[Senate Hearing 117-]
[From the U.S. Government Publishing Office]
FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS
FOR FISCAL YEAR 2023
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U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
NONDEPARTMENTAL WITNESSES
[Clerk's note.--The subcommittee was unable to hold
hearings on nondepartmental witnesses. The statements and
letters of those submitting written testimony are as follows:]
Prepared Statement of the American Friends Service Committee (AFSC)
Chairman Van Hollen, Ranking Member Hyde-Smith, and Members of the
Committee, thank you for the opportunity to submit testimony. My name
is Daniel Jasper and I am the Asia Public Education and Advocacy
Coordinator for the American Friends Service Committee (AFSC). We are a
peace and social justice organization that has worked for over a
hundred years to address the root causes of violence and conflict
throughout the world. We appreciate the opportunity to address the use
of sanctions before the subcommittee today, as this foreign policy tool
now serves as a primary response to geopolitical conflict.
Specifically, my testimony addresses (1) report language addressing the
need for the Government Accountability Office (GAO) to conduct impact
assessments on comprehensive sanctions regimes, and (2) the need for
the Treasury Department's Office of Foreign Assets Control (OFAC) to
conduct regular and comprehensive reporting on licensing procedures.
The urgency and importance of conducting impact assessments on
comprehensive sanctions regimes cannot be understated. In 2021, The
Treasury Department's sanctions review found that sanctions
designations have risen from 912 to 9,421 in the last two decades,
representing an increase of 933%.\1\ However, despite this accelerating
rate of usage, government agencies have indicated that the impact of
sanctions is often unclear.
According to a 2019 GAO report, implementing and relevant agencies
only conduct ad hoc assessments and do not monitor ``the overall
effectiveness of existing sanctions programs in achieving broad policy
goals.'' The report found that officials only ``informally'' evaluate
the overall efficacy of these measures. However, given the immense
impact of sanctions on ordinary civilians and the global economy,
informal evaluations are grossly insufficient. Notably, officials
indicated that one major reason for the lack of comprehensive
assessments is that ``there is no policy or requirement'' for this type
of analysis.\2\ It's clear, then, that until Congress enacts such a
policy, the executive branch is unlikely to undertake such critical
assessments on its own accord.
Throughout AFSC's more than one hundred-year history, the
organization has accompanied countless communities under sanctions
regimes and borne witness to the varied impacts of these measures. Our
organization, for instance, was among the first to support South
Africans in their call to sanction the apartheid regime. While the case
of South Africa has been considered a success, we have found that
critical to that success was that it was led by the impacted
communities themselves.
Conversely, we have seen that the impacts of these measures are far
more damaging when implemented unilaterally and without the support of
the local population. In recent decades, the U.S.' propensity to
unilaterally impose comprehensive sanctions without the support of
local civil society efforts has created large pockets of vulnerable
communities throughout the world.
These communities--in many cases entire nations like the Democratic
People's Republic of Korea (or ``North Korea''), Iran, Venezuela, and
Cuba--are left in a State of arrested and reversing development. Given
the mounting global challenges such as the COVID-19 pandemic and global
food supply chain disruptions, these communities represent an open
wound on the collective body of humanity. It is in these conditions
that viruses mutate, conflict arises, human rights are violated,
humanitarian crises develop, and violent ideologies take root. It is,
therefore, imperative that the subcommittee act to fill this immense
gap in monitoring and evaluation as policymakers must understand the
true impacts of these widespread tools.
Here, I would like to stress that while administration officials
have stated that there are humanitarian exemptions for comprehensive
sanctions regimes, in practice these exemptions are insufficient for
aid operations and peacebuilding initiatives.
For instance, AFSC has operated the longest-standing NGO program in
North Korea since 1980. Prior to the pandemic, our program worked to
improve conservation agricultural techniques in four cooperative farms
outside of the capital city of Pyongyang. These activities had over
84,000 direct and indirect beneficiaries as we worked to improve food
access for local communities.
We have witnessed many impacts of sanctions in our work on the
ground in places like North Korea such as a chronic shortage of basic
supplies, increases in manual labor, decreases in the availability of
transportation and fuel, and a general attitude of resentment toward
the U.S. government. A recent and dramatic example of the impact of
sanctions was the increasingly restricted space for the delivery of
humanitarian assistance since 2017.
As a consequence of the U.S.' ``maximum pressure'' campaign and a
U.S.-led UN sanctions resolution, we witnessed deeply disturbing
situations where lifesaving assistance to North Korea was delayed or
denied by bureaucratic procedures. In at least 42 instances, aid
operations were severely disrupted even in cases where agencies
obtained the correct paperwork. This resulted in patients undergoing
surgery without anesthesia, children going without nutritional
assistance, and increased mortality risks for a population already on
the margins. While some of these issues have been resolved, the damage
to key humanitarian channels had been done; relationships and
operations were largely unable to recover in the years leading up to
the pandemic.\3\
As the COVID-19 outbreak erupted in China in early 2020, North
Korea largely closed its borders to incoming travel and cargo and has
continued these border closures throughout the first half of 2022.
Despite a ``maximum pressure'' campaign and over 2 years of a self-
imposed embargo, North Korea's missile and weapons development
programs--a primary target of sanctions measures--continue unabated.
Instead, AFSC has witnessed that it is the ordinary people, who have no
say in their government's actions, that often bear the true cost of
sanctions.
In 2019, Korea Peace Now, a global movement of women mobilizing to
end the Korean War, commissioned one of the few assessments of the
impact of sanctions on citizens. The study found that ``[s]anctions
destabilize North Korean society in ways that have a disproportionate
impact on women, resonating with patterns observed in other sanctioned
countries. The resulting economic pressure tends to exacerbate rates of
domestic violence, sexual violence, and the trafficking and
prostitution of women.'' \4\ These types of impacts on the human rights
and humanitarian situations of local communities are seldom captured by
the ``informal'' impact assessments offered by administration
officials.
At the beginning of the Biden administration, 55 nongovernmental
organizations--representing over 65 million supporters--sent a letter
to the President outlining urgently needed sanctions reforms. Among the
key recommendations included in the letter was the need to institute
``ongoing reporting protocols that monitor the impact and human cost of
sanctions.'' \5\
The administration has not taken action on these reforms to date,
and with millions of lives in the balance, Congress must champion the
voice of civil society and institute common sense monitoring policies.
We strongly urge the subcommittee to adopt report language requesting
impact assessments on all comprehensive sanctions regimes from the GAO.
In many heavily sanctioned contexts such as North Korea, it is now
routine for aid operations to go through extensive OFAC licensing
procedures to send aid shipments. Throughout my tenure at AFSC, I have
seen this process take anywhere from 9 months to 2 years.
The application process is strenuous--often filled with vague
guidance on high-stakes procedures. Communication and status updates
are typically infrequent from OFAC and the process requires the aid of
expensive legal counsel. Further, OFAC staff turnover and/or the sheer
volume of applications mean that we are continuously educating
policymakers and bureaucrats about our work. This means that in moments
of humanitarian crisis (and sometimes in moments of geopolitical
opportunity), aid workers are spending precious moments navigating red
tape and re-hashing the most basic elements of longstanding programs
instead of responding to critical situations.
Consistent with the Treasury Department's commitment to
``modernizing'' sanction regimes and supporting legitimate humanitarian
actors,\6\ OFAC must begin regular and transparent reporting on
licensing procedures. Moreover, making this data publicly available
would improve the speed and consistency of these processes, reduce
humanitarian response time, and improve our collective understanding of
the impacts of sanctions on civilians.
Amid increasing global security challenges, sanctions have emerged
as a primary tool of the U.S. in dealing with its adversaries. These
tools are sometimes enacted with an alarmingly cavalier attitude toward
their potentially devastating human impact, and with a severe lack of
oversight. Given the widespread nature of these instruments, their
impact on the global economy, and the hundreds of millions of lives
they impact, we urge you to support these proposals in order for the
U.S. government and public to fully understand the consequences of
these policies.
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\1\ 2021 Sanctions Review. U.S. Department of Treasury, Oct. 2021,
https://home.treasury.gov/system/files/136/Treasury-2021-sanctions-
review.pdf.
\2\ Economic Sanctions: Agencies Assess Impacts on Targets, and
Studies Suggest Several Factors Contribute to Sanctions' Effectiveness.
U.S. Government Accountability Office, Oct. 2019, https://www.gao.gov/
assets/gao-20-145.pdf.
\3\ Jasper, Daniel. ``Why the World Should Care about the COVID
Outbreak in North Korea--38 North: Informed Analysis of North Korea.''
38 North, 27 May 2022, https://www.38north.org/2022/05/why-the-world-
should-care-about-the-covid-outbreak-in-north-korea/.
\4\ ``The Human Cost and Gendered Impact of Sanctions on North
Korea.'' Korea Peace Now. Oct. 2019, https://koreapeacenow.org/wp-
content/uploads/2019/10/human-costs-and-gendered-impact-of-sanctions-
on-north-korea.pdf.
\5\ ``Civil Society Groups Call on Biden to Provide Immediate
Sanctions Relief and Legal Reform.'' American Friends Service
Committee, 26 Mar. 2021, https://www.afsc.org/newsroom/civil-society-
groups-call-biden-to-provide-immediate-sanctions-relief-and-legal-
reform.
\6\ 2021 Sanctions Review. U.S. Department of Treasury, Oct. 2021,
https://home.treasury.gov/system/files/136/Treasury-2021-sanctions-
review.pdf.
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Prepared Statement of Coalition for a Prosperous America (CPA)
Dear Chairman Van Hollen and Ranking Member Hyde-Smith:
For the reasons outlined below, the Coalition for a Prosperous
America (CPA) strongly urges the subcommittee on Financial Services and
General Government to approve an increased appropriation for the
Financial Crimes Enforcement Network (FinCEN) to $210.3 million for the
Fiscal Year 2023. CPA is concerned the Corporate Transparency Act (CTA)
will not be implemented promptly without these resources. The CTA
prioritized our National security by denying the most egregious means
of obscuring the actual owners of different types of property.
The Coalition for a Prosperous America is a nonprofit, nonpartisan
organization that represents the interests of domestic producers across
the country engaged in agricultural production, agribusiness, and many
manufacturing supply chains. We are concerned about foreign
intellectual property theft, offshoring of industry, and the decline of
the quality of jobs in the US due to the loss of supply chains.\1\
fincen needs to implement the corporate transparency act
The FinCEN, tasked with codifying and implementing the CTA, has
already missed deadlines due to resource shortages.\2\ Therefore, CPA
strongly supports the subcommittee on Financial Services and General
Government approving increased appropriations for the Financial Crimes
Enforcement Network (FinCEN) to $210.3 million for the Fiscal Year
2023.
Congress passed the Corporate Transparency Act in 2020 as part of
the Anti-Money Laundering Act. This bipartisan landmark legislation
sought to improve anti-money laundering laws and deny the benefits of
anonymous shell companies.
Hidden `beneficial' owners include foreign kleptocrats and
criminals who pose a grave security threat to the United States. Our
recent attempts to hold Russian kleptocrats accountable for the
invasion of Ukraine exposed our vulnerability and our need to
strengthen our economic' borders.' American producers need information
regarding the competition they face from autocratic non-market foreign
owners.
kleptocracy threatens america's financial independence
The FinCEN advisory on Kleptocracy and Foreign Public Corruption
(FIN-2002-A001), released on April 14, 2022, specified that
``Kleptocratic regimes and corrupt public officials may engage in
bribery, embezzlement, extortion, or the misappropriation of public
assets, among other forms of corrupt behavior, to advance their
strategic, financial, and personal goals.'' \3\
These behaviors are not limited to the country of the foreign
kleptocrats. Once a US financial enterprise becomes involved with these
tainted funds, the enterprise has a vested interest in promoting a
continued relationship for the sake of management of this ``property.''
The vested self-interest divides the financial enterprises' allegiance
from the United States' competitive economy, moral values, and even the
Nation's national security interests.
Consider the problems concerning London's enmeshing with Russian
kleptocrats. A former Russian correspondent, Oliver Bullough, gives
``kleptocracy tours'' in the capital of the United Kingdom, showing how
illicit funds affected the city.\4\ Despite criminal activities,
including the 2018 poisoning of Sergei Skripal and his daughter on
United Kingdon soil by Russia's leader Putin, British elected officials
took few actions against the Russian kleptocrats until the invasion of
Ukraine. In effect, London's political class was a willing hostage
because it had become dependent on kleptocrat money.
With a GDP of over 500 Billion (just under $650
billion) in 2020,\5\ London's economic size did not guarantee
protection against this form of foreign political manipulation. In
2020, only 10 of our 50 American States had a greater GDP than
London.\6\ It is no small leap to assume entire American States are
vulnerable when we do not know the identities of the beneficial owners
of investments in the United States.
Meanwhile, our intended sanctions revealed how ill-prepared the US
financial system is to respond to actions like Russian aggression. When
the White House announced its comprehensive legislative package to hold
the Russian government and oligarchs accountable for President Putin's
war against Ukraine, Russian forces had invaded Ukraine for over 2
months.
The White House proposal had to take time to streamline specific
ways to enable the seizure and implementation of the sanctions because
they had been playing a game of whack-a-mole with Russian kleptocrat
funds. In the future, these mechanisms should be easy to implement and
clearly outlined against any hostile power. FinCEN's work is essential
to simplifying the knowledge of foreign-based beneficial ownership in
the United States.
Despite the successful bipartisan efforts to pass the Corporate
Transparency Act, its implementation must be accelerated, not
restricted. FinCEN is too underfunded to be effective in its current
funding state, and that weakness in our economic infrastructure must
end.
Russian kleptocrats are not the final concern as a price for our
lack of financial transparency. Any autocratic government seeking to
manipulate the United States would have good reason to use their
wealthy kleptocrats to invest in it. Chinese ``greenfield'' investments
have already been a significant concern to members of the Senate.\7\
These Chinese-held subsidiary investments can use corporate anonymity
to disguise non-market intent.
The Coalition for a Prosperous America contends that the US
underestimates our National producers' competition with non-market
firms that sacrifice market-based results in exchange for future
monopoly dominance or illicit political capital due to a lack of
information.
The Coalition for a Prosperous America does not directly oppose
foreign financial investment. But it is crucial to know which foreign
citizens of autocratic regimes own what property, how much is held, for
what purpose, and how much wealth ends up in foreign jurisdictions.
Therefore, the Coalition for a Prosperous America urges the
subcommittee on Financial Services and General Government to approve an
increased appropriation for the Financial Crimes Enforcement Network
(FinCEN) to $210.3 million for the Fiscal Year 2023. The Corporate
Transparency Act (CTA) prioritized our National security, but the
necessary regulation and enforcement need these resources to implement
the will of Congress as soon as possible.
Sincerely,
David Morse, Tax Policy Director
Coalition for a Prosperous America
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\1\ About page Coalition for a Prosperous America. https://
prosperousamerica.org/about/.
\2\ Das, Himamauli, US Treasury FinCEN Acting Director, Statement
before U.S. House of Representatives Financial Services Committee.
April 28, 2022. https://financialservices.house.gov/uploadedfiles/hhrg-
117-ba00-wstate-dash-20220428.pdf.
\3\ Advisory on Kleptocracy and Foreign Public Corruption. US
Treasury, FinCEN April 14th, 2022. https://www.fincen.gov/resources/
advisories/fincen-advisory-fin-2022-a001.
\4\ Keefe, Patrick Radden. How Putin's Oligarchs Bought London. New
Yorker Magazine. March 28th, 2022. https://www.newyorker.com/magazine/
2022/03/28/how-putins-oligarchs-bought-
london.
\5\ Gross domestic product of the United Kingdom in 2020, by region
(in million GBP). Statista. https://www.statista.com/statistics/
1004135/uk-gdp-by-region/.
\6\ Gross Domestic Product by State, 4th Quarter 2020 and Annual
2020 (Preliminary). US Commerce, Bureau of Economic Analysis. https://
www.bea.gov/sites/default/files/2021-03/qgdpstate0321.pdf.
\7\ Senator John Kennedy. Kennedy introduces bill to increase
scrutiny over Chinese investments on U.S. soil. Press Release. October
21, 2021. https://www.kennedy.senate.gov/public/2021/10/kennedy-
introduces-bill-to-increase-scrutiny-over-chinese-investments-on-u-s-
soil.
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Prepared Statement of Coalition for Integrity
Dear Chairman Van Hollen and Ranking Member Hyde-Smith:
We at Coalition for Integrity support and encourage the
subcommittee on Financial Services and General Government to approve
increased appropriations for Financial Crimes Enforcement Network
(FinCEN) in line with the President's budget request for the 2023
fiscal year.\1\
Coalition for Integrity is a non-profit, non-partisan 501(c)(3)
organization. We work in coalition with a wide range of individuals and
organizations to combat corruption and promote integrity in the public
and private sectors both in the United States and internationally. An
important area of focus for us is ending impunity for corrupt public
officials and oligarchs around the world. We have previously submitted
comments to FinCEN on a proposed rule that would address the
vulnerability of the U.S. real estate market to money laundering and
other illicit activity.\2\ We have also submitted comments on notice of
proposed rulemaking (NPRM) to implement the beneficial ownership
reporting requirements in the Corporate Transparency Act (CTA).\3\
FinCEN remains one of the leaders entrusted with combatting illicit
finance and addressing deficiencies in the anti-money laundering regime
in the first U.S. Strategy on Countering Corruption.\4\ FinCEN's work
is critical to keep the proceeds of corruption and other crimes from
being laundered through the U.S. financial system. Deputy Secretary of
the Treasury Wally Adeyemo expressed during his testimony before the
subcommittee on Financial Services and General Government, the U.S.
Treasury has ``taken unprecedented measures . . . [but] these new
actions and initiatives require substantial resources'' to conduct the
necessary analysis and produce a global response.\5\ These remarks echo
FinCEN Acting Director Himamauli Das' testimony before the House
Financial Services Committee where he explained that ``while the AML
Act made significant improvements to the AML/CFT framework, these
improvements come at a cost. FinCEN employs a team of about 300
dedicated employees, including intelligence analysts, investigators,
AML/CFT policy strategists, enforcement and compliance officers,
outreach specialists, data analysts, regulators, and economists . . .
[yet] FinCEN has significant staffing requests that remain unfunded.''
\6\
The Strategy on Countering Corruption recognizes the real estate
and private investment sectors are vulnerable to abuse by illicit
actors seeking to launder the criminal proceeds.\7\ FinCEN is
responsible for rulemaking in these sectors as well as implementing the
beneficial ownership transparency rule of the CTA.\8\ FinCEN's role
continues to grow as it follows the money.\9\
The Coalition for Integrity urges the subcommittee on Financial
Services and General Government to approve the full $210.3 million in
order for FinCEN to fulfill its duties to combat money laundering and
its related crimes such as terrorism and promote national security.\10\
Coalition for Integrity also endorses FACT Coalition's letter in
support of increased FY 2023 appropriations for FinCEN.
Thank you for your time and consideration. Please contact me with
any questions at sshah@coalitionforintegrity.org.
Sincerely, Shruti Shah
President & CEO Coalition for Integrity
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\1\ The White House, Budget of the U.S. Government: Fiscal Year
2023, Feb. 2022, https://www.whitehouse.gov/wp- content/uploads/2022/
03/budget_fy2023.pdf.
\2\ The letter was written in response to FinCEN's request for
comment. See Letter from Shruti Shah, President & CEO, Coalition for
Integrity, to Himamauli Das, Acting Dir., FinCEN, U.S. Department of
the Treasury (Feb. 21, 2022), https://www.coalitionforintegrity.org/wp-
content/uploads/2022/02/C4I-FinCEN-Comments-Feb-21-Real-Estate-
Final.pdf; see also FinCEN, 86 Fed. Reg. 69, 589 (Dec. 8, 2021),
https://www.govinfo.gov/content/pkg/FR-2021-12-08/pdf/2021-26549.pdf.
\3\ See Letter from Shruti Shah, President & CEO, Coalition for
Integrity, to Himamauli Das, Acting Dir., FinCEN, U.S. Department of
the Treasury (Feb. 7, 2022), https://www.coalitionforintegrity.org/wp-
content/uploads/2022/02/FinCEN-Comments-Feb-7-Final.pdf.
\4\ The White House, U.S. Strategy on Countering Corruption, Dec.
2021, https://www.whitehouse.gov/wp-content/uploads/2021/12/United-
States-Strategy-on-Countering-
Corruption.pdf.
\5\ U.S. Department of the Treasury, Testimony of Deputy Secretary
of the Treasury Wally Adeyemo before the subcommittee on Financial
Services and General Government, Committee on Appropriations, U.S.
Senate, June 14, 2022, https://home.treasury.gov/news/press-releases/
jy0815.
\6\ Statement by Himamauli Das Acting Director Financial Crimes
Enforcement Network U.S. Department of the Treasury before Committee on
Financial Services, U.S. House of Representatives, 12 (April 28, 2022),
https://financialservices.house.gov/uploadedfiles/hhrg-117-ba00-wstate-
dash-20220428.pdf.
\7\ Supra note 4 at 22.
\8\ FinCEN, 86 Fed. Reg. 69, 589 (Dec. 8, 2021), https://
www.govinfo.gov/content/pkg/FR-2021-12-08/pdf/2021-26549.pdf.
\9\ FinCEN, What We Do, https://www.fincen.gov/what-we-do.
\10\ FinCEN, Mission, https://www.fincen.gov/about/mission.
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Prepared Statement of Congressional Fire Services Institute
Dear Chairman Van Hollen and Ranking Member Hyde-Smith:
On behalf of the Nation's fire and emergency services, we write to
urge your support for vital funding to enhance life safety across the
country by preventing illness and death related to carbon monoxide
exposure. As you consider the Fiscal Year (FY) 2023 Financial Services
and General Government (FSGG) Appropriations bill, we urge you to
provide $10 million to the Consumer Product Safety Commission (CPSC)
for grants required by section 204 of the Nicholas and Zachary Burt
Memorial Carbon Monoxide Poisoning Prevention Act of 2022 (Public Law
117-103).
Carbon monoxide (CO) poisoning is a proven threat to Americans
across the country, claiming at least 430 lives annually. Additionally,
approximately 50,000 people are sent to emergency rooms every year due
to unintentional poisonings, according to the Centers for Disease
Control and Prevention (CDC).\1\ Since CO is an odorless, tasteless,
and colorless gas, many people are initially unaware they are even
being poisoned.
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\1\ https://www.cdc.gov/nceh/features/copoisoning/index.html.
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Carbon monoxide poisoning can result in death, but it can also
cause lifelong neurological and cardiac issues, in addition to other
harmful, long-term health conditions. While anyone can be harmed by
exposure to CO, it is especially dangerous for babies, children,
elderly individuals, and individuals with preexisting chronic health
conditions, such as cardiovascular disease, anemia, and respiratory
issues.
The Nicholas and Zachary Burt Memorial Carbon Monoxide Poisoning
Prevention Act established a grant program at CPSC to help States and
local governments implement CO alarm installation programs and ensure
that families across America are protected from CO poisoning. It is
critical that this program is adequately funded to help mitigate the
harmful-and even fatal-effects of CO poisoning.
Our organizations look forward to working with you on funding this
important public safety grant program.
Sincerely,
Congressional Fire Services Institute
International Association of Fire Chiefs
International Association of Fire Fighters
International Code Council
National Association of State Fire Marshals
National Fallen Firefighters Foundation
National Fire Protection Association
National Volunteer Fire Council
[This statement was submitted by Michaela Campbell, Director of
Government Affairs for the Congressional Fire Services Institute]
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Prepared Statement of Demand Progress
Dear Chairman Van Hollen, Ranking Member Hyde-Smith, and Members of the
subcommittee:
Thank you for the opportunity to submit written testimony regarding
the FY 2023 Financial Services and General Government Appropriations
Bill. My organization, Demand Progress, conducts research and engages
in advocacy focused on strengthening Congress's ability to legislate
and conduct oversight. In furtherance of this mission, I urge the
Committee to direct the public disclosure of in-person and virtual
visitors to the White House and the Vice President's residence, which
would further Congress's oversight role and greater governmental
accountability.
disclosure of white house visitor logs
Disclosure of White House visitor logs--records of in-person
visitors to the White House--is an important element of government
accountability and serves as a proxy for disclosure of meetings by
lobbyists and special interests with government officials. These
records of in-person meetings are generated by the activity of the
United States Secret Service, which monitors visitors and clears them
to the White
House complex using records from two automated systems.\1\ These
records track visitors from the initiation of a request that they be
cleared for access until the point that they exit the White House
complex.
On September 15, 2009, the Obama administration began voluntarily
disclosing the majority of the information in the White House visitor
logs to settle then-ongoing litigation brought by civil society
organizations over the issue of public access to these records under
the Freedom of Information Act.\2\ In doing so, the White House
recognized the ``right'' of ``Americans'' to ``know whose voices are
being heard in the policymaking process.'' As implemented, the posted
records included names of visitors, the dates and times they entered
and exited the White House compound, and the names of the White House
staff requesting that they be cleared for access. (Ultimately, the
Federal courts held the records are not legally Secret Service
property, but rather White House records, and are thus covered by the
Presidential Records Act and not the Freedom of Information Act.)
Under its disclosure policy, the Obama administration released
nearly 6,000,000 records, which opened a new window into the
functioning of the White House and helped inform the public, directly
and through countless news stories, about who was going into the White
House to meet with administration officials. This also offered
opportunities for civil society groups to analyze the data in an effort
to hold the administration accountable.
Experience under the Obama administration's voluntary disclosure
policy demonstrates how important these records are for public
accountability. The Washington Post reported that the visitor records
released by the Obama administration included ``scores of lobbyists.''
\3\ For example, one news report examining records from an
``unremarkable'' day in January 2012 revealed the ``regular presence''
of lobbyists at the White House, with ``lobbyists with personal
connections to the White House enjoy[ing] the easiest access.'' \4\ At
the same time, the Obama disclosure policy protected the interests of
the president, his family, and the Nation by excluding purely personal
guests of the president's family, records implicating national security
interests, and records of particularly time-sensitive meetings that
were temporarily withheld.
Eight years later, President Trump closed that window when he came
into the White House, leaving the public in the dark about who was
going into ``the people's house'' and fueling multiple lawsuits.
Regardless of who is president, information about White House visitors
should continue to be publicly available. These records help inform
Congress and the public about those individuals and entities that seek
to influence presidential decision-making and Executive branch
policies, and the basic day-to-day workings of our government--the
information the FOIA was designed to access and the voluntary
disclosure policy was meant to address.
The Biden administration has chosen to reverse the Trump
administration's decision to discontinue the voluntary disclosure
policy. This is a welcome development, but one granted at the
sufferance of the current administration and liable to reversal at any
time. Congress must step in to guarantee access for itself and the
American people.
To that point, the House of Representatives included language in
the Protecting Our Democracy Act, Section 2203 of H.R. 5314 (117th
Congress), which establishes ``not later than 90 days after the date of
enactment of this act, the President shall establish and update, every
90 days thereafter, a publicly available database that contains covered
records for the preceding 90-day period, on a publicly available
website in an easily searchable and downloadable format.'' While the
House passed H.R. 5315 on December 9, 2021, it has yet to see any
action in the Senate. The measure paralleled legislation introduced by
Rep. Mike Quigley in section 602 of the Transparency in Government Act
over multiple Congresses.\5\
Appropriators routinely require the administration to provide to
Congress records appropriate for legislative oversight of Executive
branch activities, including requiring the public disclosure of these
records. White House visitor logs are quintessential oversight records.
The House has already given its blessing for requiring White House
visitor log disclosure and the Appropriations Committee is best
positioned to vindicate Congress's will. I urge you to ensure
uninterrupted congressional and public visibility into visitors to the
White House and the Vice President's residence regardless of who
occupies the White House. The policy adopted by the White House with
respect to which records to disclose and which ones may be withheld is
reasonable, by and large, and should be put into law. To that end, I
recommend the following bill language that codifies the current White
House policy and vindicates Congress's oversight needs and the public's
right to know:
White House Visitor Logs.--Not later than 30 days after the
date of enactment of this act and updated every 30 days
thereafter, the White House Office of Administration shall
report to the Congress, the Senate Homeland Security and
Governmental Affairs Committee, the House Committee on
Oversight, and make contemporaneously available online, a
searchable, sortable, downloadable database of visitors to the
White House and the Vice President's residence compiled in the
White House Worker and Visitor Entry System that includes the
name of each visitor, the name of the individual who requested
clearance for each visitor, and the date and time of entry for
each visitor. Notwithstanding this requirement, the White House
Office of Administration, after consultation with the United
States Secret Service and the President or his designee, may
exclude from the database any information that would (1)
implicate personal privacy or law enforcement concerns or
threaten national security, or (2) relate to a purely personal
guest. In addition, with respect to a particular sensitive
meeting, the White House Office of Administration shall
disclose each month the number of records withheld on this
basis and post the applicable records no later than 365 days
later.
disclosure of white house virtual visitor logs
As described above, the Biden Administration reinstated the Obama
administration's policy to disclose the vast majority of records of
visitors to the White House. However, many White House meetings are
taking place virtually and are not covered under that policy. The move
from in-person to virtual meetings in response to COVID-19 could not
have been anticipated when the disclosure policy was first implemented
in 2009.
The Financial Services and General Government FY 2022
Appropriations Bill Report (H. Rept. 117-79, p. 37) requested ``[t]he
Executive Office of the President to explore the feasibility of
disclosing 'virtual' visitors to the Executive Office of the President
in a manner that provides similar information as provided for other
visitors and that is retroactive to January 20, 2021'' and ``directs
EOP to provide a briefing on this topic no later than 120 days after
enactment of this act.''
I applaud this action from the Committee and believe access to
``virtual'' visitor disclosures should become a permanent practice. I
encourage the Committee to move forward to direct the Executive Office
of the President to provide a report on the cost and implementation of
making ``virtual'' visitor log disclosures permanent. To that end, I
recommend the following bill language:
White House Virtual Visitor Logs.--The White House Executive
Office of the President, within 60 days of enactment of this
legislation, shall provide a report to Congress on how it
recommends implementing a requirement to make contemporaneously
available online on at least a biweekly basis a searchable,
sortable, downloadable database of ``virtual visitors'' to the
White House and the Vice President's residence. A virtual
visitor is a person who meets with Executive branch office
staff whose normal place of work is at the White House or the
Vice President's residence. This list should include the name
of each visitor, the name of each person they met with, and the
date and time of each meeting. This is intended to be an
analogue for disclosure of White House Visitor Logs.
As part of its report to Congress, the Executive office of the
President may evaluate whether to include a provision that would
exclude from the biweekly public disclosure any information that would
(1) implicate personal privacy or law enforcement concerns or threaten
national security, or (2) relate to a purely personal guest. In those
instances, the Executive Office of the President shall still disclose
the total number of records on a biweekly basis, but withhold the
applicable record for no more than 365 days.
The report shall also address the costs of implementing such a
system.
Thank you again for the opportunity to submit written testimony.
---------------------------------------------------------------------------
\1\ 18 U.S.C. Sec. Sec. 3056, 3056A.
\2\ Peter Baker, The White House Will Disclose Visitor Logs, New
York Times, Sept. 4, 2009, available at https://
thecaucus.blogs.nytimes.com/2009/09/04/the-white-house-will-disclose-
visitor-logs/.
\3\ John Wagner, Trump will keep list of White House visitors
secret, Washington Post, Apr. 14, 2017, available at https://
www.washingtonpost.com/news/post-politics/wp/2017/04/14/trump-to-
discontinue-obama-policy-of-voluntarily-releasing-white-house-visitor-
logs/.
\4\ T.W. Farnam, White House Visitor Logs Show Lobbying Going
Strong, Washington Post, May 20, 2012, available at https://
www.washingtonpost.com/politics/2012/05/20/gIQA2ok4dU_
story.html.
\5\ See, e.g., H.R. 2055 (117th Congress).
[This statement was submitted by Hajar Hammado, Policy Advisor]
______
Prepared Statement of Harbor Bankshares Corporation
Chairman Van Hollen, Ranking Member Hyde-Smith, and members of the
subcommittee, good afternoon. Thank you for inviting me to discuss the
important work of Community Development Financial Institutions (CDFIs).
My name is Joseph Haskins. I am a founding Director, Chairman and
CEO of Harbor Bankshares Corporation, headquartered in Baltimore,
Maryland.
bank history
The Harbor Bank of Maryland (Harbor Bank) opened its door for
business in September of 1982. The Bank had its origin dating back to
the early 1970s when Baltimore's African American leadership was
seeking ways to enhance economic opportunities for minority communities
in Baltimore City.
One of the major issues identified as limiting economic
opportunities was the lack of access to capital and more importantly
access to banking. To address these issues Harbor Bank was found.
Harbor Bank focused on providing banking services in the following
areas:
--Minority Business/Commercial Lending
--Faith Based (Church Financing)
--Residential Mortgages
Increased demands for financial services coupled with increasing
bank regulations required and expanded operations.
In 1992, Harbor Bank formed a holding company, Harbor Bankshares
Corporation (The Corporation), allowing for additional financial
services.
Establishing the holding company led to the formation of three (3)
subsidiaries and a non-profit Community Development Corporation (CDC).
Today, The Corporation oversees a $350 million Bank and
subsidiaries that directly and indirectly control another $300 million.
While the Bank remains the primary subsidiary, the other operations
provide the Baltimore community with access to more diverse capital and
financial services.
Some of the expanded services include:
--Lower priced loans
--Equity investment support
--Financial literacy programs
--Real estate development programs
--Specialized tax benefits
Over the past thirty-nine (39) years, the significance of the
Corporation and Bank to the development/revitalization of communities
is evidenced by:
--The development of the Inner Harbor East where Harbor Bank was the
first money to help build a hotel, office building, and
residential housing.
--The Canton Community where Harbor Bank was the first money to
support a residential housing project and the converting of old
warehouses to office and retailed space.
--East Baltimore Development Inc. (EBDI), a non-profit, was aided by
Harbor Bank's seed money to help an 88-acre community known for
poverty and crime to be revitalized and become livable. Johns
Hopkins Science Park is a part of this community's
revitalization. This community is now a national model.
--University of Maryland at Baltimore (UMAB) Science Park where
Harbor Bank was the first money to support land and project
development West of Martin Luther King Boulevard.
As a corporation in the financial services space, our role evolved
to that of being a catalyst and advocate for revitalizing and restoring
abandoned, forgotten, and disregarded communities in Baltimore.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
the cdfi role
The Corporation and Bank seeking to enhance financial services and
bring more resources to the Baltimore Community applied over 20 years
ago to become certified Community Development Financial Institutions
(CDFI). Today, the Corporation and two of its subsidiaries are CDFIs.
Also, The Corporation's non-profit CDC is a certified CDFI.
Under the Department of Treasury's CDFI Program, the Corporation
and its subsidiaries have participated in several of funds programs and
have successfully won/earned:
--13 Bank Enterprise Awards (BEA) totaling $3,893,753 which helped to
increase lending in lower income communities. The BEA Award is
important to CDFI Banks because of its leverage capacity.
Records show that 90 percent of BEA monies go to the lowest
income census tracts.
--Financial Assistance (FA) award totaling $649,000. ($500,000 was
for loans and $149,000 persistent poverty).
--Nine rounds of New Market Tax Credit (NMTC) awards totaling $384
million helping to leverage over $3 billion of development and
create 4,000 jobs. Projects include science buildings,
community schools, and healthcare facilities.
Many projects involve multiple level of participation from The
Corporation. A project could include New Market Tax Credit (NMTC),
Harbor Bank loan and advisory services.
maryland profile
--The programs of the CDFI Fund are very important to the state of
Maryland. Maryland is home to 15 CDFIs, two of which are banks
or bank holding companies, while two additional CDFI banks
based in the District of Columbia provide significant services
within the state.
--In 2020, Maryland-based CDFIs and CDFI banks serving Maryland
(Maryland and D.C. based) received $6.7 million in CDFI
Financial Assistance (FA) and Technical Assistance (TA)
awards. CDFI banks serving Maryland received $202,898 in
BEA funds.
--In the past 3 years Maryland-based CDFIs and CDFI banks serving
Maryland have received $31.4 million in FA and TA awards,
while CDFI banks serving Maryland have received $1.15
million in BEA funds.
--Since the CDFI Fund's inception in 1996, Maryland-based CDFIs and
CDFI banks serving Maryland have received $119.5 million in
total awards. In that same period, CDFI banks serving
Maryland have received $14.5 million in BEA funds.
--Maryland is among the poorest States in the Nation. Like other
States with persistent poverty, Maryland has a lot to lose if
the CDFI Fund and BEA Program do not have adequate funding.
--Approximately 9.1 percent of all Marylanders live in poverty--
with the poverty rate in 8 counties (Somerset, Baltimore,
Dorchester, Allegany, Wicomico, Garrett, Kent and
Washington) equal to or exceeding the 12.3 percent United
States total
--Baltimore City, Maryland's USDA designated persistent poverty
county, has a poverty rate 160 percent higher than the
United States total. Somerset County has a poverty rate 190
percent higher than the United States total.
covid-19 pandemic
The crisis of COVID-19 highlighted the importance of CDFI banks and
other community based financial institutions. CDFI banks reached and
helped the businesses that required loans to survive, the ones
disproportionately operating in low to moderate income communities and
desperate for banking services and in particular financial assistance.
The government offered stimulus programs--especially the Paycheck
Protection Program (PPP) proved to be a lifeline to many of these
businesses, especially in the distressed communities.
Harbor Bank stepped to the front of the line providing assistance
through the PPP program. Harbor Bank met and assisted over 1,000
potential PPP applicants and processed 674 applications totaling $67.5
million. Adjusting out the 10 largest borrowers, the average size of
Harbor's PPP loan was $52,000.
The government met the economic call from the community and Harbor
Bank was a part of the delivering channel.
In summary, the Treasury's CDFI Program is vital to the growth and
restoration of the communities that have been depressed or deprived for
years. It is difficult to provide the capital that these communities
need without a CDFI Program. My fear today is that the absence of the
PPP Program will render businesses incapable of continuing on the
survival path.
I urge the members of the subcommittee to recognize the significant
economic benefits of funding the CDFI Fund programs. Not only do these
programs provide access to capital in historically disadvantaged
regions of the country, but they do so by leveraging private
investment. The CDFI Fund programs are a market-based strategy for
addressing chronic economic challenges.
I thank Chairman Van Hollen, Ranking Member Hyde-Smith, and the
members of the Committee for the opportunity to tell you the story of
Bank of Anguilla, the work we do, and the communities that we serve.
[This statement was submitted by Joseph Haskins, Jr., Chairman and
Chief Executive Officer]
______
Prepared Statement of Leadership Engagement of the National Congress of
American Indians
On behalf of the National Congress of American Indians (NCAI),
thank you for this opportunity to provide testimony on FY 2023 funding
for the Office of Management and Budget (OMB), Department of the
Treasury (Treasury), the Small Business Administration (SBA), and the
Federal Communications Commission (FCC). A brief history of Native
American policy in the United States contextualizes the need for
increased and improved financial services in Indian Country and greater
representation in OMB. Specifically, the U.S. legacies of genocide,
isolation, forced assimilation, complete termination of Tribal
government recognition, revocation of Tribal government jurisdictional
authority, and forced conversion of Tribal lands, contribute to the
systemic negative socio-economic conditions in Tribal communities,
including a lack of access to deposit and credit services in Indian
Country. Policies failing to consider that Tribal Nations and their
citizens do not have the same capital equity as other American
governments and citizens cause Federal programs and initiatives to be
less successful than intended. Federal spending policy for programs
that benefit Native Americans must be considered holistically across
appropriations subcommittee jurisdictions and recognize the unique
historical and political position that was forced upon Tribal Nations
by the United States.
For example, other governments in this country can raise revenue
through tax-exempt debt. The issuance of tax-exempt bonds are a
valuable tool to raise capital because they have a longer payback
period and lower interest, in general. Tribal Nations do not have
parity in access to issuance of tax-exempt bonds because of the
``essential government function'' test, which requires a Tribal Nation
to prove that it is going to use the money for an essential government
function. However, the Department of the Treasury (Treasury) has not
defined what it means, nor has the Internal Revenue Service (IRS). Tax-
exempt debt used to be a market in Indian Country, but without an
essential government function definition, banks backed out of those
sort of activities. So, when Tribal governments raise capital for
economic purposes, the same purposes we are uniquely reliant on to
generate revenue, we are not able to use tax-exempt debt. Tribal
governments are not able to use it for housing and other activities
that, again, have other collateralized asset barriers when they take
place on Trust lands. Indian Country needs patient capital. Changing
this discriminatory practice around the issuance of tax-exempt debt
would free up a lot of capital that other governments take for granted.
Another example can be found in alignment of a banking and credit
deserts map with a map of Tribal communities, which reveals a crisis
for Tribal citizens and governments attempting to access cost-effective
capital and banking services.\1\ Unbanked and underbanked areas in the
United States are known as ``banking deserts.'' \2\ According to a 2013
national survey of unbanked and underbanked households by the FDIC,
16.9 percent of American Indian/Alaskan Native households did not have
an account at an insured institution (unbanked) and 25.5 percent with
an account also had to obtain financial services and products from non-
banks, alternative financial services providers, in the prior 12 months
(underbanked).\3\ The general U.S. population is unbanked at about 7.7
percent and underbanked at about 20 percent.\4\ Access to credit,
especially for small businesses, declines as the distance between the
bank and borrower increases.\5\
The President's FY 2023 Budget Request to Congress calls for a
historic shift in the paradigm of Nation-to-Nation relations that seeks
to restore the promises made between our ancestors and the United
States in several key programs. It includes requesting mandatory
funding for: Indian Health Service, Department of the Interior Contract
Support Costs and Section 105(l) Tribal Leases, and water settlements
operations and maintenance; along with a myriad of investments in
Indian healthcare, education, public safety, natural resource
management, and infrastructure. The Biden-Harris request represents the
most revolutionary presidential budget and policy proposals for Tribal
programs ever, which have long been advocated for by Tribal leaders,
are long overdue, and are prepaid for by our ancestors. The President's
FY 2023 Budget for Federal agencies within this subcommittee's
jurisdiction is largely a continuation of the status quo that results
in Native Americans ranking near the bottom of all Americans in terms
of health, education, and employment \6\ and the persistence of banking
deserts that inhibit economic development, but this subcommittee can
make a substantial difference by providing critical funding for
programs beyond the norm.
Cross-referencing OMB Native American Crosscut data with
Appropriations Committee reports reveals that FY 2022 spending for
Native American programs represents approximately 0.43% of total
regular appropriations budget authority within this subcommittee's
jurisdiction. With Federal investment metrics such as these, it is no
surprise that Indian Country is in a State of catastrophe by national
standards. Despite this chronic underinvestment, Indian Country is an
important economic driver in the U.S. Economy.\7\ Collectively, Tribal
Nations comprise the 13 largest employers in the United States, with
Tribal businesses employing more than 700,000 employees, providing
economic opportunity for both Native and non-Native workers.\8\
Evidence indicates that where Tribal Nations are successful with
economic development that poverty rates, arrest rates, and health issue
rates are lower, while educational outcomes and real per capita income
are higher. Further, revenue generated on Tribal lands results in a
spillover effect that supports local workforces and generates tax
revenue.\9\ Ultimately, prosperity for Indian Country increases market
penetration across sectors and productivity in the American labor
market, as well as improves outcomes associated with other Federal
spending that maximize value ratios of Federal input to desired
output--in simple terms, good governance. As such, an investment in
Indian Country is an investment in America for all Americans.
office of management and budget
The United States has a unique legal relationship with Tribal
governments--a Nation-to-Nation relationship that extends to all
Federal agencies. On April 26, 2021, OMB released its Tribal
Consultation Plan of Actions to: improve executive branch compliance
with Executive Order 13175; consider establishment of a Tribal affairs
advisor; conduct regular consultations with Tribal Nations and Tribal
officials; develop an OMB Consultation Policy; consider providing
additional information on Tribal funding; review its policies and
procedures; and identify legislation of potential interest to Tribal
Nations. Yet, OMB reports zero Federal funding for programs that
benefit Native Americans in its FY 2015 through FY 2023 Native American
Funding Crosscuts. Dedicated offices to promote and fulfill the Federal
Government's trust and treaty obligations are a proven policy mechanism
to reduce programmatic inefficiencies and improve outcomes, making
government work better with and for Tribal Nations. Congress must
provide OMB the resources to establish this ongoing expertise and must
break down the historic institutions of discriminatory gatekeeping that
harm Tribal Nations. It is a matter of fulfilling its trust
responsibility. Congress can promote this government-wide efficiency by
providing $2.5 million to OMB for an Office of Tribal Affairs to be
bureaucratically located within and report directly to the OMB
Director. The crosscutting nature of Tribal spending and policy
throughout the Federal Government necessitates that this expertise be
within the Office of the OMB Director.
department of the treasury
Treasury maintains a long standing and significant role in matters
that substantively impact the sovereignty and welfare of Tribal
Nations. Treasury invests in economic development and financial
services for Indian Country, primarily through funding and technical
assistance for Community Development Financial Institutions (CDFIs).
However, Treasury has other programs that make decisions affecting
Tribal Nations and their citizens, such as the Internal Revenue
Service, the Office of the Comptroller of the Currency (OCC), and the
Office of Recovery Programs. The Native American Community Development
Financial Institutions Fund Assistance Program (the NACA Program) has
been successful and effective in infusing desperately needed financial
capital into low-income Tribal communities through technical and
financial assistance grants; however, the CDFI bond guarantee program,
and the New Market Tax Credits program have not had the same success.
Native CDFIs provide a wide range of loans to microenterprises, small
businesses, consumers, and homeowners; financial education and
entrepreneurial development training; small business planning and
homebuyer education; and counseling on credit, foreclosure prevention,
debt relief, and other ways to improve financial capacity. Due to
limited funding, far fewer Native CDFI applications are approved than
submitted. Barriers to capital access, aggravated by the COVID
pandemic, necessitate greater funding for existing Native CDFIs and
awards to more grant applicants to generate more loans, financial
literacy, and entrepreneurial development counseling in Indian
communities.
Although regular appropriations funding levels for Treasury
programs increased in FY 2021 for the first time in more than a decade,
the increase has not kept pace with CDFI and Native CDFI growth during
that same period, resulting in lost economic opportunities throughout
Indian Country. Even with the increase in FY 2021 (which was flat-
funded for FY 2022), cross-referencing OMB Native American Crosscut
data with Appropriations Committee reports reveals that FY 2022
spending for Native American programs represents approximately 0.15% of
total regular appropriations budget authority provided for Treasury
within this subcommittee's jurisdiction. The subcommittee should
provide at least $30 million to the CDFI Fund Program Account for
Native CDFIs and $2.5 million for an Office of Tribal Affairs within
the Office of the Secretary of the Treasury. Establishment of a
permanent Office of Tribal Affairs within the Office of the Secretary
of the Treasury will promote institutional expertise and guidance
across Treasury policy and activity. Congress and Treasury should
welcome this opportunity to reduce costs and increase efficiencies
associated with necessary operations of the agency, while
simultaneously maximizing the American taxpayer's investment in this
country and growing local, regional, and national economic
productivity.
small business administration
SBA focuses on capital access, contracting, and entrepreneurial
development. The SBA's Entrepreneurial Development budget includes a
small line item for Native American Outreach that funds the Office of
Native American Affairs (ONAA) which coordinates all SBA program
activities to help Tribal Nations and Native-owned businesses navigate
SBA contracting, business assistance and lending programs. In the COVID
pandemic's wake, the ONAA needs more outreach funding to engage in
multi-agency workshops and Native supplier initiative events, encourage
greater use of SBA loan guarantees, assist Native recipients of
Paycheck Protection Program loans and disaster loans, and strengthen
Native contractors' participation in the SBA's 8(a), HUB Zone, and
other small business contracting programs. In order to provide
meaningful services, outreach, and education that is national in scope
to Tribal Nations and Native-owned businesses, this subcommittee should
provide at least $5 million for the SBA's ONAA.
federal communications commission
Tribal lands experience lower rates of both fixed and mobile
broadband deployment as compared to non-Tribal areas of the United
States, particularly in rural areas.\10\ The FCC Office of Native
Affairs and Policy (FCC-ONAP) States that, ``[u]nderstanding the
complexity of the digital divide in Indian Country requires an
appreciation of the unique challenges facing Tribal Nations, which
include deployment, adoption, affordability, and access to spectrum, as
well as lack of investment dollars and access to credit and start-up or
gap financing.'' Through this Tribal engagement, the FCC has revamped
regulations to assist in bridging the digital divide on Tribal lands.
However, the FCC-ONAP office was created without dedicated funding, and
it was not until passage of the FY 2014 Omnibus that the Office
received $300,000 to support its Tribal consultation and training
directives, an amount that is not commensurate with the scope of the
mission tasked. This subcommittee should expressly provide $2.5 million
to FCC-ONAP to promote an office with the resources to address barriers
that exacerbate the digital divide in Indian Country.
conclusion
Our people have paid for every penny obligated to Indian Country
hundreds of times over by providing this nation with our land. In order
to uphold this Nation's promises to its people, it must first uphold
its promise to this land's First People. We expect to continue to be
treated as sovereign nations and with governmental parity. When we work
together we can achieve so much. We must now continue down that path of
Nation-to-Nation growth, and only then will all of our people be able
to fully flourish.
---------------------------------------------------------------------------
\1\ Native American Finance Officers Association (NAFOA), Comments
Re: Community Reinvestment Act Modernization, Docket ID: OCC-2018-0008,
2.
\2\ Donald P. Morgan, Maxin L. Pinkovskiy, and Bryan Yang, Banking
Deserts, Branch Closings, and Soft Information, March 7, 2016, https://
libertystreeteconomics.newyorkfed.org/2016/03/banking-deserts-branch-
closings-and-soft-information.html.
\3\ Federal Deposit Insurance Corporation, 2013 Federal Deposit
Insurance Corporation National Survey of Unbanked and Underbanked
Households, 16, https://www.fdic.gov/householdsurvey/2013report.pdf.
\4\ Id.
\5\ Id.
\6\ U.S. Commission on Civil Rights, Broken Promises: Continuing
Federal Funding Shortfall for Native Americans, 1, available at:
https://www.usccr.gov/files/pubs/2018/12-20-Broken-
Promises.pdf, accessed on: May 25, 2022.
\7\ Patrice H. Kunesh, Getting real about Indian Country--
surprising progress in the heartland, https://indiancountrytoday.com/
opinion/getting-real-about-indian-country-surprising-progress-in-the-
heartland, Accessed: April 6, 2022.
\8\ Id.
\9\ Id.
\10\ See FCC, Fixed Broadband Deployment Data from FCC Form 477,
available at https://www.fcc.gov/general/broadband-deployment-data-fcc-
form-477; FCC, Mobile Deployment Form 477 Data, available at https://
www.fcc.gov/mobile-deployment-form-477-data.
[This statement was submitted by Larry Wright, Jr., Director]
______
Prepared Statement of Lincoln Network
Chairman Van Hollen, Ranking Member Hyde-Smith, and Members of the
subcommittee:
We are writing on behalf of Lincoln Network to encourage this
subcommittee to provide additional funding to the Federal Trade
Commission (FTC) and to direct funds for the hiring of additional staff
technologists.
In March, Congress passed the Consolidated Appropriations Act that
appropriated $376.5 million to the FTC for FY 2022.\1\ The FTC
requested that this subcommittee appropriate $490 million for FY 2023,
an increase of $139 million.\2\
The report language from the House Appropriations Committee for FY
2023 recommended fully funding the FTC's requested budget at $490
million.\3\ This report also encourages the Commission to address
several concerns related to the technology industry, including
deceptive data collection practices, fraud related to cryptocurrencies,
online misinformation, and online privacy for children. Addressing
these concerns requires deep technical expertise that is currently
lacking at the FTC.
In its own appropriations bill, the subcommittee should fully fund
the FTC's FY 2023 budget request and specify that a significant portion
of this funding should go toward bolstering technical expertise at the
Commission.
background
The FTC, in conjunction with the Department of Justice Antitrust
Division, is primarily responsible for enforcing laws related to unfair
and deceptive business practices and other anticompetitive activity.
Over the past few decades, the Commission has increasingly exercised
its authority over the technology industry. The Commission regularly
scrutinizes the business practices of tech firms and reviews mergers
and acquisitions in the technology sector. As the size and complexity
of the tech industry have grown, it is essential that the FTC has
sufficient technical expertise to properly evaluate consumer impacts in
this sector.
Recently, the FTC has taken dozens of enforcement actions against
tech firms, particularly regarding user privacy and data security
practices.\4\ The Commission has settled cases against Google,
Facebook, Twitter, and several other tech companies recently for
privacy violations and for violating previous orders. Perhaps most
significantly, the FTC is currently engaged in litigation against
Facebook (now Meta), alleging that the company has abused its
``monopoly power'' to implement ``an anticompetitive scheme that
prevented differentiated and innovative firms from gaining scale, thus
enabling Facebook to maintain its dominance.'' \5\ All of these actions
require the Commission to have a firm grasp of the technical issues at
play in addition to legal and economic factors.
The FTC's technical expertise, while great, tends to lag behind
other global enforcement agencies. For example, the FTC's Division of
Privacy and Identity Protection has 40-45 employees. The United
Kingdom's and Ireland's enforcement agencies have over 700 and 150
employees, respectively.\6\ While this comparison is imperfect,
comparing one Division to entire foreign agencies, this analysis
highlights that the FTC's technical staff deserves to be fully funded.
Increasing technical expertise at the FTC will not necessarily
result in more cases being brought against tech firms. The primary
value-add for investing in technical expertise at the Commission is to
help its lawyers and economists more accurately evaluate potential
consumer harms, establish enforcement priorities, and develop
technological solutions to operational challenges.
the need for technical expertise at the ftc
The FTC has long recognized the need for expanded technical
capacity, both for enforcement and general operations. In its FY 2023
budget request, the Commission asked Congress to increase its
appropriation by $65.4 million to hire 300 additional full-time
equivalent employees. Among other areas, this increase would go to
support increasing technology enforcement capacity and developing
technological solutions to casework and litigation challenges.\7\ With
regard to enforcement, the Commission further explained:
In FY 2020, the Commission established the Bureau of
Competition's Technology Enforcement Division (TED) to
reinvigorate and refocus BC's
commitment to identifying and challenging anticompetitive
mergers and conduct in complex and increasingly pervasive
technology markets. While pursuing this work, FTC staff are
severely outmatched by the resources that dominant technology
firms can deploy, such that the number of attorneys and experts
working for defendants can outmatch FTC by ten to one.\8\
Federal agencies are often outgunned when engaging in enforcement
actions against tech firms. Giving the FTC the resources it needs to
hire more technical experts for the TED and other tech-focused
departments would undoubtedly help it more effectively and efficiently
police anticompetitive activity in tech markets.
the need for qualified economists at the ftc
The Bureau of Economics is crucial to the Commission's antitrust
and consumer protection missions. It ``helps . . . evaluate the
economic impact of . . . actions by providing economic analysis for
competition and consumer protection investigations and rulemakings.''
\9\ The Bureau employs numerous Ph.D. economists, research analysts,
accountants, and other staff necessary to support the analysis it
provides to the Commission.\10\ Throughout the decades, the Bureau's
responsibilities have increased to include analysis supporting
antitrust investigations, merger review, and support for other types of
investigations and cases.
In addition to increased technical staffing levels, the FTC's
budget justification requests that Congress provide funding for 20
full-time employees to ``provide increased support and economic
analysis . . . and to increase the amount of economic analysis that
guides the Commission's consumer protection and competition policies
and enforcement.'' \11\ Within the justification document, the
Commission expresses a desire for the prospective full-time employees
to be economists focused on antitrust, including ``merger and nonmerger
enforcement investigations and litigation, and research to help the FTC
focus antitrust enforcement to maximize the agency's ability to
maintain competitive markets.'' \12\
The Commission's primary role is protecting consumers, not solely
competition. Even the competition model should ask the question of
whether the presence or absence of competition harms consumers. The
Commission and Bureau should be focused on ensuring that government
practices do not harm consumers by restricting entry, limiting
competition, chilling innovation, or restricting choices.\13\
Given the Bureau's nature supporting the Commission's work, the
core request seems appropriate. However, this subcommittee should focus
on the Bureau and Commission's broader work. While additional staff
should help the Commission's antitrust efforts, this subcommittee
should make it clear that any new staff should be used to support the
Bureau's broader mission of protecting consumers.
recommendations
This subcommittee should fully fund the FTC's FY 2023 Budget
Request.
As we have argued previously, complex technical challenges and
increased workloads at the FTC necessitate additional resources.\14\
Just as their House counterparts did, this subcommittee should fully
fund the FTC's FY 2023 budget request of $490 million. While funding
alone is insufficient, granting the Commission the resources to expand
its technical capacity would result in more effective supervision of
tech markets and more efficient operations at the FTC.
This subcommittee should include language in the FY 2023
appropriations bill that directs funds toward hiring additional
technical staff.
The need for additional technical capacity at the FTC is clear and
immediate, and it is incumbent upon appropriators to ensure that the
Commission has the resources it needs to address this challenge.
Specifically, this subcommittee should direct the necessary funds of
the $65.4 million requested for additional, full-time employees toward
hiring individuals with technical or economics expertise. These new
roles could help close capacity gaps within the Technology Enforcement
Division, Division of Privacy and Identity Protection, Office of
Technology Research and Investigation, Bureau of Economics, regional
offices, and other relevant parts of the FTC. In all cases, this
subcommittee should also ensure that the Commission remains committed
to its original and statutory purposes of protecting consumers, with a
focus both on government practices and private sector practices that
harm consumers.
---------------------------------------------------------------------------
\1\ Consolidated Appropriations Act, 2022, Public Law 117-103
(2022).
\2\ Federal Trade Commission, Federal Trade Commission Fiscal Year
2023 Congressional Budget Justification (March 2022), p. 8, https://
content.mlex.com/Attachments/2022-04-04
_X75ZUQW17T5GT2LS/FTC%20-%20FY23%20CBJ.pdf.
\3\ Financial Services and General Government Appropriations Bill,
2023, p. 69-72, (2022), https://docs.house.gov/meetings/AP/AP00/
20220624/114951/HMKP-117-AP00-20220624-SD002.pdf.
\4\ Federal Trade Commission, FTC Report to Congress on Privacy and
Security, (Sept. 13, 2021), p. 2 (focusing on efforts on health apps;
accuracy of data for housing, employment, and credit;
videoconferencing; and education technology, https://www.ftc.gov/
system/files/documents/reports/ftc-report-congress-privacy-security/
report_to_congress_on_privacy_and_data_
security_2021.pdf).
\5\ Federal Trade Commission v. Facebook, Inc., 1:20-cv-03590-JEB
(2021).
\6\ Ibid., p. 7.
\7\ Federal Trade Commission, Federal Trade Commission Fiscal Year
2023 Congressional Budget Justification (March 2022), p. 10, https://
content.mlex.com/Attachments/2022-04-04_X75ZUQW17T5GT2LS/FTC%-
%FY23%CBJ.pdf.
\8\ Ibid.
\9\ Federal Trade Commission, ``Bureau of Economics,'' https://
www.ftc.gov/about-ftc/bureaus-
offices/bureau-economics.
\10\ Michael Salinger and Paul Pautler, ``The Bureau of Economics
at the US Federal Trade Commission,'' Federal Trade Commission, April
2006, https://www.ftc.gov/sites/default/files/
attachments/careers-bureau-economics/06beover.pdf.
\11\ See 2023 Budget Justification, p. 9-10.
\12\ Ibid., p. 13.
\13\ Paul A. Pautler, ``A History of the FTC's Bureau of
Economics,'' September 8, 2015, p. 82, https://papers.ssrn.com/sol3/
papers.cfm?abstract_id=2657330.
\14\ ``Providing Resources for the Federal Trade Commission to
Promote Healthy Digital Markets and U.S. Leadership in Technology
Governance'' (2021), https://lincolnpolicy.org/wp-content/uploads/2021/
02/FTC-approps-letter-final.pdf.
[This statement was submitted by Jonathon Hauenschild, M.A., J.D.,
Policy Counsel and Luke Hogg, Policy Manager]
______
Prepared Statement of the National Association of Drug Court
Professionals
Chairman Van Hollen, Ranking Member Hyde-Smith, and distinguished
members of the subcommittee, I am Meg Kaiser, prevention associate with
the Harford County Office of Drug Control Policy in Maryland. I am
honored to have the opportunity to submit my testimony on behalf of
40,000 treatment court professionals working in adult drug courts,
family treatment courts, juvenile drug treatment courts, Tribal healing
to wellness courts, impaired-driving courts, and veterans treatment
courts. I am requesting Congress provide level funding of $3 million to
the authorized Drug Court Training and Technical Assistance Program
(Public Law 115-271) at the Office of National Drug Control Policy for
fiscal year 2023.
Across the country and in my home state of Maryland, treatment
courts are on the front lines of saving lives, reuniting families,
cutting crime, and saving money. They unite public health and public
safety to transform the justice system's response to substance use and
mental health disorders by offering an evidence-based alternative to
incarceration that combines individualized, evidence-based treatment
with accountability. Continued education and training for the
multidisciplinary court team (which includes the judge, treatment
providers, defense, prosecution, law enforcement, community
supervision, and others) is vital to ensuring fidelity to the
successful treatment court model. In fact, research shows treatment
courts whose teams participate in training see a 55% reduction in
recidivism among program graduates.
I know firsthand the importance of training and technical
assistance (TTA) for treatment courts. Prior to becoming a prevention
associate, I served as drug court case manager. In my current role, I
work closely with the Harford County Drug Court and see how training
and technical assistance (TTA) at the local and national level pays off
in ensuring fidelity to the treatment court model. Our participants
come from different backgrounds and face unique barriers to recovery
when they enter the program. From incentives and sanctions to
medication for addiction treatment and so many other relevant topics,
training is fundamental to enabling the court team to effectively serve
the unique needs of program participants.
I not only attest to the importance of TTA in my professional
capacity but also in my personal capacity. In 2018, I graduated from
the Harford County Drug Court. I had casually and sporadically used
substances in college but spiraled into heavy substance use in 2012
after I was sexually assaulted. I became dependent on opiates as I
self-medicated my trauma, and my life unraveled. I was dismissed from
the University of Maryland right before my senior year, and I began
stealing to support my addiction. For a long time, I managed to conceal
the trauma of my sexual assault and my substance use disorder from my
family, but eventually I could not hide my struggle. While in
treatment, I resumed use after receiving news that a dear friend had
overdosed. I don't like to think about where my downward trajectory
could have landed me. Had my parents not turned me in, and the drug
court program not accepted me, I'm confident I wouldn't be here today.
I'm grateful every day for the redirection my life took once I got
into drug court. The treatment, supervision, coaching, and recovery
support from the multidisciplinary treatment court team helped turn my
life around. The court team was highly functional and well trained.
They worked together seamlessly to respond to every bump in the road
and ensure I had the tools I needed to find and sustain recovery. The
treatment providers developed an individualized treatment plan for me
that included medication for opioid use disorder to help stabilize me
in early recovery. More than 3 years after graduating, I'm in long-term
recovery without medication, and I'm once again a proud daughter,
sister, friend, taxpayer, and employee. I have dedicated my career to
helping people turn their lives around and stay in recovery.
Now more than ever, TTA are needed to educate treatment courts on
critical issues such as medication for addiction treatment, overdose
prevention, and equity and inclusion. Understanding and implementing
best practices improves service delivery and outcomes and helps
treatment courts address the most pressing issues facing our justice
system.
I am one of 1.5 million people who have found long-term recovery
through treatment courts. Supporting TTA for treatment courts is
critical to ensuring these programs continue providing quality,
evidence-based care to participants struggling with mental health and
substance use disorders. I encourage this committee to provide level
funding of $3 million for the Drug Court Training and Technical
Assistance Program at the Office of National Drug Control Policy.
[This statement was submitted by Margaret ``Meg'' Kaiser,
Prevention Associate, Harford County Office of Drug Control Policy,
Maryland]
______
Prepared Statement of the National Coalition for History
The National Coalition for History (NCH) supports the Biden
administration's recommended funding level of $426.5 million for the
National Archives and Records Administration's (NARA) Operating
Expenses (OE) budget in fiscal year (FY) 2023, which is an increase of
$38.2 million from the FY 22 level of $388.3 million.
NCH also supports the Administration's base funding level of $9.5
million in FY 23 for the National Historical Publications and Records
Commission (NHPRC) grants program. That represents an increase of $2.5
million over the FY 22 base level of $7 million. The NHPRC received a
total of $12.3 million in funding in FY 22. However, $5.3 million of
that was the result of congressionally directed funding which we expect
will fluctuate from year to year.
The National Coalition for History (NCH) is a consortium of 43
organizations that advocates and educates on Federal legislative and
regulatory issues affecting historians, archivists, political
scientists, documentary editors, teachers, students, genealogists, and
other stakeholders. As researchers, teachers, and conservators of
American history and culture, we care deeply about the programs and
activities of NARA and the NHPRC.
NARA has reached an inflection point. Recently, David S. Ferriero
retired after 12 years as Archivist of the United States (AOTUS). We
want to recognize and thank him for his leadership, dedication, and
integrity during what have been challenging times for NARA.
The new Archivist will face tremendous challenges in both the short
and long term. For far too long, NARA has been neglected and
underfunded. NARA has made progress but continues to struggle with the
transition from paper to electronic records. As the quantity of
material increases exponentially, NARA will have difficulty keeping up
with Federal records generated each year, let alone tackling the
massive backlog of older, historically important paper records that
should be digitized. Perhaps most importantly, the quality and quantity
of services provided to our citizens will further deteriorate if not
addressed in this budget cycle. There are indications that NARA may be
unable to manage these important responsibilities, a trend that has
only been exacerbated by the pandemic, the ensuing shutdown and delayed
restoration of on-site services. This limitation owes less to
management issues than to inadequate funding.
NARA's operating expenses (OE) budget has remained stagnant for
more than a decade at a time when the transition to use of electronic
records by Federal agencies is well underway. Investment in human
capital, including professional archivists, is vital for providing an
elevated level of service to the public. For too long Congress and the
administrations of both parties have, unfortunately, viewed NARA as a
mere housekeeping agency, rather than as a vital agency that ensures
transparency, efficiency, and historical documentation for the Nation.
NARA's FY 22 operating expenses budget is $388 million, which is
only $3 million more than the FY 18 level of $385 million. NARA
requires a level of appropriations commensurate with its vastly
expanded responsibilities. This chart provides a summary of the NARA OE
and NHPRC budgets over the past decade.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
In inflation-adjusted dollars, NARA's OE budget has declined for
more than a decade.--No Federal agency can absorb such significant
reduction in funding without concomitant decreases in public services.
Even before the pandemic, NARA had to reduce hours at its research
rooms.
We fully understand, and agree, that NARA must prioritize the
safety of its staff, researchers, and visitors and we realize they are
doing the best they can under unusual and trying circumstances.
Currently, customers must make appointments in advance to visit NARA's
research rooms and the wait time varies from location to location. In a
vast number of cases, researchers working on a project cannot complete
their work in a single visit, thus increasing the time required to
conduct research.
Researchers may be coming from some distance to use the records at,
for example, a presidential library, and being unable to conduct
research on consecutive days is not merely an inconvenience. It may
make it impossible to do the research at all. To its credit, NARA has
tried to enhance the customer experience by allowing the researcher to
request the records to be pulled in advance. However, the current
system simply cannot be allowed to continue indefinitely.
We appreciate the additional funds you provided to address the
backlog of over 500,000 requests for veteran's records at the National
Personnel Records Center (NPRC). However, these are not the only
category of NARA's holdings that are experiencing delays. There are
tremendous backlogs in responding to Freedom of Information Act (FOIA)
requests. In addition, NARA is also facing backlogs in the
declassification of records hampering the ability of historians and
others to perform research. Delays in the processing of records and
responses to records requests at presidential libraries have also
increased.
In recent years Congress and the executive branch have placed
additional responsibilities on the agency without providing the funding
necessary to assume these functions. These include transitioning from
the preservation and storage of paper records to the preservation and
storage of electronic records. NARA also faces the continued addition
of presidential libraries. Each new presidential library created and
placed under NARA's care adds additional costs for staff, maintenance,
and records management.
The Federal Government's transition to electronic records,
including email, has exponentially increased the number of records that
NARA must process and catalog. In 2019, NARA and the Office of
Management and Budget (OMB) announced that the agency will no longer
accept paper records from Federal agencies as of December 31, 2022. We
are concerned that with diminished resources and the impact the
pandemic had on its ability to perform even its most basic functions,
NARA will not be prepared to continue this transition without serious
disruptions. We doubt that this deadline can be met without additional
resources, both human and technological.
Despite the additional appropriations you provided for this purpose
in the FY 22 budget, NARA lacks the funding needed to meet the
imperative for digitization and accessibility. This need was made even
more obvious during the pandemic which showed the public's expectation
that the Federal Government's records can be easily found on the
internet. In addition, the need to manage large volumes of textual
records is not diminishing. Proactively funding NARA's records
management programs ensures that agencies operate more efficiently and
that permanent records are preserved. We urge you to provide NARA the
additional funding necessary to ensure a seamless transition to all
digital recordkeeping in the coming years.
While not an issue that can be addressed in the appropriations
process, we urge you to press the authorizers on the House Committee on
Oversight and Reform to pass legislation strengthening and clarifying
the Presidential Records Act (PRA). Events of the past few years have
shown how woefully inadequate the statute has proven in ensuring that
the complete historical record of an administration is preserved.
Increased accountability and oversight are necessary.
national historical publications and records commission (nhprc)
The National Historical Publications and Records Commission (NHPRC)
is the grant-making arm of NARA. It enables the National Archives to
activate resources that connect the American people with archival and
historical materials of deep significance to the present. Archive-
specific work includes the preservation and access of electronic
records and disaster preparedness for vulnerable collections.
Historical grants provide for the creation of documentary collections
(websites, podcasts, books, databases, transcripts, and audio
resources) of nationally significant groups and individuals. Some
examples include the documentary histories of people like George
Washington, Willa Cather, Thomas Edison, Frederick Douglass, Walt
Whitman, Albert Einstein, Martin Luther King, Jr., and Eleanor
Roosevelt. NHPRC grants also fund the curation of content pertaining to
noteworthy institutions like the early Supreme Court, the First Federal
Congress, and the Freedmen's Bureau. In addition, the NHPRC has funded
an ongoing project to make the papers of the Founding Fathers available
for free online.
NCH supports the Administration's minimum base funding level of
$9.5 million in FY 23 for the NHPRC. That represents an increase of
$2.5 million over FY 22 base level of $7 million. The NHPRC received a
total of $12.3 million in funding in FY 22. However, $5.3 million of
that was congressionally directed pass-thru funding, an amount which we
expect will fluctuate from year to year. $9.5 million would enable
continued support of ongoing programs and modest investment in new
ones.
Thank you for the opportunity to present our views on the FY 23
budgets of NARA and the NHPRC.
[This statement was submitted by Lee White, Executive Director]
______
Prepared Statement of National Security Counselors
Chairman Van Hollen, Ranking Member Hyde-Smith, and members of the
Financial Services and General Government Appropriations subcommittee,
thank you for the opportunity to provide this testimony.
This testimony will discuss an area where I believe that
Congressional action is needed to address a subtle issue which
nonetheless has significant deleterious effects for transparency and
accountability, namely, agencies' expansive use of secret filings in
Freedom of Information Act (``FOIA'') cases and the resulting inability
of journalists, academics, and members of the public to access these
court filings years or even decades later.\1\
FOIA cases are somewhat unique in civil litigation, due to the fact
that the agency being sued must demonstrate through admissible evidence
that information must be withheld from disclosure without disclosing
the information in question. Agencies generally do so by submitting
sworn declarations from FOIA officers which ``must prove that each
document that falls within the class requested either has been
produced, is unidentifiable, or is wholly exempt from the act's
inspection requirements.'' \2\ These declarations ``must be 'relatively
detailed' and nonconclusory,'' \3\ but ``would not have to contain
factual descriptions that if made public would compromise the secret
nature of the information.'' \4\ In some cases, an agency will assert
that it cannot meet its burden on the public record, and in such cases
it generally attempts to file a declaration in camera and ex parte so
that only the judge-and not the plaintiff or their attorney--sees it.
This mechanism is an imperfect compromise at best, but it is
increasingly overused and abused by agencies with the passive
acquiescence of judges, who cite the presumption of good faith that
they must afford to agency declarations and virtually never refuse to
accept such filings.
It is not unheard of for a judge to grant summary judgment to an
agency solely on the basis of an in camera declaration, in which the
agency kept from public view not only the facts which would support its
case but even the legal arguments. In such cases, the actual legal
brief for the agency's motion includes little more than boilerplate
language about the burden of proof and the proper conduct of FOIA
litigation, and then refers the judge to the in camera declaration for
all the relevant analysis. For instance, one of the FOIA cases
involving the memos written by former Federal Bureau of Investigation
(``FBI'') Director James Comey about his meetings with former President
Trump was decided solely on the basis of in camera testimony, where
even the arguments were kept secret from the plaintiffs (although the
judge in that case did agree to review the memos themselves in camera,
which is very much the exception to the general practice).\5\ In
another such case, the judge found not only that the declaration filed
in camera by the FBI was proper, but that the plaintiff did not even
deserve a chance to file an opposition brief because ``the evidence
presented in camera was so conclusive as to the questions presented
that further briefing and argument was clearly unnecessary.'' \6\
Bizarrely, that same judge had the following to say about this
purportedly incontrovertible proof:
Nonetheless, the court must state that Hardy's unredacted
declaration is the quintessence of bureaucratic obfuscation. While
attempting to decipher its meaning, I recalled one of Orwell's
observations when confronted with such writing:
As soon as certain topics are raised, the concrete melts into
the abstract and no one seems able to think of turns of speech
that are not hackneyed: prose consists less and less of words
chosen for the sake of their meaning, and more and more of
phrases tacked together like the sections of a prefabricated
henhouse.
George Orwell, ``Politics and the English Language,'' in A
Collection of Essays 162, 165 (Anchor Books 1954). Which begs the
question, why did the government resort to hackwork here? Orwell again:
The inflated style is itself a kind of euphemism. A mass of
Latin words falls upon the facts like soft snow, blurring the
outlines and covering up all the details. The great enemy of
clear language is insincerity. When there is a gap between
one's real and one's declared aims, [the writer] turns, as it
were, instinctively to long words and exhausted idioms, like a
cuttlefish squirting out ink.\7\
My research has determined that the number of such filings has
shown a slow increase over time, from approximately 15 instances in
1994 to the high-water mark of approximately 56 in 2017.\8\ I was only
able to identify three instances of a judge denying an agency's request
to file an in camera declaration since 1993. My personal litigation
experience has suggested an increase in the expansiveness of agencies'
claims that information must remain secret. In the past, I have
occasionally received redacted versions of such declarations through
FOIA or similar means, despite the fact that the agency insisted they
could not possibly be filed on the public record without serious
consequences.\9\ Some of the newly released information has been
mundane, and some has been of significant historical importance. For
example, in the landmark FOIA case Weberman v. NSA, the National
Security Agency (``NSA'') argued that it could neither confirm nor deny
the existence of records about a telegram that Jack Ruby was alleged to
have sent to Havana the year before the assassination of President
Kennedy.\10\ The district court and the 2nd Circuit granted summary
judgment to NSA on the basis of an in camera classified declaration,
and it was not publicly revealed whether NSA had intercepted such a
telegram. However, in 2011, I obtained a redacted version of the
classified declaration from NSA, which revealed for the first time that
NSA had not intercepted the alleged telegram because it had lacked the
technical capacity at the time.\11\ This was historically important
information which would never have seen the light of day but for my
efforts, but the public's access to such information should not depend
on people like me pursuing it.
It is for these reasons that I bring this issue to the
subcommittee's attention. It is arguably beyond the jurisdiction of
this subcommittee, or even of the Appropriations Committee as a whole,
to make a significant change to the way in which in camera declarations
are handled in FOIA cases, but such an effort should not be undertaken
without hard data. It will be important for legislators to understand
how prevalent this practice truly is and under what circumstances these
filings are made by agencies and accepted by courts. To this end, I ask
that the subcommittee appropriate sufficient funds from within the
Administrative Office for U.S. Courts account (Salaries and Expenses)
directing to that office to conduct a comprehensive survey of all in
camera agency declarations filed in FOIA cases within the past 10 years
(or another reasonable time period), specifically for the purpose of:
(1) identifying with certainty the number of such filings; (2)
identifying any geographic or temporal trends; (3) specifying whether
the agency sought leave for the filings or simply filed them without
asking; (4) indicating the depth of the court's discussion of the
appropriateness of the in camera filings; (5) indicating the nature of
the claims being supported by the in camera filings; and (6) providing
any other relevant data.
I also ask the subcommittee to appropriate sufficient funds to the
Administrative Office to perform a feasibility study for a process in
which all agency declarations filed in camera in FOIA cases would
automatically be filed on the public record after 5 years (or another
reasonable time period). This study would allow Congress to
intelligently decide whether it would be appropriate to legislate such
a proposal, so that these important court records would ultimately
become accessible to journalists, academics, and the general public
without relying on individual persons to pursue their release as I did.
If any type of sealed court filings should be presumptively open after
a period of time, it would most assuredly be filings made in litigation
over government transparency.
---------------------------------------------------------------------------
\1\ NSC's Deputy Executive Director Bradley Moss provided oral
testimony elaborating on this topic as part of the 30 April 2021 Demand
Progress Webinar on fiscal Year 2022 Appropriations Public Witness
Testimony, at https://www.youtube.com/watch?v=qsUc5nLcZDk (testimony
begins at 43:56).
\2\ Nat'l Cable Television Ass'n. v. FCC, 479 F.2d 183, 186 (D.C.
Cir. 1973).
\3\ Goland v. CIA, 607 F.2d 339, 350 (D.C.Cir. 1978).
\4\ Vaughn v. Rosen, 484 F.2d 820, 826-27 (D.C. Cir. 1973).
\5\ CNN, Inc. v. FBI, 293 F. Supp. 3d 59, 66-67 (D.D.C. 2018).
\6\ Truthout v. DOJ, 20 F. Supp. 3d 760, 770 (E.D. Cal. 2014).
\7\ Id. at 768-69.
\8\ This research was performed by searching court dockets from
1993-2018 for the term ``in camera'' and then parsing out the
appropriate entries. These dockets were provided by the Transactional
Records Access Clearinghouse's FOIA Project. The degree to which these
dockets accurately reflect court filings during this time period cannot
be ascertained at this time, and so these figures may not represent the
totality of the practice. Detailed information about this analysis and
my bases for making any other claim in this testimony is available upon
request.
\9\ However, as of the last few years, agencies have resisted
releasing such in camera declarations through FOIA or Mandatory
Declassification Review (``MDR''), taking the position that because
they were sealed by a court the agency is powerless to release them.
The result of this shift in many cases is that courts will not unseal
them because they remain classified, while agencies will not declassify
them because they remain sealed, making it literally impossible for
them to be made publicly available except when the agency voluntarily
decides to release them.
\10\ 668 F.2d 676, 677 (2d Cir. 1982).
\11\ I obtained this record by filing an MDR request with the NSA
pursuant to Executive Order 13,526. MDR is a different mechanism than
FOIA which is limited to classified documents.
[This statement was submitted by Kel McClanahan, Executive
Director]
______
Prepared Statement of Never Again Coalition
Dear Chair Van Hollen and Ranking Member Hyde-Smith:
We are writing to urge you to support increased funding for the
Financial Crimes Enforcement Network (FinCEN) in FY2023 FSGG
Appropriations. Today, the House Appropriations FSGG subcommittee has
approved $210.33 million in FinCEN funding in their FY2023 bill \1\.
The Never Again Coalition is an organization dedicated to the
prevention and cessation of genocide and mass atrocities everywhere by
focusing on five core areas: Sudan, South Sudan, Democratic Republic of
Congo, Burma and Bangladesh. We seek to empower those affected by mass
violence through community-led initiatives, awareness building,
partnerships, and advocacy. The United States government is our most
powerful ally in these goals and that is why we are urging increased
funding for FinCEN, to allow them to enact and enforce effective laws
that will disrupt the cycle of corruption that enable genocide and mass
atrocities to occur.
Effective laws, and their enforcement, are part of the
infrastructure that is necessary for a healthy society. Without them
the financial system loses integrity, threatening common goals of the
United States and its allies: basic human rights, democracy,
sustainable development, and peace. Congress recognized this and passed
the Corporate Transparency Act in December 2020, in a bipartisan vote.
Thus directed, Congress must now provide the tools to FinCEN to make
this act reality. The absence of integrity in our financial system has
been made stark by the war in Ukraine. When they were most in need, the
tools were not sufficient. We can do better, and we must.
It isn't just Russian oligarchs and corrupt government officials
that we must safeguard our financial system from. It is the duty of the
U.S., as the leading economy in the world, to prevent bad actors,
wherever they are, from using and manipulating U.S. laws and financial
infrastructure for illegal activities. The $210.3 million dollars
FinCEN is requesting, and the House FSGG subcommittee approved, to
implement and enforce the CTA, is nearly imperceptible in the scheme of
costs associated with corruption. In Africa alone, ``Every year, an
estimated $88.6 billion, equivalent to 3.7% of Africa's GDP, leaves the
continent as illicit capital flight, according to UNCTAD's Economic
Development in Africa Report 2020, almost double the amount it receives
through international development assistance.'' \2\
This begs the question--is it more effective to systemically fight
corruption with laws and enforcement, or deal with the resulting famine
and mass displacement that stems from corruption and kleptocracy?
The U.S. is wasting resources through development aid if corruption
isn't stopped and missing opportunities for affected communities around
the globe to live fulfilling and productive lives when they are not
reaping any of the benefits from development aid and investment. For
the U.S. to fulfill its vision of basic human rights for all, there
must be a commitment to invest in the tools needed to stop illicit
financial flows. According to a recent report from Transparency
International, ``Up to the Task'' \3\, the U.S. financial system
generates thousands of suspicious activity reports (SAR) each year, but
we staff our enforcement team to only investigate a small fraction of
these: 10,000 SARs for each staff person, per year. In Germany and
France the equivalent ratio is 600:1. Without robust and sustained
resources, ours is a system bound to fail.
The U.S. can lead on anti-corruption, and the world needs this
leadership. FinCEN is the correct agency to work with the financial
system, law enforcement, domestic and international governments to
effectively implement and enforce these critical laws. We urge you to
support increased funding for FinCEN, in line with FinCEN's request and
the House FSGG approved $210.33 million, in your FY2023 budget.
Thank you,
Kelly McDermott
Financial Accountability Analyst
Never Again Coalition
---------------------------------------------------------------------------
\1\ https://docs.house.gov/meetings/AP/AP23/20220616/114911/BILLS-
117-SC-AP-FY2023-FServices.pdf.
\2\ All-Party Parliamentary Groups (APPG) on Anti-Corruption &
Responsible Tax and the APPG on Fair Business Banking, ``Economic Crime
Manifesto'', https://www.appgbanking.org.uk/wp-content/uploads/2022/05/
Economic-Crime-Manifesto-1.pdf.
\3\ Vincent Freigang and Maira Martini, ``Up to the Task?'',
Transparency International, https://images.transparencycdn.org/images/
2022-Report-Up-to-the-task.pdf , May 13, 2022.
---------------------------------------------------------------------------
______
Prepared Statement of The Sentry
On behalf of The Sentry, we urge the subcommittee on Financial
Services and General Government to approve increased appropriations for
the Financial Crimes Enforcement Network (FinCEN) to $210.3 million, in
alignment with the President's fiscal year 2023 budget request.
fincen's critical role
The Sentry is an investigative and policy organization that seeks
to disable multinational predatory networks that benefit from violent
conflict, repression, and kleptocracy. Launched in 2016, The Sentry
produces hard-hitting investigative reports and dossiers on individuals
and entities connected to grand corruption and violence. We advocate
for the use of tools of financial and legal pressure, including anti-
money laundering and illicit finance measures, targeted network
sanctions, criminal prosecutions, compliance actions by banks and other
private companies, and asset recovery. As a result of our work, money
laundering routes have been exposed and shut down, assets have been
frozen, travel has been banned, and corrupt networks have been cut off
from the international financial system.
One of the principal agencies The Sentry collaborates with to
achieve these objectives is FinCEN. Since The Sentry's launch, we have
worked closely with FinCEN leadership and staff to take action against
the money laundering that underlies violent kleptocracies, particularly
in East and Central Africa. In 2017 and 2018, FinCEN issued important
Advisories on illicit finance in South Sudan and on the connection
between serious human rights abuse and corruption, which helped to
elevate the risk profile of these concerns for the banking community.
More recently, FinCEN released an Advisory focused on the risks from
kleptocracies, highlighting Russia in particular.
FinCEN plays a crucial role in protecting the U.S. economy from the
threat of money laundering and illicit finance, from both domestic and
foreign sources. From the current threats posed by the Russian
government and network of oligarchs (some of whose wealth comes via
exploitation of natural resources in sub-Saharan Africa) and their
gatekeepers to regimes such as Iran and Venezuela to more general
concerns such as money laundering through real estate and
cryptocurrency, FinCEN's mandate and scope is uniquely local and
international at the same time, given that the U.S. financial system is
itself at once both local and international.
In the years ahead, FinCEN's role will only grow more important to
the ability of U.S. regulatory and law enforcement to catch up with and
even get ahead of the array of risks the financial system faces. FinCEN
plays a central role in implementing the U.S. Strategy on Countering
Corruption, as well as several critical new proposed rules and
initiatives, and in tracking new and emerging threats, including the
impact of the ongoing crisis in Russia and Ukraine.
strong cta implementation
At the top of the list of FinCEN's priorities is implementation of
the bi-partisan Anti-Money Laundering Act and the Corporate
Transparency Act (CTA)--landmark pieces of legislation. If robustly
implemented, the provisions of both laws will be cornerstones in
FinCEN's ability to address current and emerging risks.
The CTA in particular needs swift and strong attention. In
February, The Sentry was pleased to lead a coalition of 23 human rights
organizations from around the globe in urging implementation of the
initial proposed rule focused on the CTA's required establishment of a
corporate registry of beneficial owners. This registry will help bring
transparency and accountability to human rights abusers who have been
benefiting financially from their malign activities, and it will begin
to address the problem of anonymous corporate ownership that has been
widely reported, including in the blockbuster ``Pandora Papers'' series
that firmly pointed the finger at U.S. financial secrecy.
FinCEN is unfortunately behind in its rulemaking and implementation
efforts. FinCEN must be given the resources it needs so that it is able
to satisfy congressionally mandated timelines. Given that
implementation of the CTA is also a priority related to the Summit for
Democracy and that the United States will serve as host to the next
International Anti-Corruption Conference, FinCEN's delivery of final
products for these events in December would prove U.S. commitment and
provide encouragement to other countries.
addressing money laundering in real estate
A recent study by Global Financial Integrity found that at least
$2.3 billion has been laundered through the U.S. real estate market in
the past 5 years. In November 2021 as part of a massive reporting
project connected to a leak of banking documents, The Sentry reported
on money laundering scandals involving Congolese officials moving
illicitly obtained funds into the U.S. real estate market, including in
Rockville, MD--Congress' backyard--and receiving tens of millions of
dollars in bribery payments related to massive mining and
infrastructure deals from Chinese companies and middlemen. These are
just two of the myriad money laundering schemes routing through the
U.S. financial system from networks like those of former Congolese
President Joseph Kabila. Such schemes threaten not only the potential
for peace and good governance in foreign countries, but also the
integrity and soundness of the U.S. economy.
Though the Treasury Department and national security officials
identified the US real estate market as a money laundering
vulnerability more than 20 years ago, real estate professionals have
had a ``temporary exemption'' from having to fulfill anti-money
laundering obligations similar to those required of other financial
institutions, thereby offering a gateway to the U.S. financial system.
In December, FinCEN initiated a rulemaking to update U.S. anti-money
laundering safeguards for the U.S. real estate sector.
FinCEN must have the necessary resources to deliver a timely
proposed rule instituting safeguards for the U.S. real estate sector,
as another demonstration of U.S. commitment to combat corruption and
illicit finance.
conclusion
To implement the CTA, tackle money laundering in real estate, track
Russian oligarchs' assets and target their enablers, as well as
continue to deliver on the agency's baseline priorities, FinCEN
requires high-level and trained professionals to keep up with both the
financial institutions the agency partners with and the criminal
networks they seek to disrupt and penalize. As the ``FinCEN Files''
showed in 2020, in many potential money laundering investigations,
banks are fulfilling their end of the bargain by submitting the
Suspicious Activity Reports required of them; the issue is that FinCEN
lacks the staff and resources to follow up on these leads.
FinCEN serves a crucial function to uphold U.S. national security
and, by extension, to protect human rights. This has been made ever
clearer by Russia's invasion of Ukraine. The Sentry encourages the
Senate Appropriations Committee to approve the full $210.3 million for
FinCEN.
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Prepared Statement of Transparency International
Dear Chairman Leahy and Vice Chairman Shelby:
On behalf of Transparency International U.S., we write to urge you
to support increased funding in the amount of $210.3 million for the
Financial Crimes Enforcement Network (``FinCEN'') in the FY2023
appropriations process. This is the amount that FinCEN has requested
\1\ in order to effectively fulfill its mission.
Transparency International U.S. is a U.S.-based nonprofit
organization that is part of the largest global network of
organizations dedicated to combating corruption. One of our top
priorities is stemming the flow of corrupt and other criminal funds
into and through the U.S. financial system.
Corruption causes serious and widespread harm. The wealth drain
from victimized countries robs people of access to healthcare \2\ and
basic public services. It drives away private investment and economic
development opportunities \3\ that are necessary for sustainable
economies. It props up authoritarian regimes \4\ that engage in human
rights abuses and undermine democratic values, institutions, and
practices. And, as demonstrated in the current crisis in Ukraine,
corruption has played a central role \5\ in emboldening Russian
leadership to threaten global security.
Our collective understanding of transnational corruption has been
enhanced in recent years through a series of blockbuster reports \6\ by
teams of investigative journalists and others who've exposed the global
architecture of illicit financial flows. We now know that effective
enforcement of our anticorruption laws--the ability to ``follow the
money''--is nearly impossible without a well-resourced financial
intelligence unit.
In the U.S. that entity is FinCEN. In a new report, Up to the Task,
released on May 24, 2022, Transparency International U.S., in
collaboration with our global network, wrote that:
Financial intelligence units (FIUs) are one of the most
important government agencies tasked with combatting financial
crime. Their core function is to receive and analy[z]e
suspicious [activity] reports (SARs) and produce financial
intelligence for further investigation by law enforcement and
other authorities, where relevant. They also support and
coordinate the exchange of information with foreign FIU
counterparts. In some countries, FIUs have additional
responsibilities as they function as the primary regulators
and/or anti-money laundering supervisory bodies.
A key finding of the report is that compared to several financial
intelligence counterparts that have joined the U.S. to form the Russian
Elites, Proxies, and Oligarchs (``REPO'') Task Force, FinCEN resources
are woefully insufficient to address the current crisis in Ukraine and
to meet the longer-term mission of protecting the U.S. financial system
from abuse by corrupt officials and other criminals. As a proxy for the
relative size of the covered financial sectors among REPO participating
countries, consider the following: Germany and France's financial
intelligence agencies each receive fewer than 600 suspicious activity
reports per staff person, per year. In contrast, FinCEN, even with an
additional allocation this past year, receives more than 10,000 such
reports per staff person, per year.
FinCEN's ability to work with federal, state, territorial, Tribal,
and local law enforcement agencies and to respond to Congress and
financial institutions with anti-money laundering obligations is
clearly hampered by a lack of resources.\7\ The bureau we ask to
safeguard our $20- plus trillion economy has a staff that is smaller
than the staff of the financial intelligence unit of Australia.
Additionally, the bureau has outdated equipment and software, and
limited funds for licenses to access other data to do proper and
necessary analysis--frustrating partners in law enforcement and the
private sector.
The invasion of Ukraine and the subsequent search for sanctioned
funds is a stark reminder of why a robust financial intelligence bureau
is so important. The bipartisan call for an effective response to the
crisis has led to an important bipartisan agreement \8\ to increase
funding for asset tracing and other improvements to our defenses
against financial crime. We urge your continued support for increasing
the FinCEN budget to a level at which the bureau can effectively and
efficiently manage the data analysis, legally mandated rulemakings, and
timely support to public and private sector partners.
Thank you for your consideration of our views. If you have
questions, please contact Scott Greytak, Director of Advocacy for
Transparency International U.S., at sgreytak@transparency.org.
Sincerely,
Gary Kalman, Executive Director
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\1\ The Office of Management and Budget, ``Budget of the U.S.
Government Fiscal Year 2023,'' the White House, March 2022, available
at https://www.whitehouse.gov/wp-content/uploads/2022/03/
budget_fy2023.pdf.
\2\ Karen Hussmann, ``Health Sector Corruption,'' U4 Anti-
Corruption Resource Center, June 2020, available at https://www.u4.no/
publications/health-sector-corruption.pdf.
\3\ Shamim Adam, Laurence Arnold and Yudith Ho, ``How Malaysia's
1MDB Scandal Shook the Financial World,'' The Washington Post, July 28,
2020 available at https://www.washingtonpost.com/business/energy/how-
malaysias-1mdb-scandal-shook-the-financial-world/2020/07/28/dade64d6-
d094-11ea-826b-cc394d824e35_story.html.
\4\ Natasha Hall, Karam Shaar, and Munqeth Othman Agha, ``How the
Assad Regime Systematically Diverts Tens of Millions in Aid,'' Center
for Strategic & International Studies, October 20, 2021, available at
https://www.csis.org/analysis/how-assad-regime-systematically-diverts-
tens-millions-aid.
\5\ Amanda Taub, ``To Keep Putin and His Oligarchs Afloat, It Takes
a System,'' The New York Times, May 11, 2022, available at https://
www.nytimes.com/2022/05/11/world/europe/putin-russia-corruption.html.
\6\ Michael Hudson, et al., ``Offshore havens and hidden riches of
world leaders and billionaires exposed in unprecedented leak,'' the
International Consortium of Investigative Journalists, October 3, 2021,
available at https://www.icij.org/investigations/pandora-papers/global-
investigation-tax-havens-offshore/.
\7\ Himamauli Das, ``Statement by Himamauli Das Acting Director
Financial Crimes Enforcement Network United States Department of the
Treasury before the Committee on Financial Services U.S. House of
Representatives,'' Financial Crimes Enforcement Network, April 28,
2022, available at https://financialservices.house.gov/uploadedfiles/
hhrg-117-ba00-wstate-dash-20220428.pdf.
\8\ Senator Sheldon Whitehouse and Senator Charles Grassley,
``Whitehouse, Grassley Lead Senators in Call to Fully Fund FinCEN's
Anti-Money Laundering Operations,'' the office of Senator Sheldon
Whitehouse, May 17, 2022, available at https://
www.whitehouse.senate.gov/news/release/whitehouse-grassley-lead-
senators-in-call-to-fully-fund-fincens-anti-money-laundering-
operations.
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Prepared Statement of Zero Emission Transportation Association (ZETA)
The Zero Emission Transportation Association is a public interest
non-profit of over 50 member companies advocating for 100 percent
electric vehicle sales by 2030. Our membership spans the entire
electric vehicle (EV) supply chain and includes critical materials,
charging companies, utilities, vehicle manufacturers, and battery
recyclers.
We request the Senate Appropriations subcommittee on Financial
Services and General Government fully fund the General Services
Administration (GSA)'s Electric Vehicle Fund, as proposed in the Fiscal
Year (FY) 2022 White House budget. Additionally, we request that the
Committee include language in its FY 2022 appropriations report that
directs GSA to implement policies that will help achieve the
President's stated goal to rapidly electrify the Federal fleet.
We offer the following report language suggestions:
--The Committee directs the General Services Administration to
rescind delegated authorities for agency vehicle ownership and
unify fleet management and acquisition under a single updated,
government-wide fleet management and acquisition system.
--The Committee directs the General Services Administration to use a
Total Cost of Ownership (TCO) procurement model that accounts
for vehicle operating costs, including fuel/charging,
maintenance, and public health savings.
--The Committee directs the General Services Administration to work
with the U.S. Department of Energy to develop a TCO model which
uses statewide variables, regional variables, and inventory
variables to estimate the cost of electrifying the Federal
fleet and accounts for the social cost of carbon.
[This statement was submitted by Joe Britton, Executive Director]