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


 
   FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR 2015 

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                     ONE HUNDRED THIRTEENTH CONGRESS
                             SECOND SESSION
                                ________

                         U.S. GOVERNMENT PRINTING OFFICE 

88-211 PDF                       WASHINGTON : 2014



       SUBCOMMITTEE ON FINANCIAL SERVICES AND GENERAL GOVERNMENT 
                             APPROPRIATIONS

                    ANDER CRENSHAW, Florida, Chairman
 MARIO DIAZ-BALART, Florida            JOSE E. SERRANO, New York
 TOM GRAVES, Georgia                   MIKE QUIGLEY, Illinois
 KEVIN YODER, Kansas                   MARCY KAPTUR, Ohio
 STEVE WOMACK, Arkansas                ED PASTOR, Arizona
 JAIME HERRERA BEUTLER, Washington
 MARK E. AMODEI, Nevada     

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.

              John Martens, Winnie Chang, Kelly Hitchcock,
                     Ariana Sarar, and Amy Cushing,
                           Subcommittee Staff

                                ________

                                 PART 6
                                                                   Page
 Office of National Drug Control Policy...........................    1
 The Judiciary Budget.............................................   61
 Small Business Administration....................................  159
 General Services Administration..................................  205

                                ________

         Printed for the use of the Committee on Appropriations

                     U.S. GOVERNMENT PRINTING OFFICE

 88-211                     WASHINGTON : 2014




                      COMMITTEE ON APPROPRIATIONS

                    HAROLD ROGERS, Kentucky, Chairman

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

               William E. Smith, Clerk and Staff Director

                                  (ii)



   FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR 2015

                              ----------                              

                                            Monday, March 24, 2014.

                 OFFICE OF NATIONAL DRUG CONTROL POLICY

                                WITNESS

MICHAEL P. BOTTICELLI, ACTING DIRECTOR, OFFICE OF NATIONAL DRUG CONTROL 
    POLICY
    Mr. Crenshaw. The subcommittee will come to order. I want 
to welcome our witness Acting Director Botticelli. This is the 
first time he has appeared before the Appropriations Committee, 
and I appreciate you coming here to testify, and thank you for 
your service.
    The Office of National Drug Control Policy is charged with 
the extremely difficult task of coordinating multiple Federal 
agencies' efforts to address many different drug-related issues 
at home and abroad. In addition, you administer some of the 
very effective drug-prevention and enforcement grant programs, 
and today the committee will examine the Office of National 
Drug Control Policy's fiscal year 2015 budget request, along 
with your efforts to develop and coordinate our Nation's drug 
policies.
    The budget request submitted by the President has some 
interesting priorities within this subcommittee's jurisdiction. 
While the administration is requesting an increase of over $1 
billion for the IRS and an increase of over $500 million for 
the GSA, the administration has recommended a decrease below 
enacted fiscal year 2014 for the High Intensity Drug 
Trafficking Areas program and the Drug-Free Communities 
program.
    Now, both these are drug-prevention and enforcement 
programs. They are to mobilize communities and increase 
collaboration among community law enforcement, and I can say 
that specifically they have a really good impact in my district 
down in Jacksonville, Florida. And so I would typically applaud 
proposed reductions in Federal spending, but it makes me wonder 
why these drug-prevention and enforcement programs are being 
reduced, because recently the Attorney General announced that 
heroin overdoses are, he said, quote, ``urgent and growing 
public health crisis,'' end quote. States are telling our 
children that marijuana use is okay by decriminalizing 
recreational marijuana. Our Nation's problems with cocaine, 
meth and prescription drugs certainly haven't gone down any. 
And so I find it a little hard to believe that the 
administration feels that efforts to keep drugs away from our 
children and out of our communities should be reduced, while 
proposing increases for the bureaucracy of the IRS and deciding 
to build new Federal buildings.
    As the agency that is charged with developing our nation's 
drug policies, you have the difficult assignment of ensuring 
that not only do the Department of State, the Department of 
Defense, the Department of Justice, the Department of Homeland 
Security, the Department of Health and Human Services and 
numerous other agencies are all working in a coordinated manner 
to address our highest-priority drug concerns, and I look 
forward to your testimony today on how the Office of National 
Drug Control Policy is leading these efforts on this 
coordinated role.
    More specifically, we have heard concerns that the Food and 
Drug Administration doesn't always take law enforcement's 
concerns with prescription drug abuse into account when 
approving new prescription pain medication. We have also heard 
concerns that reductions in military spending could 
significantly reduce counternarcotics activities in Latin 
America, and that increases the availability of illegal drugs 
in the United States. And I hope to hear in your testimony 
today what you all are doing about some of these major 
concerns.
    Our Nation continues to fight a drug problem that takes 
lives, brings about violence, and harms our communities and 
families, and I know that you and your staff are working hard 
to keep our country safe and healthy.
    So once again, Acting Director Botticelli, welcome. I look 
forward to your testimony.
    And with that, I would like to turn the microphone over to 
my colleague Ranking Member Serrano.
    Mr. Serrano. Thank you, Mr. Chairman. I also would like to 
join you in welcoming the Acting Director of National Drug 
Control Policy, Michael Botticelli. I love that name. He used 
to be a second baseman for the Boston Red Sox.
    The Office of National Drug Control Policy's mission places 
it at the forefront of Federal drug policy and the intersection 
of several of Federal agencies, such as the Department of 
Justice, Transportation, State and the Treasury.
    The fiscal year 2015 budget request for ONDCP is 
approximately $311 million, a decrease of $55 million from the 
fiscal year 2014 funding level. This will hopefully be targeted 
towards improved coordination and oversight of interagency drug 
control programs and policies, something I continue to be 
concerned about with regards to the agency. This issue is 
particularly relevant in light of the Attorney General Eric 
Holder's recent proposal for reduced drug sentencing. I hope we 
will be able to discuss this issue so I can better understand 
your role in these efforts and learn what you are doing to 
reform some of our criminal justice policies with regard to 
drugs.
    I also continue to be interested in the development of a 
Caribbean Border Counternarcotics Strategy. The fiscal year 
2014 Consolidated Appropriations Act included language 
requiring your agency to develop a comprehensive Caribbean 
Border Counternarcotics Strategy, just as you have done for 
other U.S. borders. I believe this is not only an issue of 
parity, but extremely critical because of increased drug 
trafficking in the region. It is essential that Puerto Rico and 
the Virgin Islands are integrated into Federal counternarcotics 
strategy.
    I look forward to discussing these and other issues with 
you in detail. Thank you for your service and for appearing 
before us today.
    Mr. Crenshaw. Thank you.
    Chairman Rogers wanted to be here today, but he could not 
be here, and he send his regards. And so without objection, I 
will make his statement part of the record.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Crenshaw. And so now, Acting Director Botticelli, I 
think about art when I think of Botticelli.
    Mr. Serrano. Art?
    Mr. Crenshaw. Art.
    Mr. Serrano. Okay. Okay. So he is an opera singer for the 
Boston Red Sox.
    Mr. Crenshaw. Okay. But anyway, if you could keep your 
remarks to about 5 minutes or so, that will give us time for 
questions, and then your entire statement will be submitted for 
the record. So Mr. Botticelli.
    Mr. Botticelli. Thank you. Chairman Crenshaw, Ranking 
Member Serrano, Members of the Subcommittee, as indicated, my 
name is Michael Botticelli. I am the Acting Director of the 
White House Office of National Drug Control Policy. I am 
pleased to appear before you today to discuss the 
Administration's Fiscal Year 2015 budget request for ONDCP, 
part of the Executive Office of the President.
    ONDCP was created by statute in 1988, and November 2013 
marked our Office's 25th anniversary. ONDCP establishes 
policies, priorities and objectives for the Nation's drug 
control program. The goals of the program are to coordinate the 
Federal Government's efforts to reduce illicit drug use and its 
consequences, including drug manufacturing and trafficking, 
drug-related crime and violence, and drug-related health 
consequences.
    To achieve these goals, the Director of ONDCP is charged 
with producing the Administration's National Drug Control 
Strategy and ensuring Executive Branch agency drug control 
budget spending supports this strategy. The Administration's 
strategy, first released in 2010, is based upon input from 
public health and public safety professionals across the 
country and on decades of research from the Nation's top 
scientists that demonstrates that addiction is a brain disease, 
one that can be prevented, treated and from which one can 
recover.
    ONDCP also has responsibility for working with our national 
and international partners to develop the National Southwest 
Border Counternarcotics Strategy, the National Northern Border 
Counternarcotics Strategy, and the Fiscal Year 2014 enacted 
budget also contained a directive for ONDCP to develop a 
Caribbean Border Counternarcotics Strategy, which is now in 
process.
    Our Nation faces a number of substance use challenges. For 
instance, there is an epidemic of opioid drug abuse in this 
country. Drug overdose deaths, driven by prescription 
painkillers, surpassed homicides and traffic crashes in the 
number of injury deaths in America.
    Heroin use remains relatively low in the United States as 
compared to other drugs, but there has been a troubling 
increase in the number of people using heroin. Evidence 
suggests that some users, specifically those with chronic 
opioid addictions, will substitute heroin for prescription 
opioids since heroin is often cheaper than prescription drugs. 
A recent report from the Substance Abuse and Mental Health 
Services Administration found that while only 3.6 percent of 
people who had started using prescription drugs nonmedically 
ever initiated heroin use in the following 5-year period, four-
fifths of recent heroin initiatives had previously used 
prescription pain relievers nonmedically. These findings 
demonstrate that we need to take a comprehensive approach to 
addressing opioid drugs, including more widespread use by first 
responders of naloxone, an emergency opioid overdose reversal 
medication, as well as expanded access to medication-assisted 
treatment.
    Further, multiple studies show that young people's 
attitudes towards marijuana use and nonmedical use of 
prescription drugs are softening. Each day an estimated 4,400 
young people under the age of 18 initiate drug use for the 
first time. This can have a profound effect in the future, 
since research shows us that the earlier a person begins to use 
drugs, the more likely they are to develop a substance use 
disorder.
    To enable ONDCP to accomplish the Administration's goals to 
address these and other numerous challenges from substance use 
disorders, the President is requesting $311 million for Fiscal 
Year 2015. This request represents a decrease of $55 million 
from ONDCP's Fiscal Year 2014 enacted budget; however, it has 
been developed to ensure that we have the resources to meet the 
Strategy's goals while reducing spending.
    ONDCP's budget request includes funding for two grant 
programs that support efforts throughout the Nation to reduce 
drug use and its consequences. The Drug-Free Communities, or 
DFC, Support Program provides grants to local drug-free 
community coalitions to prevent and reduce youth substance use. 
Directed by ONDCP in partnership with SAMHSA, the DFC program 
provides grants to local drug-free community coalitions, 
enabling them to increase collaboration among community 
partners and to prevent and reduce youth substance use. During 
2014, a total of 643 DFC grants were awarded. The President's 
request for the DFC grants program is $85.6 million, a decrease 
of $6.3 million from the Fiscal Year 2014 enacted budget.
    The High Intensity Drug Trafficking Areas, or HIDTA, 
program helps improve the efficiency and effectiveness of drug-
control efforts by facilitating cooperation among Federal, 
State, local and tribal law enforcement as well as other drug-
control organizations. The President's request of $193.4 
million for the HIDTA program is a decrease of $45 million from 
the Fiscal Year 2014 enacted budget; however, this request 
maintains the HIDTA's program focus and mission of reducing 
drug trafficking and production. Core functions will be 
maintained.
    In addition to ONDCP's responsibilities to develop and 
implement the Strategy and administer its grants programs, the 
office is responsible for coordinating, overseeing and 
evaluating the effectiveness of agencies comprising the 
National Drug Control Program throughout the Federal 
Government, as well as overseeing the consolidated National 
Drug Control Budget to ensure that drug control funding 
proposed by these agencies is adequate to carry out the 
Strategy.
    The President's Fiscal Year 2015 National Drug Control 
Budget request is $25.4 billion Government-wide. This 
represents an increase of $151 million over the Fiscal Year 
2014 enacted level. Reflecting the need to address both public 
health and public safety, the portion of the budget requested 
for drug treatment and prevention efforts, 43 percent, has 
grown to its highest level in over 12 years.
    I would like to thank you for the opportunity to testify, 
and I am happy to answer any questions that you might have.
    Mr. Crenshaw. Well, thank you very much.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Crenshaw. Let me start by asking, you mentioned HIDTA 
was going to be reduced by $45 million, and I mentioned in my 
opening remarks that it seems like kind of a strange sense of 
priorities when you ask for a billion dollars for the IRS and 
half a billion dollars to the General Services Administration, 
and yet the last couple of years, the funding for HIDTA has 
been reduced in the proposed budgets, but Congress each year 
has restored that funding. And, again, in today's world when 
States are legalizing marijuana; poppy production is up in 
Afghanistan; cocaine, heroin use, all that is up, what do you 
think the impact would be if you were to reduce it by $45 
million?
    Mr. Botticelli. Clearly, Chairman, the HIDTA program is 
really essential at the Federal, State and local levels in 
terms of being able to enhance efficiency and information 
sharing among law enforcement entities. We consider that an 
incredibly valuable program.
    As you know, our challenge was within restrained resources 
making sure that we maintained core functions and core services 
with our HIDTA program. So to that extent this will not result 
in any elimination of any of our HIDTA programs. It will 
maintain its core mission and core functions.
    The biggest, I think, impact will be on the HIDTA's ability 
to address emerging drug threats that we see in the community. 
So it will preserve the core functions and preserve our core 
HIDTA infrastructure.
    Mr. Crenshaw. So in your opinion, it is still effective the 
things that you are doing, it is just a matter of not as much 
money to go around. But as you know, the last couple years the 
Congress has restored that funding, and so you wouldn't be 
upset if that happened again.
    Mr. Botticelli. We see our HIDTA programs as incredibly 
valuable programs. And one of the things that--over the past 
year that I have seen with our HIDTA programs is their ability 
to be flexible and nimble at the State and local level in terms 
of really responding, I think, to local threats and local 
emergencies.
    Mr. Crenshaw. Gotcha.
    Another question just briefly that you have this drug free 
community program, and I think there are like 600 coalitions 
across the United States. They work on mobilizing communities 
and increased collaboration, things like that. How do you 
measure the progress that is being made by those community 
groups that are--those are grants, they receive your funds. I 
mean, how do you go about deciding who is effective, how 
effective, things like that?
    Mr. Botticelli. Sure. So one of the things that I think we 
know is that local drug use patterns are different among 
localities, and so what it requires to really reduce substance 
use at a local level is really looking at those community 
factors, but also convening all of the local stakeholders, law 
enforcement, health and human service agencies, schools, to 
really look at implementing evidence-based prevention programs 
at the local level.
    As you indicated, for Fiscal Year 2014, we are estimating 
that we are going to have 672 of those local coalitions. They 
have been nationally evaluated, and it has been shown that 
those communities that have Drug-Free Communities programs are 
able to substantially reduce drug use in their communities. So 
these are programs that are implementing evidence-based 
prevention programs that are also nationally evaluated and have 
been shown to reduce substance use among youth at the local 
level.
    Mr. Crenshaw. Well, those funds are being reduced, or 
proposed to be reduced. How would that impact your ability? 
Would you give less grants, or would the grants be smaller? How 
would you handle that reduction?
    Mr. Botticelli. Sure. So at this point, it doesn't mean 
that we would take back any existing grants, so those grants 
would exist through the grant cycle. What it would mean is that 
we would probably be able to award 50 less grants in Fiscal 
Year 2015 compared to what we are estimating for Fiscal Year 
2014.
    Mr. Crenshaw. How much do you think it would take to 
continue to fund the number of grants that you have funded in 
the past?
    Mr. Botticelli. So in terms of looking at kind of level 
funding in terms of Fiscal Year 2014 enacted, that is 
approximately $92 million for the program. It is $92 million.
    Mr. Crenshaw. Gotcha. Well, thank you.
    Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman. That was going to be 
my first question, also, that you asked, so let me just--I 
don't know if you have got the number the right--the same way 
as I see it. It was--not you, but Mr. Botticelli. You said 672, 
but that is what it is now. It will be reduced to 614; am I 
correct?
    Mr. Botticelli. That is correct.
    Mr. Serrano. Okay. And you spoke about spreading the money 
around more. You see, that is a program that seems to be 
working, so we are wondering why the administration would want 
to cut or propose a cut? And I think you are hearing something, 
unless I heard it wrong, something that usually you don't hear 
from all members of a committee, and that is asking the 
question, you know, how can you continue to function at a level 
that does credit to a program that obviously works and that has 
the support of many members of this committee?
    Mr. Botticelli. You know, clearly our Drug-Free Communities 
program is one of the backbones of our prevention 
infrastructure in the United States. It is an incredibly 
valuable program to us. Obviously, you know, we had to look at 
how do we have restraint in spending in Fiscal Year 2015.
    Again, I think the proposal, if enacted, would be that we 
wouldn't eliminate any of the existing grantees; it just would 
mean that we would have about 50 less new grants in Fiscal Year 
2015.
    Mr. Serrano. So you don't think it would be a result of 
reducing from 672 to 614, because we went by those numbers? 
There would be a reduction to 614 or not?
    Mr. Botticelli. So it would be an overall reduction, but it 
does not mean that we would eliminate any existing grantees. So 
that money would continue. It just means that we would have 
less money, about--we would be able to award 50 less grants, 
new grants, in Fiscal Year 2015.
    Mr. Serrano. Okay. Let me ask you about the Caribbean 
Border Counternarcotics Strategy. Now, that was, as you had 
mentioned, language that was put in the bill at the request of 
many of us, including the Resident Commissioner from Puerto 
Rico Mr. Pierluisi. And, you know, this issue speaks to two 
situations, and a lot of the Florida Members can speak to it, 
and that is that, first, the territories get less attention 
than the States, but, most importantly in this case, that we 
are, shooting ourselves in the foot by allowing one border, if 
you will, to be totally open, not only to enter the territory, 
but then to make it to the mainland, as we say. So it is both 
setting this one up--and I want to hear your thoughts on how 
quickly that could be set up--setting this one up not only 
helps those two territories from having the drugs come into 
their area, but then it helps the States, especially Florida, 
with the drugs coming into the States.
    Mr. Botticelli. Correct. You know, clearly our ability to 
interdict drugs, particularly in the Caribbean, is really core 
to the Strategy. And as you indicated, you know, the more drugs 
that we can intercept and interdict, the less that we have 
coming to our local communities. And clearly having a Caribbean 
strategy, I think, that supports the work that we are trying to 
do domestically is particularly important.
    So we have made progress in terms of the development of 
that Caribbean strategy. So we have already convened meetings 
across our interagency looking at how each of our relevant 
Federal interagency partners can support the priority action 
items of the Caribbean strategy, and we continue to work with 
them. And so that strategy is in progress, and we hope to have 
that to you shortly.
    Mr. Serrano. Well, I hope so. And I know we have other 
Members, Mr. Chairman. I just want to make a statement for the 
record, and that is something I have said over and over and 
over again in my 24 years in Congress, that any time drugs 
enters one of our territories, it has, in fact, entered into 
the United States. And a lot of people see it as it didn't 
enter the United States until it gets to Florida or to Texas or 
to New Mexico. Not true. If it enters any territory under the 
American flag, it entered the United States, and it should be 
fought in the same way it is fought when it enters one of the 
States. And I thank you for your reply.
    Mr. Botticelli. Great. Thank you.
    And I was just handed a note. We actually have staff who 
will be meeting with your staff on Friday to be updating you on 
our progress to the strategy.
    Mr. Serrano. Thank you.
    Mr. Botticelli. You are welcome.
    Mr. Crenshaw. Thank you.
    Mr. Womack.
    Mr. Womack. Thank you, Mr. Chairman.
    Thank you, Mr. Botticelli, for your testimony here today. I 
want to confine my remarks initially and my questions on weed, 
because there has certainly been a lot of discussion about it 
from the medical side of the equation to just the outright 
legalization for recreational use. And I have my own pretty 
hard-core philosophical objections to what is going on around 
our country, but my question is as far as the ONDCP is 
concerned, help me understand what involvement your office has 
had with States like Colorado, et alia, that have gone in this 
direction in helping educate people on what the true effects of 
this increased use happens to be.
    Mr. Botticelli. Sure. I think you know that the Office of 
National Drug Control Policy and the Administration has 
remained opposed to drug legalization, and I think we come at 
this from a public health standpoint, particularly as it 
relates to what we think the impact will be on our youth. You 
have raised, I think, some pretty important concerns. You know, 
we now have more 12th graders who are using marijuana than are 
smoking cigarettes, and their perception of risk is at the 
lowest level than it has been since the 1970s. And we know that 
generally when youth perceive something as less risky, they are 
more likely to try a substance.
    Clearly we have been concerned in terms of what the impact 
will be, particularly in Colorado; but not only that, what is 
the message that that sends our youth nationally in terms of 
what it means to use marijuana? We have been engaged, following 
on the Department of Justice criteria, with both Colorado and 
Washington as well as with our Federal partners to really 
monitor both the public safety and public health impact that 
legalization will have in Colorado and Washington, in terms of 
the transportation of marijuana from one State to another, 
[and] are we going to see increased prevalence in use among our 
youth. We have been engaged with Governor's offices in both 
Colorado and Washington as well as the health departments in 
Colorado and Washington to basically see how they are going to 
implement regulatory schemes to ensure that they are doing 
everything possible to mitigate both the public's health safety 
and public health impact of legalization efforts.
    Mr. Womack. So you have weighed in; your office has helped 
try to educate the country on this particular subject. And do 
you anticipate that there might be a more--a bigger or higher 
response, a larger response, a more weighted response toward 
what we see going on around the country?
    Mr. Botticelli. You know, again, I think what we have 
generally tried to do is, with our existing resources that we 
have had, both within our Drug-Free Communities and our other 
resources, to how do we continue to highlight prevention 
efforts particularly as it relates to things like alcohol and 
marijuana. And our Drug-Free Communities have really been 
important resources that we have had to really heighten the 
prevention messaging that we need to really counteract some of 
the messages that youth are getting in terms of the perceived 
safety, if you will, of marijuana.
    Mr. Womack. Now, there is no way we can put a crystal ball 
in front of you to kind of look into the future. If there was a 
crystal ball in front of you, do you anticipate having to reach 
back to, say, Colorado as an example, since I have already 
mentioned them, and have one of these I-told-you-so moments?
    Mr. Botticelli. What the Department of Justice has laid out 
in terms of their Federal law enforcement priorities was a 
clear indication that they reserve the right to take subsequent 
action if Colorado and Washington haven't demonstrated their 
ability to meet those criteria as it relates to public health 
and public safety.
    As a public health person, I think we have every reason to 
think that we are going to see some problems in Colorado and 
Washington. And, again, usually the data and science suggest 
that as youth see something as less harmful, that there will be 
a correlational increase in terms of their use, and I think 
that is what we are seeing nationally. So I do think that we 
have some concerns both in terms of Colorado and nationally in 
terms of looking at the data that we have now, but also what 
that means going forward.
    Mr. Womack. Finally, Mr. Chairman, if I may, you know, a 
subject that is near and dear to my heart, we have talked about 
in previous hearings on this particular subject matter, but, 
you know, I have experienced this in my own family, so I think 
I am not a subject matter expert by any means, but I am a 
parent and now a grandparent, and it scares me the message that 
we are sending to future generations out here--and I am not 
saying the office is sending, I am just saying the message the 
country is sending--that some of these things that we know with 
empirical data are putting our kids on a bad path that we are 
now saying it is really okay. Look at what is going on in 
Colorado and Washington, legalization; that we are basically 
promoting almost in some remark--in some categories, we are 
almost promoting the fact that this is something you can do 
without any known consequences down the road, and I am deeply 
worried about that as a parent, and now as a grandparent, and 
certainly as a Member of Congress whose job it is to look out 
for the welfare of this country. It doesn't require a response, 
I just wanted to say that and let you know that it has my 
attention.
    I yield back my time.
    Mr. Crenshaw. Thank you.
    Mr. Diaz-Balart.
    Mr. Diaz-Balart. Thank you very much, Mr. Chairman.
    Thanks for being here, sir. You were very clear about your 
statement about, you know, your concerns, right, of use and 
expanding use of marijuana. And going to the statement that my 
colleague just mentioned, that mixed message, by the way, is 
not only heard in the country, it is also heard from our 
allies. I get it all the time when I travel abroad to Latin 
America. You know, our allies, those who are putting the 
resources and the blood to try to stop drug production, 
Congressman, they are asking me, you know, why are we doing 
this if in the United States there is this kind of this mixed 
message? So your message today was very clear.
    Let me ask you a simple question: Isn't marijuana outlawed 
by Federal law? I mean, I think it is.
    Mr. Botticelli. Correct.
    Mr. Diaz-Balart. Okay. So here is the question: Have you 
asked the Attorney General or the President to just enforce 
Federal law? In other words, I understand you have serious 
concerns. Your job is to protect the people from drugs, 
including marijuana that you have serious concerns about. Have 
you asked the administration to just enforce Federal law? 
Because if it is so problematic, which you have said it is, and 
we all have our opinions on that, but clearly, you know, you 
are an expert on this, and you speak for the administration on 
this, have you asked the President to enforce Federal law? Have 
you asked the Attorney General to not just sit back and wait to 
see what happens in Colorado, but to enforce current Federal 
law?
    Mr. Botticelli. I think what the Department of Justice has 
stated is that, given limited Federal law enforcement 
priorities, that they are going to reserve their Federal law 
enforcement actions at the most significant crimes associated 
with marijuana and not go after people who are using it for 
personal use. But, again, I think that they have reserved the 
right to go back----
    Mr. Diaz-Balart. Well, have you asked? Have you asked the 
Attorney General or the President, have you said, this is a big 
issue, this is an important issue you see as a health hazard, 
you see it as a problem? You know, clearly we are spending a 
lot of money, as we should, to try to make sure that kids don't 
smoke tobacco--I don't want my kid to smoke tobacco--and yet 
have you asked--has that been one of your priorities? Have you 
said to the Attorney General and the President, I think this is 
a bad idea, I think is dangerous, I think this is harmful, and 
I think we should enforce Federal law?
    Mr. Botticelli. During the course of the development 
process, obviously we had the opportunity to talk to the 
Department of Justice in terms of those issues. I think what we 
have agreed to going forward is, again, given what the 
Department of Justice has issued, an engagement with the 
Department of Justice to monitor the data at the Federal, local 
and State levels to see what the impact is, give that 
information to the Department of Justice with their opportunity 
to look at taking subsequent action should we see enhanced 
public safety and public health effects as it relates to 
Colorado and Washington.
    Mr. Diaz-Balart. So it was kind of an end-around question, 
and, you know, I am not going to further press you, because I 
don't want to put you at odds with the administration. However, 
it seems to me that part of the mixed message is coming, 
frankly, not from you, sir, but from the administration, 
because we have you saying this is a bad deal, this is bad for 
public policy and public health, and then you have, frankly, 
the Attorney General and others saying, you know, we are going 
to monitor, we are going to see how it goes, it is not that 
dangerous. I saw the President saying, yeah, it is probably not 
healthy, but it is not that bad. And I am paraphrasing; please 
don't quote me on that one. It is not a direct quote nor an 
accurate, because I was paraphrasing it.
    So, again, those are the mixed messages, by the way, that 
our allies are constantly complaining about, that we are giving 
mixed messages to our allies. We are also giving mixed 
messages, I think, to the American people. And I think I would 
like for one, sir, to have what is the policy of--what is our 
policy? Is marijuana illegal? Is it harmful? And if it is, what 
serious concrete steps--and to the point where we should 
continue to press our allies around the world, particularly in 
this hemisphere, to do what they are doing in this very painful 
battle against it, and if not, what should the policy be? And I 
think that mixed message is something that I hope you all kind 
of take back and realize that it is there not only for the 
American people, for our allies.
    Second point, if I have any time, Mr. Chairman, going back 
to Mr. Serrano's question, and I commend him for always 
bringing that up. You know, recently, for example, I mentioned 
how our allies are confused at best as to the mixed messages 
that are coming from the administration and from the States; 
and it is not only the administration, from the country. But 
then you have others who do not have mixed messages. You have 
the head of the Ecuadorean Government Mr. Correa that kicked 
the DEA out of the country. In Bolivia, Evo Morales has said, 
you know, that clearly their country is better off without the 
DEA.
    General Kelly, who is the Commander of the SOUTHCOM, by the 
way, located in the congressional district that I represent, he 
recently testified in front of the Senate Armed Services 
Committee that--and he was very blunt--that he believes that we 
are currently only stopping--and I know that Mr. Serrano, this 
is not going to shock him, but it is not going to please him--
only catching about 20 percent of the drugs being trafficked 
into the United States, and it is an issue there of resources.
    Do you have coordination with SOUTHCOM? And as far as on 
the budgetary aspect of it, how much coordination is there? Are 
you consulted at all? What is that role?
    Mr. Botticelli. Sure. As part of our statutory authority in 
terms of looking at the totality of the drug control budget, 
clearly we work with DOD, the Coast Guard and others in terms 
of our interdiction, part of our ongoing supply-reduction 
strategy. I actually had the opportunity to go down to SOUTHCOM 
and to talk to General Kelly and to see some of the work that 
he has been doing and to hear some of his concerns.
    Again, interdiction is part of our core supply reduction 
strategy, and we consider it very important. And we--has been a 
significant amount of discussion both with General Kelly as 
well as the interdiction community through our Interdiction 
Committee work to look at available resources, to look at 
operational efficiencies that we can achieve in terms of 
meeting our goals of interdicting as many drugs as possible.
    So clearly, we have been taking a leading role with the 
military and with all of our interagency partners to look at, 
in light of the fiscal issues that we have here, how do we 
continue to meet our goals around supply reduction and 
interdiction.
    Mr. Diaz-Balart. And that is one that we can get a big bang 
for the buck.
    Mr. Botticelli. I would agree. You know, I think that when 
we see large-scale removal of drugs that don't come into our 
country--we know, again, from a prevention perspective, that 
the more drugs that are available in the community, the more 
likely that we have people that are likely to use them. So 
clearly these are complementary strategies both in terms of our 
supply-reduction and demand-reduction strategy.
    Mr. Diaz-Balart. Thank you.
    Mr. Botticelli. So they are important goals.
    Mr. Diaz-Balart. Thank you.
    Thank you, Mr. Chairman, for you allowing me.
    Mr. Crenshaw. Certainly.
    Mr. Diaz-Balart. And just very briefly also, Director, 
again, that mixed message is really intense, and it is real 
deep. And I don't want to bust your chops, but I think we have 
heard it here today.
    Mr. Botticelli. Okay.
    Mr. Diaz-Balart. I mean, we really have. I mean, you have 
been clear about the effects and what your concerns are. On the 
other side of the same administration, you know, there is the 
lack of willingness to enforce current Federal law. Now, if the 
Federal law is wrong, and if marijuana is not a big deal, then 
we should have that discussion, and the President should be 
upfront and say, let's debate that. But right now all we are 
getting is mixed messages, and I think our allies hear that, 
those who are fighting narcotrafficking drugs are hearing that, 
and our kids are hearing that, and that is probably the most 
dangerous part of it.
    Mr. Botticelli. To be fair, Congressman, I think both the 
President and the Department of Justice have indicated their 
significant concern around the public health impact. So I think 
we have to clarify law enforcement issues versus public health 
and public safety, but thank you for your comments.
    Mr. Diaz-Balart. Thank you, sir.
    Thank you, Mr. Chairman.
    Mr. Crenshaw. Thank you.
    Mr. Graves.
    Mr. Graves. Thank you, Mr. Chairman.
    Mr. Director, thank you for being here, and thank you for 
what you do. I couldn't imagine the burden that you carry each 
day on your shoulders, and it is a very noble, noble cause, and 
I know that we have our questions and concerns and such.
    And I didn't really intend to speak on the topic that the 
two gentlemen before me had, but I was shocked at the statistic 
that you shared momentarily, and it is in your statement, you 
said it here as well, that more 12th graders today now smoke 
marijuana than cigarettes, and I think we were all shocked to 
hear that. And I heard about mixed messages and you suggesting 
that it is because they sense that marijuana has less 
consequences, fewer consequences than cigarettes.
    And it was just less than 60 days ago the President, I 
think, sent some confusing messages to the youth across the 
country. And, you know, his quote was well documented, and he 
even says, as it has been well documented, I smoked pot as a 
kid, and I view it as a bad habit and a vice, not very 
different from cigarettes that I smoked as a young person up 
through a big chunk of my adult life. This was in the New 
Yorker. And you thought he would stop there, but then he said, 
I don't think it is more dangerous than alcohol. And, I mean, 
that probably bothered you, I would imagine, because I know you 
take your job very seriously.
    Did that make your job easier or more difficult? And did 
you just, with some sort of internal frustration, go into the 
President's office and say, what are you doing here? You are 
making my job extremely more difficult and challenging. And 
what was your response to that? Could you share that with the 
committee?
    Mr. Botticelli. I think if you look at the totality of the 
President's comments and subsequent comments that he made, I 
think that a lot of what he was referring to is some of the 
inequity and disparities in sentencing that we see for 
marijuana, particularly among people of color, which is an 
issue, obviously, not just for our Office, but for him and the 
Attorney General's Office as well. So, you know, I think the 
President has repeatedly raised----
    Mr. Graves. Do you suspect that is how the youth 
interpreted his comments? And maybe you are right in totality 
that is what he was thinking and suggesting, but the youth of 
our country, I think they probably heard, I don't think 
marijuana is more dangerous than alcohol. And almost it is just 
a, I don't know, an odd statement and such.
    Mr. Botticelli. You know, again, I go back to looking at 
some comments that he made subsequent to those in terms of 
really understanding the significant public health consequences 
both for alcohol and for marijuana, and not necessarily 
endorsing what was happening in Colorado and Washington, and 
saying that we really have to be vigilant in terms of keeping 
this as a public health priority. So----
    Mr. Graves. Well, and I don't mean to interrupt, but, I 
mean, I took it as a little flippant in how he--you know, off 
the cuff, and maybe he was caught off guard with that question 
and he wasn't prepared. But he is the President of the United 
States, and I know that he gets difficult questions all the 
time, and this one couldn't have been all that difficult, but 
has he since then come forward and with remorse said, you know, 
I made a mistake; I shouldn't have done that as a youth? And, 
you know, just as all of us at some point have done things that 
we regret, has he ever expressed any regrets for that, or did 
he just allow the comments to hang and dangle, and everybody 
hoped it was about sentencing?
    Mr. Botticelli. No. I think that he made some subsequent 
comments after that relative to understanding that this was a 
significant public health and public safety issue.
    You know, the President is not unlike many parents who used 
substances in their youth to great regret. And I think the best 
thing we can do is be honest and candid about it and say that 
we don't support that for our kids, as he talked about in not 
supporting it for his daughters.
    Mr. Graves. Right.
    Mr. Botticelli. So, you know, I think that if you look at 
successful prevention strategies, we need to have those 
conversations, and we need to be candid as parents, and we need 
to say to our kids, look, I may have done this, and I may have 
done okay, but it is--I don't advise it for my kids. And I----
    Mr. Graves. And I appreciate his candidness and such, and I 
hope he has taken a statement and suggesting his regret and not 
encouraging others to do that, and not a statement in which he 
was saying, I did that, and look at me at what I have been able 
to accomplish in life, but instead take another position that 
it was a mistake.
    If I could change gears real quick. I met with some 
sheriffs last week while I was in the district, and we were 
talking about methamphetamines. And obviously, it has been a 
very difficult problem in our region in northwest Georgia. They 
were suggesting that with all the steps we have all taken to 
try to prevent it, that things have changed, the ingredients 
are changing, obviously others are finding easier ways to do 
it, but there is still that lingering problem with drugs coming 
across the southern border.
    Do you sense that our border security is adequate when it 
comes to not only from the illegal immigration perspective, not 
asking you to speak on that, but from an illegal drug 
perspective crossing our borders? What can be done? Is it 
adequate, and what more can be done?
    Mr. Botticelli. I think you have raised two critical issues 
here, one in terms of drugs coming in from Mexico and domestic 
production as well, as well as domestic use. And so I think, 
you know, we have had significantly enhanced the resources at 
the border. Part of our concern has been both good and bad in 
the sense that they have been able to actually seize a 
tremendous amount of more drugs at the border. Unfortunately, 
we have seen about a 500 percent increase in methamphetamine 
seizures at the border.
    And I think you are absolutely right that as Mexico has 
changed in terms of looking at putting controls on precursor 
chemicals, as the Combat Meth Act in States have enacted, we 
see different patterns emerging in terms of both production 
internationally as well as domestically. So previously where we 
saw large lapses here in the United States, I think some of our 
laws have made it much, much harder to get large amounts of 
chemicals, and we are seeing the increase in terms of these 
very small one-pot labs. Particularly here in the District we 
have all heard news around that. So it has been clear that this 
is a public safety and public health issue that we have to look 
at.
    You know, one of the areas that we are examining is we have 
made some pretty good progress over the past few years in terms 
of the reduction in methamphetamine use here in the United 
States, I think largely through our drug prevention and local 
law enforcement efforts. So we do have a number of programs 
through our Office that help support reducing the distribution 
in trafficking largely through a component of our HIDTA 
programs as well as through our Drug-Free Communities.
    So meth is an issue that we have to continue to look at 
both internationally as well in terms of what we seize from the 
borders, but also work on domestic production and domestic 
trafficking, as well as reducing demand for methamphetamine 
here in the States.
    Mr. Graves. And I know it is outside of your scope, but 
from the trafficking, drug trafficking across the border, do 
you--I mean, are you suggesting that adequate protections are 
in place now? Is there more that can be done? Any thoughts on 
that? Are you pleased with the effort there? Because ultimately 
it impacts your role and what you are going to have to handle.
    Mr. Botticelli. I think we have done a significant job in 
terms of looking at increasing our technology, increasing our 
information sharing, as well as increasing some of our 
prevention efforts on both sides of the border. So I think we 
actually have done a really good job in terms of looking at 
that.
    There is always more work to be done. My former boss is now 
the Commissioner of Customs and Border Protection, so I am sure 
that we will have a very good relationship in terms of Customs 
and Border Patrol, and particularly as it relates to our 
Southwest border.
    Mr. Graves. Thank you. Thank you, Mr. Chairman.
    Mr. Crenshaw. Thank you. And, you know, I share your 
concern, as well as, I think, everybody on this subcommittee 
probably is concerned about marijuana and to hear the things 
that you mentioned. But I guess the good news is that we can 
refer everyone to Governor Jerry Brown out in California, who I 
think said it very succinctly when he said it is hard to have a 
great State or great Nation when you have got too many people 
getting stoned, which surprised me to hear him say that, but 
that is the other side of the coin that probably people need to 
talk about. I think he talked about you shouldn't have too many 
potheads. So he is trying to spread the message, I guess, from 
the other side of the coin.
    We have got time for a couple more questions if Members 
have, but I wanted to ask you on the international scale and 
then more domestic, but people have talked about Latin America, 
the Caribbean, the fact that 75 percent of everything comes 
through. On the other side of the world, there is a place 
called Afghanistan where they grow poppies. And I remember the 
first time I went to Afghanistan, there was all the 
conversation about how are we going to get people to quit 
growing poppies and grow something else. And that kind of died 
down, and there was a lot of discussion about that. I was there 
about 6 weeks ago, and the military was talking about all the 
great things that have happened in Afghanistan in terms of 
education, in terms of universities being created, women's 
rights, women's voting. We didn't really talk much about the 
whole poppy situation. And then as we prepared for this 
hearing, it was called to my attention that the poppy 
production is just ever increasing. Now it is, you know, 5 
percent of the GDP.
    And I wonder, because you see the impact when these drugs, 
whether they are from Latin America or the Caribbean, or 
whether they are from Afghanistan, when they kind of hit the 
ground here, the terrible impact they have. Do you work with 
them, and are those things that are still being talked about in 
terms of maybe how you slow down that production there? And do 
you coordinate with the Department of Defense at all? Could you 
touch a little bit on the whole poppy situation?
    Mr. Botticelli. Sure. You know, clearly the situation in 
terms of poppy cultivation in Afghanistan has been a 
significant concern, and I think you are right that we have 
seen year after year increases in terms of poppy cultivation 
and, you know, have some significant concern in terms of what 
that might mean.
    We are not seeing kind of widespread heroin trafficking 
into the United States from Afghanistan, but clearly as it 
relates to the instability within the country and the money 
that it generates in terms of the insurgency, I think that is a 
particular problem.
    We work with the Department of Defense as well as the 
Department of State in terms of looking at how do we continue 
to aid counternarcotics efforts in Afghanistan. Clearly the 
next few months in terms of the election there as well as what 
are going to be resources after troop pullout is of particular 
concern in terms of looking at those issues of both poppy 
eradication, but as well as alternative development to take the 
place of those poppies.
    You know, with that said, it doesn't diminish in terms of 
what we are anticipating for our counternarcotics efforts. We 
are looking to continue priorities that provide training and 
technical assistance to the counternarcotics police of 
Afghanistan as well as vetted units within the Afghan drug law 
enforcement, as well as investing in institutional 
sustainability and capacity building within the ministry of 
counternarcotics. So these are largely efforts through our 
Department of State and their international law enforcement 
division. So clearly this is an issue that is of significant 
concern for us now and going forward.
    Mr. Crenshaw. Well, thank you. And let me now ask you about 
a more domestic problem; that is, methamphetamines. And as I 
understand it, you know, it is very addictive, it is cheap, it 
is kind of becoming the drug of choice. And maybe you could 
tell us what you see the trends are in terms of the use and 
abuse of that, talk about what you all are doing to try to 
counter the production and the use of that, and then do you 
need anything more in terms of tools that you can use, because, 
as I understand it, that is really one of the most serious 
things we are facing today.
    Mr. Botticelli. Great. Thank you. And I appreciate the 
offer.
    So, as we indicated, we have seen significant increase in 
seizures of methamphetamine at our southern border as well as 
an increase in domestic production, and some of the programs 
that we have from the law enforcement that we have talked about 
previously through our High Intensity Drug Trafficking Areas.
    We also have a national program under our HIDTA program, 
and that is the National Methamphetamine and Pharmaceuticals 
Initiative, and that provides regional support through our 
HIDTAs to look at how do we diminish drug trafficking and 
production issues particularly for methamphetamine.
    You know, again, on the prevention side, you know, we see a 
variety of resources, our Drug-Free Communities, to look at 
doing that.
    You know, I would be happy to have subsequent conversation 
with you in terms of what additional things might we have in 
place beyond just the Combating Meth Act that might hold 
promise in terms of reducing the availability of some of the 
precursor chemicals that go into the production. As Congressman 
Graves pointed out, as we have made changes at both the Federal 
and State level, there has been, I think, an evolution in both 
chemicals and production that warrant, additional consideration 
in terms of how do we continue to do everything that we can, 
from both a supply reduction and a demand reduction standpoint, 
to reduce those issues.
    I also think, too, that when we look at methamphetamine, 
that we have some significant parts of the country that are 
more affected than others.
    Mr. Crenshaw. Yeah. I was going to ask you about that. You 
know, these meth labs that you read about that kind of come and 
go, where are they going, where are they concentrated today?
    Mr. Botticelli. You know, I think that the biggest impact 
that we see in terms of methamphetamine, and this is not to say 
that we don't see it in rural pockets around other areas, but 
when you look at kind of the regional impact, I think that is 
particularly in the South--or particularly in the South and the 
West is where we see significant impact from methamphetamine.
    I came from the Northeast, where we had a big heroin 
problem and very little meth problem. So we have different 
parts of the country that I think are differentially impacted 
by methamphetamine both in terms of production and use.
    Mr. Crenshaw. Is it hard to set up a meth lab? I mean, 
like, you go to Colombia and see it is pretty--you go out in 
the jungle and make cocaine. I mean, is it something somebody 
can set up, make meth, and if somebody comes, they go somewhere 
else? I mean, how complicated is it?
    Mr. Botticelli. In the spirit of full disclosure, I don't 
think I am really fluent other than watching ``Breaking Bad.'' 
I don't think I really know the technical capabilities to do 
it.
    My understanding is that it is not tremendously 
complicated, and that is why we are seeing the development of 
some of these one-pot labs in terms of both the chemicals that 
are available as well as the process.
    That said, people who are doing production are not 
necessarily tremendously skilled at it, and we see some 
devastating environmental impact, drug-endangered children as 
it relates to it.
    So, I don't think that it is technically tremendously 
difficult to do. And, again, I think as we have put certain 
controls on certain of the chemicals, precursors, that we have 
seen an evolution in terms of----
    Mr. Crenshaw. Would you say is it the fastest growing? I 
mean, it used to be crack cocaine. I mean, how does meth rank 
in terms of abuse and potential for abuse? Because I always 
understood it was just so cheap and so, you know, available 
that it was one of the fastest-growing problems you are facing.
    Mr. Botticelli. Again, I think we have to continue to 
monitor the impact of the production, because what we have 
seen, quite honestly, over the past several years has been a 
reduction in meth use. And, again, that is probably 
differential in different parts of the country, but we have 
seen some decline in methamphetamine use.
    I think we would be well advised in terms of looking at 
both the production and the interdiction around our meth use, 
as well as some early indications that we are seeing more 
emergency department mentions, an uptick in emergency 
department mentions, for methamphetamine. So I think we have to 
pay close attention on both the regional and the national level 
in terms of those issues.
    You know, one of the issues that we talked about before, in 
terms of magnitude of order, has been the prescription drug 
abuse and the opioid epidemic that we are seeing nationally. 
That is clearly an issue that is a high priority for us, as 
well as continuing to monitor what is happening with other 
drug-use trends.
    Mr. Crenshaw. Gotcha.
    Mr. Serrano.
    Mr. Serrano. I am not doing well today. Either you are 
asking my questions, or he is answering my questions before I 
ask them.
    Mr. Botticelli. I hope it is the latter, Congressman.
    Mr. Serrano. It is both. It is both.
    So I want to talk to you about the prescription drug abuse. 
What are you specifically proposing to do to reduce the misuse 
of the prescription drugs? And also, how have past efforts--
what have they shown, and how do we integrate them into what we 
want to do now? And, lastly, I know that 49 States that have 
laws authorizing prescription drug monitoring programs, or 
PDMPs. Are they all functioning or just some of them?
    Mr. Botticelli. Sure. So in 2011, ONDCP coordinated an 
interagency effort among our Federal partners and released a 
plan to reduce prescription drug abuse, and that has four main 
pillars. One is education, educating prescribers. And what we 
have seen is as the number of prescriptions for prescription 
painkillers has increased, so has the consequence of doing 
that.
    It entails proper monitoring, as you alluded to, making 
sure that we have good prescription drug monitoring programs.
    It requires and focuses on safe disposal. One of the things 
that we see is, particularly for occasional users, about 70 
percent of people who use those medications occasionally are 
getting them free from friends and family. So how do we get 
those drugs out of the supply chain? And so we are working on 
safe disposal.
    And then the last one is around good laws to make sure that 
we eliminating pill mills and doctor shopping.
    As you talked about, one of the central components of what 
we have been proposing is making sure that we have good 
prescription drug monitoring programs. And we have 49 States 
that now have prescription drug monitoring programs and have 
been working to make sure that all of them are implementing 
best practices in terms of those.
    And I think there is probably no better example than what 
happened in Florida that had--the Congressman and I were 
talking about this in terms of implementing strong prescription 
drug monitoring programs and enacting strong legislation. And 
what we have seen in Florida is a significant decrease in the 
number of prescriptions, prescription painkillers, and I think 
probably most importantly a significant reduction in drug 
overdose deaths associated with those.
    So clearly having vibrant programs are important to us, as 
well as having programs that share information across State 
borders to make sure that as Florida implements good and sound 
policies, that people are not just moving to Georgia to focus 
on it. So it has clearly been one of the top priorities of our 
office in terms of this whole-of-government effort across our 
Federal partners to minimize the impact of prescription drug 
abuse.
    Mr. Serrano. Yeah. I should tell you that on social media 
this afternoon, after announcing that I would be attending this 
hearing, the number one question asked by about six, seven 
people, which is usually an indication of many others who want 
to ask the same question, was about the overdose issue. And so 
with that in mind, I would like to get you on the record just 
for clarification. When we talk about prescription drug abuse, 
are we talking about all prescription drugs, or are we 
basically saying that the problem is painkillers?
    Mr. Botticelli. We are chiefly talking about prescription 
pain medication. That is really----
    Mr. Serrano. Okay.
    Mr. Botticelli. That is really the issue. You know, as----
    Mr. Serrano. Because, I mean, for people who are on, for 
instance, cholesterol medication or high blood pressure, they 
are on for the rest of their lives.
    Mr. Botticelli. And I think we want them to probably stay 
on those medications.
    Mr. Serrano. Exactly.
    Mr. Botticelli. You know, I think the concern is 
particularly that physicians get very, very little training 
around the risks associated with these very powerful pain 
medications, as well as little training on how to identify 
substance use disorders in their population. So that is why 
prescribing, and particularly mandatory education on 
prescribing, for physicians is really important to the work 
that we do.
    As you indicated, the magnitude of the drug overdose deaths 
is really astounding to our office. And in 2010, we had over 
16,600 prescription-pain-related overdose deaths in the United 
States. That is 100 people a day who are dying from 
prescription pain medication overdoses.
    And our Office has been working with Federal, State and 
local folks to implement naloxone distribution programs. And 
naloxone is a very safe, effective, nontoxic substance that 
emergency responders have been using for decades to reverse an 
overdose. And we have been very heartened in terms of the 
number of States that have enacted naloxone distribution 
programs throughout the country. It is really remarkable. It is 
a really miraculous drug in terms of its ability to save lives.
    Mr. Serrano. Let me ask you one more question. And then, 
Mr. Chairman, if we don't have another round or anything, I 
will just submit a couple questions for the record.
    We know we don't have diplomatic relations with the island 
of Cuba, but in the past we have done immigration work with 
them. In fact, we do immigration work ongoing. We have done 
transportation issues in terms of airplanes flying over or not 
flying certain parts of the Caribbean. We have done hurricane 
issues, preventing tsunamis--or warning of tsunamis or so on.
    Do we have any kind of relationship when it comes to drug 
issues with the Cuban Government?
    Mr. Botticelli. To my knowledge, sir, I don't think we have 
any ongoing discussions or work with Cuba, but we are happy to 
discuss with you and your staff kind of what you might be 
thinking.
    Mr. Serrano. Okay. Because I know a couple of years ago, to 
my shock, they were willing to accept DEA agents on their turf, 
if you will, and political pressure from this country stopped 
that from happening. And I said I was shocked because, you 
know, basically saying send me agents from your country of any 
kind of agents, you know, to Cuba was quite a statement. And I 
know it is not in their best interests to have drugs coming 
into Cuba, and it is not in our best interests to have drugs 
coming here.
    So I would like to know if, you know, later on, if you 
could find out, if there has been any talk about that, in the 
near future. It is probably one of the areas where I think both 
parties could agree would be of benefit to this country.
    Mr. Botticelli. Happy to look into it, sir.
    Mr. Serrano. Thank you.
    Thank you, Mr. Chairman.
    Mr. Crenshaw. Mr. Womack.
    Mr. Womack. Thank you, Mr. Chairman.
    Mr. Botticelli, your predecessor, I think, was confirmed at 
CBP earlier this month; is that right?
    Mr. Botticelli. Correct.
    Mr. Womack. So you have been in your current capacity now 
as Acting Director----
    Mr. Botticelli. Two weeks now.
    Mr. Womack. For 2 weeks. Okay.
    Is it fair to say that you didn't have a lot of input with 
the President face to face on this particular budget?
    Mr. Botticelli. You know, clearly we work with the 
Administration and through their----
    Mr. Womack. But you personally. You personally were not 
face to face with the President on this budget?
    Mr. Botticelli. Correct.
    Mr. Womack. Okay. Have you been invited into the White 
House, into the Oval Office to talk about the growing problems 
with substance abuse and the effects, the cascading effects, 
across society? Have you had an opportunity? Have you been 
invited? Have you had the opportunity? Can you kind of take me 
inside the White House and tell me how that conversation is 
going?
    Mr. Botticelli. As part of the Executive Office of the 
President, we obviously work with the President and the 
President's advisers in terms of what our policy has been. 
And----
    Mr. Womack. I am talking about specifically the President.
    Mr. Botticelli. I have not, sir.
    Mr. Womack. Have not.
    Have you been invited?
    Mr. Botticelli. I have not, sir.
    Mr. Womack. Okay. Three hundred eleven million is the 
budget, the President's budget, for your office?
    Mr. Botticelli. For our Office.
    Mr. Womack. Down from 370? 360? Was it 55 million? Was that 
the difference?
    Mr. Botticelli. Correct.
    Mr. Womack. Okay. That is about a little less than a 20 
percent cut. I am going to guess about 17.5, 18 percent cut in 
your budget.
    Do you think that is an adequate reflection of the 
importance of your office given the fact that you are taking 
the better part of the 20 percent cut in the President's 
proposed budget? Do you think that is a reflection of the 
priorities?
    Mr. Botticelli. I think, not just looking at our budget, 
but if you look at the totality of the National Drug Control 
Budget, right, so not just ONDCP----
    Mr. Womack. Which is 20-some billion. I mean, it is a lot 
of money.
    Mr. Botticelli. Right. So if you look at kind of the 
totality of the resources that the Federal Government has in 
terms of looking at this issue, we have seen that money 
increase. And I think what is particularly important in terms 
of the overall National Drug Control Budget is that we have 
seen a significant increase in terms of our drug prevention and 
drug treatment services.
    And, again, you know, that if you think about priorities 
that we are looking at, how do we deal with this as a public 
health-related issue. And so those dollars have continued to 
increase in terms of our overall Federal budget for this 
priority. So I think, Congressman, when you look at the entire 
National Drug Control Budget, you see that it is a priority 
within the Administration.
    Mr. Womack. Well, I was reading in your statement that--and 
these numbers just kind of shocked me to my conscience on the 
fact that drug overdose deaths now number greater than motor 
vehicle crashes and greater than gunshot wounds. And so 
pertaining to the latter, I have sat in a lot of meetings, 
including the State of the Union Address, where the President 
talks about pulling out his phone or his pin to do things that 
Congress is unwilling to do, and he did spend some time talking 
about school shootings and large-scale casualty operations 
resulting from guns and this immediate desire to want to do 
something about gun violence, and yet we are going to cut this 
particular budget, even though it is the office's budget, by 
almost 20 percent, and the number of deaths related to drug 
overdoses in this country is greater than the gunshot wounds.
    Mr. Botticelli. Uh-huh.
    Mr. Womack. So I want to ask again, is this a reflection of 
where this fits in the national priority as it concerns the 
administration? And what are you doing, and what do you plan to 
do, because I am going to give you a break here. You have been 
there 2 weeks. You have been there since 2012, but in your 
capacity for 2 weeks. What are you going to say to the 
President when you have that face-to-face meeting on the 
policies of this administration as it concerns something that 
now outnumbers--drug overdoses--now outnumbers gunshot victims?
    Mr. Botticelli. I think, again, when you look at some of 
the new additions in the proposed 2015 budget items, that there 
are some additional items included in that budget that are 
specifically focusing on the opioid abuse and the overdose 
epidemic. So our Substance Abuse and Mental Health Services 
Administration has an additional $15 million to get out to 
States and local communities to particularly focus on 
prescription drug abuse issues and opioid and overdose issues.
    Contained in that budget is also an additional $10 million 
for the Centers for Disease Control and Prevention, again, to 
support State-level actions as it relates to overdose 
prevention. You know, it has clearly been a priority for our 
office in terms of promoting overdose education. We worked with 
a number of Federal partners and nongovernmental partners in 
terms of continuing to raise awareness around the magnitude of 
the opioid overdose issue.
    So, again, I think that, one of the areas that we see that 
leads to overdose is untreated addiction. And one of the 
biggest causes of why people don't get treatment is a lack of 
insurance. And one of the areas I think that the Affordable 
Care Act contains is a provision to make sure insurers have to 
include a benefit for substance use disorder treatment, and 
that is reflected in the President's budget.
    So I think if you look at, again, the commitment to not 
only expanding access to treatment, but specific vehicles to 
enhance State-level efforts to reduce the magnitude of the 
burden, I think that we see some promising proposals.
    Mr. Womack. I thank the gentleman.
    Mr. Crenshaw. Thank you.
    Mr. Diaz-Balart.
    Mr. Diaz-Balart. I was listening to you before, sir, and 
you were talking about Florida. You know, we would be remiss 
without thanking Chairman Rogers for--remember how he was so 
aggressive about the pill mills, and Florida had, frankly, a 
huge issue there, and so we have seen some good results of 
that.
    Let me just throw out another issue which I know very 
little about, which is this issue of synthetic marijuana. You 
know, I saw some things in newscasts recently; I guess there 
have been some deaths. And I know that our attorney general in 
the State of Florida has been very aggressive, and as the 
formula has changed, he is constantly looking at just trying to 
update that legislation, which is obviously much quicker on the 
State level than it is here on the Federal level.
    Tell me a little bit about your thoughts about that; how 
big of an issue is it, and, you know, what are your thoughts on 
that? And then the second question--well, let me just go for 
that one first, and then we will----
    Mr. Botticelli. Sure. So the issue of synthetics has also 
been a significant concern for us in terms of a number of 
different areas. So one is often people don't know what they 
are taking or what they are getting when they take these 
chemical substances. There is certainly not a consistency in 
terms of products, in terms of how they are using it. So we 
have seen some significant issues around those areas.
    And so it has really been an issue that we have been trying 
to kind of focus on. And clearly we have been working with our 
partners in the DEA in terms of trying to stay on top of 
scheduling some of these substances. But Congressman, quite 
honestly, that has been really difficult, because as we 
continue to schedule more and more of these substances, the 
chemists always seem to be one step ahead of us in terms of 
making kind of small tweaks to some of these chemicals to elude 
some of these scheduling processes. So we have been actually 
working with the DEA and with the Senate Drug Caucus in terms 
of are there things that we can continue to do to stay ahead of 
some of these scheduling issues as it relates to some of these 
synthetic drugs.
    We have also seen and have been having conversations--you 
know, as States and as Federal Government have implemented 
strategies--to reduce the sale of these. We see the Internet 
playing a larger and larger role in terms of where people are 
getting the substances from. So we have been actually engaged 
with payment processors, some of the large credit card 
companies as well as PayPal, to see to what extent can they 
share information with us as it relates to some of these 
Internet sites. And they have been, to this point, I think, 
concerned about the issue and willing to work with us in terms 
of some of those sites.
    So it has been an issue, again, that we continue to look at 
in terms of those priorities and look at how we can continue to 
stay on top of some of the emerging issues.
    Mr. Diaz-Balart. I am assuming, because the States do have, 
I guess, an advantage as far as at least quickness, right----
    Mr. Botticelli. Yes.
    Mr. Diaz-Balart [continuing]. Of dealing with some of this, 
so I am assuming you are--how good is your cooperation with 
States? And I guess that is kind of a general question. I am 
sure some are better than others, I would assume.
    Mr. Botticelli. You know, part of--one of our components in 
ONDCP is our Office of State, Local and Tribal Affairs, and 
they work pretty closely with our State counterparts both in 
terms of law enforcement and public health to look at things 
like model legislation, and model work, and sharing best 
practices among States. So we actually have, I think, a very 
good relationship with many of our State counterparts on both 
the law enforcement and public health sides.
    Mr. Diaz-Balart. If I may, Mr. Chairman, you have been very 
patient with me, I will be quick on this one.
    Going back to the issue of how the Attorney General and the 
administration is going to be kind of monitoring what is going 
on in Colorado and elsewhere, as far as you know, is that an 
informal monitoring? Is there a metrics? In other words, is 
there a system set up so that they can look at, you know, 
compare data, et cetera; or is it more of an informal 
monitoring that they are going to--and if it is a system that 
is already set up, the metrics, it would be good if some of 
us--I would be interested in seeing it, and also, you know, how 
long it is going to be, et cetera. What can you tell me about 
that?
    Mr. Botticelli. Sure. So our Office actually took the lead 
in convening some of our Federal partners, and we looked at 
each of the eight Department of Justice criteria as they were 
laid out, and looked at what are our data sources. And most of 
these are publicly available data sources that speak to things 
like diversion to youth and treatment admissions, things like 
drugged driving and arrests. So we will continue to monitor 
with our Federal partners those data to look at the picture of 
what happens with Colorado and Washington.
    Mr. Diaz-Balart. Thank you, Mr. Chairman.
    Mr. Crenshaw. Thank you.
    Well, I have some questions that I will submit for the 
record. I know Serrano does, as well.
    So let me just say in closing, thank you and your staff for 
what you do. You know, we talk about this fight against drugs, 
and we refer to it often as a war against drugs. And some 
people say we are winning, some people say we are not winning, 
but we are certainly fighting the war.
    And drugs, as we all know, have such a terrible impact on 
our country, whether it is destroying lives, breaking up 
communities and families, so we want to work with you and your 
staff to try to win this war, to keep America safe, to keep it 
healthy. And thank you again for being here today, and we look 
forward to working with you.
    So this meeting is adjourned.
    Mr. Botticelli. Thank you.

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                                         Wednesday, March 26, 2014.

                          THE JUDICIARY BUDGET

                               WITNESSES

HON. JOHN BATES, DIRECTOR, ADMINISTRATIVE OFFICE OF THE UNITED STATES 
    COURTS
HON. JULIA S. GIBBONS, CHAIR, COMMITTEE ON THE BUDGET OF THE JUDICIAL 
    CONFERENCE OF THE UNITED STATES

                  Chairman Crenshaw's Opening Remarks

    Mr. Crenshaw. Okay. This meeting will come to order. It is 
2 o'clock. They are ringing the bells. Why don't we start, and 
we will go as far as we can. There are only two votes, so we 
will excuse ourselves and come right back, but let's just get 
started.
    We want to welcome you all. I think that this, Judge 
Gibbons, is the tenth time that you have been before our 
subcommittee, and we appreciate your service and your 
willingness to meet with us. Judge Bates, I believe this is 
your first appearance before the subcommittee, but we look 
forward to working with you. Both of you also, thanks for being 
here today.
    The work of the judiciary is critical to the preservation 
of our Nation's system of government, where each of the three 
branches have different responsibilities and checks on the 
other branches. Americans depend on an open, accessible and 
well funded Federal court system to resolve criminal, civil and 
bankruptcy disputes. The courts must have the trust and respect 
of our citizens to do the function that the Founding Fathers 
intended. So, in addition to the judiciary's probation and 
pretrial service, officers perform critical public safety 
missions by supervising more than 200,000 offenders and 
defendants who live and work in our communities.
    And as you know, the Federal Government continues to 
operate in an environment of scarce resources, however, we will 
try to ensure that you have the resources that you need to 
accomplish your important mission. Over the past few years, you 
and your staff have worked closely with us to ensure that the 
judiciary receives increases to address only your most critical 
needs, and I thank you for your efforts to try to reduce costs 
during these challenging times.
    The judiciary's budget request proposes a discretionary 
spending increase of about $220 million. That is about 3.4 
percent above the fiscal year 2014. And I am very appreciative 
of the fact that your request is a modest increase, but 
remember, funding remains scarce. So I want to work with you, I 
want to work with Ranking Member, Serrano, to identify any 
savings that we can find in the judiciary's cost, but we still 
want to provide the courts with the resources that you need to 
fulfill your constitutional responsibilities. So I appreciate 
the important work that you do, and look forward to your 
testimony.
    And now I would like to recognize my friend, Ranking Member 
Serrano.

                Ranking Member Serrano's Opening Remarks

    Mr. Serrano. Thank you, Mr. Chairman.
    I would also like to welcome Judge Gibbons back for her 
10th time. If there was a baseball contract, I think you would 
have a pension by now. That is the best pension in the world, I 
hear.
    Back to the subcommittee, and Judge Bates, you are the 
rookie, but you will quickly find out that this is a very 
friendly Committee, especially last year, to this particular 
branch.
    There have been some significant challenges for the Federal 
judiciary over the past year. Sequestration had an extremely 
negative impact on the ability of the Federal judiciary to 
function and for the various parts of the third branch to 
conduct its important constitutional duties. And although the 
Federal judiciary was able to operate during last fall's 
government shutdown, there were delays in trials and other 
pressing matters.
    Thankfully, there has been some good news of late. In part 
because of your testimony here last year, I think many Members 
of Congress were persuaded of the vital need for additional 
funding for the judiciary, and the final fiscal year 2014 bill 
substantially reflected that need. We were able to increase 
funding for the Federal judiciary by $316 million above the 
sequester level, which helped restore most, but not all, of the 
funding cuts that affected the judiciary through sequestration. 
I hope we will get a chance to discuss the impact of 
sequestration on the Federal court system and whether this 
additional funding has been able to restore services.
    Your fiscal year 2015 budget request indicates that there 
is more work to be done in order to restore the ability of the 
judiciary to conduct fair and speedy trials, to help recently 
incarcerated individuals transition back into society, and to 
provide numerous pretrial services, among other things.
    One area that is of particular concern to me is our Federal 
defenders. Cuts both prior to and during sequestration resulted 
in both layoffs and significant furloughs during sequestration. 
Our Federal defenders play a vital role in upholding the Sixth 
Amendment's right to counsel, and I hope we get a chance to 
discuss how their work has been impacted by the sequester.
    As I said last year, the role of the Federal judiciary 
extends beyond the courtroom and into all of our communities. 
This means that your funding is not just relevant for 
litigants, but for this Nation as a whole. We all, perhaps, 
take for granted in this country that every person can have a 
fair and speedy trial, but it is up to Congress to ensure that 
you have the funding to make these constitutional promises a 
reality.
    Once again, welcome, and I look forward to your testimony.
    Thank you, Mr. Chairman.
    Mr. Crenshaw. Thank you.
    I think we will have time to hear an opening statement from 
Judge Gibbons. And Judge Gibbons, let me say that your written 
statement will be made part of the record, so take in the 
neighborhood of 5 minutes to summarize that. The floor is 
yours.

                     Judge Gibbon's Opening Remarks

    Judge Gibbons. Chairman Crenshaw, Representative Serrano, 
Judge Bates and I appreciate the opportunity you have given us. 
I am going to move as fast as somebody with a drawl can.
    When I appeared before this committee last year, 
sequestration cuts were just going into effect, and I predicted 
dire consequences for the judiciary. Our fears were realized. 
Sequestration resulted in delays in case processing, reduced 
services at courthouses nationwide, caused large staffing 
losses in clerks of court offices and probation and pretrial 
services offices. We reduced funding for court security 
equipment, and court security officers worked fewer hours, thus 
creating security vulnerabilities.
    Perhaps the most significant impact was in our Defender 
Services Program, which provides court-appointed counsel for 
indigent defendants. Federal defender organizations lost 400 
staff during 2013, an 11 percent loss, and widespread furloughs 
were implemented.
    In addition, a $15 per hour temporary rate cut to panel 
attorney hourly rates was implemented on September 1, 2013, on 
an emergency basis, an unprecedented action.
    This subcommittee, and the overall Appropriations 
Committee, responded with help through the funding you provided 
us in fiscal year 2014 in the omnibus appropriations bill. We 
are very appreciative of the 5.1 percent increase in 
discretionary appropriations, which essentially restored us to 
a pre-sequestration funding level. This funding stabilizes our 
financial position and allows us to reverse most of the 
emergency measures put in place due to sequestration. We will 
be able to backfill some of the more than 3,200 staff lost in 
recent years in clerks offices and probation and pretrial 
services offices, and we have sufficient funding to meet 
operational expenses.
    We are particularly appreciative of the funding you 
provided for the Defender Services Program. We have been able 
to restore, effective March 1, the $15 cut to panel attorney 
hourly rates and to begin backfilling the 400 staff lost in 
defender organizations. We anticipate this will take at least 2 
years to accomplish, but we are committed to restoring the 
program to its former strength, and with your help, we can do 
that.
    We continue our decade-long effort to reduce growth in the 
judiciary's budget in order to position ourselves for future 
fiscal realities. We have some real cost containment successes, 
but we realize there is more work to do.
    My written testimony discusses in detail our efforts to 
reduce the judiciary's space footprint. We take your concerns 
about that seriously. We are pursuing a multifaceted approach 
to space reduction, including reducing the judiciary's space 3 
percent by the end of fiscal year 2018. We will work hard to 
meet this goal.
    There are several chief district judges in town for their 
annual meeting who have joined us today. They are on the front 
lines in the courts implementing cost-saving practices, some of 
which are national programs and some of which are locally 
grown. I want to recognize each of them briefly. Judge Gloria 
Navarro of Nevada. Her court has developed the e-voucher system 
that is being enhanced to implement it as a national system. 
This system will automate the current paper voucher process for 
paying CJA panel attorneys.
    Judge Ricardo Hinojosa of the Southern District of Texas. 
His court is a national leader in judicial administration and, 
over 25 years ago, was the first in the country to consolidate 
bankruptcy and district clerks offices.
    We have with us Judge Kathryn Vratil of the District of 
Kansas and Judge Raner Collins of Arizona, both leaders in the 
area of shared administrative services, which will enable us to 
streamline operations by having courts within a judicial 
district share HR, IT and other resources. Thirty percent of 
courts nationally have adopted such arrangements.
    Judge Jerry Simandle of New Jersey has been at the 
forefront of efforts to reduce space. His district has reduced 
space needs of probation offices, in one case moving probation 
from leased space into a courthouse and, in another, releasing 
excess probation space to GSA.
    We also have some bankruptcy judges who are here in town 
for their conference. Judge Bill Glenn of the Middle District 
of Florida, whom I know you know well, Chairman Crenshaw, and 
Judge Ron Pearson of the Southern District of West Virginia. 
The bankruptcy courts were pioneers in many of the automation 
efforts that are now used by all courts.
    For fiscal year 2015, we seek $6.7 billion in discretionary 
appropriations, a 3.4 percent increase. This is the minimum 
amount required to meet our constitutional and statutory 
responsibilities. This is a current services budget that would 
simply maintain 2014 operations and allow continued recovery 
post-sequestration.
    There are $216 million for adjustments to base for standard 
pay and nonpay changes, and a total of $3 million for two small 
program increases. We are not requesting any new staff beyond 
that funded for 2014.
    In closing, both of you have been tremendous supporters of 
the judiciary, and I hope we will earn that support in the 
future. As you make decisions for the agencies under your 
committee's jurisdiction, we ask that you take into account our 
unique constitutional role in our system of government. In 
return, we commit to you that we will continue to be good 
fiscal stewards, cutting costs where possible, spending the 
dollars wisely, and making smart investments to achieve long-
term savings.
    I ask that my statement be placed in the record, along with 
those of the other court entities whom we represent. Thank you.
    Mr. Crenshaw. Thank you, Judge Gibbons.
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                          BRIEF HEARING RECESS

    Mr. Crenshaw. Judge Bates, I think we will save your 
remarks for when we come back. There is a little less than 2 
minutes left. There are three votes, actually, so it will take 
about 15 minutes, but we will come back, and some of the other 
members that are in other subcommittee meetings, we will see 
how all that goes, but if you don't mind, I apologize, but we 
don't plan the floor schedule around here. So we will be back 
as quick as we can. So the hearing will be in recess. Thanks.
    Judge Bates. That is fine. We appreciate it.
    [Recess.]
    Mr. Crenshaw. The meeting will come back to order. There 
will probably be some members straggling in, in or out, but 
let's continue.
    And, Judge Bates, the floor is yours.

                     Judge Bates' Opening Statement

    Judge Bates. Chairman Crenshaw, Representative Serrano, I 
am pleased to appear before you to present the fiscal year 2015 
budget request for the Administrative Office of the U.S. Courts 
and support the overall request for the judicial branch. And I 
join Judge Gibbons in thanking you and the other members of the 
committee for the support that you have provided to the 
judiciary during these difficult economic times, which has 
enabled us now to address critical funding shortfalls in the 
Defender Services Program and in the courts nationwide.
    Last summer, the Chief Justice appointed me as Director of 
the Administrative Office. I have been a Federal judge since 
2001, serving on the United States District Court for the 
District of Columbia and as the presiding judge of the Foreign 
Intelligence Surveillance Court until early last year. I 
continue to carry a reduced caseload on the D.C. District 
Court, but my primary focus now is the management of the 
Administrative Office.
    I would like to thank the committee as well for its past 
support of the judiciary's Capital Security Program, funded 
within the General Services Administration appropriation in 
both fiscal years 2012 and 2013. The Capital Security Program 
was designed to address the most serious security deficiencies 
in existing courthouses where renovation is a viable 
alternative to new construction. Unfortunately, the program was 
not funded in fiscal year 2014.
    To give you some background, this program was an outgrowth 
of the judiciary's long-range facilities planning process and 
one of our first cost-containment initiatives begun back in 
2008. Under the new process, greater emphasis is placed on 
space, rather than security, when determining the need for a 
new courthouse. As a result, the Capital Security Program 
provides a way for districts to address immediate security 
deficiencies in a timely and significantly less costly manner 
than constructing a new courthouse. We were pleased to see that 
the President's budget includes $20 million for this program in 
fiscal year 2015, and we urge the committee to support the GSA 
request in its appropriations bill.
    Funding for the judiciary's Capital Security Program should 
not, however, be a substitute for new courthouse construction. 
While that program may address a court's immediate security 
deficiencies, it does nothing to address those courts that 
combine both security deficiencies and an extreme lack of 
space. In these circumstances, the only resolution is to build 
a new courthouse or an annex to meet the operational needs of 
the court.
    The judiciary does not itself request funding for the 
construction of new courthouses. Because GSA builds our 
facilities, these monies come under the jurisdiction of the 
executive branch and are included in GSA's budget. 
Unfortunately, in 4 of the last 5 years, the President's budget 
has included no funding for courthouse construction. This year, 
the President's budget request for GSA includes $745 million 
for new executive branch construction projects, but no funding 
for any new courthouse projects. This is particularly 
troublesome, given the efforts that the judiciary has taken to 
improve its courthouse planning with a focus on cost 
containment.
    Attached to my written testimony is the judiciary's interim 
5-year plan for courthouse projects for the next 5 fiscal years 
that I ask be included in the official hearing record. That 
plan lists the same construction priorities as the 2014 plan, 
except that the funding for Mobile, Alabama, provided through 
the Consolidated Appropriations Act has been eliminated from 
the list. Nashville, Tennessee, is now the judiciary's top 
courthouse priority in fiscal year 2015. We are very pleased 
that the President's budget includes funding for the Capital 
Security Program, but it is imperative that the judiciary also 
be able to move its courthouse construction program forward. We 
respectfully ask, therefore, that you include funding for a new 
Nashville courthouse in the GSA's Federal Buildings Fund in 
your fiscal year 2015 appropriations bill.
    The Administrative Office was created by Congress back in 
1939 to assist the Federal courts in fulfilling their mission 
to provide equal justice under law. The AO does not operate as 
a headquarters for the courts but rather provides 
administrative support to the Judicial Conference, its 25 
committees, over 2,300 judicial officers and more than 28,000 
court employees. Service to the courts has been and remains our 
basic mission.
    In January 2011, a task force began looking at ways that 
the AO could ensure that it would be able to meet its core 
responsibilities during this era of fiscal constraint and 
reduced resources. Last summer, a significant restructuring and 
consolidation was announced to be implemented by the end of the 
fiscal year, and our new organizational structure is now in 
place and functioning smoothly. The goals of the AO 
restructuring were to reduce operating costs and duplication of 
effort, simplify the agency's administrative structure, create 
opportunities for greater efficiencies, and enhanced service to 
the courts, the Judicial Conference and the public. That new 
structure is leaner and more integrated.
    The fiscal year 2015 appropriations request for the AO is 
$84,399,000. That is a $3.2 million increase, which supports a 
current services budget. There are no additional staff or 
program increases included in this request. Over the last few 
years, the AO has downsized its workforce by 8 percent through 
attrition, buy-outs and early outs, imposing hiring caps and 
leaving positions vacant, and through cost-containment efforts. 
More recently, the AO's reorganization provides us with the 
flexibility to better align our existing staff in order to 
carry out the AO's statutory responsibilities.
    I recognize that fiscal year 2015 will be another difficult 
year as the committee attempts to meet the funding needs of the 
agencies and programs under your purview. In making your 
funding decisions, I hope you will consider the significant 
role that the AO plays in supporting the courts and the mission 
of the judiciary.
    Thank you again for the opportunity to be here today, and I 
would be pleased to answer any questions.
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    Mr. Crenshaw. Well, thank you all very much. We are going 
to observe our 5-minute rule for the members, and so you all, 
as you give your answers, kind of bear that in mind.
    I will recognize folks based on seniority that were here 
when the meeting started, and the latecomers will be recognized 
in the order in which they came.
    Who came in first, Mr. Graves, you or Mr. Yoder?
    Mr. Graves. I sat first. I know that.

                       JUDICIARY SPACE REDUCTION

    Mr. Crenshaw. Okay. Sitting down is important.
    Let me start by thanking you all for your testimony. I know 
last year, we talked some about the fact that rental space is a 
big part of your budget, and I think this year it is around a 
billion dollars. I wanted to find out if you are continuing to 
work on that. I think last year, there was $50 million for 
cost-containment initiatives. This year, I think you have asked 
for $10 million to continue that. So tell us how all that is 
working out. How did the--money from last year, how is that 
being spent? What do you plan to do for next year? And big 
picture, how are we doing on reducing our footprint?
    Judge Gibbons. I am going to start with the big picture. As 
you know, we have been doing a lot for a long time in the space 
area. Presently our focus is on two national policies that were 
approved by the Judicial Conference in September of 2013. The 
first is our 3 percent national space reduction target, which 
we hope to achieve by the end of fiscal year 2018. The second 
is a policy we are calling ``no net new,'' and the principles 
behind that are that any space increase must be offset by an 
equivalent space reduction in the same year. Excepted from 
these two policy initiatives are space that is congressionally 
approved. Circuit councils will be submitting their plans for 
achieving the space reduction goal by May.
    We are employing a number of different strategies to get to 
these goals. First would be our Integrated Workplace 
Initiative, IWI. And the principle there is that the growth of 
technology and the possibility of telework have made a 
different and cheaper workplace appropriate in some settings. 
IWIs require money to modify the workplace, but over time, they 
save money.
    To give you just one example, Chicago is moving its 
probation office from leased space back to the courthouse for a 
50 percent reduction in occupied space, but it costs $3.4 
million to install phone lines, cables, move walls, partitions, 
create cubicles. That cost is going to be $3.4 million. The $10 
million figure you refer to is a part of all the math we go 
through to get to the point that we have to have some money to 
save money in the long run. This construction in Chicago will 
cost $3.4 million, but overall, the savings to us will be 
substantial.
    [Clerk's note.--Subsequent to the hearing, Judge Gibbons 
provided the following additional information:]

    The project costs associated with moving the Chicago probation 
office from leased space to the courthouse are $3.4 million as I cited; 
however, vacating the commercial leased space for the probation office 
will result in annual rent savings of at least $1.4 million. Thus, the 
$3.4 million in project costs will be recouped in about two and a half 
years.

    Another strategy we are employing is releasing nonresident 
courthouse space. Six of those facilities were released in 
2012, four more in 2013. We have already garnered a savings of 
about $1 million a year, and we expect to proceed along those 
lines in other areas.
    We are looking at reducing library space and we have 
provided some incentives to the courts for giving up space.
    Coupled with these new initiatives, we are still continuing 
to emphasize our longstanding efforts to validate the rent we 
are charged and to hold GSA accountable for the bills it sends 
us to make sure we are getting billed for what we in fact 
occupy. And we are continuing programs like the circuit rent 
budget that enable us to prioritize the money we receive 
appropriately.
    Mr. Crenshaw. That is great. Thank you very much.
    Mr. Serrano.

             IMPACT OF FY 2014 FUNDING ON FEDERAL DEFENDERS

    Mr. Serrano. Thank you, Mr. Chairman.
    And, again, welcome to both of you. As you know, I have 
been greatly concerned about the impact of sequestration in our 
Federal Defender Program, which performs an important 
constitutional role in upholding the Sixth Amendment's right to 
counsel for indigent defendants. My understanding is that our 
Federal defenders lost more than 400 employees last year 
because of sequestration. Because of these concerns, this 
subcommittee provided an overall funding level of $1.044 
billion for defender services in 2014.
    With this additional funding, what steps is the judiciary 
taking to rebuild Federal defenders offices to pre-
sequestration levels?
    Judge Gibbons. The funds that were provided for 2014 will 
enable the defender offices to replace about 350 of the 400 
employees lost, so most of the losses can be replaced. We have 
been able with the panel attorneys to restore the rate that 
they had prior to the September 1, 2013, temporary reduction, 
and so that, too, has been done, plus the panel attorneys 
received a small cost-of-living increase.
    The defenders have had trouble--are having trouble 
backfilling all of these vacancies. It is a very uncertain time 
still budgetarily, but we believe that carrying forward the 
funds over 2 years, that they will be able to make substantial 
progress in restoring the defender offices to their prior 
strength. We are committed to that, and we are committed to 
working with this committee to do that.
    Mr. Serrano. Okay. And so you say you work jointly with the 
defenders to make sure that you can get them up to the level 
that they should be at?
    Judge Gibbons. Well, they have to take the steps to hire, 
obviously.
    Mr. Serrano. Right.
    Judge Gibbons. But, you know, that is not as easy a task as 
it seems, and that is why the damage to the program was really 
very unfortunate----
    Mr. Serrano. Right.
    Judge Gibbons [continuing]. Because you have to identify 
able attorneys. You have to bring them up to speed. It is not 
just--it is not the same thing as hiring just somebody who is 
more readily available. But they will get it done, and they are 
working on it. And we are encouraging them to move to hire, 
even though the future is not entirely clear.
    Mr. Serrano. Right. Any comments?
    Judge Bates. No. I think Judge Gibbons has handled it.

                SECURITY CONCERNS AT ATTORNEY COURTHOUSE

    Mr. Serrano. Okay. That is fine.
    Let me ask you. As you know, I have always had a special 
interest in issues affecting Puerto Rico. Maybe it has 
something to do with the fact that I was born there. Lately I 
have heard some troubling reports about the Federal courthouse 
complex in San Juan in the Hato Rey section. My understanding 
is that there have been some serious security breaches at the 
complex. Are you all aware of this issue, and are there plans 
in place to better secure the complex? Also, I know this is 
more of an issue for GSA, but has the judiciary discussed 
construction of a new courthouse in San Juan?
    Judge Bates. We are aware of the security issues, and 
indeed they are being worked on. At this time, there is staff 
from the Administrative Office, including the head of our space 
office, which deals with facilities and security, down in San 
Juan, assessing the situation, and working with GSA and the 
local court officials to address those security concerns. There 
also is a project ongoing, a Capital Security Program project 
going on there in San Juan that is helping to address the 
security deficiencies that have been identified in Hato Rey. 
And so we are working very diligently on that. There is a 
security study that is being done and will be completed in a 
few months, and I would expect that improvements can be made.
    With respect to a new courthouse, I think that that is 
something that GSA has agreed to begin a feasibility study of, 
and we will work with them and, again, with all of the court 
officials down in San Juan to assess that situation and see if 
the answer is a new courthouse.
    Mr. Serrano. So you have both security concerns being 
discussed now? You are working with folks down there to see if 
you could come up with a better idea of securing the existing 
facility, and GSA is leading a study to see if there is a need 
for a new courthouse?
    Judge Bates. They have agreed to begin the feasibility 
study of the courthouse, looking at all the Federal real estate 
holdings, and determine whether a new building or an annex or 
some new construction is necessary.
    Mr. Serrano. Right.
    Judge Bates. On the security side, we know what the 
security issues are, and those are being addressed both through 
the Capital Security Program project that is underway there, it 
is one of our lead projects, through funding from fiscal year 
2012 and through the assessment that is ongoing at this time.
    Mr. Serrano. Thank you.
    Thank you both.
    Mr. Crenshaw. Thank you.
    Mr. Graves.

                     IMMIGRATION REFORM LEGISLATION

    Mr. Graves. Thank you, Mr. Chairman.
    Thank you all for being here today. And, Judge, I just--
Judge Bates, wanted to see if you could elaborate a little bit 
on a part of your, and I guess it was submitted for the record, 
your statement as it related to the immigration proposal that 
was passed in the Senate. And in your comments, you indicate 
that it would take a tremendous amount of additional resources 
if the law was in fact enacted, and while the law as it was 
proposed provided some resources, it wasn't adequate. Would it 
be possible to elaborate on what you would foresee if that law 
or other forms of immigration reform were adopted, what kind of 
resources, and really, why--you know, I guess what would be the 
reasoning for additional resources, to help us navigate that as 
we think and move ahead?
    Judge Bates. I would be happy to. The impact of immigration 
reform legislation on the courts could be substantial, but it 
does depend on the specifics of any bill that eventually 
passes. The judiciary has no position on the substantive policy 
issues that are for the political branches to resolve, although 
we have provided some specific comments both to the Senate 
Judiciary Committee prior to that bill coming out of the 
Senate, and to Chairman Goodlatte and the House Judiciary 
Committee.
    The cost to the judiciary really results from increased 
cases coming into the court system. That workload could be 
great, depending on how many new cases. There could be new 
crimes. Some of the proposals have included new crimes being 
established and also enhanced penalties, and those could result 
in additional needs, particularly in the border courts, and 
those needs would include possibly additional judges, court 
staff, probation and pretrial services officers, and the 
Federal public defenders, who are representing these 
individuals, as well as the panel attorneys, who are paid for 
through our appropriations.
    The Senate bill does include billions of dollars for the 
executive branch, it is through a trust fund that has been set 
up, that will result in expanded enforcement of existing 
provisions and new provisions in that bill, but there are 
virtually no resources for the judiciary, which would be 
involved in that enforcement effort through cases brought into 
court, except for a small piece that goes to a specific area in 
Arizona, the Tucson sector.
    Even now, the Judicial Conference has included a request 
for additional judges in the border courts, but this 
immigration legislation could make that need much more acute. 
And we simply feel that it is important to point out that the 
judiciary has resource needs in all these areas that could 
result from whatever the specifics of the bill might be.
    Mr. Graves. When you reference new cases, is it because the 
law creates new crimes, or is it because there is additional 
resources being provided that provide for more enforcement, 
which therefore leads to more cases? I guess, ultimately, the 
question being, given the current law as we have it today, the 
laws that are governing us now, do you have adequate resources 
to--or are those--are the resources that are there necessary--
the necessary resources there to enforce the current laws, or 
do you see that it is inadequate at this point and that these 
proposals that are out there, whether in the House or the 
Senate, are creating additional laws or enforcement mechanisms 
that create the need for additional resources?
    Judge Bates. The answer to the current situation is the 
judiciary absolutely does its best to handle the work that 
comes into the courts. The border courts are strapped. They are 
working very, very hard, all sectors, the judges, the staff, 
the probation offices, the Federal defenders, but they are 
meeting the needs.
    Do they need more resources? Yes, but not as acutely as 
would be true if new legislation both creates additional 
enforcement by the Department of Justice and perhaps even adds 
new crimes and enhanced penalties that would lead to more 
cases.
    Mr. Graves. Okay. Thank you.
    Thank you, Mr. Chair.
    Mr. Crenshaw. Mr. Quigley.

                   HIRING IN FEDERAL DEFENDER OFFICES

    Mr. Quigley. Thank you, Mr. Chairman.
    Good afternoon, Judges.
    I, too, have, since I got here last year, tried to do what 
I can for the Defender Program. As I mentioned, I was a 
criminal defense attorney for 10 years, 26 in California; 
highest conviction rate in the county. That was funnier last 
year, I guess.
    I understand a couple things. First, on the rehiring, is it 
the first practice to rehire those that we lost before in the 
cuts?
    Judge Gibbons. I don't know. I think that would be 
dependent on each particular Federal defender's or community 
defender's decisionmaking processes, and that is not something 
that would be centrally determined in any way.
    Mr. Quigley. It would sort of make sense, though, since 
they have done the job before and had the experience.
    Judge Gibbons. Well, yes, but you know, uncertainty makes 
it difficult to rehire those--if those people have moved on to 
other opportunities.
    Mr. Quigley. You mean uncertainty that they are not sure we 
are going to do this again or not?
    Judge Gibbons. Well, they might be uncertain but there are 
no guarantees. They could be reasonably assured probably of 
remaining employed for a period of 2 years, but they may have 
learned a hard lesson, and they may not want to be here and sit 
there in 2016.

            RESOURCE ALLOCATION TO FEDERAL DEFENDER OFFICES

    Mr. Quigley. I understand. I also hear that the Executive 
and Budget Committees of the Judicial Conference have talked 
about a one-size-fits-all program for defenders and that they 
are going to be asked to create--all carry the same number of 
cases. I don't know if you have heard this or not.
    Judge Gibbons. I think----
    Mr. Quigley. Regardless of the type of case that they 
handle or----
    Judge Gibbons. Well, no. Your information is, first, I will 
say, inaccurate. There are a couple of things that you might be 
referring to that are ongoing. Taken into account, into 
determine----
    Mr. Quigley. Not the first time a judge has told me I am 
wrong, just so you know. Used to happen on a daily basis.
    Judge Gibbons. Well----
    Mr. Quigley. And I always said, Okay.
    Judge Gibbons. Well, you are----
    Judge Bates. We are just hoping not to get the same today 
from you.
    Judge Gibbons. You know, there are probably--I can 
understand it. There are a lot of fears out there, but that 
particular one is not one for a defender to be concerned about. 
Allocation----
    Mr. Quigley. What would the----
    Judge Gibbons. I don't know, but I can tell you--I think in 
the course of this answer, I will tell you what you might have 
heard about.
    Mr. Quigley. Okay.
    Judge Gibbons. Currently, allocations to individual 
defender offices in individual districts are based on case 
weights. That is not a one-size-fits-all method, because the 
whole idea is that different cases are different. For example, 
under a case weight system, as you might expect, a murder is an 
8.6 under their numerical system; a bank robbery is 2.6; 
possession of marijuana is .34; illegal entry, .15.
    There is a concern--and this, I imagine, is what you heard. 
There is a concern about apparent disparities in workload among 
defender offices. And we have defender offices where the 
individual lawyers carry workloads far below a national average 
and offices where they carry a caseload that is far above. And 
there might be reasons for those, but they are not reasons that 
are accounted for by case weights.
    One of the efforts that is ongoing, not in an effort to 
have every defender office look exactly the same, but in an 
effort to more accurately assess staffing needs is the 
development of work measurement formulas. The case weights, 
which do differentiate, will be a part of the work measurement 
formula. This is a staffing assessment methodology that we have 
used successfully in clerks offices and probation and pretrial 
services offices for years. It is not perfect. When you get it, 
it has to be taken with a grain of salt, but it is still the 
best, most objective method we know for trying to assess 
staffing needs.
    But in the defender world, they have not had a work 
measurement formula before, so there is concern and some degree 
of angst probably about that, but I think when you look at how 
they are developed more closely, that particular fear that you 
articulated is not one that ought to exist.
    A further part of that, further thing that goes to mitigate 
the fear is that there is precedent within the formulas for the 
use of subsets of formulas. So you might have different offices 
treated differently but treated the same as other offices that 
are similarly situated. So there are a lot of nuances here that 
sometimes get lost in the shuffle.
    Mr. Quigley. And I will yield back. I just want you to 
know, Judge, obviously we don't pull this out of thin air. It 
is percolating from something.
    Judge Gibbons. I understand that. And I am sure you heard 
it, but believe me, we have heard it, too.
    Mr. Quigley. Very good. Thank you.
    Mr. Crenshaw. Thank you.
    Mr. Yoder.

                     TEMPORARY DISTRICT JUDGESHIPS

    Mr. Yoder. Thank you, Mr. Chairman.
    Thank you both for coming to testify today. It is certainly 
one of our more important tasks as we determine how we make 
sure that resources are available for the judicial branch. And 
I think many of us look at our work here as not just another 
Federal agency, certainly, but an entire branch of government, 
and in all cases, the work you do is brought to you, not work 
you seek or cases that you have gone out and found. In fact, 
you can't do that. And so you have got the burdens that are put 
before you. Regardless of whether you have the resources, they 
are there. And so we want to make sure that we have the 
resources properly allocated, we want to make sure that we are, 
you know, resolving disputes in a timely fashion and making 
sure the laws are enforced properly in this country.
    A couple questions related to just how we have appropriated 
dollars. I want to thank Judge Bates for at least I think in 
your written testimony discussing the temporary judgeships 
issue. And I think it is an important one, it needs to be 
acknowledged before the committee that we have a number of 
temporary judgeships; one of them happens to be in Kansas, and 
then certainly in a number of other states. We have extended 
those temporary judgeships every year. My hope, of course, my 
strong wish would be this committee would continue that 
practice to ensure that those judgeships are available.
    I wonder what our long-term solution is for this issue. 
Every year, it comes up. Every year, we work on it to fix it, 
and this committee does their work. Certainly, we would, I 
think, all appreciate if the authorizing committee, the 
Judiciary Committee, you know, maybe permanently made these 
positions available. But what are your thoughts on how we move 
forward and what does the future look like? And thanks for your 
support on those.
    Judge Bates. Let me start by thanking you and the other 
members of the committee for including language in the fiscal 
year 2014 Consolidated Appropriations Act that extended the 
temporary judgeships in nine courts, including Kansas.
    You have identified the long-term solution, and that is for 
the authorizers to convert some of these temporary judgeships 
to permanent judgeships. And indeed, that is the hope of the 
Judicial Conference. That is what the Judicial Conference has 
requested with respect to eight of the nine temporary 
judgeships which were extended this last fiscal year. And that 
is what the long-term solution has to be.
    Those courts need that assistance from those judgeships, 
and it would be really a crucial injury if those judgeships 
lapsed and were not continued, but barring that authorization, 
I think that we will be back here year after year with a list 
of temporary judgeships that are very, very important to 
continue, asking the appropriators to extend those temporary 
judgeships, as you have done and as, again, we really thank you 
very, very seriously for.

                           WORKLOAD OF JUDGES

    Mr. Yoder. Well, it is an issue we are going to have to 
continue to work on, but I think this committee hopefully will 
continue to support those judgeships. And unfortunately, it 
creates uncertainty in our courts when we don't know whether 
those positions will continue every year. And so far this 
committee's done their work and will hopefully continue to do 
so, but certainly I think we all want to find a long-term 
solution.
    In terms of your judicial caseloads and the burdens that 
some of our judges are working through, what is optimal in 
terms of caseloads? How many do we have? Is it higher than 
optimal, I am guessing, in many cases? What is the typical 
caseload for a judge? And how many more judges would we need, 
what would they cost? And, I guess, what are the ramifications 
that we see in the court system by not having enough judges to 
cover the caseloads that are available?
    Judge Gibbons. Well, I will start, and I have a feeling 
Judge Bates may well want to add something on this, too.
    That varies greatly by district and part of the country how 
high a caseload individual judges carry. And we use a weighted 
case system in order to determine judgeship needs, too, similar 
to the one I discussed with Representative Quigley for the 
defenders. And we have worked in the past on ways of 
alleviating this imbalance. We have an intra-circuit assignment 
process. There is a lot that is done within circuits to try to 
relieve this imbalance. We do have a judgeship bill pending, 
which Judge Bates may want to address. I am drawing--we will 
probably supplement this answer, because what I am about to say 
draws on some very old knowledge on my part, so it is rough; it 
is from memory.
    Back in the 1990s, I chaired the committee that is 
responsible for assessing judgeship needs, and the formula that 
is used for judgeships starts at about--you know, if you have a 
caseload per district of over--around 450 per judge, that is 
the point at which you start looking at whether another judge 
is needed, taking into account other factors, like the 
availability of senior judge help and some other things.
    For appellate judges, my memory, subject to being corrected 
later, is that it is around 500 cases per panel. And there is, 
you know, there is a biennial survey. We have an elaborate 
process for determining judgeship needs.
    [Clerk's note.--Subsequent to the hearing, Judge Gibbons 
and Judge Bates provided the following additional information:]

    The Judicial Conference uses a threshold of 430 weighted 
filings per authorized judgeship in a judicial district as a 
starting point for considering an additional judgeship. For 
circuit judgeships, the threshold is 500 filings as I indicated 
in my response. The 430 and 500 thresholds for new district and 
circuit judgeships, respectively, applies to what filings per 
judgeship in a district or circuit would be after a new 
judgeship is created, unless certain circumstances apply. For 
this reason, judicial districts and circuits that are 
candidates for new judgeships currently have filings well above 
the 430 and 500 thresholds.
    As background, the Judicial Conference considers judgeship 
needs on a biennial basis and transmits its judgeship 
recommendations to Congress for consideration. On April 5, 
2013, the Judicial Conference's new judgeship recommendations 
to Congress included adding 5 permanent judgeships and 1 
temporary judgeship to the courts of appeals, and 65 permanent 
judgeships and 20 temporary judgeships to the district courts, 
as well as converting 8 temporary district court judgeships to 
permanent status. In addition, the Judicial Conference 
recommended the creation of 29 bankruptcy judgeships, 2 
temporary bankruptcy judgeships, and the conversion of 20 
temporary bankruptcy judgeships to permanent status.
    Judgeship recommendations are the product of formal studies 
and survey processes, based on caseload standards and workload 
factors among other considerations, tailored to meet the needs 
of the United States Article III and bankruptcy courts.
    The Judicial Conference will next transmit new judgeship 
recommendations to Congress in Spring 2015.

    Judge Bates. I will only supplement that very slightly. 
There is a very elaborate and careful process for determining 
judgeship needs, and each year, the Judicial Conference for 
each Congress makes an assessment and a recommendation of any 
new judgeships.
    One way to describe the figures that Judge Gibbons just 
gave, which are, I think, approximately correct, is that the 
Judicial Conference standard, to pull this back into the 
temporary judgeships arena, the standard for considering 
whether to recommend a temporary judgeship be converted to a 
permanent judgeship is weighted filings per authorized 
judgeship that would rise above 430 if that temporary position 
was lost. And that is on the district court level.
    In terms of costs, I don't know the figures. I have heard 
some throw around figures, when you combine staff as well as 
the judge and the build-out for chambers, of something around 
$1 million for a judgeship, but I don't know that that is 
right. We would have to supplement to give you a more accurate 
answer to that.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                       COURT SECURITY PRIORITIES

    Mr. Crenshaw. Thank you very much. We have got time, maybe, 
for a couple more questions if other members have them. Let me 
ask you a couple questions about security, both court security 
and then courthouse security. I think this year, you asked for 
an additional $33 million for court security. How do you go 
about making sure that is the most cost-effective, most 
efficient way to use money? Tell me a little bit about how you 
decide what you need in terms of court security.
    Judge Gibbons. The security account is one in which it is 
pretty hard to control the costs, but we are committed to our 
obligation to do so. And we want to make sure, though, that we 
don't create security vulnerabilities when we cut costs. As you 
know, we are in a situation within the security account where 
part of the funds that are appropriated to the judiciary go to 
the United States Marshals Service that is responsible for 
providing our courthouse security, and then we also pay the 
Federal Protective Service to provide some additional security. 
This creates a little bit of a, I wouldn't call it a problem, 
but just a situation for us on both sides of that.
    We have worked, though, very successfully with the Marshals 
Service to maintain oversight of our funds. Recent initiatives 
have been new CSO contracts that save some dollars through 
competitive bidding. We went to fewer part-time CSO's. While 
still retaining the flexibility that goes with the part-timers, 
we were able to eliminate some costs that recur through 
numbers, like uniforms, medical evaluations and such. We have 
eliminated 68 court security officer positions in overstaffed 
courts.
    We have some ongoing concerns about the FPS situation that 
is a little similar to our relationship with GSA, and we have 
not been as successful in validating--getting our bills from 
the FPS validated.
    We took a 30 percent cut in security and equipment during 
sequestration, and the CSO's had to work fewer hours. Those 
have been restored. But going forward, we have a real need for 
both new equipment that is just necessary to keep up to date on 
a recurring basis, and we have some deferred needs. It is time 
for cyclical replacements. That is just an overall problem.
    The $33 million you referred to is the full appropriations 
increase requested in the account, but obligations would 
actually go up only $18 million, and that is based on an 
assumption that there will be no carry-forward into 2015. We, 
of course, hope that that assumption proves not to be correct. 
And we will be updating you, as we always do, in May and 
September, and we hope to have some carry-forward that will 
reduce the amount that is being sought from you all.

                   JUDICIARY CAPITAL SECURITY PROGRAM

    Mr. Crenshaw. I think you did that last year. On the other 
side, regarding court security, I know a couple years ago we 
gave the GSA $20 million so rather than build a brand new 
courthouse, the Judiciary can renovate it and bring it up to 
security standards. How has that worked out? Is that money all 
gone?
    Judge Gibbons. That has been done largely through the 
capital security project that Judge Bates referred to 
previously. And he can elaborate on that further, but that is 
exactly what that was intended for and has been used for.
    Judge Bates. And very successfully. And we are grateful to 
the committee for its support of the program, and hope that it 
will be reinstated for 2015 since it was not included in 2014. 
Those Capital Security Program projects have been very 
successful. It is a way to spend a little less to address 
security needs only where there really aren't space needs that 
go along with the security needs that would warrant new 
courthouse construction. There are many projects, including the 
one in San Juan that I referred to earlier, that are underway 
with fiscal year 2012 and 2013 funds. We didn't get 2014 funds. 
Hopefully we will get 2015 funds, and that is included in the 
President's budget submission, $20 million.
    We have several projects ready to go that have been 
approved already by the circuit judicial councils in Columbus, 
Georgia; Monroe, Louisiana; and Texarkana, Texas and Arkansas. 
And they are all in the $5 million to $7 million range, and 
they address security concerns in the space, some of which are 
the Marshals Service's space concerns for prisoner security and 
the like. And it is important that it be recognized that it 
includes both judiciary and Marshals Service's concerns and 
security needs, because without the capital security project, 
we can't really address the Marshals Service's end of it, 
because with our appropriated money, we couldn't do anything 
with their space.
    Mr. Crenshaw. Thank you.
    Mr. Serrano.

           PROBATION AND PRETRIAL SERVICES USE OF TECHNOLOGY

    Mr. Serrano. Thank you. I just told the world that GSA was 
looking at the possibility of building a courthouse in Puerto 
Rico.
    Judge Bates. They will be happy.
    Mr. Serrano. Offender supervision technologies. We always 
kind of leave that to the side because we seem to know about 
ankle bracelets and all that. But can you discuss how probation 
officers use technology to improve the supervision of 
offenders?
    Judge Gibbons. There has really been a transformation of 
the way supervision is carried out as a result of all the 
technological advancements. You referred to electronic 
monitoring. We now use new technologies for drug detection and 
abuse of prescription drugs detection. Probation officers are 
able to use data mining computer services to better keep up 
with offenders. We have a PACTS system, which is an internal 
system--I won't try to tell you what that stands for--in which 
officers are able to record their own notes and case events.
    We have an electronic data warehouse for probation and 
pretrial services officers to record workload activity, release 
data. We have another program called LENS that enables us to 
give electronic notice to local law enforcement if an offender 
is moving into an area. Offenders can report electronically, 
either online at home or at a kiosk. And, of course, all the 
probation and pretrial services officers have all these devices 
that they can use in the field or in the office, you know, the 
same ones that all the rest of us use, the phones, the iPads.
    One really interesting thing about this is how much the 
extent to which this revolution in technology of supervision 
goes hand in hand with our space reduction efforts, because one 
of the reasons we are able to reduce space for probation and 
pretrial services offices is because of what technology has 
done for supervision.

                ECONOMY'S IMPACT ON RE-ENTRY INITIATIVES

    Mr. Serrano. Mr. Chairman, I have one last question. I am 
not a lawyer, but I am told that a lawyer never asks a question 
that he or she doesn't know the answer to, so I will take a 
chance that I am wrong on this one.
    How has the economy affected the reentry initiatives to 
help people come back and find jobs?
    Judge Gibbons. Well, as I am sure you can imagine, it has 
had an impact. It is always not the easiest thing to place 
offenders in gainful employment, and, of course, the economy 
makes that harder.
    Another problem has been the lack of availability during 
sequestration of Second Chance Act funding, and that was, as 
you may recall, the funding that enabled probation officers to 
undertake so many of these initiatives that helped reintegrate 
offenders into the community, things like transitional housing, 
job training, educational training, cognitive behavior therapy, 
all those kinds of things.
    For 2014, courts can use their decentralized funds if they 
have them available for Second Chance Act funding, but for 
2015, we have requested $2.9 million in dedicated Second Chance 
Act funding, and that will help very much with the 
reintegration of offenders in good times and bad.
    Mr. Serrano. Thank you.
    As you know, Mr. Chairman, I am not a lawyer, but I did 
play a judge on Law and Order once.
    Mr. Crenshaw. Yeah, we know that.
    Mr. Serrano. I told the DA to behave, and he didn't, so I 
threw out the case momentarily and never got it back.
    Mr. Crenshaw. Boy. Good thing this guy doesn't have a law 
degree.
    Mr. Yoder.
    Mr. Serrano. He is just saying that because he didn't get 
the part.

                       AVERAGE CASELOAD PER JUDGE

    Mr. Yoder. I was right. Okay, a little bit of follow up on 
our last conversation regarding the amount of caseloads per 
judge. I think you said the optimal was 450 and that is when it 
means it is time to request a new judge or there is a need for 
a new judge at least. I don't know that I ever got an answer 
what is the typical, what is the average caseload?
    Judge Gibbons. I don't have that figure. I mean, we would 
have to do some--we would have to answer that supplementally; 
450 for a district judge is the figure that I recall as being 
the figure at which you start looking for need. But to look at 
the typical caseload across the country or average, we would 
have to give you that figure.
    You know, it is so--it differs so much, and the raw figures 
that we would give you would not be the weighted figures that 
are much more meaningful in terms of evaluating what the 
workload of a court is. Also the average figures wouldn't give 
you the caseload mix between criminal and civil.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Yoder. How many judge also are over a 450 caseload?
    Judge Gibbons. I don't know. We would have to provide that 
in a supplemental answer.
    [Clerk's note.--Subsequent to the hearing, Judge Gibbons 
and Judge Bates provided the following additional information:]

    The Judicial Conference uses a threshold of 430 weighted 
filings per authorized judgeship in a judicial district as a 
starting point for considering an additional judgeship. This 
threshold applies to what filings per judgeship in a district 
would be after a new judgeship is created, unless certain 
circumstances apply. Of the 94 federal judicial districts, 
there are currently 38 districts that would have average 
weighted filings above 430 with an additional judgeship, thus 
making each of those districts candidates for at least one new 
judgeship based on the weighted filings threshold. Some of the 
38 districts would be candidates for more than one additional 
judgeship.

    Mr. Yoder. Okay.
    Judge, do you have anything on that.
    Judge Bates. No, I don't know that specifically. The only 
figures I have in my head or in front of me relate to those 
temporary judgeships, and those courts have pretty high average 
weighted caseloads, even including that temporary judge. It 
goes all the way up to over 1,200 in the Eastern District of 
Texas and over 600 in Arizona, over 600 in Florida Southern. So 
some courts have very, very high----
    Mr. Yoder. What is the net effect on the public when our 
caseloads get to that amount per judge?
    Judge Bates. I think the primary effect on the public is 
delay.
    Mr. Yoder. Judicial delay.
    Judge Bates. Delay in dispensation of justice.
    Mr. Yoder. Where do you see the highest demand for new 
cases right now? Where is the increase coming from or where are 
the greatest demands on the court right now, what types of 
cases?
    Judge Gibbons. You know, this is not a period in which the 
courts' caseloads are rocketing up in any particular area. In 
fact, even the border courts which, of course, have seen 
dramatic caseload increases since the early, very early 2000s, 
have seen a very modest diminishment lately, although we do not 
expect any dramatic decline. And, of course, immigration reform 
could affect that greatly, probably on the upswing.
    But we do expect civil cases to increase somewhat. We 
expect--criminal cases have declined a bit, and we think we may 
see that. Bankruptcy filings have been down somewhat, but we 
expect them to level off in 2015. Appeals Court, I think those 
cases are pretty flat right now.
    So you never know exactly what is going to happen next in 
the courts, and things that happen in the country generally 
very much affect that. This is kind of a stable period.

              IMPACT OF LEGISLATION ON THE FEDERAL COURTS

    Mr. Yoder. Well, the economy was brought up earlier in 
terms of reentry programs. Those are things outside of your 
control that might affect the amount of folks that are coming 
back through the system, which will increase demand on the 
court system.
    You mentioned immigration, which is something that I don't 
know that Congress has really had much of a debate about 
regarding the impact on the court system, so I am actually 
really glad that you raised that as an issue because that will 
have to be taken into account.
    I think, in previous years, you mentioned when we pass 
significant reforms to enact, like redoing the Bankruptcy Code 
or if we were to do tax reform or things like that, just kick 
up dust in terms of they are new issues that have never been 
resolved just because they are new laws the courts will have to 
weigh in on as there are portions of the laws that, for better 
or worse, this congressional process hasn't tied up every loose 
end, and the courts have come in and weigh in.
    Are there things beyond immigration, or the economy was 
mentioned earlier, are there other bills that are pending? The 
bill that relates to mandatory minimum sentences that is in the 
Senate that Attorney General Holder is supporting, the idea we 
would eliminate mandatory minimum sentences, particularly for 
drug crimes, does that affect the court system in terms of 
caseloads?
    Judge Bates. It does, but not in terms of caseload, per se. 
The place where those kinds of sentencing reforms affect the 
judiciary is more in the release of people. But there are also 
some effects from caseload. If some of the sentencing reforms 
were put into place, it might mean some additional cases 
because some of the reforms relate to changes in the sentences 
under the sentencing guidelines for certain drug offenses.
    Mr. Yoder. So they would have to come back through.
    Judge Bates. So they would come back through the system, 
and that could be quite an additional workload for the courts. 
Early release programs have an effect, but it is on the courts 
more through the probation and pretrial services end of our 
resources than through new cases occurring.
    Mr. Yoder. I appreciate it.
    Thank you, Mr. Chairman.
    Mr. Crenshaw. Thank you. Mr. Quigley.
    And I would say if you are going to start your next round 
of questions with a joke, you might preface by the remark, 
``Here is another one you might not like.''

                         PRODUCTIVITY OF JUDGES

    Mr. Quigley. The story of my life. I am beginning to feel 
like Rodney Dangerfield. There is some humor in all of this 
because it is better to laugh than cry about some of it, I 
guess.
    But following up on Mr. Yoder's questions about judicial 
productivity, and I preface it by saying some of my best 
friends are judges, in watching them for 10 years, obviously 
some of them are more productive than others, much more 
productive than others. The difference at the Federal level, it 
is not exactly like you can fire them if they are really 
unproductive, and I recognize that most are very conscientious 
and work hard. But how exactly do the courts handle this in 
trying to get judges to be more productive and move their 
caseload along faster and take more cases?
    Judge Gibbons. You know, it sort of depends on the 
situation. As you can imagine, this raises sensitive questions. 
I have been a chief judge of a district court and if you are 
the chief judge of a court, whether a district court or an 
appellate court, you try as best you can to deal with the case 
of the unproductive colleague or the less productive colleague 
and you try also to deal with what the underlying cause for 
that might be if it is something other than simply just 
differing work styles.
    On the one hand, you do have to appreciate that judges have 
different ways of doing things, and they are entitled to make 
reasonable decisions about how to do things. On the other hand, 
if the productivity of a court as a whole is threatened, you 
have got some difficult decisions to make. You might have to 
figure out whether we can get the judge help or whether there 
is something that you can do to encourage the judge to change 
his or her ways. And you hopefully do it in such a way that the 
judge won't simply resist it. If there is an underlying cause, 
then, obviously, that is another very delicate situation, and 
you have to try to address that.
    The courts really have tried as best they can to address 
all of those situations and to do it with the best judgment as 
possible to exercise in a given situation.
    Judge Bates. Let me add to that. Judge Gibbons has 
addressed it from the primary place that it needs to be 
addressed, which is locally, where the chief judge and the 
other members of a court can really grapple with any particular 
instance that may occur.
    But there are some national efforts to address it. We have 
committees of the Judicial Conference that do look at the 
productivity of courts, how far behind courts are in terms of 
the average time a civil case may take to get through the 
system, the time to get to trial, things of that sort. Our 
Committee on Case Management and other administrative matters 
spends a lot of time looking at that and then reaching out to 
those courts and trying to give those courts additional help, 
guidance, expertise, to try to make them more efficient.
    Congress has also done things that help. The Civil Justice 
Reform Act is basically a reporting system for district courts 
where judges wind up reporting cases where they have pending 
motions--again this is on the civil side, not the criminal 
side, which sort of has a timeline of its own that is 
statutory--but the civil cases, the Civil Justice Reform Act 
requires reporting of motions that are more than 6 months old, 
cases that are more than 3 years old, and those are mechanisms 
to prod judges to be more timely where there is a need to do 
so.
    Judge Gibbons. And I might say that appellate courts have 
internal reporting requirements so that the embarrassment 
factor figures there, too.
    Mr. Quigley. I appreciate that. Thanks for your service.
    I yield back.

                  Chairman Crenshaw's Closing Remarks

    Mr. Crenshaw. Well, thank you both, Judge Gibbons, Judge 
Bates, for your testimony this afternoon. We look forward to 
working with you so that you can meet the constitutional needs 
that need to be met, and we appreciate the fact that you have 
been willing to work with us in these difficult economic times 
to try to do things more efficiently and more effectively, and 
that doesn't go unnoticed. So, again, thank you for being here 
today.
    The meeting stands adjourned.
    Judge Gibbons. We appreciate very much the opportunity to 
work with you all and the staff. Thank you.
    Judge Bates. Thank you all.

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                                           Thursday, April 3, 2014.

                     SMALL BUSINESS ADMINISTRATION

                                WITNESS

MARIANNE O'BRIEN MARKOWITZ, ACTING ADMINISTRATOR, SMALL BUSINESS 
    ADMINISTRATION
    Mr. Crenshaw. The hearing will come to order.
    I would like to welcome to our subcommittee our witness 
today, Acting Administrator Marianne Markowitz from the Small 
Business Administration. Thank you for being here to testify.
    Although the new SBA administrator has been confirmed, we 
felt we might give her a chance to get settled before we asked 
her to come over and testify. The SBA plays a critical role in 
assisting small businesses by providing them with access to 
capital, opportunities to compete for government contracts, 
counseling, and technical assistance. In addition, the SBA 
helps businesses and homeowners affected by disasters through 
the disaster loan program.
    I would like to highlight a few SBA-related successes in my 
district. Heavy Equipment Resources of Florida is a company in 
Jacksonville and it has been named the Florida Small Business 
Exporter of the Year by the SBA. This Florida small business 
specializes in exporting components and heavy machinery to 
mining and earthwork companies all over the world. In 
additional, the Jacksonville Women's Business Center won the 
SBA's women's business center excellence award for Florida. I 
am proud of all the work that the small businesses in my 
district do and I appreciate that the SBA does a great deal to 
help them get started, to grow, and to succeed.
    The Fiscal Year 2015 request for the Small Business 
Administration totals $865 million. That is a $64 million 
decrease from the fiscal year 2014 levels. This decrease is 
primarily due to the decrease in the business loan subsidy 
program. Since the financial crisis has wound down, the cost of 
subsidizing small business loans has gone down, and this is 
good news for U.S. small businesses and it also shows that the 
economy is growing stronger and businesses are thriving.
    While there is bipartisan support for helping small 
businesses, we need to make sure that your programs are 
administered efficiently and effectively and that we are not 
wasting taxpayers funding on ineffective programs. With that in 
mind we want to hear about areas where the SBA can do more with 
less.
    The SBA Fiscal Year 2015 request asks for $155 million for 
Stafford Act disaster loan administration and $32 million for 
the non-Stafford Act disaster administration. In 2013 the 
Congress passed the disaster relief appropriations act, to 
support the SBA's efforts and to help in the northeast region 
after Hurricane Sandy. The SBA has continued to carry over 
large amounts of no-year funding for the disaster subsidy. As 
of your last monthly report, the SBA has $736 million in 
subsidy funding supporting 8.7 billion in available disaster 
loan program funds, and yet the SBA has spent $82 million in 
administration, but only $15 million on subsidy funds. So I am 
interested to hear how the SBA justifies spending more on 
administration than it does on program costs.
    Whether it is counseling small businesses that are just 
starting or helping businesses scale up, the SBA has a very 
important role to play in helping the U.S. economy grow. It is 
critical that the funding this committee appropriates to the 
SBA, is used thoughtfully and judiciously.
    This committee is very interested in hearing exactly what 
the SBA is doing to further promote small businesses and their 
access to capital.
    So thank you for being here today. We look forward to your 
testimony.
    And now I would like to recognize the ranking member, Mr. 
Serrano.
    Mr. Serrano. Thank you, Mr. Chairman.
    I would also like to join you in welcoming Ms. O'Brien 
Markowitz, acting administrator of the Small Business 
Administration to the hearing today.
    Small businesses are invaluable engines of economic growth, 
job creation, and innovation, and I am pleased to be able to 
discuss these important issues today.
    The SBA represents the Federal Government's investment in 
this critical part of our economy. You have the important job 
of nurturing and facilitating entrepreneurship while also 
making sure that people who have been historically underserved 
by bank loans, like women, minorities and veterans, have 
opportunities to grow their businesses. When these individuals 
have good ideas and firm foundations for their new businesses, 
they deserve help to succeed.
    As our economy improves we need to make sure that we can 
are taking fostering and supporting new ideas and new 
businesses in every segment of our society. As I examine your 
fiscal year 2015 budget request, I am concerned that you are 
again proposing to cut funding to the PRIME program. These 
grants fund technical assistance, capacity building and 
research and development for organizations that help low income 
entrepreneurs. This program is crucial to helping small 
businesses get off the ground. So I hope that this subcommittee 
will once again reject this proposed cut.
    I am encouraged, however, by the continued funding for the 
Micro Loan program. This critical program funds the start-up 
and expansion of small businesses that only need small amounts 
of money to succeed. I hope that this commitment can be 
maintained and extended to other programming.
    I thank you for your service and for appearing before us 
today. I look forward to discussing the important work of the 
SBA with you in more detail, and once again, thank you for your 
service.
    Mr. Crenshaw. I would like to recognize the Acting 
Administrator. Your written statement will be made a part of 
the record, and the floor is yours to give us your testimony.
    Ms. Markowitz. Thank you, Chairman Crenshaw.
    Thank you, Ranking Member Serrano, and distinguished 
members of the subcommittee for this opportunity to testify 
today.
    We appreciate your ongoing support for the SBA as we work 
to assist the entrepreneurs who are creating the majority of 
new jobs in this country. We know you share our commitment to 
America's small businesses.
    We remain focused on our core mission. We call it Three Cs 
and a D. Helping small businesses access capital, contracts, 
counseling, and disaster assistance. The SBA is pursuing 
programs to help small businesses export for the first time, to 
help early stage start-ups get the capital they need, and to 
help existing companies scale up, create more jobs to grow our 
economy.
    Last year was the third straight year that the SBA 
supported over $29 billion in lending to more than 47,000 small 
businesses. We also assisted more than 46,000 businesses and 
individuals through $2.8 billion in disaster lending.
    For fiscal year 2015, the SBA is requesting an 
appropriation of $710 million. This funding would enable us to 
support loans totaling $36.5 billion over the next year. Our 
budget request would allow us to deploy nearly 4 billion in 
long term investment capital. It would facilitate access to $80 
billion in Federal contracts for small businesses who are too 
often shortchanged in our procurement processes.
    Additionally, it would enable us to work with our resource 
partners to counsel and train more than 1 million small 
business owners over the next year so they can grow their 
companies and create more middle class jobs.
    We are seeking full funding for our Small Business 
Development Centers, our Women's Business Centers, our 
Veteran's Business Outreach Centers and our national network of 
SCORE mentors and volunteers.
    Notably, our fiscal year 2015 budget request represents a 
$64 million reduction in our business loan subsidy. We have 
dramatically reduced our subsidy for the 504 loan program down 
to $45 million, and I am proud to report that for the second 
consecutive year the SBA is requesting no credit subsidy for 
the 7a loan program. We are making good loans to responsible 
borrowers and we are managing our risk under these programs 
that we are good stewards of taxpayer dollars.
    Our borrowers report that these programs, the 7a and 504 
programs together, support over 650,000 jobs in this country.
    We are requesting authority to continue 504 refinancing 
lending. This program allows business owners to refinance 
existing debt and lower their monthly business costs. 504 Refi 
was a successful program that expired at the end of fiscal year 
2012. It supported $5.5 billion in lending over just 2 years. 
We are requesting zero subsidy, meaning that we can project no 
taxpayer cost to extend this program.
    We are focusing on helping our innovators take new products 
and services to market. Our request for $4 billion in lending 
authority for Small Business Investment Companies will ensure 
that our most cutting edge small businesses, including advanced 
manufacturers, have the capital that they need.
    We are helping start-ups through our growth accelerators 
program. We are working with nonprofits, universities, and 
other partners with a demonstrated expertise in turning 
promising new ideas into successful new businesses.
    Our budget ensures that our transitioning military veterans 
come home with new opportunities to grow the American economy. 
Each year, more than 250,000 service members transition home. 
We know these heroes have the leadership skills to grow 
successful civilian enterprises as small business owners. Our 
Boots to Business program allows them to continue to serve 
their country as job creators. We are requesting $7 million to 
meet Department of Defense's request for SBA to train 
transitioning service members at more than 200 installations. 
We are also making it easier for veterans to access capital by 
reducing or eliminating fees on SBA loans.
    We are prioritizing entrepreneurial education so successful 
small businesses can become medium and large businesses that 
create more jobs. This initiative builds on the success of our 
Emerging Leaders program. To date, two out of three companies 
that have been through this program have increased their 
revenue, three out of four have hired new employees, and nearly 
half have secured government contracts. We are requesting 15 
million to expand a program with proven results.
    We are also asking for full funding for disaster loan 
assistance as we continue to make process reforms to ensure 
that homeowners, renters, and businesses have access to rapid 
SBA assistance when they need us the most.
    I would like to close by addressing SBA's ongoing 
commitment to root out waste, fraud and abuse in our 
contracting and lending programs to ensure that Federal dollars 
go to deserving small businesses. We have a zero tolerance 
policy for these types of abuses. Since 2008, we suspended and 
debarred more companies and individuals for abusing SBA 
programs than in the previous 10 years combined.
    At the same time we have tightened our belts within our own 
operations at the SBA. We are saving $600,000 in rent by moving 
our DC office into our SBA national headquarters. We have 
reduced our fleet management expenses by 9 percent through 
reductions in our fleet. We have invested in new equipment that 
will save us a half million dollars in copying expenses over 
the next 5 years, and we have reduced SBA travel expense 25 
percent compared to fiscal year 2012 levels.
    We are committed to fiscal discipline at the SBA, and we 
hope that this subcommittee will factor that in as it weighs 
its support of a critical programs that serve America's small 
businesses. Thank you.
    Mr. Crenshaw. Well, thank you very much.
    And I think you know this committee has been very 
supportive of the SBA over the years, and rightly so. We 
appreciate the good work that you have been doing.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Crenshaw. One of the things I want to ask about is in 
terms of the dollars we appropriated for disaster 
administration and disaster loan subsidy funding over the 
years. I think it was in 2013, it was $800 million for 
Hurricane Sandy, and then for fiscal year 2015, the total 
request for disaster loan administration is $187 million.
    As I said in my opening statement, you tend to carry over 
large amounts of funding for disaster subsidy. And I guess the 
question is if you look at last month's report, you had $736 
million in subsidy and $296 million in administrative funding 
through February of this year.
    But, you had only spent $15 million on disaster subsidy and 
$82 million on the administration of these funds, and we want 
to be sure that the disaster victims get all the resources they 
need and we appreciate the work that you do, but it seems like 
that might be out of balance; and so can you tell us how you 
justify that funding imbalance?
    Ms. Markowitz. Sure, thank you Chairman Crenshaw.
    And before I start with my answer, I want to thank you and 
your subcommittee for all your hard work that enabled us to 
have the 2014 budget and allowed us to enact the programs that 
we need to support our mission and our small businesses.
    Around the funding for disasters, our actual request for 
187 in administrative Stafford, non-Stafford funds is actually 
a reduction from the year before, which was 192, and that 
reduction was because we made process improvements in our 
administrative functions. The way the disaster loan program 
works is actually quite efficient. It is flexible.
    So in between catastrophic disasters, we have a core level 
employment and we scale up very quickly after a disaster. Going 
into Sandy, we had about 1,100 employees; just after Sandy we 
had 2400 on staff because we keep a stable of on-call employees 
at the ready who are fully trained.
    We have been able to reduce our funding request because we 
were able to take a hard look at that core employment number 
that we keep in place to manage floods and droughts and ongoing 
disasters and we were able to reduce it because of process 
improvements we made around our queueing systems, but also 
because we rely more heavily on innovations in technology. So 
we rely more heavily on electronic loan application processes. 
So we saw that adoption go up quite a bit after Sandy. About 33 
percent before Sandy and 55 percent after Sandy. So we continue 
to make improvements in our administrative areas in disaster.
    And regarding the amount that we requested for Sandy, we 
acknowledge there was a mismatch in terms what we requested and 
what we ultimately needed. But the reason for this is we go off 
past history in our disasters. The scope and the scale of this 
disaster was quite large and looking at our past disasters, we 
made some estimates. But what we didn't anticipate was that in 
this disaster the demographic was very different. They had 
access to insurance, or they had insurance. They had access to 
quite a bit of equity in their homes. They also had access to 
commercial programs that were more competitive than the 
programs that we can offered. So the demand didn't ultimately 
happen in the way that we thought it would and that is the 
reason there was a bit of a mismatch.
    So we continue to look at this. There is always lessons 
learned from disasters. We continue to refine not only the way 
that we estimate our need, but also our administrative 
functions.
    Mr. Crenshaw. Well you have $297 million carried over and 
then ask for 187 for next year--is that normal? Do you always 
have that kind of carryover balance?
    Ms. Markowitz. I can honestly say that in my 2 months as 
acting administrator I haven't familiarized myself with that 
level of detail as to how they managed that.
    Mr. Crenshaw. Okay. That might be something to look into 
because if you have got almost $300 million in the bank, that 
is for administrative expenses, to ask for more on top of that 
there might be a better way to deal with that.
    Ms. Markowitz. Yes, we will continue to look into that. 
Thank you.
    Mr. Crenshaw. Thank you very much.
    Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman.
    So you have been acting SBA administrator since February 
8th of this year?
    Ms. Markowitz. That is correct.
    Mr. Serrano. And have served as the administrator for the 
SBA midwest region, Region 5, since August of 2009? How has 
serving as Acting Administrator changed your impression of the 
SBA and its ability to assist small businesses around the 
country? Because, you know, we speak a lot in Congress about 
small businesses. In fact there are many of us who feel that 
that is the engine that drives the economy, and yet the SBA 
takes both a lot of support and a lot of criticism; how do you 
see it now in this new role that you have?
    Ms. Markowitz. Thank you, Ranking Member Serrano.
    That is an interesting question. I mean, I loved my role as 
regional administrator and it has been really interesting to be 
on the ground working with small businesses face-to-face in 
understanding their needs and also seeing how we address their 
needs, you know in many cases very well.
    Being the head of the agency for a short time, you know, I 
have seen how it all comes together. So I mean, I think I don't 
know if it has changed my perspective. I guess I have a fuller 
understanding of how the agency works together and all the 
programs that work to support us in the field. And I have a 
better appreciation for all the work that goes on at 
headquarters to ultimately support the field.
    Mr. Serrano. Um-hmm, and let me ask you a question, one of 
the issues that always comes up all the time that I have been 
on this subcommittee, both as chairman and as ranking member; 
is whether or not the disaster fund is in good shape, and 
notwithstanding a lot of discussions we have had in this 
country about global warming, or now it is called climate 
change. You know it is the same with liberals. We used to be 
called liberals. Now we are called progressives.
    Ms. Markowitz. Um-hmm.
    Mr. Serrano. So we have climate change now. It looks like 
this is not going to end for a while. There will be need for 
assistance. And what shape are we in? Or is that something 
where SBA feels that as the issues come up, they will come to 
Congress to ask for help?
    Ms. Markowitz. You know, I don't----
    Mr. Serrano. I mean, because unfortunately the next Sandy 
we can't predict it. But everything indicates, that there will 
be the next Sandy somewhere, and the devastation that is left 
behind is something that certainly in New York, where we are 
used to a couple of inches of snow and people get upset about 
that, but this was a devastation that we had seen only in 
videos from other parts of the south and the midwest and had 
not experienced. You wonder what shape are we in to meet those 
disasters in the future.
    Ms. Markowitz. Thank you, Ranking Member Serrano.
    I can tell you that in my time here I have gotten to know 
more about disaster. I haven't familiarized myself with how 
they estimate and move forward with how they decide how well 
funded they are. But I can tell you we have a lot of experience 
in that area. We have a 20-plus-year employee that runs 
disaster, we continue to have lessons learned, both 
administratively and also on the you know, on the funding side 
from every disaster. We take those on-board and we continue to 
reengineer, we continue to make process improvements in that 
area.
    Mr. Serrano. Another question. You are asking a 60.3 
million decrease from fiscal year 2014 level for SBA. This 
seems to be largely due to the decrease in loan subsidies. What 
does this say about the state of the economy, how many loans 
will you be able to support with the requested amount? Do you 
think you will hit the authorized cap for 7a loans this year 
and has that happened before?
    You know any time we see a decrease being asked for, you 
wonder if it is a budget issue or in fact people see fewer 
problems coming down the road, which I have just spoken about. 
So the Request, is the statement more about the economy or 
about the agency, or both?
    Ms. Markowitz. So thank you, Ranking Member Serrano. Let me 
take your question apart a little bit. The decrease in funding 
is around if the 504 subsidy, and the cap for the 504 subsidy 
is 7 billion, and the decrease in subsidy is really because of 
the improving economy. This is a real estate program, the 
improving state of our real estate in our country. So that is 
the reason for that decrease in funding.
    The 7a program, the cap is 17.5 billion. This year we had 
very spiky sort of volume in that program and we are continuing 
to monitor it. If we feel that we are coming close to the cap 
in 7a, which we have come close to before, we will come to you 
for more authority.
    For next year we are asking for 17.5, again, because--the 
way our programs work, they essentially are inversely related 
to the recovering economy. As the economy recovers the 
conventional loan market recovers, the gaps in credit shrink 
and that is where our program lives. We live in the gaps in 
credit. So as the gaps expand, our programs expand, our loan 
volume goes up. And as they shrink our loan volume goes down. 
So we feel pretty confident about not reaching those caps next 
year.
    Mr. Serrano. Well, I think for your testimony so far and I 
can tell you one thing and I say this in support of your 
agency. You are not one of the agencies that gets mentioned 
every day on the Floor of the House. But yet when something 
hits hard you are the first one we go to for help and so do the 
American people.
    So, you certainly have the support of this committee. And I 
know if I speak for the Chairman, anything we can do to make 
your work easier and your services better, we will be there.
    Thank you.
    Ms. Markowitz. Thank you.
    Mr. Crenshaw. Thank you.
    Mr. Womack.
    Mr. Womack. Thank you, Mr. Chairman.
    And thank you. Madam Acting Administrator O'Brien 
Markowitz.
    I can't believe that Mr. Serrano would ask you questions 
and that you wouldn't have the answers for. You have been there 
all of 2 months and you don't know all of this stuff? I am 
kidding, obviously.
    But welcome aboard, and it is a delight to have you before 
our committee. May I start out by throwing a shoutout to a 
gentleman in your organization. You probably don't know this 
guy, and I have never met him but my staff has worked with him. 
Nick Coutsos--I see a couple of heads nodding over there--
worked with one of my constituents on a matter that was 
critically important, and let me just tell you, when any of us 
up here, regardless of party affiliation, have an experience 
that is worth bragging about--I mean, we beat you guys up 
enough on other things, but when something good happens it is 
important for people to recognize them, and I sure hope that 
down the chain Mr. Coutsos will know that his work didn't go 
unnoticed. But again, I thank you for your time here today.
    And I admit that I have another competing subcommittee, 
Defense, that Mr. Crenshaw and I share, and I am going to have 
to escape. Thankfully, Mr. Yoder has come in so that you won't 
have to just look at Serrano and Crenshaw this whole time. I 
realize that is a problem.
    In my district we had an issue with the SBA being sued 
after they guaranteed a loan for the C&H hog farm, when 
environmental questions arose after the fact. This, my office 
was told, created a new review process for Ag loans through the 
SBA. Now another group of constituents sought help from my 
office on an Ag loan that they submitted in August, throughout 
which the SBA kept coming back and kept asking for additional 
documentation that I guess had not previously been part of the 
process. So it is frustrating from a staff perspective for my 
constituents to try to navigate this. So, is there an average 
timeline for SBA applications?
    Ms. Markowitz. Thank you, Congressman Womack.
    I wish I could give you an average time, but the reality is 
we have different loan programs that have different averages 
and every loan is different. In the best case scenario, say in 
an SBA express loan, it can be approved in the matter of hours. 
It depends on the lender that you are going through and whether 
they have preapproved authority to approve the loans and 
whether it is a lender that does fewer loans and they have to 
go back to our service centers. So it really it depends on 
those factors to some degree.
    But also remember that we are coming to you asking for a 
zero subsidy in the 7a program and is there is a reason for 
that. We are managing this program well, we are managing the 
risks in this program and much of that is done in this process 
that we are talking about right now, the underwriting process 
and evaluating the loan applications, and the risks that are 
inherent and the environmental and other issues. So I know it 
can be frustrating, but that is the reason for this.
    Mr. Womack. So in the example I just gave that prompted at 
least to our understanding a new review process on these Ag 
loans, what would be the protocol that goes into reestablishing 
a process that would be influenced by a case like our case that 
drew so much attention after the fact?
    Ms. Markowitz. Sure. I wish I could have Karen--I wish she 
was here to come and testify. Thank you for that question, 
Congresswoman Womack. I can't give you full details on that, 
but I can give you a just a brief--my understanding of the 
issue. And that is----
    Mr. Womack. Give me your understanding. And if there is a 
more technical explanation, just provide that to my office 
would be great.
    Ms. Markowitz. Okay.
    Mr. Womack. We would love to be able to see that so that my 
staff members can have a better understanding and can explain 
it to our constituency better and maybe prepare them for what 
might lie ahead.
    Ms. Markowitz. Sure. So, our loan processing revolves 
around the lender puts in an application, it goes through the 
service center. If everything is normal and it can be handled 
at the service center, it is. If there is an question or 
something that comes up it goes to Sarah's office, she is the 
general counsel, and they work out the legal issues, and if 
there is something that they see that could be a reoccurring 
issue or something that we can use as a lessons learned issue, 
they work closely with our risk management area and they 
continue to reengineer the processes around this. So I think 
that is what we are talking about here.
    Mr. Womack. Do these changes create a backlog for your 
agency that might complicate a budget as an example?
    Ms. Markowitz. I think what we are talking about are loans 
that go straight through and they are not held up by the 
exception items that go off to the side. So there are exception 
items, like the one I think we are talking about right now, 
that go off into a side process and are managed thoroughly and 
thoughtfully by the legal staff.
    So I don't think it causes a full backlog of the whole 
process, but it may cause a little bit of a delay on that 
particular loan that has a particular issue.
    Mr. Womack. One other question about technology and your 
budget. Flexibility, as you know, is a key to success when we 
are dealing with time frame and resources are strained. So I 
would like to just a basic overview of how leveraging of 
technology within the SBA is helping during these critical 
resource constrained times.
    Ms. Markowitz. Sure.
    Well, thank you, Congressman Womack.
    That depends on the different areas. We are constantly 
working to reengineer the technology. Again as I mentioned in 
disaster we are relying much more heavily on the electronic 
loan application process which has caused a decrease in our 
funding request.
    We are rolling out SBA One, which is a new heavily 
streamlined technology-based application process in the rest of 
our lending programs and that is a huge improvement that is 
coming later this year. So there is that. There is some 
technology projects that are on ongoing in our GCBD area. We 
are continually changing our technology. We just brought on a 
highly competent brand new CIO who is ramping up her staff and 
looking at all the ways that we can continue to advance in this 
area.
    Mr. Womack. Before I leave and before I close out this--my 
portion of the hearing, I would just like to be on record as 
saying congratulations to this agency, Mr. Chairman. You know 
when I look in here and see that they have made some changes in 
their travel budget that saved 25 percent, that they have 
consolidated some office space that is saving $600,000 and 
reduced the fleet management expenses by more than 9 percent, 
it demonstrates to me that the SBA is behaving more like the 
small businesses that they support, that they recognize that we 
do live in constrained resource times and that they have got to 
do their part to root out these kinds of excesses. So I want to 
congratulate you for that and thank you for your testimony here 
this morning.
    And I yield back.
    Ms. Markowitz. Thank you, Congressman.
    Mr. Crenshaw. Thank you.
    Mr. Yoder has joined us and he is collecting his thoughts 
and preparing an exciting question. So, while he does it that, 
let me ask a question.
    We all talk about how half the folks in our country are 
employed by small businesses and two-thirds of the new jobs 
that are created and you all do a tremendous job of helping in 
that. But one of the concerns that I hear from time to time 
talking to the small business folks is that sometimes maybe you 
focus on the high growth small businesses that are doing pretty 
well, and sometimes the true, true small businesses that are 
just getting started don't always get the same attention; and 
it would seem that if you are a growing small business, you 
have I guess easier access to capital than you might when you 
are just a brand-new start-up.
    So can you tell us in your view are we giving enough 
priority to the true brand new start-ups?
    Ms. Markowitz. Thank you, Chairman Crenshaw.
    We absolutely are and we help a lot of different businesses 
in all different areas of their life cycle and start-ups is 
definitely a focus for us. Outside of access to capital, in 
this budget we have requested $5 million for growth 
accelerators and that is directly targeting, strengthening the 
start-up ecosystem.
    Essentially these accelerators employ experienced 
entrepreneurs to serve as facilitators to bring together a 
group of highly vetted, high potential start-ups and they help 
them access networks of you know, mentors and other forms of 
capital, even outside of our programs, venture capital, angel 
capital, et cetera. That is one area that we are focusing on 
start-ups.
    But in another important way that we are focusing on the 
access to capital programs is that we have asked to set zero 
level of fees for loans under 150,000 just for that reason. To 
spur sort of demand in the lower level, the lower dollar loans. 
And those are the loans that start-ups are looking for. They 
are not asking for a million dollars.
    And then on the supply study to also spur demand in that 
area we have introduced the Small Loan Advantage program along 
with its partner program, the Community Advantage program, and 
these are just for that reason. We streamlined the platform 
that our 7a loan program is offered on in the Small Loan 
Advantage to help encourage banks to make these less profitable 
loans. A smaller loan is less profitable, has higher risk for 
the startup and with other industries in certain communities, 
and to make it more profitable and less time consuming, 
encouraging the bank to make more loans at that level.
    And then the Community Advantage program is for the same 
reason. To work through mission driven, not-for-profit lenders, 
with the scaled down streamlined version of our 7a program to 
help encourage them--give them another tool to make access to 
capital available to higher risk industries, higher risk 
communities, and start-ups.
    Mr. Crenshaw. That is great, because one of the things I 
read is that micro loans, $50,000 to $350,000, actually have 
been on the decline. But it sounds to me like you have 
recognized that. I was going to ask you about incentives and 
things, but it sounds like you recognized that and are working 
to make those loans available.
    Because, as you point out, sometimes is takes the same 
amount of work to make a $100,000 loan as a million dollar 
loan. And so banks may say they would rather make the million 
dollar loan. But I think when we look at small businesses it is 
important to let our focus be on some of the true start-ups. So 
thank you for recognizing that.
    Ms. Markowitz. Thank you, Chairman.
    Mr. Crenshaw. Mr. Yoder.
    Mr. Yoder. Thank you, Mr. Chairman.
    Thank you for joining us today, and appreciate your service 
at the SBA, and consistent with the Chairman's remarks, I think 
we all know that job creation, job growth comes from our small 
businesses, our entrepreneurs.
    The Federal Government is not going to grow the jobs that 
is going to create a rejuvenation of our economy. It is not 
going to come from big businesses; it is going to come from 
small businesses, and so we thank you for your work. We know 
that you are sort of the tip of the spear when it comes to the 
economy.
    We spend a lot of time on both sides of the aisle talking 
to constituents and talking particularly to small businesses, 
local companies, whether they be a high-tech start-up or a mom 
and pop shop that has been on Main Street for 30 years, and 
spend a lot of time trying to figure out how to help them grow; 
I know you do the same thing. I thought you might give us some 
insight on what you and some of your staff have heard and 
feedback we should be hearing regarding what holds small 
businesses from going out and taking risk and maybe adding 
another employer or employee and expanding.
    And I wondered if you could just shed some light on what 
you hear. And as I have been out in my district, I hear 
concerns about Federal policy, uncertainty created in 
Washington policy. Whether it be policies or past, in previous 
years or policies we are looking at now as we change the rules, 
it creates I think uncertainties for businesses. That they want 
to know what the cost of doing business is they wait on us.
    I hear concerns about the Dodd-Frank rules being 
implemented and their impact on community banks and how that 
might affect local lending. I hear concerns about the Federal 
tax burden and small businesses concerned about taxes that have 
gone up in the past few years.
    We all hear concerns about the Affordable Care Act and 
whether businesses can accurately determine what their costs of 
health care are going to be.
    We hear concerns about regulatory costs. That as a new 
regulation comes down it might have been affect a business and 
the lack of predictability in that. Immigration concerns come 
up a lot. Folks having trouble getting access to labor or the 
rules being difficult for them to follow through. Job training, 
being one. Whether there is a well prepared labor pool in the 
region. Maybe businesses say we may go overseas because we 
don't have access to the engineers that we need locally.
    Depending on the businesses, there are a variety of 
concerns. I just wanted to share with you some of the concerns 
that I hear and in general I hear that all of these policies 
together make it difficult for small businesses to calculate 
the cost of hiring a new person, when they are not sure what 
their health care costs are going to be, their tax burden is 
going to be, their regulatory burden is.
    And so what do you hear out there and what can we do 
collaboratively to try to improve the climate to encourage our 
small businesses to feel comfortable to take risks and hire new 
people and help get our economy moving again?
    Ms. Markowitz. Sure. Thank you Congressman.
    We hear a lot of different things from different 
businesses. Some businesses are more focused on that and some 
businesses are focused on access to capital and how we can help 
them with more fundamental counseling around, you know, 
business decisions. We help businesses with all of this, and we 
certainly, you know, do a lot to get out and message around 
changes in our regulatory environment.
    We spent a lot of time out on the Small Business Jobs Act, 
which was the largest piece of legislation to impact small 
businesses in the last 10 years. It was very positive 
legislation, so we were out talking about the 17 tax cuts that 
the President put forward for small businesses.
    We went out and did a lot of messaging around the 
Affordable Care Act, because this a huge law that businesses 
had to learn about and understand how to respond to, and you 
know, what I encountered in that outreach--I did about 30 
seminars on the Affordable Care Act, so I heard a lot from 
small businesses about this. I first and foremost encountered 
an awful lot of confusion and that was holding businesses back 
from doing their detailed analysis about how they could and 
should respond to this law. So we did a lot of work to clear 
that up and we continue to work in that area.
    And, you know, you would be surprised by how fundamental 
issues are for businesses when--depends on if you are talking 
about a startup or a larger business or whether they are 
focused on regulatory issues or not. We do everything we can 
through our counseling resources through our field office and 
structures to meet their needs on these questions.
    Mr. Yoder. You brought up some of your seminars that you 
did on the Affordable Care Act. How much new staff time has 
been devoted towards just the implementation of that? We are 
kind of at a real hot point right now as the penalties and 
mandates are going into effect for certain segments of the 
economy. There have been some delays, which causes you know 
additional, probably some confusion. Folks don't know what is 
being implemented and what is not. And both sides have 
advocated for certain delays. I think that is part of the 
challenge.
    How much time has your staff spent on that? Is there a 
spike right now? Has it sort of subsided? What sort of traffic 
are you getting on implementation of that, questions from 
businesses?
    Ms. Markowitz. Sure, Thank you Congressman.
    Just to be clear that our field staff is primarily an 
outreach organization and what we do in our normal operating 
business is outreach. So we haven't spent any additional time, 
I mean that is what we do, outreach. And responding to 
questions about this new law falls in the scope of our duties.
    So one really happy by-product that happened as a result of 
this outreach, there is so much general interest in 
understanding this law and learning how to respond to it that 
we reached whole new groups of small businesses. And we often 
will do a side-by-side seminar, ACA seminar, SBA seminar. So we 
reached whole new groups with our message, which deepened and 
broadened our levels of businesses that we touched with our 
services. So there was no new money or time being it spent. It 
is just part of our normal activity in the field.
    Mr. Yoder. And in terms of interest level, is it higher now 
or are folks sort of getting a good understanding of it? 
Because, obviously our offices get lots of calls, lots of 
concerns, lots of just uncertainty. Whether you are for the law 
or against the law, we can continue to debate that and we do in 
this town. But your job obviously is not to render a decision 
on whether it is a good law or bad law, but just to get out and 
to make sure that whatever laws are the books that people have 
the information so that they can move forward.
    And, I think what we all want is a growing robust, economy 
and that means that Republicans and Democrats have to work 
together and ensure that you have the tools necessary when you 
are out there to answer all the questions that you need and 
have the resources to help these small businesses.
    Because I think, as we started, that is the key to our 
economy, and so we want to encourage and support your efforts 
and ensure that we are not doing anything with some of these 
policies that we have brought forward to make it harder.
    And so if you will let us know thing things at least that 
you are hearing that might allow us to modify policies, make 
things more effective or at least easier for these businesses 
to grow and expand, I think we are looking for opportunities 
for everybody to work together to do that. I appreciate your 
efforts.
    Ms. Markowitz. Thank you.
    Mr. Yoder. Thank you.
    Mr. Crenshaw. Thank you.
    Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman.
    You know throughout the years that I have been on this 
committee, from its start-up actually, it existed in the past 
as the Postal Subcommittee then it came back as the Financial 
Services Committee, but both as chairman and ranking member 
there is always something that happens and it is happening 
again, and that is the disconnect between the support that the 
PRIME technical assistance program has from Members of Congress 
and the continued desire by the Administration to get rid of 
it. And we see it happening again.
    First of all, and again it is unfair to ask you questions 
you know, 2 months in, but is there something about that 
program that the administration has looked at to see why it is 
so popular with Members of Congress and why it is so unpopular 
with you folks? Because it gets restored every year, every year 
it is almost like a done deal. You propose to get rid of it, 
you and your predecessors, and then we restore it.
    And restoring around here is not something that we take 
lightly, especially in this climate. You know, people saw 
things that they really want to restore, and I suspect it is 
going to happen again this year, or at least there will be a 
big push to do it. So what do you think is the disconnect?
    Ms. Markowitz. Thank you, Mr. Serrano.
    Mr. Serrano. And I am not assuming Members of Congress know 
best.
    Ms. Markowitz. Sure. Well, this sort of links back to your 
question earlier about how has my perspective changed now that 
I have had this experience as the acting administrator. As the 
regional administrator, I know the organizations in my area 
that benefit from PRIME and who really want PRIME to be 
restored and I understand the good that it does. Being in this 
seat, I also understand that as an agency we have to make hard 
choices and PRIME is one of those hard choices we have to make.
    While we fully support the good that it does, you know when 
you are looking at a whole organization and the funding 
structure, we also know that we have some overlap and we have 
some duplication with PRIME and some of our other programs.
    And so sitting in this seat we have to make choices around 
that duplication. That is why we don't always go back and ask 
for funding in PRIME.
    We have, as you mentioned, funding in the micro loan 
technical assistance area which provides technical assistance 
to people seeking micro loans by a large and low income areas. 
This is the same population, the same assistance that PRIME 
seeks to give.
    And then outside of micro lending we have also requested 
full funding of our resource partner network then which would 
then give us access to all the counselors through this. SCORE, 
the SBDC and the Women's Business Center, who also provide 
technical assistance and counseling in these low income areas.
    So that is the main reason. We have nothing against PRIME, 
we fully applaud the mission. It is really just about making 
the hard choices that we have to make around the budgeting 
process.
    Mr. Serrano. So what you are basically saying is that the 
information that the agency has, which Members of Congress may 
not have, is that PRIME, while it serves a purpose is a 
duplication in many cases and that is the reason why year after 
year people try to get rid of it.
    Because I have seen a lot of programs where you have 
support for it and you have support for it in Congress. But I 
have never seen one where it is almost like universal the 
support for it and almost understood that you know, when you 
are going to look at a budget to put together this bill you 
almost kind of put that aside and say, well that is going to 
get funded so let's move on to item two. If you are saying it 
is a duplication, if that is a case even from a fan like 
myself, maybe it is time the administration--the Small Business 
Administration lets Members of Congress know where the 
duplication is so that we stop this yearly occurrence.
    Ms. Markowitz. We can give you more details about how the 
determination was made to not include PRIME and you can make 
your own determination about that. But I understand. It is a 
good program. We really just can't fit everything into our 
budget. So thank you.
    Mr. Serrano. Okay. But here is my last point on that. I 
don't want to drive that to death. You say it doesn't fit into 
the budget so you make that cut. But that is the one that 
always keeps getting cut. So there must be something more than 
a budget issue every year. Somebody, somewhere or some folks 
somewhere in the administration, must feel that this program is 
not worth a penny, because it just doesn't get reduced, it gets 
cut every year.
    Ms. Markowitz. I can honestly say I don't have the details 
on that. I only understand it as a budget item and an issue in 
terms of duplication.
    Mr. Serrano. Well, we would appreciate it if you could get 
us more information on that.
    Ms. Markowitz. Okay.
    Mr. Serrano. For Women owned and minority owned businesses, 
the Small Business Act sets a government wide goal of 23 
percent of Federal procurement contracts going to small 
businesses with specific goals for different categories of 
small businesses. Can you tell the subcommittee how the Federal 
Government is doing on meeting these contracting targets?
    Ms. Markowitz. Thank you, Ranking Member Serrano.
    We are still analyzing the data from fiscal year 2013, so I 
can't comment on that today. But we can talk about fiscal year 
2012 still and we had some great successes.
    We exceeded the 3 percent goal for service disabled 
veteran-owned businesses for the first time ever, and around 
our socially disadvantaged or 8a goals, which is 5 percent, we 
hit an 8 percent target in 2012. So we are excited about that 
and we are excited about the successes we had that year and we 
are looking forward to hopefully even more in the future.
    Mr. Serrano. Well, it would help us as a Committee, and I 
know that the Chairman would agree with this, that when we 
begin to dissect what this budget will look like, and this bill 
will look like, we need to know the success stories, and again 
this is one that always gets looked at because it is minority 
and women owned businesses. So we need to know to what extent 
it is succeeding and to what extent it is exceeding our goals.
    Ms. Markowitz. Ranking Member Serrano, I can't comment on 
2013, but as I said we hit an 8 percent metric around socially 
disadvantaged in 8a programs in 2012.
    We have enacted women's contracting rule to make traction 
in that area and my understanding is we have made significant 
progress. We have rolled out some outreach efforts to help that 
new rule take hold. We are currently involved in a very 
aggressive Challenge Her campaign around the country, making 
sure that women understand the benefits that are available to 
them under this new women's contracting rule, that there are 
now contracts set aside in over 300 industries, for women to 
compete against women, so that they have a more level playing 
field. We are making progress and hopefully we can share those 
numbers for fiscal year 2013 soon.
    Mr. Serrano. Well, we appreciate that. Mr. Chairman, I 
would make a request which is a mantra with me as you know. 
That is if at some time, not necessarily for our budget but for 
our understanding, they could give us a report on how the Small 
Business Administration is dealing with the territories and 
what is being done there or not being done or what needs to be 
done.
    Mr. Crenshaw. I am sure that they will take that under 
advisement. I think that is a great idea and gives us a little 
focus.
    Mr. Serrano. Thank you. Notice he didn't say you should 
give us a report. He said he will take it under advisement. A 
very smart Chairman.
    Mr. Crenshaw. They are going to take it under advisement.
    Do you have any more questions, Mr. Yoder?
    Mr. Yoder. Thank you, Mr. Chairman.
    I had one quick question related to veterans programs. And 
I know you have spoken about that and that is in your 
testimony. I wanted to follow up.
    You know, one of the most troubling statistics that I think 
bothers a lot of us is that 22 veterans die by suicide each 
day, according to Federal Government statistics. It is a 
staggering, heartbreaking number. It is much higher than the 
general population and it speaks to a lot of larger issues that 
we are working on here.
    But I wanted to maybe tie it into some of the work you are 
doing. The 2014 NDAA act established a study in which the DOD 
would examine the ties between the veterans' economic situation 
and homelessness and suicide. One of the key aspects, in 
addition to proper mental health treatment, to help veterans 
succeed and to keep them from being homeless or committing 
suicide is economic success.
    Can you discuss some of the efforts the SBA is making to 
collaborate with veterans groups, particularly at the Veterans' 
Business Outreach Center, and are there sufficient resources to 
assist veterans in the four key areas that the SBA works on, 
the capital, contracts, counseling, disaster assistance? Thank 
you.
    Ms. Markowitz. Thank you, Congressman.
    I would like to highlight Boots to Business, which is a 
program that we are requesting $7 million in funding, and it is 
directly targeting this issue. We know that there are 250,000 
veterans returning each year transitioning. They all need an 
opportunity. That opportunity can take many forms. It can be 
going out finding a job or can be creating a job, and we are 
stepping forward to help with that process.
    We know that these veterans have leadership skills that we 
can help them port into success into the private enterprises. 
We also know that these veterans over index in entrepreneurship 
already.
    So the Boots to Business program is in partnership with the 
Department of Defense. We go out and meet these veterans at 200 
installations around the world during their transition process 
and we begin by showing them a short video on entrepreneurship. 
And if that is something they are interested in, we take them 
further. We do 2-day face-to-face training and then an 8-week 
training course. We are very excited about this, we know that 
it gives them confidence and skills that they need to pursue 
entrepreneurship as an option.
    We have also gone down the access to capital route and made 
our loans more available to them. We have a patriot pledge that 
we have asked banks to enter into to increase their lending to 
veterans, and then we have also set the fee at zero or reduced 
the fees to veterans on our loan programs to encourage them to 
seek access to capital through our program.
    So we are very focused on assisting the veterans 
transitioning to a successful life back home.
    Mr. Yoder. Well, I just wanted to highlight the efforts you 
are making there and continue to encourage you and to support 
anything we can do to really connect these veterans as they 
come back home. We have job fairs in my district where we link 
up businesses with folks who are looking for work every so 
often. We have the first hour just for veterans.
    So we want to make sure these folks on are the front lines 
for us overseas; they ought to be first in line when it comes 
to getting a job when they come home. So I appreciate your 
efforts in that regard.
    Ms. Markowitz. Thank you, Congressman.
    Mr. Yoder. Thank you.
    Mr. Crenshaw. Just to follow up on that, this Boots to 
Business program. I think it was started in 2012, and I think 
it is important to highlight.
    Can you tell us, for instance, do you know how many 
veterans have been through that program? How many you expect to 
go though it this year? How do you gauge the success of that 
program? Do you try to follow through? Not only do they come 
through your program, but is there a way to keep track of how 
many actually go out and actually start a business?
    Talk a little bit about who goes through it, how they go 
through it, and how you follow up and measure the success of 
the program.
    Ms. Markowitz. Okay. Thank you, Chairman Crenshaw.
    I know that we essentially show the video around 
entrepreneurship to everybody. And then there is a subset you 
know, that take it further. I don't have the details on those 
numbers and I don't have the details on the processes around 
tracking outcome data, but we can certainly get that to you.
    Mr. Crenshaw. I would be interested to see if we could 
really track the follow through. I think it is a tremendous 
program and we ought to emphasize it, and if we can point to 
success, we could make it grow even stronger.
    Ms. Markowitz. Thank you.
    Mr. Crenshaw. Anybody else have another question?
    We are joined by Mr. Diaz-Balart. I thank him for being 
here.
    I know that there are many different subcommittee hearings 
going on at one time, and it is hard to get everybody in the 
same room at the same time.
    But I thank the members for being here.
    Thank you very much for your service. It is pleasant every 
now and then to have some agency testify and talk about the 
good things that are going on and we appreciate the work that 
you do.
    So thank you very much, and this meeting is adjourned.
    Ms. Markowitz. Thank you.

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                                            Tuesday, April 8, 2014.

                    GENERAL SERVICES ADMINISTRATION

                                WITNESS

DAN TANGHERLINI, ADMINISTRATOR
    Mr. Crenshaw. This meeting will come to order. They are 
expecting votes around 3:00. We will proceed. I think that 
there are so many different subcommittees meetings at this time 
that people may be wandering out. I know I have been to three 
subcommittee meetings already in this hour. So let's proceed 
and then we will see what happens. But we want to thank the 
Administrator Tangherlini. Welcome to the hearing today.
    Mr. Tangherlini. Thank you.
    Mr. Crenshaw. The General Services Administration is often 
referred to as the landlord of the federal government, but 
GSA's mission goes beyond providing office space and managing 
property. Agencies across the federal government rely on GSA to 
assist in their procurement and acquisition needs and to 
deliver effective economical technological solutions. In a time 
when the budgets are shrinking and resources are scarce, GSA's 
role is all the more important and we on this committee expect 
you to be a leader to find savings and drive efficiencies in 
your own budget.
    Only a few years ago, Congress and the American people 
learned of the terrible abuses and excesses that took place 
during a time when the General Services Administration was 
flush with money but short on integrity. You have worked and we 
appreciate the reforms that you have attempted to implement 
since joining the agency, but we here in the committee and the 
American taxpayers need to be convinced that the culture has 
really changed. For that reason, the committee included several 
reporting requirements in the 2014 Omnibus Bill regarding 
training, spending, and bonuses, and we look forward to 
reviewing those reports.
    This subcommittee has pressed GSA to make better use of its 
existing portfolio of buildings and shrink the federal 
footprint through reduction in GSA's inventory in leased and 
owned office space. In the last years, we have seen a reduction 
in staffing across the federal government, and so you would 
think that we would see reductions in space requirements as 
well.
    GSA's 2015 request proposes something called zero Net 
Budget Authority, which would allow GSA to spend up to the 
level of rent collections that you take from agencies across 
the federal government. We are a little skeptical of this 
approach and we want to talk about it. Maybe you should budget 
for the highest priority projects and not simply match the 
budget to the level of rent you are collecting because the 
federal government is your customer and your job is to be a 
good steward of tax dollars. If you are collecting more than is 
needed then maybe you should charge agencies less.
    You inherited a mess and I appreciate your efforts to 
instill a culture of transparency and accountability at GSA and 
restore the public's trust in the agency. So welcome again, and 
I appreciate your service and look forward to your testimony. I 
would like now to recognize the ranking member, Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman. I would like also to 
join you in welcoming the GSA administrator to this very I was 
going to say warm setting, but actually, the room is cold.
    I am going to have call GSA.
    General Services Administration provides a spectrum of 
services to the federal government. It is our government's 
landlord, architect, facilities manager, procurer, and 
supplier. GSA's work is incredibly important and I hope that 
today we can discuss how this subcommittee can best equip the 
agency to fulfill its mission.
    As the nation's landlord, GSA both owns and leases 
property. I have always been concerned about excess rental 
properties. Over a period of years, it is less expensive to own 
property than to lease it. I look forward to discussing with 
you about the potential to invest in and pursue federal 
property ownership as a more uniform policy and how your budget 
seeks to do that.
    Another issue of concern for me is a process by which the 
agency, the size on construction of the Federal Judiciary 
courthouses. This year's budget request once again includes no 
funds for courthouse construction. I am sure that this is not 
what the Federal Judiciary requested, but I will be interested 
in understanding how you interact with the Judiciary in making 
these decisions. I encourage a greater level of transparency 
between GSA and the Judiciary as well as between GSA and the 
Congress.
    Over the last three years, the GSA has been under increased 
scrutiny. This has resulted in organizational changes as 
initiated by Congress, specifically restructuring the agency so 
that administrative costs are separated from program funds. 
Hopefully your agency is getting acquainted with these changes 
and what results they are yielding.
    GSA's a major actor in ensuring federal efficiency. This is 
increasingly critical now post-sequester. I look forward to 
discussing the agency's many responsibilities and how we can 
work together to accomplish the General Services 
Administration's goal. I thank you for your service and for 
appearing before us today. Again, thank you. Thank you, Mr. 
Chairman.
    Mr. Crenshaw. Thank you, and now I would like to recognize 
Mr. Tangherlini. If you would make your written statement part 
of the record and if you would limit your oral statement to 
about five minutes, we would appreciate it. But the floor is 
yours.
    Mr. Tangherlini. Yes, sir. Thank you, and good afternoon 
Chairman Crenshaw, Ranking Member Serrano, members of the 
subcommittee, and staff. Thank you for inviting me to appear 
before you today. My name is Dan Tangherlini and I am the 
administrator of the U.S. General Services Administration or 
GSA. GSA's mission is to deliver the best value in real estate, 
acquisition, and technology services to the government and the 
American people.
    Before I go any further, I would like to thank the chairman 
and the ranking member and the committee and the committee 
staff for their hard work on the Fiscal Year 2014 Consolidated 
Appropriations Act, especially in the current funding 
environment.
    I also want to take a moment to introduce new leadership at 
GSA. Denise Turner Roth is GSA's new deputy administrator and 
Norman Dong is GSA's new commissioner for public buildings. 
Denise is unable to join us today, but Norman is here and is 
seated right behind me; they both are dedicated public servants 
and will help us as we continue on the path to improve the 
efficiency of GSA.
    GSA's Fiscal Year 2015 budget request seeks to build on the 
progress made in the Fiscal Year 2014 budget. While we have 
started to address years of backlog repairs, there is still 
significant work to do. We need to ensure that our buildings 
can support the work of the government in the 21st century. 
This budget provides essential funds to support our public 
infrastructure while also growing our economy, creating jobs, 
and saving money for the American taxpayer.
    Perhaps most importantly for the federal government's real 
estate inventory, the president's budget requests that the rent 
agencies pay into the Federal Buildings Fund be reinvested back 
into our publicly owned buildings. These investments will meet 
the urgent needs of our partner federal agencies and preserve 
these public assets for future generations. Every dollar GSA 
can spend on repairs can save $4 in potential costs later.
    In order to provide much-needed investments in our nation's 
public infrastructure, GSA's Fiscal Year 2015 budget requests 
include more than $1 billion in repair projects. These range 
from crucial life safety upgrades to full-scale modernizations.
    In addition, the budget looks to continue critical 
investments along the border by providing $420 million for 
three border crossings: the Alexandria Bay land port of entry 
in New York State, the Calexico land port of entry in 
California, and the San Ysidro land port of entry in southern 
California. These facilities are vital to our country's 
security and economy. San Ysidro is a perfect example of this. 
Every day, 50,000 vehicles and 25,000 pedestrians enter the 
United States at San Ysidro, making this the busiest border 
crossing in the world. Using these funds, we would finally 
complete our work on this important project after 10 years. 
These improvements would ease traffic throughout the region, 
promote economic growth, and better equip the Department of 
Homeland Security to ensure our nation's safety.
    Another national security priority in this budget is a $250 
million request to continue our consolidation of DHS at the 
Saint Elizabeth campus. Consolidations such as this are 
essential to operating an efficient and effective government. 
Building on the progress from last year, GSA has again 
requested $100 million to continue our work to support our 
partner agency's efforts to streamline their space.
    The Fiscal Year 2015 budget request also includes more than 
$240 million in much-needed funds for critical programs at GSA. 
By supporting the Office of Government-wide Policy and the 
Office of Citizen Services and Innovation, Innovative 
Technologies, GSA will continue to provide our partner agencies 
in the American public with tools and services that increase 
the efficiency, effectiveness, and transparency of the federal 
government.
    As I reported to the committee last year, when I came to 
GSA, we undertook a top to bottom review of the agency. Through 
that effort, we consolidated major functions of the agency to 
eliminate redundancy and improve oversight and accountability. 
GSA continues to consolidate and streamline key administrative 
service functions to improve efficiency and better align our 
own internal operations.
    These reforms are already reducing costs. GSA has reduced 
the Working Capital Fund by $39 million or 5.6 percent. We 
saved more than $310 million through efficient spending on 
printing, advisory services, and IT devices, including $68 
million over two years in travel costs. We have more than 380 
full time positions and we have reduced indirect costs by more 
than $130 million.
    GSA has also seen significant savings through our ongoing 
programs. We have helped agencies save more than $300 million 
through our Strategic Sourcing Initiative, we have cut our 
lease inventory by 5 million square feet, and we have saved 
$193 million in avoided energy costs by improving energy 
efficiency. We expect further reductions in savings as we move 
forward and we will continue to keep the committee updated.
    The president's budget provides the investment we need to 
help rebuild our nation's public building infrastructure, 
ensure that federal agencies can support economic and job 
growth in communities across the country, and provide vital 
services to the public. I appreciate all your work on the 
Fiscal Year 2014 Consolidated Appropriations Act and I want to 
continue our partnership to make sure this is not an isolated 
investment, but a foundation for long-term, sound management of 
our government's infrastructure.
    Thank you again for the opportunity to testify before you 
today and I look forward to any questions you might have.
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    Mr. Crenshaw. Well, thank you very much. We will start with 
questions now and we will try to observe the five-minute rule 
or the lights will go on. That will give everybody a chance to 
ask a question or two before we have our votes sometime around 
3:00.
    Let me start by saying that I think between Fiscal Year 
2011 and 2013, our allocation was reduced and so we chose to 
reduce the funding for building projects so we could live 
within our allocation instead of dramatically reducing staffing 
for some of the other agencies that we oversee. As you know, in 
2014 the Building Fund received an increase of more than $1 
billion, and when you talk about zero Net Budget Authority, I 
guess that means you spend all the rent that you collect from 
the federal agencies. We understand you have a long list of 
projects, both construction and repair, that you think are 
necessary. For 2015, you are requesting even more funds than 
you received in the Omnibus so that your spending matches your 
rent collections.
    We understand you want to provide a good level of service 
for your customers, but when I looked at it, I looked at the 
long list of projects included for Fiscal Year 2015, and if I 
am not mistaken, I see that the number one priority for major 
repairs and alterations is $7 million for an IRS parking lot. 
So I just wonder how you prioritize the projects on your list. 
How did you determine that the parking lot was the highest 
priority? Can you talk about that?
    Mr. Tangherlini. No, I appreciate that question because I 
think it is an incredibly important one. First, very quickly a 
little bit about the idea of this zero Net Budget Authority. 
Congress, when it set up the Federal Buildings Fund, tried to 
bring commercial discipline into the way we manage federal real 
estate, and so they required that we charge agencies the 
commercial equivalent of rent so that we actually do a market-
based assessment of what the cost of rent is in any 
jurisdiction. We then received the money as a deposit into the 
Federal Buildings Fund and then that amount is appropriated out 
for specific projects. And the idea is like any other real 
estate business, we would take that money that we collected in 
rent and we would reinvest it back in the assets.
    Now, how we determine the reinvestment, after three years 
of getting very constrained funding where the rents we were 
collecting were not going back into the assets, we have 
actually accrued a number of pretty serious projects. The 
particular project, the one in Chambliss, Georgia for the 
parking garage, which was a project that when we asked for the 
original funding I think about three years ago was something 
closer to $3 million. What has happened is it is a great 
example of if you do not make that initial investment when the 
problem first crops up, and if you get a little hole in your 
roof and you do not patch it, more of the roof begins to 
collapse in. We have gotten to the point where half of the 
garage is roped off and if we do not make this $7 million 
investment, we think we will lose the entire garage. So that is 
essentially the way we prioritize, and really in this instance, 
it became an issue of how do we maintain what is left of the 
asset that we have?
    That having been said, there is a long list of projects out 
there that need to be done. We have worked very closely with 
each of our regions to try to prioritize the projects and then 
we have our central office folks really test and stress test 
the ability of the region to actually get the project done, can 
we contract for it, can it happen quickly, and we try to apply 
some test of our ability to do the project to the priority that 
the components of the agency assign to it.
    We would be happy to walk your staff through the process we 
use, the systems we use, and the way we have gone back and 
forth with the regions. We have even held some money in reserve 
so that they have to, at some level, demonstrate that they can 
actually deliver great outcomes in order to compete 
successfully for the funds.
    Mr. Crenshaw. Like for instance, has that parking lot been 
like that for three years?
    Mr. Tangherlini. Yes, it has.
    Mr. Crenshaw. Is this the first time it became the number 
one priority?
    Mr. Tangherlini. It has been in prior budget requests. I 
think it got to the top of the list, and I do not know if it 
was alphabetical or what. I would say that it is a high 
priority as well as all the other RNA projects are. It is an 
example of where, if we were able to meet the priority as it 
develops, we could have probably done it cheaper.
    Mr. Crenshaw. Well, another quick one. The budget requests 
$12 million to buy an IRS annex building in Austin, Texas, and 
you are paying $1 million rent for it every year. So if you pay 
$12 million for it today, then that means it will take you 12 
years to recoup your investment. So I just wonder do you look 
at the function of the building. Do you think it is important 
to own it as opposed to lease it for now? What goes into that 
decision to make that a priority?
    Mr. Tangherlini. No, that also is an excellent point. I 
think striking the right balance between leasing and owning is 
incredibly important. I will tell you that that balance may 
have gotten skewed over the last several years. Our average 
length of tenancy on a leased building is about 27 years now 
growing. So if we were to retain our kind of locational 
position in that place in Austin, Texas, which, in working 
closely with IRS, we believe that there will be a continued 
ongoing need for that facility in Austin, Texas. It really 
makes sense to recognize that even a 12-year payback is not 
bad. Some of the projects we have and really in the relocation 
and consolidation activity, we have projects that pay back 
virtually instantaneously in less than two years. So we are 
constantly looking at what is the right payback, really whether 
we think there is a continuing need for the agency to stay 
there, and what is our exposure? What will happen to that rent 
when we go back if we are going to renew our tenancy there?
    Mr. Crenshaw. Thank you. Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman. Mr. Administrator, 
since GSA provides so many products and services to so many 
other agencies, you are in a unique position to talk about the 
effects of sequestration and the government shutdown. Can you 
speak to how both affected GSA and how it affected other 
agencies you work with from your perspective?
    Mr. Tangherlini. I appreciate the question, Ranking Member 
Serrano. For GSA directly, the impact was in many ways indirect 
because our services are provided to other agencies and then 
agencies, depending on who they were or what they did and what 
their mission was, they had a different impact from things like 
the shutdown. Although almost uniformly, people have had some 
impact of the across the board cuts associated with 
sequestration.
    We have seen two things happen as a result of it. One is 
that just in general business volumes and things like the 
Federal Acquisition Service are reduced. Agencies are 
scrambling to figure out how they are going to close the gaps. 
Sometimes the choices are not based on outcomes; they are just 
made on that bottom line number.
    At the same time, we have seen then agencies really get 
increasingly creative and emphatic about finding ways to save 
money; and so suddenly there are a lot of people who want to 
talk about consolidating space and are there better ways that 
they can do acquisition.
    That having been said, we felt the impact in terms of the 
arguments over the right level of funding most acutely in our 
Federal Buildings Fund where for about three years, we were not 
getting full access to the rents that we were collecting from 
the federal agencies. And so we were collecting their rent and 
so agencies are already constrained from resources. We were 
collecting the rent, but we were not making the reinvestment 
back in the facilities. And so that was not doing a lot of 
great stuff for my relationship with those agencies as we were 
trying to work with them and figure out how we could address 
their specific facility needs as well as help them manage 
through the implications of sequestration and the certainly the 
shutdowns.
    Mr. Serrano. In dealing with their facility needs, are you 
still able to help other agencies find savings in their own 
budgets, whether that be through travel, leases, or commodities 
purchased through GSA?
    Mr. Tangherlini. That is really what we have decided should 
be the main focus of our agency. There are a couple of services 
we provide directly like facilities. There are some that we 
provide based on agency choice like acquisition, technology, 
and fleet management. What we think our job is is to really be 
the experts in administrative services and come to agencies and 
give them ideas about how they can save money either working 
with GSA or doing it themselves. As a result, we have seen 
agencies increasingly get interested in ways that they can 
shrink their footprint, that they can reduce their lease cost. 
We have seen a lot of interest around reducing fleets, a lot of 
interest in some of the work that we have done around travel 
and conference management, alternative means of training, and 
implementing of the latest technology like cloud computing 
which can save agencies money.
    So we are working every day trying to figure out how to get 
agencies to gain access to some of these best practices that 
will reduce their cost.
    Mr. Serrano. Coming back a second to the issue which you 
know I am very much interested in, leasing versus purchasing. 
Are all federal purchased buildings yours, owned buildings, or 
is it The Department of the Army, for instance or other people 
own their own buildings.
    Mr. Tangherlini. Nothing is easy in this business, right? 
So we manage about 10 percent of the federal real property. 
Now, we manage closer to 70 to 75 percent.
    Mr. Serrano. You say you manage or you own?
    Mr. Tangherlini. Well, of the property we manage, it is 
about 50 percent leased and 50 percent owned.
    Mr. Serrano. I see.
    Mr. Tangherlini. We are responsible for about 70, 75 
percent of the commercial real estate, the traditional office 
space. So we are a large player in office space but we are just 
one of many players in space in general because you have big 
players like the Department of Agriculture, the Department of 
Interior, the Department of Energy with their labs, and 
certainly the Department of Defense is really the big property 
manager and property owner.
    Mr. Serrano. Right. One last part of that, Mr. Chairman. 
Why the argument throughout the years, why do people like me 
have to continuously say let's own our buildings; let's not 
rent them. It is cheaper to own them than it is to rent them. 
Why do you think there was always a movement for renting or 
leasing?
    Mr. Tangherlini. I think there is a lot to be said about 
the flexibility that a lease offers and the ability to very 
quickly go into the market and meet the space needs of an 
agency. I will say though over time, because of the difficulty 
of getting the resources together, and in order to buy 
something or build something you need to get all the resources 
together necessary to make that investment, because of the 
difficulty getting all the resources together at the time that 
you wanted to buy or build it, it has become easier and easier 
for agencies frankly to get into operating leases to meet 
whatever space need they have.
    We have some interesting long-term data that shows that our 
ownership trends have been holding constant for the last 20 
years but our leasing square footage has been going up. Now, in 
the last two or three years and I think in a large part because 
of the work of this committee and a huge focus on this issue on 
the part of the administration, we have begun to bend the cost 
curve if you will of leasing and we have reduced the amount of 
lease space that you will see in the Fiscal Year 2015 budget by 
about 5 million square feet off of a high of about 200 million 
square feet of leased space about three years ago.
    Mr. Serrano. Thank you. Thank you, Mr. Chairman.
    Mr. Crenshaw. Mr. Graves.
    Mr. Graves. Thank you, Mr. Chairman. Mr. Administrator, 
good to see you again.
    Mr. Tangherlini. Nice to see you.
    Mr. Graves. A few questions about the LEED program and such 
and I think we have had this conversation before. I would like 
to get some updates. I know there has been some changes since 
we last spoke. First, can you maybe share with us how much each 
year on average is spent by federal agencies to adhere to the 
lead standards? Is it a measurable amount at this point that 
you can put your finger on?
    Mr. Tangherlini. I am going to have to get back to you with 
specifics about what that is. If it is measurable, we will 
figure it out and we can get back to you.
    Mr. Graves. Is it a voluntary or is it required to abide by 
the standards?
    Mr. Tangherlini. We have said that as part of a requirement 
that the Department of Energy has about having energy standards 
for buildings, we have just issued, as you pointed out, a 
recommendation to the Secretary of Energy that agencies be able 
to choose from two competing offerings of certifications.
    Mr. Graves. Do you see some of the agencies going to 
another to Green Globes?
    Mr. Tangherlini. I have already heard indications that a 
number of agencies are looking at potentially adopting Green 
Globes as an alternative to LEED because it better matches the 
way they perform their mission. The way these certification 
systems work that some are frankly better for certain types of 
buildings and efforts and some are better for others.
    Mr. Graves. It seems like with those two, and I appreciate 
the fact that you are recommending multiple applications. I 
think that is good. That is very helpful. Do you sense that 
LEED is the predominant program as to your recommendations? Are 
most agencies sort of pushed in that direction or is it an open 
platform in which they really can choose between alternative 
methods?
    Mr. Tangherlini. We would hope it is an open platform and 
we have proposed instructions for how agencies could understand 
how they might pick one versus another and we encourage 
agencies to be very thoughtful in choosing. In terms of whether 
one is more predominant than another is, there was only really 
one for a good long time, and so there is some incumbency 
there.
    We have personally looked at it at GSA and given our long 
track record with LEED, we think that it makes sense for us to 
continue using for at least this period, but we want to look at 
the emerging competition within this marketplace; we think it 
is good. We think third party standards in general are good. 
They are useful for helping people have some way of evaluating 
whether the investment they are making was actually worthwhile 
and whether they are getting the results they claim they are 
going to get from the investment they make.
    Mr. Graves. Right, and I appreciate that. And that sort of 
leaves my last question. So it is been just over five years 
since I guess the voluntary, which is now sort of a requirement 
I suppose with most of the agencies. Has there been any 
analysis, cost-benefit analysis, as to the costs they incurred 
to adhere to these standards versus maybe energy savings?
    Mr. Tangherlini. I know that is one thing we are very 
interested in is looking at making sure that the investments we 
make and in the LEED certification part of the investments we 
make in making a building more sustainable is actually very 
small. I would be happy to talk to you or your staff about what 
that actual relative cost is.
    We are very interested in making sure that the investments 
we make actually yield meaningful life cycle cost benefits and 
it really gets back to the chairman's point earlier. Look, if 
we are going to have access to this money, we want to make sure 
you are spending it in the most productive way possible or else 
maybe we should not collect it from the agencies to begin with.
    Mr. Graves. Okay. No, that is good. I would look forward to 
seeing some of that analysis, and maybe it is just folklore, 
but that it is much more expensive to adhere to these policies 
when maybe it is new construction or renovation or upgrading. 
It would be fascinating to see, in the event that it is more, 
that there is a savings over time that offsets that additional 
expense.
    Mr. Tangherlini. If I could add one more point to that, and 
this gets a little bit to the conversation I was having with 
the ranking member. This issue of life cycle cost is incredibly 
important for us; it is not just the initial expenditure, but 
what is it going to cost over the period of time that we occupy 
the asset?
    Mr. Graves. Great. Thank you, Administrator. Thank you.
    Mr. Crenshaw. Thank you. Mr. Quigley.
    Mr. Quigley. Thank you, Mr. Chairman. Welcome.
    Mr. Tangherlini. Thank you.
    Mr. Quigley. There have been national analysis of LEED 
certification and other certifications by the private sector 
that show energy savings, cost savings that you are well aware 
of, correct?
    Mr. Tangherlini. Yes, and in fact, in our evaluation of 
alternative certification methods, which we are required to do 
as part of the Department of Energy, it was based on the 
understanding that there was benefit to these certifications. 
As I said before, we find third party certifications to be 
incredibly useful in actually proving whether we are getting 
what we are paying for or not.
    Mr. Quigley. Sure, and we welcome whatever works best and I 
note that you talk about the fact that different certifications 
matter for different types of use for buildings and we 
understand that as well, but there is also an evolving world 
from when LEED certification started.
    Mr. Tangherlini. Yes.
    Mr. Quigley. There are other things about water savings 
and, you know, what comes off the rough and so forth in flood 
areas that really makes a difference as well. They are also 
cleaner buildings, healthier buildings, buildings that reduce 
the environmental footprint in the region as well, correct?
    Mr. Tangherlini. That is true, and I think it is actually 
some of the evolution of the certifications that has caused 
some of the controversy over the last year or two, and I think 
we just need to be aware that this is an evolving science, it 
is an evolving approach to making sure that we are being as 
smart as we possibly can and building buildings that will be 
around for a long time.
    Mr. Quigley. I agree. Let's talk about buildings that 
should not be around anymore. I think your inventory is over 
900,000?
    Mr. Tangherlini. Our inventory at GSA, including leases, is 
only about 10,000, but the broader federal building inventory 
reaches your bigger number.
    Mr. Quigley. 900,000. It adds up after a while.
    Mr. Tangherlini. Yes, it does.
    Mr. Quigley. We got something from the Congressional 
Research Service that their latest estimates are about 77,000 
buildings were identified as either not utilized or 
underutilized. Does that also comport with numbers you are 
familiar with?
    Mr. Tangherlini. Those numbers come out of the Federal Real 
Property Profile. Those numbers are a couple years old at this 
point, but the rough order of magnitude costs the federal 
government there roughly, right?
    Mr. Quigley. Well, bonus points for telling Mr. Chaffetz 
and I what a great bill we have on a pilot program to get rid 
of the ones that we do not need. If you want to touch on that, 
fine, but your best plan to help us drive this because it is 
not just the cost of not selling them and the money, and I do 
not know how much there would actually be there, but it is the 
extraordinary cost of maintaining them and sometimes the risk 
involved with those buildings being abandoned. What is your 
fast track way to help us get rid of the buildings we do not 
need anymore?
    Mr. Tangherlini. Well, we appreciate actually, as you 
pointed out, the fact that both the House and the Senate have 
proposed bills to speed disposal of underutilized or vacant 
property. The president, once again, in his Fiscal Year 2015 
budget request, also includes a proposal. I have said that 
those are the three ingredients you need to get anything done 
in Washington: a House proposal, a president's proposal, and a 
Senate proposal. Hopefully this year will be a year where we 
could maybe move something forward.
    In the meantime, frankly we see it as one of our core 
responsibilities to make sure that we are delivering the best 
quality asset, which means getting rid of assets that no longer 
serve the American people.
    I will tell you GSA has only 23 locations on that list of 
vacant or underutilized properties and in each one of those 
cases, I am working very closely with Norman in the Public 
Building Service to have a plan to dispose of those assets that 
are repurposed.
    Mr. Quigley. Not to interrupt, but do you play a role in 
helping other agencies get rid of all the other ones that we 
talked about as well?
    Mr. Tangherlini. Well, we play a role if the agency wants 
us to play a role, and so we have been working very closely 
with agencies such as the National Aeronautics and Space 
Administration, NASA. We have helped NASA broker a deal with a 
private sector operator for Moffett National Airfield and we 
are in the final negotiations with a very prominent local 
business partner who is going to actually operate that field, 
take it off the rolls of the books of NASA; NASA will no longer 
have to pay to operate and maintain it, and as an extra benefit 
to the federal taxpayers, the Hangar One, the historic, iconic 
Hangar One will be reclad by the operator of that airfield.
    Mr. Quigley. What do we best on for getting rid of these? 
Is it saving money for lack of maintenance and so forth or is 
it the additional revenue we are going to get in actually 
selling these?
    Mr. Tangherlini. I actually think the real benefit is the 
long term benefit to the agency of not having to worry about 
what it is going to do with that asset, how they are going to 
maintain it, how they are going to fund additional resources. 
The other long-term benefit is a benefit to the national 
account. Returning these assets to productive use within the 
economy of the localities in which they occupy is an unwritten 
part of the benefit of this story. By auctioning the West 
Heating Plant just over here in Georgetown, we have got $19 
million towards reduction of the cost of federal government, 
but more importantly, there is now a private sector developer 
who is going to turn that building into something employing 
hundreds of people in the process and providing tax revenue and 
benefits to the economy as a result.
    Mr. Quigley. Thank you. Thank you, Mr. Chairman.
    Mr. Crenshaw. There are four votes. There is eight minutes 
left. We have three folks that have questions. So I think we 
can finish up and I am sure there are questions for the record, 
but let's go to Mr. Amodei.
    Mr. Amodei. Okay. Thank you, Mr. Chairman and in view of 
that, I will just abbreviate my comments. Mr. Administrator, I 
want to sensitize you to an issue that we have seen in other 
executive branch agencies. I want to revisit the stuff that 
happened in conferences four years ago. What I do want to 
revisit or do want to visit with your staff offline is to check 
to make sure that as a result of those things that there are 
not any internal administrative policies within GSA that say, 
``Stay away from these locations,'' as it is our belief, and as 
you said in your statement, your priority is continue to 
improve efficiency of our own operations so that we utilize 
resources in the most effective manner possible.
    All I am concerned about is to the extent when you folks go 
to have a meeting, a training, a conference, whatever somewhere 
that you are picking the place with the best value for the 
taxpayer and not being afraid of the fact that perhaps, as for 
instance Department of Justice has done, says, ``For God's 
sake, stay away from New Jersey and Nevada because gambling is 
legal.'' I am sure you are not going to say, ``We want to stay 
away from Washington State or Colorado because some of their 
recreational smoking activities might be dangerous,'' or, ``God 
forbid, stay with the coastline because you might drown.'' So 
you get the gist.
    We will go ahead and visit with you offline just to make 
sure that there are not any, because I know there are no 
statutes or regulations on the requiring that, and make sure 
there are not any administrative policies doing that and I 
yield back. Thank you, Mr. Chairman.
    Mr. Tangherlini. Thank you.
    Mr. Crenshaw. Thank you. Mr. Yoder.
    Mr. Yoder. Thank you, Mr. Chairman. Thanks for coming back 
to our hearing again this year Mr. Administrator. Last year 
when we were here, we had a conversation about the same topic 
that Mr. Quigley just raised, which is a very important one, 
which is all of the property the federal government owns and 
how we can dispose of portions of it that are unneeded, unused, 
and are not benefiting taxpayers. One critical component to 
that is being able to know where all the property is. I thought 
you might update us on what the GSA has done since our hearing 
last year.
    My question was then, and it still is now, does the GSA 
have an ability to pinpoint every piece of property owned by 
the GSA and does the federal government have the ability to 
pinpoint every piece of property, real property owned by the 
federal government? Can we geolocate that property, can we 
point to it on a map very easily, and can we search in a way in 
which I could tell my constituents how many golf courses the 
federal government owns? Can we answer that? Can we answer how 
many parking garages the federal government owns, how many 
hotels the federal government owns, how many grocery stores, 
and what has changed over the last year? I know we had this 
dialogue. You were working on it. Where are we now and how can 
we get to a point that we need to be?
    Mr. Tangherlini. No, I really appreciate you asking the 
question because I took your last set of questions last year 
really as a challenge to the organization and our staff to make 
substantial progress. I can tell you for GSA, we actually do 
have a website where you can go and it shows a map of the 
United States and you can click on any state and you get the 
congressional districts and it will tell you every property and 
it will tell you the specifics of the property, whether it is 
leased, whether it is owned, what the terms of the lease are, 
and we are working to actually make that much more graphically 
interactive and simple for people to use.
    We want to use the progress we have made at GSA, because 
those are the assets we control and, frankly, we think we are 
the best at this or among the best in the federal government. 
We would like to take the progress we have made at GSA and then 
export that across the federal government to other agency 
landowners.
    In the meantime, we are working very closely with OMB, and 
there has been great leadership there with Director Burwell and 
Deputy Director Cobert, to get the Federal Real Property 
Council to really push up the quality of the data it is putting 
in to the Federal Real Property Profile so that we can be much 
better about answering what is the status and the nature and 
the quality of assets.
    I can tell you we are not quite there yet where there is 
one website where people can click and ask those questions, but 
we have taken a substantial step in that direction over the 
last year, particularly starting at GSA, and we want to export 
that progress to other agencies.
    Mr. Yoder. Well, I was looking at your website earlier. It 
does seem like you have made some significant progress in that. 
We are going to kind of work through it and see where we can 
even make it more user friendly because the idea is to let the 
public and everyone in this country know what they own and be 
able to find it. That will hopefully have all of us looking to 
root out waste and find efficiencies and hopefully what you are 
doing here as a model that we can push to other parts of the 
federal government.
    Mr. Tangherlini. We agree, and we would love your ideas and 
suggestions.
    Mr. Yoder. Right. Thank you for your work. I appreciate it.
    Mr. Tangherlini. Thank you.
    Mr. Yoder. Thank you, Mr. Chairman.
    Mr. Crenshaw. Well, I think those are all the questions and 
we appreciate the work that you are doing.
    Mr. Tangherlini. Thank you.
    Mr. Crenshaw. I think having a list of all the property 
that the federal government owns would be a great idea and I 
know you are working on that.
    Thank you for the work you do. I thank the members for 
their understanding. We have got about a minute and a half left 
to vote and they are four votes. So, again, this meeting will 
stand adjourned.

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                           W I T N E S S E S

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Bates, John......................................................    61
Botticelli, M. P.................................................     1
Gibbons, J. S....................................................    61
Markowitz, M. O'B................................................   159
Tangherlini, Dan.................................................   205
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