a community may not have the money and the time or 
the patience to do sewer separation to deal with the sewer 
overflow problem, they can come at it in different ways, and 
green infrastructure, a combination of different technologies 
and strategies are very promising, and it can work but it 
requires some time and research and also a track record, and 
across the country in communities, we are seeing a willingness 
to do something different. It may not be sewer separation but 
it can be a combination of green infrastructure practices with 
regular check-ins by the regulators so that you are making 
progress and doing it in a more cost-effective way. And it all 
gets to the basic point that water, we take it for granted and 
everybody says that but we do not really do much about that, 
and great ways to work on that are to be able to advance the 
smart technologies that monitor. So there really are--there are 
companies, there are utilities that can provide their customers 
with smartphones where they get weekly or a monthly notice that 
oh, they are exceeding a certain amount in their bill, they may 
want to check on how they are consuming that water, or they can 
pay just to have the water--in Arlington County, for instance, 
you can pay to get a bill metered just on water that you are 
using for outdoor irrigation. And businesses that are springing 
forth, and it is not just through an EPA water sense program 
but through other efforts, are developing ways to respect the 
fact that every drop counts and you can save money with new 
technology, weather-based sensors, and it is not just a 
technology for arid, water-scarce regions. I mean, that is the 
value in water. But thanks for asking the question.
    Mr. Simpson. I really did not expect this hearing to go on 
for two and a half hours, but it is obviously a very important 
subject. It is one that we take seriously and hopefully the 
Transportation Committee that oversees the Clean Water Act 
takes very seriously, and I am hopeful that we will get 
something done in this Congress to address this pressing 
problem that we have of dealing with the infrastructure, which 
will also help me with my budget and a few other things, but it 
is something that we have got to do if we are going to make the 
most of limited resources that we have.
    I thank all of you for being here today and I appreciate 
your testimony very much. Thank you.

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                                           Tuesday, March 19, 2013.

                       OVERSIGHT OF INDIAN HEALTH

                               WITNESSES

YVETTE ROUBIDEAUX, DIRECTOR, INDIAN HEALTH SERVICE
REX LEE JIM, VICE PRESIDENT, NAVAJO NATION, TREASURER AND NAVAJO AREA 
    REPRESENTATIVE, NATIONAL INDIAN HEALTH BOARD OF DIRECTORS, ON 
    BEHALF OF NATIONAL INDIAN HEALTH BOARD
D'SHANE BARNETT, EXECUTIVE DIRECTOR, NATIONAL COUNCIL OF URBAN INDIAN 
    HEALTH
KELLY MOORE, ASSOCIATE PROFESSOR, CENTERS FOR AMERICAN INDIAN AND 
    ALASKA NATIVE HEALTH, COLORADO SCHOOL OF PUBLIC HEALTH, UNIVERSITY 
    OF COLORADO DENVER, ON BEHALF OF FRIENDS OF INDIAN HEALTH
HENRY FIELDS, PROFESSOR AND CHAIR, DIVISION OF ORTHODONTICS, COLLEGE OF 
    DENTISTRY, OHIO STATE UNIVERSITY, ON BEHALF OF AMERICAN DENTAL 
    ASSOCIATION

                  Opening Remarks of Chairman Simpson

    Mr. Simpson. The hearing will come to order.
    Good afternoon and welcome to this oversight hearing on 
Indian health. In 2010, the United States enacted into law the 
following policy: ``A major national goal of the United States 
is to provide the resources, processes, and structure that will 
enable Indian tribes and tribal members to obtain the quality 
and quantity of healthcare services and opportunities that will 
eradicate the health disparities between Indians and the 
general population of the United States.'' Let me say that 
again. ``A major national goal of the United States is to 
provide the resources, processes, and structure that will 
enable Indian tribes and tribal members to obtain the quantity 
and quality of healthcare services and opportunities that will 
eradicate the health disparities between Indians and the 
general population of the United States.''
    A few of those disparities are reflected in these sobering 
statistics provided by the National Congress of American 
Indians. Native people die at higher rates than other Americans 
from tuberculosis, 500 percent; alcoholism, 514 percent; 
diabetes, 177 percent; injuries, 140 percent; homicide, 92 
percent; and suicides, 82 percent.
    This subcommittee has, over the past several years, made 
funding for Indian Health a higher priority. In fact, from 2000 
to 2012 under both Republican and Democratic leadership, 
funding for the Indian Health Service went from 2.4 billion to 
nearly 4.4 billion before sequestration. No doubt some of that 
increase was an attempt to keep pace with the nationwide 
problem of rising medical care costs, but my hope is that the 
rest of the increases has made a positive difference in 
people's lives.
    So the fiscal year 2014 budget delay provides us with this 
opportunity today to step back and ask the following questions 
in support of the national goal I stated at the outset: has the 
increased funding made a measurable difference in the health of 
American Indians and Alaska natives, and why? And where do we 
go from here in this constrained fiscal environment?
    We are pleased today to be joined by two panels of experts. 
Our first panelist will be Dr. Yvette Roubideaux, Director of 
the Indian Health Service. After Dr. Roubideaux testifies, we 
will have a round of questions from the subcommittee. Then, we 
will invite up our second panel, which includes Mr. Rex Lee 
Jim, Vice President of the Navajo Nation, testifying on behalf 
of the National Indian Health Board; Mr. D'Shane Barnett, 
Executive Director of the National Council of Urban Indian 
Health; Dr. Kelly Moore, Associate Professor at the Centers for 
American Indian and Alaska Native Health at the University of 
Colorado, testifying on behalf of the Friends of Indian Health; 
and Dr. Henry Fields, Professor at the College of Dentistry at 
the Ohio State University, testifying on behalf of the American 
Dental Association.
    Mr. Simpson. Let me also take this moment to welcome our 
distinguished guests in the audience and the many tribes and 
tribal organizations around the country who are submitting 
written testimony for the record. Thank you all for your 
commitment and your assistance in helping us today. I will say 
that we are expected to have votes at about 2:15, so our 
anticipation is that we hope we will get through with Dr. 
Roubideaux so you do not have to hang around if you do not want 
to. If you want to listen to the other panel, that is fine, but 
then we will probably go vote and then have the second panel up 
as soon as we get back from this first series of votes, which 
should not take too long.
    I would like to turn to my ranking member, who is at a 
luncheon that is not quite over yet, but he will be here as 
soon as he can make it. And then you have an opening statement?
    Ms. McCollum. I am excited to get going, sir.
    Mr. Simpson. Okay. Mr. Moran will provide his opening 
statement when he gets here. Dr. Roubideaux, the floor to you.
    Dr. Roubideaux. Thank you. I am just making sure that the 
microphone is on. You are good? Push the button. You can hear 
me now?
    Mr. Simpson. Yes.
    Dr. Roubideaux. Perfect. Well, good morning.
    Mr. Simpson. Would you like to have your opening statement 
now or----
    Mr. Moran. Apparently you are not so Irish there or 
something.
    Mr. Simpson. Seriously, so let's not go there.
    Mr. Moran. I will not go there. Do you want a cookie?
    Mr. Simpson. I have two here. You will be off the hook on 
your side of the table.

                      Opening Remarks of Mr. Moran

    Mr. Moran. Actually, I have such a fine opening statement, 
Doctor. I know you would want me to share it. We do want to 
thank you for coming to the subcommittee oversight hearing 
today.
    And I thank you, Mr. Chairman, for giving us the 
opportunity to say a couple words.
    We, I think, recognize that a person's greatest asset 
oftentimes is their state of health because if you do not have 
your health, there is not much that you can enjoy in life. And 
the fact is that too many Native Americans' health status is 
seriously impaired in category after category. The Native 
Americans suffer sickness and disease at far greater rates than 
other Americans, and that is what Chairman Simpson noted in his 
address. And Native Americans die at higher rates than other 
Americans.
    The statistics you quoted, Mr. Chairman, are just stunning. 
Whether it be alcoholism, diabetes, injuries, homicides, 
suicide, it is something that we have to address, and this is 
the best way to address it. Native Americans' life expectancy 
is still 4 years less than Americans of any other race, and as 
bad as those statistics are, though, I want to recognize the 
terrific work that is done by the Indian Health Service. Over 
the last 50 years, Indian Health Service has made a real 
difference in the lives of Native Americans, particularly in 
terms of high infant mortality and deaths from disease. But we 
still have many challenges, especially the epidemic of 
diabetes. We recognize that there are larger societal issues, 
but poverty, education, rural isolation all comes together to 
present special challenges for Indians' health.
    I do appreciate the bipartisan support that Indian Health 
has had on this subcommittee. I think it should be recognized 
because it is real and substantial and meaningful. But it is 
becoming more and more difficult. This bill proportionately was 
cut more than any other bill by the Senate, and that is very 
troubling. A 5 percent cut in Indian health programs is not 
what the American taxpayer would want done; it is certainly not 
what this subcommittee wants to see. The situation is going to 
continue to be very difficult, but this subcommittee is 
committed to doing everything we can to advance the state of 
Indians' health and to support you in your efforts, Dr. 
Roubideaux. So I thank you very much.
    I thank you, Mr. Chairman.
    Mr. Simpson. Dr. Roubideaux.

                Opening Remarks of Dr. Yvette Roubideaux

    Dr. Roubideaux. Well, thank you, Mr. Chairman and members 
of the subcommittee. My name is Dr. Yvette Roubideaux. I am the 
director of the Indian Health Service. I am really pleased to 
have the opportunity to testify on the accomplishments of the 
Indian Health Service.
    Well, over the past few years, we have been working to 
change and improve the Indian Health Service. And I want to 
thank you so much for our progress on appropriations. It has 
been really critical to our progress in terms of accomplishing 
our agency priorities and improvements. Since 2008, the IHS 
appropriations have increased by 29 percent, which is making a 
substantial difference in the quality and quantity of 
healthcare we are able to provide, which in the end helps us 
reduce health disparities in the communities we serve.
    For example, Contract Health Service funding, which is how 
we pay for referrals to the private sector, has increased 46 
percent since 2008, and 4 years ago, only four federal programs 
were funding beyond Medical Priority 1, which is ``life or 
limb'' for referrals. Now, almost half of all federal Contract 
Health Service programs are funding referrals beyond Medical 
Priority 1. This is significant because it means more patients 
are accessing healthcare services that they need, including 
preventive services like mammograms and colonoscopies. The 
increases in Contract Health Service funding also means that 
the IHS Catastrophic Health Emergency Part, or CHEF fund, which 
used to run out of funding for high-cost cases reimbursement in 
June, is now able to reimburse cases all the way until August. 
So although IHS faces uncertainty about its funding level for 
fiscal year 2013, we are committed to continuing our efforts to 
change and improve the Indian Health Service.
    While IHS has made considerable progress in addressing our 
agency priorities and reforms, our first priority is to renew 
and strengthen our partnership with tribes, and that is based 
on our belief that really the only way that we can improve the 
health of our communities is to work in partnership with them. 
Over the past few years, we have made several improvements that 
have resulted in better decision-making and more effective 
progress on our agency reforms.
    For example, Tribal Consultation is helping us improve our 
Contract Health Service program, the business of it and our 
referral process. Tribal Consultation is also helping us 
improve coordination of care for veterans through 
implementation of our 2010 updated MOU and the recently signed 
IHS-VA National Reimbursement Agreement.
    Our second agency priority is to bring reform to the Indian 
Health Service, and this year, the IHS is focused on planning 
for implementation of the Affordable Care Act health insurance 
exchanges and Medicaid expansion in 2014, and we continue to 
make progress on implementation of the reauthorization of the 
Indian Health Care Improvement Act.
    IHS is also making progress on our internal IHS reform 
efforts, including organizational and administrative reforms, 
improved budget planning, financial management, human 
resources, performance management, and more consistent business 
practices throughout the Agency. While IHS has responded with 
corrective actions for the findings from the Senate Committee 
on Indian Affairs investigation of the Aberdeen area, we have 
since conducted reviews of all 12 areas and are implementing 
corrective actions as well.
    Our third agency priority is to improve the quality of and 
access to care. We have focused our efforts on a number of 
customer service and quality improvement strategies over the 
last few years, including our Improving Patient Care program, 
which establishes a patient-centered medical home model within 
the Indian Health System.
    In 2011, the Indian Health Service successfully met all of 
its national Government Performance and Results Act, or GPRA, 
performance clinical indicators, and this is an accomplishment 
that was never before achieved in IHS. And it is really due to 
a system-wide focus on improvement and also increased access to 
care from the recent funding increases.
    For example, receipt of mammograms by women for many years 
was in the low- to mid-40 percent range, and by fiscal year 
2012, it has increased to over 50 percent.
    So our final agency priority is to ensure that our work is 
transparent, accountable, fair, and inclusive. And this 
includes a focus on system-wide accountability for progress on 
agency reform efforts.
    So in summary, we are making progress and changing and 
improving the Indian Health Service. And thank you so much for 
your support and your partnership. It has really been essential 
to our progress thus far. And although we are in a time of 
uncertainty regarding resources and we clearly have much more 
to do, the work of the past few years has clearly established 
that by working together, our efforts can change and improve 
the Indian Health Service. And that helps us ensure that our 
American Indian and Alaska Native patients and communities 
receive the quality healthcare that they need and they deserve.
    Thank you. And I am happy to answer questions.
    [The statement of Yvette Roubideaux follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                              CHEF AND CHS

    Mr. Simpson. Thank you, Dr. Roubideaux. I appreciate you 
being here today and I appreciate the work that you are doing 
and have done with us trying to address this disparity.
    You mentioned during your testimony that the old saying in 
Indian Country used to be do not get sick after June. You now 
say that you can get sick clear up until August. What happens 
in September?
    Dr. Roubideaux. Well, there are two things. So there is the 
overall budget for Contract Health Service where we make 
referrals, and then there is this pot of money called the 
Catastrophic Health Emergency Fund. That is where we reimburse 
facilities for the costs of high-cost cases after they meet a 
certain threshold. That money is sort of a first-come, first-
served, so it actually runs out when it runs out. And so what 
we are saying is it is now running out in August instead of 
June. Those cases have still been paid for; it is just that we 
are not reimbursing them. But if we reimburse them through this 
fund, that means those resources can be used for other 
referrals.
    Mr. Simpson. So tribes are having to use their own 
resources to pay for those medical costs rather than being 
reimbursed?
    Dr. Roubideaux. Their Contract Health Service fund.
    Mr. Simpson. Yes.
    Dr. Roubideaux. Yes, the overall pot of funds. The phrase 
do not get sick after June has been a very effective advocacy 
tool and way to describe the fact that for Contract Health 
Service, the way that we pay for referrals, we have an 
incredible shortfall in the amount of funding that is available 
for the referrals. So in the past, they used to just use it up 
and then it would run out.
    Mr. Simpson. Yes.
    Dr. Roubideaux. What we have done is we have implemented 
improvements in the way we manage the Contract Health Service 
program so that it is better apportioned throughout the year 
and that there are weekly meetings of the Contract Health 
Service program to look at medical priorities for approvals of 
referrals.
    So the budget is clear. Even though we are doing that and 
the money is being apportioned out throughout the entire year, 
there is still significant need. Our current Contract Health 
Service budget is around $800 million. The actual need related 
to denied and deferred services is almost $1 billion above 
that.
    Mr. Simpson. We figured out a way to separate the terms 
contract support costs and Contract Healthcare Services so that 
we can understand which we are talking about? We have mentioned 
that before that we oftentimes get them confused here.
    Dr. Roubideaux. Yes. Contract Health Services, how we pay 
for referrals, contract support costs is the administrative 
costs related to contracts to tribes. I cannot reveal anything 
about the 2014 President's budget, but I can say that we took 
your advice and are changing the name to Purchased and Referred 
Care. We are proposing that in our budget. So Purchased and 
Referred Care does better reflect that this funding goes to 
referrals.

                                  GPRA

    Mr. Simpson. Probably the thing that we rely on most is a 
measure of how well we are doing at addressing this--I do not 
want to say backlog--but this need that exists in meeting our 
obligations, and as the statute says that I read earlier, 
making sure we address this disparity. I mean I read the 
statistics of the differences between the Indian population and 
all other Americans based on pure numbers. How are we doing? I 
mean we have been at this effort for some time and trying to 
address this disparity. It seems to still exist. What measures 
are we using to try to reduce them?
    Dr. Roubideaux. Well, the Indian Health Service does do 
regular surveillance on a number of things. The ultimate 
outcome is of course reducing the disparities in mortality or 
death rates. And we can see over time over the course of the 
Indian Health Service being in place, as Representative Moran 
said, we can see that mortality is decreasing in a number of 
areas. The areas where we see mortality decreasing include 
alcohol deaths, diabetes deaths, unintentional injuries, 
homicide, and tuberculosis. But you are right. American 
Indians, Alaska Natives still do suffer significant health 
disparities and the quality of care. Alcohol mortality is still 
6.1 times greater, diabetes is still 2.8 times greater, and 
unintentional injuries are still 2.4 times greater. Those are 
in sort of the long-term health outcomes.
    The way for us to prove that as a healthcare system is to 
improve access to quality healthcare. And that is where we 
really see some of the more short-term progress that will lead 
to long-term progress. I mentioned how we, for the first time, 
met all of our GPRA indicators, which measure the quality of 
care and the access to care that we provide.
    When you look at all of the GPRA indicators, we can show 
significant improvements in, for example, access to dental 
services has increased 15.2 percent since 2008, sealants placed 
has increased 22.6 percent, topical fluoride patients have 
increased 40 percent, mammograms have increased 15.3 percent, 
colorectal cancer screening has increased 59 percent, tobacco 
cessation has increased 67.6 percent, and so on. We can provide 
you a full chart of what the increases have been over the last 
4 years. But it is really clear that in order to address those 
long-term health disparities, we have to provide better access 
to care in our system, and the resources and funding increases 
in the past few years are definitely giving us a great start in 
doing that.
    Mr. Simpson. One of the challenges we had--and it is true 
across all America I suspect--is--and maybe it is more 
emphasized within Indian Country, you go to some places, as we 
did when we went to Oklahoma and some other places, they are 
doing very well in terms of the healthcare services they are 
providing, facilities that they are building, and so forth. In 
other parts of Indian Country, it is almost the dark ages. How 
do we decrease this disparity, not just between Native 
Americans and the rest of the American population, but the 
disparity within Indian tribes?
    Dr. Roubideaux. Well, what we need to do is make sure that 
when we get more resources for the system, we make sure that 
those resources benefit all of our patients, whether they are 
served by IHS-direct programs, whether they are served by 
tribally managed programs, or served by Urban Indian Health 
programs. And looking at tracking trends, monitoring 
performance, looking at access to care, and making sure that we 
are consulting with all of the tribes in the 12 IHS areas to 
make sure what their priorities is helping us do better at 
improving the quality of care, access to care, and ultimately 
to reduce those disparities.

                           UNFILED POSITIONS

    Mr. Simpson. How are we doing filling the unfilled 
positions that you have, whether they are doctors or dentists 
or other professionals?
    Dr. Roubideaux. Well, we have always had a challenge with 
vacancy rates, especially with clinical providers and 
physicians, and we are facing greater challenge with a looming 
shortage of primary care doctors. But what we have been doing 
are a number of reforms. One is the overall agency reform. When 
I was first director, we surveyed all of our providers, all of 
our staff, and asked them what they wanted to see, and I 
thought they wanted to see more improvements in clinical care. 
And really what they wanted is the organization to function 
better. And so that is why we have had such a focus on 
improving business and administrative processes, 
accountability, performance, and communication, and so want to 
create a better environment within which people can work. We 
also continue to use recruitment and retention bonuses. We have 
our loan repayment programs, scholarship program. We have 
worked with HRSA on getting National Health Service Corps 
scholars for loan repayment and scholarship placed in our 
system.
    And overall, one of the most exciting things that we have 
is our Improving Patient Care program, which is changing our 
care to a more team-based care that spreads the work to the 
highest level of each of the providers so that the doctor does 
not become completely overwhelmed because there are other 
members of the team that can do other parts of the care. And 
then trying to make the improvements and get more modern 
equipment and really try to find ways to improve the working 
conditions that people live in----
    Mr. Simpson. Are those vacancy rates going down?
    Dr. Roubideaux. Yes. We actually are seeing some 
improvements. You may remember the vacancy rates for dental 
were over 30 percent several years ago. They are now around 10 
percent. There are improvements in a number of the other 
provider vacancies, but some of them we still struggle with, 
and physicians are always going to be an area where we really 
need to work harder. But the use of advanced practice nurses, 
physician assistants, and again, reorganizing the way we 
provide care will make sure that we use those providers more 
efficiently and that we do not overload them so that they get 
burned out.
    Mr. Simpson. Mr. Moran.
    Mr. Moran. Thanks, Mr. Chairman. Appreciate it. That 
printer must have put that nametag together in a mirror.
    Dr. Roubideaux. I know. I just noticed that.
    Mr. Moran. Did you notice that?
    Dr. Roubideaux. Roudibeaux.

                            WATER SANITATION

    Mr. Moran. We had an oversight hearing on water sanitation 
systems last year. That does contribute to some of the disease 
issues we have had to deal with. Have we made any progress in 
that regard, Dr. Roubideaux?
    Dr. Roubideaux. Well, we are doing what we can to make 
progress on sanitation facility construction, and the Recovery 
Act definitely did help with giving us $63 million more, and 
EPA also gave us $90 million more. So we were able to work on 
the backlog of sanitation projects that is there. The estimate 
of the Sanitation Deficiency System that updated the need to 
serve existing homes in 2011 was 3.1 billion, and then in 2012, 
it had gone down to 2.8 billion. But in terms of what is 
economically feasible, that has gone up a little to 1.6 
billion. There is just an enormous, enormous burden of need for 
water and the sewage disposal and solid waste disposal 
facilities in our new and existing homes. So with that 
incredible need of 2.8 billion in 2012, there is clearly still 
more to do. But it is clear that more resources do help us make 
progress.

                HEALTH EDUCATION AT RESERVATION SCHOOLS

    Mr. Moran. Thank you. A number of the illnesses, diseases 
that we experience the highest rates of are what are called 
behaviorally related problems, are you working with the school 
systems on reservations in terms of healthcare diets and 
nutrition counseling?
    Dr. Roubideaux. We are. And that is mostly through the 
resources we have received through the Special Diabetes Program 
for Indians. I know many of those programs that provide 
diabetes prevention and treatment services do outreach and work 
with the local schools and try to help with education on 
nutrition. We also have our public health nurses who can go out 
to the schools and do education, as well as our Nutrition and 
Health Education staff. So we do do some outreach. It is clear 
we could do more, and that is why I was pleased to have already 
met twice with Assistant Secretary Kevin Washburn over at the 
Department of Interior, and I hope to have more meetings to 
talk with him about how we can do further collaboration on the 
portfolio that he has that includes schools.

                            VETERANS AFFAIRS

    Mr. Moran. I hope so. The Department of Veterans Affairs 
and the Department of Defense are supposed to be sharing some 
of their medical facilities with IHS, and there are some issues 
with regard to reimbursement for the care of Native American 
veterans. How are we progressing on that?
    Dr. Roubideaux. Well, we actually are making progress in 
terms of trying to improve the coordination of care for 
American Indian/Alaska Native veterans who are eligible for 
both IHS and the VA. And in 2010 I signed an updated Memorandum 
of Understanding with the VA that is working to improve 
coordination of services. We have a number of work groups at 
the national level that are working on trying to improve 
coordination in a number of areas, including sharing 
information, quality of care, IT systems, telehealth, and so 
on.
    And in terms of reimbursement, we have been very fortunate 
that the Indian Health Care Improvement Act did include Section 
405 that allows that the VA reimburse IHS. And on December 5, 
we were able to sign our National Reimbursement Agreement with 
the VA that allows the VA to reimburse IHS for direct care 
services for eligible American Indian/Alaska Native veterans at 
a rate that helps our facilities and was requested by tribes.
    And so we are implementing that now in 10 federal sites. We 
are also implementing it in tribal sites. Alaska, of course, 
has been implementing it since August as well. And I believe 
the first federal site has already set up the billing and sent 
the first bill. So I think we are making progress there.
    The issue of sharing facilities is something that we have a 
couple of examples of in our communities, and we hope to do 
more of that.
    Mr. Moran. Very good. And lastly and very quickly, the 
chairman mentioned that the rate of death for alcoholism is 
over 500 percent greater among Native Americans. Are those 
statistics any better this year?
    Dr. Roubideaux. Those statistics over time are better, but 
there is still a significant disparity. And so we are focusing 
our alcohol and substance abuse funding to try to continue to 
address that with mostly tribal- and community-based programs.
    Mr. Moran. Thank you, Dr. Roubideaux.
    Mr. Simpson. Mr. Calvert.
    Mr. Calvert. Thank you, Mr. Chairman.

                          GENETICS AND DISEASE

    Just on a point that Mr. Moran brought up on some of the 
lifestyle diseases, has there ever been a study also whether 
there is any genetic predisposition to certain diseases more in 
the native population than in other populations?
    Dr. Roubideaux. Well, it is clear that we need more 
research in that area. We know from prevalence studies, studies 
of the rates of diseases, that certain diseases occur more 
frequently in American Indians and Alaska Natives, but that----
    Mr. Calvert. But it seems like diabetes is----
    Dr. Roubideaux. Diabetes is actually one of the most 
notable where we see some of the highest rates in the world. 
And the epidemic of diabetes that is hitting America now hit 
American Indians and Alaska Natives in the 1970s. And that is 
why we have had programs since then to try and address that 
epidemic.

                           YRTC IN CALIFORNIA

    Mr. Calvert. All right. My primary question is about the 
tribes in California that waited 4 years for the construction 
of their Youth Regional Treatment Centers mandated by the 
Indian Health Care Improvement Act, and with the development of 
these centers that have been finally initiated, it is important 
that the work continues. And I just wanted to see if you could 
assure the Committee that the centers will remain a priority 
and these facilities, their construction budgets and so forth, 
will not be delayed, and whether or not sequestration may 
affect your plan to move forward on these Youth Regional 
Treatment Centers.
    Dr. Roubideaux. Well, certainly the California tribes have 
made it very clear that the Regional Youth Treatment Centers, 
both in the southern and northern California, are a top 
priority, and that is what we have been working on over the 
past couple of years. We already have the land for the southern 
YRTC, and the design. We got the funding for the design in the 
2012 budget. And the design of the southern YRTC will be 
completed by the end of this year. And so that would make it 
perfectly ready for construction funding in the following year. 
And $15.5 million is needed to complete the southern YRTC. The 
northern YRTC we have just purchased the land and just got 
control of that. And so we are looking forward to requesting 
the funding for design and construction in future budgets.
    Mr. Calvert. Okay. Good. Thank you.
    Mr. Simpson. Ms. McCollum.

                   FORWARD FUNDING AND SEQUESTRATION

    Ms. McCollum. Thank you, Mr. Chair.
    The VA, it took them a long time, but they finally got 
forward-funded with their medical costs. That would help with 
all of the problems that we have because we have underfunded 
for contract, but in light of what is going on with 
sequestration and some other things, it might have provided 
some relief. So if you could maybe talk about forward-funding, 
if there has been any discussion with the Obama Administration 
about moving forward with that. I think it is pretty difficult 
with the scenario that we are facing right now, but I think it 
is something that the VA talked about for years and years and 
years before they got it.
    The sequestration is going to take $220 million from IHS, 
and I think for many of us, we were quite surprised. We thought 
in the sequestration, because Medicare/Medicaid were kind of 
roped off, fenced off, and protected, I think there was a lot 
of assumptions that we took care of the most vulnerable 
populations when clearly we did not. Not only did we not take 
care of a very vulnerable population in sequestration, but now, 
they are going to be facing some cuts after this committee and 
other Members of Congress worked extraordinarily hard to raise 
things up.
    Has there been any discussion about what we need to do at 
the Executive Branch? Because some of us have spoken here of 
trying to find the money to put Native American healthcare 
system at least held at, you know, not in harm's way the way 
Medicaid and Medicare have been.
    Dr. Roubideaux. Well, it is clear, as you say, 
sequestration is a devastating impact for the Indian Health 
Service. The cut, after the fiscal cliff deal, it looks like it 
is going to be about 5 percent, which is still 220 million, as 
you have said, which is very significant. And we have estimated 
that there will be 3,000 fewer inpatient admissions and 804,000 
fewer outpatient visits.
    And the thing about the law is that it mandates every 
program, project, and activity be reduced, so there is a 
limited ability to protect priorities. So even if the 
Administration wanted to protect the Indian Health Service, the 
law, as it is written right now, would not do that. We are 
grateful for working with Congress and hoping to find a 
solution to larger budget deficit issue so that we can minimize 
the impact or avoid sequestration. But it is really clear and 
we are really interested in hearing options and solutions to 
try to help us make sure that we can minimize the impact and 
also continue the progress that we have made.
    What I am concerned about is we have made so much progress 
and I certainly hope it does not take us further backwards with 
the sequestration that we are facing.
    Ms. McCollum. Mr. Chair, in the Recovery Act, which 
passed--and I realize that that was controversial amongst us, 
you know, passing it and what it achieved and what it did not 
achieve, but there was an unintended consequence of Indian 
schools being left out because they were and the Department of 
Education. Now, we had what we thought was a rope-off, a fence-
off for the most vulnerable Americans in the sequester with 
what was accounted for in Medicaid and Medicare. And once 
again, Native Americans were left out. So I think we have a 
real problem. As these grand bargains and deals are put 
through, I think one of the boxes that we are all going to have 
to ask are checked off by our colleagues and by the 
Administration is: and how are the Indian children and elders 
doing?
    Thank you, Mr. Chair.
    Mr. Simpson. Mr. Cole.

                  IHS FUNDING COMPARISON CHART AND CSC

    Mr. Cole. Thank you, Mr. Chairman.
    Good to see you again, Doctor. First, a request. You 
mentioned you could get us that improvement chart we went down. 
I would really like to get a copy of that. And a couple of 
years ago--and I have used this to great effect since then--you 
produced a chart that just, in terms of dollar amounts, went 
through Native Americans, average American, veterans, Medicare 
recipients, and it was very striking about where Native 
Americans ranked. And so if you have an updated version of 
that, I would love to get a copy of that. I was able to wave it 
around a Budget Committee meeting to some effect recently, so 
it is a great piece of ammunition to have.
    Let me ask you this: obviously, this committee--and you 
referenced it in your testimony--has put a lot of emphasis on 
contract support costs. And we had made some progress. So far 
in fiscal year 2013, have you been able to fully fund contract 
support and can you tell us whether or not you will be 
requesting full funding in fiscal year 2014?
    Dr. Roubideaux. Well, I am unfortunately not able to talk 
about the fiscal year 2014.
    Mr. Cole. Do you want to give us a hint?
    Dr. Roubideaux. I am unable to tell you what we are doing, 
but we are certainly interested in working with Congress on 
this very important issue that I know is a priority for tribes.
    Mr. Cole. Okay. Well, how are we doing in '13 to this point 
in terms of fully funding?
    Dr. Roubideaux. Well, the '13 appropriation is not 
complete, so I am not sure what the outcome will be. I know 
that the actual need in 2013, if the President's budget for 
2013 was implemented, which it does not look like now, but 
would be $70 to $80 million. And so the need is still great for 
contract support costs and we are still interested in working 
with all of you to try to address that, especially since the 
Supreme Court decision.
    Mr. Cole. Okay. Yes, absolutely. Let me ask you this: you 
might enlighten us a little bit because I think you would 
probably be better informed. We chatted a little bit about 
this. I know you are going to get at least some money it looks 
like in the Senate CR, not nearly enough, but can you give us a 
quick overview of what you think is developing through the CR 
that might assist you in the sequester process?
    Dr. Roubideaux. Well, I have heard that the Senate version 
of the CR, while it does include a rescission and 
sequestration, may include an increase of $53 million for new 
staff for facilities, and these would be facilities we are 
constructing or are being constructed by tribes through the 
Joint Venture Project. And once their construction is done, IHS 
has agreed to request the staffing from Congress, so it is 
considered a commitment. And so we have made that request and 
we do not know the final outcome of the 2013 budget, but I know 
that all of those tribes and all of those facilities that are 
waiting for that staffing funding really need it and it would 
help us get those facilities fully open in providing the 
healthcare services that the communities need.

                             JOINT VENTURE

    Mr. Cole. Last question I know because we are very limited 
in time and a point first. Chairman, you raised the difference 
between really joint venture tribes in effect and, you know, 
tribes that are getting their services directly from IHS, and 
that is a huge difference, as you know. I mean some tribes have 
revenue streams they can put additional money on top of and 
actually can deal with the sequester a little bit better than 
tribes that are not as fortunately situated. I have got 
actually both kinds of facilities and tribes in both situations 
in my district, and you know, it is pretty unfair in terms of 
those that simply do not have the ability. They would do so if 
they could.
    Toward that end, can you tell me where we are at in the 
joint venture process right now and whether or not the funds 
that were obligated--again, I know you have had to shuffle 
around funds to deal with shortfall, so if you could just give 
us some overview of how that has affected joint venture both 
for the tribes that in good faith put up money expecting 
support and sometimes not getting, but also some of the tough 
choices you have had to make because of that?
    Dr. Roubideaux. Right. Well, when we signed the Joint 
Venture Agreement with the tribes, they agree to fund the 
construction of the healthcare program and we agree to request 
the funding for the staffing through Congress. But it always is 
subject to appropriations. And so in a way, there are sort of 
three partners in this journey. It is the tribe, the Indian 
Health Service, and Congress. And as you know----
    Mr. Cole. I know who I would not trust in that trio.
    Dr. Roubideaux. Well, you know, it has been challenging 
times with the budget and the ability to predict what the 
budgets will be in any year. And I appreciate all your 
partnership and trying to help us get the funds that we need, 
but we have many facilities who we are now required to, because 
of the appropriations not meeting the need, what we have to do 
is sort of fund the staffing over multiple years. And I know 
that the tribes do not like that but it is the only way we have 
been able to try to be fair when we base it on the beneficial 
occupancy, which is when they are ready to open.
    And so we have several of these facilities in the queue and 
we have some that are just getting started, and it makes us 
concerned about should we open another round for applications 
for the Joint Venture Program when we have so many facilities 
that need new staffing? And that is a big struggle and a 
decision we will need to make.
    Mr. Cole. This is a case, Chairman, where we are being 
penny wise and pound foolish because we get tribes to invest 
and then do not follow through and they are not going to invest 
again. So hopefully, we can do better. I yield back.
    Mr. Simpson. Just to follow up on what Mr. Cole was talking 
about and what you were, the $53 million that they apparently 
plussed-up in the Senate CR, the problem is where they took 
some of it from. They terminated the BIE School Construction 
Renovation Program, and so we kind of robbed from Peter to pay 
Paul and it does not advance us anywhere. What we need when we 
are talking about fully funding the contract support that this 
committee has tried to do over the years, what we need is some 
cooperation with the body across the rotunda and we all need to 
be working off the same numbers. And we have talked about this 
before and the challenges that presents.
    So Ms. Pingree.

                       RECRUITMENT AND RETENTION

    Ms. Pingree. Thank you very much, Mr. Chair. And I am 
looking forward to the tutorial on working with the Senate. I 
knew I was going to learn something coming here.
    I am very grateful to be one of the new members on this 
committee, and a lot of my colleagues have already asked 
several of the things that I am also interested in, but just to 
the interest of time, let me reinforce a couple of them, and if 
you have some more comments, I would be happy to hear.
    Coming from the State of Maine, I am fortunate to represent 
four tribes. And some of these things, like I said, you have 
already heard the concerns. The Passamaquoddy was deeply 
concerned about the fact that, as Ms. McCollum said, that 
several programs were held harmless. And it seems very 
unreasonable that these were not, that Indian health is not 
treated in the same way as the other programs that we held 
harmless. And to the extent that there is any way to look at 
that, it certainly seems like it is causing tremendous 
difficulties for them.
    I think you talked a little bit about the model diabetes 
program, and we have been fortunate to have three of our four 
tribes involved in that and are just interested to know some of 
the things you talked about, what you can do. What can be done 
with more outreach is certainly significant. It is a 
significant problem in my State anyway and exacerbated within 
the tribes. And so to the extent that more could be done on 
outreach or, you know, just assistance to people who are really 
battling a very serious problem.
    And the one other thing I wanted to bring up was around the 
area of something that the Micmac tribe has been dealing with. 
And again, I think you talked a little bit about some of the 
challenges of medical personnel. But they have had really great 
success under the Government Performance and Results Act for 
the past 3 years. They met all 21 of the GPRA indicators and 
have been recognized nationally for their work on dental 
services and outreach, which is of course a serious challenge 
again in a rural state within and outside the tribe.
    But one of their huge issues is recruiting workers. Can you 
talk a little bit more in that area? Even in areas that have 
success stories, it does not seem like they are getting 
assistance for being able to recruit the quality staff that 
they need or retain them once they get them. So to the extent 
that you want to comment, I know some of those things you have 
already discussed today, but they are looming issues for us as 
well. Thank you for your testimony.
    Dr. Roubideaux. And we would be happy to work with you on 
recruitment and retention strategies.
    What we are trying to do now is share best practices around 
the system because it seems like there are some facilities that 
do better than others at recruiting and retaining. A part of it 
is salaries, but we have got some special pay systems that we 
have implemented that have made our physician salaries much 
more competitive than they were in the past. Our other 
providers we have recently gotten some increases in pay for 
them as well.
    One of the things that we are trying to work with tribes on 
is that--and I saw this as a physician myself when I worked in 
the Indian Health Service--it really makes a difference if the 
community helps with the recruitment efforts, the community 
welcomes the providers, invites them to local events, you know, 
works with them in partnership on how to make things improve. 
And that is why I have a high priority on tribal consultation 
because I really feel if the providers connect with the local 
community, they may be more likely to see it as home and want 
to stay there. And our primary problem, in addition to 
recruitment, we also have those challenges with retention. And 
if we find a good doctor or a good nurse or a good provider, we 
have to do everything we can to keep them.
    Mr. Simpson. Mr. Joyce.

                        SEQUESTRATION PERCENTAGE

    Mr. Joyce. Thank you, Mr. Chairman.
    Dr. Roubideaux, thank you for appearing here today, and 
this may be a little bit of a follow-up to what my colleague, 
Ms. McCollum, had asked you, but I understood that there were 
between the sequestration cuts you normally expected a 2 
percent cut, but then when doing the math, it was applied to 
closer to 9 percent. Can you explain why almost all other 
discretionary health programs are protected and the American 
Indians are not?
    Dr. Roubideaux. Well, what I can do is explain the sequence 
of events which was, you know, certainly sequestration was not 
supposed to happen, but when the Super Committee did not make 
their decision, then OMB was required to do an analysis of what 
sequestration would mean for the Federal Government. And it was 
in that analysis that OMB did that they discovered that the 
exclusion for both IHS and HRSA that had been in previous 
versions of the Budget Control Act was not in this Budget 
Control Act. That was back in September. That report was sent 
to Congress. We were informed and we notified our stakeholders 
about the fact that instead of a 2 percent exclusion, actually, 
the cut would be the full sequester, which at that time was 8.2 
percent.
    However, with the fiscal cliff deal in December, the levels 
have been brought down to about a 5 percent cut. But that is 
still $220 million, and that is really devastating for our 
system. So it appears that it is not in this version of the 
Budget Control Act, and I think there is certainly a lot of 
concern about the Indian Health Service not having that 
exclusion.
    Mr. Joyce. Thank you. I yield back.
    Mr. Simpson. Mr. Valadao.

                DOMESTIC VIOLENCE PREVENTION INITIATIVE

    Mr. Valadao. Thank you, Mr. Chair.
    Your statement indicates that because of IHS' Domestic 
Violence Prevention Initiative, 344 sexual assault frantic 
examination kits have been submitted by IHS to law enforcement. 
While I applaud the work the Service has done on this front, I 
cannot help to feel that 344 SAFE kits seems kind of low 
compared to the statistic of one in three native women will be 
sexually assaulted in their lifetime. How does your statistic 
of 344 SAFE kits submitted compare to the rate of sexual 
assault in Indian Country? If 344 is low by comparison, how 
does the Service intend to increase the number of SAFE kits it 
submits to law enforcement? And what challenges does the 
Service face in increasing the number of SAFE kits it offers?
    Dr. Roubideaux. Well, the data that we gave up about 344 
SAFE kits being submitted to law enforcement is related to the 
data collection around our Domestic Violence Prevention 
Initiative. In that initiative, we are funding 65 projects in 
the Indian Health System, 44 tribes, 13 IHS and 8 Urban Indian 
Health Programs to be able to provide culturally appropriate 
prevention and treatment models and evidence-based practices to 
address domestic violence and its strategies. In addition, we 
are training medical personnel to conduct the medical exams in 
all 45 of our hospitals that offer those kind of services and 
we are also providing funding to provide the equipment that 
they need for those services.
    And so I am not sure that this is the total number for our 
entire system. I know this is the number for the 65 projects 
that we have funded. And we will try to look and see if we can 
get some additional data to see what the number is for the 
entire system.

                      UNDERFUNDED IHCIA PROVISIONS

    Mr. Valadao. And one more question if you do not mind. 
There are currently 23 unfunded provisions in the recently 
permanently reauthorized Indian Health Care Improvement Act. 
What are the funding priority areas for IHS?
    Dr. Roubideaux. Well, you are absolutely right. The Indian 
Health Care Improvement Act has over 80 provisions that help 
update and modernize the Indian Health Service. However, many 
of them represent new authorities and demonstration projects 
for which we do not have new or additional funding.
    What we have been doing is trying to implement the ones 
that we can without funding, and we have made great progress on 
that, but there still are a number of priorities. And I have 
consulted with tribes, and some of those priorities are long-
term care services, dialysis services, and behavioral health 
issues. And so those are issues that we are trying to work on 
related to the budget formulation and working with tribes on 
tribal priorities. In this challenging budget climate, it has 
been difficult to get those budget priorities into the budget 
when there are higher priorities that we hear from tribes like 
Contract Health Service and how we pay for referrals. But we 
continue to work with the tribes on those priorities.
    Mr. Valadao. Thank you.

                          AFFORDABLE CARE ACT

    Ms. McCollum. I was going to ask you take yield for a 
second. I had a follow-up.
    Was any of that funding in the Affordable Care Act? I know 
some of it was a line item separate from where you were, but my 
understanding was there was also some things that were funded 
in the Affordable Care Act that would be of benefit to Indian 
Country.
    Dr. Roubideaux. Well, there is actually many things in the 
Affordable Care Act that are benefiting American Indians and 
Alaska Natives. Certainly, the health insurance exchanges that 
are being established increase access to health insurance 
coverage in a more affordable way and that funding is critical 
to make sure that our patients have that option to be able to 
purchase affordable health insurance in case they do not have 
it. And that helps them in addition because if they still go to 
IHS, we can build their health insurance, and then those 
revenues can be used to improve health care for the rest of the 
community. So that is one of the benefits.
    There are a number of other demonstration projects that are 
being implemented in the Affordable Care Act around community 
prevention and community transformation, long-term care, 
supports and services, and so on that we have many tribal 
grantees who are part of that as well.
    And so we are grateful for the fact that the Affordable 
Care Act is another way that the federal responsibility for 
health care is given. The Indian Health Service is a healthcare 
system that provides healthcare services, but if more of our 
patients can have these other benefits of also being covered by 
health insurance or by Medicaid, that is more resources for all 
of our facilities and for the rest of the community.
    So that is why we are really focused on implementation of 
the Affordable Care Act in preparation for 2014 when the 
exchanges go live and the Medicaid expansion and those states 
that have chosen to do it is available for our patients.

            REINSTATE HEALTH RESEARCH AND MONITORING TRENDS

    Mr. Simpson. In the House Report accompanying the fiscal 
year 2013 Appropriation Bill, we encourage the IHS to reinstate 
health research and monitoring of trends, including updating 
the trends in Indian health and regional differences. In the 
Indian Health Report, are there efforts underway to get this 
going?
    Dr. Roubideaux. Yes, there are. So the Trends in Indian 
Health is a report of mortality statistics over time, and it is 
extremely important to us and it is a priority. The challenge 
of that is that it actually takes at least 4 years for us to 
get that data from the states through a number of channels to 
get it to us where we do the analysis and adjust for the 
underreporting on death certificates. So we are always a few 
years behind on publishing that data, and that has been true 
for many, many years. We plan to publish another version of 
Trends in Indian Health during the next year and also regional 
differences in Indian Health, which looks at the differences by 
areas.
    We also on occasion do ad hoc publication of special 
reports. Those are usually based on available funds as well. 
But tracking these trends is extremely important to us and we 
are in the process of getting another report. And the issue is 
it always is several years behind because from the time we get 
the vital statistics data from the states and then it goes 
through a number of other venues. Then, it gets to us.
    Mr. Simpson. Thank you. And thank you. We have got a vote 
going on now. Thank you for your testimony. We appreciate you 
being here.
    The Committee will recess for these votes. We have got 
three votes, a 15-minute vote that started 10 minutes ago, so 
it is nearing an end, and then two 5-minute votes. And then we 
will be back for the panel that begins probably 20 minutes from 
now. So I appreciate it. Thank you for being here. And thank 
you for the work that you do in working with us in trying to 
address these concerns. As you noted and as I have noted and as 
Jim has noted, it is a bipartisan effort on the part of this 
committee. It is a responsibility we have. It is one we take 
very seriously.
    And I guess you could probably blame me as much as anybody 
for not recognizing early enough that sequestration was going 
to hit Indian Health Services unlike Medicare and Medicaid and 
the others that were kind of exempted out of that. I should 
have had my antennas up and caught that, and unfortunately, I 
did not. It is something we have got to deal with. But we want 
to work with you to make sure that it does not have any more 
negative impact than absolutely necessary. So I appreciate it. 
Thank you.
    Dr. Roubideaux. Thank you.
    [Recess.]
    Mr. Simpson. Thank you for your patience in waiting for us 
during that series of votes.
    Our next panel is Mr. Rex Lee Jim, Vice President of the 
Navajo Nation testifying on behalf of the National Indian 
Health Board; Mr. D'Shane Barnett, Executive Director of the 
National Council of Urban Indian Health; Dr. Kelly Moore, 
Associate Professor of the Centers for American Indian and 
Alaska Native Health at the University of Colorado testifying 
on behalf of the Friends of Indian Health; and Dr. Henry 
Fields, Professor at the College of Dentistry at Ohio State 
University testifying on behalf of the American Dental 
Association. I understand Dr. Moore has to catch a plane, so we 
are going to let you testify first, and then if there are 
questions there, we might do those before we go to the others.
    So Dr. Moore, the floor is yours.

                   Opening Remarks of Dr. Kelly Moore

    Dr. Moore. Thank you, Mr. Chairman. Good afternoon, Mr. 
Chairman, Mr. Moran, and committee members. I am Dr. Kelly 
Moore, a member of the Muscogee Creek Nation of Oklahoma and a 
pediatrician. I am an associate professor at the University of 
Colorado with the Centers for American Indian and Alaska Native 
Health and a retired captain in the U.S. Public Health Service 
with 20 years of service to IHS.
    I am here on behalf of the Friends of Indian Health, a 
coalition of over 50 health organizations, including the 
American Academy of Pediatrics. The Friends appreciates the 
opportunity to address whether increased congressional funding 
for the IHS has been effective in improving the health of the 
American Indians and Alaska Natives.
    I can say from my experience that funding increases have 
made a positive difference in the care and treatment of 
children, as well as people with diabetes. These are most 
evident in the sustained improvements of blood sugar, blood 
pressure, and blood cholesterol levels that we have seen among 
people with diabetes. We have also seen impressive results in 
preventing complications. By teaching people with diabetes the 
importance of foot care, providing protective footwear, and 
routine podiatry care, IHS has reduced amputations by 20 to 25 
percent in some areas.
    The Together on Diabetes program is a program for young 
people in the Navajo area and in White River, Arizona. The 
program's success lies with the family health coaches who 
provide crucial one-on-one support to help youth achieve 
changes in health behaviors and attendance at their healthcare 
appointments. This is an essential step towards better health 
for our young people with diabetes.
    Programs have also been established to address other 
pediatric health priorities. The AAP has seen a number of model 
programs on their Committee on Native American Child Health 
site visits. Open-access scheduling which allows parents to 
call and schedule sick visits or well-child care visits the 
same day or same week is now more widely available. At one 
site, this has improved show rates for appointments from 65 
percent to 91 percent. Immunization rates are now at an all-
time high. Many programs designed to address healthy weight 
promotion among youngsters have been put in place like the ``Be 
Hopi, Be Healthy'' Camps.
    Telehealth is also emerging as a way to improve healthcare 
and remote areas because ENT specialists are rare and ear 
infections and ruptured eardrums are common for children. 
Alaska has developed a telehealth solution to provide services 
to 248 sites. For every dollar spent by Alaska Medicaid to 
reimburse telehealth, $11.50 was saved in travel costs.
    Not only has there been an improvement in pediatrics and 
diabetes care, but mortality rates for IHS patients have fallen 
from the 1990s. Since 2005, overall mortality rates have fallen 
by 11 percent. But there is still much to do. Suicide is the 
second-leading cause of death among American Indians and Alaska 
Natives between the ages of 15 and 24. Almost 23 percent of 
native youth over age 12 report alcohol use. While native 
teenagers, young people, and middle-aged adults have the 
highest rates of methamphetamine use in the United States, drug 
use varies among tribes. For this reason, the Friends believe 
that IHS drug programs should not be focused exclusively on 
meth. Funding should support a treatment/prevention/recovery/
law enforcement infrastructure with a focus on family. 
Substance abuse prevention is most effective when the whole 
family is involved.
    Many American Indian and Alaska Native children live in 
economically depressed areas. Nearly one in four Native 
American children live in poverty, experience four times higher 
rates of abuse and neglect, and have lower rates of educational 
achievement than other racial and ethnic groups in America. 
Early literacy promotion initiatives like Reach Out and Read 
and family nurse home visitations can improve maternal and 
child health outcomes. Investments like these have been proven 
to produce savings in health care costs and reduce the use of 
Child and Family Services.
    In my written testimony, I also discuss the plight of the 
American Indian and Alaska Native male and the high death rate 
among this group. For several years, the Friends has testified 
about the need to fully fund Contract Health Services. In 2010, 
over 217,000 referrals for Contract Health Services were 
denied. We thank the Committee for increasing the funding by 64 
million since 2010. But in spite of these increases, the need 
for Contract Health Services and reliance on private specialty 
and tertiary care will be ongoing because the IHS and tribal 
healthcare delivery system is predominantly a primary care 
medical system. But a redesign of the Contract Health System 
could result in care that is timelier, more effective, and 
patient-centered at a lower cost.
    Prevention and early treatment programs can also reduce the 
need for Contract Health Services, but having a sufficient 
workforce is the key to their success. Filling vacancies 
through loan repayment has proven to be an effective 
recruitment and retention tool. In 2012, the IHS awarded 507 
new loan repayment contracts and 316 contract extensions. 
However, 338 requests were denied. The Friends urges the 
Committee to increase funding for this account by at least $17 
million to fund all applications.
    It is difficult to adequately address health problems 
without the best and most up-to-date research. Surveillance 
research in particular is vital to understanding disease and 
injury patterns and the impact of newer treatments and 
interventions. The Friends recommends additional funding for 
the IHS and tribal Epidemiology Centers to conduct surveillance 
research to better target resources to improve the health 
status of Indian people.
    The Friends thanks the Committee for its continued support 
of the IHS. Your actions have indeed made a difference, but 
because the IHS has been underfunded for years, the health 
disparity gap has not yet closed. We look forward to working 
with you to close that gap.
    [The statement of Kelly Moore follows:]

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    Mr. Simpson. Thank you for your testimony. What time do you 
have to catch a plane? When do we need to get you----
    Dr. Moore. My flight is at 5:10. I probably need to leave 
here by 4:00 at the latest I would say.
    Mr. Simpson. We could ask questions now and then go to the 
rest of the panel if that is okay. Do you want to do the panel 
first?
    Ms. McCollum. No.
    Mr. Simpson. Okay.
    Ms. McCollum. I am okay with it.
    Mr. Moran. Absolutely.

                          EDUCATIONAL PROGRAMS

    Mr. Simpson. Okay. Let me ask you. You mentioned a program 
called Reach Out and Read. Tell me how the educational programs 
relate to improving health care?
    Dr. Moore. You know, that is really a good question. Reach 
Out and Read is an art and literacy program that is actually 
implemented in the context of well-child care visits. So nurses 
and doctors actually distribute books at 6 months to 5 years of 
age to encourage parents to read aloud to their children. It 
has really changed the way pediatrics is practiced in our 
Nation, and it gives doctors an evidence-based strategy to 
promote child development and school readiness.
    Children served by Reach out and Read will develop the 
language and literacy skills necessary to read, complete 
school, and succeed in life. And the success of each one of 
those children and the collective success of all at-risk 
children all over the country will mean increased productivity 
and economic security for our Nation. If they are able to get 
jobs, it will improve their health literacy in terms of 
understanding instructions given to them related to 
medications, related to treatment for conditions for which they 
are being seen. So it does have a lot to do with health as well 
as health equity.

                              APPOINTMENTS

    Mr. Simpson. You mentioned also in your testimony that the 
improvement in showing up for an appointment in this one 
program went from 65 to, what did you say, 95 percent or 
something like that?
    Dr. Moore. 91 percent, yes.
    Mr. Simpson. A lot of people do not understand this when I 
tell people in the rest of the world that are not dentists and 
stuff--I was a dentist in the real world--that the biggest 
expense in the dental office is actually missed and broken 
appointments. And the same thing is true for most other medical 
programs.
    Dr. Moore. Absolutely.
    Mr. Simpson. When somebody does not show up for an 
appointment, the costs and everything else still go on. But 
there is nobody there you are servicing so that is an important 
factor. And if there are things that we can do to make sure 
that people show up for the appointments that they have, we 
will be able to spread limited dollars a lot further.
    Dr. Moore. Absolutely.
    Mr. Simpson. Mr. Moran.
    Mr. Moran. I am fine. Thank you, Mr. Chairman.
    Mr. Simpson. Mr. Cole.

                           SUCCESSFUL PROGAMS

    Mr. Cole. Just a quick one. You have got obviously a good 
and extensive background. If you are looking at things that 
tribes could do to reinforce what IHS has done, what are 
successful tribal programs, either where they have resources or 
they have taken some initiative that has really made a 
difference on top of what the service itself has?
    Dr. Moore. Well, I think Dr. Roubideaux's comment about 
helping with recruitment and retention in terms of helping to 
make health professionals feel at home in Indian communities 
where they serve would be extremely beneficial. I think that is 
one of our biggest problems is sometimes we are able to recruit 
but if tribes could help support, you know, keeping those 
healthcare professionals in our community, that would be, you 
know, a tremendous service.
    I think if tribes could also look at sort of other economic 
initiatives that can, you know, help many of our Indian Nations 
rise up and out of poverty, that would incredibly help, I 
think, the health status of American Indians and Alaska Natives 
as well.
    Mr. Cole. Thank you.
    Mr. Simpson. Ms. McCollum.

                            HHS INITIATIVES

    Ms. McCollum. Thank you. I am glad you mentioned Reach out 
and Read. I have actually seen doctors in action doing it. We 
do it with some of our low-income immigrant groups, as well as 
our Native American families on the east side of the St. Paul. 
And talking to the doctors afterwards, the doctors love it, but 
the doctors not only are encouraging a child to read, but with 
toddlers in the room, they will have a toddler book, and some 
toddlers do not even know to reach for the book because they 
have never been handed a book. And then that is a clue to the 
doc sometimes that there might be a literacy problem even with 
the adult and then spending a little more time talking about 
how the antibiotic is taken, would you like a reminder, how 
would you like me to--and so they saw even improvement in the 
way medication was being applied to the young adult. It is a 
public, private, and doctor initiative through the Department 
of Ed, so a lot of people give and donate to a lot of our 
corporations.
    Are there some other examples? I know you mentioned not 
one-size-fits-all in the drug program or its suicide 
prevention. It needs to be culturally appropriate. But we have 
got the CDC; we have got SAMHSA. My question is is there an 
intra-HHS group that works on Native American health issues 
with some of the centers for disease control with some of the, 
you know, the Department of Health? What kind of conversations 
are people having whether it be urban Native American health or 
on the reservation? And then my other question would be the 
challenges--we have people who winter back and forth or adults 
who come down for awhile while they are ill and they are in the 
Twin Cities for the winter, and then they go back up in the 
summer and electronic medical records and making sure that 
compliance and that doctors are prescribing the same thing.
    So I threw a lot of things out there and whatever you want 
to talk about, I am happy to listen to.
    Dr. Moore. Right. There are some interagency groups that 
have been, for instance, around obesity, fetal alcohol 
syndrome. Those kinds of approaches have been used in terms of 
voting interagency collaboration on important health 
disparities. I think that some of the conversations that are 
taking place are indeed that we need to move beyond addressing 
health disparities through just focusing on just healthcare and 
healthcare facilities to try and address things like the social 
determinants of health. And that is why I love the Reach out 
and Read program.
    But there are other programs. One of the ones that I am 
familiar with actually happened many years ago on the Pima 
Indian reservation where they were looking at diabetes 
prevention activities for overweight Pima individuals. And as 
many of you know, the Pima of the Gila River Indian community 
have some of the highest rates of diabetes reported in the 
world. And what they found was that they had two groups, and 
one group received just the traditional change or lifestyle, 
start eating better, start being more active, whereas another 
group got together and just talked about the cultures and 
traditions of the Pima people and what they could do to try and 
instill that in their youth. And when they looked at both 
groups later in terms of some metabolic indicators related to 
diabetes, it was actually the group where they focused on 
traditional history, traditional cultural ways that could be 
implemented again now, they actually did better. Their BMI was 
lower and some of their indicators like insulin levels for 
diabetes were also lower as well.
    So those kinds of things can really help as well. So I 
really support a lot of programs that try and instill cultural 
pride, respect, just traditional ways of living. Even though we 
cannot go back and turn back the hands of time, there are still 
many things about that that help promote self-esteem of our 
youth, and that can be very helpful.
    Mr. Simpson. Ms. Pingree.
    Ms. Pingree. Thank you.

                             LOAN REPAYMENT

    Thanks for your testimony and your work today. My 
colleagues have already asked a lot of things that I was 
interested in any way. And I will only ask you to follow up on 
one thing. I represent the State of Maine. We have four tribes 
there, and we have a practitioner shortage anyway, and that the 
tribes are experiencing it in an even more severe way.
    And it was interesting to hear you say a little bit about 
the program that helps with loan repayment. I know from talking 
to medical students--and we have a small medical school in our 
State--many of them want to stay but loan repayment is, you 
know, $250,000, $300,000 for many of them, and that they are 
dealing with a low-funded job, it is very difficult to just 
even keep their head above water even if they want to do that. 
So if you could just reiterate what the current funding is and 
what you think the shortage is to the extent that you know?
    Dr. Moore. Let's see. I think we saw there were in 2012, 
507 new loan repayment contracts and 316 contract extensions, 
but there were 338 requests that were denied. So we were urging 
the Committee to consider increased funding for this account by 
at least $17 million to fund all the applications that the 
Indian Health Service receives. But you are absolutely right. 
The incredible debt burden that is assumed by young healthcare 
professional students is extremely overwhelming and can prevent 
them from pursuing that type of career.
    Ms. Pingree. Great. Well, thank you for your testimony.
    Mr. Simpson. Thank you, Dr. Moore, for being here today. 
You can stay as far as you would like. You are welcome to stay, 
but we appreciate you being here today to give your testimony 
as we try to address this issue.
    Vice President Jim, we welcome you here, Vice President of 
the Navajo Nation, and we look forward to your testimony.
    Mr. Jim. Thank you.

                   Opening Remarks of Mr. Rex Lee Jim

    Chairman Simpson, Ranking Member Moran, and members of the 
subcommittee, thank you for holding this important oversight 
hearing on Indian health. My name is Rex Lee Jim. I am the vice 
president of the Navajo Nation. I am also the co-chair for the 
IHS Budget Formulation Group. I also sit on the Secretary's 
Tribal Advisory Committee for the DHHS.
    As the treasurer for Navajo area representatives of the 
National Indian Health Board, thank you for inviting NIHB to 
provide these comments.
    We all know that the federal trust responsibility is the 
foundation for federally funded health care to all members of 
the 566 federally recognized Indian tribes, bands, and Alaska 
Native villages. This trust responsibility is a direct result 
of treaties that were made between the United States and tribes 
and reaffirmed by Executive Orders, congressional actions, and 
two centuries of Supreme Court case law. We also all know that 
it is possible to improve health equities as the health status 
of Indian people has improved slowly over the last 40 years 
with an increase in resources, healthcare providers, funding, 
and other support. Yet, the IHS has long been plagued by 
woefully inadequate funding in all areas, a circumstance which 
has made it impossible to supply Indian people with the level 
of care they need.
    Thanks to the dedication of this committee, steps have been 
taken towards the fulfillment of the federal trust 
responsibility by ensuring that IHS receives annual increases. 
Strong and sustained funding is necessary to address 
preventable disease and allow IHS to move from a sick-care 
system to a true public health model with a focus on 
prevention.
    An excellent example of this model is the Special Diabetes 
Program for Indians. SDPI provides grant funding to 404 
diabetes treatment and prevention programs and 35 states. SDPI 
grantees follow specific reporting requirements that allow for 
assessment of grantee progress. We have seen remarkable 
progress over the last several years on the data gathered from 
the SDPI programs, for example, a decrease in the average blood 
sugar level from 9 percent in 1996 to 8.1 percent in 2010, a 73 
percent increase in primary prevention.
    SDPI is making a real difference in the lives of people who 
must manage diabetes on a daily basis. This federal investment 
and community-driven, culturally appropriate programs has led 
to significant advances in diabetes education, prevention, and 
treatment. This program is a significant accomplishment for 
travel healthcare and shows how adequate funding to address a 
chronic disease can achieve health improvements.
    Today, we offer the following recommendations to help to 
advance the Indian Health Care System. First, we asked Congress 
to work towards full funding of the Indian Health Care System, 
which is currently funded on average at 56 percent of true 
need. Tribes have long asked for full funding of the IHS and we 
do not know the full potential of the IHS unless it is fully 
funded. For example, in 2010 IHS spending for medical care was 
$2,700 per user in comparison to the average federal healthcare 
expenditure of the $7,200 per person, a difference of $4,500. 
The tribal projected needs-based budget for fiscal year 2015 is 
now $27.6 billion. This would be less than 3 percent of the HHS 
budget of $941 billion.
    NIHB also urges Congress to consider the rates of both 
medical and nonmedical inflation during the appropriations 
process and recommend an increase in funding to address these 
needs.
    As I noted in my written testimony, the national data on 
American Indians and Alaska Natives is outdated. We need timely 
and accessible data to appropriately assess the health care 
needs for our people in order to plan healthcare delivery and 
public health programs. With this foundational knowledge, 
tribes can make the best possible decisions for allocation of 
scarce financial resources. Other federal agencies collecting 
health data often do not offer American Indian and Alaska 
Native statistics, thus resulting in failure to correctly 
identify Indian individuals. Data ownership and access issues 
must be addressed, however, before this potential can be 
realized. We request additional funding to support the tribes 
and collecting data.
    Another recommendation is to advance appropriations to IHS. 
Since fiscal year 1998, funding for IHS has not been provided 
before the commencement of the new fiscal year. The delayed 
funding, which ranges from 5 days to 197 days, significantly 
hampers tribal and IHS health care providers' budgeting, 
recruitment, retention, provisional services, facility 
maintenance, and construction efforts.
    If IHS funding was an advanced appropriation cycle like the 
Veterans Administration, tribal healthcare providers, as well 
as the IHS, would know the funding a year earlier and it would 
not be subject to continuing resolutions. Providing sufficient, 
timely, and predictable funding is needed to ensure the Federal 
Government meet its obligation to provide healthcare for our 
people.
    Another priority of Indian healthcare is the Contract 
Health Service. The CHS exists because the IHS system lacks the 
capacity to provide all the healthcare needed by the IHS 
service population. In theory, CHS should be an effective and 
efficient way to purchase specialty care. In reality, CHS is so 
grossly underfunded that Indian Country cannot purchase the 
quantity and types of care needed. The IHS Tribal Alert Group 
and CHS is reviewing this issue and we encourage this committee 
to review the work group's final recommendations once they are 
released.
    The tribes are extremely concerned about the consequences 
of sequestration. Unlike other federal programs such as 
Medicaid and the VA, the IHS is not exempt from the looming 
automatic across-the-board cuts. The IHS budget will suffer a 
devastating cut of $220 million. Its true costs will be 
measurable in lives as well as dollars. If this Congress cannot 
design alternate methods of deficit reduction, the NIHB 
requests that Congress makes the IHS permanently exempt from 
all cuts.
    Lastly, we also mentioned in our written testimony and 
issue with the implementation of the Affordable Care Act. The 
Act includes Indian-specific benefits and protections, but 
unfortunately, the provisions include different statutory 
references of Indian law. We are asking for Congress' help with 
a legislative fix for adopting the definition of Indian used by 
CMS for Medicaid.
    And closing, although our Nation faces a new budget 
reality, the National Indian Health Board asks that this 
subcommittee give full consideration to the true needs of the 
IHS as well as Indian Country and the federal trust 
responsibility to its first Americans.
    I thank the subcommittee for its time and for the 
opportunity to present this testimony. Thank you.
    [The statement of Rex Lee Jim follows:]

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    Mr. Simpson. Thank you, Mr. Lee.
    Mr. Barnett.
    Mr. Moran. Mr. Chairman, I am getting a little worried 
about Dr. Moore making it to the airport on time. Even if you 
are leaving from National, you probably need to leave now if 
you are going to make a five o'clock flight.
    Mr. Simpson. There is nobody that knows that better than 
Mr. Moran.
    Mr. Moran. You could encounter a little traffic across the 
bridge.
    Dr. Moore. Absolutely. Well, thank you so much.
    Mr. Barnett. Thank you very much, Dr. Moore.
    Dr. Moore. Thank you.

                 Opening Remarks of Mr. D'Shane Barnett

    Mr. Barnett. Chairman Simpson, Ranking Member Moran, and 
members of the subcommittee, good afternoon. My name is D'Shane 
Barnett. I am Mandan and Arikara from the Mandan, Hidatsa and 
Arikara Nation of Fort Berthold, North Dakota.
    On behalf of the National Council of Urban Indian Health, 
our 38 member healthcare programs, and the more than 100,000 
American Indians and Alaska natives that we serve each year, it 
is an honor to appear before you today to speak about the 
health status of American Indians and Alaska Natives living in 
cities across the United States.
    Before I begin, I would like to thank Congress for the 
recent passage of the Violence Against Women Act and for 
including the tribal protections. Given that much of our 
population migrates back-and-forth between reservations, rural 
towns, and urban areas, these protections will support many of 
the women that we serve.
    Urban Indian communities are direct result and consequence 
of failed federal policies. Instead of investing in employment 
and education in Indian Country, between 1952 and 1960, the 
Bureau of Indian Affairs relocated an estimated 160,000 
American Indians off of their reservations to live in urban 
areas as part of its Indian Relocation Program. With job 
opportunities scarce and little or no financial assistance from 
the BIA, American Indians developed significant health 
disparities that persist to this day.
    In 1974, the Supreme Court ruled that assistance afforded 
to Indian people is not limited to those currently living on a 
reservation. In recognition of the deplorable health status of 
urban Indians, Congress enacted Title V of the Indian Health 
Care Improvement Act to ensure that healthcare services made 
available in the fulfillment of trust responsibility to reach 
all American Indians and Alaska Natives.
    IHS-funded Urban Indian Health programs are both an attempt 
to mitigate the harm caused by the federal relocation policy 
and an expression of the United States trust responsibility to 
all American Indians and Alaska Native people. IHS currently 
funds 38 Urban Indian Health programs operating in 21 states. 
With line item funding of only $43 million, these programs 
provide more than 275,000 patient encounters each year to 
Indian people providing high-quality, culturally appropriate 
services that cannot be received at other safety net healthcare 
providers.
    In addition to primary care services, our programs provide 
traditional healthcare services, behavioral and mental health 
services, residential substance abuse treatment services, 
sexual assault and domestic violence prevention, and social 
services such as job placement and health insurance eligibility 
and enrollment.
    IHS funding for Urban Indian Health is currently estimated 
to represent only 18.6 percent of total need. Because of this, 
our programs leverage $1.50 for every dollar appropriated 
through the Indian Health Service. However, the federal trust 
responsibility cannot be shifted onto states, counties, 
foundations, and public or private reimbursement. The primary 
source of funding for the majority of our programs remains of 
the Indian Health Service.
    It is essential to note that Urban Indian Health programs 
to not benefit from funding resources in other areas of the IHS 
budget such as Contract Health Services, facilities, contract 
support costs, or others. Because of this, resources intended 
to improve the health status of American Indians in urban 
centers need to be appropriated to the IHS Urban Indian Health 
line item.
    According to the 2010 census, 71 percent of Indians live in 
urban centers. This means that even in cities where Urban 
Indian Health programs, or UIHPs, exist, limited IHS funding 
and recent budget cuts have led to many patients either being 
referred out for treatment or going without care entirely.
    Current funding limitations make it impossible to provide 
comprehensive services to every patient. Further, the fact that 
UIHPs have had their sexual assault prevention grants and their 
domestic violence prevention grants eliminated means that there 
are fewer resources to address the disparities that our women 
and their families face each and every day.
    All too often, federal policies and laws that were intended 
to improve the health of all American Indians have 
inadvertently excluded urban Indian patients and providers. One 
example is the IHS-VA agreement language that was discussed 
earlier, which does not include urban programs. Another 
example, Congress provided IHS and tribal health programs with 
100 percent federal payment for Medicaid services known as 
FMAP. The tiny omission of our programs from 100 percent FMAP 
is creating significant barriers to health care for urban 
Indian people even though data provided by HHS shows that 
conclusion of urban Indian programs in 100 percent FMAP is 
estimated to cost somewhere in the range of only $5 million a 
year.
    Increased Medicaid revenues via 100 percent FMAP could 
mitigate some of the challenges of limited IHS resources. For 
this reason, NCUIH urges Congress to take the lead and provide 
urban Indian Medicaid beneficiaries with the same opportunities 
for care that IHS and tribal patients enjoy.
    Likewise, the Administration's determination that the 
definition of Indian and the Affordable Care Act is intended to 
include only members of federally recognized tribes will have a 
detrimental and disproportionate impact on urban Indian 
communities and healthcare providers. While our programs serve 
tribal citizens from hundreds of federally recognized tribes, 
many of our patients face obstacles to tribal enrollment or are 
members of tribes that lost federal recognition as a result of 
the devastating federal termination policy of the 1940s. 
Although these Indians are eligible to receive services from 
IHS, tribal, and urban healthcare facilities, they will 
nevertheless be excluded from the American Indian provisions 
and protections of the healthcare law.
    HHS leadership has publicly acknowledged their intent to 
work with Congress and we urge you to address this problem and 
a line the ACA definition of Indian with the current Medicaid 
definition of Indian, which explicitly includes urban Indians 
and other native people who may not currently be enrolled 
members of federally recognized tribes.
    In closing, I would like to emphasize that NCUIH supports 
the tribal recommendation for full funding of the Indian Health 
Service at $27.6 billion. And we ask that full funding be 
afforded to the Urban Indian Health line item at $231 million 
and that the shortfall be addressed by annual increases of only 
$18.8 million over 10 years. We would like to urge you to 
extend 100 percent FMAP for Urban Indian Health programs.
    And finally, we want to call your attention to the harmful 
effects of the sequestration. We stand with the National Indian 
Health Board in calling for exemption of the Indian Health 
Service from sequestration and we ask the Subcommittee to 
consider the impact of these cuts when determining IHS funding 
levels for fiscal year 2014 and beyond.
    Thank you very much for your time here today and I would be 
happy to take any questions you may have.
    [The statement of D'Shane Barnett follows:]

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    Mr. Simpson. Thank you, Mr. Barnett.
    Dr. Fields.

                  Opening Remarks of Dr. Henry Fields

    Mr. Fields. Good afternoon, Mr. Chair, Mr. Moran, and 
committee members. I am Henry Fields, Chairman of the American 
Dental Association's Council on Government Affairs. I am a 
professor and division chair of orthodontics at The Ohio State 
University. I am a private-practicing orthodontist and chief of 
orthodontics at Nationwide Children's Hospital in Columbus. I 
am also trained as a pediatric dentist.
    The ADA appreciates the opportunity to respond to the 
Committee's question as to whether and to what extent your 
actions in prior years have reduced the tremendous disparities 
between Native Americans and the general population and to 
recommend future actions. In the 1990s, the budget for the IHS 
Division of Oral Health was $65 million. Today, it is more than 
$159 million. We are grateful for all the Committee has done to 
address the oral health needs of the American Indian and the 
Alaska Natives. It has resulted in improvements and oral 
health, but there is much that needs to be done.
    There is an epidemic in early childhood caries, or ECC, 
which is simply tooth decay among native children. The ECC 
prevalence is about three times or 300 percent higher in this 
population than in other equivalent populations. We will never 
drill, fill, or extract our way out of this epidemic.
    Traditionally, preventing oral disease has been possible 
and cost-effective. Children having their first dental visit 
before 1 are more likely to have follow-up preventive visits 
and lower dental costs. The earlier a child sees a dentist, the 
more cost savings there are.
    Regarding ECC, the epidemiology of ECC is unclear. We need 
appropriate measures and data. Poor enamel may be a factor. 
Oral bacteria are different in this population and need 
studied, as well as does the immunology of the situation. We 
need new treatment approaches. This appears to be a different 
disease, especially among this group.
    Traditionally, placing dental sealants on older children 
has resulted in Medicaid savings, especially for high-risk 
populations. IHS dentists are making advances in these areas in 
prevention. In 2011, the IHS placed over 276,000 sealants, 
19,000 over their goal.
    Regarding treatment, IHS dentists increased the number of 
patients seen from 23 to 28 percent, which is a 5 percent 
increase since the 1990s. And regarding the utilization of 
fluoride application, over 161,000 Indian students received at 
least one fluoride treatment. This is almost 26,000 
applications over its goal. Things are improving.
    These accomplishments are due to a focus on prevention 
combined with an increased workforce. In 2009, the IHS reported 
needing 140 dentists. Today, the vacancies are down to 40. The 
IHS Summer Externship Program and improved loan program funding 
have contributed to attracting dentists. Last summer 104 
externs participated in the summer program, which resulted in 
12,000 patient visits. The average dental student alone debt is 
$200,000. In 2012, the IHS Loan Repayment Program funded all 
107 applicants from dentists and hygienists. Of those, 65 
extended their contracts, underscoring the effectiveness of 
this recruitment and retention tool. This appears to be 
working.
    Of course, more dentists are needed for more dental care. 
But while pleased with the increased utilization, we would like 
to see this rate continued to increase to 37 percent for adults 
and 46 percent for children, which is the national rate.
    Additional investments in oral health literacy, which 
others have acknowledged, prevention and workforce are needed 
to accomplish this goal. More IHS dentists means the division 
can move more quickly to implement the Early Childhood Caries 
Initiative. The first step was to conduct an oral health 
assessment of children up to age 5. These data were gathered 
over 2 years ago but have not resulted in being fully or 
officially released. This delay has consequences. The ADA has 
met with the Arizona Dental Association and they have been 
meetings that we have implemented over 2 years ago with local 
tribes preparing to try to join forces and implement these 
recommendations for the ECC. Without these data and direction 
from the IHS, we cannot act. We urge the Committee to encourage 
the IHS to release the report.
    Assuming that the report will eventually be released, the 
division will need a full-time person to monitor and coordinate 
the initiatives with the tribes and their partners, another 
comment that others have made. Having someone to oversee the 
project is vital to ensuring a uniform approach by all 
participating entities. We urge the Committee to provide an 
additional 300,000 for needed personnel and materials.
    We know that due to years of underfunding oral health 
disease among American Indians and Alaska Native children and 
adults exceeds treatment capacity. In 2009, the ADA estimated 
that to achieve parity with IHS patients, the budget for the 
division would need to be $600 million. That level of funding 
is not going to happen overnight, especially in these 
constrained economic times. So it is necessary to augment IHS 
services in other ways.
    During the past 6 years, the ADA has recruited more than 
200 volunteer dentists and dental students to serve in Indian 
Country. More volunteers could be recruited if IHS could 
streamline the credentialing process.
    The ADA and several other state societies in Indian Country 
have joined forces to advance oral health outreach through the 
Native American Oral Healthcare Project. Our meetings with 
tribal leaders have centered on such goals as we can work 
together to enhance preventive efforts, increase access to 
dentures for elderly, and to increase oral health literacy.
    Clearly, there is need for more American Indian dentists. 
We are taking the first steps to establish an educational 
pipeline that will extend from exposing young children to oral 
health careers to mentoring native dental students. As our 
plans developed, we anticipate a need for additional resources 
for the tribal nations to meet these goals. We hope that the 
Committee will continue to support our efforts in building 
these private-public partnerships. Thank you for allowing the 
ADA to testify. We are committed to working with you, the IHS, 
and the tribes to reduce dramatically the disparities in oral 
disease and access to care that currently exist in Indian 
Country. Thank you.
    [The statement of Henry Fields follows:]

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                          DENTISTRY CHALLENGES

    Mr. Simpson. Thank you, Dr. Fields. And thank all of you 
for your testimony. Since we have had vacancies go from 140 
down to 40, apparently, I better leave Congress pretty quick if 
I am going to start filling one of those. What are the 
challenges that make it difficult for dentists to practice 
dentistry on reservations?
    Mr. Fields. I think some of the cultural interactions are 
difficult for some people to understand. I think that loan 
repayment and salaries were an issue in the past. I think those 
have been improving and they are being met. I think that part 
of some of the morale issues among the dentists would be with 
early childhood caries, the inability to make inroads. It is so 
difficult. It is devastating, and it hurts the morale of the 
providers, I think.

                         HEALTHCARE PROFESSIONS

    Mr. Simpson. You mentioned something that I was going to 
ask Dr. Roubideaux about and that it seems to me like one of 
the best ways to get dentists and doctors back to reservations 
is to help educate them in the field of dentistry and being a 
physician. What is the pipeline of getting more Native 
Americans involved in healthcare professions and so forth? Are 
there very many Indians that are going to college to become 
doctors or dentists or anything else like that?
    Mr. Fields. Well, I think that the data would indicate that 
there are a number of young Indians who want healthcare 
careers. And many times, those decisions are made quite early 
in life. Sometimes, people make those in grade school and 
junior high. Unfortunately, if those aspirations are not 
cultivated, you go nowhere. And there has not been very good 
cultivation of those people so that then they can achieve the 
academic excellence that they need in high school, and then 
they need to be tutored or directed when they are in college to 
understand what they need to take for prerequisites. If you go 
to a smaller school that does not have adequate directional 
services, most people get lost. And I think it is not because 
they do not have the aspirations; it is because they are not 
cultivated. And that just requires more time and energy.
    And that is what the Pipeline Project is about, trying to 
bring these people along, give them adequate attention, help 
them succeed. Right now, they are trying to succeed on their 
own and the Pipeline Project is aimed at trying to bring those 
people along and provide them with the resources they need.
    Mr. Simpson. We can learn a lot from the TRIO program that 
actually takes young people that are first-time students where 
their parents have never really gone to college or anything--I 
happen to be the co-chair of that caucus--that it actually gets 
them in high school in the Upward Bound Programs and other 
things. A lot of times these students have never thought about 
going to college because their parents never went. They never 
had a history of that, or anything else.
    It really helps mentor them and tutor them into thinking of 
going to postsecondary education and then helps support them 
through the program. It has been a tremendous asset in helping 
these first-time students. Not only does it help that first-
time student, it helps all of their friends and sisters and 
brothers who never thought about going to college that went, 
man, Jane went to college. Maybe I can go to college.
    We could probably learn something from the TRIO program 
about how to get people, Indians, into medical educations, 
because ultimately, that is going to be part of the answer.
    But anyway, I appreciate your testimony.

                         INDIAN HEALTH FUNDING

    Mr. Simpson. Mr. Jim, after reading your written testimony, 
I came away with the message or at least the impression of the 
message that recent Indian health funding increases have been 
helpful but insufficient, that the data needed to truly measure 
progress is inadequate and outdated, and that the health 
disparity between American Indians and Alaska Natives and other 
populations continues to widen. Is that an accurate 
interpretation of your testimony?
    Mr. Jim. Mr. Chairman, that is an accurate interpretation. 
My testimony indicates that the budget based need is at $27.6 
billion, and so even though there have been increases, it is 
only a little bit over $4 billion. And also there is a huge 
difference. And so we recommend that over 12 years that there 
be a phase-in so we get to the $27.6 billion level and so we 
are asking about $5.3 billion for this fiscal year 2015. And if 
we continue to do that, we should be able to catch up.
    And to answer some of your earlier questions regarding 
Indian Country and Navajo, we are doing what is called Grow 
Your Own, and so we are beginning to do an analysis of what is 
needed on that. And there are 206 employed medical doctor 
positions on Navajo and less than 10 are occupied by Navajo.
    Mr. Simpson. So you do have 10 doctors that are Navajo?
    Mr. Jim. Less than Navajo. We have more Navajo doctors but 
they are practicing outside because they are treated better and 
they get higher paying--and so on. But we are also beginning to 
talk about medical school and more dosing program so more 
people can begin to think about the health profession. I think 
that is the key to long-term to help medical professionals stay 
on Navajo to do retention there, so we need to do that.
    Mr. Simpson. Mr. Moran.

            SCHOOL ASSAULT AND DOMESTIC VIOLENCE PREVENTION

    Mr. Moran. I was wondering about the vote we have coming up 
and it has been called, so I do not want to take long, but let 
me just mention a couple things quickly.
    The Urban Indian Health program eliminated sexual assault 
and domestic violence prevention programs. I wonder what impact 
that had on Urban Indian Health. But I need kind of a quick 
answer because I want to be able to give Ms. McCollum and Ms. 
Pingree an opportunity to ask and Mr. Cole.
    Mr. Barnett. As far as its impact on the health, it 
resulted in a reduction of about $1 million. So the total urban 
funding of $43 million does not include that additional $1 
million. So we had a $1 million loss.
    Mr. Moran. Okay.
    Mr. Barnett. And then as far as the impact of that loss, it 
is going to take a little while for us to put the data 
together.
    Mr. Moran. As many people fought so hard and particularly 
Mr. Cole to get Indians included in the protection and then 
that program is eliminated--and this will not be a question, 
but it does seem that that Special Diabetes Program for Indians 
was quite successful, Mr. Chairman, and it would seem that it 
might have applicability to other diseases, particularly those 
that are behaviorally oriented. So hopefully, we will hear more 
about that. But I do not want to take up any more time because 
we are under the pressure of a vote taking place right now.
    Mr. Simpson. Mr. Cole.

                            FUNDING BARRIERS

    Mr. Cole. Thank you, Mr. Chair. And just a couple 
observations and then kind of a question and then an offer. As 
I reflect on Dr. Roubideaux's testimony and the testimony of 
the four witnesses on this panel, it is clear we have actually 
made a difference. I mean, we have got big problems but the 
resources have measurably improved things, which is kind of 
what you look for. And I think this committee can be awfully 
proud of that, particularly you, Mr. Chairman, and you, Mr. 
Moran, because you guys laid the groundwork and built the 
bipartisan coalition for that to happen. So we know we need to 
do more.
    I am particularly concerned, and Mr. Barnett, you and I 
have talked about this before, but we clearly have some 
barriers that prevent the flow of money into these urban 
facilities. We have got one in Oklahoma City and one in Tulsa 
there that are unbelievably good, and honestly, if those 
patients are not taken care of there, they are going to flow in 
probably as indigent patients into other areas and not be 
looked after as well. I would like to sit down with you and 
perhaps Ms. McCollum would work with me on this is my fellow 
co-chairman and see if we can identify what some of these 
structural barriers are.
    And you can count on us to try to do the best we can, 
everybody on this committee to try and help on the funding 
side. So I am not trying to avoid that, but the definitional 
problems that you mentioned, those kinds of things, and perhaps 
Dr. Roubideaux would help us with that, too, and the Department 
so that we just try to remove bureaucratic barriers that are 
getting in the way and making it more difficult to function so 
that when we manage to infuse part of the system, we do not 
overlook--because I recognize how many, you know, Native 
Americans get treatment at those facilities, and a long way 
away from home in many cases. They are not where they can 
easily access trouble facilities. And we want to make sure that 
network of urban centers are good. So I would like to sit down 
and work with you, see if we can--not necessarily something we 
can do as appropriators, but maybe we can move something 
through the normal legislative process and make this a little 
bit easier.
    Mr. Moran. We can do anything.
    Mr. Cole. Yeah, well, if they will let us, yes.
    Mr. Barnett. Well, we will let you.
    Mr. Cole. Okay.
    Mr. Simpson. Ms. McCollum.
    Ms. McCollum. Thank you. And I totally agree with what we 
are hearing about, you know, the challenges of urban settings 
for dentistry. I have one over here. For dentistry it is even 
worse and the urban settings because we do not have dental 
clinics to my knowledge.
    Mr. Barnett. Most do not, exactly.
    Ms. McCollum. Maybe few do. Yes, mine does not.
    So I want to just kind of bring up another area, and it was 
told in a story by a Native American doctor, Dr. Warren, and it 
was amazing. He talked about how he was working down at the 
Phoenix Indian Medical Center. He had his grandmother come down 
living with them to provide elder care. They are both enrolled 
out of Pine Ridge. She was not doing really well. They would 
not see her in the Phoenix Indian Medical Center because they 
said, well, you have to go back to Pine Ridge. And here he is 
trying to provide intergenerational care which is very good for 
families, for his children, for him, for her, so she delayed, 
delayed, delayed, delayed. Finally, she was diagnosed with lung 
cancer. So if she wanted treatment, she has to go back.
    So this is another issue, another burden that we put, 
especially on families. Here is somebody who went and got a 
medical degree and is working.
    I think it is unethical, so is that something in Indian 
Country that we could work with with the Administration, with 
Congress to kind of come up--and part of that gets to the full 
funding. I know it is a big problem that we will be working on 
for a while.
    Mr. Barnett. Yes, and I think our programs would be 
committed to working with IHS and with Congress to explore 
this. Our programs, because of the authority coming from the 
Title V of the Indian Health Care Improvement Act are able to 
serve those individuals that perhaps cannot be served at a 
tribal or IHS facility because of where they are located. So we 
can serve those people. The problem is we do not have the 
funding. We especially do not have funding for specialty care 
like cancer, services like that. So I think we could explore an 
option and try to put our heads together.
    Mr. Simpson. Ms. Pingree.
    Ms. Pingree. I will be quick. And I just want to thank you 
for your testimony and the work that you are doing today. I am 
new to the committee but lucky enough to have four tribes in my 
State that I have been able to work with a little. And I know 
how appreciative they are of Indian Health Services when they 
work and the preventative programs like specialist diabetes 
care and how worried they are about the sequester and the cuts. 
So I am wholeheartedly in support of what you are doing.
    And Dr. Fields, I appreciate seeing that we have been 
adding to the roles of dentist. I know that is a huge issue in 
rural areas and making sure we have adequate care. And I just 
want to echo what the chair said that I think when people from 
the tribes have the ability to aspire to being in healthcare 
themselves and making those opportunities available, they are 
more likely to return to their communities. And just to get a 
brownie point, I want you to know that I went to the dentist 
yesterday, and even though it was a really busy day for me, I 
was afraid not to go because my dentist yells at me if I do not 
show up. So I have come to understand.
    Mr. Fields. That is a good dentist.
    Mr. Simpson. He must have gone to The Ohio State 
University.
    I went to The Washington University in St. Louis.
    Mr. Fields. Your chairman on this committee will also yell 
at you if you do not show up.
    Mr. Simpson. I appreciate the shortness of this panel, or I 
apologize for it. We have a vote going on, got about 4 minutes 
left in it, but I want to assure you all that your testimony is 
important and we take it very seriously, and we will be in 
touch with all of you in the coming days and months as we try 
to put together a bill for '14, and hopefully, we will get to a 
bill for '14 at some point in time. I appreciate the Dental 
Association being very active in this and trying to address a 
real need out there in Indian Country. I thank all of you.
    Mr. Fields. Thank you.
    Mr. Barnett. Thank you.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                                          Thursday, April 11, 2013.

             DEPARTMENT OF THE INTERIOR 2014 BUDGET REQUEST

                               WITNESSES

HON. KEN SALAZAR, SECRETARY OF THE INTERIOR
RHEA SUH, ASSISTANT SECRETARY, POLICY, MANAGEMENT, AND BUDGET
PAMELA HAZE, DEPUTY ASSISTANT SECRETARY, BUDGET, FINANCE, PERFORMANCE, 
    AND ACQUISITION

                  Opening Remarks of Chairman Simpson

    Mr. Simpson. Mr. Secretary, welcome back. You must be a 
glutton for punishment to want to come back so soon. But as I 
mentioned earlier, the nominee got confirmed yesterday, as you 
know, in the Senate in an 87-to-11 vote, so have you got a 
plane ticket back to Colorado pretty quickly?
    Secretary Salazar. Tomorrow at 1:33.
    Mr. Simpson. Well, welcome back. And I appreciate you 
taking the opportunity to come back and present the budget for 
fiscal year 2014 before us. I had a long glowing statement I 
was going to make. We are going to have votes at about 1:30 to 
1:45 that will take us about a half-hour to 45 minutes, which 
might be problematic. I do not know. So I am not going to go 
through a long statement other than to say that I have truly 
enjoyed working with you. You have been willing to sit and talk 
to us and discuss issues and you explain your point of view and 
listen to our point of view sometimes, and so I have truly 
appreciated that. And frankly, we are going to miss you at the 
Department of Interior and I am going to miss working with you 
in that capacity.
    But I was also going to go into the issue of sequestration 
and what happened in the Senate and the fact that they decided 
it was a good idea to take it down beyond the sequestration 
level, which I thought was devastating, but I am not going to 
go into that. I was going to chew them out a little bit but I 
hope they are getting the message. But it was unnecessary, 
frankly, to do that. And that was one of the reasons, and in 
fact the reason that I voted against the CR even though it was 
my chairman's bill. But I told him beforehand that that was 
problematic what they did with the Department of Interior in 
the CR and the Senate.
    So without getting into a long statement or anything like 
that, again, welcome. And Mr. Moran?

                      Opening Remarks of Mr. Moran

    Mr. Moran. Yes, thank you, Mike. And I want to echo your 
statements about the Secretary. I think you have been a 
terrific Secretary and I am really sorry to see you leave. We 
are going to miss you.
    I do have a few comments. Rick Healy and Tim Aiken did such 
a nice job getting some thoughts together. I am not going to 
suppress those. But you are known around town for wearing your 
cowboy hat but, as the Secretary, you have worn many different 
hats that reflect the multitude of responsibilities entrusted 
to the Interior Department and you have carried out all those 
responsibilities admirably. You put a good staff together, many 
folks you have kept like Pam, and Rhea, all of the folks, 
David, that we have had the privilege of working with have been 
terrific.
    But speaking of that cowboy hat, we understand there was an 
unveiling recently of your secretarial portrait, and in that 
portrait you are wearing that cowboy hat as well. But also 
included is your family in the picture, and their presence 
certainly is a recognition not only of the support they have 
provided you put a reminder to all of us that the decisions we 
make today impact our children and grandchildren for 
generations to come. As that great Republican President and 
conservationist Teddy Roosevelt noted, ``the Nation behaves 
well if it treats its natural resources as assets, which it 
must turn over to the next generation increased and not 
impaired in value.''
    Mr. Secretary, there is much to like in the fiscal year 
2014 budget request for the Interior Department. It carries 
forth that stewardship legacy that President Roosevelt spoke 
about. The request attempts to turn the corner and put behind 
us the mindless sequester that we are now dealing with, and I 
know you share with us concern about the impact of these 
sequester cuts not only on the natural and historical resources 
entrusted to the Department but also its impact on your 
dedicated employees, who in many ways are bearing the brunt of 
this sequester through furloughs and program cuts. We can only 
hope that as fiscal year 2014 goes forward, we can restore some 
sanity to the budget process and provide the Department with 
the fiscal tools it needs to carry out its important work.
    So Mr. Secretary, I want to again congratulate you on a job 
very well done. We will miss you, although we expect that 
Interior will remain in capable hands with your successor Sally 
Jewell, as Mike said, who was just confirmed.
    Thank you, Mr. Chairman.
    Mr. Moran. Mr. Chairman, Ms. Lowey is here as well.
    Mr. Simpson. We have the ranking member of the full 
committee with us today. Thank you for coming, Ms. Lowey.

                     Opening Remarks of Mrs. Lowey

    Mrs. Lowey. Thank you very much, Mr. Chairman. And I am 
impressed. I understand this is your last day and you are here 
before this committee, and I regret I have not had the 
opportunity to work directly with you, but there are many good 
things you did that I am well aware of and I will just take a 
moment or two to thank you for your service to your country, to 
wish you good luck in your future endeavors. You look relaxed 
already, ready to move on.
    I really do want to thank you for your service to your 
country, to the State of Colorado. You really have worked to 
restore the integrity of the Department of Interior. You have 
invested in renewable energy on public lands, you have led an 
ambitious initiative to harness offshore wind energy and forged 
a clear path in response to the Deepwater Horizon incident that 
rightly prioritized the recovery of the Gulf and instituted 
reforms to help prevent such an event from ever happening 
again.
    I personally want to thank you for your attention to the 
damage on Ellis and Liberty Islands, Gateway National 
Recreation Area as a result of Hurricane Sandy. And turning to 
the budget, I was pleased to see that the Department recognizes 
the critical role that conservation and outdoor recreation can 
play in promoting job creation and economic growth through the 
America's Great Outdoors Initiative. However, I am very 
concerned about the drastic cut to the National Heritage Areas 
program.
    My district is in the Hudson Valley and it utilizes the 
National Heritage area program for tourism and economic 
development, getting people outdoors, interacting with their 
community and natural environment. It is an important program 
and popular among my constituents. So I am hoping that as I 
work with my colleagues on the Committee and the incoming 
Secretary to continue to review the President's budget request 
and ensure that we adequately fund the initiatives that are so 
important for preserving our wild and scenic places while 
promoting economic development and job creation.
    So good luck to you. And I hope we will meet again in the 
near future. Thank you for your service.
    Mr. Simpson. Mr. Secretary.

                  Opening Remarks of Secretary Salazar

    Secretary Salazar. Thank you very much, Chairman Simpson 
and Ranking Member Moran, Ranking Member Lowey, Congresswoman 
Pingree, Congressman Serrano, Congressman Calvert, Congressman 
Cole, Congresswoman Herrera Beutler, and who do I have here? 
And Congressman Joyce, thank you so much for being here.
    Let me first say to this full committee that it has been a 
true honor for me to serve the United States and our citizens 
and to work with all of you. My own frank view of Washington, 
D.C., and our Nation's capital is that it would work well if 
the rest of the Congress worked the way that this committee 
works, and so I just very much want to applaud you for your 
bipartisanship here, for the great leadership and expertise of 
both the majority and the minority staff. It has been an honor 
for us to work with you.
    Pam Haze, who has been here for a long time with multiple 
Secretaries, continues to guide our budget at the Department of 
Interior, and today, I am joined also by the Assistant 
Secretary for Policy, Management, and Budget, Rhea Suh. Thank 
you for your positive comments about them.
    Let me be very short in my opening statement and simply say 
the following. Our work together the last 4 plus years as been 
truly an extraordinary journey. We have done a lot. We have 
moved forward in a new energy world where we are harnessing 
conventional energy in the Gulf of Mexico and offshore of the 
United States. So, we move forward with a renewable energy 
revolution on public lands as well as on the ocean floor, our 
work together as we have moved forward with the conservation 
agenda making sure people understand there is an economic nexus 
between conservation and outdoor recreation and a healthy 
economy. Some six million jobs a year come just from outdoor 
recreation.
    And as you know, Mr. Chairman, Idaho is a great place for 
national parks and for the public icons that bring people to 
your State. Even in urban places, as you were saying, 
Congresswoman Lowey, when you think about the Statue of Liberty 
and the people who come to New York because of the Statue of 
Liberty and Gateway and so many other wonderful places there, 
we appreciate the work that all of you have done to help us 
implement that agenda.
    First Americans and Alaska natives, I cannot think of a 
more wonderful champion than Congressman Cole and the work of 
this committee in addressing Cobell and water rights 
settlements around the country, law and order issues, and 
education. You have been a champion supported by the members of 
this committee as you have moved forward on that agenda.
    Water, I am proud of the work that we have done. There are 
a number of different initiatives on water, understanding that 
we have some very tough times coming up, especially in key 
basins like the Colorado River basin and the Rio Grande basin. 
It will be a continuing challenge for us in the future.
    Finally, our commitment to young people. Because of the 
leadership of this committee, we have been able to provide jobs 
over the last 4 years in the 21st Century Conservation Corps to 
some 84,000 young people around America. I am very proud of 
what we have been able to do in that vein as well.
    Now, fast forward to where we are today, and part of the 
reason I wanted personally to come to the Committee in the 
waning hours of my time as Secretary of Interior is to tell you 
that I am concerned. I am concerned, frankly, because we will 
not be able to do the job that has been assigned to us by the 
United States Government unless we are able to get the 
appropriate resources into the Department of Interior. As you 
noted in your opening comments, Chairman Simpson, we at the 
Department today are in the ditch, frankly, because of the 
sequester, and then you include on top of that over $200 
million in cuts from the Continuing Resolution.
    So to put that in the most stark of terms for me as the 
manager of the Department of Interior, we essentially are 
having to take an almost 10 percent cut just to implement the 
sequester in the remaining months that we have in this budget 
year between now and the end of October. When you add on top of 
that another $200 million plus in cuts, it starts having real 
consequences all across the United States of America.
    Now, I will only point to two or three examples that I 
think will tell that story. One is our payments to the States, 
Payments in Lieu of Taxes, and Mineral Revenue Payments that go 
out to many of the States around the country. You know, 
Governor Mead from Wyoming is not happy and we are not able to 
send out the money that Wyoming believes it is entitled to, but 
under the sequester we cannot do that. It is having impacts 
throughout the United States where we have to send out those 
payments to state and local governments, and they will be 
impacted significantly this year.
    Number two, here in Washington and New York and in San 
Francisco and places all around the country where our United 
States Park Police stands up to provide law and order to some 
of the most important icons and most important events in our 
Nation, we are seeing what is happening with the Park Police 
today in a very dramatic fashion. On average, our Park Police 
will have to take 14 days of furlough between now and October 
1. That is 14 days of furlough without pay. The consequence of 
that is whether it is the Statue of Liberty or whether it is 
the 30 million visitors that come to the National Mall every 
year here in Washington or those visitors that go to Gateway, 
to Golden Gate in San Francisco, we are not going to be able to 
provide the same level of security because we will not have the 
same kind of presence that we have had in the past. The Park 
Police, where we have made tremendous headway in recruiting 
some of the most highly talented people, including veterans who 
are returning from Afghanistan and Iraq, into the ranks of the 
United States Park Police, we have canceled the class for this 
fiscal year because we simply cannot afford it.
    Finally, just to show another place where I think the cuts 
have been declining and are having an impact, you have joined 
me in what I think is a moral undertaking in terms of providing 
opportunity for young people to come and work in national parks 
and wildlife refuges and the Bureau of Reclamation and all of 
our facilities around the country. I am very proud of the fact 
that those opportunities have been available because of the 
resources that you have provided. Over 22,000 young people were 
hired last year. This fiscal year, there are going to be 
several thousand less, somewhere between 3,000 and 5,000 fewer 
young people we will be able to hire to help do the great work, 
on the Hudson or the great work at some of the wildlife refuges 
in Oklahoma, wherever we are around the country.
    The sequester, coupled with the $200 million plus cut in 
the CR has made it very difficult for the Department of 
Interior. As I said in my informal meeting with this committee 
a few weeks ago, I think the number one issue that faces my 
successor Sally Jewell is the fiscal crunch that we are having 
to go through at this point in time.
    Finally, just a word about this budget. The President's 
budget is a good one. It is a thoughtful and a balanced one 
from my point of view. We worked very hard in putting it 
together, and if that budget is adopted by the United States 
Congress, it will take us out of the ditch that we find 
ourselves in and put us on a course that is more sustainable to 
fulfill the missions assigned to the Department of the 
Interior.
    Putting it in the macro sense because I know many of you on 
this committee and certainly the staff on this committee know 
the history of the budget of the Department of Interior. But 
right now, the budget we are dealing with today at Interior is 
essentially the budget that funded all of our programs back in 
about 2006 and 2007.
    Consider the growth that has taken place in the United 
States of America from that time until today. If you consider 
how much more activity we are doing with respect to energy, 
both oil and gas as well as renewable, if you think about 
places like the Bakken formation where we are trying to assign 
BLM employees to help in the permitting there in the Dakotas, 
it is tough to deal with the realities of the responsibilities 
that have been placed on the Department of Interior today when 
we are facing such a shortage in terms of the resources now in 
2013.
    The 2014 budget proposal helps us get back on the right 
track and I hope that this committee, Mr. Chairman and ranking 
member, seriously considers the proposal that the President has 
put on the table.
    [The statement of Ken Salazar follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                           BUDGET REDUCTIONS

    Mr. Simpson. Thank you, Mr. Secretary. And since you have 
been frank with us, I will be frank with you, too. I happen to 
agree with you that we got some real challenges and some real 
problems that are being faced because obviously sequestration 
and other things. We continue to focus on cutting spending on 
the \1/3\ of the budget, the discretionary spending that we 
have been cutting. And that seems like all we ever do is just 
keep cutting that \1/3\ of the budget and pretty soon you get 
down to where, under the budget resolution that passed, I do 
not know what our allocation will be at the $966 billion level 
down from $1042 billion but it will not be pretty. And I do not 
know that we can pass a budget at that level.
    And at some point in time--and I would like your thoughts 
on this--we have got to start asking ourselves are we going to 
try to do everything we do in this budget and do--I am trying 
to think of a good word--the word I used you would not want on 
the web--a less-than-good job at doing everything, or do we 
come to the point where we say there are just some things we 
are not going to do and eliminate them and at least concentrate 
on the parts that we do do well? And that is a tough choice.
    When you look at our entire budget, it is not only the 
Department of Interior, it is the Forest Service, it is a lot 
of smaller agencies like the National Endowment for the Arts 
and National Endowment for Humanities, the Woodrow Wilson 
Center, the Holocaust Museum, you can go through all these 
other ones, you could eliminate all those and you are not going 
to get a ton of money to try to fund some of these other 
programs within the Department of Interior, but I think we are 
getting to the point where we are going to have to make that 
kind of determination about where we are headed. Or do we take 
some functions that Department of Interior does and say we are 
just not going to do those anymore? I do not know.
    It is a frustrating situation we find ourselves in and I 
understand the need that we have got to get this budget deficit 
under control. We have got to quit managing the budget deficit 
from appropriation to appropriation and from fiscal crisis to 
fiscal crisis and the debt ceiling to debt ceiling and put 
together something that is in the long-term interest of solving 
this problem so that we can continue to do those things that we 
should do. I do not know that we will get there, at least very 
quickly.
    But I do have some concerns with some of your budget 
obviously. One of the things that happened during the 
consideration of the CR is the Senate decided we did not really 
need to fund wildfires at the level we had put in there, which 
means come fire season we are going to be draining other 
accounts that are already low to fund wildfire suppression. And 
then within the budget we have also reduced the proposed 
hazardous fuels reduction by $87 million, which means we are 
not addressing the long-term problem and trying to reduce 
forest fire costs. What are your thoughts on that?
    Secretary Salazar. First of all, Mr. Chairman, I very much 
agree with your broad assessment of what is happening here with 
this budget and the fiscal debate that is going on, and I think 
that is why it is so important for leaders like yourself and 
others to come together with a long-term solution so we stop 
the stop and start going from one crisis to another as we deal 
with these budgeting issues. It is very difficult to run a 
government and manage operations when you have to go through 
the kind of fiscal times we have been through.
    I also agree that when you are looking at only the 
discretionary part of the budget, it is a very small amount. If 
you look at the Department of Interior's dollars that come from 
the appropriations process, I understand from Pam it is less 
than 1 percent of the entire Federal budget, and yet it has 
this kind of consequence all across America. Dealing with these 
issues in the broad frame which you suggest I think is 
something that very much does have to be done.

                             WILDLAND FIRE

    Specifically with respect to the Wildland Fire Program, I 
am concerned, and that is another issue to watch carefully 
because of the consequence of the sequester and the CR. When we 
just think about last summer and the huge fires in Idaho 
monitored out of Boise, the great fires we saw in almost every 
one of the western States including my home State of Colorado. 
Our expectation is the wildfire season is going to be even 
worse this year than it was last year because of the drought 
conditions that we are seeing throughout that entire area of 
the Rocky Mountains, as well as into the western part of the 
country. The consequence of not having enough money to be able 
to fight those fires and to do the preventive side of things 
with respect to hazardous fuels reduction is something that is 
of great concern. Our hope is that as we move forward we can 
find a way of addressing it.
    Mr. Simpson. What do you do when you've got accounts that 
are already substantially reduced from what they have been in 
the past and all of a sudden you have these major wildfires and 
you have to start draining some of those accounts? What does 
that do to the other functions that the Department of Interior 
has to deal with?
    And one thing you did not mention that also concerns me but 
I am sure it concerns you also is that this committee in a 
bipartisan way has tried to meet our obligations in Indian 
health, and Indian education. And after the CR, frankly, we 
have not been able to fully fund the contract support costs 
that we have an obligation to do and we put money in last 
year's budget for one additional school. Imagine that, one 
additional school in Indian Country, and we had that taken out 
in the CR by the Senate. It is problematic. But it is going to 
have a lasting impact.
    It is easy to vote for a really serious conservative slash-
and-burn budget on the theoretical, but then when you get down 
to individual appropriations and what it means, I do not know 
that we can pass any of our appropriation bills at the level 
that we have set our overall budget at.
    So anyway, Mr. Moran.
    Mr. Moran. Yes, thank you, Mr. Chairman.

                             FRACKING RULE

    In January, BLM pulled back on its proposed rules on 
fracking. It said that it would issue a revised proposal by 
March 31. I do not think we have got that. I believe that the 
deadline has passed. What is the status of that proposed rule? 
And maybe you can just give little insight into how it is going 
to balance protection of the environment with its economic 
growth objectives.
    Secretary Salazar. Congressman Moran, it is a matter we are 
taking very seriously and have been working very hard. We have 
a proposed rule that would address disclosure of chemicals used 
in fracking. It would address wellbore integrity to make sure 
that water quality is protected and would address flow back of 
water into the hydraulic fracking process. We believe hydraulic 
fracking can be done safely but we believe the rules we have 
been working on will allow us to make sure we are fully 
developing the oil and natural gas potential of our public 
lands. The rule is imminent and I expect my successor will be 
announcing it in the very near future.

                          OIL AND GAS REFORMS

    Mr. Moran. Very good. You have got a number of legislative 
proposals for the Federal Oil and Gas Program. Can you just 
very briefly elaborate on those a little bit to see what we 
might be able to reflect in the Interior?
    Secretary Salazar. There are a number of them.
    Mr. Moran. Just the principle.
    Secretary Salazar. The principle essentially that we are 
working on, and is included in the budget, is making sure what 
we are doing is achieving the goal of getting a fair return to 
the taxpayers and doing it in a cost-efficient way. For 
example, one of the components you will find in the budget is 
royalty simplification. We believe that through royalty 
simplification we can go ahead and find significant additional 
dollars that would get a better return back to the taxpayers. 
The principle that is driving the legislative proposals 
relating to oil and gas here are the efforts to try to get a 
fair return to the American taxpayer.
    Mr. Moran. Okay. Mr. Chairman, I know we have got a vote, 
so I do not want to take any longer. We will try to get in as 
many questions as you can. So that will be up to Mr. Calvert.
    Mr. Calvert. Okay. Thank you, Mr. Salazar. And I thank you 
for your service. I appreciate the sacrifice you have gone 
through the last few years. I am sure you are looking forward 
to getting back to Colorado.

                             WILDLAND FIRE

    We mentioned wildfire, and of course, from California we 
have had our share of fires, too. And the hazardous fuel 
program has been, in my opinion, very successful and it is 
cost-effective because for every dollar in reducing these 
hazardous fuels is I think at the end of the game it costs a 
lot less to not have a fire than to have a fire. And we saw 
that in the San Bernardino National Forest in California and 
other places.
    And I see the budget is cutting it by $87 million, which is 
a substantial cut, almost to half of that account. And I know 
the budget is under a lot of stress, but saying that these 
fires cost a lot of money once they start, we have got a fuel 
that has been built up over the years that is all over the 
West, and I hope you take another look at that as we move 
through this process that we can work together on some kind of 
modification on that.

                         NATURAL GAS PRODUCTION

    The other issue, of course, is one of the great things that 
has happened, as you mentioned in your testimony, is natural 
gas production in the United States. And most of that increase, 
as you know, is on private lands. We are still having 
difficulties getting into public lands for natural gas 
production. There are a lot of companies in Europe and Asia 
that quite frankly want to go back to the United States and to 
hire people again because our natural gas prices are now 
significantly lower both in Europe and Asia, chemical 
companies, other types of industries that are dependent on 
natural gas. So I would hope that we could work towards 
streamlining the permit process for natural gas production on 
some of these public properties.
    And with that, I will leave this for your comment.
    Secretary Salazar. If I can I will be very, very quick. One 
of the areas, Congressman Calvert, that we are most proud of is 
the fact we have implemented truly an all-of-the-above energy 
strategy. Even having lived through the oil spill, which you 
lived through with me day by day, our production is up. We have 
more rigs. I think it is 10 more rigs working in the Gulf of 
Mexico today than before the oil spill. We are continuing to 
lease significant acreage on the onshore for both oil and gas 
production. We have the stats here that there are millions and 
millions of acres that are under lease already to oil and gas 
companies. There are about 7,000 permits that oil and gas 
companies have today in hand ready to move forward. We are 
finding ways to streamline the process even further.
    So some of the proposals, and partly in response to 
Congressman Moran's question as well, one of the things we have 
been trying to do is to move to electronic permitting because 
much of the delay is caused in receiving the permit, for both 
offshore as well as onshore, has to do with the paperwork that 
goes back and forth. In today's world of electronic 
communications, we can significantly shorten the amount of time 
it will take to process permits. We hope to be able to 
implement that program under this budget.

                          HYDRAULIC FRACTURING

    Mr. Calvert. And just one last comment--I know you probably 
know \2/3\ of the frackable oil in the United States is located 
in the State of California. It has been there a long time. It 
is heavy crude, expensive to extract. California, you may have 
read, had some financial difficulties and we are hoping that we 
can work with the Department of Interior and others to obtain 
that resource to help the State of California and the country 
forward. So that is the last comment. I thought I would point 
that out.
    Secretary Salazar. Thank you.
    Mr. Simpson. Mrs. Lowey.

                             HERITAGE AREAS

    Mrs. Lowey. Thank you. Mr. Secretary, as you know, the 
National Heritage areas will be funded at $9 million in the 
request, a 50 percent reduction. Earlier this year, the 
National Park Service released a report stating that the 49 
heritage areas contribute $12.9 billion annually to the 
national economy, contribute to 148,000 jobs generating $1.2 
billion in federal tax receipts. In my region, the Hudson River 
Valley heritage area contributes $538 million to the State's 
economy, supports 6,530 jobs, generates $66.6 million in tax 
revenue. Frankly, I was very surprised when I saw that cut. 
Considering the budget's emphasis on supporting another great 
program, the Great Outdoor Initiative, and we are all trying to 
focus on jobs, economic opportunity, if you can explain to us 
why the proposed cut to the program is so drastic, and are you 
as concerned as some of us are about that?
    Secretary Salazar. This is a tough choices budget, and one 
of the things that I did not go into detail on are the hundreds 
of millions of dollars of cuts that we have made to the 
Department of Interior. It includes everything from travel to 
conferences to a whole host of efficiencies that we have been 
able to find. Having said that, when you look at specific 
programs, Congresswoman Lowey, I can tell you that this one for 
me is a very difficult and painful and indeed even a tearful 
one because I have been a champion of National Heritage Areas. 
I was a promoter and successfully completed some when I was a 
U.S. Senator. I do strongly believe the economic statistics 
which you use are absolutely correct.
    Is $9 million enough for what I think are 49 heritage areas 
that we have around the country? The answer to that is 
absolutely not. It is my hope that somehow we can get to a 
broad fiscal agreement that allows us to invest in these kinds 
of economic creators because I have visited many of them and I 
know the impact they have on job creation and local 
communities, as you explained it in your area.
    Mrs. Lowey. Well, I will repeat your statement over and 
over again, so hopefully, we can adjust that because it is a 
real concern to many of us.

                        HURRICANE SANDY RECOVERY

    Another point I just wanted to bring up I have been so 
grateful for all the work that has been done with the Army 
Corps and local communities rebuilding beaches and dunes in 
protected areas. I just wonder if there are any issues or 
disputes over how to proceed. Are you satisfied with the speed 
of recovery? Is there something else we can do? And do you have 
enough money in there to complete the job?
    Secretary Salazar. The answer is yes, we do because of the 
action that you all took to provide the recovery monies for 
Hurricane Sandy. You will be very pleased that the work that 
will happen in New York and along the Atlantic Coast will 
address the kind of improvements that need to be made there.
    I will note only in passing for the entire committee that I 
believe that often in front of this committee I have spoken 
about the Everglades as one of the most significant 
conservation efforts we have going on in America. What we will 
see in the years ahead will be the entire conservation effort 
that is now underway in Jamaica Bay and New York and all along 
the Atlantic Coast.
    In addition to that, Congressman Simpson and members of the 
committee, what will happen in the Gulf of Mexico and the 
restoration of the Gulf and the Mississippi River Delta will 
probably become the most significant conservation restoration 
effort in the history of humankind, and that is because of the 
penalties that will be flowing into conservation as a result of 
the oil spill. The Fish and Wildlife Foundation is now in 
charge, working closely with the States and already have about 
$2.6 billion in the restoration effort. We have another billion 
dollars on early restoration from BP. My expectation is that 
there is a lot more to come.
    Mrs. Lowey. Well, thank you so very much. And thank you 
again, Mr. Chairman and Mr. Ranking, for all your good work.
    Mr. Simpson. Yes, thank you. We have votes on. We have 
about 2 minutes left on the vote so we need to go over and do 
that. Some members have questions, you may want to stay around 
for a little bit.
    Secretary Salazar. For you, Congressman, because it is my 
last hearing I will gladly do whatever you say.
    Mr. Simpson. I do not know what it is but every time you 
come they call votes. We will go vote and be back as quickly as 
possible. Thank you.
    Secretary Salazar. Thank you. Thank you very much.
    [Recess.]

                         WILD HORSES AND BURROS

    Mr. Moran. The budget includes $2 million I think for 
research on wild horses and burros for the National Academy of 
Science to do the study. I really am interested to know what 
the Department's long-term plan to humanely deal with wild 
horses and burros is so that we avoid all the fits and starts 
that have really plagued this program, Mr. Secretary.
    Secretary Salazar. Ranking Member Moran, the work on wild 
horses and burros is something which we have taken very 
seriously from day one. The Bureau of Land Management has put 
out a plan that we continue to implement. We have two north 
stars to guide us with the wild horse and burro plan. The first 
is that horses are treated humanely and we try to do that in 
every way we can; number two, that we are also protecting the 
public range. We have a problem. The problem is the number of 
horses we have in many of the areas of the West are simply too 
many for the amount of forage available. The State of Nevada, 
for example, has about 17,000 more wild horses and burros than 
can be carried in that range. So it is a problem which we have 
been working on for a long time.
    We have implemented programs to put birth-control measures 
in place. Some of them have been effective and what we are 
doing now is also looking at the National Academy of Sciences 
as we have brought them in to help us figure out what the 
solutions are for the long-term. The request in the budget for 
$2 million is to help us with the National Academy of Sciences 
to address the problem for the long-term.
    Mr. Moran. I support that. I sometimes wonder the extent of 
the commitment that BLM shares with that objective, but, you 
know, I will not pursue it. And I am certainly not going to 
give you a hard time on your last day, Mr. Secretary. You have 
been fine but we have had some problems with BLM's commitment 
to that program. We will see what the $2 million study yields 
and I hope it will do something we can all embrace. Some of the 
problem I think is we have severely diminished the rangeland 
that is available, but there is also a population control 
problem. I do not want to see a solution, one of slaughtering 
the young and healthy horses, particularly the wild Mustangs.
    Secretary Salazar. Well, we have, if I may, Ranking Member 
Moran, have made progress. For example, just this last year BLM 
opened a wild horse sanctuary in the State of Wyoming where we 
have several hundred wild horses. We will continue to work very 
hard on it. It is an ongoing issue and one I am certain my 
successor will be dealing with for the next 4 years.
    Mr. Moran. And they will get a gut full of it.
    Mr. Simpson. Do we do any of adoptions out of this program? 
Many?
    Secretary Salazar. We do. Chairman Simpson, the adoption 
program of the BLM is a great program and there are many, many 
horses adopted over time. There has been an issue the last 
couple of years because horse adoptions are down in large part 
because the cost of feed has gone so sky high. When you are 
thinking about adopting a horse the requirements are you have 
to take care of the horse, you have to sign up and make sure 
you have the capacity to take care of the horse, and fewer 
people are signing up in part because of the cost of hay these 
days, as you know in Idaho.

                     SECURE RURAL SCHOOLS AND PILT

    Mr. Simpson. One of the things I heard about this last week 
when I was out in Idaho the last couple weeks visiting with 
some county commissioners are two things that they are really 
concerned about with sequestration--Secure Rural Schools 
funding, which comes out of the Forest Service, and PILT 
payments and the reduction that is going to occur to the 
counties. What is the amount of the reduction going to be?
    Secretary Salazar. Chairman Simpson, the amount is 
significant, and I personally communicated this to the 
governors who were here for the National Association meeting, 
as well as the Western Governors when they met in my office. 
Let me have Rhea or Pam give you the specifics on the numbers.
    Ms. Haze. We will make PILT payments in June. We notified 
the county folks and the governors that the reduction to PILT 
will be 5.1 percent, or about 20 million nationwide, and that 
will be spread across all 1,900 county payments. We are in the 
process of calculating the payments so we do not know precisely 
county by county yet.
    Mr. Simpson. And it will be about 5.1 percent?
    Ms. Haze. Yes.
    Mr. Simpson. And then you throw on top of that a lot of the 
school districts and counties that get Secure Rural Schools 
funding from the Forest Service and that is another cut by 
point something percent or $18 million, I think, nationwide.
    Ms. Haze. For Secure Rural Schools, which BLM pays, the 
total amount was 40 million, that was a reduction of 5.1 
percent or 2 million. We made most of the payment.
    Mr. Simpson. I had thought that BLM did Secure Rural 
Schools, too.
    Ms. Haze. They do. They do the 18 Oregon counties.
    Mr. Simpson. I was thinking of BLM as that rangeland out 
there and Forest Service as that tree land out there but I 
forget that sometimes they intermix.
    Ms. Haze. Yes, we have got a little piece. The Forest 
Service has a much bigger piece.
    Mr. Simpson. Yes. Ms. Pingree. We were just asking some 
questions while we were waiting for people to come back.
    Ms. Pingree. I was finding my way back.
    Well, Secretary Salazar, thank you again. I know we had a 
chance to informally thank you and people have heaped on the 
praise this afternoon, as well they should, but I just wanted 
to once again thank you for your public service, the work you 
have done with us in Maine and the chance to get to know you a 
little bit in this line of work.

                        WILDLIFE REFUGES BUDGET

    I will just ask a couple of questions because there are a 
lot of things I am still getting to know. In looking over the 
budget, one of the things I am interested in is the wildlife 
refuge budgets. We have I think 10 or 11 of them in the State 
of Maine and some of them like the Rachel Carson Refuge are 
spectacular and covering a great part of a fairly populated 
area of our State. So I am grateful that there is a slight 
actual increase in the budget but I know there is a deep level 
of need in there. I am just kind of encouraged but also 
concerned about how are we going to be able to accomplish all 
of our goals? I know we are talking about a lot of areas where 
there are deep cuts but can you give me a little bit of 
background on what we are doing with that and what we are going 
to be able to do with that amount of money?
    Secretary Salazar. Congresswoman, the budget that we have 
put forward for 2014 would get the funding to levels that we 
can live with in the United States Fish and Wildlife Service 
refuge system. The funding cuts we are laboring with right now 
under both sequestration, as well as the Senate CR causes 
significant problems for us. We are having to determine what 
kind of visitation hours, cutbacks, and indeed potential 
closure of some of these wildlife refuges. But the President's 
budget itself as presented to the Congress yesterday will get 
us to a level where we feel comfortable operating the refuge 
system.
    Ms. Pingree. Great. So we will be able to eliminate some of 
the cutbacks in hours and then the security cuts and things 
that are in the sequester?
    Secretary Salazar. Indeed.

                             CLIMATE CHANGE

    Ms. Pingree. Great. Another area that I am interested in 
that you addressed a little bit but also of great concern to us 
in Maine and one of my concerns nationally is the work we are 
doing or not doing on climate change. And I am interested to 
see if you can get me a little background about some of the 
things that USGS is doing around climate change and how we are 
spending our money to work on this issue and some of the things 
I can tell people back home that we are actually trying to do 
to deal with the big challenges that we are already facing, 
particularly given that I represent so many coastal 
communities, and the impact on our fisheries and raising ocean 
levels already being felt.
    Secretary Salazar. It is a great question. I am going to 
have Assistant Secretary Rhea Suh follow-up but let me 
introduce the response.
    Our work at Interior is huge on climate change because we 
really are the ones who are at the front end of some of the 
impacts of climate change, whether it is a drought and dealing 
with the bark beetle issues in places like Idaho and Colorado, 
or whether it is the rising sea levels in places along the 
Atlantic or in the Gulf of Mexico to disappearance of the 
glaciers at Glacier National Park, which will be gone by 2020. 
What is happening to the arctic seas and in the North Slope of 
Alaska where I have spent a lot of time, you see the dramatic 
impacts of climate change on the lands, on wildlife, and on the 
people who live in those areas are being impacted by climate 
change.
    We know, for example, the water supply issues which are so 
important to all of the States that share the Colorado River 
and the Rio Grande River shared by Colorado, New Mexico, and 
Texas that we will see declines in precipitation there that 
will be as high as 20 percent in the years ahead. In fact, in 
the Rio Grande basin today we are seeing the driest period of 
record in 1,000 years.
    Ms. Pingree. Amazing.
    Secretary Salazar. It takes you back to the times when 
people wondered what happened to the Anasazis and what happened 
to those populations who lived at the time.
    So our job at Interior really is to develop the science and 
we do that through our Climate Science Centers through USGS and 
then also working with our other agencies making sure that we 
are implementing the changes needed to be able to adapt to the 
changing climate. Rhea works on these issues so I want her to 
also respond to the question.
    Ms. Suh. Thank you, Mr. Secretary.
    Let me just point out a couple of pieces of the USGS budget 
in particular that are directly applicable to your question. 
The first piece that Secretary Salazar mentioned is a $14.5 
million increase to the WaterSMART program. This is the program 
that enables USGS to look at water availability and to make 
more accurate projections of availability certainly in the 
Western States with respect to climate change but throughout 
the United States in terms of both monitoring of current water 
and projections of fresh water availability moving forward. 
That is one key part of how we are looking at climate change.
    The other, as the Secretary mentioned, is our work in the 
Climate Science Centers that are collaborative with 
universities across the country. These are long-term scientific 
efforts to really try to answer more of the specific questions 
associated with the climate change impacts to the United 
States. What I will say is in addition to the broader science 
and more basic science research that is undertaken by the 
Climate Science Centers, we have robust adaptive management 
efforts happening with all the land management agencies. 
Specifically with the Landscape Conservation Cooperatives, run 
primarily through the Fish and Wildlife Service, we are working 
hard and in a very collaborative manner to try to address the 
very real, very immediate consequences of climate change on the 
landscapes and be proactive about how we reorient our 
management systems around them.
    Ms. Pingree. Great. Well, thank you for that. I know that 
you do not have domain over the fisheries but I just want to 
say quickly I had a group of fishermen and fish scientists in 
my office last week and I represent a lot of coastal 
communities. Lobster fishing is an $80 million business. It is 
a huge impact to our communities and to our fisheries business. 
Given the fact that there has been about 2 or 3 degrees rise in 
the ocean, which I think does not sound like a lot, especially 
since the water in Maine is only about 60 degrees, you know, 
you think it is kind of a good thing, but our lobsters shed 
early last year. It was devastating to the industry because we 
could not process them or sell them.
    This year, it looks like they are already starting to shed, 
which is 5 to 6 months early. People are throwing up their 
hands in confusion not knowing exactly what is going on and how 
could it happen so quickly. But it could potentially have a 
huge impact, as well as ocean acidification, which is already 
impacting our clams' abilities to make shells.
    And, you know, all of these things that I think we keep 
thinking are way out in the future are already about to harm a 
lot of our communities. Some of the southern Maine communities 
are already losing their fisheries altogether because the 
species are moving north. So there are just so many impacts 
that I know some belong in one department, some belong in 
another, but it all has to do with something complicated going 
on with the weather where there is not enough water in some 
places, too much in others, and some of it is just too warm.
    So anyway, I appreciate the work you are doing. Thank you 
for your thoughts and I look forward to continuing work with 
the Department.
    Secretary Salazar. Thank you very much.

                            HAZARDOUS FUELS

    Mr. Simpson. Before I go to Tom, I was just handed a note 
and I would like your response to this. OMB, my favorite 
agency--and you will never have to deal with them again--is 
that a wonderful--you know, this is a good day, is not it? OMB 
told the staff today that there is not enough evidence that 
hazardous fuels removal is effective. Do you agree with this?
    Secretary Salazar. No.
    Mr. Simpson. Okay. I do not know that they have ever been 
out and looked at hazardous fuels reduction on the ground. 
Where they would come up with that analysis is bizarre to me, 
which is why I do not want them managing public lands, which is 
why I do not want them doing anything with the budgets frankly. 
But Tom?
    Mr. Cole. I just want to say for the record it is 
bipartisan. It does not matter who the administration is, it is 
always the same.

                             INDIAN COUNTRY

    I have some questions but I do want in the record to echo 
some of the remarks the chairman and ranking member made. And 
I, Mr. Secretary, just really--I was thinking last night about 
this session and I thought of all the things that you have been 
part of just in Indian Country. I thought of Cobell and I 
thought of tribal law and order and, you know, surface leasing 
where you guys have done some really incredible things and the 
tribal provisions in VAWA and frankly the whole attitude of the 
administration in terms of the Tribal Nations Summit and how it 
reached Indian Country, and it is exceptional.
    I cannot think of another Secretary of the Interior that 
has done more for Indian Country and has done more to empower 
individual Indians and tribal governments. This was never a 
paternalistic type of relationship. It was always about keeping 
the commitments from the federal side and what can we do to try 
and make you more self-sufficient, more self-governing, more 
able to look after your own citizens?
    It has been an extraordinary effort on your part. You have 
had a great team around you--Pam, Rhea, and David are just 
exceptional. You have had two excellent assistant secretaries 
in Larry Echo Hawk and now in Kevin Washburn. And I just want 
to tell you just thanks for an extraordinary job. And I think 
that is a bipartisan sense on this committee, and boy, it is 
certainly felt and known widely in Indian Country. So just 
thank you for what you have done.
    Last point on this, you know, because I always seem to 
focus obviously on the Native American stuff, but that is true 
across the board. Look, I am very aware of the mess you 
inherited, particularly in mineral leasings when you walked in 
the door and some of the shenanigans that had gone on there. 
You guys tackled that professionally and cleaned up a real mess 
for this country that had not happened on your watch for sure. 
And so I think across the board you have been exceptionally 
transparent. You have always been accountable.
    You have worked with this committee, been very forthright 
with us and very professional and, you know, I just think of 
the things you done in Indian Country and then I start thinking 
of all of these other multiple responsibilities that you have. 
To manage 20 percent of the land surface of the United States 
with, as Pam said, that is pretty extraordinary. I will match 
your management record dollars per management achievement with 
anybody else in the Federal Government or anybody else that has 
come before you. So just thank you for an exceptional job.
    Secretary Salazar. If I may, Mr. Chairman, Congressman 
Cole, in all humility, the reality is our progress in all those 
areas has come about in large part because of your personal 
leadership, your attendance at the annual tribal conferences 
that we have had with the President, your leadership on each of 
those pieces of legislation. It frankly would not happen 
without you. And I do think that that whole area is one where 
we as Americans, Democrats and Republicans, can celebrate where 
you showed a tremendous amount of bipartisan cooperation, and I 
think it is a great template for so many other issues that the 
Congress works on all the time. So my hat is off to you. In 
fact, I am probably going to get one of my hats and give it to 
you on the range in Oklahoma.
    Mr. Cole. I tell you what, cowboy hats on Indians is a 
pretty risky deal where I am from. But I would be honored to 
frame it.

                           SUBSURFACE LEASING

    I do have two things and they are not directly budget-
related. I have some more questions if we have more time, but 
there are two areas I would like to get your thoughts on the 
record both for the Congress and for your successor because 
these are areas where, when, I know you have been working on 
subsurface leasing rights for drives where, again, I think you 
have done groundbreaking work on the surface leasing rights. I 
would like sort of a review of that because I do think some of 
our poorest tribes are sitting on resources that, if they can 
develop them, are going to make an enormous difference in the 
lives of their citizens and make a great contribution to the 
country in energy independence and independence in other areas. 
So kind of where are we at on that?

                                CARCIERI

    The second area--and I want to particularly commend Mr. 
Moran and Mr. Simpson on this. We were able because of both of 
them in this committee to deal with Carcieri. Now, we did it in 
a pretty unconventional way. Obviously, we were legislating on 
an appropriations bill. I remember when then-Chairman Moran was 
kind enough that we were over our Indian thing and he said if 
you will propose it, I will do it. I think we should do it but 
I better go call Simpson. And I did and I came back and I said, 
well, I would like to do this. And he said, well, we are 
legislating on an appropriations bill. We do not do that, 
unless we do. I am all for it. And we kind of got out of here 
with a 14-to-0 vote and got through and we got it over to the 
other side.
    But this is an issue that continues to fester. And I know 
that this committee, if it were allowed to do it, would 
probably do exactly what it did before. But I would like your 
thoughts because I am beginning to hear more and more from 
tribes and it is exactly what everybody predicted was going to 
be happening. They are being harassed by state and local 
governments. They are facing incredible litigation. They have 
got property they thought was in trust for decades and people 
are raising issues about. You have got to somehow keep track of 
what are now effectively two different kinds of Indian tribes 
because you can do certain things for some that you cannot do--
at least we have questions as whether you can do for others.
    So your thoughts on not only what we should do--I think we 
would probably agree on that--but particularly for the record 
the kinds of challenges you see for both tribal nations. I 
think it would be helpful for people to hear that.
    Secretary Salazar. Thank you, Congressman Cole. On Carcieri 
it is high priority to get it fixed. The President is strongly 
behind getting it fixed. The Department has specified a 
supportive fix and we appreciate all the efforts you yourself 
personally have exercised along with members of this committee. 
It does create significant problems because you end up having 
to go through an analysis of the tribes. Are you a pre-Carcieri 
tribe or a post-Carcieri tribe and the complexity involved in 
terms of tribal trust lands and it just makes it even more 
difficult. It is something very important, something included 
actually in the 2014 budget. Hopefully, it is something the 
United States Congress will act on as soon as possible.

                           SUBSURFACE LEASING

    On subsurface mineral rights and especially with respect to 
energy, you will find in the budget that there are some 
additional funds requested to be able to do more with energy on 
Indian lands. My own view is informed very much by my multiple 
visits to North Dakota to the Bakken and to the Three 
Affiliated Tribes at Fort Berthold. When I went there 4 years 
ago, it was a dead zone on the reservation because there was no 
development that had occurred. Today, if you go to the Three 
Affiliated Tribes, there is huge economic development that is 
lifting up the tribe to have a great economic future.
    In addition to that, I was at Fort Berthold signing the 
documents that allowed the Three Affiliated Tribes to move 
forward with the first oil and gas refinery I believe in the 
last 40 years, on the mainland of the United States. My 
understanding is that they are getting ready to move forward to 
do groundbreaking on that here in the next several months.
    Away from the Bakken and the Three Affiliated Tribes, I 
believe there is huge potential because of the 54 million acres 
held in trust by the United States on behalf of tribes and how 
we can develop a much more robust energy program for both 
conventional, as well as renewable, is something that is a very 
high priority for me and for Assistant Secretary Washburn. I am 
certain they will continue to be of high priority for my 
successor Sally Jewell. This is a presidential initiative which 
is a high priority to the President. I know it is a high 
priority personally to almost-Secretary Jewell, and I am sure 
she will look forward to working with you, Congressman Cole, to 
also get your ideas.
    This is an area, frankly, where I think we need to do a lot 
more to make sure we are thinking about what is out there. I 
will give you just one example. I will give you lots of 
examples but this is one example. We have been permitting all 
of these renewable energy projects in Nevada, California, and 
Arizona for solar. There was a point about a year-and-a-half 
ago where I asked my staff, well, how come none of these 
renewable energy projects are creating lots of jobs but also 
lots of revenue? Why are they not located on Indian lands given 
the huge acreage of Indian lands and those solar-rich areas of 
the Southwest? We put together a strike team and worked with 
the Moapa Tribe in Nevada and now today we finally are seeing 
the first large-scale commercial utility solar power plant 
springing up out of the deserts on those tribal lands.
    It is an area which will receive continuing attention and 
increased attention from the Department of Interior.
    Mr. Cole. Well, I appreciate the progress that has been 
made. And I have had the opportunity to work with Mr. Price on 
this on a couple of occasions. And just for the record--and I 
just put this out here as a point to look at going forward 
because I actually ran this by tribes and there is tribal 
resistance to this, so it would have to be something that they 
decided to do. But one of the ideas that was put in front of me 
by a gentleman Harold Hamm who helped develop the Bakken shale, 
so he is heavily involved. It is a company called Continental 
Resources based in Oklahoma City, very successful. And he said, 
look, for years we developed right up to Indian land and it is 
just the permitting process which is so much easier on the 
other side. It was just there were a lot of regulations, a lot 
of problems. He said if you asked me, he said, I understand 
this would take a compacting arrangement between the tribe and 
the state but if it is good regulatory policies for the state, 
maybe they should compact and that should be extended in the 
regulatory function.
    Now, there is, as you know, deep suspicion between tribal 
and state governments in these areas and there is a lot of 
resistance to that. But it might be something that we should at 
least give the tribe the option to do and sort of get the feds 
a little bit out of the regulatory area. In Oklahoma we have a 
regulatory regime that obviously covers the state because we 
have no reservations. We are pretty good at it. And I expected 
South Dakota they are probably pretty good at what they do, in 
North Dakota and in these areas. But at least I raise that as 
an idea worth thinking about looking about from a departmental 
standpoint.
    Now, I would always leave the decision in tribal hands. I 
think it is up to them. If they want to maintain what they have 
got, if they want to develop the capacity, which is hard to do 
but some of them want to do that, that is fine by me. Or if 
they wanted to look at this as an option and it might even heal 
some of the historic divisions out there. I do not know. And 
again, I put that forward saying I know it is very 
controversial and that would need to be studied, but I will 
reserve my other questions. And again, thank you very much for 
your service.
    Mr. Simpson. Ms. McCollum.
    Ms. McCollum. Thank you. I too want to thank you for all 
the work that you have done with this committee and thank you 
for fighting a good battle with me that did not come up quite 
the way I had hoped it would and I think the Park Service hoped 
it would in Minnesota. But you were there protecting our 
natural resources all the way and I thank you for your service 
on that.

                             INDIAN COUNTRY

    I want to follow up a little bit about what Mr. Cole said 
about Indian Country. I am so proud of your work, the 
administration's work, your staff's work. You know, I can speak 
easier with the relationship with my 11 tribes in Minnesota and 
I can with some of the tribes I have gotten to know and to work 
in partnership with since being elected to Congress, but it is 
a breath of fresh air that they feel that they have a partner, 
someone that recognizes and appreciates their ability to make 
their own decisions, governing their own people, and, you know, 
really work nation to nation. And that credit goes to the 
person who sets the tone, the President of the United States, 
and then somebody who decided that they were going to also move 
in that direction with great, great clarity and great passion 
and you set the tone for that as well, so thank you for your 
work.
    We are at a crossroads now, especially with sequestration 
with what happened. A lot of the gains had been wiped out, and 
I think part of the reason why sequestration in particular is 
that part of the budget that you oversee for Indian Country, 
and so when decisions are made in the Recovery Act for helping 
at schools and school children, we found the Bureau of Indian 
Affairs' schools not being included in that, because people 
just were not thinking big picture when it comes to Indian 
Country. The unfortunate decision, done with no malice of 
Indian health not being protected in sequestration, impacts aid 
for the children who attend schools, and that is because the 
budget is so spread out. I mean everybody comes to Interior and 
looks at Interior but you are in the Department of Agriculture 
with outreach to Indian Country there. It is in the Department 
of Education, it is in the Department of Health, it is in all 
these other areas.
    And so one of the things that the chairman has been very 
supportive and our staff has been working on with OMB, I might 
add, is what they could do trying to come up with more of a 
unified Indian Country budget so that we are looking at all the 
big pieces at the same time. So any suggestions you might have 
for this committee in either working with other agencies would 
be helpful. So that is one reflection I would like from you.

                               ASIAN CARP

    And the other reflection is, you know, air knows no 
boundaries, water knows no boundaries, and Asian carp does not 
stop to look at boundaries. And they are coming up the 
Mississippi River. There are the other river systems. We are 
worried about them even getting in a treasured natural resource 
between the Mille Lacs Band and the residents of Minnesota with 
walleye fish in Mille Lacs Lake as this moves and spreads 
forward.
    So one of the things that I have been working on and it has 
been bipartisan and it has been a real treasure to get to meet 
people on the other side of the aisle on this is talking about 
Asian carp as an invasive species. If part of it is going to be 
climate change, it is not necessarily going to be an invasive 
species; it is going to be a species moving because of climate 
change. Some of it is going to be us doing better regulation, 
which, with budgets being as tight as they are, ideas that you 
might have for--and here again it is going to be an interagency 
cooperate, U.S. Fish and Wildlife and Army Corps and others, 
some ideas that you could give us on how we should be looking 
to work with you, with other agencies, and then we are going to 
have to work with other appropriations committees as well as 
policy committees to address this. And we have not done a good 
job but both the chairman and ranking member here are very 
interested in how we work forward on that.
    So if you could maybe give me a few reflections. And I 
would love to talk to you about water shortages but I am not 
going to have the opportunity to do this in this limited time. 
So I want to thank the USGS for the great job that they did in 
Minnesota.

                             INDIAN COUNTRY

    Secretary Salazar. Congresswoman McCollum, I very much 
appreciate both questions. First, let me say that I think we 
can do a better job and should take a look at it both with OMB 
and with Departments across the government to see how we can 
come up with a more unified way of explaining the federal 
resources that ultimately go into support of Indian Country. I 
will take that as an assignment for Rhea and Pam--and we are 
working with OMB. Hopefully, we can do a better job.
    One of the things that has come out of our annual tribal 
conferences now with the President is this sense of the whole 
government coming together to talk about tribal issues, so we 
will have the Department of Justice, Department of Health and 
Human Services, all the agencies coming together at the top 
level, and it would be cabinet officers speaking to these 
issues. I will take that as an assignment for what will 
hopefully be a next tribal conference, but that may be one of 
the things we can work on. Certainly, it is the kind of thing 
OMB--and yes, they do some things we might disagree with them. 
In fact, very often, Chairman Simpson, these are some of the 
areas that I know they are very interested in. I think with 
respect to a unified Indian Country budget, there are some 
things we ought to be able to work on there.

                               ASIAN CARP

    On the Asian carp issue, obviously, it is a huge issue. It 
obviously unites the world in a bipartisan way on trying to 
deal with the Asian carp. Our role has been to develop the 
science and to help make sure we do not have a spread of this 
invasive species. According to Pam, we have $5.9 million in the 
Fish and Wildlife Service budget for Asian carp and another $3 
million in USGS. It is a kind of challenge for us that really 
does require, again, the whole government be united in our 
approach to dealing with Asian carp.
    Mr. Simpson. Ms. Herrera Beutler.
    Ms. Herrera Beutler. I want to thank you, Mr. Chairman. I 
do not know anything about Asian carp but I know when I hear 
Asian carp I hear bad stuff is happening. So to your credit it 
is definitely a bipartisan issue. Those of us in Washington 
State who do not--obviously, we have other invasive species 
that I am familiar with but I have coastal properties as well. 
It is funny to me though. I know that there are invasive 
species called Asian carp. Totally off my subject. I do not 
have the same experience that most of the committee does, not 
having worked with you over the past several years and 
everybody has different things to say thank you for. I do thank 
you for your service.

                           DECLINING BUDGETS

    I am learning a bit since I came to Congress I think in 
just about every committee hearing I have been in and I have 
heard about the declining budget situation. It is the reality 
we live in. And one of the things you talked about since 2007, 
I will say I was a little confused because you talked about the 
growth that has taken place since 2007, and in my mind that was 
when everything went down or began. That was the foreshadowing 
of 2008, 2009, 2010, which in my neck of the woods meant that 
we had 10 percent, 20 percent unemployment in all of my 
counties. So all of the budgets in our area shrank 
significantly. And I would expect that the federal budget would 
be in step with that. Now, do I think we are going to balance 
the budget on the discretionary side? No. Do I think we should? 
No. So I agree with that.
    But at this time we are here now we are dealing with what 
we are dealing with right now, and we all hope that we are 
going to generate more job growth in the private sector and 
there will be more tax revenue and so on and so forth and 
things will ease, but this is where we are. And one of the 
things that I think is important in a situation like this and 
every family that I know has had to do is prioritize within 
that budget. And each budget request reflects the priorities of 
the person putting it forward, and I recognize the one word I 
keep hearing from people who are talking about the President's 
budget from the administration is balance. Balance, balance. I 
heard it this morning from Mr. Tidwell. I suspect we will hear 
it from some of the other agency heads who are coming in to 
talk about it.
    And I would say there are some areas that I have some 
concerns. We have any budget that you are putting forward for 
your successor--I do not know quite how to say that--will be 
defending, right?
    Secretary Salazar. It is still my budget for the day.
    Ms. Herrera Beutler. It is still your budget for the rest 
of the day until five o'clock.
    Secretary Salazar. It is actually the President's budget.
    Ms. Herrera Beutler. It is true that you are the one who is 
here to tell us about the positives and why we should fund it, 
right?
    Secretary Salazar. Right.
    Ms. Herrera Beutler. You are the messenger.
    Secretary Salazar. Yes, ma'am.

                               NPS BUDGET

    Ms. Herrera Beutler. With that, there are increases in BLM 
and Fish and Wildlife and National Park Service, all good 
things, important things, but I would argue at a time when we 
have some real challenges--let me put it this way: Park 
Service. Let us talk about this. Now, would we have these huge 
maintenance backlogs if we were increasing some of these land 
purchases? It makes me say wait a minute. Should we be making 
sure that everything that we own right now is best maintained 
before we increase those acquisitions? I will give you an 
example sticking with the land purchase side. We have a 
national park in Fort Vancouver--Vancouver, Washington, and 
southwest Washington around the Columbia River across from 
Portland.
    Secretary Salazar. Um-hum.
    Ms. Herrera Beutler. Hudson's Bay Company. It was the 
beginning of our community. We are having some real challenges 
with this. And I will be meeting with Director Jarvis today and 
then again tomorrow when he comes in. The park itself has 
several areas that it owns that, because it does not have the 
budget, has boarded up these different historic buildings, 
completely boarded up. I mean you cannot go in them, you cannot 
use them. In partnership with the city, the city manages some 
of those historic officers' houses. Those houses are beautiful. 
Because of that partnership, they are able to manage things and 
bring in some additional outside revenue. They are open, they 
are used, they are bringing in revenue, and they are 
maintained. They are all historic buildings. We want to see 
them maintained for the community.
    I guess I would say would the $60-plus million Park Service 
budget, that increase might be better used, rather than buying 
more land, would it not be best used to maybe un-board those 
windows and utilize and open up that property to the public? 
And so in my mind it comes down to a question of priorities and 
I would like to hear your thoughts on increasing what the 
Federal Government owns versus well maintaining to the best of 
your ability with the dollars you have, recognizing they are 
limited, using that money to maintain.
    Secretary Salazar. Congresswoman, I appreciate the question 
very much and let me first say that with respect to the 2006, 
2007 timeframe, frankly, if you look at the budget of the 
Department of Interior from 2000 to 2006, 2007, it was 
atrophying for whatever reason. It just was a very anemic 
budget. So the progress, frankly, that this committee has made 
over the last several years until we got to sequestration and 
to the CR had been getting us back to the point where we could 
live up to the responsibilities that had been assigned to us by 
the history of the United States and the mission given to the 
Department.
    Number two, our approach to the budget at the Department of 
Interior has been to do as much as we can with whatever it is 
we have. What that has meant is, first of all, looking at 
places where we can cut and looking at places where we can be 
more efficient. Right here in this area we have cut about $600 
million in programs that we have looked at where we have made 
determinations that things could be done much more effectively 
than they were in the past. Travel has been significantly cut; 
employees are doing a lot more videoconferencing than they ever 
did before. We have saved millions of dollars in information 
technology. We are leasing less space in order to save now I 
think it is over $150 million. So a whole host of things where 
our approach to budgeting has been let's make sure that we are 
running as lean and mean a machine as we possibly can.
    To your question on acquisitions versus maintenance, I 
would make two points. The first is that the maintenance 
backlog of the United States National Park Service is probably 
north of $9 billion, maybe even north of $10 billion at this 
point in time. The needs are there. They are huge needs. We 
recognize that maintenance is something we need to work on. We 
also, in terms of looking at the reality of what we face, have 
also developed a whole host of public-private partnerships with 
friends groups all around the country. You see the scaffolding 
going up around the Washington Monument. That is the damage 
caused by the earthquake a year or so ago. Part of that cost, 
which is going to be in the neighborhood of $14 million, at 
least this first part of it, is being put up by a private 
donor. So we do a lot of that all over the country.
    New York, even as we implement Hurricane Sandy relief, we 
are doing it hand-in-hand with the City of New York as well as 
the private foundation that support Ellis Island and the Statue 
of Liberty.

                            LAND ACQUISITION

    Now, with respect to land acquisition, I will say it is 
often Republican Members of Congress and the Senate who come to 
me and tell me there are places like the Grand Teton National 
Park where we have the land holdings that are about ready to be 
developed; they want to protect these crown jewels of America 
forever. So you start seeing then where it is that land 
acquisition does become important with respect to land holdings 
and buffer areas and a whole host of other things.
    My own view--and you and I may frankly disagree on this--is 
we are in a position today in 2013 where we are getting ready 
to celebrate the Centennial of the National Park Service. And I 
would expect that this committee will play a key role in the 
celebration of the Centennial. Ken Burns and Dayton Duncan were 
putting together their documentary 2 years ago and called the 
National Parks: America's Best Idea. You have to think about 
the economics that come from tourism from all over the world as 
people come to the United States of America to visit the icons 
of Vancouver or Seattle or New York or Idaho, and we have the 
magnets, the assets of America. How we take care of them is 
important. I would hope that we continue to fund in an 
appropriate way the needs of our national----
    Ms. Herrera Beutler. Let me jump in on that last point 
because I agree 100 percent with you that these are treasures, 
and where we can pull in these public-private partnerships, it 
is a win-win. You know, we have declining budgets. We have got 
groups who are vested in these--community groups are vested in 
a certain area and say, yeah, we want to raise money into this 
and help keep it as a public resource that is open and 
available. I agree with you 100 percent.
    I wish I could bottle that little piece that you are saying 
and I probably will take it into my meeting today and then 
tomorrow with Director Jarvis because our exact issue is we 
have a public-private partnership that is being for all intents 
and purposes shut down by the National Park Service over what I 
think has become--I do not know if it is a personality complex, 
but they have the law on their side and so my community, with 
this public-private partnership that has operated for almost--I 
want to say the best part of 30 years where they have raised 
money into it and the Park service has owned it and there has 
been a great collaboration, is completely shutting down and we 
now have closed buildings.
    So exactly what you said, I am with you on. I think our 
challenge is there are different places where I am going to be 
perhaps quoting you a little bit later.
    Secretary Salazar. The great part of this job is that it 
takes me from sea to shining sea and out into the ocean so 
often, and there are no doubt problems we have in some places 
that sometimes with some leadership we can figure out a way of 
resolving a private-public partnership, and I am certain that 
Director Jarvis would be more than happy to sit down with you 
and talk about the specifics of the park.
    Ms. Herrera Beutler. Thank you. Thank you.
    Mr. Simpson. Before I go to Mr. Valadao, Tom is going to 
take over for me. I have to actually go over to the doctor so I 
have got to leave before you do today. I have got one of those 
doctor's appointments where he only comes once a month. But I 
just again wanted to thank you for your service. I look forward 
to seeing you out in Colorado when I come through there, and 
when you see John, tell him hi from all of us and we really 
miss him.
    Secretary Salazar. Chairman Simpson, it has simply been an 
honor. Thank you.
    Mr. Simpson. It is been an honor for me.
    Secretary Salazar. Thank you.
    Mr. Simpson. Thank you.
    Mr. Valadao. Thank you, Mr. Chair, Mr. Secretary.

                       SCIENCE IN DECISION-MAKING

    The administration has been ardent about science leading 
decision-making but on many issues science has failed to 
deliver a clear answer and decision-making has been stymied. 
How would you propose to make decisions in the face of 
scientific uncertainty when maintaining the status quo is 
simply untenable such as in the California Bay Delta? And what 
do you see is the potential for problem-solving through 
scientific collaboration between federal agencies, state 
agencies, and other regional or local interests with the 
appropriate expertise?
    Secretary Salazar. Congressman Valadao, first, let me thank 
you for the question and say that in my view the Department of 
Interior has upheld the principal and the goal of scientific 
integrity. During my time as Secretary of Interior, the 
decisions we make oftentimes are not popular. Sometimes, 
neither the left nor the right agree with us, they will 
disagree with us, but I will tell them what has guided us is 
the best science and the best information.
    The California Bay-Delta and the water issues and the 
science issues you raise are very important issues. I would say 
that in my time as Secretary, there is no single water issue we 
have spent more time on trying to untie the Gordian Knot of the 
California Bay-Delta and the water issues which have been such 
a problem in California. Governor Schwarzenegger and now 
Governor Brown have worked very closely with my Deputy 
Secretary David Hayes along with Mike Connor, the head of the 
Bureau of Reclamation, to see how we can move forward on a plan 
that ultimately will bring about the equal goals that were 
articulated several years ago with the Bay-Delta. One is to 
provide a certainty for water supply, and the second is to 
address the restoration and conservation needs of the San 
Francisco Bay-Delta.
    As that process moves forward and the contractors who have 
been working with the State of California and with us as that 
whole process moves forward, they will be guided by the science 
in terms of what is probably one of the most important 
infrastructure decisions that will have to be made relative to 
the conveyance system that is being considered right now. It 
will be one of the greatest infrastructure projects, one of the 
most significant ones in the country if it is to pass. But the 
science will guide where ultimately that project will go.
    Mr. Valadao. If I may, one more?
    Mr. Cole [presiding]. Yes.

                                LAND USE

    Mr. Valadao. While I understand the resource protection is 
a priority, Interior must strike a balance when determining 
land use in obviously areas of public claims that are suitable 
for use. What have you done to ensure that this important form 
of recreation retains appropriate access and what are you doing 
to advise your successor to promote access for the millions of 
Americans who wish to participate in motorized recreation?
    Secretary Salazar. So motorized recreation is something 
that is very important. It is part of what we support in many 
of the places of the nearly 500 million acres which we manage. 
I myself visited the Imperial Sand Dunes in your State, not in 
your district but in Southern California, where I spent a lot 
of time with the off-road vehicle, four-wheel community. It is 
something we support and we believe it ought to be done in the 
right places, and there are a lot of jobs that actually come 
from the off-road vehicle industry and we very much appreciate 
the contribution and the opportunity that we provide.
    Mr. Cole. The gentleman from Georgia, Mr. Graves.
    Mr. Graves. Thank you, Mr. Chairman.

                           OFF ROAD VEHICLES

    Mr. Secretary, thank you. And just to follow up on Mr. 
Valadao, I also offer my support for the use of off-road or 
recreational vehicles in public lands. You are right. So many 
families enjoy the recreation opportunities, and oftentimes the 
only places they have to go are public lands, so I appreciate 
your good counsel to your successor in continuing that 
opportunity or even expanding those opportunities.

              ATLANTIC SEISMIC ENVIRONMENTAL IMPACT STUDY

    A couple of questions I had, one, there were a group of 
members including myself that sent a letter to you in regards 
to the Atlantic Seismic Environmental Impact Study, and I do 
not know if we have yet got the response, but I know that that 
study was long overdue and I just wanted to see if you had any 
update before your departure on a potential timeline of when we 
might know the results.
    Secretary Salazar. Congressman Graves, I would be happy to 
get back to you with the specific timing. I do not have that 
with me.
    [The information follows:]

          Atlantic Programmatic Environmental Impact Statement

    The Bureau of Ocean Energy Management is evaluating the potential 
effects of seismic and other geological and geophysical activities in 
the Mid and South Atlantic, as well as mitigation and monitoring 
measures that will reduce or eliminate potential impacts. The final 
Programmatic Environmental Impact Statement is expected to be completed 
later this year.

    Mr. Graves. Okay.
    Secretary Salazar. I will articulate what I think is 
probably the more important thing what our policy objective is 
with the programmatic environmental impact statement on the 
Atlantic, and that is the President, as part of our all-of-the-
above energy strategy, has felt that it is important for us to 
know what the resources are we have, including those resources 
on the Outer Continental Shelf. It is why even along the 
Atlantic we have been gathering this geologic information that 
will allow us to make informed decisions about the future of 
the OCS.
    Mr. Graves. Okay. So you suspect that that may be evident, 
I guess, the outcome of that at some point, the report----
    Secretary Salazar. It should be because I actually went 
somewhere I think in Virginia to announce that, and I think 
that was a year or so ago, so we will get back to you on the 
timing of it.

                        OIL AND GAS DEVELOPMENT

    Mr. Graves. Okay. Thank you. And then one more, Mr. 
Chairman, if you do not mind. Just along the same lines, it 
seems like with all the new technology that has come about with 
exploration for new energy and then so much of it being in the 
private sector on private lands, it seems to be that Georgia is 
one of the States that folks are looking at for opportunities 
in the energy field, whether it be shale oil gas, whatever the 
component might be. From a permitting perspective or from a 
forecasting perspective, how do you see it? And being from 
Georgia that is why I have the interest. How do you see it 
impacting--and previously, maybe were not even considered or 
there were no exploration opportunities, but currently in 
looking forward do you see more opportunities in states that 
maybe had not been paid attention to previously?
    Secretary Salazar. I do. I think one of the things you will 
see is that even in the eastern states where the Bureau of Land 
Management controls the mineral estate, in some places, the 
surface estate, we are holding oil and gas lease auctions. I 
think what will happen is the technology unfolds as we continue 
to learn more as we have in the last 4 or 5 years that you will 
see many of these lands coming into availability for oil and 
gas production. We did it 3 years ago. People did not think too 
much about the Bakken and what would happen in the Dakotas and 
Montana, and yet today, you see what is happening there. One of 
the things I am very proud of and I think the United States 
should be very proud of is the fact we are now importing less 
than 45 percent--in fact, the last figure I saw was about 41 
percent of our oil from foreign countries. When I came to the 
Senate in 2005 I remember giving a speech on the floor of the 
U.S. Senate. At that time we were north of 60 and on our way to 
70 percent.
    We have come a long way, and in large part, it has happened 
because of the technological innovations pushed by industry, 
which have included horizontal drilling, which is doing some 
incredible things in the country today that are good for the 
environment as well as good as a tax resource. Second, the 
process of hydraulic fracturing is making a significant amount 
of the resource available today that was not available even 5, 
6 years ago.
    Mr. Graves. So in the State of Georgia do you see 
opportunity there? Have you seen some new developments on or 
offshore?
    Secretary Salazar. Frankly, I would have to get back to you 
on that with respect specifically to the State of Georgia. I do 
not know your State on this issue frankly as well as I know 
most of the other States.
    [The information follows:]

             Oil and Gas Potential in the State of Georgia

    The Bureau of Land Management is not able to provide to a forecast 
of oil and gas development potential in Georgia. There are little or no 
federal minerals in Georgia and there is no federal oil and gas 
development there. The Bureau of Land Management does not develop or 
monitor forecasts for oil and gas resource development on fee or State 
lands or mineral estate.

    Mr. Graves. Sure. Thank you very much. Thank you, Mr. 
Chairman.
    Mr. Cole. I am going to get everybody one quick round. You 
have been very generous with your time and waited on us. I have 
been so nice. I have to quit being nice here. I do have a 
question I would like you to address or a couple actually. One, 
I was looking at the administration budget and I noticed we 
have an overall 5 percent request for increase. Of course, I 
immediately go down to the BIA and it is 1.2. So I would like 
to get some of the thinking behind that because I always argue 
that this part of the budget where we are really actually 
directly impacting people's lives in a very direct way.

                             INDIAN SCHOOLS

    The second one is one that I know causes the chairman agree 
deal of concern and this committee a great deal of concern, and 
we have had some great off-the-record discussions about the 
challenges here, so I am not trying to put you on a hard spot, 
but I think probably in a bipartisan sense we are disappointed 
at the construction budget that is being proposed for Indian 
schools. We are in the middle of a very large expansion and 
modernization of schools for military kids, another place where 
the Federal Government has a direct responsibility for the 
facilities. I know our former chairman of this committee, Norm 
Dicks, was a major player. Now, I was, too. I have military 
schools being built in my area. I think those kids are a 
special responsibility of the Federal Government.
    I feel the same way, and I know you do too, about Native 
American children, and yet there seems to be two different 
approaches by the administration. We have a significant 
investment in schools infrastructure for the children of 
military families. Last 3 years in a row, you know, the 
Department of Interior has not proposed much in the way of 
additional construction. Now, we may have this, as we have 
talked before, in the wrong area of the budget. There is a lot 
to talk about here so I am again not trying to be critical, but 
we do seem to have a disparity of interest and I would like 
your thoughts on that.
    Secretary Salazar. Well, first, I am going to ask the 
Assistant Secretary to comment a little bit specifically on the 
schools in the overall BIA budget. I will say this: we have 
done everything we can, Congressman Cole, to protect the 
budgets for the impact on Native Americans in Interior, and 
frankly, I think if you look at a composite of the last 4 
years, the hits have been taken by other parts of the Interior 
budget because this is an area which, frankly, effects the most 
impoverished and the most in need people in our entire Nation.
    This budget, in particular the 1.2 percent increase you 
talk about with BIA, you know, it is a tough, tough fiscal 
climate that we are navigating. It is not what I would like to 
have in the budget in an ideal world, and if I had the purse 
strings with respect to schools, I can tell you that we would 
do a lot more in terms of construction. We did, because of the 
Recovery program, put significant investments in the schools in 
Indian Country, but I know there is additional work to do and I 
would like the Assistant Secretary to comment on it.
    Mr. Cole. Absolutely.
    Ms. Suh. Thank you, Mr. Secretary. So maybe just start off 
with the BIE schools issue. You are correct. The 2014 budget 
does not include any new funding for construction, but as you 
know, over the last 10 years, particularly as it relates to the 
Recovery Act, BIA was able to spend over $2 billion on 
construction, specifically school construction for construction 
improvement and repair. There was quite a big opportunity. That 
certainly does not mean there is not existing need and existing 
opportunity, and we very much appreciate the reminder of the 
importance of this.

                         INDIAN AFFAIRS BUDGET

    If I could just remark more generally on both the 
Department of Interior's perspective with respect to BIE and 
BIA budgets. There probably has not been a greater emphasis on 
any other bureau than those two bureaus, at least during my 
tenure, in ensuring that the basic services that we provide 
Indian Country are upheld and are strengthened. While we may 
not have been able to increase the budget as significantly as 
we may have hoped, the 2014 budget still represents an 
increase. I think it is about a $32 million increase overall, 
and again, just to underscore, I think you have all of our very 
strong personal commitments and I believe the commitment of the 
incoming Secretary of the Interior around these issues and 
fundamentally around adequate budgets for all of these issues.
    Mr. Cole. Well, again, I do not want any questions I have 
raised to leave any doubt about my appreciation for what you 
have done because I think it has been exceptional and it has 
been a great bipartisan partnership in this committee and then 
a partnership between this committee and the administration. I 
am sure when Mr. Moran headed this committee and it is true 
when Mr. Simpson had that we fight about a lot of other stuff; 
we do not fight about Indians very much except we both usually 
fight for a little bit more. And we appreciate again all that 
you have done, Mr. Secretary.
    Mr. Moran.

                         OIL AND GAS PRODUCTION

    Mr. Moran. Thank you, Mr. Chairman. I do not have a 
question but I do have a fact that I want to put on the record 
thanks to Rick Healy, and that is that we are producing more 
oil and gas on public lands now than we were during the last 
years of the Bush Administration. But what is really 
interesting is that as production has gone up, litigation has 
gone down because the Interior Department is making better and 
smarter decisions on leasing and issuing drilling permits. So 
that is a real feather in your cap and it should be more 
acknowledged than I suspect that it is. So thank you for that. 
Well done.
    Secretary Salazar. Thank you.
    Mr. Moran. That is all I have to say, Mr. Chair.
    Mr. Cole. Thank you, Ranking Member. Mr. Graves, do you 
have any further questions?
    Mr. Graves. No.
    Mr. Cole. Ms. Pingree.
    Ms. Pingree. No, thank you very much.
    Mr. Cole. Well, I am glad I got to be in the chair in your 
very last grilling here, and again, I think I have expressed 
the sentiments and you certainly know that from the comments 
here today of all concerned. Just thank you for your superb 
tenure as Secretary of the Interior on a bipartisan basis. You 
have been terrific to work with. You have got a lot to be proud 
of and what was then an already extraordinarily distinguished 
public career before this. But I hope it is not a capstone. I 
hope you go do something else and I suspect you will. But 
regardless, this will always be something in your professional 
life that I hope you look back with as much pride and 
satisfaction for your performance as all of us have and having 
had the opportunity to work with you. So thank you, Mr. 
Secretary.
    Secretary Salazar. Chairman Cole and Congressman Moran, 
Congresswoman Pingree, and Congressman Graves and to all the 
members, I want to say if I may, just two final things because 
this will be my last official act and my last official 
statement as Secretary of the Interior. The first, I want to 
say to your staff on both sides that they are terrific. David 
does a wonderful job for this Committee. And right at his side 
with Rick and all the rest of the team, Darren and Erica and 
Missy and everybody who was part of this team, we have very 
much enjoyed the relationship, the work you do with Assistant 
Secretary Rhea Suh and with Pam Haze and our entire budget 
staff from the Department of Interior, thank you to your staff.
    And second, to all of you. I do think that somehow all the 
rest of the Congress should watch this Committee in action 
because you do it right and you do it together. You stand up 
for first Americans in a way as you have described, in a way 
that does not happen as often as it should here. So thank you 
very much for your service and I hope to be able to continue to 
see you never as a lobbyist but always as a friend. Thank you.
    Mr. Cole. With that, we are adjourned.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                               I N D E X

                              ----------                              

                   Indian Education Oversight Hearing
               February 27, 2013, 10:00 AM, B-308 Rayburn

                                                                   Page
Administrative Costs.............................................   172
Beatrice Raffert School..........................................    54
BIE School Construction..........................................    55
BIE School Governance............................................    52
Broken Promises, Broken Schools: Report ot the No Child Left 
  Behind School Facilities and Construction Negotiated Rulemaking 
  Committee......................................................    79
Capital Vs. Operating Budget.....................................    51
Communication between BIE and DASM...............................    64
Consideration of Department of Education Role....................    44
Cooperation between BIE Schools and TCUS.........................    59
Coordination Challenges..........................................   174
DOD Schools......................................................    53
Expansion of Grades at Existing Schools..........................    57
Expectations for Indian Country..................................    43
Federal Collaboration............................................    60
Federal Trust Responsibilities...................................    63
Funding Allocation...............................................   172
Guns in Indian Schools...........................................    56
Indian and Non-Indian Educational Spending.......................    49
Joint Ventures...................................................    60
Legislative Language Proposals...................................    58
Opening Remarks of Assistant Secretary Washburn..................     4
Opening Remarks of Chairman Simpson..............................1, 168
Opening Remarks of Congresswoman McCollum........................     3
Opening Remarks of Dr. Heather Shotton...........................    35
Opening Remarks of Mr. George Scott..............................    17
Questions for the Record for Assistant Secretary Washburn from 
  Chairman Simpson...............................................    65
Questions for the Record for Assistant Secretary Washburn from 
  Mr. Valadao....................................................    77
Questions for the Record for Assistant Secretary Washburn from 
  Ms. McCollum...................................................    76
Questions for the Record for Dr. Shotton from Chairman Simpson...   168
Questions for the Record for Dr. Shotton from Mr. Valadao........   174
Questions for the Record for Mr. Scott from Chairman Simpson.....   160
Questions for the Record for Mr. Scott from Mr. Valadao..........   167
School Condition.................................................   168
School Construction and Maintenance..............................   169
Sequestration and Indian Education...............................    46
Tribal Consultation, Replacement School Construction.............    47

             Water Infrastructure Finance Oversight Hearing
                 March 13, 2013, 9:30 AM, B-308 Rayburn

Additional Subsidization.........................................   362
Asset Management...............................................261, 364
Chesapeake Bay Restoration.......................................   266
Clean Water Act Regulations......................................   267
Clean Water Infrastructure Funding Backlog.......................   259
Cost of Regulations..............................................   351
Development of the Needs Assessment..............................   353
Disaster Relief..................................................   263
Financing Tools..................................................   336
Funding Arrangements.............................................   267
Future Water Infrastructure Issues...............................   341
GAP Analysis...................................................346, 360
Green Infrastructure.............................................   265
Opening Remarks of Chairman Simpson..............................   217
Opening Remarks of Mr. Alfredo Gomez.............................   233
Opening Remarks of Mr. Aurel Arndt...............................   272
Opening Remarks of Mr. Benjamin Grumbles.........................   284
Opening Remarks of Mr. Howard Neukrug............................   294
Opening Remarks of Mr. Jeffry Sterba.............................   305
Opening Remarks of Mr. Mike Shapiro..............................   221
Opening Remarks of Mr. Moran.....................................   219
Opening Remarks of Mr. Thad Wilson...............................   317
Private Activity Bonds..........................371, 380, 387, 397, 404
Public-Private Partnerships...........362, 369, 378, 385, 388, 395, 403
Questions for the Record for Mr. Arndt from Chairman Simpson.....   365
Questions for the Record for Mr. Gomez from Chairman Simpson.....   357
Questions for the Record for Mr. Grumbles from Chairman Simpson..   399
Questions for the Record for Mr. Neukrug from Chairman Simpson...   372
Questions for the Record for Mr. Shapiro from Chairman Simpson...   346
Questions for the Record for Mr. Shapiro from Mr. Valadao........   354
Questions for the Record for Mr. Shapiro from Ms. Pingree........   356
Questions for the Record for Mr. Sterba from Chairman Simpson....   381
Questions for the Record for Mr. Sterba from Mr. Rogers..........   388
Questions for the Record for Mr. Wilson from Chairman Simpson....   391
Reducing Costs/New Technologies.......346, 357, 365, 372, 381, 391, 399
Regulatory Costs.................................................   263
Rural Community Water Infrastructure.............................   270
Rural Water Coordination.........................................   360
State Private Equity Bonds.......................................   336
Top Water Issue for your Organization...........368, 378, 384, 394, 403
Water Infrastructure Management..................................   339
What should be Congress' Top Priority?..........367, 376, 384, 393, 402

                       Oversight of Indian Health
                 March 19, 2013, 1:30 PM, B-308 Rayburn

Affordable Care Act..............................................   428
Appointments.....................................................   442
Catastrophic Health Emergency Fund...............................   500
Charitable Physician Services....................................   522
CHEF and CHS.....................................................   417
Children.............................................494, 517, 530, 536
Contract Health Services.......................................489, 511
Dental Health.............................................497, 518, 536
Dentistry Challenges.............................................   477
Domestic Violence Prevention...................................427, 502
Educational Programs.............................................   442
Emerging Issues......................................499, 520, 533, 538
Forward Funding and Sequestration................................   422
Funding and Program Performance...........................486, 508, 525
Funding Barriers.................................................   479
Genetics and Disease.............................................   421
GPRA.............................................................   418
Health Disparities...................................482, 505, 523, 534
Health Education at Reservation Schools..........................   420
Healthcare Professions...........................................   477
HHS Initiatives..................................................   443
IHS Funding Comparison Chart and CSC.............................   423
Indian Health Funding............................................   478
Indian Health Service Mortality Disparity Table..................   504
Joint Venture....................................................   424
Loan Repayment...................................................   444
Opening Remarks of Chairman Simpson..............................   405
Opening Remarks of Dr. Henry Fields..............................   467
Opening Remarks of Dr. Kelly Moore...............................   430
Opening Remarks of Dr. Yvette Roubideaux.........................   407
Opening Remarks of Mr. D'Shane Barnett...........................   459
Opening Remarks of Mr. Moran.....................................   406
Opening Remarks of Mr. Rex Lee Jim...............................   445
Personal Property................................................   501
Questions for the Record for Dr. Roubideaux from Chairman Simpson   482
Questions for the Record for Dr. Roubideaux from Mr. Valadao.....   500
Questions for the Record for Dr. Fields from Chairman Simpson....   534
Questions for the Record for Mr. Barnett from Chairman Simpson...   523
Questions for the Record for Mr. Jim from Chairman Simpson.......   505
Questions for the Record for Mr. Jim from Mr. Valadao............   522
Recruitment and Retention........................................   425
Reinstate Health Research and Monitoring Trends..................   428
School Assault and Domestic Violence Prevention..................   478
Sequestration.............................................488, 510, 526
Sequestration Percentage.........................................   426
Staff Vacancies................................................491, 514
Successful Programs..............................................   443
Teen Suicide..............................................493, 517, 532
Underfunded IHCIA Provisions.....................................   427
Unfiled Positions................................................   419
Urban Indian Health.......................................492, 516, 527
Veterans Affairs.................................................   420
Water Sanitation.................................................   420
YRTC in California...............................................   421

             Department of the Interior 2014 Budget Request
                     April 11, 2013 Rayburn, B-308

Asian Carp.....................................................599, 600
Atlantic Seismic Environmental Impact Statement..................   606
Atlantic Seismic Environmental Impact Study......................   605
BIA/BIE Construction.............................................   613
Budget Reductions................................................   586
Carcieri.........................................................   596
Climate Change...................................................   593
Declining Budgets................................................   601
Delta Bay Conservation Plan......................................   615
Fracking Rule....................................................   587
Hazardous Fuels..................................................   594
Heritage Areas...................................................   589
Hurricane Sandy Recovery.........................................   589
Hydraulic Fracturing.............................................   588
Hydraulic Fracturing/Energy......................................   611
Indian Affairs Budget............................................   608
Indian Country.................................................595, 598
Indian Schools...................................................   607
Land Acquisition.................................................   603
Land Use.........................................................   604
Natural Gas Production...........................................   588
NPS Budget.......................................................   601
Off Road Vehicles................................................   605
Off-highway Vehicle Recreation...................................   616
Oil and Gas Development..........................................   606
Oil and Gas Potential in the State of Florida....................   607
Oil and Gas Production...........................................   609
Oil and Gas Reforms..............................................   587
Opening Remarks of Chairman Simpson..............................   551
Opening Remarks of Mr. Moran.....................................   551
Opening Remarks of Mrs. Lowey....................................   552
Opening Remarks of Secretary Salazar.............................   553
Questions for the Record from Mr. Cole...........................   611
Questions for the Record from Mr. Valadao........................   615
Science in Decision-Making.......................................   604
Secure Rural Schools and PILT....................................   591
Subsurface Leasing.............................................596, 597
Wild Horses and Burros...........................................   600
Wildland Fire....................................................   586
Wildland Fire....................................................   587
Wildlife Refuges Budget..........................................   592

                                  
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