[Senate Hearing 105-427]
[From the U.S. Government Printing Office]
[DOCID: f:39866]
S. Hrg. 105-427
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
=======================================================================
HEARINGS
before a
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
on
H.R. 2158/S. 1034
AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENTS OF VETERANS AFFAIRS
AND HOUSING AND URBAN DEVELOPMENT, AND FOR SUNDRY INDEPENDENT AGENCIES,
BOARDS, COMMISSIONS, CORPORATIONS, AND OFFICES FOR THE FISCAL YEAR
ENDING SEPTEMBER 30, 1998, AND FOR OTHER PURPOSES
__________
American Battle Monuments Commission
Consumer Product Safety Commission
Corporation for National and Community Service
Department of Defense--Civil
Department of Health and Human Services
Department of Housing and Urban Development
Department of the Treasury
Department of Veterans Affairs
Environmental Protection Agency
Executive Office of the President
Federal Emergency Management Agency
General Services Administration
National Aeronautics and Space Administration
National Credit Union Administration
National Science Foundation
Nondepartmental witnesses
Selective Service System
U.S. Court of Veterans Appeals
__________
Printed for the use of the Committee on Appropriations
Available via the World Wide Web: http://www.access.gpo.gov/congress/
senate
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COMMITTEE ON APPROPRIATIONS
TED STEVENS, Alaska, Chairman
THAD COCHRAN, Mississippi ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico ERNEST F. HOLLINGS, South Carolina
CHRISTOPHER S. BOND, Missouri PATRICK J. LEAHY, Vermont
SLADE GORTON, Washington DALE BUMPERS, Arkansas
MITCH McCONNELL, Kentucky FRANK R. LAUTENBERG, New Jersey
CONRAD BURNS, Montana TOM HARKIN, Iowa
RICHARD C. SHELBY, Alabama BARBARA A. MIKULSKI, Maryland
JUDD GREGG, New Hampshire HARRY REID, Nevada
ROBERT F. BENNETT, Utah HERB KOHL, Wisconsin
BEN NIGHTHORSE CAMPBELL, Colorado PATTY MURRAY, Washington
LARRY CRAIG, Idaho BYRON DORGAN, North Dakota
LAUCH FAIRCLOTH, North Carolina BARBARA BOXER, California
KAY BAILEY HUTCHISON, Texas
Steven J. Cortese, Staff Director
Lisa Sutherland, Deputy Staff Director
James H. English, Minority Staff Director
------
Subcommittee on VA, HUD, and Independent Agencies
CHRISTOPHER S. BOND, Missouri, Chairman
CONRAD BURNS, Montana BARBARA A. MIKULSKI, Maryland
TED STEVENS, Alaska PATRICK J. LEAHY, Vermont
RICHARD C. SHELBY, Alabama FRANK R. LAUTENBERG, New Jersey
BEN NIGHTHORSE CAMPBELL, Colorado TOM HARKIN, Iowa
LARRY CRAIG, Idaho BARBARA BOXER, California
ROBERT C. BYRD, West Virginia
(ex officio)
Jon Kamarck, Clerk to Subcommittee
Carolyn E. Apostolou
Minority Staff
Sally Chadbourne
C O N T E N T S
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Thursday, February 25, 1997
Page
Executive Office of the President: Council on Environmental
Quality and Office of Environmental Quality.................... 1
Department of the Treasury: Community Development Financial
Institution.................................................... 27
National Credit Union Administration............................. 63
Tuesday, March 4, 1997
Corporation for National and Community Service................... 81
U.S. Court of Veterans Appeals................................... 109
American Battle Monuments Commission............................. 121
Department of Defense--Civil: Cemeterial Expenses, Army.......... 139
Selective Service System......................................... 145
Tuesday, March 11, 1997
Consumer Product Safety Commission............................... 155
General Services Administration: Consumer Information Center..... 165
Department of Health and Human Services: Office of Consumer
Affairs........................................................ 169
Tuesday, March 18, 1997
Federal Emergency Management Agency.............................. 193
Tuesday, April 8, 1997
Environmental Protection Agency.................................. 247
Tuesday, April 22, 1997
Executive Office of the President: Office of Science and
Technology Policy.............................................. 433
National Science Foundation...................................... 457
Thursday, May 1, 1997
Department of Veterans Affairs: Office of the Secretary.......... 511
Tuesday, May 6, 1997
National Aeronautics and Space Administration.................... 601
Tuesday, May 13, 1997
Department of Housing and Urban Development...................... 665
Nondepartmental witnesses........................................ 723
Department of Veterans Affairs............................... 723
Department of Housing and Urban Development.................. 732
Environmental Protection Agency.............................. 830
Federal Emergency Management Agency.......................... 889
National Aeronautics and Space Administration................ 896
National Science Foundation.................................. 909
Miscellaneous................................................ 923
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, FEBRUARY 25, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:38 a.m., in room SD-192, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Burns, Stevens, Bennett, Mikulski,
and Lautenberg.
EXECUTIVE OFFICE OF THE PRESIDENT
Council on Environmental Quality and Office of Environmental Quality
STATEMENT OF KATHLEEN MC GINTY, CHAIR
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. Good morning, and welcome to the VA, HUD, and
Independent Agencies Subcommittee meeting. We will come to
order.
My apologies. I have spent the better part of the morning
stuck in traffic. If this were the D.C. appropriations
subcommittee, I would have questions on the construction
schedule. But all I can do now is apologize to the witnesses,
guests, and fellow members.
This is the subcommittee's first hearing on the fiscal year
1998 budget. I welcome the new members of the subcommittee, and
I look forward to working with our ranking member, Senator
Mikulski, and she probably has a story about traffic on the
Baltimore-Washington Parkway which will exceed my story.
I welcome our witnesses and guests.
We will face another year of very difficult budget
decisions as Congress continues to focus on its priorities and
seeks to balance a budget by the year 2002. I must emphasize
the need to continue to be proactive in consolidating and
reforming our many Federal programs, including many under the
jurisdiction of this subcommittee. There was much to be done
over the last several years, but there is a lot of work still
to be done.
In particular, after 4 years of sharp decline, the Federal
deficit is likely to begin to increase again, so that by 2010,
when some of us, past baby boom and baby boomers, begin to
retire, the deficit is going to skyrocket unless Congress makes
meaningful policy and spending changes. It took us more than
200 years to acquire our first trillion dollars of debt. We are
now increasing our outstanding debt by $1 trillion about every
5 years. This is a mortgage on America's future that is going
to be difficult to sustain.
I note, with interest and some concern, the President's
budget proposes some $92 billion in budget authority for the
departments and agencies under the VA, HUD, and Independent
Agencies Appropriations Subcommittee jurisdiction, of which $72
billion is discretionary spending. I would note that this
amount represents a proposed increase of approximately $8
billion over the current level. As I understand it, there are
discussions underway between leaders, the Congress, the White
House, and OMB about reaching a budget agreement. We have some
very important spending priorities to meet in this
subcommittee, and I will fight to assure that all of our
programs are adequately funded, but I would have to say that
unless some agreement is reached that is a very ambitious goal
for our 602(b) allocation.
prepared statement
This morning we will hear testimony from four of the
independent agencies under the subcommittee's jurisdiction,
Council on Environmental Quality, the National Credit Union
Administration, the Neighborhood Reinvestment Corporation, and
the community development and financial institutions fund.
While programs covered by today's hearings are small relative
to others in the subcommittee's portfolio, they are very
important programs and activities that impact millions of
Americans.
[The statement follows:]
Prepared Statement of Senator Bond
The VA, HUD and Independent Agencies Appropriations Subcommittee
hearing will come to order. This is the Subcommittee's first hearing on
the fiscal year 1998 budget. I welcome the new Members to the
Subcommittee, and, as always, I look forward to working closely with
our Ranking Member, Senator Mikulski. I also welcome our witnesses and
guests this morning.
The Appropriations Committee and the VA/HUD Appropriations
Subcommittee will face another year of very difficult budget decisions
as the Congress continues to refocus its priorities and seek to balance
the federal budget by the year 2002. I cannot emphasize enough the need
to continue to be proactive in consolidating and reforming our many
federal programs, including many under this subcommittee. We have done
much over the last several years, but there is still a lot of work to
be done.
In particular, after four years of sharp decline, the federal
deficit is likely to begin to increase again so that by 2010, when the
babyboomers begin to retire, the deficit will skyrocket unless the
Congress makes meaningful policy changes. While it took us more than
200 years to acquire our first trillion dollars of debt, we are now
increasing our outstanding debt by a trillion dollars every 5 years,
with the total national debt now standing at some $5.3 trillion. This
means that every man, woman, and child in our Nation has an individual
debt of almost $20,000. This is the mortgage on America's future that
we must begin to pay off now.
In particular, I am concerned that the President's budget proposes
some $92 billion in budget authority for the departments and agencies
under the VA, HUD and Independent Agencies Subcommittee, of which $72
billion is discretionary spending. The amount proposed represents an
increase of approximately $8 billion over the current level. And I must
tell you, absent some very compelling reasons, it is going to be very
difficult for this subcommittee to provide any increases over our 1997
budget levels.
This morning we take testimony from 4 of the independent agencies
under the subcommittee's jurisdiction: the Council on Environmental
Quality, the National Credit Union Administration, the Neighborhood
Reinvestment Corporation and the Community Development Financial
Institutions fund. While the programs covered by today's hearing are
small relative to others under the subcommittee's portfolio, they are
important programs and activities that impact millions of Americans.
panel i
We will hear first from Ms. Kathleen McGinty, Chair of the Council
on Environmental Policy or CEQ, which is responsible for coordinating
federal policy on environmental issues as well as primary
responsibility for implementation of the National Environmental Policy
Act (NEPA).
The Administration is requesting a budget for CEQ for fiscal year
1998 of $3.02 million and 23 Full-Time equivalent employees. This
Budget Request represents an increase for CEQ of $584,000, a 24 percent
increase over the fiscal year 1997 Appropriation and an increase of 4
FTE's.
I look forward to your testimony this morning.
panel ii
The second panel consists of Mr. John Hawke, Jr., the Under
Secretary for Domestic Finance for the Department of the Treasury, and
Ms. Kirsten Moy, Director of the Community Development Financial
Institutions fund program. The Administration's Budget Request for the
CDFI Fund asks for an increase of $75 million from $50 million for
fiscal year 1997 to $125 million for fiscal year 1998. I also
understand that the President also plans to ask for increases each year
to bring the 5-year total to $1 billion by fiscal year 2002.
The CDFI fund was established in the Community Development and
Regulatory Improvement Act of 1994 to provide equity investments,
grants, loans, and technical assistance to new and existing community
development financial institutions such as community development banks,
community development credit unions, community development loan funds,
community development venture capital funds and micro-loan funds.
CDFI funds are intended to enhance the capacity of these
institutions to finance economic development, housing, and community
development in distressed urban and rural communities.
I am very concerned about the amount of the CDFI funding request,
especially as we prioritize the funding needs of some of the primary
programs and activities under this subcommittee, such as the renewal of
expiring section 8 housing assistance contracts and the additional cost
of Veterans medical care. The CDFI fund is the new kid on the block--it
has no track record and looks like a number of other programs and
activities that are designed to revitalize distressed communities.
In addition, we need to see how well the CDFI funds will leverage
other public and private investment in distressed communities and also
to what degree any leveraged investment is being drained from other
activities and programs currently serving distressed communities. I
also am interested in understanding the extent to which CDFI's
discourage traditional financial institutions from opening branches and
lending in distressed communities. Opening special banks for distressed
communities is not necessarily the best way to revitalize and
incorporate these communities into, hopefully, the overall economic
growth and revitalization of our urban and rural areas.
I look forward to hearing your testimony
PANEL III
The third panel consists of Mr. Norman D'Amours, Chairman of
National Credit Union Administration (NCUA), and Mr. George Knight,
Executive Director of the Neighborhood Reinvestment Corporation.
NCUA is responsible for the chartering and regulating of federal
credit unions. In addition, NCUA administers an insurance fund to carry
out a program of insurance for member accounts in federal credit unions
and State-chartered credit unions which apply and qualify for
insurance. There are currently some 7,200 federally chartered credit
unions and it is estimated that approximately 4,500 State-chartered
credit unions will be insured by NCUA by the end of 1997.
The NCUA is self-funded through an operating fee on its member
institutions and from reimbursements from the insurance fund for
administration of the insurance fund.
Second, Mr. Knight will testify on the Administration's budget
request for the Neighborhood Reinvestment Corporation which calls for
flat funding of $50 million for fiscal year 1998. Neighborhood
Reinvestment was created in 1978 to help local communities establish
working partnerships between residents and representatives of the
public and private sectors through nonprofit entities which include
neighborhood housing services, mutual housing associations and
apartment improvement programs. Collectively, these nonprofits are
known as the NeighborWorks' network.
Neighborhood Reinvestment and the NeighborWorks' network
have a long track record and have become a good model of how the
federal government can spend a small amount of money and reap
tremendous benefits. For example, as the written testimony ably states,
$38.7 million in fiscal year 1996 appropriations allowed the
Neighborhood Reinvestment and NeighborWorks' to leverage
$420 million in affordable housing investments.
Again, I look forward to the testimony.
STATEMENT OF FRANK R. LAUTENBERG
Senator Bond. In the absence of Senator Mikulski, I will
call on Senator Lautenberg for his opening statement.
Senator Lautenberg. Thank you, Mr. Chairman. I will be
relatively brief, and relatively brief around here may have
different meanings for different people, but we will try.
[Laughter.]
I thank you for calling this hearing. I welcome Ms.
McGinty. If I may be so familiar, Katie, you have made many
important contributions here. We are glad to see you here
making the case for your small department--small, but
important.
Mr. Chairman, the Federal Government may have a single
agency devoted to environmental protection, but every agency
has environmental responsibilities and interests. The
Department of Energy spends more money on hazardous waste
cleanup than EPA. The Navy has taken dramatic steps to reduce
pollution at sea. And NOAA's weather satellites have provided
dramatic scientific information on the ozone hole and global
warming.
Additionally, although EPA enforces Superfund, the largest
responsible parties are not Fortune 500 companies. They are the
Department of Defense and the Department of Energy. Given the
many agencies involved in environmental protection, it is
important that some organization coordinate environmental
policy. And the Council on Environmental Quality performs that
critical task. And it generally does a good job.
One area where there have been problems is the processing
for reviewing disputes under NEPA, the National Environmental
Policy Act. I have some concerns about the process, and I am
pleased that the President has proposed to review it, to
reinvent it perhaps. For one thing, we need to ensure that
environmental impact statements are easier to understand so
that public participation can be more meaningful. It is also
critical that the environmental impact statement process become
a real tool in agency decisionmaking rather than a paperwork
exercise, to justify an agency previous intention.
I understand that the President's budget would provide
increased funding for four new staffers, to establish primarily
a new NEPA process. And I hope that we can find the funds to
make that happen. I think it is a very important step. I think
that it needs to be attended to, and I think it is a relatively
small request to take this important step.
So I look forward to Ms. McGinty's comments on these
issues, and I, once again, Mr. Chairman, thank you for holding
this hearing.
Senator Bond. Thank you very much, Senator Lautenberg, and
since we have been joined by the chairman of the full
committee, I would like to call on Senator Stevens for any
comments.
Senator Stevens. Thank you. I have no comment.
Senator Bond. Thank you.
I will now welcome and turn to our ranking member, and say
that we are looking forward to working together in another
challenging year, and hope that we can pass one good VA, HUD,
and Independent Agencies bill, and move on with the business.
Senator Mikulski, welcome.
STATEMENT OF BARBARA A. MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman, and
again, I apologize for my tardiness today. We oversee the space
program, and I wish I could do as good a job getting down from
Baltimore on the Baltimore-Washington Parkway as our astronauts
do fixing the Hubble.
I would like to welcome our new members to the panel,
Senators Craig, Harkin, and Boxer, who I know will be active
participants, and in this, today's hearing. I am looking
forward to hearing what Ms. McGinty has to say about the CEQ's
effort to study the effectiveness of its authorizing
legislation, the NEPA, and to examine proposals aimed at
reinventing the interagency process to carry out that statute.
As we look at so many of the issues impacting on the
environment, interagency coordination is absolutely essential.
I will also be looking forward to listening to Mr. George
Knight of the Neighborhood Reinvestment Corporation, which is
really one of the best little agencies I think we have in the
Federal Government. It has a modest budget of $50 million, and
really does help communities empower themselves. I think you
and I appreciate its self-help initiatives.
Also on the issues of the community development, the CDFI,
we look forward to hearing what they have to say, particularly
leveraging Federal dollars, and the role that they will play in
microenterprise initiatives, which I know will be crucial to
economic development in our own country. We have seen how they
work abroad. I would like to see how they work in our inner
cities, and hopefully they can be a tool to welfare reform.
And last but not at all least, I welcome an old colleague,
Congressman D'Amours, on behalf of the National Credit Union
Administration. I am worried about the credit unions. There are
a lot of lawsuits about credit unions. Some are in fragile
condition. I just want to be sure that they again are a tool
for empowerment at local levels, but yet do not leave us with
another unfunded fiasco.
Senator Bond. Thank you very much, Senator Mikulski. We
will now hear first from Ms. Kathleen McGinty, Chairman of the
Council on Environmental Quality [CEQ], which is responsible
for coordinating Federal policy on environmental issues, as
well as the primary responsibility for implementation of the
National Environmental Policy Act [NEPA], which has already
been mentioned here today.
I note the administration is requesting a budget for CEQ in
fiscal year 1998 of $3.02 million and 23 full-time equivalents.
This budget request represents an increase for CEQ of over $\1/
2\ million, or a 24-percent increase over fiscal year 1997
appropriations and an increase of four full-time employees.
I look forward to your testimony. Welcome, Ms. McGinty.
STATEMENT OF KATHLEEN MCGINTY
Ms. McGinty. Thank you very much, Mr. Chairman and members
of the committee. It is a pleasure to appear before you today
to present the President's request for CEQ for fiscal year
1998. I want to start by thanking all of you, and especially
your staff, who have been very much available to CEQ in the
last years to really help us do our job.
I would like to focus today on three things: First,
briefly, the level of our request; second, our work over the
past year; and third, I'd like to turn to our top priority for
the coming year, which is the reinvention of the National
Environmental Policy Act. First, the level of our request.
As you know, Mr. Chairman, CEQ currently operates at a
staff level of 19 FTE's and a budget of $2.4 million. Our
request today is for 23 FTE's, which would be $3,020,000. As
you noted, Mr. Chairman, especially in these budget times, this
increase in percentage terms is significant. However, I would
like to emphasize to the committee that even at 23 FTE's, CEQ
would still be significantly below the average in the Bush
administration, which was 31 FTE's, and very significantly
below CEQ's peak staffing level of nearly 70 FTE's during the
Nixon administration.
These resources are critical, Mr. Chairman, if CEQ is to
take on what I will describe in a moment as our very first
priority, the comprehensive reinvention of NEPA. Many,
including the Western Governor's Association, industry,
nongovernmental organizations, and others, have urged us to
undertake this effort, and I agree with them, it is a top
priority. But I do need resources to get that job done,
resources that could be taken out of the daily fire fights that
we find ourselves constantly involved in and consumed by,
people who are senior, professional, dedicated staff who really
can get this job done.
As I noted, I will return to the substance of this endeavor
in a moment. Before doing that, I want to turn briefly to some
of CEQ's work over the past year that we anticipated in our
meetings last year. As this committee is aware, CEQ has
responsibility both for immediate oversight of the
environmental impact assessment process conducted by every
Federal agency, as well as in our capacity as the President's
senior environmental policy advisers, policy coordination, and
dispute resolution among agencies on environmental matters.
First, environmental assessments. CEQ has worked hard over
the last year to use NEPA as it was intended, to improve agency
implementation and decisionmaking. For example, CEQ used NEPA
to design a process that will allow us to conclude even the
most complex habitat conservation plans, and these are the
plans that we have developed under the Endangered Species Act
that provide for species protection but also gives certainty to
landowners. Through NEPA we will complete those processes for
even the most complex HCP's in 10 months or less.
I recently returned from Washington State, where I signed
our latest HCP with the Governor of Washington. That HCP will
cover 1.6 million acres, and gives the State of Washington 70
to 100 years certainty that it has fulfilled its Federal
Endangered Species Act obligations. We achieved that through
NEPA.
In addition, CEQ responded to the request of Gov. Tony
Knowles, the Alaska delegation, members of the oil industry,
and others, to launch a process to identify lands for possible
oil production and environmental protection in the national
petroleum reserve in Alaska. Because of our efforts and because
of NEPA's ability to integrate various statutes, we will be
able to see that process through to completion in 18 months or
less. This builds on our effort that we achieved in just 6
months to allow for the export of oil from the Alaska North
Slope.
Through NEPA, CEQ has also worked, for example, to cut
processing times for timber salvage sales. Now, we complete
them in 1 year instead of the 3 years that was previously
required. We worked recently to resolve a longstanding dispute
between the Air Force and the FAA that now allows military
training activities again to be commenced in Alaska. And we
provided most recently for the transfer of the Homestead Air
Force Base in Florida to Dade County, FL, but in a way that
will ensure that Everglades restoration is not impaired. So we
are improving the environmental assessment process and
implementation.
On the policy front, CEQ has worked hard coordinating the
agencies and resolving disputes. CEQ developed, for example,
targeted reforms to RCRA. These reforms will avoid duplication
between RCRA and the Clean Water Act. They were developed and
signed into law last year, and in their implementation industry
will save tens of millions of dollars. CEQ also worked to
achieve an agreement that will ensure the financial viability
of the Bonneville Power Administration, while also securing
significant resources and sufficient resources to protect and
restore salmon in the Columbia and Snake Rivers. This agreement
was significant not only in substance, but also for the first
time it opened up Federal salmon decisionmaking to the tribes
and to State and local governments. That had not been done
before.
Working with the States' Attorneys General and the
International Association of Police Chiefs, CEQ also designed a
bill to take on environmental crimes. This bill, among other
things, will provide for enhanced partnerships and the sharing
of resources between Federal and State and local law
enforcement officials.
Finally, CEQ worked to craft significant reforms in a
wetlands program, and now with OMB to ensure that nonstructural
options are offered to flood victims in the wake of the recent
flooding experiences we have seen. So CEQ has worked hard to
ensure coordination, coherence, and efficiency in environmental
policy matters. NEPA is an effective tool to that end.
Turning briefly now, Mr. Chairman, to our proposal to
reinvent NEPA, we hope to build on the progress we have made
and that I have just discussed, as well as the new learning and
insights we have gained as a result of our NEPA effectiveness
study. We are already underway, working with the Western
Governors Association; Governors Geringer and Kitzhaber most
particularly have launched working groups in three areas:
timber, oil and gas, and grazing. But as the committee knows,
NEPA applies to every major Federal action, so there is much
more to be done.
We can use NEPA better to integrate environmental concerns,
and we know for sure that NEPA is the tool through which we can
provide much more access to citizens and State and local
government. I would like to launch a multistakeholder process
to get this done. I would like to bring in our universities and
our best scientists and academic talent. It is indeed my top
priority, but, Mr. Chairman, I do need additional resources to
get the job done. I look forward to working with the committee
to that end.
Thank you.
Senator Bond. Thank you very much, Ms. McGinty. Your full
statement, of course, will be made a part of the record. We
appreciate your summaries.
ELIMINATION OF CEQ
Ms. McGinty, the first year President Clinton was in office
he proposed eliminating CEQ as part of a streamlining effort,
and later reversed his decision and decided to support CEQ, but
to keep staffing at a modest level. I would note that CEQ is
not at the lowest historical staffing level, which was 13, from
1984 to 1989. In fact, the average staffing level, as opposed
to the authorized level for the past 16 years, has been just
below 19 FTE's. Can you provide us any specific examples from
last year which would illustrate where your staffing level fell
short?
Ms. McGinty. Throughout the course of the last several
years, Mr. Chairman, our staffing level has fluctuated. As you
noted, in the beginning of the administration the proposal was
to establish a new office in the White House to handle these
matters. That office would have been staffed at 10 FTE's.
Over the course of the last several years, CEQ has been
built back up from 10 to the current level of 19 FTE's, so we
have been on average in that range of staff, from 10 to now we
have built back up to 19.
Senator Bond. What work was not getting done?
Ms. McGinty. I am sorry. For example, on the lesser levels
of staffing we are about to present to the committee a combined
CEQ annual report. As the committee is aware, Senator Mikulski
has often looked to this report for the data, very important
data, it contains.
CEQ fell behind in preparing that report. But now we are
finally on the verge of catching up, and we have done that by
combining 2 years' worth of analysis into one single report.
In addition to that, we also have just recently finished
the NEPA effectiveness study, but that, too, was delayed by
1\1/2\ years because of reduced funding levels.
Senator Bond. How much of your time do you spend on putting
out these reports? Senator Mikulski has suggested making it
biannual. Is there that much new information every year that
you have to come up with a new report? How much time and effort
do you put in on that?
Ms. McGinty. It is a significant investment of time and
effort. What we have found, however, and we found it when we
were lapsed 1 year in providing the report, is that
particularly in academia and many scientists really rely on
that annual series of data. They use it for their own studies,
their own reports, and again, we found that out as we fell
behind in producing that volume of data.
It is a significant investment for us. We do take it very
seriously, and what we have found is that there are many people
who rely on it.
PROJECT XL
Senator Bond. You mentioned project XL in your written
testimony, and you say it is the centerpiece of the
administration's effort to reinvent environmental regulation,
and the President has indicated his strong support, saying it
marks the end of one size fits all Government regulations. When
we look at the reality as opposed to the rhetoric, we are a
little concerned about it.
You testified 2 years ago the administration would be
launching 50 initiatives in 1995. Yet today, as I understand
it, there have only been three project approvals, and, in fact,
of the eight original pilot XL projects announced in November
1995, only one has been given final approval, and only three
additional projects are in negotiation. Three of the original
project participants have withdrawn completely, and industry
executives have told us that EPA is too enforcement oriented
for a voluntary program to succeed. The senior director for
environmental affairs for Annheuser Bush, one of the eight
pilot projects which later withdrew, said, ``we could not seem
to get the out of the box thinking we wanted to get out of
them.''
What lessons have you learned over the past 2 years from
project XL? Why have there been so many problems, so little
progress, and specifically, what are you doing to see the
President's commitment for alternative compliance approaches is
carried out?
Ms. McGinty. Senator, the project XL, as you indicate, has
been a comprehensive effort to really try to produce a whole
new way of achieving environmental excellence. Now, in setting
that ambitious of a target for ourselves, we also have run into
some significant difficulties in getting the job done. I think
the difficulties speak really to the newness and the magnitude
of what we are trying to take on.
What we have done to continue to work through the program
is to reconvene a series of meetings with various stakeholders
to really understand the issues that they are encountering with
the program. And they seem to boil down to two. The program
requires that there be stakeholder participation in
implementing the environmental performance plan. The program
also requires that in ``throwing away the rule book,'' that a
company be willing to achieve superior environmental
performance.
Both of those phrases--stakeholder participation and
superior environmental performance, have not been well enough
understood so that as each project has moved forward there has
been confusion with regard to those elements of the program.
Recently, a Federal Register notice was issued to help
flush those conflicts out, and a stakeholder process convened
to comment on the new suggestions that have been made. Now,
over the next several weeks what we will do is reissue that
Federal Register notice, taking in the comments now of
participants in the program and try to help provide some
clarity with regard to those two concepts that do seem to have
proven to be difficult.
Senator Bond. I will come back to that, because I have a
couple of more questions on that. But let me turn now to
Senator Mikulski.
Senator Mikulski. Thank you, Mr. Chairman.
Ms. McGinty, the NEPA effectiveness study identified
certain areas, in which there was poor interagency
coordination, conflicting regulations, inadequate public
participation, too much paperwork, and so on. And having
identified those, which can be true of almost any organization
in America, your report had no navigational chart or no series
of recommendations on how to address those individual issues.
Do you have a specific list that you want accomplished and
defined timetables that you want? In other words, some of these
are more pressing than others. Would you outline your tasks and
timetables on addressing the effectiveness study, because
resources and staff should define mission and purpose, and
mission and purpose is dealt with in these issues. Do you want
to comment?
Ms. McGinty. Yes; thank you. Starting from the
effectiveness study and the five or six themes that came out of
that that you just articulated, we have moved from those themes
to try to apply them now in the first phase of this reinvention
effort to three specific areas. The first one is timber, the
second is oil and gas production, and the third is grazing. And
what that means is that we want to look in those three sectors
to see what the experience is of whether there are conflicting
regulations, whether the public is not sufficiently involved.
Yes?
Senator Mikulski. Just to continue a conversational
approach here, so rather than saying I am going to address too
much paperwork, what you are doing, then, is taking a topic
that actually affects a private sector, like grazing and
timber--of which our colleagues here have intense interest in,
and then take these four problem areas and look at a topic that
affects private sector environmental concerns and does direct
impact on the local community. I think that is an excellent way
to go about it, rather than something called--not good
coordination.
Ms. McGinty. Instead of just generalities, we really wanted
to get very specific, and one specific thing, for example, that
we would like to do, and the timing and the paperwork problems
that you mentioned, we want to give people who are seeking
Federal leases the opportunity, the right, to come in and
negotiate a timeframe, so that they know that the permitting
process will take x amount of time. But they have the right to
come in and be given that certainty. They do not have that now.
Senator Mikulski. Let us just take the grazing issue. I
know Senator Burns will probably have followup questions in
this, but that is what I hope we can do, a more conversational
approach.
Grazing is one of your tasks to be dealt with. Do you have
a timetable where you say at the end of this period we then
hope we will have resolved our internal management processes to
have dealt with creating procedures. Not necessarily to make
everybody happy with the decisions, but at least our internals
and our mechanisms will be in place.
Ms. McGinty. Yes; we hope, actually, over the next several
months, in a short timeframe, to be able to produce several
very concrete recommendations, in the grazing sector for
example. We will take those recommendations, and then open the
process up. I visited extensively with Governors Geringer and
Kitzhaber about this. The University of Wyoming and the
University of Montana will be engaged in providing a forum for
us to have our recommendations aired by the folks who are most
affected.
Senator Mikulski. Is it reasonable to expect that those
three topics could have been dealt with by the beginning of the
fiscal year, October 1?
Ms. McGinty. Oh, I believe so, yes. In terms of very
specific concrete recommendations, yes.
Senator Mikulski. Well, I'd like to ask, Ms. McGinty, that
when we are actually at our markup stage we would like to have
a progress report, and then what you need to do that, because
then, one, we will see if you have made progress, with all due
respect, and then second, what it took to make the progress.
Ms. McGinty. OK.
Senator Mikulski. The second thing is FEMA. You know we are
a FEMA-obsessed committee here because that is where all the
natural disasters come in. FEMA, as you know, has raised
concerns and yellow flashing lights that often environmental
mandates, particularly emergency rehabilitation, often impede
their efforts. We are not talking about long-range restoration.
I wonder if you could talk about your coordination with FEMA,
not that we waive or cavalier or swashbuckle over these regs,
but when they are out there and we have got floods on the
Missouri or like what we faced in Western Maryland, the
Potomac, et cetera, you have got to make decisions and you
cannot go through a lot of complicated environmental stuff.
Ms. McGinty. Yes; absolutely, especially in the context of
emergency response. We very recently were faced with this,
especially in the wake of the flooding in California. I was
contacted by Senator Feinstein and Congressman Fazio, who laid
out to me that they thought their constituents were very
concerned and confused about this, not certain that they could
take emergency actions to respond to the flood.
We called the relevant agencies together--FEMA, the Fish
and Wildlife Service, the National Marine Fishery Service, EPA,
all of them--and quickly got an analysis done that yes, in
fact, there are emergency provisions in each one of these
statutes, and that the conditions in California warranted the
invocation of those emergency procedures. Within 36 hours we
put out statements in California and the Pacific Northwest to
make clear that the environmental statutes in no way slowed
down or would impede emergency actions to respond to the flood.
Senator Mikulski. I am going to offer two suggestions to
you, and I know my time is up. It would be wonderful to spend
the whole morning talking about this. But two things: First of
all, hats off on the California response. But this is going to
happen everywhere. And I am going to suggest two things. One,
that you might want to think about SWAT teams from these
agencies to work with FEMA exactly on that, at a significant
senior level where decisions will have validity.
The other is that when FEMA does its maneuvers, and they do
them in States, and they do them in special situations, the
earthquake maneuver and so on, their simulations, that you be
part of that simulation. And, I think, it would be very
innovative, so that when they simulate how to respond to save
lives, then you are there to talk about what you would do to
follow up to save communities. And think about that, talk to
James Lee Witt, and, I think, it could be very innovative, and,
I think, it would be very energizing for your staff.
Ms. McGinty. That is an excellent suggestion. I will do
that.
Senator Mikulski. To have SWAT teams and maneuvers.
Ms. McGinty. Sounds exhilarating.
Senator Lautenberg. It sounds like they will be out there
with flack jackets. [Laughter.]
Senator Mikulski. I have seen several environmental issues
in Maryland where we have had horrendous national disaster
years, as has Senator Bond. Senator Lautenberg has very serious
issues in New Jersey relating to chemicals.
Anyway, enough said.
Ms. McGinty. Thank you.
Senator Bond. Thank you, Senator Mikulski. I feel like we
are almost in the Defense Appropriations Subcommittee.
Senator Mikulski. Senator Stevens is having a profound
impact on my psyche.
Senator Bond. That is a good idea, and you will want to go
to Alaska, like the rest of us do this year. It is not
required, but it is not a bad idea.
Now let me turn to Senator Burns.
PREPARED STATEMENT OF CONRAD BURNS
Senator Burns. I have a statement that I want to put in the
record, Mr. Chairman.
Senator Bond. Without objection, it will be so ordered.
[The statement follows:]
PREPARED STATEMENT OF SENATOR BURNS
Thank you, Mr. Chairman. Good morning, ladies and gentlemen. Mr.
Chairman, I would like to take this opportunity to commend you on your
prompt attention to appropriation matters this Congress. We have a lot
of work to accomplish this year and, considering our present fiscal
situation, it might not be easy to choose which projects to fund.
Therefore, it is important that we begin our work quickly with close
attention not only to the needs of Federal agencies individually, but
to the needs of the Nation.
For example, Mr. Chairman, I have noticed that some agencies are
requesting more than double the amount they requested in fiscal year
1997. Mr. Chairman, with the economy in the shape that it is, each
Federal agency should be trying to limit their expenses, not increase
them, because if we increase the funds for one agency, it means that
another agency will have to accept higher cuts than it would have
normally expected.
And, unfortunately, Mr. Chairman, we will have to determine if each
Federal agency is really a needed organization in today's economy. We
must do all that we can to ensure that we do not have two or three
agencies performing the same tasks--this only leads to confusion and/or
double billing the Federal Government for essentially the same work. It
is our job to ensure to the American people that we are spending their
hard earned tax payer funds with due diligence.
Again, thank you, Mr. Chairman, for the opportunity to comment on
these proceedings and for your timely attention to these vital matters
to our Nation.
Senator Burns. Ms. McGinty, I was going to have you give me
10 reasons why you should be funded at all. Now, I want you to
give me 19 reasons why you should be funded at all.
Ms. McGinty. OK. I guess I can try. One, I think that we
need better coordination among our agencies on environmental
matters, and that is CEQ's role.
Two, I think we need to streamline and cut paperwork, and
that also is CEQ's role.
Three, I think that in many different Federal decisions
environmental impact should be taken into account, and that,
again, is CEQ's role.
Four, NEPA is the statute that provides for State and local
government participation in Federal decisionmaking.
Senator Burns. Let us stop right there now. I will let you
make 15 of them in writing to me.
It just seems to me if we have, and EPA, they do not want
to visit with any other agency, you do not want to visit with
any other agency, no other agency wants to visit with you, I
just feel like, because you all went to Montana and made a
little deal, and that ain't going to fly, is it?
Ms. McGinty. I believe we are on track with that, although
I am very respectful of your views on this subject.
Senator Burns. Well, you tell me how it is going to fly,
because I will tell you what, Plum Creek has pulled out.
Ms. McGinty. Yes; that is right. The Governor, as you might
know, is still very much engaged, and has been working with us
closely on it. The company is still very much engaged, and has
worked in good faith from the beginning of this process, and
continues today. The agencies, I think, are producing a lot of
good work on this front.
Senator Burns. But your groups--in other words, your
environmental groups in Montana--are not going to allow this
thing to move forward, and I think I said at the git-go that
this was a pie in the sky, that it just jerks people around,
that their lives are in the balance locally. This is policy
that was made on a feel-good methodology, and then to come in
here and ask for more money and more people to do more crazy
things, it is absolutely--I do not see how you can justify it,
Katie. And I will tell you what, and I love your smile and I
think you are a bright young woman, but I will tell you what,
as far as any value to the American people or to the community
of Montana or Wyoming or Idaho, and Utah will love you, you
tell me what value--and you go out there and you say things to
the press that sound good, but it is just not like that. And
you made this deal, and then you ask for more money. Boy, I
will tell you one thing. I thought I was pretty brazen as an
auctioneer, but I am not near as brazen as this.
Ms. McGinty. Well, Senator, I certainly respect your
opinion, and I certainly understand, and you have made very
clear, and have been clear to us from the beginning with regard
to the New World Mine proposal about your views on that. But I
do believe that CEQ has performed a very valuable role, and
continues to, on issues that, I believe, are also very
important to your constituents.
Senator Mikulski and I were just discussing what we have
done, already, to help streamline things like grazing
practices, and to make it easier to provide----
Senator Burns. How many people do you have there in that
CEQ that knows one thing about grazing? Do you have anybody
down there from the Society of Range Management?
Ms. McGinty. No; I do not.
Senator Burns. That is right. You do not have one soul down
there that can tell us diddly doo about what a cow will eat and
what they will not, what a sheep will do and what they will
not. Now, you might have some people down there who know the
difference between clean water and bad water, but that is about
all. And this is what I am saying. We have got an Agriculture
Department. In other words, all of this is redundant.
I am going to be right honest with you. I am going to vote
to defund this whole thing, because you have not been honest
with people, and I am just to the point of frustration like you
cannot believe. People's lives are in the balance. And that is
what I am saying. We have got people that are making policy
that do not know diddly doo about nothing. And I am probably
one of them.
Ms. McGinty. Senator, it is true that CEQ is not an
institution that has specific substantive expertise in the
various areas. What CEQ works to do, though, it is the statute
that says that people with expertise have to be brought into
the decisionmaking process. NEPA is the statute that says you
have to open the doors, you have to let the public in, you have
to disclose what your intentions are.
I would not presume to second-guess the technical judgment
of a particular agency. But when you have two agencies with
clashing technical judgment, or when you have an agency that
does not want to let State or local government or private
citizens participate, that is when we get involved, to try to
help repair where there are differences or to ensure that
people have an opportunity to participate.
But you are exactly right. It is not an institution with a
cadre of scientists or a cadre of economists in specific
disciplines.
Senator Burns. But you put a lot of weight on NEPA. Yet you
went out there and interjected your own decision before the
NEPA process was allowed to be completed. You do not even have
faith in your own law in NEPA. You made that decision on the
New World Mine before the NEPA process was completed.
Ms. McGinty. That is absolutely true, Senator.
Senator Burns. Well, then why?
Ms. McGinty. Because the NEPA process is invoked when a
Federal Government agency is going to undertake an action and/
or when a citizen requests that a Federal Government agency
takes an action.
Senator Burns. But the process was in progress. Let it be
completed.
Ms. McGinty. The requesting company in this instance asked
that that action cease and desist because they wanted to pursue
an alternative course.
Senator Burns. They are just as wrong as you are.
Ms. McGinty. Well, the action was undertaken at their
instance.
Senator Burns. Well, but I am saying that they are just as
guilty as you are.
Senator Bond. Thank you very much, Senator Burns.
Senator Burns. I will go upstairs and jump on Babbitt. He
is upstairs. I will vote to pull all of your funds on this.
Senator Lautenberg. Mr. Chairman, may I?
Senator Bond. Senator Lautenberg.
Senator Burns. I have no use for it.
Senator Lautenberg. Thank you very much, Mr. Chairman.
Ms. McGinty, when did you write the NEPA law?
Ms. McGinty. Senator, it was written in 1969, and signed
into law by President Nixon.
Senator Lautenberg. Oh, so you did not write it.
Ms. McGinty. No; I did not, sir.
Senator Lautenberg. So, are you here defending what you
think is a legitimate process?
Ms. McGinty. Senator, I have come to see it as invaluable.
Senator Lautenberg. I do not think you are so brazen. I
think you have got to do it. You are the lawyer in this case.
You are defending an agency in which you have deep belief. So
stick with it.
Now, I would like to know how many of those who made
decisions here--perhaps you can help me--make decisions about
defense who have never seen war. I would like to know how many
scientists have been up in the ozone hole who are making
decisions here? What the devil do they know about ozone holes?
They have not been there.
Ms. McGinty, stick to your guns. You have an important
function to maintain there. We have agencies all over the place
who are involved in environmental decisions. And Lord knows
that we will save more lives and make lives more pleasant for
millions of people if you and the others who are involved in
environmental questions here can solve the problems that we
have.
I do not want my grandchildren drinking toxic or
contaminated water or breathing toxic air. Neither do I want my
aunt or my uncle, elderly people, breathing toxic air. You have
got to do what you have to do. You are on the side of right.
You are saving lives, and you have got to stick with it.
Do you know the TRI process and the TRI program?
Ms. McGinty. Yes; I do.
Senator Lautenberg. You know I have some involvement with
it. Are you aware that the toxic release inventory, on a
voluntary basis, has saved, in the period from 1989 to present
day or last year, 44 percent--reduced by 44 percent--toxic
emissions in the air. It is a voluntary program.
I can tell you in my State, which Senator Mikulski
acknowledged, we have very serious environmental problems,
because we are a crowded State. We have a proud industrial
past. Unfortunately, that past has caught up with us in the
wrong way, and as a consequence we are flooded with Superfund
sites and toxic air problems. Our neighbors to the west are
very generous. They deposit their contaminants all over our
soil with no charge, by the way, I might add. The fact of the
matter is that companies in New Jersey sprung to the idea of
participating in this voluntary program.
The success was enormous. Some companies save 90 percent--
reduced by 90 percent--the toxic emissions that they were
putting previously into the air, and many of them found that
they had a recoverable asset going out of those smokestacks,
and they brought them back into the shop and used them to make
paints and other solvents and things of that nature. And they
found out not only did they contribute to the neighborhood and
the community, but they also contributed to their bottom line.
So then, why should not an XL program work, if we can enlist
the support of the private sector?
Ms. McGinty. Senator, I have every confidence that it will,
and, in fact, it has. There are three agreements that have been
reached under project XL already, and some of them are huge.
One of them in particular is the difference between the
economic cutting edge competitiveness of an industry and
falling behind, and that is the one with Intel. The Intel
Corp., as you know, is involved in the development of
semiconductors. And with computer technology constantly
changing, the competitiveness of that industry depends on being
able to change their production processes very rapidly. They
can do that under XL. If it were not for XL, they would face a
very serious competitiveness challenge.
Now, the chairman does point to some of the challenges we
are having in broadening the program, but I really do believe
that is because it is a very ambitious program, and it is going
to be tough.
Senator Lautenberg. I want to say, for the chairman of this
subcommittee, who has many times mentioned his interest in
securing a budget that balances and making certain that we
reduce our expenses wherever we can, but Mr. Chairman, I have
got to compliment you, because you have stuck with some of the
programs that I know you had some questions about because you
were persuaded by the evidence that these were decent programs,
and I commend your objectivity even as you focus on the budget
reductions that you obviously advocate.
Ms. McGinty, I close by just saying that I hope you
continue doing what you do. I think you have to make the case a
little more clearly. I think it does look redundant. We have
EPA, and people are not quite sure in the outside world--I am
not even sure if we on the inside world are certain about it,
but what are the functions. But when you lay it out, and you
say yes, there is defense, and yes, there is energy, and yes,
there is agriculture, all these departments performing what I
think are fundamentally excellent and required services. Can
they do them cheaper? Perhaps. Can they do them better?
Certainly. But I think coordination of all of these departments
is essential, and I hope that CEQ can achieve the mark that it
was originally designed for.
Thank you.
Ms. McGinty. Thank you.
Senator Bond. Thank you, Senator Lautenberg. I appreciate
your kind comments. I believe that we must work toward a
balanced budget. I think there is bipartisan agreement there. I
happen to think, as I have stated on many occasions, that this
subcommittee has taken more than its share of cuts. We have
some very, very important priorities with costs that are
continuing to escalate. The housing area is one that we will be
discussing later.
Senator Mikulski. That is going to be a big balloon.
Senator Bond. Is that a big enchilada?
Senator Mikulski. The section 80 spiraling contracts.
Senator Lautenberg. I was stuck in traffic that day.
Senator Bond. We all may be stuck in traffic. [Laughter.]
SPENDING PRIORITIES
Senator Bond. But there are some difficult problems. I
raised the question about the budget in the beginning because I
am not sufficiently optimistic to think that we will get a
602(b) allocation which would accommodate all of the spending
priorities the President recommended.
Ms. McGinty, I want to come back to project XL. I believe
in the concept of project XL. I do have some problems with how
it is being implemented, and I noted in your testimony you
seemed to think that the problem was primarily with
understanding by the other non-Federal Government agencies that
they just did not get it as to how XL would work. And I note
that when 3M withdrew from project XL, the Minnesota Pollution
Control Agency said--we were all there, it was clearly stated--
there were elements at EPA who had not weighed in, powerful
elements. Intel, itself, you cited as one of the examples. The
Governors affairs manager said there were too many EPA offices,
too many levels of regulators, they were negotiating with
people who were not making the decisions.
I wonder, are you listening to the people who are getting
out of the program, the States and the private sector? Because
frankly, there has not been a lot of progress, and there have
been a lot more dropping out than are staying in the program.
So there is a problem. Are you listening to the people?
Ms. McGinty. Yes; and I think fair enough, Mr. Chairman, in
terms of pointing not only to those who might participate in
the program not understanding the elements of it, but the
agency itself trying on a new suit here, and one that does not
necessarily fit exactly right the first time around. That is
certainly involved here, too.
One of the things that we have seen in the program, again
listening to participants, is that it is uneven. Some regions
of EPA have taken this issue up and have implemented it much
more smoothly than other regions. There seems to be some
regions who kind of get the idea more quickly than others. So
there are internal difficulties.
Senator Bond. Let me ask this, and I apologize that we are
short on time, the global environmental management initiative
received a draft report which said that both CSI and project XL
suffered from a lack of clear ground rules, raising serious
questions about the viability of the programs without
fundamental statutory reforms. The President's Council,
Presidential Congressional Commission on Risk Assessment and
Risk Management, says EPA needs the legal authority to provide
flexibility. The President's Council on Sustainable Development
says that it needs a new regulatory system with greater
flexibility and alternative compliance legislation. In the past
we have raised this question. It has been the position of the
administration we get the job done without new statutory
authority.
It looks like the evidence is beginning to come in that
there does need to be some statutory changes. Are you ready to
support any such changes in alternative compliance legislation?
Where do we stand on those issues?
Ms. McGinty. Well, we did feel, Mr. Chairman, that it was
important to road test some of these issues, and that is what
we have been doing over the last year.
I think we will get further evidence in as this work that I
mentioned before continues, to try to elucidate, as you just
pointed to, what are the ground rules. Frankly, it has been a
little surprising to us that in trying to eliminate some of the
rules, to allow people to choose their own way and get there as
efficiently as they can, they have come back and said but we
need at least a few more ground rules.
So we do have some experience now, and I would look forward
to working with you and your staff and talking about that and
see what we might do now with this information that we have in
hand.
SMALL BUSINESS REGULATORY ENFORCEMENT
Senator Bond. Would you please let us know about the people
who want more ground rules? I had not heard that. I would be
interested to see that. But I really think we have gotten to
the point where we need legislation, Amoco, Yorktown, and
others.
Let me ask you about the ozone fine particles. You know
that this has raised a great deal of concern. Senator Chafee,
chairman of the EPW Committee has even suggested EPA should
delay the fine particle standard. We passed a little measure
last year that I played a role in called the Small Business
Regulatory Enforcement Fairness Act, which requires the
participation by small business in the process, plus other
standards to take care of the concerns of small business.
No. 1, I am concerned about the process. Have you looked
at, from the administration's standpoint, whether EPA's rule is
subject to the Small Business Regulatory Enforcement Fairness
Act? And No. 2, do you see a need for further scientific
evidence on the benefits of the proposed standards? Everybody
recognizes there is a scientific concern about the health
risks. The second part of the question is from a substantive
standpoint and an impact standpoint, do you see need for the
delay that Senator Chafee has suggested?
Ms. McGinty. Mr. Chairman, let me step back for a second
and describe CEQ's role in the context of this pending
rulemaking. What we have worked to do and will continue now as
the comment period is still continuing but will come to a close
in the middle-end of March, is to work with the other offices
in the White House, and particularly OMB and the National
Economic Council, to ensure that as comments are coming in that
they are made available in real time to the other agencies that
have an interest in this and that have technical expertise
themselves to be able to review and comment.
The second thing we will do is to provide a forum, whether
it is State or local governments or various interested parties,
to be able to come in and comment personally on the proposed
rules.
Separate and aside from that process, we will ensure that
there is adequate time for review of the rule before it goes
final. But at this point in time, while we are still in the
comment period, I do not have a separate substantive judgment.
I can assure the committee that I will be engaged as those
reviews and judgments come in, but the rule is still pending
and the comment period is still open on it. And so we are
awaiting those comments coming in.
Senator Bond. I did not catch your answer to the question
about small business.
Ms. McGinty. On the small business SBREFA, in terms of the
applicability of SBREFA to a particular standard--first of all,
let me say that SBREFA is a statute the administration
wholeheartedly supports, and we very much welcome your
willingness in letting us work with you last year and your
staff working with us to put that together. So we are very much
supportive of it.
In terms of the applicability of the statute to a
particular standard, to a particular proposed standard or rule,
that is a determination that is economically involved, legally
and technically involved. It would be on this issue as on other
issues that are a matter of such technical expertise, I would
not normally form a separate opinion of it. I would look to the
agency that has expertise in that area. In this instance it
would be a combination of EPA and the office in the White House
that is charged specifically with these kinds of matters, which
is the Office of Information and Regulatory Affairs. And I know
that they have reviewed that question, and I know that they
have come up with a determination about it. I have not
undertaken to make a separate determination of it myself.
Senator Bond. Senator Mikulski.
Senator Mikulski. Ms. McGinty, again, there are many topics
that we could cover in our conversation with you. But I think
what is arising here is first of all there is a lack of clarity
about what CEQ does. This is no-fault with you. Please do not
misunderstand me. And, therefore, what are the models? Are you
the EPA czar? Are you the equivalent of McCaffrey on the
environment? Are you supposed to be the EPA czar? That is a
different function.
Are you to be more like the Office of Science and
Technology Policy, which coordinates on certain topics like
ozone or science education, and an advisor to the President,
but you are not the science czar for America?
I think we need a clarification on this, because I think it
is more the latter model. You were not meant to be the
environmental czar, therefore, not be held accountable for
every environmental perceived screw-up, whether it is Interior
or EPA or agencies within Interior or Agriculture or whatever.
The second point here is that I recall when I first chaired
the subcommittee, all the work with CEQ was spent producing
this report, and often they were late, and that is what they
did. That is all they did. And more often than not, they did
not do it that well or in a timely fashion. And that is when
there began doubts on what the function of CEQ was.
Now, I believe your predecessor under Mr. Bush laid new
groundwork and things began to move more smoothly, and now this
is what you are doing. I think as we move forward here we need,
and I think it is appropriate, that you articulate what your
role is.
If we look at the models, first of all we love czar. We
think that somehow or another that is going to accomplish it.
If czars worked so well we would not have had revolutions.
[Laughter.]
Ms. McGinty. Senator, in terms of those models, the more
apt one, and a very apt one, is the Office of Science and
Technology Policy. The role is to coordinate the various
agencies, and every agency has some environmental mandate or
mission.
To take the Superfund Program, for example, I do not
implement it. I do not enforce specific remedies at specific
sites. However, I have to be concerned with the fact that we
have got a Department of Energy and a Department of Defense
that are themselves responsible for Superfund cleanups.
Senator Mikulski. But Dr. Gibbons, and we will talk to Dr.
Gibbons, neither proposes new legislation or new regulatory
frameworks, but essentially just more efficiently coordinates
the resources, particularly topical when they go across agency
lines.
Ms. McGinty. Yes; exactly. Exactly right. That is exactly
the model.
On Superfund, again, the reforms that we have seen to take
land use into account when planning a cleanup, that is the kind
of thing that comes out of a process that CEQ chairs, and we
hear from a DOE and a DOD to share their experience under the
Superfund Program, and we get insights. So we have ideas as to
how to reform the programs.
Senator Mikulski. Well, I think this is what we need to
talk about in terms of your funding and expectations of you,
and not hold you accountable for every faulty decision or
perceived faulty decision in these particular areas. And I am
afraid this is where we are drifting to, because as I
understand, the Office of Science and Technology proposed no
new legislation, no new regulatory framework, it did not solve
the science problems. Dr. Gibbons is not out there finding a
cure for cancer, for prostate cancer, but essentially advising
the President and the Vice President on how we should organize
our resources on life sciences, am I right?
Ms. McGinty. Exactly right, yes. That is the model.
Senator Mikulski. Thank you, Mr. Chairman.
Senator Bond. Thank you, Senator Mikulski.
Senator Bennett.
Senator Bennett. Thank you, Mr. Chairman. I appreciate your
willingness to let me visit a subcommittee that I very much
enjoyed. I am sorry I had to leave because of other priorities.
Senator Bond. Well, we miss you, and we are delighted to
have you as a member emeritus.
Senator Bennett. All right.
Ms. McGinty, you and I have had some exchanges, both in
hearings and in writing, and I appreciate the chairman's
willingness to let me use this forum to pursue some of those
exchanges.
It will come as no surprise to you that I want to talk
about the monument in southern Utah, and to lay the predicate
again for this record. The decision to create this monument was
made without any consultation whatsoever with any elected
official in the State of Utah. The Governor was kept out of any
considerations. Senator Hatch and I were both kept out of any
consideration. Congressman Orton, in whose district it was, was
kept out.
I asked you in a hearing before the Energy and Natural
Resources Committee if you would provide us, and provide me
specifically, with all of the written background relating to
this decision, because, as I rehearsed there, while we had the
conversations prior to the designation of the monument, people
from your office kept insisting this was being handled by the
Interior Department. My conversations with the Secretary and
people in the Interior Department show they insist that this
was being handled by the White House and no one would admit to
having been the lead agency or the lead staff group to advise
the President.
So I asked you to give me all of the background that was
used in the decisionmaking process. And on Valentines Day I
sent you a letter that was not necessarily a valentine saying
that almost 6 months had gone by and I had heard nothing. And I
received back from Shelly Fidler, Chief of Staff, a letter
saying you were traveling but they wanted to be responsive
immediately and apologizing for the delay, and this is what I
got as the substance of what went into the President's decision
to create 1.7 million acres of a national monument in Utah
without any consultation from any elected official in Utah:
A manual entitled ``The Ecosystem Approach, Healthy
Ecosystems and Sustainable Economies,'' dated June 1995; a
legal description of the Antiquities Act and what you could do
under it; a speech given by Ray Clark, Council of Economic
Quality of the United States, in Quebec City, dated June 16,
1994; and then written answers to questions from other Members
of Congress--James Hansen, that was useful, he is from Utah;
here is a letter signed by Bruce Babbitt written to Carol
Browner dated May 29, 1996; and questions for the record for
Ms. McGinty from Senator Thomas and other members of the
committee, and your response to Senator Thomas.
Frankly, I do not consider that responsive to my letter,
and I wanted to come here and raise this with you.
Second, I will tell you if you do not know that a number of
publications in Utah have submitted freedom of information
requests for the same information and have been denied. They
are anxious about that. They are pursuing their rights under
the Freedom of Information Act, and feel that they have a right
to more information about the process that was followed in the
creation of this.
Further, people in the press--and we all learn what we
learn about the press, have reported names of people who were
involved, who were consulted, who were part of the
decisionmaking process, including people from the Southern Utah
Wilderness Alliance and other environmental groups, the Sierra
Club, et cetera, who were allowed access to information that
was denied elected officials. That is, they were part of the
process of drawing maps and making decisions concerning land
use in this monument.
I am not going to attack anybody. I am not going to send
somebody to break their knees or knock out their windshields or
scratch up their cars or do anything. I simply want to know to
whom the President turned, or you as the President's agent, to
whom did you turn for information on this?
This is a very, very significant issue. It affects a very
large number of my constituents. It is a major environmental
effort on behalf of all of the people of the United States,
creating one of the largest, if not the largest, national
monument in the country, and we have no official idea who did
it. And yet we are faced with a 3-year management plan to try,
in the words of Leon Panetta when he called me to tell me about
it, to pick up the pieces after the fact. It will be much
easier for us to pick up the pieces after the fact if we have
some understanding of the pattern, the thoughts, the
motivations, that went into the creation of this thing in this
particular fashion.
So I am here to ask you once again if you will review my
letter of February 14 where I get very specific in the things
that I ask for, and do your best to be responsive to those
specific requests, and however well-meaning your staff was to
try to get you off the hook and get me something in a hurry, I
am not really interested in copies of speeches that were 2
years old prior to the decision the President made.
Ms. McGinty. Thank you, Senator. There are three or four
points I think you made. I will do my best to respond to them.
First, in terms of the materials that were sent to you
after your February 14 letter, they were the exact and complete
set of materials that we sent to the committee immediately
after the hearing, which was September 26, including in the
hearing record, because your request was part of the hearing
record to have those materials submitted, we submitted that
stack of papers that is specific to the monument that you
pointed to. That outlines the analysis. That is the complete
analysis that was done supporting the designation of the
monument. I tried to deliver that immediately. It was part of
the hearing record.
We were told at that time that the committee separately
would make it available to each member. I suppose that did not
happen, and so what my staff did 1 week ago was to resubmit
those materials to your office directly. And so what you have
there is both the materials that were directly responsive to
your question, but just in order to not leave anything out you
have the entire set of materials that were offered to close the
hearing record.
Senator Bennett. If I may, I do not consider this
responsive to my question. I can understand why the committee
did not circulate all of the materials to me.
I want to know the specific analysis that went into this
monument. I do not want general statements about the
Antiquities Act, I do not want general statements about
ecosystems, this was a very significant act taken by the
President of the United States deliberately keeping a number of
people in the dark with respect to what was going on. It
obviously did not burst full blown from the head of Zeus. There
was obviously a great deal of staff work that went into it.
I want to know the names of the people who participated in
those sessions, and I want to see the memos they created. And
as I said to you, and will repeat again, as far as the press is
concerned, they are now quoting people outside of the
administration as saying they were part of the process, and I
want either confirmation or denial of that, and the only way I
can get that is to get a list of the names of the people who
really were involved.
Again, I am not going to put out a contract on somebody who
was involved. Nobody has anything to fear. I just want to know
the process that was followed and the people that were
involved. This is clearly not responsive to that request.
Ms. McGinty. Fair enough. Let me mention two things, if I
might. One is the materials that you have there are not just
generalities about the Antiquities Act. That package of
materials includes the complete itemization of all of the
archeological, geological, and cultural factors that were
identified in the monument area, and as you know, that is
required to be identified pursuant to the Antiquities Act. So
the materials are very specific in terms of where those
archeological sites are and what they are.
Senator Bennett. I do not disagree, but they are very
incomplete.
I am sorry I have taken so much time, Mr. Chairman.
Senator Bond. Senator, I apologize. We have two very
important panels to follow. Let me just say that I think that
Senator Bennett has made a reasonable request. To the extent
that you and CEQ have knowledge and participated, I will be
interested personally in reviewing your response to his
question to, the extent that CEQ was there, who did what, and
when. I am sure that Senator Bennett will enjoy reading about
the Antiquities Act. I believe he wants to know who did what,
and that will be of interest to us.
Senator Mikulski, any further questions to Ms. McGinty?
ADDITIONAL COMMITTEE QUESTIONS
Senator Mikulski. No; and I will look forward to hearing
the followup on this conversation, and particularly the FEMA
part, which I think offers a great opportunity for saving lives
and saving communities.
Ms. McGinty. Yes; thank you.
Senator Bond. Thank you very much.
Ms. McGinty. Thank you, Mr. Chairman.
[The following questions were not asked at the hearing, but
were submitted to the Council for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
Question. NEPA Effectiveness Study. Recently CEQ released its
``NEPA Effectiveness Study.'' CEQ found that while the NEPA process
overall is sound, at times its implementation fell short of goals. For
example, ``interagency coordination is hampered because agencies often
have different timetables, requirements, and modes of public
participation;'' and ``citizens sometimes feel frustrated that they are
being treated as adversaries rather than welcome participants in the
NEPA process.''
While deficiencies with the NEPA process were identified, the
report contains no specific recommendations for change. Why?
Answer. On the occasion of the 25th anniversary of the National
Environmental Policy Act (NEPA), CEQ initiated a study to examine the
effectiveness of NEPA and prospects for improvements in the NEPA
process. In January 1997, CEQ released the findings of this study,
``The National Environmental Policy Act: A Study of its Effectiveness
After 25 Years'' (hereinafter referred to as the NEPA Effectiveness
Study).
To summarize briefly the findings of the Study; first, NEPA works.
Agencies must now take a ``hard look'' at the environmental
consequences of proposed actions before they make a final decision.
They must consult with other federal agencies and tell the public what
they are proposing to do, invite public views on their proposals, and
respond to those views. NEPA also calls for agencies to tell state,
local, and tribal governments of their plans, and provides agencies
with a mechanism to coordinate overlapping jurisdictional
responsibilities. In large part due to NEPA, federal agencies today are
better informed about the consequences of their actions on communities
and are more likely to take community views into consideration. Used
well, agency implementation of NEPA reduces conflict and saves scarce
resources.
Despite these successes, however, as you noted, NEPA's
implementation at times has fallen short of its goals. In some cases,
the NEPA process takes too long and costs too much. Agencies produce
documents that are overly long and sometimes too technical for most
people to use. Training for agency officials, particularly senior
officials, is at times inadequate. Some agencies confuse the purpose of
NEPA, acting as if the detailed statement called for in the statute is
an end in itself, rather than a tool to enhance and improve decision
making.
The purpose of the NEPA Effectiveness Study was not to provide a
detailed blueprint for change, but to give an overall assessment of the
statute and to provide a starting point for our reinvention efforts.
Instead detailed recommendations will be forthcoming as part of our
NEPA Reinvention effort.
CEQ believes that many of the deficiencies identified in the
application of NEPA can be corrected through improvements in agency's
NEPA processes. The first phase of the our Reinvention effort focuses
on the grazing, timber, and oil and gas sectors to determine what types
of process changes can be effected to increase the efficiency of NEPA.
If we find barriers that require regulatory change, we will pursue such
changes.
Question. Will it be up to the individual agencies to devise
improvements to the way they carry out the NEPA process? What guidance
will CEQ provide to the agencies to streamline and improve the process,
and what exactly will CEQ's role be in improving NEPA's effectiveness?
Answer. Inasmuch as each agency has different missions and
different planning processes, it is unlikely that a ``one-size-fits-
all'' approach from CEQ would be productive. It is more likely to be
successful if agencies understand the opportunities for improvement and
make those improvements within the context of their own mission.
Agencies are currently responsible for their NEPA compliance and
their management of the NEPA process. Improvements will necessarily
come from within. Reforms can be institutionalized in each agency's
NEPA procedures, and CEQ is encouraging all the agencies to review
their procedures with an eye toward streamlining. CEQ will consult with
each agency as they review their NEPA procedures.
Question. Two years ago, you testified that one of your priorities
was reinvention of the NEPA process, including cutting processing time
and consultation time. What specific improvements--such as the numbers
of duplicative or inconsistent regulations which have been eliminated--
have been made in the last two years?
Answer. One of the most important steps in this regard was the
elimination of duplication between the processes for complying with
NEPA and the Endangered Species Act for Habitat Conservation Plans
(HCP's). These are plans that permit landowners to conduct certain
activities over a long period of time, with the certainty and stability
of a site-specific tailored agreement. Previously, applicants were
going through two separate processes to comply with the two statutes.
This resulted in duplicative analyses and public hearings for the same
actions. This duplication has now been eliminated, significantly
reducing permit processing time for private applicants. In fact, even
the most complex HCP can now be completed in under ten months.
CEQ has also expended considerable effort in working with the Food
and Drug Administration (FDA) over the past two years to streamline
their NEPA process and reduce unnecessary submissions. According to the
FDA, the changes being made as a result of that effort will result in
an annual cost savings to industry of approximately $15.7 million, as
well as improve FDA efficiency by eliminating unnecessary agency review
costs of approximate $1 million. Equally important is that the
regulations do not compromise the FDA's efforts to promote NEPA's
policies and goals for better, more informed decision making.
Similarly, CEQ worked with the Department of Energy (DOE) as they
developed proposed revisions to their NEPA regulations. DOE's final
rule includes several streamlining features such as: establishing new
categorical exclusions; expanding existing categorical exclusions; and
eliminating the preparation of extensive documentation prior to
preparation of an environmental impact statement (EIS). In consultation
with CEQ, DOE simplified public notification requirements and
streamlined the requirements for the content of Findings of No
Significant Impact. These changes, and others like them, focus
available resources on significant environmental issues, and reduce
costs and staff time while ensuring the environmental assessment
process is useful to decisionmakers and the public.
CEQ is currently working with the Air Force to find streamlining
opportunities. One clear opportunity to save time and money is to
eliminate the necessity to have public hearings instead of informal
public meetings. We have pointed out to the Air Force that public
hearings are more expensive and not required by CEQ regulations. We are
also reviewing additional categorical exclusions which will reduce the
amount of documentation associated with Air Force NEPA compliance. We
are also jointly exploring opportunities for integrating analytical
requirements, eliminating duplication of effort. We expect that these
revised regulations will be final this summer.
As you may recall, CEQ and the Federal Highway Administration
(FHWA) cosponsored a conference in 1995 which focused on methods to
streamline the NEPA process used in the development of highway
projects. As a result of this very productive conference, the
Department of Transportation (DOT) is developing a proposed rulemaking
that will link NEPA and its principles to DOT's decision making
process. The proposed rules will affect the Federal Highway
Administration (FHWA), the Federal Railroad Administration (FRA), the
Federal Transit Administration (FTA) and the Coast Guard. The objective
of these DOT agencies is to develop a single NEPA regulation that will
reduce paperwork, streamline and expedite transportation planning and
decision making, and lead to one overall public interest decision that
integrates social, economic and environmental effects and
considerations, including economic development, health and
environmental protection and community and neighborhood sustainability.
CEQ is also working with other agencies as they amend their NEPA
procedures, including the Department of Housing and Urban Development
and the U.S. Army. I want to reiterate that CEQ will continue to take
advantage of these reinvention opportunities but we hope to institute
even more sweeping changes through our NEPA Reinvention initiative.
Question. What specifically do you anticipate to be accomplished
this year through the new NEPA reinvention initiative?
Answer. We have already begun a process to examine current NEPA
practices with regard to grazing, timber and oil and gas. Federal
agencies that have responsibilities for NEPA issues in these three
sectors are working cooperatively to suggest areas where improvements
can be made.
As you may know, the lead CEQ staff member on NEPA Reinvention is
currently on maternity leave. As I mentioned to your staff, CEQ has
brought on Robert Cunningham to lead our NEPA Reinvention Team. We also
expect Ms. Mesa to return to resume her work after her leave is
completed.
The University of Wyoming will host a conference this week to help
us identify additional activities we can cooperatively engage in to
broaden the dialogue and to help us make additional progress. The
University of Montana, as well, has offered to help us contact
stakeholders and to use the University as a resource in our project.
The Western Governors' Association and the Western States' Foundation,
as well, have expressed interest in working with us to accomplish NEPA
Reinvention.
In addition, we are shortly to begin meetings with stakeholders to
review the product of the initial interagency discussions and to
solicit stakeholder input. Within several months, we also hope to begin
discussions with the leadership of the federal agencies with
responsibilities in our three sectors to educate them about the
opportunities for reform that we have identified.
Needless to say we will bring the products of all of these
discussions with interested Senators and House Members and their
staffs.
By the end of this fiscal year we expect to have specific
recommendations for some significant changes to current NEPA practices
in the three sectors we have identified as our targets of opportunity--
grazing, timber and oil and gas. The kind of improvements we would
consider a success would reduce the time necessary to make decisions;
result in more cooperation between federal agencies; reduce costs; make
processes more transparent for the user communities; improve public
participation; as well as other efficiency improvements that are
identified through the examination of options.
Question. FEMA has told my staff of their frustration of meeting
NEPA requirements in projects resulting from Presidentially-declared
disasters. Staff who administer disaster programs often have limited
expertise or time to evaluate effectively and document environmental
considerations. NEPA is often seen as significantly slowing the funding
and construction of these very critical repair, renovation, rebuilding
and mitigation projects following disasters. FEMA tells my staff that
the most important support CEQ can provide to FEMA is guidance on
measures FEMA can undertake to expedite the NEPA process. What are you
doing to help FEMA in this regard, and will you report back to the
Subcommittee on progress made?
Answer. FEMA recently consulted with CEQ and we provided guidance
to clarify that a project that has already been categorically excluded
from NEPA documentation under FEMA's NEPA procedures can proceed
without further documentation. We are consulting with FEMA regarding
procedures related to several particular projects, including the Rodeo
Channel Stabilization in Hesperia, California, the Rolling Hills storm
drain and slope restoration in Yorba Linda, California, and certain
projects in Hawaii. In addition, we are reviewing FEMA's NEPA program
related to disasters generally, so as to identify possible
opportunities for streamlining. We will be happy to report back to the
Subcommittee on our progress later this spring.
DEPARTMENT OF THE TREASURY
Community Development Financial Institutions
STATEMENTS OF:
JOHN H. HAWKE, JR., UNDER SECRETARY OF TREASURY FOR DOMESTIC
AFFAIRS
KIRSTEN MOY, DIRECTOR
opening remarks
Senator Bond. The second panel consists of Mr. John Hawke,
the Under Secretary for Domestic Finance with the Department of
Treasury; and Ms. Kirsten Moy, Director, Community Development
Financial Institutions Fund Program. The administration's
budget request for CDFI asks for an increase of $75 million,
from the $50 million for fiscal year 1997 to $125 million to
fiscal year 1998, and the President has indicated the intent to
include increases for a 5-year total to $1 billion.
This fund was established in the Community Development
Regulatory Improvement Act in 1994, and to provide equity
investment grants and loans, and the purpose is to enhance the
capacity of these institutions to finance economic development
housing and community development.
I am concerned about the amount of funding in the CDFI
request as we have to prioritize and deal with the other
competing needs I am also concerned that CDFI does not have
much of a track record. I need to understand to what degree
leverage investment is being drained from other activities
serving distressed communities, and how and whether CDFI is
discouraging traditional financial institutions from opening
branches and lending in distressed communities.
I look forward to hearing your testimony.
Mr. Hawke, I guess if you would begin.
STATEMENT OF JOHN H. HAWKE, JR.
Mr. Hawke. Mr. Chairman, thank you very much for affording
me the opportunity to make a brief statement in support of the
community development financial institutions fund. CDFI has
been a high priority of the President since the time he took
office. It is a program with great potential for bringing the
residents of our inner cities into the economic mainstream, an
effort that I believe is vitally important to all of us.
The fund's aim is to expand access to credit and financial
services in poor urban, native American and rural communities,
areas in which one of the biggest obstacles to economic
development is a lack of access to private sector capital.
Access to financial institutions is fundamental to the efforts
of residents of these economically distressed areas to lift
themselves out of poverty.
When CDFI was assigned to the Treasury Department, it was
established as an independent office reporting to the Under
Secretary for Domestic Finance. In October 1965, Kirsten Moy
was brought on board as Director of the fund.
She brought to the fund a wealth of experience from her
work as senior vice president of the real estate subsidiary of
the Equitable Life Assurance Society of the United States, and
portfolio manager of Equitable's Community Mortgage Fund, a
pension fund vehicle for investments in affordable housing and
economic development. I believe that everyone who has observed
the great skill that she has brought to bear on this task would
agree that we are extremely fortunate to have her in this
position.
In January 1996, CDFI received 268 applications for CDFI
awards, with requests for funding 10 times the amount
available. After a rigorous review by the fund, 32 CDFI's were
selected to receive nearly $37 million in financial and
technical assistance. The CDFI Fund also received 50
applications under the Bank Enterprise Award Program, and 38
banks and thrifts were selected to receive bank enterprise
awards.
Last month, the President announced the winners of the
Presidential Award for Excellence in Microenterprise
Development to highlight the accomplishment of entrepreneurs in
this area. The fund has effectively promoted partnerships
between community-based financial institutions, banks, and
other private sector sources, leveraging scarce Federal
resources to attract private dollars into credit-starved
communities. That, in turn, fosters cooperation and synergy in
efforts to revive economically distressed areas.
For example, Senator Bond, in your State, Douglass
Bankcorp, the oldest African-American owned bank west of the
Mississippi is receiving $1.9 million in equity and technical
assistance from the fund to support its expansion to serve
Kansas City. In partnership with Kansas City Neighborhood
Alliance, they are developing a comprehensive plan to promote
affordable housing and small business development to foster
market activity in low-income neighborhoods.
In addition, Senator Mikulski, in Maryland the Bank
Enterprise Award Program helped trigger a $10 million
investment by NationsBank in the employment opportunities fund,
which invests in small businesses located in or employing
residents of the Baltimore empowerment zone.
In this era of scarce budgetary resources, we must choose
our priorities carefully and focus on those that have long-term
payoffs for our economy and our society. The fund is a top
priority of the President precisely for that reason. It uses a
very modest amount of Federal funding as a base for attracting
private capital, and its payoff is in the long-term health of
our national economy by helping break the cycle of poverty,
make our Nation more productive, and fostering higher economic
growth.
We have been and continue to work diligently to make the
CDFI and the BEA programs a success.
PREPARED STATEMENT
Mr. Chairman, I appreciate this opportunity to speak to
you, and Mrs. Moy will now discuss the program in greater
detail.
[The statement follows:]
PREPARED STATEMENT OF JOHN D. HAWKE, JR.
Mr. Chairman, distinguished members of this Subcommittee, I thank
you for the opportunity to testify this morning on the President's
fiscal year 1998 budget request for the Community Development Financial
Institutions Fund.
CDFI has been a high priority of the President since taking office.
It is a program with great potential for bringing the residents of our
inner cities into the economic mainstream, an effort that I believe is
vitally important to all of us--no matter where we live or what our
incomes may be.
The Fund's aim is to expand access to credit and financial services
in poor urban, rural and Native American communities, areas in which
one of the biggest obstacles to economic development is a lack of
access to private sector capital. Access to financial institutions is
fundamental to the efforts of residents of these economically
distressed areas to lift themselves out of poverty.
When CDFI was assigned to the Treasury Department, it was
established as an independent office reporting to the Under Secretary
for Domestic Finance. In October 1995, Kirsten Moy was brought on board
as Director of the Fund. She brought to the Fund a wealth of experience
from her work as Senior Vice President of the real estate subsidiary of
the Equitable Life Assurance Society of the United States and Portfolio
Manager of Equitable's Community Mortgage Fund, a pension fund vehicle
for investments in affordable housing and economic development. I
believe that everyone who has observed the great skill she has brought
to bear on this task would agree that we are extremely fortunate to
have her in this position.
Since it began operating in October 1995, the Fund has already made
a significant contribution to increasing access to private sector
capital, by catalyzing interest in this program. In January of 1996,
CDFI received 268 applications for CDFI awards, with requests for
funding ten times the amount available. After a rigorous review by the
Fund, 32 CDFI's were selected to receive nearly $37 million in
financial and technical assistance. CDFI also received 50 applications
under the Bank Enterprise Award program, and 38 banks and thrifts were
selected to receive Bank Enterprise Awards. Last month, the President
announced the winners of the Presidential Awards for Excellence in
Microenterprise Development to highlight the accomplishments of
entrepreneurs in this area.
The Fund has effectively promoted partnerships between community
based financial institutions, banks and other private sector sources,
leveraging scarce Federal resources to attract private dollars into
credit starved communities. That in turn, fosters cooperation and
synergy in efforts to revive economically distressed areas. For
example, Douglass Bancorp, the oldest African-American owned bank west
of the Mississippi, is receiving an investment from the Fund to support
its expansion to serve Kansas City, Missouri. In partnership with
Kansas City Neighborhood Alliance, they are developing a comprehensive
plan to promote affordable housing and small business development to
foster market activity in low income neighborhoods. In addition, the
Bank Enterprise Award program helped trigger a $10 million investment
by NationsBank in the Employment Opportunities Fund, which invests in
small businesses located in, or employing residents of the Baltimore
Empowerment Zone.
In this era of scarce budgetary resources, we must choose our
priorities carefully, and focus on those that have long term payoffs
for our economy and our society. The Fund is a top priority of the
President precisely for that reason: It uses a very modest amount of
Federal funding as a base for attracting private capital, and its
payoff is in the long-term health of our national economy, by helping
break the cycle of poverty, making our nation more productive and
fostering higher economic growth. We have been and continue to work
diligently to make the CDFI and the BEA programs a success.
Mr. Chairman, members of the Subcommittee, I appreciate this
opportunity to speak to you today. Ms. Moy will now discuss the program
in greater detail.
STATEMENT OF KIRSTEN MOY
Senator Bond. Ms. Moy.
Ms. Moy. Chairman Bond, Senator Mikulski, distinguished
members of the subcommittee, this is my first opportunity to
testify before you, and I appreciate it very much.
The CDFI fund, as you mentioned, was authorized by the
Riegle Community Development and Regulatory Improvement Act of
1994, and its purpose was to address the critical problems of
capital access in urban, rural, and native American
communities.
To this committee, the problems of access to capital are
surely no stranger. Access to capital is an essential
ingredient for creating and retaining jobs, developing
affordable housing, revitalizing neighborhoods, and building
local economies.
The fund runs two programs. The first of these, the CDFI
Program, stimulates the creation and expansion of a diverse set
of private community-based for-profit and not-for-profit
financial institutions. These CDFI's, as they are known,
complement the role of traditional financial institutions by
filling market niches which such institutions are not well
positioned to serve.
The CDFI's themselves include a broad range of
institutions. They include community development banks,
community development credit unions, loan funds,
microenterprise funds, community development venture capital
groups, and these CDFI's provide a wide range of financial
products and services to distressed urban and rural communities
and underserved populations. They do not only housing or
consumer loans, but commercial loans, loans for small business,
loans for community facilities, and many other things.
The Bank Enterprise Awards Program, which is designed to
work hand-in-hand with the CDFI Program, recognizes the key
role that traditional financial institutions, banks, and
thrifts, have played in community development lending. They
complement the CDFI Program by strongly encouraging these
institutions to support CDFI's, and they also incentivize
increased lending in distressed communities by these
organizations.
Of the institutions recognized in the first round of the
Bank Enterprise Award Program nearly two-thirds supported
CDFI's, with a total of nearly $66 million in support. For many
of these organizations, it was their first effort to support a
community development financial institution.
The Treasury Department, we believe, is uniquely situated
to carry out the CDFI initiative. As the executive branch's
leading agency in setting financial institutions' policy, the
Treasury Department is strongly committed to increasing access
to capital and investment in distressed communities.
The Department does this through the efforts of the CDFI
fund, but also through its commitment and the commitment of the
Office of the Comptroller of the Currency, and the Office of
Thrift Supervision, to a strong and effective Community
Reinvestment Act.
The Treasury Department is also strong in its support of
Federal tax policy for such efforts as the low income housing
tax credit.
During the first year, as Under Secretary Hawke mentioned,
we received and reviewed 268 applications, undertook a rigorous
and comprehensive look at all of them, announced the selection
of 32 CDFI's to receive approximately $37 million in awards,
and announced the selection of 38 banks and thrifts to receive
approximately $13 million in bank enterprise awards.
Just last month in January, President Clinton announced the
award winners for the Presidential Awards for Excellence in
Microenterprise Development, a nonmonetary award program
implemented by the fund which is designed to recognize the best
in the business of microentrepreneurship, a growing phenomenon
in the United States.
I would like to remind the committee that in the midst of
all these activities, the fund, as a startup organization, also
managed the challenge of developing almost from the ground up
internal controls, financial management systems, monitoring and
evaluation functions, and a host of other organizational
development issues. These systems we feel are critical to
ensure the effective use of scarce public resources.
Though the fund is young, its impact can already be seen. I
believe that the fund has been proven particularly effective in
six areas: Leveraging of private resources, forging linkages
with the financial services industry, creating viable self-
sustaining institutions that will not need to be assisted or
subsidized forever, expanding access to the economic
mainstream, restoring healthy marketing activity, and
catalyzing new community development activity.
You have already heard Under Secretary Hawke talk about
initiatives in Kansas City and in Baltimore to forge
partnerships and restore healthy market activity. Let me
mention a few more examples.
The fund's ability to leverage private sector funds in
distressed communities is truly dramatic. The fund first of all
requires, at a minimum, that every dollar awarded under the
CDFI Program be matched by at least $1 of non-Federal moneys.
But it does not stop there. In the near term over the next 2 to
3 years, the $37 million awarded to CDFI's will, in our
conservative estimate, leverage three to four times the amount
of the original awards.
Over the long term, the fund's investments are expected to
support lending and investment in these communities of 10 to 20
times the amount awarded.
The CDFI fund is very focused on creating viable, self-
sustaining institutions. The Vermont Community Loan Fund, for
example, which is a relatively small organization at $2.5
million of assets, finances housing, small business, and
community facilities.
Very importantly, the Vermont Community Loan Fund, through
its good business practices and track record, has achieved
notable success in attracting investments from a diverse array
of private sector players, including individuals, religious
institutions, foundations, and corporations. The fund's
investment in Vermont will help the loan fund build on its
record to expand its services to communities across the State.
The CDFI fund is also focused on catalyzing new activity,
we seek to use our scarce resources to jump-start new
initiatives, not permanently subsidize them. For example, the
fund's investment of a $1 million loan in Tlingit-Haida
Regional Housing in Alaska will begin home mortgage lending in
Alaska's three urban areas. These will be among the first
sources of mortgage loans that are available and affordable to
lower-income Alaska Natives.
I see my time is up.
PREPARED STATEMENT
Senator Bond. Ms. Moy, we will be delighted to make your
full statement a part of the record, and we apologize if we
have run longer than we intended.
[The statement follows:]
PREPARED STATEMENT OF KIRSTEN S. MOY
Chairman Bond, Senator Mikulski, and distinguished members of the
Subcommittee, I would like to thank you for the opportunity to testify
this morning on the President's fiscal year 1998 budget request for the
Community Development Financial Institutions (CDFI) Fund which is
within the U.S. Department of the Treasury. The President's budget
requests $1 billion over the course of the next five years for the CDFI
Fund. In fiscal year 1998, the request proposes $125 million to support
the Fund's initiatives.
The CDFI Fund, which was authorized by the Riegle Community
Development and Regulatory Improvement Act of 1994, was created to
address the critical problems of urban, rural and Native-American
communities that lack access to capital. Access to capital is an
essential ingredient for creating and retaining jobs, developing
affordable housing, revitalizing neighborhoods, and building local
economies. Over the past decade, much evidence has been presented that
there are significant capital gaps in distressed communities. Given the
unique character of the credit market in low-income communities, this
market niche is often not recognized or well understood--making it
difficult for conventional market players to meet the needs of this
market without local partners. Thus, in many communities, needed
financial products and services may be entirely lacking or may not be
available or offered at prices that low-income people can afford.
The CDFI Fund represents a new direction for community development
initiatives. It leverages limited public resources to invest in and
build the capacity of private sector institutions to finance community
development needs in distressed communities. The Fund's efforts are
designed to help turn dysfunctional markets in distressed communities
into well functioning local economies--thereby stemming the tide of
disinvestment and creating economic opportunity for residents. The Fund
accomplishes its mission by working with community based financial
institutions and conventional banks and thrifts. The partnerships
formed by these players will play a key role in helping to restore the
functioning of distressed markets, enhance capital access for these
communities, and enable them to join the economic mainstream. The
Fund's investments are targeted to organizations that emphasize market
discipline and performance as a strategy for restoring markets.
The Treasury Department is uniquely situated to carry out this
initiative. As the Executive Branch's lead agency in setting financial
institutions policy, the Treasury Department is strongly committed to
increasing access to capital and investment in distressed communities.
The Department does this through the efforts of the CDFI Fund, its
commitment and the commitment of the Office of the Comptroller of the
Currency and Office of Thrift Supervision to a strong and effective
Community Reinvestment Act, and Federal tax policy including strong
support for the Low Income Housing Tax Credit. Nearly seventy-percent
of the Fund's awardees under the CDFI and Bank Enterprise Award
Programs are credit unions, banks, thrifts, or bank holding companies.
The commitment of the Department to integrate distressed communities
into the greater financial services industry and the economic
mainstream is key to future viability of neglected and disinvested
neighborhoods.
FIRST YEAR ACCOMPLISHMENTS
Calendar year 1996, the first full year of the Fund's operations,
was a very exciting and significant year:
--In January, the Fund received 268 applications for the CDFI Program
and more than 50 applications for the Bank Enterprise Award
Program in response to its interim regulations and Notices of
Funds Availability issued in October 1995.
--The Fund undertook a rigorous review process of the CDFI Program
applicants including a thorough analysis of an applicant's
financial and programmatic track record, financial strength and
stability, management capacity, business development strategy,
matching funds, and projected community development impact.
--Secretary Rubin announced the CDFI Fund's selection of 32 CDFI's to
receive nearly $37 million in financial and technical
assistance.
--Secretary Rubin announced the CDFI Fund's selection of 38 banks and
thrifts to receive $13 million in Bank Enterprise Awards.
--In January 1997, President Clinton announced the award winners for
the Presidential Awards for Excellence in Microenterprise
Development, a non-monetary award program implemented by the
Fund which is designed to recognize the best in the business of
entrepreneurship.
--In the midst of these activities, the Fund also managed the
challenges of starting up a new organization including
developing financial systems, internal controls, monitoring and
evaluation functions, and other organization development
issues. As a new organization, the Fund has built many of its
management systems virtually from the ground up, or has been in
the process of converting transitional, temporary systems to
permanent ones, and creating and refining needed control
systems. These systems are critical to ensure effective use of
scarce public resources.
NEED AND IMPACT
The capital needs of urban, rural and Native-American communities
are indeed great--but very difficult to quantify. I believe that the
dramatic response of the private sector to the initiatives of the Fund
provide a clear illustration of the vast unmet capital needs. In its
first funding round, the Fund received 268 applications for the CDFI
Program from community based organizations in need of investment
capital and technical assistance. The requests for funding exceeded
$300 million--approximately 10 times the amount of resources initially
made available for the first funding round. It should be noted that
applicants that submitted requests represent only a portion of the
universe of organizations that are likely to be eligible for the
program and represent only those communities that are fortunate enough
to have a community based financial institution. The Fund also received
applications from over 50 banks and thrifts--an excellent start for a
program relatively unknown among the banking industry.
Although the Fund is young, its impact can already be seen. The
Fund has proven effective in leveraging resources, forging linkages
with the financial services industry, creating viable self sustaining
institutions, expanding access to the economic mainstream, restoring
healthy market activity, and catalyzing new community development
activity.
Leveraging Private Resources
The Fund's ability to leverage private sector funds into distressed
communities is dramatic. The Fund requires, at a minimum, that every
dollar awarded through the CDFI Program be matched by at least one
dollar of non-Federal monies. In the near term--over the next two-to-
three years--the $37 million in equity and debt capital awarded to
CDFI's will conservatively leverage three-to-four times the original
awards. Over the long term, the Fund's investments are expected to
support lending and investment of 10-to-20 times the amount awarded.
Self-Help of North Carolina is a national leader in community
development finance. Yesterday, the Fund executed a $3 million grant to
Self-Help. Over the next five years, it is conservatively projected
that the CDFI Fund's grant and matching funds will enable Self-Help to
provide more than $100 million to finance affordable housing and small
business loans over and above what they could have done without the
Fund's assistance.
Forging Linkages with the Financial Services Industry
In a short period of time, the Fund has been successful in forging
key partnerships between banks, thrifts and CDFI's through the Bank
Enterprise Awards Program. The $13.1 million in Bank Enterprise Awards
generated nearly $66 million in equity investments and other financial
support to CDFI's. In addition, the program generated $60 million in
direct lending and financial services in some of the nation's most
distressed neighborhoods. For example, the Bank Enterprise Award
Program helped catalyze a $10 million investment by NationsBank in the
Employment Opportunities Fund which invests in small businesses located
in or that employ residents of the Baltimore Empowerment Zone.
Creating Viable Self-Sustaining Institutions
The Fund is distinctive from many other Federal initiatives because
it focuses on the development of viable, self-sustaining institutions
to carry out the work of financing community development. The Vermont
Community Loan Fund, a small organization that finances housing, small
businesses and community facilities, has achieved notable success in
attracting investments from a diverse array of individuals, religious
institutions, foundations, and corporations. The Fund's investment will
help the Vermont loan fund build on its highly successful track record,
expand its services to communities across the state, and provide new
investment in Burlington's Old North End Enterprise Community where
over thirty-percent of its residents live in poverty.
Expanding Access to the Economic Mainstream
The activities of the First American Credit Union illustrates how
the Fund's resources will help bring under served communities into the
economic mainstream. The credit union, which serves Native-American
reservations throughout Arizona, New Mexico and Utah, provides basic
financial services. These basic financial services include checking and
savings accounts and consumer and home improvement loans--for people
that otherwise would have no access to these services. The Fund's
assistance will be used to expand lending and introduce ATM services to
rural, sparsely-settled low-income communities.
Restoring Healthy Market Activity
Douglass Bancorporation, the oldest African-American owned bank
west of the Mississippi, will receive an investment from the Fund to
support its expansion to serve Kansas City, Missouri. Douglass, in
partnership with the Kansas City Neighborhood Alliance, has developed a
comprehensive plan to restore healthy market activity to low-income
neighborhoods by promoting affordable housing and small business
development.
Catalyzing New Activity
The Fund's philosophy is to use its scarce resources to catalyze
and jump start new initiatives--rather than permanently subsidize them.
For example, with the Fund's investment of a $1 million loan, Tlingit-
Haida Regional Housing will begin home mortgage lending in Alaska's
three urban areas. This will be among the first sources of mortgage
loans that are affordable to low-income Alaska Natives in these
markets.
SUMMARY OF FIRST FUNDING ROUNDS
The CDFI's selected to receive investment from the Fund represent a
broad array of institutional types--both non-profit and for-profit--and
provide a broad range of financial products and services including
consumer loans, affordable housing loans and investments, small
business development, and community facilities such as day care and
health care facilities. The group of selected CDFI's serve communities
in 46 states and the District of Columbia. Approximately half of these
initiatives serve predominantly urban areas, 25-percent serve
predominantly rural areas, and the balance serve a combination of both.
Twenty-four of the 32 awardees serve an Empowerment Zone or Enterprise
Community.
Through the Bank Enterprise Award Program, the Fund has made awards
to 38 banks and thrifts located in 18 states and the District of
Columbia that ranged in asset size from a small community bank of $21
million to a major money-center bank of $320 billion. The awardees
include national banks, Federal savings banks or thrifts, state-
chartered commercial banks, and one state chartered mutual saving bank.
the president's fiscal year 1998 budget request
The President and Secretary Rubin strongly support the increased
funding for the CDFI Fund. The $125 million requested for fiscal year
1998 is proposed to be allocated as follows: $80 million to be invested
to support CDFI's; $40 million for the Bank Enterprise Awards Program;
and $5 million for administrative related costs. Most of the $80
million to be used to support CDFI's will be invested directly in such
institutions in the form of equity investment, loans, capital grants,
and deposits. As part of its provision of assistance to CDFI's, the
CDFI Fund intends to launch an important training initiative which will
significantly enhance the capacity of private sector organizations to
provide a full range of training and technical assistance services to
CDFI's at affordable prices. In addition, a new secondary market
initiative that the Fund will implement has the potential to leverage
substantial new sources of private capital to support CDFI's.
CDFI PROJECTS
Senator Bond. I am going to turn to Senator Mikulski for
questions after asking just one question to begin. We have
heard all of these glowing reports. It is no surprise to me
that everybody is anxious and making applications for funds,
but--maybe my staff is not up to date--I do not find any
evidence that a single dollar of the $32 million in CDFI funds
has actually been obligated or leveraged on a single project.
Has anything happened yet on this?
Ms. Moy. Indeed it has, Senator. First of all, the money
has all been obligated.
Senator Bond. I mean, has any money gone out to a project?
Has it been spent?
Ms. Moy. Yes.
Senator Bond. Is something happening?
Ms. Moy. First of all, we run two programs, Senator, so
that in the Bank Enterprise Award Program, which is a very
important program, 75 percent of our moneys have actually been
disbursed in that program to the participating banks, who have
already completed their activities and who have already showed
the impact of what they have done.
Under the CDFI Program, we have closed one transaction to
Self-Help in North Carolina for $3 million. We have spent the
first year putting the systems and procedures in place to make
sure that as we disburse this money we can monitor the impact
and trace the actual use of the moneys.
We now have in place our infrastructure to disburse these
moneys. For instance, we have all the appropriate legal
documents. In the next 4 to 6 weeks we expect to disburse all
of the money that we can to organizations that are ready to
receive them, which is approximately one-half of the
organizations.
Senator Bond. So you are saying no money under CDFI has
actually gone out.
Senator Mikulski.
Senator Mikulski. Mr. Hawke, good morning. Ms. Moy, first a
cordial welcome to you from the committee.
I would like to just say, looking at your background, that
we are very fortunate to have someone of such strong private
sector experience managing the CDFI fund. I know that the whole
issue of access to credit for low-income communities has been
part of my life for more than 30 years, and yet, at the same
time, I had enormous skepticism about creating the CDFI fund.
Just very quickly, when I was a young social worker in
Baltimore I helped start a credit union in an African-American
community. Of course, all they had was the opportunity to
borrow money from, really, street-corner or store-front usury
programs. Then, working as a city councilwoman and then a
Congresswoman, I dealt with the red-lining provisions, and then
came the famous Community Reinvestment Act.
When the CDFI fund was proposed, my question was, why do we
need this? Why don't we just push the big banks to do community
reinvestment, that was the big concern, rather than create new
Government entities where we played banker, instead of letting
the banks who know how to be banks be banks in communities.
Do you follow all that?
Ms. Moy. Yes; I think so.
Senator Mikulski. Now, you present this really excellent
testimony, and I have been looking at the WEB Program, the
Women Entrepreneur Program in Baltimore, as well as the
NationsBank effort to work with the Baltimore empowerment zone.
Could you just tell me very briefly, because we must move
ahead. Your testimony essentially answers many of the fears and
concerns that I had. But if you could: These issues of linkage,
leverage, and availability to people, like $6,000 level loans
for women, could you tell me how this actually worked in
Baltimore? Maybe take one of those projects on linkage and
leverage, and tell me why the Community Reinvestment Act would
not have met that need, or are we playing bank when maybe we
should pursue other options?
Ms. Moy. Those are excellent questions, and they are truly
intertwined. The whole concept of CDFI's is that they are
specialized, private institutions that fill niches that
traditional financial institutions cannot fill.
Why can't these banks fill these niches? It would be too
easy to say that they simply do not want to do it, though in
some cases that is true.
Capital gaps often arise not because of risk or return, and
not even perception. They arise for very nitty-gritty reasons
and for very unglamorous reasons. For instance, the size of a
transaction--you mentioned the $6,000 loan. It is not economic
for most traditional financial institutions to make investments
in that size because of their infrastructure and because of
their overhead.
Size is a common problem. Volume is a common problem.
Financial institutions look to cookie-cutter their investments
in order to do large volumes, which improves their profit
margins. This is not possible with many types of community
development loans, I have found. I have not been at it as long
as you, Senator, but I am older than I look, and I have been at
it for some 20 years.
Senator Mikulski. I am not. [Laughter.]
Ms. Moy. In the 20 years that I have been doing this in the
private sector, I have been able repeatedly to build products
for my company that capitalized precisely on those capital
gaps, areas they could not serve well.
I think the real way to make an impact is to push banks to
do as much as they possibly can, and to work in partnership
with CDFI's to cover the areas that they cannot.
In virtually every instance, our CDFI's are working with
traditional banks, and with the Bank Enterprise Award Program,
many of them are beginning to get more support from these banks
than they ever have.
Senator Mikulski. So you are not in lieu of the bank?
Ms. Moy. Oh, absolutely not. I think the private sector
works because people specialize. People do what they do best,
and that is what they should be doing in the private market
system. Our CDFI's in many cases are second to none in
delivering certain types of credit.
In many cases, they develop an innovative product, show the
private sector how to do it. And there are actually banks that
are beginning to do small amounts of microenterprise lending,
based on some of the models that have been pioneered by the
CDFI's. The fund made a $450,000 grant to FINCA, which is a
microenterprise organization working in Washington, DC, and in
Baltimore. FINCA works with different local community-based
organizations, one of them being WEB, and they have pioneered
the peer lending----
Senator Mikulski. Which is the Women Entrepreneurs Program.
Ms. Moy. In Baltimore, exactly, with a peer lending model,
and they are adapting that international model, which has had
so much success overseas, to the domestic market, and WEB is
one of the first groups they are working with.
Senator Mikulski. What do they do?
Ms. Moy. In this country, microenterprise groups do not do
just lending. They provide significant amounts of technical
assistance. They do a lot of handholding. They train people in
sound business practices. They help them actually startup their
businesses. They provide peer and other group support to small
organizations, which inevitably run into challenges during
their first year, and they are there to provide additional
capital as these organizations grow.
Mr. Hawke. If I could add just one comment, Senator
Mikulski, the CDFI fund also functions to leverage private
capital from sources other than ordinary banking institutions,
so it does tap into a broader range of leveraging.
Senator Mikulski. Like what?
Ms. Moy. Individuals, religious organizations,
corporations, foundations.
Senator Mikulski. Well, thank you. I look forward to
learning more about this. I know that my time has expired. You
have answered many of my questions. I mean, my questions first
of all about the CDFI fund. This is why these hearings are so
important.
I knew WEB was important, and I knew NationsBank was coming
into Baltimore, but they needed a trade group, a channel, a
fiscal channel to get the resources down to the right level.
The reason WEB is working is not only because of the money, but
the technical assistance. A local credit union in a church
might be able to give microloans, but they would not have done
the technical assistance for someone who might be opening a
home-based business like sewing and alterations.
Ms. Moy. Yes; many of them are in home-based businesses,
actually.
Senator Mikulski. I really look forward to learning more
about it. I have a great passion for microenterprise, I've seen
how it has worked around the world. It really fortifies me to
hear that it is now working in Baltimore and other communities.
I think we need to closely monitor this with lessons learned,
but I think the fact that it is beyond the Community
Reinvestment Act, which was kind of a mandate, this is really
helping them fulfill a social responsibility, but in a way that
is most effective at the street corner or neighborhood level,
is that right?
Ms. Moy. That is correct.
Senator Mikulski. Well, thank you very much.
Ms. Moy. Thank you, Senator.
Senator Bond. Thank you, Senator Mikulski.
I have been very much impressed by the testimony, as
Senator Mikulski was, but I am very much concerned about the
performance. As we put out the first $3 million, we will be
waiting to see if it works.
PERFORMANCE STANDARDS
I am going to have a series of questions about your
standards, about how we know if it is going to work. You
present a great vision for something that might work, and
before we go down the path of building this $50 million to $125
million to $1 billion, you have got to show me that this thing
works.
I mean, nobody can argue with the glowing testimony. It
sounds great. But there is an awful lot I want to see about how
this works, what the standards are. I will submit that for the
record.
Let me ask you here one nasty little question. How are you
regulating CDFI to ensure that the funds are being used
appropriately, that these entities will pose no financial risk
to the taxpayer, and what happens to a financially troubled
CDFI?
Ms. Moy. Senator, I do not regard that as a nasty question.
I think it is a fundamental question that is a very important
one.
The time that we have spent putting systems in place is
precisely for this reason. I do not think anyone wants another
program that does not work or has a troubled record. Our
statute requires us to negotiate with each CDFI a set of
performance goals that go right into the legal document that
becomes the legal vehicle by which we award them moneys. They
are required to report to us quarterly and annually on these
goals, and we can take sanctions if they do not satisfy them.
Among the performance goals that are negotiated are
financial and programmatic goals, and financial covenants of
various sorts.
In doing so, the fund is cognizant of the individual needs
of each organization and how it is different. At the same time,
we require performance from everyone. The organizations that we
selected we selected because of their impressive financial
situation, condition, stability, management capacity and so
forth.
Senator Bond. Will you be doing examinations of them?
Ms. Moy. Absolutely.
Senator Bond. And Treasury is responsible for that? When it
goes bad, who do we hang, you? [Laughter.]
Mr. Hawke. Senator, I am confident that we will be
insisting on systems being in place to achieve the objectives
you have right from the beginning of this program.
Senator Bond. But who do we hang out to dry?
Mr. Hawke. This is an operation of the Treasury Department,
Senator Bond.
Senator Bond. So you are volunteering? You are the one? You
are the belly button we point at?
Mr. Hawke. Yes, sir; this is one of our bureaus. We do not
interfere with the independence of the decisionmaking of the
CDFI fund, but the one thing that Director Moy and I have
talked about again and again from the very beginning of this
program was the need not only to have systems in place to
assure that the process of making grants was transparent and
had integrity to it, but that the followup process was
demanding.
Senator Bond. You are responsible for what happens if one
of them gets troubled. What do you do with it?
Ms. Moy. It depends on why they are in trouble. I mean, it
is possible for people to get into trouble through no fault of
their own. When you constantly monitor an organization and look
at their financials on a quarterly basis, you are generally not
surprised by things that happen. You see trends.
The best answer, actually, the best solution is to
intervene before you have a problem. We certainly do not want
to be surprised by a problem.
Senator Bond. I just realized--do you take it over? I tell
you what. Let me ask that you send me those answers, because we
do have a series of questions that we would like to find out
about, the goals, the standards, the performance objectives,
and I am going to ask our staff, both sides of the staff to
monitor what is actually happening, and I thank you very much
for your testimony.
You present a great vision of what might happen, and we
want to see that it does.
Senator Mikulski. And as you can see, there is both support
and skepticism here. The skepticism is not harsh. We want to
know what are we getting into, what our obligations are, and
make sure it is not another hollow opportunity.
Perhaps in following up with our staffs, you could do it in
a case example tracing through microenterprise, what happens if
an individual defaults, what happens if the organization is in
trouble, et cetera, et cetera. But also, how do you work in the
first place: The anatomy of the good news, and then what would
happen if there is bad news. This is asked in a no-fault way,
but we need to get to know each other.
Ms. Moy. We would be happy to do that. Thank you, Senator.
[The information follows:]
OBJECT CLASSIFICATION SCHEDULE--DIRECT OBLIGATIONS
[Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
Fiscal year
--------------------------------------------------
Object classification 1997 proposed 1998 budget
1996 actual operating level estimate
----------------------------------------------------------------------------------------------------------------
Personnel compensation: Permanent positions.................. 590 1,500 2,700
--------------------------------------------------
Total personnel compensation........................... 590 1,500 2,700
==================================================
Civilian personnel benefits.................................. 137 375 725
Travel and transportation of persons......................... 97 100 200
Transportation of things..................................... 8 25 5
Rent, communications and utilities:
Rental payments to GSA................................... ............... 340 45O
Rental payments to other agencies........................ 163 100 ...............
Communications, utilities and miscellaneous charges...... ............... 80 60
Printing and reproduction.................................... 71 80 100
Other services............................................... 1,336 975 900
Supplies..................................................... 48 75 80
Equipment.................................................... 346 350 280
Grants, subsidies and contributions.......................... 46,701 71,000 119,500
--------------------------------------------------
Total obligations...................................... 49,497 75,000 125,000
==================================================
Unobligated balance available, SOY........................... (49,878) (45,000) (20,000)
Unobligated balance available, EOY........................... 45,000 20,000 20,000
Unobligated balance expiring................................. 381 ............... ...............
--------------------------------------------------
Total enacted appropriations and budget estimate....... 45,000 50,000 125,000
----------------------------------------------------------------------------------------------------------------
ANALYSIS OF FISCAL YEAR 1997 APPROPRIATED LEVEL
[Dollars in thousands]
------------------------------------------------------------------------
FTE Amount
------------------------------------------------------------------------
Fiscal year 1997 Proposed Operating
Level.................................. 23 $75,000
Fiscal year 1998 Estimate............... 35 125,000
------------------------------------------------------------------------
DIGEST OF FISCAL YEAR 1998 BUDGET ESTIMATES BY ACTIVITY
[Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
Fiscal year Fiscal year Fiscal year
1996 actual 1997 proposed 1998 budget
Budget activity ----------------- operating level estimate
---------------------------------
FTE Amount FTE Amount FTE Amount
----------------------------------------------------------------------------------------------------------------
Management and administration:
Administrative services.................................. ... $2,760 ... $3,650 ... $4,500
Administrative expenses for Direct Loan Program \1\...... ... 35 ... 350 ... 1,000
--------------------------------------------------
Total management and administrative expenses......... ... 2,795 ... 4,000 ... 5,500
Assistance to CDFI's (other than direct loans)............... ... 30,560 ... 43,150 ... 59,500
Direct loan subsidy.......................................... ... 3,003 ... 12,850 ... 20,000
Incentives for depository institutions....................... ... 13,139 ... 15,000 ... 40,000
--------------------------------------------------
Subtotal, operating level.............................. ... 49,497 ... 75,000 ... 125,000
Unobligated balance available, SOY........................... ... (49,878) ... (45,000) ... (20,000)
Unobligated balance available, EOY........................... ... 45,000 ... 20,000 ... 20,000
Unobligated balance expiring................................. ... 381 ... .......... ... ..........
==================================================
Total enacted appropriations and budget estimate...... 10 45,000 23 50,000 35 125,000
----------------------------------------------------------------------------------------------------------------
\1\ The amount for fiscal year 1998 is a ``not to exceed'' amount that may be used for administrative expenses
for the Direct Loan Program.
______
COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS FUND
Summary Justification of Fiscal Year 1998 Budget Estimates
GENERAL STATEMENT
The CDFI Fund represents a new direction for community development
initiatives, by using limited public resources to invest in and build
the capacity of the private sector to address the community development
financing needs of distressed urban and rural communities. The CDFI
Fund's initiatives are designed to unleash large amounts of private
capital, emphasize private sector market discipline, and take full
advantage of private sector human talent, energy and creativity.
Decisions about which specific projects and businesses to finance are
left to the private sector. The effect of these efforts will be to
address market inefficiencies which exist in distressed communities,
restore healthy private market activity, promote entrepreneurship,
revitalize neighborhoods, generate tax revenues, and empower local
residents.
Through the CDFI Program, the CDFI Fund stimulates the creation and
expansion of a diverse set of specialized, private, for profit and
nonprofit financial institutions known as community development
financial institutions (CDFI's). These specialized institutions
complement the role of traditional financial institutions by filling
niches in the market which traditional financial institutions are not
well positioned to serve. CDFI's cover a broad range of institution
types, such as community development banks, community development
credit unions, community development loan funds, community development
venture capital funds, and microenterprise loan funds. They provide a
wide range of financial products and services to distressed urban and
rural communities and to low income populations, such as commercial
loans and investments to start or expand small businesses, loans for
first time home buyers, loans to rehabilitate rental housing, and loans
for community facilities. The CDFI Fund will: (1) invest directly in
CDFI's that satisfy high quality standards and raise private matching
funds; (2) provide training and technical assistance to improve the
capacity of CDFI's; and (3) implement secondary market initiatives
which draw in new sources of private institutional capital to support
the activities of CDFI's.
In its first round under the CDFI Program, the CDFI Fund selected
32 organizations to receive a total of $37.2 million in equity
investments, loans, capital grants and technical assistance. But this
barely scratches the surface of what needs to be done to achieve the
full potential of CDFI's.
Interest and demand for the CDFI program has dramatically exceeded
expectations, with requests for assistance last year exceeding $300
million. The interest demonstrated by the initial pool of applicants,
plus continued growth and interest in new CDFI formation, indicate the
dramatic potential for future investment for the CDFI Fund to stimulate
expansion of the diverse CDFI industry.
In addition to making increased direct investments in CDFI's, the
CDFI Fund is planning to take full advantage of the potential of the
diverse and growing CDFI field by implementing new initiatives to
expand the Fund's tools for assisting CDFI's, and keeping the Fund on
the cutting edge of innovation. An important new training initiative
will significantly enhance the capacity of private sector organizations
to provide a full range of training and technical assistance services
to CDFI's at affordable prices. This initiative will emphasize quality
and market discipline in the training and technical assistance services
delivered by private sector providers. By using its resources to
enhance capacity in this way, the CDFI Fund will build on the existing
marketplace for these services, which will be a much more effective
approach than if the Fund were to provide these services directly. In
the long term, this initiative will also help ensure the maximum
effectiveness of the CDFI Fund's future investments in an increasing
number of CDFI's.
While supporting the creation and expansion of new types of
specialized private financial institutions, the CDFI Fund's programs
also recognize the key role being played by traditional financial
institutions--banks and thrifts--in community development lending and
investing. In recent years, many such traditional financial
institutions have increased their efforts to lend and invest in
distressed communities. By offering incentives to such traditional
financial institutions through its Bank Enterprise Awards (BEA)
Program, the CDFI Fund builds on these trends and assists traditional
financial institutions in enhancing their direct community development
lending, as well as in investing in CDFI's.
In the first round of the BEA Program, the CDFI Fund made a total
of $13.1 million in incentive awards to 38 insured depository
institutions. These awards supported more than $120 million in total
community development investments by banks and thrifts. By making
improvements in the program and by engaging in increased outreach to
the banking and thrift industries, use of the program can be
dramatically enhanced.
As a new organization, in addition to refining its programs and
developing new initiatives, the CDFI Fund is working to develop a full
set of performance goals, measures and numerical targets in time for
the fiscal year 1999 budget presentation. Included in this year's
presentation is some initial thinking on possible performance measures.
______
activity: 1. management and administration
Functions: Provides management, staff and other services which
enable the Fund to develop and implement policies and programs, monitor
investments, and provide support functions for these activities.
Mission Statement: Management and Administration is intended to
develop and implement the initiatives of the CDFI Fund with the highest
possible quality and professionalism to maximize the capacity of the
Fund to achieve its objectives.
[In thousands of dollars]
------------------------------------------------------------------------
Fiscal year
-----------------------------------
1996 1997 1998
actual estimate estimate
------------------------------------------------------------------------
Budget Authority \1\................ 2,795 4,000 5,500
------------------------------------------------------------------------
\1\ These amounts include administrative expenses for the Direct Loan
Program.
Performance Goal: To build a strong staff with skills and
experience appropriate to the fund's unique activities.
----------------------------------------------------------------------------------------------------------------
Objective Performance measure (indicator) Type of measure
----------------------------------------------------------------------------------------------------------------
Emphasize quality, relevant Number of staff hired to fill targeted positions that Output.
experience and record of have the desired skills and professional experience.
achievement in hiring.
Contribution of staff in meeting overall performance Outcome.
goals of CDFI Fund through meeting of goals in
individual performance plans.
Build a staff reflecting Number of staff sorted by diversity characteristics...... Output.
appropriate diversity that can
serve as a model for other
organizations.
Ongoing training and skills Number of CDFI Fund staff members that attend training Output.
development of existing staff. sessions or other educational and developmental
opportunities.
Design and implement system to Implement internal data collection and retrieval system Output.
evaluate impact of Funds' programs. on participating CDFI's.
Design CDFI performance evaluation process and complete Output.
paper setting forth approach to long term impact
evaluation.
----------------------------------------------------------------------------------------------------------------
activities: 2 and 3. assistance to cdfi's (including direct loans)
Functions: The Fund makes investments in quality CDFI's, by
providing assistance in the form of equity investments, loans, capital
grants, and deposits or shares. The form of financial assistance
depends on the individualized needs of a CDFI as reflected in a
realistic business plan, consistent with its ability to raise private
matching funds in a comparable form. The Fund will also assist CDFI's
through training and technical assistance initiatives, and by providing
assistance to organizations that enhance the liquidity of CDFI's.
Mission Statement: Assistance to CDFI's is intended to spur the
creation and expansion of these specialized private financial
institutions and to enhance both immediate private sector capacity to
address community development financing needs in distressed
communities, as well as to strengthen the long term capacity of these
institutions to serve such needs and help restore healthy private
market activity in distressed communities.
[Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------
1996 actual 1997 estimate 1998 estimate
----------------------------------------------------------------------------------------------------------------
Budget Authority (Other than Direct Loans)...................... $30,560 $43,150 $59,500
Budget Authority (Direct Loan Subsidy) \1\...................... $3,003 $12,850 $20,000
Direct Loan Level \2\........................................... $6,660 $33,316 $52,521
Direct Loan Subsidy Rates \3\ (Percentage)...................... 45.09 38.57 38.08
----------------------------------------------------------------------------------------------------------------
\1\ For fiscal year 1997 and fiscal year 1998 these are upper limits. The actual mix between loans and other
forms of financial assistance will depend on the individualized needs of CDFI's as reflected in realistic
business plans, consistent with their ability to raise private matching funds in a comparable form.
\2\ For fiscal year 1997 and fiscal year 1998 these are upper limits, based on the assumed direct loan subsidy
rate.
\3\ The 45.5 percent subsidy rate for fiscal year 1996 that appears in the President's fiscal year 1998 Budget
should actually be 45.09 percent.
Performance Goal: To strengthen and expand the network of private
financial institutions to address the community development financing
needs of distressed urban and rural communities and underserved
populations.
----------------------------------------------------------------------------------------------------------------
Objective Performance measure (indicator) Type of measure
----------------------------------------------------------------------------------------------------------------
To increase the cumulative number Number of CDFI's which receive financial assistance from Output.
of CDFI's to which the Fund the CDFI Fund which have not previously received such
provides financial assistance assistance.
while maintaining high quality
standards and promoting diversity.
Cumulative number and percent of participating CDFI's by Output.
geographic region, institution type, urban v. rural
focus.
To implement a secondary market Issuance of regulations and Notification of Funding Output.
initiative to bring increased Availability (NOFA).
liquidity for CDFI's.
To implement effective training Number of participants in training and technical Output.
and technical assistance assistance programs.
initiatives which enhance the
capacity of CDFI's now and in the
future.
Number of CDFI's which report improved capacity as a Output and
result of participating in training and technical outcome.
assistance programs.
----------------------------------------------------------------------------------------------------------------
activity: 4. incentives for depository institutions
Functions: Through the Bank Enterprise Awards (BEA) Program, the
Fund makes cash awards to banks and thrifts that increase their
community development lending, investment, and provision of financial
services. The Fund will use up to one-third of program funds for BEA.
All insured banks and thrifts are eligible to participate.
Mission Statement: The BEA Program is intended to provide
incentives and rewards which assist traditional financial institutions
in prudently enhancing their activities in distressed urban and rural
communities, by direct lending and investing and also by investing in
CDFI's.
[In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------
1996 actual 1997 estimate 1998 estimate
----------------------------------------------------------------------------------------------------------------
Budget Authority................................................ 13,139 15,000 40,000
----------------------------------------------------------------------------------------------------------------
Performance Goal: To increase the general effectiveness and
community development impact of the Bank Enterprise Award (BEA)
Program.
----------------------------------------------------------------------------------------------------------------
Objective Performance measure (indicator) Type of measure
----------------------------------------------------------------------------------------------------------------
Simplify and reform regulation to Incremental and cumulative number of awards.............. Output.
improve program participation.
Reforms proposed......................................... Output.
Incremental and cumulative dollars awarded............... Output.
Develop and propose legislative Legislative improvements proposed........................ Output.
improvements to the program.
Expand the awareness of the BEA Implementation of effective outreach program to Outcome.
program by working with the appropriate regulatory entities, trade associations and
appropriate regulators and trade others as appropriate.
associations.
Number of applicants in program.......................... Output.
----------------------------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund Programs
federal funds
General and Special Funds:
For grants, loans and technical assistance to qualifying community
development lenders, and administrative expenses of the Fund,
$125,000,000, to remain available until September 30, 1999, of which
$20,000,000 may be used for the cost of direct loans, and up to
$1,000,000 may be used for administrative expenses to carry out the
direct loan program: Provided, That the cost of direct loans, including
the cost of modifying such loans, shall be defined as in section 502 of
the Congressional Budget Act of 1974: Provided further, That these
funds are available to subsidize gross obligations for the principal
amount of direct loans not to exceed $53,000,000: Provided further,
That not more than $40,000,000 of the funds made available under this
heading may be used for programs and activities authorized in section
114 of the Community Development Banking and Financial Institutions Act
of 1994.
Additional committee questions
Senator Bond. Thank you very much, Ms. Moy and Mr. Hawke.
[The following questions were not asked at the hearing, but
were submitted to the Institutions for response subsequent to
the hearing:]
Questions Submitted by Senator Bond
no track record and rushing the product
Question. The President's Budget is requesting a substantial
increase (150 percent in the funding for the CDFI Fund including the
CDFI program and the Bank Enterprise Act) from $50 million in fiscal
year 1997 to $125 million in fiscal year 1998, with an overall target
of $1 billion by fiscal year 2002. This is a substantial increase for a
new program, especially a new program without a proven track record or
any experience. How do you justify this large increase?
Answer. The requested increase in funding is justified by the great
demand and need for the types of assistance provided by the CDFI Fund.
The dramatic response to the CDFI Program during its first funding
round provides an illustration--and good proxy--of the demand and unmet
needs for the Fund's products. The Fund received 268 applications for
the CDFI Program from organizations in need of investment capital and
technical assistance. The requests for funding exceeded $300 million--
approximately 10 times the amount of resources initially made
available. The applicants that submitted requests represented only a
portion of the universe that are likely to be eligible for assistance.
Moreover, the Fund has received inquiries from a substantial number of
groups expressing interest in the formation of new CDFI's. Finally, it
should be noted that because of limited resources available to the
Fund, those applicants that received funding received, on average, only
60 percent of the amount requested.
CURRENTLY AVAILABLE FUNDING
Question. I understand that the CDFI Fund actually obligated
approximately $37.2 million for the CDFI program and approximately
$13.1 million for the Bank Enterprise Act (BEA) program. How much
additional funding does the CDFI Fund currently have available for
funding new awards during fiscal year 1997 and when does the CDFI Fund
plan to make this funding available?
Answer. For funding new awards during fiscal year 1997, the Fund
currently has available $95 million in appropriated funds. The Fund
recently published notices in the Federal Register for its second
funding rounds of the CDFI Program and the BEA Program (see Attachments
1a and 1b). The CDFI Program notices indicate that the Fund intends to
make available up to $40 million for this program which is expected to
be fully obligated by September 30, 1997.
By the summer, the Fund plans to issue funds availability notices
for funding rounds for training (authorized pursuant to Section 103 of
the Riegle Community Development and Regulatory Improvement Act of 1994
(Public Law 103-325)) and for a secondary market initiative (authorized
pursuant to Section 119 of the Riegle Community Development and
Regulatory Improvement Act of 1994) totaling approximately $20 million.
The Fund anticipates obligating the funds for these two new initiatives
by the end of calendar year 1997.
As required by the Fund's authorizing statute, one-third of all
appropriated program monies must be made available under the BEA
Program. Thus, the Fund must make available $30 million for the BEA
Program. On March 7, 1997, the Fund published a notice in the Federal
Register announcing the availability of $16.25 million for the second
funding round of the BEA Program. However, if requests exceed $16.25
million during the second funding round, the Fund intends to obligate
as much of the $30 million as possible by September 30, 1997. The
balance of the unobligated BEA monies will be rolled over into next
funding round which is expected to be announced in the Federal Register
in October 1997.
Question. In addition, the testimony seems clear that not a single
dollar of the $37.2 million in CDFI program funds have actually been
obligated or leveraged on a single project or activity. If this is
true, how do you measure the success of the CDFI program for which
there is not data?
Answer. The Fund has obligated $37.2 million in equity investments,
grants and loans under the CDFI Program and disbursed or initiated
disbursements of $13.6 million--or 37 percent--of such obligated funds.
The Fund expects to disburse nearly all of its fiscal year 1995 monies
by September 30, 1997. The Fund is working diligently to disburse the
remaining awards as expeditiously as possible after the Fund and each
awardee enters into a formal agreement that requires the institution to
comply with performance goals that are rigorous and tailored to the
unique elements of the institutions and the needs of the communities
they serve and abide by other terms and conditions pertinent to the
award. The requirements for the formal agreement are set forth in
Section 108(f)(2) of the Riegle Community Development and Regulatory
Improvement Act of 1994. As discussed the Fund recently published
notices in the Federal Register for the CDFI Program and the BEA
Program announcing the availability of funding rounds for fiscal year
1996 and fiscal year 1997 appropriated dollars most of which it expects
to obligate by September 30, 1997.
Some data currently exists that allows the Fund to measure the
success of the CDFI Program. For example, the CDFI Program has already
demonstrated a significant ability to leverage funds from non-Federal
sources. More than $50 million of such matching money has already been
raised and received by the 32 organizations selected for funding in the
first funding round of the Program. This money has, in turn, leveraged
additional funds and resulted in a total of over $100 million raised
and made available to finance community development activities. In
several cases, actual development transactions have already occurred.
For example, one of our awardees reports that the Fund's $3 million
grant has already enabled it to effectuate $24 million in home mortgage
and commercial lending transactions. Over the next two to three years,
the $37.2 million in CDFI Program awards are expected to leverage three
to four times that amount in total capital raised for these
institutions.
Question. In addition, how many grant agreements have actually been
signed or entered into under the CDFI program? Please provide a list
that describes each grant, each grant agreement, and the date on which
the grant agreement was signed or executed, and the date and amount of
the disbursement of any funds. Please list each BEA award by award,
date of award and by activity.
Answer. The Fund enters into an Assistance Agreement with each
awardee prior to providing any assistance to such awardee. The Fund may
provide assistance in the form of an equity investment, deposit, loan,
grant, technical assistance, or some combination of these instruments.
To date, the Fund has entered into ten Assistance Agreements with
awardees under the CDFI Program. Under the BEA Program, the Fund must
enter into an Award Agreement with each awardee prior to providing an
award to such awardee. All awards are in the form of a grant under the
BEA Program. To date, the Fund has entered into Award Agreements with
all of the 38 institutions selected to receive assistance under the BEA
Program. Please see Attachments 2a and 2b which describe each form of
assistance provided under the CDFI Program, the date on which each
Assistance Agreement was executed, the amount of disbursement of each
CDFI Program award and each Bank Enterprise Award, the date on which
each Bank Enterprise Awardee Agreement was executed, the amount of
disbursement of each Bank Enterprise Award, and the activities for
which such award was granted.
SUCCESS OR FAILURE OF THE CDFI PROGRAM
Question. When will there be enough data and program experience to
analyze the strengths and weaknesses and the successes and failures of
the CDFI program? What benchmarks have you established for analyzing
the use of CDFI program funds? What steps have you taken for program
integrity to prevent fraud and abuse by CDFI program grantees? Has the
CDFI Fund established post-award audit review requirements for each
CDFI grant? If not, why not?
Answer. The Fund will collect financial and performance data from
CDFI Program awardees on a quarterly and annual basis. This information
will be compiled and reported to Congress as part of the Fund's annual
report. The Fund is taking great care to design and implement the
systems and procedures necessary to effectively monitor and evaluate
the use of its assistance, impact of its investments, and the financial
and managerial soundness of the organizations it funds. To this end,
the Fund requires awardees to report at least annually on the manner in
which Fund assistance has been used. The Fund negotiates with each
award winner specific performance goals and financial soundness
covenants for non-regulated financial institutions. In this manner, the
Fund attempts to ensure program integrity and prevent fraud and abuse
by awardees.
In addition, the Fund has worked closely with the Treasury
Department's Office of Inspector General and has sought the assistance
of consultants in developing its internal quality control systems and
procedures.
The Fund's Assistance Agreements with each unregulated CDFI awardee
requires such awardees to submit audited financial statements to the
Fund each year. In the case of regulated institutions, the Fund
requirements seek to conform, to the greatest extent possible, with the
financial reporting requirements of each awardee's Federal regulatory
agency.
LEVERAGING OF FUNDS
Question. What are the yardsticks used to determine whether a CDFI
grant applicant can leverage other funds successfully? What do you look
for in a CDFI grant applicant in assessing the ability of the grant
applicant to meet the needs of a distressed community successfully
(i.e. Do you look for roots in a community? Do you look for a track
record of community development experience? Do you look for a firm
commitment of funds?)
Answer. CDFI Program awardees are required to raise a one-to-one
match for each dollar of funds requested. Applicants must submit
evidence of their ability to leverage such matching monies as part of
their application for assistance. Firm commitments are the best
evidence of such ability, but other factors such as strength of the
applicant's fund raising strategy and track record are also considered.
However, the Fund will not disburse any assistance until the requisite
matching funds are raised. The selection criteria provide that the Fund
give additional consideration to applicants that have firm commitments.
The CDFI Program Regulations, at 12 C.F.R. Sec. 1805.902, state that
``at a minimum, a firm commitment must consist of a binding written
agreement between an Awardee and the source of the matching funds that
is conditioned only upon availability of the Fund's assistance and
other such conditions as the Fund, in its sole discretion, may deem
appropriate. Such agreement must provide for disbursal of the matching
funds prior to, or simultaneous with, receipt by the Awardee of the
Federal funds.''
The matching funds represent only the initial leverage resulting
from a CDFI Program award. Applications are evaluated, in part, by
evaluating the potential for ongoing sources of funds that will be
leveraged by the Fund investment. Potential sources of leverage include
any excess match over the minimum required match, leverage of net worth
infusion through borrowing and recycling of loan funds, and attraction
of additional investment into specific deals to be financed by the
CDFI.
The Program's evaluation criteria are designed to ensure that
Federal resources are invested prudently and in a manner that maximizes
the potential of investing in organizations with long-term viability
that will serve their communities on a long-term self-sustaining basis.
CDFI awardees are selected based on track record, management capacity,
skills and experience, quality of the business plan, ability to raise
matching funds, and community development impact.
REVIEW PROCESS AND REVIEWERS
Question. What is the review process for applications for CDFI
program funding? What is the specific criteria used for assessing
applications? Describe the scoring/ranking system used for reviewing
the applications. Was the criteria applied consistently and uniformly
for all applications?
What was the review process for the CDFI program applications?
Answer. The review process used to select CDFI award recipients in
the first funding round was described in the regulations and applicable
notice of funds availability notice (see Attachment 3), published in
the Federal Register on October 19, 1995. The regulations and notice
did not prescribe a scoring/ranking system for evaluating applications;
instead those documents set forth a process similar to an investment
analysis methodology utilized by private sector investors. CDFI award
recipients were chosen on the basis of a wide range of factors
including track record, management capacity, skills and experience,
quality of the business plan, ability to raise matching funds, and
community development impact. These criteria were applied fairly and
consistently to all applicants.
Winners were chosen as a result of a tiered review process. In an
effort to conduct the review in an efficient manner, the Fund conducted
different ``tiers'' of the process simultaneously. Tier 1 of the review
process was intended to ensure that each applicant met the eligibility
requirements and submitted complete application materials. Tier 2 of
the review process was intended to ensure that each applicant meeting
the Tier 1 requirements possessed the financial and organizational
capacity to be a successful CDFI. The Fund actually performed each Tier
2 review as part of a Tier 3 review since each factor under Tier 2 was
thoroughly examined under Tier 3. Tier 3 of the review process
considered additional factors and ultimately resulted in the selection
of award winners.
The selection criteria listed in the regulations were also
reflected on the guidance sheet given to contractors and Fund staff
that performed the qualitative reviews of applications (see Attachment
4). The evaluation process and criteria aimed to ensure that the Fund
invested prudently in a manner that maximized the potential of
investing in organizations that could continue to provide capital in
their communities on a long-term self-sustaining basis. As part of the
Tier 3 review, 59 organizations were determined to be sufficiently
competitive to be invited by the Fund for an interview with the final
review panel. Of those interviewed, 32 were selected to receive an
award. In conducting the reviews, the Fund used permanent staff, as
well as outside experts, to supplement and complement internal staff.
On April 4, 1997, the Fund published revisions to its interim
regulations in the Federal Register that made modest changes to the
review process (see Attachment 5). Sections 1805.800 through 1805.802
of those regulations outline the evaluation and selection process.
Without eliminating any of the evaluation factors, the revised interim
rule restructures the process of evaluating applications described to
expedite the process and improve efficiency.
The current revised interim rule consolidates what had been Tier 2
(financial and organizational capacity) and Tier 3 (other qualitative
criteria) reviews into one set of substantive review criteria. However,
the selection criteria originally set forth on October 19, 1995, are
retained. The current regulations clarify that the criteria to be
considered include the quality of the applicant's business plan and the
extent and nature of the applicant's potential community development
impact that will be catalyzed relative to the amount of assistance to
be provided by the Fund. While ensuring fairness and consistency, the
Fund will seek to implement the evaluation and selection process in a
manner that takes into consideration the unique characteristics of
applicants that vary by organizational type, total asset size, and
stage of organizational development.
UNBIASED AWARD STRUCTURE
Question. What safeguards have the CDFI Fund implemented to ensure
an unbiased grant award system? For example, have any of the reviewers
or panel reviewers for the CDFI program ever been employed by any of
the applicant organizations or their affiliates or ever sought or
maintained client relationships with such organizations? If yes, please
provide details including the names of individuals, organizations and
the dates of the affiliation or the employment.
Answer. The CDFI Fund established a selection process with respect
to all CDFI Program applications that was unbiased, fair, thorough and
rigorous and included safeguards to ensure that no one person possessed
a dispositive influence over which entities were chosen as winners. All
Awardees under the CDFI Program were chosen by a unanimous decision of
a panel composed of five people. The CDFI Fund evaluated factors
including track record and financial strength; capacity, skills and
experience of the management team; quality of the applicant's business
plan; ability to raise non-federal matching funds; and community
development impact.
The CDFI Fund staff and outside contractors were used in the
initial review stage, with each contractor reviewing one or two groups
of applications, with groups defined on the basis of type of
organization (and in some cases, further defined by region of the
country). The tasks for these reviewers during the initial review stage
was to review each application carefully in order to make
recommendations about those applications that were potentially
competitive and therefore should be given further consideration by the
second-stage review panel.
The second-stage review panel reached all of its decisions
unanimously. This review panel made evaluations, performed due
diligence, and unanimously determined which applicants would receive
assistance. The decisions of the second-stage review panel were subject
to the approval of the CDFI Fund Director.
The Fund's Deputy Director, Steve Rohde, was an employee of the
Local Initiatives Support Corporation (LISC), an award recipient, prior
to joining the Fund. Mr. Rohde has not had any financial interest in
LISC since leaving his position with the organization. Like all other
CDFI Program winners, LISC was chosen as a result of a rigorous
selection process in which no one person had dispositive influence. The
review panel that ultimately selected LISC as a winner made a unanimous
decision with respect to LISC and all other winners.
Prior to joining the CDFI Fund, the CDFI Fund Director Kirsten Moy
served as a member of an advisory committee in connection with the New
York activities of the Low Income Housing Fund, a CDFI Program winner.
As a volunteer advisor, Ms. Moy was not compensated for her service on
the committee.
The Deputy Director of the CDFI Fund, in consultation with
individual reviewers, identified actual and potential conflicts of
interest that reviewers had with respect to any applications, and the
Deputy Director made the determination that a particular set of facts
could lead to a conflict and, therefore, prevented an expert from
reviewing a particular application, as follows:
(a) Dan Lopez was a member of the Board of Directors of the Low
Income Housing Fund and was not assigned that application.
(b) James Paquet was on a detail from the State of Michigan to the
CDFI Fund under the Intergovernmental Personnel Act. Mr. Paquet was not
assigned any applications from Michigan. Instead, he was assigned a
group of applications consisting of business loan funds in the
Northeast region.
(c) In the early to mid 1980's, Laura Henze Russell had been
Executive Director of an organization now known as the Local Enterprise
Assistance Fund, based in Boston. Ms. Russell was not assigned the
application of Local Enterprise Assistance Fund. She was assigned a
group of applications consisting of business loan funds from the
Midwest and West regions.
(d) Fredric Cooper formerly worked for The Enterprise Foundation,
which had a relationship with the San Antonio Housing Trust Foundation,
an applicant. Enterprise Foundation was not an applicant. Mr. Cooper
was assigned a group of housing loan funds from the Northeast and
Midwest.
(e) Alan Okagaki had been an employee and subcontractor of
Shorebank Advisory Services and a consultant to Southern Development
Bancorporation. After an initial look at the Albina Community Bancorp
application Mr. Okagaki informed the CDFI Fund that there was
significant material in that application that Mr. Okagaki recognized as
having been previously prepared by Shorebank Advisory Services. He was
excluded from reviewing the applications of Shorebank Corporation,
Douglass Bancorp, Louisville Development Bancorporation, Southern
Development Bancorporation, and Albina because Shorebank Advisory
Services had had a consulting relationship with these institutions.
(f) In the second stage review panel, Paul Pryde, who did not
participate in the initial stage review, recused himself from two
applications, McAuley Institute and Community Bank of the Bay, because
of an appearance of a conflict.
GRANT REVIEWS
Question. Did the CDFI Fund accept revisions to applications from
certain applicants? What rules did the CDFI Fund establish with regard
to revisions to ensure a fair process for all CDFI applicants? If
revisions were permitted for any grant application, please provide the
details of each revision, including all dates and contacts between the
CDFI fund and the applicant?
Answer. The Fund does not accept revisions to applications from any
applicants. The Fund's regulations, at 12 C.F.R. Sec. Sec. 1805.700 and
1806.206, provide that the Fund ``may request clarifying or technical
information'' with respect to any application submitted to the CDFI or
BEA Program, respectively. Consequently, when the Fund determines that
it is appropriate and necessary for its decision making, it requests
clarifying or technical information from applicants.
In addition, the Fund accepts from all applicants supplemental
information that updates previous submitted material or otherwise
informs the Fund of changes in information previously submitted.
Question. Did any reviewer or panel reviewer provide assistance to
any of the applicants or their representatives with respect to the
preparation or revision of any part of an application or for
supplemental information provided to or requested by the CDFI Fund? If
yes, please provide the date and details of each occurrence.
Answer. The Fund or its reviewers did not provide assistance to any
of the applicants or their representatives with respect to the
preparation or revision of any part of an application or for
supplemental information provided to or requested by the Fund. Section
105(c) of the Riegle Community Development and Regulatory Improvement
Act of 1994 (Public Law 103-325) states that
[t]he Fund shall provide an outreach program to identify and
provide information to potential applicants and may provide
technical assistance to potential applicants, but shall not
assist in the preparation of any application.
Accordingly, the Fund provided an outreach program to applicants.
Such outreach was accomplished through workshops, publications and
other means and included general information about the Fund's programs
and their requirements. The Fund provided outreach services to all
interested parties on an equal basis.
FEDERAL REGISTER
Question. On March 18, 1996, the CDFI Fund published in the Federal
Register a waiver of the deadline for receipt of an application under
the CDFI and BEA programs for certain applications. What was the nature
and reason for this waiver? Please provide a detailed list describing
all application materials and information which were received by the
CDFI Fund between the original deadline of January 29, 1996 at 4:00
p.m. and March 13, 1996.
Answer. On March 18, 1996, the Fund published a waiver in the
Federal Register of its January 29, 1996, 4 p.m., application deadline
for the CDFI and BEA Programs. The Fund determined it would accept an
application if: (1) the application was actually received by the Fund
on January 29, 1996; (2) the application was mailed with a postmark
date on or before January 29, 1996; or (3) the application was
delivered to a professional courier service on or before January 29,
1996. This waiver was based on the determination that such waiver
promoted the achievement of the purposes of the CDFI Program and the
BEA Program and their underlying statutes. Several factors contributed
to the Fund's determination to grant this waiver. First, in the first
year of implementation of these programs, it was determined to be in
the Fund's interest to seek the broadest possible participation.
Second, preparing an application required an extensive amount of work
which, without the waiver, might have gone to waste merely because of a
technical failure in the mail or delivery process. Third, given the
fact that these programs are new, and some of the applicants had never
previously applied to the Federal government for funding, there
appeared to have been some confusion about the precise requirements for
delivery of an application in a timely fashion. Finally, the effect of
the requirement that the Fund be in receipt of an application by a
specified time appeared to have had a disproportionate effect on
applications from geographically remote places. Thus, strict
enforcement of the deadline could have hindered the Fund in achieving
its geographic diversity objectives. See Attachment 6 for a list of
items accepted between January 29, 1996, 4 p.m., and March 13, 1996.
FUTURE FUNDING
Question. When will the CDFI Fund announce the next round of
funding? You appear to be 4 to 5 months behind the schedule of your
first round.
Answer. On March 7, 1997, the Fund published a Notice of Funds
Availability for the second round of the BEA Program (see Attachment
1b). On April 4, 1997, the Fund published Notices of Funds Availability
in connection with the CDFI Program (see Attachments 1a).
financial safety and soundness requirements
Question. How will CDFI entities be regulated to ensure that CDFI
funds are being used appropriately and that these entities will not
pose a financial risk to the American taxpayer. What happens to a
financially troubled CDFI?
Answer. CDFI Program awardees are required to comply with numerous
federal requirements and reporting mandates that are intended to
protect the taxpayers' interest. In the event that an awardee does not
comply with the aforementioned requirements, the CDFI Fund has a range
of remedies that it may employ. These mandates or requirements include:
(1) Compliance with government requirements including all Federal,
state and local laws, regulations, ordinances, applicable Office of
Management and Budget Circulars, and applicable Executive Orders;
(2) Mandatory reporting to the U.S. Department of the Treasury
Inspector General of the existence or apparent existence of fraud,
waste or abuse of Federal assistance;
(3) Provision of financial and activity reports, records,
statements, and documents as may be requested to ensure compliance with
the assistance agreement. An Awardee is required to provide full and
free access to its officers and facilities and all books, documents,
records, and financial statements relating to the use of assistance;
(4) Compliance with all record retention requirements set forth on
OMB Circular A-110 and, pursuant to such Circular, retention of all
financial records, supporting documents, and statistical records
pertinent to the assistance;
(5) Maintenance of records necessary to disclose the manner in
which assistance provided is used and demonstrate compliance with the
requirements of the CDFI Program regulations and the assistance
agreement;
(6) Submission of quarterly reports after the end of each fiscal
quarter in a form that is prescribed by the CDFI Fund in the assistance
agreement;
(7) Submission of an annual report that includes, among other
things, information regarding the manner in which assistance or
matching funds were used, financial condition and financial
performance, activities and initiatives engaged in which enhance the
awardee's ability to promote community development, the awardee's
strategy for achieving its performance goals or enhancing its financial
performance, and the ethnic, racial or gender composition of its
borrowers or investees;
(8) Compliance with the Equal Credit Opportunity Act, where
applicable; and
(9) Compliance with restrictions on certain insider activities.
DISPLACING BANKS
Question. There has been some concern that CDFI's could indirectly
discourage more traditional financial institutions may not feel welcome
or may conclude that their presence is not needed. Couldn't this result
in isolating distressed communities even more from access to mainstream
financial resources and opportunities for economic revitalization? How
are you monitoring this concern?
Answer. The roles of CDFI's and traditional financial institutions
are mutually reinforcing. CDFI's are not a substitute--and should not
be considered a replacement--for traditional financial institutions.
CDFI's complement the strong and active role that banks and thrifts
should play in providing credit within distressed communities. CDFI's
are specialized, private financial institutions that fill niches that
traditional financial institutions cannot fill--or will not fill on
their own. The credit needs in distressed communities are often unique
and require innovative solutions. CDFI's are distinct from traditional
financial institutions because they have developed specialized
expertise in delivering certain types of credit--such as micro loans,
financing day care or public health care facilities, or financing
housing for people with AIDS or other special needs. In many
communities, CDFI's have pioneered innovative new products that were
later adopted by local banks or developed partnerships with banks to
address unique local needs. For example, many microenterprise programs
work with low income entrepreneurs that have credit problems or that
don't meet standardized underwriting criteria. In these cases, the
micro enterprise programs work with these individuals to build their
business skills and history as credit-worthy business borrowers. After
the borrowers have developed a track record, they are often
``graduated'' to become borrowers of traditional financial
institutions. Many traditional financial institutions see their
partnerships with CDFI's as a vehicle to reach into markets that they
could not otherwise reach. In fact, the CDFI Fund's Bank Enterprise
Award Program recognizes the importance of these relationships and is
designed to foster partnerships between CDFI's, as well as promote
increasing lending and service provision within very distressed
neighborhoods. (Attachment 7 describes the impact and activities
generated by the BEA Program.) In summary, CDFI's help to integrate--
not isolate--distressed communities into the economic mainstream.
draining of existing economic development resources
Question. There is often a concern that there is only so many
dollars in the private market available for economic development and
affordable housing resource. Since there are such expectations for the
CDFI program to leverage significant non-federal funds, has there been
any review of where this capital is coming from, and whether it is
likely to be drained from other funding sources traditionally used for
community development and housing projects?
Answer. The vast majority of matching funds received by assisted
CDFI's are from private sector sources of capital. Of the 31
organizations selected to receive CDFI assistance, 72 percent derived
all of their matching funds from private sources (e.g. banks,
corporations, foundations, individuals) and 19 percent derived between
99 percent and 70 percent of their matching funds from private sources.
Only three awardees raised less than 70 percent of their matching
monies from private sources.
BANK ENTERPRISE ACT
Question. The Bank Enterprise Act (BEA) has been implemented as a
separate account under the CDFI Fund. Under BEA, traditional financial
institutions are encouraged through BEA awards to invest, lend and
provide other financial services in distressed communities. Isn't it
better to encourage through the BEA the availability of traditional
financial services and credit in distressed communities than to
establish a new and separate banking system for these communities?
Answer. CDFI's and traditional financial institutions both play
complementary and important roles in serving the credit and financial
service needs of distressed communities. In fact, the CDFI Program and
BEA Program were crafted by Congress to work together. Specifically,
the CDFI Program requires award recipients to obtain matching funds
from non-Federal sources and permits monies committed by banks and
thrifts under the BEA Program to assist in meeting that match. In
addition, under the BEA Program, banks and thrifts that provide support
to CDFI's are given priority consideration for BEA funding. Hence, the
CDFI Program and the BEA Program are both critically important to
improving access to credit and promoting revitalization and deserve
support. Please also see answer to Question 12.
STAFFING NEEDS
Question. Please describe your staffing needs for administering the
CDFI program. Since there are so many types of entities and activities
involved, how will you ensure program integrity?
Answer. The CDFI Fund is in the process of adding staff in certain
critical areas to ensure that key functions are and/or will be
adequately covered. Among these critical areas are program operations,
finance and administration, and awards management. The CDFI Fund is
seeking to hire an individual to oversee these areas as its Deputy
Director for Operations/Chief Financial Officer. In addition, the CDFI
Fund plans to hire, among other professional and technical staff, the
following in each of these areas: program operations--a program manager
who will focus exclusively on the CDFI Program and possibly someone to
manage the CDFI Fund's training and technical assistance initiatives;
finance and administration--a comptroller as well as a staff
accountant; awards management--an award administrator and possibly a
portfolio analyst.
GOVERNMENT PERFORMANCE AND RESULTS ACT
Question. What are you doing to comply with the Government
Performance and Results Act? What is your timetable to develop your
goals, strategic plan, performance measures and outcomes?
Answer. In the implementation of GPRA, the CDFI Fund is ahead of
schedule for compliance. Although the first annual performance plan is
not due until fiscal year 1999, the CDFI Fund submitted its first plan
as part of the fiscal year 1998 budget justification which included
performance goals, measures and outcomes--a year ahead of schedule. It
is the policy of the Department of the Treasury to integrate the annual
performance plan with the annual budget justification.
In regards to the 5-year strategic plan, the CDFI Fund intends to
have a final draft of the 5-year strategic plan in the coming weeks and
looks forward to consultations with Congress and other stakeholders in
developing a final plan. The CDFI Fund plans to submit its 5-year
strategic plan to the Department and OMB in the near future. The CDFI
Fund looks forward to utilizing this important tool to measure the
impact and effectiveness of its programs.
CRITERIA FOR SELECTING CDFI'S
Question. The testimony indicates that a wide variety of CDFI's--
new, old, rural, urban--have been awarded assistance under this
program. What were the most critical criteria used for selecting CDFI's
for assistance? What is the most common weakness in an application for
denying CDFI assistance?
Answer. The key evaluation criteria used for selecting CDFI's for
assistance include track record and financial strength; capacity,
skills, and experience of the management team; quality of the
applicant's business plan; ability to raise non-Federal matching funds;
and community development impact. Attachment 8 discusses factors that
tend to separate successful from unsuccessful applicants in the first
funding round. Through the review process, the CDFI Fund found a wide
variety of institutions working to serve the community development
finance needs of their communities. These institutions are diverse in
type (banks, credit unions, non-profit loan funds, microenterprise loan
funds, venture capital organizations, lending consortia, and others),
the types of communities they serve (urban, rural, Native American),
the types of products and services they provide (small business loans
and equity investments, housing loans, community facility loans,
training and technical assistance, and others), and, finally, their
strategies for promoting economic opportunity and revitalization.
What these organizations have in common, however, is a deep
commitment to serve their communities by building stronger local
markets and catalyzing new economic activity; leveraging resources of
private, public and non-profit sectors; building linkages with the
financial services industry; and developing viable, self-sustaining
financial institutions.
Common problems shared by these institutions include: (1)
difficulties in raising investment capital to support their activities
because, in part, their returns may not be as high as some other
private sector investment opportunities; and (2) the need to develop
further their institutional capacity to expand their activities within
the needy communities they serve. In evaluating applicants that were
best poised to make the greatest community impact, the CDFI Fund
observed several critical factors, including good management; the
importance of strategic assessment and planning in charting an
institution's activities; having sufficient net worth and a capital
structure appropriate to the nature of the activities the institution
is engaged in; the existence of well-functioning internal financial
systems; and a solid portfolio review system for managing risk.
______
Attachment 7
profiles of the first round awardees under the bank enterprise award
program
community impact of the bank enterprise award program
The Bank Enterprise Award Program (the ``BEA Program'') was
designed to provide incentives to insured depository institutions
(banks and thrifts) to invest in community development financial
institutions (CDFI's) and to increase their lending and provision of
financial services in economically distressed communities throughout
the nation.
Awards are determined based on the increase of eligible activities
between two designated six-month evaluation periods. To ensure
appropriate use of limited Federal resources, awards are disbursed only
after the activities proposed by the institutions have been completed.
Collectively, the bank and thrift awardees have provided nearly $66
million in support to CDFI's and $60 million in new lending and
financial services in economically distressed communities. The
activities for which each of the institutions received an award are
described in the following profiles.
There are no statutory or regulatory restrictions or requirements
on institutions with respect to the use of their BEA award dollars
after the completion of proposed activities. The CDFI Fund is happy to
report that the vast majority of the institutions receiving awards in
the first round have indicated that they plan to use their awards to
expand their existing community development work. These activities
would enhance the impact of the BEA Program and are described in the
profiles.
Bank of America Community Development Bank, Walnut Creek, California
Award: $1,585,510
Rewarded activities.--Bank of America Community Development Bank
was awarded $1,585,510 for increasing its commercial real estate,
multi-family housing, and business lending in distressed communities
across California. The bank made nearly $25 million in loans in
targeted neighborhoods. Bank of America Community Development Bank
projects that its activities will generate more than 185 units of
affordable housing and 300 jobs.
Post award activity.--Bank of America Community Development Bank,
together with Bank of America, F.S.B., has pledged to invest its entire
combined award back into the community. $1.1 million of their award
money has been used to establish the Bank of America Leadership
Academy, a nine-month program that provides training for senior
management of community development organizations. The Leadership
Academy is funded jointly by Bank of America Community Development
Bank, Bank of America, F.S.B., and the Local Initiatives Support
Corporation (a certified CDFI and a 1996 CDFI Program awardee); it is
conducted by the Development Training Institute. The Academy is
expected to run for three years and train 105 leaders of community
organizations across the nation. An additional 20 percent of the
combined awards will go to the Low Income Housing Fund, a certified
CDFI and a 1996 CDFI Program awardee which provides loans for very low-
income housing development across the country. Bank of America
Community Development Bank is currently considering the designation of
the balance of its award.
Bank of America, F.S.B. Portland, Oregon
Award: $521,735
Rewarded activities.--Bank of America, F.S.B. was awarded $521,735
for increasing its commercial real estate and business lending in
targeted neighborhoods in Denver, Las Vegas, and San Antonio. The Bank
made nearly $6.2 million in loans in needy communities. Bank of
America, F.S.B. projects that this activity will create or retain more
than 150 jobs.
Post award activity.--Bank of America, F.S.B., together with Bank
of America Community Development Bank, has pledged to invest its entire
combined award back into the community. $1.1 million of their award
money has been used to establish the Bank of America Leadership
Academy, a nine-month program that provides training for senior
management of community development organizations. The Leadership
Academy is funded jointly by Bank of America Community Development
Bank, Bank of America, F.S.B., and the Local Initiatives Support
Corporation, a certified CDFI and a 1996 CDFI Program awardee; it is
conducted by the Development Training Institute. The Academy is
expected to run for three years and train 105 leaders of community
organizations across the nation. An additional 20 percent of the
combined awards will go to the Low Income Housing Fund, a certified
CDFI and a 1996 CDFI Program awardee which provides loans for very low-
income housing development across the country. Bank of America, F.S.B.
is currently considering the designation of the balance of its award.
Bank of America, Illinois, Chicago, Illinois
Award: $514,815
Rewarded activities.--Bank of America, Illinois was awarded
$514,815 for increasing its affordable housing and small business
lending activity in distressed communities on the near north, west and
south sides of Chicago. The bank also made loans of nearly $3.7 million
to Neighborhood Housing Services (NHS) of Chicago, Community Investment
Corporation (CIC), and the Illinois Facilities Fund (IFF), all
certified CDFI's. The bank's loan to NHS will be used to finance home
improvement loans to low- and moderate-income homeowners in distressed
neighborhoods. The loan to CIC will be used to finance multi-family
apartment buildings in low- to moderate-income communities. The bank's
loan to IFF will be used to support mortgages to non-profit social
service agencies.
Post award activity.--Bank of America, Illinois is using $150,000
of its award to make grants to low- and moderate-income home-buyers for
downpayment assistance. In addition, the bank made $155,000 in grants
to NHS, CIC, and IFF, and the Southland Community Development
Corporation, a new loan fund in the Chicago area. The bank has also
made available a total of $75,000 in grants to smaller community
organizations--in particular, those focused on affordable housing,
economic development, and education of disadvantaged youth. The bank
will also make available grants up to $500 to community organizations
nominated by bank employees.
Bank of Louisville, Louisville, Kentucky
Award: $15,000
Rewarded activities.--Bank of Louisville was awarded $15,000 for
making an equity investment of $100,000 in the Louisville Development
Bancorp. The Louisville Development Bancorp is a newly-established
community development bank corporation and a certified CDFI that seeks
to revitalize the Louisville Enterprise Community and surrounding
neighborhoods.
Post award activity.--Bank of Louisville plans to use its award to
benefit the Louisville Development Bancorp in the form of a grant to
its non-profit subsidiary.
Central Bank of Kansas City, Kansas City, Missouri
Award: $99,869
Rewarded activities.--Central Bank of Kansas City was awarded
$99,869 for increasing its deposit-taking activities and consumer and
commercial real estate, housing, and business loans in distressed
neighborhoods. During the first six months of 1996, this bank provided
more than $8.3 million in loans and services. In addition to
facilitating neighborhood redevelopment through its single- and multi-
family housing activities, the bank made a significant loan to help a
major manufacturer and employer remain in the community.
Post award activity.--Central Bank of Kansas City is using its
award to finance revitalization efforts in its neighborhood, which
includes the distressed community designated in its BEA application.
These efforts are focused on home improvement and rehabilitation
lending. The award is, in part, being used to finance the
rehabilitation of a former drug house in the neighborhood. The bank's
$70,000 loan to a non-profit group at a concessionary interest rate
accounts for 70 percent of the financing for this project. The bank
expects to use the returns from this loan for other community
development activities.
The Chase Manhattan Bank, New York, New York
Award: $2,699,625
Rewarded activities.--The Chase Manhattan Bank was awarded
$2,699,625 for making nearly $18 million in investments in 14
organizations that finance community development. The organizations
receiving assistance are Low-lncome Housing Fund, Greater Jamaica Local
Development Company, Community Loan Fund of New Jersey, Capital
District Community Loan Fund, Nonprofit Facilities Fund, Leviticus
25:23 Alternative Fund, Bethex Federal Credit Union, Lower East Side
People's Federal Credit Union, New Community Federal Credit Union,
Homesteaders Federal Credit Union, BHA Residents Community Development
Federal Credit Union, Central Brooklyn Federal Credit Union, Parodneck
Foundation, and Enterprise Social Investment Corporation.
Post award activity.--The Chase Manhattan Bank is using its award
to make grants to CDFI's in its service area through its CDFI Support
Program. These grants can be used for capital and operating expenses
and to serve as matching funds for CDFI's applying to the CDFI Program.
Citibank F.S.B. California Marketplace, San Francisco, California
Award: $412,270
Rewarded activities.--Citibank F.S.B. California Marketplace was
awarded $412,270 for increasing its multi-family housing lending in a
distressed neighborhood by more than $5.1 million. Citibank's efforts
focused on financing two multi-family projects in Los Angeles developed
by FAME Housing Development Corporation, a non-profit affiliate of the
First African Methodist Church. Citibank also provided technical
assistance to FAME Housing in structuring these transactions.
Post award activity.--Citibank F.S.B. has established a loan pool
with its award. This pool will loan funds at concessionary terms to
community organizations for initiatives such as affordable housing and
childcare centers in low-income communities.
Citibank N.A., New York, New York
Award: $227,250
Rewarded activities.--Citibank N.A. was awarded $227,250 for
providing investments totaling $1,515,000 to 13 organizations serving
distressed communities throughout the United States. The organizations
receiving investments are ACCION New York, ACCION Texas, Chicago
Community Loan Fund, FINCA, Florida Community Loan Fund, Illinois
Facilities Fund, Institute for Community Economics, Leviticus 25:23
Alternative Fund, Low-Income Housing Fund, McAuley Institute, New
Jersey Community Loan Fund, Nonprofit Facilities Fund, Northern
California Community Loan Fund, Washington Area Community Investment
Fund, and the National Federation of Community Development Credit
Unions.
Post award activity.--Citibank N.A. is using its award for
activities that help build the capacity and skills of CDFI's. Among
these activities is a grant to the National Association of Community
Development Loan Funds to launch a series of courses for CDFI staff and
board members.
City National Bank of New Jersey, Newark, New Jersey
Award: $162,065
Rewarded activities.--City National Bank of New Jersey was awarded
$162,065 for increasing its lending commitments in distressed
neighborhoods by nearly $2 million. In the first six months of 1996,
the bank committed loans totaling $3,367,000 to consumers and for
commercial real estate, single-family housing, multi-family housing,
and small businesses. City National Bank of New Jersey is a minority-
owned national bank.
Post award activity.--City National Bank of New Jersey has not yet
determined the use of its award. Currently, City National Bank of New
Jersey is applying in the second round of the BEA Program for its
increased loans for the purchase and renovation of one- to four-family
homes.
Coast Federal Bank, West Hills, California
Award: $149,709
Rewarded activities.--Coast Federal Bank was awarded $149,709 for
providing loans, grants, and technical assistance to the Clearinghouse
CDFI and Los Angeles Neighborhood Housing Services. These CDFI's both
promote the development of affordable housing in distressed
neighborhoods throughout Southern California.
Post award activity.--Coast Federal Bank is using its award as a
reserve fund for affordable housing loans and is further supporting
affordable housing in Southern California through its close
relationships with the Clearinghouse CDFI and Los Angeles Neighborhood
Housing Services. Bank officials serve on the governing board of each
of the CDFI's; the bank has helped in fundraising and has made
operating grants and in-kind contributions to each. Additionally, the
bank is encouraging other financial institutions to support CDFI's by
disseminating information about the BEA Program.
Cole Taylor Bank, Wheeling, Illinois
Award: $115,500
Rewarded activities.--Cole Taylor Bank was awarded $115,500 for
making $1,050,000 in loans to the Illinois Facilities Fund (IFF) and
Chicago Community Loan Fund (CCLF), both certified CDFI's. IFF makes
real estate loans to non-profit social service agencies. The proceeds
from Cole Taylor Bank's loan to IFF will be used to finance projects in
Chicago's near west and lower west sides and Humbolt Park. CCLF
finances affordable housing and economic development projects.
Post award activity.--Cole Taylor Bank's award has acted as an
encouragement of further community development activities. The bank is
currently contributing toward Neighborhood Housing Services of
Chicago's goal of opening 20 new offices in the city. Specifically,
Cole Taylor Bank is supporting the office in the Back of the Yards
neighborhood by providing operational support, participating in a
revolving loan fund for flexible and low-cost home improvement
financing, and developing a new affordable homes construction project.
Community Capital Bank, Brooklyn, New York
Award: $215,461
Rewarded activities.--Community Capital Bank provides business,
housing, and commercial loans to projects in distressed communities
throughout New York City. In the first six months of 1996, Community
Capital Bank provided nearly $2.6 million in loans for small business
development and affordable housing construction and support for
entrepreneurial development initiatives among public housing residents.
Community Capital Bank was awarded $215,461 for increasing its lending
activities during this period.
Post award activity.--Community Capital Bank, a certified CDFI, is
using its award to increase its capacity to make loans in distressed
communities. Activities toward this end include increasing loan staff
and improving accounting controls with the assistance of an outside
consultant. In addition, the award has helped the bank maintain its
preferential interest rates on loans made to non-profit organizations.
First National Bank of Chicago, Chicago, Illinois
Award: $322,230
Rewarded activities.--First National Bank of Chicago was awarded
$322,230 for making a $1,998,200 investment in The Shorebank
Corporation (Shorebank) and a $150,000 capital grant to Neighborhood
Housing Services (NHS) of Chicago, both certified CDFI's. Shorebank,
based in Chicago's south side, is a bank holding company that serves
numerous distressed communities. First National's investment enabled
Shorebank to acquire Indecorp and expand its service area to nine new
neighborhoods in the south and mid-south sides of Chicago. The grant to
NHS of Chicago will serve as a capital infusion for its revolving loan
fund to support home improvement and rehabilitation loans and loans to
people unable to obtain traditional mortgage financing.
Post award activity.--First National Bank of Chicago will use
$150,000 of its award to make ``equity-equivalent'' investments in the
Chicago Community Loan Fund and the Chicago Association of Neighborhood
Development Organizations' Self-Employment Loan Fund, both certified
CDFI's. The bank expects that these investments will leverage an
additional $300,000 for the community groups.
First Union National Bank of D.C., Washington, District of Columbia
Award: $274,550
Rewarded activities.--First Union National Bank of D.C. (First
Union) was awarded $274,550 for increasing its multi-family housing
lending in several distressed neighborhoods. In partnership with local
community development corporations, the bank made loans totaling more
than $5.6 million, including financing a 177-unit apartment building.
Post award activity.--First Union plans to use a portion of its
award to make a loan to a local CDFI. This loan will be unusual for
First Union but, because of the availability of the BEA award, will be
feasible at an interest rate favorable to the CDFI. Through the CDFI,
loan funds will be made available to other community groups for
predevelopment costs.
Fullerton Savings and Loan Association, Fullerton, California
Award: $39,600
Rewarded activities.--Fullerton Savings and Loan Association
(Fullerton) was awarded $39,600 for increasing its single-family and
multi-family housing lending in three distressed communities. Fullerton
made a total of $520,000 in loans to neighborhoods located in Santa Ana
and elsewhere in Orange County.
Post award activity.--Fullerton used its award to make a grant to a
local housing development non-profit organization. The grant will be
used for the operating costs of developing affordable single-family
infill housing in Anaheim. It will also be used, if needed, to provide
second mortgages for the new housing.
Gateway National Bank of St. Louis, St. Louis, Missouri
Award: $26,038
Rewarded activities.--Gateway National Bank, the only minority-
owned bank to be incorporated and operated in the state of Missouri,
was awarded $78,116 for increasing its deposit-taking and lending
activities during the first six months of 1996. Gateway National Bank
is located and serves neighborhoods in the northern portion of St.
Louis.
Post award activity.--Gateway National Bank has used its award to
expand its capital base to meet community needs, including business and
housing lending.
Great Financial Bank, Louisville, Kentucky
Award: $22,500
Rewarded activities.--Great Financial Bank was awarded $22,500 for
making an equity investment of $150,000 in the Louisville Development
Bancorp. The Louisville Development Bancorp is a newly established
community development bank corporation that seeks to revitalize the
Louisville Enterprise Community and surrounding neighborhoods.
Post award activity.--Great Financial Bank has used its award to
benefit the Louisville Development Bancorp in the form of a grant to
its non-profit subsidiary.
Hibernia National Bank, New Orleans, Louisiana
Award: $5,875
Rewarded activities.--In late 1995, Hibernia National Bank
(Hibernia) adopted two neighborhoods as part of the City of New
Orleans' Impact Neighborhood Program. Hibernia was awarded $5,875 for
increasing its small business lending, loans to non-profit
organizations engaging in affordable housing activities, and technical
assistance activities in these neighborhoods during the first six
months of 1996. As part of this effort, Hibernia provided financial
support to three non-profit organizations that conduct home-buyer
training programs for residents of these targeted neighborhoods.
Post award activity.--Hibernia has made its award available to five
community development corporations to use as matching funds for a grant
program sponsored by the Federal Home Loan Bank of Dallas. The $500 to
$2,200 grants made by Hibernia will be leveraged up to a total of
$29,900 for non-profit organizations in Baton Rouge, New Orleans, and
Shreveport focused on affordable housing and homebuyer training.
Household Bank, f.s.b., Wood Dale, Illinois
Award: $88,090
Rewarded activities.--Household Bank, f.s.b. was awarded $88,090
for making a $588,000 investment in Sable Bancshares, a certified CDFI.
The investment enabled Sable Bancshares to acquire the Community Bank
of Lawndale, an African American-owned bank which serves distressed
neighborhoods in Chicago, for the purpose of converting it into a
community development bank. Sable Bancshares has also established a
subsidiary, REG Community Development Corporation, to promote housing
and business development.
Post award activity.--Household Bank, f.s.b. plans to use its award
for community development purposes. The use of the award is currently
being determined through a strategic planning process.
Key Bank of Maine, Portland, Maine
Award: $37,500
Rewarded activities.--Key Bank of Maine (Key Bank) was awarded
$37,500 for making a $250,000 investment in Coastal Ventures Limited
Partnership (CVLP), a subsidiary of Coastal Enterprises, Inc., a
certified CDFI. The bank's investment will create jobs by providing
venture capital to small businesses for start-up and expansion.
Post award activity.--Key Bank plans to use its entire award for
community development purposes. Part of the award is being used to
support a Small Business Information Center in Lewiston, Maine in
partnership with the U.S. Small Business Administration. An additional
part is being used to capitalize an affordable housing loan pool in
conjunction with other lenders.
National City Bank of Columbus, Columbus, Ohio
Award: $275,000
Rewarded activities.--National City Bank of Columbus (National
City) was awarded $275,000 for providing a $2.5 million line of credit
to the Columbus Growth Fund, a certified CDFI, to be used to provide
gap financing for businesses. This financing will enable businesses to
expand and create jobs for residents of targeted neighborhoods.
National City was the lead bank in a partnership with four other
financial institutions to establish the Columbus Growth Fund. The City
of Columbus is also supporting the effort by capitalizing a loan loss
reserve for the Columbus Growth Fund.
Post award activity.--National City has used its award to make a
grant to the Columbus Growth Fund. The grant serves as additional
equity for the Columbus Growth Fund, allowing it to leverage additional
funds in the form of bank loans.
National City Bank of Kentucky, Louisville, Kentucky
Award: $37,500
Rewarded activities.--National City Bank of Kentucky was awarded
$37,500 for making an equity investment of $250,000 in the Louisville
Development Bancorp, a certified CDFI. The Louisville Development
Bancorp is a newly established community development bank corporation
that seeks to revitalize the Louisville Enterprise Community and
surrounding neighborhoods.
Post award activity.--National City Bank of Kentucky has used its
award to benefit the Louisville Development Bancorp in the form of a
grant to its non-profit subsidiary.
Nationsbank, N.A., Charlotte, North Carolina
Award: $1,614,690
Rewarded activities.--Nationsbank, N.A. was awarded $1,614,690 for
making nearly $10.5 million in investments in the National Community
Investment Fund (NCIF) and the Enterprise Social Investment Corporation
(ESIC) and a $420,000 loan to the Low-income Housing Fund (LIHF). NCIF
will use its support to invest in community development banks. The ESIC
investment will expand and improve employment opportunities by
encouraging investments in businesses that employ residents of the
Baltimore Empowerment Zone. LIHF, a certified CDFI funded in the first
round of the CDFI Program, will use its loan proceeds to finance non-
profit sponsors of affordable housing.
Post award activity.--Nationsbank, N.A. is using its award to
expand its existing community development programs throughout the
franchise in 16 states and the District of Columbia. These activities
include using funds to purchase and demolish a low-rise apartment
building in Atlanta's Martin Luther King Historic District so that
affordable, single-family homes can be constructed to complete the
revitalization of the block. It will also be used to establish
community development activities in new markets including St. Louis,
Missouri and Tampa/St. Petersburg, Florida and to subsidize below-
market rate lending to CDFI's.
Nationsbank, N.A. (South), Atlanta, Georgia
Award: $1,199,275
Rewarded activities.--Nationsbank, N.A. (South) was awarded
$1,199,275 for making $7.8 million in investments in the National
Community Investment Fund (NCIF) and the Enterprise Social Investment
Corporation (ESIC) and a $312,000 loan to the Low-Income Housing Fund
(LIHF). NCIF will use its support to invest in community development
banks. The ESIC investment will expand and improve employment
opportunities through encouraging investments in businesses that employ
residents of the Baltimore Empowerment Zone. LIHF, a certified CDFI
funded in the first round of the CDFI Program, will use its loan
proceeds to finance non-profit sponsors of affordable housing.
Post award activity.--Nationsbank, N.A. (South) is using its award
to expand its existing community development programs throughout the
franchise in 16 states and the District of Columbia. These activities
include using funds to purchase and demolish a low-rise apartment
building in Atlanta's Martin Luther King Historic District so that
affordable, single-family homes can be constructed to complete the
revitalization of the block. It will also be used to establish
community development activities in new markets including St. Louis,
Missouri and Tampa/St. Petersburg, Florida and to subsidize below-
market rate lending to CDFI's.
Nationsbank of Texas, N.A., Dallas, Texas
Award: $1,036,035
Rewarded activities.--Nationsbank of Texas, N.A. was awarded
$1,036,035 for making $6.7 million in investments to the National
Community Investment Fund (NCIF) and the Enterprise Social Investment
Corporation (ESIC) and a $270,000 loan to the Low-Income Housing Fund
(LIHF). NCIF will use its support to invest in community development
banks. The ESIC investment will expand and improve employment
opportunities through encouraging investments in businesses that employ
residents of the Baltimore Empowerment Zone. LIHF, a certified CDFI
funded in the first round of the CDFI Program, will use its loan
proceeds to finance non-profit sponsors of affordable housing.
Post award activity.--Nationsbank of Texas, N.A. is using its award
to expand its existing community development programs throughout the
franchise in 16 states and the District of Columbia. These activities
include using funds to purchase and demolish a low-rise apartment
building in Atlanta's Martin Luther King Historic District so that
affordable, single-family homes can be constructed to complete the
revitalization of the block. It will also be used to establish
community development activities in new markets including St. Louis,
Missouri and Tampa/St. Petersburg, Florida and to subsidize below-
market rate lending to CDFI's.
North Shore Bank, Brookfield, Wisconsin
Award: $6,036
Rewarded activities.--North Shore Bank was awarded $6,036 for
increasing its single-family housing acquisition and rehabilitation
loans in distressed neighborhoods in central Milwaukee. During the
first six months of 1996, the bank made a total of $373,000 in loans
for activities undertaken as part of the Milwaukee Affordable Housing
Initiative.
Post award activity.--North Shore Bank plans to use its award to
assist low-income first-time home-buyers in its distressed community.
It will do this through grants to help with downpayments and closing
costs or by helping new homeowners purchase needed equipment to
maintain their homes. Additionally, the bank has continued its support
of the Milwaukee Affordable Housing Initiative and has shown further
commitment to the central city through the completion of a new, full-
service office on King Drive.
Northern Trust Company, Chicago, Illinois
Award: $88,090
Rewarded activities.--Northern Trust Company was awarded $93,713
for making a $624,750 investment in Sable Bancshares. The investment by
Northern Trust Company enabled Sable Bancshares to acquire the
Community Bank of Lawndale, an African American-owned bank which serves
distressed neighborhoods in Chicago, for the purpose of converting it
into a community development bank. Sable Bancshares has also
established a subsidiary, REG Community Development Corporation, to
promote housing and business development.
Post award activity.--Northern Trust Company has committed its
award as part of a package of support to Neighborhood Housing Services
of Chicago, a certified CDFI, to open a new office in the Auburn-
Gresham neighborhood. Northern Trust Company's support includes a $3.5
million loan, $1.5 million in subordinated debt, and a three-year
$150,000 grant to help meet the operating costs of the office. The new
office will focus on renovating single-family homes in this
neighborhood in transition.
Northwest Bank, Oklahoma City, Oklahoma
Award: $3,918
Rewarded activities.--Northwest Bank was awarded $3,918 for
providing operating grants totaling $35,618 to Neighborhood Housing
Services (NHS) of Oklahoma City. NHS of Oklahoma City, a certified
CDFI, promotes homeownership in targeted neighborhoods through
assistance with downpayments, closing costs, and other administrative
expenses.
Post award activity.--Northwest Bank is using its award to fund
community development activities through its Near Northwest Community
Development Corporation. The bank participates in community development
activities in Oklahoma City through partnerships with the city and
local organizations. The bank is also lending in the Paseo area, a
historic district with a large number of small multi-family housing
units.
Norwest Bank, New Mexico, Albuquerque, New Mexico
Award: $5,750
Rewarded activities.--Norwest Bank, New Mexico was awarded $5,750
for making a $50,000 loan and a $5,000 capital grant to the New Mexico
Community Development Loan Fund (NMCDLF). Through its partnership with
the bank, NMCDLF will make loans to small businesses and
microentrepreneurs.
Post award activity.--Norwest Bank has provided its award dollars
as a grant to NMCDLF for small and micro-business lending.
PNC Bank, Kentucky, Inc., Louisville, Kentucky
Award: $75,000
Rewarded activities.--PNC Bank, Kentucky, Inc. was awarded $75,000
for making an equity investment of $500,000 in the Louisville
Development Bancorp. The Louisville Development Bancorp, a certified
CDFI, is a newly established community development bank corporation
that seeks to revitalize the Louisville Enterprise Community and
surrounding neighborhoods.
Post award activity.--PNC Bank, Kentucky, Inc. donated its award to
the LCDB Enterprise Group, a non-profit affiliate of the Louisville
Community Development Bancorp. The grant will help fund a business
center to assist new and emerging small businesses in western
Louisville.
Regency Savings Bank, F.S.B., Naperville, Illinois
Award: $77,250
Rewarded activities.--Regency Savings Bank, F.S.B. was awarded
$77,250 for making a $515,000 equity investment in The Shorebank
Corporation (Shorebank). Shorebank is a bank holding company, a
certified CDFI, that serves numerous distressed communities and is
based on the south side of Chicago. The bank's investment enabled
Shorebank to acquire Indecorp and expand its service area to nine new
neighborhoods in the south and mid-south sides of Chicago.
Post award activity.--Regency Savings Bank, F.S.B. has used its
award to partially offset its equity investment in Shorebank.
Republic National Bank of New York, New York, New York
Award: $519,659
Rewarded activities.--Republic National Bank of New York (Republic)
was awarded $519,659 for providing loans and operating grants totaling
$5,196,592 to 21 community development organizations. The institutions
assisted include Bethex Federal Credit Union, Central Brooklyn Federal
Credit Union, Corporation for Supportive Housing, Greater Jamaica Local
Development Company, Homesteaders Federal Credit Union, Leviticus 25:23
Alternative Fund, Local Initiatives Support Corporation, Lower East
Side Peoples Federal Credit Union, Nonprofit Facilities Fund, Parodneck
Foundation, Union Settlement Federal Credit Union, Washington Heights
Inwood Development Corporation, Enterprise Foundation, and Upper
Manhattan Community Development Credit Union.
Post award activity.--Republic will use its award to leverage an
additional $5 million in economic development and small business
lending in low- and moderate-income communities. In this way, its BEA
award will be leveraged nearly 10 times over in the form of new
lending. The award dollars will be used to provide below market rates
or act as a loan loss reserve for loans Republic will make to non-
profit economic development organizations over the next few years.
St. Francis Bank, F.S.B., Milwaukee, Wisconsin
Award: $11,498
Rewarded activities.--St. Francis Bank, F.S.B. was awarded $11,498
for increasing its single-family housing acquisition and rehabilitation
loans in distressed neighborhoods of central city Milwaukee. During the
first six months of 1996, the bank made a total of $675,000 in loans
for activities undertaken as part of the Milwaukee Affordable Housing
Initiative.
Post award activity.--St. Francis Bank, F.S.B. has used its award
to expand its community lending efforts, including outreach to the
Milwaukee area's Spanish-speaking residents. These efforts include
developing new programs, marketing, and offering home-buyer seminars.
Stock Yards Bank & Trust Company, Louisville, Kentucky
Award: $3,750
Rewarded activities.--Stock Yards Bank & Trust Company was awarded
$3,750 for making an equity investment of $25,000 in the Louisville
Development Bancorp. The Louisville Development Bancorp is a newly
established community development bank corporation, a certified CDFI,
that seeks to revitalize the Louisville Enterprise Community and
surrounding neighborhoods.
Post award activity.--Stock Yards Bank & Trust Company donated its
award to the LCDB Enterprise Group, the non-profit affiliate of the
Louisville Community Development Bancorp. The grant will help fund a
business center to assist new and emerging small businesses in western
Louisville.
Troy Savings Bank, Troy, New York
Award: $389,859
Rewarded activities.--The Troy Savings Bank was awarded $389,859
for increasing its lending within distressed neighborhoods of Troy,
Albany, and Schenectady by $4.8 million. In the first six months of
1996, the bank made over $8 million in loans for housing, small
businesses, and consumer products. The bank's efforts also included
grants and technical assistance to support first-time home-buyers in
the region.
Post award activity.--Troy Savings Bank has created a Small
Business Investment Company (SBIC), whose license is currently pending
with the U.S. Small Business Administration, to foster the growth of
small businesses in the capital region. Through the SBIC, the bank will
set aside $500,000, capitalized in part with its BEA award, for
investment in businesses that agree to locate in the distressed
communities designated in the bank's BEA application. Additionally, the
bank is active in promoting affordable housing in its service area; it
is one of the first institutions to participate in the Federal Home
Loan Bank of New York's First Home Club Program, which provides funds
to match the savings of low-income prospective home-buyers.
Vine Street Trust Company, Lexington, Kentucky
Award: $55,000
Rewarded activities.--Vine Street Trust Company was awarded $55,000
for making a $500,000 loan to Community Ventures Corporation (CVC) to
serve Lexington's highest poverty area. Vine Street Trust Company and
CVC will serve this area by focusing on helping low-income people
access financing for affordable housing.
Post award activity.--Vine Street Trust Company has decided to pass
the award on to CVC to serve as a loan loss reserve and to cover a
portion of CVC's operating overhead expenses.
Wells Fargo Bank of Texas, N.A. (formerly First Interstate Bank of
Texas), Houston, Texas
Award: $97,500
Rewarded activities.--Wells Fargo Bank of Texas, N.A. was awarded
$97,500 for making investments totaling $650,000 in the Southern Dallas
Development Corporation and the Greater Houston Small Business Equity
Fund, Inc. Both of these certified CDFI's provide financing and
technical assistance to small and minority-owned businesses.
Post award activity.--Wells Fargo Bank of Texas, N.A. has not yet
determined how it will use its award. The bank's community development
activities include support to organizations in communities in which
they do business, including Alliance Capital of Houston, Austin
Community Development Corporation, Dallas Inner City Development
Corporation, and Fort Worth Community Development Corporation. The bank
has also supported the Local Initiatives Support Corporation's National
Equity Fund.
______
Attachment 8
first round experience--issues that often separated competitive from
non-competitive applications
Track Record, Financial Strength and Current Operations
Is there a pattern of positive net operating income?
Is net worth as percentage of assets reasonable in context of
institution's activities?
Are delinquency rates under control, in the context of type of
lending?
Are loss rates under control, in the context of type of lending?
What is the fund raising track record?
Does the organization have a good process for strategic assessment
and planning?
Is there a periodic portfolio review, with risk rating?
Does organization consistently generate monthly internal
financials?
Are audit opinions clean, or are they qualified?
Is there demonstrable track record of development impacts?
Is there a track record of innovation in the marketplace?
Capacity, Skills and Experience of Management Team
What is the track record of accomplishment of individual management
team members?
What is the relationship of skills and experience to tasks of
business plan?
Is appropriate staff identified for new activities?
Is there an appropriate mix of skills?
How well do management team members work with each other?
Is staff adequate or is it stretched too thin?
Is there an appropriate compensation structure for attracting and
retaining needed staff?
What is the level of personal commitments of management team
members?
What is the contribution of Board?
Are relationships between staff end Board effective?
What is the track record and capacity of management team members to
adapt to change?
Quality of Business plan
Is the business plan clear, well developed and internally
consistent?
What is the quality of market analysis?
Is there clarity about future products and services?
Is development strategy well thought out?
Are there appropriate links between products/services, market
analysis, and development strategy?
Are future staffing plans adequate, with respect to number and
skill level?
Is there appropriate meshing between lending and technical
assistance?
Is pricing strategy well thought out?
Is process and criteria for evaluating deals appropriate?
Is risk appropriately included in evaluation?
Is there a reasonable balance between financial and social
objectives?
Are projections reasonable or too aggressive?
Are assumptions for projections clearly delineated?
Are loss assumptions reasonable?
Are future staffing needs appropriately reflected in projections?
Do financial projections reconcile?
Are projections consistent with business plan narrative?
Do realistic projections show ongoing viability?
Is plan viable if performance varies from projections?
Is proposed capital structure appropriate?
If consultant is used, is use appropriate?
Matching Funds
Are commitments in hand, or if not, is there a viable fund raising
strategy?
Are matching funds comparable in form and value to financial
assistance requested?
Is business plan dependent on unrealistic match?
Does prior fund raising track record provide confidence about
prospects for securing match?
Community Development Impact as Return on CDFI Fund Investment
Are community development objectives well defined and clearly
focused?
Is there clarity on how CDFI Fund can enhance impact?
Is there a realistic plan to sustain impact of CDFI Fund
investment?
What is the prospective leverage of other resources?
What is the scale of activity?
What are prospects for innovation?
What is the level of distress of target market, and are products
suitable to address needs?
Is institution well connected to community?
What does track record, management, business plan quality suggest
about development impact?
What is the ``bang for the buck?''
NATIONAL CREDIT UNION ADMINISTRATION
STATEMENTS OF NORMAN E. D'AMOURS, CHAIRMAN
NEIGHBORHOOD REINVESTMENT CORPORATION
STATEMENT OF GEORGE KNIGHT, EXECUTIVE DIRECTOR
ACCOMPANIED BY MARY LEE WIDENER, PRESIDENT, NEIGHBORHOOD HOUSING
SERVICES OF AMERICA, INC.
OPENING REMARKS
Senator Bond. Our third panel, Mr. Norm D'Amours, Chairman
of the National Credit Union Administration, and Mr. George
Knight, Executive Director of the Neighborhood Reinvestment
Corporation. As we all know, NCUA is responsible for chartering
and regulating Federal credit unions, itself funded through an
operating fee. Second, Mr. Knight will testify on the
administration's budget request for Neighborhood Reinvestment
Corporation for a flat funding of $50 million, these funding
not-for-profits known as NeighborWorks' Network.
They have a long track record and have become a good model of
how the Federal Government can spend a small amount of money
and reap tremendous benefits. As the written testimony so well
demonstrates, $38.7 million in fiscal year 1996 allowed the
Neighborhood Reinvestment and NeighborWorks' to
leverage $420 million in affordable housing investments.
I look forward to the testimony. Mr. D'Amours.
STATEMENT OF NORMAN E. D'AMOURS
Mr. D'Amours. Thank you, Chairman Bond and Senator
Mikulski. Thanks for the opportunity to present our request
today for funding limits on the NCUA's central liquidity
facility, called the CLF, at current levels. As you know, the
CLF is a liquidity source for credit unions. It is funded by
its members, and can borrow from the Federal financing bank,
even though no such borrowing has occurred in the last year.
For fiscal year 1998 we request a $600 million limit on new
loans, and a $203,000 limit on administrative expenditures. The
requested loan limit has remained constant for 17 years. It
should be noted that NCUA is not requesting an appropriation
for the CLF, merely a limit on its borrowings.
I am pleased to report to the subcommittee that we continue
to streamline the CLF. The result is cost savings for Federal
credit unions.
Our expenses in fiscal year 1996 of $346,000 were
significantly less than our budget limitation of $546,000. The
fiscal year 1996 expenses are more than 50 percent below the
CLF expenses of $767,000 for fiscal year 1993. All of CLF's net
income in 1996 was returned to member credit unions in the form
of capital stock dividends.
In our estimation, the $600 million loan limit we are
requesting is adequate to address unexpected liquidity needs in
what is a very healthy and viable credit union system today.
The request is less than 3.55 percent of the limit set by
statute, which is 12 times paid in oncall capital or an amount
of approximately $17 billion. The borrowing authority is not
used to build up loan volumes, because by statute the proceeds
from CLF cannot be used to expand credit union loan portfolios.
Rather, these funds are advanced strictly to support the
purposes stated in the Federal Credit Union Act, and in
response to circumstances dictated by market events.
Loan demand over the years has resulted in wide variances
in the amount of outstanding CLF loan balances and individual
advances. The relatively low utilization of our total authority
can be viewed as a positive sign of credit unions' present
financial condition. By the end of 1996, all loans were repaid
and no direct loans were outstanding. However, because of a
liquidity shortage involving one of the corporate credit
unions, the CLF became an active liquidity center from December
1994 through February 1995. In that time, we made 601 loans
totaling $389 million. The majority, 509 of them, were
overnight loans.
As intended by Congress, the CLF acted successfully to
provide liquidity and to maintain financial stability during a
temporary liquidity shortage.
Mr. Chairman, Senator Mikulski, we respectfully request
that you support our authorization request in order to continue
the NCUA's and CLF's ability to respond to such adverse
liquidity situations. And that completes my oral statement. I
would ask that my full statement be included in the record.
Senator Bond. Without objection, it will be made part of
the record.
[The statement follows:]
Prepared Statement of Norman E. D'Amours
Mr. Chairman and Subcommittee Members. I want to thank you for the
opportunity to present our request for funding limits on the NCUA
Central Liquidity Facility (CLF) at current levels. Appearing with me
today are Herbert S. Yolles, President, Central Liquidity Facility;
Robert M. Fenner, General Counsel; David Marquis, Director of our
Office of Examination and Insurance; and William C. Poling, our Budget
Officer. Mr. Chairman, as you know, the CLF is a liquidity source for
credit unions. It is funded by its members and can borrow from the
Federal Financing Bank, even though no such borrowing has occurred in
the past year.
For fiscal year 1998, we request a $600 million limit on new loans
and a $203,000 limit on administrative expenditures. The requested loan
limit has remained constant for the last 17 years. It should be noted
that NCUA is not requesting an appropriation for the CLF, merely
limits.
I am pleased to report to the subcommittee that we continue to
streamline the CLF. The result is cost savings for credit unions. Our
expenses in fiscal year 1996 of $346,000 were significantly less than
our budget limitation of $546,000. The fiscal year 1996 expenses are
more than 50 percent below the CLF expenses of $767,000 for fiscal year
1993. All of CLF's net income in 1996 was returned to member credit
unions in the form of capital stock dividends.
In our estimation, the $600 million loan limit is adequate to
address unexpected liquidity needs in credit unions. The request is
less than 3.55 percent of the limit set by statute--12 times paid-in
and on-call capital or $17 billion. The borrowing authority is not used
to build up loan volumes because by statute the proceeds from CLF loans
cannot be used to expand credit union loan portfolios. Rather, the
funds are advanced strictly to support the purposes stated in the
Federal Credit Union Act and in response to circumstances dictated by
market events.
Loan demand over the years has resulted in wide variances in the
amount of outstanding CLF loan balances and individual advances. The
relatively low utilization of our total authority can be viewed as a
positive sign of credit unions' present financial condition. By the end
of 1996, all loans were repaid and no direct loans were outstanding.
However, because of a liquidity shortage involving one of the corporate
credit unions, the CLF became an active liquidity lender from December
1994 through February 1995. The CLF made 601 loans totaling $389.8
million; the majority (509) were overnight loans.
As intended by Congress, the CLF acted successfully to provide
liquidity and maintain financial stability during a temporary liquidity
shortage. Mr. Chairman, we respectively request that you support our
authorization request in order to continue the NCUA's and CLF's ability
to respond to such adverse liquidity situations.
Mr. Chairman and members of the subcommittee, the credit union
movement continues to focus on its mission of involving more people in
America's free enterprise economy. By instilling habits of thrift and
teaching the value and workings of financial discipline, credit unions
are still fulfilling the mandate Congress gave them over 60 years ago.
At NCUA, our strong commitment to the future of credit unions serving
people of limited means remains as resolute as when I last reported to
the subcommittee.
For fiscal year 1997, the subcommittee approved a $1 million
appropriation to be utilized by the Community Development Revolving
Loan Program (CDRLP), which NCUA has administered since 1987. By any
objective standard, the CDRLP has been an overwhelming success and
deserving of continued Congressional support. A $2 million
authorization, the last of a four year $10 million authorization
(Public Law 103-325), remains for fiscal year 1998.
Since NCUA began making loans from an original $6 million
appropriation (now a $7 million total), we have revolved $14.4 million
in 113 separate loans to 79 low-income credit unions. In 1996 alone we
approved $2.9 million in loans and currently we have 6 loan
applications for $1.4 million in funding.
The credit unions use these loans for a variety of different
purposes from housing rehabilitation and consumer loans to micro-
enterprise lending. We expect loan demand to increase smartly as the
year proceeds. We have had one loss in the Revolving Loan Program for
$35,000.
At mid-year 1996 we recognized 298 low-income credit unions, which
translated to a 27 percent annualized growth rate. I am proud to say
that 13 newly state and federally chartered credit unions in 1996
gained the low-income designation. Total assets in these financial
cooperatives are $1.8 billion at mid-year 1996 and loan growth was 13.2
percent. The capital ratio is a strong 11.1 percent and loan
delinquencies (loans 60 days and more overdue) are within reasonable
bounds at 2 percent.
In May 1994, the NCUA adopted a new chartering and field of
membership manual for credit unions replacing our previous version.
These changes are set forth in Interpretive Ruling and Policy Statement
(IRPS) 94-1 that became effective in July 1994. Changes contained in
IRPS 94-1 allow greater flexibility for credit unions wishing to expand
into low-income areas and make it easier for low-income credit unions
(LICU's) to expand their fields of membership and associate themselves
with other credit unions.
This initiative has been one of the more important actions taken by
the Board to encourage larger, healthy credit unions to directly reach
out into low-income communities to give residents a non-profit
alternative to pawn shops, check cashing outlets and the like. In this
way people are brought into the mainstream of the U.S. economy in a
self empowering and responsible manner.
From July 1994 until October 1996 NCUA had granted 73 federal
credit unions permission to open branches in these distressed
neighborhoods and make their services available to a potential of 1.4
million low-income residents. However, following a decision from the
U.S. Court of Appeals for the District of Columbia and then an
injunction from the District Court, NCUA has had to halt this
innovative approach for providing low cost financial services to those
who need it the most.
The ability of credit unions to add low-income groups to their
field of membership arises from an interpretation of the Federal Credit
Union Act NCUA made in 1982 to allow more than one group with each
group having a common bond be part of a credit union. The banks have
successfully challenged this interpretation of the Act and we are
currently waiting to see if the Supreme Court will take up an appeal.
As I will testify before the Financial Institutions Subcommittee of
the House Banking Committee tomorrow, NCUA believes Congress should not
wait for the Supreme Court to rule, but change the Federal Credit Union
Act to allow initiatives, like the one described above, to move
forward. In doing so, Congress will also codify two essential purposes,
or rather benefits, of the 1982 policy change: (1) by permitting
diversity within the membership of federal credit unions, the policy
provides a strong measure of protection against difficult economic
conditions that affect particular groups, industries or the reality of
military downsizing with the abatement of the cold war; and (2) it
makes credit union service available to individuals who otherwise do
not have access to it, such as members of groups too small to run and
support a viable credit union on their own.
The NCUA Board continues to explore ways to bolster low-income
credit unions. Early last year, the Board voted unanimously to adopt a
new interim rule permitting LICU's to immediately accept secondary
capital funds from institutional investors. The additional capital will
be used to support increased lending and services and provide
additional ``matching funds'' for credit unions applying for assistance
from the Community Development Financial Institutions Fund (Public Law
103-325).
The rule includes safety and soundness measures to ensure that
depositors and participating credit unions are aware of the nature and
risk associated with these accounts. For instance, the secondary
capital is not insured by the federal government and this fact must be
disclosed to investors.
In September 1996, the NCUA Board adopted a change to our Rules and
Regulations that removed the current cap of $120,000 for technical
assistance, which is drawn from the earnings of the Revolving Loan Fund
to aid LICU's. The Board believes that technical assistance is a vital
component of the Revolving Loan Program and since 1992 we have
disbursed 216 technical assistance grants totaling some $500,000.
I am particularly proud of the credit union movement coming
together for a conference held last August in Chicago. The gathering,
known among credit unions as the ``Serving the Underserved''
conference, was dedicated to bringing together credit unions of all
sizes to learn how to break down the barriers keeping people from
becoming a part of the American, free enterprise system. The conference
was a tremendous success.
Mr. Chairman, I want to briefly update you on the overall condition
of our nation's credit unions and their federal insurance fund.
Overall, the credit union industry continues to be in excellent health.
The National Credit Union Share Insurance Fund (NCUSIF) had its
best operating year in its 26-year history during 1996. For the second
consecutive year (and the third year in its history), the Fund paid
credit unions a dividend on their 1 percent deposit into the Fund. The
equity level at October 1996 exceeded the statutory ceiling of 1.3
percent or $1.30 per $100 in insured shares (deposits), so NCUA
returned a dividend totaling $102.8 million to federally insured credit
unions. We returned a $103.9 million dividend during 1995.
Meanwhile, the number of problem credit unions (CAMEL supervisory
rating 4 or 5) has continued to decline each year from 1,022 in 1988 to
a record low 286 at yearend 1996. Deposits in these problem credit
unions represented just 0.67 percent of total insured deposits in 1996,
compared to 6 percent of the total in 1988.
The number of credit union failures during 1996 fell to a record
low for the third consecutive year, dropping to 19, and requiring the
Fund to payout $2.3 million, also a record low. The previous lows were
22 failures in 1995, requiring $11 million in member payouts.
Since Congress established federal share insurance for credit
unions, the insurance fund has never had a losing year. Moreover, since
credit unions voluntarily recapitalized their insurance fund in 1985,
its equity level has ranged between 1.25 to 1.30 percent. The current
level is 1.28 percent, and we are projecting that it will again climb
to 1.30 percent by yearend 1997.
During 1996, federally insured credit unions performed admirably by
all objective standards. The yearend 1996 call report data have just
arrived at the agency and the preliminary data show that total industry
assets at the 11,429 federally insured credit unions rose 6.9 percent
to $327 billion. Capital accumulated at the rate of 11.1 percent during
1996, the tenth consecutive year of strong capital growth. The ratio of
capital to assets of federally-insured credit unions, now averaging
11.4 percent of assets, is at a record-high level; net capital is 10.8
percent--the former minus allowance for loan losses.
Loan delinquency and net charge-offs remain very low, actually at
or near historic lows. The delinquency rate is 1 percent of total
loans, while net charge-offs are 0.5 percent. Profitability, as
evaluated by the return on average assets ratio, was a healthy 1.1
percent for last year. This gauge of profitability has remained
unchanged over the last year; and the loan-to-share ratio now stands at
74.6 percent compared to 71.1 percent at yearend 1995.
In general, corporate credit unions (which act as bankers' banks to
the 12,000 natural-person credit unions) are also in good health. The
risk in their investment portfolios that concerned us two years ago
when I last appeared before this panel has been reduced significantly.
Between September 30, 1994, and September 30, 1996, corporate credit
unions' total holdings of Collateralized Mortgage Obligations declined
from $10.2 billion to $4.7 billion.
There are currently 41 corporate credit unions, of which 36 are
federally insured. While capital in corporate credit unions remains low
compared to that in natural person credit unions, there has been an
increasing trend toward capital accumulation, perhaps in anticipation
of new proposed standards the NCUA Board plans to finalize in the near
future. The ratio of reserves and undivided earnings to assets grew
from 2.1 percent as of December 31, 1994, to 2.65 percent as of
December 31, 1996. During that same period, total capital to assets
rose from 4.9 percent to 7.38 percent.
Meanwhile, our ``conflict of interest'' regulation took effect in
January 1996. This rule eliminated any real or perceived
inappropriateness in the relationship between the boards of directors
at corporate credit unions and their state and national trade
associations. I believe that significant progress has been made in the
condition of corporate credit unions, and that proposed revisions to
the corporate credit union regulation will provide additional
improvements.
Mr. Chairman, thank you again, for the opportunity to appear before
this subcommittee and present our requests for the Central Liquidity
Facility. I would be pleased to answer any questions.
STATEMENT OF GEORGE KNIGHT
Senator Bond. We thank you for the good news request, the
success and the no need for appropriations.
Let me turn to another good news story: Mr. Knight.
Mr. Knight. Thank you.
Mr. Chairman and members of the committee, I want to
especially thank you for last year's appropriation. As you
noted in 1996, the $38.7 million that you appropriated was
leveraged, in part, into $420 million, directly impacting the
lives of 16,000 families. Of those, 4,400 were new homeowners,
having the opportunity to start an equity stake not only in
their homes, but also in their families' lives, their
neighborhoods, and their cities.
In the past I have talked a great deal about the
neighborhood revitalization work of the
NeighborWorks' network. During the past year we have
focused on looking at who else benefits, and we looked
particularly beyond the resident-borrower to the block on which
they live, the lender, the insurer, and the city government,
with a real focus on the local tax base impact. I am pleased to
report we also found that the city treasurer benefits as well.
As property values rise, the tax base strengthens, and so do
tax revenues.
LESSONS LEARNED
Looking at what we have learned in the past 20 years, I
wanted to summarize it for you in several quick points. First,
raising the amounts of social investment capital currently
needed by our secondary market, Neighborhood Housing Services
of America--and I am delighted to have Mary Lee Widener, the
president of that unique institution here with me--is
challenging. We are now operating at volumes of $20 million to
$30 million a year. We need social investments that are low-
market rate, but perceived as high risk--even though we have
never missed a payment in 20 years. The effort to raise that
capital is indeed prodigious.
Second, after only 4 years of the NeighborWorks'
Campaign for Home Ownership we have reached the 5-year goal of
10,000 new homeowners. But I think more importantly, we have
shown that lower-income families not only can, but want to be
homeowners. While the portfolio is still early on those first
8,300 owners for which we have delinquency records, the
delinquency reports are coming in looking quite normal, if you
will.
Third, NeighborWorks' organizations do extend
credit. It is an essential strategy in revitalizing a
neighborhood. But they also are involved in a wide ranging
number of social-service activities. And those activities are
equally important to revitalizing a neighborhood.
Fourth, training is terribly important, and the demand is
tremendous. In 1993, the total of participants at the four
neighborhood reinvestment training institutes totaled
approximately 1,300 participants. In 1996, we had almost 2,600
participants. Last week in Atlanta we had 750 participants
alone.
EFFICIENCY MEASURES
Fifth and finally, my board, Neighborhood Reinvestment's
board, recently asked if we were being efficient with the
Federal resources we are given. We looked at three issues. The
first was were we continuing to meet the mission between 1990
and 1996? We could have become more efficient by serving higher
income people. However, we held the income level of the people
served by NeighborWorks' organizations about the
same. So we met the mission test.
Senator Mikulski. What is that income level?
Mr. Knight. It ranged from around 56 percent to 66 percent
of median family income. That translates into the low $20,000
for a family. Since many of the families we serve are single
heads of household, that really represents a very considerable
strain if you have a poor educational background to make
$20,000 to $22,000 a year. That requires a $10 or $11 or $12
an-hour job.
Second, we looked at the leverage of the appropriation over
the past 6 years, and indeed the private dollars leveraged have
increased. I am pleased to report it has almost doubled from
1990 to 1996.
Third, we inquired into the secondary market: Were they
able to handle and manage more aggregate assets for each dollar
that we gave them in 1996 than in 1990? And again, the answer
was yes, and I think a great deal of credit goes to Mary Lee,
and to her marvelous board of trustees and the day-to-day
operating board for that achievement.
With that, I look forward to your questions.
[The statement follows:]
Prepared Statement of George Knight
Mr. Chairman and Members of the Committee, thank you for the
support you have given the NeighborWorks' network and the
Neighborhood Reinvestment Corporation. I am pleased to present the
Corporation's request for fiscal year 1998 for $50 million. We are
especially grateful for the fiscal year 1997 appropriation of $49.9
million.
In fiscal year 1996, the $38.7 million you granted Neighborhood
Reinvestment and the NeighborWorks' network leveraged $420
million in investment. This is a 17 percent increase over the previous
year. The network produced almost 16,000 total units of housing, in
addition to owning 11,000 units of affordable Mutual and rental
housing. Of the 16,000 families, more than 4,400 families became new
homeowners, earning an equity stake in their neighborhoods. The
security of owning a well-insured home and the pride in paying back the
loan creates a sense of ownership and control over the quality of the
community. This frequently leads to action in solving the ``front-
door'' issues of crime, cleanup, education and other quality-of-life
concerns.
A national system for community revitalization that focuses on
addressing the disinvestment and decline in the nation's urban,
suburban and rural communities has been built over the last 20 years.
Currently, we are serving more than 420 communities. The heart of this
system is the 172 local partnerships of residents, members of the
private sector, and public officials that constitute the
NeighborWorks' network.
These NeighborWorks' organizations utilize the full
range of community development tools to positively engage the social,
economic and real-estate dynamics of their communities. Their mission
is focused on turning communities once shunned into neighborhoods of
choice for the benefit of current residents. This isn't about
demographic change; this is about engaging lower-income families in the
mainstream economy and engaging the mainstream financial mechanisms--of
lenders, insurance firms and Wall Street--in lower-income communities.
NeighborWorks' organizations serve communities
characterized by low household income--61 percent of median for African
Americans, 66 percent for Hispanics. NeighborWorks'
communities are also characterized by low rates of home ownership--only
44 percent compared to the national rate of 67 percent.
Who else beyond families and lenders and insurance firms benefit
from this reinvestment activity? Local taxpayers benefit as
neighborhood real-estate markets and, thus, tax bases strengthen. In
Savannah, Georgia's Dixon Park neighborhood, the
NeighborWorks' organization tackled a block with 23
properties, seven of which were severely dilapidated and unoccupied.
After purchase, rehabilitation and sale to new homeowners, the 16
occupied properties now show tax assessment increases of over 65
percent. Needless to say, the seven previously dilapidated properties
show a dramatically higher increase, with tax assessment increases
averaging 337 percent. As a whole, tax assessments for all 23
properties on the block increased by 109 percent--from $777,000 to $1.6
million. Everyone benefitted. More dramatically, in declining markets
such as New Haven, Connecticut, the NeighborWorks'
neighborhood held its own in property values between 1990 and 1995,
even as the city's fell 25 percent.
Beyond the resident owner, the city treasurer and lenders, the next
generation of families in NeighborWorks' communities also
benefits. The assets built by lower-income families who invest in home
ownership are a key ingredient for their future success. Children who
grow up with a stable place to live have improved educational
achievement,\1\ and when the time comes for college, the inter-
generational asset transfer mechanism of a home equity loan is
available for tuition.
---------------------------------------------------------------------------
\1\ Richard Green and Michael White, Measuring the Benefits of
Homeowning: Effects on Children, cited in ``Housing Policy Debate,''
Volume 7, 1996.
---------------------------------------------------------------------------
Does this always happen? No. It can easily be derailed by local
organizational failure, local economic collapse and a host of other
external macro reasons. Our experience, however, is that a difference
can be made and measured.
How do we sustain and increase this? Neighborhood Reinvestment's
role is four-fold:
(1) To work with organizations that meet basic programmatic and
financial health thresholds to expand their capacity;
(2) To offer intense nuts-and-bolts training to the housing and
community development field;
(3) To support Neighborhood Housing Services of America, Inc.
(NHSA) with low-cost capital so that it remains a strong financial
backstop to the NeighborWorks' system. This enables every
responsible homeowner or would-be homeowner--no matter how poor--to
borrow the necessary resources to maintain or secure a safe home; and,
(4) To monitor each local NeighborWorks' organization
for continued responsible financial and programmatic results.
What hampers vastly greater impact?
For local NeighborWorks' organizations, the main
impediment is insufficient amounts of: (1) Flexible, low-cost, equity
capital; and, (2) Funds to put loan counselors, rehab specialists and
community intervention specialists on the streets.
For Neighborhood Housing Services of America, the ongoing struggle
is to create and extend multi-year social-investor incentives and
mechanisms that will assure vastly greater sums of low-market-priced
capital.
What have we learned?
(1) First, that raising social-investment capital for NHSA--
especially in the volumes now needed--is difficult. The low market
financial return combined with a perceived high risk, even though NHSA
has never missed a payment, results in laborious capital-raising
strategies. I'd be remiss to not thank the Trustee and Board leadership
of NHSA for their incredible success in raising more than $250 million
in investment funds.
(2) Lower-income families want to be homeowners--and can be. Four
years ago I informed you that a group of NeighborWorks'
organizations were setting out to create 10,000 new homeowners,
resulting in investment of $650 million in the subsequent five years.
But when the tally is finalized at the end of four years, the five-year
goal already will have been met: 10,100 new homeowners backed by at
least $625 million invested in their homes and neighborhoods. More
importantly, the 30-60-90 day delinquency rate is 4.70 percent,
compared to about 3 percent for the conventional markets and 6-to-7
percent for government loans.
(3) Social service activities--reducing crime, providing
alternative recreation and learning opportunities, cleaning up streets
and vacant lots, enforcing building and health codes--all help to
create confidence in the neighborhood as a place of choice. These
``front-door'' issues, when addressed, lead to spontaneous sociability
so that the ill neighbor is cared for and not ignored, so that doors
are knocked on for block celebrations, so that the local school is
supported.
(4) Training works and is in tremendous demand. Three years ago the
four Training Institutes attracted 1,268 participants for 31,696
contact hours. In fiscal year 1996 that had increased approximately 105
percent for participants (2,595) and 85 percent for contact hours
(58,606).
(5) Financially and most importantly, this work is being done
efficiently with federal resources. Our board of directors requested a
report on multi-year efficiency. Balancing many factors, three measures
were utilized (charts follow):
--The first is the mission test: Over five years, has the
NeighborWorks' system continued to serve lower-
income families? The answer is yes: median incomes were 58
percent in 1990 and rose slightly to 66 percent by 1996,
primarily because of an increased emphasis on recruiting new
homeowners into these distressed communities.
--The second efficiency test measured the total investments by
NeighborWorks' organizations against the
Congressional appropriation. That grew from a 5:1 ratio in 1990
to a 9:1 ratio in 1995. And the investment ratio measures only
the real-estate-related parts of a NeighborWorks'
organization's efforts: it ignores local social-service
activities and does not directly capture our training efforts.
Overall, the amount of private-sector investment leveraged by
public-sector investment has increased steadily since 1993.
--The third efficiency test looked at NHSA in terms of total assets
managed compared to operating costs. That also nearly doubled
from 1990 to 1995.
We are grateful for your support and energetically look forward to
a successful completion of 1997 and continued opportunities in 1998. I
look forward to your questions.
NHSA's Total Assets vs. Neighborhood Reinvestments's Administrative
Grant to NHSA
Dollars:Ratio
1990..............................................................27.7:1
1991..............................................................26.4:1
1992..............................................................29.9:1
1993..............................................................35.8:1
1994..............................................................33.3:1
1995..............................................................45.9:1
1996..............................................................48.6:1
NeighborWorks Organizations Total Investment vs. Neighborhood
Reinvestment's Appropriation
Dollars:Ratio
1990.............................................................. 5.3:1
1991.............................................................. 5.8:1
1992.............................................................. 6.4:1
1993.............................................................. 7.4:1
1994.............................................................. 8.5:1
1995.............................................................. 9.2:1
1996..............................................................10.8:1
========================================================
__________________________________________________
[GRAPHIC] [TIFF OMITTED] T05FE25.000
NHSA's Clients Median Household Income--As a Percentage of National
Median Household Income
[1996 National Median=$35,200]
Percentage
1990.............................................................. 58
1991.............................................................. 59
1992.............................................................. 60
1993.............................................................. 62
1994.............................................................. 61
1995.............................................................. 65
1996.............................................................. 66
Senator Bond. Thank you very much, Mr. Knight.
I will turn to my ranking member, Senator Mikulski, for her
questions.
Senator Mikulski. Senator Bond is being very generous to
let me go first. I have to leave for a leadership meeting, and
I really will have some written questions for you, Mr.
D'Amours, and again, welcome. We were colleagues on merchant
marine and fisheries and oceanography in another life.
Mr. D'Amours. Thank you, Senator. It is good to see you.
Senator Mikulski. I would like to go directly to the
Neighborhood Reinvestment Corporation. Mr. Knight and your
staff, you know I have been a big fan of Neighborhood
Reinvestment, and in my stewardship worked to see it move
ahead. As it moved ahead, I became concerned about a couple of
things. One, could your institution keep its entrepreneurial
approach in place to meet the needs of communities, and then
second, could you avoid becoming a comfort or complacency zone
because you were successful.
Now, what I would like to do is use southeast Baltimore as
an example. Tell me how Neighborhood Reinvestment continues to
follow the same mission, of entrepreneurship in working with
local community leaders? Could you tell me what are the three
goals for your involvement in the southeast Baltimore project?
What measures are you using to determine whether you are
successful or not?
GOALS FOR SOUTHERN BALTIMORE
Mr. Knight. Our three goals are somewhat simpler to state
than they are to achieve in a short period of time. The first
is to strengthen home ownership; that is, to increase the
percentage of home ownership in southeast Baltimore. We can
look at two kinds of measures, process and absolute change. We
can look at the process measures of how many new homeowners,
such as the 50 new homeowners since last June, as well as what
kind of funds we have available. USAA has put forward funds, in
addition to many, many local institutions in Baltimore at a
rate of about 6.5 percent. The long-term measurement, however,
will come over time, and we have a database in place to start
tracking the absolute change in ownership.
Second, stabilize the community. This includes a wide range
of activities to increase the confidence of individuals in the
neighborhood. Among the actions to date has been to create a
large coalition of organizations tackling a wide range of
things. For example, encouraging local institutions to help
finance their employees to purchase homes in the neighborhood,
rewarding homeowners for purchasing in a neighborhood by
providing scholarships to the local school, working with
realtors to promote the neighborhoods and to cleanup and fix-up
kinds of things. Again, the measurement over time will be the
absolute change in market value.
Third, to decrease, significantly decrease, the number of
specific eyesore properties. At this point there are almost 100
properties individually identified. We have, through one of our
partners there, begun to prioritize legal action. A number of
individual buildings have been purchased and are under
construction. We are seeking funds to purchase more buildings.
The absolute measurement will be the decrease in the number of
eyesores.
I think on all three measures, frankly, from my perspective
we will know first from the residents whether they think it is
going well or not.
HOPE VI IN BALTIMORE
Senator Mikulski. Well, Mr. Knight, I am interested in what
was the Neighborhood Reinvestment Corporation or the
Neighborhood Housing Services of Baltimore's intervention. Just
for the committee, southeast Baltimore is a wonderful
community. I represented it as a city councilwoman, and it
faced two converging influences, one by problems created by
sheer demography, meaning a population aging in place, and also
undergoing both an economic and ethnic change. But, second, it
was steadily and gradually moving from primarily a European
ethnic community to a multiethnic, multiracial community, and
very nicely.
Then, along came a HOPE VI project in Baltimore called
Lafayette, and when the public housing came down, the Public
Housing Authority did not stand sentry. They simply dumped
everybody from public housing into this area with no screening
for section 8 assistance, and, therefore, the very role of
Government became a significant and forceful aspect of
destabilization. Section 8, because of its inappropriate use,
was also a tool for destabilization. And you had neighborhood
organizations going through heartbreak, and also deinvesting
and also leaving the community.
Am I right in summarizing that?
Mr. Knight. Absolutely correct.
Senator Mikulski. And the city took no action to correct
itself, yet the community organizations were being quite
gallant in trying to fortify the neighborhood.
Now, it was our suggestion that Neighborhood Reinvestment
Corporation come in to deal with this. Could you just very
briefly say how you have stopped the destabilization? What
organizations from Neighborhood Reinvestment stopped the
destabilization, and what community organizations have you
worked with, and what were your methods?
This was a very melancholy situation in Baltimore, Mr.
Chairman, when the very program that I helped create called
HOPE VI had become a destabilizing tool for one of the
neighborhoods that I had represented--a neighborhood that had
moved very gracefully and effectively toward racial
integration.
Mr. Knight. The organizations including the
NeighborWorks' organization, the Baltimore
Neighborhood Housing Services, to the Able Foundation, Johns
Hopkins, a series of community based CDC's, such as east
Fayette, SDI, a whole series of smaller property-owning or
would-be property-owning organizations, have formed a loose
coalition in which each continues their activity but becomes
identified under a unifying visual umbrella, if you will,
called Southeast Partners at Work. Working together has really
helped to focus broader attention on this southeast
revitalization initiative.
Senator Mikulski. Did you create that?
Mr. Knight. It certainly was an idea that came up in the
meetings in southeast Baltimore that we convened, yes. We
really see our role as the catalyst to get those kinds of
activities moving forward.
Mary Lee has managed to raise several million dollars in
low-market rate interest money that has enabled a number of
stalled construction projects to plunge forward with rapidity.
We have also succeeded in raising some first mortgage money,
again through the secondary market, at a rate of 6.5 percent,
that is enabling a very attractive incentive, if you will, to
those who would move into the neighborhood as homeowners.
Senator Mikulski. Well, I know my time is up.
I also understand you have been working with local realtors
in the private sector. But as I understand it, then the major
force from Neighborhood Reinvestment to pull together different
groups and help these groups empower themselves by being a
loose federation or coalition, was Neighborhood Housing
Services. Is that not the major tool?
Mr. Knight. Neighborhood Housing Services of Baltimore,
yes, is the major point, around which local organizations were
convened to take the action. Neighborhood Reinvestment staff's
role is to convene groups, just as we did on the Navajo
Reservation to start a new organization on the Navajo Nation.
Senator Mikulski. Well, we could elaborate. I want you to
know I continue to be a great supporter of Neighborhood
Reinvestment Corporation. Going through this hopefully was
informative for the chair, because it really shows how
Government itself is both a tool and also a problem. And
Neighborhood Reinvestment Corporation came in and worked with
what was already there, and organized it in a way that began to
stabilize it. There are lots of interesting stories, including
men organizing midnight barbecues. You know, we had drug
dealers, so instead of midnight basketball, the men of the
community just would go out on weekends and barbecue. They
would have friendship and fellowship and push those drug
dealers off the streets.
Mr. Knight. Thank you for your support.
Senator Bond. Thank you, Madam Chair. I would be far more
interested in a midnight barbecue than midnight basketball. I
have gotten past the age when basketball is that appealing to
me.
THE HOME PROGRAM
Senator Bond. Mr. Knight, would you not say that your model
really is one that should be a model for every community in
administering the HOME Program? Is this not a test case for
what we would hope that local governments would be doing with
the flexibility we are giving them. It seems to me you are
bringing it all together.
Mr. Knight. We would hope so, and that is why we spend so
much effort training others to share these techniques, with
people from a wide variety of backgrounds. Our training events
bring together representatives of the public sector, private
sector, community based groups, and church groups to learn from
each other. We think this approach is far more effective than
vastly larger sums of money that would be spent.
Senator Bond. Do not worry about the vastly larger sums of
money. To the extent that we get any money, it has already been
claimed.
Have you worked with communities? Are there people from
local housing authorities or appropriate community development
people from areas which do not have a NeighborWorks'
Program coming in to see what you are doing?
Mr. Knight. Yes; absolutely.
Senator Bond. Are you able to train these people and show
them what you are doing works?
NAVAJO PARTNERSHIP FOR HOUSING
Mr. Knight. Yes; we have just completed a little more than
\1/2\ year's work with the Navajo Nation, creating the Navajo
Partnership for Housing. It will, we hope, over the next
several years lead to the production of 10,000 units of
moderate housing on tribal lands, which is desperately needed.
It is a partnership composed of many local financial
institutions, several national institutions, including Fannie
Mae Federal Home Loan Bank of Seattle, Zion National Bank,
Northwest, and many local institutions and the nation, itself.
Residents of several of their subgroupings--chapters, as they
refer to it inside the nation--created an environment in which
people could talk, work, and come to local solutions
themselves.
rural housing concerns
Senator Bond. Outside of the native American Nation, I am
very much concerned about some of the problems we have in rural
areas, and Missouri has a lot of these. I do not know if you
have the same problems in Maryland.
Senator Mikulski. Yes.
Senator Bond. But rural housing needs are very challenging
in many parts of Missouri. What is Neighborhood Reinvestment's
experience in rural areas? Do you see the problems and the
solutions differing, and any special approaches for addressing
unique needs of affordable housing and community development?
The chicken and egg problem, do you need the jobs first or the
housing? Can you get the jobs without the housing, can you get
the housing without the jobs? That is something that community
and the town I live in is facing, and it has been a tough one.
Mr. Knight. Sometimes it's a chicken and egg problem--and
some of our responsibility, I believe--is to step forward and
take the risk. In Colorado, in the intermountain area, we are
affiliated with an organization called Colorado Rural Housing
Development Corp., that works in smaller towns to basically
create subdivisions.
Now, that may be a glorified term for a group of 10 houses
that are built, but someone has to assemble the land, get the
infrastructure in, and at that point, with either local or
statewide is financial backing, a contractor will come in and
build those 10 homes, particularly if that organization is
working with individuals who will purchase the homes. Once this
process starts it gives confidence to smaller industries and/or
employers to say now that there is housing, we will invest in
this community.
I just returned from Dimmit County, TX, which is about as
rural as one can get. It is one of the poorest counties in the
Nation, and they are doing exactly this and meeting with great
success. Frankly, it may help one of their last private
employers there, because now they will be able to purchase--
this is not a giveaway--purchase a home that would meet the
contemporary living standards of Eagle Pass, the next nearest
town.
Senator Bond. We will be interested to find out about that
experience.
CDFI
I will address a question to you and Mr. D'Amours. Just
before you testified, we heard about a new idea, the CDFI, and
based on your experience, what kind of direction, guidance
would you give to CDFI? What kind of pitfalls do you think they
ought to be aware of?
Mr. Knight. Our experience is in working with
NeighborWorks' organizations which make basically
the nonconventional, uneconomic loan. Our tandem lending
approach and small rehabilitation loans allow the private-
sector loan to work. The NeighborWorks' loan gets
paid back, but its small size and low return makes it not
feasible for a financial institution.
We think there is a great need for these niche kinds of
lending efforts. There is really at this point insufficient
capital to do them. We do as much as we can.
I think the ability of a secondary market like NHSA is
frankly part of the genius in helping a local rural area. Rural
organizations may be able to raise a pot of money once, but it
is awfully hard the second time. If they can make loans and
sell those loans, then they have funds to keep lending and
reselling. Frankly, the innovation of the secondary market, has
made a great deal of our success possible.
Senator Bond. Thank you, Mr. Knight.
Mr. D'Amours, I know that the NCUA administers a $7 million
community development revolving loan program not unlike the
CDFI. I wonder if you have any words of wisdom or suggestions
on how the CDFI can be achieved, and how is the program working
in your area?
Mr. D'Amours. Thank you, Senator. As a matter of fact, the
community development revolving loan program was passed in
1979. I was on the House Banking Committee when we approved
that.
The CDFI bill, or the Riegle bill, so-called at the time,
when he was chair of the Senate Banking Committee----
Senator Bond. And that is a good way to get your name on a
bill.
Mr. D'Amours [continuing]. Passed in 1994. Right. That is a
good way to become internalized.
The recommendations I would have, frankly, without having
any real authority to make them, but since you have asked,
would be to simplify the application procedure. We know, for
instance, out of the 268, I believe Mr. Hawke testified,
transactions last year, 50 of them were credit unions and only
a small handful received anything.
At NCUA, we operate the community development revolving
loan program very simply. The application is simple. It is only
available to the low-income credit unions. These are credit
unions 60 percent of which are below $10 million, a near
majority of which are below $2 million.
Our administrative costs at NCUA are nil. We administer
this program as an agency program. We absorb whatever
administrative costs, which are not very high, are connected
with it. In the credit union situation the money gets right
down to the people who need it most. It is done as a loan, not
as a grant. Money of the CDFI programs are grants for credit
unions rather than loans. Our money is repaid. We use the
interest of that money for technical assistance aid to credit
unions.
I think probably in my experience, I know that a lot of the
credit unions which could really make use, small, low-income
credit unions which are in the inner city or in that isolated
rural area that you are concerned about, Senator, are not
applying for CDFI moneys because the application process is a
little too complex, a little too complicated for their very,
very limited resources.
SUPREME COURT DECISION ON CREDIT UNIONS
Senator Bond. I appreciate your views on that.
As I indicated, we congratulate you on the situation you
find yourself in, that the insurance fund had its best
operating year in its 26-year history, and the number of
problem credit unions has continued to decline, and they show
strong capital growth.
As we noted, the Supreme Court granted certiorari yesterday
on the U.S. Court of Appeals decision. What do you see the
impact on credit unions being should the Supreme Court uphold
the court of appeals decision?
Mr. D'Amours. The impact over the long term would be very,
very serious, if not devastating, depending upon how the
district court ultimately would implement the court's decision.
There is a partial stay in existence as to the district
courts, Judge Jackson's injunction, which allows credit unions
to continue serving those members they now have even though
those members may share a single common bond.
That injunction could conceivably and logically under the
original court decision of the U.S. Circuit Court of Appeals be
expanded so that they cannot serve even extant members. That
would be absolutely devastating.
But even if that does not occur, Senator, over the long
period of time, what I think most people forget when they look
at credit unions is that whatever their size, whatever their
location, there are people in that credit union serving
disconnected groups, perhaps, in terms of common bond, each of
these groups being unable on their own to form sufficient mass
to operate a separate and distinct credit union.
These can be very low-income people, minimum-wage people,
janitors, secretaries, part-time workers and the like, who
would be deprived of credit union services, which are the only
alternative these people have to the loan shark, the pawn shop,
the rent-to-own store, and in some cases check-cashing
operations.
So we are very hopeful that we will prevail in the Supreme
Court, and if we do not, or even while we are in that process,
that both the House and Senate would look very seriously at the
financial empowerment that credit unions provide that will be
lost unless this challenge to the credit union common bond
system is handled properly.
Senator Bond. So you are saying the justification is that
this is a necessary service that can be provided, this ability
to go beyond what has traditionally been called a common
association. I am a little sensitive of the term, common bond.
[Laughter.]
But a common association is for low-income, disadvantaged
individuals. This is a strong justification for that.
Mr. D'Amours. Absolutely. Common bond is nothing endemic to
the definition of credit unions. It is something that happened
topsy-ish as credit unions developed. It is not a part of the
credit union definition. It is not necessary to achieve their
purposes.
It is being used by some, trying to be used by some as a
limiting factor. It was never intended in our view to be a
limiting factor, and if this effort succeeds, the effort of
credit unions and their ability to bring people into the
American economic free enterprise system would be lost, because
the banks are not going to do it unless they are required to
under CRA, and only to the extent they are required to under
CRA.
It would be shameful. It would be sad for America if this
ability of the credit union financial system to reach out and
empower people in isolated rural areas or in the inner city
were lost.
MODERNIZATION OF FINANCIAL SERVICES
Senator Bond. As Congress and the banking leaders work
toward a modernization of financial services, and they are
going to address the Glass-Stiegle fire walls that is going to
be in for revision, what do you see as the future role of
credit unions?
Mr. D'Amours. I do not think the two are related
whatsoever.
Senator Bond. There will not be any impact on the members
you serve?
Mr. D'Amours. No, sir.
Senator Bond. If there are broadening and consolidating
financial services through permitting securities firms to own
banks and banks to own securities firms, if that comes about,
there will not be any area in which the credit unions would
wish to participate?
Mr. D'Amours. No, sir; credit unions are prohibited from
investment in these kinds of areas from commercial investments,
for the most part, from securities investments. Credit unions
operate in an investment perspective within a narrow niche.
Their job is to make loans, and we have been stressing that at
NCUA.
Senator Bond. So you would not, from a credit union
standpoint, if a larger financial institution wanted to set up
a credit union to serve a target area of need, you would not
see any justification for expanding existing authority to make
that service available?
Mr. D'Amours. We would not want credit unions to start to
get into the banking business, if that is what the question
implies. Absolutely. Credit unions have their niche. They have
filled that niche. They have been doing the job they were
supposed to do very, very well. We do not want to be banks.
We would welcome banks if they wanted a credit union
charter to do what credit unions do, but we have no ambition to
take over their work.
Additional committee questions
Senator Bond. Thank you very much, Mr. D'Amours.
Mr. Knight, we appreciate your testimony. We will leave the
record open in case there are additional questions that members
of the committee want to ask. Your full statements will be made
a matter of record.
[The following questions were not asked at the hearing, but
were submitted to the Administration for response subsequent to
the hearing:]
Questions Submitted by Senator Mikulski
Question. What is the status of the Baltimore Progressive Federal
Credit Union situation?
Answer. Baltimore Progressive Federal Credit Union was liquidated
on January 30, 1997. Its members are now eligible to receive services
from Citadel Federal Credit Union, which offers services less than one
mile from Baltimore Progressive's location.
Question. What is the National Credit Union Administration doing in
low income communities today?
Answer. I enclose our 1996 Yearend Report on Low-Income Credit
Unions, which describes our efforts to expand financial services to
low-income Americans, and respectfully request its inclusion in the
hearing record.
Question.What is the potential impact of the pending case between
the NCUA and the banking industry?
Answer. As you know, the Supreme Court is hearing arguments on
October 6, 1997, on the case challenging NCUA's interpretation of the
Federal Credit Union Act's field of membership provision. After the
banks suffered a number of losses at various U.S. District Courts, the
U.S. Court of Appeals for the District of Columbia, in July, 1996,
reversed the District Court and determined that all members of an
occupational credit union must share a single common bond. The Appeals
Court remanded the case for implementation to the District Court. That
Court enjoined NCUA and all federally chartered credit unions in the
U.S. from enrolling new groups and new members from existing groups
that did not share a common bond with the credit union's core
(original) membership.
In December, the Appeals Court stayed an important part of the
District Court's injunction. Federal credit unions, for now, can
continue enrolling new members from existing membership groups with
differing common bonds so long as those groups were affiliated prior to
the District Court's October 25, 1996, injunction. However, federal
credit unions remain barred from adding to their charters any new
groups which do not share a common bond with their core group.
This (in our opinion) erroneous interpretation of the common bond
provisions of the Federal Credit Union Act could severely limit the
viability of a federal credit union whose membership includes the
employees of one sponsor organization, if that organization downsizes,
relocates or goes out of business. The limitation places these credit
unions at an unnecessary risk occasioned by a downturn in a single
industry or sector of the economy. The NCUA Board believes that
Congress should act now to clarify the Federal Credit Union Act on the
question of common bond and to obviate the negative safety and
soundness implications of court actions crippling the ability of credit
unions to serve different groups that each have a common bond.
Should the courts ultimately decide to force a complete roll-back
of our 1982 policy by ordering credit unions to divest existing members
from unrelated groups, the potential for substantial losses would be
significant and immediate for some 3,586 federally insured credit
unions serving 157,000 groups.
Many of these groups have fewer than the 500 potential members
needed, as a minimum, to organize and maintain a viable credit union.
Thus, millions of Americans would lose or be deprived of the financial
services they have chosen or desire, financial services Congress has
for 63 years directed NCUA and its predecessors to make available to
them.
There are limited regulatory steps NCUA may be able to take in
order to alleviate the problem for some credit unions. However, if the
court's decision stands, only Congress can completely fix the problem.
Since small businesses, which are usually defined as having fewer
than 500 employees (the critical mass needed for credit union
viability), represent the largest and fastest growing segment of the
United States economy, a significant portion of the workforce could be
denied access to credit union services if the Court of Appeals decision
is not reversed. Prohibiting small business employees from joining
existing credit unions would hamper credit unions' efforts to meet
their statutory mandate to provide financial services to low- and
moderate-income workers.
According to Commerce Department data, the 6.18 million businesses
in 1990 employed 93.48 million people. Of these 6.18 million
businesses, 99 percent employed fewer than 500 employees (a total of 75
million people).
As we enter the 21st century, the changing nature of our national
and world economies make it reasonable to expect continuous
downsizings, mergers, and the complete elimination of companies and
whole industries. Occupational credit unions remain extremely
susceptible to these economic changes.
Federal credit unions have remained healthy and have grown because
they invested substantial capital in achieving economic strength and
diversity through the addition of select groups. Deprived of this
option, even without the draconian order to divest existing groups,
many credit unions over time will suffer unbearable losses and their
members will lose needed services. Their liquidation or merger would
significantly affect the federal insurance fund and the health of the
entire industry.
The assets, shares and loans of the 3,586 multiple-group federal
credit unions at year-end 1995 comprised a substantial portion of the
industry's total:
Assets.--$150 billion (approximately 78 percent of $190 billion in
total assets held by federal credit unions.)
Loans.--$94.6 billion (approximately 78 percent of $120.5 billion
in total loans held by federal credit unions.)
Shares.--$132.8 billion (approximately 79 percent of $170.3 billion
in total shares held by federal credit unions.)
These statistics illustrate the potentially devastating impact of
preventing federal credit unions from continuing to add new groups or
new members from existing select groups. As the remaining employees of
existing select groups become older, they borrow less and save more.
Therefore, the inability of a credit union to add sufficient numbers of
new members will dry up the pool of younger members who tend to borrow.
The higher rates of income generated from loans will be reduced, making
it difficult to maintain existing rates paid on savings. The result is
an ultimately fatal asset-liability mismatch.
Moreover, in reliance on NCUA's 15-year multi-group field of
membership policy, many federal credit unions have invested substantial
sums to create an infrastructure to support select group expansion.
Credit unions have spent millions of dollars on branch offices, data
processing, personnel and other enhancements allowing credit unions to
service the additional members of these groups. As people change jobs,
move away, retire and die, and the credit union is prevented from
adding additional members or groups, it will lose its ability to
sustain the cost of these enhancements, adding yet more costs to an
already deteriorating income stream.
We expect to win the Supreme Court case, but if the case comes out
against us, we will continue to work for a legislative solution.
SUBCOMMITTEE RECESS
Senator Bond. We appreciate your patience in waiting for
us, and with that the hearing is recessed. Thank you.
[Whereupon, at 11:50 a.m., Thursday, February 25, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, MARCH 4, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:37 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Burns, Stevens, Shelby, Campbell,
Mikulski, and Boxer.
CORPORATION FOR NATIONAL AND COMMUNITY SERVICE
STATEMENT OF HARRIS WOFFORD, CHIEF EXECUTIVE OFFICER
ACCOMPANIED BY DONNA CUNNINGHAME, CHIEF FINANCIAL OFFICER
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. Good morning. The VA, HUD, and Independent
Agencies Subcommittee will come to order. This is the
subcommittee's second hearing on the fiscal year 1998 budget
and I welcome our witnesses and guests this morning. The
Appropriations Committee and the VA-HUD Appropriations
Subcommittee in particular will face another year of very, very
difficult budget decisions as Congress continues to refocus its
priorities and seeks to balance the budget of the Federal
Government by the year 2002.
I emphasize our continuing need to stay focused on
balancing the Federal budget, including the need to continue to
be proactive in consolidating and reforming our many Federal
programs, including many under this subcommittee's
jurisdiction. We have done much over the last several years,
but there is still much to be done.
The President's fiscal year 1998 budget in my view has not
yet set forth a blueprint for fiscal responsibility, and
without meaningful policy changes now the deficit will
skyrocket by the year 2010, when many of the baby boomers begin
to retire.
As it applies to the current year, the President's budget
optimistically proposes some $92 billion in budget authority
for the departments and agencies in the VA, HUD, and
Independent Agencies Subcommittee, of which $72 billion is
discretionary spending. The amount proposed represents an
increase of approximately $8 billion over the current year's
level, and certainly we could spend all of that and more. There
is no question that many of the activities that we have in this
subcommittee are under great pressure.
I would love to have available the kinds of funds the
President proposes. But given the very real problems elsewhere
in the budget, the significant problems faced in the defense
budget with the costs of our ongoing activities and Bosnia,
Kuwait, and elsewhere, the fact that the deficit in the
President's request actually goes up for the coming year, the
fact that our FEMA moneys are proposed to be off budget when we
fought so hard in the past couple of years to be responsible
and include the emergency spending authority and outlays in the
budget and account for them, I would say that it is very, very
optimistic to think that we would have anything like the budget
authority that the President has proposed under the
congressional resolution.
I would say, therefore, absent some compelling reasons, it
is going to be very difficult for this subcommittee as a
practical matter to provide any increases over our 1997 budget
levels. We will work to obtain as much authority as we can
find, but I would have to say that this does not appear
optimistic and does not appear promising at this point.
This morning we take testimony from five of the independent
agencies under the subcommittee's jurisdiction: The Corporation
for National and Community Service, the Court of Veterans
Appeals, the American Battle Monuments Commission, the
cemeterial expenses for the Army, and the Selective Service
System. These are important programs and activities and I look
forward to their testimony.
We will call as our first witness Mr. Harris Wofford, our
former colleague, now Chief Executive Officer of the
Corporation for National and Community Service. The
administration's budget request for the Corporation for fiscal
year 1998 totals some $546.5 million, an increase of $146
million or 36 percent from the Corporation's enacted
appropriation for fiscal year 1997 of $400 million.
As we all know, the Corporation was established by the
National and Community Service Trust Act of 1993 to provide
opportunities for national and community service and to provide
national service education awards. The Corporation makes grants
by formula, competitive, and national direct, to States,
institutions of higher education, public and private nonprofits
and others to create service opportunities for a wide variety
of individuals, such as students, out of school youth, and
adults, through a variety of full time and part time national
and community service programs.
National service participants may receive educational
payment awards for higher education, vocational education, job
training, or school to work programs.
The Corporation has many laudable and important goals, and
certainly no one has been a stronger champion of these goals
than my colleague, friend, and ranking member, the
distinguished Senator from Maryland, Senator Mikulski.
Nevertheless, there remain significant issues concerning the
implementation of the program and the financial management of
the controls that are being exercised.
First, funding of what is essentially still a new and
unproven program at $546 plus million in fiscal year 1998 is
problematic, especially when the Congress, as I said, is
confronting the budget deficit, especially when the
subcommittee may be short of adequate funds for a number of
longstanding funding priorities, such as veterans medical care
and the renewal of section 8 contracts for low-income families,
including the elderly and the disabled.
In addition, there are some significant financial and
management issues facing the Corporation. For example, the
Corporation has submitted only one annual report, including one
financial statement, and that report covered activities for
fiscal year 1994. Moreover, as I understand it, the Corporation
is currently unable to reconcile its financial accounts for
fiscal years 1994, 1995, and 1996, to the degree that as of
December 1996 some $38 million in AmeriCorps funding could not
be accounted for.
If I am wrong in that supposition, I would be pleased to be
corrected.
Finally, I have concerns about the mission of the
Corporation and how it is being carried out. While the
AmeriCorps Program has been touted as a program designed to
help young people who perform public service pay for college,
the program continues to have problems with the dropout rate in
the program, the educational usage, and, most important, the
final cost to the taxpayer of an educational award under the
AmeriCorps Program.
For example, a recent February 1997 GAO study on the role
of State commissions in implementing the AmeriCorps Program has
raised several significant concerns for me. First, the overall
rate for the programs reviewed under the GAO study indicates
that the median dropout rate for the program participants was
39 percent. In other words, almost two out of every five
participants in the program did not complete the program.
In addition, the GAO report identified a number of concerns
in each of the individual programs reviewed. For example, in
the Casa Verde Builders Program in Texas, at a cost of $2.5
million, 38 of the 64 participants, or 59 percent, ended the
program early, with less than one-third of the participants
earning an award and only 4 participants using an award. This
means the program paid over $600,000 per education award.
Using these funds for Pell grants or some other kind of
education assistance obviously could serve a far greater number
of families and young people in paying for education. Moreover,
in the Casa Verde Builders Program, even if all eligible
participants used their educational award, it would still cost
over $106,000 per person plus $4,725 for the educational award,
for a total cost of over $110,000. This means, excluding
private sector contributions, the taxpayer still would end up
paying approximately $102,000 per educational award.
The bottom line is I am very much concerned the AmeriCorps
Program is turning into another expensive jobs program, in
which we are not getting any bang for our buck.
Finally, I know that the Corporation can tell some
impressive success stories, heartwarming stories that are
obviously worthwhile and show laudable achievements.
Nevertheless, there are open issues and concerns that need to
be addressed, and unfortunately the Corporation does not have
the tracking or accounting systems to demonstrate the successes
and the failures of the Corporation.
Without these systems in place to assure the controls and
to assure that there will be successes and that there will be
accountability for taxpayers' dollars, I would find it
difficult to support the increase in the investment requested.
I look forward to hearing the testimony of Mr. Wofford and
I am optimistic that he can allay our concerns in many areas as
we begin to address these questions.
Now it is my pleasure to turn to my ranking member for her
comments. Senator Mikulski.
STATEMENT OF BARBARA MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman. Good
morning to both you and also to two members of this
subcommittee, dear colleagues from the House, Senator Ben
Nighthorse Campbell and Senator Barbara Boxer. We welcome them
and their participation.
I want to extend my welcome to our former colleague Senator
Wofford, the Chief Executive of the Corporation for National
Service, and welcome the other witnesses who will be testifying
today.
I know this morning we are going to have three panels to
deal with five agencies, and I will address the agencies
related to the Department of Defense later during their
questioning. But we do want to give a most cordial welcome to
General Herrling of the Battle Monuments Commission, Steve Dola
representing DOD and the cemetery issues, and Gil Coronado, the
Director of Selective Service, and, of course, the Chief Judge
of the Court of Veterans Appeals.
I would like to begin my opening statement, very briefly,
to talk about our first panel. I believe that the chairman has
outlined some yellow flashing lights about national service,
but I would hope that it would not be a red light to the
program. Yellow flashing lights are a metaphor that I use where
we say we have to pause, proceed with caution, and analyze the
risk as we look over the intersection and where we find
ourselves.
I think that national service, like any new program that
focuses primarily in a decentralized approach, State and local,
will have a lot of bumps on the road in terms of management.
What we want to talk about is get back to the mission of the
program, which was to deal with two issues: one, to rekindle a
sense of the civic virtues that we needed around duty,
obligation, and sense of community. But the other was to deal
with the fact that for many young people the American dream was
no longer available and that there was not a real opportunity
ladder to afford higher education.
For those of us who helped create national service, we did
not want another program; we really wanted to launch a social
movement. We did not want another giveaway, but we wanted to
say for every opportunity there was an obligation. We did not
want to talk about an entitlement society; we wanted to talk
and function on an empowerment society.
The whole role of national service is that by performing
community service you earn a voucher to reduce your student
debt, a voucher to pay for higher education. So it was based on
essentially opportunity and obligation linked.
The work that the volunteers do is not glamorous. It does
involve cleanup and it focuses on public safety, the
environment, helping with education, and focusing on many
areas. I know that not only are heartwarming stories told, but
that there are other issues around it.
What I want to be sure is that we have a national service
program. The President has talked about stimulating
voluntarism, and later on in April there will be a bipartisan
and I hope a nonpartisan summit on voluntarism in Philadelphia.
Who will be there? Not only President Clinton, but President
George Bush, who founded the Points of Light concept that our
subcommittee under both stewardships have funded. It will have
Colin Powell, who certainly knows what duty, obligation, a call
to service meant, and how we can translate that into civilian
society.
But I believe we need to have a mechanism to operationalize
good intentions and where there is a Federal role, but not a
federally restrictive set of mandates. So we look forward to
that summit and how we can continue to stimulate voluntarism,
not only through this program but through others.
The GAO report does raise some issues and concerns, but
what they talk about is, though the State commissions vary,
they are meant to vary. What we wanted to have is that each
Governor could decide how to run this program according to
local need. It was to be Federal resources and a State and
locally run program, tailored to local community needs and not
a cookie cutter approach.
So I think that we have gotten off to an uneven start, and
we thank Senator Wofford for ironing out a lot of the wrinkles
that we had: No. 1, acknowledging the validity of the concerns
that the Congress had; No. 2, taking corrective action; No. 3,
to try to put this program on track where it is not a program
only for today, but a program for tomorrow, that the values
learned by participating in the program carry on long after
someone leaves the program.
Last, but not at all least, when we talk about the
attrition rate we are talking about two things. One, that you
have to be fit for duty to stay in this program, and we wanted
the restrictions to be tough, so that if anyone had reasons for
cause to be dismissed for, say, drug abuse, then so be it.
The other is that we are recruiting not only yuppie college
kids to pay off their student debt--a very worthwhile endeavor,
I might add--by creating a sense of obligation, but we were
also recruiting among the poor. In many instances, deep
compelling personal reasons meant that people had to leave the
program. So, therefore, the attrition rate is in many ways to
be expected.
Well, I sound like I am giving the testimony that maybe
Senator Wofford is going to give, but I do think we really need
to, and through this appropriations cycle, to look at where
national service has been and correct the problem and look at
where national service could go, and really in a bipartisan,
nonpartisan way focusing on some clear objectives and strong
management controls.
So with that, I will conclude my statement.
Senator Bond. Thank you very much, Senator Mikulski.
Senator Campbell.
STATEMENT OF BEN NIGHTHORSE CAMPBELL
Senator Campbell. Thank you, Mr. Chairman.
I am pleased to see our former Senate colleague, Senator
Wofford, here, the Chief Executive Officer of the Corporation
for National Service.
In my home State of Colorado I visited the location at our
former Lowry AFB on a couple of occasions and I believe it has
a great deal of potential. I know that there has been some
growing pains with it and I know it has come into some
criticism, but generally this group in our State has helped
low-income communities. It has tutored at-risk youth, for
instance, and it has monitored students, helped with antigang
initiatives, and a number of things. Similarly, I think it has
helped homeless veterans on many occasions and I certainly
support that.
I guess that I have got some concerns that some of the
other committee people have, too, that I guess could be best
described as Senator Mikulski has. There are some yellow lights
going off about how the budget is being handled. But I think
generally it is a new program and generally doing very good.
I just wanted to tell our former Senator that I am
certainly supportive of it and hope we can iron out those
problems and get on with it.
Senator Bond. Thank you very much, Senator Campbell.
Senator Boxer.
STATEMENT OF BARBARA BOXER
Senator Boxer. Thank you so much, Mr. Chairman. It is
certainly a pleasure for me to be here today. As a new member
of this committee and this subcommittee, I am very honored.
I wanted to mention, if I have to get up and leave in the
middle of something, I have got a conflicting hearing on
Superfund sites going on elsewhere in the building. So forgive
me.
But I really wanted to come by to extend a special welcome
to Harris Wofford, our former colleague, who is now CEO of the
Corporation of National Service. He is a hero of mine and his
interest in this goes way back. I remember when I was a junior
at college President Kennedy urged our Nation's young people to
ask not what your country can do for you, but what you can do
for your country, and I remember that resonating with me, and
here we are so many years later with those same words having
tremendous meaning.
Once again, this challenge has been made to our Nation's
young people through this program, and once again I am happy as
well to see young people responding. I hope that we will not
take away this opportunity. I believe that we can get to the
bottom of whatever the problems are and have some strong
bipartisan support for it.
The Corporation for National Service plays a key role in
helping our country and our communities address unmet needs,
while ushering in a renewed commitment to civic responsibility.
In my State we have over 2,300 AmeriCorps members in 48
different sites. Members tutor children K through 12, they
mentor teens at risk of dropping out or becoming teen parents,
they assist local community organizations in reducing juvenile
crime. They support local residents in identifying and
addressing the most critical needs.
Like Senator Campbell, I have had the privilege of visiting
some of these programs and seeing our young people at work.
They have become heroes in many communities, and it is just a
joy to see that. Then they get the opportunity to go to
college.
So I think it is a program that has a vision, and if we are
careful and if we do it right I think it should meet everyone's
expectations.
As a former local elected official, I appreciate the fact
that there is not a cookie cutter approach to this program,
because every community has different needs, and that is what I
like about this program.
So I am pleased to be here today and I look forward to
hearing about the future plans.
Thank you very much, Mr. Chairman, for this time.
Senator Bond. Thank you very much, Senator Boxer.
Senator Burns.
STATEMENT OF CONRAD BURNS
Senator Burns. Move on.
Senator Bond. Thank you very much, Senator Burns. That is
one of your best statements yet. [Laughter.]
Senator Burns. Coming from you, I will accept that as a
compliment.
Senator Bond. That is how it was meant, Senator.
Senator Wofford, we are delighted to have you with us
today. As you will understand, we will make your full statement
a part of the record and would welcome your highlighting those
items which you think ought to be called to special attention
for this subcommittee.
Please begin.
statement of harris wofford
Mr. Wofford. Mr. Chairman, Senator Bond, Senator Mikulski,
Senator Boxer, Senator Campbell, Senator Shelby, Senator Burns:
I look forward to reading Senator Shelby's remarks and anything
Senator Burns has to say now or in the future.
I appreciate this opportunity to discuss the progress and
the plans of the Corporation for the coming year. Our budget
request is for $548 million for the programs authorized under
the National and Community Service Trust Act, and these funds
would support approximately 29,500 AmeriCorps members through
the grant program and 1,600 members in the National Civilian
Community Corps.
The request includes $53 million to support the Learn and
Service America, K through 12, and higher education programs,
and $6 million for the Points of Light Foundation initiated by
President Bush, which has become a special partner of ours both
in the summit and in many other ways.
By the way, Senator Mikulski, I am delighted to introduce
Marilyn Smith of Maryland, who is just taking over as the
director of the Learn and Serve America Program.
Senator Mikulski. I was going to introduce her when I do my
questions.
Mr. Wofford. She was executive director of the State
Commission in Maryland and a pioneer in service learning.
Now, my testimony does not address the VISTA section of
AmeriCorps or the Senior Corps programs funded under the
Domestic Volunteers Service Act. Mr. Chairman, I appreciate
very much your support over the years for VISTA and its 30-year
track record as the first domestic Peace Corps, of helping
people and communities help themselves.
By the way, I hope the VISTA approach is, in fact, going to
be a larger proportion of the overall AmeriCorps scheme.
I want to make three points: First, that national service
works. It is a proven way to leverage volunteers and help to
solve community problems; especially the critical problems of
children and youth.
Second, that we are committed to achieving the highest
levels of integrity and efficiency. We have already taken
important steps to cut costs, increase efficiency, and develop
a sound financial management system.
Third, I want to outline briefly three initiatives--America
Reads, National Service Scholars, and the Presidents'
Philadelphia Summit, Presidents plural, as Senator Mikulski
pointed out, to be chaired by Gen. Colin Powell. Those
initiatives can help unleash a new wave of voluntary citizen
action aimed at solving some of our country's most serious
problems in a decentralized, nonbureaucratic way.
There are very few programs that have received the same
level of scrutiny as AmeriCorps. The conclusion of the
evaluations and reports and the experience of communities
across America, reflected in so many Governors' support for
Corporation programs, is that national service works, helping
to solve the toughest problems of education, crime, drugs,
illiteracy, homelessness, environmental problems.
As I detail in my written testimony, Aguirre International,
an evaluation firm headed by President Ford's Education
Commissioner, found significant accomplishments in every area
in which AmeriCorps members serve. Nowhere is AmeriCorps having
a more profound effect than in education. More than one-half of
all AmeriCorps members work with children and youth. They
teach, tutor, run after school programs, do drug prevention
work, create safe havens and safe corridors, and organize
secondary, middle school, and university students themselves to
serve.
Thousands of AmeriCorps members serve as mentors or are
recruiting mentors to work one on one to help children do
better in school. AmeriCorps members are also in the front
lines in the fight against crime. They organize crime watch
groups, work to reduce gang violence and help crime victims.
Their efforts have won extraordinary praise from police chiefs
and sheriffs around the country.
A key to understanding AmeriCorps is the degree to which it
leverages unpaid volunteers. Originally there was some concern,
and there is still in some people's minds, that there is a
contradiction between full-time service with living allowances
and traditional unpaid volunteering, when exactly the opposite
is the case.
Very often, in most cases you cannot use large numbers of
unpaid volunteers without a cadre of full-time people to make
it possible. Right now today there are two teams of the NCCC,
National Civilian Community Corps, who have gone right away on
the call of FEMA, as they also do on the call of the Red Cross,
to the disaster area in Arkansas. They help organize unpaid
volunteers. They come quickly. They work night and day. They
stay until the job is over.
Because members serve full time every day, they help the
nonprofits in which they serve to multiply the number and
effectiveness of unpaid volunteers. Habitat for Humanity is a
case in point. At the Habitat site in Miami, 2 dozen AmeriCorps
members helped recruit, and worked alongside, thousands of
community volunteers to build 50 new homes.
Aguirre International found that each AmeriCorps member
recruited, trained, and supervised an average of 12 unpaid
volunteers. The hundred projects in our Learn and Serve America
Higher Education Program have generated the service of an
additional 27,000 volunteers. These numbers will continue to
grow as we put extra emphasis on volunteer generation.
National service is cost effective. Three separate
independent evaluations have examined the costs and benefits
and have concluded that it is a wise investment that returns
from $1.54 to $3.90 for every dollar invested. That is one
reason Massachusetts Gov. Bill Weld has said it is the wisest
investment of taxpayers' money he could think of.
On another front, AmeriCorps is living up to its GI bill
promise of expanding educational opportunity for those who
serve, especially those from America's hardworking middle
class. Last year 55 percent of AmeriCorps members came from
households with incomes of from $10,000 to $50,000. Another 21
percent come from homes with less than $10,000 income. The
National Service Trust has already made more than 26,000
payments totaling $44 million to over 6,000 education and loan-
holding entities.
The Corporation is a lean, decentralized, and responsive
public-private partnership that is locally based. Grants go to
local nonprofit groups--schools, colleges, universities, faith-
based groups--more than 430 such through AmeriCorps alone.
These groups decide what service will be performed and they
select and enroll the members.
Two-thirds of these grants are made by Governor-appointed
State commissions. The other one-third go to national
nonprofits, such as Habitat, the Red Cross, and the Boys and
Girls Clubs.
National service is competitive. States compete for
Corporation resources and local programs compete for AmeriCorps
members. Programs that do not perform get eliminated. Since
AmeriCorps started, 70 programs have not been renewed for
additional funding.
National service uses rigorous evaluation to improve
quality. Right now 14 separate studies related to AmeriCorps
are being conducted or planned, most by outside evaluators. In
addition, we require every AmeriCorps program to design annual
objectives based on measurable outcomes--reading scores raised,
children immunized--and check their progress through the year.
This is a cutting edge initiative in the nonprofit sector.
All the programs of the Corporation are nonpartisan in
spirit and in construction. By law, State commissions are
comprised of a balance of Democrats and Republicans.
Commissions are appointed by Governors, three-fifths of whom
are Republican. Bipartisanship is built in.
Perhaps no other issue has generated so much confusion and
misinformation as the issue of costs. AmeriCorps members who
serve their community full time for a year receive a living
allowance that averages about $150 per week or $7,800 per year,
going up under cost-of-living formulas to a little over $8,000
in the coming year--not $18,000, not $27,000, not $50,000, as
some critics have stated.
After the corpsmember completes a year of full-time
service, he or she earns an educational award of $4,725 to be
used at some point over the next 7 years. There is an
additional allotment for health care. The total base support
for the AmeriCorps member amounts to about $13,000 in living
allowance, health insurance, and education award.
The total average cost from the Corporation's
appropriations per AmeriCorps member has been a little over
$18,000 and it is going down. The steps we have taken to cut
costs include eliminating grants to Federal agencies, planning
grants, and member relocation costs. We have raised the local
match from 25 percent to 33 percent, requiring grantees with
above-average costs to cut costs by 10 percent this last year
and expanding the number of education awards only--a good idea
that Senator Grassley has strongly pressed for.
In this program, the Corporation provides education awards
to nonprofits, religious organizations, colleges, and others
who agree to provide the AmeriCorps member's living allowance.
We have already approved 2,000 of these assignments, including
a new partnership with the Boys and Girls Clubs of America to
support 800 AmeriCorps members. The National Council of
Churches will sponsor more than that number.
Furthermore, last May I announced an ambitious plan for
reducing AmeriCorps costs. We are reducing the average cost per
member to $17,000 in program year 1997--that is including
education award and everything--to $16,000 in 1998 and to
$15,000 in 1999.
This includes all of the items that I have listed above
including recruitment, training, and all our program support.
Senator Bond. Mr. Wofford, we turned off the light and let
you go a little longer than the 5 minutes we had forecast. We
do have four others to do. It has been about 15 minutes and I
hate to do this, but we have a heavy schedule today. If you
could wrap up.
Mr. Wofford. I will try to wrap up fast. Thank you, Mr.
Chairman.
The handling of the Corporation's financial management
problems demonstrates our commitment to change and reform. My
top priority, shared actively by our Corporation's Board of
Directors, is getting our financial house in order. Under the
leadership of our new chief financial officer, Donna
Cunninghame, we are making steady progress toward producing
auditable books and correcting deficiencies. Our goal is to
build a sound financial management system and make the
preparation of auditable financial statements a routine
operation.
The $38 million, Mr. Chairman, that you mentioned a little
earlier, in fact, is money that Ms. Cunninghame, tells me has
been brought down to the neighborhood of $28 million. With some
further adjustments it will come down more.
Last, the three initiatives. The America Reads campaign
launched by President Clinton, endorsed by so many Governors
and mayors, is----
Senator Mikulski. Senator Wofford, just to help you out
here and move along with the chairman, and not to interrupt
your testimony, but I have two questions related to America
Reads and also to the Presidents', the multiple Presidents'
summit, the Colin Powell, and perhaps we could come to those
two issues in my question.
Mr. Wofford. Very good.
Senator Mikulski. And you could brief us on that and
through that question.
Mr. Wofford. I will await your question. That help is
welcome, Senator Mikulski.
I might say that the one other initiative other than the
American Reads and the Presidents' summit is the National
Service Scholars Program for which we are asking $10 million.
In his commencement speech at Penn State, the President called
for service to become part of the ethic of every school in
America. To help make this happen in every high school, he
announced the National Service Scholars Program, which will
reward high school juniors and seniors who do outstanding
service with a $1,000 college scholarship, $500 of which will
come from the Corporation and $500 from local sponsors.
The Corporation has contracted with a private foundation to
administer this program, which will begin making its awards
this spring.
PREPARED STATEMENT
I will conclude by saying that national service fits the
era in which big Government is over because the era of big
citizens is beginning. The other side of reinventing Government
is reinventing and reinvigorating citizenship. National service
reduces our reliance on Government by mobilizing citizen
action. It helps communities solve problems in their own
ingenious ways. It strengthens the building blocks of civil
society. It is a smart and wise investment and there are
compelling reasons why it should be continued, not despite
tight budget times but because of them.
Thank you, Mr. Chairman.
[The statement follows:]
Prepared Statement of Harris Wofford
Mr. Chairman and members of the Subcommittee, I appreciate the
opportunity to appear before you today to review the Corporation's
progress over the last year and to report about our plans for the
future.
The total fiscal year 1998 budget request from this Subcommittee
for programs authorized under the National and Community Service Trust
Act is $546,500,000. In addition to this amount, we are seeking a
separate appropriation of $2,500,000 from this Subcommittee for the
Office of the Inspector General.
These funds will provide for approximately 29,500 AmeriCorps
members through grant programs and approximately 1,600 AmeriCorps
members through the National Civilian Community Corps (NCCC) program.
(Participants in the AmeriCorps*VISTA program, funded through the
Subcommittee on Labor, HHS, Education, and Related Agencies, will bring
the total to 35,000 AmeriCorps members.)
The amounts requested represent an increase of $146,500,000, or 36
percent over the fiscal year 1997 funds appropriated by this
Subcommittee for national service. The increase is targeted to the
America Reads initiative, the challenge to Americans to help all
children read well and independently by the end of the third grade.
National service's role will be specifically outlined in legislation to
be presented to the Congress later this month.
The budget request will cover the costs of making the current
District of Columbia NCCC deployment site a permanent campus, expanding
other campuses, and establishing a new campus in a region of the
country not currently served by the NCCC. In addition, these funds
provide an increase in support to service-learning initiatives in K-12
schools, community organizations, and institutions of higher education
through the Learn and Serve America program.
For three years, national service has had proven, positive results
in improving America's communities. National service programs have been
``getting things done'' and expanding educational opportunities,
improving the environment, enhancing public safety and meeting other
human needs. Outside experts have found that representative programs
have achieved positive cost-benefit ratios that merit and justify your
continued support.
GETTING THINGS DONE
In the three years since the program was created, 70,000 AmeriCorps
members have served in over 1,800 non-profit operating sites.
A 1996 independent evaluation of AmeriCorps programs by Aguirre
International--headed by President Ford's Commissioner of Education--
examined the activities of one out of every ten AmeriCorps members then
serving. Aguirre found that this small-but-representative sample of
individuals:
--Taught, tutored, or mentored almost 64,000 students.
--Collected, organized, and distributed 974,000 pounds of food.
--Helped 2,550 homeless people find shelter.
--Developed and distributed 38,500 sets of information about drug
abuse, HIV/AIDS, street safety, health care, and other issues.
--Ran violence-prevention after school programs for 50,000 youth.
--Performed energy audits for more than 18 million square feet of
buildings.
--Planted more than 210,000 trees.
AmeriCorps members have similar achievements in every state over
the last year.
The 78 AmeriCorps sponsored by the Montana Conservation Corps
repair the homes of elderly and low-income residents, restore and
protect natural resources, improve the habitat of wildlife, and
increase the public's access to natural sites. The AmeriCorps members
also mentor at-risk youth while engaging them in service.
The Fort Belknap Community Council's New Vision Youth Serve is a
program supported by a Learn and Serve America K-12 grant, run by and
for this Montana tribe. The Fort Belknap Tribal Education Department,
College Safe Future Program, Housing Authority, Youth Council, and
Tribal Health Department are developing a network of community service
centers on the tribe's reservation to address public safety, human and
environmental needs.
The Blue Hills AmeriCorps program engages 18 AmeriCorps members in
partnership with the Kansas City, Missouri Police Department to help
close drug houses, reduce crime by reporting drug activity, establish
safety corridors, and train youth and adults in conflict resolution.
This year, Blue Hills AmeriCorps members recruited and trained 734
volunteers to serve as school bus stop guards at 62 school bus stops.
Over the last three years, more than 50 drug houses were closed down,
some of which have been taken over by the city and are being
rehabilitated as affordable single-family housing for low income
families.
In Birmingham, Mobile, and Montgomery, Alabama and 17 other cities
in nine southern states--the Alliance for Catholic Education (ACE)
provides teachers and other resources for under-resourced parochial
school systems through a Learn and Serve America: Higher Education
grant. ACE and the University of Notre Dame are matching every
Corporation dollar with 13 dollars for the 1996-97 program year. ACE
Learn and Serve members are graduates of several top college
institutions of higher education, including Notre Dame, Duke,
Georgetown, and Boston College.
The 28 AmeriCorps members sponsored by the American Youth
Foundation's St. Louis Partners for Service Education tutor and assist
teachers in developing projects related to literacy, the environment,
first aid, and substance abuse prevention. The AmeriCorps members have
recruited more than 100 parents to assist in classrooms and other
educational support activities.
Twenty AmeriCorps members sponsored by the Notre Dame Mission
Volunteer Program and the Sisters of Notre Dame are serving at eight
schools, community centers, and soup kitchens across Baltimore,
Maryland. Sharonne Henderson, a Notre Dame--AmeriCorps member who
tutors children at City Springs Elementary School, recognized that one
of her students had significant trouble seeing. The child was tested,
diagnosed as having a cataract, and fitted with glasses. Ms.
Henderson's presence, attention, and concern led to the early detection
and treatment of this very serious condition. The Notre Dame Mission
Volunteer program also sponsors 48 other AmeriCorps members who serve
in Boston, Massachusetts, Cincinnati, Ohio, and Apopka, Florida.
The 173 AmeriCorps members of the United Youth Corps of Maryland
maintain and restore 15 state forests, parks, and wildlife management
areas. Members rehabilitate abandoned houses and construct community
parks in low-income Baltimore neighborhoods, tutor students with
special needs, and serve as teachers' aids.
In Alaska, AmeriCorps members serve in more than 30 communities to
improve environmental education, recycling, sanitary waste management,
early childhood education and tutoring. Members serve in rural areas
such as Hooper Bay and Nulato.
Students at the Cape May County (New Jersey) Technical High School
in New Jersey are working with Habitat for Humanity in a program
sponsored by Learn and Serve America K-12. The students build houses on
the school property which are then transferred to lots throughout the
area. The program was recently named a Best Practice/Star School in the
category of Public Engagement by the New Jersey Department of
Education--the only one of 1,000 programs under consideration to win
that distinction.
Twenty-four AmeriCorps members sponsored by Vermont's Northeast
Kingdom Initiative Program are serving youth, unemployed or under-
employed adults, and the elderly in a three-county area--one of the
poorest and most rural areas in the nation.
Twenty-two Kern County School District AmeriCorps members in
California's Central Valley are tutoring 600 students in the 1996-97
school year. Over half of the students tutored are now reading at or
above the standard for their grade levels.
Twenty-two AmeriCorps members in the Idaho TRIO AmeriCorps program
have leveraged the assistance of 369 volunteers to tutor 1,997 at-risk
K-12 students. Seventy percent of the students tutored showed
improvement of their school performance by at least one grade. The
AmeriCorps members have also advised 863 students regarding career
choices and assisted 338 Idaho teachers through in-class and other
support. AmeriCorps members were able to encourage AmeriCorps host
agencies to contribute more than 2,169 hours to support the service of
members. One student said of the program, ``I can feel good about
myself. I'm proud of myself. I feel even better about my dream to go to
college.''
Now in its third year of operation, twenty AmeriCorps members in
the Iowa Coalition Against Domestic Violence Program, a statewide
AmeriCorps program, have made 12,464 contacts with victims of domestic
abuse (250 percent of their goal), assisted over 1,000 women in
obtaining pro se protective orders (133 percent of their goal), and
provided 371 educational programs for Iowans ranging from elementary
school children to senior citizens (77 percent of their goal). This
program has been very effective in engaging another 400 non-AmeriCorps
volunteers to provide 160,000 hours of additional services to victims
of domestic violence. AmeriCorps members serve in similarly effective
programs across the country, including the New Hampshire Coalition
Against Domestic and Sexual Violence's AmeriCorps Victim Assistance
Program. This program, and others, in New Hampshire prompted former
Governor Stephen Merrill to state that ``the national service program
has been a great success in the state of New Hampshire and I anticipate
it will continue to be in the future * * *. These motivated individuals
make AmeriCorps work for New Hampshire and I am pleased to be a partner
in this process.''
In addition to environmental and disaster relief work across the
region, AmeriCorps National Civilian Community Corps (NCCC) members
based at Colorado's Lowry Air Force Base have achieved significant
results in Denver schools. Over the last year, the 14 corpsmembers who
served at Denver's Capitol Hill Children's Center helped kindergarten
students improve their language-skills test scores by an average of two
years. Thirteen other corpsmembers served as mentors to the first-
through fifth grade students at the Smith Renaissance Academy.
Together, the students and corpsmembers produced a school newspaper,
which allowed the students to develop reading, writing, and research
skills while preparing stories about their community. An additional 14
AmeriCorps*NCCC members served at the Columbine Elementary School,
where they helped set up a new school building designed to house a
program focusing on the first- and second-grade students' literacy
skills. These NCCC members tutored students who needed special
assistance and designed an after-school program for primary students
and their parents.
These examples quantify the immediate effects of national service.
While we can measure the value of the bridge AmeriCorps members helped
repair or estimate the cost to society had AmeriCorps members not
tutored children in need, some benefits of the Corporation's programs
are not immediately measurable. By instilling a sense of pride in a
community, by establishing community volunteer programs, and helping
prepare children for their first days of school, AmeriCorps members
help to crack the atom of civic indifference creating a chain reaction
whose effects transcend quantification and are felt in a myriad of
ways.
DEMOGRAPHICS
The strongest links in this chain are the AmeriCorps members.
AmeriCorps members mirror the diversity of the communities in which
they serve and look like a cross-section of 21st century American
cities. Preliminary demographic information on current participants in
AmeriCorps grants programs and the NCCC are similar to those of the
first and second years of the program. Approximately one in two
AmeriCorps members are white, slightly less than one in three is
African American, and one in six is Hispanic. Initial data shows
approximately four percent of these current AmeriCorps members are of
Native American, Asian or Pacific Islander heritage.
Data about the levels of education already achieved by AmeriCorps
members suggests an important trend: in each of the three years of
AmeriCorps, the percentage of participants who already earned their
bachelor's degree, spent some time in graduate school, or earned a
graduate degree has increased. In the 1994-95 program year, these three
categories comprised 29 percent of AmeriCorps members. The sum grew to
35 percent in 1995-96, and preliminary data for the 1996-97 program
year indicates another increase, to 36 percent.
AmeriCorps expands opportunity in exchange for responsibility for
the broad middle class. In the 1995-96 program year, 56 percent of the
AmeriCorps members came from households with annual incomes of less
than $30,000. (The Corporation receives no information about the
household family income of AmeriCorps members until the end of the
program year.)
The Subcommittee should note that for the current, 1996-97 program
year, all of these figures may reflect a shift in the balance between
urban and rural communities because the Corporation has eliminated
AmeriCorps grants to other federal agencies. Some rural programs that
utilized AmeriCorps members and worked with local offices of the United
States Department of Agriculture or other agencies no longer exist. The
Corporation is making a concerted effort to restore and increase rural
representation in the AmeriCorps program.
EXPANDED OPPORTUNITY
Over the last three years, AmeriCorps has enabled 70,000 Americans
to serve their communities in exchange for expanded opportunity.
Approximately 45,000 of these individuals were participants over the
first two years of AmeriCorps, and are eligible to earn national
service education awards. The remaining 25,000--who are currently in
the midst of their year as AmeriCorps members--will earn education
awards when they complete their terms of service. Those who have
completed their terms of service have seven years within which to use
their education awards.
The National Service Trust has already made over 26,000 payments
totaling approximately $44 million to over 6,000 education and loan-
holding entities. Currently, the Trust is averaging over $600,000 in
payments weekly. This number will increase as more and more members
avail themselves of their education award.
COST--BENEFIT
Independent evaluators have repeatedly proven that national service
yields a positive return on investment. The authors of each study have
cautioned that their findings probably underestimate the benefits of
national service significantly, because the full value of safer
streets, stronger schools, cleaner rivers, and the like are difficult
to quantify and not seen immediately.
--In the ``Cost-and-Benefit Study of Two AmeriCorps Projects in the
State of Washington,'' the Northwest Regional Educational
Laboratory concluded that every dollar invested in these
Washington State projects yielded a return up to $2.40 in
addition to less-easily measured benefits.
--To analyze their significant investments as AmeriCorps private
sponsors, the Charles A. Dana, IBM International, and James
Irvine Foundations commissioned a team of noted conservative
``Chicago School'' economists to examine more than 70
AmeriCorps sites in Austin, Texas; Columbus, Ohio; Atlanta,
Georgia; Charlotte, North Carolina; New York City; and northern
California. In their report called ``The Benefits and Costs of
National Service,'' Kormendi/Gardner Partners predict that for
every dollar AmeriCorps invests, the public will realize up to
$2.60 or more in direct, measurable benefits.
--The University of Minnesota, in the ``Youthworks-AmeriCorps
Evaluation First Year Report'' on projects across Minnesota,
found benefits up to $3.90 for each dollar invested in these
programs.
A study of the Learn and Serve America: K-12 completed by Brandeis
University and Abt Associates concluded that ``on average, the programs
in the intensive study sites produced about $3 in direct community
benefits for every dollar in program costs.''
When Massachusetts Governor Bill Weld swore in his State's
AmeriCorps members this fall, he explained how ``every taxpayers'
dollar we spend on AmeriCorps comes back threefold, when we add up the
value of your innovative ideas, your physical labor, and all of the
skills you'll bring to the workforce when you finish your education.''
That's why he calls AmeriCorps ``one of the most intelligent uses of
taxpayer dollars ever.''
AMERICA READS
These demonstrated successes led President Clinton to give national
service a major role in the America Reads Challenge. The America Reads
Challenge is a national campaign to ensure that every child can read
well and independently by the end of the third grade. The President has
proposed that money from the Corporation's budget be used so members of
AmeriCorps may play a key role in recruiting, training, and organizing
the new army of 1,000,000 volunteers who will tutor young children.
The increasing complexity of today's jobs and society amplifies the
importance of literacy. Research shows that if students cannot read
well by the end of third grade, their chances for later success are
significantly diminished--including a greater likelihood of dropping
out of school and other delinquent behavior.
Poor literacy skills are one of our nation's most serious problems.
Recent testing by National Assessment of Educational Progress found
that 43 percent of America's fourth grade students in public schools
scored below the basic reading level. Education outside the classroom
is essential to improving reading skills. A U.S. Department of
Education study, ``Reading Literacy in the United States'', found that
fourth-grade average reading scores were 46 points below the national
average where principals judged parental involvement to be low, but 28
points above the national average where parental involvement was high--
a difference of 74 points. Reading is a skill that is developed not
only in the classroom, but also outside of school in the home. To this
end, America's Reading Corps will mobilize tutors to work with reading
teachers, principals, libraries and community-based organizations to
provide individualized after-school, weekend and summer reading
tutoring for more than 3 million K-3 students and their parents.
There are several parts to the America Reads Challenge, including:
the Reading Corps, which will tutor children in grades K-3 who need
extra help; the Parents as First Teachers program, which will assist
parents in helping their children; expansion of Head Start programs;
and a challenge to the private sector to work with schools as they have
with the Department of Education's Partnership for Family Involvement
in Education and the READ*WRITE*NOW! initiative. The Reading Corps is,
the heart of the program that is proposed to be funded at almost $2.5
billion over 5 years, will provide reading specialists and tutor
coordinators to train and supervise the tutors.
The President has asked for national service's participation
because we are well equipped to handle this challenge. Many of our
programs have strong track records helping children improve their
reading skills and assist parents in becoming an essential part of
their children's education.
For example, the Home Instruction Program for Preschool Youngsters
(HIPPY) has had a remarkable record of preparing children for success
in school before their first day of kindergarten. AmeriCorps Members in
16 States and 43 HIPPY Sites serve as resources for parents, especially
single mothers on welfare. They make home visits every two weeks to
help young mothers improve their basic parenting skills and provide
their children with an enriched preschool experience. In doing so,
AmeriCorps Members often instill in parents an interest in their
children's education, and this interest spurs them to be more effective
partners with their children's classroom teachers. Programs like HIPPY
that ensure children have basic learning skills before entering the
classroom make it more likely that the children will be able to read
well by the end of third grade.
In another program, Parents and Children Together in Learning
(PACT), Learn and Serve America members through Harcum College, in Bryn
Mawr, Pennsylvania bring parents back to school to teach them how to
help their child read. Working with School District of Philadelphia,
PACT trains inner-city parents to be volunteer tutors in their
children's classrooms. PACT enrolls parents who participate in the
program in Bryn Mawr classes for two weeks to teach them how to be a
tutor. As a result, nearly 450 parents have improved their own skills
while tutoring more than 4,000 children. The parents earn college
credit for participating in the program.
In Simpson County, Kentucky, 25 AmeriCorps members work directly
with elementary school students to boost reading comprehension and
nurture a love of books. The program is called SLICE (``Service
Learning Impacting Children's Education'') and it gets results. By the
end of the first year of the program more than 100 of the 122 tutored
students in the county had improved their reading scores by at least
two grade levels.
The SLICE program exemplifies some less obvious benefits of
AmeriCorps literacy programs. The program has been successful in
improving the reading ability of students, and has helped develop
community involvement in the process. Small business owners, local
members of the American Association of Retired People (AARP), a retired
teachers group, and even the entire staff of the local city hall have
pitched in on the reading effort. Each SLICE AmeriCorps member recruits
an average of 16 unpaid volunteers.
By fostering community support, SLICE has achieved what we strive
for in every national service program--a sustainability that is not
dependent on any one individual or even a core group of original
volunteers. This is how service can take root and grow to become a
natural part of the life of a community.
NATIONAL SERVICE SCHOLARS PROGRAM
The President announced the National Service Scholars Program in
his June, 1996 commencement address at Pennsylvania State University.
To qualify for the National Service Scholars Program, students must be
juniors or seniors in high school who have performed community service
for at least a year and who have been nominated by their principals.
Recipients will receive a check for at least $1,000 for college costs,
of which $500 will come from the National Service Trust and at least
$500 will come from local scholarship sponsors.
The Administration's 1998 suggested appropriations language sets
aside $10 million for the National Service Scholars program. This is
consistent with the mission of the National Service Trust, which was
established as a repository for education awards for participants in
national service programs.
In accord with our commitment to reinventing government, a private
501(c)(3) foundation, the Citizens' Scholarship Foundation of America,
will administer the National Service Scholars Program. A competitive
announcement was made in the Federal Register for this cooperative
agreement, and the Citizens' Scholarship Foundation of America was
chosen from a pool of seven highly qualified applicants. The Foundation
has a 35-year history of encouraging and rewarding community service by
youth through its Dollars for Scholars and other programs. Last year,
the Citizens' Scholarship Foundation of America distributed close to
$40 million in scholarships. The Corporation for National Service is
pleased to rely on the talents of the Citizens' Scholarship Foundation
of America to administer the National Service Scholars program.
THE PRESIDENTS' SUMMIT FOR AMERICA'S FUTURE
The Presidents' Summit for America's Future will, with the
sponsorship of private foundations, bring together people from all over
the nation who are committed to stimulating service and community
volunteerism to ensure our youth have access to the resources that will
help them lead healthy, fulfilling, and productive lives. It is a
bipartisan endeavor convened by President Clinton and former President
Bush as honorary Co-Chairmen, retired General Colin Powell as Chairman,
and former Secretary of Housing and Urban Development Henry Cisneros as
Vice Chairman.
Summit sponsors include the Robert Wood Johnson Foundation, the
Ewing Marion Kauffman Foundation, the W.K. Kellogg Foundation, the
David and Lucille Packard Foundation, and the Pew Charitable Trusts.
Community delegations from more than 100 cities and rural
communities, state delegations led by the nation's governors, and
leading citizens from the public and private sectors will come to this
summit with concrete commitments to increase young people's access to
one or more of five critical resources: An ongoing relationship with a
caring adult: mentor, tutor, or coach; safe places and structured
activities during non-school hours to learn and grow; a healthy start;
a marketable skill through effective education; and an opportunity to
give back through community service.
Commitments that have already been made include:
--Big Brothers/Big Sisters has committed to doubling their mentoring
relationships, reaching 200,000 matches through the year 2000.
More important, service will become an integral part of the
mentoring relationship and a key activity for current and
future ``Bigs and Littles.''
--LensCrafters will provide one million needy people, especially
children, with free vision care by the year 2003.
--AT&T has committed $150 million to connect the country's 110,000
public and private elementary and secondary schools on the
Information Superhighway by the year 2000.
--The United States Army is taking the lead in encouraging a joint
effort among the military services to expand opportunities for
active-duty, reserve, and retired military personnel to
volunteer their time as mentors and tutors in their local
communities.
--The National Association For Equal Opportunity in Higher Education
(NAFEO) has promised that half of the approximately 140,000
students enrolled in 117 Historically and Predominantly Black
Colleges and Universities will volunteer as tutors and mentors.
--The presidents of 21 colleges and universities, including San
Francisco State University, the Vermont State Colleges System,
the University of Montana, the University of Maryland College
Park, the Community College of Denver, and the California State
University System have committed half or more of their
increases in work-study funds to community service initiatives
focusing on youth literacy.
The Corporation for National Service is working alongside the
Points of Light Foundation in initiating and planning the Summit to
promote the goals of the National and Community Service Trust Act, the
mission of the Corporation, and the vision set forth in the
Corporation's Strategic Plan.
The Presidents' Summit for America's Future has already created a
surge of interest from the media, community service organizations, and
corporate sponsors nationwide. We are looking forward to working
alongside those who will participate in the efforts coordinated at this
Summit to increase youth's access to fundamental resources and real
opportunity.
MANAGEMENT CONCERNS
As Chief Executive Officer, my top priority--shared by the
Corporation's Board of Directors--is putting our financial house in
order. We are making steady progress in doing so. Our new Chief
Financial Officer, Donna Cunninghame, and her staff are in the process
of improving business processes and implementing appropriate management
controls.
Ms. Cunninghame is a Certified Public Accountant. She and her staff
have experience in both public and private sector accounting. Ms.
Cunninghame served as the first full-time Chief Financial Officer of
the Resolution Trust Corporation, and achieved three clean financial
audits from the United States General Accounting Office (GAO) during
that time. As Chief Financial Officer of the University of Maryland
System, Ms. Cunninghame was directly responsible for all of its
treasury, accounting, and financial operations. Ms. Cunninghame's staff
also has expertise developing and implementing the type of corrective
action necessary to resolve the Corporation's problems.
The Corporation's Inspector General, based on the work done by two
independent auditing firms, found our fiscal year 1994 financial
statements to be inauditable. The difficulty stemmed from the unusual
creation of the Corporation, which merged existing service programs
with the new service initiatives. The Corporation inherited
organizations that had never before been required to present their
financial data in the manner now required under the Government
Corporation Control Act. The difficulties we had are common to most
federal entities required to produce auditable financial statements in
a corporate style. Though initial inauditability may be common, it is
unacceptable. We are aggressively working to produce auditable books.
Arthur Andersen, hired by the Corporation's Inspector General,
produced an audibility report which identified 99 problems. Arthur
Andersen reviewed our efforts to implement their recommendations--they
looked at our progress on 62 issues and found 28 to be completed.
By the time the written report of the review was issued in December
of 1996, Ms. Cunninghame, based on her experience producing clean audit
reports, determined that 57 items were then corrected or in the process
of implementation. The remaining 5 of the 62 reviewed items were
related to activities that require substantial time and effort to
complete. We are working on correcting those problems.
By March 1, 1997 we expect to have corrected or be in the process
of implementing an additional 31 of the 99 items. Ms. Cunninghame has
expressed to me her expectation that by May 1 of this year, all but two
of the 99 problems will be corrected or in the process of
implementation. One of those two corrections is the implementation of
the new financial management system which we are preparing to do in
1998. The second is a minor item that is difficult to correct now but
will be easy to correct when the new system is in place: a process by
which the budget obligation to pay for a purchase is entered into the
system before a purchase order is entered. When implemented, this will
be an automatic part of the process.
I can report that the Corporation is making steady progress in
establishing financial order. We are eschewing ``quick fixes'' in favor
of systematically cleaning up data integrity problems while
implementing appropriate managerial controls. By the time we install
our new financial management system in 1998, the goal is that the
underlying data will be scrubbed and reliable, business practices will
be improved and effectively controlled, and fully auditable statements
reflecting the Corporation's financial status should become routine.
CUTTING COSTS AND OTHER CHANGES
When I spoke with you last year, I outlined an early version of the
Corporation's agreement with Senator Grassley to reduce costs and
address other issues of concern to our critics. Working together, we
improved AmeriCorps by reducing expenditures and expanding the number
of individuals who will benefit from the opportunity to serve. The
Corporation has committed itself to lowering its cost-per-member in the
AmeriCorps grants programs by $1,000 in each of the next three years,
starting with the programs set to begin this fall. The AmeriCorps
budgeted average cost for programs supported with fiscal year 1998
funds will be $16,000, including the education award. By the fall of
1999, the cost will be down to $15,000 per member.
This figure includes all Corporation costs, including the
Corporation's share of members' living allowance and benefits, the
grant for program support, and the administration directly attributable
to AmeriCorps grants by the Corporation and our support of the
Governors' Commissions on National Service. (These numbers are indexed
for inflation and assume that there will be funds appropriated to
support no fewer than 25,000 AmeriCorps members each year.)
Over the last year, the Corporation has made many other changes to
improve our efficiency. We have made improvements in our grant review
process and increased the control the Governors' Commissions on
National Service have over program decisions.
The Corporation has also increased our collaborations with national
non-profit organizations, particularly by expanding the AmeriCorps
``education-award-only'' program.
In this program, the Corporation provides education awards to
individuals who are serving in traditional non-profits and whose
service qualifies them for education awards. These non-profits include
religious organizations, colleges and universities, and other
institutions which have applied to the Corporation and shown they are
able to provide living allowances and other resources for these
AmeriCorps members.
For example, the Boys and Girls Clubs of America are now supporting
800 AmeriCorps members in this way, using them to engage the youth in
Boys and Girls Clubs in community service. Currently, 2,000 AmeriCorps
members are sponsored through this program, and the Corporation plans
to announce agreements with non-profits which will sponsor up to 3,000
more AmeriCorps members in coming weeks.
THE CAP ON NATIONAL DIRECTS
Currently, 43 national non-profits sponsor 2,500 AmeriCorps members
through National Direct grants. Millard Fuller, founder and President
of Habitat for Humanity International, explained that ``as AmeriCorps
members gain in construction skill, our Affiliates are able to expand
the number of occasional volunteers through increased capacity to
supervise and manage volunteers.'' Fuller later announced at a
Washington, DC press conference that ``I want you to know that we at
Habitat for Humanity feel privileged and honored to have the AmeriCorps
people with us, and we want more of them, as time goes on. We love to
be partners with you in this work, and I salute all the AmeriCorps
people.''
Under the Corporation's authorizing statute, one third of the
AmeriCorps grants funds are directed to National Direct programs. In
fiscal year 1997, this corresponds to $71.7 million; for the proposed
fiscal year 1998 budget, this corresponds to $98.7 million. If the
fiscal year 1997 $40 million cap on national directs is not removed,
the shortfall of funds will prevent as many as 13 of these non-profits
from sponsoring AmeriCorps members this fall. All current national
direct programs--including Habitat for Humanity, the U.S. Catholic
Conference, the National Council on Aging, the I Have a Dream
Foundation, the Enterprise Foundation, and City Year--will have to
compete against each other for the remaining funds. No new AmeriCorps
national direct grants to national non-profits--such as Big Brothers/
Big Sisters--will be possible.
We are requesting that the fiscal year 1997 cap be eliminated and
that no cap be put in place for fiscal year 1998.
REAUTHORIZATION
The Corporation for National Service's authorization expired on
September 30, 1996. We are now operating under the authority of the
General Education Provisions Act (GEPA) that will expire at the end of
September, 1997. I have met with Chairman Goodling and representatives
of the House Committee on Education and the Workforce to begin the
formal reauthorization process, and am scheduled to meet with Chairman
Jeffords and members of the Senate Committee on Labor and Human
Resources in coming weeks.
Though it is too early to outline specific details about
reauthorization, I expect that any plan to improve national service
through this process will build on the key principles of the current
national service network: flexibility, including the ability to
redirect resources to meet new needs using proven techniques; stream-
lining, including the importance of constantly improving efficiency;
coordination, including maximizing cooperation among programs in a
community; and devolution, including significant state-and local-
control.
I look forward to working with the Congress through both
appropriations and reauthorization to make national service a program
in which all Americans can take pride.
I will be happy to answer your questions.
AMERICORPS MEMBERS BY RACE/ETHNICITY, 1994-1997 \1\
[Percent of members]
------------------------------------------------------------------------
Fiscal years
Race/Ethnicity --------------------------------
1994-95 1995-96 1996-97
------------------------------------------------------------------------
African-American....................... 32 27 29
American Indian........................ 2 2 1
Asian/Pacific islander................. 3 3 3
Hispanic............................... 15 18 16
White.................................. 49 48 42
Other.................................. ......... 2 9
------------------------------------------------------------------------
\1\ 1996-97 enrollment is still underway, therefore, those data are
incomplete.
EDUCATIONAL ATTAINMENT BY AMERICORPS MEMBERS 1994-1997 \1\
[Percent of members]
------------------------------------------------------------------------
Fiscal years
Education level --------------------------------
1994-95 1995-96 1996-97
------------------------------------------------------------------------
Less than high school.................. 9 5 8
High school diploma.................... 21 22 20
AA degree/some college................. 41 39 36
Bachelor's degree/some grad school..... 26 30 28
Graduate degree........................ 3 5 8
------------------------------------------------------------------------
\1\ 1996-97 enrollment is still underway, therefore, those data are
incomplete.
HOUSEHOLD FAMILY INCOME OF AMERICORPS MEMBERS, 1994-1996
[Percent of members]
------------------------------------------------------------------------
Fiscal years
Income range ---------------------
1994-95 1995-96
------------------------------------------------------------------------
$5,000 or less.................................... 8 6
$5,001 to $10,000................................. 12 15
$10,001 to $20,000................................ 16 19
$20,001 to $30,000................................ 18 16
$30,001 to $40,000................................ 12 13
$40,001 to $50,000................................ 11 7
$50,001 to $60,000................................ 7 6
$60,001 to $70,000................................ 5 5
Over $70,000...................................... 11 12
------------------------------------------------------------------------
AMERICORPS MEMBERS BY GENDER, 1994-1997 \1\
[Percent of members]
------------------------------------------------------------------------
Fiscal years
Gender --------------------------------
1994-95 1995-96 1996-97
------------------------------------------------------------------------
Female................................. 61 65 68
Male................................... 39 35 32
------------------------------------------------------------------------
\1\ 1996-97 enrollment is still underway, therefore, those data are
incomplete.
AMERICORPS MEMBERS BY AGE, 1994-1997 \1\
[Percent of members]
------------------------------------------------------------------------
Fiscal years
Age --------------------------------
1994-95 1995-96 1996-97
------------------------------------------------------------------------
Under 21............................... 38 27 26
22-29.................................. 42 47 53
30-37.................................. 9 10 10
38-45.................................. 7 9 6
Over 45................................ 4 6 5
------------------------------------------------------------------------
\1\ 1996-97 enrollment is still underway, therefore, those data are
incomplete.
FULL- AND PART-TIME TERMS OF SERVICE, 1994-1997 \1\
[Percent of members]
------------------------------------------------------------------------
Fiscal years
--------------------------------
1994-95 1995-96 1996-97
------------------------------------------------------------------------
Full time.............................. 70 78 78
Part time.............................. 30 23 23
------------------------------------------------------------------------
\1\ 1996-97 enrollment is still underway, therefore, those data are
incomplete.
Chief Financial Officer
Senator Bond. Mr. Wofford, in last year's budget hearings,
you stated you expected to shortly bring on a Chief Financial
Officer and, in fact, you only recently filled the position.
More recently, Arthur Andersen issued a report on December 9,
1996, which raised serious concerns regarding your
Corporation's progress in correcting deficiencies in financial
systems and management controls. The report concluded, better
than 8 months after our hearing last year, that the
Corporation's internal controls were not adequate--I quote from
the report:
The Corporation's internal controls were not adequate for
an independent auditor to perform an effective and efficient
financial statement audit in accordance with generally accepted
auditing standards for fiscal year 1995,
and that
an audit of the Corporation's fiscal year 1996 financial
statements may not be possible because many significant
deficiencies remain uncorrected throughout the year.
At what point do you expect the Corporation to have
established adequate internal controls for the independent
auditor to perform an effective and efficient financial
statement audit of the Corporation's financial statement, and
when do you anticipate having auditable financial statements
for 1995 and 1996?
Mr. Wofford. Ms. Cunninghame came aboard as a consultant in
October.
Ms. Cunninghame. I came on board as a consultant August 5.
Mr. Wofford. And in October you received a----
Ms. Cunninghame. Recess appointment.
Mr. Wofford [continuing]. Recess appointment, because her
nomination did not get through in time, though the Senate
worked hard to try to get her nomination through. She received
a recess appointment in October and has been aggressively
pursuing all 99 items in the Arthur Andersen auditability study
since then.
Her nomination is before the Senate Labor Committee this
very week and we hope very much she will be confirmed very
promptly.
By May 1 we expect to have 97 of the 99 items completed or
in the process of implementation. We expect to have the
remaining two items completed in 1998. One relates to the
implementation of a new financial management system and the
other is an improvement in the procurement process which can
occur simultaneously with the financial management system
implementation.
The inspector general and the Chief Financial Officer have
discussed having an audit performed for the 1997 financial
statements. Statements are going to be prepared for 1996 in
order to provide beginning balances for 1997 and the auditors
will be asked to perform a review of these balances in
connection with their audit.
I am very pleased that the inspector general of our agency
and the Chief Financial Officer have established a professional
working relationship which allows them to work together to
strengthen the Corporation's management controls. I would be
happy to give you a further detailed report.
FINANCIAL STATEMENTS
Senator Bond. My question was when do you anticipate having
auditable financial statements for fiscal year 1995 and 1996.
Given the answer, I gather that you are not expecting one. Do
you have a date when you are expecting to be able to give us
financial statements for those 2 years?
Mr. Wofford. We are hoping to have beginning balances for
1997 that will permit an auditable statement for the 1997 year.
Senator Bond. So you are not going to have one for 1995 and
1996?
Mr. Wofford. We are going to at some point have to have an
agreement on the beginning balance that will permit an
auditable statement.
Senator Bond. Thank you.
Mr. Wofford. We think it will be for 1997.
The problems related to this in our Corporation were like
those of many other Government agencies. They are compounded by
the fact that one of the agencies, the ACTION agency, goes back
over many years. Until very recently, as you know, Government
agencies were not asked to produce auditable financial
statements under the generally accepted accounting principles.
Senator Bond. Mr. Wofford, all I asked was about the 1995
and 1996 statements.
I will submit the rest of my questions for the record.
Senator Mikulski.
Senator Mikulski. Thank you very much here.
Mr. Wofford, could your Chief Financial Officer join you at
the table for a moment, please?
Mr. Wofford. Yes; indeed. Donna Cunninghame.
Senator Mikulski. Ms. Cunninghame, good morning and we
welcome you. We know very much that the Corporation needs a
Chief Financial Officer. What I am going to request is not a
detailed description of the problems that we find ourselves in,
but I think we owe it to the committee and to the taxpayers,
essentially a description of why we have this situation, No. 1;
and No. 2, what is your kind of workout or work plan to resolve
this situation, really, and presenting it to us the way an
accountant would present it.
We know you come from the Resolution Trust. Senator Bond
has had extensive experience in that and we all recall with
great melancholy what a fiasco it was and how much that cost
the taxpayer because the financial institutions, who were
supposed to be financial institutions, were not standing
sentry. So it is a little intense to place the same kind of
criterion on this nonprofit.
Could you then essentially give us a description, not an
excuse, an explanation, a no-fault one, about why this
situation existed? But then, having said that, what is your
work-through or workout plan? Is that possible for you to do?
Ms. Cunninghame. Yes; Senator, it is. And I appreciate
having an opportunity to share it with the committee. The
Corporation, of course, was started October 1----
Senator Mikulski. Remember, I have 5 minutes, so I really
need to move on.
Ms. Cunninghame. The basic problem is taking together a
group of existing companies who had different accounting
records. Whatever financial management systems they had varied.
Senator Mikulski. Ms. Cunninghame, I am not asking you to
describe your plan today. I am asking you to submit your plan
in writing to the committee. I think there was a slight
miscommunication.
Ms. Cunninghame. I am sorry. I misunderstood that. I would
be happy to.
[The information follows:]
Work Plan To Address Auditable Financial Statements
Many concurrent efforts comprise the Corporation for National
Service's plan for producing auditable financial statements. A brief
review of these efforts follows.
1. The auditability survey resulted in 99 recommendations dealing
with five broad categories of concerns: the management control
environment, integrity of financial data, data security, segregation of
duties, and budgetary controls. An aggressive and sustained effort has
been underway at the Corporation to respond to recommendations and to
implement necessary changes that improve the Corporation's
auditability. Arthur Anderson is conducting reviews of the Corporations
efforts. A major phase of that review effort is just being initiated,
and we expect to have positive responses from the auditors.
2. A Management Control Committee has been established at the
Corporation and the first draft of a Management Control Manual has been
prepared and distributed to the Board of Directors for review. Training
has begun for staff including all staff of the CFO's department, and
exposure to the issue of management control is now part of the new
employee orientation program.
3. Cash reconciliation, updated above, proceeds as an important
process for achieving the goal of auditable statements.
4. A recommendation codifying the Corporation's approach to grants
accounting, including issues of advances, expense recording, grant
closeout, and grant liability calculations is being prepared for CFO
review. This work includes a review paper by Price Waterhouse which
offered advice on many of the issues.
5. Information system changes have played a major part in our plan
for auditable statements. With the current efforts to implement a grant
review and award system within the Corporation, we are implementing a
movement away from two separate systems for grant activity. Part of
this effort will be the movement of all Corporation grants to the HHS
Payment Management System (PMS) with which we are also implementing an
electronic interface to our general ledger (GL). This all should
greatly improve the consistency and accuracy of information in the GL
and reduce the reconciliation burdens. At the same time, we have
implemented an electronic interface to the GL for all payment
transactions from the National Trust. We also are improving the process
and the supporting documentation for the calculation of liability in
the National Trust and the subsequent recording of that liability on
the GL.
6. We postponed the effort to implement a new financial management
system, originally intended for implementation with the start of fiscal
year 1998, by one year in order to ensure that we have an opportunity
to improve the underlying business processes which provide a foundation
for what is recorded in the system and because we did not feel the
schedule could be met with the competing demands on the organization's
resources, many of which relate to other issues of auditability and
related system development efforts. In Conference Report H. Report 104-
537 which accompanied H.R. 3019 making appropriations for fiscal year
1996, Congress approved report language suggested by the Senate
committee which ``urges the Corporation to submit a reprogramming
proposal for up to $3,000,000 to carry out financial management system
reforms if the Chief Financial Officer determines such additional
resources are needed.'' We have formally requested the reprogramming of
these funds, and we are planning the implementation of a new financial
system during 1998.
7. We have put a significant effort into improvements of the
process for cost share arrangements that underlie a number of our VISTA
programs. Weaknesses in this area had resulted in understated
receivables in the past. We believe that this will result in
improvement to this important area of the financial statements.
Senator Mikulski. When do you think it would be a
reasonable expectation for you to be able to present this
background brief and work-through plan to the committee?
Ms. Cunninghame. I could do that within 1 week easily,
depending on the necessary requirements.
Senator Mikulski. Well, I think it would be very useful if
we had that as quickly as you could produce it with efficiency
and accuracy for both the chairman and myself, so we can see
this, because part of what is being discussed is not only to
continue the existing program and expand it, but some pretty
new programs. I think the committee will feel that before it
can undertake anything new there has to be confidence on these
workout issues. We thank you for that.
Also, for the record we would need a description also about
why the attrition rate. Again, we are not looking for excuses,
but we are looking for crisp, clear explanations so that we
could have this, because as appropriators we really need to
know is our money being well spent and are we getting the
outcome for which the program was created.
I think if we had those two reports we could among
ourselves discuss next steps. So we thank you and we look
forward to that.
[The information follows:]
Attrition in AmeriCorps
Program Years One, Two, and Three
The rate at which Members complete their term of service, or
conversely, the rate at which they fail to do so, can be a valuable
indicator of program health. The Corporation for National Service is
well aware of the value of attrition rates and systematically analyzes
program attrition and its causes. Low attrition can be indicative of
high Member satisfaction, which in turn, suggests careful recruitment,
good training, meaningful service projects and adequate supervision,
among other strengths. While a high attrition rate does not point to a
specific problem, it may be a symptom of underlying factors that
deserve consideration.
That said, in some cases, Members leave their service program early
for reasons that are not indicative of programmatic problems. In the
data provided here we provide attrition rates adjusted rates to exclude
early exits that are not reflective of program quality.
AmeriCorps programs, at the discretion of the program director, are
permitted to make the determination that a Member is departing early
because he or she faces compelling personal circumstances that make
completing the program an unreasonable hardship.
In addition, some Members leave their program early to take
advantage of significant opportunities for personal development or
growth, for example, educational or professional advancement. Although
AmeriCorps is not a jobs program, persons who leave their service
program to enter school, obtain employment or join the military
constitute a positive outcome for the nation as well as for themselves.
Because individuals in the circumstances described above do not reflect
upon the effectiveness of their programs, we believe it appropriate to
exclude them in determining a meaningful attrition rate.
Overall Attrition in AmeriCorps*State/National
Attrition in Year One (1994-1995).--Attrition in Year One was 20
percent. This rate compares favorably with attrition rates for college
freshmen, the Peace Corps, youth Corps and HUD Youth Apprenticeship
programs.
Attrition in Year Two (1995-1996).--Year Two attrition is currently
about 18 percent, adjusted as described above. Enough Members remain
``on the books'' for 1995-1996 that we cannot yet provide a final
accounting. As the attached chart suggests, the overall pattern of
attrition has remained constant.
Attrition in Year Three (1996-1997).--Year Three attrition is
difficult to estimate because most programs are still in their fourth
quarter and some are in their third. At present, nearly 90 percent of
those who enrolled in Year Three are still serving.
Additional Attrition Issues
The socio-demographic patterns reported last year in our attrition
data remain visible, as demonstrated by the two-year attrition rates by
educational attainment. Beginning in Year Two, we began collecting
Member income data by sample only and cannot make direct comparisons to
the attrition x income data provided last year. However, data from our
sample survey, which included Members who had left early, suggests
strongly that their remains a strong relationship between family income
and attrition, with Members from lower income backgrounds being more
likely to leave early.
ATTRITION RATE BY EDUCATIONAL ATTAINMENT--PROGRAM YEARS ONE AND TWO
[Percent of members]
------------------------------------------------------------------------
Fiscal years
Education attained ---------------------
1994-95 1995-96
------------------------------------------------------------------------
Less than high school............................. 34 36
GED............................................... 31 32
Technical school.................................. 21 19
HS graduate....................................... 18 20
Some college...................................... 18 19
Associate degree.................................. 16 15
College graduate.................................. 9 8
Graduate study.................................... 12 10
Graduate degree................................... 17 12
------------------------------------------------------------------------
Senator Mikulski. Which then takes me, Senator Wofford, to
the America Reads Program and the national summit. Could you
tell me what is the purpose of the national summit and what you
think, what will be the outcomes and what is the purpose and
what role this committee or national service will play in it?
Mr. Wofford. The President's summit was proposed originally
by George Romney as a way to take the idea of national
service--both large scale volunteering and national service of
the AmeriCorps variety--out of the political football field and
move it into a true nonpartisan structure.
The summit is assembling delegations from some 130
communities, cities and rural areas as well as delegations from
all 50 States chosen by their Governors.
Senator Mikulski. What will it do?
Mr. Wofford. The summit is starting a 3-year campaign to
achieve five goals for children and youth in this country that
every parent and every grandparent wants for their children:
one, that there be a caring adult in the life of every child
that needs one, a tutor, a mentor, a coach, including the 1
million tutors needed for the America Reads campaign; two,
structured activities in safe places for every child and young
person in this country in the nonschool hours; third, a healthy
start--immunization and access to health care and incentives
for healthy behaviors; four, effective education, including the
ability to read and marketable skills acquired through school
to work experience; and fifth, that every young person gets
asked and has the opportunities themselves to serve.
The process of the summit is commitments by major
organizations of all the sectors of society and by individuals
and communities for new action--quantum leaps and value added--
toward those five goals.
Senator Mikulski. That is what they are going to do?
Mr. Wofford. Yes.
Senator Mikulski. And then after the summit is over, who
will be in charge or overseeing that all of this happens in
some organized way, so we do not have just volunteer chaos?
Mr. Wofford. We expect the Presidents to continue to work
together. General Powell will be a very active chairman.
Senator Mikulski. What will be the mechanism to
operationalize----
Mr. Wofford. The mechanism will be an organization that
General Powell will lead, with the continuing support, we
trust, of the Presidents. It is an organization that will both
seek to develop large scale resources to apply to local
organizations around the country.
Senator Mikulski. Senator Wofford, will that be an
organization not created by Government?
Mr. Wofford. It will not be created by Government. I am
personally not taking any part in the organization of that
organization.
It will be a new national organization created to be
essentially an umbrella organization to coordinate those
volunteer organizations, and the private sector entities that
are making a substantial commitment.
It will be a campaign based in the private sector, led by
General Powell not trying to compete in offering service but
trying to assemble resources from commitments from corporations
and organizations for local groups. The community delegations
at Philadelphia are coming with a commitment to go back to
their communities to organize local summits to coordinate those
campaigns locally.
Senator Mikulski. Let me just go back to what I was trying
to ask, Mr. Wofford, which is, I have been through good
intention rallies before and we have some of the finest
participants leading this, and so we just do not want it to be
a rally where, I am going to make sure that I deliver 2,000
meals on wheels to the elderly homebound. All of these are good
intentions, and then if we are going to have that, like the
commitment of a Motorola, an IBM, local corporations, scouts,
Boy Scouts, then all I was asking was how that will be followed
up so it is just not a photo op, it is just not a pep rally,
and so on, and that we have a sustained saturation effecting
communities.
So what you are saying is that there will be an
organization created that a very distinguished American,
General Powell, will chair, and this will be an entirely new
entity not created by Government or funded by Government, is
that right?
Mr. Wofford. He is saying that, and he is going to do that.
It requires that same spirit----
Senator Mikulski. But are you not the President's person on
that?
Mr. Wofford [continuing]. Senator Mikulski, that----
Senator Mikulski. Are you not the President's point person
in organizing the summit?
Mr. Wofford. The two organizations that jointly carried the
ball with George Romney's idea are ours, the Corporation and
myself actively, and the Points of Light Foundation.
Senator Mikulski. Excellent.
Mr. Wofford. And the two of us have worked together. Ray
Chambers, founder of the One to One Partnership, is chairman of
our joint board steering committee for this. But General Powell
will be carrying the ball from the summit on.
Senator Mikulski. General Powell is saying that. Are we all
saying that before we go to the summit?
Mr. Wofford. General Powell said it very strongly when he
accepted the chairmanship at the White House. In fact, he now
says it is at least a 5-year campaign, that he will throw a
good part of his life into seeing that we follow through.
Senator Mikulski. And that is his commitment?
Mr. Wofford. That is his commitment.
Senator Mikulski. It is an extraordinary commitment.
Mr. Wofford. And he is driving the commitment process. He
has what he calls the sweat test. When a corporation or
organization makes the commitment required to come to
Philadelphia, he notches it up until he sees sweat on the
forehead of the CEO who has offered for example to adopt 100
schools. He says, well, what about 1,000? And until there is a
little sweat on the forehead of the person, he has not reached
the right notching-up point.
Senator Mikulski. Well, that sounds great. Of course, we
are sweating here about how we are going to fund all the
agencies, and, therefore, we want to then be clear on what is
the role of national service, how we can be a facilitator in
this. I think we are looking forward to this and what will be
the followup.
I see that my time has expired and we will look forward to
other conversation on the America Reads Program. Thank you very
much and this sounds like a very, very exciting opportunity.
Mr. Wofford. Thank you, Senator.
Senator Bond. Thank you, Senator Mikulski.
Senator Boxer.
Senator Boxer. Mr. Chairman, I simply want to highlight
something that Senator Wofford did not get a chance to go into
in detail. As one of the authors of the Violence Against Women
Act, I note that in Iowa 20 AmeriCorps members in the Iowa
Coalition Against Domestic Violence have made 12,464 contacts
with victims of domestic abuse, assisted over 1,000 women in
obtaining protective orders, and provided 371 educational
programs for Iowans ranging from elementary school children to
senior citizens.
I wanted to point out something that Steve Merrill said,
the Governor of New Hampshire, where you took that basic idea
and instituted it there. He said:
The national service program has been a great success in
the State of New Hampshire and I anticipate it will continue to
be in the future. These motivated individuals make AmeriCorps
work for New Hampshire and I am pleased to be a partner in the
process.
I think there are certain issues that just cry out for
attention in our Nation, and with a friend helping you get
through it it means a great deal, because when a woman is
feeling that there is no one to help her through--and it is
usually a woman; sometimes it is a man who is on the other end
of violence, but about 98 percent of the time it is a woman--
and the children are impacted and so on, you do need that
helping hand.
So it sounds to me like you have come up with some idea
here. I was wondering if you had any plans to extend that
program to other States as well.
Mr. Wofford. You can view the whole of national service,
Senator Boxer, as the Corporation's work as a kind of R&D--
research and development program--in which programs are being
tried in all 50 States. One of our jobs is to find what works
and what does not work; to try to spread what works and to
share the state of the art. When there is a pilot program that
really works, such as the 11th and 12th grade kids in
Philadelphia schools being taught to tutor 2d graders three
afternoons a week a couple of hours one on one and it works to
raise the reading level of the second graders and it works to
raise their own reading level, the 11th, 12th graders----
Senator Boxer. Talking about domestic violence, I was just
asking you on that one because my State----
Mr. Wofford. I am with you.
Senator Boxer. There are so many calls from California from
our cities to the hotline, and it seems to me we could really
use this type of program.
Mr. Wofford. New Hampshire is one of the very best
programs. We convened the State executive directors of the
State commissions. We convened, we are about to convene, the
chairmen of those commissions.
We try to spread the programs that work through
publications, E-mail, etc., so that pilots perform the function
of a pilot and you ignite the furnace. The New Hampshire
Program is one of them we would like to spread around the
country.
Senator Boxer. So in our State, so if our State wants to
have this program then they could initiate it?
Mr. Wofford. Indeed. The executive director of your
commission in California, Linda Forsyth, is very aware of that
program. I am sure she has thought about it. She is in town
right today. I know she is very interested in that subject.
California has one of the most inventive and aggressive
commissions, and they are the source of many of the best pilot
programs that we are trying to spread to other parts of the
country.
Senator Boxer. Good, because a couple of our cities had the
most calls to the domestic hot line.
Thank you very much.
Mr. Wofford. It is a major issue, and if we could
contribute more to it, that is good.
Senator Boxer. Thank you, Mr. Chairman.
Senator Bond. Thank you very much, Senator Boxer. Thank you
very much, Senator Wofford.
U.S. COURT OF VETERANS APPEALS
STATEMENT OF HON. FRANK NEBEKER, CHIEF JUDGE
opening statement of christopher s. bond
Senator Bond. Next, panel No. 2. I would like to welcome
the Hon. Frank Q. Nebeker, Chief Judge of the U.S. Court of
Veterans Appeals. Chief Judge Nebeker will be testifying on the
administration's fiscal year 1998 budget request for the Court
of Veterans Appeals, which totals $9.4 million, of which
$850,000 is for the pro bono program to provide legal
representation to veterans without counsel.
The overall increase of $150,000 from fiscal year 1997 is
attributable entirely to the pro bono program. The operational
costs of the court would be held at the fiscal year 1997 level
by cutting costs in such areas as travel and security and
maintenance contracts.
I am most interested in hearing the court's assessment of
actions being taken at the VA to address the backlog of
benefits claims and the court's appraisal of the pro bono
program.
Again, Judge, as I said before, we would appreciate your
submitting a full statement for the record. Unfortunately, we
are growing short of time in a busy day and would welcome your
summary and your comments.
Judge Nebeker. I will be very brief.
Senator Bond. Thank you very much, Judge.
Judge Nebeker. You have obviously summarized this budget
situation for the court and the pro bono program and I will not
repeat it.
CASE BACKLOG
Your question was, I think, with respect to the delay or
the backlog caused in the court's processing of cases, and
indeed the problem has surfaced. The delay is in the area of
getting the record on appeal together and in filing the
Secretary's brief after the appellant has filed his or her
brief.
Group VII of the General Counsel's Office is the one that
represents the Secretary before the court. They have been
decimated by vacancies. They have been troubled by other
personnel problems and their morale is low. They have got to
have help. The resources were not given to them by the general
counsel, but that matter has been brought to her attention and
I am assured that the situation will be remedied as rapidly as
is possible.
Senator Bond. Thank you, sir.
BUDGET SUMMARY
Judge Nebeker. As I observed in my written statement, the
court's budget is flat this year, the same as it was last year.
We have to maintain--though we are cutting back on the FTE's,
we have to maintain good service for the many pro se appellants
who appear before the court. That is somewhat of a labor
intensive, if you will, undertaking.
The only other point I would like to make this morning is,
that again we ask that in your minds as you make the
appropriations decision, keep the court's operating budget
separate and apart from the pro bono program, until such time
as the pro bono program, can be authorized and made
independent.
We understand that must be done before the appropriation
process does not run through the court. But the court can act
as a conduit, provided there is not a conflict in its operating
budget over what the program needs.
I will not address the merits of the pro bono program, as
they are capable of doing that themselves.
That would conclude my comments.
[The statement follows:]
Prepared Statement of Frank Q. Nebeker
Mister Chairman and distinguished members of the committee: On
behalf of the Court, I appreciate the opportunity to present for your
consideration the fiscal year 1998 budget of $9,379,804 for the United
States Court of Veterans Appeals.
The Court's total fiscal year 1998 budget request contains the same
dollar amount for personnel and operations as in the Court's fiscal
year 1997 appropriation. It also includes $850,804 requested by the Pro
Bono Representation Program (Program), which is 121.5 percent of the
$700,000 appropriated for fiscal year 1997. The Program has provided
its own supporting statement for its budget request.
Last year I urged that the Pro Bono Representation Program be
authorized and funded outside the Court's appropriation. I outlined the
reasons for the Court's concerns with the continued inclusion of the
Program's funding in the Court's appropriation. The Court continues to
be of the view that such a funding method impermissibly links the Court
to one class of litigants, and thereby exposes the Court to an
appearance of partiality and a consequent erosion in the public's trust
and confidence in the judicial review of veterans' claims. I ask again
that the funding for the Program be separated from the Court's
appropriation, not only in the budget deliberations in Congress, but in
the actual budget enactment. To that end, I urge the authorization of
the Program and legislation permitting its independent budget.
Notwithstanding these reservations, and consistent with Congress'
direction, the Court is forwarding the Program's fiscal year 1998
request for $850,804 as an appendix to the Court's submission and,
consistent with that direction, is including that amount in the Court's
total fiscal year 1998 budget request. The Legal Services Corporation
administers the grants for the Program and, according to its
evaluations, the Program is working the way it should. The Program has
provided its own supporting statement for its budget request, which, as
noted, represents a 21.5 percent increase over the $700,000
appropriated for fiscal year 1997.
The Court has kept a flat budget by continuing a number of cost-
saving measures, including a 25 percent reduction in the budget
allotted for travel, with no funding requested for Court hearings
outside Washington. Also, as I stated in my testimony last year, the
Court now is holding its judicial conference every other year, rather
than annually. This event focuses on continuing education for the
Court's practitioners and is held locally. Of even more significance,
the Court is requesting funding for only 79 full-time equivalent (FTE)
positions in fiscal year 1998 which is a voluntary reduction of 2 FTE
positions from the fiscal year 1997 authorized FTE level, and matches
the fiscal year 1998 FTE target level recommended by the Office of
Management and Budget in its implementation of the National Performance
Review. The requested 79 FTE positions are required to maintain high-
quality service to litigants seeking judicial review, particularly
those who come to the Court unrepresented.
As the Court's budget statement illustrates, in a chart the Clerk
has compiled, after a drop in the number of appeals in fiscal year
1994, the numbers have continued to climb in fiscal year 1995 and
fiscal year 1996, and the upward trend seems to be continuing. The
number of denials by the Board of Veterans' Appeals, from whose
decisions the Court's appeals derive, increased from 6,400 appeals in
fiscal year 1995 to 10,455 appeals in fiscal year 1996. Furthermore, as
noted in the Court's budget submission, the statistics kept by the
Board of Veterans' Appeals (Board) on ``denials'' do not include Board
decisions that deny some, but not all, of the benefits sought. The
denials in such cases are also appealable to the Court. Thus, the
number of pending cases may continue to increase at an even greater
rate than is predictable as a set percentage of the number of full
Board ``denials.'' The percentage of unrepresented appeals has fallen
from 80 percent in fiscal year 1995 to 72 percent in fiscal year 1996.
However, this rate remains much higher than the 46 percent
unrepresented civil appeal rate in U.S. courts of appeals. While the
Court has, voluntarily, kept pace with the recommendations of the
National Performance Review, which propose an 11.5 percent FTE
reduction over six years, further reductions in staff may need to be
re-evaluated based on the likelihood of an increased caseload and a
percentage of pro se appellants that continues to be relatively high.
It is my understanding that the Independent Budget Veterans Service
Organizations (IBVSO's) have reached similar conclusions as to
increasing caseload in the chapter on the U.S. Court of Veterans
Appeals in their Independent Budget for Fiscal Year 1998. The IBVSO's
document a presently rising caseload and oppose downsizing of the Court
for that reason.
On another matter, I am appending to this testimony a copy of my
letter to Chairman Specter emphasizing the importance of passing Title
II of the legislative proposal submitted last year to make the Court's
retirement/survivor program comparable to the systems of other Article
I Courts. As I point out in my letter, the legislative proposal was
initially submitted in response to Congressional inquiries regarding
the Court's caseload relative to the requisite number of judges on the
Court and regarding the comparability of the Court's judicial
retirement/survivor program.
Following last year's transmittal, there was an increase in the
number of notices of appeal filed with the Court, and a consequent
increase in the number of pending cases. Some veterans service
organizations have either opposed enactment of Title I or, more
cautiously, favored a ``wait and see'' approach to it. Based on the
increase in notices of appeal, the ``wait and see'' approach has been
shown to be the wiser course as to Title I, and the Court recognizes
its merit. Accordingly, the Court does not press consideration of Title
I by the Committee.
I am aware of no negative comments with regard to the provisions of
Title II. I ask for your active support in obtaining enactment of Title
II to make the Court's retirement/survivor program more comparable with
other Article I Court programs. Because of Judge Hart Mankin's death in
May 1996, his widow, Ruth Mankin, is now a survivor under the Court's
survivor annuity program. Survivors under the Court's annuity program
are at a considerable disadvantage, over time, in comparison to the
survivors of other deceased Article I judges covered by the Survivors'
Annuity Systems enacted to provide such benefits to them. I ask that
you take expeditious action to enact Title II, which is estimated to
have an actuarially insignificant cost impact.
In conclusion, I appreciate this opportunity to present the Court's
budget request for fiscal year 1998. On behalf of the judges and staff,
I thank you for your past support and request your continued assistance
and favorable report to the Appropriations Committee on our budget
request.
______
The Veterans Consortium Pro Bono Program
revised fiscal year 1998 budget
The Veterans Consortium Advisory Committee has revised the proposed
fiscal year 1998 budget, to reflect the fact that we have found
ourselves able to fill, through personnel donated by one of the
Consortium's constituent veterans service organizations, a position
that we had expected to have to fund out of fiscal year 1998 grant
funds. We have also adjusted the Program budget to reflect the
additional cost of $5,000 for an audit in compliance with OMB Circular
A-133, required for the first time next year by LSC. The result of
these adjustments is that the overall budgeted expenditures for fiscal
year 1998, set in the original budget at $850,804, are reduced by
$57,487, to a total of $793,317.
A spreadsheet setting out the revised budget in detail is attached
hereto as Exhibit A; a summary of significant statistical information
regarding the Program is attached as Exhibit B. This memorandum will
first provide an overview of the budget as revised, and then address in
some detail the increases contemplated over the current fiscal year
1997 budget and the changes from the fiscal year 1998 budget as
originally proposed.
OVERVIEW
The revised budgeted expenditures of $793,317 represent an increase
of 13.3 percent over the $700,000 appropriation for fiscal year 1997;
but only a 6.65 percent increase over the budget on which the Program
is currently operating, which calls for expenditures of $743,838. That
budget figure was the amount of the appropriation we sought for fiscal
year 1997; and although the appropriation was for a lesser amount, we
have been able to operate on the basis of the original budget because
there were unexpended funds from the previous fiscal year, largely the
result of curtailed operations in fiscal year 1996 resulting from
uncertainties as to whether the Program would be able to continue to
operate at all.
It is pertinent to note that the level of expenditures contemplated
by the revised fiscal year 1998 budget happens to correspond quite
closely to the amount of the appropriations for the Program in fiscal
year 1994 and fiscal year 1995, namely, $790,000--and without any
adjustment for inflation for the four-year interval from fiscal year
1994 to fiscal year 1998. Indeed, that figure was the amount that the
Court of Veterans Appeals contemplated would also be provided for the
Program for fiscal year 1996: the Court requested an appropriation for
the Program for that fiscal year of $678,000, but that lesser figure
took into account $112,000 that had been conserved by the Program in
prior years, and that remained available for Program expenditures in
fiscal year 1996. The Court observed, in submitting the fiscal year
1996 request, that ``this is a nonrecurring reduction [in the requested
appropriation] that could not be maintained in future years without
programmatic changes that the Court does not now anticipate would be
desirable.''
By reason of the overall budget reductions in fiscal year 1996,
however, the Program wound up operating on a revised budget, covering
both the ``A'' and ``B'' grants, of $633,931. This revised budget was
$34,278 less than the amount actually expended in the previous fiscal
year, $44,069 less than the $678,000 in new appropriations for the
Program that had been in the Court's budget submission, and $156,069
less than the $790,000 contemplated by the Court's fiscal year 1996
budget submission. As we pointed out in our fiscal year 1997 budget
submission, the amount on which we were operating in fiscal year 1996
was insufficient for the Program to operate as originally envisioned,
and we needed to make up for that year's shortfall if the Program was
to resume operating at full steam. Mindful of budgetary exigencies,
however, we did not then ask that the Program be restored to its full
prior level of appropriated funding. That is, however, what we are
asking now.
detailed explanation of the revised fiscal year 1998 budget
The proposed increase in expenditures from the fiscal year 1997
budget reflects both the need to deal with the backlog of cases in the
Case Evaluation and Placement Component, resulting from a period when
that component was understaffed, and an anticipated continuing increase
in the number of BVA decisions and consequent appeals to the Court and
a corresponding increase in the Program's caseload. Thus, in the first
six months of fiscal year 1997 we received 294 PRF's (Participation
Request Forms), compared to 217 in the comparable period in fiscal year
1996, and placed 120 cases with volunteer lawyers as compared to 93:
increases of 35 percent and 29 percent, respectively.
Since personnel costs--the salary and benefits of some of the
individuals performing services for the Program that are reimbursed out
of grant funds--account for the major part of the Program budget (they
were 70.2 percent in fiscal year 1997, and are 74.5 percent in the
revised fiscal year 1998 budget), they account for most of the increase
as well. These personnel costs relate to a portion of the time of the
personnel who staff the Outreach and the Education Components, and the
entirety of the time of most of the personnel who staff the Case
Evaluation and Placement Component (the services of the other staff
being provided free of charge to the Program). In all instances the
staff are actually employees of one or the other of two of the
Consortium's four constituent organizations--National Veterans Legal
Services Program (NVLSP) or Paralyzed Veterans of American (PVA)--which
are reimbursed from grant funds for the appropriate portion of their
salary and benefits. Table A shows in summary form the number of
persons providing services for each component, and the number of Full-
Time Equivalent (FTE) positions to be paid out of grant funds in fiscal
year 1997 and fiscal year 1998.
TABLE A.--PRO BONO PROGRAM PERSONNEL AND FTE DISTRIBUTION
----------------------------------------------------------------------------------------------------------------
Total No. of
personnel Total FTE Total FTE to be
Component providing some reimbursed by reimbursed by
service to the grant, fiscal grant, fiscal
program year 1997 year 1998
----------------------------------------------------------------------------------------------------------------
Outreach.................................................. 6 0.17 0.21
Education................................................. 10 0.96 1.05
Case evaluation and placement............................. 10 7.5 8.0
-----------------------------------------------------
Total............................................... 26 8.63 9.26
----------------------------------------------------------------------------------------------------------------
A fuller breakdown by component follows.
I. Case Evaluation and Placement Component--$575,383
The revised fiscal year 1998 budget contemplates an increase of
$39,262 over the fiscal year 1997 budget for the Case Evaluation and
Placement Component (referred to in the budget spreadsheet as the
``Screening'' component). This is in place of the $99,249 increase
reflected in the original fiscal year 1998 budget.
A. Personnel.--There are three categories of personnel staffing
this Component: lawyers, non-lawyer veterans law specialists, and
support staff.
Two lawyers, the Director and the Deputy Director, function full
time as such in the Case Evaluation and Placement Component, and the
entirety of their personnel cost is reimbursed by the Program--in one
instance to PVA and the other to NVLSP. Thus, the lawyer FTE for this
Component reimbursed from grant funds, in both fiscal year 1997 and
fiscal year 1998, is 2.0.
Veterans law specialists review the VA claims file and BVA decision
to determine whether or not each case contains an issue that warrants
referral to a lawyer. Veterans law specialists come from the
constituent Veterans Service Organizations and are among the most
experienced non-lawyer service officers these organizations have to
offer.
It was originally contemplated that there would be four full-time
veterans law specialists, plus part-time help equivalent to half the
time of a fifth, in the Case Evaluation and Placement Component in
fiscal year 1997--two of the full time specialists being supplied, on a
reimbursable basis, by PVA, and the other two donated by Disabled
American Veterans (DAV) and The American Legion, respectively. However,
in late fiscal year 1996, The American Legion recalled its specialist
to the organization's national office and could not furnish a
replacement until midway through the fiscal year. As a result of this
and other personnel difficulties, the Component operated with only 3
FTE veterans law specialists for the first five months of the year.
This fact, combined with increased filings, had created a backlog of
some 141 cases as of May, 1997. At the time the fiscal year 1998 budget
was prepared, this Component had a total of 3.5 FTE veterans law
specialists, 2.5 of them reimbursed by the Program and the other
donated by DAV. The original fiscal year 1998 budget contemplated an
increase of 1.5 FTE, to bring the total number of specialists
(including one donated specialist) to five. Since the restoration of
the American Legion's donated specialist, however, the need for one
additional reimbursed specialist has been eliminated, and the budget
has been reduced accordingly.
There are three full-time administrative support staff in the Case
Evaluation and Placement Component, all employees of NVLSP, and all
reimbursed out of Program funds.
The levels of salaries and benefits paid to the personnel who staff
the Program are of necessity governed by the general personnel policies
of the constituent organizations of which they are employees--i.e., PVA
and NVLSP--and to which they may return in the event of termination of
the Program or rotation of personnel by the organizations involved.
Both of those organizations expect to increase their staff salaries
generally by 5 percent, of which 3 percent will be an across-the-board
cost of living increase and 2 percent will be allocated for merit
raises. The increases are reflected in the personnel costs of all three
Components of the Program in the fiscal year 1998 budget.
B. Travel/Continuing Legal Education.--The revised fiscal year 1998
budget, like the original one, includes an increased allocation of
$1,500 for travel/CLE (to $2,500) to be used for continuing legal
education for lawyer staff of this Component. This is largely offset by
a reduction of $1,000 in the amount allocated for travel/CLE for the
Education Component.
C. Audit.--Audit costs have been increased by an additional $2,500
in the revised fiscal year 1998 budget to reflect the Component's share
of the increased cost of the annual audit by reason of the new LSC
requirement, mentioned above.
D. Property Acquisition and Contract Services.--These will decrease
by $10,000 from the amount budgeted for fiscal year 1997. Major
improvements to the databases will be completed in fiscal year 1997.
II. Outreach Component--$25,157
The revised fiscal year 1998 budget calls for a $6,537 increase
over the fiscal year 1997 budget for the Outreach Component: $500 more
than the original fiscal year 1998 budget. As indicated below, all but
$1,776 of the increase is in personnel costs.
A. Personnel.--These costs are budgeted to increase by $5,349
because we anticipate a continued increase in recruiting needs. We
assume a greater need for volunteer lawyers in fiscal year 1998 because
of the known and anticipated increase in the number of BVA decisions;
the budget also assumes that we will continue outreach efforts outside
the Metropolitan Washington area. Personnel costs include an increase
of 5 percent, as discussed previously under Case Evaluation and
Placement.
Three NVLSP lawyers devote a portion of their time to the Outreach
Component; and that portion of their personnel cost is reimbursed by
the Program. The aggregate lawyer FTE for the Outreach Component
reimbursed from grant funds in fiscal year 1997 is 0.07; the FTE
contemplated for fiscal year 1998 remains at 0.07.
Three NVLSP non-lawyers also function for part of their time in the
Outreach Component; and that portion of their personnel cost is
reimbursed by the Program. The aggregate non-lawyer FTE for the
Outreach Component reimbursed from grant funds in fiscal year 1997 is
0.10; the FTE contemplated by the fiscal year 1998 budget is 0.14.
B. Other.--The only change from the original fiscal year 1998
budget to the revised one is an increase of $500 in the audit line to
reflect the Outreach Component's share of the increased cost of the
annual audit. The remainder of the $1,776 difference in non-personnel
expenses between fiscal year 1997 and fiscal year 1998 reflects line
item adjustments based on past experience.
III. Education Component--$126,545
The revised fiscal year 1998 budget calls for an increase of
$12,998 over the fiscal year 1997 budget: $2,000 more than the original
fiscal year 1998 budget.
A. Personnel.--Personnel costs are budgeted to increase by $8,934.
A total of 6 NVLSP lawyers function in the Education Component, and
a portion of their personnel cost is reimbursed by the Program. We
anticipate an increase in mentoring duties, due to the cumulative
effect from previously assigned but still pending cases. We plan to
contain this cost, however, by assigning more mentoring duties to
personnel with lower personnel costs. The aggregate lawyer FTE for the
Education Component reimbursed from grant funds in fiscal year 1997 is
0.51; the FTE contemplated for fiscal year 1998 is 0.54.
Four NVLSP non-lawyers function in the Education Component, and all
four of them have a portion of their personnel cost reimbursed by the
Program. The cost of grant administration has been increased to 25
percent of the time of both the Grant Administrator and the
Administrative Assistant, based on past experience and an anticipated
increase in the Grant Administrator's time required for audit
preparation and contract reporting. The aggregate non-lawyer FTE for
the Education Component reimbursed from grant funds in fiscal year 1997
is 0.45; for fiscal year 1998 it will be 0.51.
B. Other.--As with the Outreach Component, the only change with
respect to the Education Component, from the original fiscal year 1998
budget, is an increase in the audit costs, by $2,000, to reflect the
Education Component's share of the increased cost of the annual audit
pursuant to the new LSC requirement. The remainder of the difference
from the fiscal year 1997 budget reflects various adjustments based on
past experience.
IV. ``B'' Grant--$44,232
This line assumes a total of 24 cases at a cost of $1,843 per case.
This represents a 3 percent per case increase over the fiscal year 1997
budget figure of $1,785 per case; it also reflects a reduction from the
total number of budgeted cases (30) in both fiscal year 1996 and fiscal
year 1997, as we continue to fine-tune this requirement.
V. LSC Oversight--$20,000
DONATED SERVICES
The vast majority of services rendered to the Pro Bono Program are
donated.
The most impressive contribution is the value of the legal services
provided by volunteer lawyers recruited by the Program. For fiscal year
1996, for example, the value of the pro bono representation provided by
volunteer attorneys under the Program was estimated to be $2,255,618--
providing, when combined with the contributions of the participating
organizations, a return of some 3 to 1 on the appropriated federal
funds.
The American Legion and the DAV receive no reimbursement for the
salary or related expenses for the full-time veterans law specialists
they provide to the Program. Those two organizations have not reported
the cost of providing these specialists, but it is obviously comparable
to that of the two specialists whose costs are reimbursed from grant
funds.
Neither DAV nor PVA receives any reimbursement for the time spent
by its lawyers in providing mentoring services for the Education
Component. Together, these contributions can be conservatively
estimated at $20,000 annually.
None of the participating organizations receives any reimbursement
for time spent by their representatives in connection with the
activities of the Consortium's Advisory Committee. (The fiscal year
1996 estimated value of that time was $101,524.)
The total value of contributions by the participating organizations
(with the exception of the unreported value of the contributions by the
American Legion and DAV, mentioned above) in fiscal year 1996 was
estimated at $202,580.
CONTRIBUTIONS OF EAJA FEE AWARDS BY LAW FIRMS
As previously reported, the Program has on seven occasions since
late 1995 received unsolicited donations from law firms (four of the
donations being from one firm), in each case representing part or all
of an Equal Access to Justice (EAJA) fee award recovered by the
donating firm in a case taken under the Program. (We have also received
a $20 contribution from a grateful veteran.) All four of the
contributing firms are large firms; among such firms it is quite
commonly firm policy to give away to one or another pro bono cause fee
awards recovered in pro bono cases--generally to the organization at
whose behest the matter was taken on. The total of such donations
(including the $20 one) to date is $45,054.08.
The Advisory Committee has established a special account to which
all such contributions will be earmarked, to be used for Program
activities for which grant funds have not hitherto been sought or
applied. It is the Committee's view that the uses made of such donated
funds must be ones that the donating firms would deem appropriate, and
that would tend to elicit other donations by participating firms: thus,
it would be counterproductive to treat the donated funds as an offset
for appropriated funds. The Committee has decided that initially the
earmarked funds will be used for three purposes: to fund outreach
activities in other jurisdictions; to fund presentation of the lawyer
training program in other jurisdictions; and, in selected cases, to pay
expenses incurred by solo practitioners who wish to take cases under
the Program and who would find it more feasible to participate if
certain essential costs are defrayed by the Program.
Exhibit A
[GRAPHIC] [TIFF OMITTED] T05MA04.002
Exhibit B
PRO BONO PROGRAM AT THE U.S. COURT OF VETERANS APPEALS
----------------------------------------------------------------------------------------------------------------
Fiscal years
------------------------------------------
1993 1994 1995 1996 1997 \1\ Program
(9/1/ (10/1/ (10/1/ (10/1/ (10/1/96- total
92-9/ 93-9/ 94-9/ 95-9/ 9/30/97)
30/93) 30/94) 30/95) 30/96)
----------------------------------------------------------------------------------------------------------------
Total appeals filed at CVA \2\............................... 1,265 1,148 1,204 1,561 798 5,976
Appeals filed Pro Se \2\..................................... 1,044 918 957 1,141 547 4,607
Pro Bono Program application forms sent...................... 853 648 812 936 565 3,812
Veterans who filed applications for program consideration.... 580 450 609 493 295 2,427
Veterans who received free attorney.......................... 231 187 201 181 120 920
Veterans who received some form of legal assistance (but no
representation due to program ineligibility)................ 343 262 327 287 186 1,405
Percent of program eligible veterans who received
representation (percent).................................... 100 100 100 100 100 100
Program cases completed during fiscal year \3\............... 52 147 199 156 88 642
Program cases in which VA error found \3\.................... 45 112 158 125 64 504
Percent of cases in which veteran prevailed in litigation
through program efforts (percent)........................... 86.5 76.2 79.4 80.1 72.7 78.5
Recruited attorneys who have received training \4\........... 236 100 121 160 93 710
----------------------------------------------------------------------------------------------------------------
\1\ Figures through 2nd quarter fiscal year 1997 only.
\2\ Figures supplied by the Court (through 2/28/97 only).
\3\ Figures do not include cases where representation was declined by the appellant, nor cases where the
appellant died during pendency of appeal.
\4\ Does not include 43 attorneys for whom training was waived.
Note: Figures subject to minor revision.
______
Letter From Frank Q. Nebeker
U.S. Court of Veterans Appeals,
Washington, DC, February 4, 1997.
Hon. Arlen Specter,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: On June 10, 1996, I transmitted to the Chairmen
and Ranking Minority Members of the Senate and House Committees on
Veterans' Affairs a proposal to downsize the number of the Court's
associate judges (Title I of the proposal) and to make the Court's
retirement/survivor program comparable to the systems of other Article
I Courts (Title II of the proposal). The proposal, a duplicate of which
I again transmit with this letter, was submitted in response to
Congressional inquiries regarding the Court's caseload relative to the
requisite number of judges on the Court and regarding the comparability
of the Court's judicial retirement/survivor program. The 104th Congress
took no action on either Title I or Title II.
With respect to Title I, I indicated in my transmittal letter that
case filings during the fiscal year 1990-92 period had averaged 1,942
per year but had dropped in the fiscal year 1993-95 period to an annual
average of 1,224. At the time of my transmittal, case filings for the
first 6 months of fiscal year 1996 were estimated to be 595 which
suggested that fiscal year 1996 filings would be less than average
annual filings for fiscal year 1993-95. During the last 6 months of
fiscal year 1996, filings rose so that total fiscal year 1996 filings
reached 1,620. For the first quarter of fiscal year 1997 the Court
received 457 filings. I further indicated in my transmittal letter that
cases pending at the end of each year of the fiscal year 1990-92 period
had averaged 1,865 but had dropped to an average of 1,182 at the end of
each year of the fiscal year 1993-95 period. At the time of my
transmittal, it is estimated that 1,438 cases were pending. At the end
of the first quarter of fiscal year 1997, 1,707 cases were pending. It
should be further noted that the Board of Veterans Appeals, from which
the Court's appeals derive, denied 6,400 appeals in fiscal year 1995
and 10,455 appeals in fiscal year 1996.
Several veterans service organizations either opposed enactment of
Title I or, more cautiously, favored ``a wait and see'' approach to it.
Enactment of Title I would result in estimated net annual savings of
$660,900.
With respect to Title II, my June 10, 1996, transmittal letter
stated:
In the matter of the retirement/survivor program, I have
received several letters from past chairmen of the Senate
Veteran's Affairs Committee regarding the comparability of the
Court's program with those established for other federal courts
and have twice responded to the invitation to provide comments
on a Congressional Research Service Report (Dennis W. Snook &
Jennifer A. Neisner, ``Congressional Research Service Report
for Congress, Income Protection for Judges of Selected Federal
Courts,'' dated December 29, 1993) (CRS report), that was
prepared on that subject. The Court was asked to continue to
review the matter and to advise the Committee of its findings.
Enclosed also is a copy of the CRS report, annotated so that it
may be used in conjunction with a memorandum dated November 14,
1994 (Memorandum), also enclosed, prepared by the Court's
Committee on Legislative Matters, which addresses certain minor
deficiencies in the CRS report. The Court's review has revealed
that each judicial retirement/survivor program has unique
features and also that the retirement programs of other Article
I federal courts have generally been enhanced over the last 7
years, whereas this Court's program has generally remained
static since its creation in 1989. The Court believes that
certain aspects of this resulting disparity should be addressed
in corrective legislation to make the Court's program more
comparable with other Article I federal court retirement
programs. Accordingly, the Proposal also provides for systemic
reforms in the Court's retirement/survivor system that are
designed to put the Court on a more equal footing with the
systems provided for other Article I courts.
I ask for your active support as Chairman in obtaining enactment of
Title II to make the Court's retirement/survivor program more
comparable with other Article I court programs. Because of the death of
Judge Hart Mankin, on May 28, 1996, his widow, Ruth Mankin, is now a
survivor under the Court's survivor annuity program. Over time, she
will be at considerable disadvantage in comparison to widows of
deceased Article I judges covered by the Joint Survivors' Annuity
System. In this regard, I am hopeful that you will respond with
expeditious action to enact Section 204 of Title II which is estimated
to be without actuarially significant cost impact and without any
appropriations impact. Enactment of all sections of Title II other than
Section 204 is estimated to be without cost or appropriations impact.
I would also ask that you consider enacting legislation that would
change the Court's name to the United States Court of Appeals for
Veterans Claims. Many veterans and attorneys believe that the Court is
an administrative tribunal of the Department of Veterans Affairs rather
than an independent judicial entity. The present name of the Court
appears to add to that belief especially in view of the fact that the
name, ``United States Court of Veterans Appeals'', is often reduced to
the acronym ``CVA'', which is not readily distinguishable from ``BVA,''
the acronym for the Board of Veterans Appeals which is an
administrative tribunal of the Department, or ``DVA,'' the common
acronym for the Department. It is important that the Court be perceived
as both judicial and independent. Adoption of the name ``United States
Court of Appeals for Veterans Claims'' should promote that perception.
Such a change would also be consistent with action in recent years with
respect to the names of other Article I Courts. The United States Court
of Claims became the United States Court of Federal Claims in 1992. The
United States Court of Military Appeals became the United States Court
of Appeals for the Armed Forces in 1994.
Finally, I bring to your attention one additional matter. The Court
was created in 1988 without any antecedent structure and with no judges
in place (Veterans' Judicial Review Act, Public Law No. 100-687, Div.
A., 102 Stat. 4105 (Nov. 18, 1988)). All 6 of the Court's original
associate judges assumed office within a period of approximately 1 year
of each other. Assuming that Title I of the proposal is not enacted,
the 15-year terms of the Court's remaining 5 original associate judges
will expire within a period of approximately 1 year of each other. As a
consequence, and again assuming no downsizing, I recommend that
consideration be given to attempting to eliminate the undesirable
dislocating effect of such a rapid turnover by permitting early
retirement of remaining original associate judges who meet certain age
and service requirements which, in turn, could space the sequencing of
retirements so as to assure continuity of experience in the Court's
judicial component. Implementation may be achievable, pursuant to 38
U.S.C. Sec. 7298(2)(A), within existing appropriations. It should be
noted that several Article I Courts have early retirement programs
applicable to all their judges.
Thank you for your consideration. I am sending the same letter and
enclosures to Chairman Stump, and Ranking Minority Members Rockefeller
and Evans.
Sincerely,
Frank Q. Nebeker,
Chief Judge.
va decision process
Senator Bond. Thank you, Judge.
Senator Mikulski will be rejoining us shortly.
The committee has been concerned for a long time with the
whole process of adjudicating claims at the Department of
Veterans Affairs, both in terms of the time it takes and the
quality of decisions. The VA has undertaken some initiatives to
make improvements, such as business process reengineering.
First, do you see any evidence that the quality of
decisionmaking is improving at the VA?
Judge Nebeker. Not in the cases that come before the court.
The error rate is still approximately 50 percent. That is, 50
percent of the cases that come to issue and are decided by the
judges are remanded because of prejudicial error in the
decision somewhere.
Senator Bond. Well, 2 years ago you said the rate was in
excess of 60 percent, so while 50 percent is not great, I guess
there is progress, going from 60 percent to 50 percent.
What needs to be done?
Judge Nebeker. Well, I wish I knew. Obviously, more
resources at the Board level, but they have got the resources.
They have been augmented tremendously in an austere budget
period. They have cut back to one member panel, that is, single
member decisions, and they are putting out more decisions. As a
matter of fact, the denial rate before the Board has gone from
6,000 last year to 10,000 this year. We can expect that
reverberation to affect the case load of the court in the next
year, 6 months to 1 year.
Senator Bond. In October 1994 at the court's third judicial
conference, you called upon Secretary Brown to make unequivocal
use of the powers invested in his office to ensure that
precedent opinions are followed and the judgments in specific
cases are met with full and prompt compliance.
Has there been any action on that recommendation?
Judge Nebeker. There have been a number of committees
studying it.
Senator Bond. Studying it?
Judge Nebeker. Yes, sir.
Senator Bond. Thanks.
In addition, a commission authorized by Congress, the so-
called Melidosian Commission, recently finalized its report on
improving claims processing. It said the claims adjudication
system was created by the VA to process the benefits legislated
by Congress, but that layer upon layer of changes have been
added to the benefits and, therefore, to the processing system
and that there has never been a wholesale revision to bring all
changes into a harmonious whole. Therefore, the nature of the
product's benefits have helped lead to a system which is
perceived as inefficient, untimely, and inaccurate.
Do you believe Congress needs to legislate an overhaul to
the claims processing system as contemplated, or could it be
achieved by regulation? What is your view on the needed
reforms?
Judge Nebeker. Mr. Chairman, I am not in a position to
offer an opinion respecting the operations of an executive
branch Department, particularly one of the size of the
Department of Veterans Affairs. I note that that Melidosian
report pretty well echoed what I suggested 2 years ago at the
judicial conference, which you just mentioned.
But insofar as a court entering into the political arena of
what ought to be done to make a particular executive branch
program work, I am totally unqualified to do that.
PRO BONO REPRESENTATION PROGRAM
Senator Bond. With respect to the proposed reprogramming of
$950,000 to initiate the pro bono representation program, your
testimony says:
The court's judges continue to believe that this funding
method links the court to one class of litigants and exposes it
to charges of lacking impartiality, thereby degrading the
public's trust and confidence in the judicial review of
veterans' claims.
The court has altered its position on the pro bono
representation program last year after supporting its inclusion
in the budget for several years. Would you explain what the
status is and where this program stands and what the trust and
confidence level may be in the judicial system?
Judge Nebeker. Well, the program is a successful program.
It not only--well, its major purpose is to help the pro se
veterans. To the extent that it thereby helps the court, that
is a windfall and a desirable windfall. We are a conduit for
their funding and as long as we can be assured and the public
can be assured that the court is not funding the program out of
its own operating budget, then I think there is no real
concern.
But if the idea is that the court is funding a particular
side of the litigation that appears before it, it is not unlike
the court funding a public defender service or a prosecutor's
office to the exclusion of the other side. It is that problem
that we think needs to be solved, because there is an
appearance that the court is in a position of being compromised
where it should not be.
CLOSING
Senator Bond. Thank you very much, Judge.
Let me see if Senator Mikulski wants to ask any questions.
In the interest of time, I will submit the remainder of the
questions I have for the record. I think you have covered very
well the things we have discussed and I appreciate your
responsiveness to the questions, as well as to the concerns
that we have expressed.
Senator Mikulski has said that she will submit her
questions for the record. I appreciate very much your
testimony.
Judge Nebeker. Thank you very much, Mr. Chairman. I do try
to be responsive to questions when they are asked.
Senator Bond. It is a very pleasant trait. I certainly
enjoy it.
AMERICAN BATTLE MONUMENTS COMMISSION
STATEMENT OF GEN. JOHN P. HERRLING, U.S. ARMY
(RETIRED), SECRETARY
Senator Bond. I welcome our final panel: Gen. John P.
Herrling, Secretary of the American Battle Monuments
Commission, will be testifying on the administration's budget
request for fiscal year 1998 for the ABMC of $23.9 million, an
increase of $1.6 million over fiscal year 1997's appropriation
of $22.3 million. Mr. Steve Dola, the Deputy Assistant
Secretary for Management and Budget for the Department of the
Army, Cemeterial Expenses, will be testifying on the
administration's budget request for fiscal year 1998 of $11.8
million, a $200,000 increase over to $11.6 million appropriated
for fiscal year 1997. This funding would cover the maintenance,
operation, and improvement of Arlington National Cemetery and
the Soldiers and Airmen's Home National Cemetery. Finally, Mr.
Gil Coronado, Director of the Selective Service System, will
testify on the administration's budget request for fiscal year
1998 of $23.9 million for the Selective Service, an increase of
$1 million over the $22 million appropriated for fiscal year
1997 for the Selective Service.
With that, General Herrling.
General Herrling. Thank you, Mr. Chairman. On behalf of the
Commissioners of the American Battle Monuments Commission, I am
pleased to appear before you today. Let me begin by thanking
you and the members of this committee for the support that you
have provided our Commission over the years.
The special nature of the American Battle Monuments
Commission places it in a unique and highly responsible
position with the American people. The manner in which we care
for our honored war dead is and should remain a reflection of
the high regard in which we as a Nation memorialize their
service and sacrifices.
As you know, the American Battle Monuments Commission was
established by Congress in 1923. It is a small, one-of-a-kind
organization responsible for commemorating the services of the
Armed Forces where they have served since April 6, 1917. We do
this through the construction and maintenance of memorial
shrines, monuments, and military burial grounds on foreign
soil.
The American Battle Monuments Commission operates and
maintains 24 permanent memorial cemeteries and 28 monuments,
memorials, and markers in 15 countries around the world. We
have 8 World War I and 14 World War II cemeteries located in
Europe, the Mediterranean, North Africa, and the Philippines.
All of these cemeteries are closed to burials. In addition, we
are responsible for the American cemeteries in Mexico City and
Panama.
Interred in these cemeteries are approximately 31,000 World
War I dead, 93,000 from World War II, and 750 from the Mexican
war, for a total of 125,000. Also we have approximately 5,000
American veterans and others buried in the cemetery in Panama.
In addition, we have honored another 94,000 service members on
the Walls of the Missing, dedicated to those missing in action
or those lost or buried at sea.
The care of these cemeteries and memorials requires a
significant annual program of maintenance and repair of
facilities, equipment, and grounds. The care and maintenance of
these facilities is labor intensive. Therefore, personnel costs
amount to 72 percent of our budget for fiscal year 1998. The
remaining 28 percent is required to fund our operations which
include engineering maintenance, utilities, horticultural
supplies, equipment, and administrative costs.
Also, because of the permanent nature of our operations, we
do not have the option of closing or consolidating cemeteries
or memorials. In light of this, we have increased our efforts
to achieve greater efficiency and effectiveness through
automation in the operational and financial management areas.
In addition to our overseas mission, we have been mandated
by the Congress to construct two memorials in Washington, DC.
On July 27, 1995, President Clinton and President Kim Young
Sam of the Republic of Korea dedicated the Korean War Veterans
Memorial. Last month, on February 6, we opened the Korean War
Veterans Memorial information kiosk. This kiosk houses the
Korean war veterans honor role, which allows friends and
relatives to query a data base containing the names and
information about those who died during the Korean war. With
the opening of the kiosk, the Korean War Veterans Memorial is
now complete.
In May 1993, Congress authorized the Commission to build a
national World War II memorial. The Rainbow Pool site on The
Mall was dedicated on November 11, 1995, by President Clinton.
Since that time a national design competition for the memorial
was held, with over 400 entries submitted. Six finalists were
selected for the final stage of the competition. On January 17
of this year, President Clinton announced the winner of the
design competition.
As directed by the Congress, the project will be funded
through private contributions. The American Battle Monuments
Commission is currently working with a presidentially appointed
World War II Memorial advisory board to raise the funds for the
memorial.
Our greatest challenge, Mr. Chairman, for fiscal year 1998
will be in dealing with aging facilities and equipment. Our
memorial cemeteries range in age from approximately 50 to 80
years, with the Mexico City cemetery being over 140 years old.
The permanent structures and plantings which make our
facilities among the most beautiful memorials in the world are
aging and require prioritized funding to maintain them at
current standards. Therefore, we are requesting $250,000 more
in fiscal year 1998 for maintenance and minor construction.
In addition, much of our equipment is aging and rapidly
reaching the end of its useful life. In order to resolve this
problem, we are requesting an additional $200,000 to fund our
equipment repair and replacement program. We also have small
increases of $200,000 for supplies, $300,000 to integrate our
financial system in compliance with OMB, GAO, and recent
congressional directions, and $214,000 for rental of office
space previously provided at no cost.
In summary, since 1923 the American Battle Monuments
Commission's cemeteries and memorials have been held to a high
standard in order to reflect America's continuing commitment to
its honored war dead, their families, and the U.S. national
interest.
The Commission intends to continue to fulfill this sacred
trust. Our appropriation request for fiscal year 1998 is
$23,897,000.
PREPARED STATEMENT
Mr. Chairman, this concludes my statement. I will be
pleased to respond to your questions.
[The statement follows:]
Prepared Statement of Gen. John P. Herrling
Mr. Chairman and Members of the Committee: Thank you for the
opportunity to testify on our fiscal year 1998 Appropriation Request.
The special nature of the American Battle Monuments Commission places
it in a unique and highly responsible position with the American
people. The manner in which we care for our Honored War Dead is, and
should remain, a reflection of the high regard in which we, as a
nation, honor their service and sacrifices.
As you know, the American Battle Monuments Commission is a small,
one-of-a-kind organization, that is responsible for commemorating the
services of American Armed Forces where they have served since April 6,
1917 (the date of U.S. entry into World War I) through the erection of
suitable memorial shrines; for designing, constructing, operating, and
maintaining permanent American military burial grounds in foreign
countries; for controlling the design and construction of U.S. military
monuments and markers in foreign countries by other U.S. citizens and
organizations, both public and private; and for encouraging the
maintenance of such monuments and markers by their sponsors. In
performing these functions, the American Battle Monuments Commission
administers, operates, and maintains twenty-four permanent memorial
cemeteries and twenty-eight monuments, memorials, and markers in
fifteen countries around the world.
We have eight World War I and 14 World War II cemeteries located in
Europe, the Mediterranean, North Africa, and the Philippines. All of
these cemeteries are closed to burials except for the remains of the
War Dead who may occasionally be discovered in World War I or World War
II Battlefield areas. In addition, we are responsible for the American
cemeteries in Mexico, established after the Mexican War, and Panama.
Presently 124,914 U.S. War Dead are interred in these cemeteries--
30,921 of World War I, 93,243 of World War II and 750 of the Mexican
War. Additionally, 5,857 American veterans and others are interred in
the Mexico City and Corozal (Panama) American Cemeteries. Commemorated
individually by name on stone tablets at the World War I and II
cemeteries and three memorials on U.S. soil are the 94,120 U.S. service
men and women who were Missing in Action, or lost or buried at sea in
their general regions during the World Wars and the Korean and Vietnam
Wars.
We continue to provide services and information to the public,
friends, and relatives of those interred in, or memorialized, at ABMC
cemeteries and memorials. This includes information about grave and
memorialization sites as well as location, suggested routes, and modes
of travel to the cemeteries or memorials. Immediate family members are
provided letters authorizing fee-free passports for overseas travel to
specifically visit a loved one's grave or memorial site. Photographs of
headstones and sections of the Tablets of the Missing on which the
service person's name is engraved are also available. These photographs
are mounted on large color lithographs of the cemeteries or memorials.
In addition we assist those who wish to purchase floral decorations for
placement at grave or memorial sites in our cemeteries. A photograph of
the in-place floral arrangement is provided to the donor.
The care of these shrines to our War Dead requires a formidable
annual program of maintenance and repair of facilities, equipment, and
grounds. This care includes upkeep of 131,000 graves and headstones; 73
memorial structures; 41 quarters, utilities, and maintenance
facilities; 67 miles of roads and paths; 911 acres of flowering plants,
fine lawns and meadows; nearly 3,000,000 square feet of shrubs and
hedges and over 11,000 ornamental trees. Care and maintenance of these
resources is exceptionally labor intensive, therefore, personnel costs
account for 72 percent of our budget for fiscal year 1998. The
remaining 28 percent is required to fund our operations, including
unprogramed requirements resulting from natural disasters or foreign
currency fluctuations. We do not have the option of closing or
consolidating cemeteries. In light of this, we have increased our
efforts to achieve greater efficiency and effectiveness, through
automation and contracting, in the operational and financial management
areas, where we do have control.
This Commission fully recognizes and supports the efforts of the
President and the Congress to improve efficiency, focus on results, and
streamline the government overall. During fiscal year 1996, we
completed the upgrade to our automation system and offset telephone,
fax, and mail costs while increasing productivity. We have contracted
with the Department of Treasury's Financial Management Services Center
to study our accounting system, provide alternatives and
recommendations, and design a new system, if findings warrant. We
anticipate these recommendations will be implemented during fiscal year
1998. In addition, we have begun development of our Strategic and
Annual Performance Plans in accordance with the Government Performance
and Results Act. We believe, when finalized, our plans will provide a
comprehensive roadmap for accomplishing our mission.
On July 27, 1995, President Clinton and President Kim Young Sam
dedicated the Korean War Veterans Memorial. On February 6, 1997, we
opened the Korean War Memorial Kiosk. This Kiosk houses the Korean War
Veterans Memorial Honor Roll. This Honor Roll allows friends and
relatives to query a data base containing the names and information
about those who died during the Korean War. With the opening of the
Kiosk we are pleased to be able to report to you that the Korean War
Veterans Memorial is now complete.
Our focus for fiscal year 1998 and for the next several years will
be the World War II Memorial. As you know, on May 25, 1993, President
Clinton signed Public Law 103-32 directing the ABMC to build a World
War II Memorial. The World War II Memorial Site at the Rainbow Pool was
dedicated by President Clinton on November 11, 1995. Since that time, a
national design competition was held with over 400 preliminary designs
submitted for evaluation. Six finalists were selected and announced on
August 21, 1996. Final designs were submitted to a design jury on
October 25. Criteria included concept, past performance, specialized
experience and technical competence, professional qualifications and
the capacity to accomplish the work in the required time. The jury
interviewed the finalists and made its recommendation to the Commission
on October 31. The World War II Advisory Board met and provided its
advice to the ABMC on November 18. ABMC Commissioners considered the
advice and recommendations and selected the winning design team/concept
on November 20. On January 17, 1997, at a White House Ceremony,
President Clinton unveiled the winning design by Friedrich St. Florian,
former Dean of the Rhode Island School of Design, and a current
professor at the school. Teaming up with Professor St. Florian are
George E. Hartman, Hartman-Cox Architects, and Oehme van Sweden &
Associates, Inc., both of Washington D.C. Leo Daly will be the
architect--engineer of record.
As directed by the Congress, the $100 Million memorial will be
funded through private donations after expending the $4.7 Million that
Congress authorized from the surcharge proceeds of World War II
Commemorative Coin sales and the $5 Million transferred from Department
of Defense. The American Battle Monuments Commission is working closely
with the World War II Memorial Advisory Board to raise the funds to
meet the planned dedication on Veterans' Day in the year 2000.
While our attention has been focused on management improvements and
the design and construction of the World War II Memorial, we have not
ignored our primary mission of operating and maintaining twenty-four
memorial cemeteries and twenty-eight monuments. The Congress has been
instrumental in our success in maintaining its high standard of
excellence by providing the funds required to accomplish our
objectives, and for that we thank you.
Fiscal year 1998 will present new challenges. For the first time in
nine years we have repriced our foreign currency budget rates. This
repricing, with OMB support, conforms with the Department of Defense's
budget rates for foreign currency. With this repricing, we estimate
that we will require $2,097,000 to satisfy foreign currency fluctuation
requirements. This amount has been included in our budget request. In
addition the fiscal year 1998 request provides for cost of living
increases for our U.S. and foreign national personnel, rental expenses
for space previously provided at no cost, funding to integrate ABMC
financial systems in accordance with OMB, GAO, and recent Congressional
directions, and small increases for maintenance and equipment.
Perhaps our greatest challenge will be in dealing with aging
facilities and equipment. Our cemetery memorials range in age from 50
to 80 years old with Mexico City being over 100 years old. The
permanent structures and plantings which make our facilities among the
most beautiful memorials in the world are aging and require increased
funding to maintain them at the current standards. Our maintenance and
engineering budget is stretched to the limit. Accordingly, we are
prioritizing this spending carefully. In addition, much of our
equipment is aging and rapidly reaching the end of its useful life. We
have requested additional funding for equipment replacement this fiscal
year and will be implementing phased replacement in order to take
advantage of new labor saving technology.
Since 1923, the American Battle Monuments Commission's memorials
and cemeteries have been held to a high standard in order to reflect
America's continuing commitment to its Honored War Dead, their
families, and the U.S. national image. The Commission intends to
continue to fulfill this sacred trust.
The American Battle Monuments Commission appropriation request for
fiscal year 1998 is $23,897,000.
This concludes my prepared statement. I will be pleased to respond
to your questions.
Additional committee questions
Senator Bond. Thank you very much, General.
[The following questions were not asked at the hearing, but
were submitted to the Commission for response subsequent to the
hearing:]
Question Submitted by Senator Stevens
abmc special events and services to the public
Question. Provide to each Committee Chairman a schedule of planned
Memorial Day activities and other special events as well as information
on public services provided by American Battle Monuments Commission
(ABMC).
Answer. As of 26 March 1976, ABMC provided the Chairman of each
Senate and House Committee a listing of ABMC Special Events planned for
1997 and a Fact Sheet on ABMC's mission and services which are provided
to the public. These two documents are as follows:
1997 memorial day and other events at abmc cemeteries and memorials
The following is a list of Memorial Day, Veterans Day, D-Day
Ceremonies, and other activities that are planned for 1997.
Memorial Day.--Memorial Day programs are held at each ABMC
Cemetery. Each grave site is decorated with the flag of the United
States and that of the host country. Programs, usually including
participation by the U.S. Ambassador to the host country, includes
reading of the President's Memorial Day Proclamation, speakers, the
presentation of the National Colors, wreath laying ceremonies, and
military bands and units. The 1997 Memorial Day schedule for our
cemeteries in Europe, Tunisia, Mexico City, Panama and Philippines, is
as follows:
------------------------------------------------------------------------
Cemetery Date Time
------------------------------------------------------------------------
AISNE-MARNE (France) \1\.......... SUNDAY 25 MAY....... 10:15 AM
ARDENNES (Belgium) \2\............ SATURDAY 24 MAY..... 10:00 AM
BRITTANY (France) \2\............. SUNDAY 25 MAY....... 4:30 PM
BROOKWOOD (England) \1\........... SUNDAY 18 MAY....... 3:00 PM
CAMBRIDGE (England) \2\........... MONDAY 26 MAY....... 11:30 AM
COROZAL (Panama).................. MONDAY 26 MAY....... 9:00 AM
EPINAL (France) \2\............... SUNDAY 25 MAY....... 3:00 PM
FLANDERS FIELD (Belgium) \1\...... SUNDAY 25 MAY....... 3:00 PM
FLORENCE (Italy) \2\.............. MONDAY 26 MAY....... 11:00 AM
HENRI-CHAPELLE (Belgium) \2\...... SATURDAY 24 MAY..... 4:00 PM
LORRAINE (France) \2\............. SUNDAY 25 MAY....... 11:00 AM
LUXEMBOURG (Luxembourg) \2\....... To Be Announced..... ..............
MANILA (Philippines) \2\.......... MONDAY 26 MAY....... 4:00 PM
MEXICO CITY (Mexico).............. FRlDAY 30 MAY....... 12:00 PM
MEUSE-ARGONNE (France) \1\........ SUNDAY 25 MAY....... 3:00 PM
NETHERLANDS (The Netherlands) \2\. SUNDAY 25 MAY....... 3:00 PM
NORMANDY (France) \2\............. SUNDAY 25 MAY....... 10:30 AM
NORTH AFRICA (Tunisia) \2\........ SATURDAY 24 MAY..... 10:00 AM
OISE-AISNE (France) \1\........... SUNDAY 25 MAY....... 4:00 PM
RHONE (France) \2\................ SUNDAY 25 MAY....... 10:00 AM
ST. MIHIEL (France) \1\........... SUNDAY 25 MAY....... 4:00 PM
SICILY-ROME (Italy) \2\........... MONDAY 26 MAY....... 11:00 AM
SOMME (France) \1\................ SUNDAY 25 MAY....... 3:00 PM
SURESNES (France) \1\............. SUNDAY 25 MAY....... 2:30 PM
------------------------------------------------------------------------
\1\ World War I American Cemeteries and Memorials.
\2\ World War II American Cemeteries and Memorials.
D-Day Landing Ceremonies--6 June 1997.--A commemorative program is
held each year at a site along the Landing Beaches. The program site is
rotated between the British, French, and American Sectors. The 1997
program will be held in the American Sector of operations on 6 June at
the following locations:
Bayeux.................................... 9:30 AM Liberation Monument--
Wreath Laying.
Omaha Beach............................... 10:15 AM American cemetery--
Religious Service.
11:00 AM D-Day Monument--
Wreath Laying.
11:15 AM National Guard
Monument--Wreath Laying.
Point Du Hoc.............................. 11:30 AM Wreath Laying.
Saint-Mere-Eglise......................... 12:15 PM Wreath Laying.
12:45 PM Official Banquet.
Utah Beach................................ 3:00 PM Leclerc Monument--
Wreath Laying.
3:30 PM Monument of 4th
Division Wreath Laying.
National Ceremony-American
Federal Monument: Raising 8
National Colors; Official
Speeches; Wreath Laying
Ceremony; Military Parade.
Veterans Day.--Annual ceremonies are held at some of the cemeteries
on Veterans Day, which coincides with the French holiday commemorating
the end of World War I. Local community programs frequently include
commemorative events at some of our cemeteries. The location and
magnitude of the programs vary in location and size. We will provide
dates and times for Veterans Day celebrations at a later date.
Other Ceremonial Occasions.--Members of Congress, officials of the
Executive Branch, high ranking diplomatic and senior representatives of
the respective host nations and allied powers, personnel from NATO/
SHAPE, as well as, veterans' remembrance, educational and even local
patriotic groups frequently visit our cemeteries and memorials. These
visits include small wreath laying ceremonies and community sponsored
receptions to honor those Americans who fought in and liberated a
particular town or region.
Special Events.--Our Cemetery Superintendents serve as ambassadors
of goodwill in the country where they are stationed. They frequently
represent the United States at ceremonies and other community based
programs. These include ceremonies commemorating the liberation of
towns and villages by U.S. troops, events that honor the survivors of
Nazi concentration camps and visits by American veterans' remembrance
groups.
AMERICAN BATTLE MONUMENTS COMMISSION
Mission
The American Battle Monuments Commission (ABMC) is a small
independent agency of the Executive Branch established by Congress on
March 4, 1923 (36 U.S.C. 121-128c).
The principal mission of the agency is to commemorate the
sacrifices and achievements of the United States Armed Forces, where
they have served, since April 6, 1917, the date of U.S. entry into
World War I. This is accomplished by:
Designing, constructing, administrating, and maintaining cemetery
and memorial structures outside the United States. ABMC currently has
responsibilities for 24 permanent United States memorial cemeteries,
and 27 memorial monuments and markers.
Controlling the design and construction of U.S. Military memorials,
monuments, and markers on foreign soil which are sponsored by U.S.
citizens or U.S. public or private organizations, and encouraging these
organizations to adequately maintain them.
Establishing memorials in the United States, when legislated by the
Congress, and outside the United States, where U.S. forces have served,
as the Commission determines.
--Congress directed ABMC to establish the Korean War Veterans
Memorial on the Mall in Washington, DC. This Memorial was
completed and dedicated in July 1995 and is now administered by
the National Park Service.
--Public Law 103-94, signed by President Clinton on May 25, 1993,
authorizes ABMC to design, erect and conduct fund raising for
the national World War II Memorial that is to be sited on the
Mall in Washington, DC. This national monument will memorialize
the generation of Americans whose spirit, sacrifice, and unity
reflect the values that have made our nation strong. This
Memorial will also pay tribute to the many Americans who served
in the Armed Forces and to all those who joined the war effort
on the home front. The Commission's goal is to dedicate the
Memorial on Veterans Day 2000. Former Senator Robert Dole, a
World War II veteran, is now serving as Co-Chairman of the
World War II Memorial fund raising effort.
Services Available to the Public
General information concerning name and location of cemetery and
memorial sites.
Specific information on grave and memorialization sites of War
Dead.
General information about travel to the military shrines
administered by the Commission, including best routes, modes of travel,
available accommodations, and information about historical events which
took place in the battlefield areas in the region of the cemetery
memorials.
Authorization to immediate family members for issuance of fee free
U.S. passports when visiting burial or memorialization sites of loved
ones.
Escort of family members to appropriate grave and memorialization
sites when visiting cemetery memorials.
Photographs of grave and memorialization sites, along with large
color lithographs of the cemetery memorials.
Assistance in placing floral decorations at grave and
memorialization sites using funds provided by the donor.
Maintenance of the Honor Roll database of the Korean War Veterans
Memorial on the National Mall in Washington, DC. The Honor Roll
commemorates those members of the United States military who died
world-wide during the Korean War. Honor Roll Certificates may be
obtained at the kiosk located at the Memorial or from ABMC's Washington
office.
______
Question Submitted by Senator Mikulski
Question. Provide a plan to work through the current backlog of
engineering projects and identify a schedule which might allow American
Battle Monuments Commission to ``buy out'' of this backlog dilemma.
Answer. A copy of the current Master Priority Listing for all
identified engineering projects follows below.
There are 550 projects with a total estimated cost of slightly over
$10 million. With considerable attention to detail, this master list
has been carefully reviewed, revised, updated, and prioritized over the
course of the past nine months. Accordingly, our fiscal year 1997,
fiscal year 1998, and outyear engineering plans and programs are now
based on this newly developed master priority list.
Presently, ABMC hopes to apply $2M to engineering projects in
fiscal year 1997. At this time, our President's Budget Request has
$2.2M programmed for engineer projects in fiscal year 1998. If we do
not experience unanticipated foreign currency fluctuations, any
significant natural disasters, or unexpected utility or plant failures,
we project our backlog will be reduced to $6M by the end of fiscal year
1998. Additionally, we estimate that $700,000 in new projects must be
added to the master list each year. Consequently, if we are able to
continue to apply $2M annually toward engineer projects every year, it
could still take an additional five years (fiscal year 1999 through
fiscal year 2003) to eliminate the backlog. In order to support the
current high standards of maintenance and repair of our facilities,
plus improve our position with respect to energy conservation,
productivity, and efficiency, the Commission could effectively apply up
to an additional $1M per year above the President's Budget, for
engineer project backlog reductions. This would allow ABMC to make a
major reduction prior to fiscal year 2001.
ABMC ENGINEERING BACKLOG AT START FISCAL YEAR 1997
------------------------------------------------------------------------
Object Estimated
Cemetery Project class cost
------------------------------------------------------------------------
Meuse Argonne.................. Anchor Loose 25 $2,000
Stones at Church
Ruins at
Montfaucon.
North Africa................... Repair of Interior 32 30,000
Court Cornice.
Aisne Marne.................... Install Automatic 25 1,000
Chlorinator for
Potable Water.
Rhone.......................... Install electrical/ 32 3,000
heating System,
Visitor Center.
Aisne Marne.................... Drill New Deep 25 250,000
Well.
Manila......................... Repair Hemicycle 32 100,000
Roof.
Rhone.......................... Replacement of 25 5,800
Fuel Tank
Visitors/Office
Building.
Aisne Marne.................... Install Water 25 1,500
Softener.
Sicily-Rome.................... Drill New Well 30 32 6,800
mt. Install
Pumping System.
Meuse Argonne.................. Replace 3 ea Fuel 25 50,000
Tanks, and 1 ea
gas tank.
Sicily-Rome.................... Raise and expand 25 2,018
irrigation parts
store room.
Normandy....................... Replace 1 ea gas 25 11,000
tank.
Manila......................... Repair Water 32 30,000
Purification
System (Potable).
Sicily-Rome.................... Improve Drainage 32 3,000
to Soutwest
corner of center
mall.
Netherlands.................... Replace One 25 8,000
Gasoline Tank.
North Africa................... Replace curbstones 25 3,000
along Burial area.
Ardennes....................... Install Heavy 25 750
Security Door on
Side of Garage.
Florence....................... Gradual 25 4,000
replacement of
boundary hedges
(North ent).
Oise-Aisne..................... Construct Weir on 25 1,000
Stream.
Mexico City.................... Replace Water 25 1,000
Tanks.
Florence....................... Replace fire thorn 25 4,000
hedge both
entrance drives.
Flanders Field................. Renovate Oudenarde 25 8,000
Monument.
North Africa................... Replacement of 25 5,750
Thuya Hedges.
Ardennes....................... Sandblast, Repair 25 5,000
and Repaint
Compost Shed.
Florence....................... Replace old Tar 25 3,000
Paper, Reservoir
Roof.
Cambridge...................... Repair Stone Steps 25 15,000
at Flag Pole Base.
Corozal........................ Improve Drainage 32 47,000
System.
Florence....................... Install water pump 25 3,000
to increase
pressure.
Oise-Aisne..................... Replace Gutters on 25 8,000
Garage/Storage
Bldg in Service.
Florence....................... Replace 50 old 25 4,500
Model Sprinklers,
Burial Area.
Epinal......................... Install Lightning 25 1,000
Protection for
Sprinkler System.
Sicily-Rome.................... Replace 50 old 25 4,500
Model Sprinklers,
Burial Area.
Epinal......................... Improve Security 25 2,000
Measures of
Service Area.
Mexico City.................... Replace Four Doors 25 2,000
North Africa................... Maintenance of 25 1,000
Flagpole,
Travertine
Drainage Grill.
Cambridge...................... Repoint Steps 25 1,000
around Flagpole.
Florence....................... Install water 25 3,800
filter in both
quarters.
Aisne Marne.................... Repaint Exterior 25 500
Dormer Window
Frame, Visitors
Bldg.
Manila......................... Repair Asst 25 5,700
Superintendent's
Roof.
Henri Chapelle................. Repair Leak Around 25 500
Dormer in Supt's
Qtrs.
Florence....................... Replace walkpaths 25 3,500
cotto tiles, of
both quarters.
Lorraine....................... Refurbish 25 25,000
Biological Filter.
Cambridge...................... Install handrail 25 2,000
on steps plots E-
F.
Sicily-Rome.................... Resurfacing of 25 2,000
Spillway Canal,
Tinozzi Ditch.
Somme.......................... Repair Hinges on 25 5,000
Chapel Doors.
Manila......................... Caulk Joints of 32 15,000
Western Hemicycle.
Brookwood...................... Replace Gutters on 25 1,600
Superintendent's
Quarters.
North Africa................... Replace Deep Well 25 3,000
Pump.
Meuse Argonne.................. Relocate Compost 25 30,000
Shed.
Ardennes....................... Replace Ladder in 25 1,000
Reservoir.
Sicily-Rome.................... Maintain Facings, 25 2,100
roofs of all svc
area buildings.
Meuse Argonne.................. Build External 32 50,000
Water Reservoir
(Lake).
Garches........................ Construct 25 534
Insulating
Skylight.
Lorraine....................... Replace Sewage 25 1,000
Pump Asst Supt
Qtrs.
Lorraine....................... Replace 25 444
Circulation Pump,
New Service Bldg.
Netherlands.................... Repair Roof of 25 1,633
Transformer Bldg.
Normandy....................... Replace Water 25 899
Heater, Supt's
Qtrs.
Ardennes....................... Replace Drainage 25 285
Pipe Asst Supt
Qtrs.
Meuse Argonne.................. Replace Sprinkler 32 350,000
System.
Netherlands.................... Construct Oil- 25 20,000
Water Separator
at Wash Point.
North Africa................... Replacement of 32 25,000
Border Stone
Terrace.
Normandy....................... Modify Low Voltage 25 6,000
Electrical Panel
in Pump House.
Luxembourg..................... Repair Asst Supt's 25 10,000
Driveway.
Florence....................... Renovation of 32 25,000
Memorial Toilets
W/Handicapped Fct.
Brittany....................... Paint Flag Poles.. 25 3,000
Manila......................... Replace 3 32 47,000
Transformers and
Upgrade Sub-
station.
Flanders Field................. Repoint Base of 25 5,000
Chapel Memorial.
Rhone.......................... Enclose section of 32 8,000
Compost Shed.
Brookwood...................... Repair Chapel 25 15,000
Decorative Grills.
Meuse Argonne.................. Renovate Water 25 40,000
Reservoir.
Rhone.......................... Replace heating 32 8,000
system in
Government
quarters.
Aisne Marne.................... Install all 32 30,000
Utilities at
Chateau Thierry
Monument.
Manila......................... Upgrade Electrical 32 30,300
Panel (Pumphouse).
Cambridge...................... Repair Cracks in 25 5,000
Supt's Qtrs.
Sicily-Rome.................... Renovation of 32 24,000
Visitors Toilets
to include
handicap.
Normandy....................... Construct Path Way 25 2,100
to Debris
Disposal Area.
Brookwood...................... Improve Drainage 25 5,000
Around Chapel.
North Africa................... Install Kitchen 25 1,000
Stovetop Exhaust
Vents, Both Qtrs.
Brittany....................... Renovate Public 25 10,000
Toilets.
Manila......................... Install Automatic 32 75,000
Sprinkler System
(Phase I).
Somme.......................... Repair 25 5,000
Inscriptions at
Bellicourt
Monument.
Florence....................... Closing of Compost 32 6,000
Pit For Needed
Storage Area.
Flanders Field................. Replace Flagpole 25 7,000
Terrace.
Florence....................... Replace 50 old 25 5,000
Model Sprinklers,
Burial Area.
Luxembourg..................... Construct Ramp 25 1,750
Between Memorial
& Plots.
Corozal........................ Secure Fence Line. 25 3,600
Aisne Marne.................... Neutralize/Repair 25 7,500
Exposed Rebar at
Chateau Thierry.
Sicily-Rome.................... Closing of Compost 32 6,000
Pit for Needed
Storage Area.
Flanders Field................. Check Lightning 25 1,500
Protection System
on Chapel.
Henri Chapelle................. Renovate & Clean 25 10,000
Colonnades
Ceiling.
Sicily-Rome.................... Replace 50 old 25 5,000
Model Sprinklers,
Burial Area.
Lorraine....................... Reconstruct 25 120,000
Memorial Stairway.
Corozal........................ Replace Roof, 25 5,000
Superintendent's
Qtrs.
Aisne Marne.................... Install Oil-Water 25 2,000
Separator at Svc
Area Washrack.
North Africa................... Renovation of 32 10,000
Visitors Toilets
to include
handicap.
Cambridge...................... Treatment of Wood 25 2,500
and Stone Work in
Chapel.
Henri Chapelle................. Clean and Repair 25 60,000
Mosaic Stars in
Colonnade Ceiling.
Rhone.......................... Handicapped toilet 32 35,000
building (unisex
facility).
Brittany....................... Improve lightning 25 5,000
arrestors at
Brest Monument.
Mexico City.................... Replace Roof on 25 1,500
Service Building.
Somme.......................... Improve 25 500
Ventilation in
Garage Work Shop.
Florence....................... Renovate Toilets, 32 8,000
Visitors/Office
Building.
Oise-Aisne..................... Paint Exterior of 25 3,000
Garage/Storage
Bldg in Svc Area.
Flanders Field................. Install Electric 25 1,500
Heater in Chapel.
Rhone.......................... New Road Signs 32 19,000
Installation.
Oise-Aisne..................... Paint Exterior of 25 5,000
Visitors/Quarters
Building.
Corozal........................ Install Deep Well 32 60,000
& Reservoir.
Aisne Marne.................... Rebuild entrance 25 50,000
area and Walkways
to Bldgs.
Sicily-Rome.................... Refurbish 25 8,900
Ligustrum hedges,
Bare Spots, w/New
Plan.
Cambridge...................... Replace Damaged 25 2,000
Stones on Court
of Honor.
Brittany....................... Install Filters 25 1,500
for Tours
Monument.
Sicily-Rome.................... Renovation 25 8,700
Pittosporum
Hedgerow
Surrounding
Center.
Oise-Aisne..................... Replace Gutters on 25 5,500
Visitors/Quarters
Building.
Mexico City.................... Replace Roof 25 1,000
Garage Area.
Brittany....................... Install 25 5,000
information panel
at Tours Monument.
Rhone.......................... Remodelling of 25 4,000
Service Bldg
Shower/Toilet
Facility.
Meuse Argonne.................. Replace Roofs on 25 90,000
Garage Buildings.
Brittany....................... Install 25 5,000
Information Panel
at Brest Monument.
North Africa................... Repair sinking 25 5,000
curbstone in
front of Office
area.
Brookwood...................... Relevel Walkways & 25 50,000
Headstone beams.
Manila......................... Upgrade Asst 25 5,000
Superintendent's
Master Bath.
Flanders Field................. Repair Walkway at 25 1,000
Oudenarde
Monument at Plane
Tree.
Sicily-Rome.................... Replacement of 25 2,000
office/visitors
building doors.
Garches........................ Replace Carpeting 25 4,000
in Reception Area.
Lorraine....................... Build Handicap 32 15,000
Toilet Facilities.
Sicily-Rome.................... Replace Rain 25 2,500
Gutters & Down
Spouts Garage/Svc
Area.
Lorraine....................... Install New 25 200,000
Filtration System.
Manila......................... Paint Motor Pool 25 4,000
Buildings.
Meuse Argonne.................. Replace Lion's 25 1,500
Head at Pool.
Florence....................... Replace Rain 25 2,000
Gutters & Down
Spouts Garage/Svc
Area.
Netherlands.................... Connect Qtrs to 25 20,000
City Sewer.
Garches........................ Re-waterproof 25 10,000
Director's Office
Roof.
Lorraine....................... Refurbish Memorial 25 35,000
Bronze Window
Frame.
Meuse Argonne.................. Repaint Flagpoles. 25 4,000
Lorraine....................... Clean and Treat 25 100,000
(Water-resistant)
Memorial.
Netherlands.................... Replace Sprinkler 32 300,000
System and
Renovate Pump
Room.
Florence....................... Drilling of a new 32 40,000
artesian deep
well.
Luxembourg..................... Replace sprinkler, 32 220,000
renovate pumproom.
Luxembourg..................... Install Security 25 8,300
Doors on Compost
Shed.
Somme.......................... Replace sprinkler, 32 180,000
renovate pumproom.
Somme.......................... Repair Water 25 1,000
Softener.
Ardennes....................... Replace Sprinkler 32 200,000
System, renovate
pumproom.
Normandy....................... Install 32 5,000
Information Panel
at Pointe du Hoc.
Saint Mihiel................... Replace sprinkler, 32 200,000
renovate pumproom.
Rhone.......................... Install Drainage 25 8,000
line in Lower
Grave Plots area.
Henri Chapelle................. Replace Sprinkler 32 230,000
System and
Renovate Pump
Room.
Henri Chapelle................. Replace Kitchen 25 23,000
Cabinets, Both
Quarters.
Meuse Argonne.................. Construct an Oil- 25 2,000
Water Separator
at Wash Rack.
Oise Aisne..................... Replace Storage 25 40,000
Bldg & Apron.
Manila......................... Water Purification 32 170,000
System
(Irrigation).
Aisne Marne.................... Replace Roof on 25 15,000
Compost Shed.
Aisne Marne.................... Treat Wood Frame 25 5,000
of Compost Shed.
Henri Chapelle................. Repair Roof of 25 1,000
Transformer Bldg.
North Africa................... Renovation of 32 10,000
Visitors Toilets
to include
handicap.
Meuse Argonne.................. Reset Coping 25 3,000
Stones on
Memorial
Retaining Wall.
Aisne Marne.................... Repaint Flagpoles. 25 3,000
Luxembourg..................... Replace Rusted 25 2,500
Stained Glass
Window Hinges,
Chapel.
Sicily-Rome.................... Replace Bedroom/ 25 6,000
living room
ceiling Supt's
Qtrs.
Lorraine....................... Repaint Memorial 25 3,000
Ceiling.
Somme.......................... Repair Dry Rotted 25 7,000
Doors, Mechanical
Shop & Garage.
Saint Mihiel................... Inspect deep well 25 10,000
(100 meters
depth).
Manila......................... Refinish Pea 25 6,000
Gravel Base
Overlay--Cabanatu
an.
Henri Chapelle................. Renovate water 25 70,000
reservoir.
Ardennes....................... Construct Public 32 15,000
Handicapped
Toilet.
Cambridge...................... Install Handicap 32 10,000
Toilets.
North Africa................... Extension of 32 11,500
Sprinkling System
To Semi-Circular
Dr.
Henri Chapelle................. Reconstruct Public 25 45,000
Toilets/install
handicap facil.
Aisne Marne.................... Build Public 25 30,000
Toilets (include
handicap toilets).
Luxembourg..................... Replace Furnace, 25 8,000
Garage Bldg.
Rhone.......................... Repaint Exterior 25 8,000
of Service Area
Bldg & Qtrs.
Luxembourg..................... Replace 2 ea fuel 25 12,000
tanks (both Qtrs).
Oise Aisne..................... Replace 1 ea fuel 25 25,000
tank (VB/Qtrs), 1
ea Gasoline Ta.
Saint Mihiel................... Replace 2 ea Fuel 25 20,000
tanks, 1 ea Gas
Tank.
Manila......................... Construct an Oil 32 4,000
Storage Building.
Aisne Marne.................... Replace 2 ea 25 15,000
(Visitors Bldg/
Qtrs) fuel tanks.
Henri Chapelle................. Replace 4 ea Fuel 25 30,000
Tanks.
Ardennes....................... Replace 4 ea Fuel 25 36,000
Tanks & 1 ea Gas
Tank.
Sicily-Rome.................... Renovation and 32 3,500
modification of
Pump House roof.
Brittany....................... Replace 4 ea Fuel 25 36,000
Tanks & 1 ea Gas
Tank.
Flanders Field................. Replace heating 25 4,000
system--nursery.
Henri Chapelle................. Rewire Buildings 25 30,000
vic Collonades.
Sicily-Rome.................... Install auto 32 2,000
irrigation system
front of
res'vation.
Aisne Marne.................... Check Lightning 25 500
Arrestor System
at Memorial.
Flanders Field................. Insulate Qtrs 25 500
Attic.
Cambridge...................... Renovate Toilets 25 5,000
in Visitors Bldg.
Corozal........................ Upgrade Sprinkler 32 3,000
System.
Epinal......................... Install Road Signs 25 1,000
Normandy....................... Extend Sprinkler 25 2,000
System to Nursery
Area.
Saint Mihiel................... Remove electric 25 1,000
cable and fuel
tank pipes at
Qtrs.
Florence....................... Rent platform to 25 3,000
paint Flagpole &
clean Pylon.
Aisne Marne.................... Replace Heating in 25 15,000
Garage &
Refectory (Svc
Area).
Flanders Field................. Restructure 32 110,000
Service Area.
Oise Aisne..................... Repaint Entrance 25 500
Gates.
Sicily-Rome.................... Extension of 32 2,500
boiler room
entrance Asst
Supt Qtrs.
Suresnes....................... Repair Perimeter 25 12,000
Fence (5th and
6th phases).
Somme.......................... Reset Stone on 25 1,500
South-West Chapel
Gate.
Henri Chapelle................. Replace High Volt. 25 20,000
Transformer and
Change Amperage.
Corozal........................ Replace Roof, 25 5,000
Chapel.
Somme.......................... Paint the 25 1,000
Lettering on
Entrance Wall &
Chapel.
Flanders Field................. Replace 3 ea Fuel 25 20,000
Tanks.
Henri Chapelle................. Inspect deep well 25 10,000
(100 meters
depth).
Sicily-Rome.................... Install Security 25 5,650
Grilles, Supt's
Qtrs.
Suresnes....................... Repaint iron work 25 6,000
on Fence (5th and
6th phases).
Epinal......................... Replace Roof Tiles 25 45,000
on All Service
Bldgs.
Saint Mihiel................... Repoint Stairs and 25 2,000
Walls at Montsec
Monument.
Sicily-Rome.................... Replace entrance 32 5,000
doors both
residences.
Henri Chapelle................. Construct 32 100,000
Visitor's Room
and Office.
Ardennes....................... Replace Window 25 500
(Insulating) in
Workers Refectory.
Netherlands.................... Engrave MIA name 25 6,750
(J. Howell) on
Wall of Missing.
Manila......................... Upgrade Canteen 25 5,000
(Replace Roof &
Ceiling).
Meuse Argonne.................. Improve Crew 25 2,000
Latrines/
Lunchroom in
Service Area.
Epinal......................... Improve Heating in 25 5,000
Service Area.
Luxembourg..................... Restructure Staff 25 4,000
Area in Service
Area.
Sicily-Rome.................... Install Security 25 5,000
Grilles, Asst.
Supt's Qtrs.
Somme.......................... Install 25 500
Thermostatic
Valves on Pump
Room Radiators.
Meuse Argonne.................. Install Chemical 25 10,000
Toilets at
Sommepy Mounument.
Netherlands.................... Replace Calcified 25 6,000
Water Lines in
Qtrs.
Sicily-Rome.................... Extension of the 32 12,000
Cemetery Office,
renovation of WC.
Meuse Argonne.................. Install all 32 50,000
utilities at
Sommepy Monument.
Somme.......................... Repaint Map at 25 500
Bellicourt
Monument.
Epinal......................... Resurface Roof of 25 15,000
Pump House.
Manila......................... Upgrade 25 5,000
Superintendent's
Guest Bath.
Brittany....................... Clean Tours 25 250
Monument.
Brittany....................... Reset Stones at 25 50,000
Entrance Gate.
Brookwood...................... Construct Toilet 32 40,000
Facilities/
Enlarge Office &
Break.
Sicily-Rome.................... Convert two doors 25 1,700
into windows,
Asst Supt Qtrs.
Ardennes....................... Replace Furnace in 25 5,000
Service Bldg.
Ardennes....................... Modify Fire 25 10,000
Hydrant System/
Sep From
Sprinkler Sys.
Normandy....................... Install Heating 32 9,000
System in #2 Work
Shop.
Rhone.......................... Enclosing of 32 1,000
Garage Annex.
Suresnes....................... Extend Office..... 32 75,000
Suresnes....................... Install Curtain 32 3,000
Rods & Curtains
in Qtrs.
Suresnes....................... Replace Curtains 32 2,000
and Drapes in
Visitors Bldg.
Manila......................... Repave Roads 32 120,000
(Phase I).
Suresnes....................... Repair/Repaint 25 50,000
West Perimeter
Fence (Behind
Cem.).
Normandy....................... Replace Expansion 25 1,000
Joints in
Reflecting Pool.
Saint Mihiel................... Replace Roof of 25 1,500
Green House.
Florence....................... Replace Roses, 25 4,000
Office/Visitors
Bldg/Flagpole
Area.
Cambridge...................... Insulate Attic in 25 3,000
Both Quarters.
Aisne Marne.................... Repaint Reservoir 25 500
Roof.
Flanders Field................. Replace Zinc 25 500
Flashing on Edge
Visitor's Bldg
Roof.
North Africa................... Replace Air 25 6,000
Conditioner
Units, Dual
System (7 ea).
Aisne Marne.................... Repair Leaks in 25 5,000
Structure
Drainage System,
Chapel.
Lorraine....................... Repair Gutters on 25 1,000
Compost Shed.
Henri Chapelle................. Replace roof tiles 25 3,000
on Service
Building.
Corozal........................ Replace Roof, 25 4,000
Public Rest Rooms.
Lorraine....................... Replace Gutters, 25 15,000
Downspouts and
Zinc Flashing.
Oise Aisne..................... Install Wall 25 500
Insulation In
Attic Next to
Master BR.
Oise Aisne..................... Refinish Entrance 25 500
Floors in
Quarters.
Rhone.......................... Replace of Five 32 3,000
Window Shutters,
Supt's Qtrs.
Epinal......................... Repaint Interior 25 1,500
of Supt's Qtrs.
Brittany....................... Install Burglar 25 5,000
Alarms in Both
Qtrs.
Somme.......................... Install Security 25 1,500
Railing in Qtrs
Attic.
Florence....................... Replace Cemetery 25 1,600
Wooden Benches.
Meuse Argonne.................. Modify Lightning 25 9,000
Arrestors at
Sommepy Monument.
Henri Chapelle................. Repaint Reservoir 25 2,000
Domes.
Ardennes....................... Install Security 32 8,000
Alarms.
Corozal........................ Replace Electrical 25 15,000
System, Chapel.
Ardennes....................... Water Proof Pump 32 2,000
House Ceiling.
Normandy....................... Install Security 32 6,500
System in Service
Area.
Oise-Aisne..................... Repair Memorial 25 5,000
Roof to Stop
Water
Infiltration.
Sicily-Rome.................... Put Aggregate 32 11,000
Stone Tiles North
Garden.
Normandy....................... Install Window 25 2,000
Security Bars in
Service Area.
Normandy....................... Replace 25 8,000
Orientation Table
Security Railing.
Brittany....................... Install Rolling 25 11,000
Shutters and
Screens at Both
Qtrs.
Florence....................... Lower, & Level 25 37,000
Turf Below Height
of Cross 1st Pha.
Aisne Marne.................... Renovate 25 2,800
Electrical Wiring
in Compost Shed.
Henri Chapelle................. Insulate Storage 25 7,000
Room/Install
Radiator (Svc.
Area).
Ardennes....................... Replace Two 25 15,000
Rolling Doors and
Enclose Staircase.
Manila......................... Replace Handrails 32 12,300
to Memorial
Public Restrooms.
Suresnes....................... Replace Service 25 500
Building Locking
System.
Cambridge...................... Transform Long- 25 15,000
Step Stairway.
Saint Mihiel................... Replace Heating 25 1,500
Pipes in Boiler
Room.
Sicily-Rome.................... Place Aggregate 32 2,000
Stone Tiles
Memorial Toilet.
Normandy....................... Reforest 32 10,000
Peripheral Areas
(Replace Black
Pines).
Brittany....................... Construct Handicap 32 15,000
Access Ramp for
Chapel.
Oise-Aisne..................... Construct 32 15,000
Handicapped
Facilities
(Modify Toilet).
Florence....................... Motorize 3 Roll-up 25 4,000
Doors, Service
Group Area.
Epinal......................... Replace Fuel 25 500
Gauges (3 ea).
Epinal......................... Replace 110v 25 500
Transformer &
Distribution Box.
Suresnes....................... Relocate Gasoline 25 10,000
Pump/Storage Tank
to Svc. Area.
Manila......................... Replace 32 20,000
Underground Fuel
Storage Tanks.
Suresnes....................... Upgrade Electrical 25 10,000
Power in North
Service Area.
Garches........................ Construct Handicap 25 2,000
Access Ramp.
Garches........................ Modify Toilet for 25 2,000
Handicapped
Access.
Sicily-Rome.................... Renovation and 32 5,000
modification of
Generator Room.
Meuse Argonne.................. Install Water 25 2,000
Softener in
Visitors Building.
Netherlands.................... Replace Stone 25 2,000
Steps Around
Flagpole.
Netherlands.................... Replace Venetian 25 4,000
Blinds in
Visitors Bldg
Office.
Sicily-Rome.................... Build Concrete Bed 25 3,000
for Canal Running
into Reservoi.
Netherlands.................... Replace Roll-up 25 3,500
Door in Mower
Bldg.
Netherlands.................... Paint Floor in 25 1,000
Service Area.
Flanders Field................. Sand/Seal Wooden 25 1,000
Floor in
Visitor's Bldg.
Manila......................... Renovate Guard 25 5,000
House.
Meuse Argonne.................. Rebronze Doors of 25 1,500
Montfaucon
Monument.
Oise Aisne..................... Repoint Rear Wall 25 500
of Memorial (3rd
phase/3.
Aisne Marne.................... Clean and treat 25 1,000
chimneys &
windows
(limestone).
Florence....................... Replace Pebble 32 36,000
Mall Paths with
Pebble Tiles.
Aisne Marne.................... Repair Cracked 25 1,000
Stones on
Flagpole Base.
Aisne Marne.................... Repair South-Side 25 10,000
Bronze Door Frame.
Saint Mihiel................... Repair and Paint 25 1,000
Perimeter Fence.
Sicily-Rome.................... Renovation of 25 8,000
Lathhouse
Building.
Somme.......................... Repaint Perimeter 25 1,000
Fence at Cantigny
Monument.
Somme.......................... Reset or Grind 25 1,000
Stone in Flagpole
Base.
Suresnes....................... Clean the Cornice 25 10,000
of Memorial.
Manila......................... Install Automatic 32 45,000
Sprinklers (Phase
II).
Suresnes....................... Replace 25 1,000
information board.
Ardennes....................... Replace Damaged 25 10,000
Bricks, Exterior
Wall of Vis. Ctr.
Henri Chapelle................. Replace 3 stones 25 2,000
in Wall of
Missing.
Florence....................... Build Retaining 32 90,000
Wall in Front of
Dam.
Lorraine....................... Repair Path to 25 2,000
Overlook.
Henri Chapelle................. Repaint Pump Room. 25 2,500
Saint Mihiel................... Repaint exterior 25 3,000
walls of Qtrs.
Florence....................... Install Alarm 25 2,400
System On
Entrance Cemetery
Bridge.
Somme.......................... Repair stone 25 4,500
damage in
Perimeter Wall.
Aisne Marne.................... Repair and Paint 25 6,000
Perimeter Fence.
Netherlands.................... Retile Floor in 25 2,000
Visitors Bldg
Office.
Manila......................... Drill New Well.... 32 90,000
Lorraine....................... Repair and Paint 25 15,000
Chain-link
Perimeter Fence.
Epinal......................... Repair Perimeter 25 1,000
Fence.
Somme.......................... Repaint 25 750
Transformer
Building.
Florence....................... Install Floor 32 1,500
Tiles Service
Group Building.
Aisne Marne.................... Repair Retaining 25 1,500
Wall of Memorial.
Ardennes....................... Repair Concrete 25 2,000
Pavement Next to
Compost Shed.
Flanders Field................. Repoint Perimeter 25 2,000
Wall.
Sicily-Rome.................... Replace Capstone 25 2,000
on Boundary Walls.
Meuse Argonne.................. Repair and Repoint 25 2,000
Perimeter Wall.
Oise Aisne..................... Repoint and Repair 25 2,000
Perimeter Wall.
Saint Mihiel................... Repoint and Repair 25 7,000
Perimeter Wall.
Manila......................... Repave Roads 32 125,000
(Phase II).
Suresnes....................... Relevel Headstone 25 45,000
Beams.
Saint Mihiel................... Install 32 5,000
information panel
at Montsec
Monument.
Meuse Argonne.................. Construct garage 32 10,000
at Asst Supt Qtrs.
Rhone.......................... Resurface 32 40,000
Visitors' Parking
Lot.
Aisne Marne.................... Repair/Repaint 25 4,000
Basement Windows,
Chateau Thierry.
Henri Chapelle................. Repair Stone Wall 25 3,000
and Gate Near
North Parking
Area.
Brookwood...................... Spread Additional 25 5,000
Gravel on
Walkways.
Manila......................... Install Automatic 32 4,000
Gate Opener (Main
Entrance).
Meuse Argonne.................. Relevel 2 steps at 25 500
Montfaucon
Monument.
Netherlands.................... Clean Copper 25 500
Sulfate Stains
from Statue Stone
Base.
Flanders Field................. Regild Door of 25 1,000
Chapel.
Rhone.......................... Resurface of 32 16,000
Service Road.
Epinal......................... Repair Cemetery 25 10,000
Roads.
Henri Chapelle................. Repair Roads and 25 3,000
Walkways.
Meuse Argonne.................. Repair Chapel 25 20,000
Service Road.
Manila......................... Replace/Install 32 30,000
Electric Aluminum
Garage Bay Door.
Netherlands.................... Resurface 25 35,000
Perimeter Road.
Suresnes....................... Reconstruct 25 100,000
Memorial Terrace/
cracked retain.
wall.
Somme.......................... Install Stone Road 25 500
Sign at
Bellicourt
Monument.
Rhone.......................... Replacement of 32 7,500
Fence from NE to
SW Side of
Cemeter.
Somme.......................... Install Stone Road 25 500
Sign at Cantigny
Monument.
Meuse Argonne.................. Resurface Roads 32 60,000
and Walkways with
Asphalt.
Henri Chapelle................. Replace Remaining 25 1,000
Single-Pane
Window in Attic.
Manila......................... Construct 32 25,000
Perimeter Road.
Luxembourg..................... Replace rug in 25 500
Visitors Bldg.
Brittany....................... Replace Wooden 25 10,000
Gates w/Aluminum.
Meuse Argonne.................. Resurface 25 15,000
Esplanade at
Montfaucon
Monument.
Manila......................... Construct Road to 32 25,000
Compost Area.
Somme.......................... Resurface all 25 70,000
Walkways.
Somme.......................... Resurface Parking 25 100,000
Area at
Bellicourt
Monument.
Lorraine....................... Resurface Roads 25 75,000
and Walkways.
Luxembourg..................... Resurface Cemetery 25 90,000
Walkways.
Aisne Marne.................... Rebuild other 25 40,000
roads (Water
Res'v'r & Compost
Shed).
Epinal......................... Resurface Cemetery 32 150,000
Walkways.
Meuse Argonne.................. Extend Roof of 32 25,000
Memorial to
Eliminate Water
Seepage.
Aisne Marne.................... Resurface Parking 25 50,000
Area/Walkways at
Chateau Thierry.
Aisne Marne.................... Rebuild road in 25 60,000
Belleau Wood.
Netherlands.................... Replace Curtains/ 25 5,000
Reupholster
Furniture in Vis
Ctr.
Aisne Marne.................... Repair Drainage 25 5,000
Problem and
Repoint Memorial
Steps.
Somme.......................... Refinish Floor in 25 2,000
Visitors Center
(Entrance Foyer).
Saint Mihiel................... Clean Montsec 25 150,000
Monument.
Meuse Argonne.................. Repair Terrace in 25 30,000
Front of
Montfaucon
Monument.
Epinal......................... Replace Gravel in 25 500
Front of Chaumont
Tablet.
Epinal......................... Reasphalt Entrance 25 75,000
Road.
Brittany....................... Replace Asphalt 25 6,000
Pavement at Tours
Monument.
Brittany....................... Replace Sidewalk 25 2,000
to Public Toilets.
Oise-Aisne..................... Reasphalt Interior 25 40,000
Walkways.
Ardennes....................... Repoint Memorial 25 40,000
Podium and Steps.
Oise-Aisne..................... Replace Outside 25 1,000
Entrance Lights--
VB & Qtrs.
Netherlands.................... Renovate Pump 25 8,000
System for
Reflecting Pool.
Ardennes....................... Repair and 25 20,000
Maintain Asphalt
Service Roads.
Ardennes....................... Repair Back Wall 25 5,000
of Compost Shed.
Ardennes....................... Rebuild Wash Rack 25 5,000
w/Oil-Water
Separator.
Normandy....................... Resurface 4 25 60,000
Cemetery Walkways.
Normandy....................... Repair Beach Path. 25 25,000
Normandy....................... Replace Cubicle 25 10,000
Partitions in
Public Toilets.
Normandy....................... Engrave 2 Stone 32 1,500
Pillars at Garden
of the Missing.
Normandy....................... Repair Employee 25 2,000
Parking Lot
(Service Area).
Normandy....................... Repair Cemetery 25 12,000
Access Road
Surface.
Normandy....................... Repair 300m of 25 1,000
Access Road's
Shoulders.
Normandy....................... Replace 2 Water 25 6,000
Softeners.
Normandy....................... Repair Roads/ 25 14,000
Parking Lot/
Walkways at Pt du
Hoc.
Netherlands.................... Replace Museum 25 5,000
Glass Shields
with Safety Glass.
Cambridge...................... Replace Curb 25 2,000
Stones at Parking
Lot.
Oise-Aisne..................... Resurface East- 25 10,000
West Axis
Walkways.
Oise-Aisne..................... Repaint Basement 25 1,500
of Visitor's/Qtrs
Bldg.
Oise-Aisne..................... Paint Interior of 25 1,000
Visitors
Reception Room.
Oise-Aisne..................... Renovate Toilets 25 1,500
of Visitors Bldg.
Oise-Aisne..................... Repair Service 25 3,000
Access Road.
Oise-Aisne..................... Install Cabinets 32 2,000
and Sink in
Refectory.
Suresnes....................... Refurbish Bronze 25 1,500
Base of Flagpoles.
Meuse Argonne.................. Paint Interior of 25 1,000
Service Area
Garage.
Meuse Argonne.................. Replace Water 25 750
Softener in
Supt's Qtrs.
Normandy....................... Resurface Gravel 25 1,000
Walkways, Garden
of the Missing.
Cambridge...................... Resurface Cemetery 25 30,000
Roads.
Brittany....................... Paint Exterior of 25 16,000
Five Buildings.
Brittany....................... Install False 25 3,500
Ceiling and
Radiators in
Garage Bay.
Brittany....................... Replace Toilets in 25 6,500
Visitors Bldg.
Brookwood...................... Replace Driveway 25 5,000
at Qtrs.
Cambridge...................... Resurface Parking 25 10,000
Lot Road Near
Visitors Bldg.
Luxembourg..................... Refinish Pews and 25 1,000
Kneelers in
Chapel.
Garches........................ Replace Worn 25 5,000
Carpeting (Phase
2).
Aisne Marne.................... Clean & treat 25 2,000
Stone on Qtrs and
Visitors Bldg.
Normandy....................... Repair Perimeter 25 3,000
Fence.
Luxembourg..................... Replace Visitors 25 8,000
Building Furnace.
Saint Mihiel................... Improve water 25 40,000
supply, clean
deep well.
Somme.......................... Improve Water 25 300,000
Supply (Drill New
Well).
Aisne Marne.................... Replace Gutters on 25 500
Compost Shed.
Ardennes....................... Replace Gutters on 25 1,000
Compost Shed.
Lorraine....................... Repaint Roof of 25 750
Public Toilet
Facility.
Henri Chapelle................. Replace gutters of 25 1,000
Service Building.
Lorraine....................... Repaint Roof of 25 1,000
Visitors Building.
Saint Mihiel................... Seal Asphalt 25 4,000
Parking Area at
Montsec Monument.
Ardennes....................... Replace Memorial 25 50,000
Furnace.
Lorraine....................... Seal Parking Lot 25 1,000
in Service Area.
Netherlands.................... Repair Rain Water 25 2,000
Drains.
Netherlands.................... Inspect and Repair 25 8,000
Service Area
Roofs.
Normandy....................... Replace Roofs Both 25 25,000
Quarters.
Normandy....................... Replace Annex 25 1,000
Building Roof
Gutters.
Lorraine....................... Replace Gutters on 25 10,000
Visitors Bldg and
Public Toilet.
Suresnes....................... Treat Chapel 25 12,000
Ceiling with
Preservative.
Cambridge...................... Improve 25 2,000
Maintenance Shop
in Service Area.
Suresnes....................... Install urinal and 25 2,000
sink in Service
Area.
Aisne Marne.................... Replace gas tank 25 20,000
and pump, Service
Area.
Oise Aisne..................... Extend Roof of 25 3,000
Garage to Create
a Lean-to Storage.
Henri Chapelle................. Improve water 25 40,000
supply, clean
deep well.
Saint Mihiel................... Install Paving 25 2,000
Stones at
Memorial.
Somme.......................... Renovate Perimeter 25 2,000
Fence w/ Post
Lead Anchors.
Netherlands.................... Enclose Compost 32 10,000
Shed.
Cambridge...................... Enclose Compost 32 10,000
Shed.
Epinal......................... Construct Interior 32 5,000
Dividing Walls in
Compost Shed.
Epinal......................... Install 32 15,000
Recirculation
System for Both
Pools.
Normandy....................... Install curbstones 32 45,000
access road.
Oise Aisne..................... Install heating in 32 250
Visitors Bldg
Attic.
Epinal......................... Construct staff 32 50,000
facility area.
Ardennes....................... Paint Mechanic 25 500
Workshop in
Service Bldg.
Epinal......................... Paint Floor in 25 1,000
Workshop.
Normandy....................... Improve Shed 25 15,000
Service Area #2.
Aisne Marne.................... Install New 25 50,000
Service Building.
Cambridge...................... Resurface Walkways 32 150,000
to Eliminate
Gravel.
Aisne Marne.................... Emplace Concrete 32 2,000
Borders Around
Traffic Island.
Somme.......................... Install Fence 32 30,000
Around Grassy
Area at
Bellicourt Mon.
Ardennes....................... Install Thermostat 25 2,000
Valves in Qtrs.
Lorraine....................... Install Hand 32 1,000
Dryers in
Visitor's Toilets.
Aisne Marne.................... Renovate Basement 25 35,000
Rooms for
Caretaker's
Office.
Normandy....................... Improve toilets 32 100,000
facilities,
Pointe du Hoc.
Suresnes....................... Widen and 25 60,000
Resurface
Cemetery Walkways.
Lorraine....................... Repair, Resurface 25 55,000
Memorial Area
Walkways.
Normandy....................... Repair & Install 32 15,000
Automatic Gate
Main Entrance.
Garches........................ Enlarge Parking 25 1,000
Area.
Aisne Marne.................... Relocate Offices 25 3,000
in Visitors
Building.
Saint Mihiel................... Relocate Entrance 25 1,000
Gate at Qtrs.
Saint Mihiel................... Install Gate on 25 3,000
Access Road to
Montsec Monument.
Lorraine....................... Replace Ceiling in 32 1,500
Supt's Office in
Visitors Bldg.
Lorraine....................... Install Sprinkler 32 10,000
System for Meadow
Area.
Epinal......................... Construct Heated 32 5,000
Chemical Storage
Shed.
Normandy....................... Construct 32 50,000
Replacement
Storage Building.
Netherlands.................... Construct 32 30,000
Permanent Stone
Handicapped Ramps.
Ardennes....................... Install 1.5m Chain 32 30,000
Link Fence Around
Perimeter.
Ardennes....................... Construct Truck 32 5,000
Loading Ramp in
Compost Area.
Ardennes....................... Construct 32 10,000
Retaining Wall in
Compost Area.
Normandy....................... Tile Wood Working 32 3,000
and Mechanic Shop
Floors.
Normandy....................... Install 4 Metal 32 5,000
Gates in Overflow
Parking Area.
Suresnes....................... Install Air- 32 3,000
compressor in
North Service
Area.
Ardennes....................... Relocate Youth 25 10,000
Statue.
Meuse Argonne.................. Replace Perimeter 25 5,000
Fence.
Netherlands.................... Install Upstairs 25 1,000
Toilet in Supt's
Qtrs.
Epinal......................... Install second 32 2,500
toilet in Both
Qtrs.
Epinal......................... Renovate Kitchens 25 15,000
in Qtrs.
Netherlands.................... Paint Garage 25 500
Floors in Both
Qtrs.
Normandy....................... Paint Basement 25 500
Walls and Floor
of Memorial.
Aisne Marne.................... Repaint Basement 25 1,000
and Garage Floor,
Visitors Bldg.
Ardennes....................... Replace Sidewalk 25 5,000
in Front of Supt
Qtrs.
Saint Mihiel................... Repaint basement 25 1,000
in Qtrs.
Normandy....................... Replace kitchen 25 20,000
cabinets, both
Quarters.
Meuse Argonne.................. Install 2 Bedrooms 32 10,000
in Asst Supt Qtrs.
Henri Chapelle................. Construct Veranda 32 50,000
both Qrts.
Cambridge...................... Install a Veranda 32 13,000
at Supt's Qtrs.
Brookwood...................... Enlarge and 32 50,000
improve Supt's
Qtrs.
Netherlands.................... Install Rolling 32 1,250
Shutter in Supt
Qtrs vic Veranda.
Epinal......................... Install Two Hand 25 500
Dryers in
Visitors Bldg.
Netherlands.................... Install Hand 25 750
Dryers in Public
Toilets.
Henri Chapelle................. Install Hand 25 500
Dryers in Public
Toilets.
Cambridge...................... Replace carpeting 25 2,000
in Asst Supt Qtrs.
Aisne Marne.................... Sand and Varnish 25 5,000
Floors in Qtrs.
Ardennes....................... Replace Wall to 25 5,000
Wall Carpeting in
Both Qtrs.
Ardennes....................... Renovate bathroom 25 1,000
in Supt Qtrs.
Netherlands.................... Install New 25 3,000
Carpeting in
Asst. Supt's Qtrs.
Brittany....................... Renovate bathrooms 25 5,000
in Qtrs (Bathtub
& Sink).
Netherlands.................... Renovate upstairs 25 1,500
bathroom in
Supt's Qtrs.
Normandy....................... Renovate bathroom 25 1,000
in Asst Supt's
Qtrs.
Aisne Marne.................... Renovate Kitchen 25 2,000
in Qtrs (Tile &
Paint).
Epinal......................... Renovate Bathrooms 25 10,000
in Both Qtrs.
Normandy....................... Install Dormer 25 10,000
Windows, Asst
Supt's Qtrs.
Epinal......................... Construct Veranda 32 50,000
in both Qtrs.
Epinal......................... Construct Front 32 5,000
Porch Overhang
for Supt's Qtrs.
Ardennes....................... Construct Veranda 32 50,000
Both Qtrs.
Ardennes....................... Renovate Attic in 32 35,000
Asst Qtrs &
Construct
Staircase.
Ardennes....................... Tile Basement 32 5,000
Floor in Both
Qtrs.
Ardennes....................... Replace Kitchen 25 1,000
Floor Tiles in
Asst Supt's Qtrs.
Normandy....................... Renovate Attic in 32 15,000
Asst Supt Qtrs.
Normandy....................... Construct Garage 32 15,000
in Supt Qtrs.
Normandy....................... Tile Storage Area 32 3,000
Floors Both Qtrs.
Normandy....................... Extend Garage-- 32 5,000
Asst Supt Qtrs.
Oise-Aisne..................... Renovate Bathrooms 25 4,000
in Supt's Qtrs.
Ardennes....................... Repaint Interior 25 2,000
of Asst Supt Qtrs.
Suresnes....................... Renovate Supt's 25 5,000
Qtrs Bathroom.
Brookwood...................... Construct 32 20,000
Extension of
Entrance to
Supt's Qtrs.
Cambridge...................... Sandblast Chimney 25 152
on Visitors
Building.
Lorraine....................... Repair Furnace in 25 306
Service Area.
Garches........................ Construct Fire 25 2,500
Escape.
Aisne Marne.................... Resurface Road, 25 100,000
Belleau Wood
Towards Lucy (1.1
km).
Aisne Marne.................... Construct 25 5,000
Handicapped Ramp
to Visitors Bldg.
Flanders Field................. Replace Well Head 25 1,500
Hatch.
Flanders Field................. Renovate Oudenarde 25 1,000
Monument Bunker.
Flanders Field................. Improve Drainage 25 2,000
vic Visitors Bldg
Walkway.
Netherlands.................... Replace Damaged 25 12,000
Stones Around
Memorial.
Netherlands.................... Replace Sidewalk 25 1,500
at Supt's Qtrs.
Netherlands.................... Improve Attic 25 3,000
Insulation Both
Qtrs.
Normandy....................... Install Handrail 32 3,000
Utah Beach Fed
Monument
Staircase.
Oise Aisne..................... Sand & Varnish 25 1,500
Hardwood Floors
in Visitors Bldg.
Oise Aisne..................... Paint Small Metal 25 2,000
Storage Bldg,
Pump Rm,
Reservoir.
Somme.......................... Construct Water 32 50,000
Reservoir & Pump
House.
Suresnes....................... Repaint Boulevard 25 3,000
Fence Near Qtrs.
Suresnes....................... Improve Drainage 25 15,000
System (4 Blocked
Drains).
Brittany....................... Install New 25 10,000
Drainage Field
Asst Supt Qtrs.
Normandy....................... Replace Electric 25 1,000
Hand Dryers in
Public Toilets.
Netherlands.................... Clean Back Side of 25 9,000
Wall of Missing.
Brookwood...................... Replace Gas 25 2,500
Furnace, Supt
Qtrs.
Normandy....................... Paint Garage Floor 25 2,000
in Service Bldg.
----------------------------------------
Grand Total.............. .................. ...... 10,191,671
------------------------------------------------------------------------
DEPARTMENT OF DEFENSE--CIVIL
Cemeterial Expenses, Army
STATEMENT OF STEVEN DOLA, DEPUTY ASSISTANT SECRETARY
FOR MANAGEMENT AND BUDGET, OFFICE OF THE
ASSISTANT SECRETARY OF THE ARMY FOR CIVIL
WORKS
Senator Bond. We will now go to Mr. Steve Dola.
Mr. Dola. Thank you very much, Mr. Chairman. I appreciate
the opportunity to appear before the subcommittee today and
testify, as you pointed out, in support of the fiscal year 1998
Cemeterial Expenses, Department of the Army budget request.
Senator Bond. Let me say we have a letter from Secretary
Lancaster, a good friend, who points out that we have managed
to schedule a conflict for him, and we appreciate the fact that
you are able to attend and sorry that we conflicted with a
hearing on the House side. So thank you very much for being
here.
Mr. Dola. Mr. Chairman, Secretary Lancaster very much
wanted to be here in person. As you know, he is defending the
water resources program over in the House this morning.
As you indicated, our budget request is $11,815,000 and it
will finance operations at both Arlington and Soldiers' and
Airmen's Home National Cemeteries. The full-time permanent
positions in 1998 will be 117, down from a total of 121 in 1997
and 128 authorized in 1996. We have three programs: operation
and maintenance, administration, and construction.
The operation and maintenance program, $8,779,000, will
provide for the cost of daily operations necessary to support
an average of 20 services daily and for maintenance of
approximately 630 acres. This program supports 111 of the 117
full-time permanent positions in 1998. We plan to perform the
same amount of work contractually that previously was performed
by civil servants and direct the contractors to take on
additional tasks that need to be accomplished. Grounds
maintenance, tree and shrub maintenance, custodial services,
guide service, and information receptionists and headstone
setting, realignment and cleaning are major functions performed
by contract personnel.
The administration program, $599,000, provides for
essential management and administrative functions, to include
staff supervision of Arlington and Soldiers' and Airmen's Home
National Cemetery.
The construction program funded--requested at $2,437,000,
provides $1,175,000 to replace the Custis Walk, $810,000 to
construct Columbarium access roads, and $350,000 to continue
the graveliner program and other minor items.
Finally, with regard to the Columbarium, the 11,286 niche
capacity of Columbarium phase 3, currently under construction,
will bring the total niches in the Columbarium complex to
31,286. Phase 1, completed in 1984, phase 2, completed in 1991,
each provided 10,000 niches. The North Court will be completed
in October 1997 and the South Court will be completed in June
1998.
At this time there remain only about 2,000 niches in phase
2, so we are right on time with the additional capacity.
For that, Mr. Chairman, and for the subcommittee's support
of past appropriations for the Columbarium, Arlington National
Cemetery and the Army are very grateful. We have a sound budget
request for 1998 and we again ask for your support and
approval.
PREPARED STATEMENT
That completes my summary, Mr. Chairman.
Senator Bond. Thank you very much Mr. Dola.
[The statement follows:]
Prepared Statement of Steven Dola
INTRODUCTION
Mr. Chairman and members of the subcommittee: I appreciate the
opportunity to appear before the subcommittee in support of the fiscal
year 1998 appropriation request for Cemeterial Expenses, Department of
the Army. With me today are Mr. John C. Metzler, Jr., Superintendent of
Arlington National Cemetery, and Mr. Rory D. Smith, Budget Officer,
also from Arlington National Cemetery. We are appearing on behalf of
the Secretary of the Army, who is responsible for the operation and
maintenance of Arlington and Soldiers' and Airmen's Home National
Cemeteries.
FISCAL YEAR 1998 BUDGET OVERVIEW
The request for fiscal year 1998 is $11,815,000; $215,000 more than
the fiscal year 1997 appropriation. The funds requested are sufficient
to support the work force, to assure adequate maintenance of the
buildings, to acquire necessary supplies and equipment, and to provide
maintenance standards expected at Arlington and Soldiers' and Airmen's
Home National Cemeteries and include:
--$1,175,000 for replacement of the historic Custis Walk;
--$810,000 for construction of access roads associated with
Columbarium Phase III; and
--$200,000 to further expand contracts for enhancing the appearance
of the cemetery while implementing government-wide streamlining
plans.
The first item is a significant commitment to complete a capital
improvement project, which, when completed, will eliminate the heaving
and cracks which affect 75 percent of the walkway.
The second item will allow the cemetery to make full utilization of
Columbarium Phase III.
The third item continues the initiative begun in fiscal year 1996.
In fiscal year 1996 these contractual services were increased by
$230,000, in fiscal year 1997 they were increased by an additional
$165,000, and in fiscal year 1998 they will be increased by $200,000.
Additional work will be performed by these contractors that was not
done before and total personnel are being reduced from 128, to 121 and
117, respectively.
The funds requested are divided into three programs, Operation and
Maintenance, Administration, and Construction. The principal items in
each program are as follows:
The Operation and Maintenance Program, $8,779,000, will provide for
the cost of daily operations necessary to support an average of 20
interments and inurnments daily and for maintenance of approximately
630 acres. This program supports 111 of the cemetery's total 117 FTE's.
Contractual services, including estimated costs associated with the
million dollar grounds maintenance contract, the $775,000 information
and guide service contract, $410,000 of contract tree and shrub
maintenance, and a $210,000 custodial contract, are estimated to cost
$2,947,000.
The Administration Program, $599,000, provides for essential
management and administrative functions to include staff supervision of
Arlington and Soldiers' and Airmen's Home National Cemeteries. Funds
requested will provide for personnel compensation, benefits and the
reimbursable administrative support costs of the cemeteries.
The Construction Program, $2,437,000, provides funds as follows:
$1,175,000 to replace the historic Custis Walk, $810,000 to construct
roads that originally were included as part of Phase III of the
Columbarium, $50,000 of minor road repair, $350,000 for the graveliner
program, and $45,000 to prepare the final design for the Wash Stand/
Fuel Island project.
FUNERALS
In fiscal year 1996, there were 3,325 interments and 1,733
inurnments; 3,500 interments and 1,900 inurnments are estimated in
fiscal year 1997; and 3,500 interments and 1,900 inurnments are
estimated in fiscal year 1998.
CEREMONIES
Arlington National Cemetery is this Nation's principal shrine to
honor the men and women who served in the Armed Forces. It is a visible
reflection of America's appreciation for those who have made the
ultimate sacrifice to maintain our freedom. In addition to the
thousands of funerals, with military honors, held there each year,
hundreds of other ceremonies are conducted to honor those who rest in
the cemetery. Thousands of visitors, both foreign and American, visit
Arlington to participate in these events. During fiscal year 1996,
about 2,700 ceremonies were conducted and the President of the United
States attended the ceremony on Veterans Day and Memorial Day.
During fiscal year 1996, Arlington National Cemetery accommodated
approximately 4 million visitors, making Arlington one of the most
visited historic sites in the National Capital Region. This budget
includes $35,000 for a study to develop an estimating procedure and
reliable estimates of the kinds of visitors that Arlington National
Cemetery serves. This increased orientation to our ``customers'' is
consistent with the Government and Performance Results Act and the
National Performance Review.
CONSTRUCTION PROJECTS
New projects in fiscal year 1998
Custis Walk.--The Custis Walkway was constructed in 1879 and is
2,500 feet long. Approximately 75 percent of the walkway is affected by
heaving and cracks, requiring visitors to exercise additional care
while using the walkway. The design for restoration/replacement has now
been completed using fiscal year 1995 appropriations in the amount of
$250,000. Construction funding of $1,175,000 is included in the fiscal
year 1998 budget submission.
Columbarium.--Columbarium roads associated with the Phase III
increment are planned in fiscal year 1998 costing an estimated
$810,000.
Construction project underway
Columbarium Phase III.--On July 1, 1996, construction of one of two
courts comprising Phase III of the Columbarium began, the contract for
construction of the second court was awarded on February 7, 1997, and
the construction cost is estimated to be $3,227,100. Construction funds
were appropriated in fiscal year 1996 and 1997, respectively. The
11,286 niche combined capacity of the Phase III increment will bring
the total niches in the Columbarium Complex to 31,286. Phase I,
completed in 1984, and Phase II, completed in 1991, each provided
10,000 niches. The additional 1,286 niche capacity of Phase III was
achieved by increasing the square footage or ``foot print'' of each of
the Phase III courts by 10 percent. In addition to providing more
niches, the larger ``foot print'' permits inclusion of a needed rest
room and mechanical/storage area into the North court of Phase III, and
makes more efficient use of the site.
RECENTLY COMPLETED CONSTRUCTION PROJECTS
Amphitheater.--The repair of damage done by rainwater leaks at the
Amphitheater and restoration of deteriorated marble there which were
begun in July 1994 are now complete. The work included replacing
waterproofing membranes; cleaning, patching and repointing stonework;
replacing deteriorated marble and balusters; replacing benches,
railings, drinking fountains, trash receptacles, signage and flagstone
paving. The Memorial Amphitheater Restoration Project now provides a
fitting place for ceremonies where public honor and recognition are
accorded national heros.
Facility Maintenance Complex.--A new facility maintenance complex
was constructed to replace buildings constructed in the 1930's. The
facility maintenance complex consists of work and storage areas for
three divisions (Facility Maintenance, Horticulture, and Field
Operations), in three separate buildings. There is another building for
warehouse operations and a building for the administrative functions
associated with all of these operations.
McClellan Gate.--The work associated with restoration of the
McClellan Gate has been recently completed. Work included removal and
resetting of stone including some stone replacement, structural
repairs, repointing, patching and cleaning of the entire arch, a new
concrete ring foundation, new copper roofing and flashing, repair and
painting of the iron gate, and new granite cobblestone paving around
the arch.
CLAIMS AND SETTLEMENTS
The status and disposition of claims associated with projects and
contracts at Arlington National Cemetery is summarized in the following
paragraphs.
In our letter of December 5, 1996, we informed the Subcommittee of
our plan to make final payment to the construction contractor on the
Facility Maintenance Complex under the terms of a settlement agreement
reached with the contractor and final payment to the contractor was
made on January 14, 1997.
Last year, we reported that a claim for differing site conditions,
submitted by the construction contractor for the demolition of the old
temporary Visitors Center and development of that land (Sections 54 and
55) into gravesites, was formally denied. The contractor appealed the
decision to the U.S. Court of Federal Claims on December 19, 1996.
Two claims from a previous grounds maintenance contractor have been
received. Settlement of a claim related to a defective contract option
in a previous grounds maintenance contract was reached in the amount of
$98,000. A claim alleging defective specifications in an interim
grounds maintenance contract is expected to be litigated in June or
July 1997.
MASTER PLAN
The new Master Plan, which currently is undergoing review within
the Army Secretariat, will identify projects and policies to respond to
the challenges confronting Arlington National Cemetery. These
challenges include an aging infrastructure, declining availability of
space for initial interment, and the need to preserve the dignity of
the cemetery while accommodating substantial public visitation. The
future projects envisioned in the Master Plan will not begin to be
implemented until we are into the next century. Projects and policies
must be measured against funding to be made available in the budget and
appropriations processes. Detailed planning and engineering studies
necessary to establish the cost, feasibility, and responsiveness of
individual capital projects to the Master Plan challenges would be
programmed and proposed to Congress, after review and consideration by
the Administration, at the appropriate times.
ARMY--INTERIOR LAND TRANSFERS
Public Law 104-201, the National Defense Authorization Act for
Fiscal Year 1997 (``1997 Authorization Act''), which was enacted on
September 23, 1996, includes two land transfer provisions in Section
2821 relating to Arlington National Cemetery.
Section 29 Land Transfer.--The first part of Section 2821 of the
1997 Authorization Act instructs the Secretary of the Interior to
transfer to the Secretary of the Army certain lands found in Section 29
of Arlington National Cemetery. The land found in Section 29 is
currently divided into two zones: the 12 acre Arlington National
Cemetery Interment Zone and 12.5 acre Robert E. Lee Memorial
Preservation Zone. The transfer encompasses the Arlington National
Cemetery Interment Zone and the portions of the Robert E. Lee Memorial
Preservation Zone that do not have historical significance and are not
needed for the maintenance of nearby lands and facilities.
The Secretary of the Interior is to base his or her determination
of which portion of the Preservation Zone will be transferred primarily
on a cultural resources study that will consider whether archeological
resources are likely to be located on the land, whether portions of the
property are eligible for inclusion in the National Register of
Historic Places, and whether property has forest cover that contributes
to the setting of the Preservation Zone. The cost of the study,
estimated at $85,000, will be split evenly between the Department of
Interior and Department of the Army. In addition, the Secretary of the
Interior will provide the Committee on Armed Services of the Senate and
the Committee on National Security of the House of Representatives with
environmental and cultural resource information and analysis.
The transfer, which is to be carried out under the Interagency
Agreement Between the Department of the Interior, the National Park
Service, and the Department of the Army, dated February 22, 1995, is to
occur not sooner than 60 days after the Secretary of the Interior has
submitted the information and analysis to the Committees. The Secretary
of the Interior must provide the information and analysis to the
Committees no later than October 31, 1997.
Visitors Center/Old Administration Building.--The second part of
Section 2821 of the 1997 Authorization Act instructs the Secretary of
the Interior to transfer to the Secretary of the Army 2.43 acres of
land and the Visitors Center, which is constructed on the land. In
return, the Secretary of the Army will transfer to the Secretary of the
Interior .17 acres of land and the Old Administration Building, which
is constructed on the site. Section 2821 provides the authority by
which this agreed-upon exchange of lands may take place.
CONCLUSION
The funds included in the fiscal year 1998 budget are necessary to
permit the Department of the Army to continue the high standards of
maintenance Arlington National Cemetery deserves. I urge the
Subcommittee to approve this request.
Mr. Chairman, this concludes my remarks. We will be pleased to
respond to questions from the Subcommittee.
SELECTIVE SERVICE SYSTEM
STATEMENT OF GIL CORONADO, DIRECTOR
Senator Bond. Mr. Coronado, we know you had some conflicts
in your schedule today, we congratulate you on your sense of
timing. It reminds me of the trapeze artist who lets go without
seeing the other bar and it arrives right on time. That
demonstrates excellent planning, and we are delighted to
welcome you today.
Mr. Coronado. Thank you, Mr. Chairman.
Senator Bond. Please proceed.
OPENING REMARKS
Mr. Coronado. Mr. Chairman, I am delighted to appear before
you and the other distinguished members of this subcommittee. I
have a written statement that I would like to submit for the
record.
Senator Bond. We will accept the statement in full, it will
go into the record, and we would invite you to summarize what
you think are the most important parts.
Mr. Coronado. Yes, sir; we are grateful to the subcommittee
and the Congress for continuing to provide us with the funds
necessary to carry out our mission. As you know, in November
1994 the Department of Defense revised its mobilization
timetables and we are now in the process of adjusting to that.
At the same time, we are moving forward with modernization of
our data processing capabilities and we are trying to enhance
service in every area.
SERVICE TO AMERICA INITIATIVE
As you consider our fiscal year 1998 appropriation, I know
that to function in an era of Government downsizing, the
Selective Service System cannot merely dwell on its proud past,
nor depend exclusively on the threat of future crisis. This
agency must demonstrate that America benefits from its work
each and every day. So in the spirit of the national
performance review, we are broadening our agency's direction.
We have enthusiastically embarked upon a new initiative that we
call Service to America, while continuing to meet our statutory
responsibilities.
We have reached out in close cooperation with the
Department of Defense and the Corporation for National Service.
We are informing young men about service opportunities today in
the Armed Forces and in our Nation's communities. With Service
to America, we proudly continue our time-honored purpose in a
new way.
We want to fully implement Service to America, and our
fiscal year 1998 request of $23.9 million is a slight increase
for the very first time in 4 years. Slightly over one-half of
the increase is for the printing, mailing, processing, and
staffing of the Service to America initiative, and the balance
is, of course, to offset pay raise costs.
Service to America, Mr. Chairman, is a solid example of
Federal agencies working together to achieve common goals and
provide better, more efficient service to the public. It is
also relevant to our Nation's new bipartisan emphasis on
voluntarism. We have been in touch with Gen. Colin Powell as he
spearheads with former President Bush the Presidents' Summit
for America's Future. We have suggested ways that our agency's
capabilities can be adapted to support programs and initiatives
sparked by the upcoming Philadelphia summit.
The General responded recently. He was happy to receive our
suggestions and his staff is now considering our proposals.
I strongly urge that you fund this innovative, modest
adjustment to our acknowledgment program, a program that was
born from an original concept in 1993, suggested by Senator
Mikulski. With your support and this 4-percent increase in our
agency's budget, we can move forward with an endeavor that has
great benefits for America and coincides with our Nation's new
bipartisan emphasis on voluntarism.
Mr. Chairman, members of this committee, I am proud of what
Selective Service does for America. I hope you share in this
pride as I answer your questions about our fiscal year 1998
budget request.
Thank you.
[The statement follows:]
Prepared Statement of Gil Coronado
I am delighted to appear before you and the other distinguished
members of this Subcommittee, and to update you on the good things
happening at the Selective Service System (SSS).
The President's Budget requests this Agency be funded at a level of
$23.9 million in fiscal year 1998. This amount represents a slight
increase in Selective Service funding for the first time in four years.
Why the increase? In part, it is related directly to the
Administration's support of our new ``Service to America'' initiative,
an endeavor I hope the members of this Subcommittee will support.
SELECTIVE SERVICE SYSTEM FISCAL HISTORY
[In millions of dollars]
------------------------------------------------------------------------
Obligations/year
---------------------
Fiscal year 1982 Actual
dollars dollars
------------------------------------------------------------------------
1982.............................................. 19.6 19.6
1983.............................................. 22.0 22.8
1984.............................................. 23.0 24.8
1985.............................................. 24.5 27.4
1986.............................................. 22.7 26.0
1987.............................................. 22.2 26.1
1988.............................................. 21.0 25.4
1989.............................................. 20.9 26.2
1990.............................................. 19.6 25.6
1991.............................................. 19.5 26.6
1992.............................................. 19.3 27.4
1993.............................................. 19.4 28.5
1994.............................................. 16.6 24.8
1995.............................................. 14.9 22.8
1996.............................................. 14.4 22.9
Estimated:
1997.......................................... 13.7 22.9
1998.......................................... 13.9 23.9
------------------------------------------------------------------------
In the past year, more than a million-and-a-half men followed the
example of young Jerry Lewis, Jr., of Rankin, Texas. In February 1996,
Jerry was the 35 millionth man to register with Selective Service since
the requirement was reinstated in 1980. As America's young men comply
with the law, they demonstrate to the men and women who serve in the
all-volunteer military that the U.S. population stands behind them,
committed to serve, should the preservation of our national security so
require.
AGENCY CONTINUES TO BE EXAMINED
Much Congressional and media interest has focused on the SSS since
the early 1990's because of: (1) the end of the Cold War; (2)
Department of Defense (DOD) analyses that addressed many intangible
elements associated with maintaining a standby system of conscription;
(3) the Administration's reviews and policy decisions by the President;
and, (4) a 1994 change in DOD's forecast for manpower requirements. DOD
now anticipates that the first draftees will be needed six months after
a crisis begins. In light of this, the SSS adjusted its programs and
streamlined its staffing. The resulting changes enable SSS to work
better and more efficiently, and conform with Administration guidelines
promulgated by the National Performance Review. Simultaneously, the SSS
has had several examinations of its mission and structure. Currently
(since January 1997), the General Accounting Office (GAO) is studying
possible alternative methods of registration at the request of three
Members of Congress who believe that personal registration is no longer
necessary. GAO's review will summarize the merits of the current
program and present the pros and cons of alternatives.
IMPACT OF NEW INDUCTION TIMETABLES
In February 1995, the President forwarded to Congress the
Administration's position emphasizing the need to maintain the SSS and
peacetime registration. It also reaffirmed the Department of Defense's
position to keep the SSS in its present configuration. The DOD revised
its mobilization timetables to reflect post-Cold War scenarios, with
first inductees now required 193 days after mobilization for a national
emergency. We had anticipated the new timetables, and began right-
sizing a few years ago. We reduced several programs and streamlined the
organization. On the other hand, the shift to new mobilization
timetables for inductees increased our operational workload by adding
new planning and training requirements. To conduct a more deliberate
build-up to a draft during a future national emergency, extensive new
plans are being developed and training on them must be accomplished.
Additionally, we must revise our procedures, regulations, and
documentation to reflect a new, graduated or ``time-phased response''
to deliver preexamined draftees for induction 193 days after
Mobilization Day. This work is progressing smoothly.
PLANNING AND PERFORMANCE MEASURES
Working closely with the Office of Management and Budget and
following National Performance Review mandates, the SSS has tailored
its goals and objectives to produce result-oriented performance
measures and improve service to America. This is described in our six-
year draft Strategic Plan.
For example, we continue in our commitment to reinvent the SSS to
improve operations, enhance customer service, and increase efficiency.
Our measures of performance effectiveness are: qualitative improvements
within specific time frames, more accurate and faster turnaround of
data, solid levels of personnel staffing, and total customer
satisfaction. Each of these issues is also outlined in our draft fiscal
year 1997-2002 Strategic Plan, which represents our road map to the
21st Century. Part of the Agency's strategy is to form partnerships
with other Federal government agencies, to work together to achieve
common goals and provide better, more efficient service to the public.
Selective Service provides essential administrative support services,
such as computer matching and automation, especially where there is a
requirement to have access to a data base of more than 36 million young
men. Currently we provide automation services to the Department of
Defense, the Department of Health and Human Services, the Census
Bureau, the Department of Justice, and the Corporation for National
Service. Similarly, at SSS, we obtain some administrative services from
other agencies. As an example, we out source for accounting, employee
assistance, health, payroll and personnel support programs as a means
to enhance internal productivity and limit costs.
In sum, we are committed to reshaping SSS to meet the demands of
the 21st Century. We are actively embracing other creative alternatives
to accomplish our statutory missions, and we continue to investigate
new and better ways to do business.
REGISTRATION IMPROVEMENT
Since public awareness of the requirement that men register
influences registration, and because a high rate of compliance fosters
fairness and equity in any future draft, the SSS has initiated several
programs:
--Radio and television public service announcements (PSA's) in
English and Spanish were developed and distributed to stations
nationally. These high-quality PSA's have received laudatory
comments from viewers around the country.
--Many governors and local officials issued proclamations supporting
SSS registration. Eighteen states have laws which parallel
Federal laws and require men to register with SSS as a
prerequisite for receiving state loans, educational assistance,
or employment. Several other states have similar legislation
pending.
HEALTH CARE PERSONNEL DELIVERY SYSTEM (HCPDS)
HCPDS is the Agency's standby system to conscript health care
personnel during a national emergency. The plans and procedures for the
registration and classification of health care personnel are complete
and have been placed on the shelf as Congress directed. Conscription of
health care personnel can be implemented, should the Congress
authorize, and the President so direct. In 1994, the Department of
Defense extended the time-line for delivery of health care personnel by
six months. Development of plans to comply with this extension will be
complete this fiscal year.
AUTOMATED DATA PROCESSING (ADP) INITIATIVES
Increasing demands for speedy services dictate the need to improve
productivity through advanced ADP technologies. A number of initiatives
were started last year and are making a difference in fiscal year 1997.
A new I-CASE Tools software package, which automates computer program
development, is aiding us in our business process improvement work.
Also, we are making good use of enhanced scanning equipment and an
Intelligent Character Recognition System, which have enabled the Agency
to file registration data faster and without loss of accuracy. In
addition to improving business processes and registration compliance
statistics, the Agency is moving to a more modern computer technology,
new reengineering projects, and revised methods of registrations. For
example, SSS will be looking at shifting from mainframe technology to
small computer technology to reduce operating and maintenance costs.
After an internal cost-benefit analysis, we will validate findings with
the General Service Administration, and work with a contractor to
implement the necessary changes.
SERVICE TO AMERICA INITIATIVE
While continuing to meet our statutory responsibilities, and with
strong Administration support, we have enthusiastically embarked on a
new initiative which we call ``Service to America.'' President Clinton
recently acknowledged it as ``a noble and worthwhile effort sure to
increase civic mindedness and opportunities in our country.'' The idea
is simple. With your support, the SSS registration process will serve
dual functions in American society. In our routine communication with
all new registrants in America, we encourage them to serve America
today. In close cooperation with the Department of Defense and the
Corporation for National Service, we are informing young men about
opportunities today in the U.S. Armed Forces and about community
service through the Corporation for National Service. On the
acknowledgment card they receive from us in the mail, we encourage them
to explore options for voluntary service to the Nation.
This ancillary service is meaningful, appropriate, reinvigorating
and exciting. With ``Service to America,'' this Agency proudly
continues to fulfill its time-honored purpose in a creative way. We
historically focused the attention of America's young men on meeting
national wartime needs, and now we also remind them to volunteer for
other civic opportunities in peacetime. Thus, the Selective Service
System is and will remain ready for tomorrow's national emergency, as
it serves America's needs today.
We want to implement fully the ``Service to America'' initiative.
Our fiscal year 1998 budget submission requests $23.9 million. This is
a slight increase for the first time since fiscal year 1993. About half
of this $1 million increase would fund five additional full-time
equivalents and offset the increased costs of printing, mailing, and
processing a larger acknowledgment card. It would also allow a portion
of the new card to be a detachable mail-back postcard. On it, new
registrants would indicate their interest in military or community
service. In turn, we would process the returning information into
timely, accurate, high quality recruiter leads for the U.S. Armed
Forces and the Corporation for National Service. The balance of the
funding increase would offset 1998 pay raise costs.
The ``Service to America'' initiative is another good example of
interagency cooperation that benefits the public. It is also relevant
to our Nation's new bipartisan emphasis on volunteerism. We have been
in touch with General Colin Powell as he spearheads, with former
President Bush, the President's Summit for America's Future.'' We
suggested ways that this Agency's capabilities can be adapted to
support programs and initiatives sparked by the upcoming Philadelphia
Summit. The General responded recently. He was happy to receive our
suggestions and his staff is now considering our proposals.
The four percent budget increase for Selective Service, requested
by the President for fiscal year 1998, demonstrates the Administration
is in agreement with the ``Service to America'' initiative. I strongly
urge that you fund this innovative and modest adjustment to our
acknowledgment program. With your support, we can move forward with
this endeavor that has great benefits for America, and parallels our
Nation's new, bipartisan emphasis on volunteerism.
Mr. Chairman and members of the Subcommittee, I am proud of what
Selective Service does for America. I hope you share in this pride.
ABMC INFRASTRUCTURE
Senator Bond. Thank you very much, Mr. Coronado.
Let me start with General Herrling. What do you estimate
the future infrastructure needs and costs to be for the AMBC?
General Herrling. Sir, today I estimate our infrastructure
costs as far as repair and maintenance and the backlog thereof
to be in the area of about $10 million. If we do not receive
some help to try to defray some of that cost, I can only see
that growing in future years.
Senator Bond. So this is a one-time cost, or what is the
annual cost? Are we talking about a one-time cost?
General Herrling. Sir, it would average somewhere around
$2.0 million a year for construction, repair and maintenance.
We have tried to make inroads into the backlog. In fact, in
fiscal year 1993 and 1994 Senator Mikulski added $1 million and
$250,000 to our budget and we were able to make serious inroads
into that backlog.
Now, over the last 4 or 5 years it has built up again.
Senator Bond. I know that one of the problems we face in
dealing with overseas responsibilities is the fluctuation in
foreign currency. What is the best approach for meeting the
foreign currency market fluctuations? What are you doing to
deal with that?
General Herrling. Sir, in this, the fiscal year 1998
appropriation, we have asked for $2.1 million to cover foreign
currency fluctuation costs. That seems consistent with the
past. The 1 year that it was not provided for in the budget, in
1996, we got into a deficit position, and were short $700,000.
So I had to go into my operational account to make up the
difference for the foreign currency fluctuation.
We have used our best judgment on what current fluctuation
needs will be for both this year and in 1998.
RESPONSIBILITIES
Senator Bond. Thank you, sir.
Turning to Mr. Dola, what are your primary responsibilities
with regard to the Arlington National Cemetery and the
Soldiers' and Airmen's Home National Cemetery?
Mr. Dola. As Secretary Lancaster's Deputy, my primary
responsibilities with regard to Arlington and Soldiers' and
Airmen's Home National Cemeteries are program formulation and
budget oversight. The budget request is to operate and maintain
both of those cemeteries, the entire works: scheduling,
orchestrating and supporting, the funerals there, operating and
maintaining the grounds, and providing for infrastructure needs
that may occur, such as the Columbarium, the restoration of the
Memorial Amphitheater, and other projects that are coming down
the road.
Senator Bond. The Columbarium. What are the other
infrastructure needs with respect to those? What kind of
funding do you expect to be requiring in the future?
Mr. Dola. As you know from our budget, Mr. Chairman, we are
asking for $2.4 million for construction, and in the next 5
years we would be expecting on the order of $2.5 million per
year. The larger issue will occur after that period, where we
would anticipate that the construction needs could perhaps
double that amount on an annual basis to take care of things
that we see in our master plan down the road.
COSTS OF SERVICE TO AMERICA INITIATIVE
Senator Bond. Mr. Coronado, what costs are you envisioning
in the Selective Service on the Service to America initiative?
Mr. Coronado. For Service to America, Mr. Chairman, it is
$506,000.
FUTURE OF SELECTIVE SERVICE
Senator Bond. There are questions being addressed by the
GAO on the need to maintain the Selective Service in view of
the success of the Volunteer Army. What do you see as the
future of Selective Service, and if you had to forecast the
outcome of this review what would you forecast? What do you
think it should be?
Mr. Coronado. It is my understanding that the GAO is at our
agency, according to them, at the request of three Members of
Congress to look at alternative methods of registration. So I
do not believe the future of this agency is in jeopardy. I
believe that this has been discussed and rediscussed by the
Congress, studied by the National Security Council, the
Department of Defense, and the administration. The majority of
the people involved in these studies and discussions have
decided SSS must remain ready and voted for maintaining a
strong third tier of our Nation's defense. I am optimistic
about the future of this agency inasmuch as it represents
something very important to all of us.
Senator Bond. Thank you very much, Mr. Coronado.
Let me turn to Senator Mikulski for her questions.
Senator Mikulski. Thank you.
Gentlemen, each one of you plays a very important role, one
in registering young people should we need to mobilize; and
then after service a way to pay tribute to that. General
Herrling--I am going to have a question for each one. First of
all, we have been very blessed that the head of the American
Battle Monuments Commission has always been a very
distinguished American, and we thank you for taking on that
responsibility.
ABMC INFRASTRUCTURE AND BACKLOG
I just want to follow upon what Senator Bond raised, which
is I am very concerned about the backlog in terms of
maintenance, and I think we would welcome either a plan or kind
of a work-through schedule. I do not want to call it a workout,
but a work-through schedule, where in an organized and
systematic way, dealing with those that are most at risk, then
through, and how we could bring ourselves up to date so that we
actually are not only funding current operating expenses, but
essentially really having an organized, systematic way of
working this down.
Do you think that is a possibility, to be able to give that
to us?
General Herrling. Yes; I do, Senator. In fact, I am
prepared to provide for the record a priority list of our
maintenance, which includes some 550 projects at this point. As
I mentioned earlier, it totals about $10 million.
Now, through this fiscal year and hopefully if funded at
the requested level for 1998, I will be able to work that
backlog down somewhere in the range of $6 million. We will use
our priority list, which includes some 550 projects, and start
working down it. As you know, each year other projects are
added to it.
But I think with a modest increase each year, over maybe
the next 5 years, I could whittle that down to something that
is very manageable.
Senator Mikulski. Well, this Senator is certainly not going
to suggest a management plan to a U.S. Army General. But we
might want to go to those that are most severely distressed,
like a barbell approach, and then those that are beginning to
be telltale, frayed and tattered, so that by beginning to
intervene now they are not on that cascading slope. Some of
those expenditures are quite low.
So we look forward to working with you on this, and thank
you.
A question then for Mr. Coronado. You spoke about the
Service to America and what I had asked. Do you want to just
very quickly say what that is?
Mr. Coronado. Absolutely. Senator, I want to thank you
personally for having brought this up in 1993. The
opportunities to interface with other agencies. How can we do
something to better serve the American public? Very basically,
we are in contact with 1.9 million young men each year. What we
have done is to redesign the registration acknowledgment card
and are asking men to serve America today as volunteers, either
through the Armed Forces--or through AmeriCorps--and the card
shows 1-800 numbers--for DOD and AmeriCorps. We are promoting
Service to America in close cooperation with these agencies,
who have voiced a very, very strong and very positive reception
to this adjunct effort. We communicate this simple message to
America's youth, at no additional cost, Mr. Chairman.
However, for fiscal year 1998, we are asking for a slight
increase in funding to redesign the whole process.
Senator Mikulski. So what you are saying is that Selective
Service does three things: one, it registers young men for the
draft should they need to be mobilized; but simultaneously, you
alert them to two opportunities for service now. One, if they
are ready to sign up for the U.S. military, here is the number
to call and go for it. The other is if you choose to begin to
manifest a patriotic feeling, you can also do it in your local
community by being a scout leader or big brother, and then that
is the other 800 number that you call.
But it is a way of reaching out to young men to say, we do
have an obligation, but you also have a great opportunity for
immediate service, either in the military or by being a good
citizen in your neighborhood.
Is that what we are talking about?
Mr. Coronado. That is exactly correct, Senator Mikulski. In
my travels throughout the country, we find that there is a lack
of communication with our young people. This is one effort to
get them to think about service to America, either in the
military or in their local communities.
RESULTS OF SERVICE TO AMERICA INITIATIVE
Senator Mikulski. I know my time has expired, but can you
tell, have there been any concrete results that you can talk
about that, because of this methodology, x number of young men
have said military, x number have said local volunteerism?
Mr. Coronado. This new methodology was implemented 2 days
ago, so we have no direct results yet. And, it is doubtful that
with a 1-800 number we would really be able to measure it. It
is our hope, it is our desire, that we will get the additional
funds for fiscal year 1998, and then we could include the
business reply card that would come back to us. It would give
us an accurate listing of the men who volunteered for the
military versus the ones who want to serve in the local
community. At a later date we would be very, very happy to
share that with you.
Senator Mikulski. OK.
Well, Mr. Chairman, I know my time has expired. I want to
thank Mr. Dola. Four million people visit Arlington. Four
million people come to Arlington to, of course, visit the
Kennedy grave and pay our respects to America's heros. I think
that is an extraordinary, just an extraordinary number of
visitors. We do not want to call it tourism. They are not
coming to tour. They are coming to express a feeling, and that
is an exceptional feeling.
We look forward to running this place because, in addition
to providing proper interment and burial services, you have
this other management responsibility which I think is
significant. You probably are visited--and please do not
confuse my vocabulary in any way with demeaning the special
nature, but you are visited more than a national park, many of
the national parks.
I would just hope that we really provide some type of
understanding of the support that you need, so that you do that
and at the same time meet the mission, the very honorable and
sacred mission for which you were established.
Mr. Dola. Senator Mikulski, we appreciate the understanding
of this subcommittee for the sacred trust that we try so very
hard to discharge in a way the subcommittee and Congress and
the American people will be proud of. We thank you for the
support that we have had in the past and hope that we will
merit it in the future.
Senator Mikulski. Thank you, Mr. Chairman.
Senator Bond. Thank you very much, Senator Mikulski.
We are very pleased to be joined by the chairman of the
full committee, Senator Stevens.
STATEMENT OF TED STEVENS
Senator Stevens. Thank you. I just dropped by to say hello,
to see what was occurring in terms of this area of your
jurisdiction, Mr. Chairman.
ABMC INFORMATIONAL SERVICES
I am concerned about the Battle Monuments Commission
activities. What kind of really informational services do you
have to let people know where these monuments and memorials and
cemeteries are overseas?
General Herrling. Senator Stevens, we have quite an
extensive program to keep next of kin, friends, and interested
people informed on just those subjects. Anybody can call or
write to our office and we will provide them with a letter that
gives them information concerning their request. We will also
provide them with general information pamphlets on the
cemetery. We will tell them how to get there from an airport or
railroad station. We will have the superintendent, in some
cases, go to the railroad station or airport to pick up and
bring the next-of-kin to the cemetery.
So we provide all that information through correspondence
daily. We receive probably hundreds of letters every week on
just that sort of request.
ABMC MEMORIAL DAY AND OTHER CEREMONIES
Senator Stevens. And what do you do to organize the various
ceremonies on our national days, like Memorial Day or Veterans
Day, over there?
General Herrling. Sir, each one of our cemeteries has a
ceremony on Memorial Day and also on Veterans' Day. It will
usually involve the U.S. Ambassador to that country as well as
distinguished military and civilians who live and work in that
country. They are formal ceremonies. The military, who are
still stationed throughout Europe, will provide the color
guards, firing squads, the buglers, to make it truly a
remembrance type of a ceremony.
I believe we do this very well and we pretty much mirror
what is done here in the States for those national holidays.
Senator Stevens. Many of us travel abroad about that time.
I remember I was asked to speak in The Netherlands at
Margraten.
General Herrling. Margraten.
Senator Stevens. But I do not remember ever--I have been
here quite a while, but I do not remember ever anyone sending
me a notice of where there would be events. I want to ask that
you undertake the task of sending, at least to the chairman of
the committees of both the House and the Senate, notice of what
type of ceremony is going to take place at the monuments and
memorials under your jurisdiction during the year. I think we
ought to have a little more attention to paying our respects at
those areas when we do go overseas.
I am not asking you for it any more than just once a year,
to say these are the events that will take place and to offer
opportunity to our people to visit these sites. I find them
very rewarding when I visit them, but I do not know how many
people do that.
Would you do that for us?
General Herrling. Senator, we would be delighted. We would
be delighted to provide that information to members of
Congress.
Senator Stevens. Good. Thank you very much. I appreciate
it.
Senator Bond. Thank you very much, Senator Stevens.
Thank you, gentlemen, for joining us today. We will keep
the record open for questions that other members of the
committee may have. We do appreciate the opportunity to work
with you. Our staff will be in contact with you on any further
questions that may arise and we urge you, as always, to feel
free to contact the staff. John Kamarck is our new head of the
staff for this committee and I hope that you will feel free to
call on him and other members of the staff if you have
additional views or comments that may be necessary.
SUBCOMMITTEE RECESS
Thank you, and the hearing is recessed.
[Whereupon, at 11:15 a.m., Tuesday, March 4, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, MARCH 11, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:38 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond and Mikulski.
CONSUMER PRODUCT SAFETY COMMISSION
STATEMENT OF ANN BROWN, CHAIRMAN
ACCOMPANIED BY:
MARY SHEILA GALL, COMMISSIONER
THOMAS H. MOORE, VICE CHAIRMAN
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. The subcommittee will come to order.
This morning we are very pleased to be able to take
testimony from three agencies with responsibilities to the
American consumer, including protecting citizens from injury
and death associated with consumer products and providing them
with important information on subjects as diverse as preparing
a will and eating healthfully.
The Consumer Product Safety Commission, represented by
Chairman Ann Brown, is requesting an appropriation of $45
million, an increase of $2.5 million over the current year. The
Consumer Information Center, represented by Director Teresa
Nasif, is requesting $2.1 million. And the Office of Consumer
Affairs, represented by Director Leslie Byrne, is requesting
$1.8 million.
For the most part, these budget requests would fund current
services without major enhancements in agency operations.
However, even funding marginal increases necessary for normal
inflationary adjustments will be tough in the budgetary
environment in which we are operating.
If you have had representatives at previous hearings, you
will know that this committee is blessed with some very
difficult problems, particularly with respect to the costs of
HUD and the section 8 contracts.
Moreover, it will come as no surprise to some of you that I
continue to have very strong concerns about the redundant role
of the Office of Consumer Affairs and question why the office
should be continued. We tried, unsuccessfully, to fulfill the
President's commitment to streamlining Government activities
and reducing duplication in the last two appropriations cycles
by eliminating the Office of Consumer Affairs. And, while I
received no calls or letters from constituents or consumer
groups in opposition, the administration insisted on funding
the organization in fiscal years 1995 and 1996. This was
disappointing to me.
In my view, OCA's role has become obsolete as most Federal
agencies have consumer affairs officers or individuals
responsible for consumer issues.
In addition, I have been concerned that in attempting to
create a role for itself in the last 2 years, OCA has succeeded
in creating yet another duplicative activity through the
consumer HelpLine.
OCA was without a director for several years. Ms. Byrne,
you are the newly installed director and you will be given the
opportunity to defend your agency. I have worked with you in
the past and have great respect for your abilities. It is the
agency, not the people, that I am concerned about. I will
require a lot of convincing.
Now let me turn to my ranking member, Senator Mikulski.
Good morning, Senator.
STATEMENT OF BARBARA A. MIKULSKI
Senator Mikulski. Thank you, Mr. Chairman and good morning
to you and to all members of the panel.
Each and every one of you have worked closely with me in a
variety of capacities, of course, with both Ms. Brown and Ms.
Nasif in the committee and with Ms. Byrne when she was a
Congresswoman, a cousin from the other side of the Potomac who
knows about the bridges.
PREPARED STATEMENT
Mr. Chairman, in the interest of moving ahead and hearing
the witnesses, I ask unanimous consent that my statement be
placed in the record and I look forward to hearing the
testimony and their answers to our questions.
Senator Bond. Without objection. Thank you.
[The statement follows:]
Prepared Statement of Senator Barbara Mikulski
Thank you, Mr. Chairman. I know that we have a lot to go through
this morning so I will be brief.
We will be hearing testimony from six of the independent agencies
within the jurisdiction of the VA-HUD Subcommittee: The American Battle
Monuments Commission, Cemeterial Expenses of the Army, the Consumer
Information Center, the Consumer Product Safety Commission, the Office
of Consumer Affairs, and the U.S. Court of Veterans Appeals.
Collectively, these agencies are requesting $92,091,000 for fiscal
year 1996 which is an increase of $3.7 million or 4.2 percent above the
fiscal year 1995 enacted level. The fiscal year 1996 budget request for
these agencies represents a mere fraction of the $91.2 billion in total
funding requested by the President for all agencies within this
Subcommittee's jurisdiction. The relative size of their budget
requests, however, should in no way diminish the importance of the
services that these agencies perform.
The witnesses before us are responsible for commemorating the
achievements and sacrifices of United States Armed Forces, operating
and maintaining that sacred area that is Arlington Cemetery, protecting
and informing America's consumers, and helping to ensure that veterans'
benefit claims are appropriately and adequately reviewed. This is
important work, Mr. Chairman.
My time here this morning is limited, so I will not be able to hear
all of the witnesses. Let me welcome all of you before the Subcommittee
as we begin our review of the President's fiscal year 1996 budget
request. Let me also echo what Senator Bond has said regarding our
budgetary situation. A freeze at current levels is probably the best
this Subcommittee can hope for.
One final thought before we turn to the witnesses. You know, Mr.
Chairman, the new majority in Congress seems determined to visit some
version of regulatory reform upon the American people. You are directly
involved in this effort as the co-Chairman of the regulatory Reform
Task Force appointed by the Majority Leader here in the Senate.
I hope that you and many of our colleagues will pay close attention
to the leadership that Ann Brown has brought to the Consumer Product
Safety Commission. As Chairman of the CPSC, Ann Brown has streamlined
and revitalized what had become a dormant agency under previous
administrations. She has made consumer protection more effective--not
by making the Federal government more invasive--but instead, working
cooperatively with consumers and businesses to minimize the risk of
death and injury from consumer products. Under Ann Brown's leadership,
the CPSC seeks voluntary compliance if it is at all possible and takes
mandatory action only when necessary.
As we consider the issue of regulatory reform here in the Congress,
Mr. Chairman, we should be looking to the CPSC to see just how the
Federal government can be made more effective at protecting our
citizens by ensuring that they are better informed and encouraging
businesses to pay more attention to safety in their products.
Thank you, Mr. Chairman. And now, let's here from the witnesses.
STATEMENT OF ANN BROWN
Senator Bond. Now we will turn to the chairman, Ann Brown.
Ms. Brown. Thank you. Mr. Chairman and members of the
subcommittee, I am Ann Brown, Chairman of the Consumer Product
Safety Commission, known as CPSC.
With me today are Commissioner Mary Sheila Gall and Vice
Chairman Thomas H. Moore and members of the commission staff.
I am pleased to have this opportunity to testify in support
of our fiscal year 1998 appropriation request.
For the information of any new members, I want to explain
very briefly who we are and what we do. The Commission was
established in 1973 by Congress as a five, now a three member
independent agency with the mission to protect the public
against unreasonable risks, injury and death from consumer
products.
We enforce five Federal statues--the Consumer Product
Safety Act, the Flammable Fabrics Act, the Poison Prevention
Packaging Act, the Hazardous Substances Act, and the
Refrigerator Safety Act. All told, we have jurisdiction over
15,000 different kinds of consumer products which are found in
and around the home.
These products are involved in more than 21,000 deaths and
over 29 million injuries with a total cost in excess of $200
billion annually to the Nation.
At the outset, I want to express our appreciation for our
fiscal year 1997 appropriation of $42.5 million, the full
amount requested in the President's budget. These funds are
being used effectively to protect the American people against
unreasonable risk of injury or death from dangerous or
defective consumer products.
I am especially proud of our Baby Safety Shower Program and
I want to show a very short tape about it.
[A videotape was shown.]
Senator Mikulski. Ms. Brown, how long is this tape?
Ms. Brown. It goes on for 1 more minute.
Senator Mikulski. This is a busy day and we do have three
witnesses.
Senator Bond. That's all right. It came out of her time.
[Laughter.]
Ms. Brown. Then please let me continue.
In fiscal year 1998, we are requesting an appropriation
increase to $45 million, an increase of $2.5 million to
continue and expand our vital work. In preparing our budget, we
carefully reviewed the needs and contributions of all our three
operating divisions.
As a result, we are proposing important investments above
current service levels in most of these areas. These
investments total $1.1 million. They include funding of a
larger number of product incident investigations, support for
hazard reduction initiatives, including a major effort on fire
hazards, an innovative compliance investigation program, and
certain information technology efforts critical to efficient
agency operations.
These modest programs requested for 1998 are more than
justified by our record of accomplishment.
PREPARED STATEMENTS
CPSC has made vital contributions to the 20-percent decline
in annual deaths and injuries. Past agency work in
electrocutions, children's poisonings, children's cribs, power
mowers, and fire safety helps save the Nation almost $7 billion
annually in health care, property damage, and other societal
costs--more than 100 times CPSC's annual budget, or about $155
million in savings for each $1 million of the agency's 1998
request.
[The statements follow:]
Prepared Statement of Ann Brown
Mr. Chairman, and members of the Subcommittee, I am Ann Brown,
Chairman of the Consumer Product Safety Commission (CPSC). With me
today are Commissioner Mary Sheila Gall, Vice Chairman Thomas H. Moore
and members of the Commission staff.
I am pleased to have this opportunity to testify in support of our
fiscal year 1998 appropriation request.
For the information of the new members of the Subcommittee, I want
to explain briefly who we are and what we do. The Commission was
established in 1973, by Congress as a five, now three, member
independent agency with a mission to protect the public against
unreasonable risk of injury or death from consumer products. We enforce
five federal statutes, the Consumer Product Safety Act, the Flammable
Fabrics Act, the Poison Prevention Packaging Act, the Hazardous
Substances Act and the Refrigerator Safety Act. All told, we have
jurisdiction over 15,000 different kinds of consumer products which are
found in and around the home. These products are involved in more than
21,000 deaths, and over 29 million injuries with a total cost in excess
of $200 billion annually to the nation.
RECENT ACCOMPLISHMENTS
At the outset, I want to express our appreciation for our fiscal
year 1997 appropriation of $42.5 million, the full amount requested in
the President's budget. These funds are being used effectively to
protect the American people against unreasonable risk of injury or
death from dangerous or defective consumer products.
I want to tell you just a few of the ways in which we have used the
taxpayers' hard earned dollars to safeguard their health and safety.
--In fiscal year 1997 we have negotiated 106 voluntary corrective
actions involving 17.2 million consumer product units that
violated mandatory safety standards or presented a substantial
risk of injury to the public.
--Also in fiscal year 1997, in partnership with the Customs Service,
we stopped 2.8 million dangerous product units from reaching
store shelves.
--We recently issued a rule to alleviate the tip-over hazard of
large, multiple tube fireworks. Spectators have been killed
when these devices fell over and fired horizontally. The new
rule becomes effective this month, well before the fireworks
season.
--In fiscal year 1996 we tested several brands of imported, non-
glossy vinyl miniblinds and found they contained amounts of
lead which would be harmful to young children. When we
presented these results to the miniblind industry, the
manufacturers voluntarily agreed to change the composition of
these products to eliminate the lead.
--In cooperation with the Gerber Products Company, we continued our
campaign this year to promote baby safety events across the
country. To demonstrate this program I want to show you a brief
excerpt from the CBS Morning News, which broadcast a segment on
the kickoff of our program.
Mr. Chairman, these are just a few of the ways we have used our
resources to advance consumer product safety in fiscal year 1996 and
97.
FISCAL YEAR 1998 PROGRAMS
In fiscal year 1998, we are requesting an appropriation increase to
$45 million, an increase of $2.5 million, to continue and expand our
vital work. In preparing our budget, we carefully reviewed the needs
and contributions of our three operating divisions, hazard
identification and reduction, compliance, and information and
education. As a result we are proposing important investments above
current service levels in most of these areas to enhance our ability to
prevent and reduce the deaths and injuries related to consumer
products.
These investments total $1.1 million. They include funding of a
larger number of product incident investigations, support for hazard
reduction initiatives (including a major effort on fire hazards), an
innovative compliance investigation program, increased consumer
information outreach, and certain information technology efforts
critical to efficient agency operations.
In the hazard assessment and reduction area, funding would increase
by $443,000, with one-third required to maintain current hazard
reduction activities. The remainder of the increase, $325,000, funds
critical enhancements in two areas: a partial update of the agency's
child anthropometric measurements (measurements of children's physical
dimensions, which are critical to analysis of their injuries); and
several initiatives to address the nation's high fire death rate.
Nationally, there were 470,000 residential structure fires in 1993.
Fire is a leading cause of accidental home deaths among children
younger than five years old.
Even though efforts by the agency and the nation's fire prevention
community have resulted in a steady decline in residential fires, this
nation's fire death rate remains one of the highest among
industrialized nations. Past CPSC actions in this area involving, for
example, cigarette-resistant mattresses and upholstered furniture,
heating equipment, flame resistant children's sleepwear, and smoke
detectors have contributed to the general decline in fires and fire
deaths, and show that the agency can be effective in reducing fire
hazards.
The fire-related hazards project continues our 1997 work on
upholstered furniture, mattresses and bedding, revisions to the apparel
flammability standard, and fire/gas codes and standards. New activities
will be undertaken to evaluate the effectiveness of the Commission's
safety standard on cigarette lighters and to address an emerging
hazard, fires started by children using multi-purpose lighters. Fire
investigation training for certain CPSC staff in our field offices is
also recommended.
In the Compliance program, we are requesting an increase of about
$600,000 to enhance the Special Investigations Unit initiative. This
recently established unit serves to identify and remedy previously
unidentified and/or technically complex hazards. We believe that much
of the agency's future work and effectiveness will involve addressing
more technically complex hazards. The requested funds begin to develop
the necessary tools to address such hazards. This includes a critically
important effort to link and integrate agency and non-agency databases
and the application of rapid product testing and evaluation techniques.
Advances in this effort will benefit safety work throughout the agency.
For fiscal year 1998, the information and education program's
dollars increase by $196,000, with most of the funds necessary to
maintain the current consumer information efforts in support of agency
hazard reduction and compliance efforts. An increase of $22,000 will
allow greater use of cost-effective video news releases to reach the
public with product recall and other safety information.
We know the Subcommittee has been especially concerned about the
level of management expense at the CPSC. Accordingly, I want to inform
you about a change I instituted in all CPSC programs. I have made it a
policy that managers must be working supervisors, sharing the
substantive work with our staff. Recognizing the Subcommittee's desire
to reduce administrative expenses, we have worked to do so, and have
achieved a 21 percent decrease since 1989. Only 19 percent of our
fiscal year 1998 budget funds administrative needs, down from 24
percent in 1989.
The modest program increases requested for fiscal year 1998 are
more than justified by our record of accomplishment. CPSC has made
vital contributions to the 20 percent decline in annual deaths and
injuries related to consumer products that occurred between 1980 and
1993. Past agency work in electrocutions, children's poisonings,
children's cribs, power mowers, and fire safety helps save the nation
almost $7 billion annually in health care, property damage, and other
societal costs--more than 100 times CPSC's annual budget or about $155
million in savings for each $1 million of the agency's 1998 request.
The agency expects its 1993 standard to make cigarette lighters child
resistant to save over $400 million in societal costs and prevent up to
100 deaths annually. Similarly, the agency expects its work in curbing
carbon monoxide (CO) poisoning to reduce societal costs by one billion
dollars annually. CPSC removal of dangerous fireworks from the
marketplace prevents about 14,000 injuries each year.
As you know, Mr. Chairman, I stress a cooperative, non-adversarial
approach to business whenever possible. My first priority is to achieve
voluntary compliance with our laws and rules. For this reason, I am
particularly proud of our record of working cooperatively with
industry. Since I became Chairman in 1994, the CPSC has developed 27
voluntary standards with manufacturers, while issuing only 10 mandatory
regulations, a ratio of almost 3-1 voluntary to mandatory standards.
I have also emphasized my belief in the product safety triangle,
where business, consumers and government each have an equal role to
play. The Commission should not become overly invasive. We cannot and
should not attempt to protect consumers from every possible risk of
injury from consumer products. There are limits to what government can
achieve.
In this connection, Mr. Chairman, I want to tell you what we have
done to implement your bill, S. 942 (Public Law 104-121), the Small
Business Regulatory Enforcement Fairness Act.
First, on October 9, 1996, the Commission adopted a regulation
establishing a CPSC Small Business Ombudsman and a Small Business
Enforcement Policy. The Ombudsman, Clarence Bishop, who is also Deputy
Executive Director, has answered more than 700 calls on a special toll-
free hotline from small businesses seeking product safety information.
Over 80 percent of the callers received a personal response to their
inquiry from our staff within 3 business days. This service helps small
businesses get important information quickly, and, at the same time,
furthers public safety.
Second, we have scrupulously followed the Congressional review
procedures set forth in the law. We have issued four rules since the
Act's effective date--none of which were ``major'' rules. In each
instance, we submitted the required reports to Congress and the General
Accounting Office on a timely basis.
Third, we are near completion of a compliance guide for our
February, 1997, revisions to the fireworks fuse burn time regulation,
which were unanimously supported by industry and safety groups. Our
Economics staff concluded in its regulatory flexibility analysis that
these changes will benefit small businesses by making it easier for
them to comply with the fuse burn time standard.
Finally, consistent with the purpose of your legislation, in June
1996, we co-sponsored a Small Business Conference with the
International Consumer Product Health and Safety Organization. More
than 130 representatives of small businesses participated in panels
designed to assist them in complying with our laws and regulations.
reduced funding limits commission programs
As you know, in a concurrent submission to this Subcommittee and
the OMB in September 1996, the Commission requested a budget of $49.7
million for fiscal year 1998. The OMB reduced our budget request to $45
million. Although this reduction of $4.7 million seems small, it will
have a negative impact on our efforts to protect the health and safety
of American children and families.
For example, we proposed to invest $800,000 to update the
Commission's 20 year old child anthropometry data. This information is
essential for effectively addressing product hazards to children. Due
to the rejection of this request, our effort in this area will have to
be spread over several years, thereby hampering our efforts to protect
one of our most vulnerable populations, children.
Earlier in my testimony I mentioned our program to reduce deaths
and injuries from household fires. We requested $500,000 for this
project, but due to the budget reduction, we will be able to invest
only half that amount in fiscal year 1998. The continuing high cost of
fires justifies a greater investment and more innovative activities.
The increased funds would have provided a mix of research and action
items to address the many complex aspects of the fire problem. These
items could include a cost-benefit evaluation of fire suppression
devices, research to refine our knowledge of the causes of fire deaths
to help identify appropriate prevention strategies, and the
investigation of new product-specific hazards. These efforts would have
provided a broader, more inclusive attack on the nation's fire
problems. Since we were denied these funds, we will not be able to
protect the public as well as we could from death and injury due to
fire hazards.
investment in information technology is needed
In the past, agency funds invested in information technology have
saved many thousands of hours of staff time for the Commission,
improving our effectiveness and efficiency enormously. We have used
these funds to develop discrete databases, to network the agency's
computer system, and to move our data systems from a mainframe computer
located at another federal agency to our own local network.
Unfortunately, our fiscal year 1998 budget request would barely
maintain our capabilities in this area. The proposed funding level
leaves no resources to implement further technological advances, and
only permits minimal investment to meet the new requirements of the
recent Freedom of Information Act amendments (which require that most
requested material be in electronic format and available over the
Internet).
An additional investment of $1,000,000 would allow us to respond
faster and better to product hazards, saving more lives and preventing
more injuries, and would help us implement the new FOIA law. As you
know, CPSC is a data-driven agency that carries out its mission with a
sense of urgency, since quick action by the agency saves lives. To
provide even greater benefits to American consumers, we would like to
establish an integrated information system at the agency that would
give staff access to a much larger universe of product safety data and
would improve the speed with which staff could gain access to that
data.
This system would integrate the agency's databases, and other data
and documents not included in our current databases, allowing CPSC
employees to get all the information the agency has on a particular
product hazard using one quick and easy information request. Currently,
gathering all such information can take weeks.
Let me give you an example. Last year, CPSC's Compliance Office
became aware of the suffocation death of a toddler who had been trapped
in a cedar chest. To discover whether similar incidents had occurred in
the past, the compliance officer searched each database in the agency
individually, which took approximately two hours of staff time. Without
recent improvements in information technology, she would have conducted
these searches manually, which could have taken days, if not weeks.
However, our system only allowed her to search for information that
was available in certain discrete databases, which includes less than
50 percent of all the information that has been developed by the agency
since its establishment. If we had an integrated database, this same
search could have been conducted in a matter of minutes, instead of
hours, and would have represented a complete review of all information
developed by the Commission, not just what is in currently available
databases.
In this particular case, the compliance officer did identify
additional deaths of children who had become entrapped in a cedar chest
manufactured by the same company. This data enabled us to reach
agreement with the company to repair 12 million cedar chests currently
in the hands of consumers. However, if it had been necessary for the
staff to obtain more information before action could be taken, such as
staff reports on toy chest entrapments or product safety assessments
conducted by staff years ago on similar products, it would have taken
weeks or months to locate the information through a manual search of
Commission files and archives. Meanwhile, unrepaired chests would
remain with consumers, threatening the safety of millions of children.
This demonstrates that the benefits of an additional investment in
CPSC information technology will far outweigh the slight increase in
our appropriation.
CONCLUSION
In conclusion, Mr. Chairman, the CPSC is a great value to the
American people. By every rational cost-benefit measure we save the
taxpayer many times our budget in deaths, injuries and property damage
prevented. Accordingly, we urge you to appropriate not only the full
amount requested, we also hope you can find an additional $1 million,
within the Subcommittee's budget allocation, and within the framework
of the President's balanced budget for necessary enhancement of our
information technology.
______
Prepared Statement of Mary Sheila Gall
I support the request of the Commission for $45 million for fiscal
year 1998. Since my vote was against the original request to the Office
of Management and Budget and Congress, I want to explain to the
Subcommittee why I now support the budget request.
In July 1996 I opposed the staff-proposed fiscal year 1998 budget
of $49.9 million. I did so with reluctance, since many of the proposals
to increase funding lay in areas such as additional laboratory
equipment and other infrastructure expenditures that I have
traditionally supported. My opposition to this budget proposal stemmed
mainly from the fact that it proposed to spend 17 percent more in
fiscal year 1998 than the request made by the Commission for fiscal
year 1997. I recognize the importance of the mission and the operations
of the Commission, but that importance must be balanced by the
necessity to keep planning for future expenditures closer to probable
increases.
I supported certain portions of the staff-proposed budget. Current
services needed to be funded and the cuts of fiscal year 1996 had to be
restored. The Commission's accounting system needs modernizing and
additional money for training is essential. But I did not agree that
all of the proposed expenditures were as worthy as others. For example,
I support increased expenditures to reduce fire deaths and injuries,
but did not believe that several of the projects contained in the staff
proposal represented a wise use of Commission resources. Similarly, the
$40,000 proposed project to evaluate recall effectiveness struck me as
less than crucial. Finally, many of the staff-proposed spending
increases could be deferred to subsequent fiscal years.
I am pleased to support the Commission's budget request contained
within the President's budget request. This Commission performs a
valuable public service by seeking to prevent injuries and death
associated with the use of consumer products. I think that this
Committee should note that, while many agencies within its jurisdiction
seek benefits that will accrue in the distant future, the Commission's
activities prevent deaths and injuries in the near term. This
observation does not mean that the activities of those agencies are
unimportant, but the immediacy of the benefits that this Commission's
activities confer upon the American public ought to be a factor when
this Subcommittee considers the appropriation request of this
Commission along with the appropriations requests made by other
agencies.
The details of the Commission's fiscal year 1998 Budget Request
have been set forth in the Chairman's Statement and I have nothing to
add to that portion of her Statement.
Additional committee questions
Senator Bond. Thank you very much, Chairman Brown.
[The following questions were not asked at the hearing, but
were submitted to the Agency for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
cpsc fte's
Question. CPSC currently has on-board approximately 455 staff; your
FTE ceiling is 487 FTE, and your fiscal year 1998 request would fund
480 FTE. How much could we save if you did no hiring, and maintained
staff at the current level of 455?
Answer. First, the agency is no longer at the 455 employee level.
Current employment is 460 and climbing. We have announcements
outstanding to bring us up to 480 employees very shortly. We are
aggressively hiring new employees because our product safety work has
been hurt by staff vacancies caused by 1996 budget uncertainties and
funding delays. Staff has been doing a tremendous job of covering for
the vacant positions but productivity will soon suffer without
additional staff support.
Second, CPSC is already about half the size it was in 1980, and we
have worked very hard to keep productivity up despite reduced staff
resources. Since our specialized and highly skilled workforce is our
chief asset (comprising 75 percent of our entire budget), cutting staff
time further would reduce our product safety work now and for many
years to come. While an FTE cut of 5 percent to 455 would reduce salary
costs by about $1 million, this savings would be more than offset by a
significant erosion in our life-saving safety work. Past work by the
agency shows savings to society of at least $155 million each year for
every $1 million spent on the agency.
Finally, CPSC has already cut down on agency administrative support
as much as we can. Since 1994, due to budget and FTE reductions, we cut
support staff and contracted out such administrative functions as
copier, mail and library services. Any further reductions in
administrative staff would not be prudent given the size of our agency
and our management needs. Therefore, most additional staff cuts would
come from our programmatic work. In short, staff reductions would
translate into fewer investigations, fewer product recalls, and fewer
interceptions of hazardous products entering the country.
1998 PRIORITIES
Question. What would you list as your top three priorities for
fiscal year 1998?
Answer. All of CPSC's efforts make a vital contribution to reducing
the nation's $200 billion annual cost associated with product hazards.
Our top priorities for 1998 are:
1. Maintaining our current safety program in 1998. This requires
funding of approximately $2 million ($1.2 million for salary and space
costs, $300,000 for a Year 2000 compliant accounting system, $300,000
for increased retirement costs and $200,000 to implement new FOIA
requirements).
2. Pursuing new safety initiatives to reduce fires, update the
nation's child measurement database, and expand the Special
Investigations Unit initiative. These initiatives are critical to our
efforts to further reduce the nation's high fire death rate, increase
protections for children from product hazards, and improve our ability
to identify and remedy technically-complex product hazards. These
programs require funding of approximately $1 million.
3. Information technology investment. The agency has increased its
product safety productivity in part by using information technology.
Without further investment, aging information systems jeopardize our
ability to pursue current activities and dim the possibilities of
future gains in productivity. We would need about $1 million to
properly upgrade and improve current systems to meet future workload
and to make greater reductions in deaths and injuries.
MULTI-PURPOSE LIGHTERS
Question. Your budget request proposes several new program
initiatives, including $283,000 to address the nation's high death and
injury rate from fire. Your budget justification indicates in 1998 CPSC
will undertake activities to address fires started by children using
multi-purpose lighters. How did this particular issue emerge as a top
priority for fiscal year 1998? What specifically do you propose to do
with the requested funds, and what particular activities do you
anticipate in fiscal year 1998 to address the issue (such as
regulations or working with industry on a voluntary basis)?
Answer. Multi-purpose lighters are lighters with long nozzles that
are most commonly used to light charcoal or gas grills, fireplaces and
pilot lights on gas appliances. In 1997, the Commission considered a
petition requesting that multi-purpose lighters be child-resistant. The
Commission granted that petition and initiated a new rulemaking
activity by issuing an Advance Notice of Proposed Rulemaking to require
these lighters to be child-resistant. The Commission noted that a
standard may be needed to reduce the fire hazard to children under 5
years of age starting fires while playing with this product.
The Commission is aware of 67 incidents since 1988 involving fires
started by children under age 5 using multi-purpose lighters. These
fires resulted in 10 deaths and 26 injuries. Children under age 5
typically are incapable of dealing with a fire once started. This puts
them and their families at special risk of injury. Almost all of the 10
fatalities were the children who started the fires. For example, a 4-
year-old girl died last September when she set her day bed on fire
while playing with a multi-purpose lighter.
Multi-purpose lighters are relatively new products which were
introduced to the U.S. market in 1985. Since then sales have increased
steadily. One million units were sold in 1985; in 1996, 20 million
units were sold. With increasing sales and the attractiveness of these
lighters to young children, the Commission is acting to address the
fire hazard before the deaths and injuries increase.
In 1998, the Commission will continue working with a contractor to
build surrogate lighters and to test several different multi-purpose
lighters to determine how child-resistant they are for children under
age 5. These results will be used to prepare a cost/benefit analysis
for the proposed regulation.
The Commission will decide whether to issue a proposed standard in
1998 and will participate in the development of a voluntary standard if
the industry decides to initiate action to address this problem
voluntarily.
CIGARETTE LIGHTERS/COST BENEFIT ANALYSIS
Question. I'd like to understand better how the agency does cost-
benefit analyses. In your statement, you say that CPSC's 1993 standard
to make cigarette lighters child resistant saves over $400 million in
societal costs. Please explain the basis for this estimate, and more
generally the process for conducting cost-benefit studies.
Answer.
Cigarette Lighter Standard
Prior to this standard, fires started by children under 5 years of
age playing with cigarette lighters resulted in 150 deaths, 1,200
injuries, and $70 million in property damage annually, for a total
societal cost of about $900 million (about $750 million in fatality
costs, over $60 million in injury costs, and about $70 million in
property damage).
The child resistant features of lighters are expected to reduce
incidents by up to 70 percent, resulting in $500 million dollars of
benefits. Taking into account the estimated $90 million in added costs
to comply with the standard, the estimated net benefits to society are
about $400 million per year.
Cost-Benefit Analysis at CPSC
Under several of the Acts enforced by CPSC, prior to promulgation
of a new regulation, the Commission must find that the benefits
expected from a rule bear a reasonable relationship to the costs. In
developing a safety regulation, CPSC examines the benefits and costs of
alternative ways of addressing consumer product hazards. The process
involves identifying the extent to which specific remedies will reduce
product-related injuries and deaths. It also includes identification
and estimation of the full range of costs to society of each potential
remedial action.
The benefits of a regulation include preventing injuries, deaths,
and (sometimes) property damage from hazardous products. CPSC's Injury
Cost Model estimates direct costs (e.g., medical, foregone earnings)
and indirect costs (e.g., pain and suffering) of injuries reported
through the National Electronic Injury Surveillance System and other
injury data sources.
The costs to society of addressing a product hazard include the
cost of modifying a product design to make it safer or sometimes simply
modifying the product labeling or packaging. Also the Agency takes into
account estimated effects of increased consumer prices and product
utility. In developing a rule, the estimated benefits are compared to
the estimated costs; other economic factors that are not readily
quantifiable are also considered (e.g., small business effects, effects
on competition).
GENERAL SERVICES ADMINISTRATION
Consumer Information Center
STATEMENT OF TERESA NASIF, DIRECTOR
Senator Bond. Now we will hear from Director Nasif.
I apologize if I have mispronounced your name. If you
would, tell us the proper pronunciation and present your
testimony. Thank you.
Ms. Nasif. It's Nasif, yes, as you said it.
Mr. Chairman and members of the subcommittee, thank you for
the opportunity to present the fiscal year 1998 budget request
for the Consumer Information Center.
With me today is Bill Early, Director of Budget of the
General Services Administration.
Established more than a quarter century ago, CIC continues
to successfully carry out its vital mission mandate of helping
Federal departments and agencies inform the public about health
and safety issues, developments in Federal programs, and the
impact and effects of Federal research and regulatory actions.
Today, many elements of the CIC program remain the same: an
essential mission mandate; a commitment to serve the American
public; and the firm support of the administration and this
committee.
However, the CIC Program is going through a time of change
that reflects a new environment in Government and in customer
behavior. Overall, Federal agencies have reduced the scope of
their publishing activities due to budget constraints, and the
American public is placing fewer orders for merchandise,
including information, by mail.
CIC is meeting these challenges in two ways. First, we have
redoubled efforts to identify private sector partners who share
Federal information goals and can provide resources to stretch
limited Federal dollars. Second, CIC has set up telephone
ordering systems for both the consumer information catalog and
its listed publications.
CIC has implemented a toll free number--1-888-8PUEBLO--for
citizens to call to receive a copy of the catalog. Also, I am
pleased to report that, beginning with the spring 1997 edition,
all copies of the catalog will include a telephone number for
placing publication orders at the Pueblo facility.
Citizens pay for these calls, thereby sharing in the
expense of the program. Making access easier and quicker will
encourage more Americans to take advantage of the wealth of
information available from the Federal Government.
CIC remains in the forefront of Federal electronic
dissemination. The public will access the CIC Internet web site
more than 3 million times in fiscal year 1997. This is a
threefold increase since its inception in fiscal year 1995.
While Americans can now access CIC either electronically or
by phone, our address, Pueblo, CO, 81009, remains one of the
best known addresses in the country where Americans order
millions of publications published by more than 40 Federal
departments and agencies.
The Government Printing Office facility in Pueblo provides
order fulfillment services for tens of thousands of orders
received weekly as a result of the promotion that we do. During
fiscal year 1996, consumers ordered 7 million publications from
CIC, and in the years ahead we will continue our efforts to
make helpful information available to all citizens, whether
they are seeking it by computer or by mail.
We are very committed to maintaining a vigorous publication
distribution program in recognition of the fact that most
Americans still continue to receive their information primarily
through traditional print channels.
Our ongoing efforts to identify and obtain valuable Federal
information, our media and marketing programs, our centralized
distribution system, and our widely acclaimed electronic
information activities all combine to make CIC an essential
source for citizens needing vital consumer information from
their Federal Government.
Mr. Chairman, we trust that the committee will agree that
CIC is a valuable Federal program and that you will look
favorably upon our request.
Thank you.
Senator Bond. Thank you very much, Director Nasif.
[The statement follows:]
Prepared Statement of Teresa Nasif
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to present the fiscal year 1998 budget request of the
Consumer Information Center (CIC).
Established more than a quarter of a century ago, the Consumer
Information Center continues to successfully carry out its vital
mission mandate: Help federal departments and agencies inform the
public about health and safety issues, developments in federal
programs, and the impact and effects of federal research and regulatory
actions. To ensure that the public is made aware of and has easy access
to this information, CIC promotes the information through a dynamic
media and marketing program and disseminates it through print and
electronic outlets.
Today, many elements of the CIC program remain the same: An
essential mission mandate; a commitment to serve the American public;
and the firm support of the Administration and this Committee. However,
the CIC program is going through a time of change that reflects a new
environment in government and in customer behavior. Overall, federal
agencies have reduced the scope of their publishing activities due to
budget constraints. And the American public is placing fewer and fewer
orders for merchandise, including information, by mail.
CIC is meeting these challenges in two ways: First, we have
redoubled efforts to identify private sector partners who share federal
information goals and can provide resources to stretch limited federal
dollars. For example, CIC has forged an alliance with the Metropolitan
Life Insurance Company's Consumer Education Center to help educate
consumers by developing publications on such diverse topics as starting
a business, planning for college, making a will, and doing your taxes.
And second, CIC has set up telephone ordering systems for both the
Consumer Information Catalog and its listed publications. In
partnership with GSA's Federal Information Center Program, CIC has
implemented a toll-free number (1-888-8 PUEBLO) for citizens to call to
receive a copy of the Catalog. IRS will place the number in a message
on the back of one million tax refund check envelopes and CIC will use
the number in our new television public service ads to be released in
May 1997.
Also, I am pleased to report that, beginning with the spring 1997
edition, all copies of the Catalog will include instructions for
placing publication orders by telephoning the Pueblo facility at 719-
948-4000. Citizens pay for these toll calls, thereby sharing in the
expense of the program. Making access easier and quicker will encourage
more Americans to take advantage of the wealth of information available
from the federal government.
And CIC remains in the forefront of federal electronic
dissemination as more and more schools, libraries, and families are
accessing information through the Internet. The public will access the
CIC website more than 3 million times in fiscal year 1998, a threefold
increase since its inception in fiscal year 1995. In recognition of the
value of CIC's website, plans are underway to display CIC's Home Page
address at the top of the newly revised ``Blue Pages'' listing of
government agencies that will be in thousands of local telephone
directories nationwide. This is part of the Administration's effort to
make government more easily accessible to citizens.
While Americans can now access CIC information electronically and
order publications by phone, ``Pueblo, Colorado 81009'' remains one of
the best known addresses in the country where Americans order millions
of publications published by more than 40 federal departments and
agencies. The Government Printing Office facility in Pueblo provides
warehousing and order fulfillment services for tens of thousands of
orders received weekly as a result of the Catalog, media mentions, and
marketing promotions done by CIC. During fiscal year 1996, consumers
ordered seven million copies of federal publications from CIC. In the
years ahead, CIC will continue its efforts to ensure delivery of
services to all citizens and to make helpful information available to
all citizens whether they are seeking information by computer or mail.
We are very committed to maintaining a vigorous publication
distribution program in recognition of the fact that most Americans
still continue to receive their information through traditional print
channels.
CIC's ongoing efforts to identify and obtain valuable federal
information, its media and marketing programs, its centralized
distribution system based in Pueblo, Colorado, and its widely acclaimed
electronic information activities--all complement each other and
combine to make CIC an essential source for citizens desiring unbiased
and vital consumer information from their federal government. CIC
remains uniquely positioned among federal agencies to perform the
services it has so effectively delivered to the American public since
1970.
Mr. Chairman, again I thank you for the privilege of being here
today on behalf of the Consumer Information Center to present its
budget request for fiscal year 1998. We trust that the Committee will
agree that CIC is a valuable federal program and that it will look
favorably upon our request. At this time, I would be pleased to answer
any questions you may have.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Consumer Affairs
STATEMENT OF LESLIE L. BYRNE, DIRECTOR AND SPECIAL
ASSISTANT TO THE PRESIDENT
Senator Bond. Now we will hear from Director Byrne.
Ms. Byrne. Thank you, Chairman Bond and Senator Mikulski.
Thank you for giving us this opportunity. We have submitted our
formal statement for the record, but I would like to make some
brief comments.
Senator Bond. Thank you. All of your statements will be
made a part of the record in full. I should have mentioned that
earlier.
Ms. Byrne. Thank you, Mr. Chairman.
Because we have received a generous offer from a group who
purport to be Nigerian Government officials, we will not need
an appropriation for fiscal year 1998 and we will turn money
back to the Treasury. [Laughter.]
They say they find themselves with a somewhat embarrassing
surplus of 28.6 million U.S. dollars as a result of an
intentionally overinvoiced contract. They have graciously
offered us 30 percent if we will bank the entire sum for them
in the United States and supply them with several items of
personal information, including our bank account numbers.
Their letter closes with, ``Let honesty and trust be our
watchwords,'' so it must be legitimate. [Laughter.]
Although this scam is almost laughably transparent, Mr.
Chairman, it is a prime example of the type of fraud based on
illegal use of personal information that we have focused much
of our consumer education, policy development, and coordination
efforts on at OCA in the last year.
We are the only agency with White House responsibility to
coordinate and monitor Federal consumer programs, identify
consumer needs, and educate and advocate for consumers.
Because we are nonregulatory, we have no mixed mission or
restrictions on our role to represent consumers.
Mr. Chairman, you have our budget request before you. It
shows that we understood what this committee was saying last
year about cutting the cost of Government, reducing its size
and making it more efficient. We are reorganizing, using
technology to make us more productive, helping consumers in a
faster, cheaper, and better way, including our HelpLine with
the new database that allows us to track consumer complaints
and developing web links with the Federal Trade Commission and
other agencies.
Our emphasis is on providing consumers the tools to help
themselves because it is far cheaper and more efficient than
fixing problems after the fact.
For every one of these Nigerian frauds or other frauds like
them, even if the authorities can catch the perpetrators, the
likelihood is that they will only retrieve 10 cents on every
dollar lost. So education and information are the key to
protecting consumers and they are the ones who can protect
themselves the best.
Because of the shift in our economy, we are looking at a
White House conference on consumer issues. We have gone from an
industrial based economy to a service and information economy.
Our consumer laws really are there for tangible things, for
products. We have yet to wrestle with the greater questions of
how to protect somebody from a European travel scam as opposed
to a product that is faulty.
So we want a national focus on this new paradigm through
this White House conference.
Our long-term goals are very simple--to create a fair shake
marketplace through disclosure of information, choice, access,
and redress. These are the principles of good consumerism.
We plan to recognize organizations that adopt these
principles.
Finally, Mr. Chairman, we plan to continue working with
members of Congress, this committee, and other agencies on
specific consumer information and education issues, in town
meetings, in joint seminar formats on topics such as privacy,
fraud, financial management--a growing concern--and a new
concern, military families, with these being targeted for
fraudulent efforts.
Thank you, Mr. Chairman for your attention.
[The statement follows:]
Prepared Statement of Leslie L. Byrne
Mr. Chairman and distinguished members of the Subcommittee, I am
pleased to come before you today to present our fiscal year 1998
budget, to review the progress USOCA has made toward addressing the
concerns expressed by this committee, and to share our plans for the
coming year.
Our fiscal year 1998 budget request is for $1,800,000 and 13 Full-
Time Equivalent staff positions.
Our Agency's Mission remains unique. Our charge is to be the
consumer advocate within the Executive Branch, both domestically and in
the international marketplace. Because USOCA is non-regulatory, it is
our singular conviction that we can better protect consumers by giving
them the tools they need to protect themselves, through education and
information. This becomes an even more important concept in an era of
deregulation.
This Committee has rightly expressed its concern about government's
role, outdated and costly regulations, duplication of efforts, and the
need for a smaller but more effective government. We at USOCA have
heard your message loud and clear. In listening to the concerns of the
American people, we have also heard loud and clear that they want
consumer education and protection that must be strengthened, not
endangered.
To meet this committee's and the public's concerns, we continue to
re-tool USOCA's organizational structure. I am in the process of
reorganizing staff and functions to be more responsive. We are
currently developing our performance measurement standards and
indicators to meet GPRA's September 1997 deadline. Through these
initiatives, we are becoming a more results oriented agency whose
progress towards the goal of consumer education and information will be
accurately measured. To further fulfill our mission, USOCA is
reenergizing the Consumer Affairs Council (as mandated by Executive
Orders 11583 and 12160). This will allow government agencies to reduce
duplication and avoid redundancies in consumer policy.
PRIORITIES
USOCA continues to focus its efforts in three primary areas of
consumer concern: privacy; fraud; and the integrity of the marketplace.
We addressed these areas through information and education with special
emphasis on underserved populations. We are also working to improve
responsiveness by both government and industry to consumer complaints
and inquires. Based on these three areas, real accomplishments were
gained during fiscal year 1997 and specific initiatives are identified
for fiscal year 1998.
PRIVACY PROTECTION
The public's desire for protection from intrusiveness grows and
touches every institution. Government agencies, multimillion-dollar
corporations, ``mom and pop'' operations, are being more vigorously
challenged in their information gathering. Consumers want to be told,
in language they can understand, why information is being collected,
what will be done with it, and who will have access to it. People want
to be sure the information they give is pertinent to transactions, and
will not be used or sold for other purposes without their prior
approval. All of us want to be able to see what is being collected
about us and to have an uncomplicated way to correct errors and/or
include explanations.
Because of increased data collection and technology, we are seeing
a national increase in identity theft. USOCA continues its cyber-fraud
prevention efforts by informing the public on ways to protect
themselves from identity theft and securing personal information on the
Internet. Using traditional media such as print articles, press
releases, T.V., speeches, brochures, etc., we have reached hundreds of
thousands of Americans with information they can use to protect their
personal information. We want to expand these efforts in fiscal year
1998 by establishing and maintaining a web-site with this information.
On the international front, the absence of a U.S. privacy policy is
at odds with our European trading partners stance on the issue of
privacy. American companies may face self-imposed trade barriers if
USOCA cannot continue its work in harmonizing global marketplace
privacy protection guidelines.
A major illustration of USOCA's work in this area was as a catalyst
in alerting the nation to the fact that personal information about
consumers was being gathered and often used for purposes other than
those for which the information was volunteered. Our work with industry
improved communication between providers and consumers on this issue.
We have persuaded many corporations to give the public a choice about
how their personal information is used--by permitting consumers to
determine whether or not the information they give a company will be
shared with other companies, (for example, information on credit
applications). At the same time, USOCA organized a working group of
Federal agency representatives to examine the issues and privacy policy
options. During our National Consumers Week Kickoff Conference in
October 1995 at the White House, this group, called the Privacy Task
Force, released the Federal Privacy Principles--guidance for industry,
government, and individuals about how to protect personal privacy.
In 1997-98, USOCA and the Privacy Task Force will continue working
with government agencies and the private sector (both domestic and
international) to refine and adapt the Privacy Principles, for
implementation, particularly by users of the information superhighway.
Increasingly, the World Wide Web and other electronic tools are being
used for consumer purchases of products and services and interactions
with government. The success of electronic commerce and the Internet
depends on consumers belief in the security and integrity of this new
medium. To achieve the full potential of the electronic marketplace,
consumers want to be protected from a loss of control of personal
information and, in the worst case, fraud. With personal, financial,
health and other sensitive information going directly into computer
data bases for storage, retrieval and manipulation, the need for
consumer confidence in the security and control of that information is
critical.
It is USOCA's belief that the need for information by government
and industry can be balanced with consumers' desire to preserve their
privacy and control the use of personal data. Our goal is to protect
consumers while encouraging growth and innovation in the use of
telecommunications and information management technology. We find that
industry shares our belief that a balance can be struck without
unnecessary and burdensome regulation.
We will continue to work with industry, government and consumers to
achieve this goal. To lead by example we are developing a program to
publicly recognize those who contribute to the protection of consumer
privacy. This honor would be an award presented annually to various
business, non-profit, government, and consumer organizations for
outstanding efforts in privacy protection, particularly in areas where
technological advancements encroach on personal privacy.
CONSUMER FRAUD PREVENTION
USOCA continues its efforts to raise consumer awareness about
fraud. Scams and fraud cost consumers over $100 billion annually in
America. A new and growing target of fraud is military families. USOCA
is working with the military personnel and their spouses to reduce the
number of families harmed by these scams.
Additionally, the growing use of credit and debit cards, of
telephone and of Internet for purchasing goods and services, multiplies
opportunities for fraud and increases the need for consumer education.
USOCA is working closely with major credit card companies, media, trade
associations, and consumer organizations to promote extensive consumer
education campaigns. In addition, USOCA will continue to work with the
Department of Treasury and other agencies overseeing electronic
commerce to ensure that consumers know how to protect themselves from
fraud. Again our proposed web site will allow the public to
electronically access USOCA publications and information directly.
Because the problems of consumer fraud require constant attention, we
will publish an updated version of our popular pamphlet, ``Too Good To
Be True.'' This newest edition of the publication will be the
centerpiece of an anti-fraud campaign in 1998.
TELECOMMUNICATIONS AND TELEMARKETING FRAUD
Currently, USOCA's policy development efforts focus primarily on
the profound changes that technological advances in telecommunications
and information management have wrought in the marketplace. These
changes acutely affect consumers, with potential for both good and ill,
and create a need for government and industry to find means to balance
the consumer/provider interests and promote probity and fairness in the
marketplace.
For example, as a result of consumer complaints to USOCA's toll-
free National Consumer HelpLine, our office, in cooperation with the
Federal Trade Commission (FTC) and the Federal Communications
Commission (FCC), convened a series of industry/consumer/government
meeting on abuses in the telephone information services industry. The
initial meeting, held early in fiscal year 1996, alerted the industry
and Federal regulatory agencies to significant problems with ``pay-per-
call'' information services, despite recent legislation. Subsequently,
a second USOCA-convened meeting was held to develop proposals for
voluntary action on these problems. A third meeting produced major
changes in the industries ethical guidelines. With the passage of The
Communications Act of 1996 and the proposed legislation,
``Telemarketing Fraud Punishment and Prevention Act of 1996'', Congress
may further authorize regulatory action that will resolve some of the
problems consumers are experiencing. Prevention still remains the best
antidote to fraud.
outreach and serving the underserved populations
Outreach is a critical element in the success of USOCA's mission,
especially to consumers who have traditionally been underserved: the
disabled, frail, elderly, geographically isolated, ethnically diverse.
Through consumer dialogues we have worked with neighborhood leaders to
discuss the concerns and problems of consumers in their communities.
Most importantly, community leaders have given us their recommendations
on how government and the private sector can improve the delivery of
consumer information to diverse communities.
USOCA is successfully recruiting leaders from ethnic communities to
advise this office on consumer issues that affect diverse communities.
Our goal is to build an ``early warning system'' with these groups to
keep consumer problems from becoming larger, which leads to regulations
or legislation that could be avoided if people can find redress early
on.
USOCA has provided consumer education materials and conducted
workshops at a variety of conferences and seminars sponsored by
organizations representing the elderly and citizens with disabilities.
In the first quarter of fiscal year 1997, USOCA developed a working
group to discuss and formulate an agenda regarding consumer issues of
particular concerns to the 49 million Americans with disabilities.
USOCA is committed to encouraging marketers and employers to recognize
consumers with disabilities as deserving of consumer rights as fully
abled people.
Town meetings and seminars are being planned around the theme,
``Real People--Real Challenges.'' The aim of these fora is to provide
an opportunity for traditionally underserved communities to discuss
their consumer concerns. USOCA also plans to convene consumer education
opportunities for youth in major cities throughout the country .
Outreach to youth will include educational programs and projects to
raise public awareness and to generate support for personal financial
literacy for our children and young adults. By working with
organizations such as the JumpStart Coalition for Personal Financial
Literacy, which includes the National Institute for Consumer Education
of Eastern Michigan University and the American Financial Services
Association, USOCA will expand its mission by encouraging ``responsible
use of credit'' and ``planning for savings, spending and investing to
meet current and future needs'' among America's consumers under the age
of 18.
National Consumers Week (NCW) observed annually during the last
week in October, is a signature event of the United States Office of
Consumer Affairs and the nation. It is a major promotional event that
highlights consumer education by informing consumers about their rights
and responsibilities in the marketplace.
Representatives from business, all levels of government,
educational institutions, consumer organizations and media use this
unique opportunity to encourage dialogue with consumers about a variety
of important issues. With coast-to-coast involvement, planning and
execution of NCW activities is a year-round undertaking. Recruitment of
NCW public/private partnerships, follow-up activities, coordination
with the Executive Branch and the White House, preparation of written
materials and the development of various reports and documents are
crucial to the success of NCW. This year's NCW theme is `` A Fair Shake
Marketplace.''
A White House Conference on Consumer Issues is being planned for
October 1998. Our economy has changed from industrial based to service
and information based. The nation's response to the new challenges this
creates for consumers, has been slow. USOCA is proposing a new look at
consumerism brought about by this profound shift in the economy. The
consumer rights associated with tangible products are more difficult to
ascribe to non-tangibles like services and information. We are using
our resources for a national focus on this new paradigm.
Communications.--USOCA has maintained a moderate communications
operation. Due to the current budget shortfall USOCA has ceased to
publish its newsletter. The newsletter circulation included hundreds of
consumer groups, professional associations and media outlets. Within
the fiscal year 1998 request, we plan to restore the newsletter to
semi-annual publication.
Another trademark event for USOCA has been the Constituent Resource
Exposition (EXPO). Traditionally held for each new Congress, EXPO has
served as an educational event for congressional staff where they meet
representatives of Federal Agencies, discuss agency programs, and
obtain pertinent information which enabled them to better respond to
constituent requests in the Member's districts. This event helped
eliminate Federal waste and red tape caused by misdirection of
constituent complaints and queries.
Again because of budget issues, USOCA has decided to take a
different approach to reaching congressional staff members to
disseminate information--a method which may prove to be more efficient
and cost-effective. USOCA is working to conduct workshops in
partnership with the Congressional Research Service (CRS) for Senators,
Members of Congress and their staffs. At these workshops, USOCA's much
requested publication, the Congressional Liaison Handbook (CLH) will be
distributed. The CLH directs staff to appropriate agency consumer and
congressional liaison officials.
The primary tool with which USOCA has traditionally used to reach a
broad cross-section of the population is the Consumer's Resource
Handbook. This award winning resource is one of the most popular
publications produced by the Federal government. It is filled with
valuable information and ``Buying Smart'' tips for consumers to assist
them in making informed choices and avoiding pitfalls such as fraud in
the marketplace. Just as important are its listings of both private and
public sector resources for consumer information and problem
resolution. Keeping this information relevant to consumer problems in
the marketplace, as well as complete and accurate requires more than
checking addresses and telephone numbers.
USOCA has in place the staff, expertise, knowledge, skills and
interaction with industry, government agencies, consumer organizations
and individual consumers needed to produce this Handbook. Any other
agency handling this would assume research, training, and production
costs well above the costs incurred by this office.
There is a significant amount of work that could be done in 1997 on
the 1998 edition of the Handbook. For example, the inclusion of E-mail
addresses and web sites available for complaint handling. Currently, we
are working with the FTC on a single Web-link to Federal web sites, at
the address, consumer.gov, for which the Handbook's index would serve
to guide consumers through the maze of Federal, state and local
agencies with jurisdiction over consumer problems. To do this
effectively there is considerable work to do to make the index more
user-friendly in the Internet environment.
Funding for the Handbook, as well as other consumer education
publications have been accomplished through public and private
contributions. Gift acceptance authority is extremely important to
ensure that adequate numbers of these publication are updated and
available to consumers. In addition to the Handbook, four significant
publications/studies scheduled for fiscal year 1998, such as,
``Protecting Your Privacy,'' ``Too Good To Be True 2000--A Consumer
Guide to Avoiding Fraud in the New Century,'' and ``Improving Customer
Service'' will require research, editing, design, printing, and
distribution.
RAPID RESPONSE FOR CONSUMER COMPLAINTS
The National Consumer HelpLine is a toll free number available in
every state and U.S. territory offering a rapid response to consumer
complaints through referrals and consumer information. It is staffed
four hours a day by USOCA's professional staff, including its director,
who refer or answer questions on the spot. We call back anyone who
leaves a message during non-staffed hours. HelpLine is serving as the
central federal clearinghouse for consumer complaint handling. Through
the HelpLine, we make our decades of experience with consumer issues
available to all Americans.
Calls are logged into a database to help USOCA keep abreast of new
trends such as fraudulent schemes in telemarketing, sweepstakes, and
pay-per-call and long distance telephone billing. It tracks consumer
complaints on automobile repair, home maintenance, warranties, stock
fraud and returned merchandise. Other areas generating frequent calls
are credit reporting and credit harassment, direct marketing and mail
order complaints, insurance, mobile homes, Social Security and
Medicare, student loans, and airlines.
It provides a window on the public's reaction to developments in
the marketplace long before the media or researchers can identify them.
Dialogues with companies, trade associations, consumers and regulatory
agencies have followed. In some cases, due to the industry being made
aware of consumer problems, action has been taken to eliminate the need
for new regulations. This is in keeping with the President's initiative
to eliminate unnecessary regulations.
DOMESTIC POLICY
USOCA has no regulatory authority but it directly impacts proposed
legislation and regulations being considered by Congress and the
Administration. USOCA is regularly solicited for input or comments on
proposed legislation, regulations and reports. While the demand for
USOCA review has increased over the last decade the number of employees
has dramatically decreased. USOCA has been involved with such complex
issues as privacy, emerging technology, the global marketplace, anti-
terrorism, debt and credit, and fraud.
USOCA is the sounding board on consumer issues for buyers, sellers,
all levels of government, neighborhood groups, and consumer
organizations. We are the consumer's voice in the decisions of
government and the impact of proposed legislation and regulations on
their lives.
INTERNATIONAL POLICY
Representing the interests of U.S. consumers in international
forums, USOCA provides support to the President's consumer advisor as
head of the U.S. delegation to the Committee on Consumer Policy of the
Organization for Economic Cooperation and Development (OECD). The U.S.
has taken a leading role in the areas of product safety, lowering
tariff barriers for services and consumer redress in the international
marketplace. The U.S. has encouraged OECD to adopt the use of new
technology on global warning systems for product safety and consumer
fraud.
The world stands at the doorstep of a great expansion of cross-
border consumer transactions. Interest in the changing global
marketplace and how it affects consumers is widespread among
businesses, consumer advocacy groups, educators and world leaders. As
consumer policy issues are increasingly internationalized, the need for
effective mechanisms for the exchange of critically important consumer
information, product safety, and efforts to counteract fraud and
deception in the marketplace becomes more urgent.
USOCA's role is vital as head of the U.S. Delegation to the
Committee on Consumer Policy of OECD in order to fully represent
America's consumer interests. It is viewed by our OECD partners as a
beacon of leadership particularly for countries just becoming free
market economies. Newly emerging nations from the former Soviet
Republics want to study our governmental and nongovernmental structures
as they seek to develop national consumer policy in a free market
setting. USOCA also assists visiting delegations from other nations
that wish to study our consumer protection system and our unique
network of citizen run consumer organizations.
interagency coordination
USOCA chairs and coordinates the Consumer Affairs Council and
provides staffing. The Consumer Affairs Council was established as a
body of senior consumer policy officials designated by the heads of
Federal departments and agencies to provide leadership, coordination
and effective management to consumer protection and policy initiatives.
It has been used effectively in recent years to coordinate cross-
cutting initiatives, such as National Consumers Week, The Constituent
Resource Exposition (EXPO), and the Consumer Resource Handbook
publications and distribution. We intend to also use the Council as a
means to raise standards of customer service and achieve greater
consistency in consumer policy implementation government-wide.
CONCLUSION
Mr. Chairman, this is a conservative budget. With the support of
this committee, USOCA can fulfill its mission to empower every American
to make the best choices in the marketplace. With our emphasis on
education and information we arm the public with the tools they need to
avoid the frauds, scams, charlatans and con-artists. We can give them
the peace of mind and security to enter into new marketplaces, whether
cross borders or in cyberspace and most importantly assure families
redress if things go wrong. The subcommittee's choice is clear: help
us, help your constituents or rely on after-the-fact remedies like more
laws, more regulation, and more police trying to catch the crooks. Even
when law enforcement is successful, it only recoups a small fraction of
the money lost to our citizens and honest and ethical businesses. Mr.
Chairman, we can do better.
I would like to thank the Subcommittee for allowing me to express
these views and I would be glad to answer any questions you have for
me.
SMALL BUSINESS REGULATORY ENFORCEMENT FAIRNESS ACT [SBREFA]
Senator Bond. Thank you very much, Director Byrne.
Let me turn to some questions. Let me begin, Chairman
Brown, with a question that is near and dear to my heart as
author of the Small Business Red Tape Relief Act, also known by
the mind-numbing, eye-glazing acronym of SBREFA. I appreciate
your attention to that legislation. The law requires agencies
to establish a policy or program to provide for penalty
reductions or waivers where appropriate to accommodate the good
faith efforts of small businesses to comply with agency
regulations.
What steps has your agency taken toward instituting such a
program? When do you see it up and running?
Ms. Brown. We have it up and running now because we have
long been sensitive to the needs of small business. In fact, in
June 1996, the agency sponsored, with the Small Business
Administration, a very well attended conference on small
business and consumer product safety. At that conference, we
announced the designation of a CPSC small business ombudsman,
who will help direct calls from small business operators and
insure appropriate followup.
So far, through direct contact with CPSC staff, we have
helped more than 700 small business persons comply more easily
with our product safety guidelines. We, therefore, helped them
to manufacture safe products.
Requests to our ombudsman for assistance average about 90
calls per month and represent 35 States and foreign countries.
Our goal is to provide expert assistance to every small
business within 48 to 72 hours of when they call CPSC for help.
To date we have been about 80 percent successful in meeting our
goal.
Senator Bond. I appreciate that good work.
Is there a waiver program in place? Do you impose fines for
violations of your regulations?
Ms. Brown. Yes; Clarence Bishop is the small business
ombudsman and perhaps you would like him to answer that.
Mr. Bishop. Good morning, Mr. Chairman.
Senator Bond. Good morning.
Mr. Bishop. Good morning, Senator Mikulski.
Senator Mikulski. Good morning.
Mr. Bishop. Yes, sir; we do have a waiver program in place
through our compliance department, although we have not had to
use it to date.
Senator Bond. What would be the normal range of fines that
you would impose?
Ms. Brown. We are going to pass your question one more
time. This will be David Schmeltzer, head of our Department of
Compliance.
Mr. Schmeltzer. Good morning.
Our statute provides for civil penalties of up to $1.5
million. We are directed to consider the size of the business
when levying the fines, and we always do. We have about 15
fines per year, and when we deal with small businesses, first
we try to explain to them how to meet the regulations. If there
are violations, then we take into consideration the size of the
company and the appropriate figure. All of these cases are
resolved through settlement procedures.
Senator Bond. Rather than carry on the discussion further,
we would appreciate having a report on the fines, what you are
doing and how, and particularly if there are small businesses
involved.
Thank you very much.
[The information follows:]
Penalties for Small Businesses
The Commission staff has authority to pursue civil penalties
against firms who fail to report a product hazard to the Commission
under section 15(b) of the CPSA, 15 U.S.C. Sec. 2064(b). Since 1990, it
may also pursue penalties against firms who knowingly violate the
safety standards of the FHSA, FFA and PPPA.
The Commission has always placed an emphasis on seeking voluntary
compliance with our laws first. When product hazards exist, our first
effort is to obtain corrective action. Some of these violations are
committed out of ignorance, others because the firms choose not to put
time and money into complying with the law. Civil penalties are used
sparingly and generally only pursued against repeat violators.
The purposes of a civil penalty are to deter the firm from future
violations of our safety standards and to deter others from such
violations. Under our laws, the Commission must consider a number of
factors in deciding whether to pursue civil penalties. In determining
whether a civil penalty is appropriate and the amount of the penalty,
the Commission's laws require the agency to consider the risk of injury
presented by the product and ``the size of the business of the person
charged'' along with other factors. (See, section 20(b) of the CPSA, 15
U.S.C. 2069(b)). The staff also examines the level of sophistication
and knowledge of the firm involved and the gravity of the violation.
Reporting Violations
The staff received 239 section 15(b) reports in fiscal year 1996
and investigated many other products. The staff's primary focus was on
corrective action and the vast majority of the cases were resolved by
voluntary corrective action plans with no penalty. In fiscal year 1996,
the agency obtained penalties from 5 firms who failed to report under
section 15(b) of the CPSA. None of these 5 firms were small businesses.
In addition, an agreement was reached with one firm which did not
result in a civil penalty.
Regulated Products
In fiscal year 1996, the staff discovered hundreds of violations of
the Commission's safety standards. When the staff learned of a
violation of a regulation, it advised the firm of the violation,
addressed the hazard, and sought to bring the firm's products into
conformance by working with that firm.
Out of the hundreds of violations found, the staff obtained only 4
(3 were small businesses) penalties and initiated two federal court
actions for penalties against firms for regulated product violations in
fiscal year 1996. (The Commission reduced one of those penalties to
$5,000 from a negotiated penalty of $10,000 because of the small size
of the firm involved.)
The two Federal Court actions initiated in fiscal year 1996 were
against a fireworks importer and a children's products importer. Each
had more than ten violations and had not taken reasonable steps to
correct the violations. U.S. v. Big Save International Corp. (C.D.
Cal., No. 96-5318), and U.S. v. Shelton Fireworks, (W.D. Mo., No. 96-
6131-CV-SJ-1) (23 violations). Both firms are small businesses.
During the last several years, the staff has worked with many small
businesses who are repeat violators to bring them into future
compliance without civil penalties. Toward that end, the staff has used
meetings, inspections, and compliance agreements. It has also put civil
penalty cases ``into abeyance.'' (This means the firm is informed that
we could seek penalties, but do not plan to do so if the firm does not
commit future violations.)
Ability to Pay
Although the Commission's laws refer to the size of the business
charged, as the factor to consider, the staff also takes into account
the firm's ability to pay in determining the appropriate amount of any
civil penalty and the payment terms. In three cases involving smaller
firms, the staff has structured the payment of penalties so the penalty
amount will send a strong message, but the payments are spread over
time to allow the firm to continue as a viable concern.
Civil Penalty Report
[Final orders]
Fiscal Year 1996
Burlington Coat Factory (FFA)........................... $250,000
Cosco, Inc. (Sec. 15(b), CPSA).......................... \1\ 725,000
JBI, Inc. (Sec. 15(b), CPSA)............................ 225,000
National Media (Sec. 15(b), CPSA)....................... 150,000
Premier \2\ (FHSA)...................................... \1\ 75,000
Shrdlu, d.b.a.\2\ (FFA)................................. 5,000
Singer Sewing Co. (Sec. 15(b), CPSA).................... 120,000
SKR Resources, Inc.\2\ (FHSA)........................... \1\ 40,000
Taito America Corp. (Sec. 15(b), CPSA).................. 50,000
--------------------------------------------------------
____________________________________________________
Total............................................. 1,640,000
========================================================
____________________________________________________
Other remedies: McDonalds, Inc. Sec. 15(b), CPSA........ \3\ 5,000,000
Referred to Department of Justice:
Big Save International Corporation \2\
Shelton Fireworks \2\
\1\ Structured Payment Schedule.
\2\ Small Business--CPSC follows 15 U.S.C. 632 which states that the
business must meet the criteria of being independently owned and
operated and not dominant in its field of operation. In addition, the
Small Business Administration sets size standards for various industries
which are published in 13 CFR Part 121. Industries are identified by
their Standard Industrial Classification (SIC) Code and their maximum
size to be considered small is determined by either annual receipts or
number of employees. If the industry is not listed in the CFR, the
default size standard is $5 million in annual receipts.
\3\ Program.
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CPSC BUDGET
Senator Bond. Chairman Brown, you have indicated that the
budget request is modest. But even a 6-percent increase, to $45
million, over the current year when overall funding is likely
to be held flat is difficult. What lower priority items would
you eliminate or reduce if we had to hold you at a level
funding.
Ms. Brown. Level funding meaning the $42.5 million?
Senator Bond. Yes.
Ms. Brown. That would be extremely difficult for us, of
course, because there would be a reduced level of safety, I
think, to the American people. We would have a problem even in
holding level. That does not mean that we would be holding
level. Many of our information technologies, which is very
important, much of that would not be able to be done.
Senator Bond. In the budget process, sometimes you have to
make hard choices. Rather than strangling every program,
sometimes it is better to cut the lower priority program.
Is there a lower priority program?
Ms. Brown. At this point, I will have to get back to you
and think about that because we are on such a bare bones budget
now, as we are, that I just cannot think of any. We have
already reduced. We have put our two laboratories together. I
am thinking that there are so many things we have done. We have
cut down on training of our personnel.
I am not trying to be evasive, Mr. Chairman.
Senator Bond. I understand, but that is something we would
like for you to think about in case the worst happens.
[The information follows:]
Effect of Budget Request Cut
Any cuts to CPSC's budget would simply not be cost-beneficial. CPSC
delivers more than $155 million in savings to the American public for
every $1 million invested in the agency. Furthermore, the work of the
agency has been a major factor in the 20 percent decline in annual
deaths and injuries related to consumer products that occurred between
1980 and 1993. Any cuts to CPSC's budget at this point would reduce
this tremendous return on investment for consumers and would place more
families at risk from dangerous products.
Limiting CPSC's 1998 funding to the 1997 level of $42.5 million is
approximately equivalent to a $2 million budget cut.\1\ But CPSC is
already half the size it was in 1980, while our mission has grown
substantially.\2\ To accommodate these reductions, we cut staff and
trimmed away spending. We are now a lean and efficient operation.
Therefore, any further budget reduction would cut directly into our
safety programs.
---------------------------------------------------------------------------
\1\ The agency needs a minimum of $2 million over 1997 funding if
it is to fund non-discretionary cost increases occurring in 1998. This
includes $1.2 million for increased salary and space costs, $300,000 to
make its accounting system Year 2000 compliant, and $500,000 to fund
proposed increased retirement contributions and carrying out of Freedom
of Information Act amendments.
\2\ CPSC's budget has fared worse than most other health and safety
agencies. For example, from 1981 to 1996, EPA's budget increased 25
percent and FDA's budget increased 56 percent while CPSC's budget
decreased 45 percent.
---------------------------------------------------------------------------
A $2 million budget reduction would force cutbacks in new safety
initiatives planned for 1998 and in current safety work. The very
difficult decisions of exactly which life-saving initiatives to
sacrifice if this were necessary can not be made until we are much
closer to new fiscal year.
We believe that any cut in CPSC's budget at this time would rob the
American public of essential safety benefits. Injuries from consumer
products presently cost this country $200 billion each year. Past
successes by the agency show that we can reduce deaths and injuries
without expensive and intrusive interventions. The additional funds
requested for 1998, $2.5 million, are small. Judging by recent
accomplishments, this modest investment will deliver almost $400
million in benefits to U.S. consumers. This small investment will keep
one of the country's best working assets in good working order and
build a better future for American families.
When the subcommittee receives its budget allocation, if cuts are
indeed necessary, we will certainly work with the subcommittee staff to
identify those that would result in the least damage to our mission.
Senator Bond. Senator Mikulski.
Senator Mikulski. Thank you very much, Mr. Chairman.
I have no questions for Ms. Nasif. But I do want to thank
you for the excellent and continued work that you have done.
We have had these conversations now for many years, and I
must say that all of the literature that comes out of your shop
is really I think remarkably received by the taxpayer. Often
they wonder if they give us $1, we're going to spend $2 and at
the end of the day have nothing to show for it that means
anything in their day to day lives.
The practical information that you disseminate, whether it
is on how to buy a car or how to buy long-term care insurance
is wonderful. I have looked at all of those. The very excellent
check lists were helpful.
I, myself, used your guide in looking for long-term care
insurance because I was ready for purchasing that product. Like
any other consumer, I wanted to know what specifically I could
turn to.
I could go over many issues like that. So I thank you.
I know you face many financial challenges because you must
be ready for the electronic world. But most people still will
get their information through a printed form. So we look
forward to working with you.
Ms. Nasif. Thank you, Senator.
FRAUD PERPETRATED AGAINST ELDERLY
Senator Mikulski. Congresswoman Byrne, I have a question
about HHS consumer affairs.
What does your organization do to protect people against
fraud in those areas that are vulnerable in HHS service
delivery areas? I am thinking about Medicare scams, for
instance. You know, there are so many scams going on now among
senior citizens, whether it is in products, though not the
dangerous ones that Ms. Brown so effectively oversees--that
privacy of information is absolutely important and I understand
that.
But there are a lot of scams going on in the area of
Medicare and health care, et cetera. Are you involved in that?
Ms. Byrne. What we try to do is go out to the communities
of seniors and make them aware of these scams. One of the
things we find is that we hear about them after the fact, after
the widow has been deprived of $70,000, not once over a scam
but once she gets on a sucker list it's again and again and
again. She has been proven vulnerable in one instance. There
are actual lists that are published, shared among the scam
artists that allow them to go back to her.
So what we are trying to do with education and information
is get information out into the hands of seniors.
Senator Mikulski. And how do you do that?
Ms. Byrne. We do it through AARP and all of the other
organizations. We work very closely with senior organizations,
such as the Senior Citizens Council, the AARP, in educating
their members. We do media campaigns in senior citizen areas
that are heavily populated. We send out alerts when we find out
a particular scam is in a neighborhood, for example. That is
all to that effort of getting information to the consumer.
The other, the back end to that is through our HelpLine and
this kind of first alert that we have, we are able to notify
law enforcement agencies when there is a scam going on directed
toward senior citizens or anyone else. So when they call us, we
go after them.
Senator Mikulski. Thank you. I think everybody wonders what
is--not really your personal job--what is the job of your
agency.
Ms. Byrne. Right.
Senator Mikulski. I really think that where there is need
there is greed, and where there is greed there is scam; and
where there is scam, there is scum.
Ms. Byrne. That's right.
Senator Mikulski. That's the way I see it.
Ms. Byrne. You got it.
Senator Bond. Let me jot that down.
Senator Mikulski. It's need/greed, scam/scum.
I would hope that, instead of looking with a broad brush
across agencies, really that agency, particularly with the
senior population that is so vulnerable, is so helpful.
Ms. Brown, regarding your agency, you are now talking about
a new fire prevention, death prevention initiative. Could you
tell us--and I know my time is short----
Senator Bond. Take your time.
CPSC INITIATIVES
Senator Mikulski [continuing]. Where did that come from?
Where did that idea come from? That then takes me to a second
question, which is are you moving the Consumer Product Safety
Commission to what I call a risk based strategy focus. I mean,
in other words, looking at those consumer vulnerabilities that
are most likely to affect most of the American people.
Ms. Brown. The way that we figured out the fire initiative
is because that is where the major deaths, injuries, and
property damage occur. So we are always a data driven agency.
We have a fine data system, a hospital emergency room system.
We are driven by the fact that we must prioritize. We must
prioritize in this era of limited resources and that must be
done based on where the greatest injuries and deaths occur.
We have three new initiatives, to reduce fire deaths and
injuries, consideration of a multipurpose lighter standard,
evaluation of our child resistant cigarette lighter standard,
and investigator training for CPSC investigators. All of those
were arrived at because that is where we see the largest number
of injuries and deaths.
Senator Mikulski. And what are the other top two?
Ms. Brown. The other top two apart from fire?
Senator Mikulski. Uh-huh.
Ms. Brown. Those would be children's injuries and deaths,
which are, of course, always important to us, and sports
injuries. All of those were arrived at when we looked at our
data and we saw where is the greatest need.
Senator Mikulski. Let me say just one word about fire. I
know that it is one of the terrible problems in my communities
in Maryland. Once again we just suffered the death of three
children, and we would hope that you are also going to be
coordinating with FEMA and the national association. FEMA has
the firefighters. I will get back to floods in a minute. We
hope you do work across agency lines in this area.
What we hope and what we tried to get FEMA to do and EPA--
this committee has been around management--is not to go after
individual boutique issues that capture the headlines--and I'm
not saying you do, but we all know how that goes--but to focus
on where most people are at risk, whether it is to scams and
being defrauded, such as buying the hearing aid that is going
to solve all of your problems, all those sorts of things. That
is important.
It is very important to me that we coordinate with other
agencies. The issue of firefighting and fire prevention is an
intensely local, block by block issue. How will you be
coordinating there?
WORKING WITH OTHER AGENCIES
Ms. Brown. We are already working with the Fire
Administration on many of our fire efforts and other efforts as
well. They are funding some work that we are doing on stoves
and burners.
We work very closely with FEMA, as well, as we have during
this flood. They are giving out all of our material about how
people will reenter a house and the dangers that lurk when
people reenter a house that has been flooded.
I have a list of the agencies with which we cooperatively
work. I would be delighted to submit that for the record so
that you can see that one of our major goals is to work
cooperatively across Government, both in Government and outside
of Government with industries and other organizations. It
really is a way to aggrandize your resources. I would like to
submit that for you.
Senator Mikulski. Thank you.
[The information follows:]
Working with Other Agencies and Organizations
CPSC works with many Federal agencies and private organizations in
many ways to advance safety programs and to maximize the effect of CPSC
safety efforts. These relationships have proven very productive to the
agency and the American public because they provide greatly expanded
resources to the problem of hazard reduction at little cost. We are
always careful not to duplicate services of other organizations, but to
complement and augment one another. CPSC offers other agencies unique
abilities to identify hazards and analyze hazards, and at times,
suggest practical ways to reduce hazards. For example, CPSC has the
best system in the world for collecting information about hospital
emergency room visits--The National Electronic Injury Surveillance
System (NEISS). Many agencies purchase services from NEISS to obtain
data about injuries within their jurisdiction. In one example of such
an arrangement, NEISS is providing children's injury data to the
Department of Transportation for its work on children and airbags.
The reduction of fire hazards provides an excellent example of how
CPSC works with other organizations. CPSC has a long and productive
relationship with local and State fire organizations. CPSC depends on
fire data, collected by local fire departments and coordinated at the
State level through the National Fire Incident Reporting System, to
provide essential support for our regulatory mission. In addition,
special in-depth field investigation projects regarding fire incidents
almost always rely on close coordination with local fire departments.
Examples of such projects include cigarette lighters, upholstered
furniture open-flame fires, smoke detectors, and range fires.
CPSC has also worked with local fire departments and community
groups to develop community-based smoke detector programs. Recently,
under a program organized by CPSC, 5,000 smoke detectors were
distributed and installed by firefighters or trained volunteers in 10
cities, targeted to vulnerable populations.
CPSC also works with many national organizations to address fire
hazards:
The U.S. Fire Administration (USFA) collects and provides essential
data on residential fires to CPSC, stimulates new technology, and
conducts public education campaigns relating to fire. USFA has provided
supporting funds for CPSC projects on Range Fires, Smoke Detectors, and
Home Electrical Wiring Systems.
The National Institute of Standards and Technology (NIST) performs
basic and applied research in the fire sciences, provides their
facilities for CPSC special fire testing, and serves as a comprehensive
resource for standards information. NIST is providing fire test
facility support for our current project on Fire Safety Devices.
The Centers for Disease Control and Prevention (CDC) provide
programs and grants to expand community awareness in the field. CPSC
staff participates in the CDC Healthy People 2000 Work Group on Fire
Prevention, and CPSC has provided funding in support of their fire
prevention initiative.
The Congressional Fire Services Institute (CFSI) was a member of
the Steering Committee of our National Smoke Detector Project.
CPSC communicates with other agencies that have regulatory
authority and conduct research in areas beyond CPSC jurisdiction such
as the Federal Aviation Administration (aircraft), the Occupational
Safety and Health Administration (workplace), the National Highway
Traffic Safety Administration (automotive), and the Department of
Housing and Urban Development (manufactured housing).
The private sector organization, the National Fire Protection
Association (NFPA), also collects and provides CPSC residential fire
data in addition to developing and publishing this country's national
fire codes and voluntary standards, investigating major fires, and
conducting public information and education programs.
In October of 1996, the Commission signed a Memorandum of
Understanding with the International Association of Arson Investigators
(IAAI) through the Commission's Special Investigations Unit (SIU). The
IAAI is a non-profit technical and educational organization comprised
of volunteers through various government organizations, such as ATF,
insurance investigators and certified fire investigators. This
cooperative effort allows both organizations to work together toward
the common goals of improving public fire safety, sharing technical
information and training fire investigators. In addition, the IAAI
publishes bi-monthly Commission recalls to notify IAAI members of fire
hazards associated with potentially defective consumer products.
CPSC works cooperatively with many other public and private
organizations on a variety of product safety efforts. Federal agencies
we have worked with include:
--Centers for Disease Control (data collection on a wide-range of
injuries)
--Customs Service (import surveillance to prevent entry of unsafe
products)
--Department of the Army (share information and expertise on injury
prevention, baby safety events, lead in playground equipment)
--Consumer Information Center (distribution of CPSC safety
publications)
--Department of Energy (chemical emissions from consumer products)
--Department of Housing and Urban Development (injury prevention in
housing)
--Department of Health and Human Services (injury prevention, data
collection)
--Department of Interior (playground safety in National Parks)
--Department of Justice (data collection)
--Environmental Protection Agency (indoor air, lead poisoning,
chemicals)
--Federal Emergency Management Agency (injury prevention in disaster
situations)
--Federal Trade Commission (data sharing on consumer protection legal
actions)
--Food and Drug Administration (poison prevention)
--Fire Administration (fire safety and fire education programs)
--Indian Health Service (injury prevention, fire safety)
--National Highway Traffic Safety Administration (bicycle safety)
--National Institutes of Health (toxins and carcinogens in consumer
products)
--National Institutes of Standards and Technology (product safety
testing)
--Office of Consumer Affairs (coordination of numerous safety
matters)
--Occupational Safety and Health Administration (data collection)
--Small Business Administration (small business concerns,
implementation of CPSC Small Business Ombudsman program)
We work cooperatively with a large number of non-Federal groups to
disseminate injury prevention information, gather injury data, develop
safety standards, and ensure compliance with safety regulations,
corrective actions, and recalls. These groups include:
--American Academy of Pediatrics
--American Association of Retired Persons
--American Nurses Association
--American Red Cross
--Association of Food and Drug Officials
--Better Business Bureau
--Businesses (such as Gerber Foods who is co-sponsoring the Baby
Safety Shower effort)
--Coalition for Consumer Health and Safety
--Consumer Federation of America
--Dana Alliance for Brain Initiatives
--Danny Foundation
--Defense Research Institute (Defense attorneys)
--D.C. Bar Association
--International Association of Chiefs of Police
--National Association of Consumer Agency Administrators
--National Consumers League
--National Safety Council
--National Safe Kids Campaign
--National 4-H Council
--Salvation Army
--Snell Foundation (Bicycle Helmets)
--Society of Academic Emergency Medicine
--State Attorneys Generals
--State and local coroners, medical examiners, health departments,
and consumer protection offices
--Trade Associations (Outdoor Power Equipment Institute; Coalition
for Automatic Garage Door Openers, Gas Water Heater
Association, Toy Manufacturers of America, etc.)
--Voluntary product standard setting organizations (ASTM; the
American National Standards Association; Underwriters
Laboratories; National Electrical Code and Building Code
groups)
Senator Bond. I have to step out very briefly to meet with
some constituents. I am going to ask that Senator Mikulski
continue this hearing.
Senator Mikulski. And if I am done?
Senator Bond. I will be back shortly. I have some more
questions. This will be very brief.
If you will forgive me, I will turn the gavel over to you.
Senator Mikulski [presiding]. Ms. Brown, have you had any
involvement in the air bag controversy?
Ms. Brown. No, we have not.
Senator Mikulski. Has anyone called you--let's wait for the
bells to finish ringing.
[Pause.]
AIR BAG SAFETY
Senator Mikulski. Has the Department of Transportation
contacted you on the air bag issue?
Ms. Brown. We have had some directives from them about what
they are doing, just information.
Senator Mikulski. Well, you see, nobody knows what they are
doing. This is a very prickly situation. There is a great deal
of concern about the safety of air bags. You have just
indicated the concern about the special risks to children in
the home. But there is a special risk in that home on wheels,
called an automobile. Given commuters and day care every day,
our little kids spend a lot of time in cars. We are finding
that they are at risk, either from their child seats, et
cetera, and now the air bags. There is the air bags controversy
not only for what it means to children but what it means to,
essentially, people my size, and where that air bag releases,
hits you, and so on.
There is a great deal of confusion, uncertainty, and
apprehension about what the Department of Transportation is
doing. I am not blaming this on you, of course.
Ms. Brown. It is not in our jurisdiction.
Senator Mikulski. But you are the Consumer Product Safety
Commission with incredible expertise and really significant
data. Your database I think should not be minimized because it
contains risk based information and lots of ideas even for the
private sector to improve itself.
My question is this. Given that, do you know anything about
this? Does your agency have any data on the air bag
controversy? Do we know where the risks are?
It would seem to me that you, you meaning your agency,
would play a significant role. First of all, you probably know
more about what happens to children other than pediatricians
and parents. Am I right in that?
Ms. Brown. Absolutely. You are.
Senator Mikulski. We had that marvelous conversation on
playground equipment.
Ms. Brown. It is both my area of expertise, coming into the
agency as a child safety expert, and, of course, what our
agency has concentrated on.
The problem with air bags or with anything in cars is it is
not legally within our jurisdiction. However, our very
excellent data, the NEISS system, which gets reports of
hospital emergency room injuries every day, has done work for
the National Highway Traffic Safety Administration on motor
vehicle injuries. So they do use our data.
But we are not involved in the air bag controversy per se.
Many people call me, Senator Mikulski, because I, too, am
small, and they ask me what are you doing in your own car.
I, therefore, did my own personal, little survey and told
people that you have to be at least 10 inches away from your
air bag in your steering wheel. I also had found out some
information on how to get extenders on pedals. That I just did
as something personal to help my other short friends.
But this is an area that is very serious and I do know that
there is a lot of concern out in the Nation. We specifically do
collect air bag data specifically for NHTSA.
CPSC SHOULD WORK WITH DOT
Senator Mikulski. Ms. Brown, I am going to ask you because
of the confidence I have in your agency and in your
considerable database, to reach out to Secretary Slater. We
have to really deal with this air bag controversy.
I am glad people know that they can call you. I go to
senior citizen meetings and they ask me the same question,
partly because I have the same personal geography, so to speak,
as they do. But it shouldn't be member-to-constituency groups
of 30 people only. I am absolutely convinced that the
Department of Transportation has not brought in the total
expertise that is available within its own Government.
I know that Secretary Slater, I hope, will be moving on
this.
I am going to really recommend that you call Secretary
Slater and that you have a list of all the agencies that have
been involved in the subject of children--and there are also
parallels to frail elderly or the short elderly--that could be
used here, and that you recommend whatever task force they have
that they use the best information. Let's get out there with
this information. It could be a new line of commercial
products, exactly as you said. People may laugh about a pedal
extender, but if you are 5 foot 2 inches and automobiles are
built for people structured like Clint Eastwood, it gets to be
very difficult for us.
I don't want to turn this into an air bag hearing, but I am
deeply concerned about the sluggish way we are moving toward a
relationship with the private sector and the consumers on this
very significant issue, and perhaps even about talking about
additional consumer products that would enable people to be
more safe. Let me include here also the information on where do
you put your baby's car seat--all of those kinds of things.
Right now, if we have a driving grannie, then maybe grannie
needs to be in the back seat.
I could go on and on here.
Ms. Brown. Senator, I did want to mention also that we have
asked for funds to do some anthropometric work. That sounds
exotic. But what it really is is the measurement of children.
More work to upgrade this would be very helpful to NHTSA in
moving forward to do some greater calculations on car seats.
Education is fine, but I think you've hit it on the head. In
every field of products, it is very important to have as much
as possible safety built into the product.
Senator Mikulski. From what I understand from the private
sector, particularly those involved in the automobile industry,
they are waiting for the Department of Transportation to give
them some guidance on the direction in which they want to go.
I will tell you what I fear--the wholesale dismantling of,
in particular, passenger air bags out of fear rather than out
of science and out of technology. I truly believe the genius of
the American private sector for both liability reasons as well
as good citizenship, and ultimately profit, to be able to come
up with solutions. But right now they need the guidance of DOT.
Knowing what you all know about children, I think it would be
enormously important for there to be a task force. It is
disturbing to me that with DOT there is not a relationship on
this issue.
Ms. Brown. I'll call Secretary Slater this afternoon.
Senator Mikulski. Thank you very much and good luck with
that.
Again, many, many thanks.
CONSUMER'S RESOURCE HANDBOOK
Senator Bond [presiding]. Thank you, Senator Mikulski.
Director Nasif, in 1997, the Congress gave the CIC the
responsibility for producing the Consumer's Resource Handbook.
Can you give us an estimate of the resources you might require
to produce the report in fiscal year 1998 if Congress should
decide to maintain responsibility for the handbook at CIC?
Ms. Nasif. The President's budget does provide for the
transferring back to the Office of Consumer Affairs
responsibility for the Consumer's Resource Handbook for fiscal
year 1998. It is my understanding that the resources required,
whether by OCA or by the Consumer Information Center, would be
in the neighborhood of about $1.50 per publication. I believe
the estimate for printing would be under $1. The estimated cost
for CIC distribution is about $.54. So if 250,000 were produced
and distributed, it would be about $400,000 for the total cost.
In the past, OCA has been very successful in leveraging the
support of the consumer community and other Federal agencies as
well as the private sector in helping to cover the costs of the
Consumer's Resource Handbook. Traditionally, what is done is
that the committee provides a foundation of funding for the
Consumer's Resource Handbook and then the Director of the
Office of Consumer Affairs invites other Federal agencies, as
well as corporate and other private sector organizations, to
contribute resources to cover the costs of the publication.
So it really is a very joint effort in coming up with the
funds to successfully print and distribute the handbook.
DISSEMINATING INFORMATION ELECTRONICALLY
Senator Bond. Can consumers order publications from the CIC
web site? Do you see a demand for this? Do you see a day when
you would move to distributing all of CIC's publications
electronically?
Ms. Nasif. Currently we are working toward consumers being
able to order right off our web site, and we are actually
working with the Government Printing Office to make it a
reality. About 50 percent of the publications in the CIC system
are actually GPO sales documents. So it is not something that
CIC can proceed ahead with on our own. But we are working with
them.
GPO is putting into place an interactive system so that the
public can order from their web site. As soon as they have
perfected and debugged that system, we will work to have it
applied to CIC in the Pueblo facility.
Of course, the main concern of all of us interested in
electronic commerce is maintaining the privacy and the
confidentiality of credit card information, which must go
through the Internet web site.
We are fortunate that we are part of the General Services
Administration because the agency is a leader in the emerging
technologies that do safeguard that kind of personal
information. So we will be working within GSA as well.
As far as whether the day will come when all consumers will
be ordering from the web site as opposed to writing to Pueblo,
I don't think so. Given the explosive growth of the Internet
and especially the World Wide Web, it seems that certainly this
country is going down that path. However, we are totally
committed to maintaining our print program because we know that
the majority of Americans depend on printed publications to get
their information.
So we are looking forward to maintaining a dual track and
keeping both programs going.
Senator Bond. Well, as long as this consumer is still
around, there will be demand for the printed material.
Senator Mikulski. And with big print. [Laughter.]
Senator Bond. Yes; maybe the next generation will be all
electronic, but not me.
Ms. Nasif. The day will come we are told.
Senator Bond. I don't believe that.
Ms. Nasif. I know I am not ready for it. I am holding on to
those publications as best I can.
Senator Bond. Thank you very much, Director Nasif.
USOCA HELPLINE DATABASE
Director Byrne, one of the things, obviously, where I have
already indicated my concern is for the duplication of effort.
I previously served as a consumer affairs counsel in the
attorney general's office. It seems that every State has at
least one, if not several, entities that are providing consumer
information and warning. I happen to know of a man who was one
of the unfortunate ones who managed to get burned twice by the
Nigerian scam, a man who had some money that he no longer has,
but he had enough that he was still hit with it, indeed hit
twice.
Obviously we cannot stop all scams. We have not gotten the
message out. To what extent do you work with States and others
who have the same responsibility you do?
Ms. Byrne. Mr. Chairman, last March Money magazine did a
compendium of all the State and local government efforts in
consumer protection and found that there had been, over the
last several years, a 60-percent cut in State and local offices
in their efforts.
One of our jobs is in just taking up the slack. What we
find in the calls that we are getting is that people don't know
where to turn. Their local offices have sometimes been closed
down. Their 800 numbers have been disconnected. We often tell
them to call their attorney general because they don't know
where to turn.
Oftentimes with these 1-800 numbers and the other agencies
that are available, the consumer finds himself in Dante's third
ring of hell. They push from voice-mail to voice-mail without
ever getting a real person on the line. All they needed was a
simple question answered.
We hope that we provide that kind of answer, that kind of
help to consumers because what we are finding is that we are
not getting the kind of coverage that we would hope in State
and local governments.
Senator Bond. I think some of us in Congress are getting
those calls as well.
MEASURING OCA'S EFFECTIVENESS
Is there any measurement or any impact that you can
identify that your agency has that others do not have? When you
are providing information, I know it is difficult to determine
what impact you are having. But have you developed any means of
measuring the impact of your agency?
Ms. Byrne. One of the things we have implemented with the
HelpLine is a database that we can track people and how they
are getting responded to. If we refer them to another agency,
what was the response from that other agency?
As the Special Assistant to the President, besides being
the Director of the Office of Consumer Affairs, I head up the
Consumer Affairs Council for all the Federal agencies and all
their consumer components. I feed that information back to them
so that they'll know if their agency has been doing a good job.
We can measure now the outcomes which we were not able to
do prior to my arrival, the outcomes of these calls that are
being made. How many people actually got their money back? How
many people actually got their question answered? How many
people actually avoided a scam because that is the data that we
are now keeping that we were not keeping 3 months ago.
Senator Bond. We would be interested to see that
information.
But isn't the HelpLine duplicative of the GSA's Federal
Information Center?
Ms. Byrne. Mr. Chairman, when I served in Congress, I
thought that they were the same thing. I really was not clear
in my own mind what each did. But what I find right now is that
the Federal Information Center is referring calls to us because
they don't know what to do with them.
Congressional offices are calling us because they don't
know where else to turn. Also consumers are calling us because
they don't know where else to turn.
It is different to be a vocal yellow pages, if you will,
for Federal agencies than it is to give help. It is my
understanding that the Federal Information Service is a
vocalized yellow pages for Federal agencies. If you know where
you are going, you can get the right number.
But most people, when they call for help, don't know who to
call. They are swimming through the alphabet soup of Government
agencies.
Senator Bond. The FIC I understand has a staff of over 100
personnel who are supposed to assist citizens with consumer
problems utilizing the Consumer Resource Handbook. Are they not
doing the job?
Ms. Byrne. We have in our agency, in the Office of Consumer
Affairs, over 25 to 30 years experience in every imaginable
consumer issue you can think of. To have that kind of expertise
willing to talk to consumers is much different than just trying
to give somebody a phone number.
I don't think the Federal Information Center is as
equipped, just through lack of experience, to deal with these
consumer inquiries. We have a very specific task.
[The information follows:]
U.S. General Services Administration Federal Information Center
PROVIDING SERVICE TO CITIZENS AND GOVERNMENT AGENCIES
INTRODUCTION
Established in 1966, the Federal Information Center (FIC) is a
single point of contact for people who have questions about Federal
agencies, programs, and services. The FIC currently responds to about 2
million calls per year via its nationwide, toll-free number: 800-688-
9889 (800-326-2996 for TTY users). The FIC is open for public inquiries
from 9 a.m. to 8 p.m., eastern time, Monday through Friday, except
Federal holidays.
The FIC program is operated by a contractor that maintains the call
center in Cumberland, Maryland, and uses about 80 staff-years to
accomplish its tasks. The program's annual budget is about $3.2
million, or approximately $1.50 per call: This includes all contractor
expenses, payments to FTS2000 for the `800' service, and Government
support and oversight.
SERVICE TO CITIZENS
The information specialists either answer directly, refer the
caller to the correct office, or research the inquiry to provide a
suitable response.
The most frequent public inquiries have to do with workplace issues
(safety, discrimination, wages, etc.), State-government matters,
immigration and naturalization, Federal taxes, Federal employment,
savings bonds, Government publications, housing-related concerns, FCC
matters, and disaster assistance. Many other inquiries relate to such
consumer matters as product safety and reliability, advertising, food
products, banking, and motor vehicles.
The metropolitan areas from which the largest number of telephone
calls come are Los Angeles, New York, Miami, Chicago, Atlanta, Dallas/
Fort Worth, Houston, San Francisco, San Diego, and Tampa/St.
Petersburg.
The staff responds to 2-3 inquiries a day from Congressional
offices who call for their constituents.
Citizens may discuss their inquiries with senior staff members who
have a combined total of decades of consumer contact and research
ability. Citizens usually start their inquiries by talking to junior
staff members who have been trained to differentiate between calls they
should refer to the senior staff members and those they should answer
themselves.
a sampling of specific services to other agencies
Copyright Office, Library of Congress.--Since about 1975, have
distributed copyright forms to individuals and answered basic questions
about copyrights. In fact, the FIC distributes more forms to
individuals than the Copyright Office itself.
Bureau of Land Management, Department of the Interior.--Since about
1980, have assisted in the dissemination of information about the wild
horse and burro program.
U.S. Marshals Service, Department of Justice.--Started partnership
in July 1995 to inform the public about acquiring property seized by
law enforcement agencies. In December 1996, expanded partnership by
including GSA's Consumer Information Center.
Passport Office, Department of State.--In 1995 and 1996, expanded
existing level of expertise on passport matters and responded to
passport inquiries referred from the New York, Miami, and Seattle
passport offices.
Authentication Office, Department of State.--Beginning in November
1996, expanded the assistance available to persons wanting information
on certifying documents.
Consumer Information Center, General Services Administration.--Have
assisted in the distribution of the Consumer Information Catalog since
1970. Beginning in January 1997, received requests for the Catalog on a
separate toll-free telephone number.
Travel and Transportation Policy, General Services
Administration.--Starting in November 1996, have served as the main
source for print or electronic copies of the per diem rates issued by
GSA.
U.S. Forest Service, Department of Agriculture.--In late summer of
1995, removed excess workload from their campground reservation line by
answering callers who were requesting information instead of wanting to
make reservations.
reference materials in use at the fic
Principal reference tool is the FIC's own electronic data base,
which lists more than 100,000 points of contact (telephone numbers,
addresses, electronic access) by agency and subject. The data base also
includes the Catalog of Federal Domestic Assistance and many agency
fact sheets. GSA and the FIC contractor are working with the Government
Printing Office to place the FIC's data base on CD-ROM, sell it to the
public, and distribute it to all Government Depository Libraries.
Printed periodicals such as the Federal Register and the Code of
Federal Regulations.
Printed agency materials such as the Consumer's Resource Handbook,
the Budget of the United States Government, and agency telephone
directories.
Printed materials from private sources such as the Encyclopedia of
Associations; directories of key officials in Federal, State, and local
governments; and directories that list foreign travel information.
Regular and frequent use of government and private information
accessed through the World Wide Web.
Senator Bond. But you have had this HelpLine for how long,
2 years?
Ms. Byrne. Yes, sir.
CONSUMER RESOURCE HANDBOOK
Senator Bond. You are proposing to expand substantially the
1998 edition of the Consumer Resource Handbook. Why are you
doing that? What precisely do you have in mind? What is the
precise cost and who will pay the additional mailing costs?
Ms. Byrne. We have proposed that we increase the number of
printings for the Consumer Handbook, that we focus more on how
people can get their questions answered through e-mail, through
web sites. We have a whole, new, growing area of complaints,
which is hardware. People's printers, people's computers don't
work right. The help lines that are put up by these companies
are not responsive.
So we need to focus in on what is happening in the
marketplace. That is our job. So we are going to expand those
sections.
Also there is consumer debt, how to avoid bankruptcy, the
difference between a debit card and a credit card--this last is
causing a great deal of confusion in the marketplace right now.
These are areas that we want to highlight and expand in the
handbook.
We do it by asking other agencies who have interests here
to help us with this. We have asked the Securities and Exchange
Commission, through their efforts on decreasing consumer debt,
to help us with those sections.
This is a cooperative effort. But because we have been in
the business for so long we know where to go to get the help
within the Government. We also have a lot of support within
industry and the marketplace in this product.
So they are willing to help with the costs.
Senator Bond. Do you accept corporate contributions for
this?
Ms. Byrne. We have a gift fund, as you know, ordinarily,
and we would accept corporate help in producing and printing
the book.
USOCA TRAVEL FUND FOR FISCAL YEAR 1998
Senator Bond. Your testimony refers to the OCA's role in
representing U.S. consumers in international fora. What
international travel is planned for fiscal year 1997 and fiscal
year 1998 and at what cost?
Ms. Byrne. We have domestic travel to do seminars and town
meetings at the cost of about $10,000 for the entire year. We
have two international fora in which we participate, which is
OECD. Right now we are working on international parameters for
electronic commerce, so that when people step into this brave,
new world of the Internet that we all think is coming, they
will have a sense of security, trust, and safety about it.
Right now, on the world marketplace that is not true. So we
are looking at what we can do through these various mechanisms
to enhance consumer safety in electronic commerce.
Senator Bond. So what would be the cost of that?
Ms. Byrne. That is $10,000 also. We are looking at like
$20,000 in travel.
Senator Bond. OK. Thank you.
Senator Mikulski, have you any further questions?
Senator Mikulski. No, Mr. Chairman. I look forward to
working with our witnesses.
Senator Bond. All right. Thank you very much.
Additional committee questions
Our thanks to each of you for presenting your testimony. We
appreciate it and we look forward to working with you all in
the months to come.
[The following questions were not asked at the hearing, but
were submitted to the Office for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
Question. How much are you spending on the HelpLine? Are the costs
of the calls being paid for by the White House, or OCA?
Answer. Calls to the National Consumer HelpLine through the White
House telephone grid average $1,100 per month or a cost of $0.08 per
minute based on the rate which was negotiated for all national 800
number lines serviced under the carrier Sprint. The HelpLine is
currently staffed four hours daily by full-time staffers on a rotating
basis, for an average total of 2.5 FTE's. All costs associated with the
HelpLine are paid with funds appropriated to USOCA.
Question. OCA plans to expand substantially the 1998 edition of the
Consumer Resource Handbook, Why is an expansion necessary, who has
suggested you do so, what precisely do you have in mind, and what is
the proposed cost? What will be the additional mailing cost? Do you
have plans to reduce mailing costs, for example by using newspaper-
weight paper?
Answer. The next edition of the Consumer Resource Handbook produced
by USOCA will expand its Consumer Tips section to include information
on dealing with child care as a consumer issue, more specific
information on car leasing, home based businesses, investing and
pension protection. Additional directory listings for computer and
computer software companies will be included. E-mail addresses will be
added to all listings when available. We will delete out-of-date-
information. The new listings are the suggestions from consumers,
government agencies, and businesses. We do not anticipate a substantial
increase in weight, therefore, the printing and mailing costs will be
virtually the same as they have been for the last three fiscal years.
Our mailing costs are controlled by CIC, but we continue to ``shop''
for the lowest price. The use of newspaper-weight paper had been tried
in the past. USOCA received negative responses from the public because
the Handbook is used as reference and needs to stand up to continued
use.
Question. Last year, we learned that OCA discontinued using the
Consumer Information Center to mail out the Consumer Resource Handbook,
at a cost of $2.52 per copy more than what it would cost using CIC. In
fiscal year 1998, do you intend to use CIC to mail out the Handbook
should the Congress agree that OCA retain responsibility for producing
the Handbook?
Answer. USOCA does plan to continue to use the Consumer Information
Center in fiscal year 1998, as long as they can provide us with the
lowest audited mailing prices.
USOCA mails a few thousand copies at the first class rate in
response to requests from Congress, Governors and Lt. Governors,
Attorneys General, district offices of Congressmen and Senators and
other officials, and corporate and community offices when they request
rush delivery. This special service has been provided since Mrs.
Virginia Knauer was the USOCA Director under president Reagan.
Question. OCA has the authority to accept corporate contributions
for the Consumer Resource Handbook. How much do you plan to receive in
corporate contributions in fiscal year 1998? What did the contributions
total in fiscal year 1996?
Answer. Last September Congress eliminated USOCA's gift acceptance
authority in the Omnibus Appropriations Bill. Currently, USOCA is in
the process of regaining its gift acceptance authority through the
President's Supplemental Appropriations Bill. When USOCA receives its
gift acceptance authority USOCA anticipates approximately $100,000 from
private sources.
USOCA received $2,000 from private sources for the Consumer
Resource Handbook in fiscal year 1996, before the gift acceptance
authority expired. These monies cannot be spent until the gift
authority is restored. Non-public funds were used to sponsor National
Consumer's Week events around the country totaling approximately
$25,000. USOCA utilizes in-kind contributions from various consumer
organizations and private sources in partnership for consumer education
events and conferences.
Question. Your budget indicated you plan to revive the Consumer
Newsletter. How much will this cost, and why is reviving this
necessary?
Answer. USOCA has over 10,000 names and addresses of grassroots
consumer groups; national, state and local consumer organizations;
businesses; government; and interested parties in its newsletter
database. The Consumer Newsletter fulfills USOCA's mission by
informing, educating and warning interested parties about issues and
events they need to be aware of. In addition, consumers often want to
know how USOCA views an issue, what other Federal agencies are doing
about a particular issue and what's new on the consumer horizon. The
Consumer Newsletter serves this purpose and helps reduce duplication of
effort by other agencies. The estimated cost for a quarterly newsletter
is approximately $30,000 per year.
Should you require additional information please let us know. We
will be more than happy to assist you.
SUBCOMMITTEE RECESS
Senator Bond. This hearing is recessed.
[Whereupon, at 10:30 a.m., Tuesday, March 11, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, MARCH 18, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:34 a.m., in room SD-562, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Campbell, Mikulski, and Boxer.
FEDERAL EMERGENCY MANAGEMENT AGENCY
STATEMENT OF JAMES L. WITT, DIRECTOR
ACCOMPANIED BY:
GARY D. JOHNSON, CHIEF FINANCIAL OFFICER
GEORGE OPFER, INSPECTOR GENERAL
OPENING STATEMENT OF CHRISTOPHER BOND
Senator Bond. Good morning. The subcommittee hearing will
come to order.
The subcommittee meets today to review the budget request
of the Federal Emergency Management Agency, and we are pleased
to welcome the Director, James Lee Witt, and his team. Welcome,
Mr. Witt. We appreciate all the work that FEMA has done to
respond quickly to the most recent spate of disasters. As we
all know, there were devastating tornadoes, flooding along the
Ohio River, something we know too well just west of the
Mississippi, and in the Northwest. I know that you personally
have visited a number of the disaster areas. Our hearts and our
thoughts go out to the victims of these disasters and we pray
for the speedy recovery of their communities.
FEMA is requesting a 1998 budget of $3.2 billion, of which
$374 million would fund the operating programs, $100 million
would fund the emergency food and shelter program, and $2.7
billion would fund the disaster relief account. The amount
requested for the operating programs represents a slight
reduction below the current year, while the disaster program
would increase $1.4 billion more than the current year
appropriation.
While FEMA's responsiveness is commendable, I do not think
it has been balanced with fiscal responsibility. I continue to
be very troubled by the management of FEMA's multibillion
dollar disaster relief fund, which has never been audited, and
I am very concerned about the request that is pending before
the committee. Currently FEMA has more than 500 open disasters
on the books dating back to 1989 with costs totaling $22
billion. More than $4.5 billion remain to be obligated for
these open disasters and this does not include the costs of the
most recent Ohio flooding disasters and the tornadoes. This is
a very significant amount of expenditures.
The number of major disaster declarations in the 1992-96
period has increased 54 percent above the preceding 5-year
period and FEMA's calculation of 5-year historical average cost
of disaster relief for fiscal year 1998, excluding the
Northridge earthquake, is $2.3 billion, an increase of 28
percent over last year's 5-year average of $1.8 billion.
Now, FEMA has acknowledged that the escalation in cost is
due not only to the increase in large-scale disasters, but also
because ``The scope of Federal disaster assistance has
expanded, the Federal role and response has expanded
considerably, and State and local governments are increasingly
turning to the Federal Government for assistance.''
It seemed to me that FEMA has significant mission creep. It
is no longer simply to come in when States and local
governments are overwhelmed, which was the intent of the
Stafford Act. Indeed, FEMA itself has said, ``The current
system of disaster relief tends to discourage States and local
governments from assuming primary responsibility for initiating
appropriate mitigation, preparedness, response, and recovery
measures before a disaster strikes.''
And FEMA's role seems to be forever expanding, illustrated
by the spate of disaster declarations for snow removal in the
last 5 years. There have been no snow disasters declared from
1979 to 1993, some 14 years, and there have been calls for FEMA
to reimburse the State of New York for costs related to the TWA
disaster.
To my knowledge, the disaster relief program is the only
program in the Federal Government that does not have to
consider fiscal constraints whatsoever. FEMA's other programs
do not compete with this program for funding, so there is no
incentive within the agency to exercise prudent stewardship of
this fund.
When disaster relief funds have fallen short, Congress has
responded quickly time and again to FEMA's request for
additional funds in an effort to meet the needs of disaster
victims expeditiously, and to provide this aid we have slashed
low income housing and other programs to offset the costs. We
have cut other VA-HUD programs totaling $8 billion under my
chairmanship to pay for disaster assistance in the past 2
years. Yet, we have learned that some of these funds have gone
to such questionable projects as golf courses and the planting
of shrubbery.
Recently FEMA was, as we learned from the news media,
considering expending $500,000 to replace a bottle village,
which some have named folk art and others have called an
eyesore, damaged in the Northridge earthquake and eligible for
FEMA funding since it happened to be placed on the Register of
Historic Places. I was glad to learn that Friday you made the
right decision and decided against funding this project.
Following the Northridge earthquake, about $400 million has
gone to one university, UCLA, clearly an institution with
strong revenue generating capabilities. We need to review
whether we can continue to make such expenditures in this era
of belt tightening.
We have learned about some of these expenditures through
inspector general's reports and press accounts since FEMA
budgets do not provide documentation beyond very broad
categories of the specific projects being funded. In fact, FEMA
centrally has no information on the numbers, costs, or status
of the public assistance projects currently underway. There are
literally thousands of such projects underway.
The Agency's responsiveness to disasters is truly laudable,
and I join with others who commend you, Mr. Witt, and the
Agency for moving quickly. But suggestions and even directives
from Congress to submit proposals to reform this program to be
fiscally responsible have gone unheeded or have apparently been
treated someplace in the administration as low priority at
best.
In September 1993, the administration's ``National
Performance Review'' report called for, by March 1995, a
comprehensive plan, including proposed executive orders and
legislation to develop objective disaster declaration criteria
and comprehensive Federal policies to reduce the Federal costs
of disaster assistance. To my knowledge, this commitment has
been ignored.
A series of GAO and inspector general reports have been
issued over the past 2 years at the request of this committee.
They have outlined a number of options for reducing disaster
relief costs, including establishing more explicit and
stringent criteria for providing Federal disaster assistance,
eliminating public assistance grants for revenue producing
private nonprofits, shortening the appeals process from three
levels to one, making marinas, golf courses, trees, and shrubs,
except in parks, ineligible, and clarifying the criteria
related to the standards to which damaged facilities should be
restored. For the most part, these recommendations have not
been acted upon.
Our efforts time and again to get this Agency to propose
plans for implementing those recommendations and reducing
excessive costs have been stonewalled. We discussed these
issues in the hearings for the past 2 years. We have been
through this before. This is not new. This is not a surprise.
We included a requirement in the fiscal year 1997 committee
report for a proposal for reform, including a request for
necessary legislation, if that is required, and we included a
statutory requirement in the fiscal year 1997 VA-HUD bill. To
date, these directives have not been fully met.
Now, we received a draft report on March 12 which was a
about 45 days late in response to the statutory requirement in
the fiscal year 1997 VA-HUD bill for a plan to reduce disaster
expenditure. The report is still in draft form. It falls short
of the mark and it outlines options. That is not what we had in
mind. You knew and we knew what the options were. We do not
need to be told what the options are again. We want specific
suggestions and recommendations.
In response to questions submitted at last year's hearing,
you said:
FEMA is committed to implementing all the inspector
general's recommendations in principle. We believe that our
disaster criteria initiative, which will contain disaster
payment thresholds, as well as declaration thresholds, will
comprise the major portion of reforms called for by both the
GAO and the FEMA inspector general and lay the foundation for
substantial long-term Federal cost share reductions.
Now, the draft report is completely silent on the issue of
disaster criteria. It does not propose an implementation plan
for the inspector general's recommendations. It only repeats
some of the options that the inspector general and the GAO have
proposed in the past.
The report does not address the issue of State cost shares.
While States are required to cost share in the disaster relief
program, I understand FEMA does not enforce its own regulations
and require cost shares to be put forth at the beginning of a
project. Apparently the State of California has not
appropriated one dime--one dime--to match the $5 billion in
FEMA-funded projects. Because the cost share is not required up
front, the State has little incentive to control and reduce
costs.
In addition, last year we received testimony from the GAO
that:
FEMA's criteria for determining the extent of permanent
restoration for public facilities and for determining the
eligibility of certain private nonprofit facilities are
ambiguous. FEMA relies on States to ensure that expenditures
are limited to eligible items.
Regrettably, I have seen absolutely no evidence that these
massive loopholes have been closed.
While some management improvements have been made in such
areas as centralizing processing, reconciling the disaster
relief fund so it can be audited for the first time in fiscal
year 1998, and other administrative reforms which have reduced
costs marginally, the commitments that have been made to us and
that we have directed you to fulfill to address the disaster
criteria have not been met, and the really hard choices have
not been made.
Let me be quite clear. I am a strong supporter of FEMA
getting to a disaster site quickly and dispensing aid to needy
individuals as soon as possible. I am a supporter of helping
communities rebuild so they can get on with their lives. But I
am not a supporter of using the disaster relief fund to gold-
plate revenue generating facilities and to finance golf courses
in wealthy communities. And I cannot condone fiscal
irresponsibility.
Last year, at the suggestion and at the implied request of
FEMA, we did go forward with some of the language that had been
added in the Senate to limit disaster relief. Let me be quite
clear, Mr. Witt. We expect you to come forth with a
comprehensive plan. We want to know where it is, and if we do
not have one in place by the time this bill comes out of
committee, I will strongly consider working with my colleagues
to implement our own system. Something has got to be done. You
all have had a couple of years now since we started requesting
and talking about this to come forward, and if you do not do it
or at least suggest to us how it can be done, we may have to do
it for you because the scope and the amount of these disaster
requests is out of hand.
Now, I am also very concerned about the supplemental
request that we understand the administration will be
submitting. It is my understanding that FEMA currently
anticipates requirements totaling $2.9 billion in fiscal year
1997. Yet, the administration will request about $1 billion,
according to the latest rumors, of which some portion would be
in a contingency fund. How we will pay for the supplemental and
the additional requirements coming due in fiscal year 1998
totaling some $5.9 billion will be an enormous challenge.
There are also very serious problems with the
administration's proposals for funding future disasters through
a contingency fund. Mr. Witt, this is nothing but a gimmick. I
could not take that to the floor with a straight face. My
colleagues rightly would pound me about the head, and we expect
better from OMB and from FEMA. This is a very irresponsible
fiscal gimmick. The proposal to treat these funds off budget is
just not going to work. The Congress has made its position very
clear.
The fiscal year 1998 5-year historical average annual cost
to FEMA disaster relief is $2.3 billion. We know that close to
this level of funds will be needed next year and these funds
need to be budgeted.
In addition, the contingency fund concept gives entirely
too much discretion to the administration to distribute these
funds with virtually no oversight of Congress. I have been in
the executive branch, and I would love to have a honey pot to
go around and hand out money. It makes you feel good. People
love you. You come in town with free money, and it is great.
Love to do that. Nothing is more fun. Unfortunately, that is
not how Government should work. There should be explicit
standards and criteria. We do not have those.
We also have questions about the proposed $50 million
predisaster mitigation fund you have requested. We have seen no
details for this request or any proposal on how we would pay
for it. Moreover, there is $1.4 billion in existing
postdisaster hazard mitigation funds currently unobligated. So,
there are significant questions about why States are not
spending these funds and how the proposed new program would be
more effective.
There are a number of very important issues to be
addressed, including the status of the flood insurance fund,
the level of Treasury borrowing in that program, the future of
chemical stockpile emergency preparedness programs, and FEMA's
progress in developing performance measures for the States
through performance partnership agreements and assessing
States' capabilities in disaster response.
In closing, Mr. Witt, you have earned well deserved
accolades for the many improvements in FEMA's responsiveness in
the last 4 years. You have done an excellent job personally and
made great personal commitments to be there and to have your
people on the ground, but the steps that we must take for
fiscal responsibility are not there. They have got to be put in
place, and I would hope that you would suggest to us and help
us work out how they are put in place rather than have us do it
a cappella because one way or the other, it is going to be
done.
I am now going to turn to my distinguished ranking member,
Senator Mikulski.
STATEMENT OF BARBARA MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman.
I want to welcome FEMA Director James Lee Witt. I want to
applaud your work with streamlining FEMA and making it a more
effective and efficient Agency.
The chairman raises some very important fiscal questions,
but I would like to go back to 5 years ago when FEMA itself was
a disaster, when our readiness and our response was a national
embarrassment. We were not ready in most States to respond to
disaster. All 50 States were very uneven in their preparedness,
and those often at most risk were the least prepared. We
remember with great sadness what happened in Florida when the
very nature of what occurred overwhelmed the capacity of even
the Governor to estimate what damage that he had. Thanks to
you, Mr. Witt, you then have made us fit for duty in readiness
and response.
But I recall that there were three R's to what we had
talked about for FEMA. It was called readiness, response, and
rehab. The rehab now is what is being discussed by the
chairman, and I believe that those are very serious concerns.
But I think we also need to note that it was under your
leadership that many of the recommendations of the National
Academy of Public Administration about how to improve FEMA in
its work in saving lives and saving communities were followed.
So, we thank you for implementation of the National Association
of Public Administrators' recommendations about bringing down
the artificial wall between the old cold war, civil defense
approach and the new realities of a risk-based strategy.
I believe that FEMA does do what it was supposed to do,
which is save lives and save communities. Now we are called
upon, because we have now done the first two R's and done them
very well, to focus on the third R which is rehabilitation, or,
in some instances, reengineering. In other words, in
communities that are most at risk for flood or hurricane, what
are the things that could be done beforehand that would prevent
future disaster funds for request.
I believe the chairman's concerns are valid and I think you
would agree with them.
But thank you for the first two R's, readiness and
response, saving lives, saving communities. Now we will move to
the issues related to rehabilitation and reengineering, if you
will, of those disaster-prone areas, and we will come back and
talk about that.
I also want to talk about the issue of mission creep. I
know that they are of concern to you, but I know that every
time a disaster occurs, that FEMA is under tremendous pressure
both from a Governor and its two Senators for you to show up,
to be able to be there to provide disaster assistance.
Everybody likes the photographs, the helicopters landing, going
out there to show where people feel powerless, at least that
our response is not.
I believe that that is where that is coming when we talk
about the lack of matching funds and so on. I believe there
needs to be work done with the National Governors Association
really on what are clear triggers that bring you in and also a
real commitment on their cost sharing.
The chairman's concerns are valid, but I believe you are
placed under extraordinary pressure not only by the White House
to respond with compassion and effectiveness, but by the
Governor and the two Senators in those areas to really be able
to do that. So, I believe that much work needs to be done, but
I do not believe the work to be done is a one-sided effort.
The other is this whole issue of what this committee has
borne because FEMA is in it. We all recall after the tremendous
problems in California, this subcommittee was called upon to
fund the entire disaster relief and out of the HUD account. We
never quite recovered from that in terms of our appropriations.
Again, the chairman's concerns are quite valid, but I think we
need to talk about not a honey pot, but really a specific way
of having the resources that, therefore, are not charged
against this committee.
I like the chairman am very reluctant to put big ticket
items off budget. I would agree that it should not, but I am
not quite sure what is the best thinking because we cannot
appropriate for every disaster that might affect the United
States of America.
I know Senator Glenn, when he chaired Government Ops, was
looking at this. I would hope Government Ops would give us some
recommendations as well as ours.
I believe Senator Bond is quite serious when he says if you
do not come up with the recommendations, we will. I would
prefer we could do it together and that we could do it not only
with OMB but with the Governors because I think now is the time
to say thank you for response, thank you for readiness. Let us
now go on to the rehabilitation aspects, and most of all, the
other R which is called fiscally responsible. I think then we
will really have had a holistic approach to this.
Thank you and I look forward to talking with you about the
national issues as well as some in Maryland.
GETTING GOVERNORS INVOLVED IN DISASTER PROGRAM CHANGES
Senator Bond. Thank you very much, Senator Mikulski.
I would agree with you that the Director and the Agency
come under great pressure not only from the White House but
from Governors and Senators. There is nothing like having a
solid wall behind you to stiffen your back and help you say no
if we can get Congress to act, in cooperation with the
administration and the Governors, on specific criteria. It
takes some of the pressure off of Mr. Witt and the Agency.
Senator Mikulski. That is right. Mr. Chairman, you were a
Governor and by all accounts, a very excellent Governor. That
is one of the reasons the people of Missouri sent you for your
first term, and an excellent Senator why they sent you for your
second term.
I really do think the Governors have to come in on this,
and maybe you and I could actually meet with them as well.
Senator Bond. We will make a decision here that you and I
will request of the National Governors Association their views
on this. I will ask our staff to prepare that.
Senator Mikulski. I think that will be excellent.
Senator Bond. We will start with something, but we are
really awaiting the word from the administration because you
are the people who do it and you know how it works or does not
work.
So, with that, forgive me for taking up some time. Let me
turn to Senator Boxer. Good morning, Senator Boxer.
STATEMENT OF BARBARA BOXER
Senator Boxer. Good morning, Mr. Chairman. Good morning,
Senator Mikulski, and good morning, James Lee Witt.
I want to say that I have come to know James Lee Witt
almost too well and his wonderful staff. It seems that we pick
ourselves up from one disaster and we have got another one in
my magnificent State, having gone through so many of these,
both as a Member of Congress where I had one terrible
earthquake in San Francisco where we are still picking up, if
you will, the pieces because FEMA at that time simply did not
have the ability to respond.
I remember very well that when I came here, Mr. Chairman,
the faith and trust in FEMA was almost nonexistent, and I have
to say to James Lee Witt--and I know that not every single
Senator is going to agree with you on every decision you make.
No two people could agree on everything, and you and I have not
agreed on everything either, of course, as I fight for my
State. This is the natural course of events.
What you have done for your country is just fantastic
because you have taken an Agency that was in the depths and you
have brought it up and you have made people understand that we
can respond with a sense of fairness and a sense of urgency and
a sense of efficiency.
Mr. Chairman, I do not have a statement for you, but what I
would like to do is respond to some of the issues that were
raised, I understand, by you before I came in.
I want to say something about earthquakes in general, Mr.
Chairman. You and I have experienced floods in our States and I
have had that awful experience. Earthquakes are very different
than any other disaster because the damage is not readily seen
at first, and that is the reason why we have moving estimates.
That is the reason why Governor Wilson has not yet made the
match because we still do not have the final answer on the
number. So, these things happen and they look strange, but I
would urge you to realize that it is a very, very different
thing.
If you look at the California Seismic Safety Commission,
what they said about Northridge--and I will quote--``Much of
the damage was hidden under fireproofing and finishes.'' So,
you do not find out. You see a little crack. It does not look
like anything and then you get in there and you realize the
incredible damage.
Also, on UCLA, it is, in fact, a public supported
university and it is a major medical center, so it is a public
institution.
I would agree with you, Mr. Chairman. I voted for the
McCain amendment to end the practice of funding golf courses
and so on. I think we really need reform and I will join with
you in doing that. You and I have gone through enough disasters
to understand that we know who really needs the help and we
want to be able to provide it.
First of all, I am so privileged to be with both of you.
You are such leaders in this area, and I hope that as a result
of my experience I can help you and I can work with you in
making the reforms we need and still be able to respond to
people in need.
With that, I want to say to you that what is very
interesting in California now, people are talking in the flood-
prone areas about ways that they cannot rebuild in flood-prone
areas. I think it is happening in California. People are
realizing you just cannot keep going back and making people
whole. We have to have policies here that recognize there are
certain areas that you are never going to be able to secure
from flooding and so on.
So, I am very pleased and privileged to be on this
subcommittee. I want to work with all of you and James Lee Witt
the best that I can. I want to thank you very much for this
opportunity.
Senator Bond. Thank you very much, Senator Boxer. Certainly
you have had the experience with disasters that exceeds that
which we have had in our State, but we have had quite a bit of
experience with it too. That is why we think the Agency is so
important.
Now we will turn to the leader of that Agency with all the
attention. Mr. Witt, welcome.
STATEMENT OF JAMES L. WITT
Mr. Witt. Mr. Chairman, members of the committee, thank you
very much. I am pleased to be here with you this morning to
discuss FEMA's appropriations. Also with me this morning is
Gary Johnson, our Chief Financial Officer. I hope that together
we can be responsive to your questions. We have a capable team
behind us who can respond to any specific questions.
Each year it seems like we start out at appropriation
hearings discussing where we have been and what we have been
doing. Mr. Chairman, you briefly laid out what we have faced
over the last few weeks. I do not think I have ever seen a
January like the one we had this year. We had floods in the
West, in the States of California, Washington, Oregon, Idaho,
and Nevada. At the same period, we had blizzards in the
Midwest, tornadoes in Alabama and Georgia, preceding the floods
in Ohio, Indiana, West Virginia, Kentucky, and Tennessee, and
tornadoes in Arkansas. We had 59 fatalities in this last round
of disasters.
I will be brief so that we have time to answer your
questions.
I think, Mr. Chairman, that you and the members of this
committee have seen the difference that mitigation makes in a
community that has been hit by a disaster. The reason that FEMA
is requesting $50 million for the predisaster mitigation
program is to try to bring the insurance industry and local and
State governments into the fold to help us to eliminate and
high-risk areas. The fact that every $1 we spend in the area of
predisaster mitigation can save $2 in future taxpayer dollars
is well documented. I think that we need to change the
direction we are going as far as dealing with disaster costs.
I totally agree with your view that the costs of disasters
have escalated and need to be controlled. We need to redefine
what we fund and what we do not fund. We should target our
funding to address the health and safety of individuals and
communities. We will work with you and this committee, Mr.
Chairman, to develop language for legislation in that area.
The idea of reducing risk is very prevalent. I have talked
to many Governors, including Governor Voinovich of Ohio, just
this past week, Governor Underwood of West Virginia, the
Governor of Tennessee, other Governors at press conferences and
those with whom we toured communities. They all support
preventive measures to keep from repeating disaster costs in
communities where we can mitigate that particular risk. I think
that is the direction that we need to head in.
Disaster costs have escalated despite the fact that over
the past 4 years, we have declared only 24 more disasters than
during the previous administration. We have also denied 56
requests for disaster declarations during that time period.
Therefore, it is important that we look at the
implementation of the disaster program and how we work with the
States and local communities on predisaster programs. All of
the staff and I recognize the need for a new direction, and we
are working very diligently to make it happen.
PREPARED STATEMENT
I am very proud of what we have accomplished to date,
including the cost-cutting measures that we have taken. We have
been very, very busy, and I do not apologize for what we have
not been able to do. We are making a difference in communities
as they rebuild and in people's lives. I am very proud that we
have been able to cut costs related to the application process.
I am proud of FEMA and I am proud of the employees. They are
very dedicated and they work very hard, Mr. Chairman.
[The statement follows:]
Prepared Statement of James L. Witt
Good morning Mr. Chairman, members of the subcommittee. I'm pleased
to be with you this morning to discuss the appropriation needs of the
Federal Emergency Management Agency (FEMA) for fiscal year 1998.
I am joined today by Gary Johnson, our Chief Financial Officer, and
together I hope we can be responsive to any questions you might have
regarding our request. Also with me are the rest of our executive
management team who can help me in responding to specific questions, if
needed.
It seems that each year we are talking about incredible events that
we could never forecast. In the past it has been historic flooding in
the Midwest, a huge earthquake in southern California, a tragic bombing
in Oklahoma City, or any number of hurricanes that have devastated
parts of our east coast with troubling frequency.
I mention all these events as ones we could not forecast. But just
because we can't see an event coming doesn't mean we can't lessen its
impact. We can make a difference. And it's my hope that in fiscal year
1997 and fiscal year 1998, we at FEMA will begin to suggest a new path
we can take.
We need to do more, much more, from this day forward, to reduce the
risks facing our communities. We can't stop an earthquake or a
hurricane, but we can build better and stronger. We have to get this
message across. We have to break this cycle.
Disasters are no longer unusual or singular events. Their
frequency, and their degree of devastation, demand that we raise our
own expectations about what we can do. We need to set higher standards
in building our communities. We have to make our mission of protecting
public health and safety a shared goal. We can do better. And we know
that.
Yes, we do a great deal in the area of mitigation right now.
Section 404 of the Stafford Act has been a great success in towns like
Arnold, Missouri, Memphis, Tennessee and Miami, Florida. All of these
places have suffered from devastating natural disasters and have
undertaken mitigation measures to reduce the future risk to their
communities. Actions including moving structures out of the floodplain,
seismic retrofit of critical facilities and floodproofing of
residences.
But we shouldn't have to wait for problems to happen. While some
FEMA programs already have made significant strides in mitigation
ranging from our work on building codes to the U.S. Fire
Administration's leadership on the use of sprinkler systems, much of
our most significant work in reducing risks can only be triggered by a
disaster. Foresight, planning, intelligent preparedness work, cannot be
rewarded under our current disaster assistance program--nature has to
force our hand.
The strong message of what communities can do to strengthen codes,
to make schools and public facilities safer, to lessen the impact of
these events, has to be heard outside of this committee room, outside
of the walls of FEMA, outside of the emergency management community,
and insurance roundtables.
The idea of reducing the risks has to enter the mainstream. No one
knows better than the members of the appropriations subcommittees in
each chamber, that the losses from recent disasters are neither small
nor rare.
That is why we are seeking $50 million in pre-disaster mitigation
funding to begin a program of forging coalitions to create disaster-
resistant communities. And we do mean coalitions where everyone plays
an important part.
If pre-disaster mitigation is considered ``a FEMA program'', then
it's a failure. This has to be a program that leverages the resources
and energy of other Federal agencies, States and local governments, and
especially the private sector, and brings them in as partners. They
have to recognize their stake in this; they too have to provide the
leadership.
We believe many State and local governments are ready and willing
to join us. The business community and the voluntary community are
ready to join in. We think this program will demonstrate their
commitment and resolve. It's my belief that this is the ultimate route
for reducing disaster costs.
We must continue to be good stewards of the funds you provide for
disaster response and recovery. We must continue to re-invent the ways
we deliver assistance that help to save resources and provide better
customer service.
But we also believe that pre-disaster mitigation, along with the
enormous amount of post-disaster mitigation work we accomplish, is the
path to increased safety and reduced costs. I hope you'll provide us
the opportunity to continue these efforts.
The resources you have already provided have allowed us to begin to
provide important tools to State and local governments to assess their
risks and to begin to establish a framework for building, and
retrofitting, smarter and safer:
--Just this month we have completed the initial development of the
first nationally-applicable tool to estimate losses from a
natural hazard (at this point, earthquakes, but we hope to make
this an all-hazard system) and to demonstrate the impact of
mitigation actions.
--This year we will complete and issue nationally-applicable
technical guidelines for the seismic rehabilitation of existing
buildings--this is critical. For example, the replacement cost
for bridges averages about $135 per square foot, while the
retrofitting for seismic strengthening averages about $38 per
square foot.
--This year, in partnership with the U.S. Geological Survey (USGS),
we will be issuing the 1997 update of the NEHRP (national
earthquake hazard reduction program) recommended provisions for
seismic regulations for new buildings. This update is
incorporating information based on new USGS spectral response
maps.
--And this year we will continue our partnership work in developing a
proposed international building code. My visit to Kobe, Japan
following that devastating earthquake in 1995 impressed upon me
the need for international standards. We have much to share and
we also have much to learn.
I have gone on at some length on the matter of mitigation, or risk
reduction, because we at FEMA are not satisfied to pride ourselves on
fast response or long-term recovery programs. We want to do less of
that response and recovery business--and I hope every member of the
committee will take this message back to your States and districts.
You can provide the kind of leadership that will put risk reduction
into the mainstream, to make it a fundamental part of community
development and community life.
This year we are asking for $2.4 billion for the disaster relief
fund (DRF) to ``clean up'' all of our disaster requirements as we move
into fiscal year 1998. That's a large sum, but it represents our
estimate of the remaining costs of years of disaster activity. Such an
appropriation would allow us to meet our commitments to hundreds of
communities who are still recovering and rebuilding from the
devastating impacts of disasters.
Congress has been generous in providing assistance for disaster
relief. But we all realize that being locked in a culture of
supplemental spending is not a prudent approach for any of us who work
in this arena. For this reason the President's budget proposes that
Congress appropriate $5.8 billion as a contingency fund for the
emergency requirements for disasters and designate that amount as an
emergency funding requirement.
These funds would be available only to the extent that the
President designates them as emergency funding requirements and only 15
days after notifying Congress that the funds have been so designated.
This approach is similar to that taken by Congress and the President in
the Emergency Supplemental Appropriations Act of 1994, Public Law 103-
211.
This proposal is designed to avoid the numerous emergency
supplemental appropriations that historically occur each year and would
support the six agencies, including FEMA, involved with significant
disaster responsibilities.
I also want to report to you on the progress we have made in
improving our disaster response and recovery programs. Since we met
last year we have worked to implement the commitments we made to the
committees. And we have taken actions on suggestions the committees
have recommended.
One significant area of improvement has been our ability to manage
more closely disasters from previous years. These are the disaster
events that initially persisted due to their scope and complexity, but
then remained open far too long. You may remember I told the committees
that disaster close-out was a top priority for me because of the
potential cost savings.
This effort is beginning to pay off. During the last year, FEMA
closed out 16 disasters. Since February of 1994, we closed out 415
human services programs, resulting in a reconciliation of more than
$1.8 billion to the disaster relief fund from disasters declared as
long ago as fiscal year 1975. Of the $1.8 billion reconciled, over $400
million were returned to the disaster relief fund. This reduced the
Federal Government's interest obligation accordingly.
Our use of our 1-800 Teleregistration System has greatly reduced
our costs to take an application for assistance. Where our on-site
costs used to average close to $60 per application, teleregistration
has brought that down to $19 per application.
Along with, and as a result of our careful auditing practices, we
have also been pursuing an aggressive debt collection process. Up to
this point, we've collected close to $4 million in debts.
We have taken all of these steps because we are aware of the
obligations that come with the large appropriations that have been
entrusted to FEMA. And the cost savings in these areas are an important
part of the Government-wide effort to achieve the President's goal of a
balanced budget.
The recent draft report we sent to the committees on FEMA's
improvements in financial management details the efforts we have made
in grants management, non-specific disaster spending and additional
steps we have taken to prudently manage disaster funds.
We are streamlining our disaster relief procedures by proposing the
elimination of one appeal level for the public assistance program. We
are also making other procedural adjustments that will reduce costs now
and in the out years.
In fact, this year we are undertaking a complete reengineering of
our infrastructure system. We are looking at it from start to finish to
determine what parts of our program make sense and what parts need to
be changed. This comprehensive approach will result in further
improvements and savings.
One of our logistics management initiatives has been the disaster
information systems clearinghouse (DISC). The DISC deploys standard
equipment packs to disaster field offices within 24 hours, recaptures
the equipment after it is used at the disaster site, refurbishes and
repacks it as necessary, and returns it to the inventory for the next
disaster.
Since August of 1995 through January of this year, the DISC process
has filled orders for more than 4,400 personal computers, 900 printers,
250 fax machines, and 2,800 cellular phones from disaster field
offices. If this equipment had been bought new off the shelf the cost
of just these four items, considered to be staples of the modern
workplace, would have exceeded $10 million.
Concurrent with that work, and in response to the appropriations
conference report, I convened an Agency-wide task force which has been
reviewing all aspects of our work and exploring areas where we can cut
costs. Because of the significance of this project, I wanted to have
our partners at the State and local level play a role in developing
this report.
But we can give you a few examples of some of the options we are
considering with our State and local partners both in terms of
regulatory changes at FEMA and legislative changes to the Stafford Act.
Some of the regulatory options would propose to:
--Eliminate eligibility of publicly owned facilities which are rented
out to private enterprise for revenue generation, including
sports arenas, commercial space, or industrial parks.
--Eliminate funding for tree and shrub replacement. FEMA currently
has an interim policy that prohibits funding replacement of
trees and shrubs on otherwise eligible public properties. A
formal policy will be circulated to the States for review.
--Eliminate building contents or cultural objects. Eliminate
assistance for cultural and decorative objects such as
paintings, statues, antique airplanes or trains or fire trucks,
etc.
The legislative options discussed in our report would:
--Abolish or restructure the community disaster loan (CDL) program.
Although used infrequently, the CDL often becomes a grant
rather than a loan because of the forgiveness feature. In fact,
$4 has been forgiven for every $1 collected.
--Eliminate funding for revenue-producing publicly owned recreational
facilities such as yacht harbors, golf courses, and stadiums.
--Require that all private non-profit (PNP's) applicants go through
the Small Business Administration (SBA) loan program prior to
applying for public assistance. This would encourage PNP's to
mitigate potential disaster losses and equalize the treatment
of private and public utilities.
--Eliminate funding for rural utilities service electrical and
utility cooperatives due to their commercial nature and the
availability of rural utilities service or Small Business
Administration loans. Since the cooperatives are eligible to
obtain loans, they should be required to do so first, rather
than automatically qualifying for a grant.
These are all options that should contribute to an informed public
dialogue on disaster costs. But it should be remembered that the report
has one strong conclusion that harkens back to the mitigation message:
If the only solutions implemented involve shifting the burden
within the society rather than a reduction of actual risk of
loss, everyone--taxpayers, insurance policy holders, municipal
bonds, etc. will lose.
Moving from theory to the all too real world, it has, once again,
been a very difficult year in natural disasters. The hurricane season
was severe once again, with Hurricane Fran being especially widespread
in its impact. And we also experienced more State-wide flooding in
California and an extremely harsh winter in the Northwest that
compounded problems from the flooding of the previous year.
There are other commitments from last year that we have kept that I
would like to review. As promised last year, we have published for
comment a proposed rule addressing eligible costs for snow emergencies.
Based on the comments we have received and the recent experiences in
several States, we will likely publish a new proposed rule in the near
future.
Fortunately, this winter has not been as severe in the East as the
last, but we have had important snow declarations in Minnesota and the
Dakotas that have been, perhaps, even more extreme.
In these snow declarations we have maintained our policy of only
clearing primary routes to protect public health and safety. We have
also worked to hold States more accountable for their work in disaster
preparedness and response and recovery work. The steps they have taken
in self-assessment of their programs is helping to establish a clear
base-line of capabilities at the State level.
Additionally, our new budget will, as in fiscal year 1997, continue
to support State Hazard Mitigation Officers. Again, this consistency
will help to bring the emphasis on risk reduction into the mainstream.
And this work is taking place within the context of the Performance
Partnership Agreement (PPA). The PPA has streamlined our assistance to
States and has simplified our processes and encouraged State
initiatives.
I will also continue to work with EPA and DOT to have all of us
work closer in the area of hazardous materials. The more we can mesh
our efforts, perhaps even consolidating our funding streams, the better
it will be for the States and the front line responders.
My earlier discussion on building hazard-resistant communities
should sound familiar in some respects, because it is building upon
another Governmental success story: the National Flood Insurance
Program.
Both the compliance provisions of the Flood Reform Act of 1994, and
our own ``Cover America'' marketing campaign have moved us up to nearly
3.5 million policies in place.
The coming year will bring forth more information, from studies
that the reform act mandated, to tell us what we can do with rate
structures, and what the impacts of any changes would be to communities
and the program itself.
But even in a time of higher borrowing by the flood fund, it is
important to ask what the Nation's resistance to risks and disasters
would look like without the NFIP? It would mean no flood maps, little
mitigation, weaker codes, bad zoning, more Federal disaster spending,
and more private and public losses of all kinds.
The NFIP is, in microcosm, an example of risk reduction as a
mainstream approach: policies that are sold by local agents, policies
that are required by local lending institutions, and communities that
enforce sound flood plain management in exchange for the availability
of affordable flood insurance.
This budget for fiscal year 1998 also contains a request for $100
million for the Emergency Food and Shelter Program. At a time when
great changes are affecting national social service programs it is
vitally important that a supplemental program such as EFS, that assists
the private non-profits ability to provide emergency help, be
maintained at this level.
As with our other efforts, the EFS program encourages coalitions
within communities and leverages funds to help people in greatest need.
I am also concerned with the health and safety of our employees
nationwide and you will see line items that reflect this concern.
Throughout these constant challenges of hard work and long hours
under the most difficult conditions, FEMA employees performed with
dedication and grace. One of the most pleasant parts of my job is
reading the customer service surveys that disaster applicants fill out.
Their level of satisfaction is extraordinarily high, but it's the
personal touches that grab my attention.
On many of these surveys, people take the time to tell us that not
only was their service swift, but it was sympathetic and courteous.
That people were treated with dignity. FEMA employees put a good and, I
believe, true face on Government service. I'm very proud of that.
In summary, this year's budget is not a wish list, but operates
within budgetary constraints. It is a prudent and sensible spending
plan that looks to the future rather than holding on to the past. It
has one message:
We can't go on as we have; from this day forward we have to start
reducing the risks we face.
During my tenure at FEMA the appropriations committees have not
simply provided us the resources to do our job, but have offered the
encouragement and support that have heightened our morale and
contributed to our success. On behalf of all the employees at FEMA, I
thank you for that support.
I hope that in fiscal year 1998 we can continue that tradition.
Thank you for your time and attention. I'd be pleased to answer any
questions you might have.
STATUS OF DISASTER RELIEF FUND
Senator Bond. Thank you very much, Mr. Witt.
Let me turn to the status of the disaster relief fund
first. What is the current balance in the disaster relief fund
and when do you project the fund will be depleted?
Mr. Johnson. Mr. Chairman, as of last Friday the
unobligated balance in the disaster relief fund was $2.295
billion. Without the assistance that is included in the
supplemental request pending at the White House, we would
project right now that we would be unable to meet obligations
this year by about $442 million. Without the supplemental
appropriation, we will be forced sometime this spring to
revisit how we allocate our moneys for our public assistance
type projects to ensure that we have dollars available to meet
individual victims' needs.
Senator Bond. With almost $2.3 billion you would run out
this spring?
Mr. Johnson. We estimate that by the end of the fiscal
year, Mr. Chairman, we would be short $442 million to meet
obligations against requirements. By spring, we would have to
begin to adjust how we would allocate money to the open
disasters to ensure that we have dollars available for
immediate needs of victims.
Senator Bond. Mr. Witt, why are the current projections
exceeding the projections contained in the congressional budget
justification which showed a yearend carryover of $100 million?
Are the most recent spate of disasters the reason?
Mr. Witt. I think so, yes, Mr. Chairman.
Senator Bond. It's not Northridge?
Mr. Witt. Yes, sir; partly.
Senator Bond. How much has that Northridge estimate gone up
this year?
Mr. Johnson. Mr. Chairman since the budget submission was
forwarded to you, the obligations and projections for
Northridge went up about $200 million.
Senator Bond. What is required to meet the cost of all open
disasters and those projected for the balance of the year? In
other words, to wipe the slate clean, what is your best
estimate of the total amount needed? And will the
administration request this amount in the supplemental?
Mr. Witt. I believe, Mr. Chairman, it was $2.4 billion when
the budget was submitted.
Senator Bond. $2.4 billion?
Mr. Witt. Yes, sir.
Senator Bond. I had heard the current reestimate was $2.9
billion.
Mr. Johnson. That's correct, Mr. Chairman, based on more
current forecasting that we have done since the budget request
was prepared. It has escalated up to about $2.9 billion.
Senator Bond. Since we have not gotten the supplemental
request yet, can we expect that $2.9 billion will be in the
supplemental request?
Mr. Johnson. No, Mr. Chairman. I do not think you will see
that. I think you will probably see a supplemental request on
the order of $979 million. The rationale for that is that they
are looking toward our budget request for fiscal year 1998 of
$2.4 billion to address prior year requirements, along with the
$320 million requested for 1998 requirements.
Senator Bond. Well, there are going to be needs for 1998
too. Why do we not go ahead? We know it is there. It does not
make a lot of sense to me that we put off to another year--
where we are going to have tremendous budget pressures--the
request for the things that you know you are going to need now.
That just does not make any sense.
Mr. Witt. I think OMB had intended that the central fund
would help meet those requirements in 1998.
estimates for recent ohio river flooding and tornado disasters
Senator Bond. Oh, yes; that is the contingency fund? Take
it off budget. Yes; that will work.
What is the status of the most recent Ohio River flooding
and the tornado disasters? Do you have any cost estimates on
this?
Mr. Witt. No, sir; the water has just now receded and we
are following through with the preliminary damage estimates for
public assistance. I do not have the total figure for the
checks that were sent out for individual assistance programs
yet, but we will provide it to you with the estimates on the
public assistance.
COSTS FOR NORTHRIDGE
Senator Bond. Can you give us some idea why the cost
estimates for Northridge have increased from $6.1 billion a
year ago to $7.8 billion? Senator Boxer touched on some of
these. I would appreciate any expansion that you would like to
make on that.
Mr. Witt. The cost has increased because of the findings of
the architectural and engineering studies completed for the
rebuilding of large projects. It has become very evident that
when we gave the early estimates on Northridge the extent of
the damages was hidden. The actual cost of repairing those
buildings that were condemned or red-tagged in California is
much more than we had anticipated.
For example, when I was at Cal State University, workers
removed sheetrock from the wall and it revealed 6-inch steel
torn in half in the foundation of the building. Of course, we
could not know the extent of the damage until it was torn out
and the foundation examined.
Senator Bond. Thank you, Mr. Witt. We will come back later.
I turn to Senator Mikulski.
FUNDING FOR DISASTERS
Senator Mikulski. Thank you very much, Mr. Chairman. I have
a set of questions I would like to ask, one of which, of
course, goes to the Maryland situation.
First, let us talk, though, about some national issues. How
do you best think we need to fund disaster relief? This is not
a general question for a general answer. You focused on this.
You see how OMB is essentially pushing this over for a few
years, but essentially how do you think we should do this? Or
if you do not have a recommendation specifically today, what do
you think you will be able to tell the committee on how we
could be able to do that?
Mr. Witt. In light of the data my staff has put together
regarding historical averages faced over the past years, we
have determined that the 5-year average cost, less Northridge,
has been pretty consistent.
I think it is very important that we not only have the
funds to be able to respond and recover, but as the chairman
said earlier and as we all agree we have to get control of the
cost of disasters. We all need to sit down realistically and
say ``This is what is going to be needed to address future
disasters.''
DISASTER CLOSE-OUTS
Senator Mikulski. But what is the process by which we are
going to arrive at this? Are we going to have clear criteria
for what we get into, specific cost sharing by the States, the
issue related to rehabilitation? I understand there are 500
open disasters currently on the books, some dating back to
1989, some small, but they are not small if you have been hit
by a tornado. Are they open because of the ongoing
rehabilitation efforts?
Mr. Witt. First of all, it has been a top priority of mine,
of our Chief Financial Officer, and of the inspector general to
close out the old disasters. Gary, what is the total to date
for disaster close-outs?
Mr. Johnson. $1.8 billion in human services programs with
recoveries of over $400 million back into the fund.
Senator Mikulski. I did not understand that answer, sir. I
am sorry. The microphones are----
Mr. Witt. We have closed out over 100 old disasters that
were opened back in the 1970's during Hugo, and other
disasters. We have also put a top priority on reconciling the
disaster fund, and Gary has done a really great job on this.
CRITERIA FOR REHABILITATION FROM DISASTERS
Senator Mikulski. Let us then go to the whole issue of
rehabilitation as compared to reengineering. This seems to be a
subject of great dispute about what do you rehab to. Do you
rehab to its former state? Do you say that if a hurricane hit
your very expensive project but not a project necessarily to
declare health, safety, economic viability of a community? What
do you think should be the criteria for the rehabilitation
expenditures, and have you been involved with HUD in this
because I understand that is also one of the dynamics? What is
HUD's criteria for that?
Mr. Witt. FEMA's criteria is if a structure has suffered
more than 50 percent damage, then we do a cost-benefit analysis
to determine whether it is realistic to repair that structure
or to rebuild that structure. In most cases, it has proved to
be better to rebuild it rather than repair it, particularly if
it is a high-risk facility such as one that has never been
retrofitted against earthquakes, or one that is located in a
floodplain.
I have not worked with HUD regarding their criteria, but I
will be happy to talk to Andrew and work with him on this
issue.
FLOOD MITIGATION IN MARYLAND
Senator Mikulski. Well, Mr. Director, I am very proud of
what happened in Maryland after the disaster--first of all,
during the disaster when we were hit by so much floods in which
the Potomac overflooded, businesses were wiped out along the
Potomac. There is one area in Cumberland that was so
heartbreaking in which three automobile dealers that were lined
up one after the other lost their entire business and
inventory, and our readiness and response really did save
lives. And we thank you for your response.
Also, as you know, the Hagerstown water supply went out. We
had to take in water by the National Guard to make sure that
nursing homes, schools, and others at risk had fresh water.
After the flood, at my request Governor Glendening
established a flood mitigation task force, chaired by the
Speaker of the House, cochaired by the Army Corps of Engineers,
and Maryland Emergency Management to look at what could be done
so that we would not be faced with such dire economic impact
again on local communities. I believe that that is a model
where local people, working with Federal resources, came up
with a series of specific recommendations on how their home
would not be flooded out, their business would not be flooded
out, and the community would be safe.
What I would like to know is then what is your response to
even the procedure that we did? Do you think that is a national
model?
And then No. 2, based on that, what do you think you could
do to respond to Maryland and what criteria you would be using
to save lives, save communities, but then ultimately, so that
if we ever have those terrible floods again, we do not have to
turn to FEMA because of the homework and Federal investments we
are making now.
Mr. Witt. The flood task force that Governor Glendening put
together and that we all worked on is a very good example of
what needs to be done nationwide, not only to address floods
but to address whatever risk a particular State is facing. The
ideas works very well in conjunction with what FEMA wants to do
with hazard mitigation in developing disaster-resistant
communities. If we can identify high risks up front and start
eliminating those risks before a disaster happens, then the
cost of a disaster when it happens will be less. This is
something that has been proven time and time again. So, it is
important that we try to cut the cost by cutting the risk.
I have had round table discussions with private industry,
including mortgage lending institutes, and representatives from
the insurance industry. They want to start investing in
communities by helping to eliminate the risks faced by those
communities. It is to their benefit as well as the economy of a
community. We can do a lot working together on these task
forces and I think it will make a significant difference in the
long term.
Senator Mikulski. Well, Mr. Witt, I have met with those
families. I met with the business people and said we would do
all we could not only to get them back on their feet but that
they would not face these terrible risks again.
I met with a mother whose family nearly lost their lives
and promised that mother--and the little boy lost his catcher's
mit, but happy that we did not lose his life--that we would
take specific steps along the Potomac, whether it was related
to the relocation of housing, whether it was also retrofitting
a water plant.
What do you see as your criteria for responding to that? In
Maryland what projects do you think could be pursued to do this
type of reengineering and rehabilitation?
Mr. Witt. My staff met with Dave McMillion this week on the
task force recommendations regarding mitigation activities for
Maryland. The criteria for any mitigation project is whether it
is cost effective to do this. Does the cost analysis support
the activity?
The criteria for establishing the disaster-resistant
community concept is very similar to what we have in the flood
insurance program. We have 18,000 communities that belong to
the flood insurance program, but those communities that belong
to the program have to comply with building standards for
future building in that community. If you can get a community
to build better and safer, complying with standards established
to be a disaster-resistant community, this would make a
difference.
Senator Mikulski. So, we can look forward to help in those
areas related to housing, the issues relating to waterproofing
the wastewater treatment program, and issues like that?
Mr. Witt. The projects that they presented to me in the
report I read were very good projects, and they showed that it
was cost effective to do those projects.
Senator Mikulski. Thank you, Mr. Chairman.
Senator Bond. Thank you very much, Senator Mikulski.
Senator Boxer.
HAZARD MITIGATION
Senator Boxer. Thank you, Mr. Chairman.
Mr. Witt, I understand that the largest single cost to FEMA
has been public building repairs from earthquakes, and we
discussed that a little as to the fact that they're hidden at
first and once you get behind the sheetrock, it's a nightmare.
The President has proposed in your budget a $50 million
program to work with State and local agencies--and this may
dovetail on what Senator Mikulski was talking about--on steps
to lessen the damage in future disasters--this mitigation idea.
Has your experience with Northridge helped shape this program,
and if so, in what way?
Mr. Witt. Absolutely. If you remember, prior to Northridge,
the State had a program that they were working on to retrofit
the bridges in California for seismic resistance. Every single
bridge that they had already retrofitted stood up to the
earthquake. The bridges that had not been retrofitted
collapsed. The cost of rebuilding those bridges--that
infrastructure--was very, very expensive.
Even the public buildings that had been retrofitted and the
private buildings that had been retrofitted to the new
California building code survived that earthquake with very
minimal damage.
Another good example is that house in Hollywood. Every
house on the block had major damage or was almost destroyed
except one. The owner spent $1,000 on that house, doing the
work himself. He never even had a single pane of glass broken
in his house. He did not even have to ask for any assistance.
That is the type of thing that can make a difference.
Senator Boxer. I hope also what we do through these
programs is let the States know that we want them to pay
attention to this and not leave the deadline wide open because
the States have to work with us on this because as Senator
Mikulski has talked about, we have these disasters that we do
not close out. I just do not think it is a message we want to
send. I think the States, even though it is hard, have to come
with a match. Of course, it is small compared to what they are
going to get out of it, but we have to have some reasonable
expectation that by a date certain, they are going to apply for
this program. Do you not agree?
Mr. Witt. Absolutely. California is a good example. The
State of California has not only been hit by earthquakes but
fires and three floods. The State staff has been overwhelmed in
California.
But what we are doing now is important. Last year you
appropriated $3 million to support State hazard mitigation
officers to work on mitigation projects. We are also working
with the States to put in place a statewide mitigation plan
which will prioritize mitigation projects before a disaster
ever happens. That will make a significant difference. Instead
of a State having to establish a hazard mitigation team and
then follow through trying to prioritize projects, we will be
able to help a great deal.
Senator Boxer. Good. One second.
[Pause.]
DISASTER COST-CUTTING PROPOSALS
Senator Boxer. I wanted to just make sure that I remembered
this correctly. A couple of years ago we passed an amendment
that I wrote in EPW that gave States permission to use their
highway funds for retrofit prior to a disaster. So, we are
trying to help. In other words, if we can get those highway
funds on a regular basis used to retrofit highways and bridges,
it is going to be a big help, and we are starting to see that
happen in California.
Well, I understand you will be presenting a number of cost-
cutting proposals as part of your recommended changes to
disaster legislation. Senator Bond and I both serve on the
Environment and Public Works Committee which has jurisdiction
over this legislation. Without telling us all the different
things that you are doing, at what point do you expect to have
this legislation ready for us to take a look at?
Mr. Witt. I am going to have it in the chairman's hands
before this bill goes to the floor.
Senator Boxer. So, you expect soon?
Mr. Witt. Yes; I will see to it myself.
DISASTER ASSISTANCE FOR RECREATIONAL FACILITIES
Senator Boxer. OK.
My last question had to do with the recreational
facilities. As I mentioned in my opening remarks, I feel that
Senator Bond has hit on a very important point. We have so many
things we need to do and then we look at some of the more
frivolous things that we perhaps do.
However, I want to make a point that if something like the
Los Angeles Coliseum which is a publicly owned facility is hit,
that becomes a major economic loss to a community. So, I am
just hoping that as you look at these areas where we can save
funds, we just cannot say all recreation because in many cases
these sports facilities are economic engines for communities
and they are publicly owned. So, I hope that there would be
some discernment when we look at the whole area of recreation.
Mr. Witt. Authorization for types of spending from the
disaster relief fund has changed over the years.
I agree with the chairman that it is time to revisit this
area. I think if it is a revenue-producing entity, such a
publicly owned piece of property that is rented out to a group
that is operating that facility, then that group needs to look
at getting a low-interest SBA loan. I think we seriously should
look at that.
I think we should concentrate on the health and safety of a
community and of individuals. I think that is absolutely
essential and should come first.
Senator Boxer. Thank you.
DISASTER APPEALS
Senator Bond. Thank you very much, Senator Boxer.
Mr. Witt, going back to your discussion with Senator
Mikulski about the open cases, I gather a lot of these are kept
open because there are three levels of appeals for disaster
projects and for disasters. Apparently there is no disincentive
to States to continue to appeal and appeal and appeal. No. 1,
they have three levels. Why is any more than one needed? What
percentage of appeals are sustained? What additional cost?
There has got to be a way we can clean this mess up, is there
not?
Mr. Witt. Mr. Chairman, I totally agree with you and with
the inspector general's report on this. We want to have one
level of appeal. I was astounded to find, Mr. Chairman, that we
pay for the appeals.
Senator Bond. So, it is a free bite at the apple. You can
keep coming back and going and going and going.
Mr. Witt. There is no disincentive at all. If a State loses
an appeal, it should pay for it.
SEISMIC ALGORITHM
Senator Bond. Somewhere along the line, there is the
beginning of some criteria on that.
Let me jump back to one on this seismic algorithm. I am not
sure I understand what a seismic algorithm is, but I gather it
has cost us about $900 million because the program was designed
to expedite disaster aid, and instead of just repairing the
damage, you have said the funds can be used for an improved
project involving construction of a new building on a different
site.
Under what authority did you implement the program? Do you
think that FEMA can create without congressional authority the
opportunity to launch a major new project like this? Does
Congress not have a role to play in establishing a brand new
program like this?
Mr. Witt. Yes, sir; Mr. Chairman. I did not do it to
circumvent anything that Congress had not approved. The
algorithm is basically an outgrowth of what we have in place
with the mitigation program. I did coordinate the concept with
the inspector general and with our General Counsel to make sure
that I did not violate any laws, and they assured me that I was
not doing so.
The algorithm was put in place to evaluate whether it was
more cost effective to do an alternate project than it was to
rebuild the existing project.
DISASTER ASSISTANCE FOR SPORTS FACILITIES
Senator Bond. Let me go to disaster criteria. My colleague
from California mentioned possible damage to the Los Angeles
Coliseum. If that were completely wiped out, I think it would
cost less than what we put in to UCLA by about a factor of
five.
But we have some brand new sports facilities in St. Louis,
marvelous facilities. We even imported a California quarterback
to try to improve the performance there. [Laughter.]
These are revenue-generating facilities, and we live along
the New Madrid fault. You are well aware of the New Madrid
fault.
Before something happens to a sports facility anywhere, do
you think it would be proper if we met with the Governors
administration and said to those local organizations,
governments owning sports facilities, you better have
insurance, you better take some steps to cover them because in
the future if one of these major revenue facilities comes
tumbling down, we are not going to be able to provide the
relief to the otherwise incapable of paying for it? Is this
something that you would recommend?
Mr. Witt. I totally support that, Mr. Chairman.
TIMETABLE FOR DISASTER CRITERIA
Senator Bond. I have a list of all of our discussions. When
we asked about formulating disaster criteria, you said we are
pretty close to having something concrete. In last year's
questions, you said we are--2 years ago, we are going to define
objective criteria. In September 1996, you said that FEMA is in
the process of developing a new approach. We intend to present
options early in the 105th Congress.
Having these things as we go to the floor may not be early
enough. Where are they and will they include criteria to ensure
that States use their own capabilities to handle disasters not
declared by the President?
Mr. Witt. Yes, sir; they will.
Senator Bond. And when do you think we might see those?
Mr. Witt. Mr. Chairman, if you want it before it goes to
the floor, I will do my very best to get it to you.
Senator Bond. We have been asking for this, and seriously,
if we are going to work on this, we ought to work on this at
the committee level. I do not want to write this. I do not want
the committee to have to write this. We have been called on to
do enough legislating, but if we are going to have to do it, I
would like to have that before we go to markup so we can see
your recommendations.
Mr. Witt. OK.
Senator Bond. Thank you, Mr. Witt.
Senator Mikulski.
INSTITUTIONALIZING REFORM
Senator Mikulski. Mr. Chairman, I have only a very few
questions.
What we are trying to get here is a momentum. I will tell
you the objective that I see is, No. 1, I would like to be able
to institutionalize the reforms that came under your
administration. Because this committee is spread out over such
a wide variety of authorizing committees, this might with some
consensus be able to institutionalize those reforms.
The second part of that is I believe is both the disaster
contingency fund, which is a significant issue, and then the
difference between rehabilitation, restoration, and
reengineering for want of another word. After the flood waters
go down, after the hurricane debris is picked up, after the
earthquake and aftershocks are over, what do we do?
I recall when we were dealing with the San Francisco
earthquake, the whole idea of restoration of some historic
buildings was so phenomenal that it would have been difficult
to undertake. Therefore, that is different from rehabilitation
to make sure that housing for ordinary people or small
businesses are helped back in business. So, you see
rehabilitation is an issue.
The second is restoration and then the third is what are
the steps that we could take during rehabilitation that really
prevent some of the risk-prone aspects from--in other words,
where we know there is risk, where we know that a facility is
risk prone, either through engineering, relocation, all those
techniques that the corps and others can tell us that we can
take so in the process of rehabbing, three raindrops later we
are not back in the flood business. I am not being cynical
here.
I think that last part takes a lot of clarification because
what we face is where people want restoration. In many ways,
that is just not fiscally possible.
No. 2, even though some projects are desirable from a local
community's standpoint, they might not be fiscally feasible
from a Federal standpoint.
I know during the last debate, Senator McCain showed great
sensitivity to Maryland when we were talking about marinas.
Some marinas are private yacht clubs, and I am sorry if anybody
loses their yacht. But in Maryland those marinas were small
business, primarily small boats or where watermen keep their
boats and so on. So, you see, part of it is not to describe
something like a marina, but it is: What is the impact on the
local community? What is the real economic impact? If you take
20 of those marinas and knock them out up and down the 3,000
miles of the Chesapeake Bay, that is not a big ticket item, but
that is 20 small businesses.
Anyway, that is the kind of criteria that we are looking
for. One, what brings you in? What do you pay for it once you
do come in? And No. 3, once the emergency is over, what
business is FEMA in? Rehab, restoration, reengineering, all of
the above, none of the above, and so on. This is a great
opportunity to institutionalize reform and lay the groundwork
for others.
I know that you have been out on the road. It has been an
enormously trying time for you and a great sacrifice for your
family too, to just have to be able to pick up and go. I just
want to say thank you.
Do you have any comments you want to make on what I have
just said?
Mr. Witt. I think it is very important to develop the
disaster criteria and that is what we are trying to do. Mr.
Chairman and members of the committee, I blame no one but
myself for not having everything done on time. What Senator
Mikulski is talking about is important, that legislation be put
in place so that whether I am here at FEMA or someone else is
here, that something is institutionalized. I wholeheartedly
agree with you, Senator. We have to do this.
Senator Mikulski. I think you really need to task a group
within your organization to do this for whatever is your own
management mechanism and to work with us, and then we will be
consulting with the House. You have got three of us
particularly with the chairman of the House committee, Mr.
Bond, and myself are in risk areas because of flood or
hurricane, earthquake, and so on.
Mr. Chairman, I have no further questions, but I think we
have got some momentum going here today.
Senator Bond. I think so. How about July 4?
Mr. Witt. Sounds good.
Senator Bond. Let us do that by July 4. OK?
Mr. Witt. Yes, sir.
Senator Mikulski. Even if we do not have campaign finance
reform by that date, maybe we could have FEMA finance reform.
Senator Bond. These are going to be some unpopular
decisions.
Mr. Witt. Yes, sir.
Senator Bond. How do you plan to deal with these? Is that
going to make it difficult for you to come forward with the
recommendations?
Mr. Witt. It will probably be very difficult, but I think
we can deal with this working with organizations such as the
Governors Association, NEMA, and NCCEM. I think they
understand, Mr. Chairman, that dollars are limited and that in
the future, we are going to have to put those dollars to the
best use that we possibly can. I think it is feasible and I
think we can do it.
INSURANCE FOR PUBLIC FACILITIES
Senator Bond. So long as FEMA is willing to cover a
community's disaster losses, it seems to me there is not much
of an incentive for the community to purchase insurance
coverage for public facilities, and in some instances people
say that FEMA is a lot more generous than the insurance company
would be. Does it not make sense to get those priorities in
line and make sure that we are not discouraging the purchase of
private insurance?
Mr. Witt. Yes, sir; it does.
Senator Bond. Do you have any empirical data as to how
insured versus FEMA-covered facilities fare?
Mr. Witt. Public facilities?
Senator Bond. Yes.
Mr. Witt. I do not have the data now but we are looking at
trying to get the States and local governments away from being
self-insured and try to move them toward the direction of
insuring public facilities.
Senator Bond. That would be part of the proposal?
Mr. Witt. Yes, sir.
The important thing is, if we can work with them and give
them some kind of an incentive such as a better cost share
where they do insure public facilities, then it would help
eliminate the long-term disaster cost.
STATE COST SHARE
Senator Bond. I need to go back to this question of project
cost share upfront. We heard earlier today that California has
not come up with its cost share because they do not know what
the total cost is, but if we have already paid out billions of
dollars, they are getting some cost. Is not the failure to have
this upfront cost a bit of a disincentive for States to control
costs if they do not have to come up with the cash in advance?
Mr. Witt. A lot of States--of course, you are very familiar
with this--legislatures meet every 2 years instead of every
year. So, it is difficult sometimes for States to come up with
that upfront cost-share match. The percentage of the cost-share
match they share in with the local subgrantee varies. Some
States pick up the full cost share, while some States pick up
12\1/2\ percent, and then the county or city will pick up the
other 12\1/2\ percent. It varies across the whole country.
A lot of States will hold their cost share until the final
inspection is done and then finish paying the total amount of
the project.
ELIGIBILITY OF PRIVATE, NONPROFIT ENTITIES
Senator Bond. I think that is something we might want to
address.
Last year the GAO issued a report called ``Improvements
Needed in Determining Eligibility for Public Assistance.''
GAO's recommendations include clarifying the criteria for
certain private, nonprofit facilities and in the September 20
letter you told me that policy changes for revenue-generating
private nonprofits were under consideration. Do you have any
recommendations on that yet?
Mr. Witt. Yes, sir, Mr. Chairman. We will include those
recommendations in the report we are preparing for you. If it
is a private entity that is revenue producing then it should
apply for SBA loans instead of grants.
HAZARD MITIGATION
Senator Bond. Let me turn to the hazard mitigation efforts.
Your 404 hazard mitigation grant program is funded through the
disaster relief program. States are entitled to receive funds
equal to 15 percent of FEMA disaster relief assistance in the
State. There is approximately, I understand, $1.4 billion
unobligated.
What is the problem with it and what do you propose to do
about it? Are the funds not needed?
Mr. Witt. Yes, sir; they are very much needed.
We have been working with State directors on a hazard
mitigation task force to identify how we can speed the process
up, what we need to do to be more accountable, and to be less
bureaucratic and get rid of the redtape.
Most States go through an environmental review process
which we then review. The process goes from the State to the
region to FEMA headquarters. We have been pushing the
responsibility to work directly with the State down to the
regional level.
We are also looking at HUD and other agencies to see how
they do environmental assessments and reviews in order to put
in place the best procedures.
We have been working on the States' capability to
prioritize these projects as well. Last year you graciously
gave us money to support a person in each State to work
strictly on these mitigation projects. We are working now with
the States on the 409 mitigation statewide plans that are going
to help a great deal, as will changes in the cost-effectiveness
review process changes.
When a State has a disaster--and they have had many--they
are often bogged down in disaster recovery and response
activities and they do not have time or staff to concentrate on
mitigation at that point. We really need to emphasize
mitigation as a community being rebuilt, not later.
We are looking at the possibility of putting a sunset
clause in the legislation that we are going to provide to you.
If a State cannot obligate funds and get its projects done in 2
years, then it would lose the money. We just cannot continue to
drag projects out year after year.
CRITERIA FOR PERFORMANCE PARTNERSHIP AGREEMENTS
Senator Bond. All right. So, with $1.4 billion remaining
unobligated--it struck me that we are asking for $50 million
more when we have got a great big pot of money that has not
been utilized. Well, I guess we will see your legislative
proposals on that.
FEMA's budget includes $147 million for State grants, the
so-called performance partnership agreements. When you first
proposed them 2 years ago, your Agency indicated there would be
new criteria for awarding State grants. What are those
criteria?
Mr. Witt. Under the PPA, which has been in place for 2
years, States have the flexibility to design programs with FEMA
to meet the risks that they face in their State. We have been
working with the States in developing a self-assessment process
which will be used to establish a baseline of capability in
those States.
We are tying this baseline assessment into FEMA's GPRA
developmental activities.
INCENTIVES FOR STATES
Senator Bond. Are there specific performance measures so
you know whether the State is getting the job done? How do you
hold them accountable? Are there any rewards for States that do
the good jobs or disincentives for the ones that do not get it
done?
Mr. Witt. One incentive to do a better job or to have a
statewide disaster fund set up could be a favorable cost share
should the State have a disaster that warrants a declaration.
Also, if a State has a mitigation program in place with a
mitigation fund established it could be used in State-declared
disasters, not only in the federally declared disasters. Those
are some incentives that we are trying to work into the changes
that we are going to implement.
Senator Bond. That would require statutory authorization to
do that?
Mr. Witt. Yes, sir.
STATUS OF NATIONAL FLOOD INSURANCE FUND
Senator Bond. Again, we would be anxious to see your
recommendation on that because that certainly would seem to
make some sense.
What is the status of the flood insurance fund in light of
the recent flooding? What is the current level of borrowing? Is
there any danger you would exceed the $1.5 billion statutory
limit on borrowing?
Mr. Witt. Mr. Chairman, with the rash of floods that we
have had recently, I am concerned that even with the additional
$500 million in borrowing authority in 1997, the limit has not
kept pace with changes over the years in the flood insurance
program. We have $370 billion in coverage now compared to the
$8 billion in coverage that we had back in 1974, but we will
still only have a $1 billion borrowing authority in October. I
think we are up to $800 million in borrowing now and we are now
assessing how many policies and claims we have to pay in this
recent rash of floods.
Senator Bond. Are we looking at another overhaul of the
flood insurance program? It sounds to me like it would take at
least 2 years of normal operation just to get that back, would
it not?
Mr. Witt. Yes, sir; at least.
REQUIREMENTS FOR DAM SAFETY
Senator Bond. Dam safety is something that is very
important to Missouri and we worked hard to put that in the
water resources development authorization bill last year. Why
does FEMA not request any funds for the requirements of the new
dam safety legislation? Are these a priority for you?
Mr. Witt. Yes, sir; they are. We are planning to spend
$432,000 for the dam safety program from the flood program. We
are developing an implementation plan for a national dam safety
program as well.
Senator Bond. Will you be seeking reprogramming or anything
more on that program? Do you have the money to carry it out?
Mr. Witt. We have the $432,000 to get the implementation
program in place and determine what other moneys we will need
for the national dam safety program.
STATE AND LOCAL ASSISTANCE
Senator Mikulski. Mr. Chairman, I just have two other
things that I wanted to submit to the record. One is a letter
from the Maryland Emergency Management Agency talking about our
need to continue to focus our interest on the SLA, State and
local assistance account, which, of course, is the one that
really enhances our response and readiness.
MARYLAND REPRESENTATION IN FALLEN FIREFIGHTERS FOUNDATION
Another question goes to the fact that we are very proud of
the Fire Academy in Maryland. The Maryland State Firemen's
Association has played a major role in putting the Fallen
Firefighter Memorial Program together which you know is so
touching. We understand that this year you have turned over the
Fallen Firefighters Foundation, and we are asking if you would
ensure that the Maryland Firefighters Association has a seat at
the table in the foundation.
Mr. Witt. Yes, ma'am.
Senator Mikulski. Because they really provide so much of
the core support to the foundation.
Mr. Witt. Yes, ma'am.
Senator Mikulski. I thank you for that.
Thank you very much, Mr. Chairman, and I look forward to
working with you in advance on the solutions to the really
significant issues we have raised today. Thank you.
INSPECTOR GENERAL RECOMMENDATIONS
Senator Bond. Thank you, Senator Mikulski.
Very briefly I understand Mr. George Opfer, the FEMA
inspector general, is here and I would like to invite him
forward since we have been referring to him all morning on the
recommendations that he has made. I gather the FEMA inspector
general requests a slight increase from about $4.67 million to
$4.8 million.
I will just ask you, Mr. Opfer, what problems face FEMA
over the next few years and any recommendations you have for us
that would improve program integrity at FEMA.
Mr. Opfer. I think, Mr. Chairman, that we are working quite
well with the Agency. Shortly after the Northridge earthquake,
there was a change in the philosophy both within the inspector
general's office and the Agency itself when Director Witt
requested the inspector general's office to immediately respond
to disasters.
That was a change that really was not very common in the
inspector general's community, not only in FEMA but in all the
agencies--a change in the atmosphere where you have an
inspector general's office trying to work with the management
and going out to disasters on the scene so you can give upfront
advice and try to become very proactive.
The Agency itself, as you know, is relatively small in
comparison to other Federal agencies as far as the amount of
money that is passed through to States and what is given out in
disasters. Also, the inspector general's office in itself is
very small. So, we try to marshal our resources with the other
Federal communities to establish a task force.
We have been very successful in trying to weed out any sort
of corruption in the disaster programs because we do not want
the people to become victims twice--from the disaster and from
people scheming to take Federal dollars.
In the 2\1/2\ years that I have been in the Agency, I have
seen quite a change as far as program managers and the Director
requesting the inspector general's assistance in looking at
programs. We are trying to provide service similar to a
management consultant, where rather than doing a full audit or
a full inspection, we can look at a program or look at issues
which might be before the Director at the beginning stages, and
provide recommendations that could possibly prevent any future
problems in that area.
Senator Bond. You mentioned fraud possibly perpetrated on
the victims of disaster. Do you find any other general problems
relating to fraud, abuse, or mismanagement?
Mr. Opfer. We find a correlation between the larger
disaster where more Federal money is put into a disaster area
and the potential or increased, chance for different schemes or
questionable activities.
We have been working with the insurance industry to see
what information we can get as they are responding to disasters
and marshal our resources with them. We also work with the
State and local officials, including the Attorneys General, to
get information in areas such as consumer fraud where we do not
have jurisdiction. We want to make sure that we are marshaling
all the resources that are available both at the State and
local level.
Senator Bond. Well, thank you very much for your testimony
and for your good work.
Mr. Witt, any closing comments or thoughts you wish to
share with us?
Mr. Witt. Mr. Chairman, thank you for your support. We will
work very hard with you, Mr. Chairman, and the committee to
institutionalize those changes we discussed by July 4.
Additional committee questions
Senator Bond. We will expect that by July 4 and look
forward to working with you.
[The following questions were not asked at the hearing, but
were submitted to the Agency for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
status of disaster relief fund
Question. What is the current balance in the Disaster Relief Fund,
and when do you project the fund will be depleted?
Answer. As of March 31, $2.1 billion remained unobligated in the
Disaster Relief Fund. Absent a supplemental appropriation, it is
projected that by late spring, as the unobligated balance nears $500
million, FEMA will need to begin adjusting how we allocate money to the
open disasters to ensure that we have dollars available for the
immediate needs of victims and for emergency measures.
Question. Please explain, and provide a break-out for, why your
current projections for the Disaster Relief Fund in fiscal year 1997
exceed the projections contained in the Congressional budget
justification--which showed a year-end carryover of $100 million.
Answer. When the President's budget was prepared in early January,
the projected unobligated balance in the Disaster Relief Fund for the
end of fiscal year 1997 was $107 million. By mid-March, this same
balance showed a deficit of $442 million. During this time period, FEMA
had undertaken a major effort to refine its projected costs and unmet
requirements. The increase of $549 million in projected obligations can
be attributed to the following:
[In millions of dollars]
Northridge:....................................................... 200
1996 declarations................................................. 74
Other prior year disasters........................................ 268
1997 activity..................................................... 7
Question. Why have the cost estimates for the Northridge Earthquake
escalated from $6.1 billion one year ago to $7.8 billion today--an
increase of $1.7 billion? Please describe precisely what accounts for
this increase. To what extent does the increase in Northridge estimates
account for the fund's shortfall in fiscal year 1997?
Answer. The original cost estimate for the Northridge Earthquake
was prepared prior to the development of the detailed cost estimates
for the general acute care hospitals and other structures, the final
estimates for the repair and retrofit of the historic Los Angeles City
Hall, construction cost increases in the Los Angeles area, and the
consequential increase in mitigation funding (which is calculated as a
percentage of the estimated total program costs). These factors raised
the estimated costs for the Northridge earthquake by $1.7 billion as
summarized below:
[In millions of dollars]
Safeguarding hospitals (seismic algorithm)........................ 940
Los Angeles City Hall............................................. 130
Safeguarding other structures..................................... 100
Rebuilding Hospitals to EERI standard............................. 250
Rise in LA construction costs since 1994.......................... 105
Increased Section 404 Mitigation Ceiling.......................... 230
Reduced Administrative Costs...................................... -50
-----------------------------------------------------------------
________________________________________________
Total....................................................... 1,705
The higher estimated cost for the Northridge earthquake is one
factor in FEMA's revised estimated shortfall for fiscal year 1997.
seismic algorithm
Question. How much of the increase in the Northridge estimates is
attributable to the ``seismic algorithm?'' Under what authority did
FEMA implement this program? Do you think it is appropriate that FEMA
has the authority to implement a program of this kind with such sizable
resource implications, with virtually no formal approval process from
the Congress? Do you plan to use this algorithm in other disasters? How
are you measuring the success (or failure) of this pilot program?
Answer. The Seismic Hazard Mitigation Program for Hospitals (SHMPH)
was piloted and implemented under the authority of Sec. 406(c)(2).
FEMA rebuilt the hospitals to a higher safety standard under the
authority of Section 406(e)(1) of the Stafford Act, which defines
eligible costs in rebuilding structures:
``(e) Net Eligible Cost. (1) General rule.--For purposes of
this section, the cost of repairing, restoring, reconstructing,
or replacing a public facility or private nonprofit facility on
the basis of the design of such facility as it existed
immediately prior to the major disaster and in conformity with
current applicable codes, specifications and standards
(including floodplain management and hazard mitigation criteria
required by the President or by the Coastal Barrier Resources
Act (16 U.S.C. 3501 et seq.)) shall, at a minimum, be treated
as the net eligible cost of such repair, restoration,
reconstruction, or replacement.'' Emphasis Added
This higher rebuilding standard for the area hospitals serves two
goals: it reduces the level of damage expected from future earthquakes,
and it helps ensure that acute care hospitals can continue to function
in the aftermath of a future disaster, especially to treat disaster
victims.
The cost increase attributed to the seismic mitigation program for
hospitals was $940 million and included the repair and mitigation of
all 20 affected hospitals. This increase is less than half of the $2
billion requested by two of the hospitals alone.
FEMA believes that mitigation should be integrated into the
rebuilding from disasters. After an event occurs, communities tend to
be more receptive to undertaking mitigation measures, and mitigation
goals can more easily be attained by enhancing reconstruction
standards.
Congress has a vital role to play in implementing a program with
major resource implications. For Northridge specifically, FEMA included
the projected spending for these infrastructure projects in its two
supplemental budget requests for Northridge, both of which were
approved by Congress.
FEMA took into careful consideration the Congress's opinion as
stated in a March 21, 1996 letter to Director Witt signed by
Congressmen Jerry Lewis and Bob Livingston and Senators Kit Bond and
Mark Hatfield. This letter applauded the use of the algorithm and
encouraged FEMA to use the Earthquake Engineering Research Institute
(EERI) to further evaluate these projects.
Because many hospitals were closed due to damage, the algorithm was
specifically designed to address rebuilding after the Northridge
earthquake. When the detailed estimates were first being developed, it
became apparent that reaching closure on hospital repairs would be
extraordinarily time consuming and contentious due to the complexity of
the facilities and differences in professional judgment of architects,
engineers and other technical specialists. To reach a timely solution
at a reasonable cost, a consortium of professional experts developed
the algorithm for calculating the costs of repairing damages and
providing hazard mitigation measures. This algorithm produces a repair
and retrofit program that is consistent with hazard mitigation goals.
The success or failure of this seismic program will be measured by
the ability of the hospitals to withstand a future earthquake (or other
catastrophic event) and continue functioning.
We discussed this program with Members of Congress and their
staffs, particularly those Members chairing or ranking on the relevant
Committees of the House or Senate and in the affected areas. We believe
the SHMPH is a prudent expenditure from the Disaster Relief Fund (DRF)
since it will avoid future DRF expenditures and, more importantly,
provide public health and safety services after the next earthquake.
A central concept of the algorithm, that is the arithmetical
computation of disaster assistance in damaged critical facilities, is
that it expedites recovery and diminishes confrontational exchanges
between the Federal sector and disaster victims. Nevertheless, the
SHMPH is not presently contemplated for use in other earthquake
disasters.
Since mitigation is frequently a long-term investment, declarations
of success (or failure) would be premature at this point. Expenditures
under the SHMPH, however, are being tracked so that avoided costs can
be estimated after the next earthquake.
report to congress on reducing expenditures
Question. The fiscal year 1997 VA-HUD appropriations act required
FEMA to propose a plan to reduce disaster relief expenditures. The
Subcommittee recently received a draft report, about 45 days late and
still not final. The draft report includes only some of the proposed
recommendations of the GAO and the I.G. Why were the other
recommendations--such as eliminating alternate projects, and changing
the so-called 50 percent rule which triggers full-scale replacement of
a damaged facility--taken off the table? Please explain which other
options were considered and rejected, and why, and the cost-savings
associated with the rejected options.
Answer. In developing the Report to Congress on Reducing Disaster
Relief Expenditures, a broad range of options were considered,
including all of the recommendations of the General Accounting Office
and the FEMA Inspector General. Some of the GAO and IG recommendations
were determined not to be feasible at this time. For example,
eliminating alternative projects may provide an incentive for State and
local officials to rebuild facilities even if they no longer serve the
public welfare, in order to receive the grant award. Elimination of the
50 percent rule which triggers replacement would be inconsistent with
the National Flood Insurance Program and may impact negatively on
mitigation.
Two other approaches recommended by the Inspector General--the
disaster tax return system of assistance and block grants--will be
studied for potential applicability in the future.
Specific cost savings for these options have not been identified.
Question. Some of the proposed changes undoubtedly will be
unpopular with certain constituents. Will this impede your ability to
proceed with the changes and how do you plan to deal with these
impediments?
Answer. We are currently in the process of consulting with our
partners on potential policy changes. In general, they recognize that
governmental resources at all levels are becoming more limited, and
there is a need to reduce disaster relief expenditures.
To the extent possible, we have tried to focus on prudent ways of
reducing disaster costs without impeding service delivery. For example,
streamlining the public assistance program will not only save dollars
but will actually improve customer service. We are also trying to
reduce total costs through a pre-disaster mitigation program, rather
than simply shifting the costs to another level of government.
We recognize that there may be some measures, particularly those
which reduce eligibility, which may be unpopular with our constituents.
In those cases, we will work with our constituents and Congress to
develop appropriate legislative solutions.
disaster criteria
Question. Two years after the initial commitment, FEMA has not made
any changes to the disaster criteria. What changes--and when--will you
be proposing to the declaration process?
Answer. In the fall of 1996, FEMA established a Panel on Disaster
Cost Savings to examine, among other things, the issue of declaration
criteria. Upon analysis and consultation with our partners, we have
concluded that the high costs in the disaster program are driven by the
number of large major disasters and broad eligibility criteria, rather
than the number of declarations.
While we believe that the current declaration criteria continue to
be appropriate, we can reduce costs by streamlining activities and
targeting eligibility. However, factors used to judge severity,
magnitude and impact are being updated to reflect current dollars, and
procedures for conducting Preliminary Damage Assessment are being
reengineered.
Question. How will the new criteria ensure that states use their
own capability to handle disasters that should not be declared by the
President?
Answer. The current criteria involve making a judgment on whether
the severity, magnitude, and impact warrant Federal assistance to
supplement the State's capability. FEMA provides grants to State and
local governments through the Performance Partnership Agreement grants
for the purpose of developing the capability to handle disasters.
Question. The number of disaster declarations has increased 54
percent in the last 5 years, compared to the previous 5-year period,
partly due to FEMA's more liberal interpretation of the law. Don't you
believe disaster declaration criteria would bring some much-needed
discipline to this program?
Answer. The increase in total number of declarations is greatly
influenced by the number of fire suppression grants in recent years, as
well as a documented increase in severe weather events. Over the years,
the Congress has changed the statute to be more liberal in its eligible
benefits. Restricting eligible costs would achieve long-term savings in
the disaster program.
state-share
Question. Why isn't FEMA enforcing its own regulation to require
states to demonstrate they have their project cost-share upfront? Isn't
your policy of not requiring this upfront commitment a disincentive for
states to control costs? What is FEMA doing to ensure that recipients
of disaster assistance are satisfying their cost-sharing requirements?
Answer. Current disaster assistance regulations do not require a
specific timing for the payment of the State's portion of the non-
Federal share. A FEMA/State Agreement, which is executed between the
Governor and the FEMA Regional Director immediately following a major
disaster declaration, specifies the portion of the non-Federal share
that will be paid by the affected State. At the end of a disaster
contract, States are required to certify that they have paid their
share of a project's costs as agreed to in the FEMA/State Agreement.
Consistent with the intent of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (Public Law 93-288, as amended),
current FEMA policy includes in the Agreement a provision for a
Federal/State cost-share arrangement. FEMA believes that States have an
incentive to control costs, because they are making a contribution to
recovery efforts. FEMA only obligates and makes available to the State
the Federal share of the estimated costs of a project (usually 75
percent). Therefore, in order to complete a project, the remainder of
the funds must come from either the grantee or the subgrantee. If a
project is not completed, the Federal share will be deobligated and any
Federal funds that were already disbursed must be repaid by the
grantee.
INSURANCE
Question. What measures is FEMA taking to see that public
facilities are insured against the most probable perils they face?
Should disaster assistance be reduced for public facilities in
vulnerable communities that could have been insured but were not, as is
currently done with flood insurance?
Answer. As a condition for receiving Public Assistance grants,
insurance must be purchased and maintained to cover future damages for
any insurable hazard to any public facility for which FEMA funding is
provided. If the facility is insured at the time of a disaster, FEMA
will fund damages not already covered by insurance.
Establishing the vulnerability of communities for hazards other
than floods is a difficult task. While some areas of the country have
established vulnerability to earthquakes, participation in earthquake
insurance programs has been limited due to the expensive nature of the
program. For example, in California, the State Insurance Commissioner
has ruled that earthquake insurance is not reasonably available because
it is not affordable. FEMA's regulations state that the Agency shall
not require greater types and extent of insurance than are certified by
the State Insurance Commissioner. Consequently, FEMA has been unable to
require the purchase of earthquake insurance in California as a
condition of Public Assistance grant funding.
SNOW DISASTER DECLARATIONS
Question. In your draft report, FEMA said it would, ``publish
revised regulations to ensure that FEMA is consistently only paying for
those snow removal costs that are extraordinary and significantly
beyond the states normal capability and resources.'' When will these
regulations be revised? How do you define costs that are extraordinary
and significantly beyond states normal capability and resources?
Answer. In October 1996, FEMA published a proposed rule that
specified the work and costs that would be eligible for assistance in
the event of a major disaster declaration for a snowstorm. The proposed
rule stated that eligible work would be the clearance of snow from one
lane in each direction on ``snow emergency routes'' or their
equivalent, and from routes to critical facilities. The rule did not
address declaration criteria or the measurement of States'
capabilities.
Based on comments received on the proposed rule and FEMA's
experiences in three snow declarations in January 1997, FEMA has
decided to withdraw the October 1996 rule and publish a new proposed
rule. This new proposed rule will establish declaration criteria and
cost eligibility to ensure that assistance is only granted when the
situation is truly beyond a State's capability and resources. As
published in the Semi-annual Agenda of Rulemaking, the proposed rule
for snow disasters will be published between April and November of
1997.
COMMUNITY CENTERS
Question. Last year, in response to questions for the record, you
stated that FEMA would more precisely define community centers in order
to clarify which of these facilities FEMA considers eligible. Has this
been done? If not, when?
Answer. FEMA has published draft Policy No. 4511.050A, ``Private
Nonprofit Community Center Eligibility.'' The draft policy provides a
more specific definition of community centers than the definition found
at 44 CFR 206.221(e)(6), and includes examples of both eligible and
ineligible community centers. In particular, the policy more
specifically defines criteria such as: (1) open to the general public;
and (2) established and primarily used as a gathering place for a
variety of social, educational enrichment, and community service
activities.
This draft policy is currently in the internal approval process.
Pending its final approval, FEMA considers and rules on eligibility
applications in the Private Nonprofit Community Center category on a
case-by-case basis.
GRANTS MANAGEMENT
Question. When will FEMA have in place the new grants management
system? Will it ensure that FEMA funds are spent effectively,
efficiently, and according to law?
Answer. The Office of Financial Management, assisted by the
Logistics Management Institute (LMI), has recently completed a thorough
assessment of the grants management process for all of the Agency's
disaster and non-disaster grant programs. An Agency-wide Team, reviewed
and documented the current processes, identified issues and made
recommendations for improving the grants management processes used in
each of FEMA's disaster grant programs. A report, summarizing the
reengineering process and the Team's recommended solutions covering the
full cycle of the grants management process will be finalized in the
near future.
In general, the Teams recommendations include instituting
procedures that will enable FEMA to more effectively comply with
federal regulations on grants administration and financial management;
track grants from application through close-out, including timely
financial reports and program performance monitoring. Once FEMA
management formally accepts the recommendations of the Team, the Office
of Financial Management (OFM) will secure a charter for managing the
implementation of appropriate changes and developing an improved grants
management system in the Agency. It is anticipated that the Agency will
begin initiating some recommendations immediately and that a detailed
action plan will be developed this summer. The development of this plan
will include close coordination with other FEMA Directorates to assure
that it is all inclusive and takes into consideration other disaster
program initiatives. It should be noted, however, that it is expected
that FEMA management will consider additional improvements and
alternatives as the Agency begins implementing the recommended changes.
FEMA will realize several benefits by implementing the Team's
recommendations. The Agency can not only expect to more effectively
comply with federal regulations governing grants administration and
financial management, but also to improve the Agency's ability to
provide oversight and manage the disaster grant programs. Including the
other cross-cutting disaster program improvements, along with the need
for external coordination and significant internal training must be
accomplished prior to seeing long term results. Full implementation of
the Agency's improved grants management system is expected to take
between two-three years.
DISASTER CLOSE-OUTS
Question. Why do you have disasters open that go back to 1989? Why
can't you close-out disasters within two years or less? What is the
average length of time to close out a disaster? What does FEMA believe
is a reasonable time to close-out a disaster? Wouldn't a shorter period
enhance fiscal responsibility and accountability? How long does the
insurance industry take to close-out major projects, and why couldn't
FEMA follow an insurance industry model? Couldn't FEMA deobligate
significant amounts of disaster relief funds if it closed out disasters
in a more timely manner?
Answer. FEMA funding is made available to the disaster-affected
State as a grantee and further transferred to the sub-grantee in
accordance with the Office of Management and Budget's requirements for
Grants management. Public Assistance grants are governed by FEMA's
regulations, also known as the common rule. The intent of the rule is
to allow the States more discretion in administering Federal programs
in accordance with their own procedures. Because these grants are for
reimbursable costs, the grantee must make an accounting to FEMA for all
eligible costs on each approved large project. Final payments are made
only after the approved work is completed and certified by the State.
Large, complex projects that require extensive design and
construction phases in addition to compliance with all codes,
regulations, standards and local permitting procedures can be extremely
time-consuming. As a result, disaster close-outs are often delayed by
these large projects. However, FEMA has made significant progress in
closing out disasters. For example: in fiscal year 1993, FEMA closed
out seven (7) disasters; in fiscal year 1994, FEMA closed out 31
disasters; in fiscal year 1995, FEMA closed out 42 disasters; and in
fiscal year 1996, FEMA closed out 16 disasters.
As part of our Business Process Reengineering effort, FEMA is
considering several options--including looking at insurance industry
methods--to determine if we can adopt a more rapid settlement approach,
based on accurate cost and scope estimates, and additional means of
providing incentives to complete work as quickly as possible.
FAST-TRACKING
Question. Following the Northridge Earthquake, FEMA used a system
referred to as ``Fast tracking'' to deliver assistance to individuals,
which involved providing aid to applicants prior to inspecting homes. I
understand a very high proportion of those receiving aid were deemed
ineligible and FEMA is attempting to recover those ineligible costs.
Will you be using this method again? Do you believe it is appropriate
that FEMA has such discretion to dispense federal aid without following
appropriate and prudent procedures? Are you using fast-tracking now?
Answer. The extent of the damage and the densely populated
geographic areas impacted by the Northridge Earthquake indicated that
FEMA would receive an unprecedented number of applications for disaster
assistance. In an effort to help the greatest number of disaster
victims as quickly as possible, FEMA assisted applicants from areas
where the damage was most pervasive on a expedited basis; prior to
inspecting the applicant's home.
To identify the most heavily damaged areas, FEMA used computer
mapping of Modified Mercali Intensity (MMI) readings. ``Fast-track''
checks were then mailed to disaster assistance applicants only if: (1)
the applicants resided in a zip code that corresponded with the four
MMI zones of most intense seismic activity (67 zip codes were
identified); and (2) the applicant indicated that they had experienced
real property damage when they registered with FEMA. Recipients of
``fast-track'' assistance were notified at the time of their
application that a subsequent housing inspection would take place, and
that if they were found to be ineligible for assistance, they would be
required to return their assistance grant to FEMA.
Each home was subsequently inspected, the degree of damage was
assessed, and the determination of eligibility for housing assistance
was evaluated. Recipients found to be ineligible for assistance were
required to return their checks. The rate of confirmed eligibility for
those households assisted before inspection was 90 percent.
The fast-track method of expediting assistance helped thousands of
severely impacted disaster victims significantly more quickly than
standard procedures could accommodate. During the seven-week period the
fast-track system was implemented (from January 21-March 9, 1994) FEMA
issued 152,573 checks totaling $400,486,000 of assistance.
Approximately one-third of these applicants, 48,302, were provided
assistance via the fast-track system. It should be noted, however, that
recipients of ``fast-track'' assistance represent only 7 percent of the
total number of applicants who registered for assistance.
Although the fast-track process resulted in some ineligible
recipients, FEMA believes it was appropriate to implement the fast-
track system, given the unique circumstances of the Northridge
earthquake. FEMA is not currently using the ``fast-track'' system, but
would not rule out its use in the future under appropriate emergency
conditions.
ADMINISTRATIVE COSTS
Question. Last year, in response to questions submitted for the
record, FEMA stated it would propose a rule requiring grantees to
provide a full accounting of their administrative costs associated with
public assistance grants. To date, FEMA has taken no action to clarify
the rules governing administrative costs, or to ensure that grantees
properly account for administrative costs. Why? Also, FEMA stated it is
planning to promulgate a proposed rule that would require small project
expenditures to be accounted for and excess funds returned to FEMA. Why
hasn't this been done?
Answer. Last year, in response to recommendations from the General
Accounting Office (GAO) and the FEMA Inspector General (IG), FEMA
proposed to develop a regulation that would require an accounting of
grantee administrative costs. Prior to drafting such a rule, FEMA
determined that the statutory administrative expenses were also
intertwined with both State disaster management costs, and indirect
costs that may be claimed in connection with Federal grants. Therefore,
FEMA is conducting studies to determine the complete picture of the
costs to States to manage a disaster recovery effort. The goal is to
develop a single cost factor that will cover all administrative
expenses, both direct and indirect.
In response to further recommendations in the subject GAO and IG
reports, FEMA began to examine the impacts of a regulation that would
require refund of overpayments on ``small projects.'' Concurrently,
FEMA embarked on a 12-month process to study existing Public Assistance
procedures, develop new procedures, and implement the procedures in
actual disasters. Because these changes may affect the concept of small
projects as it was originally envisioned in 1988, we have delayed
proposing a rule change.
public assistance/business process reengineering
Question. FEMA has underway a ``BPR'' effort to streamline the
public assistance program. When will this be complete? What specific
changes do you envision at this time? What sort of cost-savings might
we expect?
Answer. A draft report on the proposed reengineered process was
issued on April 7, 1997, to FEMA regional offices, the National
Emergency Management Association (NEMA), and various project
participants for comment and feedback prior to issuing a final report.
The final report on the Public Assistance Reengineering project is
scheduled to be completed on April 30, 1997. The next phase of the
project moves beyond redesign in concept and into actual
implementation. This will include development of a pilot test
implementation plan, a pilot set-up and pilot test and a pilot
evaluation, prior to full-scale implementation. We anticipate
conducting a pilot-test and evaluation within the next six months.
Some of the changes envisioned in the proposed redesign include:
--Pre-identify and pre-educate potential applicants;
--Provide applicants with alternatives for accessing the Public
Assistance application process;
--Use Preliminary Damage Assessment (PDA) data to make initial
obligations to the State for immediate emergency funding needs,
rather than relying on additional site inspections;
--Establish deadline for State reconciliation of emergency work
costs;
--Require a more detailed and deliberate application for permanent
restorative work to include a schedule of damaged sites,
location, damage description, preliminary cost estimate, and
insurance coverage;
--Establish a FEMA single point of coordination for applicants and
States;
--Capture damage information one time, at the source, and
electronically if possible;
--Move decision-making and project review closer to the customer;
--Empower the States to validate small projects (under $46,000)
without always requiring a Federal inspection;
--Process large projects (over $46,000) or complex projects through
inspection and field review by certified FEMA/State inspection
teams;
--Focus on organizing work around the applicant and developing
``projects'' that best meet their recovery needs;
--Institute a settlement approach (based on an accurate scope and
cost estimate) versus actual cost reimbursement to avoid
revisiting cases multiple times;
--Provide incentives to complete permanent work as quickly as
possible and to submit documentation within a reasonable time-
frame; and
--Strictly adhere to and enforce time frames such as project
completion deadlines, deadlines for submittal of documentation,
appeal submittal deadlines, and appeal resolution deadlines.
The expected benefits of the redesign include quantitative
reductions in time and costs that will enhance and strengthen
qualitative aspects of FEMA's relationship with the States and
applicants. Benefits include: Reduced processing time; reduced
administrative costs; more efficient allocation of resources; reduction
in job redundancy; improved tracking; fewer de-obligations; and fewer
appeals.
HAZARD MITIGATION GRANT PROGRAM
Question. FEMA's Sec. 404 hazard mitigation grant program is funded
through the disaster relief program. States are entitled to receive
funds equal to 15 percent of FEMA disaster relief assistance in the
state. Currently, more than $1.4 billion remains unobligated. Has there
been an increase in section 404 mitigation activity since the federal
cost share was raised and the formula was revised to increase the
amount made available?
Answer. There has been a significant increase in Section 404 hazard
mitigation grant program activity since the Federal cost share was
raised and the formula was changed to increase the amount of funding
made available. The reasons for this have been two-fold: First, States
and Territories receive an increased amount of total available dollars
for mitigation. For example, in the Midwest Floods alone, total
available HMGP funds increased by approximately five times. Secondly,
changing the cost share from 50 percent federal to 75 percent federal
funding has made grants more attainable for State and local
participants.
It is essential to note that nearly 67 percent of the remaining
funds (approximately $776 million) stems from three unique disaster
situations:
--The State of California accounts for approximately $642 million of
this figure. In that State, numerous sizable disasters
(including multiple flood events, wildfires, and the most
costly disaster in U.S. history, the Northridge Earthquake)
have occurred in the last several years. This tremendous
workload has greatly strained the State's ability to identify,
review, and process available monies in a timely fashion to
meet mitigation, response and recovery needs.
--Similarly, the Virgin Islands accounts for approximately $50
million of the outstanding HMGP balance, due in large part to
the fact that the islands were struck by two powerful
Hurricanes--Marilyn and Bertha--within a year.
--Finally, Hurricane Fran, which caused Presidentially declared
disasters in seven States, accounts for another $84 million in
unobligated funds. The outstanding balance of HMGP funds for
these disasters is not unusual, in that the event occurred only
recently (last Fall).
These three unique situations account for over $776 million of the
unobligated HMGP funds. They are not due to recurring programmatic
obstacles.
It also should be noted that FEMA has taken substantial action in
recent years to improve the management of the HMGP in order to speed
the obligation of funds. For example, this fiscal year an additional $3
million was made available to States to improve implementation of
Hazard Mitigation Programs. To improve National Environmental Policy
Act (NEPA) compliance reviews, FEMA published an expanded list of NEPA
categorical exclusions which have significantly reduced the time
required for environmental review for approximately 50 percent of the
projects submitted by States for HMGP funding. FEMA has developed a new
process to streamline project cost-effectiveness determinations which
emphasizes quick determination of lower and upper bound estimates to
allow State staff to focus resources on potentially eligible projects.
In addition we have provided substantial new training sessions to both
FEMA Regional staff and State Hazard Mitigation staff. All of these
activities are expected to greatly speed the HMGP process in the
future.
Question. FEMA is proposing a new $50 million pre-disaster
mitigation program. Why would this program be used more by the states
than mitigation activities authorized under sec. 404?
Answer. Section 404 funds are only available if a disaster has been
declared; therefore, mitigation actions are generally limited to
declared area(s).
This means that States must absorb a cost-share associated with
mitigation activities at the very same time that they must identify
resources to pay for the tremendous costs of disaster response, which
is often prohibitive. Through the Pre-Disaster Mitigation Program,
however, communities will be able to thoughtfully plan and budget for
their contribution to eligible risk reduction activities. They will
also have the time to work with other elements of the community,
including the private sector, to leverage additional funding and
resources against their own. These advantages will help ensure that
Pre-Disaster Mitigation Program funds are used effectively to reduce
our nation's risk from natural hazards.
Question. FEMA funds some mitigation work using public assistance
funds (sec. 406) and sometimes in combination with sec. 404 funds. Is
this appropriate and in accordance with the Stafford Act? What is FEMA
doing to clarify whether mitigation should occur under sec. 406 versus
sec. 404?
Answer. When Congress amended Public Law 93-288, the Disaster
Relief Act of 1974, in 1988 (upon enactment of Public Law 100-707) the
legislation was amended to: (1) add new section 404, which authorized
hazard mitigation funding; and (2) revise the authority of what is now
Section 406 to add the reference at subsection 406(e)(1) that
prescribed hazard mitigation criteria.
The use of Section 406 alone or in combination with Section 404 is
both appropriate and consistent with explicit Stafford Act authorities.
Section 406(e)(1) allows for ``hazard mitigation criteria'' to be
included in funding determinations for discrete public assistance
projects. A Section 404 project may affect several Section 406 public
assistance projects, as well as the community at large. If a Section
404 project ties into and augments the mitigation elements of a Section
406 project, it is neither an inconsistent nor an inappropriate use of
Stafford Act funding. There is no indication in the Stafford Act that
these two hazard mitigation authorities cannot be used in conjunction
with each other, and FEMA believes that it has implemented these two
hazard mitigation authorities consistent with the congressional intent
behind their simultaneous enactment.
To clarify the use of these two authorities, FEMA has issued
policies that distinguish between the mitigation scenarios in which
either Section 404 or 406 can be invoked. FEMA has also assembled a
404/406 Mitigation Task Force, which will provide additional
clarification as specific instances require.
Question. When will you submit your legislative proposal for this
new $50 million plan? How many projects do you anticipate will be
funded, and what will be the criteria for participation? How will you
maximize the use of this relatively modest sum for mitigation projects?
Answer. The legislative proposal will be included in the package
containing cost eligibility changes that we are planning to send to you
in July of this year. We will try to fund as many projects as we can in
order to achieve some balances among the geographic spread, the types
of risks and hazards, and the categories of mitigation measures carried
out. We will be testing criteria for participation with the pilot
effort this fiscal year, and proposed criteria will be formalized
through regulations authorized by the legislation being drafted. In
addition to criteria that relates to risk reduction requirements, we
will also be looking at leveraging non-Federal resources in order to
maximize the modest amount of funds requested.
Question. We understand that mitigation saves money, but we have
seen no quantification of the extent to which mitigation reduces future
disaster relief costs. Has an assessment been done to provide some
baseline for cost-savings? If not, when will it be done?
Answer. Over the last several years, the need for an assessment of
mitigation cost savings has become apparent. At this time, we are in
the process of planning a project to perform a macro-economic analysis
of mitigation. We plan to initiate a study of the cost-effectiveness of
a broad spectrum of mitigation measures (such as building codes and
acquisition/relocation projects) before the end of fiscal year 1998.
Because this analysis will take time to complete, we commissioned a
smaller report on the cost-effectiveness of mitigation that is
scheduled for release in the next two weeks. This report includes a
brief explanation of many of the types of mitigation which have
produced useful effects. It also includes 16 ``case studies,'' which
were chosen to provide multi-hazard examples of a variety of mitigation
techniques across a wide geographical distribution. A copy is attached
for your reference.
performance partnership agreements
Question. FEMA's budget includes $147 million for state grants
through the so-called ``performance partnerships'' agreements. Two
years ago, when FEMA first proposed performance partnerships, the
agency indicated there would be new criteria for awarding state grants.
Please explain what those criteria are.
Answer. A driving force behind the Performance Partnership
Agreement (PPA) is to make performance a consideration in the awarding
of annual pre-disaster grants to the states. The PPA is a five-year
agreement designed to implement the strategic planning concepts of
GPRA. A June 1, 1998 deadline has been set for all state PPA's to be
modified to reflect measurable performance indicators.
FEMA Regions continue to consider annual performance as criteria
for annual cooperative agreement grant funding. Risk, need and special
projects also continue to be considerations in how funds are divided
among the states.
Question. What are the specific performance measures states are
held to under these new performance partnership agreements, and how are
states held accountable for meeting these measures? How are high-
performing states rewarded?
Answer. Performance measures under the PPA are jointly developed by
the State and FEMA. The measures vary depending on the unique
circumstances of the state and objectives set as part of that states
strategic planning. Eventually, states will be held accountable by
making long-term PPA performance a criteria for annual CA funds. In
addition, FEMA is exploring options for rewarding states for pre-
disaster performance in mitigation and increasing their disaster
capability through post-disaster grants. Another option under
consideration is a more favorable cost-share on public assistance
disaster grants.
Question. How are performance partnerships used to encourage states
and local governments to undertake mitigation activities to reduce the
risk of losses to public facilities?
Answer. The PPA is developed around the four functions of emergency
management: preparedness, mitigation, response and recovery. Each
function has partnership and state objectives and strategies for
accomplishing the objectives. Mitigation is a major focus of the PPA
objectives and strategies and is an area FEMA is working to encourage
through future incentives.
Question. Other than reducing administrative burdens and providing
a single funding stream, how are the performance partnerships any
different from the old grant process under the comprehensive
cooperative agreements?
Answer. The PPA was developed to replace FEMA's comprehensive
cooperative agreement (CCA) process. Under the PPA, states have more
flexibility in the use of funds in exchange for accountability of
performance; while the states, not FEMA, propose how the funds will be
spent, annual activities must clearly reflect state priorities and
needs and contribute to the achievement of long-term state objectives
in the PPA. Under the old CCA, FEMA determined how the funds were to be
spent and there were no established long-term objectives that annual
CCA activities worked towards accomplishing.
Question. What is the status of FEMA's ability to assess states'
capacities to respond to disasters? What means do you use to make these
assessments? Has the I.G. deemed whether your method is adequate and
appropriate? How can you rely on states' self-assessments to make
determinations on capabilities? In your opinion, how many states
currently have a reliable assessment of their capability to respond to
disasters?
Answer. FEMA is currently developing the capability assessment
process to assess the capabilities of State and local governments to
effectively respond to catastrophic disasters. The Program Elements
Guide (PEG) is the principal tool that FEMA is currently developing to
accomplish this task. This tool categorizes emergency management
activities into the following 13 components: (1) Laws and Authorities;
(2) Hazard Identification and Risk Assessment; (3) Hazard Management;
(4) Resource Management; (5) Planning; (6) Direction, Control and
Coordination; (7) Communications and Warning; (8) Operations and
Procedures; (9) Logistics and Facilities; (10) Training; (11)
Exercises; (12) Public Education and Information; and (13) Finance and
Administration. It was recently favorably reviewed by representatives
from the National Emergency Management Association (NEMA), an
organization of State Directors of Emergency Management. It is
anticipated that the PEG will be finalized by April 21, 1997. The
Inspector General's office has participated in the briefings on
capability assessment and the implementation schedule.
The capability assessments will be completed for all States during
fiscal year 1997, and FEMA will submit a report to the Congress by
October 1, 1997, on the status of State capabilities and the Emergency
Management Partnership to respond to major disasters. FEMA will not be
relying entirely on State self-assessments. It is our intention that
there be substantial Federal involvement in as many of the State
assessments as possible this year, given timing, staffing and funding
restraints. Many of the States have conducted capability assessments
over the course of time, but these have not been developed in a
standardized format; therefore, it is difficult to draw substantive
conclusions on these efforts. The goal of the FEMA capability
assessment process is to create an assessment system that will be
acceptable to all States and will result in a reliable and consistent
national evaluation of the state of readiness in the nation.
GPRA
Question. Under the Government Performance and Results Act (GPRA),
FEMA is required to develop a mission statement and strategic plans.
I'm very concerned with mission creep at FEMA over the last several
years. The mission creep is evident in the fact that there's been a 54
percent increase in the number of major disaster declarations in the 5-
year period fiscal year 1992-96, compared to fiscal year 1987-91. Where
FEMA used to confine itself to responding when state and local
governments were overwhelmed, FEMA's new role seems to be about being
all things to all people. What process are you using to develop your
mission statement and strategic plan, and who are you consulting with
to ensure it meets the intent of Congress?
Answer. FEMA was one of the first federal agencies to develop a
strategic plan back in December 1994. The strategic plan's mission
statement and its goals were developed even earlier and served to guide
the agency's 1993 reorganization. In its June 1996 report, entitled,
``Executive Guide--Effectively Implementing the Government Performance
and Results Act,'' Congress's General Accounting Office (GAO)
highlighted FEMA's reorganization around its mission statement and
strategic goals.
In 1993, FEMA's new Director refocused the agency on meeting its
mission and aligning its activities to better serve the public. As part
of its first agency-wide strategic planning effort, FEMA
comprehensively reviewed its programs and structures and initiated a
major reorganization in November 1993. By more closely aligning its
activities, processes, and resources with its mission, FEMA appears
today to be better positioned to accomplish that mission.
As a result of experience gained through the GPRA pilot phase FEMA
realized that agency-wide training on the concept of GPRA and strategic
planning would be necessary. To date, training has been conducted for
over 400 managers and staff agency-wide. The training effort includes a
two-day workshop in each of the 10 regions for our regional staff and
our State partners.
FEMA is in the process of updating its strategic plan, and making
it more precise, measurable and consistent with GPRA requirements. FEMA
established a GPRA Steering Committee, made-up of representatives from
throughout the agency, to oversee the process. FEMA is not proposing
any changes to its current mission statement (in fact, the
Congressional Institute and National Academy of Public Administration
which trained congressional staff on GPRA used FEMA's mission statement
as a model). Our six strategic goals have been reduced to three draft
goals which we believe represent FEMA's statutory mandates.
A significant part of FEMA's mission is to lead and support the
national emergency management system. Therefore, performance measures
for FEMA's draft new strategic goals will reflect how well the national
system is performing. We believe the information we need to measure our
performance already exists in the public and private sector. We expect
to have draft performance measures identified by May 1997.
FEMA's primary stakeholders are the State governments and the State
emergency managers and the National Emergency Management Association in
particular. We have discussed the direction of our strategic planning
efforts with the States and NEMA and shared draft documents. We will
continue to consult with them throughout the process and ask for final
comments before the plan is finalized. FEMA has also shared its draft
strategic plan with Federal agencies such as EPA, Transportation, SBA,
Army Corps of Engineers, etc., to ensure a complimentary approach to
GPRA.
FEMA has already briefed two congressional committees and will be
making more consultations to discuss all aspects of proposed changes to
the agency's strategic plan, including, options for performance
measures.
The Agency is on track to have the updated plan and new performance
measures, as well as the GPRA required fiscal year 1999 Performance
Plan completed this summer in advance of the September 30 deadline.
CSEPP
Question. In January, GAO presented preliminary findings of a
review conducted on CSEPP, a joint Army/FEMA program to improve
emergency response capabilities in the communities near the chemical
weapons storage sites. GAO found that while $420 million has been
appropriated to date, local communities still lack critical items 9
years after the program's inception and there are long-standing
management weaknesses at the federal level, including unclear roles and
responsibilities.
Why has so little progress been made with the $420 million spent to
date? What is the status of negotiations with the Army over the future
of the CSEPP program. What role does FEMA believe it ought to play in
this program? Who should be held accountable for the lack of progress
in this program?
Answer. FEMA has discussed with GAO the validity of the draft
report's finding that emergency preparedness capability has been unduly
slow in the communities surrounding the eight chemical weapons storage
sites. We anticipate that the final report may differ from the draft
somewhat, since it is demonstrable that considerable progress has been
made in CSEPP emergency preparedness. States are significantly better
prepared to respond to a chemical incident today than even two years
ago. Alert and notification systems have been installed to warn the
public, in-place communications systems will allow on- and off-post
responders to communicate effectively, and, through Federally-funded
public education programs, the public is continually informed of
protective action measures to be taken in case of a chemical accident.
FEMA recognizes that not all anticipated emergency preparedness
equipment has been purchased and/or installed, and, as a result, full
programmatic capability has not yet been attained in all sites.
However, many sites have completed the purchase and installation of
necessary equipment, and are nearing the maintenance phase. While not
all equipment is in place, operational capability has been attained for
most benchmark items at each site. Thus, while capability will
undeniably improve, employable capability exists in nearly every case.
There have been issues requiring resolution between FEMA and the
Department of the Army regarding the day-to-day management of CSEPP.
However, while we recognize that perceptions exist in some quarters
that the issues are affecting program delivery, both FEMA and the Army
have worked very closely to ensure the uninterrupted delivery of
program services. Given the different operating styles of FEMA and the
Army, it is reasonable to expect periodic problems to arise with
program delivery. As they have with previous programmatic or stylistic
differences, both FEMA and the Army have been taking positive steps
toward resolving those issues and believe that they will be resolved
shortly for the maximum benefit of the program. It is worthy of note
that FEMA Director James Lee Witt and Secretary of the Army Togo West
are personally involved in resolving these issues expeditiously.
ARSON INITIATIVE
Question. In the fiscal year 1997 operating plan, FEMA proposed a
reprogramming of $775,000 for participation in the President's National
Arson Prevention Initiative, which was established in response to the
rash of church burnings last year. Can you tell me precisely what
FEMA's role is in this initiative, what has been accomplished so far,
and whether additional funds are requested in fiscal year 1998 to
continue participating in the President's initiative?
Answer. In June 1996, the President asked FEMA Director Witt to
lead a National Arson Prevention Initiative and coordinate available
public and private sector resources to combat arson nationally.
Although prompted by the tragic series of fires at houses of worship,
the Initiative is intended to address the larger problem posed by arson
in this country. FEMA has been joined in this effort by the Departments
of Justice, the Treasury, Housing and Urban Development, Education,
Agriculture, and the Corporation for National Service. Governors in
States most affected by the church burnings have rallied in their
support of arson prevention and they, with local leaders throughout the
country, have been strong partners in the Initiative.
Each of the major law enforcement, crime prevention, education,
church, and voluntary groups and organizations have been tremendous
contributors to the Initiative. In addition, eight national fire
service organizations pledged their memberships in the fight against
arson including the Alliance for Fire and Emergency Management
(International Society of Fire Service Instructors), the International
Association of Arson Investigators, the International Association of
Black Professional Fire Fighters, the International Association of Fire
Chiefs, the International Association of Fire Fighters, the National
Fire Protection Association, the National Association of State Fire
Marshals, and the National Volunteer Fire Council.
Recognizing that arson is a local problem that requires local
solutions, FEMA's role in the Initiative has been to facilitate
community arson prevention efforts and apply public and private
resources to their best effect. Provided for the record is a copy of
``Fire Stops With You--The National Arson Prevention Initiative: Six
Month Report to the President.'' This report details the interagency
and intergovernmental accomplishments of the Initiative from June
through December 1996.
The Initiative entered a new phase in January. FEMA is piloting the
creation of community-based arson prevention coalitions in three cities
in the Southeast and one city in the Northeast. The cities that are
participating include Macon, Georgia, Nashville, Tennessee, Charlotte,
North Carolina, and Utica, New York. The experiences of these
communities in forming a coalition and actively engaging their
residents in arson prevention will serve as models for communities
across the country. Three of the pilot cities will ``launch'' their
coalitions nationally as part of a series of events occurring during
National Arson Awareness Week, May 4-10, 1997. As part of that week,
arson prevention grant awards of $12,000 will be made to every State
($5,000 to each territory and the District) to encourage and support
Statewide arson public education and awareness effort.
Efforts on the full range of arson prevention topics also continue.
In partnership with the Department of Justice, a series of Statewide
arson prevention conferences will be conducted over the next several
months in seventeen States. Additionally, development of training and
public education materials on juvenile firesetters is underway. Between
July 1996 and March 1997, the National Arson Prevention Clearinghouse
received nearly 15,000 telephone calls and distributed approximately
half a million packets of information.
The National Arson Prevention Initiative has resulted in a
framework to support State and local governments that capitalizes on
available resources from a variety of sources and has resulted in
increased understanding and awareness of the problem. Individuals have
begun to recognize the impact that arson has on their lives and have
become involved in preventing it within their communities. This
Initiative will be institutionalized and will serve as the umbrella
strategy for the Agency's overall arson efforts within the U.S. Fire
Administration. Funding requested for fiscal year 1998 will continue to
support vital training, public education, and technical assistance
efforts, as well as the continuance of the National Arson Prevention
Clearinghouse and the coalition-building efforts.
mt. weather emergency assistance center
Question. In the fiscal year 1997 operating plan, FEMA indicated
the need to renovate and expand building 430 at MWEAC to accommodate a
rapidly expanding demand for additional training class rooms and
conference areas, at a cost of $1.67 million. At the time, FEMA said
``we are currently evaluating options to fund this requirement later
this fiscal year. Should sufficient funds be available, we will forward
to you the required reprogramming request.'' What is the status of your
evaluation? Do you anticipate a reprogramming request? Are any funds
requested in fiscal year 1998 for renovations at Mt. Weather? When will
there be a long-term plan for the Mt. Weather facility, and why should
any renovations take place prior to the completion of such a plan?
Answer. The Office of Financial Management is conducting a mid-year
review of all FEMA spending plans. Upon completion of the review, a
final determination will be made as to the distribution of fiscal year
1997 funds held for prior year obligations. The expansion of the Mt.
Weather Training Center has already been determined a high priority
candidate for any funds that may become available. If funds are
determined to be available, a reprogramming request will be forwarded.
Mt. Weather has been selected as the initial participant in FEMA's
Working Capital Fund (WCF) and in fiscal year 1998, will complete the
transition to a fully operational mode, continuing to provide office,
conference, training and billeting accommodations for FEMA and other
Federal agencies. Currently Mount Weather supports seven internal
customers and several external Federal tenants. While an aggressive
marketing plan has been implemented to attract new customers, the
fiscal year 1998 anticipated income will not fund extensive building
renovations. Some building maintenance projects such as roof repair,
road maintenance, painting and concrete repair are planned and will be
funded through the collections of the WCF.
Mt. Weather has become a hub of emergency activity since it was
restructured in 1993 to support the all-hazards mission of the agency.
A population explosion has occurred during the last 4 years, moving
from a daily workforce of about 400 employees to one of more than 900.
The Conference and Training Center (CTC) activity has expanded
dramatically from fewer than 6,000 students/conferees in 1993 to more
than 18,000 in fiscal year 1996.
Much of this growth is attributed to the decision to locate fixed
disaster operations at Mt. Weather. Six major disaster functions have
been established at the Facility that include: the National Processing
Service Center-Virginia; Satellite Teleregistration Center; Disaster
Finance Center; Disaster Information Systems Clearinghouse; Disaster
Personnel Operations Division; and the Agency Logistics Center. On a
day-to-day basis, Mount Weather supports about 250 new disaster CORE
positions that did not exist in 1993.
This changed environment requires careful strategic planning to
support current operations and to accommodate the growth that is likely
to occur with the implementation of an aggressive marketing effort. As
part of the strategic planning, a capital expansion plan, based upon an
assessment of the Agency's operational requirements over the next 5
years, has been prepared. This plan includes six projects that will
provide additional space and capability to include major building
renovations, expansion of training facilities and infrastructure
improvements.
NATIONAL PROCESSING CENTER
Question. What is the status of the new National Processing Center
in Hyattsville, MD? How many staff have been hired at Hyattsville, and
how many additional staff are anticipated?
Answer. The Hyattsville National Processing Services Center build-
out is nearing completion and FEMA and the General Services
Administration (GSA) are entering into final lease negotiations. While
these deliberations are taking place, FEMA has initiated recruitment
actions for 66 of the 112 baseline staffing positions at the facility
and has established a Human Resources Management recruiting office on-
site. The Human Resources Management Office will also be responsible
for the recruitment of surge staff that will provide additional
operational staffing capacity on a disaster by disaster basis.
Occupancy of the facility will occur as soon as the lease between FEMA
and GSA is signed, which is expected to occur sometime during the month
of June.
INEEL
Question. In the fiscal year 1997 operating plan, FEMA proposed
funding for the Idaho Nuclear Engineering Laboratory (INEL) out of
funds set aside by the Congress for pre-disaster mitigation activities,
even while the conference report stipulated that no such funds be spent
until the agency develop a comprehensive pre-disaster mitigation plan.
Even more astounding in the agency's proposal was the fact that in
answers to questions proposed by Congressman Jerry Lewis last year,
FEMA said, ``We advised [INEL] that they should discuss research with
the National Science Foundation. With limited resources for hazard
mitigation, it is our opinion that additional research and testing
facilities are not needed at this time. The money could be better spent
by taking existing research and putting it into application for use by
state and local governments to reduce the damages to life and property
from natural disaster.'' Why did FEMA reverse itself and propose
funding INEL's research proposal? What is the status of the
International Multi-hazard Mitigation Partnership to be created by
INEL, and what is this partnership intending to accomplish?
Answer. FEMA's response to Chairman Lewis' question regarding the
Idaho National Engineering and Environmental Laboratory (INEEL) was
based on an initial proposal presented by INEEL. Later, INEEL changed
the proposal significantly, to emphasize the concept of a private--
public partnership to promote full-scale environmental hazard
simulation. INEEL informed FEMA that many private sector potential
partners were prepared to make significant contributions to this
initiative if FEMA would step forward and provide an initial financial
contribution. FEMA technical staff carefully analyzed the revised
proposal and consulted many of our mitigation partners. The analysis
and discussion with our partners, underscored some of the benefits of a
full-scale wind storm simulation facility.
FEMA recognizes the need to move towards a greater emphasis on
disaster loss mitigation through the development of policies and
procedures that may either prevent future losses or reduce their
magnitude. FEMA has also identified the need for a greater coordinated
effort in the area of Private-Public partnerships. This need is
greatest in the area of windstorm mitigation. The FEMA--Department of
Energy agreement is designed to result in the creation of a new
mitigation partnership called the International Multi-Hazard Mitigation
Partnership (IMMP).
Since the benefits derived under the IMMP will be diffused across a
broad spectrum, FEMA expects INEEL to identify a broad spectrum of
technical and financial support. The Agency's continued involvement in
the IMMP is predicated on a broad coalition being constituted. It
expects that its financial contribution will be leveraged against the
contributions of others, particularly the private sector that will reap
much of the benefit from the testing that will occur at this facility.
FEMA`s future financial contributions should not be the primary source
of funding for the IMMP or the construction and use of any proposed
testing facilities.
In an effort to advance the IMMP, FEMA agreed to provide an initial
financial contribution of $1 million dollars. To date, INEEL has
contributed a similar amount of funds, in both cash and services. To
ensure accountability, FEMA is providing funding in four installments.
Presently, the IMMP has received and spent $731,000. The remaining
funding of $269,000 is proposed to come from the fiscal year 1997 Pre-
disaster Mitigation Program. These funds have recently been obligated
based on Congressional concurrence with FEMA's proposed Predisaster
Mitigation Program spending plan.
MOBILE ASSETS
Question. Last year, FEMA identified 10 actions considered to be of
highest priority for upgrading its mobile response actions. While no
funds were requested by the administration, the Congress appropriated
$3.4 million in fiscal year 1997 for the first of these 10 actions.
What is the total cost associated with the remaining ``high priority''
actions, and are any funds requested in fiscal year 1998, and if not,
why not? How much is requested to maintain the Mobile Emergency
Response System (MERS)? What is the status of the baseline capability
assessment of MERS, which was due at the end of calendar 1996? What did
the baseline assessment reveal? What are the costs in the next 5 years
required to maintain adequately the MERS system?
Answer. The projected cost associated with the remaining high
priority actions is $18.85 million. While the fiscal year 1998 budget
submission was made prior to the initiation of the baseline assessment
of the MERS, the annual budget requested $5.75 million for the
Operation and Maintenance of the MERS. This supports the costs of
electricity, water, heating oil or gas, trash collection, vehicle/
equipment maintenance, spare parts, maintenance contracts for unique
equipment and systems, facility maintenance, and training.
Following completion of the initial phase of the baseline
capability assessment of MERS in December 1996, a summary of the
assessment was provided in the Report to Congress. The second phase of
the baseline assessment will continue in 1997 and the results will be
used to reprioritize any request included in the fiscal year 1999
Budget submission. The baseline assessment determined the priority for
the replacement/upgrade of MERS vehicles and equipment. In addition, a
list of vehicles and systems no longer required to support the FEMA
All-Hazard Mission was developed. These vehicles and systems are to be
declared excess to the needs of MERS and offered to other elements
within FEMA and through GSA to other Federal Departments and Agencies
for their use.
The projected O&M budget of $5.75 million is adequate to maintain
the MERS if limited or no replacement/upgrade of vehicles or systems is
accomplished. To insure the replacement/upgrade of those systems
identified by the baseline assessment is accomplished over the next 5
years, the additional funds estimated are: fiscal year 1998: $5.15M;
fiscal year 1999: $5.45M; fiscal year 2000: $4.75M; fiscal year 2001:
$3.5M. Following these replacements/upgrades, an additional $1.5
million per year should be programmed to allow for the replacement/
upgrade of other vehicles, equipment, or systems that will become non-
maintainable.
______
Questions Submitted by Senator Campbell
fire suppression declaration
Question. I understand that it is FEMA's responsibility to make a
Fire Suppression Declaration to get aid to communities in fighting
wildfires. Is it possible to streamline this process so communities can
get the help they need in a shorter amount of time?
Answer. The Fire Suppression Assistance program provides assistance
to any State for suppression of any fire on publicly or privately owned
forest or grassland which threatens such destruction that would lead to
a major disaster declaration.
The entire process, described below, is accomplished in an
expedited or streamlined manner, normally by telephone, and many times
a FEMA decision is rendered within an hour upon receipt at national
headquarters. FEMA can respond to a State's request for Fire
Suppression Assistance 24 hours a day.
The program is administered on a real time active ``incident fire''
basis, under which the Governor or authorized representative submits a
request for assistance to FEMA's Regional Director at the time a
``threat of a major disaster'' exists. The Region contacts headquarters
with the State's request, the Regional recommendation, and the U.S.
Forest Service's Principal Advisors assessment of the fire situation.
FEMA then evaluates the following factors in order of priority to
determine the approval of a Fire Suppression Assistance grant:
--The location of the fire and continued threat to life and improved
property.
--The existence of high fire danger conditions: humidity, wind speed
and direction.
--The availability of State and local resources.
--The existence of two or more fires in the same area.
To facilitate program delivery, FEMA has updated the Fire
Suppression Assistance manual, which should be ready for distribution
in June of 1997.
PUBLIC-PRIVATE PARTNERSHIPS
Question. Following the Buffalo Creek wildfire and the flooding
that resulted in Colorado, I understand that FEMA produced some
educational materials for homeowners. The JANUS group paid for
production while Rotary Clubs distributed the material. Is FEMA looking
at this excellent model of a public-private partnership in other areas
of its responsibility?
Answer. For the past year and a half, FEMA has been actively
exploring opportunities to partner with the business sector to develop
and distribute educational materials and better coordinate and
communicate with the business sector during and after disasters.
Director Witt has sponsored several roundtable discussions with
business and constituency groups to explore partnership opportunities.
FEMA is currently working with insurance industry representatives on
several task forces seeking ways we can work together to provide better
service to mutual customers, and is in the final stages of developing a
local-based emergency management pilot project designed to include the
business sector in emergency management planning and operational
activities at the local level. FEMA has also worked closely with the
business sector in managing donations of goods and services to
communities and individuals impacted by disasters.
DROUGHT ASSISTANCE
Question. During and after the devastating drought in the
Southwest, it seemed to take a long time to get relief to communities
and individuals in need. Has FEMA considered changing its policy on
dealing with drought problems as rapidly as it already does with higher
profile emergencies such as hurricanes?
Answer. Unlike the immediate devastation usually caused by a
hurricane, droughts develop and inflict damage over an extended period
of time. In response to the Drought of 1996, FEMA formed a task force
to coordinate Federal response to drought affected States by
identifying needs, applicable programs and barriers to programs, and
outlining suggestions of the participants for improved drought
management. At the urging of the Western Governors' Association (WGA)
Drought Task Force, a Memorandum of Understanding was signed early this
year which identifies the United States Department of Agriculture
(USDA) as the lead Federal agency on drought issues. USDA volunteered
to be the lead agency because agriculture is most severely affected by
drought. Currently, a Coordinating Council is being formed by the WGA,
which will include other relevant Federal agencies, including FEMA, to
address drought on an event-by-event basis and to also establish long-
term planning, mitigation and response policies for droughts.
HAZARDOUS MATERIALS
Question. Some of the nation's major highways run through Colorado.
This places our citizens at risk as hazardous materials routinely move
through our state. Do you feel confident that FEMA is prepared to deal
with emergencies resulting from accidents involving these hazardous
materials?
Answer. Initial response to a hazardous materials incident is a
state and local government responsibility. In Colorado, the State
Highway Patrol has responsibility for hazardous materials response.
This organization is well trained and equipped to respond to most
hazardous materials transportation emergencies. In the event that an
incident should be severe enough to require a presidential disaster
declaration, FEMA, in partnership with the Environmental Protection
Agency (EPA) would respond under the Federal Response Plan. The Federal
Response Plan has been successfully used in past disasters and I am
confident that it would save lives and property in the case of a severe
hazardous materials spill.
______
Questions Submitted by Senator Craig
LANDSLIDE POLICY
Question. Please clarify what policy, if any, the federal
government has related to disaster assistance for landslides. Please
differentiate between FEMA assistance during an incident period as it
relates to actual slide damage and FEMA assistance either during or
after the incident period as it relates to potential land slides and
damage.
Answer. The FEMA policy related to assistance when landslides
occur, has remained substantially unchanged since 1984, although it was
recently (November 30, 1995) republished in a format that FEMA has
adopted for all disaster assistance program policies. The policy is
best explained as it relates to two different types of work, emergency
protective measures, and permanent repair of damaged facilities.
Eligible emergency protective measures are defined as work
necessary to alleviate an immediate threat to public health and safety
or improved property that is the result of a slide caused by the
declared disaster. When such a slide results in an immediate threat,
that threat may be reduced by removal of slide material or by temporary
stabilization. Such emergency work may also be completed if the
disaster event causes an immediate potential of a slide that would
damage improved property or endanger public health and safety.
Emergency protective measures could also include work completed during
the incident period to reduce immediate threats. The basic eligibility
question to be answered in both situations is whether the threat is a
result of the disaster and not a condition that existed before the
disaster.
When an eligible facility has been damaged by a landslide, work to
stabilize the slide is only eligible when it is integral to the
eligible repair of the damaged facility and when the site is not
unstable due to a pre-existing condition. The applicant must first
correct any pre-existing condition before the facility repair will be
approved by FEMA.
fema coordination of long term flood recovery plans
Question. As I understand it FEMA is currently responsible for
coordinating the response phase of a disaster. Is any agency
responsible during the recovery phase of federal disaster efforts? In
your opinion, could FEMA be the lead agency in the recovery phase? If
so, how would you direct your agency to handle the responsibility?
Answer. FEMA has been working with the primary Federal departments
and agencies involved in the Federal Response Plan (FRP) to determine
if, and how best to integrate recovery into the FRP. The complexity
arises from the significant difference between response and recovery
operations. Different authorities, Federal agencies and programs are
involved during disaster recovery. The full recovery effort may take a
considerable period of time, and continue long after FEMA field
operations have been concluded. The State and local role in recovery is
much more critical because that is where mitigation priorities are
determined and implemented.
FEMA has the clear responsibility under statute and executive
orders to lead and coordinate the Federal response to an emergency or
major disaster. Normal disaster response includes many of the recovery
efforts we now engage in for the full range of disasters, including
floods. At present, FEMA addresses recovery issues on a case by case
basis with our State and Federal counterparts to determine: (1) what
recovery efforts are appropriate; (2) who should participate; and (3)
what resources are available. FEMA's long-term goals to reduce the
impacts of future disasters can often be implemented by focusing on
increased mitigation efforts during the recovery phase. In addition,
during this year's Midwest floods, FEMA was asked by President Clinton
to establish a Long-Term Recovery Task Force to coordinate the Federal
effort. This approach may serve as a model for our future efforts;
however, to do this effectively additional personnel and financial
resources should be required. Normally, FEMA would transition out of
the recovery process as quickly as possible to free up critical
manpower and resources for other disasters, and to permit State and
local authorities to assert themselves in carrying out their recovery
responsibilities.
We acknowledge that specific Federal programs may continue as an
integral component of the long-term recovery effort. These programs
would operate under their own authorities and program guidelines.
PRE-DISASTER MITIGATION/INTERNATIONAL MULTI-HAZARD MITIGATION
PARTNERSHIP
Question. The President's budget request includes funding for pre-
disaster mitigation. Would you please tell the subcommittee what
specifically that funding is intended to accomplish?
Answer. Specifically, our priority goal is to reduce the impact of
natural hazards on public facilities eligible for disaster assistance
under the Stafford Act.
Question. Do you feel there is a need for additional technical
knowledge to help understand the science of how physical structures
react to disasters?
Answer. FEMA recognizes the need to improve our understanding of
how structures react to natural hazard events. Improved understanding
may either prevent future losses or reduce their magnitude. For this
reason, FEMA's National Mitigation Strategy (NMS) has identified
applied research and technology transfer as one area for further work.
Question. Do you feel there is a role for the national laboratories
in the pre-disaster mitigation program? What is that role?
Answer. The Department of Energy's National Engineering and
Environmental Laboratories have a long history of developing and
transferring state-of-the-art technologies throughout the public and
private sectors. The laboratories have been involved in studying the
effects of natural hazards for many years, such as the effects of high
winds and earthquakes on nuclear facilities. Currently the laboratories
have numerous initiatives underway in the area of natural hazards
mitigation. As examples, the Idaho lab is implementing the
International Multihazard Mitigation Partnership, intended to promote
full-scale simulation of natural hazards on structures and the Oak
Ridge lab has formed a partnership with the Roofing Industry Council On
Wind Impacts (RICOWI) to study the effects of high winds from tornadoes
hurricanes on roofing systems.
Question. Could you explain FEMA's position on the need for full-
scale testing of physical structures against simulated environmental
phenomena?
Answer. There is a broad agreement, both inside and outside
government, that a full scale wind test facility may improve our
understanding of the performance of buildings, structures, and
infrastructure when exposed to high winds associated with hurricanes,
coastal storms, gust fronts, thunderstorm downbursts, and limited
tornado scenarios.
FEMA and the Department of Energy have an inter-agency agreement to
establish a mitigation partnership called the International Multi-
Hazard Mitigation Partnership (IMMP). The IMMP shall work to achieve
relevant goals of the National Mitigation Strategy, specifically the
coordination of applied research and the implementation of research
results and public education. The IMMP will emphasize wind hazard
mitigation and utilize the Idaho National Engineering and Environmental
Laboratory (INEEL) as its applied research instrument.
Since the benefits derived under the IMMP will be diffused across a
broad spectrum, FEMA and INEEL believe there must be a broad coalition
of technical and financial support. FEMA's continued partnership with
INEEL is predicated on such a broad coalition being established.
Therefore, FEMA expects that its financial contribution will be
leveraged against the contributions of others and that the agency's
future financial contributions will not be the primary source of
funding for the IMMP or the construction and use of any proposed test
facilities.
______
Questions Submitted by Senator Mikulski
MARYLAND FLOOD TASK FORCE REPORT
Question. What commitments if any has FEMA made to assist with the
projects recommended in the Task Force Report?
Answer. FEMA has committed to working with the State of Maryland in
order to define statewide mitigation priorities relative to the
projects and measures identified in the Western Maryland flood
mitigation report. Prioritization will be based upon costs, projected
benefits, the effectiveness of the measures, and any other criteria
which the State believes need to be included. This is a critical step
in the process of carrying out the mitigation measures and actions
delineated in the report since the estimated cost of them is, at this
point, well beyond even those resources available nationwide.
Question. What time-line has FEMA committed to providing any
assistance to Maryland for projects outlined in the Flood Task Force
Report?
Answer. Two of the projects have already been approved for hazard
mitigation grant program funds: (1) the floodproofing of the Hancock
waste water pumping station and (2) floodproofing of the Friendsville
water treatment plant.
Question. Will any of the localities be eligible for a greater
match from FEMA than 75 percent?
Answer. Matching for hazard mitigation grants is set at 75 percent
Federal/25 percent State by the Stafford Act.
FLOOD INSURANCE CLAIM PROCESSING
Question. What steps have been taken in the last year by FEMA to
improve flood insurance claim processing?
Answer: While there are no published industry guidelines, the
private insurance industry accepts average claims closure of 60 days.
They expect 90 percent of all claims to be closed in 90 days. The NFIP
processing compares very well with private industry. Our record is
above private industry standards when you consider NFIP's losses are
much more severe and more difficult to adjust than windstorm losses
sustained by private industry in similar events.
In fact, private industry standards for claims check processing is
7 days from receipt of proof of loss. The average claims check
processing time for the NFIP is 3 days. Additionally, the standard for
claims adjustments averages 45 days from receipt of notice of loss. The
NFIP average is 31 days.
Ninety-two percent of the National Flood Insurance Program (NFIP)
policies are written by private insurance companies participating in
the Write Your Own (WYO) Program under an agreement with the Federal
Insurance Administrator. The agreement calls for the WYO Companies to
handle flood insurance as they would any other line of business.
When a claim is presented by the policyholder, the WYO company
handles the claim as if it were any other line of business they write.
Depending on their own rules, they will allow the agent to assign the
claim to an independent adjuster or the company will make the
assignment themselves, either to an independent or staff adjuster.
The other 8 percent of the NFIP policies are handled by the NFIP
Servicing Agent, National Con-Serv Incorporated (NCSI). These flood
policies are written through an insurance agent, but there is no
private company involved. The Federal Insurance Administration (FIA)
has staff on site to oversee the claims and policy operations.
At the time of a disaster, the WYO companies or NFIP Servicing
Agent decide whether to set up a claims office in the area of the
flooding. This generally depends on how many claims each entity expects
from the flooding event. Some of the WYO Companies have contracts with
independent insurance adjusting firms to handle the flood claims;
others rely on the local agents' knowledge of competent local adjusters
to handle the claims; and others assign the claims, or some of them, to
staff adjusters.
It should be remembered that the NFIP is an insurance operation and
must deal with an insurance contract that spells out what is covered
(paid) and under what circumstances. An adjuster is assigned to
determine what coverage is available to the insured, what the true
damages are, and what the values of the damaged items are. In order to
do this, the adjuster must write a building estimate and help the
insured compile a damaged contents list. All of this activity takes
some time and may require several visits to the same structure to
conclude the loss.
When a homeowner reports a fire claim under his homeowners policy,
it is assigned to an adjuster, generally a staff adjuster, who has a
backlog of about 30 claims, assigned to him over a period of a month.
In a flood catastrophe, the adjuster is assigned about 30 claims, or
more, all at once. Some structures are not ready to be inspected,
either because they are not completely dry or actually have flood
waters in them. Some dwellings are secondary dwellings, and the
insureds are not in the area. In hurricane catastrophes, some areas are
inaccessible, either because the roads/bridges are washed out or it is
too dangerous for anyone other than emergency or repair people to
enter.
The FIA has Computer Sciences Corporation under contract to act as
the NFIP Bureau and Statistical Agent. One of their duties is to employ
experienced, knowledgeable property insurance ``general adjusters''
(GA's) to be in the field to help the company and the NFIP Servicing
Agent adjusters with claims handling in general and with specific
coverage questions. The GA's also conduct reinspections of claims to
determine if the rules and regulations of the NFIP are being followed.
Also, the FIA has seven claims professionals who oversee various
aspects of the claims process and are available to give guidance to the
companies, contractors and adjusters. They also handle claims appeals
that deal with technical issues. The FIA staff go into the field to
help in the overall claims process and to give support to the Federal
Coordinating Officer (FCO) at the Disaster Field Office (DFO). The FCO
is also supported by the NFIP Bureau and Statistical Agent staff in the
aftermath of a Presidentially declared disaster.
Finally, to improve NFIP claims processing, the Bureau and
Statistical Agent holds adjuster workshops all over the United States.
The adjuster workshops teach what is expected by the NFIP on claims
handling processes and also claims coverage. Some of these workshops
are done in conjunction with workshops put on by the larger independent
claims adjustment firms or for staff adjusters of individual WYO
Companies. In fiscal year 1996 FEMA conducted 33 workshops.
MITIGATION EFFORTS
Question. Director Witt, like you, I am an advocate for strong
mitigation efforts that take a proactive approach to reducing the
impact from nature's fury. At last year's hearing, you mentioned that
FEMA was working on Memoranda of Understanding (MOU's) with the States
to establish a statewide mitigation plan within each State where they
identify their high-priority mitigation projects. What is the status of
the MOU's? What are the State plans looking like--are the standards
consistent with FEMA's view of what standards States should meet?
Answer. After last year's hearings, a workgroup composed of both
FEMA and State representatives met and determined that there are
several existing FEMA/State documents beyond MOU's that can serve as
tools for resolution and clarification of issues. These documents range
from formal long-term agreements (such as the Performance Partnership
Agreements), to extremely detailed operational documents (such as the
Hazard Mitigation Grant Program Administrative Plan).
Because of the existence of these other tools, FEMA and the
National Emergency Management Association decided to leave it up to
each State whether or not they wish to develop a separate MOU with FEMA
in order to capture high-priority mitigation projects and other
critical pieces of information that could streamline State mitigation
activities. FEMA's Regional Offices are currently working with the
individual States to determine their interest in developing separate
MOU's.
Question. FEMA's budget request for fiscal year 1998 includes $50
million for a pre-disaster mitigation program. Has the program been
authorized? If not, what is the status of FEMA's attempt to get the
program authorized? Will the program take into account lessons learned
in past mitigation work by FEMA and local communities? What are the
eligibility criteria for communities seeking funding? Will communities
that have received post-disaster mitigation money in the past be
eligible for funds? Has FEMA done an analysis of how much money could
be saved by doing needed pre-disaster mitigation?
Answer. There is presently no statutory authority for the pre-
disaster mitigation program for which FEMA has requested $50 million in
fiscal year 1998 appropriations. However, by July 4 we will be
submitting draft legislation to amend the Stafford Act to authorize a
pre-disaster hazard mitigation program.
In designing the Pre-Disaster Mitigation Program (using the $2
million already provided by the Congress in fiscal year 1997), FEMA
considered lessons learned from Federal, State and local mitigation
activities in order to ensure the success of the program. For example:
--Historically, the most successful mitigation actions have been
those which involved persons and organizations from across the
community. That is why the Pre-Disaster Mitigation Program will
encourage communities to bring all the necessary players to the
table from the very beginning to develop a consensus regarding
mitigation needs and priorities.
--In many areas, the support of the private sector has been critical
in gaining the necessary resources and support for mitigation
work, and in ensuring that the subject mitigation actions
protect the economic health and vitality of target communities.
That is why FEMA's Pre-Disaster Mitigation Program will place
such a heavy emphasis on bringing in private sector partners
(such as insurance companies, financial institutions, and area
manufacturers) at an early stage.
--Communities often have difficulty managing unreasonable
administrative requirements associated with Federal programs.
At FEMA, we are committed to reducing paperwork and
bureaucratic red-tape in the delivery of this new mitigation
program.
--Both past experience and research have demonstrated that mitigation
is a ``dollars and cents'' issue (i.e., incentives are
necessary to effectively encourage mitigation at the State and
local levels). This is the reason why the Pre-Disaster
Mitigation Program will leverage State, local and private
sector contributions with Federal project funding.
While these are but a few examples of how we plan to use ``lessons
learned'' from past experience, they demonstrate that we are trying to
avoid past mistakes and maximize our successes in implementing this new
program at FEMA.
The communities selected to participate in the program will be
chosen according to a number of factors, including: their level of
risk; the degree to which the proposed pre-disaster mitigation actions
and processes will reduce that risk; and the ability to transfer the
processes, approaches, or technologies to similar at-risk communities
throughout the United States. In addition, communities will be selected
according to the proposed level of commitment of State, local, and
private sector partners (i.e., time, funding and resources brought to
the table). This should help maximize the ``bang for the buck''
realized for each taxpayer dollar invested through the Pre-Disaster
Mitigation Program. Communities will not be disqualified or lowered on
the priority list simply because they have experienced past disasters
and have received prior mitigation funding from FEMA.
The actual level of cost-savings resulting from this program are
difficult to quantify at this time, since the return on the Federal
investment will be highly project-specific, and will vary upon the
amount of non-Federal contribution to each activity. However, we have
found that mitigation measures return, on average, more than $2 for
every $1 invested. This demonstrates that an investment in pre-disaster
mitigation now will result in real cost-savings over the long-term to
the American taxpayer.
FITNESS FOR DUTY/PREPAREDNESS TRAINING
Question. What is the status of FEMA's work with states on
developing a plan to evaluate state capability that gauges fitness for
duty, and not just written reports?
Answer. FEMA is currently working with our partners to develop a
formal system that will enable us to assess the effectiveness of State
and local capabilities. The goal is to create an assessment system that
will be acceptable to all States and will result in a reliable and
consistent national evaluation of the state of readiness in the nation.
Our intent is to have the capability assessment tool tie into and
complement the States' strategic plans developed as a part of their
performance partnership agreements developed cooperatively by FEMA and
the State and local emergency management departments and agencies. We
expect that we will soon be able to provide an objective appraisal of
their capabilities and progress.
It is intended that States will use these Mitigation Assistance
funds to enhance their capabilities to implement mitigation, and
provide assistance to local governments to implement mitigation. As a
result, these funds should have minimized any impact that reduced SLA
support would have on State mitigation programs.
Question. The budget request asks for $11.3 million less for
Preparedness, Training and Exercises. I understand that some of this is
due to limiting development, revision, and dissemination of field
courses. How will this impact the ability of FEMA to ensure we have
adequate fitness for duty training?
Answer. Nearly 80 percent of the $11.3 million reduction results
from the redistribution of funds that support the Mt. Weather Emergency
Assistance Center from the Preparedness, Training and Exercises
activity to users/customers of the facility. A shift to decentralized
counter-terrorism programs results in the reduction of approximately 17
percent of the total reduction. Lastly, less that a two percent
reduction applied to training activities. This $200,000 reduction will
somewhat reduce centrally-developed materials which support field
delivery of training, and will defer two course development/revision
projects. FEMA has not taken any steps that will reduce fitness for
duty training, either for our State and local partners, or for in-house
personnel.
Question. The Maryland Emergency Management Agency and the National
Emergency Management Association have contacted me about the negative
impact experienced at the local level by reductions in the State and
Local Assistance Grants (SLA). My understanding is that there was a
$2.9 million cut to SLA for deficit reduction purposes, and that FEMA
has requested additional money for the account to bring it back up to
fiscal year 1996 levels. What impact has the cut had on States'
response and recovery and hazard mitigation efforts?
Answer. FEMA's fiscal year 1998 budget request for SLA is at the
same level as the fiscal year 1997 appropriation. This request includes
funding in support of implementing counter-terrorism activities and
improving HAZMAT emergency preparedness. FEMA also has several other
programs that provide assistance, directly or indirectly, to State and
local governments for the development and enhancement of emergency
management capabilities.
The decrease in SLA funds should have had no impact on States'
mitigation efforts. In fiscal year 1997, FEMA provided an additional $3
million to States for the purpose of enhancing their capabilities to
implement hazard mitigation efforts. These Mitigation Assistance funds
were distributed equally among all 56 States and Territories.
Additionally, FEMA provides risk-based funds to States that have an
identified hurricane or earthquake hazard (in fact, during 1997 FEMA
doubled the funding it provides to hurricane-prone States). Both of the
Hurricane and Mitigation Assistance funds are provided to States as
elements of the Mitigation Assistance Program, which is part of the
FEMA/State Performance Partnership Agreement/Cooperative Agreements
(PPA/CA) process.
Our current approach emphasizes development of partnerships with
State and local emergency management departments and agencies that will
allow greater flexibility to better meet their needs. FEMA provides
grants to the States and encourages the locals to work through their
States to ensure a coordinated effort in working towards the objectives
identified in their Performance Partnership Agreements. These
partnerships are based on the expectation, and the confidence, that
giving the States greater control over the process will enable the
States and their subdivisions to perform more effectively and
efficiently. We are developing a nationwide capability assessment
process in fiscal year 1997 which will allow us to provide an objective
appraisal of the level of capability among all pieces of the emergency
management partnership nationwide, and our progress.
DISASTER RELIEF (FEMA REPORT ON REDUCING COSTS)
Question. During consideration of last year's VA-HUD bill, FEMA was
directed to submit a report within 120 days proposing steps to reduce
disaster relief costs. The draft of this report was delivered to staff
last week. What has FEMA done to reduce disaster relief costs? How
effective have these efforts been in reducing costs?
Answer. As indicated in FEMA's March 13, 1997 Report to Congress
entitled ``Improving Management Controls in the Disaster Relief Fund,''
major steps have been taken in the administration of disaster programs
that have not only helped contain costs, but have also resulted in
better and more timely service to our customers. Chief among these
steps is the central processing of our Human Services Programs. We no
longer establish Disaster Application Centers throughout the declared
areas or a separate processing center for each disaster--which can be
very costly in terms of staff and equipment. Rather, disaster victims
are encouraged to call a toll-free number to register for assistance,
and all applications are processed at one of three National Processing
Service Centers. In a similar fashion, a single Disaster Finance Center
has been established to aggregate disaster payments and reduce overhead
costs.
Administrative improvements have been accomplished in many other
areas to streamline our operations and reduce costs. These include the
establishment of a Disaster Resources Board to review and monitor
funding for those support functions needed to support all disasters,
and reinvigorated efforts for disaster debt collection and disaster
close-outs.
FEMA also has a major initiative underway to streamline the Public
Assistance Program, and has proposed measures to reduce program costs
by limiting eligibility for certain types of assistance. These measures
were addressed in a separate March 13, 1997 Draft Report to Congress,
entitled ``Reducing Disaster Relief Expenditures.'' That report has
been transmitted to our State partners in emergency management for
review and comment.
However, a number of the recommendations from that report are
already in the process of being implemented.
--A final report with recommendations to streamline the Public
Assistance Program will be issued by late April, and measures
to streamline the program will be pilot tested by early summer.
--A proposed rule was published in October 1996 to limit appeals from
three to two. FEMA is now in the process of preparing a final
rule to reduce the number of appeals.
--A massive training effort was undertaken in the past year to train
Public Assistance Inspectors to ensure that the program is
implemented efficiently and consistently. Over the past two
years over 1,000 inspectors have been trained.
--On February 20, 1997 FEMA issued an interim policy stating that
trees and shrubs would no longer be an eligible cost under the
Public Assistance Program. On March 10, 1997 a formal policy
disallowing trees and shrubs was sent to all FEMA regions and
to States for review and comment.
--FEMA is in the process of preparing legislative changes that would
implement many of the other recommendations of the draft
report.
It is difficult to calculate the cost savings of many of our
administrative or program improvements, though we do have specific cost
figures on some of these measures. FEMA, in a study two years ago,
calculated that using teleregistration rather than Disaster Application
Centers for the Human Services Programs has reduced the cost per
application from $59 to under $14. FEMA's accelerated disaster close-
out effort has resulted in closing out 415 Human Services Programs,
with a reconciliation of more than $1.8 billion in the Disaster Relief
Fund. Of this amount nearly $403 million in obligation authority was
returned to the Fund.
Measures to streamline the Public Assistance Program, and to
restrict types of assistance, are still in the early stages of
development and implementation so their effectiveness has not yet been
measured. Cost-savings could potentially be great if substantive
measures are taken to refocus this program on essential governmental
facilities and the protection of life and property.
Question. Which of the options for reducing costs outlined in the
FEMA report can realistically be implemented in the next 1-2 years?
Answer. Those recommendations which do not require statutory change
could be implemented in the next 1-2 years.
Question. What is FEMA's time-line for implementing the options
noted in the FEMA report?
Answer. Those recommendations which can be done without statutory
change can be implemented within the next 1-2 years. FEMA will also be
submitting a legislative proposal by July, 1997 to implement those
recommendations which require statutory change.
Question. What is the status of work on clarifying the criteria for
disaster declarations?
Answer. In the Fall of 1996, FEMA established a Panel on Disaster
Cost Savings to examine, among other things, the issue of declaration
criteria. Upon analysis and consultation with our partners, we have
concluded that the high costs in the disaster program are driven by the
number of large major disasters and broad eligibility criteria, rather
than the number of declarations.
We believe that the current declaration criteria continue to be
appropriate, and, in order to reduce costs, have placed major focus on
streamlining activities and targeting eligibility. However, factors
used to judge severity, magnitude and impact are being updated to
reflect current dollars and procedures for conducting Preliminary
Damage Assessment are being reengineered.
CHEMICAL STOCKPILE EMERGENCY PREPAREDNESS PROGRAM
Question. FEMA and the Army have been working jointly on the
Chemical Stockpile Emergency Preparedness Program (CSEPP). I know there
has been some dispute over the management of the program, and the
funding of some programs and activities that didn't necessarily fit the
mission of the program. What is the status of FEMA's involvement with
the CSEPP program?
Answer. There have been issues between FEMA and the Department of
the Army regarding the day-to-day management of CSEPP that require
resolution. However, while we recognize that there is a perception in
some quarters that the issues are affecting program delivery, both FEMA
and the Army have worked very closely to ensure the uninterrupted
delivery of program services. Given the different operating styles of
FEMA and the Army, it is reasonable to expect periodic problems to
arise with program delivery. As they have with previous programmatic or
stylistic differences, both FEMA and the Army have been taking positive
steps towards resolving these issues and believe that they will be
resolved shortly for the maximum benefit of the program. It is
important to note that FEMA Director James Lee Witt and Secretary of
the Army Togo West are personally involved in resolving these issues
expeditiously.
Question. What are some improvements that you think both the Army
and FEMA could make to ensure that we are getting the most bang for the
taxpayers buck, and to make sure we are sticking to the mission of the
program?
Answer. With respect to program funding, of over $536 million
requested to date by the States to support the program, only $240
million has been provided. In many instances, this difference is the
direct result of the Federal government's insistence that only projects
consistent with CSEPP policy be funded. Thus, while in some instances
States and local governments continue to make budgetary requests which
exceed programmatic needs, FEMA is confident that strong program
oversight has minimized the approval of these excess or extravagant
projects.
NATIONAL DAM SAFETY PROGRAM
Question. The National Dam Safety Act was signed by the President
in October. This program to help States prevent dam failures seems like
a prudent investment toward protecting people and property below dams,
especially considering there are over 1,800 unsafe dams in the country.
There are 55 high hazard dams in Maryland alone--many of which don't
have effective emergency warning plans. The issue of effective warning
systems was raised after the flooding at Port Deposit, Maryland last
year. What is FEMA doing to implement the Dam Safety Act Program?
Answer. After the National Dam Safety Act was signed into law, FEMA
developed a work plan, which established a mechanism and process for
implementing the new legislation. The work plan consists of nine
sections:
--Establish an Interagency Committee on Dam Safety (ICODS).--ICODS
was originally established in 1980 under Executive Order 12148
and operated under a Charter published in the Federal Register
on August 28, 1985. Now that the National Dam Safety Act has
codified the ICODS, the group's charter is being revised to
reflect its new status.
--Develop and Complete the Implementation Plan for the Dam Safety
Program.--A task force, including representatives from FEMA,
the Departments of Agriculture, Defense and Interior, the
Federal Energy Regulatory Commission, and the States, has been
formed to accomplish this initiative. To date, the Task Force
has met three times and the assignments made to members have,
to date, progressed on schedule. The Task Force is on course
for completion of the implementation plan by the deadline
established in the National Dam Safety Act.
--Training for State Dam Safety Officials.--An ICODS training
subcommittee has been revived, and members are now working on
developing a list of priorities for new training courses. In
addition, FEMA recently developed two new courses: (1) Dam
Safety Emergency Action Plan Development for Dam Owners; and
(2) Dam Safety Emergency Action Plan Exercise Development for
Dam Owners. If the funds that were authorized for training are
appropriated by the Congress, the dissemination of new training
opportunities will escalate.
--Establish Goals, Objectives, Priorities, Schedules, and Regulations
for Implementing the National Dam Safety Program.--The Task
Force, in a largely parallel effort, is developing information
on goals, objectives, priorities and schedules necessary to
prepare the needed regulations. All activities are on schedule
at this time.
--Provide Recommendations on Establishment of the National Dam Safety
Review Board.--The Act specifies the composition of this Board,
and the Task Force is in the process of developing
recommendations to present to the FEMA Director on the
feasibility, desirability and viability of forming this Board.
--Develop and Implement a Program of Technical and Archival
Research.--This assignment is being accomplished at two levels:
(1) the ICODS Subcommittee on Research has been established and
will identify research needs both at the Federal and non-
Federal level; and (2) the National Performance of Dams Program
(located at the Center on the Performance of Dams at Stanford
University) has been established as an outreach mechanism to
obtain information and data on dams.
--Prepare a Biennial Report to Congress on the Status of the National
Dam Safety Program for Fiscal Year 1996-97.--FEMA has been
providing biennial reports to the President and Congress since
1980. This process will continue. The 1996-97 report will be
ready to transmit to Congress and others by December 31, 1997.
--Report to Congress on the Availability of Dam Insurance.--We have
solicited information from the Federal Insurance Administration
and the Insurance Industry, and are in the process of analyzing
available data. This report should be ready by April 30, 1997.
--Develop a Staffing Plan for Implementing the National Dam Safety
Program.--At this time, two FTE are dedicated to the Program.
No change in the staffing level is anticipated for fiscal year
1998.
Question. I understand that one dam failure last year alone caused
$5.5 million in damages and the death of one woman. What amount of
disaster relief funds have been spent by FEMA as a result of dam
failures over the past five years?
Answer. While dam failures may have resulted from some incidents,
they have not been the principal cause of any recent major disaster
declarations. FEMA's charting of the causes of natural disasters
generally reflects the weather event (hurricane, storms, tornadoes,
etc.) which was the initial cause of the declaration.
COORDINATION EFFORTS WITH COUNCIL ON ENVIRONMENTAL QUALITY (CEQ)
Question. I know that FEMA works in partnership with other
agencies. Working in partnerships with other agencies can help produce
a more effective and efficient government approach to disaster
readiness, response, recovery, and mitigation. What is FEMA doing to
coordinate with the Council on Environmental Quality (CEQ) to make sure
that environmental mandates don't impede relief efforts?
Answer. FEMA has historically coordinated with CEQ as we developed
improved environmental compliance methodologies or as complex and
controversial issues have arisen. Of special note is the fact that CEQ
recently hired an individual to act as primary point of contact with
FEMA. This provides a mechanism to better interact with CEQ as we
continue to improve the process to evaluate and minimize environmental
impacts of our activities while ensuring environmental mandates do not
impede relief efforts.
FEMA, in coordination with CEQ, has undertaken several significant
initiatives recently which have helped reduce potential impediments of
environmental compliance. The most significant initiatives include:
--FEMA has revised its environmental regulations at 44 CFR adding to
its list of Categorical Exclusions activities requiring minimal
environmental review and documentation. This has reduced
environmental review requirements by as much as 50 per cent for
some Agency programs.
--FEMA has provided a National Environmental Policy Act (NEPA)
training course to over 300 FEMA and State Emergency Management
staff Nationwide to enhance the capabilities of individuals
involved in environmental review. This has served to provide
the State Agencies who administer many of FEMA's programs with
the ability to identify and resolve environmental issues early
in the relief effort or project development phase.
--FEMA has hired seven Regional Environmental Officers to coordinate
environmental issues in the field. This is a significant step
in the process of decentralization of environmental review that
will allow for improved coordination between FEMA, other
federal agencies, and State and local officials on
environmental issues related to disaster relief efforts.
Question. I suggested to CEQ Chairman Katie McGinty at their
hearing in February that FEMA, CEQ and other relevant agencies develop
SWAT teams that can rapidly determine emergency provisions in
environmental regulations so that relief efforts won't be unduly
delayed while FEMA is trying to save lives. What can you commit FEMA to
doing regarding this coordination of SWAT teams? What can FEMA do to
involve CEQ in its simulation maneuvers?
Answer. It is very important to note that provisions within the
Stafford Act and FEMA's regulations are in place to ensure that
environmental requirements will never delay FEMA's immediate efforts to
save life or property. The issue of streamlining environmental review
requirements by utilizing emergency provisions and through coordination
with other Federal agencies is an issue which is more relevant in FEMA
undertakings for which there is sufficient time to plan and evaluate an
action.
One of the primary responsibilities of the recently created
position of Regional Environmental Officer is to coordinate
environmental issues immediately following a disaster event. This
includes being located at the Disaster Field Office to coordinate with
relevant agencies such as the Environmental Protection Agency, the Army
Corps of Engineers, and the U.S. Fish and Wildlife Service in order to
streamline implementation of the requirements of the environmental laws
that these agencies administer. FEMA will continue to further define
the roles of the Regional Environmental Officers and work with CEQ to
ensure coordination of relevant agencies, an approach which is
consistent with the ``SWAT'' team concept.
SUBCOMMITTEE RECESS
Senator Bond. The subcommittee stands in recess until April
8, at 9:30 a.m., when we will take testimony from the EPA.
[Whereupon, at 10:58 a.m., Tuesday, March 18, the
subcommittee was recessed, to reconvene at 9:30 a.m., Tuesday,
April 8.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, APRIL 8, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:34 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Burns, Shelby, Craig, Mikulski,
Leahy, Lautenberg, and Boxer.
ENVIRONMENTAL PROTECTION AGENCY
STATEMENT OF CAROL M. BROWNER, ADMINISTRATOR
ACCOMPANIED BY:
FRED HANSEN, DEPUTY ADMINISTRATOR
SALLYANNE HARPER, ACTING CHIEF FINANCIAL OFFICER
AL PESACHOWITZ, ASSISTANT ADMINISTRATOR, OFFICE OF
ADMINISTRATION AND RESOURCES MANAGEMENT
JONATHAN Z. CANNON, GENERAL COUNSEL
DAVID GARDINER, ASSISTANT ADMINISTRATOR, OFFICE OF POLICY,
PLANNING AND EVALUATION
ROBERT PERCIASEPE, ASSISTANT ADMINISTRATOR, OFFICE OF WATER
TIMOTHY FIELDS, ACTING DEPUTY ASSISTANT ADMINISTRATOR, OFFICE
OF SOLID WASTE AND EMERGENCY RESPONSE
MARY NICHOLS, ASSISTANT ADMINISTRATOR, OFFICE OF AIR AND
RADIATION
STEVE HERMAN, ASSISTANT ADMINISTRATOR, OFFICE OF ENFORCEMENT
AND COMPLIANCE ASSURANCE
LYNN R. GOLDMAN, ASSISTANT ADMINISTRATOR, OFFICE OF PREVENTION,
PESTICIDES AND TOXIC SUBSTANCES
ROBERT J. HUGGETT, ASSISTANT ADMINISTRATOR, OFFICE OF RESEARCH
AND DEVELOPMENT
WILLIAM A. NITZE, ASSISTANT ADMINISTRATOR, OFFICE OF
INTERNATIONAL ACTIVITIES
NIKKI L. TINSLEY, ACTING INSPECTOR GENERAL
JULIE ANDERSON, ACTING ASSOCIATE ADMINISTRATOR, OFFICE OF
CONGRESSIONAL AND LEGISLATIVE AFFAIRS
MARY LOUISE UHLIG, ACTING ASSOCIATE ADMINISTRATOR, OFFICE OF
REGIONAL OPERATIONS AND STATE/LOCAL RELATIONS
PHILIP LANGRIGAN, EPA CONSULTANT, CHILDREN'S OFFICE
J. CHARLES FOX, ASSOCIATE ADMINISTRATOR, OFFICE OF REINVENTION
W. MICHAEL MC CABE, REGIONAL ADMINISTRATOR, EPA REGION, III
KATHRYN S. SCHMOLL, COMPTROLLER
ELIZABETH CRAIG, DIRECTOR, BUDGET DIVISION
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. Good morning. The subcommittee will come to
order.
We meet this morning to take testimony from the
Environmental Protection Agency on its fiscal year 1998 budget
request. The request totals $7.6 billion, an increase of $845
million, or 12 percent over the current budget. Today, we are
pleased to welcome EPA Administrator Carol Browner, Deputy
Administrator Fred Hansen, and other EPA officials.
While most agencies in the VA-HUD portfolio have budget
requests which would maintain current services at best, EPA
would enjoy increases in virtually every programmatic area
under the President's proposal with the exception of clean
water State revolving funds. Not surprisingly, I do not believe
EPA's proposal is realistic in the budget environment in which
we are operating.
Overall spending available to this subcommittee for
Veterans Affairs and Housing and Urban Development, EPA, NASA,
and other areas may not be significantly more than a freeze at
the current year's level. Yet to maintain current health care
service for veterans, at last $500 million above last year's
level would be needed. About $5.6 billion would be needed to
maintain existing low-income housing contracts scheduled to
expire next year, and a total of $5 billion will be needed to
meet FEMA disaster assistance requirements this year and next
year. Clearly, we have to be looking closely at all aspects of
EPA's budget requests to ensure that dollars are targeted to
those areas offering the largest opportunity for risk
reduction.
Quite frankly, EPA's budget proposal is disappointing. Last
year, Deputy Administrator Hansen testified that EPA's fiscal
year 1998 budget process would be based on a new system,
bringing together risk-based planning, budgeting, and
accountability. But there is no evidence that such a process
was employed to develop the budget for the coming year. It
seems to me that no hard choices were made to discontinue lower
priority programs or to reduce costs through program
efficiencies.
Despite internal EPA analyses dating back to 1987 that
found that Superfund sites rank relatively low in risk compared
to such problems as air pollution and pesticide residue on
foods, EPA's budget proposes a 50-percent increase, $700
million for the Superfund program. The proposal seems based
entirely on a campaign commitment made by the President in
Kalamazoo, MI, to double the pace of cleanups. If EPA were
truly applying a relative risk methodology to its budget
process, I am convinced this program would not merit a 50-
percent increase.
While the Superfund budget would increase dramatically, the
clean water State revolving fund, a program which works well
and for which tens of billions of dollars are needed, would be
cut by $275 million. Rumor has it that EPA offered up this
program to be cut as an offset to the Superfund increase. If
additional funds are to be found within our allocation, my
highest priority within EPA will be to restore the cut to the
clean water SRF program.
Now, the General Accounting Office has done a little study
in the high-risk series. It has found that Superfund is 1 of 25
Government programs which is high risk, subject to fraud,
waste, abuse, and mismanagement. It is not just the GAO. This
program has been criticized by many, many in this room, I dare
say, over the years because it lines the pockets of lawyers
while sites get studied and studied and studied. Legislative
reforms have been blocked. But until legislative reforms are
enacted, I cannot support any increase in this program. If we
get this program reformed so it cleans up sites, call me
immediately. I can be reached day or night when a proposal to
reform Superfund is adopted.
EPA's fiscal year 1997 budget showed outyear budget
projections of $1.4 billion through the year 2000 for the
Superfund program. Yet now we are told $2.1 billion is
imperative for each of the next 2 years. Indeed, top officials
at EPA have been quoted in the press warning about the dire
consequences of not fully funding the President's request for a
50-percent increase. Why all of a sudden this program became
EPA's highest priority has not been fully explained. How EPA
would manage to spend prudently 50 percent more in the program
has not been explained. Which specific sites will be funded, at
what cost and when has not been explained. It appears that the
methodology used to support the Superfund request is flawed,
and uses inflated cost assumptions, according to the
Congressional Budget Office.
Finally, I note that skepticism abounds over the Superfund
proposal. Senator Chafee, chairman of the authorizing
committee, has stated:
That Superfund remains a fundamentally flawed program.
Cleanups still take too long, many cleanups are still too
costly, and there is still too much litigation. It would be
unwise and irresponsible for Congress to authorize a
significant increase in funding for this program until we
complete the task of reauthorization and can be sure that the
money will be used to accelerate the pace of cleanup and
protect our citizens.
And the Association of State and Territorial Solid Waste
Management Officials, in testimony, states:
We do not know whether there is enough pending work for the
full $700 million in additional funds requested in fiscal year
1998, nor that the infrastructure exists to spend it
effectively.
Other items in EPA's budget request rekindle debates of the
past. For example, $149 million is requested for the climate
change action plan, a 73-percent increase over current spending
even while the global environment management initiative
recently reported that voluntary programs are not affected. In
its recent report, GMI stated programs which depend for their
success on cooperation, voluntariness, and trust still do not
fare well. To date, the Green Lights Program, which would enjoy
the largest proportion of the requested increase, has achieved
a relatively small amount of greenhouse gas reductions and
participants have not upgraded as much floor space as
anticipated.
Also, an earmark of $100 million is requested for Boston
Harbor, more than double what was approved in the VA-HUD bill
last year. While the clean water State revolving funds which go
to every State on a fair share basis would be cut by $275
million. Several new initiatives have been proposed with scant
detail, including an urban livability initiative and a new
right to know initiative announced by the President in
Kalamazoo.
Outside of the budget proposal, we have other concerns.
While this committee has strongly supported efforts to provide
more flexibility and reduce oversight on the States, and the
National Academy of Public Administration recommended 2 years
ago, recent reports raise concerns about EPA's relationship
with the States. While EPA promised there would be a new
partnership, it appears that the marriage is on the rocks. Ms.
Browner, the Environmental Council of States told you after
your interview with the New York Times in December, in which
you criticized State enforcement efforts:
States are very concerned about what appears to be a
retreat on your part from the partnership relationship which
has been carefully, and in some instances painfully built over
the past 4 years. State commissioners are disappointed to be
the objects of your apparent lack of trust.
In addition, there are significant problems with EPA's so-
called reinvention efforts. Ms. Browner, in our hearings 2
years ago you told Senator Mikulski:
We would like nothing better than to see an integration of
our underlying statutes. I believe we can achieve almost exact
same results through programs such as the common sense
initiative. We want to focus our energy on those kind of
concrete on-the-ground changes. Our reinvestment effort CSL
project XL will in the end achieve as important results as the
kind of legislation which you speak of.
Unfortunately, it appears that project XL and the common
sense initiative hardly have lived up to the promises made.
Earlier this year the petroleum industry withdrew from the
common sense initiative, and the auto industry apparently said
it would remain a part of CSI until work it has done is
completed. CSI participants have told us that little has been
accomplished in the way of meaningful reforms, and too much
emphasis has been placed on reaching absolute consensus.
As to project XL, which has been called the centerpiece of
the administration efforts to reinvent environmental
regulations, 2 years ago EPA claimed it would be launching 50
initiatives in 1995. Yet today there have been only three
project approvals. Bill Sugar, senior director of environmental
affairs for Anheuser Busch in St. Louis, one of the eight pilot
XL projects selected in November 1995, has said we could not
seem to get the out of the box thinking we wanted to get out of
them.
EPA recently announced the creation of an Office of
Reinvention. We look forward to hearing about how this new
office will reinvigorate these initiatives and get them on the
track. I would note that the enterprise for the environment
project under Bill Ruckelshaus' stewardship, is nearing
completion. EPA has been an active participant in that project,
and I particularly commend Fred Hansen for the many hours he
has devoted to it. E4E is intended to offer recommendations for
an improved environmental management system, including
legislative recommendations. We are anxiously awaiting the
final report and recommendations of E4E, and hope to see
positive bipartisan recommendations to address some of the
current problems.
In closing, it is my hope that EPA's appropriation can be
resolved in an expeditious nonpartisan manner, and that we can
work together to address some of the problems we are seeing and
achieve the most effective allocation of resources. We look
forward to your testimony, and now it is my pleasure to turn to
my ranking member, Senator Mikulski.
STATEMENT OF BARBARA A. MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman, and I
want to welcome Administrator Browner here today, and her team.
I note that this is Ms. Browner's fifth appearance before this
subcommittee, and I want to take this opportunity to thank her
for her efforts and her leadership over the last 5 years.
I also note that Ms. Browner's tenure has not been
uneventful. Budget cuts and Government shutdowns have not made
it easy to do her job or easy for the people who work at EPA to
do their job. In addition, often a climate of hostility toward
environmental protection in the Congress as a whole,
particularly the authorizing committees, has not necessarily
been the most constructive climate to move our agenda. I
believe that EPA has survived these challenges, and has taken
many initiatives to make the long-term changes that are
necessary to keep up with a changing world.
I would agree that we need to do more in better management
and more in better use of technology. I happen to believe that
environmental protection goes hand in hand with economic growth
and job creation. Protecting our environment does create jobs,
and not destroy them. New economic opportunities and markets
flow from environmental protection services and technology
which hopefully generate jobs in our own country, and even give
us an opportunity for global exports with both exporting our
knowledge, our services, and our technology, an area I would
like to pursue in our questions.
Also, Maryland has benefited from the Environmental
Protection Agency in the bipartisan support for the Chesapeake
Bay, going back to Richard Nixon, to Senator Mathias, who
really is the father of the Bay Program, until now. Cleaning up
the Bay is not only good environment, but it is sure very good
for Maryland economy. Watermen, commercial fishermen, economic
development, and a host of other businesses depend upon a clean
bay to earn a living. The Chesapeake Bay Program is an
investment in cleaner environment and a healthier economy.
I also want to talk about two other aspects in our
questioning that I think will generate jobs, and then, also,
another to save lives. Administrator Browner, I look forward to
hearing from you more on the brownfields initiative. The
brownfields legislation was recently passed by my own Maryland
General Assembly. We are now looking forward to how brownfields
could be an absolute tool to helping clean up some of the toxic
areas around Baltimore that would then leave us new land, and,
therefore, new opportunity in the very empowerment zone to
attract jobs.
We also note the President's child's health initiative,
which though might not generate jobs, sure saves lives. We note
again in my own home State of Maryland the rise in lung and
respiratory illness gives me enormous pause, particularly the
rise if asthma among children and the onslaught of adult asthma
among adults is really of concern. This does not seem to have a
genetic base, but it certainly does seem to have an
environmental base. And for the little kids in Baltimore that
we are trying to get in school and having them read by the time
they are in the third grade, we want to make sure that this is
an initiative that we want to hear more about, and is not just
a photo op, just not a press release, and it is not a throw-a-
line at press conference, but a real initiative.
I must say that in the budget, though, I am deeply
concerned about the cut in the State water revolving fund. This
has been a very important tool when I was both the chairman and
now as ranking. We get more requests for special projects from
our colleagues in the Senate around the need to have more water
infrastructure, and as you know, Ms. Browner, infrastructure in
our cities is really aging.
So we look forward to working with you. We want to look at
how we can reduce costs, and we also want to hear more about
project XL, the commonsense initiative, and how you have
continued to implement the NAPA project.
So I welcome you, fellow or sister resident from downtown
Tacoma Park, one of the garden spots in Maryland, and look
forward to your testimony.
Senator Bond. Thank you very much, Senator Mikulski.
Senator Burns.
STATEMENT OF CONRAD BURNS
Senator Burns. Thank you very much, Mr. Chairman. I do not
have much of a statement. It would not make any difference
anyway. There are a couple of areas that I cannot get my hands
on. I got in late last night, and I cannot get my hands on
them, but I am going to look at them very shortly. We had a
list of all this money that goes to foreign countries to do
something that comes out of the EPA. I do not know what it
does, but I know there is a chunk of it. I would rather spend
it in this country, to be honest with you.
I am sensitive to ground water. I want to give you a little
figure here, and I will tell you why. We in the West get very
sensitive about our water. I got a daughter that graduates
medical school in June. Her advice to me right now is very
economical; however, she says after June 7 it goes up sharply.
But she said, you know, the increase in the average life span
of an American has gone up rather sharply since World War II.
The medical profession cannot take but maybe 5 or 10 percent
credit for that advance. The rest of it goes as how we handle
our water, because more life-shortening diseases are waterborne
than any other disease. So we are sensitive to that, and I want
to look at it.
You have also requested 100 more people in each one of your
regions for EPA people, I think, and this is what I read in a
newspaper, I think, the Casper Star. Well, anyway, it is always
a big surprise, but the President has got it in his budget, and
that should be you, I would imagine. I would want to change the
emphasis of enforcement to people who help in compliance rather
than a hammer. I want to carrot people, I do not want hammer
people. And if I heard anything on small business hearings, and
we had two of them in Montana and Wyoming over this last break,
it is that.
There are people who are willing to comply, but will not
say much to anybody for the simple reason the way they have
been treated in the past, and we have got to turn that around
some way or another, and I do not know how we do it, but that
is where I am going to place my emphasis, and I will get a hold
of this other stuff later on.
Thank you very much, Mr. Chairman
Senator Bond. Thank you, Senator Burns.
Senator Lautenberg.
STATEMENT OF FRANK R. LAUTENBERG
Senator Lautenberg. Thank you, Mr. Chairman. I am pleased
to see Administrator Browner here to talk about the EPA budget
for 1998. I believe that the President's budget places the
proper priority on protecting the environment by increasing
funds for several Environmental Protection Agency programs. It
also follows through on his pledge to offer a balanced budget
while advancing the goals that Americans share in continuing
programs to protect our Nation's environment.
In poll after poll you will see that people will say I am
willing to pay more if it goes to environmental cleanup. I want
to know that it goes directly there, but they are willing to do
it because that is the one legacy that all of us agree--that we
ought to be giving our children a better environment in future
generations.
I am particularly impressed by the fact that the
President's budget recognizes the importance of speeding the
cleanup of our Nation's most hazardous wastesites. After 16
years, the Superfund Program is now primarily in the
construction rather than the study phase, and since
construction is generally more expensive than studies, the need
for funding is growing. Level Superfund spending would mean
slower cleanups and a hampered ability to protect our
neighborhoods and ground water from hazardous waste.
The President's budget provides an additional $700 million
for Superfund. It is a 50-percent increase, bring the total
Superfund spending to over $2 billion. This increased spending
is the first phase of funding that will allow an additional 250
Superfund sites to be cleaned up by the year 2000. We will
double the pace of that cleanup. The fact that the President's
budget seeks to spend more on Superfund is a good sign. It
means that we now have a handle on our hazardous waste
problems, and that we are on the verge of making significant
progress in expediting the cleaning of hazardous wastesites.
Some have said that providing additional money to Superfund
would simply be throwing more money at the problem. Well, in
1993, I was one of the leading critics who claimed that
Superfund was severely broken and needed fixing. In fact, in
his first inaugural address President Clinton committed to
changing Superfund so that money would go toward cleanup of
hazardous wastes instead of paying lawyers. Since that time, I
believe the administration's reform efforts have moved
Superfund much closer to the goals of faster, fairer, and more
efficient cleanups.
It bears noting that these reforms do not reflect only the
goals of the present administration; rather, Ms. Browner's
administrative reform efforts were based on studies and task
force recommendations developed under Administrator Bill Riley,
a Bush appointee. And as a result of their reform efforts,
Superfund is no longer in need of drastic overhaul.
At the same time, I am in negotiation with the
administration and Senators Baucus, Smith, and Chafee on
improving Superfund, and I am confident that we can reach
agreement on the issues that separate us and end up with a bill
that will meet the goals of faster, fairer, more efficient
cleanups, and we will receive the support of both parties, the
various stakeholders, and the administration.
Whether we fail or not in this ambitious goal, whether it
takes the Congress one session or two, the President's budget
recognizes a necessary and proper increase in EPA's budget so
that we can speed the cleanup of our Nation's most hazardous
wastesites. Seventy-five percent of the sites have proven
health impacts, and holding funding hostage while we in
Washington referee fights between the insurance industry and
polluters and States and communities is not a position that I
find appealing.
I want to again thank Administrator Browner for her hard
work, her leadership, and I look forward to hearing her
testimony and her continued service.
Senator Bond. Thank you, Senator Lautenberg.
Senator Shelby.
STATEMENT OF RICHARD C. SHELBY
Senator Shelby. I have just got a few remarks.
Ms. Browner, welcome again to the committee.
I believe overall that EPA has changed a lot of things for
the better in this country: clean air, water, you name it, we
can go on and on. But I want to associate myself with the
remarks of Senator Burns that I believe your administration, if
it were guided from the top down, could do a lot of things
maybe with a velvet glove, a softer glove, and get notice to a
lot of people that they have got to comply rather than a
vicious attack on them. I think it would help the Agency and
the image of the Agency.
Having said that, I want to support you where I can. But I
do not believe that everything is money. A lot of it is
management. A lot of it is administration. I know it takes some
money, but we are in some tight money situations up here. The
chairman alluded to that earlier in his opening statement. But
all of us are having to do basically more with less money, and
I think EPA might have to do that.
But I commend you for a lot of good things that I believe
you are doing. I believe you are committed to the health, clean
air, and water for people, and water is very, very important.
Air is very, very important. You do not have to have asthma to
know that. We all know it. But people with asthma or touches of
it realize it more than some of us. But think about how you can
do more with less, how you can be a top-flight administrator
with less dollars, with fewer dollars, and I think you would
hit it off not only here but with the American people, because
overall your purpose is good.
Thank you.
Senator Bond. Thank you very much, Senator Shelby.
Now, Administrator Browner, you have heard all of our
views. We are ready to hear your testimony.
STATEMENT OF CAROL M. BROWNER
Ms. Browner. Thank you, Mr. Chairman and members of the
subcommittee, for this opportunity to testify before you on the
1998 budget request for the Environmental Protection Agency. I
am proud to be joined by colleagues at the Agency, including
the new Associate Administrator for Reinvention, Chuck Fox, and
Dr. Phil Langrigan, who has joined us in our work to create an
Office of Children's Health.
As we approach the 21st century, EPA faces many stiff
challenges in our mission to the public health and the
environment, including the air, the water, the land, the food
they eat. We believe that Americans want us to meet these
challenges, that they want clean, healthy air to breathe, they
want to know their tap water is safe to drink, and that the
food they buy is safe to eat. They want us to rid the Nation of
its toxic waste dumps and to prevent the further pollution of
America's neighborhoods.
Americans want their children protected from environmental
hazards. They want to pass on to their children a safe and
healthy environment. And they have come to expect that we can
do the job of protecting their health, their environment, and
provide for the Nation's economic growth and security. We
firmly believe, as I think all here believe, that environmental
protection goes hand in hand with economic progress, that a
healthy environment is, in fact, vital to the long-term
economic success of the Nation, and vice versa. Indeed, this
has been our history.
EPA celebrates its 27th anniversary this year. Over the
past 27 years, we have made tremendous strides in cleaning up
our environment. While we have taken these efforts to reduce
pollution, America's gross domestic product has nearly doubled.
Over the past 4 years in particular, President Clinton has
shown that it is possible to bring down the deficit, restore
the Nation's economic health, and at the same time strengthen
protection of public health and the environment.
The budget request we make today totaling $7.6 billion
expands on that commitment and that promise. It calls for an
increase of nearly $850 million over this year's appropriated
levels, most of which would be used to fund the President's
call to action to clean up the worst environmental problems
millions of Americans face in their own community. We are
talking about doubling our record pace of cleanups at the
Nation's worst toxic wastesites, and ridding our country of 500
more Superfund sites by the end of the year 2000. We want to
expand on our brownfields initiative, so that we can help the
communities across the country clean up literally thousands of
old, abandoned industrial sites and return them to productive
use.
Additionally, this budget request increases funding for
expansion of the public's right-to-know about toxic pollution
in their neighborhoods, without imposing any new reporting
requirements on anyone. It also means tougher, more aggressive
criminal enforcement against those who actually pollute our
air, our water, and our land.
NEW LEGISLATION
On another front, this requested increase enables EPA to do
its part to implement two major new environmental laws passed
by Congress last year. Both enjoyed broad bipartisan support:
The Safe Drinking Water Act amendments of 1996 and the new Food
Quality Protection Act, are two shining examples of how
Congress and the administration can work together to protect
the public health and our environment.
Under the Safe Drinking Water Act amendments, EPA will
undertake a variety of new efforts to improve the way we set
and enforce drinking water standards, protect drinking water
supplies, help communities upgrade their facilities, and
provide timely and important information to consumers. The new
law is a model for regulatory reform. It gives EPA flexibility
to act on contaminants of greatest risk, and to analyze cost
and benefits while keeping the public health as the paramount
concern.
Under the Food Quality Protection Act, EPA will be adding a
new level of protection from harmful pesticides in our food.
The budget includes funds to set a single health-based child-
first standard for pesticides and all foods.
CHILDREN AS A HIGH PRIORITY
In addition to funding these new, high-priority items, the
EPA budget request for 1998 supports a greater overall emphasis
on protecting children. Since the President came to office we
have tried to put children at the focal point of our mission,
because they are among the most vulnerable to environmental
threats. Their bodies, their brains, are still developing.
Relative to their body weight they consume more of certain
types of foods and fluids, and breathe more air than adults.
When we set public health and environmental standards, we will
do so after taking into account the unique vulnerabilities of
our children.
We believe that by doing all of this we will be ensuring
that everyone is protected. All of these initiatives, Mr.
Chairman, will be enhanced by our efforts to continue
reinventing the way EPA works. We are determined to carry out
our action plan in the most commonsense, cost-effective ways.
We are resolved to strengthening our partnerships with States
and tribes, and to providing them more flexibility in how they
reach the environmental goals we all share.
We intend to improve our success at reducing redtape,
adopting alternative strategies so long as they produce
superior environmental results.
In closing, Mr. Chairman, this budget will take us further
down the road toward our goal of a cleaner, safer, and
healthier environment. It is a budget that says to our citizens
we can put our fiscal house in order without sacrificing our
basic values; we can protect both the health of our economy,
the health of our children; we can have both economic progress
and environmental protection that is second to none.
Thank you, Mr. Chairman, and I am happy to answer any of
your questions.
[The statements follow:]
Prepared Statement of Carol M. Browner
Mr. Chairman, I appreciate the opportunity to be here before you
and the Members of your Subcommittee to present the President's 1998
Budget Request for the U. S. Environmental Protection Agency. This
request is $7.6 billion and 18,283 FTE's. President Clinton showed
during his first term that it is possible to reduce the deficit,
restore the nation's economic health, and protect public health and the
environment, and he believes in continuing on that course. The
President and I believe strongly that a healthy environment and a
strong economy go hand in hand.
This budget focuses on the environmental challenges of the 21st
Century by strategically expanding EPA's resources for protecting the
air we breathe, the water we drink, and the land on which we live. By
protecting the environment we protect the health of millions of
Americans, particularly our children, who are often the most vulnerable
to environmental health risks. Everything we do to clean our air, water
and soil, and to make the environment more healthy, we do for them.
The President is requesting an increase for EPA of nearly $850
million over this year's appropriated levels. When you add the
additional resources that our agency will be redirecting from other
areas, this budget contains a total of more than $900 million in new,
high priority investments for environmental protection and public
health.
Last August, the President presented America with a ``call to
action'' to deal with the most pressing environmental problems faced by
our nation's communities. Of this year's budget increase, $736 million
will fund these high priority initiatives, including an acceleration of
Superfund cleanups, a revitalization of communities through Brownfields
cleanups, a commitment to expand the public's access to information
about toxic pollution in their neighborhoods, and a strengthening of
criminal enforcement against polluters.
This budget proposes $2.1 billion for Superfund, including a $650
million increase over 1997 to meet the President's pledge to nearly
double the pace of toxic waste cleanups. This increase is the first of
two installments of the $1.3 billion planned to accomplish this goal,
which will result in the cleanup of another 500 sites by the end of the
year 2000. Twenty-seven million Americans live near a Superfund site. A
commitment to clean up these sites means that millions of Americans who
live near the nation's worst toxic waste sites will start off their
21st Century in healthier neighborhoods free of toxic impacts. Cleaning
up toxic waste sites will not only ensure the health of our citizens,
but will generate jobs and economic development through returning
damaged areas of our country to productive use.
This budget also proposes a major expansion of the Brownfields
initiative with a $50 million increase to the budget, as part of a
program to ensure cleanup of approximately 5,000 sites by the year
2000. Restoring these areas through a partnership with communities and
the Department of Housing and Urban Development will result in economic
revitalization for communities throughout the country, where scores of
abandoned commercial properties will be re-developed and put back into
commercial use.
Americans have a right to information about toxic pollution in
their neighborhoods. This budget proposes an additional $35 million for
an initiative to expand the information available to people about toxic
threats to their families--without imposing more reporting requirements
on anyone. Informed, involved citizens will always make far better
decisions than some distant bureaucracy. Information on toxics will be
available to American citizens through a comprehensive monitoring
system with computer links to schools, libraries, and home computers.
The President has also made a commitment to a more aggressive
criminal enforcement effort against those who pollute our air, our
water, and our land. This budget requests a modest funding increase to
enhance the training available for state, local, and tribal officials
who work at the grassroots of environmental law enforcement.
On another front, this budget contains a $36 million increase to
enable EPA to implement two major new environmental laws passed by
Congress last year: the Safe Drinking Water Act Amendments and the new
Food Quality Protection Act. Those bipartisan legislative successes
show how the Congress and the Administration can work together to serve
the American people by enhancing the safety of the water we drink and
the food we eat.
Under the Safe Drinking Water Act Amendments, EPA will undertake a
variety of new efforts to improve the way we set and enforce drinking
water standards, protect drinking water supplies, help communities
upgrade their facilities, and provide timely and important information
to consumers. The new law is a model for regulatory reform. It gives
the EPA flexibility to act on contaminants of greatest risk and to
analyze costs and benefits, while keeping the public health as the
paramount concern.
Under the Food Quality Protection Act, EPA will be adding a new
level of protection from harmful pesticides in our food. The budget
includes funds to set a single, health-based, children-first standard
for pesticides in all foods, along with the resources necessary to re-
evaluate some 9,000 different pesticides to assure safety and to
provide better information to the public. By carrying out this act, we
will help families to have the safest possible food on the dinner
table.
In addition to our commitment to helping implement this new
legislation, the President's budget supports the broad goals of
protecting children from environmental health threats, revitalizing the
environmental and economic health of cities, and strengthening
partnerships with state, local and tribal governments.
Because children may face significant, long-term, and unique
threats from environmental toxics, we are taking a comprehensive
approach to providing children with the strongest possible health
protection. Children are more at risk from toxics because their systems
are still developing. Relative to their body weight, children consume
more of certain types of food and fluids and breathe more air than
adults. We are addressing these concerns in programs across the Agency
with an initiative called ``Assessing Health Risks to Children.'' This
budget dedicates $15.5 million to this initiative. Through focusing
activities such as standards-setting and scientific research on
children, we will invest in the health of those Americans who will live
most of their lives in the next century.
This budget recognizes that states and tribes play a central role
in protecting the environment. To strengthen our partnership with them,
the President requests an increase in the State and Tribal Assistance
Grants account from $674 million to $715 million. Because tribes face
some of the greatest environmental challenges today, this increase
includes $31 million in additional funds to tribes.
The Administration recognizes the unique circumstances facing
states and tribes when it comes to environmental protection. Last year,
Congress enacted the President's proposal for EPA's Performance
Partnership Grants, which allows states and tribes to combine several
categorical grants into a single multi-media grant. These grants give
states and tribes more flexibility to reach environmental goals, and
they allow less-extensive EPA oversight for States that show strong
performance. Last year, 20 states took advantage of the flexibility you
provided in our fiscal year 1996 appropriation. In 1997, we expect at
least 13 more to use this same flexibility. As more states recognize
the benefits of these grants, we expect most, if not all, of them to
participate in this program. We are confident that Performance
Partnership Grants will continue to reap environmental benefits while
they streamline grant administration and strengthen our partnerships
with states and tribes.
An important part of our partnerships with local governments
involves helping communities upgrade their drinking water
infrastructure. This budget proposes $725 million in capitalization
grants for the new Drinking Water State Revolving Funds, which make
low-interest loans to municipalities to help them meet the requirements
of the new Safe Drinking Water Act Amendments. Combined with last
year's levels, the states will ultimately receive $2 billion to help
provide all Americans with safe, clean drinking water.
Through specific initiatives such as the Project XL and the Common
Sense Initiative, we are reinventing the way EPA does business. Forging
productive relationships with industry, environmental groups, and
concerned citizens is a common thread through all that we do at EPA. In
Project XL, industries are able to adopt alternative strategies to
current regulations, so long as they produce superior environmental
results. Industry has responded positively to this initiative. One
example is Intel's new computer chip manufacturing plant in Arizona. An
agreement with EPA provides for Intel to reduce overall pollution at
the plant, as well as inform and involve local residents on
environmental matters through frequent and regular public meetings. In
return, Intel gains regulatory flexibility to continue to adapt its
operations quickly and efficiently in a competitive and rapidly
changing industry.
The Common Sense Initiative (CSI) is another commitment to build
effective partnerships. Through this initiative, EPA is working with a
variety of stakeholders who have voluntarily come together to explore
comprehensive environmental strategies for entire industries. The
future of environmental protection rests on cooperative relationships
among all stakeholders. CSI can demonstrate how interested sectors can
work together for the dual goals of environmental protection and
economic productivity.
Agency-wide, our reinvention efforts have been bolstered by the
Government Performance and Results Act (GPRA). Our new processes will
link planning, budgeting, and accountability to improve EPA's ability
to focus on targeted environmental results. In 1996 EPA was a major
player in efforts across the Federal Government to pilot GPRA planning
activities. We had six of the roughly 70 government-wide accountability
pilots. In 1997 we have put in place nearly 50 internal Agency pilots
to help strengthen our ability to manage for results. We believe GPRA
is a positive tool that can help us reach our most important goal:
providing the highest level of environmental protection for our
ultimate customer--the American people.
Let me conclude by saying that since the start of this
Administration, we have tried to put children at the focal point of
EPA's mission. We know that by protecting the most vulnerable among us,
we will be protecting everyone. This is a budget for America's
children--and for a cleaner, safer and more healthy environment. It is
a budget that says to America: ``We can put our fiscal house in order
without sacrificing our basic values. We can protect both the health of
our economy and the health of our children.'' The President has made a
commitment to both goals. With this budget we can carry that commitment
into the next century.
I will be happy to answer any questions you have at this time.
______
Prepared Statement of Peter F. Guerrero, Director, Environmental
Protection Issues, Resources, Community, and Economic Development
Division, General Accounting Office
Mr. Chairman and Members of the Subcommittee: We appreciate the
opportunity to present this statement for the record, which discusses
the Environmental Protection Agency's (EPA) efforts to improve its
methods of establishing priorities, allocating resources, and measuring
performance. As you know, EPA is currently developing a new approach
for managing its strategic planning, budgeting, and accountability
processes. The new approach, known as the planning, budgeting, and
accountability system, responds to the National Academy of Public
Administration's (NAPA) April 1995 recommendation that EPA improve and
integrate its management processes.\1\
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\1\ ``Setting Priorities, Getting Results: A New Direction for
EPA,'' NAPA (Apr. 1995).
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In response to this Subcommittee's continuing interest in how EPA
sets priorities and helps to manage the nation's environment, we
reviewed the status of EPA's efforts to (1) establish an Office of
Planning, Analysis, and Accountability to develop and implement an
integrated planning, budgeting, and accountability system and (2)
ensure that the agency has comprehensive scientific and environmental
data and appropriate environmental measures of progress in carrying out
its strategic planning, budgeting, and accountability processes. Our
testimony today is based on the preliminary results of our ongoing work
for the Subcommittee. A final report on our work will be provided to
the Subcommittee this summer.
In summary, our preliminary findings are as follows:
In March 1996, the EPA Administrator announced plans to create a
new Office of Planning, Analysis, and Accountability. The office was
established in January 1997. In the interim, an EPA work group composed
of employees on temporary assignment started to develop the new
planning, budgeting, and accountability system. However, the work group
was not fully staffed, and the development of the new system is still
in the early stages. The new Office of Planning, Analysis, and
Accountability will not be fully staffed before July 1997.
EPA faces long-term challenges to obtain the scientific and
environmental data needed to fully support its new system. Although
much environmental information has already been collected, many gaps
exist and the data are often difficult to compile because divergent
data collection methods have been used. Likewise, much effort is still
required to identify, develop, and agree on a comprehensive set of
environmental measures to link the agency's activities to changes in
environmental conditions. Without environmental measures, EPA has to
rely solely on administrative measures, such as the number of permits
issued or inspections made, to measure its performance or success.
BACKGROUND
In an April 1995 report, the National Academy of Public
Administration recommended that EPA establish specific environmental
goals and strategies to attain them, and use comparative risk analyses
to select priorities and develop strategies for specific programs. NAPA
also said that EPA should consolidate its planning and budgeting
functions, use the budget process to allocate resources to the agency's
priorities, and establish accountability by setting and tracking
benchmarks and evaluating performance. The NAPA study's recommendations
are similar to the requirements for federal agencies established by the
Government Performance and Results Act of 1993 (GPRA). Under GPRA,
agencies must establish, by September 30, 1997, strategic plans and
annual performance plans, including annual performance goals and
performance measures.
In response to NAPA's recommendations, in July 1995, EPA created a
task force to study ways to improve the agency's management processes.
In its report, the task force recommended an integrated system composed
of strategic planning, budgeting, and accountability processes. In the
planning process, EPA was to develop a strategic plan that would be
based on the agency's goals. During the budgeting process, each goal in
the strategic plan would be considered, and an annual performance plan
would be prepared showing the agency's progress to date and plans for
future expenditures. During the accountability process, EPA would
determine progress under the annual plans and use the data on progress
to make corrections in the strategic and annual performance plans.
In March 1996, the EPA Administrator and Deputy Administrator
endorsed the task force's recommendations for developing an integrated
planning, budgeting, and accountability system and directed that the
recommendations be implemented. In making a commitment to substantially
revise the agency's management systems, EPA officials recognized that
the effort would take several years to complete. The EPA Administrator
and Deputy Administrator also announced plans to create a new office by
January 1997 to consolidate the agency's planning, budgeting, and
accountability processes. In the interim, a work group composed of
employees on temporary assignment was established to begin developing
the new system.
EPA IS IN THE PROCESS OF STAFFING ITS NEW OFFICE
In January 1997, the EPA Administrator approved the structure and
staffing plans for the new office, called the Office of Planning,
Analysis, and Accountability. The interim work group that had been
assigned to develop the new system was detailed to the new office to
continue its work. The work group has 21 employees, fewer than half the
number that EPA had planned for the group.
The new office is authorized 49 employees. As of the end of March
1997, EPA had published job announcements to fill 26 of the new
positions. EPA officials told us that these announced positions, which
are open only to current EPA employees, will be filled in May 1997. The
remaining positions, which are to be announced governmentwide, are not
likely to be filled before July 1997. The officials told us that the
office was not fully staffed when it was established because time was
required to determine the most appropriate types of skills and work
experiences needed and to implement a competitive process for selecting
staff.
Given the office's limited staffing, the development of an
integrated system is in the early stages. For example, EPA is reviewing
the agency's former accountability process to find out what did and did
not work well, contacting other federal agencies to determine how they
account for progress in meeting their goals, and examining reporting
systems in the agency's program offices to identify their potential use
in the new system. EPA hopes to have the accountability component in
place by September 1999. According to EPA officials, the development of
the new budgeting component will begin after the agency completes its
strategic plan in September 1997. They said that EPA's fiscal year 1999
budget will be structured along the lines of the goals in the strategic
plan.
Thus far, the work group members have spent most of their time
developing a strategic plan, which is required by September 30, 1997,
under GPRA. An important part of the new strategic planning process is
the selection of goals and objectives that can be used to guide the
agency's actions and to measure its performance. Although EPA is making
progress toward developing its strategic plan, it has not completed two
studies that are intended to identify the most appropriate goals for
the agency and to provide the latest scientific information on
environmental risk.\2\ EPA officials told us that the September 30,
1997, strategic plan will be updated, as appropriate, to reflect the
final results of these studies, which are likely to be completed in
late 1997 or early 1998.
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\2\ One of the studies, EPA's National Environmental Goals Project,
is being performed to establish a set of long-range national
environmental goals with realistic and measurable milestones for the
year 2005. The other study, the Integrated Risk Project, is being
performed to rank the relative risk of environmental problems, and to
develop methodologies that EPA can use to make future risk rankings.
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EPA MUST OVERCOME INFORMATION CHALLENGES TO IMPLEMENT ITS NEW SYSTEM
Although EPA continues to expand and improve the environmental data
it compiles, it still needs to fill data gaps; improve the quality of
its data; integrate information systems; and build the capability to
compile, organize, and analyze the data in ways useful to EPA managers
and stakeholders. In addition to the measures of outputs or program
activities that it currently relies on to assess its performance, EPA
is working to develop environmental measures that enable the agency to
evaluate the impact of its programs on the environment and determine
whether they are achieving the desired results.
epa's environmental data and systems need to be improved
The need to assess EPA's performance in terms of changes in
environmental conditions substantially increases the demand for high-
quality environmental data. Such data are also needed to identify
emerging problems so that they can be addressed before significant
damage is done to the environment. Despite EPA's efforts to improve the
quality of its data, these data are often unreliable, and the agency's
many disparate information systems are not integrated. These
shortcomings have been raised in various external and internal reports
on EPA, including the Vice President's report on reinventing
government.\3\
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\3\ ``Reinventing Environmental Regulation,'' National Performance
Review (Mar. 16, 1995).
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In its April 1995 report, NAPA also identified the lack of high-
quality data on environmental conditions as a particularly important
problem for EPA. NAPA specifically noted the limited amount of
information based on the real-time monitoring of environmental
conditions. Without monitoring data, EPA must rely on estimates and
limited, site-specific data. NAPA also concluded that much remains to
be done to improve the overall management of environmental information
in the agency. It noted that EPA had over 500 information systems and
that program offices, which are responsible for their own data, use
different methods and definitions to gather data. Furthermore, EPA
relies on data compiled by other federal agencies and the states.
According to NAPA, these agencies and the states also use divergent
methods of collecting data.\4\
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\4\ In ``Environmental Protection: EPA's Problems With Collection
and Management of Scientific Data and Its Efforts to Address Them''
(GAO/T-RCED-95-174, May 12, 1995), we testified that our previous
reports had identified long-standing data quality and data management
problems at EPA.
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More recently, a 1996 EPA report concluded that the agency needs to
redesign its many disparate fiscal and environmental data systems so
that it and others can measure its success in meeting environmental
goals and determine the costs of doing so.\5\ The agency's difficulty
in demonstrating its performance or the impact of its actions is
illustrated by the findings of a team of agency personnel, which was
formed in 1995 to evaluate the agency's needs for environmental
information. The team identified various problems with the information
needed to report on environmental goals, such as gaps in the data and
inconsistencies in the methods of collecting and/or reporting data
across states or federal agencies. Specific examples include the lack
of (1) national reporting on risk reduction at waste sites, (2)
reliable data on the nature and cause of pesticide poisonings, (3)
effective reporting on progress in improving the nation's water
quality, and (4) complete data on air pollutants.
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\5\ ``Managing for Results,'' EPA's Planning, Budgeting, and
Accountability Task Force (Feb. 23, 1996).
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EFFORTS TO DEVELOP ENVIRONMENTAL MEASURES NEED FOCUS
EPA and the states are devoting considerable attention to
developing environmental indicators or measures for use in assessing
programs' performance and better informing the public about
environmental conditions and trends. Some efforts are just starting,
while some of the agency's program and regional offices and some states
have begun to use these measures in reporting on their programs'
performance. Although EPA and state officials believe that
environmental measures are more useful than measures of activities for
assessing programs' performance, they recognize that scientific and
technical issues have to be addressed before indicators that really
measure environmental conditions and trends can be widely used.
Developing and using environmental indicators for an entire program
presents significant challenges.
The scientific and technical challenges include identifying (1) a
range of health or environmental conditions that can be measured and
(2) changes in these conditions that can be linked to a program's
activities. These tasks are especially difficult because natural
causes, such as changes in weather patterns, and other factors outside
a program's control can affect environmental conditions. In some cases,
data or indicators are not available for a specific aspect of the
environment because of high costs or technical difficulties. Thus, it
could be some time before EPA is able to develop and use a set of
environmental indicators that accurately reflect the impact of its
programs or their results.
According to EPA officials, the agency's and the states' efforts to
develop and use environmental measures have been valuable but
disparate. Furthermore, at a conference convened by EPA in September
1996 to better coordinate these efforts, as well as in interviews
conducted by EPA staff to prepare for the conference, regional and
state representatives cited several concerns. They said, for example,
that (1) clarification is needed on EPA's and the states' direction in
developing goals and indicators, (2) the qualities of a good indicator
are not well understood, and (3) determining whether the best
indicators have been chosen will take many years. The representatives
also believed that the data and resources needed to develop and use
environmental indicators are inadequate.
An additional challenge will be to reach agreement within EPA and
among its stakeholders on the specific environmental indicators that
will be used to measure performance. A consensus may be difficult to
reach because of the potential for debate on what is important about
individual programs and whether a relatively small number of measures
can adequately reflect the effects of an agency's or a program's
activities. EPA will need a set of measures common to all the states to
report to the Congress and the public on the agency's performance and
the state of the nation's environment. At the same time, the
development of national measures, to the extent that such measures
drive the implementation of environmental programs, will reduce the
states' flexibility to tailor the programs to meet local needs and
conditions, a major concern of the states. Reporting on new measures
will also increase the states' costs unless other reporting
requirements are eliminated or reduced.
In May 1995, EPA signed an agreement with state leaders to
implement a new system of federal oversight for state environmental
programs. This new National Environmental Performance Partnership
System (NEPPS) fundamentally changes EPA's working relationship with
the states because it places greater emphasis on the use of
environmental goals and indicators, calls for environmental performance
agreements between EPA and individual states, and provides
opportunities for reducing the agency's oversight of state programs
that exhibit high performance in certain areas. As of March 1997, about
half of the states had signed performance partnership agreements to
participate in the system.
EPA's Office of Regional Operations and State/Local Relations is
developing a set of core performance measures, including some
environmental indicators, that the agency's regional offices are to use
in negotiating annual work plans and agreements with the states. The
core measures are to be focused and limited in number, representing
measurable priorities for each of EPA's national program managers. They
are to serve as the minimum measures in performance agreements with the
states, which may develop additional measures to represent their own
environmental or programmatic issues. In addition, a particular core
measure may not be required if a state can demonstrate that the measure
does not apply or cannot be addressed. According to EPA, its national
program managers will finalize their core measures in April 1997 and
its regional staff will begin negotiations with the states to
incorporate the measures into the agreements for fiscal year 1998. At
this point, it is too soon to know how extensively EPA's regional
offices will be negotiating measures that reflect programs' direct
effects on human health and the environment.
______
Prepared Statement of Stanley J. Czerwinski, Associate Director,
Environmental Protection Issues, Resources, Community, and Economic
Development Division, General Accounting Office
Mr. Chairman and Members of the Subcommittee: We appreciate this
opportunity to provide a statement for the record for use in the
Subcommittee's hearing on the Environmental Protection Agency's (EPA)
fiscal year 1998 appropriation. As you requested, we have reviewed
certain aspects of EPA's contracts and assistance agreements \1\ that
are used to accomplish the work of the Superfund program. Specifically,
we are providing information on (1) the total amount of unspent
obligated funds remaining on completed contract work orders and
assistance agreements and the EPA offices and regions primarily
responsible for administering these funds and (2) the timeliness of
EPA's recovery of such funds.
---------------------------------------------------------------------------
\1\ Assistance agreements include grants, cooperative agreements,
and interagency agreements. Grants provide financial assistance to
organizations to carry out a program without substantial federal
involvement. Cooperative agreements provide financial assistance and
require substantial federal involvement to carry out a program.
Interagency agreements transfer funds between federal agencies.
---------------------------------------------------------------------------
In summary, we found the following:
--As of December 1996, about $249 million in unspent obligated funds
was potentially available to be recovered on over 6,000
completed work orders and assistance agreements. EPA's Office
of Solid Waste and Emergency Response and its regional offices
located in Atlanta, New York, and Philadelphia administer most
of the funds.
--In the early 1990's, EPA recognized the need to take more timely
action to recover unspent funds. However, according to the
agency's Inspector General, EPA's offices responsible for
managing contracts and assistance agreements were not provided
sufficient resources to do so, while carrying out their other
responsibilities. Consequently, in 1994, EPA created the
Superfund Deobligation Task Force to respond to a growing
backlog of completed work orders and assistance agreements, and
the associated unspent funds. Since fiscal year 1994, the task
force has recovered over $400 million. However, the task force
is not keeping up with a growing backlog of completed work
orders and assistance agreements because it is composed of
part-time members who perform these activities only when their
primary job responsibilities enable them to do so.
BACKGROUND
EPA relies heavily on contracts and assistance agreements for the
Superfund program, which was created to clean up the nation's most
hazardous waste sites. EPA relies on contractors to accomplish the work
of the program, including (1) cleaning up hazardous waste sites, (2)
supervising cleanups performed by others, and (3) providing technical
and scientific support to the program. Contracts are generally used to
obtain the services of private businesses when EPA manages the work.
Assistance agreements are generally used to support the activities of
states, nonprofit organizations, and universities in the Superfund
program. From fiscal years 1990 through 1996, Superfund contracts
accounted for $5 billion, or 57 percent, of the $8.8 billion that EPA
obligated for all contracts awarded during that period. From fiscal
years 1990 through 1995, the most recent period for which information
is available, EPA entered into 620 Superfund assistance agreements
valued at about $387 million.
EPA issues individual work orders to describe the specific tasks
and requirements to be completed on contracts. When a new work order is
awarded or a new assistance agreement is entered into, EPA obligates an
amount equal to the estimated cost of the work. As work progresses, EPA
releases funds to contractors or the recipients of assistance
agreements and liquidates its obligations. In many instances, the
amount of funds obligated exceeds the amount eventually needed to pay
the contractor or other entities for the completed tasks and other
requirements. In such cases, the unspent funds may be deobligated and
recovered when all work has been completed or when the specified period
of performance has expired. Before recovering unspent funds, EPA
reviews the completed contract or assistance agreement to ensure that
all appropriate payments have been made. EPA leaves between 10 to 15
percent of the total expenditures made under the contract or assistance
agreement as a reserve to cover any additional costs, as determined by
a final audit. Recovered funds are to be used for other Superfund
activities, since congressional appropriations for the Superfund
program remain available for use until expended.
EPA contracting officers or grant specialists are responsible for
reviewing the costs of the work and performing other closeout
activities. The maximum amount of time allowed for closing out
contracts according to the Federal Acquisition Regulation is 36 months
from the date the contracting officer receives evidence of the
project's completion. Similarly, EPA's Final Closeout Policy for
Assistance Agreements specifies that assistance agreements be closed
within 180 days after completion.
SUBSTANTIAL UNSPENT FUNDS COULD BE RECOVERED FROM INACTIVE SUPERFUND
CONTRACTS AND ASSISTANCE AGREEMENTS
Using EPA's data systems,\2\ we identified contract work orders and
assistance agreements having unspent obligations for work that has been
completed or for which the specified performance period has expired.
Our analysis of the data shows that about $249 million in unspent funds
are potentially available for recovery, mostly on contracts and
agreements administered by the Office of Solid Waste and Emergency
Response and three EPA regional offices. As shown in table 1, hundreds
of work orders or agreements were completed prior to 1991.
---------------------------------------------------------------------------
\2\ The EPA data systems that we used include (1) the Contracts
Information System, (2) the Financial Information System, (3) the
Grants Information and Control System, and (4) the Management and
Accounting System. We did not verify the accuracy or reliability of the
data systems.
TABLE 1.--BALANCES OF UNSPENT OBLIGATIONS BY CONTRACT AND ASSISTANCE
AGREEMENTS' COMPLETION
------------------------------------------------------------------------
No. of orders/
Fiscal year assistance Unspent
agreements obligations
------------------------------------------------------------------------
1981-84................................. 7 $100,945
1985-87................................. 30 1,542,836
1988-90................................. 886 16,871,139
1991-93................................. 2,477 68,923,588
1994-96................................. 2,682 161,484,102
-------------------------------
Total............................. 6,082 248,922,610
------------------------------------------------------------------------
We found that each of EPA's 10 regional offices and various
headquarters offices currently have unspent balances obligated for work
that has been completed. (See app. I.) Completed work orders and
agreements administered by the Office of Solid Waste and Emergency
Response total over $54 million in unspent funds. In addition, such
funds total over $43 million in region 2 (New York), over $18 million
in region 3 (Philadelphia), and over $30 million in region 4 (Atlanta).
These four agency units account for approximately $145 million, or
about 58 percent, of the $249 million potentially available for
recovery.
EPA officials told us that the Office of Solid Waste and Emergency
Response has a large amount of unspent funds because the Superfund
Deobligation Task Force, thus far, has given higher priority to
recovering funds in EPA's regions. However, the director of the task
force told us that more emphasis will be placed on headquarters' units
during fiscal year 1997. He also told us that EPA regions located in
the eastern part of the United States, such as regions 2, 3, and 4,
typically award a greater number of Superfund contracts and assistance
agreements than other regions and, therefore, have more unspent funds
on work orders and agreements.
TIMELY ACTIONS HAVE NOT BEEN TAKEN TO RECOVER FUNDS
EPA has experienced a continuing problem in recovering unspent
funds on completed Superfund work orders and assistance agreements. To
address this problem, EPA created a Superfund Deobligation Task Force,
which has succeeded in recovering nearly $400 million in unspent funds
since fiscal year 1994. Nevertheless, the backlog of completed work
orders and assistance agreements with unspent funds continues to grow,
as additional work orders and assistance agreements are completed.
Consequently, on October 1, 1996, the agency implemented a policy that
allows EPA offices to use the funds they recover for their own
Superfund activities, rather than returning them to the agency for
redistribution. However, thus far, this incentive has not resulted in
increased recoveries of funds.
Recovering Unspent Funds Is a Long-Term Problem
In December 1990 hearings before the Subcommittee on Oversight and
Investigations, House Committee on Energy and Commerce, we said that
EPA's failure to recover unspent funds increased the government's need
to borrow; increased the agency's vulnerability to fraud, waste, and
abuse; and resulted in missed opportunities to obtain interest payments
due the government from overpayments to contractors.\3\ A few years
later, EPA's Inspector General reported that, as of March 1993,
contracts awarded under the Superfund program still had balances of
over $100 million in unspent obligated funds that were no longer needed
for their original purposes.
---------------------------------------------------------------------------
\3\ ``EPA's Contract Management: Audit Backlogs and Audit Follow-Up
Problems Undermine EPA's Contract Management'' (GAO/T-RCED-91-5, Dec.
11, 1990).
---------------------------------------------------------------------------
According to the Inspector General's report, EPA had experienced
delay in recovering unspent funds because it had given a low priority
and few resources to closing contracts, which involves ensuring that
all goods and services have been received, evaluating performance, and
resolving all outstanding issues or problems. The report stated that
EPA's Contract Management Division had requested, but not received,
additional resources to carry out these responsibilities in a more
timely manner.
In addition, according to the Inspector General's report on
assistance agreements,\4\ EPA officials stated that competing
priorities for staff resources also has resulted in untimely closings
of Superfund assistance agreements. Officials of EPA's Grants
Administration Division, which administers the agreements, stated that,
while closeout functions are important, the division places more
emphasis on entering into new assistance agreements than on closing old
ones.
---------------------------------------------------------------------------
\4\ ``Final Report of Audit on EPA's Controls Over Assistance
Agreements,'' EPA's Office of Inspector General (Sept. 28, 1995).
---------------------------------------------------------------------------
EPA's Task Force Has Recovered Substantial Funds
To handle a backlog of completed work orders and assistance
agreements, in 1994 EPA established a Superfund Deobligation Task
Force. The task force is composed of about 30 part-time members,
representing several headquarters offices and each of EPA's 10 regional
offices. Members review individual contract work orders to identify
completed projects, determine the amount of unspent funds available for
deobligation, and prepare requests to deobligate and recover the unused
funds. The task force gives priority to work orders and assistance
agreements with the largest potential recovery of funds.
After the task force identifies unspent funds, EPA takes action to
deobligate and recover them, except for an amount held in reserve
pending a final audit of the actual costs of the work. If the reserve
funds are not sufficient to cover the final costs, as determined by the
audit, EPA uses current-year appropriated funds to pay the difference.
Since fiscal year 1994, the task force has recovered over $400
million. However, we found that substantial funds remain on work orders
and assistance agreements that were completed years earlier. For
example, our analysis shows that 3,400 work orders and assistance
agreements were completed more than 3 years earlier, the maximum amount
of time that the Federal Acquisition Regulation and EPA's regulations
allow for closing out contracts and assistance agreements. Funds
totaling approximately $87 million, or about 35 percent, of the $249
million that we identified were associated with these orders and
assistance agreements. If the work orders or assistance agreements are
not closed within the time specified, EPA is required to do so as soon
as possible.
Furthermore, while the task force has recovered substantial funds,
it apparently is not keeping up with a growing backlog of completed
work orders and assistance agreements. For example, in a May 1, 1996,
statement for the record to the Subcommittee on VA, HUD, and
Independent Agencies, House Committee on Appropriations, we said that
unspent funds on completed work orders totaled $164 million as of March
1, 1996.\5\ Our analysis shows that as of January 1, 1997, such unspent
funds had grown by $13 million, an increase of about 8 percent.
---------------------------------------------------------------------------
\5\ ``Environmental Protection: Selected Issues Related to EPA's
Fiscal Year 1997 Appropriation'' (GAO/T-RCED-96-164, May 1, 1996).
---------------------------------------------------------------------------
Task force officials told us that during fiscal year 1996, they
spent less time on recoveries than they had during the previous 2
fiscal years. The task force recovered $160 million in fiscal year
1994, $170 million in fiscal year 1995, but only $67 million in fiscal
year 1996. According to task force officials, fewer staff resources
were provided and fewer funds were recovered during fiscal year 1996
because higher priority was given to other work requirements of the EPA
units providing the part-time task force members.
These officials also told us that EPA does not have records showing
the amount of time that members spend on their task force activities
but noted that it is not unusual for competing priorities to severely
limit the staff resources that are available. The officials also told
us that EPA has never performed an analysis to determine the resources
needed to eliminate the agency's backlog and to keep pace with new
completed work orders and assistance agreements.
The director of the task force told us that EPA intends to continue
with its task force approach. He acknowledged, however, that other
options may be considered if sufficient progress is not made in
achieving timely recoveries of unspent funds. Among such options are
adding resources to the EPA organizations responsible for managing and
auditing contracts and grants so that they may be closed in a more
timely manner.
New Incentive Policy
EPA believes that a new policy, initiated on October 1, 1996, may
result in additional recoveries by providing more incentive to
headquarters and regional task force members to identify, deobligate,
and recover funds on completed work orders and assistance agreements.
Until fiscal year 1997, recovered funds were placed in a central pool
and then distributed on the basis of national Superfund priorities. As
of October 1, 1996, the funds remain with the offices recovering them
to meet the offices' Superfund cleanup needs. EPA officials told us
that this new policy might achieve better results by providing greater
incentive to EPA offices to deobligate and recover unspent funds. The
officials acknowledged, however, that under the new policy, task force
members must still find time to perform the recovery activities while
meeting other work requirements having higher priority within their
organizational units.
CONCLUSIONS
The recovery of substantial unspent funds on completed Superfund
contract work orders and assistance agreements could help EPA in
meeting its responsibilities for cleaning up Superfund hazardous waste
sites. Although the agency has taken actions to recover such funds, it
has not succeeded in eliminating a substantial backlog of completed
work orders and assistance agreements while keeping pace with annual
additions to the backlog. Consequently, EPA is not achieving timely
recoveries of these funds, as required by agency policy and the
applicable federal contracting regulation.
RECOMMENDATION
To recover unspent funds on inactive Superfund contract work orders
and assistance agreements, we recommend that the Administrator of EPA
develop a strategy for identifying, deobligating, and recovering
unspent funds within the period specified for contracts by the Federal
Acquisition Regulation, and for assistance agreements by EPA's Final
Closeout Policy for Assistance Agreements.
AGENCY COMMENTS
EPA officials, including the Director of the Budget Division,
Office of the Comptroller, generally agreed with the information
contained in this statement for the record. They also agreed that a
strategy was needed for recovering unspent funds within the period
specified by Federal Acquisition Regulations and EPA's regulations. We
have incorporated clarifying comments provided by EPA where
appropriate.
Appendix I
FUNDS AVAILABLE FOR DEOBLIGATION FROM SUPERFUND WORK ORDERS AND
ASSISTANCE AGREEMENTS BY EPA ORGANIZATION AS OF DECEMBER 2, 1996
------------------------------------------------------------------------
No. of
orders/
assistance Estimated
EPA organization agreements recovery
to be
deobligated
------------------------------------------------------------------------
Region 1................................... 229 $7,668,938
Region 2................................... 589 43,569,654
Region 3................................... 423 18,983,622
Region 4................................... 590 30,651,835
Region 5................................... 452 18,905,755
Region 6................................... 247 11,504,173
Region 7................................... 243 8,764,694
Region 8................................... 190 12,931,893
Region 9................................... 275 14,986,054
Region 10.................................. 175 11,218,870
Office of Research and Development......... 704 5,061,885
Office of Solid Waste and Emergency
Response.................................. 1,088 54,905,483
Office of Policy, Planning, and Evaluation. 113 1,802,992
Office of Administration and Resources
Management................................ 497 4,751,486
Office of Enforcement and Compliance
Assurance................................. 132 2,086,980
Miscellaneous.............................. 135 1,128,296
----------------------------
Total................................ 6,082 248,922,610
------------------------------------------------------------------------
PROPOSED SUPERFUND INCREASE
Senator Bond. Thank you very much, Madam Administrator.
To go back to the points that I raised in my opening
questions, EPA's most significant budget proposal is for
Superfund, where there is a 50-percent increase proposed. The
amount requested, $2.1 billion, is the highest ever requested,
at a time when budget constraints are tighter than ever. In the
fiscal year 1997 budget EPA requested, and the Congress
provided, a $1.4 billion Superfund budget. Last year EPA
projected outyear Superfund budgets of $1.4 billion through the
year 2000. Now EPA claims a budget of $2.1 billion for each of
the next 2 years is imperative. What I would like to know is
what occurred between the preparation of last year's budget and
the President's trip to Kalamazoo at which a decision was made
to increase the budget by 50 percent for fiscal year 1998 and
1999, and why did this program suddenly become a much higher
priority for EPA?
Ms. Browner. The Superfund Program, the cleanup of the
Nation's worst toxic dump sites, has long been a priority for
the EPA. Since I came to EPA almost 4\1/2\ years ago, this
program has taken almost more of my time than any other
program. It is a large undertaking. It is one that is important
to literally thousands of communities across the country.
We have made progress in this program, that we would all
agree has had its share of problems. I am the first to say that
and I have said it for 4 years. I have worked hard to change
the day-to-day management of this program, and I think you can
see the effects. In the last 4 years we have cleaned up more
sites than had been cleaned up in the entire 12 years prior to
that. This is an example of how we are getting the job done
faster, fairer, and more efficiently. We looked at the number
of large toxic dump sites that would be ready to go into the
final cleanup phase. This phase takes approximately 2 years,
and we have a growing number of such sites. With additional
money we could get these done on an expedited basis. We could
give these communities back the productive use of these sites.
It is just that simple. We have moved the sites through the
early phases of the program. We now have in excess of 600 sites
where either construction or design is underway. In other
words, in the next 2 years we will have candidates ready to do
the final 2 years of work if the dollars are there. It is that
simple. There is nothing else going on.
Senator Bond. Well, we all like to see progress, but quite
frankly, as you indicated earlier, the program is matured. One
of the reasons that we are able to move forward is because
there has been 12 years of study, and we are at the position
where more sites are ready to go into the construction phase.
But is it not true that Superfund sites rank relatively low
on a risk continuum, and that EPA could achieve substantially
greater risk reduction by applying $650 million to other EPA
programs such as the air program?
Ms. Browner. Mr. Chairman, we are responsible for
implementing more than a dozen national environmental laws.
They each speak to different problems. In the case of
Superfund, I think Congress ought to speak to the needs of
individual communities, of the people who live next to a toxic
dump site, who want their children to be able to play and drink
the ground water, and who want a quality of life free of toxic
contamination. In looking at the needs of those communities, in
looking at our desire to be responsive to the needs of those
communities, this is the best investment we can make. Let us
get the job done.
We can all spend a lot of time talking about why it took us
so long to get here. I think we would all agree, there were
problems. The truth of the matter is, today we have the sites
ready to go. Why not get it over with and give these
communities back their neighborhoods?
SUPERFUND: NEW YORK TIMES ARTICLE
Senator Bond. Well, you will recall you were questioned
about this previously in the Sunday New York Times of March 21,
1993. There was a very thoughtful article calling environmental
policy misguided. Quote:
These experts say in the last 15 years environmental policy
is too often evolved largely in reaction to popular panics, not
in response to sound scientific analysis, of which
environmental hazards present the greatest risks.
It goes on to state:
That as an example few experts question the value of
spending roughly $3 billion each year on new sewage treatment
plants. Many experts, however, question the wisdom of spending
billions of dollars to protect people from traces of toxic
compounds,
To which you responded in that article, quote,
The President is aware of this dilemma, and there is
leadership in this administration for trying to change the way
we do business in every aspect of governing, including
environmental protection. We have to allow for change to occur
as new information becomes available. This is not an area where
a solution will fit forever.
And then the article goes on to say almost everyone
involved, including community and local environmental groups,
agrees that the toxic waste program stands as the most wasteful
effort of all.
Ms. Browner. That is a quote from me?
Senator Bond. No.
Ms. Browner. That does not sound like me.
Senator Bond. I said the article went on to say that. I
would like your response based on what purports in the New York
Times article to be the state of scientific thinking. How do
you respond to the priority for putting money into Superfund?
Ms. Browner. I apologize. I think it is an older article,
and I am not familiar with it at this point. I would be more
than happy to look at it.
Senator Bond. We will be happy to share it with you.
Ms. Browner. I can tell you that from day one of coming to
EPA I believed, the President believed, that we had to change
the way Superfund functioned on a day-to-day basis, and that is
why we have instituted literally dozens of administrative
reforms. It is why we have been able to reduce the amount of
time it takes to clean up a site. It is why we have been able
to reduce the amount of money that is necessary to clean up a
site. It is why we have been able to take out the small parties
that no one thinks should be trapped in the Superfund net. It
is why we have been able to come up with better technologies
and presumptive remedy. There are a whole host of changes that
result in a very different program today than yesterday.
In terms of the people who live in these communities, in
terms of their experiences of these sites, in terms of the
health effects and the environmental effects, which they deal
with on a day-to-day basis, getting the job done is probably
the most important thing we can do for these people at this
point in time, and that is why we seek an increase in the
budget. This would allow us to complete 500 sites by the end of
the year 2000 to give these neighborhoods a future.
Senator Bond. Thank you, Madam Administrator. In the words
of General MacArthur, I shall return.
Senator Mikulski.
BROWNFIELDS INITIATIVE
Senator Mikulski. Thank you, Mr. Chairman.
Ms. Browner, as you know, one of my great passions is
really to be able to generate jobs, believing that the best
social program is a job. And our urban areas are so hard hit in
the ability to do so. This is why I am tremendously interested
in the brownfields initiative. The Maryland General Assembly
has just passed legislation. We are recommending funds for a
substantial brownfields initiative. And I am very much
interested in knowing how the brownfields initiative will work,
and No. 2, how will EPA be working with urban areas,
particularly those that have urban or enterprise zone like my
own hometown, what will that mean in terms of your initiative,
coordination with HUD, working with the mayor and the county
executive on the ground to make sure we not only clean up a
lemon, but in the process create a whole new lemonade stand?
Ms. Browner. That is precisely what we have been doing.
Approximately 3 years ago, after meeting with mayors from
across the country, it became clear to me that these brownfield
sites were something we needed to address. Within our existing
budget resources, we began a modest program of providing
relatively small dollars to allow communities and cities to
assess the nature of contamination and bring in those who would
both clean up and redevelop the sites. This program turned out
to be far more successful than anyone could have imagined on
the front end. That is why we are here today asking for an
increase in the dollars that we can make available to local
communities across the country.
What we have seen at the brownfield sites that we funded in
the early phase of the program is really quite remarkable. We
have seen in community after community that when a site is
cleaned up, businesses are reopened, jobs are created, and a
tax base is restored. What we want is to replicate that in
many, many more communities.
The increase that we seek, $50 million, is in addition to a
base of $37 million. That would allow for a total of $87
million for this program. It would allow us to dramatically
increase the number of assessment grants. We currently make
$200,000 assessment grants to cities. It would allow us to
create a revolving loan fund for cleanup at 106 pilots. We have
found sometimes a little bit of money is needed on the front
end. We could make a grant that would then be loaned out and it
would be repaid.
Senator Mikulski. How will it work, like, in a city? How
will it work in a city?
Ms. Browner. In an individual city they would receive a
grant, as they can right now. There would be more available. A
certain percentage of those would be available in the
empowerment zone communities. They would be able to take that
money, go out and do an assessment of the sites that they think
are appropriate for redevelopment. They would bring in the
developers, bring in the banks, bring in the lenders, and
actually see the job of cleanup restoration.
Senator Mikulski. In the communities?
Ms. Browner. Yes.
CHESAPEAKE BAY PROGRAM
Senator Mikulski. Will you be coordinating with Housing and
Urban Development on this initiative so that we are actually
working to leverage each other, because the chairman said
without limited resources in the subcommittee and cuts in HUD,
as well, we need to make sure that every dollar of EPA money
and HUD money is actually working for empowerment so that
people can move from work to welfare and move to work.
Let us then go on to the Chesapeake Bay Program, which I
know is of your great interest. The bay program has been in
existence for 10 years, and does seem to show cleanup results.
But yet, at the same time, oyster and crab harvest have been
declining in the bay. My question is, First of all, and I am
sure you would agree, you do not want to see our watermen
become as much of an endangered species as our oysters and our
crabs. How is the Chesapeake Bay Program now going to move from
research to results, from research to focusing on how to
maintain both water quality, but also deal with the species
decline of oysters and crabs and clams in the bay?
Ms. Browner. The primary focus of the Chesapeake Bay
Program is working out in the field. For example, we have found
working with farmers to deal with nitrogen control practices,
that to be a tremendous problem throughout the region. Working
a field in terms of habitat restoration, the States, the
District, and EPA have made a commitment to restoring habitat
along the bay and along the streams that feed into the bay. I
think, at this point in time, it is fair to say we have moved
beyond the research phase and are out in the field. As
important as the environmental protections are, so are the
economic realities of the bay. I think the bay is a good
example of how we can achieve both a better environmental
protection and an economic growth.
But it is not without its challenges. This is an area that
is experiencing tremendous growth, and that is probably our
single greatest challenge. We have to continue to work in the
partnership from Pennsylvania all the way down to EPA to find
the commonsense, cost-effective, and on-the-ground solutions
that we are now implementing.
Senator Mikulski. Thank you, Mr. Chairman. I see my time is
up.
Ms. Browner, I look forward to EPA issuing the proposed
cluster rule for the paper industry that has had a great impact
on those jobs in western Maryland, Westvaco. Westvaco is the
only thing we have got going in western Maryland now with the
close of the Bausch & Lomb.
Ms. Browner. As you know, we have probably spent hundreds
of hours in meetings with both industry, community
representatives, and States' officials. We do anticipate
sending that to OMB in the course of this month for their
interagency review.
Senator Mikulski. Thank you.
Thank you, Mr. Chairman.
Senator Bond. Thank you very much, Senator Mikulski.
Senator Shelby.
NAAQS PROPOSALS
Senator Shelby. Thank you, Mr. Chairman.
Administrator Browner, do you agree that the American
people have a basic right to know the scientific basis for the
EPA's rulemaking proposals?
Ms. Browner. Yes.
Senator Shelby. Has the data used to support the ozone and
particulate matter rule been made available to the public? In
other words, the information?
Ms. Browner. There has been a 4-year public process
reviewing the science that underlies our proposal.
Senator Shelby. What does that mean?
Ms. Browner. That means there were many, many meetings of
the Science Advisory Board held in the public. There are more
than 250 peer-reviewed published scientific reports that have
been made available to the public. We have not had this kind of
extensive scientific review and public discussion. This is not
an EPA internal review; this is external.
Senator Shelby. Excuse me. Did you say you have not had it
before?
Ms. Browner. This kind of review.
Senator Shelby. You have not had this type of scientific
review?
Ms. Browner. Not of this magnitude. We began this 4 years
ago when I first came to EPA.
Senator Shelby. OK.
Ms. Browner. To just explain one thing briefly, we have
dramatically changed in the last 4 years both how we do our
scientific review and how we subject our science to peer
review: whether it be our own internal science or science we
looked at from outside of the Agency. We have dramatically
increased the number of peer-review panels we use.
NAAQS: SCIENTIFIC DATA
Senator Bond. Do you believe that your basic decisions
regarding health should have a scientific basis?
Ms. Browner. Absolutely.
Senator Shelby. Has EPA, Administrator Browner, received
any Freedom of Information requests for this information
regarding your scientific data?
Ms. Browner. Senator Shelby, with all due respect, I think
I know the question you are asking. So if I might say what I
think the question is then maybe I can answer it a little bit
more directly.
Senator Shelby. You go right ahead.
Ms. Browner. There have been some who have raised a
question about some of the data that underlies some of the
published peer reviewed studies in the 200-plus studies that we
and our external peer-review panel relied on in reaching a
scientific proposal regarding a health standard for air. Those
data bases, one of which is at Harvard, another of which is
with the American Cancer Society, underlie those studies. We
have encouraged both Harvard and the American Cancer Society to
make those databases public.
Senator Shelby. Excuse me just 1 minute. Do you have those
databases?
Ms. Browner. No; we do not.
Senator Shelby. You do not have what they came up with?
Ms. Browner. What the scientific community does in this and
any other effort of this type is look at the scientific studies
that are done.
Senator Shelby. Absolutely.
Ms. Browner. We have all of the peer-reviewed studies.
Senator Shelby. Excuse me just 1 minute. But you at EPA, as
the Administrator, you commissioned these people----
Ms. Browner. No.
Senator Shelby. You do not, to do these studies?
Ms. Browner. Not necessarily, no.
Senator Shelby. Well, did you in any of these cases? Did
you commission or encourage the American Society to do a study
in this regard?
Ms. Browner. No; we did not commission or encourage the
American Cancer Society to collect this data or to do a
particular study. No; we did not.
Senator Shelby. But have you requested from them as the
Administrator the data in which they based their decisions?
Ms. Browner. The American Cancer Society.
Senator Shelby. I know who they are. I just asked you a
question. Have you requested from them as the Administrator the
data on which they based their decision?
Ms. Browner. The American Cancer Society does not have any
decision. They have a database that any scientist with an
appropriate scientific research question can access. They have
a written protocol. Anyone can access it.
Senator Shelby. Do you have that.
Ms. Browner. No; do we have the protocol? We would be more
than happy to get it for you, certainly. It is a written
protocol of what a scientist should do.
Senator Shelby. Would you get that and furnish it to the
committee and to this Senator?
Ms. Browner. Yes, we would be more than happy to.
[The information follows:]
Cancer Prevention Study II
DESCRIPTION
Cancer Prevention Study II (CPS-II) is a prospective mortality
study of approximately 1.2 million American men and women, begun in
1982. Participants were recruited into the study in all fifty states,
the District of Columbia, and Puerto Rico by approximately 77,000
volunteers for the American Cancer Society. Many of the participants
were friends, neighbors, or acquaintances of the volunteers. Enrollment
was restricted to adult members (age 30 or older) of families in which
at least one household member was 45 years or older.
Each participant completed a four page confidential questionnaire
and returned it in a sealed envelope. Baseline questions included
personal identifiers, height, weight, demographic characteristics,
personal and family history of cancer and other diseases, use of
medicines and vitamins, menstrual and reproductive history (women),
occupational exposures, dietary habits, alcohol and tobacco use and
various questions regarding exercise and behavior. For males, the
questionnaire covered 376 items, and for females, 395 items.
During the first six years of follow up (September 1, 1982 to
August 31, 1988), each participant's vital status was determined at two
year intervals through personal inquiries by the volunteers. Volunteers
were asked to check whether their enrollees were alive or dead and to
record the date and place of all deaths. Death certificates were
subsequently obtained from State Health Departments and coded by a
nosologist according to a simplified system based on the International
Classification of Disease, 9th revision (92 categories). For deceased
persons whose death certificates mentioned cancer, clinical information
was sought from cancer registries, physicians and hospitals to verify
the primary cancer site and histologic type.
The CPS-II study population is being traced beyond 1988 using
computerized linkage with the National Death Index (NDI), a database of
all deaths in the U.S. NDI provides ACS with a list of deceased
persons, their dates of death, states of death, and death certificate
numbers. With this information, ACS National is able to obtain most
death certificates directly from the State Health Departments. Vital
status follow-up at completion of the 1991 follow-up is shown in Table
1.
Follow up of CPS-II is expected to continue for many years (See
Figure 1) to maximize the information obtained from this valuable
study.
CPS-II NUTRITION SURVEY
In the Fall of 1992 and 1993 we recontacted approximately half of
the CPS-II Study population (men and women age 50-74 in 21 states) and
obtained updated information on nutrition and other cancer risk factors
on approximately 90,000 men and 100,000 women. The 21 States (26
Divisions) participating in this survey were California, Connecticut,
Florida, Georgia, Illinois, Iowa, Louisiana, Maryland, Massachusetts,
Michigan, Minnesota, Missouri, New Mexico, New Jersey, New York, North
Carolina, Pennsylvania, Utah, Virginia, Washington, and Wisconsin.
Our objective is to establish ongoing cancer incidence follow-up
for the CPS-II Nutrition Survey cohort through linkage with state
cancer registries. We then will be able to study the association of
many factors (e.g. diet, lifestyle, environment) reported in both 1982
and 1992 with cancer incidence. Because we will continue our mortality
follow-up of the entire CPS-II cohort (through linkage with the NDI),
we also will be able to study the association between reported risk
factors and survival.
A new questionnaire will be sent to the CPS-II Nutrition Survey
cohort in the Fall of 1997. This questionnaire will update information
on exposures and will also capture self-reported cancer incidence.
PUBLICATIONS
As of March 1997, 56 scientific papers on CPS-II had been published
or were about to be published in peer-reviewed journals. CPS-II is also
discussed extensively in two reports by the U.S. Surgeon General on The
Health Consequences of Smoking (1989), and The Benefits of Quitting
Smoking (1990). A list of references is attached.
ONGOING ANALYSES
Staff in the Epidemiology and Statistics Program are currently
conducting a series of analyses on CPS-II. These include analyses of
diet, hormones, and other risk factors for selected common fatal
cancers, analyses of risk factors for fatal breast and prostate cancer,
and updated dose-response analyses between smoking and mortality.
Collaborative studies are underway with the National Cancer Institute,
the Centers for Disease Control, and several universities.
CPS-II PUBLICATIONS
In Press
1. Heath CW, Lally CA, Calle EE, McLaughlin JK, Thun MJ.
Hypertension diuretics, and anti-hypertensive medications as possible
risk factors for renal cell cancer. Am J Epidemiol, 1966.
2. Kahn HS, Tatham LM, Rodriguez C, Calle EE, Thun MJ, Heath CW.
Stable behaviors associated with adults' 10-year change in body mass
index and likelihood of gain at the waist. Am J Public Health, 1996.
3. Thun MJ, Day-Lally C, Myers DG, Calle EE, Flanders WD, Zhu BP,
Namboodiri MM, Heath CW. Trends in tobacco smoking and mortality from
cigarette use in Cancer Prevention Studies I (1959-1965) and II (1982-
1988). In: National Cancer Institute, Smoking and Tobacco Control,
Monograph 6: Changes in Cigarette-Related Disease Risks and Their
Implication for Prevention and Control. Washington, DC: National
Institutes of Health.
4. Thun MJ, Myers DG, Day-Lally C, Namboodiri MM, Calle EE,
Flanders WD, Adams SL, Heath CW. Age and the exposure-response
relations between cigarette smoking and premature death in Cancer
Prevention Study II. In: National Cancer Institute, Smoking and Tobacco
Control, Monograph 6: Changes in Cigarette-Related Disease Risks and
Their Implication for Prevention and Control. Washington, DC: National
Institutes of Health.
5. Thun MJ, Heath CW. Changes in mortality from smoking in two
American Cancer Society prospective studies since 1959. Prev Med.
Published
1. Calle EE, Mervis CA, Thun MJ, Rodriguez C, Wingo PA, Heath CW.
Diethylstilbestrol and risk of fatal breast cancer. Am J Epidemiol
1996;144:645-52.
2. Cardenas VM, Thun MJ, Austin H, Lally CA, Clark WS, Greenberg
RS, Heath CW. Environmental tobacco smoke and lung cancer mortality in
the American Cancer Society's Cancer Prevention Study II. Cancer Causes
Control, 1997;8:57-64.
3. Miracle-McMahill HL, Calle EE, Kosinski AS, Rodriguez C, Wingo
PA, Thun MJ, Heath CW. Tubal ligation and fatal ovarian cancer in a
large prospective cohort study. Am J Epidemiol 1997;145:349-57. Calle
EE, Mervis CA, Thun MJ, Rodriguez C, Wingo PA, Heath CW.
Diethylstilbestrol and risk of fatal breast cancer. Am J Epidemiol
1997; 144:645-52.
4. Rodriguez C, Tatham LM, Thun MJ, Calle EE, Heath CW. Smoking and
fatal prostate cancer in a large cohort of adult men. Am J Epidemiol
1997;145:466-75.
5. Collaborative Group on Hormonal Factors in Breast Cancer. (Calle
EE, Heath CW, Jr., Miracle-McMahill HL, collaborators). Breast Cancer
and Hormonal Contraceptives: Further Results. Contraception 54, No.3
(Supplement), 1996.
6. Collaborative Group on Hormonal Factors in Breast Cancer. (Calle
EE, collaborator). Breast cancer and hormonal contraceptives:
collaborative reanalysis of individual data on 53,297 women with breast
cancer and 100,239 women without breast cancer from 54 epidemiological
studies. Lancet 347:1713-27, 1996.
7. Doll R. Cancers weakly related to smoking. Br Med Bull
1996;52:35-49.
8. Peto R, Lopez AD, Boreham J, Thun M, Heath C, Jr, Doll R.
Mortality from smoking worldwide. Br Med Bull 1996;52:12-21.
9. Steenland K, Thun MJ, Lally CA, et al. Environmental tobacco
smoking and ischemic heart disease in the American Cancer Society CPS-
II cohort. Circulation 1996;94:622-628.
10. Steenland K, Lally C, Thun M. Parity and coronary heart disease
among women in the American Cancer Society CPS-II population.
Epidemiology 1996;7:641-643.
11. Soucie JM, Coates RJ, McClellan W, Austin H, Thun M. Relation
between geographic variability in kidney stones prevalence and risk
factors for stones. Am J Epidemiol 1996;143:487-95.
12. Willis DB, Calle EE, Miracle-McMahill HL, Heath CW. Estrogen
replacement therapy and risk of fatal breast cancer in a prospective
cohort of postmenopausal women in the United States. Cancer Causes
Control 1996;7:449-57.
13. Thun MJ, Day-Lally CA, Calle EE, Flanders WD, Heath CW. Excess
mortality among cigarette smokers: Changes in a 20-year interval. Am J
Public Health 1995;85:1223-1230.
14. Thun MJ, Heath CW. Aspirin use and reduced risk of
gastrointestinal tract cancer in the American Cancer Society
Prospective Studies. Prev Med 1995;24:116-118.
15. Rodriguez C, Calle EE, Coates RJ, Miracle-McMahill HL, Thun MJ,
Heath CW. Estrogen replacement therapy and fatal ovarian cancer. Am J
Epidemiol 1995;141:828-835.
16. Pope, CA, Thun MJ, Namboodiri MM, Dockery DW, Evans JS, Speizer
FE, Heath CW. Particulate air pollution as a predictor of mortality in
a prospective study of U.S. adults. Am J Respir & Crit Care Med
1995;151:669-674.
17. Holmberg L, Ekbom A, Calle EE, Mokdad A, Byers T. Parental age
and breast cancer mortality: a cohort study of 384,000 women.
Epidemiology 1995:6:425-427.
18. Calle EE, Mervis CA, Wingo PA, Thun MJ, Rodriguez C, Heath CW.
Spontaneous abortion and risk of fatal breast cancer in a prospective
cohort of U.S. women. Cancer Causes Control 1995;6:460-468.
19. Calle EE, Miracle-McMahill HL, Thun MJ, Heath CW. Estrogen
replacement therapy and risk of fatal colon cancer in a prospective
cohort of postmenopausal women. J Natl Cancer Inst 1995;87:517-523.
20. Thun MJ, Aspirin, NSAIDS, and digestive tract cancers. Cancer
Metastasis Rev 1994;13:269-277.
21. Soucie JM, Thun MJ, Coates RJ, McClellan W, Austin H.
Demographic and geographic variability of kidney stones in the United
States. Kidney Int 1994;46:
22. Thun MJ, Calle EE, Myers DG, Heath CW. Response. Hair coloring
products: safe or still suspect? J Natl Cancer Inst 1994;86:943-944.
(Correspondence.)
23. Calle EE, Miracle-McMahill HL, Thun MJ, Heath CW. Cigarette
smoking and risk of fatal breast cancer. Am J Epidemiol 1994;139:1001-
1007.
24. Thun MJ, Altekruse SF, Namboodiri MM, Calle EE, Myers DG, Heath
CW. Hairdye use and risk of fatal cancers in women. J Natl Cancer Inst
1994;86:210-215.
25. Thun M, Namboodiri M, Calle EE, Heath CW. Nonsteroidal
antiinflammatory drugs in skin cancer revisited: Response. J Natl
Cancer Inst 1993;85:581. (Correspondence).
26. Calle EE, Martin LM, Thun MJ, Miracle HL, Heath CW. Family
history, age, and risk of fatal breast cancer. Am J Epidemiol
1993;138:675-681.
27. Thun MJ, Namboodiri MM, Calle EE, Flanders WD, Heath CW.
Aspirin use and risk of fatal cancer. Cancer Research 1993;53:1322-
1327.
28. Calle EE, Terrell DD. Utility of the National Death Index for
ascertainment of mortality among Cancer Prevention Study II
participants. Am J Epidemiol 1993;137:235-241.
29 Halperin Mt, Gillespie BW, Warner KE. Patterns of absolute risk
of lung cancer mortality in former smokers. J. Natl Cancer Inst
1993;85:457-464.
30. Thun MJ, Calle EE, Namboodiri MM, Flanders WD, Coates RJ, Byers
T, Boffetta P, Garfinkel L, Heath CW. Risk factors for fatal colon
cancer in a large prospective study. J Natl Cancer Inst. 1992;84:1491-
1500.
31. Peto R, Lopez AD, Boreham J, Thun M, Heath C. Mortality from
tobacco in developed countries: indirect estimation from national vital
statistics. Lancet 1992;339:1268-1278.
32. Lee PY, Silverman MK, Rigel DS et al. Level of education and
the risk of malignant melanoma. J Am Acad Dermatol 1992;26:59-63.
33. Thun MJ, Namboodiri M, Heath CW. Aspirin use and reduced risk
of fatal colon cancer. N Engl J Med 1991;325:1593-1596.
34. Shopland DR, Eyre HJ, Pechacek TF. Smoking-attributable cancer
mortality in 1991: is lung cancer now the leading cause of death among
smokers in the United States? J Natl Cancer lnst 1991;83:1142-1148.
35. Garfinkel L, Boffetta P. Association between smoking and
leukemia in two American Cancer Society prospective studies. Cancer
1990;65:2356-2360.
36. Garfinkel L, Boffetta P. Smoking and Estrogen-Related Sites
Data from American Cancer Society Studies. In Smoking and Hormone
Related Disorders. N. Wald, J. Baron (Eds.). Oxford, England: Oxford
Medical Publications, 1990.
37. Stellman SD, Garfinkel L. Proportions of cancer deaths
attributable to cigarette smoking in women. Women Health, 1989;15:19-
28.
38. Garfinkel L, LaVerda N. Dietary patterns of nurses. Proc of 5th
National Conference on Cancer Nursing. American Cancer Society, 1989.
39. Stellman, SD. Brief Reports: The case of the missing eights--An
object lesson in data quality assurance. Am J Epidemiol, 1989;129:857-
860.
40. Boffetta P, Stellman SD, Garfinkel L. A case-control study of
multiple myeloma nested in the American Cancer Society prospective
study. Int J Cancer 1989;43:
41. Stellman SD, Garfinkel L. Patterns of artificial sweetener use
and weight change in an American Cancer Society prospective study.
Appetite (suppl. II) 1988;85-91.
42. Stellman SD. Sweetener usage in America. A brief history and
current usage patterns. In G.M. Williams (Ed.), Sweeteners: Health
Effects. Princeton, NJ: Princeton Scientific Publishers. 1988:1-18.
43. Stellman SD, Boffetta P, Garfinkel L. Smoking habits of 800,000
American men and women in relation to their occupation. Am J Ind Med
1988;13:43-58.
44. Boffetta P, Stellman SD, Garfinkel L. Diesel exhaust exposure
and mortality among males in the American Cancer Society prospective
study. Am J Ind Med 1988;14:403-415.
45. Garfinkel L, Stellman SD. Mortality by relative weight and
exercise. Cancer 1988;62:1844-1850.
46. Garfinkel L, Stellman SD. Smoking and lung cancer in women:
findings in a prospective study. Cancer Res 1988;48:6951-6955.
47. Stellman SD, Garfinkel L. Patterns of reported age: Lack of
digit bias. JAMA 1987;257:2593-2594. (Correspondence).
48. Garfinkel L, Stellman SD. Cigarette smoking among physicians,
dentists, and nurses. CA cancer J Clin 1986;36:2-8. (Reprinted in World
Smoking & Health 1986;11:2-9).
49. Stellman SD. Cigarette yield and cancer risk: Evidence from
case-control and prospective studies. In: Zaridze D, Peto R, Eds.
Tobacco: A major international health hazard. International Agency for
Research on Cancer, Lyon, IARC 1986;74:197-209.
50. Stellman SD, Garfinkel L. Artificial sweetener use and one-year
weight change among women. Prev Med 1986;15:195-202.
51. Stellman SD, Garfinkel L. Smoking habits and tar levels in a
new American Cancer Society prospective study of 1.2 million men and
women. J Natl Cancer Inst 1986;76:1057-1063.
OTHER IMPORTANT PUBLICATIONS USING CPS II DATA
U.S. Department of Health and Human Services. Reducing the Health
Consequences of Smoking. 25 Years of Progress. A Report of the Surgeon
General. U.S. Department of Health and Human Services, Public Health
Service, Centers for Disease Control, Center for Chronic Disease
Prevention and Health Promotion, Office on Smoking and Health. DHHS
Publication No. (CDC) 89-8411, 1989:140-152.
U.S. Department of Health and Human Services. The Health Benefits
of Smoking Cessation. A Report of the Surgeon General. U.S. Department
of Health and Human Services, Public Health Service, Centers for
Disease Control, Center for Chronic Disease Prevention and Health
Promotion, Office on Smoking and Health. DHHS Publication No. (CDC) 90-
8416, 1990:75-84.
Smoking and Health in the Americas. A 1992 Report of the Surgeon
General, in collaboration with the Pan American Health Organization.
DHHS Publication No. (CDC) 92-8419. 1992.
Peto R, Lopez AD, Boreham J, Thun M, Heath C. Mortality from
smoking in developed countries 1950-2000. New York, NY: Oxford
University Press; 1994.
guidelines for collaboration with the epidemiology and surveillance
research department of the american cancer society
The following criteria will be used by the American Cancer Society
(ACS) to evaluate collaborative proposals by external researchers
involving use of ACS databases for epidemiologic analysis.
1. A written proposal must be submitted describing the project, its
intent, public health importance, and methodology.
2. The scientific question must be important, biologically
relevant, and timely.
3. ACS data must be suitable to study the topic.
4. ACS must have confidence in the ability of the collaborator(s)
to work productively with its staff.
5. Higher priority will be given to analyses that concern common
cancers or other issues of direct value to ACS.
6. Priority will be placed on cancer-oriented research. The number
of studies addressing only endpoints other than cancer will be limited
at any given time.
7. It is (highly) preferable that the collaborator(s) complete most
of the research at the ACS Home Office in Atlanta.
8. Scientific papers must be jointly authored by the collaborators
and ACS Epidemiology and Surveillance Research staff.
9. The timing of the analysis will depend upon the need for and
availability of support staff to assist in the project. Projects which
can provide funds to reimburse ACS for computer programming will
receive special consideration.
epidemiologic collaboration using american cancer society data
Title of Epidemiologic Research Project:
________________________________________
TERMS OF AGREEMENT
1. This epidemiologic research project involves active professional
collaboration between the American Cancer Society (ACS) and ______.
2. The agreement will cover the work outlined in the written
proposal submitted for the project, as later amended in writing by
mutual agreement, if applicable.
3. The project is planned to be completed within______ months
beginning ______ and ending ______.
4. The investigator(s) will complete most of the project work at
the ACS Home Office in Atlanta.
5. Work space and equipment will be provided for ______ external
collaborators at the ACS Home Office during the planned project period.
6. Any scientific papers submitted for publication as an outcome of
this project will be jointly authored by the collaborators and ACS
Epidemiology & Surveillance Research staff.
7. ACS Epidemiology research analyst staff support will be provided
to assist with the project for a total of ______ hours.
8. ACS will be reimbursed for computer programming by the
collaborator for hours at the rate of ______ per hour.
Work under this agreement will be governed by the following principles:
1. In addition to providing data necessary for analysis, ACS staff
will participate in development of the study protocol and in the
analysis and publication of study results. In this process, the
collaborating groups will reach mutually agreeable decisions regarding
data to be analyzed, protocols to be followed, and participation in
data analysis.
2. Access to ACS data will be contingent upon acceptance of the
terms of this agreement by all collaborating parties and upon
assurances of confidentiality for all personal identifying material in
the data. When the research project is completed, all original data
materials (tapes, printouts, etc.) will either be destroyed or returned
to ACS.
Signed:
__________________________________________________
Clark W. Heath, Jr., M.D. Date
Vice President for Epidemiology
and Surveillance Research
American Cancer Society
__________________________________________________
Name: Date
Title:
Institution:
NAAQS: PROTOCOL FOR ACCESSING DATA
Senator Shelby. Have you commissioned or have you
encouraged the National Academy of Sciences to do some
scientific studies regarding this?
Ms. Browner. Again, there are 250 scientific peer-review
published studies. Each study came through a process on its own
of peer review. Once that was completed, and some of those
extend over a 10-year period, the body of the science was then
subject to an external peer review. So you have peer review of
peer review of peer review.
We have encouraged both the American Cancer Society and
Harvard to make public those underlying databases. We have
encouraged that and we have written to them. Mary Nichols, the
Assistant Administrator for Air and Radiation, has written to
them asking them to make those public. It is important to
understand that these are peer-reviewed published scientific
studies that then were peer reviewed again by an independent
panel. The panel, which is made up of industry, university
scientists, and others, then formed the scientific basis of the
proposal we have made to the American people on public health
protection.
Senator Shelby. Again, do you believe that people that may
be questioning some of your decisions in various areas as the
Administrator of EPA would have a right to the data in which
you base your decision?
Ms. Browner. The American Cancer Society has an absolute
protocol, as does Harvard, for allowing people to access that.
We have encouraged them to go beyond that, to just put it out
in the public. We agree with you.
Senator Shelby. Very important, because it goes to what you
base your decisions on, is it not?
Ms. Browner. What we based our proposal on--there was no
decision yet--there is a proposal.
Senator Shelby. But there has been decisions in the past on
various things. And you base them, or try to I hope, on a
scientific basis?
Ms. Browner. The process I have used the last 4 years in
setting a public health standard or in adopting a regulation,
is to understand the body of science that is available.
Senator Shelby. Absolutely.
Ms. Browner. Each statute asks us to do something a little
bit different, so we have to take that into account. Once we
understand the body of science, it is then and in most
instances, subjected to a peer review.
Senator Shelby. We understand.
Ms. Browner. From that flows a proposal, which we take
public comment on. This is where we are today in the air
process. No final decision has been made and will not be made
until we have completed review of the 16,000 comments we
received. That is not pages; that is the number of comments.
Some of those comments may be hundreds of pages, which we are
now committed to reviewing and being informed by.
Senator Shelby. I understand what you are going through. I
know my time is up. If I could just take 10 seconds.
But, again, the scientific data that would support the new
particulate matter rule, do you believe that other people that
would be affected by this in America are entitled to the same
information, and would you make sure that people that request
it from you get this information to evaluate the basis on which
you make these proposals, to see if they are real or if they
are flawed? That was my question.
Ms. Browner. The two databases, the American Cancer Society
and the Harvard database are the databases there have been
questions about. They are available for valid research
purposes. You can file with either institution a request to
access it.
Senator Shelby. But do you have that information?
Ms. Browner. No; we do not have the databases.
Senator Shelby. So you make a decision just on their
findings, and you do not go back to their basis of their
information? I am troubled by this.
Ms. Browner. We use a 4-year process to evaluate published,
peer-reviewed scientific studies.
Senator Shelby. You still have not answered my question. I
have got another round. I will be back.
Senator Bond. Senator Shelby, I know this is an extremely
important area. I apologize, but we do want to make sure that
everybody has a shot at it.
Senator Shelby. My time is up.
Senator Bond. Yes; Senator Boxer.
BUDGET PRIORITIES
Senator Boxer. Secretary Browner, I am just going to step
back for 1 minute and say that--Mr. Chairman, thank you. Excuse
me for coming after the hearing started. I had to give a talk
down the hall in another meeting.
Just stepping back and wearing my budget committee hat, it
seems to me, as we look at the overall budget in these very
tight times, that we have got to make some pretty tough
decisions about where our priorities lie. And what the
administration did in this budget, pretty boldly I think, is
take out--is to target a few areas and say, you know what, this
is important to the American people.
Now, one of those is your Agency, EPA. And as I look from
the perspective of my State and the country, I think it is
right.
Now, that does not mean that when you throw money at
something, it necessarily has results. We have got to make sure
that, if we do that, we have results. I am extremely impressed
with what I see you have been doing in the past.
BROWNFIELDS SITES
Senator Boxer. I think what the people of my State want,
and I think it is true across the country--and I will give an
example of these contaminated strawberries as just an example--
of where people, if they demand anything at all--we know they
want the country to defend its borders and to act in the
national security interest of the Nation, but a lot of the
enemies they face in their daily lives are not knowing if they
can take their kid to the corner hamburger stand, if you will.
And I have met more than one parent who has had that
experience, done it 100 times and the 101 they lost a child
from E. coli. And when a mother cannot turn on the tap water
and give her child clean water, this is something they do not
ask us to do, they demand.
So I think, just overall, the fact that this administration
would recognize this as a priority is very important. And I
want to be as supportive as I can.
Now, certainly one of the reasons is that we have a great
number of Superfund sites in my home State. Over 40 percent of
Californians live within 4 miles of a Superfund site. We have
96 Superfund sites, the third highest of any State, seven
natural resource damage sites--that is, sites where the
environment has been damaged by the release of hazardous
substances--more than any other States. And we have got to have
brownfields.
And I would echo what Senator Mikulski said, when you have
these abandoned brownfield sites, it means there are fewer job
opportunities, you have neighborhood blight, and increased
pressure of urban sprawl. And the city of San Francisco alone
has over 5,000 of these sites.
So, to me, when we spend funding to clean it up, we are
making a major--we are making major progress, should that
cleanup go forward, if you will, toward economic redevelopment,
for jobs and toward a future that we will all be proud of. So
my question to you, I want to make sure everything we do is
based on science. I want to make sure everything is based on
reality. I want to make sure, to the greatest extent possible,
everything we do is based on consensus, which you are so good
at. So in terms of these cleanups, do you feel comfortable in
asking for these increases and that we are not going to see
this funding go toward attorneys?
I do not have anything against attorneys. I happen to be
married to one. My father was one. My son is one. But I
honestly feel, we give you money, we want cleanup. We do not
want court cases. So can you make us feel more comfortable as
we hopefully come through with some of this--I hope we come
through with all of it; I do not know if we will--that we are
going to see a dramatic improvement, we are going to see these
Superfund sites cleaned up by the year 2000, we are going to
see these brownfields sites cleaned up?
Ms. Browner. This money is for cleanup. Let me say this the
easiest way: we now have a universe of 600-plus sites that are
candidates that may beready to go, or just about ready to go,
into the final 2-year phase, which is the construction cleanup
phase. The lawyers are essentially done.
When we give you the numbers, it is based on the candidate
list we have and our belief that, within this level of
resources and the kind of experts we need to get it done, we
can deliver to you 500 sites, with the money, if we have the
money, by the end of the year 2000.
The lawyer part of this happens in an earlier phase. For
these particular 600-plus candidate sites, out of which will
come the 500, we are essentially done with the lawyers.
Senator Boxer. And brownfields, you feel the same way?
Ms. Browner. I think that brownfields is a great example of
how we avoided, in many instances, the lawyer problem up front.
We sat down with the American Bar Association, and with the
American Banking Association, and together crafted legal
agreements, to avoid any problems that could have flowed.
Senator Boxer. And just to finish this part, and then I
will wait to the next round. Eighty-two percent of your
increase would go toward these Superfund sites.
Thank you.
FISCAL YEAR 1997 SUPERFUND BUDGET
Senator Bond. Thank you very much, Senator Boxer.
Administrator Browner, my first question to you was why the
knowledge of the progress on Superfund sites, which led to a
projection of $1.4 billion in spending in the fiscal year 1997
budget, changed. I do not believe I got an answer for that, so
I will ask you to submit that for the record.
Senator Bond. My second question was why the Superfund
program merits a higher priority on the scientific risk
continuum than other areas. I do not believe the answer was
responsive to the question and I would invite you to submit
that answer in writing for the record.
SUPERFUND: REAUTHORIZATION
Let me try another area. In the February 1997 GAO report,
which stated that Superfund was a high-risk program, vulnerable
to mismanagement, waste, fraud and abuse, have you not----
Ms. Browner. We may not have seen this final report. I
apologize.
Senator Bond. It is dated February 1997.
Ms. Browner. We have seen this one. There are several GAO
reports. Some we have seen and some we have not.
Senator Bond. Yes; all right. This one was titled ``High
Risk Series, February 1997 Superfund Program Management,'' 1 of
25. We have the luxury in this committee of handling the high-
risk Superfund Program, the entire Department of HUD, which is
high risk, and the NASA contracting agency. This has been our
year. But I would call your attention to this.
The report does say that the program is vulnerable to
mismanagement, waste, fraud, and abuse. The report said:
That although EPA has been addressing weaknesses in
contract management, the Agency remains vulnerable to
overpaying its contractors and not achieving the maximum
cleanup work with its resources.
GAO also found that EPA pays its cleanup contractors a
higher percentage of total contract costs to cover
administrative expenses rather than ensuring the maximum amount
of available funds go to the actual cleanup. And I would like
to know why, with the demonstrated problems in Superfund, we do
not have a priority on reauthorization, correction of the
statutory deficiencies, and codification of the program reforms
prior to the request for an increase.
Ms. Browner. Mr. Chairman, I have spent the better part of
3 years asking the U.S. Congress to rewrite the Superfund law.
I have probably testified on proposals to rewrite that law more
than any other. I had reached an agreement with everyone, from
the Chemical Manufacturers Association to the Sierra Club, on
what a rewrite of that program could be. That was more than 3
years ago. Unfortunately, it did not come to pass.
Elections happend. Things changed. I accepted that. We are
back at it again this year. I will be meeting again this week
on both the House and the Senate side, asking the committees of
jurisdiction to please work with us in a bipartisan, consensus-
based manner, as we did on drinking water and on food quality.
Food quality took more than 20 years, but this body,
working with the administration, did it. There is no reason we
cannot do it again on Superfund. There is absolutely no reason
we cannot see this law rewritten in the next several months and
see it move through the congressional process. We are ready,
willing, and able to be at the table to write the legislation
to see the law changed.
However, we do not think that the funding increase that we
seek should be held hostage to a legislative rewrite,
particularly, since we have been about this now for the better
part of almost 4 years and have been unable to succeed.
Senator Bond. Madam Administrator, I am running out of
time. I would be happy to ask you to submit any further
comments on that for the record. But let me point out that when
the leadership went to the White House and asked to put
Superfund on the fast track, the Vice President said that they
were not ready to do so. We know that you have worked for a
long time to do it. We are waiting for your proposals. We are
not holding anything hostage.
We have a simple request that rather than pouring money
into a program which has been criticized by probably one-half
the people in this room, and the GAO says is vulnerable to
mismanagement, waste, fraud, and abuse because of the statutory
scheme in which it operates, that we need to work together to
see your proposal, to get your proposal first, and to sit down
and work on it, to make sure that we are putting money into
cleanup rather than into continued litigation problems and the
possible waste and abuse that has been identified.
Ms. Browner. Mr. Chairman, if I may, I know my time is up.
But we have gone to the relevant committee chairmen and asked
how they would like to proceed with getting it done this year.
They have suggested that rather than us crafting another bill,
they would like to work with us. I think that is important for
the record to reflect. That has been our understanding of their
request to us.
If we have misunderstood something and they want a bill,
then we will deliver you another bill. But I believe, at this
point in time, we are more likely to get this done, after 4
years of trying, if we just get in a room, close the doors and
hammer out our differences. Now, if they want a bill, if that
is what they are telling you, then tell me, and we will deliver
you a bill. We have written a bill.
What we need now is an honest dialog, in the same way we
had it on drinking water and we had it on food safety. There is
a way to do this, and that is what I am committed to.
Senator Bond. Well, I share your commitment. And we need to
get it done, because we need to make sure that the money goes
to cleanups and that the program works as efficiently as
possible.
Senator Mikulski.
SUPERFUND REFORM
Senator Mikulski. Thank you. Mr. Chairman, I am sorry that
Senator Lautenberg had to leave because of a pressing hearing
on the issues around tobacco, a longstanding public health
commitment of his. But I believe that Senator Lautenberg did
state and has said to me privately that he is working on a
Superfund reform effort with Senator Chafee, the driving force
in the environmental authorizing committee, and that they were
close to arriving at, if not a consensus, at least a workable
framework to bring to the full Senate for discussion and
amendment. And I think it might be useful if we then got a real
read on where that negotiation was going.
If they are stalled out, as you feel, that is one
situation. If they are moving, then that is optimistic. If they
are stalled out, then I think it is important that the
authorizers and Ms. Browner, and perhaps you and I, get into a
room to jump start the Superfund. But I do believe that there
has been very serious and methodical work on both cleaning up
Superfund sites, but also cleaning up our cumbersome Superfund
site process, which is costly and lends itself to needless
litigation and often excessive payments.
Am I right in this Ms. Browner?
Ms. Browner. From our perspective, the process is not
stalled. I will be meeting on both the House and the Senate
side later this week. I hope to come to closure on the Senate
side on what steps will be taken, when they will be taken, how
they will be taken, and who will be in the room. We had very
productive meetings with Senator Smith and with Senator Chafee
prior to the recess.
Senator Mikulski. You know what is happening here is Bond
raised the question. You are answering Bond and it is on my
nickel. [Laughter.]
Ms. Browner. I do not think the process is stalled.
Senator Bond. We will give you a few cents change, Senator
Mikulski.
Senator Mikulski. Can I get a few cents change?
Ms. Browner. From my perspective, the process is not
stalled. If Senator Chafee or Senator Smith believes the
process is stalled, then I am very disappointed, since we are
working in good faith.
INTERNATIONAL PROGRAM VISION
Senator Mikulski. And I do not know if it is stalled
either. I just know that we are working on, each, different
sets of assumptions here.
Now, I would like to come back to two areas of interest of
mine, one being the international effort. And, Ms. Browner, I
know you have a very modest international office, and I am not
for building up the Agency, but I do believe very strongly that
there is an international effort in exporting our knowledge,
our services and our technology. In conversations with me from
the private sector, there have been concerns that your
international office--and these are not my words but the words
given to me--are a lot of guys sitting around in khakis who
like to fly around the world, going to conferences and sitting
at head tables, talking about how the world ought to clean up.
My question to you is, while you are grappling with such
compelling issues like Superfund, do you have a vision and a
plan for this international office to really be a mechanism by
which we really promote not only environmental knowledge but
this opportunity, and are you connected to the Department of
Commerce in being able to achieve that?
Ms. Browner. We think there is a tremendous opportunity for
the export of American environmental technology. The world
market for environmental technology is growing dramatically.
There is no reason why the United States should not be No. 1 in
that export market. We are not, unfortunately, No. 1. There are
other countries that now surpass us.
Part of our international work is in partnership with the
Department of Commerce and others to ensure that our
technologies and our environmental technology firms are able to
access those foreign markets. Last year there was a lot of
discussion about our environmental technology initiative. In
the budget, we are requesting $10 million for technology
verification.
This is one of the most important things we can do for
these technology firms. When they go to other countries, the
first thing that is asked of us is, what does EPA think? If
they can demonstrate they have our verification, then it makes
their product and their technology that much more interesting.
Senator Mikulski. Ms. Browner, have you given an explicit
direction to your international office that this must be a
focus, and require from them a strategy, a plan of action,
targeted opportunities either in sectors or in geographic
areas?
Ms. Browner. Yes.
Senator Mikulski. Why is it that we do not sense a momentum
in that?
Ms. Browner. Well, I think the challenge is large. Other
countries, quite frankly, are extremely aggressive. They put a
large amount of resources into pushing their technology in
other countries, far more, I think, than we probably do. We
also do work in conjunction with the Department of Commerce,
which saw some of their budget cuts targeted to these areas.
But certainly we see it as a priority which is, you know,
twofold. First, we get the opportunity for American businesses,
and second, we all solve a pollution problem. Pollution does
not recognize political boundaries and some pollution problems
in other parts of the world may ultimately affect us. So we see
it as twofold, a pollution reduction and a technology
advancement.
Senator Mikulski. I know my time is up. I am supportive of
the AMI initiative.
Senator Bond. You have got a couple of seconds.
Senator Mikulski. I agree with that.
Ms. Browner. Thank you.
Senator Mikulski. And I would really like to be able to
have, for me, really what is this strategy and plan of action,
so that we can look at how we can support it and become more
aware.
Ms. Browner. OK.
Senator Mikulski. Many thanks.
Ms. Browner. Thank you.
Senator Bond. Thank you very much, Senator Mikulski.
Senator Shelby.
[The information follows:]
Strengthening EPA'S International Programs
INTRODUCTION
In the Report accompanying EPA's fiscal year 1997 appropriations
bill, the Senate stressed the important role EPA's international
programs play in fulfilling the Agency's environmental mission: ``The
Committee recognizes that the protection of the U.S. environment
depends in part on the environmental protection efforts of other
countries * * *. The Committee encourages the integration of EPA's
international goals more coherently into its principal mission and
objectives.''
To this end, the Senate Appropriations Committee directed EPA to
report to Congress by March 1, 1997 on its measures to strengthen its
international program. The Committee specified that EPA's report should
address: (a) the integration of international considerations into EPA's
primary objectives (Section II); (b) the prioritization of
international activities (Section III); the role of other Federal
agencies in international environmental activities and their
relationship to EPA's Office of International Activities (Section IV);
and (d) the value to the American people of EPA's international
programs (Section V).
This report responds to that Congressional directive. Structured
according to the specific request from Congress, the report contains a
separate section for each of the four elements identified by the
Committee. It concludes with a section describing measures EPA is
taking to strengthen the Agency's international programs.
ACHIEVING EPA'S MISSION
EPA leads the nation's efforts to protect and preserve public
health and the vitality of natural ecosystems in this country. The
Agency is committed to achieving these goals by reducing risks to human
health and the environment, preventing pollution, and fostering
environmentally sound and sustainable economic development in a cost-
effective and efficient manner.
International cooperation is a key element in EPA's ability to
achieve this mission. The U.S. faces significant challenges in
protecting the health of its citizens and its natural resources from
environmental hazards. In today's world, since pollution does not honor
national boundaries, overcoming these challenges requires the
cooperation of other countries. Some examples:
--Cross-border air, water and waste pollution from Mexico, Canada and
other areas affect the health, environment and well-being of
American citizens living along borders as well as other areas
of the United States.
--Improper use of chemicals abroad can affect the safety of food and
other products imported into the United States.
--Health and environmental benefits resulting from the multi-billion
dollar U.S. investment by industry under the Clean Air Act to
reduce emissions of stratospheric ozone depleting compounds
could be undermined by failure to control production or use of
these chemicals in other countries, such as China, India or
Russia.
--Pollution of the marine environment in the Wider Caribbean Region
\1\ can damage U.S. fisheries and coral reefs and jeopardize
tourism and other livelihoods.
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\1\ The Wider Caribbean includes the Gulf of Mexico, the Straits of
Florida and the Caribbean Sea. These shared waters are bordered by the
United States, Mexico, Belize, Honduras, Nicaragua, Costa Rica. Panama,
Colombia, Venezuela, Guyana, Suriname, French Guiana, and all of the
Caribbean islands.
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--Pollution of the oceans and irreversible loss of species and
habitat worldwide damage natural systems critical to our well-
being and quality of life, and deprive us of commercially
valuable and potentially life-saving genetic materials.
--The long-range transport of persistent organic pollutants like DDT,
chlordane and polychlorinated biphenyls (PCB's) can adversely
affect health and environment in the United States.
Every major EPA program area has an important and indispensable
international component. The Air Office must concern itself with the
transboundary fluxes of pollutants such as sulfur dioxide; the
Pesticides Office must establish safe tolerances for the import of food
to ensure food safety and share information on certain pesticide
exports and regulatory decisions; the Office of Solid Waste must ensure
the safe import and export of waste; the Office of Enforcement and
Compliance Assurance must work with foreign countries, for example, to
stop the smuggling of ozone-depleting chemicals; the Office of General
Counsel works with USTR on such issues as reformulated gasoline and to
defend EPA's regulations when these are challenged at the World Trade
Organization (WTO); the Office of Policy, Planning and Evaluation must
examine how non-environmental policies, such as trade policies, affect
EPA's regulations; and the Office of Water must deal with ocean dumping
and pollution of international watercourses such as the Great Lakes. It
is absolutely clear, therefore, that EPA's work to protect human health
and the environment in the United States has an essential international
component that cannot be considered independently from EPA's other
work.
Within EPA, the Office of International Activities (OIA) leads
these international efforts working in close cooperation with other
parts of the Agency. As described by the General Accounting Office in
its report of September 1996,\2\ OIA ``serves as the focal point and
catalyst for the agency's international agenda, providing leadership
and coordination on behalf of EPA's Administrator.'' OIA is essential
to a strong and efficient international program at EPA. Centralizing
certain core international functions prevents costly duplication and
facilitates the mobilization of Agency program and regional office
resources in support of U. S. environmental goals and objectives. As
chief advisor to the EPA Administrator on international issues, OIA
plays a particularly important role with respect to cross-cutting
programs and projects and ensures that the Agency speaks with one voice
on critical policy matters. OIA also serves as EPA's principal point of
contact on international environmental matters with the Department of
State, the U.S. Agency for International Development, the Department of
Commerce and other federal departments, and oversees the Agency's
international travel and visitors programs.
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\2\ ``International Environment: U.S. Funding of Environmental
Programs and Activities,'' Report to the Chairman, Committee on Foreign
Relations, U.S. Senate, United States General Accounting Office, GAO-
RCED-96-234, September 1996, Page 22.
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EXCERPT FROM THE U.S. GENERAL ACCOUNTING OFFICE--SEPTEMBER 1996
EPA is the nation's chief technical and regulatory agency for
environmental matters. As such, it plays a major role not only in
domestic environmental protection activities but in international
environmental programs and activities as well * * *. EPA's
international programs also serve important U.S. economic, foreign
policy, and security interests.
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Consistent with EPA's Five-Year Strategic Plan \3\ and the National
Environmental Policy Act, EPA has taken steps to incorporate essential
international activities into the Agency's programs. Program and
regional offices now have a point of contact for international
activities. OIA also facilitates a network of regional coordinators to
better mobilize the scientific and technical expertise available
through the Agency's regions and laboratories. The reduction of global
and regional environmental risks is one of twelve environmental goals
identified in EPA's draft ``National Environmental Goals for America''
report. In addition, corresponding goals, objectives and measures for
international activities are being developed as part of the ``planning,
budgeting, analysis, and accountability'' process that is currently
being introduced in the Agency. The Agency's goal is to link budget
decisions with priorities in a more formal, structured way, and to
measure results.
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\3\ ``The New Generation of Environmental Protection: EPA's Five-
Year Strategic Plan,'' Office of the Administrator, U.S. Environmental
Protection Agency, EPA 200-B-94-002, July 1994.
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EPA has been very successful in advancing the U.S. international
environmental agenda. With new planning and management tools, and
enhanced cooperation with the Congress and other partners, the Agency
can do an even better job in meeting today's challenges. This will
require, among other things, developing well-targeted international
activities within major programmatic areas.
SETTING CLEAR PRIORITIES
The Agency recognizes the importance of ensuring that its
international activities contribute to its primary mission. To that
end, the Agency has developed a set of criteria to help determine the
relative priority of EPA's proposed international efforts for planning
and budgeting purposes. As part of its implementation of the Government
Performance and Results Act (Public Law 103-62) and the restructuring
of its planning, budgeting, analysis, and accountability processes, the
Agency is also developing a results-oriented process for evaluating the
effectiveness of its international programs.
Criteria
EPA has identified the following criteria to better determine the
relative priority of international efforts within the Agency. Proposed
programs and activities are weighed according to the degree to which
they:
--Protect U.S. public health and the environment from transboundary
or global environmental risks;
--Fulfill statutory and treaty obligations and respond to
congressional mandates and court-ordered deadlines;
--Contribute directly to U.S. domestic environmental programs by
increasing the effectiveness or lowering the cost of
environmental protection in the United States (e.g., through
the acquisition of new research, data or technology);
--Advance broader U.S. foreign policy, economic or national security
objectives as defined by Congress and the Administration; and
Take advantage of EPA's unique expertise and experience in the most
cost-effective manner possible.
Evaluation and Monitoring
Responding to the Government Performance and Results Act of 1993,
EPA is increasing its efforts to measure the environmental results of
its activities, including those in the international arena. The Agency
has begun to develop measurable outcomes for environmental programs at
the national and programmatic levels. The ``National Environmental
Goals for America'' report, released recently in public draft form,
defines broad goals to improve the nation's environment. Included in
this report are a series of proposed milestones to indicate progress
toward achievement of the proposed national environmental goals. To
achieve the milestones, Federal agencies, states, tribes, communities,
industries and individuals must work collectively to implement
programs, monitor results and report successes and deficiencies. The
draft Goals Report includes a chapter on the global environment that
proposes specific, measurable milestones within defined time frames for
achieving international environmental objectives. EPA will implement
programs to help achieve the global environmental goal and related
milestones and will monitor the progress of these programs.
EPA is developing specific goals, objectives and outcome measures
to indicate environmental achievements across the Agency. Each major
program of the Agency, including international activities, is required
to define subordinate programmatic goals and measures and employ
monitoring and evaluation techniques for positive environmental
results. If these evaluation and monitoring efforts suggest that
statutory changes would be beneficial, EPA will report these findings
to Congress for its consideration. Our overriding objective is to
provide the best protection possible for U.S. citizens and natural
resources, consistent with the full range of U.S. political, economic
and environmental interests.
COOPERATION WITH OTHER FEDERAL AGENCIES
EPA's environmental mandate and expertise make it uniquely
qualified to represent the nation's environmental interests abroad.
While the Department of State is responsible for the conduct of overall
U.S. foreign policy and other agencies are also involved in the
international environmental arena, only EPA has environmental expertise
as its primary mission and focus of expertise. The following summarizes
EPA's cooperative relations with other U.S. agencies.
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Major Global Environmental Treaties:
1996-Protocol Relating to the London Dumping Convention \1\
1992--Framework Convention on Climate Change \1\
1992-Convention on Biological Diversity
1989--Basel Convention on the Control of Transboundary Movements of
Hazardous Wastes and Their Disposal
1987--Montreal Protocol on Substances that Deplete the Ozone Layer
\1\
1985--Vienna Convention on the Protection of the Ozone Layer \1\
1982--United Nations Convention on the Law of the Sea
Principal North American Environmental Agreements:
1992--North American Agreement on Environmental Cooperation \1\
1991--Canada-United States Air Quality Agreement \1\
1983--Agreement Between the States and Mexico on Cooperation for
the Protection and Improvement in the Border Area \1\
1983--Convention for the Protection and Development of the Marine
Environment of the Wider Caribbean Region \1\
1978--Great Lakes Water Quality Agreement \1\
\1\ Ratified/given final approval by U.S.
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Under the Foreign Relations Act of 1979 (Public Law 95-426), as
amended, the Department of State is given primary coordination and
oversight responsibility for all major science and technology
agreements and activities between the United States and foreign
countries, international organizations, or commissions of which the
United States and one or more countries are members. Relations between
EPA and the Department of State cut across several offices/bureaus in
both organizations. For example, EPA works closely with the Bureau for
Oceans, Environment and Scientific Affairs (OES), the offices of the
Legal Adviser, International Organizations, Economic Affairs, and
regional bureaus. OIA at EPA and the OES at State serve as principal
points of contact for overall coordination.
EPA plays a large role in the negotiation of international
environmental agreements and programs and, at the request of the State
Department, sometimes leads U.S. delegations. The degree and level of
responsibility for policy development and treaty negotiation on
environmental agreements varies by issue between EPA and the Department
of State. The policy development necessary for negotiation and
implementation of these agreements is invariably dependent upon EPA
expertise and support. This expertise is especially critical with
respect to ensuring consistency with our domestic environmental
policies and regulatory programs.
Recognizing that international agreements are only as effective as
their implementation, the Agency also draws on its statutory authority
and unique technical and policy expertise to assure the effectiveness
of these agreements, both within the United States through the
promulgation of appropriate regulations and abroad through technical
assistance and training. EPA's policy leadership and technical
cooperation programs under the Montreal Protocol, London Ocean Dumping
Convention and Framework Convention on Climate Change, for example,
have been critical to the success of those international agreements.
The Agency is now playing a similar role in preparing for negotiations
on a global convention on persistent organic pollutants (POP's) and
existing negotiations on prior informed consent (PIC) for the export of
certain banned or severely restricted chemicals.
EPA recently signed a Memorandum of Agreement with the Department
of Defense and Department of Energy to formalize on-going cooperation
in the area of ``environmental security''. Responding to the
recommendation of EPA's Science Advisory Board that EPA ``recognize
that global environmental quality is a matter of strategic national
interest,'' \4\ the agreement will facilitate inter-agency cooperation
in responding to emerging environmental threats to the health and
safety of U.S. citizens, U.S. foreign policy interests and
environmental problems associated with the legacy of the Cold War. EPA
is offering its unique technical expertise in such areas as
environmental monitoring and assessment, emergency planning and
response, risk assessment, environmental technology development and
transfer, and the investigation of international environmental crimes.
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\4\ ``Beyond the Horizon: Using Foresight to Protect the
Environmental Future,'' Science Advisory Board, U.S. Environmental
Protection Agency, EPA-SAB-EC-95-007, Page 6.
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EPA has often been asked by the State Department and Defense
Department to provide leadership on critical political and security
issues. For example, EPA officials and experts were an important part
of the U.S. team that promoted scientific and technical cooperation as
an effective tool for reducing Cold War tensions with Eastern Europe
and the Soviet Union. EPA chaired the U.S. delegation to the historic
NATO environmental conference in 1993 that included former Soviet bloc
countries for the first time.
EPA and the many components of the Department of Commerce work
together closely on a range of different issues, including many science
and technology issues. OIA has the lead for coordinating with the
Department of Commerce on international issues, including
responsibility for organizations carrying out EPA's activities under
the Export Enhancement Act of 1992. The Act mandated EPA participation
on the Environmental Trade Working Group (ETWG) of the Trade Promotion
Coordinating Committee (TPCC), an inter-agency working group chaired by
the Secretary of Commerce to coordinate the government's overall trade
promotion activities. OIA represents EPA on the sub-cabinet TPCC
Deputies' Committee and, along with the International Trade
Administration at Commerce, co-chairs both the ETWG and the ETWG
``Advance Team''.
The Department of Commerce and other trade promotion agencies often
look to EPA for information on international environmental needs and
market opportunities. Cooperative activities among these agencies have
also led to joint economic and environmental benefits for the United
States. Joint funding for environmental training of foreign officials,
for example, has helped strengthen environmental management
capabilities worldwide while leading to over $150 million in sales for
small and medium-sized companies in the U.S.
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excerpt from the epa science advisory board--january 1995
Recognizing that the United States is part of a global ecosystem
that is affected by the actions of all countries, EPA should begin
working with relevant agencies and organizations to develop strategic
national policies that link national security, foreign relations,
environmental quality, and economic growth.
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EPA also works extensively with the National Oceanic and
Atmospheric Administration (NOAA) and the U.S. Coast Guard on
international environmental scientific and policy issues related to the
protection of our coasts, marine environment and atmosphere. At the
Coast Guard's request, for example, EPA's international office chairs
an inter-agency work group tasked with negotiating an international
agreement on air pollution standards for ships through the
International Maritime Organization. EPA provides technical and policy
guidance to the Coast Guard on other vessel safety and pollution
prevention matters, for example, problems associated with anti-fouling
paint used on ship hulls.
OIA serves as EPA's primary point of contact and liaison with the
U.S. Agency for International Development (U.S. AID). Specifically,
drawing on expertise from throughout EPA, OIA administers a number of
inter-agency agreements for environmental assistance. Under the Support
for Eastern European Democracy Act and the Freedom Support Act, for
example, OIA coordinates the provision of technical assistance,
training, information exchange, and demonstrations in building
environmental institutions and human resource capabilities in Central
and Eastern Europe, Russia and the New Independent States. OIA also
coordinates similar inter-agreements with respect to capacity-building
in Central America and Asia.
EPA works extensively with the Office of the U.S. Trade
Representative (USTR), particularly its Office of Environment and
Natural Resources, to ensure that U.S. international trade policies are
mutually supportive, reflecting the Administration's continuing
commitment to sustainable economic growth. For example, through the
Agency's participation in the negotiation of both the North American
Free Trade Agreement and the World Trade Organization and in the
Committees created by both sets of agreements, EPA has worked with USTR
to ensure that U.S. obligations under international trade agreements do
not hamper the ability of federal and state governments to maintain
high levels of domestic environmental protection. The two agencies also
work together to ensure that EPA's rules, regulations and other
programs are consistent with U.S. obligations under international trade
agreements. EPA is represented on the subcabinet Trade Policy Review
Group (TPRG) and the Trade Policy Staff Committee (TPSC), coordinated
by USTR and responsible for the development of U.S. international trade
policy.
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THE MURMANSK INITIATIVE: SUCCESSFULLY APPLYING THE CONCEPT OF
``ENVIRONMENTAL SECURITY''
EPA, the Department of Defense and other agencies are working with
Russia and Norway to upgrade and expand a low-level liquid radioactive
waste (LLW) processing facility in Murmansk, Russia. Designed to halt
possible sea disposal of LLW from the decommissioning of Russia's
nuclear submarine fleet, the project is introducing an innovative U.S.
technology employing special filtering, containment and processing
techniques.
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EPA has participated in all of the work leading up to the Report of
the WTO Committee on Trade and Environment (WTO/CTE) to the Singapore
Economic, Ministerial in December 1996. The WTO/CTE was created with
strong support from the U.S. in order to provide, among other things, a
mechanism to help ensure that the international trade rules are
environmentally sensitive. EPA, together with State and USTR, also
leads U.S. delegations to meetings of the OECD Joint Experts Group on
Trade and Environment.
Finally, EPA works closely with a number of other agencies with
environmental, health or safety mandates, including the departments of
Labor, Transportation, Agriculture, Interior, Health and Human Services
and the Food and Drug Administration.
BENEFITS TO THE AMERICAN PEOPLE
EPA's international environmental programs help protect the health
and environment of American citizens. They enlist the cooperation of
other nations in reducing transboundary and global environmental
threats to the United States and reduce the cost of the nation's
environmental protection. They also serve the nation's broad foreign
policy, economic and national security interests.
Reducing Environmental Threats Along Our Borders
Over half of the U.S. population lives in the 19 States that form
our borders with Mexico and Canada. Nowhere are the benefits of EPA's
international programs more apparent than along our common borders with
Mexico and Canada and in the Arctic and Wider Caribbean Region.
EPA's cooperative programs with Mexico, along with the Agency's
role in negotiating the North American Free Trade Agreement (NAFTA),
have led to specific environmental gains in both countries. The
construction of wastewater treatment facilities in Mexico is helping
solve decades-old problems affecting human health and the environment
in California, Arizona, New Mexico, and Texas. Joint air pollution
efforts under the 1983 Border Environment Agreement will help reduce
respiratory and other health problems in U.S. cities along the border,
as well as their Mexican ``sister'' cities (e.g., Ciudad Juarez,
Tijuana). Coordinated enforcement efforts are reducing illegal waste
dumping and other pollution on both sides of the border. Working
closely with the Department of Health and Human Services, the
Department of the Interior and the Department of Agriculture, EPA will
play a leading role in implementing ``Border XXI'', a new five-year
program for protecting health and environment along the border (See
box).
Long-standing cooperation with Canada has resulted in corresponding
environmental gains along our northern border. Benefitting from the
Great Lakes Water Quality Agreement and other cooperative agreements,
mercury levels in fish in Lakes Michigan, Huron and Erie have dropped
by more than 75 percent since 1970. Phosphorous loadings into Lake Erie
decreased by more than 50 percent over the same time period, improving
water quality and raising fish stocks. EPA and Environment Canada are
working closely with public and private interests on both sides of the
border to eliminate health and environmental risks from persistent
organic pollutants in the Great Lakes.
U.S. and Canadian efforts to achieve the goals of the U.S.-Canada
Air Quality Agreement resulted in reductions of sulfate wet deposition
over eastern North America by over 20 percent of 1979 levels. U.S. and
Canadian federal, British Columbia provincial and Washington state
agencies are cooperating to achieve shared goals for the Puget Sound-
Straits of Georgia Basin eco-region. Their top four priorities are
minimizing habitat loss, protecting marine plants and animals,
minimizing introduction of non-native species, and creating marine
protected areas. Joint contingency planning with Mexico and Canada is
helping prevent and ensure appropriate response capabilities for
chemical accidents or other hazardous spills along inland borders.
Finally, the U.S. and its NAFTA partners have determined that some
transboundary issues related to Mexico and Canada are better addressed
on a regional scale through the Commission for Environmental
Cooperation (CEC), which was established under the North American Free
Trade Agreement side agreement. For instance, the three parties have
developed regional actions plans for DDT, mercury, PCB's and chlordane,
and are negotiating procedures to notify and mitigate transboundary
environmental impacts. They are also considering a conservation
strategy for North American migratory songbirds. The CEC has
facilitated cooperation among the North American nations on other
issues such as environmental enforcement; development of a North
American pollutant release inventory; regional greenhouse gas emissions
trading; and regional implementation of global environmental
agreements.
Reducing Global and Regional Environmental Risk
Global threats have local effects since they can affect the health
and well-being of every U.S. citizen. Depletion of the stratospheric
ozone layer increases the amount of the sun's ultraviolet radiation
reaching the earth's surface, thereby increasing risk of skin cancer,
cataracts and suppression of human immune systems. Pollution of the
oceans originating in other countries threatens health and environment
along U.S. coasts. Similarly, the United States is vulnerable to the
impacts of climate change caused by global greenhouse gas emissions.
Even with stabilization of emissions by the year 2100, global
temperatures would continue to rise for several decades and sea level
for centuries. Loss of biological diversity is damaging the health of
ecosystems and depleting the world's commercially valuable and
potentially life-saving genetic materials. The global ramifications of
the nuclear accident at Chernobyl underscored U.S. vulnerability to the
results of environmental mismanagement in other countries.
Environmental problems like ozone depletion and water pollution also
have adverse economic effects for industries like agriculture and
fishing.
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BORDER XXI: PROTECTING U.S. HEALTH AND ENVIRONMENT ALONG THE U.S.-
MEXICO BORDER
EPA will play a leading role in implementing ``Border 21'', the
next five-year phase of the binational program to address
environmental, public health and natural resource issues along the
U.S.-Mexico border. EPA's goal is to make border communities safe and
cleaner for the more than 10 million people who live there. Underlying
principles for the plan include enhanced public participation, greater
involvement of tribal nations and state agencies, and enhanced
coordination and integration of effort among federal agencies and
between federal and state agencies.
Objectives of the plan include: (1) reducing and responding to
health problems from exposure to chemical, physical and biological
agents; (2) building or upgrading wastewater and drinking water
systems; (3) reducing air pollution in innovative ways, including
expansion of monitoring and control programs; (4) expanded tracking of
trans-border shipments of hazardous and toxic substances; (5) expanded
use of pollution prevention and recycling practices; (6) improved
emergency response procedures; (7) intensified enforcement of
environmental and health protection laws in both countries; and (8)
increased public access to information, including environmental data.
To achieve maximum environmental results under this program, EPA is
using implementation of Border XXI as a pilot under the Government
Performance and Results Act.
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Drawing on its policy and technical expertise, and in accordance
with its statutory authority, EPA plays a leading role in negotiating
and implementing international agreements and programs on global and
regional environmental problems directly affecting the United States.
The Agency was a leading policy and technical voice in the
international negotiations on the Montreal Protocol on Substances that
Deplete the Ozone Layer. EPA was a key participant on the U.S.
delegation to many technical working group meetings, and had lead
responsibility for domestic implementation of the Protocol through the
promulgation of regulations under the Clean Air Act. The Agency is also
instrumental in carrying out U.S. responsibilities related to the
provision of technical assistance to developing-country Parties to the
Protocol. EPA is now leading the inter-agency effort to reduce illegal
exports and imports of chlorofluorocarbons (CFC's) through enforcement
cooperation with other countries.
EPA also provides policy and technical leadership in international
efforts to implement the Framework Convention on Climate Change,
particularly through the President's Climate Change Action Program, and
international agreements to prevent and reduce pollution of the marine
environment from dumping, vessels and land-based sources. The recent
agreement under the London Convention to ban the sea disposal of
radioactive and industrial wastes, for example, helps protect U.S.
coastal areas, fisheries and human health. Through U.S.G. activities
like the U.S. Country Studies Program and the United States Initiative
on Joint Implementation (USIJI), EPA assists developing countries in
identifying innovative, cost-effective ways to reduce greenhouse gas
emissions. Increasing private sector investment in developing countries
while enhancing environmental and human health benefits are goals of
the USIJI, the Country Studies Program and related programs. The
Country Studies Program is expanding its analytic activities with the
fifty-five participating countries to support the negotiations,
including assisting up to ten additional countries in assessing the
extent of emissions reductions achievable through implementation of
``win-win'' or ``no regrets'' measures. These activities stimulate the
development and diffusion of clean, energy-efficient technologies in
developing countries and reduce the need to achieve the same greenhouse
gas reductions in the United States.
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EXCERPT FROM THE NATIONAL ACADEMY OF PUBLIC ADMINISTRATION--APRIL 1995
EPA's role as protector of the national interest in environmental
matters would require it to work with other nations on problems
affecting the United States and the world.
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EPA has been a global leader in international efforts to control
the long-range transport of persistent organic polychlorinated
biphenyls (PCB's). The Agency recently helped secure international
consensus on the need for a legally binding convention on these
pollutants. Such a convention will enlist the cooperation of nations in
limiting the production of chemicals long banned or restricted for use
in the United States and whose continued use abroad poses a threat to
health and environment in this country. EPA has also played a major
role in international agreement on prior informed consent (PIC) for the
transboundary movement of certain toxic chemicals and pesticides, and
for a Biosafety Protocol to the Biodiversity Convention seeking to
construct an international regime for trade in living modified
organisms.
Similarly, EPA has a key role on implementing the Global Programme
of Action on Land-Based Sources of Marine Pollution adopted at the
Washington Conference in 1995, and in negotiations on a Land-Based
Marine Pollution Protocol under the Cartagena Convention for the Wider
Caribbean Region. The development and implementation of effective
controls on land-based sources of marine pollution such as outfalls and
runoff will go far toward advancing important U.S. environmental and
economic interests. Clean beaches and healthy coral reefs, for example,
are very important to the tourist, fishing and recreation industries.
EPA's international programs on safe pesticide use are helping to
improve the quality of the U.S. food supply. Many off-season fruits and
vegetables are imported from developing countries whose environmental
inspection and regulatory systems are considerably less stringent than
those in the U.S. By working with foreign environmental protection
agencies and agricultural producers, EPA is able to promote safer
pesticide use and food production practices in countries producing a
significant amount of export crops for the U.S. market. Since 1991, for
example, EPA has provided technical assistance on pesticide management
to many countries in Central America. Much of the produce grown in
Central America is intended for the U.S. market.
Elevating the Quality and Reducing the Cost of Environmental Protection
in the United States
The United States is a world leader in environmental protection,
with significant expertise residing in both the public and private
sectors. Cooperative research and regulatory development enables the
United States to share the costs of environmental protection efforts
and to benefit from scientific and technological breakthroughs in other
countries, thereby elevating the quality and reducing the cost of
environmental protection in the United States.
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learning lessons from abroad: the polish biosolids project
EPA's international technology and assistance projects not only
help solve pressing environmental problems abroad; they can also
identify innovative approaches for use in the United States. Over the
last three years, for example, EPA has used AID-funding to work with
the Government of Poland in demonstrating the use of biosolids (sewage
sludge) in revegetating and detoxifying land contaminated by coal
mining and smelter wastes. The successful results of this small-scale
demonstration could help introduce the use of this low-cost and
effective technique in the U.S.
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Cooperative research with several countries, including Canada,
Germany, Sweden, Japan, China, and India, has yielded valuable
information to the United States at a fraction of the cost of
collecting and analyzing the data here. In a cooperative study with
China, for example, EPA was able to assess the loss of lung function in
children due to their exposure to coarse and fine air-borne particulate
matter. Joint testing with Germany on the development of thermal
destruction techniques for hazardous waste saved the U.S. taxpayer
millions of dollars and accelerated the U.S. domestic program in this
area three to four years. Shared testing through the Organization for
Economic Cooperation and Development (OECD) of over 700 high production
volume chemicals greatly reduces the cost and administrative burden of
chemical testing in the United States. OECD's long-standing Test
Guidelines harmonization program for toxic chemicals data has been
expanded to explicitly consider pesticides data, thereby leading to
even greater resource savings for national regulatory agencies and
industry as well as more consistent scientific and regulatory
conclusions. Cooperation with the European Union is helping to enhance
the effectiveness of ecolabeling as a market-based, environmental
policy tool.
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RUSSIA: PROTECTING OUR SHARED ENVIRONMENT
Environmental cooperation with Russia plays a critical role in
reducing global and transboundary risks affecting health and the
environment in the United States. Russia is the largest source of
industrial and radioactive pollution in the Arctic. It possesses the
world's largest forested area and a considerable share of the world's
biological diversity. It is also the world's third largest emitter of
greenhouse gases and the largest remaining producer of ozone-depleting
substances. EPA's cooperative programs with Russia have helped:
--Leverage the funding needed to achieve significant emission
reductions of CO2 and other greenhouse gases over
the next few years;
--Cease Russia's dumping of low-level radioactive waste in the
Arctic, thereby enabling Russia to comply with the London
Dumping Convention (see related box on Murmansk);
--Reform major components of Russia's environmental management
system, particularly for air pollution;
--Introduce low-cost, innovative technologies to reduce and prevent
pollution; and
--Achieve measurable improvements in environmental quality in the
Moscow area and in several other Russian cities, including
Volgograd and Nizhnii Tagil.
EPA's cooperative programs have helped strengthen U.S. ties with
strategically vital nation.
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EPA is also working with many developed countries in sharing
environmental management expertise on new, non-regulatory mechanisms
for protecting the environment. Other countries are extremely
interested in our experience with voluntary, non-regulatory programs
like the Common Sense Initiative, an industry sector approach to
environmental protection. In addition, as EPA moves away from the
medium-by-medium approach of the past toward a more integrated view of
the environment, it can learn much from the experience of other
countries that have already applied such techniques. Swedish and Dutch
authorities, for example, have been implementing multi-media systems of
environmental protection for many years. Similarly, experience in
Germany and other countries in rehabilitating derelict industrial sites
offers valuable lessons for the ``Brownfields'' program in the U.S.
EPA ``know-how'' and experience is in great demand throughout the
world. One very cost-effective way to assist other countries in
designing and implementing environmental protection strategies is
through EPA's international visitors program. In 1996, for example, EPA
hosted over 1,200 visitors from 109 countries. These typically brief
stops at EPA enable environmental professionals from other countries to
meet and exchange ideas with their counterparts in the United States.
Such visits often serve as a springboard for building or strengthening
environmental institutions abroad and set the foundation for mutually
beneficial future exchanges.
Serving Broader National Objectives
As emphasized by the General Accounting Office in its recent review
of international environmental programs across the U.S. government,
``EPA's international programs also serve important U.S. economic,
foreign policy, and security interests.'' \5\ Working closely with
other U.S. agencies, for example, EPA has actively supported regional
cooperation under the auspices of the Middle East Peace Process
Multilateral Working Group, including bringing together regional
parties to cooperate on reducing risks from pesticides, small community
wastewater, and preventing and responding to chemical accidents or oil
spills.
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\5\ GAO Report, Page 22.
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EXCERPT FROM THE ENVIRONMENTAL TECHNOLOGIES TRADE ADVISORY COMMITTEE--
JUNE 1996
Widely recognized as the leading source of environmental regulatory
and management expertise worldwide, EPA is frequently approached by
foreign governments and organizations for assistance in establishing
the environmental regulatory and management capabilities that can drive
the demand for U.S. technologies.
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The Agency's emphasis on community-based environmental management
plays an important role in encouraging the development of more
responsible, participatory decision-making in countries around the
world. Reduced environmental problems can relieve pressures for illegal
immigration, promote economic and political stability, and serve other
national security interests.
Technical cooperation has also played an important role in foreign
policy initiatives in Latin America and with Mexico, China, India,
Russia, and South Africa. Finally, EPA's technical assistance and
training programs create demand--and markets--for environmental
technologies and expertise, thereby enhancing commercial opportunities
for U.S. business and industry and creating high-wage jobs for American
citizens.
Senior private sector individuals and groups have recently
reaffirmed the key role EPA's international technology and capacity-
building programs play in creating commercial opportunities for U.S.
suppliers of environmental technologies and expertise. In so doing,
they have differentiated the export assistance (supply-side) role of
the Department of Commerce, Export-Import Bank and other export
promotion agencies from EPA's role in creating demand for U.S.
technologies and expertise through the development of environmental
standards, institutions and human resource capabilities. EPA's short-
term technical assistance to the Royal Thai Government, for example,
not only helped solve a pressing health and environmental problem in
the Mae Moh Valley, it also led to the sale of almost $200 million for
U.S.-made air pollution monitoring and control equipment.
International harmonization of good laboratory practices, test
guidelines and mutual acceptance of data for industrial chemicals and
pesticides means more efficient data development by industry and
greater assurance of the quality of data EPA uses in responding to
statutory requests for risk and risk benefit assessments. The mutual
acceptance of data for risk assessment purposes must now be expanded
beyond countries of the Organization for Economic Cooperation and
Development to include emerging markets in Asia and Central and Eastern
Europe. EPA's efforts to promote the upward harmonization of
environmental standards also protect U.S. business and industry from
unfair trade advantages through lax or non-existent environmental
controls in other countries.
conclusion: strengthening epa's international programs
EPA has long been a central player in the formulation and
implementation of U.S. international environmental policy. The direct
benefit to U.S. citizens and natural resources resulting from this
involvement underscores the importance of ensuring an active and
continuing international presence. EPA is working to strengthen its
ability to lead and support U.S. efforts to prevent and control
environmental pollution at the regional and global level. In addition
to the priority setting, evaluation and monitoring measures described
earlier, EPA is undertaking the following steps to strengthen its
international programs.
EMPHASIZING RISK REDUCTION
Consistent with recommendations of the EPA Science Advisory Board
(SAB) \6\ and the recommendations of the National Academy for Public
Administration (NAPA),\7\ EPA is putting much greater emphasis on the
potential for risk reduction in setting priorities. The SAB called
particular attention to top-ranked risks to the natural ecology and
human welfare, all of which have significant international
implications. By making better use of good science and balancing
numerous environmental, social, economic, political and scientific
considerations, the Agency is working to ensure that its limited
resources are devoted to the areas of greatest risk.
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\6\ ``Reducing Risk: Setting Priorities and Strategies for
Environmental Protection,'' Science Advisory Board, U.S. Environmental
Protection Agency, SAB-EC-90-021, September 1990.
\7\ ``Setting Priorities, Getting Results: A New Direction for
EPA,'' A National Academy of Public Administration Report to Congress,
April 1995, Page 12.
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Responding to the NAPA recommendations, the Agency is also making
better use of science, strategic planning, budgeting, and
accountability in the planning and implementation of its international
programs. The following steps will ensure more rigorous evaluation of
the risks associated with different international environmental
problems as well as better use of this information in making Agency
decisions:
--Evaluation of all existing international commitments in light of
the relevant risks to U.S. health and ecosystems;
--Establishment of a more formal mechanism for evaluating future
international involvements against the criteria outlined in
section III.A of this report; and
--Comparative examination of the Agency's international activities,
with accompanying investments and disinvestments.\8\
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\8\ Coordinated by EPA's Office of International Activities, this
effort will review all program and regional office involvements
internationally.
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Strengthening Internal Coordination
EPA is committed to improve internal coordination within the Agency
in planning and implementing its international activities. The Agency
currently uses a variety of mechanisms to tap the best expertise
available within the Agency and to ensure effective integration between
domestic and international programs. Overall coordination of programs
through the Office of International Activities ensures policy
coherence, integration and efficiency, particularly on cross-cutting
environmental issues and programs.
Consistent with the overall restructuring of the Agency's planning,
budgeting and accountability procedures, EPA will institutionalize an
annual planning process for its international activities. Under this
process, OIA will coordinate an agency-wide effort to develop an annual
activity plan describing the various project areas for the coming
fiscal year. These activities will include short-term and long-term
projects and major upcoming events.This process will ensure that
international activities are reflected adequately in the Agency's
overall strategic plan, and incorporated into the specific workplans of
the various program and regional offices. This process will help EPA
prioritize its international activities and provide a forum for
assessing the results of the previous year's activities. It will also
lead to the necessary disinvestments.
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excerpt from the general accounting office--september 1996
EPA's Office of International Activities serves as the focal point
and catalyst for the agency's international agenda, providing
leadership and coordination on behalf of EPA's Administrator.
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In addition to the international contact points for many program
and regional offices, OIA has recently: (1) created a strategic
planning team of senior managers and staff, (2) undertaken a program to
identify specific milestones for EPA's international work, and (3)
reassigned one of its senior staff to work full-time on strategic
planning. The person is working with program and regional offices in
developing appropriate goals, objectives and milestones for
international activities under the Agency's new planning, budgeting,
accountability and analysis system. OIA will also lead an EPA-wide
strategic planning process to apply the criteria described earlier to
prioritize among existing and new activities and to begin the process
of linking budget decisions to priorities.
Finally, with respect to internal coordination, EPA is taking steps
to ensure greater accountability and streamline the international
travel process for Agency officials traveling abroad and to improve the
efficiency of its international technical cooperation programs. The
Agency has begun developing, for example, a set of generic ``technology
diffusion'' modules to disseminate information and training on selected
U.S. environmental management techniques. Coordinated closely with
complementary programs in the non-profit and private sector, and
building on the success of existing domestic programs, the modules will
cover priority environmental management techniques (e.g., risk
assessment, pollution prevention), sectors (electronics, pulp/paper)
and problems (chemical safety, urban air pollution).
Improving External Coordination
EPA cannot achieve its environmental mission on its own. One of the
most effective ways of strengthening EPA's international program is
through building and maintaining effective partnerships with its many
stakeholder organizations. It must also leverage its limited resources
through closer cooperation with other federal agencies, state and local
governments, foreign governments, and international organizations. Such
collaborative efforts will bring benefits to the American people
through wise allocation of funds that avoid duplication of effort and
tap into the wealth of expertise that other organizations offer.
EPA is working to leverage resources for environmental purposes
(e.g., lead abatement, methane recovery) and improve the lending
practices of the World Bank and other multilateral funding and
development institutions. Accounting for approximately $35 billion of
development assistance in developing and transition countries, lending
institutions play an influential role in shaping international
financial practices.
EPA is looking for additional ways to better enlist the expertise,
creativity and resources of the U.S. private sector in achieving U.S.
environmental objectives abroad. The private sector can benefit, for
example, from EPA's extensive network of contacts and detailed
understanding of environmental needs and market opportunities
worldwide. To protect EPA's credibility and international reputation
for objectivity and to ensure that EPA's activities in this area are
carried out in a way consistent with the Agency's domestic
environmental mandate, EPA has developed the following set of
operational guidelines for ensuring that this work is carried out
consistent with the Agency's statutory authority and environmental
mission:
--What is the environmental rationale for the activity?
--Is the program or project an appropriate activity for public sector
involvement?
--Is the activity appropriate for EPA as opposed to another federal
agency?
--Does EPA's involvement imply endorsement or favoritism for
participating private sector parties?
--Can EPA's participation in the activity be conducted
professionally, impartially and objectively?
--Does EPA's role in the activity jeopardize the Agency's ability to
fulfill its domestic regulatory or enforcement
responsibilities?
--How were private sector parties selected for participation in the
project?
Finally, EPA is making better use of regional offices and their
international program managers to enlist greater cooperation of States
and other public and private sector groups in the international arena.
State and city-based managers and organizations often have more to
offer to foreign groups seeking to benefit from U.S. expertise and
experience. The Agency is also working to strengthen its ties with
environmental, conservation and consumer organizations and other non-
governmental organizations (NGO's). EPA's Office of Communication,
Education and Public Affairs maintains ongoing dialogue with a wide
variety of these organizations, including those working on
international issues.
Taken together, the steps discussed in this report should
strengthen EPA's commitment to international cooperation, and ensure
that the Agency's international goals are pursued in the most efficient
and cost-effective way possible. Most importantly, active EPA
international engagement will result in greater protection against
pollution for U.S. citizens and natural resources. These measures
should also serve broader U.S. foreign policy, economic and security
interests well. Working closely with the Congress, federal agencies,
the private sector, and other partners, EPA leadership can continue to
make a difference in the United States and around the world.
NAAQS: CLEAN AIR ACT
Senator Shelby. Thank you, Mr. Chairman.
Administrator Browner, you used the phrase, I believe, a
few minutes ago, and correct me if I misquote you, that we need
to have an honest dialog--I believe that was your phrase--
dealing with all of this.
Ms. Browner. Yes, on Superfund.
Senator Shelby. And I hope that we will.
As I said earlier, the EPA, along with numerous Federal
agencies, States, corporate America, and the citizens of this
Nation, should be congratulated on a lot of the accomplishments
that have occurred over the years. Numerous constituents, the
same people that have supported prior clean air regulations,
have come to me and others with their concern. A lot of people
are troubled by rushing pellmell into new particulate
standards. Has the 1990 Clean Air law been implemented in all
of its respects?
Ms. Browner. The 1990 Clean Air Act is built on a law that
has been in existence since the mid-1970's.
Senator Shelby. I know that.
Ms. Browner. We are continuing with the implementation.
Senator Shelby. Implementing it.
Ms. Browner. Yes; we are basically on target. There are
many components to the law. For example, in toxic air
emissions, we have achieved the single largest reduction in the
last 4 years in the history of the United States because of our
implementation work.
Senator Shelby. We have come a long way, have we not?
Ms. Browner. We should all be very proud. But the job is
not done.
Senator Shelby. But we have not completely implemented the
1990 amendments to the Clean Air Act, have we?
Ms. Browner. One of the provisions in the 1990 amendments
is a 5-year review of the public health standards. We are in
the process of taking public comment on our review of two of
the six public health standards. We have not proposed to change
three of the six, and one we did not review.
Senator Shelby. Your new proposals have come under attack
by a lot of sources.
Ms. Browner. I think it is fair to say that some in
industry do not like them.
Senator Shelby. Not just industry. It has been sharply
criticized by a lot of the State Governors, municipal leaders
and business organizations. And, also, I have been recently
made aware that these rules have also been criticized, Ms.
Browner, by other Federal agencies, such as the Council of
Economic Advisors, the Department of Science and Technology
Policy, the Department of Commerce, the Small Business
Administration, and the Department of Agriculture have also
expressed concern about the scientific basis and--let me
finish--and the massive cost for implementing these
regulations. Yet, your Agency is continuing full speed ahead.
Why, Administrator Browner, should not the concerns of
these other Federal agencies and departments be investigated
and heard, proven or disproved, prior to the implementation of
these regulations? And are you going to ask that these agencies
be made part of the process?
Ms. Browner. They are part of the process. And they have
been, dating back to, in some instances, several years and, in
all instances, last fall.
I would like to go back to the question of Governors. You
suggest that all Governors oppose strengthening.
Senator Shelby. I did not say all; I said a lot of
Governors.
Ms. Browner. A lot of Governors also support strengthening
the public health standards in the way that we have
recommended, including Governor King, Governor Weld, Governor
Whitman, and Governor Romer. There are a number of Governors
who believe that it is important to strengthen the public
health protections. We take all of the Governors' comments into
account, whether they be supportive or not.
Senator Shelby. You named four or five; you are going to
consider those other 45 you did not name, I hope?
Ms. Browner. We did not hear from all 50 Governors.
Senator Shelby. But I bet you heard from more than four or
five.
Ms. Browner. I was just pointing out that there were some
who had been supportive of our proposal and there were some who
had not been.
Senator Shelby. Sure. You were naming the ones who
supported you.
Ms. Browner. My response is in keeping with what you had
said.
It is absolutely appropriate when any agency, be it EPA or
another agency, makes a proposal. That is exactly what happened
here. We would have an opinion if the Department of Agriculture
wanted to do something. We would have questions that we would
want to see answered.
Senator Shelby. Absolutely.
Ms. Browner. The Office of Management and Budget runs what
is called an interagency process that brings all of the various
Federal agencies and departments to the table for a vigorous
debate and discussion. That is what happened in this instance.
It was vigorous, without a doubt.
At the end of the day, a decision was made by the Office of
Management and Budget to clear our proposal for public comment.
While we have been in a public phase and while we are reviewing
all of the comments we have received, we have stayed in a
discussion across the Federal Government, seeking to understand
the concerns, the questions and the points of view that others
may have, and speak to them. This is an ongoing process and
will continue until a final decision is reached.
OZONE NAAQS: CEA LETTER
Senator Shelby. I want to ask you this, and tell me if this
is correct. I have been told that EPA has stated that the total
national cost of implementing the ozone rule would be $2.5
billion; is that correct? Is it about like that?
Ms. Browner. We projected a range of costs. The range is
from $500 million to $2.5 billion.
With all due respect, Senator, I do need to remind you that
the law is very clear. The Clean Air Act, which you all rewrote
in 1990, is very clear in telling us this is not a cost/benefit
decision. It is a public health decision. Cost/benefit, which
we did, because we thought it was an important thing, is
somewhat speculative. Until you sit down and sort out
community-by-community, State-by-State, and industry-by-
industry, and determine where you can get the most cost-
effective pollution reductions, you cannot do more than give a
range.
Senator Shelby. Sure. Now, let me remind you of this. I
have also been told that the Council of Economics Advisors has
stated that the cost of full attainment of just the ozone rule
could be $60 billion--or $57.5 billion more than what was
estimated by EPA. Now, somebody is way off on their numbers.
Ms. Browner. Yes.
Senator Shelby. Now is it EPA or is it the Council of
Economic Advisors?
Ms. Browner. I presume you are referring to a draft memo.
We have docketed that memo. It is in the public record, because
we think it is an important memo. We did not receive it from
the Council of Economic Advisors.
Senator Shelby. Did you disregard the memo and its
contents?
Ms. Browner. I am trying to explain to you what we did. We
subsequently wrote a letter to the chairman of the CEA, asking
for all of the backup documentation and any analysis they may
have done. We want to make it part of the public record so we
could fully consider it.
Senator Shelby. OK.
Ms. Browner. To the best of my knowledge, we have not
received that backup documentation. I personally placed a phone
call to the chairman of the council, asking for the backup
documentation, because we want to consider it. All we have is
what you have, which is a three- or four-page memo stamped
draft. It was produced after our proposal was made public in
November. When it was brought to our attention by a reporter,
not by the CEA, we docketed it and asked the CEA for all of the
backup documentation. CEA did not give us the memo.
Senator Bond. Thank you very much, Senator Shelby.
Senator Shelby. Thank you, Mr. Chairman.
Ms. Browner. But the concerns are concerns that should be
taken into account. That is why we have asked for backup
documentation.
Senator Bond. Thank you, Administrator.
Senator Shelby. Thank you, Mr. Chairman.
Senator Bond. Senator Boxer..
CLEAN AIR ACT REVIEWS
Senator Boxer. Thank you, Mr. Chairman.
Administrator Browner, to pick up on the Clean Air
minidebate between you and Senator Shelby. As I understand it,
we have gained great benefit from the Clean Air Act over the
last 25 years. It was a bipartisan act with great bipartisan
support. And as I understand the law, you did not just get
involved and say, OK, it is time for more stringent standards.
Did not the courts say that you had to look at the standards
and see whether, in fact, they were the proper standards for
the health and safety of our people?
Ms. Browner. The law requires EPA to review the six most
commonly found air pollutants on a 5-year basis. EPA reviews
the best available science and determines whether or not the
current public health standards adequately protects the
American people.
For a variety of reasons, not the least of which was you
did have a time when the White House was very hostile to EPA,
EPA had not done this for the better part of 10 years. When I
came to EPA, we were sued by the American Lung Association
because we had not been doing these things on schedule. We
agreed that we should be. It is what the law said. It is what
the Congress had promised the American people. We settled the
lawsuit by laying out a schedule on which we would fulfill our
obligation to review these standards.
We were also threatened with a lawsuit on the other
standard, ozone. In that case, the lawsuit was eventually
withdrawn because we made a public promise, through a Federal
Register notice, to similarly undertake the review that the
statute has required of us. That is why you now have two that
we have proposed and have taken public comment on whether or
not we should change.
We also did three more reviews. There are six of these. We
have done five reviews. Three of them we are not proposing to
change. Two of them we are proposing to change. And one we did
not review. It is lead. And the reason we did not review it is
because, in many ways, our work is done on that side of things.
Senator Boxer. So I think it is important, Mr. Chairman,
that we understand that it was Congress, in a bipartisan
fashion, that crafted the Clean Air Act, and that a court has
now ordered EPA to take a look at these standards. And I feel
that the legitimate question is, are you going to base your
final decision on science? That is quite legitimate. And I
support that. But we are supposed to consider the health of the
people when we set these standards, by our own laws, unless we
decide to change it, which I would hope we would not do.
And as I understand it, we are talking about saving lives
here. And the latest estimate is 15,000 lives, as I understand
it.
Ms. Browner. That is for the fine particles. In the case of
ozone, we are talking about literally hundreds of thousands of
respiratory illnesses, asthma attacks avoided and aggravated
asthma cases avoided. Large numbers of people, particularly
children or senior citizens, should we finalize the standards
as we propose them, will receive tremendous public health
benefits and protections.
SAFE DRINKING WATER ACT
Senator Boxer. Speaking of children, the Safe Drinking
Water Act--I sit on the authorizing committee, as you know--and
the Safe Drinking Water Act, I was very proud of. And there
were two amendments that got included that I was involved in.
One dealt with consumer confidence reports.
Ms. Browner. Yes.
Senator Boxer. So every year people find out what is in
their water. And then the other is that when we set drinking
water standards, we set them at levels that protect children
and other vulnerable populations. You have asked for an $8
million increase in research funding, and I am hopeful that
some of that will go toward children.
Ms. Browner. Yes.
Senator Boxer. Is that an accurate assumption?
Ms. Browner. Yes; we have made our public health standards-
setting program focus on the children, whether it be drinking
water, air, or whatever. Therefore, we are increasing budget
and research dollars, so that we can better understand the
environmental effects on the health of our children.
Senator Boxer. And, in addition, the implementation of the
consumer confidence reports, you will be able to----
Ms. Browner. We are on track.
Senator Boxer [continuing]. Make sure that that happens?
Ms. Browner. Yes.
Senator Boxer. I have written a bill, and Jim Moran is
going to carry it on the House side, called the Children's
Environmental Protection Act. And it really builds on this
progress we made in the Safe Drinking Water Act, where we are
now seeing that when we set any type of standard, it really
ought to be not for the--with all due respect--the 165-pound
guy, who is the strongest among us, but to look at the most
vulnerable.
Because, you know, even if you look at air bags today, one
of the problems is they set that standard on the air bag for a
175-pound male who was not strapped in. Well, you take a
littler person, some of whom are sitting at this dais, and it
is a little bit of a force here for us, which could wind up
leaving us without a very important part of our body, such as
our head. [Laughter.]
So I think it is important that when we set these standards
we not go for the strongest, but, in fact, look at the most
vulnerable. Therefore, everyone is protected, not just a select
group.
Ms. Browner. I agree.
Senator Boxer. You know, a survival-of-the-fittest kind of
approach.
I would love to have your reaction--I know you have not
seen the final draft of our bill, but, in theory, would you
support taking that same idea that we applied in safe drinking
water and applying it more broadly?
Ms. Browner. I have issued guidance to all of the offices
at EPA to take into account children in every decision we make.
And we would certainly welcome the opportunity to review your
legislation.
Dr. Phil Langrigan, who was one of the authors of the
National Academy of Sciences report on children and pesticides,
has recently joined us to assist us in this effort of putting
children first and foremost when we make public health and
environmental decisions for the country. We would appreciate
the opportunity to look at your legislation.
Senator Boxer. Mr. Chairman, I will hold for a final round.
Senator Bond. Thank you very much, Senator Boxer..
Senator Leahy.
MERCURY STUDY
Senator Leahy. Thank you, Mr. Chairman.
Madam Administrator, good to see you here, as it is when we
see you in Vermont.
You seem to be spending a lot of time on the question of
air quality, and I think that is wise. Everyone has to take
some responsibility for controlling pollution in their own
communities. I look at my own State of Vermont, which has some
of the strongest environmental laws in the country, but even
though we have strong standards within our own borders, we have
become a dumping ground for a lot of other States. We have
imposed very high environmental standards on ourselves. We pay
the price of maintaining those. But then we are faced with an
uphill battle when the pollution we are striving to control
just silently creeps through the air, comes across borders, and
then is dropped in Vermont--pollution that is caused by other
States but it comes and hits us.
Now, we are concerned about that. Acid rain taught us that
our tough laws on the environment were not enough to protect
us.
Now, I think it is safe to say that Vermonters are proud
that you serve as our Administrator. You have made a lot of
efforts to address pollution transport. I commend you for
proposing new regulations on ozone and particulates. Acid rain
demonstrated that sulfur dioxide can go hundreds of miles. So,
too, can Ozone and particulates, which can cause up to 15,000
premature deaths a year. These are intricately related to
whatever kind of deregulation we do in the electric utility
industry. Our own legislature is debating that issue right now.
But I think the deregulation of the utility industry adds a
level of urgency to your proposed ozone and particulate
standards. Some, and some even on this committee, have
challenged the science behind the standards. I have reviewed
the citations of the studies that back up the EPA rules. They
are remarkable. The bibliography alone of science that supports
these regulations, I think, is over 100 feet long. The science
behind the standards is comprehensive. It is objective.
Now, because there is sound science behind these proposed
rules, I am puzzled by the EPA's attempt to postpone the
release of another study on mercury. The Science Advisory Board
recently recommended the release of this report. I hope that
you will do just that. The effects of transport of mercury will
be important information to know as we go forward with utility
restructuring.
This report is 1,700 pages long. And it contains state-of-
the-art information. In February, the Science Advisory Board
joined a long list of scientists in saying the report should be
released. I wonder why it is that when the Agency's mercury
report is supported by equally compelling and sound science as
the ozone and particulate standards, the Agency has not
released it. Can you tell me when it may be released to the
public?
Ms. Browner. Yes; we are currently involved in the peer-
review process. The Science Advisory Board met in March to
review the analysis that has been done and the underlying
science that has been provided. We expect to hear back from
them in writing. We do not have the Science Advisory Board's
final report, but we expect to have it by the end of the
summer.
Depending on what they tell us in that report, we will make
the appropriate adjustments and would expect to see release,
hopefully, by the end of the year. It really depends on how
much we get back.
Senator Leahy. By the end of 1997?
Ms. Browner. It depends on how much we get back from the
Science Advisory Board. Since they have not put it in writing
yet, we do not know. They were complimentary of the work that
we had done. However, they do need to give us a written report,
and we are awaiting that.
Senator Leahy. If the SAB recommends a release, will you
release it?
Ms. Browner. Certainly.
LAKE CHAMPLAIN MANAGEMENT PLAN
Senator Leahy. Now, when you were here last year, you and I
discussed EPA's commitment to the Lake Champlain management
plan. And you have cited the Lake Champlain program as a model
for how we can bring together all the parties, develop plans,
and find solutions to watershed issues. And I agree with you on
that. Two of your regional offices have approved the management
plan. Your Assistant Administrator for Water has reaffirmed the
Agency's commitment to implement the pollution prevention and
restoration plans. I do not see this in your fiscal year 1998
request.
Can you tell me what actions your Agency will take to
support the implementation of the management plan and what kind
of resources we can expect from the EPA over the next 5 years?
Ms. Browner. We will continue to work, as I think we have
to facilitate the relationships among the 31 member management
team that has been developed. There are many other Federal
agencies, as you are well aware, who participate in this and
provide funding. We believe that that funding and perhaps some
additional dollars we may be able to make available will allow
us to continue our work.
Senator Leahy. Well, as you can imagine, you and I probably
have a lot more discussions on this. The Lake Champlain
management plan is a particular favorite of mine.
Ms. Browner. Yes.
Senator Leahy. Any time you would like to come up, Mr.
Chairman, we would love to show it to you.
Senator Bond. I enjoyed my last visit up there, when we
went up there with the agriculture committee. You were a
gracious host.
Senator Leahy. Please come again. Thank you.
Senator Bond. It is a beautiful, beautiful lake.
Thank you very much, Senator Leahy.
Would you check--Senator Craig wanted to ask some
questions--is he ready?
Senator Leahy. Mr. Chairman, I might note that you have
been very helpful to those in both New York and Vermont and all
others who use Lake Champlain in the past. And I appreciate
that.
Senator Bond. Last year's bill looked as if somebody had
put a Vermont glitch in the computer that printed it.
[Laughter.]
We noted that.
Senator Leahy. Do not get that glitch out of the computer.
Senator Bond. And we are trying to get the computer fixed
this year. [Laughter.]
PM AND OZONE STANDARDS
I will go ahead. Senator Craig is not available. I will go
ahead on several questions.
Thank you, Senator Leahy.
I would note, following up on Senator Shelby's comments,
that we have received letters with regard to the PM and ozone
standards from over 30 mayors and elected officials. Both
houses of the Missouri General Assembly have passed resolutions
raising questions and concerns about the standards. When they
agree on a final resolution, we will share that one with you.
Ms. Browner. Thank you.
Senator Bond. I also will ask, for the record, but I wanted
to tell you in person, that we are concerned about the cost
figures you used on the operable units. The Congressional
Budget Office told my staff the average cleanup cost in 1994-95
was $5.6 million, and with a 20-percent growth factor, to $6.6
million for each operable unit. Yet EPA is assuming a $10
million cost per operable unit.
We also would need to see a list of the specific projects
to be funded under Superfund, including a risk-based ranking
and estimated cost for each, along with a project start date
and whether you are going to continue to use the risk-based
ranking.
Ms. Browner. Yes.
Senator Bond. We also have questions about staff to manage
and the contracting capacity to carry out these additional
things. I will submit those for the record and ask you to
respond to those.
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Ms. Browner. We have given some of those lists to your
staff already. We have given to you a list of 600 candidates.
We can work with you on that list.
Senator Bond. Yes; we have a broad universe of science. We
want the specifics.
Ms. Browner. Right. We can do that.
Senator Bond. And we will work with you to get that and
share that with the committee.
Ms. Browner. Good.
EPA/STATE RELATIONSHIPS
Senator Bond. Let me turn to your relationship with the
States. As you will recall, we have discussed here before the
National Academy of Public Administration, 2 years ago,
recommended that EPA turn more responsibility over to the
States. We are hearing from the States that despite your claims
to wanting to develop a partnership, the efforts to foster the
partnership are disintegrating. A recent Inside EPA article
states,
State officials are becoming increasingly concerned that
Hansen and Browner are not living up to their rhetoric
regarding a new partnership between the Agency and the States.
They see a trend of EPA walking away from the partnership
process.
Why is there an appearance that the relationship with the
States is collapsing? Is EPA committed to working with the
States and devolving the responsibility?
Ms. Browner. Absolutely, we are committed to working with
the States. I think one of the earlier quotes you referenced
talked about how we had begun this in the last 4 years. This is
not small. This is not easy. No two States are the same. No two
State legislatures are the same. No two State Governors feel
the same about these issues.
We look to the States to manage a variety of Federal
responsibilities on a day-to-day basis. In most instances, it
works quite successfully. There will inevitably be times when
there are challenges in individual States. We have found that
if we can sit down and talk through these challenges, we can
reach a resolution. I will give you just one recent example.
The State of Texas is not a State with which we are
expected to be able to find resolution. The State passed a
piece of legislation that raised concerns in our minds and in
our lawyers' minds, about whether or not they could adequately
fulfill their responsibilities under Federal statutes,
responsibilities we had delegated to them.
We had a lot of meetings. Fred Hansen had meetings. Steve
Herman had meetings. Approximately, 2 weeks ago, we agreed that
there is a way to allow them to meet the needs of their State
legislation, but to honor the Federal statutes.
Similarly, in Utah.
Senator Bond. May I interrupt just to ask one last question
on this round. Mr. Hansen abruptly pulled back last month a
draft agreement to establish a process for reviewing and
improving innovative regulatory reform projects conceived by
the States. This brought a lot of surprise and disappointment
to the State officials. They were very much concerned and
upset.
Why did the process break down? What specific problems did
you have with the draft agreement? And where do you see the
possibility for this going forward?
Mr. Hansen. Mr. Chairman, for the record, I am Fred Hansen,
Deputy Administrator.
It was with great reluctance that I took the step to pull
that draft agreement back. But, upon review, what was at issue
is that the States and we both agree on the need to be able to
move ahead with good, innovative approaches. The language that
was included in the draft agreement went well beyond what I
think both of us felt were the types of projects that would be
brought forward under that agreement. As a result, it raised
very legitimate concerns in other people's minds about whether
or not that agreement was too broad.
We and the States have agreed to be able to, in fact,
redraft an agreement. The Administrator and I met with the
ECOS, the Environmental Commissioners of the States, governing
body and agreed to, in fact, be able to relaunch that effort.
Our staffs have been meeting and things are progressing. I
cannot tell you today that it has been agreed to, but there has
been very real progress made in making sure that what was the
intent of the States and what was our intent can be captured in
such an agreement.
Senator Bond. Thank you very much, Mr. Hansen.
Senator Boxer, if you do not mind, I would like to turn now
to Senator Craig, since he missed out on that last round.
Senator Craig, welcome.
WIPP
Senator Craig. Mr. Chairman, thank you very much.
Administrator Browner, let me thank you for coming before
us this morning. I apologize for being in and out and not
hearing all of your testimony or comments. I will direct my
questions specific ally to a couple of activities that EPA is
involved in at the moment that are giving us considerable
consternation.
Specific to my State of Idaho, but also very true across
the country, is the concern for our ability to deal with
transuranic waste. Last year, the Senate passed a Sense of the
Senate, in a very strong bipartisan vote, to expedite your
activities in the overall oversight and certification of the
WIPP facility in Carlsbad, NM. Time is important. We gave you
authority and we gave you time, and you are not meeting those
schedules.
Now, let me comment first, then you will have ample time to
comment. The Sense of the Senate suggested that you be able to
open it by November of this year. Now you have asked for an
extension of at least 1 year, arguing that you need more
information. In fact, you have gone back to DOE, requesting
more information. The Sense of the Senate, in essence,
suggested that you run parallel tracks with your certificate of
completeness. Why?
To get the time sequence down, so that we could cope with
and respond to a national need. In fact, we gave EPA authority
in this area largely to solve some problems. I helped move the
legislation, along with Senator Domenici, that allowed you
greater flexibility to deal with your role in that area. In
fact, it was new authority.
My simple question to you is, why the extension? Why the
request for more time? Why are you suggesting that it will be
now May 6, or somewhere near that, of 1998, instead of the
Sense of the Senate direction that you open it by November of
this year by completing your work using parallel tracks? Can
you respond to that with detail?
Ms. Browner. We will be more than happy to respond with all
of the different model requests and model runs that we are
awaiting from DOE in writing. But, to step back and speak
broadly, we are in dialog with DOE about the information we
need to make the determination. I think we have explained that
from when DOE completes its work, it would take us
approximately 1 year to complete our work.
Senator Craig. That is why the Congress reacted last year
by saying parallel the tracks so that it would not take 1 year.
Ms. Browner. Yes.
TRANSURANIC WASTE
Senator Craig. Because we have a Federal court order
requiring the transuranic waste begin to move in a timely
fashion; therefore, we need to expedite with certainty.
Ms. Browner. Yes; we have been attempting to move as much
as possible in parallel tracks. We are still awaiting some
information from the Department of Energy. We have no reason to
think they are not going to be forthcoming. I want to suggest
there is a problem. We are in dialog with one another.
Secretary Pena and I have spoken recently about this. I think
we are going to meet later this week or next week again about
this. Once we have that, we will do an analysis and go through
a public notice and comment. At which point, we will then
evaluate the comments and come to a conclusion.
We share your desire to get this done expeditiously. We are
doing it quicker than I think anyone imagined we would.
However, there is this issue of more information.
If you would like, we will explain the modeling.
Senator Craig. No; I understand the modeling. In fact, I
know more about this issue than I would like to know. What I am
concerned about is timely action.
Ms. Browner. Yes.
Senator Craig. Because many of us believe what you are
doing is duplicative of what has already been done. But we
understand the political waltz that has to go on here to
satisfy certain requirements. We also understand the
criticality of public appreciation for safety and for
completeness. I was of the latter, thinking that EPA did not
necessarily have to have a role, but we played that game out
with you all. We have given you that authority. We just cannot
live with an extension of time that takes us well into 1998,
with no certainty that we will even get there at that point.
This facility, by most scientists' and engineers'
knowledge, has been ready to open for several years. And it is
a phenomenally costly environment we are dealing with.
Ms. Browner. You have given us a responsibility to review
this. We do take that seriously. We are doing it expeditiously.
But in order to fulfill the responsibility of review, there are
certain steps we will have to follow.
Senator Craig. Yes.
Ms. Browner. We are doing that as quickly as possible.
Senator Craig. Have you, then, changed the time schedule,
or do you feel you can stay on track when you are announcing
now, in 1998?
Ms. Browner. We believe we will be able to make what is
called a completeness determination in the next couple of
months. From that point, it would take us no more than 1 year
to give you the certification.
Senator Craig. Completeness by when, May 1998?
Ms. Browner. No; this is a completeness for what DOE has to
provide to us. A completeness determination will be done by the
end of May.
Senator Craig. Of this year?
Ms. Browner. Yes.
Senator Craig. 1997?
Ms. Browner. Yes.
Senator Craig. And then another year following that, into
1998?
Ms. Browner. At the most, it will take us 1 year.
Senator Craig. At the most. OK.
Ms. Browner. We are required to go through a public notice
and comment period. The comment period will be 120 days.
Senator Craig. And it was with that sensitivity,
Administrator Browner, that this Congress acted 1 year ago,
suggesting that you do parallel tracking to speed up the time.
Ms. Browner. We are doing that.
Senator Craig. You are doing that?
Ms. Browner. As DOE makes information available, we analyze
it. So we are moving parallel.
Senator Craig. Well, we are going to two-track you on this
and stay with you on it. My Governor has just written to the
President. DOE is under a Federal court order to respond in a
timely fashion.
Ms. Browner. Yes; we are aware of that.
Senator Craig. We expect them to comply. If they do not
comply, I would not be surprised if my State would once again
have to shut its borders to the movement of naval spent fuel.
And that brings the ships at sea to a halt. I do not think you
need that as your burden. I do not want that to happen. But my
State is very insistent. They have waited long enough for this
repository to open so that we can start a major movement of
transuranic waste to a safe storage facility.
Mr. Chairman, I am out of time?
Senator Bond. Yes.
Senator Craig. Thank you.
Senator Bond. I think Senator Boxer. said she had just a
few minutes. So let me turn to Senator Boxer..
Senator Boxer. Yes; I have 3 minutes. I will be glad to
yield.
Senator Craig. No; why don't you go ahead, Senator, and
then I will come back with one more question.
METHYLBROMIDE
Senator Bond. I will come back to you, Senator.
Senator Boxer. Five minutes ago I had to be somewhere, but
I will be fast.
Mr. Chairman, there is a river on the Mexico-California
border called New River. It is one of the most polluted in the
entire world. And I know you smiled when you thought about
going up to Vermont to see the beautiful lake. I would not even
want to take you down there. I hope that we can make some
progress on this cleanup. I went down there to look at it, and
it just bubbles up filth and dirt and foam and chemicals. And
the good people who go in there to try and clean it up or to do
any sort of river work have to wear astronaut's gear. And it is
extraordinary.
I went down there. I was promised EPA would clean it up.
And they have begun to do that. I just want to make sure that
you are still committed to this cleanup and that this year we
will see some more cleanup done there.
Ms. Browner. Absolutely.
Senator Boxer. Excellent. And I would hope that I could go
back there and see a little less filth. Because it was an
experience you could never, ever, ever forget. So I am going to
take you up on that and monitor that.
In terms of methylbromide and the ozone layer and all the
problems, because I represent such a diverse State, we have so
much agriculture. There are countries that will not take
produce that has not had methylbromide sprayed on it. My
question is, how are we doing in the search for substitutes?
Because there is no way anybody that I know of is going to do
away with one product the world is still using, and then we
cannot ship our produce anywhere. So how are we doing? Do we
have a commitment to search for substitutes to methylbromide?
Ms. Browner. Yes; and there have been dollars made
available through the EPA budget to form groups out in the
field that are looking at how to manage in terms of moving away
from the use of methylbromide. The Department of Agriculture
has had almost $55 million over the course of a 3- or 4-year
period, which looks at alternatives in doing its work.
We are still working in this area, and appreciate all of
the cooperation we are receiving both at the State and local
level and from the farming organizations across the country.
Senator Boxer. So what is your commitment to finding a
substitute?
Ms. Browner. We all want to find a substitute. The work is
underway. We are working diligently. The Department of
Agriculture industry is working diligently to find a
substitute. Everyone wants to find a substitute.
Senator Boxer. I am just saying that unless we do that, we
are not going to phase out methylbromide until we have a
substitute. That is my own particular view. I just think that
is a prevailing view, period. Because there is no point in it,
when you have got everybody else using it, unless we have a
substitute that works. It is a real crisis situation for our
farmers.
Ms. Browner. I do not think anyone, scientists, the
scientific community or otherwise is suggesting that there will
be one alternative to methylbromide in all of its many uses.
There has been some progress made in the varieties of pest
control tools which can manage pests currently controlled with
methylbromide. It does take a series of steps. But work will
continue in finding a substitute. There is a tremendous amount
going on there.
SOUTH LAKE TAHOE
Senator Boxer. Mr. Chairman, last point. I look forward to
working with you on my South Lake Tahoe export pipeline. I know
there were reasons why we could not resolve that problem. And
members of Congress and I are very concerned. If we want to
avoid a catastrophic bill and serious harm to Lake Tahoe, I
hope we can work together this year. So I look forward to
working with you on what you think is the right approach. And I
want to thank you so much for your courtesy.
Senator Bond. Senator Boxer., let me emphasize that the
concerns that you bring are very important concerns. We look
forward to working with you and the EPA to address the New
River concern, methylbromide, and South Lake Tahoe. These are
all very important issues, and very valuable members of this
committee bring to our attention. I think Senator Leahy has
already achieved success. Some of the rest of us have farther
to go.
And now, turning back to another issue that is very
important to this committee, as well as to the distinguished
Senator from Idaho, Senator Craig.
WIPP REVIEW
Senator Craig. Thank you very much, Mr. Chairman.
Administrator Browner, I just have a couple of additional
questions that are reasonably short. But let me suggest to you
that May 1998 as a time line that gets talked about for the
opening of the WIPP facility in Carlsbad is an unacceptable
time line for this Senator and for a good many members of
Congress, and we would much prefer you try to find a date
earlier than that.
Now, we understand the process you have to go through, and
that is why the Congress acted with the urgency that it did 1
year ago--knowing that we did not want to shortcut the process,
we just wanted to engage you along the way at a quicker time
than would otherwise play out if there was not an expression of
urgency as it relates to this environmental concern.
Ms. Browner. Senator, if I might, for the record, provide
for the record, a list of what we have been doing on the
parallel track. That might be helpful.
Senator Craig. I would appreciate that.
[The information follows:]
WIPP: EPA Activity on Site Evaluation
The Waste Isolation Pilot Plant (WIPP) Land Withdrawal Act (LWA),
as amended, requires that EPA make a determination as to whether WIPP
meets the Radioactive Waste Disposal Regulations at 40 CFR Part 191.
The LWA requires that EPA make this determination by rulemaking under
Section 553 of the Administrative Procedures Act (APA). This
requirement imposes certain procedural and substantive obligations upon
the Agency in making this determination. EPA is currently proceeding
with rulemaking activities in accordance with the provisions of the
WIPP Compliance Criteria at 40 CFR Part 194.
EPA is taking every step to facilitate the certification decision
with the Department of Energy (DOE) since the original application was
submitted on October 29, 1996. Almost weekly over the past six months,
the Agency has been sending people to New Mexico to work with DOE and
their science advisor, Sandia National Laboratory. EPA is reviewing
their extensive records to ensure that the Agency understands what was
done, and that DOE understands our concerns and information needs
required to fulfill the regulations.
EPA has completed its review of the original application which DOE
submitted on October 29, 1996. EPA has sent DOE three requests for
additional information to fulfill the regulatory requirements of 40 CFR
Part 194. The first letter, sent on December 19, 1996, identified
completeness and technical sufficiency issues and identified required
information that was not included; the second letter, sent on February
18, 1997, provided clarification for resolving an issue raised in the
December 19, 1996 letter regarding Sandia National Laboratory's record
center; and the third letter, sent on March 19, 1997, identified
technical sufficiency issues requiring additional information to
fulfill the regulatory requirements. EPA believes that the information
requested in these letters is absolutely essential for the Agency to be
able to make a certification determination that withstands the scrutiny
of a reviewing court under the Administrative Procedures Act (APA).
While DOE was fulfilling the December 19, 1996 request, the Agency
continued its extensive review of the application. EPA met with key
stakeholders to provide them an opportunity to inform the Agency of
their comments early in the process, and held a series of public
hearings to solicit additional public comment. Since that letter was
sent, DOE has been periodically submitting responses to the requests
and the Agency has been reviewing those as quickly as possible once
received.
Following the close of EPA's public comment period on DOE's
application on March 17, 1997, and while DOE is responding to the
remaining information requests, the Agency is, in parallel, drafting
sections of its proposed certification rulemaking where we have
sufficient information. The Agency will continue to draft proposed rule
sections as DOE submits information to fulfill the requests in the
above mentioned letters.
In addition, the Agency is reducing the complexity and amount of
time required for internal Agency review of the certification decision.
EPA will propose to the Office of Management and Budget to expedite the
time required for interagency review required under Executive Order
12866.
Accomplishing all this work in parallel will allow the Agency to
publish a proposed rule 2\1/2\ months after DOE submits all the
information required to fulfill the requirements of 40 CFR 194 (as
identified in the March 19, 1997 letter from EPA to DOE). Following
proposal, a four month public comment period will begin as required by
40 CFR 194.62. Upon completion of the public comment period, EPA will
need 3\1/2\ months to accomplish an expedited rulemaking process
including responding to public comments, completing the technical
support, drafting the final rule and completing the intra- and
interagency review [see schedule below]. In total, it will take the
Agency 10 months to complete the final certification decision once DOE
has submitted the required information.
EPA Schedule for a WIPP Certification Decision
Days
EPA Analysis of DOE Final Submission, Complete Proposal and
Technical Support............................................. 44
Expedited Intra/Interagency Review Process........................ 31
-----------------------------------------------------------------
________________________________________________
Total....................................................... 75
EPA will propose the certification decision 2\1/2\ months after the
last piece of information required to fulfill the requests in the March
19, 1997 letter is received.
Days
Public Comment Period............................................. 120
Respond to Comments, Finalize Technical Support Documents and
Complete Final Rule........................................... 74
Expedited Intra/Interagency Review Process........................ 31
-----------------------------------------------------------------
________________________________________________
Total....................................................... 225
EPA will complete final rule on certification decision 7\1/2\
months after the proposed rule, which is 10 months after DOE submits
the last piece of information to fulfill the requests in the March 19,
1997 letter.
NATIONAL MINING STRATEGY
Senator Craig. I think the citizens of my State would
greatly appreciate that.
Could you please explain to me what your Agency is doing in
the area of developing a national mining strategy? Now, I say
this with this concern--because I know that your Agency is
involved. What is your authority for this work? And what have
been your expenditures to date in this area? And the third
question would be, what is your budget request for fiscal year
1998 as it relates to your participation in a national mining
strategy of this administration?
Ms. Browner. As you pointed out, there are many other
Federal agencies and departments that have a role to play in
mining activities in the United States. Our focus is largely
threefold. First, we look at the impacts on water quality,
second, impacts on air quality issues, and finally, impacts on
waste issues.
If I might, with the leave of the chairman, ask Bob
Perciasepe, who is the Assistant Administrator for Water, to
speak to what we are doing in this area. He has been taking the
lead within EPA on the interagency work.
Senator Bond. We welcome Mr. Perciasepe.
Mr. Perciasepe. Thank you. For the record, I am Bob
Perciasepe, Assistant Administrator, Office of Water.
Senator Craig. You probably better come up, Bob, and use
the microphone.
Mr. Perciasepe. Yes; I am coming up so that they can hear
me.
Senator, as the Administrator said, EPA has a number of
programs which impact the mining industry, Superfund, RCRA, the
Clean Water Act, and the Clean Air Act. We are working inside
the Agency to try to make sure that those efforts are
coordinated. We are also reaching out to the mining industry,
to the States and to others as to how a strategy might be
pulled together.
I would say that our expenditures are just nominal, ongoing
staff work to come up with a strategy. We have not finalized
the strategy yet. We had a meeting just a couple of weeks ago,
with a couple of the assistant administrators, to talk through
what the staff has found. We have shared their findings with
outside stakeholders.
What the long-term consequences of a strategy would be
inside EPA's coordination, and then with the other agencies has
yet to be determined. There is not a specific budget request in
1998, other than our ongoing work, which we have many programs
that impact mining. Thus, we think it is a good idea to try to
coordinate our efforts and to do it with the industry.
Senator Craig. I appreciate the need to coordinate. I
believe mining is an important industry of our country, but it
has to be done in an environmentally sound and safe way. We are
on the verge of overkill--not in the cleanliness--current rule
and regulation is doing quite well there. The problem is that
we have mines operating in Idaho that now have as many as 10
Federal and State agencies overviewing them. They spend all of
their time with Federal or State agencies and no time
underground. And I know of three State agencies, so that leaves
five to six Federal agencies.
We really do not need that kind of excessiveness. And a
coordinated strategy that allows certain agencies to do that,
and has the capability of playing dual roles, as long as there
is reasonable oversight, makes good sense. And I am less
critical of your expenditure and more interested in the work
you get done to get a strategy, so that we can move away from
this kind of regulatory overburden that is very close to being
excessive. We have a tremendous exodus from our shores right
now of the industry for a lot of reasons. This happens to be
one of the reasons.
Now, that is perfectly satisfactory to some people. But
when I see thousands of high-paying jobs leaving our country
and our mineral and metals base leaving our country, and
Government cannot get its act together, that is an additional
concern that I think we have got to deal with. So I am
concerned and I am very interested in the dollars and cents you
spend, and the fact is that you have a targeted effort at
getting the job done.
Ms. Browner. Senator, if we might, we would be more than
happy to keep you informed on both the work we are doing
internally and across the administration, in the coordinated
strategy. However, I think equally important is the work across
the administration. The administration recognizes that you have
a variety of Federal agencies and departments that get a piece
of this, in looking at it more broadly. We would be more than
happy to keep you informed as we proceed.
[The information follows:]
Mining Strategy: Status
Addressing the environmental impacts of mining activities requires
the coordination of a number of statutory authorities under which EPA
operates, as well as extensive coordination with other Federal agencies
with jurisdiction in the mining area. The principal environmental
statutes that EPA has used to regulate releases to the environment as a
consequence of mining over the last decade are the Clean Water Act
(CWA) and the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA). The Resource Conservation and Recovery Act
(RCRA) has been used by the Agency to examine the environmental impacts
of mining. In addition, EPA's role in the National Environmental Policy
Act (NEPA) process has been important in mine site evaluation and
planning.
In an effort to better address the statutory and regulatory
complexities involved in mining activities, EPA's former Deputy
Administrator, Robert Sussman, directed EPA's Office of Water in 1994
to lead a multi-program, cross-organizational workgroup to draft an
Agency-wide mining framework. The workgroup was comprised of staff from
EPA's Regional offices, the Office of General Counsel (OGC), the Office
of Solid Waste and Emergency Response (OSWER), the Office of
Enforcement Compliance and Assurance (OECA), and other affected
programs.
Currently in a Final Draft Form, the Hardrock Mining Framework
identifies recommendations that will help EPA implement a multi-media,
multi-statute approach to dealing with the environmental concerns posed
by hardrock mining. The Framework focuses on understanding and
improving the use of existing EPA authorities with a clear recognition
of the role of other stakeholders. Building effective working
relationships with other mining stakeholders is a key element of EPA's
efforts to improve the effectiveness of its own programs. In developing
the Framework, EPA solicited input from a number of mining
stakeholders, including other Federal agencies, States, Tribes, local
government, industry, and environmental groups.
While the Agency continues to work to improve coordination within
the Agency, EPA also recognizes the importance of working in
conjunction with other Federal and State agencies to address the
environmental concerns posed by hardrock mining. One example where
interagency coordination is presently taking place is an effort to
develop an interagency strategy to address abandoned mine sites on
federally managed lands. The workgroup is comprised of staff from EPA,
Department of Interior, and Department of Agriculture. The Agency
agrees that any future efforts will require a similar level of
coordination among affected parties.
NEW LEGISLATION IMPLEMENTATION
Senator Craig. Mr. Chairman, one last comment to the
Administrator, because I think she understands the urgency of
it. But I want her to know that there are a lot of Senators who
are watching, and appreciate the urgency of it.
As you know, last year, with the Food Quality Protection
Act, we, in essence, abolished the Delaney clause and, at the
same time, recognize that there were new standards that needed
to be set for the protection of food, food quality, crop
production, and all of that. I will be submitting a number of
questions for the record for you to respond to, so that we can
keep this thing on track. What we do not need is 2 or 3 years
of reg writing, and keeping an industry in limbo.
It took us two decades here to get to a proper handling of
the Delaney clause. We think we have done it. And now we need a
new mode of operation for what I think we all recognize is
probably one of the most important industries of our country to
produce a quality food product of the kind that it does, and to
be able to do that in a competitive environment. I think
Senator Boxer.'s references are a part of all of that concern
that we get it done and that we have scientifically acceptable
tolerance levels for crop production, and that we are able to
respond to it.
So, Mr. Chairman, I will be submitting some questions to
the record that we will send to the Administrator.
Senator Bond. Thank you very much, Senator Craig. We will
keep the record open for those questions. I will have a number
of my own.
Madam Administrator, do you have a response?
Ms. Browner. Yea; just one just very briefly. I might call
the attention of the Senator to the fact that in the budget
request before you, we are asking for additional dollars to
honor the implementation activities that we think are necessary
to keep on track and stay on schedule with both the Food
Quality Act and drinking water. In fact, we ask that we be
allowed to spend $35 million just for the implementation of the
new Food Quality Act. That does not speak to the other
components of our pesticide program, only to the
implementation. Similarly, we ask that we be allowed to spend
$48 million in drinking water.
In both instances, these are dramatic increases off of the
base from the prior year.
Senator Craig. Thank you.
Ms. Browner. As far as I know, we have not missed any
deadlines and any statutory deadlines under either of these
statutes. We are on time.
Senator Craig. And we do not want you to.
Ms. Browner. Neither do we. I would just point out to you
that we are not asking for new dollars. We have redirected them
internally.
Senator Craig. Yes; I understand that.
Ms. Browner. We have looked at things that we do not think
we should be doing anymore, and we have moved them over so we
can honor the commitments that we have all made under these
statutes.
Senator Craig. Thank you.
Senator Browner. Thank you, Mr. Chairman.
NAAQS: STATE GRANT REQUEST
Senator Bond. Thank you very much, Madam Administrator.
Let me turn now to some other areas. We talked earlier
about the proposed standards for ozone and PM fine
particulates, and you talked about the importance of this.
There is that one study, which has been discussed, that
suggests averting 20,000 premature mortalities. I am concerned
that your budget does not reflect the commitment to carrying
out the air quality standards. There is only a 3-percent
increase for grants to the States to administer the air
program.
We have talked about the importance of the States in this
process. And if there is to be a major task of the magnitude
envisioned by these new standards, do you think that an
inflationary-only increase in the air grants to the States
would be adequate to implement it?
Ms. Browner. In fact, in terms of the money to the States
for their air work, there are some redirects. Thus, in the case
of fine particles, the recognition that we will all need to
install a fine monitoring network we do provide for an increase
in funding. I believe, we provide $11.2 million to the States
under the statute. We provide a match of approximately $7
million. We can detail for you how we take into account what
may be required of the States--when we reach a final decision
on the proposed standards.
Senator Bond. Well, some of the moneys that you are
reprogramming, are they not for programs that are still
required under the Clean Air Act? I mean if you are talking
about shifting some money around to deal with perhaps the
particulate matter standards, as I understand it, you are
talking about taking away from other programs.
Ms. Browner. Here is an example of where, quite frankly, we
have made some progress and we do not need to continue the same
level of funding. It is the toxic air emissions and the MACT
standard work. We are recommending a redirection in excess of
$1 million. We are on target to do the work we are supposed to
do under the Clean Air Act. We have sort of caught up with the
backlog. Thus, we are recommending to Congress a redirection
from that program to other higher-priority areas.
CWSRF
Senator Bond. Turning now to the clean water State
revolving funds, the only major disinvestment EPA is proposing
for fiscal year 1998 is the clean water State revolving funds.
I spoke with Mr. Perciasepe at hearings last year. I commend
him on the progress we are making. And I expressed my interest
in seeing that we move forward on this program. It works
effectively. There is a tremendous need for the dollars. EPA's
own estimate of the cost of needed wastewater treatment
construction is about $140 billion nationwide.
Could you tell me why EPA chose to cut the program by 20
percent, $275 million? And can you put to rest the rumors that
the program was cut as an offset to the increase in Superfund?
Ms. Browner. It was not cut as an offset to anything. Our
commitment has been to see this very, very successful State
revolving fund revolve at $2 billion. That was the President's
commitment when he took office. It is in excess of what
President Bush committed to in his work on clean water, because
we think there should be a Federal cost share in these
programs.
In fiscal year 1998, the amount of money that will be in
the clean water funds across the country will be $25 billion.
This program is reaching a level of maturity, and we should all
be proud of that. Money has been lent out. It is being repaid.
The bonds have been leveraged. More money is coming in. The
State matches are in. Thus, the size of these funds has grown
dramatically. With the budget request we make, we are on track,
to honor the revolving level at $2 billion, and to see the very
important projects for which this money goes be successfully
completed.
Senator Bond. Well, that does not answer my point. Because
we know there--as I said, there is $140 billion worth of needs.
I think we were looking at a target of--was it $10 billion, I
think, that we--excuse me, I was thinking of the drinking water
fund.
Ms. Browner. Yes.
Senator Bond. But there are 140 billion dollars' worth of
needs out there, and your outyear projections shows the funding
going along, being cut and then going back up in fiscal year
1999. Why does that make sense? I mean, granted, there is a lot
of money in the pipeline. There is supposed to be a lot of
money in the pipeline. It is supposed to be paid back, because
there is such a need. Why the dip in the funding and then
reinstatement of the funding request later?
Ms. Browner. What you are seeing is a growth in the total
dollar amounts available in each State to be loaned for the
construction. The percentage of funds made up from the Federal
appropriation is decreasing. This is because other things are
coming into play. The size of the fund is growing, but you do
have State matches. You have the leveraged bonds, which have
grown dramatically. We would be more than happy to provide
information for the record, to show you that given what the
States have available to do the job, there is a growth in the
dollars out there.
It is a success story that we should all be proud of. It is
not only a success story from the Federal Government's point of
view. The States have done an important piece of this. In
addition, local governments are, in fact, repaying the fund so
other local governments can now get a loan.
[The information follows:]
CW-SRF Fiscal Year 1998 Funding
The attached charts show: (1) the projected cumulative
capitalization of the Clean Water SRF through fiscal year 1998 and
associated loan activity; (2) the relative contribution of the various
components of SRF capitalization for 1990, 1992, and 1996; and (3)
projected cumulative financial assistance provided by the Clean Water
SRF through the year 2026 (in constant 1996 dollars).
SRF CUMULATIVE CAPITALIZATION AND LOAN ACTIVITY--REPORT YEAR ENDING JUNE
30
[In billion of dollars]
------------------------------------------------------------------------
Cumulative
Fiscal year -------------------------------
Capitalization Loans
------------------------------------------------------------------------
1992.................................... 9 7
1993.................................... 11 8
1994.................................... 15 11
1995.................................... 19 14
1996.................................... 22 17
1997 \1\................................ 23 20
1998 \1\................................ 25 23
------------------------------------------------------------------------
\1\ Projected
Note: Dollars not adjusted for inflation
SRF CAPTILIZATION--REPORTING YEAR ENDING JUNE 30
[Percentage of Capitalization]
------------------------------------------------------------------------
Fiscal year
--------------------------
1990 1992 1996
------------------------------------------------------------------------
Interest earnings............................ ....... 1 4
Loan principal repayments.................... ....... 1 5
Leveraged bonds.............................. 14 22 25
State match.................................. 16 14 12
Federal capitalization grants................ 70 62 54
------------------------------------------------------------------------
[GRAPHIC] [TIFF OMITTED] T05AP08.000
Senator Bond. I agree with all of that. But does your
budget not project more money in fiscal year 1999 to go into
the clean water revolving fund?
Ms. Browner. Yes; it does show an increase.
Senator Bond. OK. You are just taking it down this year and
bringing it back up next year. That does not seem to be a
normal phaseout to me.
Ms. Browner. Mr. Chairman, if I might. On the question of
the $100 million, which you have mentioned several times, was
it taken from this fund to fund Superfund? It was not.
If you look at the increases in water across the Agency,
what you see is that we have made some important increases to
provide the water quality necessary to this country. For
example, we have moved money to allow us to deal with the Safe
Drinking Water Act Amendments, the new legislation, to increase
nonpoint-source funding, to do the work with the States on the
total maximum daily loading. What you see are some
redirections.
At the end of the day, I think the question for all of us
is, are we making the most sensible use of dollars in terms of
what the States need to be doing and what we do in partnership
with the States? There are some redirections in our budget,
because we have some new requirements that Congress has
directed us to undertake that we agree with, that we think are
important, and that we had to fund. That is what we did in our
budget.
GPRA: BUDGET PRIORITIZATION
Senator Bond. Moving on to the planning and budgeting area.
NAPA recommended EPA overhaul its budget process to allocate
resources to highest-risk-based priorities. And as I said, Mr.
Hansen testified about EPA's proposed system. He stated ``the
new system would be in place to formulate the 1998 budget.'' Is
it in place? Can you point to some specific examples, how it
impacts the 1998 budget, and does it result in a risk-based
reprioritization of activities across the agency?
Mr. Hansen. Thank you, Mr. Chairman.
Yes, we believe that it has been implemented. Obviously, it
is still in the process of full implementation. However, we
have, in fact, made numerous decisions throughout the Agency's
budget, in preparation for 1998 and will continue to do so.
This is a key part of our effort to be able to set long-term-
priority goals, to be able to have multiyear goals and annual
goals, and to be able to build a prioritization process to
better reflect the very priorities at the highest-risk areas
and the highest areas of need.
This fits very well within that context and the Government
Performance and Results Act [GPRA]. Also, we believe that the
efforts we have underway, comply with GPRA. The Administrator
and I believe these are steps that we ought to be taking with
or without GPRA. This is being accomplished through our new
structure. Sallyanne Harper, our Acting Chief Financial Officer
who is here at the table, has established the process for being
able to plan, analyze, and to hold accountable our systems.
RISK DECISIONS IN 1998 BUDGET
Senator Bond. I will return to Senator Craig, but I have
one followup question on this.
How does your Agency's decision to increase the Superfund
Program by 50 percent and the climate change action plan by 73
percent reflect this budget discipline which was supposed to be
imposed and you said it is imposed on planning, budgeting, and
accountability? Do not the dollars spent on Superfund provide
significantly less opportunity for risk reduction compared to
other EPA programs?
Mr. Hansen. Mr. Chairman, first, regarding Superfund, and
having been one of the authors of the Reducing Risk Report that
came from the Science Advisory Board, this report is oftentimes
one of the things that is referenced in relationship to whether
Superfund is the highest risk.
We have concluded that when one looks at risk, one needs to
look at it both from the standpoint of the citizens who are
directly affected and those who are closest to that site. To
them, it is a very high risk, as opposed to being able to look
across the whole of other environmental priorities. The
commitment we, as an administration, have is an obligation and
a need to be able to move ahead on those very sites that are,
in fact, directly affecting 1 in 4 Americans that live within 4
miles of a Superfund site.
In terms of greenhouse gases and our climate change action
plan, we believe very strongly that the voluntary programs that
are included within a good, nonnormal, command and control,
regulatory, nonregulatory in the traditional sense program
addresses a very real issue that needs to be moved forward.
Consequently, it has. I think many people, certainly, the 2,500
scientists and others would agree is one of the most pressing
of problems and one of the highest of environmental priorities.
Senator Bond. Are you telling me that the risk to the
people living in the vicinity of Superfund sites is a real and
significant scientifically based risk, or is it a perception of
the problem?
Mr. Hansen. Mr. Chairman, of the Superfund sites, 60
percent have documented health effects associated with those
sites and 40 percent have potential health effects associated
with the direct contamination from those sites. So yes, it is
clearly a direct, not a perceived health effect.
Obviously, one must look at each site to determine how
serious the risk actually is. However, there are direct
documented health effects associated with those Superfund
sites.
Senator Bond. Well, I think I would like to see that system
and see how you have----
Mr. Hansen. We would be happy to.
Senator Bond. But I have already asked for the listing of
the project sites. We want to know where there are specific
scientifically identified risks and how you came to those
conclusions and those recommendations.
Mr. Hansen. Certainly.
[Clerk's note.--The information on the Superfund can be
found in the VA-HUD Subcommittee files.]
SALMON, ID
Senator Bond. Senator Craig.
Senator Craig. Mr. Chairman, thank you.
Carol, this is an observation more than it is a question,
because it is a frustration. And it deals with the ozone and
fine particulate matter standards that you are proposing. And I
want to paint a picture for you, because it speaks to the
application of the problem and the need for greater flexibility
than you might have anticipated in some areas.
I was recently in a community in Idaho called Salmon, ID.
It is in Lemhi County. Lemhi County is as big as New Jersey,
Rhode Island, Connecticut, and Delaware put together. And it is
over 85 percent public land. In other words, undeveloped
grasslands and timberlands. About one-half of it is national
forests. This little community once had three sawmills and
three tepee burners--open-air burning--and a burning operation
out at the local city dump. None of those exist any more and
have not existed now for a good number of years.
And yet, under your new PM-2.5, they cannot meet the
particulate standards without investing a tremendous amount of
money--and, to them, a tremendous amount of money--we are
talking of a community of 3,000 people and a county of ranchers
widely dispersed. They cannot meet the standard without the
expenditure of over $500,000. And that would largely go into
the paving of streets and alleys in a city where many of the
streets are gravel and alleys are gravel.
Now, coupled with, is the new management by match--I call
that Bruce Babbitt's new burn policy on forest lands, as
management by match--they are even concerned that they would be
out of compliance at increasing levels over an extended period
of time if the Forest Service actually actively engages in some
reasonable management by fire. And I accept that to some
extent. But without that, by just moving the standards to where
you are suggesting they go--and I am not disputing that--this
city is out of compliance, this little community----
Here is the addition of insult to the injury. I am told--
and I visited with the mayor at length about it--because he
said it this way. He said,
Senator, it is not that we do not want to comply. It is
that I cannot ask my taxpayers to comply. I cannot ask for that
kind of money to do that when we have other critical needs.
Now, this is a community where health is not a factor. The
greatest factor in health is that the nearest hospital of any
high-level medical application is 150 miles away, over a
mountain pass. And their concern about $500,000 expenditure for
these particulate standards is wasteful, when they have lived
all of their lives under these conditions. And, in fact, the
conditions have dramatically improved over the last several
decades because of the existing law.
How do we solve that problem?
Ms. Browner. I apologize. I am not familiar with this
county. I am aware of some counties.
Senator Craig. No; I did not expect you to be. But this is
a typical example of many of the rural environments of the
West, where dust is a normal part of the environment during
certain periods of the year.
Ms. Browner. I agree.
PM-2.5
Senator Craig. And then when you add to it auto traffic on
gravel roads that have not been paved and will never be paved
because it is economically unfeasible to pave them, and then
you put in a rural community environment, we have got some
problems. And then you add, on top of that, in the wintertime,
heating by wood, and you have got bigger problems. Because
wood, in an environment like that, where the forests are next
door, makes all the right sense in the world for a form of
space heating.
Ms. Browner. What I would like to do, with your lead, is to
look at the information we have on this particular area and to
have our air expert sit down with some of your people and the
city or the mayor.
Senator Craig. Sure.
Ms. Browner. We recognize that, in seeking to provide a
level of public health protection for fine particles, PM-2.5 is
tiny. However, it is almost as if we are talking about a new
pollutant. The work that has been done on coarser particles,
such as PM-10, is really work on a different sort of pollutant,
thus PM-2.5 is tiny when compared to PM-10. However, the health
data shows us that PM-2.5 can result in large numbers of
premature death.
In looking at how we will actually reduce the levels of
pollution, we see that when we look nationally, that for about
40 percent of the areas that might not today be able to meet a
PM-2.5 standard, they would be able to do so through
technologies that we have on line. These technologies are
coming into place and some are already in place. For 60 percent
of the areas, we are going to have to work literally area by
area and community by community, to shape the appropriate plans
and the strategies for reducing the pollution levels to meet a
public health standard.
We would be more than happy, we have done this with several
other communities and States already, to sit down and
understand better what are the particular sources or what may
be the sources there, and then to look at what may be the cost-
effective, commonsense strategies.
Senator Craig. Well, it is important to remember in these
contexts, this is a community without smog. It does not exist.
Ms. Browner. Yes; and PM is not smog.
Senator Craig. It is a beautiful, open-air environment of
probably what most citizens of our country, if they walked into
it, would think they are in the wilderness and say, oh, my
goodness, is not this a beautiful area.
Ms. Browner. Yes.
Senator Craig. And yet they still fall out.
Ms. Browner. We are dealing with two different issues here.
I do not believe that we think Idaho has an ozone problem. We
think the concern is, as you stated originally, the fine
particles.
Senator Craig. Yes; it appears to be that would be the
greater case.
Ms. Browner. It is not the smog issue. It is the particle
issue.
Senator Craig. That is right.
Ms. Browner. There is some good news in that, as you say,
you do not have smog and you do not have an ozone problem.
Senator Craig. Yes.
Ms. Browner. I think we would tend to agree with that.
FINE PARTICLES
Senator Craig. This community would rather spend $500,000
on a helicopter for a life flight, so that they could really
deal with human health and safety than to spend $500,000 paving
roads that have been graveled for the last 50 years. They do
not understand the problem. Because a community of that size,
and as poor as that community is, has a choice, with limited
dollars, they have to make some very real tradeoffs at times.
What they are afraid is that they lose that flexibility.
Ms. Browner. If we could just take one more moment, Mr.
Chairman, and ask Mary Nichols, the Assistant Administrator for
the Office of Air, who may know a little bit more about this
particular situation than I know.
Ms. Nichols. Well, I am not familiar with Salmon, ID.
Senator Craig. No; I would not expect you to be.
Senator Bond. Ms. Nichols, would you take a seat and speak
into the microphone so that we can get that recorded. Thank
you.
Ms. Nichols. I am Mary Nichols, Assistant Administrator for
Air and Radiation.
I was just out visiting five Western States, along with the
Director of the Western Governors' Association. I did not get a
chance to go to Idaho.
Senator Craig. Well, you are getting a sense, though, of
our concerns, sure.
Ms. Nichols. I have heard similar comments. Being from
southern California, where we have windblown dust problems, I
am very familiar with this issue, and it is a serious concern.
A bit of good news, perhaps, is that, focusing on fine
particles, which we believe are the ones which are more
directly related to more serious health effects, in fact,
eliminates most of the road dust concern. That is, the smaller
particles generally are caused by automobiles and industrial
pollution rather than by dust.
Senator Craig. Yes.
Ms. Nichols. However, there are areas where it simply is
very difficult to find effective controls for the PM-10. We are
looking, through a Federal advisory committee which
Administrator Browner directed us to impanel, at whether there
are some innovative ways we can implement the Clean Air Act. We
are looking not only to find other technologies but, frankly,
to find other ways to work with communities to develop plans to
address their overall particulate and ozone problems in a more
comprehensive and more cost-effective way.
Some interesting ideas are coming out of that process. We
would be happy to come and talk to your staff.
Senator Craig. I would appreciate that. I mean Salmon is
not unique. It is just a good example of a variety of
communities of that character across the Western States that,
on occasion, in a seasonal way, have problems. They have had
those problems long before the human species existed there. But
we happened along and then we put regulations on top of them.
And then, all of a sudden, those regulations start costing real
money, and in communities where their priorities conflict with
those.
Because they just cannot understand the value of that, when
yes, 30 years ago, at certain times of the year, you had a bit
of dust and you had a bit of smoke, maybe not by their own
doing, but by the doing of Mother Nature or by others. And we
have got to demonstrate some flexibility in those communities.
Because there is no base of economy to justify them spending
that kind of money. Or at least that is their guesstimate now,
based on an early analysis of what this could mean to them.
Ms. Nichols. Right. And we do fortunately have some time to
actually work through those issues and try to get better
information.
Senator Craig. Great. Thank you.
Mr. Chairman, thank you for your patience.
NAPA STUDIES
Senator Bond. Thank you very much, Senator Craig.
Administrator Browner, going back to the NAPA studies,
which I like to do from time to time, that study found that EPA
had no systematic way of performing program evaluations to
determine what programs are accomplishing their stated goals
and objectives, and that it was difficult to make rationale,
informed budget decisions without it. I would be interested to
know what EPA has done to establish a centralized routine of
systematic program evaluation as part of the budget process.
And I would be happy to hear from Deputy Administrator
Hansen. That seems to be in his ball park.
Mr. Hansen. Thank you, Mr. Chairman.
Again, I stress that Administrator Browner and I have felt
that the concepts are contained within our planning, budget
analysis, and accountability office, that they address those
very issues that you have just referenced and that NAPA
originally recommended. These are tremendously important. We
believe that the absolute key to this type of work is being
able to understand exactly what we are delivering in all of our
program areas, and being able to evaluate that, being able to
have that as an element of our budgeting.
We are in the beginning stages of that process. We believe
we have made very real progress. We have additional steps to
take.
CSI AND PROJECT XL
Senator Bond. Thank you.
Let me turn now to project XL and the commonsense
initiative. I expressed my concerns in the opening statement. I
thought you might want to address those and find out what
lessons you have learned over the last 2 years, why there have
been so many problems, what specifically are you doing to see
that the President's stated commitment to alternative
compliance approaches is being carried out, and is there
alternative compliance legislation needed?
Ms. Browner. First, I want to speak to the commonsense
initiative. The work on an industry-by-industry and sector-by-
sector basis has produced some very, very important results. It
has not been without its difficulties, in terms of its history,
the relationships between industry and local communities, State
representatives and others. What we did for the first time ever
was bring everyone together and build a level of dialog, a
level of trust.
I think you had suggested that the automobile and the
petroleum industries had withdrawn from CSI. They have, in
fact, committed to continue in the process. I am not suggesting
that they may not want to revisit that at some point. Again, it
is not without its challenges. However, we are very proud of
the dialog and the work that is being done.
Each of them is different. We took the time and the
resources to bring in an outside evaluator to look at this
program, to review whether or not this was working, what could
make it better and what lessons were learned. The evaluator
found and what the evaluator shared with us and the CSI council
is that, in each instance, the individual sectors believe they
are making progress. No two are alike, but then no two sectors
are alike.
So we are committed to continuing our sector-by-sector
approach, building on the success of the dialogs on the work
heretofore.
In terms of project XL, we are actually doing the difficult
work, on a project-by-project basis, of finding out how to go
beyond current requirements, to actually get better
environmental performance. We have projects that are now up and
running, showing us that you can go further.
I joined Intel in announcing their project. This is a
facility that is literally acres. When we are done and when
Intel and the community groups that are working together on
this project are done, its emissions will be less than 1
neighborhood gas station. This is not a small undertaking.
In terms of legislation, I would encourage you, as I think
you suggest that you are inclined to do, to look to E4E and the
work that Bill Ruckelshaus is doing. We have been extremely
active participants in that process. Fred Hansen, I think, has
attended all of the meetings. I have spoken with Mr.
Ruckelshaus on several occasions. We believe there is a real
sense within that group of how to really fashion any
legislative recommendations that may be forthcoming, and we
would encourage all to await the outcome of that process.
I think they are hoping to wrap up their work in the next
several months. That is the target they are on. I know the last
time I spoke to Bill Ruckelshaus, that was certainly what he
thought was when they could be able to conclude their work.
E4E PROGRAM
Senator Bond. I am very supportive of the E4E program. I
have urged them to go forward. It is not my sense that they are
going to come up with specific legislative proposals, but that
they will come up with general principles. But nevertheless,
whether they come up with proposals or not, and we are most
anxious to see their report, the question to you is do we need
alternative compliance legislation? Right now, you have got the
ball.
Ms. Browner. At this point in time, I do not think we need
alternative compliance legislation, and I will explain why.
Senator Bond. Well, the Amoco, you could not do the Amoco
project in Virginia.
Ms. Browner. Well, Amoco is a good example of the kind of
analysis that you have to go through to understand the
shortcomings of an individual statute. In the case of Amoco, I
think the lessons learned from Amoco are demonstrated in Intel,
where you actually were able to go out and figure out how to do
something to speak to the air issues to get greater
environmental progress, and to provide flexibility in exchange
for that environmental progress. So we learned from Amoco.
I would suggest to you that it is not accurate, and I do
not think you are saying this but I think someone said this,
that somehow or another Amoco shows you that the whole system
is flawed. We learned from Amoco, and we have moved on from
Amoco in a very real and concrete manner.
What I think you did in drinking water in actually looking
at an individual statute, understanding what the goals of that
program are for the people of this country, and how best to
provide appropriate flexibility will at the end of the day be
the best way to deal with these challenges. Each of these
statutes are fundamentally different. They seek to speak and
look to fundamentally different challenges. I think trying to
speak across them will prove to be all but impossible in the
short run, and it may well be that E4E will give us some
guidance and advice on how to do that. However, we will get the
greatest progress in the new generation of environmental
programs and solutions by going into the guts of existing
statutes and working within them to craft the new solutions.
GREEN PROGRAMS
Senator Bond. Well, I do not in any way downgrade or deny
what apparently is and will be happening at Intel. I think that
is great. The fact remains it is one of three out of 50 we were
expecting, and we want to know--if you think there is no
legislation necessary, then I would expect the pace to pick up
very significantly. And I am asking the question do you need
legislation, because something seems to be holding the program
up. That is the reason I asked it.
Let me move now to the green programs. The climate change
action plan was issued in October 1993 to meet the goal of
stabilizing greenhouse gas emissions at 1990 levels by year
2000. As I understand it, the program was designed to reduce
greenhouse gas emissions by 109 million metric tons of carbon
equivalent relative to 1990 levels. Yet EPA has achieved only
.6 MMTCE reduction through 1996. Given that 0.6 out of 109
million goal, why do you think that we can make much more
significant progress? Why should we provide additional
assistance to that plan?
Ms. Browner. When the President announced the
administration's plan, the commitment, and the recognition were
that if we would stabilize in the year 2000 at 1990 levels we
would need a 110 million metric ton reduction. We will not make
that. We will not make that in part because we have had growth.
Thus, we actually need greater reductions than were originally
forecasted. Also, we have not had the financial resources. We
have not had the appropriation levels to allow us to do the
kind of work that would have resulted in greater reductions. It
is just that simple.
We take the money that is appropriated in the Climate
Change Action Plan Program and work in a variety of ways. Many
are the kind of new generation tools that have been encouraged,
that we have been encouraged to utilize in terms of forming
partnerships with businesses and finding more commonsense,
cost-effective solutions to pollution. We use that money to go
out and do that work, and it does result in very real
reductions in the kind of climate change gases and other things
that we are worried about.
Mary, do you have the specific numbers?
Ms. Nichols. This is Mary Nichols again. The most recent
assessment that has been done by the interagency group on this
shows that if the full 1997 enacted levels are maintained that
we would achieve 80 million metric tons by the year 2000. This
is about 75 percent of what was originally projected to be
needed. As the Administrator indicated, our estimates were
wrong, because there has been more growth than was projected.
However, we do project that if the funding that the President
sought was restored that we could make up the 25 million metric
ton shortfall by the year 2005. In other words, we would meet
the goal that we had actually set for ourselves through the
green programs based on what we are actually achieving today in
terms of companies installing energy-efficient equipment.
Senator Bond. But you would agree that to date reduction
has been 0.6 in MMTCE?
Ms. Nichols. Yes; that is just one of the programs of the
total.
Ms. Browner. There are many programs.
Ms. Nichols. I am giving you the totals for the Climate
Change Action Plan Green Program. One of those was the .6. I
frankly cannot remember which one it was.
Senator Bond. We would like to see the analysis.
Ms. Nichols. Sure. We will be glad to provide that to you.
[The information follows:]
Greens Programs: Greenhouse Gases Removed
The Administration's analysis of the full impact of the Climate
Change Action Plan programs, which is being coordinated by CEQ, is
still underway. Comprehensive, draft results will soon be completed, at
which time they will be immediately provided to the Committee. At the
same time, the results will be available for public comment via a
Federal Register notice. It is expected that these results will be
available before the end of May. After receiving comments and
conducting any further analysis, the results will be finalized and
published later this summer in the United States' second submission to
the Framework Convention on Climate Change.
Nevertheless, it is clear that EPA's partnership programs are
successfully overcoming market barriers (such as the lack of reliable
information) to investments in economically attractive technologies
that reduce greenhouse gas emissions. Despite a 40 percent
Congressional budget cut in fiscal year 1996 and fiscal year 1997,
EPA's partnership programs prevented the emission of over 6 million
metric tons of carbon equivalent, or mmtce during the past year, equal
to the pollution from over 3 million cars. In the past year, program
partners and consumers also saved over $750 million on their energy
bills due to CCAP programs, helping to prove in yet another way that
pollution prevention is a contributor to economic growth.
It is the nature of these programs that their benefits will
accumulate rapidly, now that solid foundations have been laid. Just as
the pollution savings last year doubled the savings from the previous
year, the pollution prevention from these programs is expected to
double again in 1998. This is due to the more than 3,000 strong
partnerships that EPA has formed with corporations, small businesses,
universities, hospitals, utilities, and state and local governments.
Senator Bond. We provided 96 million in 1996 and 86 million
in 1997. You say with that we will get 75 percent of the way
toward the goal?
Ms. Nichols. Yes, that is right.
Senator Bond. I would be interested in seeing that, thank
you, if you would provide that analysis.
Ms. Browner. Certainly.
SBREFA
Senator Bond. Madam Administrator, what specifically are
you requesting for any additional requirements or burdens
associated with the Small Business Regulatory Enforcement
Fairness Act, known as SBREFA, or the Red Tape Relief Act.
Ms. Browner. Each of what we would refer to as the large
component programs, such as air, water, waste, pesticides, and
toxic substances, have a responsibility under the law as they
move through a rulemaking to comply with the small business
aspects: bring the panels in where appropriate and work in
partnership with the small business community. So those are
managed in each of the program budgets.
In addition, we have asked our Office of Policy, Planning
and Evaluation to provide an across-the-Agency management of
the requirements under SBREFA to ensure that we are doing
everything that is important, not just in terms of the letter
of the law, but in the spirit of the law. There is included in
their budget a dollar amount of $200,000 or more to provide
that coordination. That is in addition to what is in each
programmatic area.
PEER REVIEW
Senator Bond. Finally, in a recent report GAO was critical
of EPA's implementation of the peer-review policy. GAO
attributed the uneven implementation to inadequate
accountability and oversight to ensure that all relevant
products are properly peer reviewed, and confusion among EPA
staff and management about what peer review is, its importance
and benefits, and how and when it should be conducted.
Ms. Browner, when you came into office you claimed peer
review would be top priority. We agreed with that. You
instituted a peer-review policy. Could you articulate precisely
what the peer-review policy is, why its implementation has been
uneven, why the top science official in the Agency, Dr.
Huggett, was not the responsible official for the Agencywide
implementation, and how will you ensure that adequate oversight
of peer review is exercised?
Ms. Browner. There are generally speaking, two ways in
which peer review is important to the work we do at EPA.
Obviously, within our Office of Research and Development the
sort of traditional scientific analysis research done by the
Agency peer review is extremely important. Under Dr. Huggett's
leadership, that office has installed a peer-review policy that
has been praised by many in the scientific community as taking
our peer review to a new level.
We also do science in our individual program areas. The
Office of Water undertakes scientific analysis in conjunction
with our Office of Research and Development. In some instances
they do science beyond what our Office of Research and
Development might be doing, particularly in the case of an
individual rulemaking or regulatory action. This is true for
all of the large programs such as air, waste, pesticides, and
toxic substances.
In each of those programmatic areas, we have also directed
the development of peer-review programs to ensure that peer-
review panels are used where appropriate. Given the fact that
we have these two general areas where peer review can occur, I
felt it was important to have Fred Hansen provide the
leadership across the Agency to ensure that we were using this
very important tool of peer-review practices. My sense is, and
if I might ask Mr. Hansen to speak more specifically, that when
GAO looked at this what they found is within the Office of
Research and Development a very good program, and a program
that was up and running. GAO also feels that we needed to
similarly bring along the programmatic peer-review programs,
and that is what we have been focusing our efforts on.
I might just point out that in fiscal year 1997 we had 231
panels of scientists reviewing our work. They reviewed almost
3,500 studies, just to show you how many times we are going to
external peer review panels. This is no small undertaking on
our part.
Mr. Hansen. Just briefly, two things. First, we believe
very strongly that if peer review is not done where the science
is actually done we will not have as much engagement in exactly
the best peer review and processes to ensure that the overall
goals are achieved. That is why we believe it is important to
have peer review done in all the places that science is done.
Second, what the Administrator has just indicated has not
happened within the program offices as well as we think is
necessary. In January of this year, to be able to carry out the
Administrator's requirement, I have asked Dr. Robert Nuggett,
Assistant Administrator of the Office of Research and
Development, to do two things. One, provide a level of training
throughout the Agency to ensure that all of our people who are
involved in science understand exactly what it is to be able to
conduct all the details of peer review. Not because they did
not have a general understanding of its process. Two, ensure
that peer review is applied to all products that are worked on
by the EPA, and if there are any deficiencies, that they are
either worked out between Assistant Administrators, between Dr.
Huggett and that Assistant Administrator, or brought ultimately
to me for any resolution.
We take peer review very, very seriously. We think that it
is the backbone of our good science.
CLOSING REMARKS
Senator Bond. Thank you, Mr. Hansen.
Ms. Browner, we will leave the record open. If you have
comments on the many points that were raised and not fully
explored, we will have questions that we ask for you to respond
to and would welcome any comments you have.
In closing, I would note that it appears to me that if you
are really applying a relative risk methodology to the budget,
I just do not believe that Superfund would get a 50-percent
increase. To me, let us be honest, I think this request is
driven not by the merits but more by politics, because while
the Superfund budget would increase dramatically, the clean
water State revolving fund, a program which works well and for
which tens of billions of dollars are needed, would be cut by
$275 million----
Ms. Browner. No; it is $100 million.
Senator Bond. It released funds early in the year. It is
$275 million. It is a cut, in any event.
Ms. Browner. We will agree with you that $100 million was
redirected. We would like to discuss with you the other $175
million, because we do not understand where that number comes
from, with all due respect.
Senator Bond. Well, it is cut. We believe it is cut $275
million.
The GAO has found that Superfund is one of the 25
Government programs which is high risk, subject to fraud,
waste, abuse, and mismanagement. We look forward to working
with you to reform a program which has been criticized for
years, and when we get the reforms enacted I will be happy to
talk with you about it. But as I note, even the States and the
State officials responsible are skeptical that the dollars can
be effectively and efficiently utilized.
Additional committee questions
So we will continue to work on that, and before I close I
ask unanimous consent of all of my colleagues on the committee
to keep the record open to include testimony from the GAO on
Superfund and NAPA related issues.
Hearing no objection, it is so ordered. [Laughter.]
[The following questions were not asked at the hearing, but
were submitted to the Agency For response subsequent to the
hearing:]
Questions Submitted by Senator Bond
SUPERFUND OUTYEAR PROJECTIONS
Question. EPA's budget proposal assumes that 76 percent of the
sites currently in the construction and design phases of the Superfund
``pipeline'' would be completed by 2000, leaving less than 500 sites in
the ``pipeline.'' Yet your outyear budget projections for fiscal year
2000 through 2002 show $1.4 billion a year. Given that the number of
sites left to be cleaned up would be cut in half, why is EPA projecting
$1.4 billion outyear budgets?
Answer. The Agency estimates that approximately 18 fund-lead
remedial action starts will occur after the fiscal year 1998 and fiscal
year 1999 accelerated cleanup initiative is completed in the year 2000.
In addition, the Agency's budget estimates the Superfund program will
list 30 sites per year on the National Priorities List (NPL). In other
words, 30 sites per year are entering the Superfund ``pipeline'' which
will result in more than 600 sites by fiscal year 2001. Resources at
the current fiscal year 1997 level in 2000 and beyond will be necessary
to maintain a steady progress of sites through the entire site
remediation process.
SUPERFUND GAO REPORT ON HIGH RISK
Question. In a February 1997 report, GAO reported that Superfund
was a high risk program--vulnerable to mismanagement, waste, fraud and
abuse. In light of GAO's high-risk designation, how could the Congress
have any confidence that the funds you are requesting would be spent
prudently and effectively?
Answer. GAO's high risk report acknowledges EPA's efforts to
correct past contract management problems and commends those efforts.
Some of the contracts management improvements the Superfund program has
made include: (1) reducing program management costs from a high of 20
percent at the start up of the Alternative Remedial Contracting
Strategy (ARCS) contracts to a national average of 8.4 percent for
fiscal year 1995 and fiscal year 1996, (2) increasing management
emphasis on obtaining independent government cost estimates and
establishing improved cost tracking systems to provide better
historical cost data bases, and (3) instituting improved invoice review
processes. Over the past few years, EPA has focused increased attention
on strengthening its management of Superfund contracts and will
continue to do so in the future.
SUPERFUND GAO REPORT ON CONTRACT MANAGEMENT WEAKNESS
Question. GAO's recent report said ``although EPA has been
addressing the weaknesses in contract management, the agency remains
vulnerable to overpaying its contractors and not achieving the maximum
cleanup work with its resources.'' GAO found that EPA pays its cleanup
contractors a high percentage of total contract costs to cover
administrative expenses rather than ensuring the maximum amount of
available funds is going toward the actual cleanup. What plans does EPA
have to address these contract management weaknesses?
Answer. As discussed in the Agency's response to the GAO's high
risk report, we take exception with many of GAO's findings. Our own
internal regional reviews have shown that the agency has made
significant strides to establish the practice in which independent
government cost estimates (IGCE's) are performed for all work
assignments and sufficient negotiation documentation exists in cases
where costs different from those in the IGCE's are accepted. Additional
actions we are taking in this area include sharing best practices and
expertise in preparing IGCE's among the regions and instituting an
improved cost tracking and reporting system under the Response Action
Contracts (the follow on to the ARCS contracts). In addition, the high
program management percentages cited by GAO were due in large measure
to the lack of work assigned to these contractors in fiscal year 1996.
Fiscal year 1996 was clearly an atypical year due to the budget
situation and it is misleading to make projections based on this data.
We continue to emphasize the need to control and minimize program
management costs under all of our cleanup contracts and to monitor
these costs very closely.
SUPERFUND DEOBLIGATIONS
Question. In testimony provided for the record today, GAO states
that $250 million in unspent obligations are potentially available to
be recovered on over 6,000 completed work orders in the Superfund
program. Once deobligated, these funds could be applied to ongoing and
new cleanup activities. EPA's fiscal year 1997 and fiscal year 1998
projections include only $50 million and $20 million, respectively, in
deobligations. What accounts for the difference between EPA's projected
deobligations of $70 million over the next two years, and GAO's
estimate of $250 million?
Answer. Differences in methodology account for the variances in
EPA's and GAO's estimate of deobligations over the next two year. GAO
assumes that all unliquidated funds in completed ``work orders'' are
available for deobligation. GAO's estimate does not take into account
the fiduciary reserves that EPA and States hold in their contracts to
cover costs associated with contract closeout. EPA's deobligation
estimate assumes that prudent reserves will be maintained to cover
closeout costs. However, the Agency is working diligently to deobligate
inactive funds where appropriate.
SUPERFUND PACE OF DEOBLIGATIONS
Question. Why has EPA been slow to deobligate these funds? Couldn't
your budget request be reduced by enhancing your efforts to deobligate
the full $250 million available?
Answer. The Agency has moved aggressively to deobligate inactive
funds. In 1994, the Agency established a taskforce to promote prompt
and effective deobligation of Superfund funds that had not been fully
utilized. In the three full years of this deobligation effort, a total
of $397 million have been deobligated (fiscal year 1994 $160 million,
fiscal year 1995 $170 million, fiscal year 1996 $67 million). These
efforts will continue in fiscal year 1997 with a special emphasis on
expired contracts and grants. Due to fiscal year 1997 efforts and the
need for fiduciary reserves to cover contract closeout costs, the
majority of the contract dollars identified by GAO will not be
available in fiscal year 1998.
SUPERFUND DEOBLIGATION EFFORT
Question. What level of resources are you devoting to this
deobligation effort, and how much do you need to deobligate the full
amount available?
Answer. The President's budget provides adequate resources to
headquarters and regions to process all appropriate deobligations. The
Agency has established a deobligation task force with representatives
from five headquarters offices and all Regions and issued guidance on
processing deobligations. The task force works with programmatic,
contracting, grants, and finance personnel to process all appropriate
deobligations. Due to the need for fiduciary reserves to cover contract
closeout costs, the Agency does not believe an increase in personnel
would result in deobligation of the full amount identified by GAO.
SUPERFUND CLEANUP: AVERAGE COSTS
Question. EPA has claimed its administrative reforms result in a 20
percent reduction in the cost of cleanups. Yet in the model EPA
developed to support the requested level of resources, EPA used a
pricing factor of the average cleanup cost for fiscal year 1987-95 with
60 percent cost growth. Why would you have assumed such cost growth if
in fact you are seeing 20 percent savings?
Answer. The 20 percent cost savings is based on Record of Decision
(ROD) estimates of construction costs. In calculating the average
Remedial Action (RA) cost, the program applies a cost adjustment, a
cost growth factor. The construction cost estimates in the ROD are made
on average 3 years in advance of actual construction. Cost adjustments
related to new information discovered during the design of the project
and time are reasonable and standard engineering practice. This
adjustment is a fixed percentage and would apply to any ROD estimate.
It has no effect on the cost savings exhibited in the last several
years worth of ROD estimates.
SUPERFUND COST OF CLEANUPS CBO ESTIMATES
Question. CBO tells my staff that the average cleanup cost (``ROD''
cost) for fiscal year 1994-95 was $5.6 million, and applying 20 percent
cost growth would be appropriate, for a total cost of $6.72 million.
Why, then, is EPA assuming a $10 million cost for remedial actions?
Answer. The $10.0 million average remedial action cost figure was
used because it represents the average of ROD estimates plus a cost
growth for ROD's signed post the Superfund Amendments and
Reauthorization Act of 1986. Applying a recent two year average of
estimated remedial action costs would under estimate the resources
required to complete construction at these sites.
SUPERFUND SITE DATA
Question. EPA's budget estimates are based on the number of sites
in the queue and historical cleanup costs, not real data on specific
sites. Why?
Answer. Budget estimates, which are based on real data, are used
because it is difficult to say with certainty 18 months prior to the
beginning of a fiscal year which specific sites will begin
construction. Averages based on historical performance provide
reasonable indicators for resource and time requirements.
SUPERFUND SITE DATA: RISK RANKING
Question. Does EPA have a list of specific projects to be funded in
fiscal year 1998, including a risk-based ranking, an estimated cost for
each, along with a projected start-date?
Answer. The Agency has a list of candidate sites with planned
remedial action starts in fiscal year 1998. These sites have not yet
been ranked using the Agency's risk ranking system. These sites do have
planned start dates and cost estimates. It should be noted that the
cost estimates would be used in generating the average remedial action
cost used for the budget projection. A list and total cost estimate of
the planned projects was provided to the Senate Appropriation's
Committee staff on April 3, 1997.
Question. If EPA does not yet have such a list, how can we be sure
that EPA could actually spend the dollars requested?
Answer. EPA does have a candidate list and a projection for the
cost to complete construction. This list and a total cost estimate was
provided to the Senate Appropriation staff on April 3, 1997. Site
specific cost estimates were not provided due to the procurement
sensitivity of the data.
SUPERFUND RISK-BASED PRIORITY SETTING
Question. Would EPA continue to use its risk-based priority setting
process in Superfund?
Answer. Yes. The Agency intends to continue the risk ranking
process to ensure that the worst sites are addressed first.
Question. Given that virtually all sites ready to go to
construction would be funded, why would this be necessary?
Answer. While it is true that most sites would be funded, it is
important that the Agency continue to address the highest risk sites
first.
SUPERFUND STATE COSTS
Question. States are required to put up 10 percent of the cleanup
cost. Have you checked with the States to determine whether they could
afford their share of the cleanup costs?
Answer. The Agency is continuing to work with the States to address
strategies for cost share on the candidate sites. Possible
considerations, in lieu of lump sum payment, are phased payments and
in-kind services.
superfund fiscal year 1997 projected start dates
Question. EPA projects there will be 58 sites in fiscal year 1997
ready-to-go to construction, but unfunded because of budget shortfalls.
However, about a third of these sites are not projected to be ready
until the fourth quarter. Isn't it true that projected start-dates
often slip?
Answer. While projected start dates can slip, the Agency's best
information indicates that the 58 sites will be ready for construction
this fiscal year.
SUPERFUND 900 SITES COMPLETION SCHEDULE
Question. EPA has indicated the additional funds requested would
enable it to complete 900 sites by the year 2000, instead of 650
construction completes committed to in 1991. Over the life of the
program, there have been about 423 construction completions to date.
How will EPA achieve another 477 completions--more than the total
number completed in 15 years--in less than three years?
Answer. Current analyses of the Superfund site cleanup pipeline
show that 147 sites are in design and 482 sites are in construction.
This provides a universe of 629 sites that are potential candidates to
achieve the 477 completions needed to reach the President's 900
construction completion goal. With the resources requested over two
years (fiscal year 1998 and fiscal year 1999), the Agency will be able
to provide project managers and funding necessary to move these sites
to construction completion.
SUPERFUND ADEQUATE STAFFING
Question. Are there sufficient staff to manage and contracting
capacity to carry out these additional cleanups?
Answer. The President's Budget requests an additional 100 full-time
equivalents (FTE) to support the 900 construction completions goal.
This will provide the necessary staff to support the accelerated number
of cleanups projected. Recently the Agency awarded a new set of
remedial action contracts. These contracts provide ample contract
capacity over the next five years to accommodate the estimated number
of construction projects.
Question. While EPA's budget indicates an additional 130 FTE would
go to Superfund, I understand that the budget is adequate to fund only
44 of those. How can you say you've requested enough staff to oversee a
doubling of the program?
Answer. The Superfund budget supports full funding of all FTE's.
SUPERFUND ATSDR FUNDING
Question. Why isn't EPA requesting increases for the other agencies
who support the Superfund program--such as the Agency for Toxic
Substances and Disease Registry?
Answer. Most of the increases are requested for cleanup activities
that our other Federal agency partners don't perform. However, the
Agency is requesting $6.0 million in funding for the Agency for Toxic
Substances and Disease Registry (ATSDR) to specifically support the
President's 900 Superfund completion goal. ATSDR will address community
concerns regarding how the implementation of cleanup designs affect
their health ad surrounding environment. The other federal agencies do
not play as active a role in remedial site cleanup. Their
responsibilities focus on research, worker safety training, and
emergency response. The President's 1998 budget requests total funding
of $152.1 million for other Federal agencies who support the Superfund
program.
SUPERFUND REDUCED FUNDING AFFECT ON 900 SITES
Question. If the Congress were to provide the $1.4 billion
originally projected for fiscal year 1998, how many ``ready-to-go''
projects would carry into fiscal year 1999?
Answer. The Agency expects to carry over 50 to 55 fund-lead sites
from fiscal year 1997 to fiscal year 1998. Eighty fund lead projects
are planned in the fiscal year 1998 budget. If the Agency's Superfund
budget remains at the $1.4 billion level, it is estimated that over 100
fund-lead sites will carryover into fiscal year 1999.
METHYL PARATHION
Question. What is the status of EPA's efforts to cleanup homes
contaminated by the illegal application of methyl parathion?
Answer. As of April 18, 1997, the Agency was responding to 3,687
homes with reported methyl parathion spraying. The Agency has sampled
2,629 of the 3,687 homes, relocated 503 of the households, totaling
2,239 residents. Of the 2,629 homes sampled, 57 are completely clean
and 195 residents have been returned to their homes. Twenty-five
businesses require cleanup of which 4 have been cleaned.
Question. How much has been expended to date and how much
additional funding will be required in fiscal year 1997?
Answer. To date, the Agency has issued $33.0 million to address the
cleanup of methyl parathion application. The Agency expects to issue
another $32.0 million by the end of the fiscal year.
Question. Some have questioned whether this activity is an
appropriate use of the Superfund budget. Has EPA General Counsel made a
determination on whether such expenditures are appropriate?
Answer. The Agency's Office of General Counsel has concurred on all
the decision documents prepared outlining the Agency's response to the
methyl parathion public health.
METHYL PARATHION DELIBERATE USE
Question. Some Louisiana residents have been accused of
deliberately having their homes sprayed with methyl parathion ``to take
advantage of a federal offer to renovate their homes,'' according to
The Washington Post (March 10, 1997). Is this accurate?
Answer. The EPA Office of Inspector General (OIG) has presented
(April 16, 1997) three cases of suspected fraudulent claims relating to
methyl parathion application to the U. S. Attorney's Office in New
Orleans, Louisiana. The OIG is currently awaiting a prosecutive
decision. There have been several arrests made by the EPA Criminal
Investigations Division regarding the illegal application of this
substance.
Question. How will the costs associated with those emergency
removals be recovered to the Superfund trust fund?
Answer. The costs associated with the emergency removals will
probably never be recovered to the Superfund trust fund. The
individuals suspected of submitting fraudulent claims live well below
the poverty level and are not likely to be subjects of Department of
Justice (DOJ) civil actions. The OIG has been working with Agency
officials to set up controls to identify fraud indicators and is
providing the DOJ with the most egregious case identified to create a
deterrent effect.
EPA-STATE PARTNERSHIP: REGULATORY FLEXIBILITY
Question. In President Clinton's 1996 state of the union address he
said ``We must challenge business and communities to take more
initiative in protecting the environment and we have to make it easier
for them to do it.'' Yet EPA has taken the position that all requests
for state regulatory flexibility projects must meet the criteria for
superior environmental performance. Why? What incentive is there for
attempting innovative regulatory programs if a fundamental requirement
is superior environmental performance--as opposed to simply the most
efficient and effective means of meeting environmental requirements?
Answer. Although significant improvement has occurred over the last
25 years in the U.S. environment, much remains to be done. In
traditional regulatory program areas such as air and water, many areas
of the country do not meet standards, and areas of environmental
concern continue to grow. Given projected population growth and
anticipated economic growth, continuous environmental improvement has
become an approach that many companies and communities endorse--to
ensure a sustainable future. For example, the three companies that have
signed Project XL agreements have identified ``win-win'' solutions for
both the company and the environment, agreements through which an
innovative approach can achieve superior results and also save money
for the company. The Aspen Project, a broad-based consensus effort,
concluded that requiring superior environmental performance in exchange
for regulatory flexibility in Project XL was the best way to achieve
sustainable development.
Many opportunities exist to improve environmental protection
through innovations that are straight forward, technically achievable,
and non-controversial--and most of these innovations will also provide
environmental benefits. In some cases, innovations may be designed
primarily to improve the cost effectiveness of achieving environmental
goals; these projects must ensure there is no adverse impact on
environmental protection, public access to information, and public
access to the decision making process.
EPA-STATE PARTNERSHIP DIMINISHED REGIONAL ROLE
Question. Ms. Browner, two years ago you said ``I think the most
important thing that we can do, and do it immediately, is diminish the
oversight of the regions of the states' actions. We do not need to be
in there second guessing them at every turn.'' Can you tell me how the
regional oversight has been diminished, and how the role of the regions
has changed in the past two years?
Answer. EPA is successfully working with the states to reshape the
federal-state relationship to develop true partnerships between the
federal government and states to provide the best possible
environmental management system. The Environmental Protection Agency is
currently in the second year of working with the states under the
National Environmental Performance Partnership System (NEPPS). NEPPS is
a program that evaluates environmental problems and program needs.
NEPPS Agreements and Grants are based upon state specific measurements
of results. The Performance Partnership Agreements and Grants are
voluntary, and are flexible enough to either encompass a broad range of
environmental programs or they can focus on single programs as defined
by the state.
Regional oversight of a state's environmental programs can be
significantly reduced through NEPPS by the state and the regional
office agreeing on what the state's annual accomplishments should be. A
series of performance measures has been developed by each of the
Agency's programs to assist the regions and states in negotiating
Performance Partnership Agreements. These performance measures were
reviewed by the Environmental Commissioners at their Spring meeting in
March 1997, and received their endorsement. This program is succeeding
in reducing oversight by changing the fundamental relationship between
the EPA Regions and the states from one of federal oversight to a true
partnership.
At last year's EPA-States Meeting, attended by state environmental
commissioners and EPA senior management, and at the last EPA Annual
Planning Meeting, a common theme was the need for more assistance from
regions to states to make a real working partnership effective. The
regions held discussions with states that revealed states and tribes
highly value the technical assistance and applied science capabilities
EPA brings to difficult environmental problems. Many states highly
value EPA's technical, programmatic, scientific, and legal assistance
in dealing with permit review and enforcement in both non-delegated and
delegated programs.
EPA has focused on work-sharing with state and local governments
through several new approaches. In addition to NEPPS, the Agency is
working with states and local governments through such efforts as
Regional Geographic Initiatives, XL, compliance assistance, and
technical assistance. We are trying to maximize state and Federal
resources by dividing the work, moving away from counting
administrative actions, and moving toward using environmental results
as our indicator of progress and success. Our role is to address
problems that state programs cannot or do not have the appropriate
skill-set to handle.
Many geographic, tailor-made solutions are more labor-intensive and
may require more time and resources, especially in the short-term.
According to a report done by ECOS magazine, 23 states reduced their
resources devoted to environmental management from fiscal year 1995 to
fiscal year 1996. In addition, states continue to expect EPA to deal
with federal facilities and emergency response, cross-state boundary
issues, and international issues. States need the talents of many
specialists, who are brought together through project-specific teams.
This is especially true for the regional labs who provide extensive
technical support. States have begun to ask us to help fill their gaps
with technical assistance and direct support.
EPA has reduced oversight where appropriate, maintained oversight
where we are statutorily obligated to do so, and redirected efforts
towards new activities, often at the request of states, tribes,
industry, and the general public. Oversight reduction has been ongoing
for the last few years. Some oversight is and will continue to be
necessary; just as direct federal action will continue to be necessary
in some cases.
It is important to note that while we have indeed shifted resources
to many new activities, we still have activities we are statutorily
required to undertake. We have a legal obligation to ensure national
standards and implement programs the states have elected not to take
on. We also have a unique role with tribes in carrying out our Trust
responsibilities. If we discover that reduced oversight in a particular
state leads to less diligent enforcement, for example, EPA will
exercise the appropriate federal responsibility to ensure a level
playing field across state boundaries and take needed action to remedy
the situation.
NAAQS PARTNERSHIP AIR GRANTS
Question. Ms. Browner, while you have professed great commitment to
the EPA's proposed new standards for ozone and fine particles--claiming
they would result in averting 20,000 premature mortalities--your budget
does not seem to reflect that commitment. EPA's budget request provides
a very marginal--3 percent--increase for air grants to the states. How
can states undertake the multitude of tasks required to implement these
proposed rules with the budget you've requested?
Answer. In fiscal year 1998 much of the work involving the new air
quality standards for ozone and fine particles will remain with EPA.
Development of implementation policies and guidance materials will be a
principal priority of the Office of Air and Radiation for fiscal year
1998. Once the new standards are promulgated, States will have 3 years
to submit their plans addressing how they will attain the new
standards. The due date for these plans is presently anticipated to be
July, 2000.
The initial state need in addressing the new PM fine standard will
be to develop and implement a monitoring network to measure the ambient
levels of fine particles. In EPA's fiscal year 1997 and fiscal year
1998 budget, the Agency has included funds to begin the establishment
of fine particle monitoring networks. Initial efforts are primarily
aimed at laboratory equipment and other infrastructure needs. Once EPA
promulgates a fine particle standard and a subsequent federal reference
method for ambient monitoring, greater emphasis will be placed on the
purchase and siting of monitoring equipment.
We are currently working with the states to examine the states'
total needs for implementing programs to meet these new standards.
NAAQS PARTNERSHIP AIR GRANTS
Question. Ms. Browner, while you have professed great commitment to
the EPA's proposed new standards for ozone and fine particles--claiming
they would result in averting 20,000 premature mortalities--your budget
does not seem to reflect that commitment. EPA's budget request provides
a very marginal--3 percent --increase for air grants to the states. How
can states undertake the multitude of tasks required to implement these
proposed rules with the budget you've requested?
Answer. In fiscal year 1998 much of the work involving the new air
quality standards for ozone and fine particles will remain with EPA.
Development of implementation policies and guidance materials will be a
principal priority of the Office of Air and Radiation for fiscal year
1998. Once the new standards are promulgated, States will have 3 years
to submit their plans addressing how they will attain the new
standards. The due date for these plans is presently anticipated to be
July, 2000.
The initial state need in addressing the new PM fine standard will
be to develop and implement a monitoring network to measure the ambient
levels of fine particles. In EPA's fiscal year 1997 and fiscal year
1998 budget, the Agency has included funds to begin the establishment
of fine particle monitoring networks. Initial efforts are primarily
aimed at laboratory equipment and other infrastructure needs. Once EPA
promulgates a fine particle standard and a subsequent federal reference
method for ambient monitoring, greater emphasis will be placed on the
purchase and siting of monitoring equipment.
We are currently working with the states to examine the states'
total needs for implementing programs to meet these new standards.
NAAQS AIR GRANTS PM FUNDING
Question. In addition, in your agency's proposed fiscal year 1998
budget you have set aside only $10.9 million in grants for state and
local air agencies for particulate matter monitoring, which is
something they'll need to start right away. However, much of that is
simply reprogrammed money--taking funds away from other important air
programs, such as ozone or PM 10 monitoring. Aren't these programs
still required under the Clean Air Act? If so, how are the states going
to pay for them?
Answer. EPA's fiscal year 1998 budget, $10.9 million would provide
for the implementation of fine particle monitoring networks. This
amount is an $8.2 million increase over the amount available for fiscal
year 1997. Of this $8.2 million, $4.0 million would be funds over and
above the total amount appropriated for fiscal year 1997. The
remainder, $4.2 million is reprogrammed from other activities that were
either completed in fiscal year 1997 or can be delayed in order to
expedite the implementation of the fine particle network. Two
activities comprise the $4.2 million. In fiscal year 1996 and fiscal
year 1997, $2.2 million was directed towards the establishment of data
delivery systems that would enhance the transmission of emissions
inventory data from the States into EPA's emission inventory data
systems. With this 2 year effort completed, we are able to redirect
these funds to the fine particle network. The remaining $2 million
comes from the total funds available to the Photochemical Assessment
Monitor Stations (PAMS) program. In fiscal year 1997, $14.7 million was
available for PAMS; for fiscal year 1998, we are able to redirect $2.0
million of those funds to the fine particle network. The $2 million
reduction in PAMS funding is brought about by reducing the sampling
frequency at certain PAMS sites. Reduced sampling frequency saves both
in FTE's as well as reductions in supply costs and equipment
replacement costs. Reducing the sampling frequency while reducing the
total data collected, does not impact the integrity of the data or our
ability to shows trends in air quality levels.
NAAQS AIR GRANTS MACT STANDARDS
Question. One area of great concern is the release of hazardous air
pollutants. For that reason, the Clean Air Act calls upon EPA to
develop a series of standards to curb these emissions--MACT standards.
We understand that you have a MACT Partnership Program under which
state and local air agencies have such expertise. However, if the Clean
Air Act gives the responsibility for developing the standards to EPA,
why is it that under your proposed allocation of air grants to state
and local air agencies for fiscal year 1998 you plan to make these air
agencies use their own grant funds to help you. Since the Act calls
upon EPA to carry out this function, shouldn't the agency use its own
budget for that and leave state and local air grants for other
activities for which state and local agencies are primarily
responsible?
Answer. The Agency does not require states and local agencies to
use their grant funds to help us develop rules but rather offers them
an opportunity to participate in the process. The MACT Partnership
program brings together the knowledge, skills and resources of all
major stakeholders in the development of MACT standards under Section
112 of the CAA. This has been necessary because frequently stakeholders
want issues addressed that go beyond our basic mandate to create MACT
standards (e.g., our efforts to bring emission averaging into the MACT
program or providing alternatives to specific state rules). As a part
of this program, we involve state and local personnel in the initial
thinking and planning about a MACT standard. The state and local
agencies generally want to participate and have agreed that we can
identify an appropriate portion of their grants for this purpose. This
allows them to share data and information among themselves and EPA and
to develop their interest in the completion of a MACT standard, along
side with the industry affected by the standard. The goal is to provide
the best possible ways for state and local interests to be incorporated
into the final MACT standard. This involvement (and the grants) are not
associated with the main work in developing a MACT standard; state and
local personnel decide independently if they want to participate in
such efforts. While we have successfully developed MACT standards that
will assure the reduction in emissions of hazardous air pollutants by
nearly 1 million tons per year, we have many additional such standards
to develop. By providing grant resources for the MACT partnership
program, we ensure state and local agencies can participate in the
development of these standards, an essential aspect of the consensus-
based MACT partnership program.
EPA-STATE PARTNERSHIP OROSLR REORGANIZATION
Question. EPA recently announced it was closing its office of
Regional Operations and State & Local Support. Responsibility for state
and local relations is moved to the Intergovernmental Affairs office.
How will you ensure state and local issues don't get lost among
Congressional relations responsibilities?
Answer. EPA is not closing its Office of State and Local Relations.
The functions performed by this office are vital to the Agency. The
Agency is combining the Office of State/Local Relations with the Office
of Congressional Affairs. A senior level political appointee will head
the state and local relation functions. The Associate Administrator for
Intergovernmental Relations--the most senior person with responsibility
for state and local relations--will report directly to the
Administrator. We expect these changes to improve the relationships
between EPA, the states, and local officials and we fully intend to
actively solicit and consult our state partners.
EPA-STATE PARTNERSHIP NEPPS
Question. In the past two years, EPA has been working with states
to implement a new National Environmental Performance Partnership
System, in which states are to be assessed based on their performance,
not on how many permits they issue or reports they write. In order to
implement NEPPS successfully, states need to shift resources to the
development of environmental indicators.
To what extent has EPA allowed states to ``disinvest'' in
traditional activities such as reporting requirements in order to
redirect resources to the environmental indicators development?
Answer. All of the Agency's Media offices have been encouraged to
develop environmental core measures that move away from traditional
activity measures and in the direction of direct measures of
environmental status/condition. The Offices of Water, Air and
Radiation, Pesticides and Toxic Substances, Solid Waste and Emergency
Response, and Enforcement and Compliance Assurance have completed draft
core measures. The intent is for these core measures, once finalized
and adopted by the Agency, to be used by EPA's regions in negotiating
Performance Partnership Agreements with the states, and to give the
states some idea where EPA is heading so they, in turn, can begin to
develop their own core measures. Once EPA has the core measures in
place--including expanded use of environmental indicators--more
traditional reporting requirements will be significantly reduced.
For example, the Office of Water has developed a set of 18
environmental indicators designed to measure surface water and drinking
water quality nationally. Nine of these indicators are also on the list
of eleven core measures being developed by the Office of Water. In
piloting some of these environmental indicators with states, the Office
of Water agreed in some cases to reduce other reporting requirements to
free up state resources needed to work on the new approach. As more of
the core measures get implemented, and more states start switching to
the new approach, EPA can begin eliminating older reporting
requirements that have been replaced and/or are no longer needed.
To specifically address state reporting requirements, in December
of 1996, EPA convened the State Reporting Requirements Reduction
Workgroup, co-chaired by Michael O'Connor, Commissioner of the Indiana
Department of Environmental Management; Bob Perciasepe, EPA Assistant
Administrator for Water; and Mike McCabe, Regional Administrator of
EPA's Region 3. Nine states are represented on the workgroup: Colorado,
Delaware, Indiana, Maryland, Massachusetts, Missouri, New Jersey,
Oklahoma, and Utah. So far, the workgroup has met twice and heard
presentations from Massachusetts and Florida on how they have worked
with EPA to reduce reporting burdens in their states. The workgroup has
drafted, and is circulating for members' comment, a set of principals
for guiding EPA/State decisions about what should be reported, versus
what reporting can be eliminated. The workgroup hopes to finalize the
principles in the next three months and turn its attention to
implementing them in the fiscal year 1998 National Environmental
Performance Partnership System agreements. In one example of reductions
already achieved, the State of Florida and EPA Region 4 reported
reducing Florida's solid waste and superfund reporting requirements by
50 percent in the process of negotiating Florida's fiscal year 1997
Performance Partnership Agreement. Other examples are being collected
by the workgroup.
EPA-STATE PARTNERSHIP ENVIRONMENTAL GOALS
Question. Have differences arisen between state and EPA
environmental goals? If so, how have they been resolved?
Answer. At this time we know of no significant differences between
EPA and state environmental goals. Most of the differences are in the
approach or program strategy to be used, rather than in disagreement
with environmental goals. The negotiation of Performance Partnership
Agreements resolves differences through joint planning and priority-
setting by state and EPA regional officials, taking into account
national environmental goals, program guidance and individual
performance measures, regional and state analyses of environmental
status and trends, and program performance. Each EPA Regional
Administrator is charged with working with National Program Managers
and state environmental officials to ``harmonize'' state and national
objectives in the Performance Partnership Agreements. States are also
expected to involve stakeholders in the discussion of environmental
goals and priorities.
EPA-STATE PARTNERSHIP NEPPS EFFICIENCIES
Question. Are anticipated costs and other efficiencies being
realized in the new performance partnership grants?
Answer. Since we have not yet completed the first full fiscal year
of implementing Performance Partnership Grants (PPG's), we do not have
much information about efficiencies realized thus far. As a
fundamentally new approach to state grants and state-EPA relations,
many procedural and policy issues emerged during this first year that
had to be resolved. Nonetheless, we made remarkable progress putting
PPG's in place. As of April 1, 1997, EPA had awarded one or more fiscal
year 1997 PPG's to 33 different states; 21 PPG's went to environmental
agencies, 2 to health agencies, and 13 to agricultural agencies.
Although difficult to quantify, all state agencies with PPG's
should be realizing at least some administrative savings. They can now
submit a single grant application combining several programs and are no
longer required to account separately for multiple grants.
The other PPG's are also funding more integrated environmental
protection efforts, involving joint state-EPA goal and priority setting
based on environmental conditions, strategies that address the most
pressing problems, and negotiated performance measures. Only a few
modest resource shifts were made this year. Many state and EPA
officials found the process more difficult than negotiating traditional
grants. However, most believe the benefits of this more comprehensive
and flexible approach are worth the effort and expect PPG's to be
easier in the future.
EPA-STATE PARTNERSHIP CORE PERFORMANCE MEASURES
Question. What is the status of the development of core performance
measures under NEPPS?
Answer. EPA and the states, working together, have defined for each
media program--air, water, waste, toxics, and enforcement--a set of
core performance measures to be used by the regions and the states in
negotiating Performance Partnership Agreements. Core performance
measures are the principle long-term gauge of state and national
progress in protecting human health and the environment. These
measures, supplemented by other data routinely reported by the states,
provide the ``performance'' element in the Performance Partnership
Agreements. EPA and state environmental officials have jointly
developed a framework and a set of definitions for core performance
measures which are compatible with GPRA, and the National Environmental
Goals Report. Each media office has proposed a set of core measures
which track with their program goals and objectives, and are consistent
with the framework and definitions. EPA and the states will continue to
further refine these measures together, moving towards expanded use of
environmental indicators. The framework, definitions, and examples of
the measures are publicly available via EPA's home page.
EPA-STATE PARTNERSHIP NEPPS MANAGEMENT
Question. Given the dissolution of the Office of Regional
Operations and State & Local Support, who will be responsible for
managing NEPPS?
Answer. EPA is currently evaluating options for how the National
Environmental Performance Partnership System (NEPPS) will be managed.
EPA believes that NEPPS is a crucial reinvention program that will
strengthen the state-EPA partnership. A final decision about
organizational placement will be made in the next few months.
PLANNING, BUDGETING, AND ACCOUNTABILITY (PBA)
Question. Can you point to some specific examples of how it [the
proposed planning, budgeting, and accountability system] impacted the
1998 budget? Did it result in a risk-based reprioritization of
activities across the agency, and disinvestments in low priority
activities?
Answer. EPA is engaged in a far-reaching effort to fundamentally
change past approaches to planning, budgeting, performance measurement,
and accountability. Our goal is to make better use of scientific
information in setting priorities, improve the link between long-term
environmental planning and resource management, and implement a new
accountability system to assess accomplishments and provide feedback
for future decisions. This effort will take several years to be fully
in place.
In fiscal year 1998, EPA expanded its GPRA pilot programs designed
to bring together environmental goals and specific desired outcomes.
These programs also serve as the prelude to full implementation of
goal-based budgeting, complete with analytic criteria (including risk)
and accountability measures, for fiscal year 1999. Together with a
strategic plan and an annual performance plan, the Agency will submit a
budget for fiscal year 1999 incorporating the principles and spirit of
the GPRA.
In fiscal year 1999, risk-based criteria, statutorily mandated
tasks, and improved efficiency in government performance will be the
bases for reprioritization of activities across the Agency. EPA will
learn from its fiscal year 1997-98 GPRA pilot programs the best
approaches to evaluating the work we do, providing resources, and
measuring the results.
PBA AFFECT ON FUNDING DECISIONS
Question. How does the agency's decision to increase the Superfund
program by 50 percent and the Climate Change Action Plan programs by 73
percent reflect the budget discipline which was supposed to be imposed
by the new planning, budgeting, and accountability system? Don't
dollars spent in Superfund provide relatively little opportunity for
risk reduction, compared to other EPA programs?
Answer. EPA continues to make fundamental changes to planning,
budgeting, performance measurement, and accountability. As the Agency
fully integrates these changes into the budget process over the next
several years, decisions will be based on priorities at the highest
risk areas and at the highest areas of need. The fiscal year 1998
budget does begin to implement the need for a more risk-based and need-
based budget through the support of the Superfund program and the
Climate Change Action Plan programs.
Superfund sites pose a risk to human health and the environment and
additional funding for the Superfund program offers the opportunity to
address the direct risk for those individuals who live close to a site.
These risks include concerns about exposures from multiple pathways,
multiple chemicals, and non-cancer risks. By increasing funds for
Superfund, the budget supports the commitment to clean up sites for the
one in four Americans who live within four miles of a Superfund site.
PBA STATUS
Question. GAO, in testimony submitted for today's hearing record,
found that the overall framework for the new [Planning, Budgeting, and
Accountability] system has been developed, but critical details are
missing, such as the Integrated Risk Project to rank the relative risk
of environmental problems. When will these missing elements be in
place?
Answer. The Agency is currently evaluating various approaches to
incorporate relative risk analyses into our strategic planning process.
There are several activities underway, including the Integrated Risk
Project of the EPA Science Advisory Board (SAB). However, it is not yet
possible to incorporate any results from the SAB's project as there is
not yet an available public draft of their efforts. The Agency,
however, does plan to consider the methods and results of the
Integrated Risk Project to incorporate into future year planning
processes. Currently, the Agency is using some very preliminary
relative risk analyses as a first step in this initial strategic
planning process. The nature and amount of risk information that is
available varies by program area. Over time, we plan to continuously
improve this information and revise our strategic plans accordingly.
PBA SCIENTIFIC AND ENVIRONMENTAL DATA
Question. GAO also found that EPA faces long-term challenges to
obtain the scientific and environmental data needed to fully support
the new systems. What are EPA's plans to address this issue?
Answer. EPA is committed to developing results oriented performance
measures that will provide relevant information to the public on
protection of public health and the environment. EPA plans to address
the long-term challenges to obtain the scientific and environmental
data by identifying the most important data gaps associated with its
strategic objectives and to invest as needed in gathering and/or
analyzing data required to fill these gaps. Each program office is
expected to invest adequate resources to do this. However, there may be
crosscutting areas where data needs can be met by Agency-wide efforts
to gather and analyze data. EPA is very conscious of the cost of
developing environmental outcome information and the reporting burden
it places on EPA and potentially our partners. Thus, the Agency will
emphasize using existing data collected by EPA, other Federal agencies
and the States to measure the effectiveness of our program activities.
We will seek to acquire new data and information only when it is
critically needed to measure program effectiveness; in so doing, we
will consult with State, Tribal and local governments, as well as the
regulated community, to identify and collect data in the most efficient
manner possible.
center for environmental information and statistics (ceis)
Question. EPA recently announced the creation of a center for
environmental information and statistics. This comes in response to
NAPA's recommendations. NAPA found a lack of adequate, high quality
data on environmental conditions and the need for an independent office
to analyze and disseminate such data. NAPA recommended such a center
conduct a comprehensive assessment to determine what types of
information EPA needs to make good policy decisions, and to identify
what types of information EPA no longer needs to collect.
Answer. EPA agreed with the NAPA findings concerning weaknesses in
the Agency's environmental data quality, and with the NAPA
recommendation to create a CEIS.
CEIS STRATEGY
Question. What is EPA's strategy for the proposed new center, when
will the comprehensive assessment NAPA recommended be conducted, and
how will you ensure that the need for better, more reliable data does
not result in increased reporting burdens on states and the regulated
community?
Answer. The strategy for CEIS operation during the remainder of
fiscal year 1997 is to focus on an ambitious, but achievable agenda
using budget resources redirected from OPPE environmental information
and statistics functions, and to a lesser extent, from certain OARM
data management functions and other parts of EPA. The early CEIS agenda
will include a few, key products that define and illustrate the CEIS
role. Examples include:
--An integrated, multimedia state of the environment report,
addressing environmental issues for which EPA has, or shares
lead federal responsibility and aimed at EPA's historical
audiences for information on environmental quality, status and
trends; and
--A comprehensive assessment of the environmental information needs
of EPA audiences to identify priorities for improving data
quality, integration and access.
The CEIS environmental information needs assessment will also aid
in identifying low priority data collections that become subject to
burden reduction activities under the Agency's BRITE (Burden Reduction
Information Technology Executive task force) program. The AA for OPPE,
working with the CIO, has lead Agency responsibilities for both CEIS
needs assessment and BRITE, thus ensuring close coordination between
the two programs.
CEIS APOLITICAL USES
Question. NAPA said the center ``should be free of political
interference, and should not participate in political advocacy or
regulatory activities.'' Yet the agency has indicated the center will
be used to help implement the President's Right-to-Know initiative--
clearly a very political initiative created at the political levels of
EPA with the White House. Can you assure us the Center will not be used
for political purposes?
Answer. EPA strongly believes that to be successful, both the CEIS
and EMPACT must earn reputations as objective, reliable environmental
information sources, known for the clear presentation of environmental
information, as well as for fair and balanced interpretation and
analysis. The purpose of the President's Right-to-Know initiative,
known as EMPACT (Environmental Monitoring for Public Access and
Community Tracking), is to work with at least 75 major, U.S. urban
areas to provide the public with more timely and accessible,
environmental monitoring information. The motivation for EMPACT is to
improve the science and effectiveness of environmental monitoring. EPA
has also explicitly stated that the objectives for the program include
making environmental data understandable and promoting fair and
unbiased data interpretation. EPA will use peer review of products and
balanced stakeholder involvement in implementing both CEIS and EMPACT
to ensure the credibility of the environmental information they make
available.
CEIS ORGANIZATIONAL LOCATION
Question. Why is the Center under the control of the Policy Office,
rather than the Chief Information Officer, as recommended by NACEPT in
its report on managing information resources?
Answer. The CEIS will enhance EPA's presentation of environmental
information mainly by providing comprehensive, multimedia analysis and
interpretation of environmental quality, status and trends. OPPE is the
natural placement for CEIS by virtue of its long history as EPA's
office for multimedia analysis. Because the CEIS will rely heavily on
the CIO for the information technology and infrastructure necessary to
integrate and manage environmental data, the CEIS will function as an
OPPE/CIO partnership, with the CEIS located in OPPE to advance its
important, substantive analytical role.
CEIS NACEPT REPORT RECOMMENDATION
Question. NACEPT stated that ``integrated information--the
strategic tool for the Agency's new place-based approach--will not be
available unless one individual in the Agency is charged with managing
information resources as their sole responsibility''. Why hasn't EPA
followed NACEPT's recommendation that the CIO be charged solely with
information resources management?
Answer. Long before the passage of the Information Technology
Management Reform Act, EPA named a Chief Information Officer to perform
enterprise-wide information management responsibilities. With the
passage of the new law, EPA has heightened the importance of the Chief
Information Officer by vesting in this position the full authorities of
the new law. The Chief Information Officer has sole responsibility for
the Agency's information management planning process, Strategic Plan,
policy formulation, and architecture. The CIO's authority has been
further strengthened with responsibilities for investment planning and
for reengineering review imposed by the new law.
Within the parameters of this centralized authority, the Chief
Information Officer relies on senior officials in EPA's program and
regional offices to develop and implement information management
programs in support of their environmental statutes and regulations.
This centralized/decentralized operating framework has traditionally
worked well in EPA because it yields centralized authority on policy
and infrastructure requirements, while allowing day-to-day
responsibilities for data systems and management to occur at
operational levels more closely associated with the nature of the
environmental program.
EPA is highly sensitive to the need for more integrated
environmental information highlighted by the NACEPT committee, and its
Chief Information Officer is leading a number of efforts to evaluate
and improve the Agency's ability to deliver integrated information. The
CIO's authority is enhanced by the Agency's Executive Steering
Committee for IRM, which serves as the Chief Information Officer's
board of directors for agencywide information management directions,
cross-media efforts, and IRM investment planning. The Executive
Steering Committee is composed of the senior officials in each of EPA's
program offices, along with representatives from our regional offices
and state environmental agencies. EPA's place-based and community-based
efforts are overseen by the Executive Steering Committee, under the
direction of the CIO. Thus, EPA is moving forward with a clear effort
and management framework for meeting the integrated information needs
identified by NACEPT.
CEIS BUDGET REQUEST
Question. What is the budget request for the Center in fiscal year
1998? When will a center director be named?
Answer. Because the decision to create the CEIS was made after the
fiscal year 1998 President's budget was submitted to Congress, EPA's
budget did not include a specific CEIS budget request. The fiscal year
1998 resource needs for CEIS will be addressed as the Agency works with
Congress to develop EPA's fiscal year 1998 operating plan. EPA will
seek to fund CEIS by redirecting OPPE base resources, and, to a lesser
extent, by redirecting resources from OARM and other parts of the
Agency. Some of the Agency resources redirected to CEIS will include a
portion of those funding EMPACT, to support the important CEIS role in
the EMPACT program. EPA will name a CEIS director before the CEIS
organization plan is finalized in late spring.
PBA PROGRAM EVALUATION
Question. NAPA found that EPA has no systematic way of performing
program evaluations to determine whether programs are accomplishing
their stated goals and objectives. Without this information, it is
difficult to make rational, informed budget decisions. What has EPA
done to establish centralized, routine, systematic program evaluation
as part of the budget process?
Answer. EPA is currently developing a new process to substantially
change the way the Agency makes decisions with regard to planning and
budgeting. This process is driven by a set of environmental goals and
results-oriented environmental outcomes that are associated with these
goals. The process integrates the Agency's planning and budgeting
processes and establishes a program performance evaluation and
accountability system that will ensure compliance with the Government
Performance and Results Act. At the foundation of this planning-
budgeting-accountability process will be clearly identifiable links
between the Agency's goals; objectives for achieving those goals;
performance measures to assess progress in meeting objectives;
activities designed to attain desired environmental outcomes; and
resources used in support of those activities. EPA has formalized these
links by creating the Office of Planning, Analysis and Accountability
(OPAA) within the Office of the Chief Financial Officer.
Two primary responsibilities of OPAA are the development of an
Agency-wide Strategic Plan that incorporates the goals and objectives
we have identified as essential in achieving desired outcomes, and an
accountability system that will enable us to evaluate program
performance and related costs in terms of goals and objectives. This
will be done systematically by focusing on accomplishments relative to
the commitments made in annual performance plans, which will constitute
the body of Agency budget submissions. Annual performance reports will
evaluate environmental and managerial results and relate them to
resources expended, and the results will support future decision-making
on program direction and budgets. In the future, this system is
intended to integrate other ongoing evaluation efforts, including
regular internal program assessments, Federal Managers' Financial
Integrity Act monitoring and reporting, and Agency financial
statements, to provide comprehensive information for management.
project xl and common sense initiative
Question. How will the new Office of Reinvention EPA recently
established improve the effectiveness of Project XL and the Common
Sense Initiative? What specific changes do you envision?
Answer. The Office of Reinvention (OR) will enhance the
effectiveness of Project XL (XL) and the Common Sense Initiative (CSI)
within EPA in four ways:
First, we expect the reorganization to improve the ability of the
Agency to coordinate across the reinvention programs and ensure that
resources are used in the most efficient and effective manner possible.
Second, the true purpose of reinvention is to implement new
approaches to environmental protection. While XL and CSI are different
in their approach to reinvention, common ideas and themes will continue
to emerge. OR will track these ideas, look for the best opportunities
to test and refine them in reinvention programs, and work to
incorporate them into Agency regulatory or policy decisions. The
``lessons learned'' will be shared among the reinvention programs.
Third, establishment of OR will improve the Agency's ability to
make operational and policy decisions that move the XL and CSI programs
forward. As programs with significant implications that cut across
Agency divisions, XL and CSI repeatedly face the difficult task of
facilitating cross-agency decision making on an ad hoc basis. OR will
provide structure and authority to cross-agency actions on reinvention
programs.
Fourth, OR will be involved with other Agency reinvention efforts
such as the Environmental Leadership Program and the One-Stop Reporting
Program. The office will be able to bring the experiences and successes
of these efforts to XL and CSI to foster continuous improvement.
PROJECT XL AND CSI ALTERNATIVE COMPLIANCE LEGISLATION
Question. After the problems you have encountered with Project XL,
why do you not agree that alternative compliance legislation is needed?
Answer. GEMI's critique stated that successful reinvention programs
had common characteristics of clear goals developed with input from
direct participants, the provision of significant flexibility in how to
achieve set ends, and trust among participants. They go on to state
that without statutory provisions, initiatives take a lower priority,
and require consensus-based decisions to be effective. GEMI suggests
that having statutory authority would remedy the lack of these
characteristics in XL and CSI, and would overcome the weak incentives
and risks of litigation of these two reinvention initiatives.
EPA disagrees that legislative action would serve to remedy the
majority of criticisms that have been directed at Project XL or CSI.
These criticisms not easily resolved by legislation. Most suggestions
can be implemented without legislation and some may evolve and change
as our learning in these areas expands. While the characteristics of
clear, shared goals, flexibility to achieve set ends, and trust are
important if reinvention programs are to be successful, legislation is
not required to accomplish any of those criteria.
Both XL and CSI are undergoing substantial efforts currently to
redefine program objectives and goals, with substantial input from
stakeholders of all types. As these dialogues continue, a greater level
of support and an understanding of the expected outcomes of these
programs is developing. This is an ongoing, dynamic process; one that
is necessary at the program level regardless of statutory authority.
EPA has found there is substantial room for flexibility within the
existing framework of our legal authorities.
It is important to recognize that Project XL is not intended to be
an alternative compliance system; rather it is a laboratory within
which we can test new approaches to environmental protection, which if
successful can be used to change and improve our current system. EPA
has not believed it needed separate statutory authority to run a pilot
program of temporary duration (50 projects). Our experience with XL to
date is that we have been able to test the concepts proposed by project
sponsors and still remain within our statutory authorities. Using our
existing statutory framework has important advantages.
--First, it engages the very staff that wrote the rules that are
being challenged in thinking about new ways of doing business.
This is the most effective way to accomplish one of the biggest
goals of reinvention--cultural change. Clearly, the
Administrator has established XL and CSI as Agency priorities.
But it is the rethinking of the traditional approaches as rules
and policies get developed where cultural change and staff buy-
in actually happen.
--Secondly, by conducting pilot projects within the confines of
existing statutory authorities, it is easier to transfer the
successful ideas out of the reinvention programs into that
existing current system in a way that is acceptable to states,
industry, and stakeholders.
Finally, EPA agrees that there is a need to better articulate and
develop incentives for participation of project sponsors in XL.
However, EPA questions the need for legislation to provide those
incentives. EPA will actively be exploring ideas on ways to provide
clear benefits to those who are willing to provide leadership and make
the investments necessary to pilot change in the way we do business.
project xl and csi presidential commissions recommendations
Question. How will EPA see that the recommendations of these
Presidential Commissions are implemented?
Answer. EPA is establishing a new Office of Reinvention which will
be responsible for managing changes to traditional regulatory
approaches. This new office, under the leadership of an Associate
Administrator, will be responsible for ensuring follow-up to the many
policy recommendations from the President's Council on Sustainable
Development, Presidential/Congressional Commission on Risk Assessment
and Risk Management, and other groups. Much of the specific follow-up
work will be done by the line operating programs in the Agency, and it
will be the job of the Office of Reinvention to provide overall
direction and coordination across the Agency.
PROJECT XL AND CSI GLOBAL ENVIRONMENTAL MANAGEMENT
Question. According to a report by the Global Environmental
Management Initiative, called ``Industry Incentives for Environmental
Improvement: Evaluation of U.S. Federal Initiatives,'' EPA's voluntary
programs have not been terribly effective. GEMI looked at CSI, Project
XL, the 33-50 program, and the sulfur dioxide emissions trading
program. With the exception of emissions trading, GEMI found these
programs ``do not address most of the important problems with the
pollution control system nor do they appear to contribute significantly
to improving environmental quality or safety.'' What implications do
these findings have for Project XL and CSI?
Answer. Project XL and the Common Sense Initiative (CSI) were
created in recognition that there are many visions for a future system
of environmental protection, and that different approaches for
exploring these visions make sense. EPA did not identify specific
innovations or outcomes from these reinvention programs, choosing
instead to allow sponsors and sectors the freedom to suggest their own
ideas. It was reasoned that industry, along with stakeholders, would
know where the biggest problems in our current system lie. The GEMI
report voices a criticism of this approach, advocating that EPA take a
more aggressive approach in directing these programs.
In Project XL, there still exists an open invitation for project
proposals, with specific emphases on innovative technology and
pollution prevention. EPA has, however, been working with environmental
policy opinion leaders from states, industry, and environmental NGO's
to strategically identify the types of XL projects that will help us
achieve the desired environmental protection system of the future.
CSI has almost 40 projects in the six participating industrial
sectors. These projects, which have been identified by the external
stakeholders, run the gamut from alternative regulatory systems,
permitting reform, community outreach, and pollution prevention to
reporting reforms and technical assistance. CSI continues to rely upon
the external stakeholders on each sector subcommittee to establish
goals to help direct the efforts of their industrial sector. The CSI
Council works with the sector subcommittees to assure that the
individual sector goals support the vision of the Common Sense
Initiative--cleaner, cheaper, smarter solutions to environmental
management.
EPA is confident that individual XL and CSI projects currently
being implemented and under development do contribute to improving
environmental quality and safety both by producing superior
environmental performance and by testing new approaches to
environmental protection.
PROJECT XL AND CSI GEMI REPORT
Question. GEMI said ``It is difficult to make any non-statutory
program work'' and, ``there is no short-cut, no way around the
difficult task of trying to legislate a better system.'' Has the report
influenced your views as to the need to legislate an alternative
compliance system?
Answer. GEMI's critique stated that successful reinvention programs
had common characteristics of clear goals developed with input from
direct participants, the provision of significant flexibility in how to
achieve set ends, and trust among participants. They go on to state
that without statutory provisions, initiatives take a lower priority,
and require consensus-based decisions to be effective. GEMI suggests
that having statutory authority would remedy the lack of these
characteristics in XL and CSI, and would overcome the weak incentives
and risks of litigation of these two reinvention initiatives.
EPA disagrees that legislative action would serve to remedy the
majority of criticisms that have been directed at Project XL or CSI.
These criticisms not easily resolved by legislation. Most suggestions
can be implemented without legislation and some may evolve and change
as our learning in these areas expands. While the characteristics of
clear, shared goals, flexibility to achieve set ends, and trust are
important if reinvention programs are to be successful, legislation is
not required to accomplish any of those criteria.
Both XL and CSI are undergoing substantial efforts currently to
redefine program objectives and goals, with substantial input from
stakeholders of all types. As these dialogues continue, a greater level
of support and an understanding of the expected outcomes of these
programs is developing. This is an ongoing, dynamic process; one that
is necessary at the program level regardless of statutory authority.
EPA has found there is substantial room for flexibility within the
existing framework of our legal authorities.
It is important to recognize that Project XL is not intended to be
an alternative compliance system; rather it is a laboratory within
which we can test new approaches to environmental protection, which if
successful can be used to change and improve our current system. EPA
has not believed it needed separate statutory authority to run a pilot
program of temporary duration (50 projects). Our experience with XL to
date is that we have been able to test the concepts proposed by project
sponsors and still remain within our statutory authorities. Using our
existing statutory framework has important advantages.
--First, it engages the very staff that wrote the rules that are
being challenged in thinking about new ways of doing business.
This is the most effective way to accomplish one of the biggest
goals of reinvention--cultural change. Clearly, the
Administrator has established XL and CSI as Agency priorities.
But it is the rethinking of the traditional approaches as rules
and policies get developed where cultural change and staff buy-
in actually happen.
--Secondly, by conducting pilot projects within the confines of
existing statutory authorities, it is easier to transfer the
successful ideas out of the reinvention programs into that
existing current system in a way that is acceptable to states,
industry, and stakeholders.
Finally, EPA agrees that there is a need to better articulate and
develop incentives for participation of project sponsors in XL.
However, EPA questions the need for legislation to provide those
incentives. EPA will actively be exploring ideas on ways to provide
clear benefits to those who are willing to provide leadership and make
the investments necessary to pilot change in the way we do business.
STATUTORY INTEGRATION
Question. About two years ago, this Committee directed EPA to
examine options for better integrating its statutory authorities. In
response, EPA established a team to explore options for bringing about
integration. Yet following the establishment of the Enterprise for the
Environment Initiative, EPA decided ``E4E'' would serve as the vehicle
for fulfilling this Committee's request for analysis of statutory
integration. This is not what we intended. When will EPA report to the
Committee on the findings of its statutory integration task force?
Answer. The rationale for having E4E serve as the vehicle for
fulfilling the Committee's request on statutory integration was that it
will be more fruitful to discuss integration of authorities in the
broader context of policy changes being considered by E4E, rather than
have EPA's work on statutory integration stand in isolation from, or
appear to be in competition with, E4E's related work. To do otherwise
would run counter to the Committee's request that the Agency coordinate
with and provide support to E4E, in addition to using it for additional
stakeholder input on improving our programs and authorities. We would
be happy to brief Committee staff on our work on statutory integration,
either before release of the final E4E report, or after Committee staff
have reviewed the E4E product.
GREEN PROGRAMS
Question. EPA's budget request includes a 73 percent increase for
the Climate Change Action Plan--the so-called ``green programs''--for a
total of $149 million. The Green Lights program would more than double
to $52 million. The Green Lights program has been in existence for
about 6 years and there are now over 2,300 partners. The purpose of the
program is to promote the use of energy efficient lighting
technologies. At what point will EPA begin proposing a phase out of
this program due to ``market saturation''?
Answer. The current budget cuts have limited the Agency's ability
to achieve its goal of overcoming the barriers in the marketplace that
will allow the markets themselves to provide greater energy efficiency
and reduce pollution. Because the funding cuts are hindering EPA in its
ability to achieve these market transformation goals, the cuts are also
postponing the point at which EPA will be able to reduce funding for
the programs. The timing of phasing out of all CCAP programs, including
Green Lights, will depend in large part on whether or not full funding
levels are restored in the near term.
The Green Lights program has been extremely successful at
increasing energy savings and pollution prevention, in spite of reduced
funding. The attached chart shows the rapid increase in annual
pollution prevention from the program over time. These program results
are based on detailed reporting from partners on completed projects. As
can be seen in the chart, the program is gaining momentum as its
pollution prevention achievements climb rapidly. This is because, even
though the program is successful, there remains a large untapped
potential. The 6 billion square feet of floorspace owned by the
program's 2,300 partners represents only 7 percent of total U.S.
commercial and industrial floorspace. Although partners are already
preventing over 5 billion pounds of carbon dioxide emissions every
year, significant opportunity remains.
In addition, EPA's commitment does not end with recruiting
partners. In fact, that is just the beginning of affecting real change.
In the Memorandum of Understanding between EPA and its partners, the
Agency agrees to provide technical support as the partners fulfill
their commitments within 5 years of signing. The Agency considers its
growing reputation as a dependable source of unbiased information to be
an essential component of the program's current and future success.
EPA is currently tracking energy efficient lighting product markets
to assist with overall monitoring and evaluation of the Green Lights
program. The Agency is developing a plan to identify criteria by which
decisions can be made for determining the proper exit strategy from the
market. This is consistent with recommendations in a 1997 Office of the
Inspector General (OIG) report.\1\ For the CCAP partnership programs
that were evaluated, the OIG found that the Agency was demonstrating
``good management practices,'' including good planning, progress
evaluation, and program adjustment (p. 11). The OIG also recommended
that management develop plans for evaluating market transformation and
determining when resources should be reduced for individual programs
(p. 31).
---------------------------------------------------------------------------
\1\ EPA Office of the Inspector General, ``Risk Reduction Through
Voluntary Programs,'' Audit Report No. E1KAF6-05-0080-7100130, 3/19/97.
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It should be noted that a significant portion of the increased
funding (i.e., the referenced $52 million) is targeted for the Energy
Star Buildings program (CCAP Action # 1). Launched in 1995, this
important program builds on the success the Green Lights program has
had in developing solid partnerships and establishing EPA's credibility
within the private sector. Beyond lighting, the Energy Star Buildings
program engages partners in a more aggressive and challenging agreement
to improve total energy performance throughout buildings. This can
provide significant pollution prevention benefits. In fact, the energy
used in U.S. commercial and industrial buildings is responsible for as
much carbon dioxide emissions as all of the cars, light trucks, jeeps,
and minivans in the U.S. today. Energy Star Buildings partners can
cost-effectively eliminate about one-third of their energy use and
pollution.
Providing full funding of the CCAP at this time will allow the
buildings programs to expand their partnerships in line with original
expectations. With the additional funding, the Green Lights and Energy
Star Buildings programs will (1) increase recruiting by 100 percent
(focussing on a broader range of sector specific opportunities), (2)
enhance customer support by 100 percent for existing partners so that
they can perform better upgrades more quickly, (3) enhance outreach on
the environmental and economic benefits of improved building
technologies, (4) provide technical information on a broader set of
newer technologies of interest to State and Local governments such as
high efficiency traffic signals, (5) complete more comprehensive
program evaluation efforts, and (6) develop the foundations for
including the design and construction of new commercial buildings
within the programs.
Question. What is the long-term strategy for the green programs?
Answer. Over 2,500 of the world's best climate scientists recently
concluded that the threat of global warming must be taken seriously.
More than 2,400 economists endorse the U.S. taking action to slow
climate change.
--The Intergovernmental Panel on Climate Change (IPCC), drawing on
the work of more than 2,500 scientists, concluded in 1995 that
global temperatures are expected to rise 2 to 6 degrees
Fahrenheit in the next century, and that ``the balance of the
evidence suggests a discernible human influence on global
climate'' that is already apparent.
--The IPCC concluded that greenhouse gas emissions can be reduced by
as much as 30 percent from anticipated future levels by more
fully using cost-effective technologies.
--More than 2,400 economists (including eight Nobel prize winners)
agreed, saying in a statement this year that: ``There are many
potential policies to reduce greenhouse gas emissions for which
the total benefits outweigh the total costs.'' These measures,
they said, ``would slow climate change without harming American
living standards'' and ``may, in fact, improve U.S.
productivity in the longer run.'' (Statement attached).
The recent scientific evidence and the endorsement by over 2,400
economists that many cost-effective policies exist to reduce greenhouse
gasses makes fully funding the Climate Change Action Plan programs more
compelling than ever before because, the CCAP programs are beginning to
do precisely what these experts call for. By providing information,
helping establish markets for new technologies, and promoting new
arrangements for private financing, the CCAP programs are accelerating
the adoption of this money-saving and pollution-preventing technology
by large and small American businesses, schools, hospitals and other
non-profits, and homeowners and consumers.
Recent research at leading centers for economic research
demonstrates that these programs are highly effective. In 1996, a study
by Resources for the Future concluded that, in addition to prices, the
Green Lights program makes a ``significant contribution to the
diffusion of high efficiency lighting in commercial office buildings *
* *.'' \2\ Also in 1996, a study by Stephen DeCanio of the Department
of Economics at the University of California at Santa Barbara concluded
that: ``By speeding the dissemination of information about energy-
saving technologies, programs such as Green Lights can offer win-win
benefits to taxpayers, consumers, and shareholders.'' \3\ Nevertheless,
the programs are being restrained by funding cuts that have limited
their effectiveness.
---------------------------------------------------------------------------
\2\ Morgenstern, Resources for the Future, ``Does the Provision of
Free Technical Information Really Influence Firm Behavior? '' 5/96.
\3\ DeCanio and Watkins, UCSB Department of Economics, ``Investment
in Energy Efficiency: Do the Characteristics of Firms Matter? '' 7/96.
---------------------------------------------------------------------------
Rapid deployment of this energy-efficiency technology will be even
more critical in the future. The U.S. and many other countries will
meet in December 1997 to discuss the next phase of actions under the
Framework Convention on Climate Change. Reflecting the recent
scientific evidence on climate change risks, and because current non-
binding approaches under the Convention are not working to fully
accomplish their goals, more than 100 nations agreed last year that the
new agreement should move from non-binding emissions goals to legally-
binding emissions targets. The U.S. position is that binding emissions
obligations must be set at realistic and achievable levels, with
adequate lead time and flexible implementation tools (emissions
budgets, banking and borrowing, international emissions trading, and
joint implementation). The U.S. position also includes commitments by
developing nations, culminating in binding emissions targets for all
nations.
If binding emissions targets are adopted in December 1997, rapid
deployment of the currently available, money-saving technology to
produce and use energy more efficiently will be more important than
ever. It will be one of the keys to meeting these targets at the lowest
possible cost for the private sector and the U.S. economy as a whole.
Restoring Climate Change Action Plan funding to the President's
request will allow EPA to fully implement its programs to achieve the
highest possible rate of adoption of these technologies by American
firms, non-profit institutions, and individual consumers. But if
funding for the CCAP programs remains at reduced levels, many of these
technologies will remain on the shelf or be adopted by only a fraction
of the potential users. Consumers energy bills and other costs will be
unnecessarily high. The productivity and competitive position of U.S.
businesses will suffer. Americans will lose far more as investors,
employees, and consumers than these programs cost.
[GRAPHIC] [TIFF OMITTED] T05AP08.022
ENFORCEMENT
Question. Despite all the rhetoric about the supposed inadequacy of
EPA's enforcement budget in fiscal year 1996, in the operating plan EPA
actually proposed reprogramming $4 million out of the fiscal year 1996
enforcement budget. Why did EPA cut enforcement? Couldn`t the carryover
have been reprogrammed into other enforcement activities?
Answer. In fiscal year 1996 EPA did not cut Enforcement. The
resource levels provided in the original fiscal year 1996 Operating
Plan fully funded projected Enforcement FTE. The hiring, promotion and
bonus freezes, implemented during the fiscal year 1996 appropriation
process, held on-board levels and personnel compensation and benefits
costs below levels projected in the Operating Plan. The Enforcement
program is especially sensitive to these personnel factors given that
almost 75 percent of the program's budget within the Environmental
Programs and Management appropriation is payroll.
Once the freezes were lifted, the Enforcement program began to hire
additional personnel in areas such as criminal investigation and data
systems support. However despite this activity, actual on-board levels
remained below levels provided in the fiscal year 1996 Operating Plan.
However, in fiscal year 1997 the Agency fully funded the Enacted
Operating Plan level of Enforcement FTE. Despite the many uncertainties
faced in the previous year, the Enforcement program was able to
accomplish its goals and objectives in fiscal year 1996 without the
reprogramming of carryover funds.
ENFORCEMENT: RECORD ENFORCEMENT ACTIONS
Question. According to a February press release, EPA had a record
number of criminal enforcement actions in 1996, despite claiming that
the ``environmental cop was off the beat.'' How did EPA manage to have
record numbers of criminal enforcement actions in fiscal year 1996?
Answer. During fiscal year 1996, EPA was subject to a series of
continuing resolutions which placed the Agency under spending and
hiring restrictions for approximately seven months, including several
weeks in which the Agency was shutdown. During this time, EPA's
criminal program continued to carry out its enforcement
responsibilities. Criminal investigators were ``essential'' employees
under the furlough and resources were provided for basic program
operations throughout the continuing resolutions. However, efforts to
open new criminal cases were limited by available travel resources. The
program focused primarily on cases already in the criminal enforcement
pipeline, in which ``front-end'' investigative activities were
completed in prior years. EPA brought many of these cases to closure in
fiscal year 1996, allowing the Agency to report record numbers of
criminal enforcement actions despite the budget circumstances.
However, EPA staff who work in civil enforcement were more directly
affected by the fiscal year 1996 budget situation. Staff who normally
interact with states on enforcement issues, conduct inspections,
administrative actions, and develop civil referrals, were not able to
carry out their work during the furlough and their activities were
significantly disrupted under the continuing resolutions.
ENFORCEMENT: COMPLIANCE ASSISTANCE PROGRAM
Question. While EPA's overall EPM enforcement budget would increase
7 percent to $237 million, there is no increase requested for
compliance assistance. According to Agency documents:
The enforcement program recognizes that most businesses and
regulated facilities want to comply with the law. Often, however, they
need help with understanding environmental requirements and coming into
compliance with them. This is particularly true of small businesses.
The enforcement program's compliance assistance program helps the
regulated community to understand and come into compliance with the
law.
Why is there no increase in the relatively modest ($20 million)
compliance assistance program?
Answer. In 1998 the Agency's enforcement program will continue to
conduct a broad spectrum of outreach and technical assistance to the
regulated community in concert with the States. By 1998 the ground work
for the Enforcement's Compliance Assistance Program, such as policy and
strategy development, will have been completed and the program will
direct resources at implementation. Also, states are increasingly
providing compliance assistance. All 50 states have a Clean Air Act
State Small Business Assistance Program and many are now expanding into
other media. The Enforcement program is investing additional resources
in 1998 in helping the states develop their compliance assistance
programs.
By 1998 the Agency will have Compliance Assistance Centers up and
running for eight industry sectors. The goal is for these centers to be
self-sufficient.
The compliance assistance tools that the Agency is developing for
use by the industry sectors are building upon themselves. EPA is able
to apply lessons learned in developing tools for one sector to another
sector, producing cost savings. The Agency's approach is to complete
work on a set of sectors before moving onto the next thereby
efficiently utilizing the Agency's resources.
ENFORCEMENT: SBREFA FUNDING
Question. What specifically is requested for the additional
requirements associated with the Small Business Regulatory Enforcement
Fairness Act?
Answer. To support the requirements of SBREFA, the fiscal year 1998
Budget requests three workyears and two hundred thousand dollars for
the Office of Policy, Planning and Evaluation (OPPE).
OPPE projects that there will be fifteen SBREFA panel processes in
fiscal year 1998, which will require approximately 20 FTE in agency
personnel and $125,000 in travel and $150,000 in contract support of
panel requirements.
NAAQS
Question. Last November EPA proposed new standards for ozone and
fine particles which are highly controversial. Recent press reports
have stated that there were deep divisions with the administration over
EPA's proposal. According to one account, OSTP Director Jack Gibbons
called on EPA to delay its ozone proposal, saying EPA should look more
closely at the health benefits from improving compliance with the
current standard. In addition, staff memos at the Council of Economic
Advisors said ``the incremental health risk reduction for more
stringent standards is small, while the cost are high.'' Treasury
Department staff challenged the health benefits. And the Small Business
Administration urged EPA to follow the requirements of the Small
Business Regulatory Enforcement Fairness Act.
Ms. Browner, why did EPA seemingly ignore these significant
concerns from within your own administration? Do you have plans to
address other agencies concerns about the costs and benefits?
Answer. The Clean Air Act requires that EPA establish ambient
standards based on selecting a level that protects the public health
with an adequate margin of safety. While preparation of a regulatory
impact analysis that includes an estimate of the costs and benefits
associated with the proposed standards is part of the review process,
these costs cannot be considered in the final decision on what the
standard should be. EPA's decision is to be based solely on protection
of public health.
In addition, as we move forward on responding to the comments
received on the proposed standards and developing final standards, EPA
is working with all of the other Departments and Agencies to address
their issues and concerns. There are weekly meetings of an Interagency
technical staff work group and of a higher level Interagency policy
work group to have regular discussion of these issues. This process
will continue through until the final standards are issued.
Finally, although the Agency disagrees with the SBA's
interpretation of SBREFA, we are voluntarily complying with all
procedures for consultation with small businesses.
NAAQS SBREFA REQUIREMENTS
Question. When does EPA plan to comply with the SBREFA
requirements, which called for consultation with small businesses on
the costs of the regulation, prior to the proposal of major rules?
Answer. As you know, SBREFA amended the Regulatory Flexibility Act
(RFA) to add a requirement that EPA convene a Small Business Advocacy
Review Panel for any rule that requires preparation of an initial
regulatory flexibility analysis (IRFA) under section 603 of the RFA. As
explained further below, EPA did not convene a panel because EPA
determined that an IRFA is not required for rules like the NAAQS that
do not apply to small businesses or other small entities. As the RFA's
``Findings and Purposes'' section (Public Law 96-354 section 2) makes
clear, Congress enacted the RFA in 1980 out of concern that agencies
were writing one-size-fits-all regulations that, in fact, did not fit
the size and resources of small entities or their relative contribution
to the problem being addressed. To change this practice, Congress
required agencies, when developing a rule, to focus on the small
entities that would have to comply with the rule's requirements and
consider ways of easing or even waiving those requirements as they
would apply to small entities. That purpose cannot be served in the
case of rules like the NAAQS that do not have requirements that apply
to small entities.
As a rulemaking subject to notice-and-comment rulemaking
requirements, the NAAQS proposals are subject to the RFA. The RFA
requires that an agency prepare an IRFA describing ``the impact of the
proposed rule on small entities,'' unless the agency certifies that the
rule ``will not, if promulgated, have a significant economic impact on
a substantial number of small entities'' (RFA sections 603(a) and
605(b)).
At the heart of whether EPA was required to convene a panel prior
to proposing the NAAQS is the question of what ``impact'' an agency
must assess for an IRFA or a certification. Is an agency supposed to
assess a rule's impact on the small entities that will have to comply
with the rule, or the rule's impact on small entities in general,
whether or not they will be subject to the rule? In the NAAQS case, the
question arises because of the Congressionally-designed mixture of
Federal and State responsibilities in setting and implementing the
NAAQS.
NAAQS rules establish air quality performance standards that States
decide how to meet. Under section 110 of the Clean Air Act (CAA), every
State develops a State implementation plan (SIP) containing the control
measures that will achieve the NAAQS. States have broad discretion in
the choice of control measures. In short, it is State rules, not the
NAAQS themselves, that may establish control requirements applicable to
small entities, depending on each State's strategy for meeting the
NAAQS. See Virginia v. EPA, No. 95-1163, slip op. at 20 (D.C.Cir. March
11, 1997), quoting Union Electric v. EPA, 427 U.S. 246, 269 (1976)
(``section 110 left to the states `the power to determine which sources
would be burdened by regulations and to what extent' '').
To properly interpret ``impact'' under the RFA, EPA looked at the
RFA's stated purpose, its requirements for regulatory flexibility
analyses, its legislative history, the amendments made by SBREFA, and
case law. All of these traditional tools of statutory construction
point in one direction--that an agency need only assess the impact of a
rule on the small entities that will be subject to the rule's
requirements, because the purpose of a regulatory flexibility analysis
is to identify what rule requirements will apply to what kinds of small
entities and how those requirements may be eased or even waived for
small entities, consistent with the objectives of the statute
authorizing the rule. Since NAAQS rules do not establish requirements
that apply to small entities, they cannot be eased or waived as they
apply to small entities. They thus do not impose the kind of ``impact''
that the RFA was intended to address.
This interpretation of ``impact'' flows from the express purpose of
the RFA itself. In the ``Findings'' section of the 1980 law enacting
the RFA, Congress expressed concern that agencies were writing rules
with big businesses in mind, but applying those rules uniformly to big
and small businesses (Public Law 96-354, section 2(a)). Congress noted
that it is generally easier for big businesses (and governments) to
comply with regulations, and that small businesses are, therefore, at a
competitive disadvantage in complying with one-size-fits-all rules.
Congress also noted that small entities' relative contribution to the
problem a rule is supposed to solve may not warrant applying the same
requirements to large and small entities alike. In the RFA itself,
Congress therefore stated:
``It is the purpose of this Act to establish as a principle of
regulatory issuance that agencies shall endeavor, consistent with the
objectives of the rule and of applicable statutes, to fit regulatory
and informational requirements to the scale of the businesses,
organizations, and governmental jurisdictions subject to regulation.
[Public Law 96-354, section 2(b).]''
The RFA sections governing initial and final regulatory flexibility
analyses reflect this statement of purpose. RFA sections 603 and 604
require that initial and final regulatory flexibility analyses identify
the types and estimate the numbers of small entities ``to which the
proposed rule will apply'' (sections 603(b)(3) and 604(a)(3)).
Similarly, they require a description of the ``projected reporting,
record keeping and other compliance requirements of the proposed rule,
including an estimate of the classes of small entities which will be
subject to the requirement'' (sections 603(b)(4) and 604(a)(4)). At the
heart of the analyses is the requirement that agencies identify and
consider ``significant regulatory alternatives'' that would
``accomplish the stated objectives of applicable statutes and which
minimize any significant economic impact of the proposed rule on small
entities'' (sections 603(c) and 604(a)(5)). Among the types of
alternatives agencies are to consider are the establishment of
different ``compliance or reporting requirements or timetables'' for
small entities and exempting small entities ``from coverage of the
rule, or any part'' of the rule (section 603(c)(1) and (4)). Regulatory
flexibility analyses are thus to focus on how to minimize rule
requirements on small entities.
Since finding that a rule will not have ``a significant economic
impact on a substantial number of small entities'' exempts a rule from
the requirement for regulatory flexibility analyses, it makes sense to
interpret ``impact'' in light of that requirement. As described above,
regulatory flexibility analyses are to assess how a rule will apply to
small entities and how its requirements may be minimized with respect
to small entities. In this context, ``impact'' is appropriately
interpreted to mean the impact of a rule on the small entities subject
to the rule's requirements.
The Federal courts have so held. In 1986, the United States Court
of Appeals for the D.C. Circuit ``conducted an extensive analysis of
the RFA provisions governing when a regulatory flexibility analysis is
required and concluded that no analysis is necessary when an agency
determines `that the rule will not have a significant economic impact
on a substantial number of small entities that are subject to the
requirements of the rule' '' United Distribution Companies v. FERC, 88
F.3d 1105, 1170 (D.C. Cir. 1996) (citing and quoting Mid-Tex Elec. Co-
op v. FERC, 773 F.2d 327, 342 (D.C. Cir. 1985) (emphasis added by
United Distribution court)). The Mid-Tex petitioners had claimed that
the RFA is intended to apply to all rules that affect small entities,
whether the small entities are directly regulated or not. After
reviewing the requirements for regulatory flexibility analyses, the
Mid-Tex court concluded that ``The relevant `economic impact' was the
impact of compliance with the proposed rule on regulated small
entities. Reading section 605 [the provision exempting a rule from the
regulatory flexibility analysis requirement if the agency certifies the
rule will have no significant economic impact on a substantial number
of small entities] in light of section 603 [the provision governing
initial regulatory flexibility analyses], we conclude that an agency
may properly certify * * * when it determines that the rule will not
have a significant economic impact on a substantial number of small
entities that are subject to the requirements of the rule.'' Mid-Tex,,
773 F.2d at 342.''
Congress let this interpretation stand when it recently amended the
RFA in enacting SBREFA. If it had disagreed with the court's decision
it would have revised the relevant statutory provisions or otherwise
indicated its disagreement when it enacted SBREFA. Since SBREFA's
passage, the United Distribution court has reaffirmed the Mid-Tex
court's interpretation.
In fact, SBREFA reinforces the conclusion that the RFA is aimed at
rules that establish requirements that small entities must meet.
Section 212(a) of SBREFA requires that an agency issue a ``small entity
compliance guide'' for ``each rule * * * for which an agency is
required to prepare a final regulatory flexibility analysis under
section 604'' of the RFA. The guide is ``to assist small entities in
complying with the rule'' by ``explain[ing] the actions a small entity
is required to take to comply'' with the rule (SBREFA section 212(a)).
Obviously, it makes no sense to prepare a small entity compliance guide
for a rule that does not apply to small entities, so SBREFA stands as
further confirmation that regulatory flexibility analyses are intended
to address rules that establish requirements small entities must meet.
Given the Federal/State partnership for attaining healthy air, the
proposed NAAQS, if adopted, will not establish any requirements
applicable to small entities. Instead, any new or revised standards
will establish levels of air quality that States will achieve by
adopting plans containing specific control measures for that purpose.
NAAQS rulemakings are thus not susceptible to regulatory flexibility
analysis as prescribed by the amended RFA. They establish no
requirements applicable to small entities, and thus afford no
opportunity for EPA to fashion for small entities less burdensome
compliance or reporting requirements or timetables or exemptions from
all or part of the rules. Moreover, since NAAQS are not applicable to
small entities, there would be no point in issuing small entity
compliance guides under SBREFA for them. For these reasons, EPA
appropriately certified that the ozone and PM NAAQS rulemaking actions
will not, if promulgated, have a significant economic impact on a
substantial number of small entities within the meaning of the RFA.
Since the Agency certified the proposals, it was not required to
convene a panel for them.
At the same time, EPA recognizes that the proposed NAAQS standards,
if promulgated, would begin a process of State implementation that
could eventually lead to small entities having to comply with new or
different control measures, depending on the implementation plans
developed by the States. Under these circumstances, EPA believes that
the best way to take account of small entity concerns regarding any new
or revised NAAQS is to work with small entity representatives and
States to provide information and guidance on how States can address
small entity concerns when they write their implementation plans. This
approach is sensible and appropriate given that the Clean Air Act does
not allow EPA to dictate how States must regulate to attain any new or
revised NAAQS.
In line with this approach, as part of the Regulatory Impact
Analyses it prepared for the proposed NAAQS, EPA analyzed how State
plans for implementing the proposed standards might affect small
entities. The analyses were necessarily general and speculative, since
they depended on projections about what States might do several years
in the future. Nevertheless, they provide as much insight as possible
at this point in the NAAQS process.
The Agency also took steps to ensure that small entities' voices
are heard and considered in the NAAQS rulemakings themselves. With Jere
Glover, Chief Counsel for Advocacy of the Small Business Administration
(SBA), we convened outreach meetings modeled on the SBREFA panel
process to solicit and convey small entities' concerns with the
proposed NAAQS. Two meetings were held as part of this process, on
January 7 and February 28, with a total attendance of 41
representatives of small businesses, small governments, and small
nonprofit organizations. Both meetings were attended by representatives
of SBA and the Office of Management and Budget (OMB), as well as EPA
staff. A report will be produced based on these meetings to ensure that
small entity concerns are part of the rulemaking record when the Agency
makes its final decision on the proposals.
In light of States' pivotal role in NAAQS implementation, EPA is
also undertaking a number of additional activities to guide, assist and
encourage the States to be sensitive to small-entity impacts as they
implement any new or revised NAAQS. With the Small Business
Administration, EPA is conducting interagency panels to collect advice
and recommendations from small-entity representatives on how states
could lessen the impacts on small entities. If it promulgates new or
revised NAAQS, EPA will issue materials in two phases to help States
develop their implementation plans. In view of States' discretion in
implementing the NAAQS, these materials will mostly take the form of
guidance, which is not subject to the RFA. But regardless of the form
such materials might take, we intend to employ panel procedures before
issuing them for public comment. These procedures will include the
following steps: assessing to the extent possible any potential impact
on small entities of NAAQS implementation by the States; conducting
small-entity outreach on those issues; preparing an interagency panel
report on small entities' concerns and recommendations with respect to
implementation issues; and completing an analysis of any potential
small entity impacts in light of the panel report. The Agency will then
consider whether to change the materials in light of the report.
To supplement the input we receive from the aforementioned panel
process, EPA is augmenting its Federal Advisory Committee Act (FACA)
process to add more small-entity representatives to the subcommittee on
NAAQS implementation. These representatives have formed a small-entity
caucus to develop and bring to the subcommittee a focused approach to
small-entity issues. These new subcommittee members are also part of
the larger group involved in the aforementioned panel process, and we
are encouraging them to work together to share the views of the larger
group with the FACA subcommittee. In this way, EPA hopes to promote the
consideration of small entity concerns and advice throughout the NAAQS
implementation process.
NAAQS CASAC CONCERNS
Question. I understand that EPA's Clean Air Scientific Advisory
Committee is urging EPA to revamp its particulate research strategy,
including putting resources into the issue of whether there is a link
between exposure to fine particles and premature mortality. CASAC
believes EPA's research budget request of $26 million is inadequate.
What are you doing to address CASAC's concerns?
Answer. The Clean Air Scientific Advisory Committee (CASAC)
reviewed two draft documents, ``Particulate Matter Research Needs for
Human Health Risk Assessment'' and ``Particulate Matter Research
Program Strategy'' at a public meeting on November 18 and 19, 1996.
During this meeting a number of constructive comments were provided by
individual CASAC members, and on March 12, 1997 a letter providing
CASAC summary comments was provided to the Administrator. In some areas
the CASAC provided general comments (e.g., use of the risk assessment
framework to identify and prioritize research and allocate resources to
the effort; research resources are insufficient), and in other areas
there was a consensus on specific research priorities (e.g., that
epidemiological research on links between long-term exposure to
particulate matter (PM) and life shortening and other long-term health
effects was among the highest priorities). Beyond a consensus view in
these few areas, however, the opinions of the members varied and the
committee did not achieve a consensus on an overall set of priorities.
The PM research strategy is being revised to incorporate
suggestions provided by CASAC regarding general structural,
presentation, and context issues. The comments of individual members
will be carefully considered and revisions will be made where
appropriate to reflect the many constructive suggestions. More
importantly, the core issue of the document is the prioritization of
research issues and, in the final document, the Agency will incorporate
the consensus recommendations of CASAC regarding highest priority
research areas. Specifically, the Environmental Protection Agency (EPA)
will emphasize: (1) research to elucidate mechanisms of PM-associated
mortality and morbidity to determine the biological plausibility of
effects associated with PM exposures; (2) epidemiological research on
links between long-term exposure to PM and life shortening and other
long-term health effects; (3) research to examine linkages between
health effects and personal exposures to physical-chemical subclasses
of PM; (4) research to refine our understanding of exposure-dose-
effects relationships to particles, alone and in combination with other
air pollutants; and (5) research to provide a better understanding of
personal exposure to PM, especially of individuals thought to be most
susceptible. All these areas were identified in the draft research
strategy, and EPA's research program in these and other areas will
provide a solid basis for the next National Ambient Air Quality
Standards review. Research also will be conducted in other areas, such
as the development of a Federal Reference Method, consistent with the
need to improve the scientific and technical basis for implementation
of PM standards.
Regarding CASAC comments on the level of resources allocated to PM
research, the ORD Strategic Plan identifies PM as one of six highest
priority research areas, clearly underscoring the importance the Agency
places on PM research. The fiscal year 1998 PM total President's Budget
request represents an increase of between 200 and 300 percent above the
fiscal year 1995 PM resources. With the requested fiscal year 1998
resources EPA is in a position to make substantial headway in
addressing critical PM research issues in the next several years, and
the fiscal year 1998 request is consistent with the need to conduct PM
research.
The Agency cannot and does not expect to attack this problem alone.
We are working with other Federal agencies (such as, the National
Oceanic and Atmospheric Administration, etc.) through the Committee on
Environmental and Natural Resources, the private sector (through our
cooperative ventures with the Health Effects Institute and outreach to
industry), and with other countries, such as Canada, the Netherlands,
and other European countries, all of whom have begun to take this
important problem into consideration under new regulations and
guidelines, and have increased their research. With this multi-
participant approach and its own strong research program, EPA can
provide a leadership role to ensure that critical research needs are
met.
COMMUNITY RIGHT-TO-KNOW--KALAMAZOO INITIATIVE
Question. EPA is proposing $35 million for a new ``right-to-know''
initiative. How is this initiative different from the existing Toxics
Release Inventory program?
Answer. The Environmental Monitoring for Public Access and
Community Tracking (EMPACT) program will provide at least 75 of the
largest metropolitan areas (by population) in the U.S. with access to
information regarding local environmental characteristics and relevant
scientific and technical tools to understand and interpret the
information. EMPACT is a program founded on collaboration across the
Environmental Protection Agency (EPA) Program Offices and Regions, as
well as with the United States Geological Survey (USGS) and the
National Oceanic and Atmospheric Administration (NOAA) (partner EMPACT
agencies). EMPACT will: incorporate improved and updated technology
solutions for real- or relevant-time environmental measurement and
monitoring; ensure that the information is useful and timely for
families and communities; facilitate easy public access to
comprehensive environmental data; and provide effective tools for
communicating and interpreting environmental data. The Toxics Release
Inventory (TRI) program is a national data base identifying facilities,
chemicals manufactured and used at those facilities and the annual
accidental and routine releases of these materials. TRI data will be
included in the collections of information provided to EMPACT
communities.
Question. What type of information will be made available through
this new program and how will it be made available?
Answer. There are two distinct tracks for providing information
through EMPACT. One track is the delivery of existing environmental
monitoring information. Currently, the public is presented with a
myriad of conflicting information that is of questionable quality and
clarity and typically dated. The first track of EMPACT will provide the
EMPACT cities with the best available data from USGS, NOAA (partner
agencies in EMPACT) and EPA. Existing, easily understood information
will be disseminated through the Internet. This track will gradually be
phased out, to be replaced with a second track. At this point, EMPACT
agencies will work with communities to identify opportunities to
upgrade existing monitoring and data collection activities and provide
the information in a format that is easily understood. This will result
in the widespread use of real-time measurement and communication
technologies. The experience gained by the EMPACT cities will be
leveraged for the development of a framework that will enable the
transfer of these technologies to other interested cities and
communities.
Question. To what extent has EPA consulted with citizens to assess
the type of information which would be useful?
Answer. During these early planning stages of EMPACT, EPA has
relied on information provided by the Regions relevant to the types of
information that would be useful to the 75 candidate cities. There is
currently under development a formal plan that outlines an approach for
interactions with the citizens, cities and states. The plan will
facilitate consultation with citizens to assess the type of information
which would be useful and desirable.
Question. How will the areas be selected?
Answer. The 75 metropolitan areas have been identified on the basis
of population (source: Census Bureau). In addition, we are exploring
metropolitan areas that are not represented by the top 75 cities.
Question. How will you ensure that the information which is
provided in a context to make it relevant and meaningful?
Answer. A number of partners will be engaged to accomplish the goal
of providing information in a context that is relevant and meaningful.
EMPACT is currently reviewing options for collaborations with the
private sector, focus groups in communities and non-profit
participation.
urban livability
QUESTION. IN THE FISCAL YEAR 1997 BUDGET, EPA PROPOSED A NEW
initiative called ``Sustainable Development Challenge Grants,'' for
which $5 million was appropriated. EPA has requested $15 million in
fiscal year 1998. According to agency material on the program, these
grants ``will be catalysts that challenge communities to invest in a
sustainable future, recognizing that sustainable environmental quality,
economic prosperity, and social equity are inextricably linked.'' What
has been accomplished to date with this program?
Answer. In fiscal year 1996, EPA received over 600 proposals.
Approximately 75 percent of the proposals had an urban focus, 25
percent rural. To date seven projects have received grant funding and
EPA anticipates that three more grants will be awarded shortly.
This year, in addition to completing award of the fiscal year 1996
grants, EPA has prepared a Federal Register notice calling for
proposals for Sustainable Development Challenge Grants. We expect to
solicit proposals in April 1997 with proposals due three months from
the date of publication in the Federal Register. After receipt and
review of the proposals, EPA expects to make grant decisions in October
1997.
URBAN LIVABILITY VS. CHALLENGE GRANTS
Question. In the fiscal year 1997 operating plan, EPA proposed a
new initiative called ``Urban Livability'' and $5.5 million is
requested for this program in fiscal year 1998. ``The program is
designed to provide cities with tools and information to develop
community-based solutions to pressing environmental issues.'' The
challenge grants are to ``catalyze community-based projects to enhance
environmental quality.'' Other than the urban emphasis, how is the new
initiative different from challenge grants?
Answer. The sustainable development challenge grants are
complimentary to the urban livability initiative. The primary activity
within the urban initiative is to identify generic urban environmental
problems. EPA currently plans to use pilot cities (one in 1997 and
three in 1998) as the ``real-world'' basis for the urban initiative. By
bringing together other federal agencies, local governments, and
private sector partners in the pilot programs, together, EPA and its
partners will use either existing tools or develop new tools to propose
solutions that can be replicated in urban areas across the country.
Funds from the grant program can be used to support urban livability
initiatives in pilot areas but also may be used to provide seed money
to encourage community based development of solutions for site-specific
projects that solve environmental problems, encourage economic
development, and foster clean urban environments while removing
barriers to development and economic growth.
URBAN LIVABILITY AND PERFORMANCE PARTNERSHIP AGREEMENTS
Question. Why is yet another initiative necessary? Why not allow
states to fund such projects as part of their performance partnership
agreements, rather than having a new EPA program?
Answer. The urban livability initiative is necessary in order to
develop a unified national program that cities and localities can look
to for a tool bag of strategies and solutions to common urban
environmental problems that can be used in urban areas across the
country. EPA will use a pilot city approach to assist in identifying
the environmental issues and will work hand-in-hand with partners and
stakeholders to develop strategies and tools and to propose solutions
to urban environmental problems while encouraging economic development
and removing barriers to economic development and growth.
EPA will use part of the requested funding to develop the tools and
information needed to carry out the urban livability initiative. EPA
will use the other part of the funding to stimulate state and local
efforts to address urban environmental problems. We expect that State
and local governments will look to the urban livability initiative as a
model and in the future, may use performance partnership grants, other
federal grant funds, and state, local and nongovernmental resources to
carry out urban livability initiatives. In allocating funds to pilot
areas, EPA will give priority to those areas that demonstrate
commitment by targeting other resources.
ADVANCED MEASUREMENT INITIATIVE (AMI)
Question. EPA proposed a new initiative in the fiscal year 1997
operating plan called the Advanced Measurement Initiative. EPA
requested $1 million in fiscal year 1997 and additional $4 million in
fiscal year 1998. The program is intended ``to accelerate the
application of advanced technologies to enhance environmental
measurement and monitoring capabilities,'' such as remote sensing.
What specific roles will other agencies plan in this initiative,
and are they committed to this program?
Answer. A key part of the initiative is to work in partnership with
other agencies that have developed relevant technologies and
demonstrated related applications and techniques. In the first phase of
AMI, EPA, NASA and DOE have held and will hold workshops to assess
environmental needs of the Agency, and to demonstrate applications of
advanced technologies.
AMI will also work with other agencies as sponsors or partners in
pilot applications to identify and potentially adapt technologies. A
significant role of each agency in these partnerships will be to verify
techniques that will produce information that each agency will need,
accept and deem credible. The specific roles and commitments of a
partner agency will depend upon each AMI project.
Question. What will you do with just $4 million to develop these
existing technologies to meet EPA's needs?
Answer. AMI will apply the $4 million and leverage the investment
of other agencies to identify, adapt and apply existing innovative
environmental monitoring and observation tools. EPA will invest
resources to conduct a small number of applications to demonstrate the
technical and institutional uses of these technologies, verify
acceptable methods, and determine lessons to implement other advanced
technologies throughout EPA in the future.
Question. Given the states are responsible for a significant amount
of environmental monitoring, what role will they play in the selection
and prioritorization of projects?
Answer. EPA appreciates that the states are responsible for a
significant amount of environmental monitoring and recognizes that
implementation of advanced technologies and improved techniques will
involve state participation. In the process of project selection, AMI
will include state representatives in the peer review
Question. When do you expect these technologies will be made
available for environmental monitoring?
Answer. The ability to apply advanced technologies depends largely
on two factors: (1) the maturity of the technology, and (2) the ability
of the organization to incorporate the technology into its standard
operating procedures. Each factor has its own development timeframe,
but one may not always want to address both factors in parallel. In
general, AMI does not feel it is wise to tackle institutional issues
before a technology demonstrates a significant potential.
AMI estimates that the projects will involve technical and
institutional issues involving technology verification and acceptance
in approximately 1-5 years. Availability will depend upon the projects
that are selected and the technical and institutional factors involved.
The sooner the technologies are verified and the institutional issues
are resolved to accept information from new sources, the sooner EPA can
expect a proliferation of environmental monitoring technologies from
the private sector.
STAR AWARDS BY STATE AND CATEGORY
Question. Please provide a state-by-state breakdown of STAR awards
by category (focused RFA's, Exploratory Research Grants Program, and
the Graduate Fellowship Program).
Answer. Following are a series of tables which identify the total
STAR Program awards by state for fiscal year 1995 and fiscal year 1996.
The dollar values listed below are total commitments by EPA for new
1995 and 1996 grants, and include future increments of funding. In
addition to the below listing, partner funding of nine jointly-funded
grants increases the funding by approximately $1.37 million. In
addition to the listing below, there are 55 partner-funded grants
resulting from our joint solicitations. The total funding of those
grants is approximately $18.84 million.
RESEARCH FUNDING BY STATE
Question. Please provide a table listing the distribution of all
EPA research funding by state for the two most recent years this data
is available.
Answer.
----------------------------------------------------------------------------------------------------------------
Fiscal year 1995 Fiscal year 1996
-------------------------------------------------------
Number Amount Number Amount
----------------------------------------------------------------------------------------------------------------
RFA's................................................... 87 $26,029,758 144 $77,672,873
Exploratory............................................. 87 26,609,795 51 18,849,648
-------------------------------------------------------
Total............................................. 174 52,639,553 195 96,522,621
----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 1995 RFA award Fiscal year 1995 Fiscal year 1996 RFA award Fiscal year 1996
---------------------------- Exploratory awards ---------------------------- Exploratory awards
State ---------------------------- ---------------------------
No. Funding No. Funding No. Funding No. Funding
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama................................. .......... .............. 1 $118,996 2 $783,779 .......... ..............
Alaska.................................. .......... .............. .......... .............. .......... .............. .......... ..............
Arizona................................. 2 $425,258 .......... .............. 3 1,329,755 2 $793,068
Arkansas................................ .......... .............. .......... .............. 1 538,785 1 481,991
California.............................. 8 1,859,809 15 4,301,399 7 4,795,847 9 3,139,106
Colorado................................ 5 885,616 5 1,223,136 11 7,062,624 3 1,340,300
Connecticut............................. .......... .............. .......... .............. 1 572,710 2 697,735
Delaware................................ .......... .............. 1 334,455 .......... .............. .......... ..............
District of Columbia.................... 5 1,192,341 2 232,227 2 375,000 .......... ..............
Florida................................. 1 407,769 2 478,512 4 2,558,883 .......... ..............
Georgia................................. 4 1,123,855 1 189,104 5 1,934,686 1 264,669
Guam.................................... .......... .............. .......... .............. 1 353,723 .......... ..............
Hawaii.................................. .......... .............. 1 420,636 .......... .............. .......... ..............
Idaho................................... .......... .............. 1 323,920 .......... .............. 1 280,133
Illinois................................ 3 779,964 2 705,442 1 350,000 .......... ..............
Indiana................................. 1 100,000 1 3,000,000 2 1,834,141 1 356,212
Iowa.................................... 1 635,257 4 763,496 5 2,011,271 .......... ..............
Kansas.................................. 1 220,000 .......... .............. 2 804,697 .......... ..............
Kentucky................................ 2 676,200 .......... .............. 1 475,760 1 346,543
Louisiana............................... .......... .............. 1 362,823 .......... .............. 1 165,436
Maine................................... .......... .............. .......... .............. .......... .............. .......... ..............
Maryland................................ 2 1,119,824 1 242,538 7 5,678,816 .......... ..............
Massachusetts........................... 7 2,561,985 6 1,726,798 14 5,965,627 6 2,695,438
Michigan................................ 2 287,802 .......... .............. 5 2,159,811 2 765,794
Minnesota............................... 3 835,000 .......... .............. 5 3,105,350 .......... ..............
Mississippi............................. .......... .............. 3 541,531 2 1,197,259 .......... ..............
Missouri................................ .......... .............. 1 267,000 1 190,000 .......... ..............
Montana................................. .......... .............. .......... .............. 1 329,735 .......... ..............
Nebraska................................ .......... .............. .......... .............. .......... .............. .......... ..............
New Hampshire........................... .......... .............. .......... .............. .......... .............. .......... ..............
New Jersey.............................. 2 549,950 2 668,961 3 1,309,690 .......... ..............
New Mexico.............................. 1 184,998 1 155,609 .......... .............. 1 500,000
New York................................ 5 2,296,666 6 1,834,844 11 4,333,999 1 335,507
Nevada.................................. .......... .............. .......... .............. 1 767,805 1 288,645
North Carolina.......................... 5 1,321,400 3 714,781 15 7,704,339 3 1,138,428
North Dakota............................ .......... .............. .......... .............. 2 485,285 1 374,925
Ohio.................................... 4 1,249,784 4 1,245,662 2 922,347 1 488,000
Oklahoma................................ 1 244,955 .......... .............. 3 836,654 .......... ..............
Oregon.................................. 2 896,975 5 1,372,345 2 1,844,846 2 824,802
Pennsylvania............................ 5 1,241,481 5 1,598,032 8 3,412,653 1 218,643
Puerto Rico............................. .......... .............. 2 477,292 .......... .............. .......... ..............
Rhode Island............................ 1 125,972 .......... .............. 1 165,081 .......... ..............
South Carolina.......................... 1 465,300 .......... .............. 1 484,376 1 372,642
South Dakota............................ .......... .............. .......... .............. .......... .............. .......... ..............
Tennessee............................... 1 139,327 .......... .............. 1 1,697,105 1 359,300
Texas................................... 4 1,580,992 6 1,707,244 4 1,519,918 2 579,170
Utah.................................... 1 330,000 .......... .............. 1 353,103 1 315,706
Vermont................................. .......... .............. .......... .............. .......... .............. .......... ..............
Virginia................................ 3 779,990 2 529,763 1 283,737 3 963,642
Washington.............................. 3 1,351,378 1 259,064 4 6,680,650 2 763,813
West Virginia........................... .......... .............. .......... .............. .......... .............. .......... ..............
Wisconsin............................... 1 160,000 1 401,130 1 463,117 .......... ..............
Wyoming................................. .......... .............. 1 413,055 .......... .............. .......... ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
RESEARCH FUNDING BY STATE
Questions. Please provide a table listing the distribtuion of all
EPA research funding by state for the two most recent years this data
is available.
Answer:
----------------------------------------------------------------------------------------------------------------
Fiscal year 1995 awards Fiscal year 1996 awards
---------------------------------------------------------
State No. of No. of
fellowships Total dollars fellowships Total dollars
----------------------------------------------------------------------------------------------------------------
Alabama............................................... ........... .............. ........... ..............
Alaska................................................ ........... .............. ........... ..............
Arizona............................................... ........... .............. 6 $168,160
Arkansas.............................................. ........... .............. ........... ..............
California............................................ 11 $320,326 20 528,984
Colorado.............................................. 5 134,076 10 263,470
Connecticut........................................... 6 192,328 3 102,000
Delaware.............................................. ........... .............. ........... ..............
D.C................................................... ........... .............. ........... ..............
Florida............................................... 2 58,759 3 75,931
Georgia............................................... 1 25,344 2 58,716
Guam.................................................. ........... .............. ........... ..............
Hawaii................................................ 1 29,341 1 19,954
Idaho................................................. ........... .............. ........... ..............
Illinois.............................................. 7 235,212 6 167,952
Indiana............................................... 1 26,192 1 32,090
Iowa.................................................. 2 58,520 ........... ..............
Kansas................................................ ........... .............. 1 31,270
Kentucky.............................................. ........... .............. ........... ..............
Louisiana............................................. ........... .............. ........... ..............
Maine................................................. ........... .............. ........... ..............
Maryland.............................................. 2 57,150 4 118,415
Massachusetts......................................... 5 169,682 10 321,884
Michigan.............................................. 6 167,878 3 127,746
Minnesota............................................. 3 85,260 ........... ..............
Missouri.............................................. ........... .............. 2 53,146
Montana............................................... ........... .............. ........... ..............
Nebraska.............................................. 1 24,310 ........... ..............
New Hampshire......................................... ........... .............. 2 68,000
New Jersey............................................ 2 58,700 1 31,032
New Mexico............................................ 2 48,152 ........... ..............
New York.............................................. 12 348,459 6 190,881
Nevada................................................ 1 23,623 1 25,138
North Carolina........................................ 4 108,420 6 165,608
North Dakota.......................................... ........... .............. ........... ..............
Ohio.................................................. 1 38,405 1 29,302
Oklahoma.............................................. 1 26,742 2 53,163
Oregon................................................ 4 138,881 1 27,047
Pennsylvania.......................................... 5 176,025 ........... ..............
Puerto Rico........................................... ........... .............. ........... ..............
Rhode Island.......................................... 1 26,891 ........... ..............
South Carolina........................................ 2 50,066 ........... ..............
South Dakota.......................................... ........... .............. ........... ..............
Tennessee............................................. ........... .............. 2 60,011
Texas................................................. 6 174,354 4 124,935
Utah.................................................. ........... .............. 1 24,532
Vermont............................................... ........... .............. ........... ..............
Virginia.............................................. 2 53,162 2 53,654
Washington............................................ 1 37,333 3 85,159
West Virginia......................................... ........... .............. 1 29,366
Wisconsin............................................. 3 87,118 1 24,466
Wyoming............................................... ........... .............. 1 24,741
----------------------------------------------------------------------------------------------------------------
ORD GRANTS AND COOPERATIVE AGREEMENTS BY STATE
----------------------------------------------------------------------------------------------------------------
Fiscal year 1995 Fiscal year 1996
State -----------------------------------------------
Awards Total dollars Awards Total dollars
----------------------------------------------------------------------------------------------------------------
ALASKA.......................................................... 2 728,146 1 15,000
ALABAMA......................................................... 12 2,718,648 11 3,214,170
ARKANSAS........................................................ 5 641,797 1 75,000
ARIZONA......................................................... 9 1,916,547 4 2,001,427
CALIFORNIA...................................................... 78 17,280,805 44 9,774,089
COLORADO........................................................ 24 4,661,485 17 5,082,973
CONNECTICUT..................................................... 3 278,224 3 310,886
D.C............................................................. 95 18,137,464 68 13,600,494
DELAWARE........................................................ 2 165,836 1 105,489
FLORIDA......................................................... 20 2,984,099 12 2,367,274
GEORGIA......................................................... 23 5,536,950 19 3,317,351
HAWAII.......................................................... 3 245,629 1 140,373
IOWA............................................................ 10 2,281,144 8 1,959,372
IDAHO........................................................... 5 769,249 3 265,400
ILLINOIS........................................................ 14 2,058,854 4 720,236
INDIANA......................................................... 8 1,516,134 5 1,324,533
KANSAS.......................................................... 7 4,844,816 4 1,284,755
KENTUCKY........................................................ 6 11,374,961 4 320,956
LOUISIANA....................................................... 14 5,868,190 7 1,094,240
MASSACHUSETTS................................................... 43 13,281,796 28 5,642,964
MARYLAND........................................................ 14 2,675,171 8 2,960,597
MAINE........................................................... 2 2,667,400 3 277,644
MICHIGAN........................................................ 25 14,600,089 19 5,859,039
MINNESOTA....................................................... 14 2,024,859 8 2,488,114
MISSOURI........................................................ 6 632,727 1 89,000
MISSISSIPPI..................................................... 10 1,322,523 5 901,568
MONTANA......................................................... 2 204,697 44 10,261,042
NORTH CAROLINA.................................................. 79 21,280,549 3 492,094
NORTH DAKOTA.................................................... 2 1,098,183 1 100,135
NEBRASKA........................................................ 2 79,031 14 3,071,019
NEW HAMPSHIRE................................................... 3 499,983 3 418,541
NEW JERSEY...................................................... 17 7,842,262 3 616,669
NEW MEXICO...................................................... 5 569,596 21 2,194,661
NEVADA.......................................................... 8 1,062,743 27 3,154,601
NEW YORK........................................................ 34 4,803,501 5 936,110
OHIO............................................................ 43 7,704,762 14 3,776,980
OKLAHOMA........................................................ 4 666,666 15 2,315,102
OREGON.......................................................... 23 6,175,135 3 322,153
PENNSYLVANIA.................................................... 28 3,979,698 1 133,512
RHODE ISLAND.................................................... 3 724,623 2 690,919
SOUTH CAROLINA.................................................. 2 489,911 14 1,672,581
TENNESSEE....................................................... 6 856,075 1 126,804
TEXAS........................................................... 33 9,259,608 1 54,150
UTAH............................................................ 3 1,030,000 14 2,664,152
VIRGINIA........................................................ 12 1,333,426 4 500,916
VERMONT......................................................... 1 50,846 1 128,930
WASHINGTON...................................................... 19 2,548,920 14 2,664,152
WISCONSIN....................................................... 14 1,610,517 4 500,916
WYOMING......................................................... 2 476,667 1 128,930
-----------------------------------------------
TOTALS.................................................... ...... 68,945,214 ...... 78,335,658
----------------------------------------------------------------------------------------------------------------
EPSCOR AWARDS
Question. Please provide a summary of recent EPSCoR Awards
Answer. The table below summarizes all EPA EPSCoR Awards for fiscal
years 1993 through 1995. Resources appropriated to EPA for the EPSCoR
program for fiscal years 1996 and 1997 will be awarded to new proposals
submitted in response to the 1996 December EPSCoR program announcement.
------------------------------------------------------------------------
EPA funding
Lead institution/participating institutions amount
------------------------------------------------------------------------
Fiscal year 1993
University of Alabama/Auburn University................. $400,000
University of South Carolina/Clemson University......... 400,000
Fiscal year 1994
University of Nevada, Reno/University Nevada Las Vegas,
Desert Research Institute.............................. 394,000
North Dakota State University/University of North Dakota 394,000
University of Puerto Rico/International Institute of
Tropical Forestry...................................... 394,000
University of Idaho/Idaho State University.............. 394,000
University of Kansas.................................... 394,000
Fiscal year 1995
University of Louisville/Eastern Kentucky University.... 326,667
University of Wyoming................................... 326,667
University of Mississippi/Jackson State University...... 326,667
------------------------------------------------------------------------
EPSCOR REPORT
Question. The report accompanying the fiscal year 1997 VA, HUD and
Independent Agencies Appropriations bill directed the EPA to report to
Congress within 6 months on the Agency's Experimental Program to
stimulate Competitive Research. Please provide the Committee with the
status of the report, and indicate any particular challenges
encountered thus far.
Answer. The report to Congress on the Experimental Program to
Stimulate Competitive Research (EPSCoR) program is in the final stages
of review within the Administration. There have been no significant
challenges or problems identified in EPA during the writing and review
process.
EPSCOR NSF MODELING
Question. Last year's Senate report also directed the EPA to model
its EPSCoR program after the National Science Foundation's EPSCoR
program and to coordinate the structure and selection process with the
NSF. Please indicate steps the EPA has taken to coordinate the
structure and selection process of EPA EPSCoR with the NSF EPSCoR. What
Impact has this had on the program? What future steps toward this goal
are expected?
Answer. EPA's EPSCoR program is modeled after the NSF's EPSCoR
program. NSF provided guidance on the development of the Agency's first
planning grants as well as assistance in the preparation of the first
solicitation for implementation proposals. In addition, like NSF's
program, EPA's program consists of two parts, a Strategic Improvement
Plan (SIP) and individual Science and Engineering Environmental
Research (SEER) project proposals designed to advance the state of
knowledge in environmental science and engineering. All applications
received in response to a solicitation are evaluated through a two-
stage, competitive merit-review process. The first stage involves the
evaluation of individual SEER projects for technical merit by science
and engineering peer reviewers. The results of the first stage review
of the SEER's are used by the peer reviewers to evaluate the complete
EPSCoR application which includes the SIP and the corresponding SEER's.
This evaluation becomes the basis for guiding Agency approval or
disapproval for funding decisions on the EPSCoR applications. As a
follow up to this effort, EPA staff have also participated in a number
of NSF's EPSCoR application reviews which has enhanced the Agency's
selection process. In addition, EPA is a member of the EPSCoR
Interagency Coordinating Committee (EICC) which was established by NSF
in July 1992 to coordinate EPSCoR activities of six other federal
agencies. The committee provides a forum which deals with all aspects
of the EPSCoR Program. EPA will continue to work with NSF and the EICC
to develop a sound program to support the EPSCoR states.
EPSCOR FUNDING DISTRIBUTION
Question. Of the total amount of research contracts and grants
provided by the EPA in fiscal year 1995, 8 percent of the funds went to
18 EPSCoR States and the Commonwealth of Puerto Rico combined. For
fiscal year 1994, this number was approximately 6.5 percent.
Given the localized nature of many environmental problems, does EPA
feel this distribution of research funds is sufficient to meet
environmental concerns and solve environmental problems in all regions
of the country? Is this distribution of funds due to a lack of proposal
submissions from the EPSCoR states, or is it due to a significantly
lower success rate for these states?
Answer. EPA's Office of Research and Development (ORD) has
developed a risk-based strategic plan to direct the overall ORD
research program to focus on environmental problems presenting the most
significant risks, but where the uncertainty about the magnitude is
high. All aspects of ORD's research program are focused on these high
risk areas in order to provide significant contributions to addressing
the Nation's environmental problems and to ensure that the results have
the broadest possible application.
We have analyzed the distribution and success rates for
applications submitted to the STAR Program in fiscal year 1996 from
both EPSCoR and non-EPSCoR states. Interpretation of this information
at the state level is very difficult because the applications are
submitted by individuals at different institutions within each state,
and the range of both applications per state and success rate per state
is very large. In fiscal year 1996 a total of 1,950 applications was
received; 324 from 19 EPSCoR eligible participants, with an average of
17 applications/state, and a range 4-41, and 1,626 from 34 non-EPSCoR
states, with an average of 48 applications/state, range 1-166. The
success rate for EPSCoR participants averaged 7 percent with a range
from 0-18 percent, while the success rate for non-EPSCoR states
averaged 10 percent with a range 0-33 percent. Because both the number
of applications per state and the success rate per state varies so
widely it is not possible to determine a difference between the two
groups in fiscal year 1996. Furthermore, as discussed in the EPSCoR
Report to Congress, under the STAR Program in fiscal year 1995 and
fiscal year 1996 the number of awards, the number of states and the
number of institutions have all increased.
STAR PEER REVIEW
Question. Also, last year's Senate report encouraged the EPA, as
part of the STAR Program, to ``give special consideration to proposals
for EPSCoR States that successfully meet the Agency's peer review
requirements and are identified in the Agency's competitive award
process. Will this be reflected in the 1997 Graduate Fellowship awards
and other aspects of the STAR Program?
Answer. In accord with prior guidance from Congress, EPA is working
diligently to improve the quality of its research. We have instituted a
peer review process for the STAR Program that is patterned after that
of the NSF. Consequently, we have made our primary consideration
scientific merit of the application.
During the past two years, ORD has developed a Strategic Plan which
guides decisions about research priorities. Using this plan we focus on
research that deals with environmental issues that pose high risk but
where there is great uncertainty about the magnitude of the risks;
leads to new methods and models that can be used broadly across Agency;
and develops risk reduction and pollution prevention methods where
order-of-magnitude improvements are possible.
Finally, we look at ways in which the STAR Program complements
research that we are doing in EPA laboratories, and the balance of the
STAR Program in terms of distribution of awards by discipline,
geographic area, etc.
As discussed in the previous response and in the EPSCoR Report to
Congress currently under review, the steps we have taken to ensure
impartial peer review and relevancy to the EPA mission have permitted
EPSCoR states to compete effectively for STAR awards.
SBREFA
Question. How has your agency allocated its personnel and financial
resources to meet the requirements of SBREFA?
Answer. The Administrator has delegated agency management of SBREFA
to the Regulatory Management Division in the Office of Policy, Planning
and Evaluation. As required by the Act, the agency has named a Small
Business Advocacy Chair. Additionally, three employees support SBREFA
compliance activities. All program offices have designated personnel as
SBREFA coordinators for their respective offices. The program offices
meet with the Small Business Advocacy Chair regularly to coordinate
SBREFA implementation.
OPPE projects that there will be fifteen SBREFA panel processes in
fiscal year 1998, which will require approximately 20 FTE in agency
personnel and $125,000 in travel and $150,000 in contract support of
panel requirements.
SBREFA PENALTY REDUCTIONS PROGRAM
Question. The law requires agencies that regulate small businesses
to establish a policy or program to provide penalty reductions or
waivers, where appropriate, to accommodate the good faith efforts of
small businesses to comply with agency regulations. What steps has your
agency taken toward instituting such a program? When will this program
be up and running?
Answer. Section 223 requires each agency to develop within one year
of SBREFA's enactment a policy or program providing for reductions or
waivers of civil penalties for violations of statutory or regulatory
requirements by small entities under appropriate circumstances. EPA has
several policies which implement the section 223 requirement. The
Agency's Policy on Compliance Incentives for Small Businesses (Small
Business Policy) and a similar policy aimed at municipalities provide
for civil penalties to be reduced or waived for small entities which
discover first-time violations through on-site, government-supported
compliance assistance programs or self-audits, where the entity
promptly discloses and corrects the violation and meets certain other
criteria. In a statement made on the Senate floor during congressional
consideration of SBREFA, Senator Christopher Bond used EPA's Small
Business Policy as an example of the kind of policy sought by the
section 223 requirement. Vol. 142 No. 46, 142 Cong Rec S 3242 (Friday,
March 29, 1996). In addition to that policy, EPA has issued a final
audit policy entitled ``Incentives for Self-Policing: Discovery,
Disclosure, Correction and Prevention of Violations'' which creates
incentives for all entities, including small entities, to voluntarily
discover, disclose and correct violations of environmental regulations.
SBREFA REG FLEX ACT
Question. Could you share with the committee recent examples of
your agency's compliance with SBREFA will (has) enhanced your agency's
compliance with the Reg Flex Act?
Answer. Prior to the passage of SBREFA, the Agency's reg flex
policy was to perform a reg flex analysis on all rulemakings that were
determined to have any impact on any small entities. With the passage
of SBREFA, the Agency has reviewed guidelines to determine which rules
will have ``a significant impact on a substantial number of small
entities'' and, therefore, will be subject to a reg flex analysis. This
review has established a policy that proposed rules that meet the
``significant impact on a substantial number'' threshold will have a
reg flex analysis performed.
Prior to passage of SBREFA, EPA performed a wide variety of
outreach activities to small entities. SBREFA Sec. 609 amendments
requiring Small Business Advocacy Review Panels have formalized many of
these activities by structuring outreach to small entities in the
rulemaking process. EPA engages in outreach activities on any
rulemaking that may have an impact on small entities. This outreach has
helped determine that, at this time, 15 rules are listed on EPA's
Provisional Panel list for small business input into the rulemaking
process. Our first panel, Non Road Diesel Engines, convened on March
25, 1997. We will convene several more panels in the upcoming months.
The Agency has reviewed existing procedures for compliance with
Sec. 610 of the Reg Flex Act. The Agency has previously performed
Sec. 610 review as part of Sec. 602 Unified Agenda requirements. EPA
will now publish in the Federal Register a separate listing of rules
subject to Sec. 610 review.
SBREFA SMALL BUSINESS ADVOCACY REVIEW PANEL
Question. What process has your agency implemented to determine
whether a Small Business Advocacy Review Panel should be established
prior to publication of a proposed rule?
Answer. The first steps of the process are actually designed to
determine whether a panel must be convened. Unless the Agency certifies
that a rule will not have a significant impact on a substantial number
of small entities, a panel must be convened. Accordingly, the program
office responsible for the rule must identify the rule's potential
impact on small entities as soon as possible, and consider ways of
structuring the rule to avoid any undue burden on small entities. To
the extent the program office is successful in designing the rule to
avoid any significant impact on a substantial number of small entities,
a panel need not be convened.
If it is determined that a rule may have a significant impact on a
substantial number of small entities, the program office will proceed
with the next steps of the panel process, which include identifying and
initiating discussions with representatives of small entities
potentially affected by the rule.
Because of this process, the program office may still learn as a
result of further consultations with small entity representatives or
further analysis that the rule will not have a significant economic
impact on a substantial number of small entities, and thus that neither
an initial regulatory flexibility analysis nor a panel is required.
SBREFA REVIEW PANELS
Question. Have review panels been convened to review any
forthcoming rules?
Answer. We are currently engaged in one panel which involves a
forthcoming rulemaking on Non-Road Diesel Engines, and are beginning a
panel process on the National Ambient Air Quality Standards Phase 1
Guidelines. We will be moving to convene panels on several other rules
in the next few months.
NAAQS PM-10 REQUEST
Question. Could you tell the Subcommittee how much of EPA's fiscal
1998 funding request will be used for PM 2.5 monitoring and how much
will be used for additional PM 2.5 health effects research?
Answer. The Agency has requested the following for PM 2.5
monitoring and research:
[In millions of dollars]
Fiscal year
1998 request
Environmental Program Management Account:
PM 10 monitoring.............................................. 0.1
PM 2.5 monitoring............................................. 1.2
-----------------------------------------------------------------
________________________________________________
Total....................................................... 1.3
=================================================================
________________________________________________
State and Tribal Assistance Grants:
PM 10 monitoring.............................................. 6.6
PM 2.5 monitoring............................................. 10.9
-----------------------------------------------------------------
________________________________________________
Total....................................................... 17.5
=================================================================
________________________________________________
Science and Technology Account:
Generic PM research \1\....................................... 12.6
Specific PM 2.5 research...................................... 8.3
Research grants \2\........................................... 5.7
-----------------------------------------------------------------
________________________________________________
Total....................................................... 26.9
\1\ Generic PM research includes activities that are applicable to both
PM-10 and PM 2.5 pollutants but could not be segregated.
\2\ For fiscal year 1998 research grants have not yet been awarded but
are expected to be predominantly for PM 2.5 research.
---------------------------------------------------------------------------
NAAQS MONITORING AND RESEARCH REPORT
Question. How does the 1998 funding request for PM compare with
amounts expended for PM-10 monitoring and research over the past three
fiscal years? Have any of these monies been expended for PM 2.5
research or monitoring? If so how much?
Answer. The table below shows the Agency's funding request for PM
for fiscal 1998 compared to the previous three years for PM-10 vs. PM
2.5 and for monitoring versus research. We expended funding in fiscal
1995-97 for PM 2.5 monitoring methods development and testing. In
fiscal 1997 the Agency is providing funding to states to begin to
purchase laboratory equipment and other infrastructure needs for
monitoring.
[In millions of dollars]
------------------------------------------------------------------------
Fiscal year
---------------------------------------
1997 1998
1995 1996 estimate request
------------------------------------------------------------------------
Environmental Program Management
Account:
PM 10 monitoring............ 0.4 0.4 0.2 0.1
PM 2.5 monitoring........... 0.4 0.8 1.1 1.2
---------------------------------------
Total..................... 0.8 1.2 1.3 1.30
=======================================
State and Tribal Assistance
Grants:
PM 10 monitoring............ 5.5 5.5 6.1 6.6
PM 2.5 monitoring........... ........ ........ 2.7 10.9
---------------------------------------
Total..................... 5.5 5.5 8.8 17.5
=======================================
Science and Technology Account:
Generic PM research \1\..... 6.4 6.1 8.3 12.6
Specific PM 2.5 research.... 4.3 7.2 7.6 8.3
Research grants \2\......... ........ ........ 3.2 5.7
---------------------------------------
Total..................... 10.6 13.2 19.1 26.6
------------------------------------------------------------------------
\1\ Generic PM research includes activities that are applicable to both
PM-10 and PM 2.5 pollutants but could not be segregated.
\2\ For fiscal year 1995 and 1996, the actual allocation of research
grant resources are included in the figures for PM 10 and PM 2.5
research. For fiscal year 1997 and 1998 research grants have not yet
been awarded but are expected to be predominately for PM 2.5 research.
NAAQS BASIC RESEARCH FUNDING
Question. There has been a realignment of resources in the Agency's
research program over the past few years to enhance the basic research
program, primarily through the STAR initiative. Please outline the
extent to which any and all research performed by the EPA laboratories
in support of NAAQS standard setting for criteria pollutants has
declined in the last four fiscal years?
Answer. The Agency has pursued a balanced research program to
ensure that we take full advantage of the Agency's strong in-house
capability (complemented by the procurement of services from
contracts), as well as engaging university and private sector
scientists through grants and cooperative agreements. This approach is
determined by the research requirements and how to best address those
research requirements. Funding for the National Ambient Air Quality
Standards (NAAQS) by the Office of Research and Development (ORD)
laboratories has remained proportional.
The Science to Achieve Results (STAR) Program reflects the Agency's
commitment of engaging the participation of the nations's best
scientists in the implementation of the Agency's research program.
However, STAR is not a basic research program. Through the STAR
Program, ORD works with the Agency's National Program Managers to
develop the Requests for Applications (RFA's) in particular research
problem areas that are of importance to the Program Offices. The STAR
program supports the Agency's mission.
NAAQS RESEARCH FISCAL YEAR 1997 FUNDING
Question. Describe how the $18.8 million appropriated in fiscal
year 1997 for PM research was allocated between PM 2.5 research and
monitoring.
Answer. The total Particulate Matter (PM) (both PM 2.5 and PM-10)
research budget in the Environmental Protection Agency's fiscal year
1997 enacted budget is $19.1 million. (The $18.8 million mentioned
above refers to the total extramural research dollars in the fiscal
year 1997 budget.) All of these funds are for research.
The total research allotted to PM 2.5 breaks as follows. The PM 2.5
non-grants research portion is $7.6 million, which includes $6.7
million for PM exposure assessment monitoring and PM monitoring
methods, $0.225 million for mechanism and dose work, $0.35 million for
assessments, and $0.3 million for controls. The research grants, which
will predominantly address PM 2.5, will total $3.2 million. However,
the PM-10 research includes research on the total population of PM,
both fine (PM 2.5) and coarse (PM-10), not just coarse PM.
The Agency's Office of Air and Radiation (OAR) conducts specific PM
monitoring and, therefore, these monitoring efforts are not included
within the research budget. In fiscal year 1997, the PM 2.5 monitoring
efforts includes $1.1 million under the Environmental Program
Management account and $2.7 million for State and Tribal Assistance
Grants.
NAAQS FISCAL YEAR 1998 FUNDING
Question. How are the fiscal 1998 funds requested for PM proposed
to be allocated between EPA and the states? How much will go to the
EPA's Office of Air and Radiation and how much will go to the Agency's
Office of Research and Development? Will any of these monies filter
down to state agencies to install PM 2.5 monitoring systems?
Answer. Of the total PM budget for fiscal 1998 budget request of
$73.9 million, $28.5 million is directed to states in assistance
grants, $18.8 million is proposed for the Office of Air and Radiation
(including Regional air activities) and $26.6 million is proposed for
the Office of Research and Development. Of the $28.5 million for state
assistance grants, $10.9 million will be targeted towards establishing
a PM 2.5 monitoring network.
NAAQS PM RESEARCH INCREASES
Question. With respect to PM 2.5 health effects research, one of
the members of the Clean Air Scientific Advisory Committee (CASAC)
stated that EPA would be well advised to embark on a targeted research
effort for PM 2.5. He has suggested a 3.5 year effort funded at a level
of $30 million per year for research only. If the Agency had funding at
this level, what aspects of PM 2.5 health effects research would you
propose to enhance?
Answer. The overarching mission of the Environmental Protection
Agency's (EPA's) particulate matter (PM) research program is to provide
an improved scientific basis for future regulatory decisions concerning
public health risks posed by airborne particles, alone and in
combination with other air pollutants. EPA is finalizing a research
strategy, ``Particulate Matter Research Program Strategy: Health,
Exposure, Assessment and Risk Management Issues,'' targeted to fill
specific knowledge gaps identified in the Air Quality Criteria Document
and subsequent PM Research Needs Document. The areas of research that
need to be addressed to effect these decisions and implementation
activities are as follows: (1) biological mechanisms, including
characterization of particle characteristics, both alone and in
combination with other air pollutants, associated with effects,
dosimetry and other factors affecting susceptibility, and exposure-
dose-response relationships; (2) population exposures to ambient,
indoor and personal PM, especially of important subpopulations (e.g.,
children, the elderly, individuals with pre-existing disease) by
developing and applying improved exposure methodologies and models; (3)
regional and temporal variability in particle characteristics and
toxicity; (4) the morbidity and mortality associated with ``real
world'' short- and long-term exposure to PM and important co-pollutants
such as ozone, through epidemiology, including development of new
methods and evaluation of existing data; (5) atmospheric chemistry of
PM to support fate and transport modeling to support regulatory
implementation; (6) source contributions to ambient PM concentrations
and the availability, performance and cost of risk management options
to meet ambient PM standards; (7) improved particle measurement methods
to characterize atmospheric PM; and (8) consultation and support to
enable state, Regional, and international air pollution control
organizations to perform risk assessments and apply risk management
approaches with less uncertainty. The fiscal year 1998 budget request
of $26.6 million will address these areas.
NAAQS PM 2.5 MONITORING COST
Question. With respect to PM 2.5 monitoring, what is EPA's
estimated costs of installing air quality monitoring systems for all of
the PM 2.5 nonattainment counties identified by EPA in its proposal? At
the rate that the Agency is requesting funds for this fiscal year, how
long do you project that it will take to fund the nationwide monitoring
program?
Answer. EPA's monitoring proposal allows for monitoring coverage in
most metropolitan areas as well as areas that might violate the
standards. The estimated cost of the proposal for installing and
operating this network of 1,200 monitoring sites is $70.8 million over
four years. These costs will be shared by EPA and states. We project
the nationwide monitoring network will be completed in the year 2000.
NAAQS HUMAN HEALTH PROTECTION
Question. Given the paucity of monitoring data and research, what
assurances do we have that the proposed NAAQS standards would be
protective of human health as required by the Clean Air Act?
Answer. With regard to the availability of fine particle monitoring
data, over 20 studies have examined fine particle exposures directly
(using fine particle monitor data, including PM 2.5, from over 50
cities), and showed associations with serious health effects. EPA used
fine PM data from two cities (Philadelphia and Los Angeles) in
performing its exposure and risk assessments. These assessments showed
significant benefits associated with a fine PM standard. These studies
and assessments were submitted to the Clean Air Scientific Advisory
Committee (CASAC) for their review. In its closure letter to the
Administrator on the PM Staff Paper, CASAC noted that there was a
consensus, ``that a new PM 2.5 [PM less than 2.5 microns in diameter]
NAAQS be established, with nineteen [of 21] Panel members endorsing the
concept of a 24-hour and/or annual PM 2.5 NAAQS.'' (Wolff, 1996) This
advice from CASAC reflects the Panel members judgments with regard to
the current scientific basis for making regulatory decisions concerning
PM standards in the context of this review of the standards and their
conclusion that such standards are necessary to protect the public
health with an adequate margin of safety.
NAAQS SBREFA PROCEDURES
Question. Putting aside for a moment our disagreement on NAAQS,
Mary Nichols' February 11 letter stated that ``regardless of the
ultimate composition of the implementation materials [meaning they
would be a mix of rules and guidance], we [the EPA] intend to employ
RFA/SBREFA procedures before issuing any proposed guidance or rules
concerning implementation of revised NAAQS.'' Am I correct in assuming
EPA will comply with the letter and spirit of SBREFA when it enters the
``implementation'' phase?
Answer. Yes, EPA plans to continue to follow both the letter and
spirit of SBREFA as it develops implementation materials. We will
follow SBREFA panel procedures regardless of the form these materials
take. For that portion of the materials that is in the form of
nonbinding guidance, our following of SBREFA procedures is a voluntary
effort going beyond what SBREFA requires, since the RFA only applies to
rules as defined in that act. Our intention is to work with small
businesses to make sure we address their concerns in developing that
guidance, which the States will ultimately use as they develop their
plans to attain the NAAQS. To the extent that the materials include
rules that would have a significant impact on a substantial number of
small entities, our following of SBREFA procedures for those rules will
be in fulfillment of the SBREFA panel requirement. In either case, we
will follow SBREFA procedures to make sure small-business concerns are
addressed as we develop these materials.
NAAQS AND SBREFA
Question. Because it is unclear what portion of implementation will
be issued by rulemaking versus guidance, how can the agency comply with
SBREFA on the one hand and employ ``SBREFA-like'' procedures on the
other?
Answer. For that portion of the materials that is in the form of
guidance, our following of SBREFA procedures is a voluntary effort
going beyond what SBREFA requires, since SBREFA does not apply to
guidance that does not have the force and effect of a rule. It is in
this case that we consider our efforts ``SBREFA-like.'' Our intention
is to work with small businesses to make sure we address their concerns
in developing that guidance, which the States will ultimately use as
they develop their plans to attain the NAAQS.
To the extent that the materials include rules that would have a
significant impact on a substantial number of small entities, our
following of SBREFA procedures for those rules will be in fulfillment
of a formal SBREFA requirement. In either case, we will follow SBREFA
procedures to make sure small-business concerns are addressed as we
develop these materials.
FOOD QUALITY PROTECTION ACT
Question. The recently passed Food Quality Protection Act places
great emphasis on ensuring that the nation's food supply is safe for
infants and children. In fact, the new law requires USDA to collect
data on children's consumption patterns in consultation with EPA so
that your agency can use actual real world information rather than
hypothetical assumptions when assessing risk. For EPA decisions to be
science-based, it is very important that accurate and scientifically
valid data be used.
USDA has requested $6 million in the Administration's budget
request to conduct a new children's food intake survey. What is your
opinion of the need for this survey and what are your plans for
ensuring that EPA and USDA do consult to ensure that the information
collected by the children's survey and USDA's broad Continuing Survey
of Food Intakes by Individuals is accurate and usable to EPA?
Answer. EPA has been and continues to be very supportive of USDA's
programs to improve information on food consumption, particularly
children's consumption patterns. The need to improve dietary
assessments for children was originally identified by the National
Academy of Sciences in its report titled ``Pesticides in the Diets of
Infants and Children''. One of the major needs identified in fulfilling
this goal is better data defining the dietary habits of infants and
children. The major source of food consumption data used by the Agency
to conduct dietary risk assessments is that generated by USDA. In its
efforts to update existing data, EPA will use the Continuing Survey of
Food Intakes by Individuals (CSFII) 1994-1996 survey data to provide
up-to-date information on food consumption, which reflects changes in
eating patterns which have occurred due to population behavioral
changes and changes in ethnic distribution. However, the number of
children sampled in the CSFII 1994-1996 survey is not sufficient to
provide an acceptable projection of children's consumption patterns.
Therefore, EPA has requested that USDA increase the sampling of
children in the CSFII 1994-1996 to increase confidence in the dietary
risk assessments for children.
EPA has already met with USDA--Agriculture Research Service (ARS)
to discuss the number of children in the survey, timing, and the data
collection protocol for the survey. EPA and USDA are committed to
continued communication to ensure that reliable data to assess the risk
of pesticide exposure to children from foods is developed.
The supplementary children's survey is specifically designed to
address the need for greater representation of children in the CSFII
1994-1996. It is critical that this data is collected in a timely
manner using a protocol identical to the one used in the 1994-1996
survey in order to ensure that the data can be combined, increasing our
ability to accurately and defensibly estimate children's exposure.
Failure to adhere to the protocol will jeopardize our ability to use
the combined survey.
The larger data set will greatly improve the predictive power of
the survey as a risk assessment tool. The Food Quality Protection Act
(FQPA) mandates tolerance reassessments for all existing pesticides
within ten years. A timely supplementary survey will permit EPA to use
the data in the particularly complex assessments that EPA will conduct
early in the process, because of the requirement to reassess the
``worst-first.''
According to USDA, ARS intends to begin the supplemental survey in
fiscal year 1998. The results will be available for EPA's use in fiscal
year 2000. USDA's proposed schedule is sufficient to meet EPA's needs.
EPA and USDA staff have also begun detailed discussion of the design of
USDA's next CSFII.
TRI PHASE II AND SBREFA
Question. I am concerned about a rulemaking that is currently at
OMB, TRI Phase II and how the agency may have tried to skirt the
requirements of the Small Business Regulatory Enforcement Fairness Act
(SBREFA) and the Paperwork Reduction Act--both of these were supported
by the President. I understand that this proposed TRI rulemaking was
issued on June 27, 1996--just two days before SBREFA became effective.
It would appear that the agency was trying to avoid some of the
requirements of SBREFA by hastily proposing this rule. For instance,
convening small business panels to discuss the rule. Also, the
Paperwork Reduction Act requires the Agency take all ``practical steps
to develop separate and simplified requirements for small businesses
and other small entities.'' Can you tell me what the agency has done to
comply with both SBREFA and the Paperwork Reduction Act for this
rulemaking?
Answer. EPA's rulemaking record for the TRI Facilities Expansion
Rule (TRI-Phase II) clearly demonstrates that EPA did not ``hastily
propose this rule.'' EPA has been working with TRI stakeholders since
1992 to identify appropriate sectors for inclusion in this core Right-
to-Know Program. A review of EPA's outreach, screening process, and
rulemaking record indicate a thorough and lengthy sector selection
process. EPA scheduled issuance of the proposed rule for TRI Phase II
long before the SBREFA requirements came into effect. TRI Facility
Expansion has been included in the Agencies Annual Regulatory Plan and
Semi-annual Regulatory Agenda as far back as November 1992. EPA
conducted a public meeting on Facility Expansion in May 1992. In the
May 1996 Regulatory Agenda, EPA indicated that the proposed rule would
be issued in May 1996. However, EPA delayed issuance of the proposal to
accommodate additional meetings and stakeholder discussions requested
by various sectors including Chemical Distribution and Hazardous Waste.
EPA issued its proposed rule on June 27, 1996, not to avoid the
requirements associated with SBREFA, but to avoid the delays associated
with repeating its outreach effort. EPA's issuance of this proposal on
June 27, 1996 reflects a balancing of the Agency's commitment to hear
from all stakeholders prior to proposal with its obligation to respond
to President Clinton's August 1995 Directive calling for expedited
expansion of the TRI program.
At proposal, EPA provided a number of alternatives for reporting
and facility coverage for the proposed sectors. As a result, the Agency
did not take a specific position on whether the rule would have a
significant impact on a substantial number of small entities. Instead,
EPA chose to prepare an initial regulatory flexibility analysis and
presented the analysis for public comment in conjunction with the
proposed rule. EPA carefully evaluated and considered all comments that
were provided to the Agency on this issue. EPA believes that its
sensitivity to small business concerns in developing the proposal, its
proposal of alternatives, and other provisions such as small facility
exemptions already built into the program and EPA's commitment to
assist small businesses with their compliance with the program, more
than satisfy the provisions of the Regulatory Flexibility Act (RFA) in
effect at the time of the proposal.
Notwithstanding the Agency's intention to certify pursuant to
section 605(b) of the RFA that the rule will not have a significant
economic impact on a substantial number of small entities, EPA remains
committed to minimizing small entity impacts when feasible and to
ensuring that small entities receive assistance to ease their burden of
compliance. Consequently, in developing the final rule EPA has chosen
to consider all of the elements of a final regulatory flexibility
analysis as set forth in section 604. In addition, as noted above, EPA
will be preparing compliance guides and offering assistance to small
businesses in complying with the rule.
With regard to the Paperwork Reduction Act (PRA), EPA believes that
it has and will continue to work on simplification of reporting
requirements for small businesses and other small entities. EPA has
already provided an abbreviated reporting form for facilities with
relatively low annual reportable amounts, has provided a hotline and
training sessions for technical assistance, is developing sector
specific reporting guidance, and provided facility specific, pre-
printed forms and user friendly software packages. In addition to these
efforts, EPA will convene a stakeholder process to review additional
options to reduce reporting burdens.
Question. What steps have you taken to simplify requirements for
small business and other entities in this rulemaking?
Answer. ``The best available information'' required to be reported
to the TRI, as identified by the Emergency Planning Community Right-to-
know Act (EPCRA), are based on facility specific data. TRI data is
information which some reporting facilities may use to operate in an
efficient and responsible manner. By its nature, some of the
information is simple and straightforward. For many small businesses,
only portions of the form need to be completed. The basic requirement
of the TRI program is that covered facilities submit annual reports on
their releases, management and transfers of listed toxic chemicals to
EPA and their respective States. In comparison to many other regulatory
programs which involve numerous requirements in addition to record-
keeping and reporting, such as meeting performance standards and/or
complying with prescribed management practices, the TRI program
requires only the reporting of information.
Nevertheless, over the course of the Phase II rulemaking, including
development of the proposed rule, EPA has taken a number of steps to
reduce the economic impacts that might be imposed by the rule on both
small and large entities. For the industries EPA proposed to add to the
program, the Agency took steps to eliminate reporting burdens for
distinct facility operations where information was not expected to be
generated. For example, EPA proposed an exemption from reporting for
coal extraction activities by facilities in the coal mining group, SIC
code 12, which simplifies threshold and reporting calculations for
these facilities. EPA proposed this exemption because it concluded that
coal extraction activities are not likely to involve the manufacture,
process, or otherwise use of toxic chemicals above threshold levels,
and thus facilities operating primarily extractive operations would
likely not be filing reports.
In addition to measures such as the examples discussed above, the
rule will incorporate a number of existing features of the TRI program
that are designed to reduce burdens on small entities. The statute
specifically exempts facilities with fewer than ten full-time employees
or the equivalent. In addition, EPCRA only requires reports from
facilities which manufacture or process more than 25,000 pounds, or
otherwise use more than 10,000 pounds, of a chemical in a year.
Further, facilities that would report as released or otherwise managed
less than 500 pounds may take advantage of short-form reporting (TRI
Form A) unless exceeding a 1-million pound alternate threshold for the
manufacture, process, or otherwise use of a listed toxic chemical. The
burden of this short form is only two-thirds that of filing the longer
form R. Moreover, facilities reporting smaller amounts of chemicals may
report in ranges rather than making more precise calculations. These
features of the TRI program have a significant burden-reducing impact
for small entities. For example, there are approximately 9,000 total
facilities in SIC code 5169 (Chemical Distributors) but only 2,800,
have ten or more employees. Of these 2,800 only 720 are expected to
exceed the manufacture, process, or otherwise use threshold for one or
more chemicals. Therefore, TRI, through its `` built in'' small
business exemptions, would exempt over 8,000 or 92 percent of the
Chemical Distributors. Moreover, of the estimated 720 reporting
facilities, some will be eligible for short-form reporting under the
alternate threshold, while others will be eligible for range reporting,
both of which will lower the burden of reporting for the covered
facilities. In addition, EPA has deferred the reporting associated with
this rule until January 1, 1998 to facilitate development of sector
specific guidance and training for small entities.
Question. Did you conduct a regulatory flexibility analysis for
this regulation?
Answer. In accordance with the Regulatory Flexibility Act (RFA) and
the Agency's longstanding policy of considering whether there may be a
potential for adverse impacts on small entities, the Agency has
evaluated the potential impacts of the rule on small entities. At
proposal, EPA chose not to certify that the rule as proposed would not
have a significant economic impact on a substantial number of small
entities. EPA chose to develop an initial regulatory flexibility
analysis for the proposed rule and provided that analyses to the public
for comment. For the final rule, EPA certified that the rule will not
have a significant economic impact on a substantial number of small
entities. While EPA will, therefore, not be required by the RFA to
perform a final regulatory flexibility analysis for the final rule, EPA
has chosen to assess the impact of the rule on small entities, and is
considering all the elements required in a final regulatory flexibility
analysis.
Question. Since there seems to be so many problems with this
rulemaking, why not pull it back and take the time to get the necessary
input from small businesses and follow the SBREFA procedures?
Answer. EPA does not believe that there are significant problems
with this rulemaking. EPA has conducted extensive outreach with the
potentially regulated community prior and subsequent to issuance of the
proposed rule. EPA has considered and evaluated all the issues raised
by commenters and stakeholders. While EPA may not agree with some
conclusions reached by some of the commenters, EPA has explained its
reasoning in response to each of the comments raised. However, not
agreeing with all these commenters or stakeholders does not mean that
the Agency has not considered all comments raised nor does it mean that
there are problems with the rule. As with any rulemaking, there can be
a difference of opinion about various issues. EPA conducted a lengthy
and thorough analysis of many different industry groups. EPA deferred
addition of industry groups where significant questions existed
relating to TRI reporting and EPA carefully weighed the standards
provided in and consistent with the statute in deciding to add the
industry groups included in the final rule. EPA's intentions to expand
industries covered under TRI have been well publicized for many years.
SBA and EPA's Office of Small Business Ombudsman have been informed and
have conducted several meetings where EPA has participated to inform
industry and industry advocates of the Agency's intent and progress.
This action fulfills the President's August 8, 1995, directive to
expedite an open and transparent rulemaking to expand the TRI program's
industry coverage.
TRI PHASE II GAO STUDY
Question. As you know, the conferees in the fiscal year 1997
appropriations bill addressed the concerns about expanding the TRI
program. GAO is currently studying this issue and how the program can
be improved. We do not yet have the GAO report, how many small
businesses would be impacted by this rulemaking?
Answer. Each facility which must file even one report is defined as
an ``affected'' facility. The Agency estimates that the 6,400
facilities affected by the rule, i.e. those which must file even one
report, are owned and operated by approximately 4,800 parent companies.
Of these 4,800 companies, up to 3,600 of these qualify as small based
on the applicable SBA size standards.
Question. Wouldn't it make more sense to wait for the GAO report to
find out how this program is working before doing additional
expansions?
Answer. EPA believes that expanding TRI to include additional
industries actually addresses one of the fundamental recommendations
made in GAO's 1991 report, which found that the TRI program was highly
successful with regard to the chemicals and industries covered at that
time, but should be expanded to cover more chemicals and industries.
EPA agrees with GAO's earlier assessment and believes that this action
will support GAO's recommendation to expand the TRI program to cover
more chemicals and industries.
Question. What is the timing of all future expansions?
Answer. EPA has not established a schedule for any additional
rulemakings that would add industries to TRI. However, EPA requested
comments on industries that were not included in the proposed
rulemaking and committed to considering any comments on those and other
industries at some point in the future. Many comments were received
that requested EPA consider the addition of other industries. EPA
issued an ANPR (61 FR 51322, October 1, 1996) concerning the possible
collection of additional data elements regarding chemical use.
Following a series of public meetings and evaluation of public comment,
EPA will determine whether and how to proceed on that initiative.
TRI PHASE II SBA OBJECTIONS
Question. Last December, Jere Glover, the Small Business
Administration's Chief Counsel for Advocacy, requested that EPA
consider the need to include chemical wholesalers and petroleum bulk
distributors--which are primarily small business facilities that EPA's
own data indicates release fairly insignificant amounts of pollutants.
Apparently OIRA also objects to EPA's rule, having extended its review
of the rule. In light of the objects raised by OIRA and SBA, why is EPA
unwilling to alter a rule that imposes significant impacts on these
small businesses without commensurate environmental benefits?
Answer. EPA does not believe that the addition of the petroleum
bulk distribution and chemical wholesaling industry segments will
impose significant impacts on small business. For many facilities
within these industry groups, EPA believes that estimated impacts may
greatly overstate the level of impacts that facilities will actually
face. Many of the facilities within the affected industry segments
conduct reasonably simple and routine activities which will not require
the facility to calculate all elements for the TRI reporting form, for
which costs are based. Further, EPA believes addition of these sectors
will add significantly to the available public information on the use,
management, and disposition of toxic chemicals and thus EPA believes
addition of these industry segments will contribute significant
environmental benefits. EPA also believes that, based on available
information, facilities within this industry are comparable to
facilities within the current reporting sector and are likely to
provide similar information, thereby furthering the purpose of
community right-to-know. While these industry segments have relatively
high numbers of entities meeting SBA's size standards for small
businesses (up to 500 employees in some cases), some facilities within
these segments manage large volumes of TRI listed chemicals and
mixtures containing TRI chemicals in a manner that may result in
releases and transfers of toxic chemicals and in reports being
submitted to EPA, the states and the public. EPA believes this
information is relevant to the purposes of EPCRA and important for
communities that are trying to assess the impact that industrial
facilities have on their local environment.
TRI PHASE II ADJUSTMENTS
Question. If these facilities released significant amounts of
pollutants, I would be among many members of Congress urging EPA and
the businesses involved to take action to correct the situation. But
Mr. Glover's letter reveals that EPA overestimated the potential
releases from some facilities by a factor of 100 and had ``inexplicable
deleted all records of zero releases from the analysis,'' resulting in
``misleadingly higher average release figures.'' Has EPA taken this
adjustment into consideration?
Answer. Reporting from these industry segments is significant for
community right-to-know purposes given the volume of toxic chemicals
handled and managed by them. Absent addition of these industry
segments, communities may not have any information on the use and
disposition of toxic chemicals of concern to them.
Further, EPA shared the background information for the data
relating to chemical distribution facilities with SBA and engaged in
extensive discussions with SBA; however, EPA does not agree with Mr.
Glover's interpretation of EPA's use of some of the data in question.
EPA did not use the data in question either to identify the chemical
distribution industry as a candidate for consideration, or to select
this industry for addition.
SBA's statement that EPA overestimated potential releases by a
factor of 100 is a reference to a report for a single chemical at a
single facility, which later submitted a revised estimate for that
chemical. This revision was submitted by the facility in December 1996
for 1993 activities. The state currently is investigating the
legitimacy of the revision. However, EPA has already incorporated this
revision into its analyses. EPA has not revised any analyses that
excluded reports of zero releases. However, again because these
analyses were not used in connection with EPA's decision to add the
chemical distribution industry, neither the reports of zero releases
nor the 1996 revision from the facility would affect the bases for
EPA's decision.
information resources management (irm)
Question. How much money is EPA investing in information management
activities? How much is in the program base? How much additional
resources does this budget add? Where are the new resources being
invested?
Answer. In the 1998 President's Budget, EPA is investing $469.6
million in its information management activities. The program base for
information management activities in the Agency's 1997 operating plan
is $463.4 million. EPA is increasing its information management
activities by $6.2 million from 1997 (1.3 percent). The increase
supports the following activities: the President's Community Right-to-
Know: Kalamazoo Initiative; fixing Year 2000 software problem; building
regional capacity to support data sharing/data warehousing with the
states and tribes; and the acquisition and upgrade of the Agency's
personal computers, servers, and storage capacity requirements.
IRM MANAGEMENT
Question. How are the Agency's information resources being managed?
Who is responsible for the overall quality and integrity of EPA's
information resources? How do they discharge this responsibility? Who
decides what goes out on Internet? What standards of quality do they
apply?
Answer. The Agency's Chief Information Officer (CIO) is responsible
for developing the information policies that guide the management of
information resources in EPA. EPA operates in a decentralized
information management model (i.e., each EPA national program office
has budget authority and provides certain program-specific information
management support directly to its operating divisions). Within this
decentralized model, the CIO retains responsibility for developing and
implementing Agency-wide information policies. The CIO is also
responsible for establishing and implementing an Agency IRM strategic
plan and for providing various centralized information services such as
management of EPA's National Data Center.
The CIO executes the information policy function through an Agency-
wide directives clearance process. This process is guided and informed
by EPA's Executive Steering Committee for Information Resources
Management (ESC for IRM). All major Agency programs and functions are
represented on the ESC for IRM. Additionally, the ESC for IRM
membership includes representatives of EPA's Regional Offices and
senior managers of state environmental agencies. Working in conjunction
with the ESC for IRM, the CIO manages and discharges the Agency's IRM
policy and management function, including the development of policies
and standards for data quality and accuracy. Because many Agency
functions rely on high quality scientific data to effectively protect
public health and the environment, EPA's Office Research and
Development is also a leader in developing data quality standards and
practices for the Agency.
The information holdings for the Internet are approved by a
Division Director (usually a Senior Executive Service rank) or higher
(i.e., Office, Deputy Assistant Administrator, or Assistant
Administrator) before they are posted to the EPA Internet site. The
standards used for information released to the Internet are similar to
those required for publication in other formats such as CD-ROMS, paper,
bulletin boards, or fax. The quality of the information or data is
often dictated by the source of the information, be it from a State
Agency or the official submission from a regulated entity. Most of our
national systems have data quality edit checks to ensure some level of
data quality, which varies depending on the data field and the source
of the data element. EPA's programs have an extensive quality assurance
program in the design and extract of its databases to assure that
public databases offer the official data that is contained in our
national systems.
IRM INVENTORY
Question. Does the Agency have an inventory of all the information
resources, public documents and software tools that it has produced,
endorsed or funded?
Answer. EPA's portion of the Federal government-wide Government
Information Locator Service (GILS) provides a high-level inventory of
the Agency's major publicly available information resources. This
inventory is available and easily searchable via the Internet, both
from EPA's website, and from the Government Printing Office's Access
website.
IRM PUBLIC RIGHT TO KNOW
Question. Since the Agency has emphasized the importance of public
right to know, what steps are being taken to obtain an understanding of
the average citizen? How much research and analysis of public
information needs has EPA conducted? How much has it spent on such
efforts? Have those efforts established the priority needs of the
average citizen or have they identified the areas of potential
interest?
Answer. Many of our public right to know efforts have been directed
to the understanding of the average citizen. EPA realizes its customer/
user community is a wide and diverse group of citizens. Much of our
work reflecting right to know efforts have been undertaken with EPA's
State partners. Regional Office staff have also been engaged to discern
what the public wants. Staff, who directly support Freedom of
Information Act requests (FOIA), have been consulted so that right to
know efforts are responsive to FOIA requests. EPA has held
presentations and focus groups with industry and not-for-profit
organizations to hear from them what data is being sought by the
public. Recently, EPA's NACEPT Committee's IRM Subcommittee held public
meetings on the types of information needed by different types of
constituent groups.
In the development and deployment of GILS, EPA held focus group
meetings in various cities in the United States to understand average
citizens' interests and requirements. The meetings included average
citizens as well as environmental and information technology experts.
Six meetings were held, and a survey conducted, at a cost of
approximately $5,000.
This spring and summer, EPA will undertake more directed focus
groups with the participation of major citizen groups, such as
children, students, parents, industry representatives, and researchers
to better understand and hear their needs. Hands on ``lab'' experiences
are being planned to better understand what the citizens want.
Understanding citizen needs is also obtained from direct feedback
to EPA's Internet site. Those comments and feedback submissions are
provided to the data holders and appropriately addressed. User
requirements are part of any system development effort. Having a better
understanding of the citizens' concerns and needs for right to know
have always been part of program office system design efforts. As part
of system life cycle costs, they have been part of system development
efforts that have not been specifically tracked or captured. EPA does
not track the costs of such efforts, but it estimates that it expends a
small but growing percentage of its public access budget on such
research. Constant interaction with the public from the FOIA process
and from our Internet comments and feedback is a vital step in our
process for constant improvement to meeting our customer needs. Focus
group meetings are being conducted in Washington, DC, New York, and
North Carolina. They all involve hands-on observation of users from ten
distinct user communities. The total cost is approximately $105,000.
PAPERWORK REDUCTION ACT
Question. What is the current OMB estimate of paperwork burden
imposed by EPA reporting requirements? What steps will EPA be taking to
reduce burden as required by the Paperwork Reduction Act (PRA)?
Answer. As of March 31, 1997, the estimate is 105,664,834 hours. To
comply with requirements of the Paperwork Reduction Act (PRA) and a
January 13, 1997 directive issued by the Office of Management and
Budget (OMB), EPA recently completed a thorough review of its
information collections with the objective of reducing paperwork burden
in the aggregate by 25 percent over three years. On April 14, the
Agency submitted to OMB a comprehensive burden reduction plan.
As the plan indicates, EPA's information collection and
distribution functions are going through a period of significant
change. The Agency is committed to improving data collection, making it
more useful to the Agency's many constituencies, and thus allowing
information to serve as a more powerful tool for protecting the
environment. This commitment is reflected in three different but
related activities currently underway.
First, the Agency is in the process of reducing the paperwork
burden that was in place as of October 1, 1995. By October 1, 1998, EPA
expects to reduce its October 1, 1995 paperwork burden, by 21.8 million
hours, or 21 percent of its baseline burden inventory. However the
reduction is offset by 30.3 million hours of new rule requirements
coming on line during that period of which the agency is projecting an
additional reduction of 4.1 million hours. Of the twenty-one
collections with burden hours greater than one million, sixteen will
have significant reductions during the three years covered by the plan,
and two additional ones are scheduled for reductions in 1999 or 2000.
All-in-all, EPA projects its 10/1/98 burden will rise to 108.5 million
hours, from its 10/1/95 baseline of 104 million hours.
Many of the new rules involve information requirements that enhance
a community's right-to-know. Right-to-know information is environmental
information presented directly to the public, enabling citizens and
communities to make informed environmental decisions and providing a
strong incentive for businesses to improve environmental management
practices. EPA now has about 15 right-to-know collections, including,
for example, drinking water notifications, reporting on releases and
transfers of toxic chemicals, and disclosures by home sellers of lead-
based paint hazards.
Under the Paperwork Reduction Act of 1995, ``third-party''
information, a large subset of this community right-to-know
information, must be counted as ``burden'' within the Agency's
information collection budget, even though this information is never
actually ``collected'' by EPA. By the end of fiscal year 1998,
community right-to-know information will total at least 26.7 million
hours, or nearly 25 percent of EPA's total burden.
The third way that EPA's information collection and distribution
efforts are changing is through a senior level Burden Reduction and
Information Technology Executive (BRITE) task group. The Agency is
looking comprehensively across programs and fundamentally rethinking
why information is collected, how, and from whom, and then identifying
ways to improve the process from the ground up. In particular, through
the BRITE process the Agency is (1) looking at ways to introduce and
expand the use of electronic recordkeeping and reporting, and (2)
studying different ways to improve the efficiency of EPA's information
collection system.
Because many major environmental programs involve compliance roles
for both EPA and States, a complex mosaic of information collection
responsibilities has developed over time. Therefore, a recurrent theme
in EPA's burden reduction effort is partnership with States in
implementation of reporting innovations. Coordinated State-EPA action
is essential for successful implementation of reporting reform, and EPA
is fully committed to this continuing deliberative process.
Question. Is EPA prepared to offer legislative proposals to modify
existing environmental statues where needed to meet the PRA targets?
Answer. EPA has not identified any specific legislative proposals,
but will continue to look at this option as it identifies further
burden reduction opportunities.
IRM REPORTING EFFICIENCY
Question. Will EPA's burden reduction strategy include efforts to
reduce duplication between EPA programs?
Answer. Yes, EPA has initiatives underway to improve system
efficiency in collecting, managing and sharing environmental
information. EPA's Locational Data Improvement Project and Key
Identifier Initiative will consolidate information about facilities
into one standard set of data common to all programs. Through the One
Stop Reporting Initiative, EPA is working with States to develop a
coherent overall environmental reporting and data management system
that effectively serves all stakeholders (the public, regulators, and
industry). This involves, in part, eliminating redundancies among
environmental information collections at all levels of government, as
well as streamlining and improving processes for more efficient
information management.
Question. Will it include efforts to adjust reporting obligations
based on a company's good compliance record?
Answer. Yes, EPA is investigating further opportunities to build
upon the successful approach adopted by the Office of Water for the
Discharge Monitoring Report. On April 16, 1996, EPA issued Interim
Guidance for reducing the frequency of monitoring and reporting by
permittees under the NPDES program. Under this guidance, any facility
that can demonstrate an excellent compliance history, and an ability to
reduce pollution beyond requirements in existing permits may qualify
for reduced paperwork burden. Further reductions may be granted for
facilities that also increase their levels of ambient monitoring and
share this information with other stakeholders. EPA estimated this new
approach will result in a 26 percent reduction in burden, or 4.7
million burden hours, when the program is fully implemented.
IRM DATA SECURITY
Question. What steps is EPA taking to make sure that increased
public access will not compromise important trade secrets? What steps
are you taking to build ``firewalls'' between public data readily
available to on-line access and trade secret data that EPA is obligated
to protect? Computer networks now allow competitors around the world to
put together pieces of ordinary data to reveal trade secrets about how
products are made: what steps are you taking to prevent this problem?
How are you working with other agencies, such as the FBI, on preventing
the use of public data to conduct economic espionage?
Answer. EPA does not post confidential business information (CBI),
as defined by regulation, on the public access Internet server.
Databases that are publicly available are screened for CBI information
and those data elements that are CBI are not modeled for the database
that would be released to the Internet. Thus, the database copy on the
Internet does not contain such sensitive data or information.
Another important category of data is enforcement sensitive
information. The Office of Enforcement and Compliance Assurance
provides technical assistance in screening the databases offered on the
Internet for enforcement sensitive data fields. These data elements are
not part of the database that is Internet-available.
While economic espionage is of great concern to EPA, EPA has not
worked with other federal agencies, such as the FBI, on this particular
issue. EPA is currently discussing how to handle economic espionage
problems and concerns with different and diverse industry groups.
IRM MISUSE OF ENVIRONMENTAL DATA
Question. If EPA is made aware of the misuse or the
mischaracterization of environmental data by third parties, what steps
is EPA prepared to take to stop such behavior and prevent its
reoccurrence in the future?
Answer. The misuse and mischaracterization of environmental data by
a third party is difficult to control. EPA has its own Internet site
with proper security and controls. Our Internet site with the domain of
``www.epa.gov'' gives the public the assurance that the information
found from our registered site is the government's information. EPA
takes great effort to provide descriptions of the purpose and intent of
data releases on the Internet. EPA's data holdings and information
offerings provide an explanation as to what the data represents; from
whom and when this information was obtained or released. Providing a
thorough description of EPA data and information offerings in the form
of data dictionaries and registered records is another of EPA's efforts
to protect the misuse of environmental data.
Without examples of specific data misuse, it is difficult to answer
precisely what actions the Agency would take to alleviate the problem.
It is in EPA's best interest to provide a level, fair, and objective
information base for the use of environmental information by any and
all parties who are trying to protect the environment and public
health. EPA's users are many and quite diverse. It is EPA's intent to
provide all parties with complete and accurate environmental
information on the Internet. Of course, ultimately citizens are free to
provide their interpretations of EPA's data. When EPA is aware of any
egregious misuse of its data, it attempts to provide clarity in
appropriate forums.
IRM AND STATE-MANAGED DATA
Question. Since most environmental data collected under EPA
programs is assembled by state governments, should the principal
decisions about what to collect and how to manage the data be made at
the state level? Should EPA be the principal data manager or one of
several users of state-managed data?
Answer. The decisions about what environmental data to collect are
shared between EPA and the states. Data to document compliance with
Federal regulations and to ensure accountability under EPA-state
delegation agreements are logically defined by EPA. The states, the
regulated community and the public are consulted by EPA in defining
these requirements. The states are also consulted on the methods for
aggregating and reporting data to EPA. In addition to EPA-mandated
reports, a few states require reports that go well beyond Federal law.
Finally, the states both define and finance a large portion of all
ambient environmental monitoring.
Most data obtained from those subject to environmental regulations
are collected by states operating under delegated agreements with EPA.
The principal exceptions are the Toxic Release Inventory and the
Biennial Report under the Resource Conservation and Recovery Act. For
this reason, decisions about data management are increasingly being
made by states within the framework of the minimum Federal requirements
established by EPA. The expanding role of the states in data management
reflects both changes in information technology and an increase in the
resources and management attention that the states devote to data
management. This trend also reflects EPA efforts to strengthen its
partnership with states in this area.
EPA's One Stop Reporting Program is developing new data sharing
partnerships with states that have a demonstrated commitment to
comprehensive data management reforms. The One Stop program emphasizes
data sharing based on common data standards and appears to offer
increased efficiency to both the states and EPA. Both EPA and the
participating states believe that this approach will also reduce the
reporting burden on industry and enhance public access to environmental
information.
In fiscal year 1996, EPA selected five states to receive $500,000
One Stop Reporting grants: Massachusetts; New Jersey; Missouri; Utah;
and Washington. In a highly competitive process that attracted
applications from 31 states, EPA has just selected an additional eight
states to receive similar grants in fiscal year 1997: Pennsylvania;
West Virginia; Georgia; Minnesota; Mississippi; Texas; New Mexico; and
Oregon. Each One Stop state agrees to adopt data management reforms
including the integration of data around common data standards,
reduction of reporting burden, enhanced public access, inclusive
stakeholder participation, strengthened accountability for data
management, and over the long term, universal access to electronic
reporting.
The priority states now assign to data management and data sharing
is evident in the portion of total reform costs being financed by the
One Stop states. Although figures vary widely, the typical One Stop
state is investing $2 to $3 million dollars of state funds annually
whereas the Federal contribution is a one-time grant of only $500
thousand.
NRC ADDITIONAL NPL SITES
Question. It has come to the Committee's attention that EPA is
proposing to place tens or perhaps even hundreds of additional sites on
the NPL if those sites are cleaned up under the jurisdiction of the
Nuclear Regulatory Commission (NRC) to NRC's recently developed
radiological clean up standards. These facilities include universities
and research organizations with small reactors, radiopharamaceutical
manufacturers, nuclear power plants, large teaching organizations and
biotechnology companies. It is my understanding that EPA is under no
statutory obligation or judicial directive to issue its own regulations
in this area. Could you please describe for the Subcommittee, NRC's
response to EPA's proposal to place its licensees on the Superfund
list.
Answer. While EPA is not required to set clean-up standards under
the Atomic Energy Act (AEA), EPA has clear authority to establish
generally applicable cleanup standards and to provide guidance for
Federal agencies. NRC and the Department of Energy (DOE), under the
AEA, must ensure, through licensing requirements and other
restrictions, that activities at regulated facilities do not exceed
EPA's generally applicable standards. At this time, EPA is coordinating
development of cleanup standards with DOE and NRC. However, given NRC's
proposal to promulgate a rule less protective than what EPA would
prefer, EPA may reconsider its policy under a separate statute (CERCLA)
of not listing NRC sites on the Superfund National Priorities List
(NPL).
EPA did work extensively with NRC during the development of NRC's
standards. NRC's proposed rule was considered by EPA to be adequately
protective of human health and the environment. Throughout the
rulemaking process, EPA indicated to NRC that a dose limit of higher
than 15 millirem a year (which EPA estimates corresponds to a risk of
approximately 3.010-4), and the absence of requirement to
protect groundwater that could be used as drinking water, might not be
considered protective. EPA did not know that NRC intended to make
changes from its proposal until November, 1996. EPA's concerns were
heightened in April upon review of NRC's draft proposed rule which
includes an ``alternative criteria'' that would allow the dose limit at
some sites to be as high as 100 millirems per year (which EPA estimates
corresponds to a risk of approximately 2.010-3).
The number of NRC licensee sites that could be added to the NPL is
dependent upon many factors including the degree of risks posed by the
site and State concurrence on listing. A precise determination of the
number of sites that could be listed cannot be determined at this time.
The probable universe from which the sites which could be listed are as
follows:
Total Large NRC Sites \4\ : 275
---------------------------------------------------------------------------
\4\ U.S. EPA Sites Report, July, 1996, unpublished.
---------------------------------------------------------------------------
--Estimated number of large NRC licensee sites.
--These are sites associated with nuclear fuel cycle and rare earth
extraction.
Large NRC Sites Not on the Site Decommissioning Management Plan
(SDMP) \5\ : 240
---------------------------------------------------------------------------
\5\ EPA expects that only a small fraction of these sites would be
listed on the NPL.
---------------------------------------------------------------------------
Large NRC Sites on the SDMP: 35
SDMP sites that are on the NPL: 3
Other Sites on the SDMP \6\ : 51
---------------------------------------------------------------------------
\6\ U.S. Nuclear Regulatory Commission. November 1995. Site
Decommissioning Management Plan. NUREG-1444 Supplement 1. Office of
Nuclear Material Safety and Safeguards. Division of Waste Management.
---------------------------------------------------------------------------
--The draft NRC decommissioning rule dated March 28, 1997 page 31,
discusses a list of sites that may have ``extensive soil
contamination (albeit at relatively low levels) and have been
placed in the Site Decommissioning Management Plan.'' NRC
indicates that these sites warrant specific attention regarding
their decommissioning.
NRC ADDITIONAL SITE CLEANUP
Question. In your Superfund budget request--is the cost of cleaning
up these additional sites included in the budget request?
Answer. As the final resolution of the issue between EPA and NRC is
uncertain, no change in budget priorities has been made to prepare for
EPA response at these sites. If NRC finalizes the regulation in its
current form, EPA would reconsider listing these sites. However, it is
premature to assume that EPA must now absorb this additional workload,
pending actual finalization of the regulation.
NRC DUPLICATIVE REGULATORY SITUATION
Question. In this era of shrinking federal budgets, agencies are
being asked to do more with less. In light of NRC's oversight and
separately implemented cleanup program for these sites, do you believe
the cost and inefficiency of this duplicative regulatory situation can
be justified?
Answer. EPA is committed to ensuring that cleanups are protective
of human health and the environment. Under CERCLA, EPA may choose not
to respond to certain types of releases if existing regulatory or
authority under other Federal statutes provides for an appropriate
response. In its current form, the NRC regulation may not be adequately
protective of human health and the environment, forcing EPA to
reconsider its policy of exempting NRC sites from listing on the NPL.
We hope that NRC will recognize the inefficiency that might occur
and promulgates a standard that provides the public with the same level
of protection from radiation that the public receives from other
chemicals.
PULP AND PAPER INDUSTRY CLUSTER RULE
Question. As proposed in 1994, the new water and air standards for
the pulp and paper industry, known as the Cluster Rule, would have had
a devastating affect on this important U.S. industry. As a consequence,
many members of Congress wrote to you and your staff to express very
serious and specific reservations. As I understand it, the agency may
be moving to address these concerns, but a firm date for promulgation
never seems to be forthcoming. In view of the fact that the U.S. pulp
and paper industry's capital planning is being held hostage to this
rule, can you give us some idea of why promulgation has been delayed so
long and when we can hope to see the rule finalized?
Answer. This regulation is the first one of its kind to integrate
analyses of technologies to control both air and water pollution. It is
also the first to consider an incentives program to encourage mills to
go beyond the requirements of the Federal regulations and commit to
improvements toward a low-flow, minimum impact mill of the future.
What you describe as a significant delay in our schedule to
promulgate the rule is largely the result of two factors: (1) our
ground-breaking efforts, involving extensive stakeholder participation,
to build an incentives program using existing authorities that will be
a powerful impetus to continuous environmental improvement, and (2) the
reiterative analytical process that is necessary to consider the
combined effects of the air and water rules. While this approach has
resulted in a longer developmental process, EPA is optimistic that the
lessons we are learning through this process will serve us well through
this rulemaking and future ones. EPA expects to transmit the rule for
OMB review in early May 1997.
pulp and paper industry cluster rule participation
Question. I understand that in a July 1996 Federal Register notice,
you indicated that EPA was considering offering regulatory incentives
for mills willing and able to go beyond the requirements of the final
cluster Rule. I applaud this approach and hope that the final rule will
contain a program that provides meaningful rewards for companies
willing to make the kind of large investments contemplated by your
original proposal. Since this is precisely the kind of regulatory
reform initiative many of us support, please share your latest thinking
with respect to ways in which you will make this program attractive
enough to gain the widest participation possible.
Answer. It is our firm belief that many mills are interested in
improving their environmental performance. Our main goal in the
incentives program is to provide the necessary flexibility, in the form
of additional time, for mills to plan for and install improved
pollution prevention technologies. In addition, we are exploring a
variety of rewards for mills that achieve standards beyond baseline
BAT. These incentives include public recognition and consideration of
their advanced performance in our routine permitting and compliance
monitoring. We believe many mills will choose to pursue the flexibility
offered in this package.
pulp and paper industry cluster rule incentives
Question. I think it is critical that the final rule contain a
meaningful incentives program. Do any of your problems stem from
hesitation regarding the authority you have to offer such incentives?
Answer. We believe we have the statutory authority to provide an
effective incentives program. We have explored the mix of options
available for using regulations, policy and guidance to provide the
strongest incentives program without tying the hands of the States who
are our co-regulators. We are currently working out the final details
of this incentives program.
______
Questions Submitted by Senator Shelby
FQPA OFFICE OF MINOR USE
Question. Will the FQPA mandated Office of Minor Use be in place by
September 1997?
Answer. Yes, section 31(a) of FIFRA, as amended by FQPA, requires
EPA to ``assure coordination of minor use issues through the
establishment of a minor use program within the Office of Pesticide
Programs.'' The Agency has been coordinating minor use issues for many
years. To implement FQPA, EPA's Office of Pesticide Programs is
developing an organized unit which will include a home for the minor
use program. The program will establish policies and coordinate all
minor use pesticide issues within EPA, with other agencies and with all
interested parties.
FQPA MONITORING
Question. What distinction does EPA make when monitoring
domestically manufactured products as compared to imported products?
Answer. EPA makes no distinction between domestic and imported
pesticides. They must all be registered with EPA and comply with
identical sets of requirements. All registrants of pesticides subject
to FIFRA, whether manufactured domestically or outside of the United
States, must report to EPA the types and amounts of pesticides
produced, sold or distributed, beginning 30 days after production
begins and annually thereafter. All products must be registered by EPA
for their specific use before they can be legally applied, and must
have an established tolerance or exemption from tolerance if used on
food or feed commodities. FDA and USDA monitors pesticide residues on
foods for both domestic and imported commodities. Any food found in the
U.S. with illegal pesticide residues would be declared adulterated and
subject to seizure by FDA.
FQPA FOREIGN DATA
Question. Is EPA willing to accept data collected and verified in
other countries when registering a domestic product? For instance,
conditions, trials and field work on Canadian canola, peas and lentils
is very similar to the U.S. situation.
Answer. EPA has reviewed and accepted data generated in other
countries to support some registration decisions. EPA will continue to
do so provided those data are collected under conditions similar to
those in the U.S. and as long as they meet U.S. standards. EPA will
continue to work with Canada to harmonize pesticide registration data
requirements so our farmers have similar pest control tools and are not
at a competitive disadvantage.
FQPA SECTION 18 EMERGENCY EXEMPTIONS
Question. Section 18's (Emergency Exemptions) are of vital
importance to production agriculture. Are the timely issuances of
Section 18's a high priority for agency resources both during and after
final implementation of the Food Quality Protection Act (FQPA)?
Answer. Making timely decisions on emergency exemptions has been
and will continue to be a high priority for EPA. In fact, the first
decisions which were reviewed and completed under the new requirements
of the FQPA were emergency exemptions. EPA remains committed to making
timely decisions on emergency exemptions even though the resources and
complexities involved with these decisions has substantially increased.
FQPA SECTION 18 LEVEL OF REVIEW
Question. Given the stress on agency resources being created by the
implementation of the FQPA, does the agency now require the same level
of review for Section 18's as for full registrations? If so, why is
this being done since Section 18's result in diminished exposure and
are time limited tolerances?
Answer. Emergency exemptions involving food uses have always
required a significant level of review. Section 18's are primarily only
allowed when progress can be shown toward a full Section 3 registration
and the safety finding of ``no unreasonable harm'' can be met. EPA has
always used the toxicological and environmental fate data submitted for
the Section 3 to help make the Section 18 decision. FQPA did not change
the provisions of FIFRA Section 18's or the need for quick responses.
The additional effort for FQPA is that today we must make and publish a
formal tolerance determination.
Section 18's do not result in diminished exposure, only in a
shorter time span of exposure. Conceivably, many people may be exposed
for several years to pesticides permitted under emergency exemptions.
For example, if a Section 18 pesticide is used on corn, people eating
that corn will be exposed for a shorter time frame but it would be the
same level of exposure. Therefore, EPA must still consider all of the
toxicological endpoints of concern, the amount of exposure and what the
potential risk is to each exposed populations (i.e., adults, children,
etc.). As a petition to address an emergency situation, the difficulty
sometimes is that EPA must make a decision in an accelerated time frame
(the target is fifty days but some situations require EPA to respond
within a few days).
FQPA NEW PRODUCT AND NEW USE REGISTRATIONS
Question. If the agency is giving up high priority to Section 18's
and also using up resources for a complete level of review, is this
decision resulting in a slow down of new product and new use
registration? If so, is this wise since new and safer products could,
therefore, be delayed for market use?
Answer. New active ingredients and ``reduced risk'' chemicals
continue to receive a high level of priority. While the Agency
experienced an initial slow down in the 3 months following passage of
the FQPA, EPA has recently approved a significant number of Section
18's and new active ingredient registrations. Because these actions are
given high priority, EPA does not expect that new and safer products
will be delayed in getting to market. In fact, in the first six months
of fiscal year 1997, EPA has made more decisions on new active
ingredients then the historical average.
Additionally, prior to FQPA, the Biopesticide and Pollution
Prevention Division (BPPD) was created to focus their efforts on safer
biopesticides and biopesticides in general. Their processes were well
implemented prior to FQPA, therefore, there was very little if any slow
down in their new product and new use registrations due to FQPA. BPPD
has registered 10 new biological active ingredients (AI's) under FQPA,
one of which is BT corn, and will register an additional 6-8 new AI's
in the next six months.
FQPA PRIORITIZATION TOP FIVE PRODUCTS
Question. By forcing companies to prioritize only their top five
products due to agency resource problems, isn't the agency adversely
impacting the marketing of new active ingredients and new label for
existing products for minor uses?
Answer. EPA established the priority setting policy a year prior to
passage of FQPA. It does not limit the number of applications which can
be submitted, rather, it helps industry identify which applications are
of greatest importance to them and to consumers. The purpose of the
policy is to align Industry priorities with EPA's workload, and has
proven to be an important management tool. EPA believes the priority
planning system has enabled the agency to better manage the resources
and, in fact, has increased the number of registration decisions for
new uses and active ingredients. The priority setting process does not
impact the approval of new pesticides because registrants have never
had applications for more than two or three new pesticides pending at
one time. Thus, each company always can make new pesticides their top
priority with room for other applications as well. Likewise, many minor
uses are considered priorities in the que. Further, EPA makes IR-4
minor use tolerance petitions a high priority for review.
FQPA DEFAULT TOLERANCES
Question. In considering whether to establish a tolerance, in
absence of data on aggregate exposure to a pesticide residue, the
agency has indicated it will create artificial percentages to represent
aggregate exposure. This appears to be inconsistent with Section
405(b)(2) (C) and (D) of the FQPA statute. Under the FQPA, an
adjustment for aggregate exposure appears to be warranted only when
there is ``available information'' which evidences a need for an
adjustment.
If the agency is spending time on the development of defaults in
the absence of information, this would appear to be another reason for
an overload of the agency resources resulting in delays in moving
products to the market. It may also result in a system which may be at
odds with the law. Has the agency given consideration to this problem
and why has it continued to use theoretical defaults in the absence of
``available information?''
Answer. EPA bases all determinations on available information. We
have an obligation to use the best scientific methodology in evaluating
the non-food exposures when considering a pesticide for registration,
an emergency exemption or reregistration. EPA employs default
assumptions only when information regarding the exposure to the
pesticide is incomplete. If EPA knows that a pesticide has non-food
exposures, we believe that it would be inappropriate to act as if such
exposures are not occurring simply because we don't have rigorous data
to calculate the precise level of exposure. Instead we will use
protective but defensible estimates of such non-food exposures in our
assessments.
For example, if EPA has information showing a pesticide is
registered for use in and around the home, EPA believes that
``available information'' shows that residential exposure is occurring.
In the absence of residential exposure data for the exact pesticide
being evaluated, EPA will attempt to estimate exposure using available
data. In many instances, for residential exposure, EPA scientists will
use residential exposure data from other similar pesticides and
calculate a reasonable exposure value from that data.
EPA will work to review all available information to refine our
risk assessments, which could, in fact, lower our exposure estimates
and allow the approval of additional uses. This approach may be helpful
in areas where complete data have not been submitted.
Given the requirements of the law, not using some reasonable value
representing our best scientific judgement would result in indefinite
denials of applications while precise data were generated, a process
which in many cases could delay decisions for a period of many months
or years.
ENVIRONMENTAL SELF-AUDIT LAWS
Question. Alabama currently has legislation before the State House
and Senate regarding environmental audit laws. As you are aware,
environmental audit laws, which have been adopted in 20 states and are
before 19 state legislatures, help determine the status of a company's
compliance with federal, state and local regulations. The audits
generally serve as a basis for corrective actions, remedial programs
and lead to an improvement in environmental practices. Realizing that
budgets stretch only so far and the funds for inspection and audits are
limited, states should be praised for creating a process that
encourages companies to implement self-audits and then any corrective
problem.
While recently EPA has taken small measures to recognize the value
of environmental audits, why isn't your agency more supportive of the
states efforts?
Answer. EPA supports environmental self-auditing and has an
incentives policy of its own to encourage auditing and other forms of
self-policing. Nonetheless, EPA opposes audit privilege and immunity
legislation. Audit privilege invites secrecy, instead of the openness
needed to build public trust in industry's ability to self police. EPA
believes that audit privilege greatly complicates criminal and civil
discovery, and frustrates public access to information. While EPA
supports penalty mitigation as an incentive for voluntary disclosure
and correction of violations, EPA believes that to immunize serious
violations discourages companies from making the investments in
pollution control necessary to prevent such violations. These are among
the reasons that audit privilege and immunity laws are strongly opposed
by law enforcement, state and local officials, citizens, and public
interest groups.
Question. Isn't one of the purposes of early detection compliance
with the law?
Answer. Yes. EPA's Self-Policing Policy, ``Incentives for Self-
Policing: Discovery, Disclosure, Correction and Prevention of
Violations,'' issued on December 22, 1995, encourages early detection
of environmental problems and their prompt correction. Unlike many
immunity laws, EPA's policy encourages a high standard of care to
prevent environmental problems from occurring in the first instance and
to ensure that those who comply in a timely manner are not
competitively disadvantaged by those who do not.
Question. Why is early detection of environmental hazards bad?
Answer. Early detection of environmental hazards is good in that it
allows facilities to remediate any environmental damage sooner than if
the facility waits until the hazard is discovered by a regulatory
agency or the public. That's why EPA's Self-Policing Policy encourages
early detection and correction of environmental hazards in exchange for
reduced penalties.
Question. Why wouldn't the EPA support creative innovative state
programs that promote compliance with the law and early detection of
possible environmental hazards?
Answer. EPA does support state programs that promote compliance
with the law and early detection of possible environmental hazards. EPA
opposes certain state audit privilege and immunity laws precisely
because they do not promote compliance with the law, but instead
interfere with law enforcement and with the public's right to know.
As an alternative to audit privilege, EPA supports efforts by state
environmental agencies, such as Pennsylvania and Florida, to develop
penalty mitigation policies with criteria for self audits that are
consistent with EPA's. Indeed, the EPA has encouraged the development
of policies that offer penalty mitigation incentives for environmental
auditing. EPA's Self-Policing Policy is working well to encourage
environmental auditing and voluntary compliance without the adverse
consequences to law enforcement and the public's right to know of a
privilege and immunity bill. As of April 1997, 120 companies had
disclosed violations at more than 400 facilities under the federal
policy, proving that environmental auditing can be encouraged without
blanket amnesties or audit privileges.
Moreover, federal laws and regulations establish clear standards
that states must meet to obtain approval to administer federal
environmental programs. To meet the minimum federal requirements for
adequate enforcement authority for program approval, states with audit
laws must retain the ability to obtain penalties and injunctive relief
for violations, as well as the ability to obtain information needed to
identify violations or determine compliance status. In analyzing the
impact of state audit laws, the EPA stands ready to consult with state
officials to ensure the adequacy of enforcement authority in federally-
approved state programs. In working with the states, the EPA relies on
a policy issued February 14, 1997, ``Statement of Principles, Effect of
State Audit Immunity/Privilege Laws on Enforcement Authority for State
Programs,'' which articulates the minimum requirements for adequate
enforcement and information gathering authority for the purpose of
approving programs in states with audit privilege or immunity laws.
Question. It seems as though EPA's stance on this matter promotes
an adversarial relationship with the very states and business that are
attempting to comply with your agency's regulations. Why?
Answer. Recently, Administrator Browner met with representatives
from several states and had a very positive discussion regarding EPA's
concerns with audit privilege and immunity statutes. Since then, EPA
has met with the states of Texas and Michigan to work out changes to
those audit privilege and immunity statutes that would enable the
states to meet Federal legal requirements. EPA is ready and willing to
meet with any other states to discuss amendments to existing or pending
audit statutes for that purpose.
______
Questions Submitted by Senator Craig
WIPP SAFETY
Question. If WIPP is deemed to be acceptable, will it be safer to
store waste at WIPP or where it is currently being stored?
Answer. The waste is currently being stored primarily at ten sites
throughout the country and, at present, poses no immediate threat to
public health. However, the dangers with the type of waste
(transuranic) proposed for disposal at the Waste Isolation Pilot Plant
(WIPP) is that it is radioactive and will be for tens of thousands of
years.
Leaving the waste stored above ground will subject the waste
containers to degradation from the weather, as well as leave them
vulnerable to natural or other disasters. The current method of storage
for transuranic waste is a medium-term fix, not a long-term solution.
The advantage of a facility such as the WIPP is that, if it is proven
to comply with the U.S. Environmental Protection Agency's (EPA's)
disposal regulations, the facility would provide long-term protection
to public health and the environment.
WIPP COST
Question. What has been the cost to the federal government to date
and what is the status of construction at WIPP?
Answer. EPA defers to DOE for information regarding both the total
cost of the WIPP facility and the status of construction.
WIPP COST OF REVIEW
Question. Do you have adequate resources to conduct a review of the
application? What additional resources do you need, if any?
Answer. Yes, EPA has adequate resources to conduct the review of
the application in a timely manner. No additional resources are needed.
WIPP COMPLETENESS REVIEW
Question. What is the process of the review you are conducting or
will conduct, and what is the schedule to complete this review?
Answer. The WIPP Land Withdrawal Act (LWA), as amended, requires
that EPA make a determination as to whether WIPP meets the Radioactive
Waste Disposal Regulations at 40 CFR Part 191. The LWA requires that
EPA make this determination by rulemaking under Section 553 of the
Administrative Procedures Act (APA). EPA is currently proceeding with
rulemaking activities in accordance with the provisions of the WIPP
Compliance Criteria at 40 CFR Part 194.
The Agency is taking every step to facilitate the certification
decision. We are reducing the complexity and amount of time required
for internal Agency review of the certification decision, and would
like to expedite the time required for interagency review. We estimate
that once DOE has provided all the required information identified in
our March 19, 1997 letter to the Department, the Agency will produce a
final certification decision within a minimum of 10 months. The
expected certification decision of the DOE WIPP application is
currently April 1998. This date is subject to change depending, in
part, on the planned DOE delivery to EPA of the confirmatory
verification test of the performance assessment by early July, 1997.
It is the Agency's goal to make a technically and legally
defensible decision since it is likely that any decision will be
subject to litigation. If EPA's final determination is not legally
defensible, and it is overturned in court, the possibility of WIPP
opening could be significantly delayed.
WIPP COMPLETENESS REVIEW START
Question. Is there any prohibition as to when you can begin your
evaluation of the Completeness Certification Application in 40 CFR
194.1?
Answer. There are no prohibitions identified in 40 CFR 194.11
[Section 40 CFR 194.1 identified in the question addresses the purpose,
scope and applicability of the 194 regulation, while 40 CFR 194.11
addresses completeness and accuracy of compliance applications]
regarding when EPA can begin review of completeness following DOE's
submission of the WIPP Compliance Certification Application (CCA). In
fact, the Agency began review of the CCA immediately following receipt
of the CCA on October 29, 1996. The Agency informed DOE on December 19,
1996, that additional information was required for a complete
application. Since that time, the Department has periodically provided
information to fulfill that request. The Agency received the last
installment of information on that request and, as promised by
Administrator Browner, will make a completeness determination in May,
1997.
WIPP CERTIFICATION EVALUATION
Question. How would you characterize EPA's evaluation for
certification--is it a technical review of the application?
Answer. EPA is conducting a technical review of DOE's application.
This review is designed to determine whether DOE has demonstrated a
reasonable expectation of compliance with the disposal standards in 40
CFR 191. Reasonable expectation is demonstrated by compliance with the
criteria identified in 40 CFR 194.
WIPP APPLICATION COMPLETION
Question. The application was filed at the end of October, 1996. To
date, your reviews of the application have not been for the purposes of
certification but for purposes of determining whether the application
is complete--is that correct? What is the definition of complete and is
that consistent with the definition found in 40 CFR 194.1?
Answer. No. EPA has conducted both its technical and completeness
reviews simultaneously and has been doing so since receipt of DOE's
application on October 29, 1996.
A complete application, as defined in EPA's Compliance Application
Guidance (EPA 402-B-95-014), is one which addresses each of the
requirements of 40 CFR 194 in such a manner as to warrant further
scrutiny, so that EPA, DOE, and the public do not invest major
resources in a rulemaking proceeding for an incomplete document. A
completeness determination is a preliminary step in a more extensive
administrative process and is consistent with the process identified in
40 CFR 194.11 [as previously noted, 40 CFR 194.1 addresses the purpose,
scope and applicability of the 194 regulations, while 40 CFR 194.11
addresses completeness and accuracy of the application].
WIPP REVIEW COMPLETION SCHEDULE
Question. Would EPA please provide the Subcommittee with its
schedule for a timely completion of review of the WIPP application
within the next two weeks?
Answer. The Agency is taking every step to facilitate the
certification decision. We are reducing the complexity and amount of
time required for internal Agency review of the certification decision,
and would like to expedite the time required for interagency review.
EPA would like to publish a proposed rule approximately 2\1/2\
months after DOE submits all the information EPA requested to fulfill
the requirements of 40 CFR 194 (as identified in the March 19, 1997
letter from EPA to DOE). Following proposal, a four month public
comment period will begin as required by 40 CFR 194. Upon completion of
the public comment period, EPA will need a minimum of 3\1/2\ months to
accomplish an expedited rulemaking process including responding to
public comments, completing the technical support, drafting the final
rule and completing the intra and interagency review. In total, it will
take the Agency a minimum of 10 months to complete the final
certification decision once DOE has submitted the required information.
The expected certification decision of the WIPP application is
currently April, 1998, although subject to change depending, in part,
on the planned delivery to EPA of the confirmatory verification test of
the performance assessment by early July, 1997.
WIPP INFORMATION FROM DOE
Question. Does EPA recognize a difference in the review process
between requests to DOE for information related to a completeness
determination and other additional requests for information which are
for technical sufficiency or of a general nature?
Answer. Yes. The Agency has specified the difference in its letters
to the Department. The Agency sent a letter to DOE on December 19,
1996, which identified areas of completeness and technical sufficiency;
it also identified areas where necessary supporting documentation to
demonstrate compliance with the regulatory requirements of 40 CFR 194
was lacking. Enclosed with the letter were separate attachments for
items of completeness and technical sufficiency. The December 19, 1996,
letter was the only one which identified additional information needs
related to completeness.
WIPP COMPLETENESS DETERMINATION
Question. Is EPA's failure to issue a completeness determination
based on requests for information of technical sufficiency?
Answer. No. It is based solely on those items identified in the
December 19, 1996, letter where additional information is required for
purposes of completeness.
WIPP REVIEW: REASONABLE EXPECTATION STANDARDS
Question. Does your review conform to the reasonable expectation
standards contained in 40 CFR 191 and 194? Please be specific as to how
this might relate to any requests for additional information relating
to parameter evaluations, parameter variance determination and
confirmatory performance assessments.
Answer. Yes. Regarding the parameter values chosen by DOE, EPA
reviewed the available record on all of the approximately 1,500
parameters used in the WIPP performance assessment. Section 40 CFR
194.23 requires, among other things, for ``detailed descriptions of
data collection procedures, sources of data, data reduction and
analysis, and code input parameter development.'' From our review, EPA
identified 58 parameters which could have a significant impact on the
results but the supporting data could not be found, the data did not
support the values chosen, or the connection between the data and the
chosen value was unclear. Questions about the values chosen for many of
these parameters were also raised by DOE's own peer review groups, the
National Academy of Sciences, the Congressionally appointed
Environmental Evaluation Group and public commenters.
EPA has asked DOE to resolve the discrepancies between the
information available in the record and the parameter values chosen.
Where that cannot satisfactorily be accomplished, EPA will evaluate the
data and provide parameter value(s) to DOE. The parameter variance
determination was one tool which EPA used to determine whether each of
those 58 parameters did indeed play a significant role in the results.
If the results showed that a parameter did not play a significant role
in the results, that parameter was dropped from consideration. EPA has
already provided DOE a partial list of parameter values in an April 17,
1997, letter. Since this exercise has resulted in changes to some of
the parameters which play a significant role in the results of the
performance analysis. EPA has requested a confirmatory verification of
the performance assessment to be completed by DOE using the parameter
values which EPA believes more adequately reflect the available data.
As stated earlier, EPA's goal is to make a final determination
which is both technically and legally defensible.
WIPP AND SANDIA NATIONAL LABORATORY COMPUTER COSTS
Question. Is EPA planning to duplicate all of the computer codes
developed by Sandia National Laboratory? Will you use these codes to
determine whether or nor the ultimate findings made by DOE are
supportable?
Answer. No. EPA has not, nor does it plan to duplicate any of the
computer codes developed by Sandia National Laboratory.
EPA has and will conduct exercises to verify that the computer
codes developed by DOE produce reasonable and stable results. This is
accomplished through benchmarking of the DOE codes against existing,
commercially available codes used for similar purposes.
TECHNOLOGY NEUTRAL RECORDS OF DECISION
Question. I understand the Department of Energy's Environmental
Management Program is proposing to perform Superfund Records of
Decision that are technology neutral. This approach is proposed so that
private industry can bring competitive technologies to bear on DOE
problems, based solely on the required cleanup end state for the site.
Given EPA's promotion of consensus-based remedy selection, could
you comment on how you think the public and state regulators would
respond to technology neutral RODS? Has DOE requested EPA comment on
this approach? What is your response to a technology neutral ROD
approach?
Answer. The Agency is not familiar with the term ``technology
neutral'' ROD's. However, your explanation of the concept of signing
ROD's that rely on performance of a remedy is quite challenging and on
the surface may seem deceptively easy. What follows are some issues
that any performance-based ROD process would need to address.
The circumstances found at Superfund sites vary, both in the
characteristics of the contaminants and in the different trade-offs
that accompany any technology applied at the site. Such trade-offs can
include different possible uses of the land after cleanup, different
levels of emissions during cleanup, different time frames to complete
cleanup, different levels of long term reliability and maintenance, and
different costs. Each of these factors, along with others, is
considered during the selection of remedy process identified in the
National Contingency Plan. Equally important is the NCP's open
decision-making process that incorporates community views. The Agency
has learned that full involvement of the community in making decisions
at sites leads to a successful, supported cleanup. It is this
involvement that would have to be incorporated into any consideration
of this concept in the long run.
However, there are opportunities for flexible approaches (e.g.,
treatment that offers similar performance relative to most NCP
criteria) that should be considered within the context of an open
consensus based decision making process.
Selecting only end-of-the-line performance in a remedy would appear
to bury many of the important lessons we have learned over the past 15
years. For example, in 1991 the Superfund program began a series of
program reforms, one of which directly relates to the concept you set
forth. The reform called for treatability studies, which review the
capability of new, innovative technologies to accomplish a hazardous
waste cleanup, to be conducted prior to selection of a remedy. The
reform addressed citizen concerns about technology selection after a
ROD is signed. We have learned that it is most efficient and cost
effective to ``compete'' new technologies in advance of signing a ROD.
More recently, EPA issued a presumptive approach for cleanup of
ground water contamination in fiscal year 1996. This approach calls for
developing a complete response to contaminated ground water based on
incremental results (i.e., performance) of technologies put in place.
This approach provides an iterative process for response that ensures
both protection of human health and the environment and is a cost
effective, appropriate response to ground water contamination at sites.
While DOE and EPA staff apparently have had some preliminary
limited discussions, DOE has not formally requested EPA comment on this
approach at this time.
TECHNOLOGY DEVELOPMENT
Question. The Department of Energy's Environmental Management
Technology Development Program has a new technology development
initiative to advance implementation of recently developed and
demonstrated cleanup technologies. Is your agency working with the DOE
to ensure the deployment benefits are passed on to DOD and private
sector cleanup sites?
Answer. Yes, EPA is working with DOE to coordinate the deployment
of new technologies. EPA is participating as a member of DOE's
Environmental Management Advisory Board-Technology Development and
Transfer Committee. EPA also participates with DOE, DOD, and other
federal agencies in the Federal Remediation Technologies Roundtable.
The Roundtable was created to exchange information on site remediation
technologies, and to consider cooperative efforts that could lead to
greater application of innovative technologies. These collaborative
efforts have led to technology development and demonstration
partnerships with industry and a unified federal approach to assessing
and documenting technologies.
Question. What is your agency doing to encourage the use of
innovative and alternative technology in the cleanup industry?
Answer. EPA is actively involved in encouraging the use of
alternative and innovative technology. Under the Office of Solid Waste
and Emergency Response (OSWER), the Technology Innovation Office
operates to reduce barriers for new treatment and site characterization
technologies. The use of innovative treatment technologies has
increased over the past several years and in the Superfund program,
approximately one-third of the treatment technologies chosen for source
control may be considered as innovative.
OSWER is assisting private developers by publishing market studies
and hosting marketplace conferences (in cooperation with DOE and other
agencies) to better define the near-term demand for innovative
technologies. To inform site managers about current technology
capabilities, OSWER has developed two computer-based systems with
information about vendors who supply treatment, as well as
characterization and monitoring technologies, to the marketplace. The
data bases allow site managers to identify potentially applicable
technologies and the vendors who supply them. OSWER is also sponsoring
an American Academy of Environmental Engineers project to publish peer-
reviewed design manuals to give consulting engineering firms access to
state of the art information on the applicability of technologies to
various contamination problems. In an effort to pool risks associated
with technology development, OSWER and EPA's Office of Research and
Development are jointly leading an effort with other agencies and
several Fortune 500 companies to jointly develop and evaluate treatment
technologies. The Remediation Technologies Development Forum (RTDF)
harnesses the intellectual and financial resources of the agencies and
companies to develop technologies of mutual interest. This pooling of
effort reduces the financial burden and risk of technology research on
any one organization. EPA leads another collaborative effort to
evaluate characterization and monitoring technologies. The Consortium
for Site Characterization provides developers with an independent
evaluation of their technology's performance. The RTDF and Consortium
efforts will accelerate the evolution of new methods and their
acceptance by federal and state regulators as well as technology users.
EPA's Superfund Innovative Technology Evaluation (SITE) program has
been evaluating new treatment technologies for over a decade. Under
SITE, the agency enters into cooperative agreements with vendors to
demonstrate and evaluate technology performance.
OSWER has issued a policy directive affirming our commitment to
technology innovation. The directive provides additional flexibility to
support the development, demonstration, and application of treatment
technologies, particularly those which address groundwater
contamination and those which involve potential cost saving by treating
wastes in situ. We also see the potential for significant benefits in
productivity and cost savings through increased use of field
measurement and monitoring methods. Our policy directive supports
broader use of such approaches. We also hope to bring our increased
regulatory flexibility together with desirable attributes of federal
facilities to act as test beds for innovative technology development
and demonstration.
EPA produces a vast amount of information describing markets and
assessing new treatment and site characterization technologies. The
Technology Innovation Offices's homepage at HTTP://CLU-IN.COM is
dedicated to the exchange of information related to new technologies
for soil and ground water cleanup.
Question. Would a centralized national effort to demonstrate
deployability of new cleanup or monitoring technology be a worthwhile
goal for the country?
Answer. At the present time, there are several different agency
efforts to demonstrate and promote new cleanup and monitoring
technology. Many of these efforts currently involve extensive
coordination among federal agencies. A summary of these programs may be
found in the Roundtable publication, Accessing the Federal Government:
Site Remediation Technology Programs and Initiatives. An advantage to
having separately administered efforts is the ability of the sponsoring
agency to tailor their program to their own particular cleanup needs
while avoiding the possibility of a bottleneck which could result from
a centralized effort.
CLEANUP CONTRACTOR LIABILITY
Question. Should a contractor's liability be based on the
consequences of their performance? In other words, should the
contractor be held to a professional standard of negligence rather than
one of strict, joint and severable liability?
Answer. Under current law, response action contractors are uniquely
situated, in that they are not liable under CERCLA unless the release
is caused by conduct of the response action contractor that is
negligent, grossly negligent, or which constitutes intentional
misconduct. 42 U.S.C. Sec. 9619(a)(2). EPA has not proposed any
deviation from this standard.
cleanup contractor liability orphan shares
Question. Who should hold the liability for hazardous waste
generation and orphaned sites for government-owned and operated
facilities, the government or the operating contractor?
Answer. The Federal government is responsible for compliance and
cleanup at Federally owned facilities so these are not ``orphan
sites''. Where EPA has authority under a given statute to initiate an
enforcement action against an owner or operator at a Federal facility
and the contractor fits the statutory or regulatory definition of an
operator, EPA can hold Federal agency, the contractor-operator or both
liable. Determinations whether to hold the Federal agency or the
contractor-operator liable are made by EPA regional offices based upon
site-specific factors, such as whether the contractor is believed to
have contributed to the contamination at the facility.
EPA's policy on contractor vs. government agency liability is
described in a document titled ``EPA Enforcement Policy for Private
Contractor Operators at Government-Owned/Contractor-Operated (GOCO)
Facilities'', issued January 7, 1994. A copy is attached.
SUPERFUND REAUTHORIZATION
Question. I congratulate you for the well-intentioned
administrative reforms you have sought to implement in the federal
Superfund program, and also for your public statements about the need
for fundamental statutory changes to increase the pace of cleanups.
According to engineering and construction firms engaged in
environmental remediation work around the country, the pace of cleanups
has slowed significantly during the lengthy, ongoing debate over
comprehensive reauthorization legislation.
The administration proposed a $650 million increase for the
Superfund program in its fiscal year 1998 budget request yet has not
seen fit to offer comprehensive reauthorization legislation during this
Congress.
What assurance can you provide that the Administration will work
with Congress to enact comprehensive reauthorization legislation before
the end of the current fiscal year?
Answer. Over the past several weeks, Senate Committee staff, the
Administration, and a broad based group of stakeholders have been
involved in extensive discussions of the issues and concerns
surrounding reauthorization of the Superfund law. These discussions are
intended to build a common understanding of the issues that require
legislative action. During this time, I have met with several members
of the Environment and Public Works Committee to stress the importance
of enacting Superfund reauthorization quickly. In the House, similar
discussions to identify issues that may require legislative action are
underway.
I am encouraged by the discussions to date, and have directed EPA
staff to continue to build the kind of consensus-based agreement that
is a requisite to revision of this law. It is the responsibility of
Congress to move legislation forward, so I am not in a position to
ensure enactment of legislation this year. We remain committed to
working in a bipartisan fashion with Congress and Superfund
stakeholders in good faith efforts to develop responsible legislative
reform of Superfund this year. That reform must continue to build upon
the successes of the current Superfund program and be rooted in common
sense.
______
Questions Submitted by Senator Bennett
PRICE COALBED METHANE PROJECT EIS NEPA OVERSIGHT
Question. What is EPA's role in the administration of the National
Environmental Policy Act?
Answer. The Environmental Protection Agency (EPA) has two major
roles in the administration of the National Environmental Policy Act
(NEPA). The first role is mandated by section 309 of the Clean Air Act,
and requires EPA to review certain federal actions including all
environmental impact statements, comment to the lead agency in writing,
and make the comments available to the public. It further directs the
Administrator of EPA to refer to the Council on Environmental Quality
(CEQ) any `` * * * legislation, action, or regulation * * * '' that the
Administrator determines to be `` * * * unsatisfactory from the
standpoint of public health or welfare or environmental quality * *
*.''
The second role played by EPA is under a memorandum of
understanding with CEQ whereby EPA is responsible for accepting
environmental impact statements for filing from federal agencies and
publishing each week in the Federal Register a Notice of Availability
that starts the official comment period for the documents.
Question. What is the relationship between EPA and CEQ with regard
to NEPA oversight?
Answer. The Environmental Protection Agency (EPA) and the Council
on Environmental Quality (CEQ) have worked closely together through the
years in the overall administration of the National Environmental
Policy Act (NEPA). CEQ is responsible for NEPA oversight and for
issuing regulations and guidance to federal agencies to support their
compliance with the Act. EPA is responsible for reviewing individual
projects subject to the environmental impact statement requirements of
NEPA and, where necessary, referring environmentally unsatisfactory
projects to CEQ. The two agencies coordinate their activities to avoid
duplication of effort while working to protect the environment from
unanticipated adverse impacts from federal actions.
Question. Which agency is ultimately responsible for the
administration of NEPA?
Answer. The Council on Environmental Quality is ultimately
responsible for the administration of NEPA.
PRICE COALBED METHANE PROJECT EIS EPA COMMENTS
Question. Is it routine for EPA to comment on the substantive
aspects of Environmental Impact Statements prepared by other agencies?
Answer. It is routine for EPA to comment on the substantive aspects
of environmental impact statements (EIS's) prepared by other agencies.
Section 309 of the Clean Air Act directs the Agency to do so, to
comment in writing on the EIS's, and to make those comments public.
When we believe that a project is so environmentally unsatisfactory
that it is a candidate for referral to the Council on Environmental
Quality, we comment to that effect when we review the draft EIS to
ensure that the responsible federal agency understands our concerns
about the project.
PRICE COALBED METHANE PROJECT EIS UTAH WILDLIFE
Question. What sources of information did EPA rely on to base its
comments on the management of wildlife in Utah?
Answer. Sources of information used by EPA included the concerns
raised in the draft environmental impact statement (DEIS) prepared by
Bureau of Land Management, telephone conversations with the Utah
Division of Wildlife Resources (UDWR) staff, and the Utah Division of
Wildlife Resources' draft comments on the DEIS. The EPA lead reviewer
believed that the comments raised valid concerns, and EPA's comments
supported the UDWR's concerns.
PRICE COALBED METHANE PROJECT EIS WILDLIFE EXPERT
Question. Please identify the wildlife expert employed by EPA which
provided the information by which Ms. Campbell relied upon to make the
assertions in the December 30 letter.
Answer. The potential for significant impact to wildlife in the
project is discussed in the draft environmental impact statement
(DEIS). After reviewing the document, Mike Strieby, the EPA Review Team
Leader, contacted the Utah Division of Wildlife Resources (UDWR) to
discuss concerns raised by review of the document, since the Gordon
Creek Wildlife Management Area is managed under an existing Habitat
Management Plan approved by the UDWR Habitat Council. The management
goals under this plan, jointly administered by UDWR and the Bureau of
Land Management (BLM), are `` * * * to manage habitats for optimum
numbers and diversity of wildlife species with special emphasis on
deer, elk, and moose, and to allow regulated public access for
consumptive and nonconsumptive uses that do not unduly impact habitat
or wildlife during crucial periods'' (page 3-42, DEIS).
EPA requested a copy of UDWR's comments and, based on discussion
with UDWR, review of its draft comments, and EPA's own review of the
draft EIS, the Lead Reviewer for EPA concluded that the Price Coal Bed
Methane project goals conflicted with the Habitat Management Plan for
the same area. UDWR in its January 2, 1997, letter to BLM also made
this same point.
Question. Were comments or suggestions provided to EPA by other
agencies or commissions of the federal government regarding the impacts
of the Gordon Creek Wildlife Management Area prior to December 30,
1996?
Answer. Neither comments nor suggestions were provided to EPA by
other agencies or commissions of the federal government regarding the
impacts of the Gordon Creek Wildlife Management Area prior to December
30, 1996.
Question. Did EPA seek or receive information from any nonprofit or
private organization regarding the DEIS and the impacts on wildlife?
Answer. EPA did not seek information from any nonprofit or private
organization during its review of the draft EIS. Unsolicited comments
were received from the Moab Sportsman's Club concerning wildlife
impacts. These comments were consistent with the concerns expressed by
the Utah Department of Wildlife Resources; they were not specifically
used in EPA's review.
PRICE COALBED METHANE PROJECT EIS WILDLIFE MANAGEMENT
Question. How long has EPA been responsible for wildlife
management?
Answer. In the review of environmental impact statements, EPA
examines the analyses in the document and comments in its areas of
jurisdiction and expertise, as directed by the Council on Environmental
Quality's NEPA implementing regulations. More broadly, section 309 of
the Clean Air Act directs EPA to review the document to determine
whether it is unsatisfactory from the standpoint of public health or
welfare or environmental quality. EPA considers terrestrial and aquatic
habitat concerns to be important elements of environmental quality, and
consequently does include comments on habitat issues in its comments.
The comments, however, are advisory in nature and EPA cannot
unilaterally require another federal agency to follow its
recommendations concerning wildlife management. EPA does believe,
however, that its concerns should be addressed for the public record in
the final EIS.
Question. Does EPA have statutory authority to supersede wildlife
management practices and/or the recommendations of states?
Answer. EPA does not have direct statutory authority to impose
wildlife management practices on federal agencies or states.
PRICE COALBED METHANE PROJECT EIS CATEGORY RATING
Question. I understand that EPA has procedures to evaluate the
adequacy of information in EIS's and a category rating system. Where is
that system described?
Answer. The category rating system is described in EPA's ``Policies
and Procedures for the Review of Federal Actions Impacting the
Environment,'' which was published on October 3, 1984. This document
was a revision of the original ``Environmental Review Manual'' dated
March 1, 1975.
Question. What are the categories?
Answer. The rating system used in the review of draft environmental
impact statements (DEIS's) is an alpha-numeric system that rates both
the environmental impact of the action and the adequacy of the impact
statement. The categories for environmental impact are (1) LO (Lack of
Objections), (2) EC (Environmental Concerns), (3) EO (Environmental
Objections), and (4) EU (Environmentally Unsatisfactory). The
categories for document adequacy are ``1'' (Adequate), ``2''
(Insufficient Information), and ``3'' (Inadequate). Ratings that
include an ``EU'' on project impact or ``3'' on document adequacy are
candidates for referral to the Council on Environmental Quality if the
final EIS does not demonstrate that the project will not be
unsatisfactory from the standpoint of public health or welfare, or
environmental quality.
PRICE COALBED METHANE PROJECT EIS EPA AUTHORITY
Question. What is the basis of EPA authority to rate an EIS
prepared by another agency as adequate or inadequate?
Answer. Section 309 of the Clean Air Act directs EPA to review and
comment in writing on the environmental impact of projects subject to
the environmental impact statement (EIS) requirements of the National
Environmental Policy Act (NEPA), and to make those comments public at
the conclusion of the review. It further directs the Administrator to
refer to the Council on Environmental Quality any proposed projects
when the Administrator determines that the proposed project is
unsatisfactory from the standpoint of public health or welfare or
environmental quality.
EPA provides a rating to the lead federal agency which summarizes
EPA's level of concern. The EPA review is primarily concerned with
identifying and recommending corrective action for the significant
environmental impacts associated with the proposal. Review of the
adequacy of the information and analysis contained in the draft EIS's
is done to support this objective.
PRICE COALBED METHANE PROJECT EIS OEPR
Question. What is the Office of Ecosystem Protection and
Remediation? What is the mandate of this office? What is its annual
appropriation? How many FTE's are employed by this office?
Answer. The Office of Ecosystem Protection and Remediation was
formed as part of Region VIII EPA's reorganization in October of 1995.
Parts of the previous Hazardous Waste Management Division and the Water
Management Division were reorganized to form this new office. The new
organization moved away from a statutory/media organization to a
functional/strategic principle structure based upon EPA's July, 1994
Five Year Strategic Plan. The guiding principles behind the
reorganization included:
--Ecosystem Protection
--Pollution Prevention
--Partnerships with State, Tribal, Federal and Small/Regulated
Communities
--Improved Science
--Multi-Media/Sector Strategies and Results
--Enhanced Communication and Public Involvement
--Enhanced Regional Strategic Planning and Implementation
--Reinventing Management.
The Office of Ecosystems Protection and Remediation is responsible
for the identification, characterization, and remediation of
contaminated areas and sites under CERCLA authorities. This
organization is also the focal point for ecosystems protection
coordination and priority setting in the Region. Included in the
ecosystems protection activities, are mine waste, NEPA, community based
environmental protection, wetlands, water quality standards, non-point
source, total maximum daily loads, stormwater permitting, watersheds,
Clean Lakes, salinity, water quality monitoring, groundwater
activities, source water protection for drinking water, and whole
effluent toxicity.
Of the funds that Region VIII received in the fiscal year 1997
enacted operating plan, $32,978.2 thousand was provided to the Office
of Ecosystem Protection and Remediation to manage on behalf of the
Regions. These ``extramural'' funds are for the following purposes:
Dollars in
thousands
Superfund Site Response & Technical Enforcement Budgets....... $11,011.4
Superfund Site Specific Response Funds........................ 10,034.2
Oil Spill Funds............................................... 205.5
Regional Geographic Ecosystem Protection Initiatives.......... 870.3
Regional Wetlands Program Funds............................... 34.4
Non-point Source/319 State Grants............................. 8,564.6
Water Quality Management Cooperative Agreements............... 729.6
Wetlands State/Tribal Grants.................................. 1,528.2
Of the above amount, $11,727.1 thousand has been provided
to the Ecosystem Protection Program to manage on behalf of the
Region. These funds are:
Dollars in
thousands
Regional Geographic Ecosystem Protection Initiatives.......... $870.3
Regional Wetlands Program Funds............................... 34.4
Non-point Source/319 State Grants............................. 8,564.6
Water Quality Management Cooperative Agreements............... 729.6
Wetlands State/Tribal Grants.................................. 1,528.2
Region VIII is allocated 616 FTE in fiscal year 1997, of which
155.7 are allocated to the Office of Ecosystem Protection and
Remediation. The Ecosystem Protection Program received 49.2 of the
155.7 FTE.
PRICE COALBED METHANE PROJECT EIS OEPR MANDATE
Question. Does EPA's Office of Ecosystem Protection and Remediation
share a similar mandate within other federal agencies?
Answer. The Region is not aware of another federal agency organized
similarly, although our Regional structure is similar to a number of
other EPA Regions. The United States Forest Service, and the Bureau of
Land Management, however, do look at problems with managing their lands
in a holistic fashion and thus use an ecosystem scale to frame their
decisions. EPA Region VIII in organizing the Ecosystem Protection
Program recognized that environmental problems are often multi-media in
nature, and set up a structure with staff trained in many different
media programs that could respond to the complex environmental problems
that exist in communities today.
PRICE COALBED METHANE PROJECT EIS ECOSYSTEM PROTECTION
Question. Please define ecosystem protection.
Answer. EPA encourages ecosystem management and economic
development that promotes the health and productivity of natural
systems. Ecosystem protection is the use of our statutory mandates to
maintain those ecological functions and processes that are vital for
ecosystems and the services that they provide to humans. This
protection is focused on specific geographic areas with an emphasis on
coordination among federal, state, tribal and local agencies.
Question. Describe the role of the states in providing protection
to ecosystems.
Answer. States have an important role in ecosystem protection
through management of the lands and programs under their control and
implementation of their statutory authorities.
Question. Does EPA ecosystem protection supersede the role of the
states or other federal agencies such as the National Park System, the
U.S. Fish and Wildlife Service or the Bureau of Land Management?
Answer. The success of ecosystem protection ultimately depends on
the cooperation among all the stake-holders. Consequently, EPA's
efforts do not supersede the role of other state or federal programs
and, in fact, complement those protective actions.
______
Questions Submitted by Senator Leahy
SAB MERCURY REPORT
Question. If the Science Advisory Board recommends that the mercury
report be released, will the EPA release it?
Answer. The EPA is committed to fulfilling the requirements of the
Clean Air Act and to providing Congress with the information it has
requested by submitting the Report to Congress on Mercury. If the
Science Advisory Board (SAB) is in agreement with the science of the
Mercury Study, then the EPA is prepared to make the necessary
revisions, obtain the required Administration clearance and release the
report.
Question. After that recommendation, what steps need to be taken
before the report is made final?
Answer. First, the comments and suggestions made by the SAB will be
reviewed by EPA staff scientists responsible for the study. They will
assess the effort needed to respond to the comments and provide EPA
management with a summary of the required analyses, a technical plan to
complete such analyses, an estimate of resources and a schedule.
Depending on the extent of the SAB comments, the revisions may need to
be reviewed by a sub-group of SAB committee members if the committee
members request such a review. After final revisions and internal EPA
clearance, the report will be submitted to the Office of Management and
Budget (OMB). The OMB will then coordinate a Federal interagency
review, which for this report has typically involved about twelve
Departments or agencies. The report will likely be revised a final time
in response to the interagency review, cleared by OMB and then
submitted to Congress.
Question. During the February meeting of the SAB mercury review
panel, several of the questions that EPA initially raised in referring
the study to the SAB were addressed, what remaining questions remain
for the SAB to reach conclusion on?
Answer. The EPA posed about 40 detailed questions, which covered a
wide variety of scientific issues, to the SAB review committee. The SAB
panel was very diligent in its review and discussed all of these
questions during the 2-day February 1997 meeting. Thus, EPA believes
that of the initial charge, there are no remaining questions for the
SAB to reach conclusion on. However, EPA is still waiting for the
written SAB response presenting their assessment.
In addition, there was a second charge also posed to the SAB which
asked for their help in convening an independent review panel to assess
data which will be forthcoming from two ongoing studies of human
exposure to mercury through fish consumption. However, this effort will
not take place until sometime in the future, at which point EPA will
again seek the advice of the SAB.
AIR QUALITY REGULATION OF UTILITIES
Question. In Assistant Administrator Mary Nichols's March 28, 1997
letter to Representative Markey, EPA stated that ``if environmental
control costs are not appropriately internalized in the cost of
electricity generation, retail competition could result * * * in
increases in overall emissions.'' The letter goes on to recommend a cap
and trade system where it is necessary and appropriate to protect
public health and welfare. What steps has EPA taken to implement such a
system?
Answer. EPA is working with regional bodies such as the Ozone
Transport Commission (OTC) and the Ozone Transport Assessment Group
(OTAG) to facilitate cap and trade approaches which offer flexible,
low-cost approaches to emissions reduction. EPA assisted the OTC in the
development of a model NOX cap and trade rule for that 13-
state region. Moreover, at the request of the OTC, EPA is modifying its
Emissions Tracking System (ETS) and Allowance Tracking System (ATS)
software to accommodate the OTC's need for seasonal data on
NOX emissions from electric power plants and other large
industrial combustion sources to record NOX allowance
trades. EPA has also encouraged states to adopt a cap and trade
approach for NOX emission reductions in the 37-state OTAG
region.
EPA is committed to reducing long-distance transport of
NOX, which contributes to exceedences of the public health
standard for ozone in downwind areas. On April 16, 1997, EPA Assistant
Administrator Mary D. Nichols wrote to OTAG Chair Mary Gade stating the
Agency's preliminary conclusion that at least 26 states will be
required to make NOX reductions because of their
contributions to pollution transport. EPA intends to address this
matter in a formal rulemaking after we receive OTAG's technical
analyses and final recommendations, which are scheduled to be completed
in June of this year. Through SIP calls, EPA can establish a maximum
amount of NOX emissions for each of the states that
contribute to pollution transport. We can, and will, strongly recommend
to those states that they meet their statewide limits through a
coordinated, regional cap and trade mechanism. We believe states will
find such a mechanism attractive because of its flexibility and cost-
effectiveness. While we can recommend a particular implementation
approach, EPA cannot require states to employ it. As long as states
achieve the necessary emission limits, states have the discretion to
choose the specific means of implementation.
Question. What areas of the country do you foresee as being
impacted to the extent necessary to implement a cap and trade system to
protect public health?
Answer. EPA notes that the 48 contiguous states are already subject
to a market-based cap and trade system for sulfur dioxide under Title
IV of the Clean Air Act Amendments of 1990. EPA believes that this same
area could be affected by a cap and trade system for pollutants such as
NOX. A nationwide cap and trade system for NOX
emissions would reduce background levels of NOX
(facilitating attainment and maintenance of the ozone standard) and
would provide a level playing field for all power plants.
Question. What other market-based alternatives are there to address
the competitive advantage of older, higher emitting power plants?
Answer. The problem of older, higher emitting power plants could be
addressed through a uniform emission limit that is fuel-neutral and
output-based. Market forces would help to determine the mix of
compliance strategies chosen. However, because such an approach would
apply uniformly to all power plants without regard to differential cost
effectiveness, EPA believes that such an approach would be less cost-
effective than a cap and trade approach for the same degree of emission
reductions. With regard to cap and trade, there are a number of
possible variations in approach. Allowances could be distributed either
through an allocation process or through an auction. If allowances are
allocated, the allocation could be made in a variety of ways. For
example, allocations could be made according to historic emissions or
according to a performance standard that applies equally to all
sources.
Question. Are there current estimates of how much ozone, fine
particulate, mercury, and other pollution would be reduced if these
power plants were required to comply with new source performance
standards upon reaching a certain age, say 30 or 35 years?
Answer. The Agency has not conducted an analysis of reductions in
ozone, fine particles, and mercury if power plants were required to
comply with new source performance standards upon reaching a certain
age. However, under EPA's Clean Air Power Initiative (CAPI), the Agency
projected large reductions of ozone, fine particles, and mercury from
electric power plants using a cap and trade approach.
Question. Finally, what recommendations did the EPA make to the
Department of Energy in crafting the Administration's utility
restructuring legislation?
Answer. In response to a congressional request, EPA recently
indicated that the Clean Air Act and other statutes provide Federal and
State regulators with considerable authorities designed to address the
environmental problems contributed to, or caused by, electric
generating plants, but that because these authorities are not
integrated to address the many environmental problems related to the
electric power generation industry, they are not as economically
efficient as they could be, and they create unnecessary levels of
uncertainty which are bad for industry and government alike. EPA has
indicated to DOE that it strongly supports increased competition in the
electric generation sector. We believe that the economic benefits of
competition can be achieved along with protection of public health and
the environment and that in the long run competition will be good for
both the environment and the consumer. EPA recommended the following
legislative principles to ensure that the transition period will not
result in unacceptable environmental degradation:
Emission Caps.--For a competitive electric market to work
efficiently, we need to internalize the cost of pollution from this
sector. We believe that this can best be accomplished with legislative
language that gives us the specific authority to cap utility emissions
at levels that will adequately protect public health and welfare. This
provision is important to our current efforts to meet ambient air
quality standards and toxics loadings, but will be equally important to
any future requirement to limit carbon dioxide emissions under a global
climate change agreement.
Consumer Information.--In a competitive market, consumer
information is essential to informed choice and an efficient
marketplace. EPA believes that the environmental characteristics of
electricity generation should be clear and publicly available.
Energy Efficiency.--The new market must support and recognize the
economic and environmental benefits of energy efficiency and demand
side management. EPA favors a mechanism which ensures the viability of
this important resource.
Renewable Energy.--A healthy renewable energy sector must be
maintained in the United States to meet both our environmental and
energy security needs. A market for clean power is essential for the
future.
Federal Power Act.--EPA believes that the FERC, in regulating
interstate power markets, should include environmental impacts along
with other economic considerations.
Stranded Cost Recovery.--With respect to stranded cost recovery, we
believe that States should be discouraged from allowing ratepayer
subsidies that would prolong the lives of inefficient, dirty generating
plants that could not survive without those subsidies in a competitive
marketplace.
AIR QUALITY FERC OPEN ACCESS RULE
Question. When the Administration concluded last year that utility
restructuring would not result in an increase in air pollution, it
assumed that new regulations for ozone and particulates would be in
place. If opponents of the proposed regulations succeed in derailing
these standards, will the environmental impact of competition in the
utility industry conducted for the FERC ``open access'' rule be
reviewed?
Answer. While the OTAG process is taking longer than expected,
OTAG's final analysis and recommendations are expected in June 1997.
EPA is committed to moving forward with a rulemaking to address
pollution transport related to ozone after we receive OTAG's analysis
and recommendations. Reduction of precursor transport is likely to be a
major strategy for implementation of a fine particulate standard, if
promulgated. EPA believes that the potential exists for emissions to
increase as a result of industry restructuring if actions are not taken
to reduce emissions of NOX and fine particulate precursors.
AIR QUALITY CEQ COMMITMENTS
Question. When the ``open access'' rule was made last year, the
Administration delayed actions to mitigate potential air pollution
increases from utility restructuring by deferring to the Ozone
Transport Assessment Group (OTAG). The Council on Environmental Quality
committed EPA to a series of actions if the OTAG process fails.
Although OTAG has produced valuable analytical work on ozone transport,
it does not appear to be approaching consensus on mitigation actions.
What specific plans, separate from the OTAG process, do you have to
meet the commitments made last June by CEQ to protect against these
increases?
Answer. At this time EPA remains hopeful that the OTAG process will
reach a consensus on a solution to the NOX transport
problem. In the meantime, as indicated in answers to earlier questions,
EPA has assured the OTAG states that the agency will issue a rulemaking
on ozone transport this summer after receiving OTAG's final
recommendations. In the event that the OTAG process does not achieve a
consensus solution, FERC has committed to initiate a notice of inquiry
into potential mitigation measures related to its open access rule.
Moreover, should EPA find it necessary to impose federal implementation
plans (FIP's) to address the NOX transport problem, FERC has
agreed to undertake a rulemaking on mitigation strategies.
AIR QUALITY ACID RAIN REDUCTIONS
Question. Under the clean air sub-goal of controlling acid rain, a
25-40 percent reduction is sought in the eastern U.S. by 2005. What is
the current level of reduction since 1980?
Answer. A recent wet deposition trend analysis indicated that wet
sulfur deposition (``acid rain'') decreased 10 to 25 percent in 1995
over large areas of the eastern U.S. as compared to the 1983 to 1994
trend line. These decreases are considered substantial in magnitude and
spatial extent. Another analysis which examined dry deposition data
indicated that dry sulfur deposition decreased by 30 percent in the
eastern U.S. between 1989 and 1995.
Question. What areas of the eastern U.S. have seen the greatest and
least reductions?
Answer. With implementation of Phase I of the Acid Rain Program,
Northern New England and the Mid-Atlantic region saw the largest wet
sulfur deposition reductions in 1995, between 20 and 25 percent from
the 1983 to 1994 trend line. 1995 data showed the largest decreases in
and downwind of the Ohio River Valley. Wet sulfur deposition increased
by 7.5 percent in the western U.S. Wet nitrogen deposition increased
slightly by almost 5 percent in the eastern U.S. and increased by
almost 4 percent in the western U.S. Another analysis indicated that
dry sulfur deposition was reduced by 30 percent in 1995, relative to
1989 levels; results were similar across the eastern U.S.
Question. How do the EPA activities to reach the 2005 goal account
for potential increased demand for electricity under utility
restructuring?
Answer. Because sulfur dioxide emissions are capped by Title IV of
the Clean Air Act Amendments of 1990, any increase in electricity
demand would not affect total SO emissions in the long term.
Any increase in electricity generation would need to be offset by
sources reducing their in emission rates to meet the Title IV
SO cap.
noX fiscal year 1998 funding
Question. In the fiscal year 1998 request, an additional $681,000
is requested to address NOX issues in the Northeast. Where
will these funds be allocated?
Answer. The Agency has requested an increase of $414,620 to address
NOX issues in Northeast. This money will support salaries
for 2 EPA employees in Headquarters and 3 employees in the Regions. The
remaining of $181,780 covers increased workforce costs in the base.
Question. What activities will be undertaken with these additional
funds?
Answer. These funds will be used to continue development and
implementation of an emissions tracking system and an allowance
tracking system for the Ozone Transport Commission's (OTC)
NOX budget program. The NOX budget program is the
result of a collaboration between interested states in the Northeast to
reduce NOX from stationary sources using a cap and trade
approach. EPA has offered to track NOX emissions and
allowances for the OTC by modifying and expanding the existing Acid
Rain data system used to track sulfur dioxide allowances and nitrogen
oxide emissions.
SAFE DRINKING WATER ACT NATIONAL MEETINGS
Question. In the fiscal year 1998 request under the Safe Drinking
Water Act amendments of 1996, new prevention approaches, EPA states
that the Agency plans to hold national meetings in 1997 to scope out
partnership duties and to identify current and new operator training
and certification programs. How many of these meetings will be in the
Northeast and what locations and dates is EPA considering?
Answer. The Agency has already formed its operator certification
partnership and has held one meeting in Washington, D.C. on March 25
and 26, 1997. Another meeting has been scheduled in Washington, D.C. on
June 5 and 6, 1997. The partnership will decide at the end of this
meeting when and where the next meeting should be held. In establishing
the partnership, the Agency has tried to obtain representatives from
various interests and from different geographic locations, including
one member from the Northeast.
The partnership will provide advice to the Agency, through the
Drinking Water Advisory Council, as it develops information and
guidelines to meet new Safe Drinking Water Act requirements. A draft of
the guidelines will be circulated widely for comment before it is
finalized. We have not made any definite plans to hold stakeholder
meetings to review the guidelines as yet, however, if we do so, we will
consider holding a meeting in the Northeast.
SAFE DRINKING WATER ACT STATE SOURCE WATER
Question. The 1996 SDWA amendments also expanded authorization for
source water protection. When will EPA guidance for this program be
made available? Which states have used 1997 state revolving funds for
state source water assessments? Under the current program or under the
1996 amendments will states be able to use SDWA funds to purchase land
or easements for source water areas? Are there areas where this has
already been done? What is the process for using SDWA funds for this
type of activity?
Answer. The draft guidance for State source water assessment and
protection programs, which was developed in consultation with many
stakeholders, was released by EPA on April 4, 1997 to the public. As
part of its ongoing discussions, EPA will convene a meeting of New
England States on May 28th in Worcester, Massachusetts and May 29th in
Concord, New Hampshire. We plan to publish the final guidance on or
before the statutory deadline of August 6, 1997.
In the final Drinking Water State Revolving Fund (DWSRF)
Guidelines, EPA strongly encouraged States to determine the level of
activities that needed to be undertaken in order to complete source
water assessments in the State, and then utilize necessary funds, up to
10 percent from the 1997 DWSRF capitalization grant. The most recent
survey of States in April 1997 showed that approximately three-quarters
of the States plan to use funds for source water assessments. As EPA
reviews the State capitalization grant applications, States' actual use
of the assessment set aside will be tracked and EPA will ask States
that do not intend to use the set-aside to demonstrate how they intend
to meet the requirement to complete their source water assessment
programs.
Under Section 1452(k)(1)(A)(I), States may make loans to public
water systems to ``acquire land or a conservation easement from a
willing seller or grantor, if the purpose of the acquisition is to
protect the source water of the system from contamination and to ensure
compliance with national primary drinking water regulations.'' The
final DWSRF Guidelines provides the States with the flexibility to use
loan repayments from land acquisition and source water projects for
future projects of a similar nature if the State so chooses, or the
State may direct these repayments into the DWSRF project fund. This
flexibility would allow States the option to develop a long-term
program to fund land acquisition and source water projects.
To date, no DWSRF funds have been used for land acquisition or
conservation easements, or source water projects. Only one State,
Georgia, has received its capitalization grant. Georgia's intended use
plan (IUP) indicated that it will use 6 percent of its capitalization
grant for source water assessments, but no fiscal year 1997 funds are
planned for source water protection loan activities. Prior to the SDWA
Amendments of 1996, public water systems purchased land and easements
in order to protect source waters. For example, Seattle, Washington,
and Portland, Oregon purchased the entire watershed that supplies water
to their public water system.
Prior to awarding DWSRF funds under Section 1452(k)(1)(A)(I), EPA
must approve a State's capitalization grant, which includes the
Intended Use Plan (IUP), and the State must develop a workplan which
provides specific details on how the State will use these (k)(1)(A)(I)
loans. Once a State has an approved workplan, it may make the loans to
public water systems consistent with the IUP and work plan, and as
permitted by State law, regulations and procedures.
BROWNFIELDS INITIATIVE IN RURAL AREAS
Question. The Administration requests a significant funding
increase for the Brownfields initiative in fiscal year 1998. How much
of this funding increase is targeted towards rural Brownfields sites?
Where are these located and what type of industry is involved? Has the
EPA worked with the U.S. Forest Service to identify potential
Brownfield pilot sites in the Northeast?
Answer. The selection process for the Brownfield assessment pilots
is competitive, based on an objective set of criteria. The funding
increase for the Brownfield initiative in fiscal year 1998 does not
have a targeted amount that will go toward rural Brownfield sites.
There are currently 14 rural and small town pilots, which have
populations of less than 50,000, of the existing 78 pilots. They are
located and have the following types of industry involved:
--Burlington, VT (Commercial and Industrial)
--Bonne Terre, MO (Mining)
--Cape Charles, VA (Eco-Industrial Park)
--Concord, NH (Railyard, Maintenance Sheds, Gas and Steam Plants, and
Factories)
--Chippewa County, MI (Former DOD Base)
--Emeryville, CA (Widespread Groundwater Contamination, source
unknown)
--Murray City, UT (Smelter)
--Panhandle Health District, ID (Smelter)
--Lima, OH (Industrial Park)
--Prichard, AL (Volatile Organic Carbon in Drinking Water and
Semivolatile Organic Carbon in Soil)
--Navajo Nation, AZ (Wood Processing)
--Phoenixville, PA (Iron and Steel)
--West Jordan, UT (Mining, Smelting, Sugar, Copper, Lead, Zinc, and
Silver Industries)
--Rome, NY (Lead in Soil and Chlorinated Solvent in Groundwater).
EPA is in the process of forming a Partnership Agenda with other
Federal Agencies. The U.S.D.A. and Forest Service have participated in
our meetings and contributed to the Agenda. The Forest Service is
currently working with the Cape Charles, VA Brownfield pilot. The
National Park Service's Urban Resources Program is meeting with EPA
Region 9 to identify potential links with Brownfield pilots.
LAKE CHAMPLAIN ACTION PLAN
Question. In two recent letters on implementation of the Lake
Champlain Action Plan, EPA has committed itself to implement the
pollution prevention and restoration plans. The July 22, 1996 letter
from Assistant Administrator Perciasepe mentioned ``significant
resources that can be devoted to the special problems faced by Lake
Champlain.'' What programs has EPA used to target problems in Lake
Champlain?
Answer. The Agency continues to be a partner in the Lake Champlain
Basin Program, and, in cooperation with the States, has used a variety
of programs to support activities in the Basin through technical
assistance, grants for base State programs, and targeted project
grants. The programs that have supported activities are: the Clean
Water Act (CWA) including State Revolving Fund (Title VI), Construction
Grants (Title II), Nonpoint Source Grants (Section 319), Wetland
Program Grants, Pollution Control Grants (Section 106), Water Quality
Cooperative Agreements and Appropriation earmarks.
Question. Over the past five years, how much funding has gone to
Lake Champlain though these programs?
Answer. Since fiscal year 1993, over 60 million dollars has been
provided through these programs to support work in the Lake Champlain
Basin.
Question. Of that funding, which funds were through state revolving
funds or state delegated programs?
Answer. Over the past five years, $41 million has been provided
through the Clean Water State Revolving Fund to support programs in the
Lake Champlain area. While not included in the figure above,
substantial resources from the Clean Water Act, Section 106 Pollution
Control grants have benefitted the Lake through base program permitting
and enforcement.
LAKE CHAMPLAIN MANAGEMENT PLAN ANNUAL FUNDING
Question. If EPA were to create a dedicated Lake Champlain
initiative to address the actions identified for EPA participation in
the Lake Champlain Management Plan, what level of annual funding would
be required and which EPA programs would be drawn upon?
Answer. EPA will continue to support water quality protection
efforts in the Lake Champlain Basin, including providing active
participation on the management conference and working with the States
to direct available grant funds to activities in the Basin as
determined by State priorities. EPA participation in the Plan will
continue to involve technical staff support and support to State
agencies through available water quality grant programs such as the
Nonpoint Source Grant program, the Clean Water State Revolving Fund,
Wetlands Program grants, and Water Quality Cooperative Agreements.
NATIONAL INVASIVE SPECIES ACT OF 1996
Question. In his July 22, 1996 letter, Mr. Perciasepe also
mentioned EPA's support of the National Invasive Species Act of 1996.
With the passage of NISA, what activities is EPA undertaking to address
invasive species?
Answer. EPA is one of the participating agencies serving on the
Aquatic Nuisance Species Task Force. The Task Force is responsible for
coordinating inter-governmental actions to reduce the risks from
nuisance species. Much of the task force work has focused on control of
ballast water and review of control programs for nuisance species
(e.g., round goby, ruffe).
Various EPA programs are addressing invasive species. A number of
EPA's Regions are involved in inter-agency working groups within their
regions to address nuisance species in the context of NISA. EPA's
Office of Research and Development has developed risk assessments for
nuisance species as part of their effort to develop ecological risk
assessment guidelines for biological agents. NISA Sec 1202(I)(2) calls
for EPA, in conjunction with NSF and the Task Force, to develop an
annual call for research proposals to study dispersal containments for
nuisance species.
The Chesapeake Bay Program has completed an Implementation Plan for
managing the introduction of non-indigenous aquatic species. The plan
is intended to minimize the economic and/or ecological risks associated
with first time introduction of non-indigenous aquatic species. In the
Great Lakes, EPA has begun a project that will focus on prevention and
control, ecological impacts, geographic extent, and information/
outreach. The Gulf of Mexico Program will be initiating a strategic
assessment process to evaluate the effectiveness of current programs
and the needs of program shareholders to reduce and prevent the
introduction of undesirable, non-indigenous species (including ballast
water). The Gulf Program will support through financial and technical
assistance Gulf state and local efforts to reduce and prevent the
introduction of undesirable, non-indigenous species (including ballast
water). EPA chairs the Washington State Exotic Species Work Group which
has developed an Implementation Plan for addressing marine exotic
species in Puget Sound. The Agency is also working closely with the
British Columbia Exotic Species Work Group in developing a similar
implementation plan.
Question. Has EPA identified funds within the Clean Lakes program
to address this issue?
Answer. The Clean Water Act (CWA) Section 314 Clean Lakes program
has not been funded for several years. EPA has encouraged States in its
Nonpoint Source Program guidance to use Section 319 Nonpoint Source
grants to fund eligible watershed management activities that might have
been funded in previous years under Section 314.
LAKE CHAMPLAIN PROJECTS FUNDING
Question. What other lakewide projects were funded in the fiscal
year 1997 budget or the fiscal year 1998 request?
Answer. Our 1998 request does not include targeted funding for
lakewide projects, though our request includes a number of State grant
programs (such as Nonpoint Source, Wetlands Program, and Water Quality
Cooperative Agreements) under which such projects can be funded at the
State's discretion. In addition, activities included in a state's
Nonpoint Source Plan are eligible for funding under the Clean Water
State Revolving Fund. Our 1997 request, likewise, did not include
targeted lake projects, though the appropriation included earmarks
(along with the earmark for Lake Champlain) for Five Island Lake, Lake
Hollingsworth, and for Skaneatles, Owasco and Otisco Lakes.
Question. What EPA programs were they funded under?
Answer. These projects were not funded under existing EPA grant
programs, but rather were explicitly directed in the 1997 Appropriation
conference report.
GREAT WATER BODIES
Question. In the fiscal year 1998 request, $37 million is requested
for the Great Water Bodies program component. What activities are
conducted under this program and where are funds allocated?
Answer. The Great Water Bodies program component, within the Office
of Water, is comprised of the Chesapeake Bay Program Office, the Great
Lakes National Program Office and the Gulf of Mexico Program Office.
The Chesapeake Bay Program Office (CBPO): The Agency requests a
total of $19,683,000 and 16.8 total workyears in 1998 for the
Chesapeake Bay Program. The Chesapeake Bay Program (CBP) will develop,
implement and monitor interstate management plans for pollution
prevention and control activities to improve the water quality habitat
in the Bay Region. This will be accomplished by integrating efforts for
addressing point and nonpoint sources of pollution from air, water and
land-based sources through the watershed and airshed approach and by
coordinating with both state and Federal natural resources agencies,
local governments, land managers and various stakeholders.
The CBP will evaluate, and communicate the progress of these
interstate plans by using quantifiable environmental goals and
indicators for the nutrient, toxics, habitat, living resources and land
stewardship aspects of the program. New efforts, and possibly
corrective measures, will likely be implemented based on the results of
the 1997 Nutrient Reduction Strategy Reevaluation, and its
recommendations for achieving the year 2000 nutrient reduction goal.
Recommendations will be made to the Chesapeake Executive Council for
new or refined goals and strategies to improve water quality and living
resources conditions of the Bay. Expanded public awareness programs and
public access to Bay restoration information will be a major focus.
This will be accomplished through regular public reports, continued
maintenance of Internet information resources, and the maintenance of
the Chesapeake Information Management System in accordance with a
directive of the Chesapeake Executive Council. These communications
will be aimed at providing information on the State of the Bay and what
citizens can do to reduce pollution at the source.
The CBP will work directly with state and local governments to meet
the commitments of the ten tributary strategies for nutrient reduction
adopted from 1994-1996. Increased efforts will be made to further
involve and expand the role of local governments in the CBP. Some of
these efforts will be aimed at improving nutrient reductions at
Publicly Owned Treatment Works (POTW's). Implementation of nonpoint
source projects on farmlands and urban areas will continue to yield
nutrient reductions meant to meet tributary specific and Bay-wide
environmental goals. New technologies and approaches will be supported
for point and nonpoint source controls to close the gap between goals
and current progress. In addition, efforts will focus on linking air
deposition sources of nitrogen and toxics pollution to the health of
the Bay and developing cost effective control strategies.
EPA will continue to address the commitments of the Chesapeake Bay
Basinwide Toxics Reduction and Prevention Strategy of 1994. The 1998
obligations include: implementation of management actions (reduction,
prevention, protection, assessment) for designated geographical areas;
revision of the basinwide toxics loading and release inventory;
establishment of reductions goals for atmospheric deposition, urban
stormwater, and acid mine drainage loadings to the Bay; establishment
of water quality and/or sediment quality criteria for the designated
Bay Toxics of Concern; implementing Business for the Bay, a pollution
prevention program; and reporting progress on implementing the
Strategy.
By funding identified fish passage projects, CBP will work to
achieve the five and ten-year goals for stream miles opened to
migratory fish. Efforts will be increased to ensure that the 1998 goal
of the reopening of 582 miles of migratory fish spawning habitat will
be met. Most of these projects will include funding from both private
and public sources. In addition, wetlands, stream and forest
restoration, oyster reef habitat restoration and the implementation of
a riparian forest buffer policy will yield progress toward restoring
critical habitat in the basin.
The Great Lakes National Program Office (GLNPO): The Agency's Great
Lakes program includes $13,326,400 and 46.2 workyears in the Great
Lakes National Program Office. EPA's Great Lakes Program utilizes a
multimedia approach to Great Lakes ecosystem management, emphasizing
geographic targeting, risk-based prioritization and coordinated
cooperative efforts on the parts of states, tribes, other Federal
agencies, industry, non-governmental organizations, and Canada. The
Program monitors Lake ecosystem indicators; manages and provides public
access to Great Lakes data; helps communities address contaminated
sediments in their harbors; supports local protection and restoration
of important habitats; promotes pollution prevention through activities
and projects such as the 1997 Canada-U.S. Binational Toxics Strategy;
and provides assistance to implement community-based Remedial Action
Plans (RAP's) for Areas of Concern and for development and
implementation of Lakewide Management Plans. Fiscal year 1998 Lake
indicator activities will include reporting results of modeling
scenarios from the monitoring of Lake Michigan air, water, sediments,
and biota (the Lake Michigan Mass Balance Study), supporting the Great
Waters provision of the Clean Air Act and Sec. 118 of the Clean Water
Act. This will enable the Agency and its partners to determine how to
further reduce Great Lakes pollutants. Principal LaMP and RAP
activities will include implementation of remedial actions to address
toxics in targeted Areas of Concern and other priorities under the
LaMP's for Lakes Ontario, Michigan, Erie, and Superior.
The Gulf of Mexico Program Office (GMPO): The fiscal year 1998
allocation for the Gulf of Mexico Program within the Coastal
Environmental Management (CEM) program element is $4,292,300 and 13.8
workyears. The Gulf of Mexico Program priorities are to protect the
Gulf of Mexico from the deleterious effects of nutrient enrichment;
reduce adverse health effects resulting from the consumption of raw
shellfish harvested from the Gulf of Mexico; protect and restore
essential Gulf of Mexico habitats; reduce the ecological and economic
impact on living resources in the Gulf of Mexico by reducing/preventing
the introduction of undesirable, nonindigenous species; improve the
ability of the American public to participate in the protection of
public health and the environment by increasing the quality and
quantity of general environmental education, outreach, and data
availability programs.
In fiscal year 1998 the Gulf of Mexico Program will establish a
quantitative goal for nutrient loadings from the Mississippi River
Basin into the Gulf of Mexico through a broad-based, shareholder
process. Activities to support this objective are to provide support to
the states of Louisiana and Mississippi in monitoring nutrient loads
from major tributaries and sources and in implementing innovative,
prevention approaches to reduce nutrient loading to surface waters; to
coordinate nutrient modeling efforts among state and federal agencies
and develop the modeling/decision support capacity to target future
actions and report environmental progress; and to support targeted
state and federal education and communication efforts to foster
voluntary actions by industries and landowners to reduce nutrient
pollution.
By fiscal year 2005, the Gulf of Mexico Program will reduce adverse
health effects resulting from the consumption of raw shellfish
harvested from the Gulf by increasing the number of shellfish beds
available for safe harvesting by 10 percent in five coastal estuaries.
Activities in fiscal year 1998 will include: Barataria-Terrebonne,
Louisiana and Mobile Bay, Alabama shellfish growing water restoration
implementation plan completion and project implementation started;
shellfish assessment planning and implementation for three additional
Gulf estuaries will be initiated, one for each year fiscal year 1999,
fiscal year 2000, and fiscal year 2001.
By 1999, the Gulf of Mexico Program will establish the scope of
efforts and quantitative goals for the protection and restoration of
essential habitat. Activities in fiscal year 1998 will include to
initiate a strategic assessment process to evaluate the effectiveness
of current programs and the needs of Program shareholders to protect
and restore essential habitat; to support through financial and
technical assistance Gulf state and local efforts to target specific
habitat areas for protection and restoration.
By 1999, the Gulf of Mexico Program will establish the scope of
efforts and quantitative objectives for the reduction and prevention of
impacts resulting from the introduction of undesirable, nonindigenous
species. Activities in fiscal year 1998 are to initiate a strategic
assessment process to evaluate the effectiveness of current programs
and the needs of Program shareholders to reduce and prevent the
introduction of undesirable, nonindigenous species (including ballast
water); to support through financial and technical assistance Gulf
state and local efforts to reduce and prevent the introduction of
undesirable, nonindigenous species.
By 2005, the Gulf of Mexico Program will provide effective
communications of Gulf-related environmental issues and activities to
every Gulf coastal county and parish. Activities in fiscal year 1998
are to develop and distribute environmental curricula support programs
for primary and secondary school systems; to support state and
community-led environmental information centers in each of the five
Gulf states; to develop more effective community access to Gulf marine
research and science through the Gulf Information Network.
LIVING MACHINE: WASTEWATER TREATMENT
Question. Last month EPA released a report to Congress on the
``Living Machine'' Wastewater Treatment Technology. Do you believe that
the 11-week period of observation at the Maryland facility which was
used as the basis for this report, is representative or typical of the
long-term performance of the facility? Might an analysis during a more
stable period of the plant's operation have yielded different results?
Answer. The 11-week independent testing period at the Frederick,
MD, facility was scheduled to be run during a period of steady-state
operating conditions while the facility ran at design capacity flow
rates. The disruption in performance that resulted from the switch in
chemical usage was discussed in detail in the Interim Report issued on
the Frederick, MD, project in September 1995 (EPA 832-B-96-002) and was
also summarized in our recent Response to the Appropriations
Subcommittee.
While the project steady-state operations and performance during
the 11-week test period were disrupted somewhat by a switch from
acetate to methanol as a carbon source for denitrification, this impact
was not significant. It had no apparent effect on the follow-on 3-week
evaluation of the treatment performance of treatment trains with vs
without the floating vegetation cover on the open tanks. When the data
generated during the test period were plotted in our Response, along
with the data generated by the grantee, the performance levels were
very close prior to and after the period of disruption.
The cause of the disruption in performance was taken into account
when EPA developed our findings--that the AEES ``Living Machine'' has
the potential to produce an effluent with: 5-day biological oxygen
demand (BOD5) <10mg/1, Total Suspended Solids (TSS) <10mg/1,
Ammonia >1mg/1, Nitrate-Nitrogen (NO3) >5mg/1, Total
Nitrogen (TN) <10mg/1, and fecal coliforms <200 cfu/100ml--which would
satisfy all of the specified treatment goals for the Frederick, MD,
project, except Total Phosphorus (TP). As a result, if the testing had
occurred during a more stable period of plant operations, the Agency
doubts that the final conclusions drawn from the results of the testing
would have been any different.
LIVING MACHINE: ACCURATE REPORTING
Question. The report states that the Maryland Living Machine ``did
not meet any of its treatment goals during the study period, with the
exception of TSS.'' Wouldn't a more accurate reporting of the facility
be that except for the 11-week period during which EPA studied, the
plant reliably met its goals for BOD, COD and TSS in its final year of
operation?
Answer. The Response to Congress on the AEES ``Living Machine'' as
well as the earlier Interim Report on the Frederick, MD, facility
stated that during the 11-week independent testing period, the facility
``did not meet any of its treatment goals during the study period, with
the exception of TSS'' because this is a matter of fact relative to the
11-week testing period. Since the Interim Report only addressed the 11-
week testing period results and was drafted in 1995, it could not
address the facility's performance during its final year of operation.
Still, this report concluded that the AEES ``Living Machine'' has the
potential to produce an effluent with: BOD5 <10mg/1, TSS
<10mg/1, Ammonia <1mg/1, NO3 >5mg/1, TN <10mg/1, and fecal
coliforms <200 cfu/100ml--which would satisfy all of the specified
treatment goals for the Frederick, MD, project, except TP. While the
final version of the Response to Congress also makes a similar
statement about the 11-week testing period performance, the report
clearly states in the conclusions that the ``Living Machine,'' in the
present configuration, can reliably meet process goals for removal of
BOD5, TSS, and Ammonia, can produce an effluent with fecal
coliforms at <200 cfu/100ml, and has the potential to achieve target
removal requirements for nitrate and total nitrogen. The report also
presents graphics demonstrating this fact for the Frederick, MD,
system's final year of operation. No original target COD goals were
established by the grantee for the Frederick, MD, facility.
LIVING MACHINE PEER REVIEW
Question. Because of the anomalies that existed during the 11-week
study period, a peer review of the report might provide further insight
into the reliability of the data and its interpretation. Will you agree
to have the report peer reviewed?
Answer. The Interim Report on the Frederick, MD, facility which
reported the results of the EPA 11-week independent testing effort was
both formally and informally peer reviewed. Input provided by our
reviewers was carefully addressed in putting together the final version
of the ``Interim Report'' that was published and has been circulated to
interested parties. The report and peer review procedures we employed
were subjected to a detailed audit by the Agency's review of our peer
review processes earlier this year. The Response to Congress report was
intended to provide EPA's response to questions regarding the status of
the four demonstration projects and future funding recommendations. It
relied heavily upon the earlier, peer-reviewed ``Interim Report on
Frederick, MD, Facility'' and data supplied by the grantee in progress
reports. The Agency felt it was not necessary to subject the Response
to Congress report to formal peer review, but did seek informal review
by EPA Headquarters, the EPA/ORD-Cincinnati laboratory, EPA Regional
staff, and the grantee prior to finalizing the document.
LIVING MACHINE UPDATES
Question. The report includes information from the first four
months of steady-state operations at the South Burlington Vermont
Living Machine. Although already reflecting improved performance, the
numbers do not show the degree of stability that has been achieved
since that time. Despite the cold Vermont winter, the Living Machine
has met every target in the last few months. Does EPA intend to supply
Congress with updates to this report that describe the ongoing
improvements to effluent treatment?
Answer. EPA currently intends to prepare a final report in the form
of an Emerging Technology Assessment of the AEES ``Living Machine'' and
related technologies based upon all of the data generated by the four
demonstration projects, as well as from previous pilot-scale projects,
vendors, and other sources. The Agency plans to have a draft of this
document available by the end of September 1997. The document will be
thoroughly peer reviewed and opportunities will be provided for input
and comment by all interested parties. Copies of this document will be
provided to Congress.
LIVING MACHINE WASTEWATER TREATMENT INTANGIBLES
Question. In determining the cost/benefit of EPA regulations and
standards the Agency must often weigh intangibles such as quality of
life, and improved health. The Living Machine has intangibles of its
own that do not appear to be addressed in the report. Operating a
wastewater plant which uses fewer chemicals than standard plants and
incorporates natural biological decay processes is more environmentally
friendly and raises awareness about the issues of waste treatment
facing communities. The South Burlington plant in particular has
developed an extensive educational program which has introduced school
students from throughout the area to the problem of waste management.
Students have gone on to conduct experiments of their own using mini-
Living Machines which they take back to their classrooms to study.
Shouldn't EPA incorporate these qualities into its analysis of the
Living Machine, as it does when weighing the benefits of regulatory
policies? What other steps is the Agency taking to raise awareness
about waste management, and could the Living Machine be incorporated
into those activities?
Answer. The Agency is requesting that the grantee provide better
documentation of the additional values as a part of their efforts to
document the benefits of the technology.
Claims made by the developers of the AEES ``Living Machine''
technology that the technology cleans wastewater to advanced treatment
standards using ``natural solar powered greenhouse based technology
without chemicals'' were addressed in the Response to Congress report
as misleading--the available data indicates that these systems use
about the same mechanical energy sources (at the same levels) and the
same chemicals as many of the conventional biological wastewater
treatment systems. In addition, EPA found that the sludge volume
produced by these systems appears to be only slightly less than a
conventional extended aeration treatment process which is inconsistent
with earlier claims made in promotional materials about the technology.
However, EPA agrees that the environmentally friendly atmosphere
created as a part of the AEES ``Living Machine'' and related
technologies offer special opportunities for interface with the public
about issues associated with wastewater management. While the Agency's
efforts to date have focused on evaluating the treatment performance of
the technology, we hope to see our grantee more fully explore and
document these opportunities as part of their project documentation.
Based in part on this information, to the degree possible, EPA will
attempt to address this issue in our Emerging Technology Assessment
Report.
EPA has developed numerous materials (fact sheets, primers, videos,
technical reports, etc.) as well as worked closely with groups such as
the Water Environment Federation, the National Small Flows Clearing
House, the National Water Research Institute, the National Academy of
Sciences, universities, and others to address a wide variety of waste
management issues and outreach materials. Once the Agency has
adequately documented the actual performance capabilities of the AEES
``Living Machine,'' we will be able to appropriately represent this
alternative approach to wastewater treatment in future editions of
these materials.
LIVING MACHINE SUPPLEMENT
Question. The Massachusetts Foundation of Excellence in Marine and
Polymer Sciences has provided EPA with more updated figures on the cost
of building and operating a Living Machine. While I understand that EPA
has not yet had the opportunity to analyze this new data, I believe
this information could provide valuable insight into the comparative
costs of operating a Living Machine versus a conventional system.
Considering the developments in the performance of the South Burlington
plant and the new information on operating and construction costs, I
think that a supplement to the report would be appropriate and helpful
for the most accurate understanding of this technology when EPA has had
an opportunity to properly review the new data. Will you provide such a
supplement to the recipients of the original report when the more
recent data has been reviewed?
Answer. The supplemental cost data provided by the Massachusetts
Foundation of Excellence in Marine and Polymer Sciences (MFEMPS) was
not adequately documented to allow a detailed evaluation. MFEMPS has
agreed to provide us with a more detailed basis for the cost savings
that they have projected as well as schematics to help facilitate a
detailed evaluation. MFEMPS is proposing to have a cost evaluation
conducted by one of its Technical Advisory Group members who is well
respected within the wastewater treatment industry. The Emerging
Technology Assessment Report will include an independent cost
evaluation section prepared by personnel with an extensive background
in both conventional and natural treatment systems and in conducting
cost evaluations of wastewater treatment alternatives. The Agency has
suggested to MFEMPS that these two cost evaluation efforts be closely
coordinated if not merged. Copies of the Emerging Technology Assessment
Report with the cost evaluation section will be provided to Congress.
______
Questions Submitted by Senator Lautenberg
ATSDR FUNDING
Question. Ms. Browner, as you know there has been considerable
criticism by my colleagues that Superfund sites are not a significant
health risk. The work and evaluations by ATSDR have proven those
allegations to be false. But despite the proposed increase in funding
for Superfund, the non-EPA programs funded out of Superfund, NIEHS,
ATSDR, and Justice, receive essentially no increase or decreases. ATSDR
has been doing risk assessments and health studies at Superfund and
non-Superfund sites including Hoboken and Toms River, New Jersey. It
does not appear that ATSDR can keep up with its workload or its ability
to fund state programs on critical environmental health issues. Without
additional funding, most of the state health departments that depend
for site epidemiological work may be cut off. Why does the
Administration not fund this program to a level more commensurate to
its importance to public health?
Answer. ATSDR is a valuable partner for EPA at priority Superfund
sites--particularly at sites moving into the remedy selection/
construction phase. The fiscal year 1998 Budget provides $64 million
for ATSDR which is a $6 million increase over the fiscal year 1997
request. As stated, ATSDR's assessments can, and are, used to
effectively communicate the risks and threats being addressed by
Superfund cleanups. However, our investments must focus on our efforts
to actually remove the threats we know to exist at the Nation's worst
sites. Notwithstanding ATSDR's importance to safeguarding public
health, EPA needs the additional funding to meet its construction
completion goals which will prevent populations from exposure to
hazardous waste.
ATSDR FUNDING: IMPACT ON STATES
Question. How many states will have their grants lowered or
discontinued under the President's proposal?
Answer. EPA does not provide direction to ATSDR on state supported
public health programs. Nevertheless, EPA has provided ample funding to
ATSDR in fiscal year 1998 to continue providing steady support for
state sponsored public health activities.
NIEHS FUNDING
Question. One of the major criticisms of Superfund, is the high
cost of technology needed for remedial actions. There has been research
on innovative technologies that have significantly brought down costs.
For instance, the National Institute of Environmental Health Sciences,
NIEHS, through UC-Berkeley developed and tested a stream injection
technology for removing solvents and liquid from soils that is 60 times
more efficient than pump and treat methods. Despite this work and other
work around the country funded by NIEHS, the President's request is a
$7 million cut at the same time Superfund's budget increases $700
million. What was the rationale for cutting this program?
Answer. NIEHS conducts valuable basic research on the effects of
hazardous waste on human health. However, the President has committed
EPA to achieve cleanup results at NPL Superfund sites. In fiscal year
1998, the Superfund program funding must focus on the physical
construction of cleanup remedies at hundreds of waste sites around the
country. Currently the program has 490 sites with construction underway
and more than 880 sites have final remedy decisions signed. Superfund
resources are being focused to achieve the maximum number of site
cleanups to protect as many people as possible from the health effects
of exposure at Superfund sites.
The President's request of $48.5 million is consistent with past
requests. It supports both the basic research program ($25.5 million)
and the worker safety training ($23.0 million).
SUPERFUND FISCAL YEAR 1998 REQUEST
Question. Senator Chafee has gone on record opposing the increase
in Superfund spending. Why do you think the increase is appropriate and
necessary now?
Answer. Through a progression of events including program
maturation and administrative reforms to speed up our process, we now
find ourselves in a situation where more projects are ready to begin
cleanup than we are able to fund. Our projections indicate that unless
the Superfund budget is increased, our existing backlog of projects
awaiting cleanup funds will grow.
SUPERFUND SITE CLEANUP
Question. How many sites are ready for cleanup now that you
couldn't fund if Superfund were flat-leveled at fiscal year 1997
funding level?
Answer. Under the risk-based prioritization of sites, the Agency
ranked 65 fund lead sites which are, or will be, ready for funding
during fiscal year 1997. Of this, seven have already been funded and 2-
3 more sites are expected to be funded in priority order. This will
leave approximately 55 sites unfunded at the end of fiscal year 1997.
The backlog of sites is expected to continue to grow in future years if
budgets are maintained at current funding levels. The fiscal year 1998
budget includes the $650 million needed to address this backlog and to
accelerate sites to construction completion by the end of calendar year
2000. If we do not receive these funds, over 100 fund lead sites which
would have otherwise started their final phase of cleanup will not be
funded in fiscal year 1998 (the backlog would be expected to grow from
55 sites to over 100). Additionally, the Superfund program would not be
able to attain the 250 site completions that the two-year ``900 Sites''
investment would fund and most of the 55 ranked projects unfunded at
the end of fiscal year 1997 would not be completed. Each project start
and completion not funded represents at least one community not
protected or risks to public health and the environment not addressed.
RESEARCH LAB: EDISON, NEW JERSEY
Question. I understand that the Administration considered funding
to build a modern laboratory in Edison, New Jersey to perform critical
environmental analysis for Region II. As you know, my state has the
largest number of Superfund sites as well as other serious air, water,
and waste problems. I feel that it is vitally important that the
scientists in Region II have modern equipment and facilities with which
to assess these problems. Do you agree?
Answer. EPA strongly supports the construction of a modern
analytical laboratory at the Edison Facility. This project has been,
and continues to be, a top priority for the Agency and ranks high
within its master plan.
LEAKING ABOVE GROUND STORAGE TANKS: REGULATION
Question. In the conference report which accompanied the VA, HUD,
and Independent Agencies Appropriations for fiscal year 1997, the
conferees recognized that leaking above ground storage tanks storing
petroleum or petroleum products can pose a serious threat not only to
communities neighboring these tank farms, but also to the ground water
underneath and surrounding these facilities. Furthermore, the conferees
expressed their concern that EPA has yet to take substantive action on
recommendations made by the General Accounting Office in two reports
regarding the safe regulations of these tanks.
Ms. Browner, can you please elaborate on what the Environmental
Protection Agency has done to address the gaps identified in these two
GAO reports? Specifically, what action has EPA undertaken to enhance
the regulation of these tanks in the area of secondary containment,
overfill protection, testing, inspection, compatibility, installation,
corrosion control, and structural integrity of petroleum tanks in
excess of 42,000?
Answer. Part 1. GAO Recommendations. EPA has begun to implement the
1989 GAO recommendations, and has made great progress on such
implementation, notably with training activities, but also in all other
areas. Specifics follow:
Actions to Strengthen the Inspection Program. EPA has completed its
survey of approximately 30,000 facilities, has analyzed the results and
is currently issuing the results of the survey. The information from
the survey will be used for a number of purposes including assistance
in targeting high risk facilities for inspections within our existing
targeting process, and risk-based rulemaking.
Developing Instructions to Perform and Document Uniform
Inspections. A workgroup with representatives from EPA Regions and
Headquarters oil program and compliance offices developed a
comprehensive Inspector Training course with the goal of achieving
national consistency in the inspection, documentation, and enforcement
of the prevention and response requirements of 40 CFR part 112. The
material developed for the Inspector Training course includes national
checklists and procedures for documenting inspection results. There are
checklists for prevention and response requirements that include
flexibility for regional conditions and various types of regulated
facilities. The course also includes a national approach to target
inspections.
Better Training for Inspectors. EPA Order 3500.1 establishes the
basic training requirements to ensure that inspectors are properly
trained to conduct themselves in a safe and professional manner and
build enforcement cases. The order requires three types of inspector
training: Occupational Health and Safety Curriculum (OSHA) training
levels appropriate to hazards encountered; Basic Inspector Curriculum
for instruction in litigation, entry and information gathering tools,
evidence, records review for compliance inspections/field
investigations; and, Program Specific Curriculum with specific training
in the legal, programmatic, and technical subjects for 40 CFR part 112.
In addition to the requirements for the hours and courses described
in the above inspector training, all new inspectors must complete a
number of facility inspections with a trained inspector prior to
conducting inspections alone. The number of inspections is related to
the various types of facility types in a Region and the type of
inspections being conducted.
The course has been taught in EPA Region VIII and will be given in
selected Regions to accommodate attendance by surrounding Regions.
Depending on funding, EPA plans to conduct three or four Inspector
Training courses a year until all inspectors are trained and then
conduct the course on a periodic basis as needed.
Part 2. The Cooperative Program. In addition, EPA is preparing to
publish in the Federal Register a proposal to implement an Oil
Cooperative Program. Instead of a traditional regulatory approach, EPA
will recommend, as a first step, the initiation of a public process to
develop a voluntary action or cooperative program, i.e., the Oil
Cooperative Program. In this program, aboveground storage tank (AST)
facility owners and operators would take action to implement applicable
industry standards where no regulations exist to achieve program goals.
The program goals for companies participating in the Oil Cooperative
Program include one or more of the following: (1) adopting appropriate
prevention standards and upgrading equipment as necessary; (2)
monitoring and/or implementing leak detection to identify new leaks;
(3) addressing known contamination and implementing steps to minimize
off-site migration (which may involve appropriate aspects of risk-based
corrective action); and/or (4) reporting actions underway to address
contamination to appropriate government agencies. The Agency favors a
cooperative, rather than a regulatory approach at this time in order to
provide greater flexibility in addressing contamination at the vast
range of oil storage facility types, sizes, and locations. A
cooperative program could focus more directly on facilities that pose
the greatest threat to public health and the environment.
Factors that support the development of a cooperative program
include: (1) the universe of large AST facilities is easily defined and
represented by several large trade associations; (2) the Cooperative
Program is consistent with the Agency's goal of developing and
promoting innovative approaches to achieve environmental goals; (3)
clear, achievable goals are apparent (i.e., to clean up contamination
and prevent future release); (4) flexible approaches are available to
address the problem, thus allowing participants to implement the
Program in a tailored manner appropriate to their circumstances; (5)
EPA is committed to providing technical assistance; and (6) there are
established industry and State practices and standards that can be used
as a basis for constructing a comprehensive program.
In keeping with the Agency's initiatives to develop innovative,
common-sense approaches to environmental problems, a cooperative
prevention and cleanup program can be an important first step in
addressing the environmental problem presented by contamination from
AST facilities. Industry representatives have expressed their support
for such a program as a more cost-effective, flexible alternative than
traditional regulation. EPA believes it will be successful, provided
that it has the full commitment of those involved.
leaking above ground storage tanks: voluntary
Question. In EPA's 1996 Report to Congress under section 4113(a) of
the Oil Pollution Act of 1990, the ``EPA Liner Study,'' EPA recommended
a voluntary rather than a regulatory program to prevent leaks from
above ground petroleum storage tanks and their piping. It is my
understanding the Agency considers this voluntary program an initial
step toward alleviating the public and environmental risks associated
with these types of leaks.
Ms. Browner, what measures will EPA use to assess the success or
failure of this voluntary program?
Answer. EPA plans to develop these measures in consultation with
stakeholders.
Question. What are the specific goals of the program?
Answer. The goals for companies participating in the Oil
Cooperative Program include one or more of the following: (1) adopting
appropriate prevention standards and upgrading equipment as necessary;
(2) monitoring and/or implementing leak detection to identify new
leaks; (3) addressing known contamination and implementing steps to
minimize off-site migration (which may involve appropriate aspects of
risk-based corrective action); and/or (4) reporting actions underway to
address contamination to appropriate government agencies.
Question. What action will EPA take should the voluntary program
not achieve its goals?
Answer. We believe that a cooperative approach is the appropriate
first step towards addressing potential risks from AST facilities. I
would also add, however, that while we are very hopeful that a
voluntary approach will succeed, this approach does not preclude
development of a regulatory program in the future if warranted. We
believe that our risk-based cooperative approach is the most
appropriate course of action at this time because it will allow us to
gather the information we need to determine if additional measures,
such as regulation, are necessary. A cooperative approach also comports
with our overall Agency focus on promoting innovative, common-sense
approaches to environmental problems through cooperative initiatives
with regulated industries.
Question. Finally, what strategies does EPA intend to take to
prevent leaks from above ground petroleum tank facilities which do not
participate in the voluntary program?
Answer. To prevent leaks from facilities that do not participate in
the Program, EPA will pursue strategies designed to provide incentives
for those facilities to voluntarily take action to prevent leaks.
Incentives might include public recognition, technical assistance and
cost savings, and reduction of liability.
______
Questions Submitted by Senator Harkin
OZONE TRANSPORT ASSESSMENT GROUP (OTAG)
Question. Since its first meeting in May, 1995, Iowa has been a
member of the Ozone Transport Assessment Group (OTAG). This consortium
of 37 states, in addition to industries, utilities and
environmentalists was created to address the difficult problem of ozone
transport at a regional level. I recognize the difficulty many states
have in complying with the ozone standards in the 1990 Clean Air Act
and understand the frustration they face knowing that many of their air
problems are beyond their control due to pollutants being transported
from other states. However, I am also concerned that the northwestern
OTAG states, including Iowa, may be unfairly required to implement
stricter air pollution controls which would have very little, if any,
positive effect on nonattainment areas.
I understand that the Alpine Geophysics model shows that the five
northwestern OTAG states do not contribute significantly to the ozone
transport problem. Is that true?
Answer. EPA intends to base any ``significant contribution''
decisions for the OTAG states on a weight-of-evidence analysis of all
modeling and monitoring information. The Alpine Geophysics model is
only one piece of information for consideration.
Based upon all of the technical materials presented to date,
including the first two rounds of OTAG modeling, on April 16, 1997, EPA
formally notified the OTAG that our preliminary view of the available
data do not appear to support the need for additional emission
reductions for several states. These are Arkansas, Florida, Iowa,
Kansas, Louisiana, Minnesota, Nebraska, North Dakota, Oklahoma, South
Dakota, and Texas. Of course, EPA intends to fully evaluate additional
OTAG information from subsequent modeling runs as well as respond to
final OTAG control recommendations.
OZONE IOWA SPECIFIC
Question. Do you know of any model, which looks at Iowa as a whole,
shows the state adding to the ozone transport problem of the eastern
states?
Answer. The modeling performed by Alpine Geophysics included Iowa
``as a whole'' along with four other states. The results indicate
contributions to ozone in ``downwind'' states of up to 2-3 ppb. To our
knowledge, there is no modeling that looks at Iowa alone.
ozone transport federal register notice
Question. Although the OTAG process will not be completed until
this summer, the EPA has announced that later this month it will
publish a notice in the Federal Register notifying states of its
intention to implement new clean air regulations. Why has EPA decided
to do this instead of waiting a few extra months for OTAG to complete
its work? After so much energy, time, and federal money was expended on
the OTAG process, doesn't it seem appropriate to wait for the group's
results before issuing new proposed regulations?
Answer. In an April 16, 1997, letter from Mary Nichols, Assistant
Administrator for Air and Radiation, to Mary Gade, Chair of Ozone
Transport Assessment Group (OTAG), EPA announced a revised schedule for
taking rulemaking action. Based upon the excellent progress that the
OTAG has made to date, the EPA has decided not to publish a notice this
spring notifying states of planning deficiencies. Because OTAG's
schedule for completing their work is consistent with the timeframe for
the planned EPA actions, EPA believes it makes sense to condense the
two-step proposal process we had planned into a single notice this
summer in order to take maximum advantage of OTAG's technical work and
its deliberations. The states and other stakeholders have been working
very hard to complete their technical analyses of the impacts of ozone
transport as well as solutions for mitigation. These analyses are the
best that have been done in this country.
OZONE TRANSPORT STATES
Question. Requiring ``transport'' states to comply with new
regulations may also be premature. Under Phase I of the Clean Air Act,
states with the worst air problems were supposed to establish plans
determining how they would address their air problems. These states
have not met this obligation. It is not until Phase II that
``transport'' states, such as Iowa, were supposed to be discussed. What
are your thoughts on beginning Phase II before Phase I was completed?
Answer. The EPA presumes that Phase I and II refer to the steps for
SIP development described in Agency policy guidance issued on March 7,
1995. This established an alternative 2-phased process which provided
ozone nonattainment areas flexibility in the attainment planning
efforts for the most polluted areas of the Eastern U.S. The policy
called for the establishment of a collaborative process among States,
known as Ozone Transport Assessment Group (OTAG), to assess ozone
transport and develop regional solutions. Under phase I, states were to
submit rules to ensure that their areas were making progress toward
attainment. The full attainment plans are due under phase II which is
currently reaching completion. Thus EPA is not beginning Phase II
before completing Phase I. The EPA intends to wait on the OTAG
information and recommendations before taking any action. As previously
stated, it is questionable whether ``western fringe'' states such as
Iowa will be involved in any control efforts.
OZONE FREE STATES
Question. Shouldn't states like Iowa and the other ``ozone-free''
states be logically exempted from the new clean air guidelines since
they would not significantly help the eastern states but would under
the regulation bear a significant regulatory cost?
Answer. Before making decisions on how best to deal with this major
air pollution issue, Ozone Transport Assessment Group (OTAG) and the
Environmental Protection Agency (EPA) believe it is important to
understand and characterize as accurately as possible the extent and
impact of transported ozone and its precursors throughout the eastern
United States. The OTAG air quality modeling system provides the most
complete, scientifically credible tools and data available for the
assessment of interstate transport. The OTAG modeling domain, which
includes 37 States and the District of Columbia, was based upon
technical considerations such as the need to include major emission
sources that might affect high ozone formation and transport in the
East. Inclusion of Iowa and the other four States who label themselves
as ``ozone-free'' States (North Dakota, South Dakota, Minnesota, and
Nebraska) in this OTAG study region does not automatically mean that
these States will need to implement additional control measures as part
of the regional strategy to mitigate ozone transport. Only those States
that significantly contribute to nonattainment, or interfere with
maintenance, of the ozone standard downwind will be required to reduce
emissions.
In an April 16, 1997 from Mary Nichols, Assistant Administrator for
Air and Radiation, to Mary Gade, Chair of OTAG, EPA provided its
preliminary assessment, based on OTAG data and other information, of
which States will need to make additional reductions in ozone
precursors in order to reduce regional ozone transport. In regards to
Iowa, North Dakota, South Dakota, Minnesota, Nebraska, and 6 other
States, EPA's preliminary view is that the OTAG data do not appear to
support the need for additional reductions. However, we believe that it
is necessary to evaluate additional information, and more appropriate
to wait for final recommendations from OTAG, in order to determine if
additional emissions reductions will be needed from these States to
address ozone transport.
SMALL BUSINESS ENVIRONMENTAL ASSISTANCE
Question. Small business plays a vital role in our economy, and are
subject to a multitude of environmental regulations. Small businesses
have the smallest capacity to comprehend complex rules and to determine
least cost methods to meet those requirements. EPA is beginning to move
in the right direction by working to simplify regulations so small
businesses can better work with them and to providing assistance
through programs such as each state's Clean Air Act Small Business
Assistance Programs. However, many additional entities are involved
such as Small Business Development Centers and NIST Manufacturing
Extension Programs.
The Small Business Pollution Prevention Center at the University of
Northern Iowa has developed ways to work cooperatively with a variety
of others which try to reduce a pollution generated by small business.
The center performs a combination of roles such as producing easy to
understand cook book type guides for specific processes and industries
targeting those involving a large number of small operators and which
generate significant wastes such as dry cleaners, printers and vehicle
maintenance facilities as contemplated in the Small Business Regulatory
Enforcement and Fairness Act.
Question. I would appreciate your views on the needs for centers
such as the one that exists at the Small Business Pollution Prevention
Center at the University of Northern Iowa and the role that it plays in
translating EPA requirements into a form understandable to small
businesses and communicating back to EPA about the difficulty that
businesses face in meeting specific EPA requirements?
Answer. The Iowa Center as well as other organizations such as the
Northeast Waste Management Officials Association, and the Solid and
Hazardous Waste Education Center at the University of Wisconsin play a
valuable role in developing state-specific compliance and pollution
prevention guides that complement the federal compliance guides that
are being developed by the Office of Compliance. EPA sees such state
organizations as the appropriate providers of site-specific and/or on-
site assistance to small business. The larger state organizations such
as Iowa's have also played an important role in developing tools and
guides that other organizations within a given state and across state-
programs can use. Our goal is to make it easier for state and regional
centers to supplement plain-language guides and other compliance
assistance tools for federal rules with similar information on state
rules.
In addition, we see an important need for our work to feed and
encourage cooperation between the broad and growing range of state and
local service providers such as the state Clean Air Act Section 507
Small Business Assistance Programs, the Small Business Development
Centers, the NIST Manufacturing Extension Partnerships, the regulatory
agencies and the state pollution prevention programs.
The EPA's Small Business Ombudsman's Office has found the Iowa
Waste Reduction Center to be very effective in carrying out an outreach
program to inform and assist small businesses to understand and comply
with environmental regulatory requirements. The Center not only offers
advice and information but, if necessary, offers ``hands on''
assistance to bring about voluntary compliance. It also promotes and
advocates pollution prevention policies that help alleviate future
environmental degradation problems.
Over the past five years, the Ombudsman has awarded annual ``Peer
Match'' grants to the University of Northern Iowa for the Waste
Reduction Center to familiarize other State assistance programs with
its successful operating procedures. This involved hands-on training at
the Center in Iowa, as well as, Center personnel traveling to ``Peer
Match'' States to provide on-site assistance. Our evaluation reports
indicate that the ``Peer Match'' assistance was most beneficial in
helping other States develop effective programs.
In addition, the Agency's Small Business Ombudsman awarded a grant
to the Waste Reduction Center to develop Environmental Auditing
Assessment Guidance material for small businesses to use in reviewing
their environmental compliance requirements. We have been most pleased
with the professional treatment given to this undertaking. Good, sound,
self-initiated environmental auditing programs will lead to additional
voluntary compliance, as well as a greater sensitivity to environmental
problems and issues.
SMALL BUSINESS POLLUTION PREVENTION CENTER
Question. One example of a feedback mechanism relates to the Center
informing EPA of the difficulty that service stations had in handling
used oil filters. Happily, EPA changed its rules in this area. These
seemingly narrow issues are exactly what can both create consternation
in small business people and add to their cost. Shouldn't EPA be doing
more to create centers like the one at the University, to strengthen
those that already exist and to actively seek feedback to find easier
ways to meet environmental objectives at lower cost?
Answer. There is an important distinction between the national
Compliance Assistance Centers program that EPA's Office of Compliance
is supporting and the state-programs such as the Iowa Waste Reduction
Center. The Office of Compliance has supported the establishment of
four national compliance assistance centers for the metal finishing,
auto service and repair, printing and agriculture sectors. These
centers are communications-based rather than physical locations and
serve the entire nation rather than a particular state or region. These
national Centers provide readily accessible information on federal
regulatory requirements to small businesses via the Internet and toll-
free numbers. They complement and support programs such as the Iowa
Waste Reduction Center in two important ways:
--They complement the on-site and state-specific work that Iowa
conducts by providing a place for small businesses to get ``the
basics'' on federal regulatory requirement as well as by
alerting small business to the additional services of state and
local programs; and
--They support state programs such as Iowa's by providing easy access
to sector-specific compliance assistance tools they can use in
their own work with small businesses. EPA is expanding its
support of national Centers, based on industry demand, to
establish Centers for the printed wiring board manufacturing,
chemical manufacturing, local government and transportation
sectors.
In addition, EPA has several grant programs that support programs
like the pollution prevention program at the University of Iowa. These
include the Pollution Prevention Incentives to States Grants, which has
been in existence since 1990 as well as some newer efforts.
The Office of Compliance now uses a portion of the TSCA Enforcement
Grants funding to support state operation of comprehensive compliance
monitoring and assistance program on a facility-wide and industry
sector basis. Most recently, EPA is in the process of distributing
funding pursuant to Section 215 of SBREFA. Under this project $1
million will go to the states to develop compliance guides and tools
that integrate state and federal rules to enhance a small businesses
understanding of their total regulatory requirements.
small business compliance assistance center funding
Question. I am pleased that EPA recently designated a painting and
coating compliance assistance center at the University of Iowa to work
on that process which is used by many industries. It was unique in that
it targeted a process rather than a specific industry. However, don't
you believe that, given the size of the area involved, additional
funding would be appropriate, comparable to the industry specific
compliance assistance centers?
Answer. We funded a project at the University that would develop
various tools for technical assistance providers to use in their
client-relationships with painting facilities. The Office of Compliance
(OC) has an existing Metal Finishing Resource Center that has been
expanded to serve the organic coatings side of that industry. This
Center will work very closely with the University of Iowa and plans to
assist in the development and distribution of Iowa's products.
While the Compliance Assistance Centers that OC supports do
distribute tools for technical assistance providers this is just one of
their functions. The OC program has supported the development of
communications-based centers (e.g. via the Internet or toll-free
numbers) that do several key things:
--Provide easy access to federal regulations, interpretations and
guidance.
--Distribute compliance tools that can be used directly by small
businesses or by those assistance providers that serve small
business.
--Develop process-specific training modules to improve assistance
providers understanding of the industries they serve.
--Enable information exchange among businesses through ``chat rooms''
and ``on-line conferences.''
--House databases of technologies and pollution prevention ideas.
--Provide easy access to vendors, state and local assistance
providers and other resources for additional compliance
assistance.
POLLUTION PREVENTION AND FEDERAL GOVERNMENT
Question. Pollution Prevention is vital to ensuring the health of
our nation's citizens, in protecting the environment and in saving
dollars, especially by avoiding the cost of waste disposal and future
environmental cleanups. As you know, pollution prevention involves
reducing, avoiding, or eliminating the use of toxins and the generation
of hazardous waste and pollution at the point of production itself. The
best way to avoid harming the environment is to prevent pollution
before it is created.
As President Clinton pointed out, the federal government should set
the example for the rest of the country in applying pollution
prevention strategies in order to protect our health and the
environment
Pollution prevention should be a key element of good government.
Federal Agencies should find ways of using more environmentally
friendly products and methods in order to save tax payer dollars.
Often, with a relatively small investment now, the federal government
can avoid having to pay far higher costs of cleaning up the environment
and meeting environmental compliance rules in the future.
Question. Which federal agencies and facilities have complied with
the deadlines of Executive Order 12856, which requires each federal
agency and facility to establish a pollution prevention plan?
Answer. Executive Order 12856 directs that all Federal agencies
with facilities meeting any regulatory threshold for reporting under
EPCRA (``covered facilities'') to develop a strategy for implementation
of the Executive Order. Seventeen Federal agencies meet the threshold
provided by Executive Order 12856 and have prepared formal pollution
prevention strategies. In a document entitled ``Meeting the Challenge:
A Summary of Federal Agency Pollution Prevention Strategies,'' EPA has
compiled agency strategies and prepared an overview of each agency's
commitment to the various provisions of the Executive Order.
The Executive Order also directs that covered facilities prepare
pollution prevention plans for implementing agency strategies and
provisions of the Order at the facility level; these plans were to be
completed by the end of December 1995. Federal facilities covered by
the Executive Order are not required to submit their plans to EPA but
they must be available upon request by the public or EPA. Over 2,400
Federal facilities meet the threshold for preparation of the plans. The
Department of Defense (DOD) has directed all DOD facilities to prepare
those plans, whether or not they are ``covered facilities''. EPA has
provided extensive training to assist Federal facilities in preparing
their pollution prevention plans and estimates that a majority of
facilities required to prepare the plans have done so.
While there is no provision established by the Order for
determining compliance, EPA regional staff use compliance inspections
and other facility visits to request and informally review copies of
the facility plans.
POLLUTION PREVENTION STRATEGIES
Question. Has EPA found that individual agencies and facilities are
adequately funding the pollution prevention strategies established by
these plans?
Answer. EPA does not track specific funding allocations related to
implementation of Executive Order 12856.
As directed by Executive Order 12088, however, EPA reviews agency
environmental budget requests and has recently amended its FEDPLAN
guidance on those requests to include projects required to comply with
the specified deadline requirements of Executive Order 12856 in the
``Class 1'' category of funding requests. This revision will be
implemented for fiscal year 1998. These projects are compliance/
enforcement related and the Class 1 designation signifies a vital
project. The amended guidance will allow facility funding requests for
projects outlined in agency pollution prevention strategies and
facility pollution prevention plans to be designated as Class 1 and
thus receive more favorable consideration during the budget allocation
process. In addition, EPA's FEDPLAN guidance also allows Class 1
designations for pollution prevention projects that are necessary to
bring a facility into compliance or prevent non-compliance in the
following fiscal year.
POLLUTION PREVENTION CONGRESSIONAL SUPPORT
Question. I understand that, at times, implementing pollution
prevention plans requires a short term cost increase to an agency or
facility in order to realize longer-term savings in the costs of
complying with environmental laws and regulations. It is my hope that
federal agency and facility budget staff will see the fiscal wisdom of
paying for good pollution prevention practices. In EPA's view, what
budgeting rules or policies should be established by the Congress or
the Administration in order to further encourage implementing federal
pollution prevention plans?
Answer. While EPA does not have any specific recommendations, our
experience indicates that those agencies that have been most effective
in implementing pollution prevention plans and strategies are those
where agency budget policies include life cycle considerations and
recognize the economic benefit of pollution prevention as well as the
ability of pollution prevention projects to meet or exceed the
requirements set forth in many environmental regulations.
In addition, within the Executive Branch process, EPA has provided
comment to the General Services Administration on proposed changes to
the Federal Acquisition Regulation to meet the requirements of
Executive Order 12856. Section 3-303(c) of the Executive Order
recognizes that changes would be necessary to ensure that acquisition
and procurement goals established in the Order were carried out. Under
the Executive Order, these changes are expected to be completed in
fiscal year 1997.
POLLUTION PREVENTION IMPROVED COMPLIANCE
Question. I understand that during this Administration, the
compliance levels for the federal procurement and acquisition rules
that encourage pollution prevention strategies have improved
significantly. However, there is still room for further improvement. Is
EPA devoting adequate resources toward achieving improved compliance?
What is the level of support? What resources are needed for the coming
fiscal year?
Answer. In response to Executive Order 12873 on Federal
Acquisition, Recycling, and Waste Prevention, EPA proposed guidance for
federal agencies which establishes a set of principles to help federal
agencies incorporate environmental preferability into their procurement
practices. The Environmentally Preferable Products Program (EPP) is
budgeted in fiscal year 1998 at $677.6 thousand. EPA also has a number
of pilot projects underway to apply the guidance's principles to
specific product categories. The pilot projects EPA has initiated focus
on cleaning products with the General Services Administration and
building construction and renovation with the Department of Defense.
The Cleaning Products Pilot Project is a cooperative interagency effort
which has established a framework for identifying and comparing the
relevant environmental attributes of cleaning products. The DOD-EPA
construction and renovation pilot has focused initially on using the
procurement process to encourage contractors to use environmentally
preferable products in parking lot construction and will extend to
integrating environmental considerations into the renovation of the
Pentagon. Other agencies are beginning pilots which will demonstrate
how third party certification programs can assist federal agencies in
assessing environmental preferability.
SUBCOMMITTEE RECESS
Senator Bond. And with that, the subcommittee stands in
recess until April 22, when we will take testimony from the
National Science Foundation and OSTP.
The hearing is recessed.
[Whereupon, at 12:30 p.m., Tuesday, April 8, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, APRIL 22, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:33 a.m., in room SD-192, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Burns, and Mikulski.
EXECUTIVE OFFICE OF THE PRESIDENT
Office of Science and Technology Policy
STATEMENT OF JOHN GIBBONS, DIRECTOR
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. Good morning. The hearing comes to order. The
subcommittee meets today to review the budget request of the
Office of Science and Technology Policy and the National
Science Foundation.
We welcome Dr. John Gibbons, the President's science
advisor, and Dr. Neal Lane, the Director of the National
Science Foundation. OSTP's budget request totals $4.932
million, the same as fiscal year 1997 enacted level. The NSF's
budget request for fiscal year 1998 is $3.367 billion, a $97
million or 3-percent increase over enacted fiscal year 1997
level.
I am very pleased to be able to convene this hearing today
on the Office of Science and Technology Policy and the National
Science Foundation. I do not guess we need to remind you of the
strong support this subcommittee has provided for the Nation's
scientific endeavors, certainly under Senator Mikulski's
leadership as well as in the last couple of years.
Some of you may have heard that my fellow Missourian Harry
Truman once commented that he needed a one-handed economist so
his advisors would not be able to say, but on the other hand.
Senator Burns. Economists are like that. [Laughter.]
Senator Bond. You will have your time, Senator Burns, but I
now have one on you.
Support for science is where we do not need a one-handed
economist. Economists generally agree that investment in
research and development provides a positive return to the
economy, although they may disagree on exactly how much return,
or how to measure the rate of return, and we agree with the
general principles of economists on this one. Research and
development are good investments, and we will have some
questions to find out how you are prioritizing those
investments.
We know that you Dr. Gibbons and Dr. Lane agree with it. We
acknowledge and applaud the efforts you have made to
communicate the wonder and awe that scientific endeavors can
inspire in the American public, particularly in Americas' young
people.
As one who normally drives a car pool with a bunch of high
school sophomores once a week, I am fascinated that they are
paying attention to the scientific accomplishments that are
reported in the news media. We have seen great coverage, this
morning's television focusing on Hale-Bopp, the Washington Post
Magazine covering everything from the smallest bacteria to the
far reaches of the universe, and I think that is exciting and
very healthy.
As chair of the subcommittee I have a particular interest
in exploring the Federal investment in biotechnology,
particularly as it applies to agricultural sectors, plant
genetics.
I think it is imperative to maintain the long-term
sustainability and competitiveness of U.S. agriculture, and I
agree with Dr. Gibbons that plant genome research is vital to
this effort. I know I can count on both OSTP and the National
Science Foundation to help organize, direct, coordinate, and
support the efforts that are beginning in this important area.
And on the other hand, this is another very difficult year
for this subcommittee. We have human-scale problems, ranging
from medical care for veterans to housing for low-income
Americans to relief for victims of disasters, which also
unfortunately are occupying the headlines in the top of the
news.
We are not far enough along in the budget process to have
an allocation for this subcommittee to know how much money we
will be dealing with, so it is premature to be able to discuss
absolute levels of funding that may be available for these
critical science accounts.
Our purpose today is to discuss with both of you the
priorities for this Nation's scientific enterprise and how
those priorities are reflected in your agency's activities. We
are particularly interested in the implementation of the
results act, which requires agencies to think strategically
about their goals and to measure their performance against
goals they have set.
Although we appreciate the difficulty of setting goals in
basic scientific research, where the goal is to explore the
unknown, we have to ask that you hold yourselves and that you
be accountable and responsible to us for how we spend those
Federal dollars.
It is a pleasure now to call on my distinguished ranking
member, Senator Mikulski, for her opening statement. Senator
Mikulski.
STATEMENT OF BARBARA MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman, and I
would like to welcome our two witnesses today, Dr. Lane of the
National Science Foundation, and Dr. Gibbons, the Director of
the Office of Science Technology Policy for the President.
Mr. Chairman, I have long been an advocate for Federal
investments in research and in development, and several years
ago a report was issued by various councils on competitiveness
that outlined 13 critical technologies that would be needed in
the 21st century, the type of work that you have just outlined
that will be so important for not only agriculture but its
ultimate impact on the value-added agriculture for people.
The report noted how we should link our science and our
engineering to the development of technology, and give us and
develop manufacturing in this country that would allow us to
have products to export overseas.
Everyone knows that for some time I have been concerned
about how the fact the United States of America wins the Nobel
Prize, and yet other nations win markets. Therefore, I
encouraged the National Science Foundation to examine how it
organized itself and encouraged it to increase funding for
basic research, always focusing on basic research, but in
strategic areas, what were the needs of this country to be able
to develop and move ahead.
The aim was not to reduce basic research, but to develop a
navigational chart of strategic areas in which funds could be
focused. Therefore, in the course of our testimony, I will want
to know exactly where we have been moving in that particular
area.
I want to hear what progress has been made in developing
national goals to stimulate not only new ideas, but new
opportunities for economic growth through research and
development. I want to hear what the agencies are doing to
encourage public-private partnerships, and how public
investment is leveraging private sector research and also,
ultimately, leading to private sector jobs.
Mr. Chairman, I am not calling for an industrial policy,
but I am calling for a national set of the focus. I understand
that the National Science Foundation no longer highlights these
strategic interests, and I will be interested in knowing how
they are moving ahead.
I also understand that Dr. Gibbons in his testimony has
referred to the gap between university research and private
sector product development as the valley of death. We want to
make sure that there is no valley of death between the creating
of new ideas and new products, but that we really work to have
a broadbased set of policies that create a canyon of
opportunity.
I know I am using agriculture and western metaphors, but I
will come back to my own Chesapeake Bay one. We need a
navigational chart to make sure that we go from a clipper ship
economy to a microchip economy, and I look forward to working
with you and our colleagues, who I esteem very much in this
endeavor.
Thank you.
Senator Bond. An inspiring metaphor, Senator Mikulski.
[Laughter.]
Now we will turn to Senator Burns for equally lofty
comments.
STATEMENT OF CONRAD BURNS
Senator Burns. Mine will not be lofty, Mr Chairman. In
fact, the working relationship that we have had both in the
authorizing committee and in the Appropriations Committee with
Jack Gibbons and Neal Lane has been one that I think has been a
very good one. We will probably argue about priorities, but we
never argue about the need of science and technology and the
role that the Government plays and the dollars that the
taxpayers invest in science and technology.
I am struck by the comment of the ranking member, Ms.
Mikulski, that we win the Nobel Prizes and other countries get
the markets. Maybe we better get some scientists in trading. We
send lousy traders to these negotiations. That is what we have.
We better get on the street and know how to sell a product and
know when to make a deal and when not to make a deal, and that
is where we fall down quite a lot.
I just want to congratulate Jack and Dr. Lane in our
working relationship. We want to do that. I would just like for
my statement to be made part of the record, and I think we
should hear from them.
Thank you very much.
STATEMENT OF JOHN GIBBONS
Senator Bond. Now I would like to call forth Dr. John
Gibbons, Director of the Office of Science and Technology
Policy and Dr. Neal Lane, Director of the National Science
Foundation. We would like to ask both of you gentlemen to give
your statements, and the questions will be directed in many
instances to one or both of you so we can hear your ideas
together. So with that, Dr. Gibbons.
Dr. Gibbons. Thank you, Senator. I am delighted to appear
before you, Senator. I must say at the outset how much I have
appreciated the strong support, the bipartisan support of this
committee over the years with respect to science and technology
in our Nation's future. There are a lot of discomforting things
in this job, but your support is a very comforting thing to me.
As I was preparing for today I was recalling some of the
events that were transpiring a little over 1 year ago in which
there were serious talks of draconian cuts in research. There
was acrimonious debate about the role of Government in our
Nation's life, especially the public-private cooperation and
partnerships in science and technology, but I am really
optimistic that much of this is behind us, that we are slowly
but surely moving toward reestablishing the more traditional
broad bipartisan support for science and technology.
But having said that, I think there are as many struggles
ahead of us as there are opportunities. We talk about
opportunities in a report I sent to the Congress about 1 week
ago. It is a biennial report on the status of science and
technology. It is a very enthusiastic report because it relates
the enormous progress we are making, but also the number of
extraordinary opportunities ahead of us.
But our central concern still is our fiscal challenge. The
heaviest pressure of getting our budget balanced is on the
discretionary part of our national budget, which is only one-
sixth of the total. In that sense, nothing should be immune
from very close scrutiny. In my view, science and technology
stands out as one of those proven public investments that is so
key to our national strength, and so essential to enabling our
future, that it merits very special nurturing. At the same
time, it must not escape the same kind of scrutiny that all of
these programs must receive.
As you said, Mr. Chairman, we have an extraordinarily well-
proven high rate of return of public investments in research.
Probably one-half of our economy, our economic growth over the
last one-half century, is relatable to our research, and it has
shown up in our national security, our economy and jobs, our
health, and our environment. All of these directly benefit from
those investments.
We are now in our fifth year of moving toward that budget
balance. At the same time, it is the fifth year in which the
President has proposed a modest increase in support of our
research budget. We have budgeted for 1998 an increase in R&D
of about $1.6 billion over fiscal year 1997, to a total of
about $75 billion as scored by OMB. This represents about a 3-
percent increase in our civilian R&D activities and a
significant increase in our fundamental science support within
the Department of Defense.
What the budget does is, it boosts basic research, so key
to our future. It emphasizes peer-reviewed university-based
research because you get the double hit of training new
scientists along with the research.
It gives new support to technologies to benefit the
revolution in the new information age that we are immersing
ourselves in. It gives greater support for bringing that same
kind of information technology to our classrooms, which can so
greatly profit by having this kind of infusion and newness.
It puts greater investments in science and technology to
ensure our continued economic leadership and job creation. It
gives incentives to lever private sector investments in
research by providing ways to tease greater private investments
in this direction.
It increases environmental research. I was thinking about
that this morning. With the great floods in the upper Midwest,
we are now suffering about $1 billion a week from natural
disasters in the United States. The word natural is getting a
little unusual, because I think people are getting to be part
of that so-called natural system.
It increases our support for health, food, and safety
research. It sustains support for our civil space program. It
promotes science and technology for national security,
especially the long-term support base.
Balanced against our imperative to balance the budget, I am
satisfied that we are on target.
Of course, there are calls for larger increases in the
budget, and I would be delighted. It makes me very happy to
hear of these calls, but to turn a phrase, happiness cannot buy
money. Would I like to see an increase in Federal funding for
research? You bet I would. So would the President, and so would
all three of you.
Would strengthening Federal support for science and
technology support our economic and other national security
issues? Of course, but the constraints on Federal research
funding are driven by that need to balance the budget, and we
must keep that in mind as we go ahead.
I would be delighted to argue for increasing research to
track our national economic growth. Until we find that we can
secure ourselves fiscally, I think that would be premature
judgment.
Finally, in the face of these enduring constraints on our
funding, we have to find ways to stretch our effectiveness. I
would say there are three ways before I close. First, increase
productivity of our Federal agency-sponsored research. We can
talk about this during the question period, Mr. Chairman. I
think OSTP's work has been to more closely integrate the work
of the agencies across these agency boundaries, where you can
get much greater from the whole than the sum of the parts
separately, so we are working within the Federal administration
family.
The second thing is that we want to strengthen the national
innovation system, not just the Federal system. The Federal
system is only about 39 percent of the total national R&D. That
means encouraging greater private sector investment with tax
policies, with partnering, strengthening university-Government
relationships, which are stretched and need work. I will be
happy to recount some of that for you, increasing our State-
Federal collaboration, and we have a new activity going on now
with the National Governors' Conference. We are seeking greater
international cooperation where it makes sense for us,
especially in very expensive research and in basic research
where the information is so broadly shared.
The third area is introducing more effective
accountability, and you mentioned this earlier this morning,
Mr. Chairman. We are working hard on the Government Performance
and Results Act, especially as it relates to research and, of
course, this can get very difficult, as you pointed out, when
you are working in basic research. Sometimes you have to wait
20 years to find out how important it was or was not.
Nonetheless, we are working hard in that area, because more
effective accountability on the outcomes measures are really
important for us.
PREPARED STATEMENT
And finally, Mr. Chairman, as you pointed out, we are
asking for the same people and dollars in this coming year,
which we hope the committee will look favorably upon.
Thank you.
[The statement follows:]
Prepared Statement of John H. Gibbons
Mr. Chairman, Members of the Committee, I am pleased to appear
before you today to discuss the Office of Science and Technology
Policy's (OSTP) budget request for fiscal year 1998.
As we approach the turn of the century, it seems appropriate to
take stock of the Nation's science and technology (S&T) enterprise, and
to look to the opportunities that lie ahead as well as the challenges
that we face. The Information Age is bringing changes to our society
that are only beginning to unfold. Already, new communications
technologies are transforming the way we work, where we work, and what
we need to know to be successful in tomorrow's competitive environment.
Five years ago ``Internet'' was still a word known mostly to those in
S&T. Today, it is the backbone of a new industry and a window to a
tremendous world of information for all segments of our society, from
business executives to school children.
The rapid economic growth of other nations means a future with
greatly expanded markets for U.S. goods and services. Our ability to
move our ideas, our goods, and ourselves swiftly to any place on the
planet, with the help of new technologies, enhances our ability to
share in the growth of global wealth. The increasing availability of
these same capabilities throughout the world also means greater
competition; it means increasing pressures on our shared environment,
health, and natural resources; and it means more diverse dangers to our
security from threats such as terrorism and the spread of nuclear and
other materials of mass destruction.
The President's key goals for our country include competing
aggressively in the global market place, preserving our environment and
managing our Nation's resources in a sustainable manner, safeguarding
our national security from emerging threats, and maintaining the
technological innovation that has contributed to our economic
prosperity and quality of life. Achieving these goals requires a
sustained commitment to our S&T investments. Therefore, this year, as
in the previous four, the President has called for increasing our
national commitment to support S&T.
Just as we struggle with the increasingly difficult choices that a
balanced budget requires, we also must focus on the importance of
sustaining our investment in the future. Funding for S&T, like funding
for education, is a high-leverage investment in our continued peace and
prosperity. Support for such investments has traditionally been a
matter of bipartisan agreement. It is imperative that we build common
ground in support of a shared vision--a commitment to keep America the
world's leader in S&T.
RECENT ADVANCES IN SCIENCE AND TECHNOLOGY
Over the past year there have been numerous scientific and
technological advances, reminding us of how much there is yet to know,
and of the potential of S&T to further enrich and improve our lives. I
will mention just a few such recent advances.
--In December 1996, the U.S. Department of Energy, in cooperation
with Intel Corporation, announced the completion of the world's
first 1-trillion-calculations-per-second computer--breaking the
teraflop goal. This computer was developed as part of the
Department's Accelerated Strategic Computing Initiative, which
is pioneering technology to ensure the safety and reliability
of the U.S. nuclear stockpile. This accomplishment is the
culmination of years of effort to reinvent computing, organized
within the Federal government as a multiagency consortium
called the High Performance Computing and Communications (HPCC)
Initiative. Instead of focusing on a single computer processor,
which would have been extremely difficult and expensive, the
U.S. program resulted in an entirely new computer technology
called parallel computing. Parallel computing allows the
biggest computers in the world to be assembled from mass-
produced microprocessors, which were originally developed for
use in desktop and home PC's. This new computing power is
valuable in a variety of applications, including the simulation
of disease progression, the projection of severe weather
systems, the mapping of the human genome, the improvement of
highway safety, and the development of environmental
remediation methods to reclaim polluted lands.
--Scientists are unraveling the complex interactions that exist
between HIV and the human immune system. We now have a much
better understanding of how HIV gains entry into cells. NIH-
supported scientists have discovered two new cell-surface
proteins that act as ``cofactors,'' along with the CD4 receptor
that assists HIV, in binding and infecting immune cells. This
information will be extremely useful in developing new
approaches to control AIDS. In addition, the use of powerful
triple drug therapies is having a remarkable impact on the
number of deaths caused by HIV. Such deaths are down 13 percent
from last year, although the number of infected persons in the
population remains high.
--Two NIH-funded groups, using different but related genetic
techniques, reported an important advance in neuroscience:
employing sophisticated monitoring equipment, researchers were
able to detect activity in individual brain cells as the mice
investigated their surroundings and created a mental map of
their environment. This work provides a window into how human
memory functions.
--A group at the Massachusetts Institute of Technology has succeeded
in using a Bose-Einstein condensate (BEC) to make the world's
first ``atom laser,'' which fires a narrow beam of coherent
``matter waves'' with about a million atoms per pulse. Coherent
beams of atoms could eventually allow much finer measurements
and manipulations, such as moving atoms around one by one, or
``writing'' atoms into semiconductors.
--In a stunning scientific advance that contributes to our
fundamental understanding of the origins of life, in August of
1996 a team of researchers announced that they had decoded the
first complete genetic blueprint of a microorganism from the
third major branch of life on earth, a microbe named
Methanococcus janaschii. The finding will allow scientists to
understand more about the operation and function of the cell,
while bringing them closer to understanding the nature of
ancestral cells from which life stemmed early in the planet's
history. In the years ahead, this gene sequencing achievement
holds dramatic prospects for commercial applications in
biotechnology, for the development of renewable energy sources,
and for cleaning the environment.
THE NATIONAL RESEARCH INVESTMENT PORTFOLIO
Overall, the Federal government invests approximately 2.5 percent
of the Federal budget annually (roughly $75 billion) to generate new
knowledge, new technologies, and new scientists and engineers. The
return on investments in S&T as a whole for our Nation has been
impressive: half of our economic productivity growth in the last fifty
years is attributable to technological innovation and to the science
that supported this innovation.
The Administration's fiscal year 1998 budget supports the cutting-
edge research of the Federal government's mission agencies by
augmenting stable funding levels with targeted increases that include:
--A 2.6 percent increase in the National Institutes of Health budget,
to fund high-priority research areas such as HIV/AIDS-related
illnesses, breast cancer, minority health initiatives, disease
prevention, and spinal cord research.
--A 3 percent increase in the funding of science, engineering, and
education R&D at the National Science Foundation.
--A five-year, 1 billion dollar increase in NASA's space science
budget, funding research into the origins of the universe and
the possibility of life beyond Earth.
--An almost 8 percent increase in the basic research budget of the
Defense Department.
--A $1.4 billion appropriation (exclusive of funding for facilities
construction) for the Department of Energy's Stockpile
Stewardship Program, which supports the research that will
allow us to assure the reliability and safety of our nuclear
stockpile without resorting to nuclear testing.
--An almost 5 percent increase in basic science research programs at
the Department of Energy.
--A $289 million increase in funding for university-based research to
strengthen the University-Government partnership and a $497
million increase in peer reviewed R&D programs.
SHAPING THE TWENTY-FIRST CENTURY
A bipartisan consensus has emerged around the view that we must
create, not simply a Federal research program, but a truly national S&T
enterprise--one in which Federal investments stimulate and leverage the
S&T efforts of state and local governments, of private industry, of
universities and of our international collaborations. In a tight budget
environment, these partnerships are essential, and will be a
cornerstone of our S&T enterprise in the coming years.
The long-standing Federal partnership with universities has made
our Nation the world's leading generator of new knowledge and of
fundamental insights that lead to new industries, breakthrough medical
therapies, and a more sophisticated defense. We are also placing an
increased emphasis on partnerships with industry, in which the Federal
government shares the costs and the risks of advances that promise a
large benefit to society. An example is the Partnership for a New
Generation of Vehicles initiative, in which seven federal agencies and
twenty national laboratories have partnered with the Big Three
automobile manufacturers in R&D projects aimed at improving auto
safety, emissions, and fuel efficiency.
Increasingly, we are also seeing research at the frontier of
scientific knowledge become more sophisticated and more costly. Federal
investments in international collaborations have provided an effective
way in which we not only can share the burden of these expensive
programs, but we can benefit from the expertise and know-how of the
others. The International Space Station, the Large Hadron Project at
CERN, and the Gemini Telescopes in Chile and Hawaii are excellent
examples of how we can leverage our domestic investments and priorities
by collaborating with our international partners.
Other Federal partnerships include grass roots projects that bring
people and technology together. One such venture, the Technology
Innovation Challenge Grant Program, has already lead to the creation of
dozens of partnerships linking school systems with businesses,
universities, parks, and museums to develop creative uses for
information technologies. Partnerships such as these extend the
benefits of our Nation's investment in S&T.
THE OSTP MISSION
In support of our Nation's S&T priorities, OSTP has two primary
responsibilities: advising the President on S&T; and providing
leadership and coordination for our government's role in the national
S&T enterprise.
In the 1950's, in response to Soviet advances highlighted by the
launch of Sputnik, President Eisenhower saw the need for expert S&T
counsel, and he invited MIT President James Killian to serve as the
head of the first President's Science Advisory Committee, an OSTP
predecessor. Since then our Nation's Presidents have drawn on the
expertise of our office for S&T policy advice, and I see this as a
contribution that will continue to grow in value as the challenges we
face become increasingly complex.
Within our agency, a small staff of professionals analyzes
developments at the frontiers of scientific knowledge, and aids the
President in shaping policy. OSTP also provides scientific and
technical information and recommendations to the Vice President, the
White House Offices, the Executive Branch Agencies, and to Congress.
A second responsibility of OSTP is to provide leadership and
coordination across the Administration. OSTP plays this role for a
range of Administration S&T priorities, including national security and
global stability, environment, science, and technology. The National
Science and Technology Council (NSTC) has been an invaluable partner
with OSTP in developing interagency evaluations and forging consensus
on many crucial S&T issues.
NATIONAL SCIENCE AND TECHNOLOGY COUNCIL
To meet the Administration's priority S&T goals we must combine the
efforts and the expertise of multiple agencies. OSTP personnel support
the work of the NSTC, a Cabinet-level Council that sponsors interagency
initiatives to advance key S&T objectives. Our distributed system of
research funding also places a premium on coordination between
complementary agency programs. The NSTC, now in its fourth year, is
improving such coordination.
NSTC membership includes Cabinet Secretaries, heads of S&T
agencies, and key White House officials with significant S&T
responsibilities. In the process of generating specific budgetary and
policy recommendations, the NSTC routinely reaches beyond the federal
government to seek input from a wide spectrum of stakeholders in the
public and private sectors.
An important objective of the NSTC is to guide individual agency
budget priorities for R&D and to orient the S&T spending of each
Federal mission agency toward achieving national goals. To meet this
objective, the NSTC has established nine goal-oriented committees, each
of which is chaired jointly by a senior agency official and an OSTP
Associate Director. These standing committees, along with ad hoc
working groups within the NSTC, provide an effective forum to resolve
cross-cutting issues such as interagency review of the future role of
the U.S. national laboratories, or the Federal response to the threat
of emerging infectious diseases.
Current interagency S&T initiatives include:
--The National Bioethics Advisory Commission, a multiagency-supported
commission composed of experts and community representatives,
established by the President to ensure ethical conduct in human
biological and behavioral research.
--A three-year, $300 million Next Generation Internet Initiative to
create the foundation for the networks of the 21st century, by
connecting more than 100 of our universities and national labs
at speeds that are 100-1,000 times faster than today's
Internet--with the capacity for secure, reliable transmission
of voice, video, and virtual reality data.
--A multiagency task force to conduct a comprehensive review of the
University-Government partnership. This review will examine
which components of the university system may be under stress,
and will determine what the U.S. Government role should be in
addressing these issues.
--An Intelligent Transportation Initiative to support traffic control
centers that can manage the operation of major roads by
providing real-time information that will drastically cut
accident rates, produce an estimated 15 percent savings in
travel time, and result in significant productivity gains for
business and industry.
--An Emerging Infectious Diseases Initiative to develop more
effective systems of surveillance, prevention, treatment, and
response to these growing domestic and international health
threats.
--An interagency antiterrorism body, the Technical Support Working
Group, to coordinate the development of new technologies to
counter the modern terrorist threat.
--An Environmental Modeling and Research Initiative to allow, for the
first time, a comprehensive evaluation of our Nation's
environmental resources and its ecological systems, thus
producing a sound scientific base to support natural resource
assessment and decision-making.
--A variety of educational technology projects and classroom
telecommunications links, funded by major Federal agencies, to
reflect the President's unwavering support for improving the
educational and training opportunities of the workforce of
tomorrow.
--A multiagency Children's Initiative to assess the current scope of
research on children and adolescents, to identify significant
gaps in the research agenda, and to develop recommendations for
needed efforts and linkage in the research and policy
development.
the president's committee of advisors on science and technology
As Assistant to the President for Science and Technology, I co-
chair the President's Committee of Advisors on Science and Technology
(PCAST). John Young, former President and CEO of Hewlett-Packard Co.,
serves as the other co-chair. PCAST is a distinguished assembly of
scientists, academics, and industrial leaders. It serves as the
highest-level private sector S&T advisory group for both the President
and the NSTC. This past year, issues examined by PCAST included the
health of our research universities, the government's investment role
in technology, prevention of deadly conflict, University-Government
partnerships, sustainable development, and the Federal research and
development role in learning technologies.
OSTP BUDGET REQUEST
I ask today for your continued support of OST's role in
coordinating S&T policy for the Executive Branch and for our Nation at
large. OSTP's budget request of $4,932,000 for fiscal year 1998 will
maintain the ability of our agency to serve both the public and this
President to the fullest extent. This is the same figure as our request
for fiscal year 1997.
Since personnel costs constitute the largest portion of OSTP's
budget, wherever possible the fiscal year 1998 request reflects a
reduction of administrative expense in keeping with the
Administration's goal of creating a leaner, more efficient government.
The request for fiscal year 1998 reflects our commitment to operate
cost-effectively while retaining the most vital element of our agency--
our high-caliber personnel.
1996 ACCOMPLISHMENTS
Before concluding, it is appropriate that I take some time to
provide a sample of OSTP's accomplishments over the past year. (We have
submitted for the record a document fully summarizing our fiscal year
1996 accomplishments.) OSTP, working with the NSTC, has been
instrumental in shaping our Nation's S&T policy; not only as it relates
to Federal S&T activities, but also to partnerships between the Federal
government and states, universities, industry, and our international
colleagues.
Environment.--OSTP continued its focus on improving the efficiency
and coordination of on-going agency and interagency environmental R&D
activities. OSTP fostered an interagency effort, NSTC's Committee on
Environment and Natural Resources (CENR), to integrate the Nation's
environmental monitoring and related research. CENR will provide an
integrated scientific information base to support natural resource
assessment and decision-making. Many of today's monitoring programs are
designed with the goal of providing information on single-agency
missions, and tend to focus on a single source or issue. By integrating
these monitoring and research activities, the Nation can begin to
assess the status of resources and their multiple uses in the context
of entire ecosystems.
OSTP staff helped develop a strategy for national earthquake loss
reduction to focus scarce research and development dollars on the most
effective means of saving lives and property and of limiting the social
disruptions from earthquakes. This Administration is strongly committed
to reducing losses from natural disasters by supporting programs for
observing, documenting, understanding, assessing, and predicting the
potential consequences of natural hazards.
Following a series of workshops held across the country with more
than 1,000 key stakeholders, OSTP hosted a White House Conference to
discuss ways to implement the National Environmental Technology
Strategy. The required improved efficiency in our technological
infrastructure is being achieved through collaboration among industry,
academia, and communities to develop long-term goals, measure
performance on multiple scales, and implement complementary policies to
encourage high levels of innovation. Anticipating future needs is
critical to achieving successful improvements in efficiency.
OSTP played a key role in a number of domestic and international
science assessments. In climate change research, OSTP continued its
role in coordinating scientific and technical assessments to support
the U.S. delegation to the Framework Convention on Climate Change. A
planning framework for Federal research related to the human health and
ecological effects of endocrine disrupting chemicals was developed and
an inventory of related on-going Federal research programs was
completed.
Technology.--OSTP led the effort to reshape agency research
programs in information technology through the NSTC Committee on
Computing, Information, and Communications. This group designed and is
leading the Next Generation Internet (NGI) initiative, launched in
October 1996. The NGI initiative is a three year, $300 million
investment that will create the foundation for the networks of the 21st
century.
OSTP continued its active role in the Administration's education
technology programs. OSTP has provided broad support for the
President's Technology Initiative, launched in February 1996, which has
included public/private partnership activities such as NetDays, Tech
Corps, Cyber Ed, and the Technology Literacy Challenge (TLC). The TLC
program challenges communities to form local partnerships of school
systems, colleges, universities, and private businesses, to develop
creative new ways to use technology for learning. In fiscal year 1997,
24 finalists were awarded grants to communities in 16 states. An
interagency team under NSTC, developed a set of research priorities
which shaped agency R&D funding for education technology.
OSTP, through both its Technology and its National Security and
International Affairs divisions, provided technical support for the
White House Commission on Aviation Safety and Security. OSTP is also
coordinating the new interagency research program on advanced air
traffic management, developed in response to the Commission's
recommendations.
Other OSTP efforts included: (1) providing continued leadership for
the Partnership for a New Generation of Vehicle program; (2) developing
an integrated plan for R&D in transportation and launching a number of
implementation efforts; (3) initiating a project to streamline and
coordinate the regulatory permitting of construction projects by
developing model regulations and standards; and (4) initiating
cooperative agreements with the Departments of Energy and Agriculture
to evaluate the near- and long-term potential for biomass to serve as a
major fuel source for electricity generation and for converting biomass
fuels for transportation. This effort led to three pilot biomass energy
projects in 1996.
OSTP played a leadership role in the broad interagency review and
revision of the National Space Policy released last September. OSTP has
ongoing White House oversight responsibility for the International
Space Station and Space Shuttle programs, national R&D strategies for
satellite technology, launch vehicle systems in international trade,
and global communications technologies. OSTP supported the President in
commissioning an independent review of the Space Shuttle program, which
reaffirmed the operational safety of the Space Shuttle. OSTP
coordinated the White House response to the discovery that life may
have existed on ancient Mars and organized the Vice President's Space
Science Symposium in December. OSTP worked with OMB to define a stable
and balanced budget for NASA that continues to support our ongoing
mission priorities while enhancing our commitment to science. OSTP
continues to co-chair with the National Economic Council, an
interagency and international process designed to transform the current
intergovernmental organizations INTELSAT and INMARSAT into competitive,
fully-private satellite communication firms.
Science.--OSTP led the effort to ensure that basic research budgets
were given high priority in the fiscal year 1998 budget request and in
the outyears. OSTP also led an effort to follow up on the results of
the Presidential Decision Directive (PDD) on reforming DOD, DOE, and
NASA national laboratories. This effort indicated that substantial
progress has been made in meeting the goals of the PDD, but much
remains to be done.
OSTP initiated the first Presidential Early Career Award for
Scientists and Engineers. This award was given to sixty young
scientists who have made outstanding scientific contributions and who
have the leadership potential to keep our Nation on the cutting edge of
scientific and engineering advancement. OSTP also initiated the first
Presidential Award for Excellence in Science, Math, and Engineering
Mentoring, given to ten individuals and to six institutions that have
demonstrated a high degree of commitment to promoting diversity in the
S&T community.
Working with the NSTC, OSTP staff developed the Children's
Initiative, which addresses the need to better tie Federal actions that
impact children to sound science. As the Initiative develops it will
identify research gaps in a variety of areas relating to the health and
well-being of children and promote tighter linkages to policy making.
Other accomplishments related to children include the OSTP, DPC, NSF,
and DoEd collaboration on how to improve the performance of our
Nation's eighth graders in math.
The Presidential Advisory Committee on Gulf War Veterans'
Illnesses, for which OSTP had White House responsibility, released to
the President its final report that evaluated a number of potential
causes for illnesses reported by Gulf War veterans, and contained
numerous recommendations on how we can improve the treatment of these
veterans and how we can prevent similar problems in future conflicts.
An interagency response to the Committee's report was delivered to the
President on March 7, 1997. OSTP also launched the National Bioethics
Advisory Commission and was instrumental in arranging for appropriate
levels of funding. The Commission was recently charged by the President
to address the legal and ethical issues associated with cloning human
embryos.
National Security and International Affairs.--OSTP coordinates, in
conjunction with the National Security Council, both the national and
international aspects of U.S. efforts to dispose of worldwide stocks of
excess weapons-grade plutonium. OSTP played a key role in the
successful October 1996 conference of experts on plutonium disposition
that was called for by the April 1996 Nuclear Safety and Security
Summit. OSTP co-chairs a joint U.S.-Russian Plutonium Disposition
Steering Committee, which oversees the government-to-government
collaboration in this area and delivered the first-ever joint study of
plutonium disposition options last September. This committee continues
to meet and to coordinate both studies and demonstration projects.
OSTP provided technical analyses and advice to the White House
during negotiation of the Comprehensive Test Ban Treaty (CTBT), and
OSTP has led the interagency effort to ensure that existing U.S.-
operated global seismic networks will be adequately supported to
fulfill the international CTBT verification mission assigned to them
under the Treaty. More generally, OSTP has provided important S&T
policy perspectives in a variety of key national security areas
including aviation security, critical infrastructure protection, the
banning of antipersonnel landmines, counterterrorism, information
warfare, and ballistic missile defenses.
To more effectively address the growing global threat of emerging
and reemerging infectious diseases, at the President's direction OSTP
took the lead in forming an interagency task force to address this
issue. The Task Force has initiated activities to strengthen disease
surveillance, prevention, and response, including the development of a
global disease surveillance network.
OSTP has worked successfully to expand U.S. S&T relationships with
important trading partners and economies in transition to strengthen
benefits to our national security, economic, and scientific goals.
Through the Gore-Chernomyrdin Commission OSTP played a lead role in the
effort to develop guidelines for intellectual property rights
protection for government agreements and contracts with Russia, to
reach agreement on a plan to promote the use of the Internet in Russia,
and to build support for the U.S. Civilian Research and Development
Foundation for the Independent States Forum of the Former Soviet Union.
OSTP has also supported international S&T efforts to address policy
priorities through other high level bilateral commissions with South
Africa and Egypt, and through the evolving Sustainable Development
Forum with China. S&T partnerships have been strengthened with Japan,
such as in the creation of an Earthquake Disaster Mitigation
Partnership, and OSTP is participating in negotiations over an S&T
agreement with the European Union.
OSTP has also taken the U.S. Government lead in several
multilateral fora as a way to promote U.S. interests and maximize the
value of U.S. S&T investments. OSTP worked closely with the technical
agencies and OMB to coordinate the U.S. Government's negotiating
position on such international projects as the Large Hadron Collider,
the Human Frontier Science Program, and the International Thermonuclear
Experimental Reactor. OSTP promoted the creation of a follow-on
mechanism to the OECD Megascience Forum. In Asia, OSTP led U.S.
participation in the APEC Science and Technology Ministerial, and in
Latin America, OSTP had a lead in organizing the first-ever meeting of
S&T Ministers. Both fora have launched S&T initiatives that are useful
in promoting U.S. S&T interests in these regions.
Mr. Chairman and Members of the Committee, I hope that this brief
overview has conveyed to you the extent of this Administration's
commitment to advancing S&T in the national interest, and the
importance of OSTP's role in the national S&T enterprise.
Regardless of party affiliation, we can all agree that investments
in S&T are investments in our Nation's future. I look forward to
achieving bipartisan support for a national S&T strategy that will
combine the resources of industry, academia, non-profit organizations,
and all levels of government to advance knowledge, promote education,
strengthen institutions, and develop human potential.
I ask not only for your support for OSTP's fiscal year 1998 budget
request but also want you to know how much I appreciate the long-
standing bipartisan support of the committee for OSTP and for the S&T
research enterprise. I would be happy to answer any questions that you
have.
______
Appendix A. Reports Issued By The NSTC During Calendar Year 1996
1. Interagency Assessment of Potential Health Risks Associated with
Oxygenated Gasoline, NSTC Committee on Environment and Natural
Resources, February 1996.
2. Meeting the Challenge (A Research Agenda for America's Health,
Safety, and Food), NSTC Committee on Health, Safety, and Food, February
1996.
3. United States Antarctic Program, NSTC Committee on Fundamental
Science, April 1996.
4. Strategy for National Earthquake Loss Reduction, NSTC Committee
on Environment and Natural Resources, April 1996.
5. NSTC Accomplishments B Calendar Year 1995, NSTC Executive
Secretariat, May 1996.
6. Human-Centered Transportation Systems Brochure, NSTC Committee
on Transportation, May 1996.
7. Assessing Fundamental Science Report, NSTC Committee on
Fundamental Science, July 1996.
8. Program Guide to Federally-Funded Environment and Natural
Resources, NSTC Committee on Environment and Natural Resources, June
1996.
9. Environmental Technologies Testing and Demonstration Sites: A
federal Directory, NSTC Committee on Environment and Natural Resources,
September 1996.
10. Our Changing Planet: The fiscal year 1997 U.S. Global Change
Research Program, NSTC Committee on Environment and Natural Resources,
September 1996.
11. Committee on Environment and Natural Resources Brochure, NSTC
Committee on Environment and Natural Resources, September 1996.
12. The Federal Research and Development Program in Materials
Science and Technology, NSTC Committee on Technological Innovation,
November 1996.
13.High Performance Computing and Communications (HPCC) Advancing
The Frontiers of Information Technology, NSTC Committee on Computing,
Information, and Communications, November 1996.
14. The Health and Ecological Effects of Endocrine Disrupting
Chemicals: A Framework for Planning, NSTC Committee on Environment and
Natural Resources, November 1996.
______
Appendix B. Reports Issued By PCAST During The First Clinton
Administration
Report of the PCAST Panel on U.S.-Russian Cooperation to Protect,
Control, and Account for Weapons-Useable Nuclear Materials (May 1995).
The U.S. Program of Fusion Energy Research and Development (July
1995).
Science and Technology Principles (September 1995), Report to the
President on Academic Health Centers (November 1995).
Principles of the U.S. Government's Investment Role in Technology
(June 1996).
Report on Research Universities (June 1996).
Report on Preventing Deadly Conflict (November 1996).
Report on Sustainable Development (January 1997).
ADDITIONAL COMMITTEE QUESTIONS
[The following questions were not asked at the hearing, but
were submitted to the Office for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
RESULTS OUT VERSUS DOLLARS IN
Question. As you know, we in Congress are very interested in the
Government Performance and Results Act, which we've shortened to ``the
Results Act.'' Given the focus of the Results Act, it might be more
important to look at what is coming out of the federal investments in
R&D in terms of results, and not just at the dollars going into the
program. The Council on Competitiveness recently issued a report
entitled ``Endless Frontier, Limited Resources,'' setting scientific
priorities and defining a more realistic, pragmatic framework for
allocating federal resources. In recent years, the National Academy of
Sciences has also issued several reports which require setting
priorities with the federal science and technology budget.
What role does the Office of Science and Technology Policy play in
setting national scientific priorities? Is OSTP involved in developing
guidance to R&D agencies on how to measure for results and the setting
of appropriate outcomes for R&D programs?
Answer. The Office of Science and Technology Policy (OSTP) plays
both a leadership and a coordination role in setting national
scientific priorities and in mobilizing scientific expertise to
accomplish national goals. OSTP advises the President of the United
States on policy and budget formulation in matters in which science and
technology are important elements. OSTP also coordinates the
development and implementation of the Administration's domestic and
international science, research, and technology policies, programs, and
budgets in support of the President's goals for strengthening the
economy and creating jobs, improving education and health care,
enhancing the quality of the environment, harnessing information
technology, and maintaining national security. More information about
national scientific priorities and OSTP's role in both setting and
communicating them can be found in Science in the National Interest
(1994), Building a Scientific Basis to Ensure the Vitality and
Productivity of U.S. Ecosystems (1995), National Security Science and
Technology Strategy (1995), Technology in the National Interest (1996),
and Meeting the Challenge: A Research Agenda for America's Health,
Safety, and Food (1996). The Administration's biennial report to the
Congress: Science and Technology Shaping the Twenty-First Century
(1997) provides a comprehensive overview of the substance and process
of OSTP's role in guiding the development of science and technology
policy.
OSTP is involved in developing guidance for R&D agencies and is
working with them in partnership with the Office of Management and
Budget (OMB) on the important tasks of strategic planning, goal
setting, and creating performance plans with meaningful, reasonable,
and measurable target outcomes. Recognizing both the importance and the
challenge of designing a planning and assessment methodology for
fundamental science that would satisfy the requirements of the Results
Act (1993), OSTP took the initiative in 1994 to conceive and initiate
the Assessment Process under the auspices of the National Science and
Technology Council (NSTC). The NSTC Assessment Process involved senior
scientific managers from ten major R&D agencies, OMB, and OSTP and was
charged to establish a framework for implementing Results Act
requirements in assessing fundamental science programs. The report,
``Assessing Fundamental Science,'' was published in 1996, and provides
guidance to R&D agencies for their development of strategic and
performance plans. The report also provides a set of principles for use
by these agencies for designing and testing a range of methods
appropriate to their particular goals and programs. In partnership with
OMB, OSTP is now working with the individual R&D agencies to develop
and fine tune their strategic and performance plans and to ensure that
they are responsive to the requirements of the Results Act. These plans
should be useful as management tools for the agency and the
Administration, and should promote scientific excellence, high
productivity, and accountability to the taxpayer, without creating an
unreasonable and costly bureaucracy that detracts from program
outcomes.
ROLE OF THE NATIONAL SCIENCE AND TECHNOLOGY COUNCIL (NSTC)
Question. Two years ago, we asked you what role the NSTC played in
the formulation of the President's fiscal year 1996 budget. You said
that NSTC committees had compiled the ``lessons learned'' from that
process, and were streamlining the process for fiscal year 1997. Could
you please update us on the progress of the ``lessons learned?'' What
was NSTC's role in developing the fiscal year 1998 budget? What grade
would you give the NSTC in fiscal year 1997? In fiscal year 1996?
What other role does the NSTC play, in addition to its role in
developing the President's budget request? How have the NSTC roles
evolved over time?
Answer. The President established the NSTC in 1993 to coordinate
the diverse parts of the federal research and development (R&D)
enterprise and to foster synergy among the varied talents of the
federal science and technology (S&T) workforce. This coordination
includes the federal R&D budget, as well as S&T policy making. In
November 1996, the NSTC completed its third year of operation and moved
from the identification of strategic goals, as defined in the 1995 NSTC
committees' strategic plans, to implementation of specific initiatives
that redirect the federal government's investments in S&T toward
fundamental national goals, while streamlining government and saving
taxpayers' dollars.
At the beginning of the Clinton Administration, the President
committed to integrating agency R&D budgets to ensure that the nation's
S&T investments serve broad national goals as well as agency missions.
This is the most important budget issue addressed by the NSTC. Starting
with the fiscal year 1996 budget, the NSTC has been using a process
designed to improve the way priorities are set in federal R&D
expenditures. This process starts in the spring each year with R&D
budget guidance to the NSTC departments and agencies, issued jointly by
the Directors of the Office of Science and Technology Policy (OSTP) and
the Office of Management and Budget (OMB). This guidance is developed
through the NSTC process, a mechanism for building consensus throughout
the federal S&T enterprise, and reflects the President's budget message
for that year. The NSTC departments and agencies are instructed to
examine their base programs carefully and focus and/or redirect funds
into the identified R&D priority areas within the budget constraints
provided from OMB.
Following the initial joint OSTP/OMB R&D budget guidance, issued
for the fiscal year 1996 budget, feedback was solicited and received
from the nine NSTC committees (which represent all NSTC member
departments and agencies) on how to improve the process in preparation
for the fiscal year 1997 budget guidance. This feedback mechanism or
``lessons learned'' is used each year to continuously streamline the
R&D budget priority setting process and make it more useful for the
NSTC departments and agencies. The joint OSTP/OMB budget guidance
memorandum for fiscal year 1999 reflects three years of evolution in
the S&T priority setting process through the NSTC.
For fiscal years 1996, 1997 and 1998, the NSTC R&D budget guidance
process resulted in positive outcomes for the overall S&T budgets by
concentrating federal spending on critical national priorities. Each
year, by the time the agency budgets were submitted to OMB in the fall,
agencies had already made trade-offs by eliminating programs that did
not correspond to the priority areas identified in the OSTP/OMB R&D
budget guidance.
In addition to the NSTC's role in developing the President's R&D
budget request, the NSTC effectively provides a venue for developing
interagency consensus on major S&T policy decisions. The NSTC review
process ensures that all agencies impacted by a decision are afforded
an opportunity to provide thoughtful input. The NSTC Presidential
Decision Directive (PDD) is one mechanism used to implement major
policy decisions, often having budgetary implications.
Examples of recent NSTC accomplishments include:
--National Bioethics Advisory Commission.--To address bioethical
issues arising from research on human biology, the President
appointed 18 non-government experts to serve on the National
Bioethics Advisory Commission (NBAC) under the auspices of the
NSTC. The NBAC charter was signed by the Assistant to the
President for Science and Technology in June 1996 and NBAC met
for the first time in October 1996. NBAC recently advised the
President on appropriate policy regarding cloning research
results announced in February 1997.
--United States Antarctic Program.--The NSTC conducted a review of
the United States Antarctic Program, concluding that the
science performed under that program was of high quality and
high interest and should be maintained within funding
constraints.
--U.S. Research Universities.--In response to communications to the
President from the President's Committee of Advisors on Science
and Technology (PCAST) and other national, political,
corporate, and educational leaders emphasizing that the
nation's university research system was going through a period
of stress, Dr. John H. Gibbons issued a Presidential Review
Directive to evaluate the need to revisit federal policies
concerning the capacity of U.S. universities to meet the
nation's research and educational requirements of the next
century. The resulting NSTC review will be completed in Fall
1997.
--Federal Laboratory System.--During the summer 1996, OSTP assessed
each agency's response to the Federal Laboratory Reform
Presidential Decision Directive (PDD). The review confirmed
that the agencies are making progress in meeting the PDD goals,
however, much still needs to be done to be fully responsive.
Opportunities exist to advance the goals of the PDD through
simplified directives and better use of federal personnel rules
and other regulations.
--Education.--The NSTC established and presented awards through two
new programs: (1) Presidential Awards for Excellence in
Science, Mathematics, and Engineering Mentoring; and (2)
Presidential Early Career Awards for Scientists and Engineers
(PECASE). The Presidential Awards for Excellence in Science,
Mathematics, and Engineering Mentoring program was established
in 1996 as one strategy to achieve the goal of developing a
pool of highly trained scientists and engineers that reflects
the nation's diverse population. President Clinton named 10
individual and six institutions as the first recipients of this
award in September 1996. The PECASE award recognizes
demonstrated excellence and promise of future success in
scientific or engineering research, and the potential for
eventual leadership of the recipients in their respective
fields. In December 1996, the President selected 60 individuals
to receive the first annual PECASE awards.
The work of the NSTC has also supported the President's
Educational Technology Initiative, launched in February 1996,
and has included public/private partnership activities such as
NetDays, Tech Corps, and America's Technology Literacy
Challenge.
--Dual-Use Technologies.--To address civil, military, scientific, and
commercial interests, Presidential Decision Directives were
issued for National Space Policy (PDD NSTC-8) and the Global
Positioning System (PDD NSTC-6).
--Children's Research.--The NSTC developed a policy statement on
children's issues, ``A National Research Initiative for
Children for the 21st Century,'' that examines the federal
research agenda on the biological, cognitive, and social
development of America's children and adolescents.
--Environmental Quality.--The NSTC fostered the development of
partnerships between the federal government and non-federal
researchers working toward improving environmental quality by
making information available to the public on: (1) federal
environmental testing and demonstration sites; and (2)
federally-funded environment and natural resources R&D.
--High-Performance Computing, and Communications (HPCC) Advisory
Committee.--On February 11, 1997, the President signed the
Executive Order establishing the Advisory Committee on High-
Performance Computing, and Communications (HPCC), Information
Technology, and the Next Generation Internet. This Advisory
Committee will provide guidance and advice on all areas of
advanced computing, communications and information
technologies. The Committee has already completed an initial
review of plans for the Administration's Next Generation
Internet Initiative (NGI) and concluded the NGI is essential to
sustaining U.S. technological and commercial leadership in
computing and communications. Members bring together a broad
range of expertise and interests from business and
universities.
--Emerging Infectious Diseases.--In response to an NSTC study, Vice
President Gore announced a Presidential Decision Directive
directing the federal government to strengthen the United
States' ability to respond to the growing threat of emerging
and re-emerging infectious diseases. This NSTC has begun a
tracking process of our investments in this important field of
research. We are now able to look across agencies and
understand what the federal R&D effort includes.
--Partnerships.--The NSTC also fosters collaborations between
industry, academia, and federal, state and local governments.
--The Partnership for a New Generation of Vehicles (PNGV).--Each of
the Big Three U.S. automakers--Ford, Chrysler, and General
Motors, working with small and medium sized suppliers and
leveraging collaborative research with government
agencies--produced a PNGV concept vehicle demonstrating
different ``Supercar'' possibilities. The partnership
includes research on: (1) manufacturing productivity
improvement; (2) near-term improvement in fuel efficiency
and emission reduction; and (3) development of a production
prototype by the year 2010 that can achieve three times the
fuel efficiency of today's vehicles with comparable cost
and performance.
--National Electronics Manufacturing Initiative (NEMI).--The NSTC
undertook an initiative with the American Electronics
Association (AEA) to develop a research partnership with
the nation's electronics manufacturing industry. This
effort came to fruition on March 13, 1996, with the
announcement of National Electronics Manufacturing
Initiative, Incorporated (NEMI), a consortium created to
ensure the sustained growth and competitiveness of
electronics manufacturing in the U.S. NEMI is an industry-
funded, industry-led, private-public partnership that
brings together the largest electronic equipment
manufacturers in the U.S. and their key suppliers with
government agencies to foster development of the world's
best electronics manufacturing supply chain. NEMI is a
prime example of the NSTC providing an initial federal
government impetus to stimulate collaboration and growth of
a non-government activity.
--Building and Construction.--In the area of construction and
building, progress was made toward streamlining and
coordinating regulatory permitting of construction
projects, as well as meeting the National Construction
Goals and supporting the Department of Housing and Urban
Developments' National Home Ownership Strategy.
--United States Innovation Partnership (USIP).--To enhance the
technology partnerships between the federal and state
governments, the United States Innovation Partnership
(USIP) was established. A Memorandum of Understanding (MOU)
between OSTP, the Department of Commerce (DOC), and the
National Governors Association (NGA), outlining policies
and procedures for USIP, has been approved by all parties.
There are plans for the MOU to be signed the week of June
23 in the home states of the NGA lead-Governors on
technology, Governor John Rowland, Connecticut, and
Governor Paris Glendening, Maryland. The NGA and DOC issued
solicitations for state and federal participants in Task
Forces for initial USIP projects. A federal agency or
department head and a governor will be sought to act as
champions for selected projects.
The NSTC developed several major science and technology policies
that drive the activities of several NSTC committees and have led to
some of the accomplishments listed above.
--Technology in the National Interest (July 1996) outlines the rich
portfolio of policies and programs being carried out by
departments and agencies across the federal government to
ensure that technology remains the key driver of the nation's
economic growth, leading to creation of high-wage jobs in the
U.S. and an improved standard of living and quality of life for
the American people.
--Meeting the Challenge (February 1996) laid out the following five
initiatives: (1) establish the Presidential Early Career
Scientist Award; (2) strengthen domestic health, safety, and
food data systems; (3) strengthen the integrated,
multidisciplinary human nutrition research initiative; (4)
develop an integrated research agenda to develop technologies
to assure the safety and quality of food for consumers; and (5)
develop methods for assessing exposures and other factors
influencing health.
--National Security Science and Technology Strategy (September 1995)
was the nation's first national security S&T strategy document
to describe how U.S. investments and international cooperation
in S&T support the full range of U.S. national security
objectives. This report offers a policy context for a rigorous
defense of Clinton Administration initiatives, including the
Cooperative Threat Reduction (Nunn-Lugar) Program, the Advanced
Technology Program, and economic development programs aimed at
mitigating or addressing the problems of endemic poverty,
overpopulation, food scarcity, infectious diseases and
environmental degradation. This report focuses on the
importance of investments in support of military superiority,
verifiable arms control, sustainable development abroad, and
economic performance at home.
--Preparing for the Future Through Science and Technology, An Agenda
for Environmental and Natural Resources Research (March 1995)
is a multidisciplinary environmental strategy that provides the
scientific and technical information needed for national and
international policy formulation and to assure the most
efficient use of scarce research and development resources.
This strategy was developed by the NSTC, with assistance from
stakeholders from academia, industry, and state and local
governments.
--Science in the National Interest (August 1994) is the
Administration's statement on science policy released by the
Vice-President. The first such statement in 15 years, this
document presents policy objectives for the Nation's research
enterprise. It is the product of extensive NSTC consultation,
combined with the input received at the forum held on January
31-February 1, 1994.
The Clinton Administration considers science and technology an
important investment for America's future. Our nation relies on federal
investments in science and technology to contribute to: the growth of
our economy; the health of our citizens; the sustainability of our
environment and natural resources; the United States' leadership in
critical world markets; the education of our children; the ensuring of
our national security; and the addressing of global problems through
cooperation with other countries.
Since its establishment, the NSTC has served a vital role in
identifying and prioritizing how federal investments in science and
technology can be wisely applied toward addressing our nation's
critical needs, in the context of balancing the budget. The NSTC has
made considerable progress in helping federal research and development
organizations evolve from an autonomous, fiscally expansive environment
to a collaborative fiscally constrained one. There is still much
progress to be made, however, in integrating our federal R&D efforts to
face the challenges in the areas of education, transportation systems,
energy resources, human health, national security, and the environment.
Working through the NSTC will become even more compelling as the
players are more comfortable with change, as innovators recognize the
untapped opportunities, and the federal research and development
enterprise is guided toward a unified set of goals.
federal investments in producing new scientists and engineers
Question. In 1993, there were about 2.5 million people in the U S.
with graduate degrees in science or engineering. In addition, there
were about 330,000 science and engineering graduate students. Over 70
percent of the scientists and engineers with Ph.D.'s were working in
science and engineering, in their own or a closely related field.
Yet, there are repeated complaints from young scientists that their
opportunities for a career in science are abysmal. In my own state of
Missouri, at least one university has tried to address this problem.
Washington University in St. Louis has recently chosen to scale back
the number of students to those the university can provide full
financial support for six years, rather than producing as many students
as they can.
What should the federal government's role be in assisting the
development of the next generation of scientists and engineers? Are we
overproducing scientist and engineers? Are we producing the right kind
of scientists and engineers?
Answer. For forty years since enactment of the National Defense
Education Act of 1958, the federal government has played a role in the
support of graduate students seeking a career in science or
engineering. Through fellowships, traineeships, and research
assistantships, students gain experience and become professionally
socialized as team members and apprentice researchers. But the
Committee's question about graduate degrees is integrally related to an
even larger issue: the health of research institutions and the strength
of the government-university partnership. The President has received
letters from national, political, corporate and education leaders
warning that universities are stressed in a number of ways, and urging
a policy and administrative review of the government-university
partnership. The President's Council of Advisors on Science and
Technology also urged such a review. Accordingly, I have established an
interagency Task Force under the auspices of the NSTC to review the
status of the federal government-university partnership and recommend
options for strengthening it. The Committee's question regarding the
number of Ph.D.'s produced through this partnership is central to the
issues being addressed by the Task Force: the policies, programs, and
regulations that shape the partnership, the education of graduate
students, and research administration. In addition, the Task Force will
consider mechanisms that can help sustain the strong U.S. tradition of
innovative research, even under current budgetary and other
constraints. How we utilize new Ph.D.'s is an important element of
whether or not we continue to get new ideas into the system.
The Task Force's work constitutes a first step in a multi-step
process. In this first phase, expected to be completed this fall, the
Task Force will recommend actions to the NSTC through its Committee on
Fundamental Science. Follow-on activities will also be identified at
that time. The Task Force is chaired by the Acting Associate Director
for OSTP's Science Division, and is composed of representatives from
the six major research funding agencies: DOD, DOE, NASA, NIH, NSF, and
USDA. Both OMB and the National Performance Review are also
represented. RAND's Critical Technologies Institute, the Federal
Demonstration Partnership, and the NAS Government-University-Industry
Research Roundtable are providing crucial assistance and insight based
on their extensive experience in this area.
I would like to address one special concern I have about the impact
of depressed demand for science and engineering Ph.D.'s, and that is
the continued and persistent under representation of women, persons of
color, and persons with disabilities in the science and engineering
workforce. With market opportunities sluggish in the 1990's, new
Ph.D.'s have experienced unprecedented under-employment rates in
mathematics and strikingly high rates in physics and chemistry. In
general, there are fewer positions to be found in research
universities. But students recruited from traditionally under
represented categories receive less financial support, experience
higher attrition at each succeeding educational stage, and complete
proportionately fewer degrees relative to their number in the pool. And
those who do earn the Ph.D. still face lesser career prospects in terms
of full-time employment, tenure-track status, promotion to full
professor, etc.
So at a time of constrained opportunity for all, diversity suffers.
At present, the student pool is becoming more ethnically diverse with
foreign citizens earning a majority of the doctoral degrees from U.S.
institutions in some science and engineering disciplines. There is the
perception and perhaps the reality--that science and engineering are
not rewarding career choices for U.S. students. We must be concerned
about what this means not only in terms of individual career choices,
but about what it means for the future of the nation. We must therefore
consider the impact of federal policies and graduate support mechanisms
on the future vitality of our nation's scientific enterprise and
economic competitiveness.
international cooperation versus international competition
Question. One of the key R&D goals of the Administration is to
``maintain world leadership in science, engineering, and mathematics.''
Yet another important strategy of the Administration seems to be
involving our sometimes competitors as international partners. How do
you perceive the difference between international cooperation and
international competition?
More specifically, there have been reports that Japan intends to
increase their investments in R&D, particularly at colleges and
universities, by a substantial amount. Some seem to see that increase
as a threat, and others see it as an opportunity. What is your view?
Answer. International cooperation and international competition are
both important drivers of innovation. Embracing the benefits of both is
essential to advancing U.S. science and technology policies. In many
parts of the globe today, a clear rise in sources of innovation in
science and technology creates expanded opportunities to leverage
international cooperation and international competition to benefit our
society and our economy.
Cooperation among nations is becoming more essential to our goals
in science and technology for several reasons, including: (1) a growing
number of the challenges that we face are regional or global and
require an international solution; (2) the scale of resources needed to
tackle priority issues stretch the capability of support by any one
nation, but can be addressed through cooperation; and (3) finding
solutions to problems of common concern can be accelerated. For
example, cooperation among nations in environmental research is
expanding rapidly and has been essential in deciphering climate changes
and other complex interactions in our planet's system; understanding
the fundamental nature of life and matter are large-scale efforts that
advance more rapidly by pooling international resources; and in the
fight against emerging infectious diseases or the mitigation of natural
disasters, the U.S. shares an interest with all nations in bringing the
best science and technology to bear, with other nations having
important assets and experiences to share.
I should also note that an important benefit of international
cooperation in science and technology is its value in helping to defuse
the sources of conflict abroad. Steady cooperation between U.S. and
Soviet scientists during the Cold War has been of significant value in
the post-Soviet era in smoothing that transition and in dealing with
critical issues such as the management and disposition of nuclear
materials.
International competition is also a resource in advancing
innovation. To the extent that international advances spur further
innovation in the United States, we are all better off as it drives all
of us to greater heights. However, this requires that the U.S. makes
the investments needed to stay at the forefront of science and
technology and works with other nations to remove barriers to
innovation and trade that handicap our interests. Domestically, we must
maintain the investments that we need to keep up with the pace of
international competition. Internationally, we are working with the
U.S. Trade Representative and other agencies to remove regulations and
practices that are discriminatory against U.S. innovations and to
achieve fair and consistent protection for intellectual property. We
are supporting work to develop international regimes such as the
Multilateral Agreement on Investments that will help to protect our
competitive edge.
With regard to Japan, we are currently assessing its Basic Plan for
Science and Technology, for potential impacts on our science and
technology relations. This ambitious plan calls for substantial
increases in government support for science and technology and major
reforms in the public system of innovation. Under the Committee on
International Science, Engineering and Technology of the NSTC we have
formed a Working Group on Japan. This Working Group is charged with
broadly examining our bilateral relations in science and technology to
identify areas in which we can strengthen the value to the U.S. of this
partnership. The increases in investments being undertaken by the
government of Japan, particularly in the universities, will spur their
innovative capability and will surely bring long-term benefit to their
economy and societal well being. These increases will ultimately lead
to greater competition for the U.S. in future markets, but they will
also create greater opportunities for leveraging research cooperation
to more effectively address common concerns.
One of the challenges that we face is pressing for reciprocal
access to Japan's resources for innovation, a challenge that continues
to need attention. A concern that has been raised by the U.S. members
of the U.S.-Japan Joint High Level Advisory Panel on science and
technology is that Japan develop transparent processes for access to
its universities and clear protection of intellectual property. Another
area of concern continues to be the substantial asymmetry in exchange
of scientific and technical personnel and in the flow of information.
We will continue to work with Japan to ensure that more Americans
participate in Japan's research system and that information is made
more easily available from Japan, exploiting the capabilities of
machine translation and the Internet.
It is our responsibility to engage with the innovation community in
Japan, to gain from their advances in science and technology as they
have gained from our open system, and to encourage Japan to join with
the U.S. and other nations in taking leadership to address common
international concerns. We have had a recent success in the rapidly
expanding area of global change prediction, where Japan plans to
increase its investment four-fold in five years. In this area, the
government of Japan has been forthcoming in seeking mutually beneficial
cooperation. The U.S. government must ensure that engagement with
Japan, and with other nations, is given appropriate priority because
achieving the benefits of international cooperation and competition for
the U.S. will depend on our deep commitment to success.
ostp budget
Question. Please provide travel costs by division within OSTP for
fiscal year 1995 and fiscal year 1996, differentiated into domestic and
international travel. Also, please provide projected travel costs for
fiscal year 1997.
Answer. Please see attached chart.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal Year 1995 Fiscal Year 1996
Divison -----------------------------------------------------------------------------------------------
Local travel Domestic International Local travel Domestic International
--------------------------------------------------------------------------------------------------------------------------------------------------------
Director................................................ $294.20 $12,111.19 $16,031.88 $282.23 $16,058.97 $9,235.87
Environment............................................. 547.50 16,225.08 24,087.81 769.50 20,637.24 16,155.53
National Security and International..................... 1,555.12 703.10 42,727.02 2,521.31 2,575.96 43,499.82
Science................................................. 2,131.05 29,932.90 2,619.61 1,767.10 15,949.12 7,749.19
Technology.............................................. 862.10 10,659.45 14,156.39 868.05 14,267.76 7,642.97
PCAST................................................... 751.65 33,707.88 .............. 613.25 26,945.09 ..............
Budget and Administration............................... 214.25 .............. .............. 320.30 .............. ..............
-----------------------------------------------------------------------------------------------
Subtotal.......................................... 6,355.87 103,339.60 99,622.71 7,141.74 96,434.14 84,283.38
===============================================================================================
Grand total....................................... 209,318.18 187,859.26
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal Year 1997 to date Fiscal Year 1997 remaining
Divison -----------------------------------------------------------------------------------------------
Local travel Domestic International Local travel Domestic International
--------------------------------------------------------------------------------------------------------------------------------------------------------
Director................................................ $22.00 $6,472.61 $22,631.79 $1,428.00 $5,400.00 $8,000.00
Environment............................................. 735.42 17,469.21 1,141.51 714.58 7,100.00 2,600.00
National Security and International..................... 1,361.68 75.36 39,202.44 88.32 .............. 12,800.00
Science................................................. 606.41 13,701.72 5,981.58 843.59 4,115.00 2,550.00
Technology.............................................. 107.70 7,881.09 6,076.25 1,342.30 11,500.00 800.00
PCAST................................................... 377.95 25,221.70 .............. 122.05 13,074.00 ..............
Budget and Administration............................... 108.55 3,050.77 .............. 141.45 .............. ..............
-----------------------------------------------------------------------------------------------
Subtotal.......................................... 3,319.71 73,872.46 75,033.57 4,680.29 41,189.00 26,750.00
===============================================================================================
Total............................................. 152,225.74 72,619.29
-----------------------------------------------------------------------------------------------
Grand total.......................................
(5)224,845.03
--------------------------------------------------------------------------------------------------------------------------------------------------------
Question. Please provide data, by division, on FTE's, and
reimbursed and nonreimbursed detailees for fiscal year 1995 and fiscal
year 1996, and projections for fiscal year 1997.
Answer. The attached table illustrates OSTP's personnel expenses,
FTE's, detailees, non-reimbursed detailees, and reimbursed IPA's.
SUMMARY OF OSTP PERSONNEL EXPENSES--FISCAL YEAR 1995 THROUGH FISCAL YEAR 1997 (ESTIMATED)
----------------------------------------------------------------------------------------------------------------
Fiscal year 1995 Fiscal year 1996 Fiscal year 1997 estimate
--------------------------------------------------------------------------------
Division Salary/ Salary/ Salary/
benefits FTE count benefits FTE count benefits FTE count
----------------------------------------------------------------------------------------------------------------
Director's Office--FTE's....... $610,825.98 7.34 $654,454.72 7.29 $709,954.06 8.25
Environment--FTE's............. 470,320.54 5.00 345,619.30 4.00 340,318.45 3.83
National Security and
International--FTE's.......... 437,329.81 5.50 573,038.81 6.70 674,412.69 7.70
Science--FTE's................. 349,816.04 4.67 356,466.53 5.58 330,912.26 3.92
Technology-- FTE's............. 644,867.35 6.70 554,432.11 5.80 432,820.40 4.83
Budget and Administration--
FTE's......................... 272,479.24 5.42 $271,611.55 4.50 310,581.63 5.00
PCAST--FTE's................... 40,650.76 0.88 95,625.22 0.96 46,029.79 0.59
--------------------------------------------------------------------------------
Total FTE's, salary and
benefits................ 2,826,289.72 35.51 2,851,248.24 34.83 2,845,029.28 34.12
================================================================================
Director's Office--Detailees/
IPA's......................... .............. ......... .............. ......... $30,000.00 0.50
Environment--Detailees/IPA's... $17,125.00 0.25 $38,158.00 0.21 230,623.02 1.67
National Security and
International--Detailees/IPA's 178,809.00 1.60 .............. ......... .............. .........
Science--Detailees/IPA's....... 307,873.48 3.25 266,283.31 3.17 145,052.38 2.46
Technology--Detailees/IPA's.... 156,231.00 2.00 74,888.01 1.08 87,537.82 1.00
Budget and Administration--
Detailees/IPA's............... .............. ......... .............. ......... .............. .........
PCAST--Detailees/IPA's......... .............. ......... .............. ......... .............. .........
--------------------------------------------------------------------------------
Total detailees/IPA's.... 660,038.48 7.10 379,329.32 4.46 493,213.22 5.63
================================================================================
Lump Sum Leave Payments........ 32,550.80 ......... 16,165.74 ......... 53,058.81 .........
Overtime Payments.............. 27,109.57 ......... 21,183.25 ......... 20,000.00 .........
Awards......................... 40,500.00 ......... 24,000.00 ......... 40,000.00 .........
Unemployment Compensation...... .............. ......... 7,713.00 ......... 10,000.00 .........
OPM Buyout Charge.............. 3,040.00 ......... 2,880.00 ......... 2,680.00 .........
--------------------------------------------------------------------------------
Total personnel expenses. 3,589,528.57 ......... 3,302,519.55 ......... 3,463,981.31 .........
Budget apportionment or
request................. 3,754,000.00 ......... 3,797,000.00 ......... 3,746,000.00 .........
Difference--Surplus or
(deficit)............... 164,471.43 ......... 494,480.45 ......... 282,018.69 .........
----------------------------------------------------------------------------------------------------------------
With regard to fiscal year 1996 and fiscal year 1997 staffing,
these were unusual years. During these two years OSTP had long
stretches of time without confirmed Associate Directors. Because
incoming Associate Directors should make the decision on permanent
staffing replacements for departing staff, in many instances Acting
Associate Directors made temporary assignments in order to ensure that
required work got done during the transitions. Many of these temporary
assignments were in the form of short-term detailees, hiring of
consultants, etc. In addition, in most cases individuals currently on
staff were named Acting Associate Directors. These individuals have
salaries that are $10,000 to $30,000 less than the salaries of
confirmed Associate Directors. The combination of unfilled Executive
Level III positions and temporary assignments to enable OSTP to meet
required deadlines contributed substantially to the excess of personnel
funds.
NATIONAL SCIENCE FOUNDATION
STATEMENT OF NEAL LANE, DIRECTOR
ACCOMPANIED BY DR. JOSEPH BORDOGNA, ACTING DEPUTY DIRECTOR
Senator Bond. Thank you very much. Dr. Lane.
Dr. Lane. Thank you very much, Mr. Chairman and ranking
member Mikulski. I very much appreciate the opportunity to
appear before you this afternoon to discuss NSF's budget
request for the coming fiscal year. I join my colleague, Jack
Gibbons, in expressing my appreciation for the very good
working relationship that we have had with the committee under
your leadership and under Senator Mikulski's leadership.
I would like to ask your permission, Mr Chairman, if during
the question session Dr. Joe Bordogna be permitted to join us
at the table.
Senator Bond. We will be happy to do so, and I should have
said earlier that we will make your full statements part of the
record so that you may just touch on what you feel are the most
important items.
Dr. Lane. Thank you. I would also like to submit the
statement of Dr. Richard Zare, Chairman of the National Science
Board, for the record.
Senator Bond. Without objection, it will be accepted.
Dr. Lane. NSF-supported discoveries have a very large
impact on the world, from understanding how plants respond to
diseases, and paving the way to plants that resist parasites
without pesticides, to developing microbes that purify
contaminated groundwater, to using auditory detection
strategies first identified in frogs as models for improving
hearing aids.
The 1996 Nobel Prize in chemistry was awarded for research
that NSF has supported for over a decade on the carbon
molecules known as buckyballs. Today, these NSF-supported
researchers are stringing buckyballs together to create tiny
nanotubes which are 100 times stronger than steel, but only a
fraction--one-sixth--of the weight. In the words of the
Washington Post, these could be the drop-dead superfiber of the
future.
NSF's unique role in support of university-based research
and education across all fields has been found to be among the
most productive of all public investments. One seminal study
has estimated that the rate of return on investments on
academic research exceeds 25 percent on an annual basis,
outpacing even the market over the long haul.
America's system of higher education sets a world-leading
standard of excellence and inclusiveness, yet even this
outstanding system faces challenges in preparing students to
deal with a rapidly changing scientific and technological
world. NSF addresses these challenges by supporting innovative,
systemic approaches to education and training at all levels.
NSF remains committed to delivering the highest possible
returns on the Nation's investments. We have traditionally
maintained a very low overhead rate and have received national
recognition for our commitment to efficiency and productivity.
This past December, NSF became the first Federal agency to
receive the prestigious National Information Infrastructure
Award, which recognizes innovative uses of the Internet and
World Wide Web in business, education, and Government.
Mr. Chairman, our budget request of $3.367 billion will
provide us with resources to continue supporting more than
19,000 research and education projects in science and
engineering. An increase of $97 million, it represents a strong
commitment to research at a time of constrained Federal
discretionary spending.
This increase will enable NSF to pursue several
initiatives, one of which we call knowledge and distributed
intelligence, or KDI. It is designed to push the frontier of
Internet use and development to a new level of capability. It
has not only major scientific implications, but practical
societal benefits as well.
This is a truly remarkable era for research and education
in America. The investments in this request will help ensure
that our Nation gains full benefit from these emerging
opportunities, and that the future brings greater progress and
prosperity to all Americans.
We are struck by the recent commitment by Japan to double
the Government's research and development budget between the
years 1992 and 2000. This is one more reminder that strong
support for research and education is essential if the United
States is to remain a world-leading economy in the 21st
century. How can we expect to compete in the world's aggressive
technology-driven markets if we reduce the very investments in
people and ideas and instrumentation that creates technology?
PREPARED STATEMENTS
Mr. Chairman, I thank you for this opportunity to discuss
the role of the National Science Foundation in ensuring
America's global leadership in science, engineering, and
technology, as well as quality education for all Americans.
I would be very pleased to respond to any questions that
you or members of the committee might have.
[The statements follow:]
Prepared Statement of Dr. Neal Lane
Mr. Chairman, I appreciate the opportunity to appear today and
provide the subcommittee with an overview of the NSF budget request for
1998. For the coming fiscal year, the National Science Foundation
requests $3.367 billion. This will allow us to invest in more than
19,000 research and education projects in science and engineering.
These investments in people, ideas, and exploring the unknown will
guide our future course as a nation and bring new sources of prosperity
and opportunity to all Americans.
If one were to take a snapshot of the U.S. economy today, it would
show a number of key areas driving growth and opportunity. They come
under headings like biotechnology, multimedia, medical imaging,
environmental technologies, polymers, decision theory, educational
technologies, sensors, and opto-electronics, not to mention high-speed
computational and communications technologies like the Internet and
World Wide Web.
Virtually all of these innovations have become widely used within
the past few decades. And while these areas are key to productivity in
a wide array of industries and sectors, from manufacturing to health
care to financial services, they share one important trait--each has
deep roots in the support for fundamental research and education
provided by the National Science Foundation and other Federal agencies.
For example:
--Boeing's new 777 jetliner has been cited as ``the most advanced and
service-ready jet in commercial aviation history.'' Yet, the
777 was designed entirely ``on screen'' bypassing the need for
models and mockups, and saving the company an estimated $100
million. The computer-assisted-design and virtual reality
systems that underlie this important accomplishment can all be
traced to years of sustained public investments in such diverse
topics as scientific visualization, fundamental mathematics,
rapid prototyping, and other areas that cut across the spectrum
of science and engineering.
--On January 2, 1997, a New York Times article on productivity in
business opened with the following passage: ``Dell Computer
Corp. has designed its newest factory without room for
inventory storage. Chrysler Corp. can increase vehicle
production without building new factories. And General Electric
expects to save millions of dollars by purchasing spare parts
over the Internet. On the surface, these are manufacturing
stories. At heart they are among the thousands of new business
practices made possible by technology.''
--If an ordinary citizen were asked to name a field of research that
is unlikely to generate much in the way of discoveries that
would quickly find their way to the marketplace, it would not
be surprising if astronomy were mentioned. But the
determination of precise positions for satellites can only be
accomplished by very long baseline interferometry (VLBI) radio
telescopes fixing on distant cosmic radio sources. The Global
Positioning System that uses satellites to precisely pinpoint
our location at any spot on the globe would be impossible
without such precision. GPS has important applications for the
military, recreation, transportation, and even for reducing the
time and cost of commercial airline flights. GPS is a
multibillion dollar industry that would have been impossible
without astronomical research.
Moreover, the technologies that made possible these new innovations
were in turn made possible by steady and stable Federal support for the
instruments and insights needed to extend the frontiers of physics,
cosmology, supercomputing, manufacturing research, and other areas of
science and engineering that demand the most of new technologies.
Similar success stories abound in today's world, such as bacteria
that munch on oil spills, classroom computers that adapt automatically
to students' strengths and weaknesses, and new chemical techniques that
slash the cost of drug design and development. Each can be traced back
to investments in people and ideas through research and education in
science and engineering.
In this same way, we have great expectations that recent
breakthroughs in fundamental research hold the key to future economic
success. For example, the 1996 Nobel Prize in Chemistry was awarded for
research on the carbon structures known as buckyballs that NSF has
supported for over a decade. Today, these NSF-supported researchers are
stringing buckyballs together to create ``nanotubes'' which turn out to
be 100 times stronger than steel but only one sixth the weight. In the
words of The Washington Post, these could be the ``drop-dead super-
fiber of the future.'' These and other examples bring to life what top
economists have been saying for years: public investments in science
and engineering yield immense dividends to our economy and society.
Furthermore, NSF's unique role--that of supporting university-based
(non-clinical) research and education across all fields and
disciplines--has been found to be among the most productive of all
public investments. One seminal study \1\ has estimated that the rate
of return on investments in academic research exceeds 25 percent on an
annual basis, outpacing even the stock market over the long haul. Other
studies have found an increasingly vital link between our university
research base and the competitive position of U.S. industry. Newly
awarded patents, for example, draw upon current findings from academic
research at a rate never before seen in history.
---------------------------------------------------------------------------
\1\ Mansfield, E. 199. ``Academic Research and Industrial
Innovation.'' Research Policy 20: 1-12. For a fuller discussion of the
rate of return on scientific research, See ``Science and Engineering
Indicators 1996'', Chapter 8.
---------------------------------------------------------------------------
While these examples provide ample testimony to the success of
NSF's past investments, all signs are that they are only the beginning
of what is possible--provided we uphold our nation's position of
leadership across the spectrum of science and engineering research and
education.
As we approach the 21st Century, it is especially noteworthy that
other nations--Japan in particular--are demonstrating a growing
awareness of the link between a strong science and technology base and
a nation's overall economic vitality. U.S. Ambassador and former Vice
President Walter Mondale noted this in a recent editorial: ``One clear
indicator of the seriousness of Japan's R&D efforts is the level of
spending * * *.'' Japan has recently announced a national goal of
doubling its support of basic research over the next five years. This
provides one more reminder that strong public support for research and
education is essential if the U.S. is to remain a world leading economy
in the 21st Century.
NSF FISCAL YEAR 1998 REQUEST: HIGHLIGHTS AND PRIORITIES
NSF's fiscal year 1998 budget request provides NSF with an overall
increase of 3 percent, which would enable the agency to pursue a number
of emerging opportunities that hold immense potential both from a
scientific standpoint and as drivers of future economic growth and
social benefit.
These focused efforts draw upon NSF's strong linkages across all
science and engineering fields, as well as the agency's commitment to
the integration of research and education and to working in partnership
with academic institutions, private industry, and other agencies at all
levels of government.
Knowledge and Distributed Intelligence in the Age of Information
Over the span of a few years, computers have moved from large, air-
conditioned rooms to our laps and our pockets. While in 1980 NSF-
supported scientists and engineers had only limited access to the
highest levels of computational power, today they employ desktop
systems of comparable power and have access to a collection of
supercomputing facilities with capabilities they could only dream about
a decade ago. Over this same period, the number of host computers on
what is now the Internet has leapt from about 200 to over 10 million in
1996--a 50,000 fold increase.
This rise in both power and connectivity has changed the face of
science and engineering, just as it has generated new opportunities for
all Americans. The challenge today is to realize the full potential of
these emerging technologies for research, for education, and for our
economy and society. This era is often referred to as ``the information
age,'' but that heading does not do justice to the possibilities and
opportunities emerging today. The coming age is perhaps best described
as an era of ``knowledge and distributed intelligence''--an era in
which knowledge is available to anyone, located anywhere, at any time,
and an era in which power, information, and control move away from
centralized systems to the individual.
Knowledge and Distributed Intelligence (KDI) is an ambitious
Foundation-wide effort designed to take information, communications,
computing and networking to a new level of technological, economic,
educational, and societal impact. It has the potential to revolutionize
not only U.S. science and engineering, but also the way in which all
Americans learn, work, and interact. It draws on past advances made in
networking, supercomputing, and learning and intelligent systems. In
fiscal year 1998, NSF plans a focused, multidisciplinary $58 million
program of activities in support of KDI research, infrastructure
development, and education that draws upon and reinforces related on-
going efforts totaling approximately $355 million.
For fiscal year 1998, these investments in KDI fall into two basic
categories:
--Multidisciplinary Approaches to Knowledge and Distributed
Intelligence ($48 million). This NSF-wide activity will provide
researchers and educators an opportunity to link diverse
components of the KDI framework, so that advances in one area
work to the benefit of all. This effort will span such
activities as knowledge-based networking, learning and
intelligent systems, and new approaches to computational tools
important to many disciplines.
--Next Generation Internet ($10 million). NSF is a key participant in
the President's 5-year program to move toward the Next
Generation Internet. The agency's role builds on its current
programs of networking, infrastructure development, and
research. NSF's $10 million contribution will be devoted to
participation in a multi-agency program aimed at enhancing
Internet capabilities for research and education at colleges
and universities.
Life and Earth's Environment
NSF has had a strong presence in the life, social, and
environmental sciences for many years, supporting research and
education activities that complement the mission-driven activities of
other agencies. Increasingly, NSF is focusing on how living organisms
interact with their environment, including how humans affect their
environment and vice versa. Examples include microbial diversity and
bioremediation, metabolic engineering and bioprocessing, natural
hazards mitigation, environmental geochemistry and biogeochemistry,
human dimensions of global change, and long term ecological research
sites.
The study of life in extreme environments can provide important new
insights into how organisms formed, and about the range of adaptive
mechanisms which allow them to function. Researchers can then examine
how to mimic such mechanisms for use in situations inimical to human
life such as bioremediation or bioprocessing. This overall effort was
begun in fiscal year 1997 and we will continue to develop this program
in fiscal year 1998, in concert with activities in other agencies (such
as NASA's Origins program).
Educating for the Future
America's system of higher education sets a world-leading standard
for excellence and inclusiveness. Yet even this outstanding system
faces challenges in preparing students for dealing with the rapidly
changing scientific and technological landscape expected in the 21st
century. NSF is addressing these challenges by supporting innovative,
systemic approaches to education and training at all levels, and
especially through activities that link learning and discovery.
Integration of Research and Education.--This core strategy from the
Foundation's strategic plan has emerged as a key touchstone for all NSF
investments. Educating today's students in a discovery-rich environment
will better prepare them to meet tomorrow's challenges. Likewise,
history has shown that research in an education-rich environment yields
an exceptionally dynamic and diverse enterprise. Fiscal year 1998
highlights include:
--The CAREER program (Faculty Early Career Development), which
provides a framework for junior-level faculty to link their
research activities with their teaching and mentoring
responsibilities. For fiscal year 1998 the CAREER program will
grow by 21 percent, to $81 million. NSF nominates selected
awardees for the prestigious Presidential Early Career Awards
for Scientists and Engineers in order to recognize both the
outstanding character of their research and their commitment to
education.
--The REU program (Research Experiences for Undergraduates) will
significantly expand in fiscal year 1998, increasing by 11
percent to almost $30 million. It is one of NSF's most popular
and successful programs, as it provides opportunities for
several thousand undergraduate students each year to
participate in ongoing or specially designated research
projects at sites throughout the nation.
--Integrative Graduate Education and Research Training (IGERT). This
new cross-Foundation activity, funded at $20 million, will
merge features of the ongoing Research Training Group program
in the biological sciences with the Graduate Research
Traineeship program. This experimental effort provides a
flexible alternate approach to graduate education--as was
recommended in recent reports by the National Science Board and
the National Academy of Sciences.
Systemic Reform.--NSF's systemic reform activities are well-
established at the K-12 level, where they will remain a high priority.
Fiscal year 1998 will see the initiation of focused systemic reform
efforts at the undergraduate and graduate levels that will involve all
parts of the Foundation. Experimental activities in fiscal year 1996
and fiscal year 1997--such as the Comprehensive Reform of Undergraduate
Education and the Recognition Awards for the Integration of Research
and Education--have set the stage for an enhanced effort, or more
accurately, the age of Knowledge and Distributed Intelligence.
The Urban Systemic Initiative will fund up to 25 implementation
sites in the remaining eligible cities. In 1996 our investment in USI
was leveraged nearly 4-fold as other Federal agencies, states, and the
private sector committed over $206 million. More than 145,000 teachers
who serve 3.6 million students typically in minority districts in urban
centers have received intensive training in math and science content as
a result of their participation in the USI.
Challenges to Learning.--Just as the information age creates
challenges and opportunities for the research component of science and
engineering, it creates challenges and opportunities for learning.
Formal education systems have changed little while the workplace and
other aspects of life have been transformed and redesigned. In
conjunction with the KDI effort described above, NSF will explore how
individuals and groups of individuals learn, both inside and outside
formal education systems, as well as how technology might be used to
change the patterns of traditional education.
EPSCoR (Experimental Program to Stimulate Competitive Research) is
a Foundation-wide investment pursued in cooperation with state
governments that helps to broaden U.S. capabilities in science,
engineering, and technology. In fiscal year 1998, NSF funding for
EPSCoR totals more than $38 million. Improved linkages between EPSCoR
and other NSF-supported research and education activities is expected
to result in an additional $8-10 million in merit-reviewed research for
EPSCoR states. This funding is intended to enable researchers and
educators supported through EPSCoR to participate more fully in other
Foundation-wide activities.
Facility Investments
In keeping with its core purpose of advancing the frontiers of
science and engineering, NSF is acutely aware of the need for major
research platforms that support the activities of a broad spectrum of
researchers and educators. Fiscal year 1998 will see the completion of
funding for the Laser Interferometer Gravitational Wave Observatory
(LIGO), maintain investments in facility improvements at the South
Pole, and initiate support for the Polar Cap Observatory and the first
phase of the Millimeter Array.
Last month the External Review Panel for the South Pole Station
completed its work and its chairman, Dr. Norm Augustine, presented a
set of recommendations for NSF supported research at the South Pole.
Included in the list of recommendations was that the existing South
Pole Station be replaced with an optimized new station.
Salaries and Expenses
NSF has a well-deserved reputation as an efficiently run agency.
Credit for this belongs to dedicated men and women who have worked
there over the years. But the work is growing increasingly challenging
as the workload increases and the resources for managing the agency
remain flat. Over the past decade NSF's budget has effectively doubled,
from $1.62 billion to $3.22 billion. During that time the number of
participating institutions has grown by 50 percent, as has the number
of proposals submitted for evaluation and review. During this same
period, however, NSF career staffing levels have remained relatively
flat.
Two factors contribute to the agency's success in increasing its
workload with no accompanying growth in personnel. First is the
successful partnership with the research community to provide merit
review for proposals. Last year more than 59,000 experts provided more
than 170,000 reviews of proposals submitted to NSF. The second factor
is the astute use of technology to automate labor intensive processes.
NSF was the first government agency chosen for a National Information
Infrastructure (NII) award for extraordinary achievements and
innovative uses of the information highway for its FastLane initiative.
conclusion
I would like to close with just a brief comment on NSF's efforts to
improve our accountability--to Congress, to the public, and to the
research and education communities that are our major constituencies.
This budget was prepared in accordance with our Strategic Plan. We are
now working to develop performance measurements so that our next budget
submission complies with the Government Performance and Results Act. We
are anxious to have your views on the types of metrics that would be
most helpful to Congress in setting budget priorities.
Today's budget realities require that every dollar work harder and
yield the highest possible dividends. At the same time, the
possibilities and opportunities emerging across the spectrum of science
and engineering remind us that this is a truly remarkable era for
research and education in America. The investments contained in this
request will help ensure that our nation gains full benefit from these
emerging opportunities--and that the future brings greater progress and
prosperity to all Americans.
Mr. Chairman, thank you for this opportunity to discuss some of the
highlights of our budget request. I would be pleased to respond to any
questions that you or members of the committee might have.
______
Prepared Statement of Dr. Richard Zare, Chairman, National Science
Board
Chairman Bond and members of the Subcommittee, I appreciate the
opportunity to provided testimony on behalf of the appropriation for
the National Science Foundation. I am Dr. Richard Zare, Chairman of the
National Science Board and Professor of Chemistry at Stanford
University. I would like to convey to you a bit of the excitement and
value to the nation of the research and education activities that will
be supported by the National Science Foundation's fiscal year 1998
budget request. I will also mention some of the work of the Board in
helping to develop this budget, and in trying to get a better
understanding of the possible effects of any changes in Federal agency
research programs on the broader picture of Federal support for
research.
First, however, I would like to thank the Subcommittee for its
strong support of the Foundation in the past. Your continuing
commitment to a strong national effort in research and education is
extremely important to the NSF as we carry out our various
responsibilities.
The National Science Board is a 24-member body appointed by the
President for six-year terms. We represent a broad cross-section of the
nation's leaders in science, engineering and education, and include
full-time researchers, educators, university officials and industry
executives. Since the founding of the NSF in 1950, the Board has
exercised two roles: that of a national policy body, and that of a
governing body for the Foundation. In many respects the latter role is
similar to that of a corporate board of directors, but as a Federal
entity we operate within the framework of policy guidance established
by the Congress and the Administration.
The Board approves NSF's policies, budget proposals, new programs,
and major multimillion-dollar awards, and generally oversees the fiscal
and management operations of NSF as a whole. We work very hard to make
sure that all of the Foundation's policies, systems, programs and
awards are of the highest quality, incorporate our best thinking, and
reflect the perspectives of the communities we represent.
The budget before you has the wholehearted approval of the Board.
NSF funding is a vital investment in the nation's future. The budget
you're looking at today will provide the means to fund thousands of
worthwhile projects across the exciting frontiers of all fields of
research, and it will fund important efforts to improve the Nation's
education in science, mathematics, engineering and technology.
I would especially like to call your attention to a new initiative
in the area of Knowledge and Distributed Intelligence, which holds
immense potential as a driver of progress and opportunity for all
Americans. This is a new set of investments spanning a wide range of
Foundation programs, including NSF's part of the Next Generation
Internet, and going beyond that, for example, to better link research
in cognition with technologies for teaching and learning. I am so
excited about the possibilities arising from this ``KDI'' initiative
that I wrote an editorial that appeared in Science magazine on February
21. With your permission, I would like to submit the editorial for the
record.
The Foundation's fiscal year 1998 budget also is important for
improving education in science and mathematics at all grade levels.
Aside from the beauty and enjoyment that flows from better
understanding our world, there are three practical reasons for that
education:
First, to educate the workers and entrepreneurs who are able to
understand and use research results and new technological capabilities
to keep the nation at the forefront in today's global marketplace;
Second, to refresh the pool of researchers who can go about gaining
new understanding of nature, who can design novel processes and
products, and who are able to capitalize on discoveries made by other
societies; and,
Third, to give the public as a whole, and especially its future
leaders, a sufficient foundation in science, mathematics, technology
and problem-solving, to make sound decisions about important national
and global issues.
The Board also recently led an effort to revise the general
criteria for proposal review that are used to select projects for
funding in all NSF programs. The criteria have served the Foundation
well, by and large, but they have not been given a comprehensive
examination since the early 1980's, and we think they need at least
some updating to be brought into line with the Foundation's Strategic
Plan.
A task force consisting of the Board members and senior NSF staff,
with input from our proposer and reviewer communities developed new
general criteria. The revised criteria were adopted at our March
meeting, a couple of weeks ago for use for all proposals reviewed
beginning October 1. NSF is getting the word out to the national
research community, so investigators can have the new criteria in mind
as they work on their proposals over the summer.
We are also providing oversight to NSF as it develops methods and
processes to comply with the present and forthcoming requirements of
the Government Performance and Results Act, and monitoring the phase-in
of other legislated government-wide requirements such as the
Information Technology Management Reform Act.
In addition to our close and continuing oversight of NSF, the Board
has a special role in monitoring the health of science and engineering
in the U.S. and in providing advice on national policy in research and
education. We have been discussing ways to give considerable attention
this year to research funding priorities within NSF, in the context of
the overall picture of support by the various Federal agencies.
The world is changing more quickly than ever. Each of us sees the
speed and force of those changes around us every day, in ways that we
perceive as wondrous, elegant and profound--even, sometimes, a little
overwhelming. I need only mention three examples:
--Developing (when it's working) a nearly instantaneous, worldwide
information delivery capability that, among other things, is
promising to cause a revolution in scientific publishing
comparable in its impact to the Gutenberg printing press;
--The ever-increasing use of microprocessors and robotics, from what
you see in the home to those used in manufacturing; and,
--Something that I have a very personal involvement in, namely,
finding possible evidence of primitive life on ancient Mars.
In more down-to-earth ways, we also see, for example, that global
competition in manufacturing continues to grow, challenging our
economic base; and that the public's expectations about combating
terrorism, violence, disease, poverty and environmental problems
continue to rise. Although research alone cannot solve these problems,
it is one of the most important contributors to their solution. Because
the Federal government plays a critical role in supporting the
fundamental research that underlies progress in these areas, it is more
important than ever that a robust and well-considered level of overall
Federal investment in long-term research be sustained.
Strong support for NSF is clearly a keystone of that investment.
And strong support for the research performed or supported by other
Federal agencies, in connection with their missions, is vital as well.
The Board is very concerned about the possibilities for reduction or
compression of the overall Federal investment in research. We are
concerned as well for the possible fate of the various research
programs in Federal agencies whose budgets--indeed, their very
existence--continue to be challenged.
Mr. Chairman, we urge the Congress, when considering funding for
Federal agencies that have science, engineering and education programs,
to do so with explicit regard for the relationships among those
programs across the government and with industrial research and
development. It is important not to take actions that will undercut
areas of science and engineering vital to our national interest.
The Board's efforts over the next few months will center on getting
a clearer understanding of the many linkages within the Federal and
national picture for research so that we will be better able to
visualize or anticipate the consequences of various actions by the
Administration and Congress.
Thank you, Mr. Chairman.
______
Knowledge and Distributed Intelligence
(By Richard N. Zare)
The author is chairman of the National Science Board, which is the
governing body of NSF, and professor of chemistry at Stanford
University, Stanford, CA.
In reading the pages of Science, I have been struck by the stunning
progress being made in science and engineering--new phenomena
discovered, new materials synthesized, new methods developed. What I
see behind many of these exciting stories is the widespread and even
revolutionary use of distributed intelligence that is made possible by
the ``wiring'' of the scientific community. It is more than a time
saver or a communication enhancer; it is enabling us to think in new
ways and its impact on society may be monumental.
Consider this random sampling of newspaper headlines: ``Medical
Schools Use Palmtop Computers to Improve Training,'' ``Web Site Allows
Users to `Handle' Specimens From Smithsonian,'' ``Laugh and Your
Computer Will Laugh With You, Someday.'' There's obviously something
profound going on here, and it is more than just the Internet.
Computational technologies are becoming more powerful and more
portable. We can access more information at greater speeds and with
greater facility than was previously imaginable. We can even remotely
control sophisticated experiments--on a recent visit to the National
Science Foundation's (NSF's) South Pole Station, I watched as
astronomers in Wisconsin controlled an infrared telescope on site. As
these advances in computing and communications coalesce, we begin to
see their full potential for promoting progress in science and
engineering and for driving economic growth and societal gain.
The term ``information age'' probably does not do justice to the
possibilities of this emerging era. This is an age of ``knowledge and
distributed intelligence,'' in which knowledge is available to anyone,
located anywhere, at any time; and in which power, information, and
control are moving from centralized systems to individuals. This era
calls for a new form of leadership and vision from the academic science
and engineering community. We know from countless examples that
academic science and engineering have enabled our society to make the
most of new technologies. We wouldn't have today's advanced computer
graphics systems if mathematicians hadn't been able to solve problems
related to surface geometries. We wouldn't have networks capable of
handling massive amounts of data if physicists and astronomers hadn't
continuously forged tools to look more deeply into subatomic structures
and the cosmos. Chemists' efforts to simulate complex phenomena and
predict the properties of many-electron systems have inspired massively
parallel architectures for computing. And the information made
available by the sequencing of the human genome has caused us to
rethink how to store, manipulate, and retrieve data most effectively.
It will take new insights from studies of human cognition, linguistics,
neurobiology, computing, and more to develop systems that truly augment
our capacity to learn and create. The best may be yet to come.
Despite brutally tight constraints on federal discretionary
spending, President Clinton has stepped forward to champion a 3 percent
increase (uncorrected for inflation) in NSF's 1998 budget. The
president's request is only the first step in the congressional budget
process ahead. Given that the priorities of Congress will almost
certainly differ from those of the president, it will take an
unprecedented level of input and commitment from the research community
to ensure that investments in science and engineering receive the same
strong bipartisan support they have enjoyed for generations. This 3
percent increase would enable NSF to launch a new set of investments
spanning all its directorates. This knowledge and distributed
intelligence (KDI) initiative would promote collaborations that seem
long overdue, such as linking the science of learning and cognition
with the development of technologies for teaching and learning. NSF's
role in the proposed Next Generation Internet project is also part of
the KDI package. This project would create a ``smart'' infrastructure
for research and education at colleges and universities that would
facilitate collaboration across geographic as well as intellectual
distances.
It is clear that knowledge and distributed intelligence holds
immense potential, both from a scientific standpoint and as a driver of
progress and opportunity for all Americans. Knowledge and distributed
intelligence is not just about hardware or software, but about the
wherewithal to change for the better the way we learn, communicate, and
do research.
FEDERAL R&D INVESTMENT
Senator Bond. Thank you very much, Dr. Lane.
First, we recognize the comments made by Dr. Gibbons that
the amount of money is a critically important item. The
discretionary funds have been squeezed because we have not yet
been able to come to agreement on dealing with the entitlement
or mandated benefit programs which threaten to bankrupt our
country.
Until we get that part of the spending under control we are
going to see continued pressure on not only science but other
items funded through the appropriations process, and I am
hopeful that perhaps as early as this week we will see some
evidence of bipartisan agreement that will move us in the path
of getting entitlement spending under control.
SCIENCE AND TECHNOLOGY BUDGET
Let me ask a broad, probably unanswerable question as to
the correct level in science and research development. As you
know, the NSTC put out a report that said 3 percent of gross
domestic product would be a good total investment. The
President's fiscal year 1998 budget shows an overall increase
of some 2 percent. Unfortunately, the entire budget shows a
very significant increase this year with all the cuts to come
in year 2001 and 2002, and that is not going to happen, so we
have additional pressure that I can expect from the budget
agreement.
What would you say is the proper Federal investment in R&D?
How should it be made in relationship with the private sector
investment, and what kind of tests should we be using to
determine this level?
Let us start with Dr. Gibbons.
Dr. Gibbons. Well, there is an interesting dialog going on
now as you know, Senator, that talks about how much should we
be putting into research, and it has been an international
dialog.
The Japanese, in the face of a sluggard economy, decided to
double their Federal research budget as a means of stimulating
their economic growth. At the same time, we have been trimming
ours well below the past historical trajectories.
The study that OSTP carried out suggested that the
traditional level of presently around 2\1/2\, 2.6 percent total
fraction of our national GNP, public and private, goes into
research, and perhaps as we move into the new century it would
be well to ramp that up to around 3, because we are so much
more dependent on science and technology in that future time.
It was not a recommendation, but it raised the question of
whether or not we should not be thinking about what fraction of
our national wealth should we be recommitting to assure our
future.
Now, what we have done in the past several years is try to
assure that at least we are holding on as we all struggle to
get our fiscal house in balance, and so our changes over the
past 4 years have been basically to try to hold on to our
purchasing power, but we have been unable to make the kinds of
historic increases that have been made in the past, when we are
borrowing money from the future to do it.
Now, I would suggest that our first priority, then, is to
hold on to the level of support we have, and to maintain that
support with a reasonably stable environment. We do not want a
lot of up and down in research, because it is very difficult to
plan and carry out research in that way, or to train students,
but that in the long term we might want to talk very seriously
about establishing some kind of a goal in which the research
reinvestments in our Nation would track our economic growth
over the long term.
PUBLIC INVESTMENT IN RESEARCH AND DEVELOPMENT
Senator Bond. Where public investment results in a
profitable R&D result, should the Government participate in a
share of the profits in order to reinvest?
Dr. Gibbons. The Government does clearly but indirectly
profit, because those investments in the private economy result
in taxes on goods and services. That is probably the most
assured and most efficient way of return.
At the same time, there are other measures now when public
and private sectors partner and both invest in a research
project that private investor receives certain advantages in
that intellectual property, such as an exclusive license for a
period of time.
PUBLIC INVESTMENT IN R&D
Senator Bond. Let me ask Dr. Lane to comment on that
unanswerable question.
Dr. Lane. Thank you, Mr. Chairman. Maybe I would just add
to the excellent response Dr. Gibbons just gave that, in
particular in the area that NSF focuses on, namely research and
education activities integrated in a university and college
environment, I think the payoff even for the most fundamental
studies can be immediate and large in terms of educational
benefits, because the students that flow through those
institutions go very quickly out into jobs, careers of various
kinds that take advantage of technological capability that they
get from a university education.
There is a place in which our investment is relatively
small. I think we invest from the Federal budget about $13
billion in academic research compared to a total Federal
investment of $75 billion or so.
I believe that, in deciding how much is enough and
addressing the issue of how you test to determine whether you
are there yet or not, one needs to try to look for those scale-
dependent terms of the equation. The size of our country, the
number of students that flow through our universities and
colleges, for example, and the size of our industry that will
require the knowledge and technology as it comes out of the
companies does make a difference.
So whether it should scale directly with GDP or not I
certainly do not know, but we must make a larger investment
than other countries. It is not enough just to say the United
States is at the leading edge in all of these important fields.
It is at the leading edge right now in many fields. Our worry
is about the future. But there also are the direct benefits
that come out of research activity, and I point particularly to
the educational benefits that flow from our universities and
colleges.
Senator Bond. Thank you, Dr. Lane. Senator Mikulski.
Senator Mikulski. Thank you. Dr. Gibbons, I do not want to
turn this hearing into a NASA hearing by proxy, but I do have a
few questions related to our space program if we would, and
then also to some of the roles directly related to the OSTP.
ROLE OF OSTP IN SPACE ISSUES
In your testimony you outline essentially the role of the
Office of Science and Technology in space. First, I want to
thank you for your role in helping increase space funding so
that we did not have that draconian dip that took us to $11
billion in the out-years and I felt would have decimated it, so
thank you for your very key advocacy role in that.
I want to ask two questions, one about the space station
and the shuttle, and I understand they are interlocked. We are
deeply concerned about the future of the space station because
of the role, of the involvement with the Russians.
There are, as you know, questions raised by both ourselves
as well as our counterpart in the House, Mr. Sensenbrenner,
about what are we bankrolling with the Russians? Do we have
what will then amount to a bailout operation, and if we do, are
we then foraging, taking money out of the space shuttle program
to pay for the inadequacies of the Russians failing to meet
their commitments.
RUSSIA'S ROLE IN SPACE STATION
So now, having said that, let me go to my questions. Where
are we with the Russians? Second, do you think they are going
to keep their commitments? Do we have to have this kind of
backup system, and then if we then are funding two programs
with the Russians and then our own backup to them, what is the
impact on the other NASA budget, particularly the shuttle and
the safety of the shuttle, essentially the Sensenbrenner
question.
Dr. Gibbons. Senator, first of all I want to thank you for
your steadfast support of NASA and the space science
activities. Without that kind of support we would not have
gotten where I think we have gotten today in terms of improving
especially those outyear profiles.
With respect to the station, as you know, early in
President Clinton's first term we decided to try to move toward
a full internationalization of the work and to bring the
Russians into that equation for a variety of reasons, including
their extensive knowledge of space science and engineering and
the capability of their being added to that international
consortium to make a truly extraordinary venture.
Now, we did not anticipate all of the problems that Russia
was going to have, and one never can do that, but clearly they
have run into some enormous fiscal problems here in this past
year or so. They have delivered fully on those things for which
we were purchasing from them, purchasing at a far less cost
than we could have done ourselves. Where they have fallen short
are on the areas in which they promised to furnish at their own
expense certain elements of the space station.
What has happened is that their lack of funds flowing into
their space agency has caused them to be slipping in their
schedule of a couple of important units for the space station.
We want to treat this incrementally because both Prime Minister
Chernomyrdin and at Helsinki a conversation between the
President and President Yeltsin indicated that the Russian
leadership does indeed intend to fulfill their obligations.
We would like to see that happen. We very much want to see
that happen, so we are going to make our moves as required to
maintain the station's integrity, but we will make them
incrementally rather than some sudden decision to walk away
from Russia or some other, I would call it a draconian move.
So our first move is to put a little postponement--well,
not a little, about 6 months of postponement into the launch
sequence of the elements of the station. Second, to provide
some funding to assist in the preparation of an alternative way
to maintain the station's elements in orbit as it is assembled.
This would cause perhaps a $200 million investment which
Administrator Goldin feels he can provide from internal funds
within NASA, the largest portion of them being the fact that he
has so increased the efficiency of the shuttle program that
there are underruns in this year that could provide funds
without any sacrifice in safety with respect to providing some
of this funding. It would need funding some this year and some
next year.
So we are in close negotiations and discussions, of course,
with the Russians on this matter. We would like to move
incrementally. We believe we can do it from within the NASA
budget framework, but that is still a matter to be worked out.
SPACE PROGRAMS
Senator Mikulski. Well, Dr. Gibbons, first of all I do not
doubt the technical competency of the Russians and would rely
on our scientific and administrative teams to evaluate this. I
think the condition, the situation in which we find ourselves
within the Congress makes the international space station
coalition a bit vulnerable. I do not say it is fragile, and I
do not say it is brittle, but I think that there is a very
serious question about whether that commitment, the Russian
commitment can be made.
We understand the Russian contractors themselves would
rather be doing direct business with us than going through
their own country because of the hard currency and actually
cash on delivery, and there is question that if we have saved
$200 million in efficiency, then No. 1, why should not the
American space program, the other aspects, benefit?
You know, we have been through a hard time with buyouts and
drawdowns, all of those anxiety issues that you and I have had
excellent conversations on, and I am very concerned about the
future of the station because every year Senator Bond and I and
others and our colleagues in the House have to mount a vigorous
battle to save it.
SAFETY OF SPACE PROGRAM
I think these are the kinds of things surrounding the
debate that could make the viability of the votes in--I would
not say danger, but I think it could move to a danger zone very
quickly, so I really caution the administration that they will
really need to step forward here and tell us where we are
going, recognizing the delicate international situation.
But we cannot place any American at risk either through
underfunding the shuttle, any American at risk in space without
an evacuation vehicle, and No. 2, that for all of our benefits
in trying to make NASA faster, quicker, cheaper, et cetera,
that then we do not benefit from it in another way, but that
the benefits go to the Russians.
Dr. Gibbons. I firmly agree with that, Senator. I think we
must assure that our safety record be maintained. You know, the
President asked for a review of the shuttle safety system, and
an independent and very expert group did have a look at it and
they are satisfied with the process that Administrator Goldin
has gone through in the shuttle operations.
I tend to think of shuttle and space station both as very
much our human space flight, center of investment in human
space flight, and that in the prime protection here must be
that the safety be assured. In no way will we want to sacrifice
any of the safety moves on the shuttle or the shuttle upgrades,
which I think would be a good way to invest some of this
efficiency, but neither do we want to take away from our space
science work in order to do this.
Senator Mikulski. That is right.
Dr. Gibbons. So we have to be very careful which Peter we
rob to pay Paul.
Senator Mikulski. But you see, I do not want anybody to be
robbed, because we feel we had a deal and the deal is not there
any more.
Dr. Gibbons. That is right.
Senator Mikulski. So now we are providing, kind of like--I
do not want this to be like a space savings and loan bailout
here.
Dr. Gibbons. That is why I was pleased that the President
spoke specifically with Mr. Yeltsin about this issue in
Helsinki.
Senator Mikulski. I am going to yield back to the chairman
and we will come back to the National Science Foundation. As
both the House and the Senate move on their appropriations and
this particular subcommittee I think we really need to have
clarity and specificity about where we are going, and what is
this cost to us for the involvement, and what would be the cost
if we did not provide this backup.
But anyway, thank you.
Dr. Gibbons. Thank you.
Senator Mikulski. I think you would agree this is a big
deal.
Senator Bond. Oh, this is one of many very important things
we need to cover.
STRATEGIC RESEARCH
Let me move on again and ask Dr. Lane, Senator Mikulski
several years ago called for the National Science Foundation to
increase its investment in strategic research, and NSF came
back to us identifying certain areas of strategic areas of high
national priority. These included high performance computing
and communications, biotechnology, global climate change,
manufacturing materials, civil infrastructure systems, et
cetera.
I note that the fiscal year 1998 budget request contains no
discussion nor funding profiles for these strategic areas, and
they are not included in the NSF's list of highlights and
priorities. What happened to them? What were the outcomes of
the investments in these strategic areas, and what happened to
all these strategic areas?
Dr. Lane. Mr. Chairman, Senator Mikulski, NSF is continuing
to support these strategic areas and, in fact, they are
incorporated throughout the budget request, even though they
are not highlighted or pulled together, as you have pointed
out. They really have become part of our day-to-day activities.
For the most part they came from the bottom up, out of the
research interests and capabilities of the community in ways
that most of the outstanding research disciplines and cross-
discipline areas do.
In some cases they were coordinated across many agencies so
as to take advantage of the fact that other agencies than NSF
could contribute in one or another of these areas, and it is
important to make the larger investment greater than the sum of
the parts. Such areas as global change and high performance
computing and communications come to mind. We have expanded
some of our areas, and I will be a little more specific here in
just 1 second, in what we think are particularly timely
directions.
One area that is highlighted in this budget request--it is
our highest priority for new investment and research--is
something we call knowledge and distributed intelligence. It
has a high overlap with high performance computing and
communications, but what it really does is pull in much of the
human side and much of what we learned about learning, about
human learning, about animal learning, machine learning,
putting it all together to try to move the whole computing
networking, communication, and other aspects of information
technology, one whole leap forward.
It is a very exciting area for us. It has an infrastructure
aspect to it. It has a large multidisciplinary research
challenge associated with it, and it is very much highlighted.
As I pointed out, it does overlap substantially with high
performance computing and communications.
We continue to place high emphasis on our other strategic
areas such as biotechnology, manufacturing, and materials. Just
to give you an example of some of these areas, they are all--
the amounts that we continue to track within the Foundation
cutting across the budget--are all well above what they were at
the time of my arrival in fiscal year 1993 and our discussions
in fiscal year 1994. In particular, for 1998 our support for
environmental and natural resources, including global change,
goes up by almost $10 million.
HPCC, a part of knowledge and distributed intelligence,
goes up by $16 million. There is over a $4-million increase in
biotechnology, almost $3 million increase in materials, and
over $20 million in science, math, engineering, and technology
education.
So as we talked a couple of years ago, Senator, about the
evolving nature of strategic areas, you made very clear to me
in our early discussions and in hearings that one would expect
these areas to evolve. Some will mature, some will simply
become a part of the larger program, others will change their
character to take advantage of new technologies, new
capabilities of the scientists and engineers, and that is what
NSF is about.
We still have in place at the Foundation, a high level
management committee called the Senior Management Integration
Group. It exists in order to bring the Assistant Directors of
the Foundation and the other office heads together to deal on a
regular basis with all kinds of crosscutting activities in
research and education, including these areas.
Senator Bond. Dr. Lane, if you will excuse me, that may be
a little more about frogs than we want to know.
Dr. Lane. Oh, I am sorry, sir.
GOAL SETTING
Senator Bond. The problem that we have, since we have a
very brief acquaintance with science quite a few years ago, we
need to be able to understand better what it is you are setting
out to do, and the progress you are making.
When you come up with a whole new set of schemes and ideas
and come forth with a brand new program, they all sound good to
us, but as we proceed in the budget process we have to have a
more definable area as to what your focus is going to be, how
you know whether you are making progress in that area, and so
we can when challenged on the floor tell our colleagues that
here are the high priority areas, and this is the progress.
I know in basic research it may be 20 years before you come
to a final result, but we had better be able to find some way
to explain to lay persons, who at least 99 out of the 100 are,
whether we have made any progress. Are we getting there?
We are most impressed with and supportive of the scientific
skills and knowledge you bring, but in the budget process we
need specific things like an ability to say, well, we are
getting these results. This, I think, is a problem that we
face.
We need to have a common framework of projected goals that
you can explain to us in simple enough terms that we can
understand and share with our colleagues, and so next year when
you come back you can tell us either, (a) we met the
milestones, we met the guideposts, or (b) we didn't, and here
is why not.
I would welcome any comments you might have. How can you
tell us in concrete, definable terms what it is you are doing?
MEASURING THE IMPACT OF RESEARCH
Dr. Gibbons. I might just add a vignette. I think as you
understand, and Neal Lane has pointed out, the closer you get
to the fundamental science the tougher it is to do this thing.
You can look at the number of Noble Prizes, you can look at
citation indexes in peer-review journals, you can look even
farther back at that stream or flow of research into satisfying
national needs and concerns, and all those look like pretty
good numbers. The question is, how can one put this in a
tighter framework?
There are some areas, for instance in the development of
supercomputers, in which goals have been set. The teraflop was
a goal that was established. Just last year it was met and
exceeded ahead of schedule, if anything, so there are those
particular areas where one can identify and put down a marker
and then measure against it in a much clearer way.
I think there are some interesting markers coming up, for
instance, that have not yet been defined, but one marker is can
we continue this extraordinary improvement in semiconductors
and microelectronics called Moore's Law, which says roughly
every 3 years you have the cost of the chips, and the question
is, how long can we continue that before we run into some real
limits of science, and, therefore, what are the areas of
science most needing advancement in order to be able to
continue on that curve?
GPRA
Senator Bond. Dr. Lane, did you want to comment on that?
Dr. Lane. Yes, Mr. Chairman. Let me add that we really
think this is how we should be thinking about the results act
for the investments that are made in science and engineering by
the National Science Foundation. We need to be able to identify
clearly stated objectives that we can agree on which will
provide a basis to evaluate how well we are doing, and we, in
fact, are working on that very hard. It is not so easy to do.
Perhaps it is not easy for anyone to do, but it is
particularly challenging in the area of fundamental research,
where quantitative measures are not likely to be very helpful,
and where even qualitative descriptions might only provide
guidance over some period of time.
So for example in our budget, we report examples of major
advances in one or another field of science, any of which
overlap. Biotechnology for example, where plant communication
and response to attack is an interesting area. Our progress on
unraveling the genome of Arabidopsis, a little mustard plant,
makes progress here.
There is much that we could have described about materials
and manufacturing and many other areas. That is our challenge,
to try to identify a descriptor that will satisfy your needs
and our needs to measure our progress.
Senator Bond. Clearly I do not have the ability--I speak of
myself--to establish clearly what the milestones and guideposts
are, but we need to have those from you in ascertainable terms
because I assume that you do not just throw money out in the
hope that 20 years later something good is going to come out of
it. There has got to be some kind of measure, and that has to
be explainable.
That may be the toughest thing explaining it to people like
me, but to continue to support it we have got to have that kind
of promise, performance, and report on the progress.
Senator Mikulski.
Senator Mikulski. Thank you, Mr. Chairman. You have really
covered my questions on both the strategic initiatives and the
so-called Government Performance and Results Act, known as
results act, so I will not go over that ground.
I just want to affirm that my position is that Government
is not involved in commercial research, and so I am going to be
very clear when we talk about strategic research that
Government really helps by both directing and then leveraging
in other areas the precompetitive research, the basic
knowledge, but that we are organized around these strategic
goals which we know this century demands.
YEAR 2000 COMPUTER DILEMMA
However, I do believe that both the Office of Science and
Technology and NSF could play a role in solving a juggernaut
problem that is presenting itself to us, and that is, what
happens to all the computers in the world when we hit 2000, the
so-called year 2000?
I wonder, as part of the science and technology role, and
then really where so much information technology is developed
through the NSF and I believe NIST have really been the two
agencies most responsive, what is the White House role and the
NSF role in working to come up with a solution that has
enormous ramifications for not only the public sector but the
private sector, or should we say do it the American way and
offer a $1 billion, or a prize to anybody in America that comes
up with it?
Dr. Gibbons. That is the best idea I have heard in a long
time on that issue, Senator, the one you just mentioned. I
would like to respond to that, but may I do just a postscript
on this assessing outcomes of research, because I think it is
really important.
There are two things I should have mentioned to you. First
is that the National Science and Technology Council, with OSTP
and Neal Lane's direct involvement, completed a study last year
called Assessing Fundamental Science. We are now using that
report with the agencies in their preparation for the GPRA, so
we hope we are sharing wisdom across the agencies.
The second point I should have mentioned is that at the end
of each of the chapters in our biannual report on science and
technology is a discussion of the accomplishments over the
previous 2 years, so it gives at least a benchmark for that
progress.
Now, with respect to the year 2000 issue, which is what
happens when you get the double zeros and the computers do not
know what to do about it, there is going to be no magic bullet,
but it was a uniformly missed concern in programmers throughout
the years in thousands of different programs about how to
handle the double zero. Each program has to be reviewed
technically, so across Government as well as the private sector
there is a sharing of experience.
ROLE WHITE HOUSE HAS IN SOLVING YEAR 2000 ISSUE
Senator Mikulski. Are you all taking the lead? In other
words, who is taking the lead?
Dr. Gibbons. Well, the lead within the White House I
believe is both the National Economic Council and OMB because
it is more a business and programming issue than it is a
science issue.
Honestly, it is not a science issue. It is an issue of
having not thought very well in advance about these programs as
we get to the millennium.
Senator Mikulski. Where is the solution going to come from?
Dr. Gibbons. The solution is going to come--Neal may have a
special one for you, but I would say the solution is going to
come from a number of innovative approaches to fixing these
programs and records so that there will be minimum problems as
we cross the millennium. It is happening all over the world. It
is not just a U.S. issue.
Dr. Lane. Excuse me. May I add a comment, Senator?
Senator Mikulski. Yes.
YEAR 2000 ISSUES
Dr. Lane. There are millions of lines of computer code all
around in businesses and governments, and somewhere buried in
there is a statement that deals with this issue of how to
handle the flipover, and it has not been dealt with in much of
that code. There really is no magic way to get into all of
that. We are focusing with OMB in making sure that our agency
does not have any problems, and I am assured by my Chief
Information Officer that we are on schedule with that, but it
really is not a research problem. It is not an area where the
National Science Foundation or other Federal agencies can
somehow support research that will take care of it.
All of us who deal with computers are just going to have to
find these problems before the time happens.
Senator Mikulski. I find these answers dismaying,
gentlemen. Everywhere I go in my own State and even outside,
talking with people, this is one of the No. 1 issues facing
business, Government, academic centers, et cetera, what is
going to happen with this so-called flipover, as you said, that
could throw us into chaos, and there is enormous concern from
the private sector about this.
I can go on where the concerns are, and just as there has
been a missing of the problem, there seems to be a missing of
the solution, and I am somewhat surprised--I do not know if my
colleague shares it--that there is not a one-stop shop within
our own Government that wants to take the leadership in helping
deal with this issue, and it might not be research, but I do
not know, then, what it is.
To say it is a business problem, it has horrendous
implications for national defense, our encryption, our
banking--it goes on. I could name so many different sectors,
and frankly, I think this is where the United States should be
playing a role in global leadership and global cooperation.
I know it is a global problem because computers are global,
but if we are going to have all these, let us wire schools, and
let us do Kid Net, College Net and so on, unless we deal with
the year 2000 issue we are truly going to be in a global
meltdown.
Dr. Gibbons. Senator, I agree with your statement of the
importance and the pervasiveness of this problem. The
frustration is, as Dr. Lane points out, it is buried in some,
however, mundane computer line codes down in all of these
various programs. Each agency--for instance, the Department of
Defense, Social Security----
Senator Mikulski. Are you telling me each agency is going
to have to solve its own problem, that each business is going
to have to solve its own problem?
Dr. Gibbons. They are going to have to solve their own
problems, but hopefully we will be able to share, and this is
where I would like to pick up on your comment, share on each
other's experience, and I promise you that when I get back to
my office this afternoon I will look into the extent to which
appropriate sharing of innovative ideas or progress is being
made.
I have not focused on this recently, but you have gotten my
attention for sure.
YEAR 2000 FLIPOVER
Dr. Lane. I am aware that OMB has thought through the
phases of activity, advising all of the agencies to go through
this process, and they are scheduled for that, and we are on
that schedule. I am sorry that I do not have those things with
me today, but OMB is at least playing a very important role
here.
Senator Mikulski. What role do you play?
Dr. Lane. Our role is to ensure that we follow those
guidelines and make our whole system work.
Senator Mikulski. Are you helping to write the guidelines?
In your testimony, Dr. Lane, you talk about how you are one of
the premier agencies in funding information technology
knowledge and sharing your networking and micro this and
parallel that, and I am not minimizing this. I do not want this
to be a cranky hearing, but if you aren't, then what the agency
is, are you in the room? Are you helping them solve the
problems? Is there a sense of urgency? Is there a collaboration
here, or is it OMB?
I know--you know, I really do not feel comfortable with OMB
being the lead agency. They are management and budget of this,
and given the way every single agency in the Federal Government
that even buys information technology squanders its resources,
we have no leadership advising the agency on what they should
even buy now.
NEED FOR BETTER COMMUNICATION/COORDINATION
We could go to IRS, we could go through every--the veterans
and what they buy, et cetera. So do we need a White House Chief
Information Officer that does all that and tells these agencies
what to do? That is another topic.
But now, there is one issue that the world knows that it
will face, that there will come a year 2000, and all of the
computers in the world are going to have a problem, every
single computer in the world is going to have a problem, and
all dependent on it are going to have a problem. Well, maybe
not every single--I mean, you are shaking your head.
You know, I am a generalist here. I am on five
Appropriations Committees. I am on two other committees. We
work on FDA reform. We really rely on you.
But I am really relying on the United States of America to
have (1) a sense of urgency, (2) a one-stop shop that we are
coordinating this, that this is not a management issue, it is a
serious technology issue, and the guidance that we can offer
the world and that we can gain from other thinkers in the world
I think is absolutely crucial, and obviously the sense of
urgency I feel from the private sector and other local and
State government agencies is not what is felt.
Do you share this view or not?
Senator Bond. Senator Mikulski, when we talk about computer
technology my lack of knowledge is infinite, and as one who
still relies on a Rolodex----
Senator Mikulski. And under Moore's law, that will multiply
manyfold.
Senator Bond. Well, I carry these things around, so really
my own personal life is not going to be much more difficult if
I get to 2000, because I will just get a brandnew card with the
knowledge on it, but from my very limited understanding----
Senator Mikulski. But it is going to say 1900.
Senator Bond. Not mine. Not mine. [Laughter.]
YEAR 2000 FLIPOVER ISSUES
Let me ask you two gentlemen to collaborate and do one
thing for the ranking member and me. It seemed to me--this is a
humongous problem that is going to afflict everybody who uses
computers, generations younger than me and those who are into
the computer age.
It would seem to me that this is a problem in applied
technology and programming that is not rocket science but it is
very complicated real time technological unscrambling of
something that has been scrambled.
There may be some high-level scientific input that is
appropriate, but it seems to me that there may be a technology
body or a technology focus that would be the appropriate one to
coordinate the efforts, that it may be a different level of
science, and rather than continuing it, if you would all just
send us a very brief memo, two pages, who is going to do it and
what you see as the resources and needs on it. We would like to
have something.
[The information follows:]
Year 2000 Computer Concerns
There appears to be no generic solution to the Year 2000 problem.
The reason is to be found in the economics of and practices used in the
early days of widespread computer use.
In order to save on what was then very expensive memory (which in
the mid sixties cost about $1/byte, compared to the present cost of
roughly $0.000005/byte, which equals $5/megabyte), many business and
other systems coded the year as two bytes or in some cases at two
digits in one byte. This served immediate purposes well and at an
acceptable cost. The standard procedure for determining which year is
earlier consists of subtracting the old year from the new and testing
to see if the result is positive. Once again, to speed up the operation
on relatively slow computers or to save memory, many codes did this
``in line'', i. e. the instructions were imbedded in the instruction
stream to be used whenever needed. Such calculations could occur dozens
of times in a business system.
An additional problem arises because of how many ``legacy systems''
were programmed. In the 1960's and 1970's many applications were coded
in assembly language, specific to a given processor type. The primary
reason for this was to obtain maximum performance on slow systems.
Difficulties in addressing problems arise because this kind of code is
difficult to interpret or read. Further, in many cases, the processors
in question no longer exist, although the code is still running by
emulating old processors on new ones. Moreover, many organizations did
not put into place adequate means for maintaining software.
This complexity and diversity is what stands in the way of a
broadly applicable procedure for resolving the Year 2000 problem. The
result is that in legacy systems many of the problem sections
associated with the date comparison must be found by hand in a
laborious fashion and the results tested as comprehensively as
possible. Such actions will, in the case of more modern software,
especially that produced by third parties and widely used on standard
architectures, be easier to fix.
GENOME STUDIES
Senator Bond. But let me move from these wonderful broad
generalities down to the specific. I mentioned the corn genome
project. We have had tremendous growth in technology in
agriculture, more food, healthier food, less expensive, more
nutritious, and we are going to continue to need to do that
with more people on less land.
One hundred years ago, 60 percent of our population was
engaged in providing food. Now, maybe 2 to 3 percent is. An
acre that produced food for one person in 1960 now produces
food for two and one-half today, and biotechnology, plant
genetics and specifically, I believe, carrying the work from
the mustard plant on to the corn plant is going to be one of
the significant steps that we take that will benefit all of
agriculture.
We know that Japan is deeply involved in mapping the rice
genome, and rice may be appropriate for them, but when they get
the mapping done on the rice genome they are going to be in a
very significant competitive position to expand that into other
grains, and it seems to me that No. 1, I know there are a
number of groups in the private sector, there are a number of
disparate efforts underway on this project.
I would like to have your honest opinion, and if you think
I am wrong, please tell me. I promise no retaliation. I just
want to know, is this from a scientific standpoint as
significant an effort as I believe it is? If so, what role
should the NSF and Government science play in this?
If it is important, what is the best way to organize it and
manage it so that all of the different efforts are brought
together in a consistent and productive and complementary
fashion?
Let me start with Dr. Gibbons and go to Dr. Lane.
Dr. Gibbons. Mr. Chairman, I applaud your interest in this.
The whole food genome is now, in the current decade, ripe for
major advances in understanding, and I think we have a lot of
lessons to learn from the human genome project, which is
working very well. It is achieving its goals. It is reducing
dramatically the cost of sequencing and the like, so other
things become less costly than they would have been.
At the same time, in approaching corn, which presently is
mostly the subject of research at USDA--I think they are doing
the majority of the work at this point--corn has to be taken in
the context of the other grasses, because you might learn
faster and cheaper about corn by working on some of the grass.
We are not quite sure.
So I would suggest that we push ahead on this notion of the
food genome program, which would inherently be best done as a
multiagency activity. Presumably USDA leads, but we know that
NSF, USDA, Department of Energy, all are, and obviously the
health agencies, are all pretty well working together now, and
if we could focus this and take the best of the capabilities of
each of these agencies in a food genome program, that would be
the best way to get there.
I do not think we can do it, as I think you intimate, with
existing funds. It will probably take some additional
commitment of funding to do this.
Senator Bond. Dr. Lane.
Dr. Lane. Mr. Chairman, I also commend your interest in
this area. Undoubtedly, understanding the genomes of plants is
going to continue to be very important for agriculture.
ARABIDOPSIS GENOME PROJECT
Let me say a word about why we have focused on the mustard
plant, arabidopsis. There are very good reasons for it. First
of all, how are we doing it? It is an international project.
There is an international steering committee that we are
involved with in countries in the European Union, United
Kingdom, France, and in Asia, Japan, working together on this.
Why did we choose this mustard plant? Well, one of the
unique things about this plant is that its genome is the
smallest, as far as we know, of any flowering plant. So, if we
can sequence the genes in this plant we can gain the tools and
the understanding that will then enable us to do things with
other plants, to transfer properties, and in time to realize
the benefits over a larger class of important food plants and
other plants that benefit people.
How much simpler? Well, the genome size is 100 million base
pairs. For corn and for humans the number is approximately 3
billion base pairs, so corn, while I think corn is terrific,
and it does not look a lot like a human, on the other hand it
has got this extraordinarily complex genome.
So our approach is to understand a plant that replicates
itself very fast and that flowers rapidly. It is not of any
commercial value, so an international partnership is very easy
to form. Nobody is worried about intellectual property on the
mustard plant, and the partnership has worked extremely well.
The tools we get from that plant are going to help us in
many, many ways in trying to understand the genomes of corn and
wheat and barley and rice, and I agree with Dr. Gibbons that
the way to get at some of these others is through many
agencies' involvement and perhaps international activities,
where we can forge those partnerships.
We think that our investment is the right way for NSF now.
It is an active partnership that ought to deliver the full
genome for arabidopsis around the year 2002. We are requesting
about $3 million in 1998 to continue this work. It is being
carried out by a couple of consortia, one of which involves
Washington University in St. Louis, and one organization doing
this work is the Institute for Genomic Research in Maryland.
Senator Bond. Those are very well chosen examples.
[Laughter.]
Nice target on the examples. [Laughter.]
Dr. Lane. It really turns out that there are two consortia
and two institutions. One of the consortia involves Missouri,
and one of the institutions is in Maryland, so I just think it
shows there is wisdom in those States at least. [Laughter.]
Senator Bond. I am always struck by your farsightedness and
your intuitive sense of what is important. [Laughter.]
FUNDING FOR AGRICULTURAL RESEARCH
As we speak, the Under Secretary for Research Education is
testifying before the Agricultural Appropriations Committee,
and I intend to submit a question over there asking whether
funding should be included in the fund for rural America
instead of excluding it, but there are a couple of points I
guess I ought to make.
We talked abut the USDA, and I have supported much USDA
research, but applied practical research on things like dealing
with soybean nematodes, some practical applications, and the
Food & Agricultural Policy Research Institute does economic
research. The fescue problems in feeding cattle are really the
strong point of research in the USDA.
But we know that there is currently research going on in
this area, and what I am concerned about is that there is
significant resources being put in piecemeal. There are
uncoordinated, underfunded, proprietary limits. There is some
redundancy. It is unfocused.
Now, I recognize and I strongly support that private
funding should be utilized extensively to the greatest extent
possible, but there ought to be some way through your agency or
agencies that progress, or the paths could be coordinated so
that at least someone would have an idea of where progress is
being made.
POTENTIAL CORN GENOME STUDY
The reason that we focus on corn, and I recognize that it
is a second step, or something like it is a second step after
the mustard plant, is that it is our highest value crop. It is
our most exported crop. Scientists say that of the cereal crops
it makes the most scientific sense to begin with corn. That is
what the experts have told us, that you ought to begin with
corn because you can move from there.
They have told me that doing corn would yield the most
information on other cereals, and the industry itself is coming
forward with a business plan and they are willing to bring in
resources and organize major funding for it, but if it is more
appropriate to begin a 5-year plan to map the genomes of other
cereals, if that makes more scientific sense, please let us
know.
REQUEST FOR INTERAGENCY MEETING
I would ask--maybe Dr. Gibbons you would be the appropriate
one--if you and your staff could arrange an interagency meeting
with the appropriate agencies and departments, including NSF
and Energy and Agriculture and NIH, to lay out not only for us
but for all those who are interested in what an appropriate
strategy would be.
Scientifically, how can we make the most progress where
there will be benefits to agriculture and to all of us who
enjoy the benefits of agriculture--i.e., we eat--in this area,
the mapping of the genome, whether it is corn or whether it is
all cereals, and give us a game plan that we can understand and
that the private sector can relate to, provide input to, and
provide assistance and research.
Is this something that would be appropriate for you or for
the NSF?
Dr. Gibbons. Absolutely. I would be pleased to put together
an interagency working group on this, Senator, and get as early
as possible feedback to you on an interim basis of what we
would suggest as the most appropriate and efficient way of
going about this as a Federal family, also keeping in mind that
we should look for partnerships with the private sector and
perhaps the States on this as well.
Senator Bond. Well, clearly there will be just for one
example the University of Missouri has a very well recognized
program, Food for the 21st century, which has brought together
tremendous scientists with plant biotechnology skills and the
universities and the State government has supported it very
strongly.
I think that there are resources out there. You are the
ones to take the lead in identifying how to use those
resources.
Dr. Lane, a comment on that?
Dr. Lane. Mr. Chairman, I do not know what the right thing
to do here is. I think the outcome is very important. It may
well be that we need to understand the series of grasses
better. After we go from the mustard plant, then it might be
that an intermediate step before going to a genome as
complicated as corn is the proper strategy, but I am not sure.
I think we certainly look forward to participating with
other agencies in this discussion and getting the best advice
of the scientists in the country, and then there is excellent
fundamental research to be done here, and NSF would expect to
be part of it.
FUTURE OF GENOME STUDIES
Senator Bond. Could you give me an idea--it is going to be
done by somebody somewhere. A cereal is going to be--the genome
is going to be mapped. What are the benefits? What will happen?
What do you see as the likely area of benefits when the job is
done for something more complicated than the mustard plant,
whether it be the rice genome in Japan, or a cereal genome
here? What is likely to come from it?
Dr. Gibbons. Well, it is very hazardous to make guesses on
areas like this, but I am getting old enough to not be worried
that much about it, so let me make a few guesses.
Senator Bond. Good. Good. Nobody will hold it against you
if you miss this one.
Dr. Gibbons. Corn probably has at least one-half as many
genes in it as people do. It is a very complicated plant, but
those genes do various things. They turn on and off things.
They make various proteins that cause various things to happen,
and if we could learn the structure of corn we can figure out
from other research how we might be able to insert, for
instance, the capability of corn--and these are going to be
wild guesses, Senator, but sometimes it helps. How to insert a
gene that would enable the corn to be even better in terms of
its protein production. You know, corn is typically lysine
short and maybe you could figure out how to get lysine in the
corn.
The second thing is how to maybe make corn perennial. There
are primitive corn plants in Mexico that are perennial, and
that would change very much the situation with respect to corn
growing. It is a long shot, but that is a question.
Another question could be corn that would attract microbes
to its roots and enable it to fix nitrogen, like our legumes
do.
Senator Bond. Clover and legumes.
Dr. Gibbons. These are wild stabs, but those are the sort
of things one would look for after we come to understand the
structure of the corn genes, their functions, and how one might
be able to manipulate by bringing in certain special functions
into the corn genome.
Senator Bond. One of the items suggested to me was by
making corn more digestible you would make it a more efficient
feed for cattle and eliminate the environmental problems which
always draw laughs on the floor of the Senate when discussed as
being a significant environmental problem as a result of the
indigestibility of corn that is fed to many of the herds.
Dr. Lane, any thoughts that you would like to offer on the
higher noble uses of the corn genome?
Dr. Lane. Well, Mr. Chairman, I think the examples that Dr.
Gibbons gave are excellent ones, and we will want to check back
down the road to see how well he did.
Dr. Gibbons. Uh-oh.
Dr. Lane. I think an obvious thing that we are interested
in, in the cases of all valuable and useful plants, is disease-
resistance, and we want to be able to make these plants
disease-resistant in a way that has the least damaging
environmental impact to the plant itself, other plants around,
people, animals and so on, so it is a clear area in which I
think researchers will be looking.
I like chocolate a lot. I do not know if there is any way
to change that substance.
Senator Bond. If you could make it less fattening, I am
with you on that one. We will have a special set-aside if you
find a solution to that one. [Laughter.]
I do not want to get into your business, but if you give me
a promising area there we will steal money from some place to
make that happen, to make that nonnutritive but delectable.
EXAMINATION OF GOAL SETTINGS
Let me just ask, let me go back to my questions about what
we are doing, and how we are going to get there. There are two
things you have talked about, knowledge and distributed
intelligence, and life and Earth's environment. Would you try
to explain to me briefly what you are doing in each of those
initiatives, why you chose them, and precisely what mile
markers, guideposts you will set out for us to tell us whether
you have been successful in the progress that you propose or
expect in these two areas?
Dr. Lane. Mr. Chairman, if I could just make a comment, I
would like my colleague, Dr. Joe Bordogna, who is Deputy
Director of the Foundation, to add his comments. He chairs the
senior staff group that, in fact, developed the programs in
these interdisciplinary areas, and I would like to get his
comment on those.
There are two things about them. First, the research that
falls within the interdisciplinary areas really does arise out
of the community. It comes from what scientists are interested
in and what they can do, and the advances that they have made
in recent years.
What they have begun to see is a commonality of interests
across all fields of science in information, science and
technology, and we are going to build on that because we see
real benefits not only for the science itself but benefits of a
more practical nature. Education clearly relates to these
advanced technologies that are coming out of KDI.
The second thing I would say in terms of the objectives and
matrices that we will use is, we are working on those. Those
will be a part for the long range of our strategic plan that is
due to OMB this fall. The particular objectives for the fiscal
year 1999 will be a part of the submission of the 1999 budget,
as required by the act, so it is a work in progress, and we
will give you as much information on how that is going as we
can.
Senator Bond. Do not bury me with information. Just give me
something that is clearly understandable, because if I have to
defend it on the floor I am not going to be able to give a \1/
2\-hour speech. I need to have just a simplified explanation of
what it is all about, why it is important, and how we know we
are getting there.
Dr. Lane. Let me ask Dr. Bordogna to start.
Senator Bond. That is very simple, and you have 90 seconds
on each one. [Laughter.]
KNOWLEDGE AND DISTRIBUTED INTELLIGENCE
Mr. Bordogna. We are not wedded to this term, knowledge and
distributed intelligence. It is the moniker at the moment,
because this is something at the edge of the knowledge base,
but there are two pieces to it.
Distributed intelligence is a term we use because we can
now, more and more of us individually, access knowledge from
any place, any time, anywhere. That is a strength the United
States has. We would like to enable more people to be able to
access it, and when they access this information it is more
facile to get it.
It is very complicated to interface with a machine now, or
a keyboard. Wiring the school is good, but once you have the
interface with the students, how can they access this
information and learn from it better?
The knowledge part means, can we create a whole new
knowledge base for doing things differently? For example, in
the strategic area of manufacturing, we have done a lot of
things there the last several years to move that strategic area
ahead. Five of the last six engineering research centers in the
last couple of years deal with manufacturing.
One of the key issues there is using information to make
manufacturing less expensive to do, be more competitive in
world markets. Can we, for example, take this Moore's Law that
was talked about--yes, we can get more in a small space. That
creates a new problem of packaging things better, and that
needs a knowledge base for doing that.
Manufacturing is done in many places from anywhere at any
time, and having a broadbased infrastructure that is
intelligent as well as having the Internet can be helpful for
that.
Another piece of this is what we call learning and
intelligence systems. The idea there simply is, can we augment
a capacity for each of us, at any level in life, not just
professionals but everybody, to learn and create more
efficiently? Can we work smarter in this? This is a key basis
of distributed intelligence, increasing the knowledge base of
everyone to do things better, including craftsman, carpenters,
plumbers, and well as professional people.
On the high end, we will do our research differently and
more efficiently. We will share resources around the country.
One of the problems we have in equipment now is that the
equipment need to push back the frontiers of knowledge is
increasingly expensive. You cannot have it repeated in many
universities. We have to share this infrastructure equipment.
Having a knowledge and distributed intelligence infrastructure
will enable us and enable our clients, in a sense, the people
we support, to share instrumentation, to be able to do their
research better.
A nice neat aspect of this is with regard to the EPSCoR
effort. Many States and universities cannot afford the
equipment needed, but with this kind of system they are going
to be able to access it everywhere.
We have a cute term called collaboratories, collaborative
laboratories, collaborative meaning working together.
All of this is coming together. We are trying to integrate
all of that to lift the knowledge base to a level where people
can work smarter, and a greater range of people can work
smarter. We can also change, perhaps, the paradigm of
education.
One bottom line here is that life and society as we have
known it so far is essentially entity-based, companies,
schools, and so on. All of this is enabling this whole effort
to be human-center based, where the individual is empowered
better.
So knowledge and distributed intelligence, in summary, is
the ability to get knowledge anywhere, any place, at any time.
The knowledge part lifts the knowledge level of everyone, and
lets us work smarter. It provides a certain competitive
advantage against the rest of the world, and it also enables
progress in all the strategic areas that were listed in the
last several years. It is going to help us move ahead.
SUCCESS INDICATORS
Senator Bond. I agree that is noble. It is very important.
Next year at this time how will we know if you have made
progress in that area? How will we make sure that you have not
just blown the money?
Dr. Bordogna. Well, I will give you some examples. That is
the best way to do it. Let us take manufacturing. Some
strategic areas have been brought up. Let me relate it to that.
Right now, the interagency effort in manufacturing, which
is still extant, is into a new way of looking at manufacturing,
and that is, now that we have distributed intelligence, now
that we have a high-speed network, now that we can enable even
small manufacturers to get access to the best ways of doing
things, we can measure next year, whether new engineering
research centers arise, for example, because of this effort.
Five of the latest engineering research centers arose
because of the strategic effort in manufacturing. We did not
spend extra money. We reoriented the investment in engineering
research programs to these new issues.
Another example would be if we were able to take the wiring
of the schools, for example, and we could see that students are
learning better, that their scores are increasing, for example.
These are measures of how to ensure that this infrastructure
base is really moving us ahead.
LIFE AND EARTH'S ENVIRONMENT
Senator Bond. All right. I would be interested to see, and
I would ask you to submit for the record what you think these
markers would be, and then suggest that next year we get a
report on which of the markers have been achieved, or whatever
markers there may be.
Life and Earth's environment, just a quick synopsis of
that. Not that it is not rather broad.
Dr. Bordogna. We are trying to do two things here. One of
the things that has happened over the past few years is that a
lot of new knowledge has been created on how life is formed,
where do we come from, and many, many venues of research. That
is an important issue. We are at the cusp of learning a lot
very, very fast.
The environment is an issue. The environment is a concern
because we have to live in it, and so on, so life in the
environment on the Earth is an important issue for NSF, and we
are trying to couple these two things.
From an environmental point of view, we have really two
issues there. One is to ensure that the environment is
sustainable as we know it, that we can somehow get into a
system of producing wealth while not impacting the environment
obviously. We also want to be able make wealth out of that
activity, however, so one of the issues we have a very serious
interest in at NSF is how to avoid harm to the environment in
the first place.
It is a very technologically based kind of thing. Can we
apply technologies to the processes that we use in life to
create wealth and lift our standard of living, while at the
same time creating businesses out of that so that it can be
wealth created out of the idea of working with the environment.
The bottom line here is that we are trying to connect the
issues of where life has come from, understanding that well,
with all of the ramifications that means for our progress and
health and so on, with sustaining the environment so that we
have a livable society.
[The information follows:]
NSF Initiatives in Knowledge and Distributed Intelligence (KDI) and
Life and Earth's Environment (LEE)
NSF's initiative in Knowledge and Distributed Intelligence (KDI)
addresses the question of ``what's next for the computer-communications
revolution?'' We have already seen advanced information technologies
transform how research is conducted. We have glimpsed how they can
dramatically improve teaching and learning in schools and classrooms at
all levels of education. We have seen the Internet grow into a
veritable global village. We have even seen a supercomputer crowned
champion of chess.
In fiscal year 1998, NSF plans to initiate its targeted KDI
program. We will issue focused program solicitations in specific areas
of research, based on workshops currently being held. In the first year
of this program, NSF will support scientists and engineers, selected
through the merit review process, to begin working in focused,
multidisciplinary areas, on problems such as those described below.
Through this first KDI competition, we will gain a better sense of the
range and type of questions that researchers consider most pressing,
while enabling researchers to begin working on those problems.
After the first year of KDI, we should be able to show that NSF has
indeed funded important research projects in this area. We should be
able to describe, both generally and in detail, what those projects
are, what they are setting out to accomplish, and what the priorities
for research within KDI are. Through review of the merit review
process, we should be able to show that the projects selected for
funding are competitive and of very high quality. We will also be able
to demonstrate the outputs of NSF's processes--numbers of proposals
received, awards made and people involved, and lessons learned from the
merit review process for the initial KDI competition. We will, however,
not yet be able to identify what scientific or technical results have
been achieved or even much about the training and educational results.
In subsequent years, NSF should be able to show the accumulated
research results from these awards, and link these to NSF's outcome
goals. The initial awards made in fiscal year 1998 will be generating a
stream of outputs and outcomes. Indeed, we are currently developing a
new Web-based project reporting system that should allow us to collect
much better information on direct outputs from awards. Even then,
however, many of the truly important ``outcomes'' of KDI--the knowledge
gained, the training of scientists and engineers, and the education of
students--may still be years off.
The challenge for KDI is to develop new ways to manage and make
productive use of the flood of information released by these emerging
technologies. To address this challenge, we need first to create new
ways of collecting, transforming, representing, sharing and using
information. We need to develop ways of modeling complex systems,
managing vast amounts of data, and merging data and models. We need to
effectively harness these new technologies to improve education. In
short, we need to mobilize them for the benefit of society.
NSF's KDI initiative will lay the scientific and technical base for
these next steps. It will address a wide range of highly complex issues
such as:
--New technologies such as satellite and airborne sensors, and
automated or remotely-operated sampling stations are generating
an explosion of geospacial information. Integration of this
data is necessary to proceed with multidisciplinary research on
problems such as environmental phenomena (e.g. the Ozone Hole),
and using real-time data to understand and predict storms.
--Taxonomists are building a Web-linked network to share databases,
and to analyze and identify specimens. A major challenge they
face is managing and coordinating the amount and complexity of
information. However, the availability of quick and accurate
taxonomic identification would be valuable for uses ranging
from agricultural extension agents encountering a new weed, to
customs officials interdicting imports of new biological
materials, to geologists searching marine cores for fossils
indicative of petroleum deposits.
--Systems as dissimilar as an economic market, the brain, and large
computer networks have this in common: information is widely
distributed throughout the system, and no identifiable entity
coordinates the information or makes decisions. Yet, this
information is somehow coordinated and focused into sensible
outcomes. Researchers in disciplines ranging from economics to
neuroscience to mathematics and computer science currently
study these types of systems separately. Collaboration may
reveal similarities in how these systems function, and hence
how to improve system performance.
--Most simulations of complex phenomena generate vast volumes of
numeric data. Whether these simulations address natural
processes--the collapse of a star, global weather patterns,
groundwater flow, or the function of the nervous system--or
engineering or social processes--the management of electrical
power networks, fluid flow around an airplane, or the behavior
of financial markets--the phenomena are too complicated to be
understood either by simple observation or by reduction to
isolated components. The only hope of extracting useful
information from those volumes of data depends on visualization
techniques that are beyond current capabilities.
NSF's initiative in Life and Earth's Environment (LEE) seeks to
increase understanding of the mutual interdependence among Earth's
lifeforms and the environments that affect and sustain them. LEE builds
on the exciting new discoveries regarding how lifeforms originate and
flourish in a diverse range of environments. These discoveries have
challenged traditional conceptions of the origins and conditions for
life. LEE also focuses on the interactions between lifeforms and the
environments they inhabit, ranging from desolate parts of the world
where few lifeforms survive to urban complexes dominated by human
activity to tropical forests where flora and fauna abound.
NSF initiated its targeted LEE program in fiscal year 1997 by
enhancing existing programs in areas such as global change, natural
hazard reduction, and the NSF-EPA Environmental Partnership. Fiscal
year 1997 also saw the conduct of a special competition focusing on
Life in Extreme Environments (LExEn). During fiscal year 1998, NSF
plans to continue these efforts and to expand its coordination
activities. A set of workshops and studies will be held to stimulate
identification of new lines of inquiry, and special competitions
focused on urban environments will be held. NSF also will encourage the
development of new educational approaches that will initially focus on
life and Earth's environment but that ultimately will be useful in
improving science and engineering knowledge for people at all levels
across a broad range of topics.
Looking beyond fiscal year 1998, NSF will encourage increased
interdisciplinary work to address a set of integrating themes
associated with Life and Earth's Environment. Through the merit review
process, NSF will identify those projects for which potential
contributions in expanding and disseminating knowledge are especially
great. As with KDI, we will be ale to demonstrate the output of NSF's
merit review process, but it will take a decade or longer for the
ultimate outputs and outcomes of NSF's investments to become clear. The
new Web-based project reporting system that NSF will be implementing
during fiscal year 1998 will provide improved means for identifying
both short- and longer-term products and contributions of LEE research
and educational projects.
An expanded emphasis on support for research and education dealing
with life and Earth's environment will enable us to build on the
exciting new perspectives provided by recent discoveries; enhanced
capabilities for making observations, conducting analyses, and making
predictions; and growing awareness among the scientific communities and
the general public regarding the potential value of increased knowledge
about life and Earth's environment.
Increased understanding about life processes and the interactions
among lifeforms and other facets of their environments gained through
LEE could address issues which affect all Americans. For instance,
citizens would be better able to assess how changing environmental
conditions may affect their health and well-being. Industrial firms
could have a sounder basis for developing and implementing productions
techniques that will stimulate economic growth while improving
environmental quality. Local governments would be better prepared to
deal with hazards associated with adverse environmental conditions,
while state and federal agency officials would be able to evaluate how
to deal with environmental change.
Examples of LEE research activities follow:
--New research shows that millions of years ago, fish in the
Antarctic and in the Arctic independently evolved nearly
identical antifreeze glycoproteins that kept them from freezing
in frigid oceans, which in turn allowed them to exploit new
ecological niches. For the first time the genetic process by
which a novel protein evolved to enable this adaptation has
been traced. This knowledge will provide the basis to
understand how life originated and evolved on Earth as well as
how life has managed to thrive in unexpected environments.
--One of the biggest challenges facing scientists and engineers
involved in environmental research is understanding the highly
interrelated physical, chemical and biological feedback loops
commonly present in the Earth's natural systems. NSF addresses
this challenge by supporting studies on a variety of
environments of interest including soils, ground waters,
surface waters, coastal marine and estuarine areas, and
portions of the troposphere in contact with these environments.
Methods from molecular biology and high resolution surface
microscopy are combining to revolutionize understanding of many
geological processes in these environments. For example,
microorganisms have been found to interact with minerals, such
as pyrite, causing them to dissolve. Previously, weathering was
understood as an inorganic process, but that is now known to be
inadequate. The role of microorganisms is critical since it
often controls the first step in the dissolution process.
Because the constituents of soils and sediments depend on
mineral weathering, fundamental knowledge of these complex
chemical reactions is basic to understanding environments both
natural and man-made, and may have longer-term impacts on our
understanding of processes such as the weathering of man-made
infrastructure.
--Global change research focuses on interactions among different
components of the integrated Earth system. NSF-supported global
change research has been instrumental in observing ocean
circulation patterns and in advancing understanding of the
ocean-atmosphere interactions that have permitted major
improvements in capabilities for predicting the onset of major
seasonal events like El Nino nearly a year in advance. This
prediction enables affected communities to adapt and to
minimize the destructive impacts of El Nino. Other global
change programs have supported research that improves
understanding of the ways that ecological systems respond to
changes in climate and to the impacts of climate variability
and change on human activities at local and regional scales.
EVALUATION AND PERFORMANCE
Senator Bond. And you will be able to give us some markers
on progress and we will be able to measure in future years your
progress toward those goals, those two areas?
Dr. Lane. Yes; Mr. Chairman, but let me be very clear about
this kind of research activity, that the way we evaluate what
we found and set our priorities is by using expert opinion of
scientists and engineers. That is the merit review process that
we use now and have used for years. That is also how we will
have to evaluate ultimate outcomes of these investments. It is
the field advancing? Are we world class in one or another area?
So we have to write these objectives, and we have to
present for you these markers or metrics in such a way that it
satisfies both the needs, that it is going to be a genuine
measurement of quality at the same time.
Senator Bond. Maybe we ought to ask you to have a peer-
review group look at from the outside NSF who is not dependent
upon you for the funding, evaluate the markers and the
guideposts that you set forth, and come back next year as an
independent scientific auditor to say are you doing the job?
Are you game for that?
Dr. Lane. Well, I think there is not anybody who could not
come to NSF. There is not any scientist or engineer who could
not come to NSF for support. We support the entire research and
education community, so if you ask who the experts are I would
say we probably support many of them.
But I do agree with the point of putting together an
objective such as you describe.
SETTING PRIORITIES AND MEASURING PROGRAMS
Senator Bond. We have used the National Academy of Public
Administrators and others in many instances to evaluate it, and
obviously apparently everybody has the hope of getting an NSF
grant, but perhaps--I am sure there are enough scientists, men
and women of integrity that maybe we have to have them
anonymously work for an independent agency that can evaluate
your markers, your guidelines, and then come back to us.
I have been looking forward to seeing from the National
Academy of Sciences a report they worked on a couple of years
ago about how we do a better job of appropriating research
dollars, and we are still struggling to apply the scientific
tests in a way that is feasible through the political process.
I would welcome your comments and discussion on that so
that we can give assurances to our colleagues and to our
constituents that we are getting something for the money, and
you all lay out lofty goals and talk about things that are
absolutely mind-boggling and breathtaking, but we need to be
able to make sure that we are getting our breath taken and our
mind boggled in an efficient manner with the dollars that we
make available.
Dr. Gibbons. Mr. Chairman, may I interject just an element
that I think you would enjoy?
Senator Bond. Please.
Dr. Gibbons. The late Lewis Thomas, who was a famous
physician and medical writer, once observed that he thought in
terms of proposals in the area of basic research that when
people proposed things and proposed what they would achieve
during the time of that research, that if they came back and
reported that they had achieved just what they said they were
going to do, they should be penalized, because it means they
did not discover anything new that they did not expect, and
that I think puts the bottom line on the concern and issues
that I know you understand.
Senator Bond. Yes; it makes it a little tougher for you to
develop the guidelines you are going to give me on how you
measure those things.
Dr. Gibbons. That is right, but I think there are
guidelines, and we are working on this assessment of
fundamental science. I believe we are going to make some real
progress in the months ahead now as we get ready for GPRA this
fall--that is, G-P-R-A--and we very much are in sympathy with
your concern that we have got to report back to our investors,
the American people, about how well their investment is
working.
Senator Bond. Well, we will look forward to working with
you. We would like to have that information, and we would like
to have a means, better means than we have now, of assessing
it, because I think that is really important.
We very much appreciate your time, and I know there are
many knowledgeable people in the audience here who seem to be
nodding and scratching their heads, and proposing thinking of
things.
Additional committee questions
We would welcome your written comments, but we would keep
the record open for you to present to us your suggestions in
response to these questions and a few other questions we will
submit to you in writing.
[The following questions were not asked at the hearing, but
were submitted to the Foundation for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
IMPACT OF BUDGET REDUCTION
Question. What programs would the agency cut or eliminate if the
subcommittee had to recommend a reduction in the NSF budget of 10
percent? What parts of the budget request would the agency protect?
Answer. A 10 percent reduction in NSF's budget would have serious
consequences. It would not only lead to significant reductions in our
ability to support the conduct of science and engineering research and
education, but would also cause:
--A reduction of approximately 4,600 research and education awards,
about 50 percent of the number of new competitive awards;
--Consideration of funding continuing awards below their committed
levels;
--A delay in initiation and/or stretch-out of construction for new
research facilities;
--Significant reductions for K-12 teacher enhancement; and
--Major reductions in all aspects of undergraduate education.
This level of reduction would also have significant impact on the
number of people NSF supports through its programs, with possibly the
greatest reduction in numbers of people realized in the support of K-12
teachers. In total, over 20,000 people could lose NSF support. All
interagency agreements, memoranda of understanding with other agencies
and other countries, and partnership agreements with universities,
colleges, other institutions and industry would require reexamination.
In the face of such reductions, NSF would continue to move its agenda
forward through:
--Significant shifts in funding to maintain areas of priority at or
near fiscal year 1997 levels;
--Completion of LIGO construction and initiation of operations of
LIGO and Gemini;
--A shift toward graduate traineeships and away from other mechanisms
of graduate student support; and
--Maintaining appropriate levels of staff for effective management
during a period of massive change.
GOVERNMENT PERFORMANCE AND RESULTS ACT
Question. NSF's draft strategic plan does not meet the requirements
of the Government Performance and Results Act (GPRA). Please provide
your timetable for addressing the following issues: (a) long range
goals, which are within the agency's statutory authority and span of
responsibility; (b) objectives that conform with statutory
requirements, and provide guidance in formulating budget requests,
setting priorities, and allocating resources; (c) an annual performance
plan with quantifiable annual performance goals.
Answer. On March 14, 1997, NSF submitted to all the relevant
Congressional committees a copy of its GPRA Strategic Plan. This
version contained a mission statement condensed from its statutory
authority; both over-arching and outcome-specific goals generated
therefrom; investment strategies to achieve those goals; and a set of
critical factors for success that address agency management.
Based on comments received from Congressional staff, the Office of
Management and Budget, the Office of Science and Technology Policy, and
the National Science Board, a revised draft of the strategic plan was
developed and forwarded to Congress. This draft will also be available
on the Internet in order to provide a broad range of stakeholders an
opportunity to comment on it. As required, we will also submit our
Strategic Plan to Congress by September 30, 1997. An annual Performance
Plan, based upon but distinct from, the Strategic Plan, will be
submitted with the President's fiscal year 1999 budget request for NSF,
per the Results Act.
NSF recognizes the difficulty of identifying specific goals for
which NSF's discrete contributions can be separated from the
contributions of other agencies and activities. Nonetheless, we are
committed to working with Congress and the relevant stakeholders in
developing and refining over time the most reasonable outcome measures
practical.
Question. The NSF budget justification states that NSF is committed
to delivering ``the highest possible social returns'' on the Nation's
investment in research and education. Could you please explain what you
mean by that statement, and how you will measure ``the highest possible
social returns''?
Answer. A number of studies by economists and others have
demonstrated the benefits of research to the economy. We use the phrase
``social returns'' to refer to this broad range of benefits that
research and education activities provide for the public, including new
knowledge, the capacity for innovation, and new educational approaches.
The statement that appears in the budget justification is one statement
of our vision for the agency. It reminds us that we promote the
progress of science in order to obtain such returns for the nation.
Social returns can only be assessed over time, and then only
indirectly. The concept is not appropriate as a performance goal that
requires direct measurement.
NSF'S ROLE IN EDUCATION STRATEGY
Question. The President placed an extremely high priority on
education in his budget proposals for fiscal year 1998. What role is
NSF playing in the White House education initiatives? If the President
has made education a priority, why does NSF's budget for the education
account go up by only 1 percent, and support for precollege math and
science education actually decline from the fiscal year 1997 level?
Answer. NSF places high priority on education and has a coordinated
set of programs that cross the education spectrum. In fiscal year 1998,
the funding request for grade K-12 activities is $376 million, less
than $2 million below the fiscal year 1997 level. Nearly 56 percent of
the NSF education and training portfolio is invested in grades K-12
with the objective of developing resources and strategies that enable
implementation of standards-based mathematics and science education
materials. NSF programs thus fully support the Presidential initiative
for improving mathematics education, grades K-8.
Informed by fiscal realities and careful review of priorities and
emerging opportunities, the fiscal year 1998 budget request redirects
funding from certain K-12 activities to other important program areas
within the K-12 arena. For example, increased emphasis is planned for
pre-service undergraduate preparation and education of teachers by
redirecting resources from teacher enhancement activities that focus on
in-service training of the existing workforce. NSF will also place
emphasis on developing materials and strategies that will ensure the
effective application of learning technologies throughout the K-12
sector. Increases will be offset by reductions in the Instructional
Materials Development program, which has a number of comprehensive
mathematics curricula projects nearing completion. The fiscal year 1998
program thrusts complement NSF's existing large-scale systemic projects
that engage entire states, urban and rural areas, and school districts
in mathematics and science education reform. In addition, through its
dissemination and evaluation activities, NSF will intensify efforts to
communicate information about effective curricula, research on teaching
and learning, as well as effective strategies for reform and teacher
development.
NSF and the Department of Education (DoED) share expertise and work
to coordinate their science and mathematics education activities.
Recently, in response to a March 6, 1997 Presidential Directive, Dr.
Lane and Secretary Riley established a Working Group on Improving
Mathematics and Science Education that is comprised of senior officials
and program experts from each agency. That Working Group has nearly
completed an action strategy for ensuring effective use of Federal
resources for improving teaching and learning in support of the
President's voluntary, standards-based national mathematics test for
individual eighth grade students. The strategy addresses: teacher
preparation and professional development; implementation of
instructional materials; improved integration of technology into the
classrooms; and effective strategies for motivating students.
GRADUATE EDUCATION
Question. The budget proposes a new graduate program called
integrated graduate research and education traineeships to be supported
at a level of $20 million. An additional $14.5 million is being spent
on other traineeship programs, thereby increasing traineeship
activities by about 65 percent. In order to make this increase, you
must have some convincing evidence that this is a good investment. What
evaluations have you done of your traineeship programs? Please provide
copies of the evaluations. What criteria were used to determine the
fiscal year 1998 funding request? What are the annual performance goals
for fiscal year 1997? When will you know if they have been met?
Answer. Development of the new Integrative Graduate Education and
Research Training (IGERT) program, to be initiated in fiscal year 1998,
is based on need, on an understanding of the ability of the traineeship
mode of support to affect institutional change, and on experience with
two prototype programs. Recent studies by the National Academy of
Sciences and the National Science Board indicate a growing need for
broadly prepared Ph.D.'s with multidisciplinary backgrounds. The need
for technical, professional, and personal skills essential to
addressing career demands of the future also has been articulated in a
number of recent studies. The goal of the NSF-wide IGERT program is to
develop a new training paradigm by supporting the development of better
education and training activities that provide an environment for
acquiring those skills, as well as for conducting the nation's premier
research.
The IGERT program builds on the strengths of two NSF existing
traineeship programs: Research Training Groups and Graduate Research
Traineeships. IGERT will support development of innovative graduate
education efforts based on multidisciplinary research themes in
emerging areas of science, mathematics, and engineering. These grantee-
identified themes will provide the framework for integrating research
and education and for fostering effective interdisciplinary
collaboration of faculty. Projects will develop innovative courses,
workshops and other activities; provide access to state-of-the-art
research instrumentation and methodologies; offer training experiences
relevant to academic and non-academic careers; develop communication
and teamwork skills; and provide international perspectives on
research. In addition, IGERT will facilitate development of a
demographically diverse Ph.D. workforce.
Summative program evaluation can only be conducted after projects
have appropriate opportunity to mature. Such evaluations for the
programs underlying IGERT are being developed. Interim formative
program development is based on project monitoring and focuses on
progress in meeting long-range objectives for improving the quality of
graduate education and, as appropriate, increasing Ph.D. production in
critical disciplinary areas. Projects under both underlying programs
have been evaluated through annual reports. Program performance is
being strengthened through implementation of an electronic, Web-based
distance-monitoring system that collects annual performance data on
students and faculty, as well as written reports. The future
development of IGERT will be informed by the formal evaluations that
are being initiated.
INVESTMENTS IN PRODUCING NEW SCIENTISTS AND ENGINEERS
Question. In 1993, there were about 2.5 million people in the U.S.
with graduate degrees in science or engineering. In addition, there
were about 330,000 science and engineering graduate students. Over 70
percent of the scientists and engineers with Ph.D.'s were working in
science and engineering, in their own or a closely related field.
Yet, there are repeated complaints from young scientists (most
recently from the co-discoverer of the Hale-Bopp comet) that their
opportunities for a career in science are abysmal. In my own state of
Missouri, at least one university has tried to address this problem.
Washington University in St. Louis has recently chosen to scale back
the number of students to those the university can provide full
financial support for six years, rather than producing as many students
as they can.
Why are you proposing to increase the number of graduate students
supported by NSF?
Answer. NSF supports only about four percent of the full-time
science and engineering graduate students in the United States. In
fiscal year 1998, NSF expects to support approximately 21,000 graduate
students, an increase of 2 percent above the fiscal year 1997 level.
The majority of this increase (380 students) is directly attributable
to the new Integrative Graduate Education and Research Training (IGERT)
program. The IGERT program is a focused experiment designed to reform
graduate education, making it more responsive to the growing need for
researchers and educators who are capable of functioning beyond the
boundaries of a single discipline and who have technical, professional,
and personal skills necessary to address varied career demands of the
future. In addition to IGERT, NSF will provide for a modest increase in
the number of students supported as research assistants on NSF-
supported grants and a slight reduction in students supported by
graduate research fellowships.
COSTS AND MANAGEMENT OF HIGHER EDUCATION
Question. Recently Time Magazine ran a story on why a college
education costs so much. The article seemed to challenge the entire
academic enterprise to wake up to the fact that they--just like
corporate America and government--have to downsize, re-engineer,
streamline and reduce costs if they are to remain strong and vital
institutions in the future. And, by and large, the public perception is
that they have not yet stepped up to the plate. What do you think our
colleges and universities need to do to remain strong and yet, at the
same time, control their costs and management activities.
Answer. University costs are increasing in a number of areas,
including physical plant improvements, maintenance of competitive
salaries, financial aid to students, acquisition of technical
information, upgrading of computer technology, and compliance with
federal regulations (such as improving access and services for the
disabled). In addition, many public universities face decreasing
support from state funds. All these factors result in a difficult
financial situation for many universities but one which NSF believes
most universities are, each in their own way, attempting to address.
NSF can comment on this complex matter only in connection with the
research and other activities that the federal government sponsors at
universities.
The federal government and university communities face similar
budgetary constraints, but share common goals, in the conduct of
academic research. There is incentive for both communities to not only
work together to assure that universities are fairly compensated for
the costs of performing federally-sponsored research, but also to
strive to contain the cost of engaging in that research. In that
regard, the Federal Demonstration Partnership (FDP) is a valuable forum
for both federal agencies and the university community to consider not
only which research-related costs should be reimbursed by the federal
government, but also to discuss issues such as simplifying
accountability for federal funds and eliminating unnecessary
administrative requirements.
ANTARCTIC PROGRAM: SOUTH POLE STATION MODERNIZATION
Question. The Antarctic External Panel led by Norm Augustine is
about to issue their reports on the Antarctic Program. This
Subcommittee asked for an examination of the U.S. Antarctic Program
about 18 months ago. According to recent Congressional testimony by Mr.
Augustine, the panel is going to reaffirm the need for this country to
maintain its active and influential presence in the Antarctic. The
panel is also going to call for the modernization of the South Pole
station to address some very critical safety, health, and structural
issues. The panel estimates that a new station and other necessary
infrastructure improvements would come to about $145 million--less than
earlier estimates that were in the $180 to $200 million range.
If you accept the panel's assumptions and recommendations, an
additional $95 million is needed over the next five years to rebuild
the station. You have a request of $25 million in the fiscal year 1998
request so if we were to provide the request, over the next few years,
you would have to come up with an additional $70 million. Would you
agree with that estimate?
Answer. The $145 million estimate includes the following:
In millions
New South Pole Station............................................ $125
Repairs to keep the existing South Pole Station operational during
construction of the new station............................... 5
Minimum infrastructure improvements at McMurdo and Palmer Stations
identified by the Augustine Panel............................. 15
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Total....................................................... 145
NSF's fiscal year 1998 Budget Request includes $25 million for a
new South Pole Station. To rebuild the station for $70 million in post-
1998 costs, two additional assumptions are necessary. First, the USAP
must actually realize an estimated $30 million in savings associated
with the transfer from the Navy to other DOD support. These would bring
the post-1998 costs down to $90 million.
In addition, NSF would have to reprogram $20 million away from
ongoing research and support activities to the South Pole Station
rebuilding effort. Which research efforts would not receive funding has
not been identified at this early stage.
If this additional reprogramming were implemented, the remaining
post-1998 costs would be reduced to the $70 million identified in the
Augustine report:
In millions
South Pole Station and other infrastructure....................... $145
Fiscal year 1998 Budget Request for South Pole Station............ -25
Cost savings...................................................... -30
Reallocation of science funds..................................... -20
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Total....................................................... 70
Note that the cost estimates for the South Pole Station were based
on inflation rates in use at the time of planning (2.2 percent).
Current projected inflation rates are slightly higher (2.7 percent),
which may affect the total cost.
Question. Within the Administration's outyear profile for NSF, are
there sufficient funds to accommodate the cost of the redevelopment of
the South Pole station?
Answer. The Administration's outyear profile for NSF's Major
Research Equipment Account is flat from fiscal year 1998 to fiscal year
2002. The Foundation continues to examine how to accommodate needs for
major projects across the agency within its funding profile. Funding
for redevelopment of South Pole Station is one item being considered,
in the context of the Augustine Panel statement that the USAP should be
viewed as a national program, not as another NSF science project, and
should be designed, funded and judged as such.
Question. Have you thought about international participation in the
redevelopment of the station?
Answer. NSF concurs with Recommendation IV in the Augustine Panel
report, which states that ``International cooperation in scientific
research and logistics support should be encouraged, but permanent
facilities and infrastructure at permanent U.S. sites in Antarctica
should be provided by and maintained by the U.S.'' The Panel concluded
that:
``Considering the geopolitical history of Antarctica outside the
reach of the Antarctic Treaty system, that joint funding and/or
ownership of infrastructure and facilities may lead to substantial
international legal issues while producing little or no fiscal benefit.
The Panel is mindful of the experience of the space program in
international cooperation, but draws a strong distinction between joint
ownership of a space station--where there are no territorial issues in
contention--and the joint ownership of a facility at, say, the South
Pole.''
The Panel also concluded that:
``To internationalize the physical plant in Antarctica with foreign
capital investment in fixed facilities at the U.S. stations raises
ownership issues that, ultimately, work to the detriment of U.S.
interests and, in the opinion of the Panel, worldwide interests. It is
not, it would seem, illogical that a nation which shares the basic
costs of the existence of a facility would seek a voice in the
operation and governance of that facility--and ultimately in the title
to that facility.''
Question. How do you plan to respond to the Augustine Panel's
report?
Answer. NSF is currently analyzing the recommendations contained in
the Augustine Panel report to determine how best to address them.
NSF-EPA PARTNERSHIP/ENVIRONMENTAL BIOLOGY
Question. A few years back this subcommittee urged NSF and EPA to
work together on some common research interests. Part of the reason for
that effort was to assist EPA in improving the quality of its research
and research program management activities. Recently NSF and EPA
decided to renew that partnership activity through a new Memorandum of
Understanding. How well is that partnership effort working?
Answer. The NSF-EPA Partnership for Environmental Research has
sponsored joint competitions each year since fiscal year 1995.
Professional staff from both agencies have worked together to plan and
manage the competitions, and both agencies have provided funds to
support the highest quality peer reviewed research proposals. The NSF
administered the competitions in the first two years while mentoring
EPA staff. In the third year of the partnership (fiscal year 1997), the
EPA is administering the competitions.
The partnership emphasizes shared investments, shared risks and
shared benefits. From an NSF perspective, the partnership has enabled
the support of research that synergistically integrates elements of
diverse core activities. Fundamental interdisciplinary research has
been particularly emphasized in the three competitions sponsored to
date: (1) Water and Watersheds, (2) Technology for Sustainable
Environment, and (3) Decision Making and Valuation for Environmental
Policy. Of special value has been the ability to link the traditional
NSF-supported community of researchers with the management-oriented
goals of EPA.
NSF has been pleased to join with the EPA to promote the discovery,
integration, dissemination, and employment of new environmental
knowledge in service to society.
ADMINISTRATIVE EXPENSES
Question. One of your ``key program functions'' is Administration
and Management. In your fiscal year 1998 Budget Submission (Overview)
you state that Administration and Management function constitutes 4
percent of your request of $3.367 billion. How is that percentage
determined?
Answer. The percentage of fiscal year 1998 total support provided
for NSF's Administration and Management function is determined by
adding the $136.9 million in the Salaries and Expenses appropriation to
the $4.85 million request for the Office of Inspector General and
dividing by the total NSF request of $3.367 billion.
Question. What activities are included in the four percent
Administration and management category?
Answer. The Administration and Management function includes funds
for staff salaries, benefits, travel, rent, contracted administrative
services, supplies, equipment, and other administrative operating
expenses.
Question. Are there any personnel-related and/or program support-
related activities funded out of other appropriation accounts?
Answer. NSF has traditionally funded program support costs from the
``program'' appropriations because of their direct support to the
research and education programs. Some examples include the cost of
proposal review panels, contracts for special services--such as
proposal processing and evaluation--directly related to the program,
and grants to institutions to obtain the temporary assignment of
visiting program managers through the Intergovernmental Personnel Act.
These scientists and engineers contribute significantly to our program
operations. Program support costs are usually program specific, short
term costs.
Question. Please provide the funding levels for the various program
support activities outlined above, including but not limited to cost
associated with holding review panels, personnel costs for IPA
positions, and costs for performing program evaluation.
Answer. Program support costs funded through ``program''
appropriations are shown below for fiscal year 1996.
National Science Foundation Fiscal Year 1996 Program Support Costs
[In millions of dollars]
IPA's............................................................. 16.9
Travel--(panelists, committees of visitors (COV) and IPA's)....... 5.1
Printing.......................................................... 0.8
Equipment......................................................... 0.3
Contracts (includes education evaluations, SRS and other contracts 14.6
Panelists and COV's............................................... 4.5
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Total....................................................... 42.2
internet registration
Question. NSF entered into a cooperative agreement in 1993 with
Network Solutions, Inc. (NSI) to manage the registration service for
domain names on the Internet. The agreement is due to expire in
September 1998. What plans does NSF have regarding the ending of that
cooperative agreement?
Answer. The September 30, 1998 date allows for an administrative
period for concluding activities such as the preparation and submission
of the final report. As a result, the agreement is actually scheduled
to be concluded by March 31, 1998. Since there appears to be no need
for continued NSF support of an activity which has become self-
supporting, no recompetition, extension or other follow-on of the
current award is anticipated.
Question. How will NSF ensure that NSI does not have an unfair
advantage over other potential registrars for domain name services?
Answer. There are currently several proposals based on two
alternative concepts being discussed that are posing alternative
mechanisms for increasing competition for name registration in Internet
Top Level Domains (TLD's). All involve the creation of additional
TLD's. One is based on the model of ``sharing'' of TLD's among several
registries (competition within TLD's). Others involve the ownership of
specific TLD's by individual registries (competition among TLD's). It
is probable that, by March 31, 1998, a number of registries, both
``shared'' and private, will be competing for domain name
registrations.
Question. Does NSF retain the rights to the database of
registration information?
Answer. In accordance with the principles governing the treatment
of copyrightable material produced under NSF awards adopted by the
National Science Board on March 16, 1984, the Foundation normally
acquires only such rights to copyrightable material as are needed to
achieve its purposes or to comply with the requirements of any
applicable international agreement or government-wide policy notably
Sec.__36(a) of Office of Management and Budget Circular A-110, Uniform
Administrative Requirements for Grants and Agreements with Institutions
of Higher Education, Hospitals, and Other Non-Profit Organizations
(revised November 1993), which for efficient administration the
Foundation applies to most of its few for-profit awardees. The
Copyrightable Material clause in the Foundation's Grant General
Conditions, which were attached to and made part of the cooperative
agreement with NSI, provides (in part): ``[T]he grantee may own or
permit others to own copyright in all subject writings. The grantee
agrees that if it or anyone else does own copyright in a subject
writing, the Federal Government will have a nonexclusive,
nontransferable, irrevocable, royalty-free license to exercise or have
exercised for or on behalf of the United States throughout the world
all exclusive rights provided by copyright. Such license, however, will
not include the right to sell copies or of the copyrighted work to the
public.''
``Subject writing'' is defined in the first paragraph of that
clause as meaning any material produced by the awardee or its employees
that is or may be copyrightable under Title 17 of the United States
Code.
Under the above-quoted Copyrightable Material provision, NSF has a
license under any copyright asserted on the database as it exists
during, and at the conclusion of, the agreement. Also, under Article
10E of the agreement, NSF has the right to request ``a copy and
documentation of any and all software and data generated'' as part of
the final report, which must ``contain a description of all work
performed and problems encountered * * * in such form and sufficient
detail as to permit replication of the work by a reasonably
knowledgeable party or organization''. This discretionary ``delivery''
requirement, unusual in an assistance award, was added to give the
Foundation the option of continuing to assist Internet registration by
supporting some other entity subsequent to the NSI agreement. Since
Internet registration has become self-supporting and NSF will no longer
be involved in supporting the activity, there is no need for us to
obtain that material.
Question. Beginning in 1995, NSF authorized NSI to charge $100 to
register a domain name initially, and $50 a year to maintain it in the
master database. Thirty percent of that money is set aside in an
account for the purpose of reinvestment of the ``intellectual
infrastructure'' of the Internet. As of December 1996, over $12 million
was deposited in that account, but there has not been any disbursement
of funds. What plans does NSF have for using those funds and future
monies that will be collected?
Answer. As of April 30, 1997, the balance in the fund was
approximately $23.8 million. Consistent with the requirements of the
agreement, Network Solutions has proposed that a 501(c)(3) non-profit
organization (having no connection with either Network Solutions or
NSF), with an appropriate charter and board of directors, be formed to
disburse the funds. Using this proposed approach, as of an established
date, all funds collected in the account would be transferred into the
nonprofit organization, collection of additional Infrastructure funds
would cease and fees would be reduced by a corresponding amount.
Pending resolution of appropriate details we believe this to be a
reasonable plan for disposition of the funds.
Question. Recently, there has been criticism of NSI's performance
of the registration function and concern about their role as the sole
provider of certain categories of domain names. What oversight has NSF
conducted of NSI's activities?
Answer. Consistent with normal practice for such awards, NSF
conducted an external merit review of NSI's performance in 1994 which
found it to be excellent. NSF receives and reviews monthly, quarterly
and annual reports on their activities as well as copies of complaints
or comments on their service and conducts periodic performance review
meetings. Recently, a management review of the registration activity
was conducted by the NSF's Office of the Inspector General. The
resulting report and Agency response have been released to the public.
Additionally, NSF's Office of the Inspector General is currently
conducting a financial audit of the NSI award at our request.
Question. There is a new proposal from a coalition involving the
Internet Society and other interested groups for adding additional
generic groups of domain names and adding new registrars. What is NSF's
position on this proposal?
Answer. The proposal from the Internet Society is only one of a
number of proposals which have recently been advanced to increase
competition in the Internet Domain Name registration process. NSF
believes that several of the proposals currently being considered by
the Internet community have merit. NSF also believes that any of the
proposals being considered will have only minimal, if any, impact on
the research and education community which we support. As a result, NSF
has no preference at this time among the proposed alternatives.
MATH AND SCIENCE EDUCATION
Question. For the past several years, NSF has invested about $300
million annually in efforts to improve K-12 math and science education.
How has NSF evaluated the progress in this area? How were these
evaluations used in determining the fiscal year 1998 budget request?
Answer. NSF's K-12 education programs benefit from a comprehensive
set of evaluation activities that includes project monitoring, formal
program evaluations, informal assessments by staff and external
experts, and management reviews. As part of NSF's response to the
Government Performance and Results Act (GPRA), other efforts are being
implemented to ensure accountability: (1) Performance Effectiveness
Reviews (PER) of sets of large-scale projects to obtain management and
standardized performance information; (2) standardized program
evaluation that allows monitoring of individual projects, program
aggregation, and cross-site comparisons; and (3) electronic, Web-based
monitoring systems. NSF also regularly supports specialized studies,
such as the Third International Mathematics and Science Survey (TIMSS)
to obtain information on the context in which our programs operate.
Development of NSF K-12 programs is firmly grounded in evaluations
and can itself be viewed as implementation research, evolving with
observations of strengths and weaknesses. Examples of rationale for
major program thrusts include:
--Systemic Reform: NSF is able to broaden and deepen its impact in
implementing standards-based science and mathematics education
reform when it engages entire school districts and
simultaneously addresses requisite policies, curriculum,
professional development, assessment, and resources. In the
1995-96 school year, NSF reform initiatives reached nearly 7.5
million students and 103,000 teachers and administrators. Sites
reported improvements in standardized achievement tests and
statewide assessments in mathematics and science. Program
monitoring has demonstrated the need for reform projects to
articulate high student and teacher expectations; align
assessment and curriculum; converge resources; provide linkages
to parents, communities and industry; and develop scale-up
strategies. While systemic programs show great promise for
being effective, only a portion of the students in greatest
need have been reached thus far. A large number of systems are
looking for resources (financial and otherwise) to undertake
such reform, particularly those in urban settings.
--Teacher Education: A major obstacle to reform and increased student
achievement has been shown to be the competency of the
instructional workforce. It has become apparent that pre-
service preparation of teachers must be accelerated and linked
to systemic reform sites. Recent TIMSS findings further
indicate the critical need for elementary teachers to develop
an understanding of mathematics. While pre-service education is
a critical issue, in-service training of the existing workforce
continues to remain problematic.
--Technology: The potential of educational technologies, as well as
barriers to its implementation are documented by systemic
reform, instructional materials development, and teacher
education programs. Technology is effectively being used to
foster development of learning communities, to provide access
to expertise and other resources in underserved areas (e.g.,
inner cities, rural areas), and to address differences in
learning styles.
SUPERCOMPUTERS CENTERS COMPETITION
Question. Earlier this year (March 27 and 28) the National Science
Board gave its approval for two partnership proposals for
supercomputing. How does this supercomputer initiative differ from the
previous NSF advanced scientific computing program?
Answer. At its inception, the existing NSF Supercomputer Centers
program focused on providing access to high performance computers for
the research and education community that NSF supports. This program
has evolved over time, moving from providing cycles on vector multi-
processors, to exploring and adopting scalable, massively parallel
systems. This transition demonstrated that usage and performance
advances of these architectures are hampered by difficulties in
programming such systems for a broad range of applications. General
acceptance of these systems by the research and education community,
who generally program applications themselves, can benefit from a
broadened effort.
In examining possible structures for an advanced computational
infrastructure program, it became apparent that considerable expertise
in this area existed at many universities and research centers. The
Partnerships for Advanced Computational Infrastructure (PACI) program
was NSF's response to the recommendations of the Task Force on the
Future of the NSF Supercomputing Centers Program (the Hayes Task
Force), and represented a plan to deploy the most competent
investigators to develop a coordinated national infrastructure.
The Hayes report indicated that the new initiative should be
substantially different from the current activity. In particular, the
addition of a large number of partner universities engaged in
infrastructure development is a shift from the previous concentration
on ``leading-edge'' sites in the current centers program. The result is
a broadening of participation in the program, targeted initiatives in
software development, and a national education, training, and outreach
effort.
Question. How will NSF transition to this new partnership
arrangement? (e.g. the phaseout process for those centers not part of
the new program, how the user community will be accommodated during the
transition process).
Answer. There are several aspects of the transition to the new
partnership arrangement--funding, allocations, and phase-out--that
merit individual attention.
Funding for the new partnerships is derived from the reduction in
operating expenses by reducing the number of ``leading-edge'' sites
from four to two. These savings are accomplished as follows:
--The operations budgets for the leading-edge sites in the PACI
program are substantially the same as in the current centers
program.
--The capital budget for the overall PACI Program is essentially the
same as that for the four previous centers.
--The savings in operations at the discontinued centers program
(approximately $20 million in 1997 dollars) will be used mainly
to fund partner activities, increased maintenance on the larger
system configurations, and a modest increase in staff at the
continuing leading edge sites to augment the user support that
is expected to increase less than 50 percent at each site.
NSF plans to fund the PACI partnerships through cooperative
agreements, the same means used to fund the current Centers. This
funding mechanism assures a cooperative management structure, and close
oversight of all partnership activities, including those at the leading
edge site. An independent contractor will survey user opinion of the
performance, and designated NSF staff will be contacted in instances
when users do not receive satisfactory responses from center staff. All
allocations will remain under the control of peer review allocation
panels, with active NSF oversight.
Current allocations of the largest users have been made for the
period April 1, 1997 to March 31, 1998. Future allocations for these
resources will be made only at permanent PACI leading edge sites and
partner sites, as appropriate. All plans include retention and use of
current facilities for the entire transition period at centers being
phased out.
Both of the new PACI sites, the National Partnership for Advanced
Computational Infrastructure (NPACI) at the University of California,
San Diego and the National Computational Science Alliance (NCSA) at the
University of Illinois at Urbana-Champaign, are making plans for new
systems and upgrades to be brought on-line during the fall of 1997.
These systems are powerful enough to meet the current demand, even
without the Pittsburgh Supercomputer Center (PSC) and the Cornell
Theory Center (CTC) resources, and are expected to attract some users
from phase-out sites. Both NPACI and NCSA have active plans for
workshops and training sessions to orient current users of both PSC and
CTC to the new facilities.
Very few high-end users make exclusive use of resources at only one
center. We do not anticipate a major difficulty in providing proper
orientation and training to this segment of the community. Other users
will be moving from one phasing-out center to a partnership to utilize
the same type of computer system. The problems resulting from this
transfer are substantially less than a change in operating systems at
one facility, an event that has occurred and been successfully
addressed many times during the history of the centers program.
One potential significant problem is the movement of user data from
one center to another. This is a consequence of the fact that PSC had
not adopted the same standard mass storage systems as the other
centers. As a result, the migration of files from PSC may also involve
some data translation and record reformatting. NCSA is already working
with the largest users at PSC by providing access to the NCSA Origin
2000 computer system to ease the transition.
The NPACI's facilities at the San Diego Supercomputer Center (SDSC)
will support a new vector system approximately 75 percent faster than
the current systems at PSC. The greater speed machine should attract
users, and the capacity to be added should equal the current capacity
at PSC and SDSC. Additionally, NPACI will be augmenting its distributed
memory system to one having approximately the same capacity as the one
at CTC.
Transition plans for both CTC and PSC include measures to retain
key personnel during the phase-out period. NSF plans to augment user
support services at both NCSA and NPACI to handle the new user load.
Towards this end, NCSA has completed a reorganization of its user
support function and is expected to have the new structure in place by
the summer of 1997 to meet the requirements of PACI. It appears that no
reorganization will be necessary at NPACI, except for that involving
the integration of partnership expertise into the national
infrastructure.
When the current Supercomputer Centers program was extended by the
National Science Board (NSB) in October 1994, and again in the Board's
December 1995 resolution approving the new PACI program, all of the
centers were informed that the transition would begin immediately
following Board approval of the new awards. After analyzing the cost
structure of each center, NSF concluded (based on the argument outlined
below) that one year's operations budget (i.e., excluding all
supercomputer capital payments) should be sufficient to support a
center for 15-18 months, if they started to reduce expenditure levels
immediately.
NSF is now providing an average of $800,000 per month for non-
capital items (salaries and wages, maintenance, expendable materials
and supplies, indirect costs, etc.) at each center. A phase-out model
was constructed that included a linear ramp-down of personnel from
April 1, 1997 staffing levels to a 25 FTE level in early fiscal year
1998 which generally results in a loss of about 2.5 FTE/month. Other
expenses were modeled as fixed (hardware maintenance, software
licenses, power, utilities), while others (travel, training, etc.) were
set to arbitrarily lower (but non-zero) levels; indirect costs were
estimated at the last current rate. Based on the different cost
structures at each center, this model projected an operation time of
15-18 months. With this, NSF allocated one full year's operating
expenses (at an $11 million level, about $1 million higher than actual)
to be expended during a period not to exceed 24 months beginning April
1, 1997, for phase-out. The detailed validity of the model is being
explored in phase out negotiations with PSC and CTC.
This $11 million figure was authorized in the NSB resolution, i.e.,
a sum not-to-exceed one full year's operational funding (actually $11
million) that could be expended over a period not-to-exceed two years,
starting April 1, 1997. Thus, the last six months of the final year of
the extended cooperative agreement would be part of the phase-out.
MERIT REVIEW PROCESS--ADJUSTING THE CRITERIA
Question. The Foundation and the Board have recently issued draft
revisions to the merit review criteria. Please provide background and
an update on the status of this effort.
Answer. NSF's current criteria were adopted by the National Science
Board in 1981. They remain an effective means for determining the
optimal allocation of NSF's valuable resources. From time to time, it
is nevertheless prudent to examine the review criteria--in the spirit
of improving an already outstanding system.
Furthermore, there are also a number of important factors that
deserve consideration in any assessment of NSF's review criteria, such
as:
--NSF's 1994 strategic plan established long-range goals and core
strategies for the Foundation;
--Several studies suggest that there is room for improvement in NSF's
highly successful system of merit review. For example, surveys
of reviewers and program officers have revealed that the
current criteria are not always well understood and some are
often ignored; and
--Seminal events over the past fifteen years--notably the end of the
Cold War and the rise of global economic competition--have
altered the context for public support of research and
education. It is now more important than ever to highlight and
document the returns to society on NSF's investments in
research and education.
On March 28, 1997, the National Science Board passed a resolution
approving use of the following criteria for all proposals reviewed
beginning October 1, 1997:
1. What is the intellectual merit of the proposed activity?
The following are suggested questions to consider in assessing how
well the proposal meets this criterion: How important is the proposed
activity to advancing knowledge and understanding within its own field
and across different fields? How well qualified is the proposer
(individual or team) to conduct the project? (If appropriate, please
comment on the quality of prior work.) To what extent does the proposed
activity suggest and explore creative and original concepts? How well
conceived and organized is the proposed activity? Is there sufficient
access to resources?
2. What are the broader impacts of the proposed activity?
The following are suggested questions to consider in assessing how
well the proposal meets this criterion: How well does the activity
advance discovery and understanding while promoting teaching, training,
and learning? How well does the proposed activity broaden the
participation of underrepresented groups (e.g., gender, ethnicity,
geographic, etc.)? To what extent will it enhance the infrastructure
for research and education, such as facilities, instrumentation,
networks, and partnerships? Will the results be disseminated broadly to
enhance scientific and technological understanding? What may be the
benefits of the proposed activity to society?
The Task Force's Final Recommendations are available on the World
Wide Web at http://www.nsf.gov/home/nsb/pubs/nsbmr975/nsbmr975.htm.
A task group of NSF staff is developing procedures to implement the
Board's resolution.
privatizing logistics in the antarctic
Question. This past season in the Antarctic, private sector
helicopter support was used in place of the helicopter support of the
Navy, as part of the privatization actions you have been undertaking
for sometime. How well is the privatizing program working and do you
agree with the Augustine External Panel's estimates that an additional
$30 million over the next 5 years will be saved if we continue with
these privatization efforts?
Answer. Since 1993 when the Navy proposed a phased withdrawal from
the U.S. Antarctic Program, NSF has planned for replacement support by
both civilian contractors and other Department of Defense units,
including air support by the New York Air National Guard. The 1996-1997
field season was the first year of civilian helicopter support,
provided by Petroleum Helicopters, Inc. (PHI) of Lafayette, Louisiana.
NSF considers the transfer of this function an extraordinary success
for the following reasons:
--Helicopter operations costs have decreased from $5 million to about
$2.5 million per year.
--The ``footprint'' in McMurdo has decreased from 52 to 18 people,
placing less strain on station resources, and the aircraft
footprint has decreased from six to four.
--A greater overall efficiency of operations has been realized, with
a 20 percent reduction in flight hours with no decrease in
support service.
--There is a greater platform variety--the helicopter inventory is
now comprised of light and medium-lift aircraft. Previously,
only medium-lift helicopters were available through the Navy.
--PHI had a perfect safety record this season with no helicopter
accidents or incidents.
Other parts of the transition are also continuing on track. An
agreement between the NSF, Office of the Secretary of Defense, Navy,
Air Force, and Air National Guard (ANG) will result in transition of
the LC-130 aircraft operations from the Navy to the ANG by March 31,
1999.
Other functions supported by the Navy such as medical services,
services in New Zealand, and communications, will be transferred in
fiscal year 1998 to civilian contractors in fiscal year 1998. Air
traffic control and weather forecasting functions will be transferred
to civilian contractors under the management of other DOD units.
DOD will continue to support the following functions: procurement
of fuel, fuel and cargo ships, and some engineering services.
NSF believes the Augustine Panel's estimate that up to $30 million
can be saved over the next five years (fiscal year 1998-2002) as a
result of the transition to private contractors and other DOD
providers--is realistic.
ACADEMIC RESEARCH INSTRUMENTATION
Question. The budget contains no discussion about academic research
infrastructure. Last year NSF proposed to terminate its support for the
modernization of research facilities. That was a decision this
subcommittee supported reluctantly. But now this budget is strangely
silent on the instrumentation program for fiscal year 1998. Are you
going to support the effort in fiscal year 1998 and, if so, why is
there no discussion or funding level outlined in the budget proposal?
Answer. The NSF's Academic Research Infrastructure (ARI) Program
was well conceived, well planned, and well leveraged but the overall
impact on the nation's research and research training facilities
infrastructure was relatively minor. This program, funded at
approximately $50 million per year, was not a major source of funds for
colleges and universities that were renewing their research
infrastructure. With approval from the National Science Board, NSF
decided to focus its investment of limited funds in areas where NSF can
make a major contribution to the science and engineering education
enterprise. Consequently, NSF chose to terminate the ARI facilities
program.
NSF will continue to support instrumentation programs in fiscal
year 1998. As mentioned in the discussion of Research Project Support
within NSF's fiscal year 1998 budget justification, $50 million will be
used to continue support for an NSF-wide instrumentation program. This
program, formerly funded out of the Academic Research Infrastructure
appropriation, is now supported through the Research and Related
Activities appropriation. In addition, approximately $180 million in
additional support for smaller-scale instrumentation will also be
provided.
STATUS OF GREEN BANK AND ARECIBO TELESCOPE OVERRUNS
Question. In December press reports circulated about the Arecibo
telescope and the Green Bank telescope. Stories of cost overruns and
significant delays appeared on the pages of Nature magazine. Please
provide the status of these two telescope. What steps have been taken
to address the construction management issues associated with large
scale facilities?
Answer. The Green Bank Telescope (GBT) is located at the National
Radio Astronomy Observatory's (NRAO) Green Bank, West Virginia site. In
December 1990, Radiation Systems Inc (RSi) was awarded a $55 million
fixed-price, design-and-build contract by NRAO's managing organization,
Associated Universities Inc (AUI), for the 100-meter diameter Green
Bank telescope. In 1994, COMSAT Corporation purchased RSi and its
subsidiaries.
The telescope was originally contracted for delivery in late 1994,
but the contractor was unable to meet this date. The current schedule
calls for completion of the telescope assembly, telescope,
installation, and alignment of the panels by the contractor by the end
of April 1998. Recently, the contractor requested that the schedule be
extended by an additional eight months, but has been told that further
delays are unacceptable; the contractor has been asked for
clarification and a plan to keep the project on schedule. All the
systems for the telescope that are to be provided by the NRAO are
expected to be ready for a delivery as early as April 1998.
Progress on the telescope has been significant during the past
year, with the contractor's workforce nearly doubled at the job site in
recent months. All 16 million pounds of steel that make up the
telescope have been designed, engineered, fabricated, and delivered.
About 1,500 of the 2,200 curved aluminum reflecting panels have been
manufactured. The 165-foot-high telescope base is essentially complete,
and the 100-meter diameter surface backup structure has been pre-
assembled on the ground; it will be lifted into place on the telescope
for final welding beginning in June.
In an attempt to recover costs incurred due to its delays, the
contractor has filed claims against AUI under the Disputes provision of
the telescope contract; the claims allege that actions on the
Observatory's part have resulted in additional costs. The initial claim
filed in October 1995 totaled $14.4 million; in December 1996, it was
increased to $28.6 million. AUI disputes the factual basis of these
claims, and is auditing their fiscal basis. Should the claims be
unresolved to the mutual satisfaction of NRAO and COMSAT RSi, the
contract calls for binding arbitration. At this stage, the claims do
not involve the National Science Foundation.
At the National Astronomy and Ionosphere Center's (NAIC) Arecibo
radio telescope, NSF and NASA co-funded--approximately equally--a major
upgrade projected to cost $22 million. The upgrade has three separate
elements: (i) structural reinforcement of the main antenna structure
and the installation of so-called ``Gregorian'' reflectors to correct
the aberration of the main spherical antenna; (ii) construction of a
50-foot high ground screen surrounding the 1,000-foot diameter main
dish to reduce the effect on astronomical observations of scattered
radiation from the ground; and (iii) doubling the power of the
planetary radar.
All upgrade construction was completed in April 1997, and NAIC
staff are now in the process of putting the Arecibo radio telescope--
the world's largest--back into service. The upgrade, started in 1992,
was originally scheduled for final completion at the end of 1995, and
is thus about 15 months late. (It should be noted that the telescope
was only out of service for about one year of the upgrade period.) The
upgrade project ran over its original 1990 budget by about 7 percent;
the costs of the overrun were borne by the NAIC program within the
Division of Astronomical Sciences.
In June 1996, the prime contractor for the structural reinforcement
phase of the project, RSi (now COMSAT RSi), filed a $7 million lawsuit
in Federal Court against Cornell University, NSF's manager of NAIC. NSF
is not a party to the suit. The crux of the lawsuit is COMSAT RSi's
contention that Cornell did not provide adequate and accurate
engineering drawings of the Arecibo radio telescope to RSi. Since these
drawings were the responsibility of Cornell's engineering contractor
for the Arecibo facility, Amman and Whitney (AW), Cornell has made AW a
third party to the law suit. Cornell disputes COMSAT RSi's claims and
has counter-sued the contractor for $635,000 in excess costs resulting
from the company's failure to complete its work in a timely fashion.
The case is scheduled to go to trial in United States District Court,
Northern District New York. The trial date was recently (re)set to May
4, 1998. Both sides are gathering information at this time.
Regarding the construction management issues associated with large
scale facilities, the Foundation is taking a number of steps to
minimize the possibility of future problems like those associated with
the GBT and Arecibo projects. First, the Foundation plans a high-level
review of its methods for overseeing management of large facilities,
and intends to provide closer project oversight where needed in the
future. Second, in light of our Green Bank experience where the
contractor subcontracted a key activity of the project, NSF will now
take steps to ensure that more careful attention will be paid to the
in-house capabilities of potential contractors.
Finally, the construction of any large single telescope presents a
unique potential problem: the telescope being constructed is also the
prototype. This issue is particularly acute when the telescope breaks
new ground in technology, as was the case with the GBT.
MILLIMETER ARRAY (MMA)
Question. In light of the situation with respect to your ongoing
telescope projects, why is it necessary to start forward with the new
Millimeter Array radio telescope? Please describe the project, the
outyear funding implications, as well as your interactions with NASA to
coordinate with ongoing NASA programs.
Answer. We are confident that the construction and management of
the Millimeter Array (MMA) will not encounter the same type of concerns
involved with the Green Bank Telescope (GBT) and the Arecibo radio
telescope. The MMA is a mature concept; there are no technical
impediments to making the instrument work.
Any problems encountered in developing the prototype during the
Design and Development phase will be resolved prior to beginning the
construction phase of the project. Construction of the MMA was endorsed
by the Astronomy and Astrophysics Survey Committee of the National
Research Council (NRC) as the highest-priority radio astronomy project
for the 1990's in its last decadal planning study (the ``Bahcall
Report''). Most important, momentum for the project has built up over
the past few years to the point where there is now strong international
interest in cooperation; postponement could put this at serious risk.
The MMA will be the world's most sensitive and highest-resolution
millimeter-wavelength telescope, and will consist of an array of
antennas rather than a single antenna. In the proposed Design and
Development phase, it will be possible to construct a true prototype,
resolve on a small scale any problems that will be encountered, and
then proceed to replicate the prototype many times during the
construction phase. Millimeter wavelength astronomy provides a testing
ground for theories of star birth and stellar evolution, galaxy
formation and evolution, and the evolution of the Universe itself. The
chemistry and composition of the interstellar medium, the earliest
stages of star formation, and the internal kinematics of luminous
galaxies are uniquely revealed by observations at millimeter
wavelengths. The MMA will combine angular resolution comparable to that
of the Hubble Space Telescope with the sensitivity of a single antenna
over 50 meters in diameter.
With these capabilities, the MMA will reveal the inner workings of
the central black hole ``engines'' which power quasars, and will make
possible a search for planets around hundreds of nearby stars.
Instrumentation to be developed for the MMA will push existing gallium
arsenide (GaAs) and indium phosphide (InP) amplifier technology to high
frequencies, will challenge production of high-density, high-speed
integrated circuits, and can be expected to stimulate commercial device
and communication technologies.
Physically, the MMA is to consist of 40 transportable, precision
antennas, each eight meters in diameter and equipped with a suite of
advanced receivers. To fulfill its potential, the array must be located
at a high, dry site. Two candidate sites currently under serious
consideration and undergoing testing for sky transparency and phase
stability are Mauna Kea, Hawaii, and a high plateau in Northern Chile.
The MMA was proposed to NSF by the National Radio Astronomy
Observatory in 1990. It is expected that the MMA will be a cooperative
project, with the construction and operating costs to be shared by
international partners or other Federal agencies. The NRAO has active
discussions underway with the Netherlands, Japan, Chile and Spain.
The total cost for design, development and construction of the MMA
is estimated at $232 million. Estimated annual funding requirements
are:
[By fiscal year]
In millions
Design and development phase:
1998.......................................................... $9.0
1999.......................................................... 9.0
2000.......................................................... 8.0
Capital construction phase:
2001.......................................................... 30.8
2002.......................................................... 50.5
2003.......................................................... 50.6
2004.......................................................... 38.1
2005.......................................................... 35.9
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________________________________________________
Total....................................................... 231.9
Although we have presented a five year capital construction
timeline, the design and development phase will address the question of
the optimum construction period for this project. Also, current budget
planning models assume cost-sharing between NSF and international/other
agency partners on roughly a 60/40 percent basis.
The annual operating cost for the MMA is estimated to be $8.5
million in fiscal year 1998 dollars. All of the U.S. share of the
operating funds will come from the Research and Related Activities
appropriation; however, approximately $3 million of these funds will
come from the closure of the NRAO 12m millimeter-wave antenna on Kitt
Peak.
NSF would welcome NASA participation in the MMA project as part of
the Space Agency's Origins initiative. Discussions between the NSF and
NASA staff have been held, as yet with no definite results.
POLAR CAP OBSERVATORY
Question. The budget also proposes another new start, the Polar Cap
Observatory. In this very tight budget environment, why are you
proposing this new start at this time?
Answer. Completion of the PCO by the year 2001 will allow
observations during the Sun's next sunspot maximum phase, during which
the dramatic effects of solar storms on Earth's upper atmosphere occur
more frequently. The Polar Cap Observatory (PCO) is planned for
construction in Resolute Bay, Northwest Territory, Canada and will be
completed in three years.
The facility will include an array of radiowave and optical
instruments for remotely sensing properties of the upper atmosphere and
ionosphere. The centerpiece of the facility is a large, state-of-the-
art incoherent scatter radar. Fiscal year 1998 proposed funding of $25
million fully constructs the PCO with no further construction funds
required in the outyears. The PCO will also complement a constellation
of international research satellites being deployed over the next five
years.
At a location very close to Earth's magnetic pole, the site of
unique atmospheric phenomena such as sun-aligned auroral arcs and
drifting ionospheric plasma clouds, the PCO will serve as the apex of
both the U.S. and European chains of large upper atmospheric radar
facilities. The PCO will allow us to better understand these unique
atmospheric phenomena, enabling us to better forecast space weather,
leading to the prevention of satellite damage, communication and
navigation disruptions, and electrical power loss.
LARGE HADRON COLLIDER
Question. While not yet in the NSF budget, the Department of Energy
is proposing an advance appropriation of nearly $400 million for the
Large Hadron Collider as part of its fiscal year 1998 budget. Is the
Foundation planning on participating in the LHC and if so, when and in
what way? Please provide the Foundation's funding profile and
programmatic interest in the LHC.
Answer. In February 1996, the National Science Board approved a
Project Development Plan which authorizes NSF to proceed with planning
and R&D support for possible eventual NSF participation in the Large
Hadron Collider (LHC). In fiscal year 1996, about $1 million was
provided from the Research and Related Activities (R&RA) account for
these activities. We are planning to spend up to $1.4 million toward
R&D in both fiscal year 1997 and fiscal year 1998. NSF grantees are
proposing involvement in two detectors, ATLAS and CMS. NSF will not be
involved in the construction of the LHC accelerator. It is standard
practice at accelerator labs around the world that participating
parties make financial and in-kind contributions to hardware for the
experiments (i.e. the detectors) in which they are involved. NSF
support for the construction of the detectors would likely begin in
fiscal year 1999 and end in fiscal year 2003.
NSF support for R&D and construction of the detectors was projected
to be approximately $81 million. It is likely that a substantial
portion of the funds will be requested through the Major Research
Equipment (MRE) account, although the internal discussions that will
shape our request have not yet been completed.
We anticipate that about $61 million of the $81 million total would
go to ATLAS R&D and construction, and the remaining $20 million to CMS
R&D and construction. Operations costs for NSF participants would be in
addition to these amounts, and would be provided via NSF's usual
proposals procedures from R&RA resources.
The National Science Board (NSB) authorized NSF participation in
these construction projects at its May 1997 meeting. CERN has been
informed from the beginning that NSB approval is necessary prior to
NSF's involvement. This is written into the ``Umbrella Agreement'' and
the ``Experiment Protocol'' that have recently been initialed by DOE,
NSF, and CERN. The Director General of CERN, Chris Llewellyn-Smith,
attended the March 1997 NSB meeting to discuss the LHC project with the
Board.
The DOE and the NSF have worked very closely together on this
project. The process has been mutually consultative at each step over
the last two or more years, and the result, in terms of inter-agency
cooperation, has been very positive. Dr. Martha Krebs, Director of the
Office of Energy Research at DOE, also attended the March 1997 NSB
meeting to discuss the LHC project with the Board.
To our knowledge, CERN has never stated that the U.S. would not be
allowed access to the LHC should we not contribute. The Director of
CERN, Chris Llewellyn-Smith, has recently reaffirmed that CERN has an
``open door'' policy with respect to U.S. participation in the LHC.
This policy is a continuation of long-standing international tradition
in the fields of nuclear and particle physics.
UNDERGRADUATE EDUCATION
Question. The fiscal year 1998 budget also puts a rather high
priority on undergraduate education--with a particularly large emphasis
on an undergraduate reform initiative. What are your reasons for
emphasizing undergraduate education seemingly, by the way, at the
expense of the precollege level of education?
Answer. In fiscal year 1998, NSF requests an increase of $11.3
million (or 12.9 percent) for several critical undergraduate areas--
teacher education, undergraduate institutional reform, and advanced
technological education. Many of these NSF-funded undergraduate
programs will in fact have a major impact on K-12 education. The
rationale for these areas of emphasis are as follows:
--Pre-Service Teacher Education.--The availability of well-trained
teachers has been identified as one of the most critical needs
of school systems engaged in science and mathematics reform.
Retirements, student population growth, and turnover will
require the hiring of more than two million teachers during the
next decade, over 75 percent at elementary and middle grade
levels. Therefore, NSF is investing more of its teacher
education resources in accelerating production and subsequent
career retention of teachers whose preparation meets national
science and mathematics education standards.
--Undergraduate Institution Reform.--Recent studies highlight the
need for improving undergraduate education in science,
mathematics, engineering, and technology (SMET) in order to
achieve major gains in learning for all students--SMET majors,
non-majors, and the future K-12 instructional workforce.
Building on pilot efforts, this program will lead to visionary
institutional models for stimulating the modernization of
academic culture and infrastructure through development of
innovative curricula and courses; revision of faculty reward
systems; modification of operating policies, procedures, and
budgets; and development of effective partnerships with
industry and the broader community.
--Advanced Technological Workforce.--Critical high-technology
industrial sectors face shortages of personnel with requisite
SMET expertise. Program efforts in this area address this need,
as well as strengthen the capacity of two-year colleges to
deliver SMET education. The effort also facilitates the
transition among secondary schools, two- and four-year
institutions, and the workplace and builds effective
partnerships between the academic and industrial sectors.
The proposed fiscal year 1998 support for preK-12 education ($376
million) is a relatively modest decline of $1.73 million from fiscal
year 1997. Within this relatively stable funding environment, NSF can
continue to strengthen its programmatic impact by broadening systemic
reform efforts; redirecting teacher education activities; and focusing
attention on materials development and implementation strategies that
effectively bring learning technologies into the classroom. NSF will
also intensify its dissemination of standards-based curriculum models,
research on teaching and learning, and effective strategies for
systemic reform, teacher education, and the engagement of
underrepresented groups (e.g., minorities, women, and the disabled) in
SMET disciplines.
SCIENCE AND TECHNOLOGY CENTERS
Question. The fiscal year 1998 budget proposes a net decrease in
support of your science and technology centers of about $6 million.
What is the Foundation's long range plan for the science and tech
centers programs? Are you beginning to phase it out with this request?
Answer. NSF has recently concluded a major evaluation of the
Science and Technology Centers (STC) program in order to determine the
future of the program. The National Academy of Public Administrators
(NAPA) performed an evaluation of the management of the STC program and
published their findings in NSF's STC Program--Building an
Interdisciplinary Research Paradigm (July 1995). Abt Associates Inc.,
under contract to the NSF, performed an evaluation of the STC program
to determine the progress of the program towards its stated goals. This
study was completed in June 1996. The National Research Council also
performed an assessment of this program and the utility of this mode of
support for fostering interdisciplinary research and published a report
on their findings in An Assessment of the NSF's STC Program (August
1996). Finally, an STC ad hoc Advisory Committee reviewed the findings
of the aforementioned reports as well as reports from the NSF research
directorate advisory committees on the STC Program, and made
recommendations to the Director of the NSF regarding the STC program
and how it fits into the NSF strategic plan. All of the reviews and
evaluations stated this mode of support was very valuable to the NSF
portfolio and recommended that the STC program should be continued.
NSF views the STC program as a vehicle for innovation in the
integrative conduct of research and education and knowledge transfer.
This program helps NSF fulfill its strategic vision and, with
programmatic and management modifications, we will continue to support
it.
On the basis of the numerous evaluations and reviews, in February
1997, the National Science Board approved a plan to hold a new
competition for Science and Technology Centers: Integrative
Partnerships. This competition for new centers will be initiated in
fiscal year 1998, with new competitions to be held about every three
years. Each competition is expected to be for approximately $25 million
with a steady-state being reached in 2006 of approximately $75 million.
In the guidelines for the initial Science and Technology Centers
program, it was written that the awardees would have a maximum of
eleven years of NSF support and would be phased out in the final two
years of their awards if they continued to be successful. In fiscal
year 1998 the planned budget phase-down for the first cohort of STC's
begins. Also in fiscal year 1998, NSF will have shut down two STC's due
to performance issues. These factors contribute to the net decrease in
support for STC's in the fiscal year 1998 budget.
LASER INTERFEROMETER GRAVITATIONAL WAVE OBSERVATORY
Question. Support for the LIGO observatory is slated to decline by
some $22 million in fiscal year 1998. Presumably, this is because the
construction phase of this project is beginning to come to an end.
Please provide a brief update on LIGO.
Answer. The fiscal year 1998 request for LIGO construction of $26
million represents the final increment of support for LIGO
construction. The construction at Washington is proceeding on schedule,
but unusual rainy weather has delayed the scheduled initiation of
construction activities at the Louisiana site. This is not expected to
cause any significant delay in the final completion of the entire
construction project.
In Washington, the concrete slabs supporting the two beam tubes (4
km vacuum pipes) have been finished. All beam tube sections produced
have been individually tested, and no leaks were discovered that were
due to the manufacturing process. Manufacture of the remaining tube
sections is nearing completion and the contractor is planning to
demobilize the spiral beam tube mill around June 1 in order to move it
to Louisiana. Currently, one entire beam tube has been assembled and
vacuum testing will begin shortly. The manufacture of all the 2,500
precast concrete beam tube enclosures is complete, and the casting
forms are being demobilized for shipment to Louisiana. The corner and
mid-station buildings are under construction. The vacuum equipment
vendor has completed six of the large vacuum chambers which will house
the optical components needed for the experimental program.
In Louisiana, the first concrete was poured in March. Preparations
are underway for the installation of the concrete slabs, and the road
along one arm has been constructed. The state of Louisiana has
completed construction of the bypass road which provides alternate
access to the southern end of the facility.
PRECOLLEGE TEACHERS OF SCIENCE AND MATH
Question. In fiscal year 1998 you are proposing to increase your
support for teacher preparation substantially (up by $7 million) while
at the same time you are calling for a reduction in support for teacher
enhancement to the tune of $8 million. Please explain the difference
between teacher preparation and teacher enhancement and why the teacher
preparation program is being emphasized seemingly at the expense of
enhancement activities.
Answer. Teacher training activities--both preparation and
enhancement--remain high priority areas within NSF's support of K-12
education. The goal of both programs is to support development of a K-
12 instructional workforce with sufficient grounding in disciplinary
content and pedagogy to deliver standards-based science and mathematics
education. Teacher preparation focuses on undergraduate education of
pre-service (or future) teachers; teacher enhancement focuses on
strengthening skills of in-service teachers (i.e., the current
workforce). In general, teacher preparation is viewed as a long-term
strategy for improving the instructional workforce while teacher
enhancement is more short-term in nature. Each strategy complements the
other and activities must be coordinated. Over time, stronger pre-
service teacher training will change the nature of in-service training.
The redirection of funding to teacher pre-service education is
derived from identified needs at the national level, as well as those
to ensure success of NSF systemic reform projects. Studies show that
(1) retirements, student population growth, and turnover will result in
the hiring of more than two million teachers during the next decade,
over 75 percent at elementary and middle grade levels and (2)
availability of well-trained teachers presents a major obstacle to the
effective implementation of science and mathematics education reform.
In fiscal year 1998, NSF intends to pursue a revised strategy for
teacher preparation that will accelerate production and subsequent
career retention of teachers whose preparation meets national science
and mathematics education standards.
Teacher enhancement operates in an environment in which a vast
majority of an instructional workforce of more than 2.5 million
teachers requires remedial training, especially at the K-8 grade
levels. Over the past several years, teacher enhancement has pursued a
strategy for training the instructional workforce within entire
districts thereby broadening program impact, strengthening the training
of individual teachers, and positioning school districts for continual
development of their instructional workforce well after termination of
NSF funding. The gains made under this strategy will leave in place a
strong program despite the budget reduction.
OCEAN DRILLING VESSEL REFIT
Question. The budget proposes to allocate about $1.5 million for
some retrofit work associated with the ocean drilling vessel. Please
provide the agency's future plans for the ocean drilling program.
Answer. The Ocean Drilling Program is a multinational program of
basic scientific research in the oceans which uses drilling and data
from drill holes to improve fundamental understanding of the role of
physical, chemical and biological processes in the geological history,
structure and evolution of the oceanic portion of the earth's crust.
Operational support for this activity is shared by seven international
partners, comprising 19 other countries.
In fiscal year 1998, the JOIDES Resolution is scheduled for a mid-
life refit. This refit, which will cost $6 million over two years, is
necessary to extend the life of the ship. This will be the first major
replacement and upgrading of primary ship systems since the ODP began
in 1985. Emphasis will be on ship station-keeping capability, pipe
handling and drilling systems, and improvements to laboratory and
personnel spaces. With these improvements, operational life of the
vessel will be adequate to support the Program through 2003.
An additional motivation for conducting a mid-life refit is that
doing so will result in considerable cost savings to NSF. Under the
terms of the operating contract for the ship, unless a refit is done,
the daily rate NSF is charged for drilling activities will have to be
renegotiated. The large increase in ocean drilling activities
associated with oil exploration has caused the average industry daily
rate to jump significantly. We estimate that a renegotiated daily rate
would be at least twice what we currently pay. Under these assumptions,
the entire cost of the mid-life refit will be recovered in cost savings
in about 120 days of operation. The JOIDES Resolution is operated
essentially year-round.
In addition, planning for ocean drilling activity beyond 2003 is
underway. JOIDES (Joint Oceanographic Institutions for Deep Earth
Sampling) has recently published a Long Range Plan which calls for the
addition of a second drilling vessel in the period following 2003. This
vessel would be capable of deploying a marine riser and well-control
equipment to improve hole stability while drilling deep holes and to
allow drilling in areas of oil and gas accumulations.
Simultaneously, the Science and Technology Agency (STA) in Japan
has been working to attain resources to construct a next-generation
drillship of the type envisioned by JOIDES. STA is committed to seeking
the $500-$600 million required for the new vessel's construction.
Recently, the Japanese and JOIDES plans have been merged into what
is presently called the ``Integrated Ocean Drilling Program'' which
would operate two vessels--one to undertake global studies of climate
and oceanographic processes requiring large spatial arrays of cores,
and the second to provide deep drilling for studies of continental and
ocean crust evolution. NSF and STA staffs are pursuing additional
international participation in the program.
ARCTIC RESEARCH VESSEL
Question. Please provide an update on the Coast Guard icebreaker.
What role is NSF playing so that this vessel will serve the needs of
the arctic research community?
Answer. NSF and the U.S. Coast Guard established an Arctic
Icebreaker Coordinating Committee (AICC), which operates under the
auspices of the University National Oceanographic Laboratory System
(UNOLS). The AICC chair, Dr. James Swift of Scripps Institution of
Oceanography, reports that the AICC has made an ``excellent start to a
working relationship with the ship construction oversight group'' of
the Coast Guard. The AICC, which represents the research community, has
met both in Washington, DC, and at the shipyard in Louisiana where the
icebreaker is being constructed. Based on these reports, the committee
has made a number of recommendations regarding science-related layout
and specifications of the ship and has found the Coast Guard receptive
to these suggestions. In fact, certain changes in the main deck science
area will be accommodated during construction instead of waiting until
after delivery in 1998, as originally planned by the Coast Guard. Dr.
Swift states that AICC is pleased that the Coast Guard is working to
meet the needs of the research community. Final conclusions on the
suitability of the ship for research support purposes will ultimately
depend on sea trials, but at this point the research community is
optimistic about progress with respect to the ship, which has been
named the Healy.
TECHNOLOGY PROGRAM IN RESEARCH, EVALUATION, AND COMMUNICATION
Question. The Technology program in EHR is slated to increase by
over 40 percent in fiscal year 1998. What is this program designed to
accomplish and why is such a substantial increase necessary?
Answer. In education, technology is both the catalyst for change
and a means to implementing significant reform and restructuring. It
affords the opportunity to equalize access to high-quality materials
and expertise; to connect learning communities that foster development
of knowledge bases; and to individualize instruction in response to
differences in learning styles. Yet, the academic sector has yet to
visualize the potential, let alone realize the benefits of the computer
revolution.
The Foundation brings leadership and critical expertise to
research, experimentation, and implementation of educational
technologies that support science, mathematics, engineering, and
technology (SMET) education. Current programmatic emphasis is on
developing new strategies that promise to make significant and lasting
improvements in the nation's educational system. In fiscal year 1998,
the technology-related increment of $5.25 million is directly
attributable to Learning and Intelligent Systems (LIS) which supports
the NSF-wide Knowledge and Distributed Intelligence (KDI) initiative.
LIS will stimulate interdisciplinary research that promotes use and
development of information technologies in learning. Priority will be
placed on: (1) embedding technology within learning systems for
judicious and appropriate use; (2) expanding R&D on advanced
technologies for the enhancement of student achievement and teacher
competencies in standards-based pre-K-12 education, as well as inquiry-
based undergraduate education; (3) integrating technology to enrich the
pre-K-12 educational enterprise with emphasis on creating and modifying
effective tools to enrich teaching and learning; and, (4) strengthening
collaborations and partnerships between developers of learning
technologies and education experts. Programming efforts will continue
to focus on several critical issues: the absence of science and
mathematics content for delivery by hardware/software systems; barriers
afforded by the instructional workforce; and other factors that affect
large-scale, systemic implementation (e.g., education policies,
resources).
MAJOR RESEARCH EQUIPMENT ACCOUNT
Question. Please provide your plans for the next five years for
this account, including what projects you plan to fund and what dollar
levels.
Answer. The fiscal year 1998 Budget Request for the MRE account
includes $85 million for four projects: completion of construction
funding for Laser Interferometer Gravitational-Wave Observatory ($26
million); initial funding for the design and development phase of the
Millimeter Array ($9 million); construction of the Polar Cap
Observatory ($25 million); and initial requirements for modernization
of South Pole Station ($25 million). In addition, there are several
potential projects for future consideration.
NSF senior management are currently conducting an annual review of
MRE candidates to determine which projects may be considered for
funding in fiscal year 1999 and which are more appropriate for later
consideration. Decision factors include scientific merit, technical
readiness, quality and comprehensiveness of the planning effort, impact
on other programs, balance and availability of funds. Several projects
are in the preliminary stage, with planning, design, construction and
cost estimates still being assessed. With the exception of the Large
Hadron Collider and continued work on South Pole Station, all of the
other projects are at various stages in conceptual design.
Below is a brief description of some potential future projects--
over the next five years and beyond--with preliminary cost estimates:
--Large Hadron Collider (LHC).--The LHC will be constructed at the
CERN Laboratory in Geneva, Switzerland by a consortium of more
than 22 nations and will be the world's most energetic
accelerator. Coupled to this device will be four particle
detectors, including the two largest, most complex ever built,
ATLAS and CMS. NSF support for the construction phase of the
ATLAS and CMS projects, pending Congressional approval of U.S.
participation in the LHC project, is expected to be $81
million.
--South Pole Station.--The Foundation is currently considering the
recommendations of the U.S. Antarctic Program External Panel
(the Augustine Panel) regarding modernization of the U.S.
research station at the South Pole. Those recommendations
outline the need to replace the station--for economic, safety
and operational reasons--at a cost of approximately $125
million. The fiscal year 1998 Budget Request includes $25
million toward this modernization, leaving an anticipated
balance in the range of $100 million for fiscal year 1999 and
beyond.
The following potential projects are in a more preliminary planning
phase than those cited above:
--High Altitude Research Platform (HARP).--HARP is a specially-
instrumented high altitude mid-sized jet with range, altitude
and communication capabilities that will significantly advance
national capabilities in airborne research and provide
measurement access over the entire globe. The acquisition cost,
which includes airframe, structural modifications, research
modifications, and instrumentation, is estimated at about $60
million.
--National Network for High Performance Seismic Simulation (NHPS).--
NHPS is a geographically distributed set of facilities linked
by an efficient communication network, for research in earth
sciences, geotechnical and structural engineering, and
earthquake-related social science that contributes to
earthquake hazard mitigation. The preliminary projected total
cost for developing new facilities, upgrading existing
facilities, integrating them and developing one or several user
networks is estimated to be in the range of $100 to $120
million.
--Millimeter Array (MMA)--Construction Phase.--The MMA will be the
world's most sensitive, highest resolution, millimeter-wave
telescope. Following the proposed three-year design and
development phase of MMA (requested for funding in fiscal year
1998), NSF will decide whether to proceed to the capital
construction phase. Costs for construction are estimated to be
approximately $200 million. International or other agency
participation will be sought.
--Coastal Research Vessel.--A coastal research vessel is planned as a
replacement for one or more existing aging research vessels.
Interdisciplinary studies of coastal systems require the
involvement of a large contingent of scientists engaged in a
diverse mix of activities, including the rapid sampling of
conditions for extended periods. The diversity of measurements,
experiments, and over-the-side operations necessary for the
conduct of science require extensive laboratory and deck space,
usually not available on the current coastal research ships.
Estimated costs for construction are in the range of $20
million to $30 million.
--Ocean Drillship.--The Ocean Drilling Program (ODP) is a
multinational program, consisting of a total of seven
international partners involving nineteen nations. Continued
use of the Drilling Vessel (DV) JOIDES Resolution as the
primary facility for ODP coring and logging is anticipated
through at least 2003. In ongoing discussions with Japan and
European ODP partners on future drillship requirements,
possible alternatives have been identified including a major
refitting of the DV JOIDES Resolution. The U.S. will be
expected to help support the maintenance of ODP drillship
capabilities. If this alternative were to be pursued, the total
estimated cost is in the range of $50 million to $70 million.
--National Spallation Neutron Source (NSNS).--The U.S. has fallen
behind the European scientific community in the past twenty
years in the availability of neutron sources and
instrumentation. No single agency is able to take full
responsibility for a facility of this kind. The proposal calls
for a joint partnership between DOE and NSF. DOE would
construct the proton accelerators and one fully instrumented
target area at a cost of approximately $1 billion. NSF would
assume the responsibility for the second fully instrumented
target area. At the present time, the estimated cost would be
approximately $150-175 million.
This list provides an indication of the ongoing planning for major
research equipment. Other projects are likely to be brought forward--
such as an ocean floor observatory system to understand processes in
the ocean crust--as planning continues and as needs for forefront
facilities are defined.
Question. What mechanisms do you have in place to discourage cost
overruns in major equipment projects?
Answer. Projects funded through the Major Research Equipment (MRE)
account contain award conditions which allow NSF to monitor the
performance of the organizations that construct, manage and operate
research facilities, and to oversee the expenditure of federal funds.
Increasingly, large projects are being undertaken on a ``build-to-
cost'' basis that controls cost overruns. In the current MRE program,
cost overruns are to be borne within the sponsoring organization within
NSF, a policy that focuses additional attention by staff to this issue.
The NSF Director names an NSF staff person to be responsible for
monitoring progress during the construction phase of a MRE project and
for advising on the transition from construction to operations. The
responsibility for project management typically resides in the
cognizant disciplinary division or office, with assistance provided as
necessary from other parts of the NSF. Status reports on the progress
of MRE projects are provided by the responsible directorate or office
at least semiannually to the Chief Operating Officer, the Director and
to the National Science Board (NSB).
At its February 1997 NSB meeting, the NSB Committee on Programs and
Plans received status reports on all major facilities construction
projects. At the present time, internal discussions with staff about
the oversight of large facilities are being conducted by the Chief
Operating Officer. Recommendations will be made to the Director based
on these discussions.
NEXT GENERATION INTERNET
Question. What is NSF's role in the interagency Next Generation
Internet project? What are the expected outcomes for this project.
The Next Generation Internet project has three closely-related
goals:
1. To connect about 100 leading research universities and labs with
an advanced network fabric that provides an increase of 100 fold in
end-to-end performance and serves as a testbed for the development of
future Internet technologies,
2. To develop, test, and model future network technologies that
provide differentiated qualities of service, enhanced reliability and
security, and other capabilities required for advanced applications of
the Internet, and
3. To develop and model advanced applications that better support
important national objectives in research, education, medicine, crisis
management, commerce, etc.
NSF will play an important role in all three facets of the NGI:
1. NSF's ongoing ``high-performance connections'' program will play
a central role in the first NGI goal by interconnecting about 100
leading universities and their research partners to NSF's existing
VBNS, the very high-speed backbone network service. (The VBNS recently
has been selected as the primary network of ``Internet 2,'' a
university-based consortium committed to the development of advanced
networking to support future modes of education.)
2. NSF will continue to fund research in network technologies in a
coordinated effort with DARPA and other agencies.
3. NSF will direct more than $200 million in new and existing
funding to the development of a wide variety of advanced network
applications in the cross-foundation Knowledge and Distributed
Intelligence (KDI) program.
Nearly all programs in NSF are expected to substantially benefit
from the deployment of the advanced network fabric of the NGI, and some
(e.g., the PACI partnerships) depend by design on NSF's success in the
connections program.
LIFE IN EXTREME ENVIRONMENTS (LEXEN) INITIATIVE
Question. The NSF budget includes funding for an initiative called
``Life in Extreme Environments (LExEn),'' an exobiology program that is
one of the components of the Administration's Origins Initiative. While
$35.9 million is requested for this program in 1998, it appears that
little of this investment represents new money. Given the
Administration's emphasis on this particular initiative, including the
meeting which the Vice President hosted last fall, why are there no
additional funds proposed for it in 1998?
Answer. Recent discoveries of the incredible diversity of microbial
life here on Earth, the development of molecular techniques for
analyzing genetic material, discoveries concerning volcanism on our
ocean floors, oceans on Europa, and extra-solar planets around other
stars, have revolutionized our perceptions of life and the potential
for life in extreme environments.
To capitalize on these discoveries, the National Science Foundation
invested $6 million in fiscal year 1997 in a special competition
focused on the development and application of techniques, technologies
and methodologies associated with the Life in Extreme Environments
(LExEn) initiative. Together with related research, the total effort
for the LExEn initiative accounted for more than $35 million in fiscal
year 1997.
We estimate that our investment in the LExEn Activity will continue
to exceed $35 million in fiscal year 1998. This estimate is based upon
support that individual programs within the Foundation expect to devote
to the LExEn Activity. NSF believes that the research accomplished at
this funding level, along with increased support for specific
activities not included under the LExEn umbrella, will contribute
significantly to the ORIGINS initiative.
NSF PARTICIPATION IN ``ORIGINS''
Question. We understand that NASA, the Department of Energy (DOE),
and NSF are discussing the consideration of an interagency Origins
program, with NSF taking a broader role than simply to support the
LExEn initiative, but to include a significant role in the use of
ground-based optical observatories to help in the detection of planets
and determine the origins of the universe. We further understand that
NSF alone has been unwilling to sign this proposed agreement. Can you
explain why the Foundation has not agreed to support this interagency
effort and when we might see a change of heart from the leadership of
the Math and Physical Sciences Directorate to support a significant and
meaningful role for NSF in Origins?
Answer. NSF's support for ``Origins'' research includes continued
funding for the Life in Extreme Environments (LExEn) initiative,
increased funding for a number of research activities to be supported
collaboratively with NASA or the Department of Energy (DOE) under the
``Origins'' umbrella, support for the Design and Development phase of
the Millimeter Array, and support for the Gemini Telescopes. Together,
these constitute a much broader role for NSF than simply maintaining
support for the LExEn initiative.
NSF is unaware of any proposed interagency agreement concerning
``Origins'' but is participating actively with NASA and DOE in
developing a brochure describing the activities of the three agencies
concerning ``Origins'' research. NSF regards the suite of activities
described above to constitute a very significant and meaningful role
for NSF in ``Origins''. In fact a major portion of NSF's Division of
Astronomical Sciences' efforts are focused already on questions related
to the origin of the Universe. Within the next two years, the upgraded
Arecibo Telescope, the new Green Bank Telescope, and the Gemini
Telescope in Mauna Kea will become operational, adding immensely to the
capabilities for exploring these questions.
OPTICAL ASTRONOMY PARTICIPATION IN ``ORIGINS''
Question. Does NSF's outyear planning estimates (fiscal year 1999-
2002) for the MPS Directorate assume any funding in optical astronomy
for the Origins Initiative over and above the base funding for
astronomy? If so, please explain. If not, please advise the Committee
on why this has been given relatively lower priority relative to other
NSF programs, particularly within MPS.
Answer. NSF's outyear planning for optical astronomy does assume
funding for ``Origins'' over and above the base funding for astronomy.
This includes (1) increased participation in the Life in Extreme
Environments (LExEn) initiative, and (2) a joint effort with NASA to
support comparative investigations of planetary atmospheres. Probably
the most important development in NSF's efforts in optical astronomy in
the outyears will be the completion of construction of the Gemini
Telescopes and the beginning of Gemini operations, first at Mauna Kea
in 1998 and at Cerro Pachon in Chile in 2000.
subcommittee recess
Senator Bond. There being no further business to come
before the subcommittee, we stand recessed.
[Whereupon, at 11:10 a.m., Tuesday, April 22, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, MAY 1, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 2:23 p.m., in room SD-124, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Mikulski, and Harkin.
Also present: Senator Faircloth.
DEPARTMENT OF VETERANS AFFAIRS
Office of the Secretary
STATEMENT OF HON. JESSE BROWN, SECRETARY
ACCOMPANIED BY:
KENNETH W. KIZER, M.D., M.P.H., UNDER SECRETARY FOR HEALTH
D. MARK CATLETT, ASSISTANT SECRETARY FOR MANAGEMENT
STEPHEN L. LEMONS, ACTING UNDER SECRETARY FOR BENEFITS
JERRY BOWEN, DIRECTOR, NATIONAL CEMETERY SYSTEM
KATHY E. JURADO, ASSISTANT SECRETARY FOR PUBLIC AND
INTERGOVERNMENTAL AFFAIRS
WILLIAM MERRIMAN, DEPUTY INSPECTOR GENERAL
EDWARD SCOTT, ASSISTANT SECRETARY FOR CONGRESSIONAL AFFAIRS
SHIRLEY C. CAROZZA, DEPUTY ASSISTANT SECRETARY FOR BUDGET
ROGER BAUER, VICE CHAIRMAN, BOARD OF VETERANS' APPEALS
MARY LOU KEENER, GENERAL COUNSEL
EUGENE BRICKHOUSE, ASSISTANT SECRETARY FOR HUMAN RESOURCES AND
ADMINISTRATION
DENNIS DUFFY, ASSISTANT SECRETARY FOR POLICY AND PLANNING
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. Good afternoon. The committee will come to
order. Let me apologize again for the schedule of the Senate.
We had a vote that began just after 2 p.m., and I wanted to
make that vote so that I could come back and start as soon as
possible.
Senator Mikulski, who has been here, asked us to go ahead.
I will make sure to submit to her a full copy of my written
statement so she will not miss anything, and we are very
pleased today to welcome on behalf of the Department of
Veterans Affairs on the fiscal year 1998 budget request
Secretary Jesse Brown and other VA officials.
The Department of Veterans Affairs appropriations request
totals about $40 billion, including $21.3 billion in mandatory
programs and $18.7 billion in discretionary programs.
Discretionary appropriations would decrease in fiscal year 1998
by $225 million, while mandatory programs would increase by
about $1 billion.
In general, VA's budget request is modest, and the goals
presented are worthy, albeit ambitious. The budget reflects
continued progress in overhauling VA service delivery without a
massive price tag. However, there are a number of important
concerns raised by the budget request.
The largest discretionary program in this subcommittee's
jurisdiction, and one of our highest priorities, is veterans'
medical care, for which no increase has been requested. In
fact, under the President's budget VA medical care actually
would be reduced by $54.6 million owing to some accounting
changes, but in essence the proposed budget would freeze VA
medical care at about $17 billion in fiscal year 1998.
In order to finance the increase VA believes is necessary
to cover inflation, payroll, and other increases, the
administration is proposing the Department be authorized to
retain third-party collections and veterans copayments totaling
about $468 million after deducting administrative costs.
Mr. Secretary, the administration's proposal is a great
gamble, with veterans' medical care at stake. I am concerned
that, while it provides an incentive for VA to improve cost
recovery, and that is not a bad idea, the concept is part of a
large and, frankly, controversial package of proposed user fees
for a number of departments.
Should VA's proposal not be enacted as part of the budget
reconciliation legislation, I really question whether the
Veterans Health Administration could avoid making large
reductions in staff and undertaking other major cost-cutting
measures if no increase in discretionary appropriations were to
be provided.
We have to acknowledge, and we are delighted to
acknowledge, that the VA has made significant and impressive
changes to its health care system in the last 2 years. The
system has been completely restructured. Major improvements
have been put in place and are continuing to be implemented,
such as enrolling patients in primary care, eliminating
redundancies and unnecessary management layers, increasing the
use of ambulatory care, and implementing bulk purchasing.
These changes have enabled the VA to redirect millions of
dollars to patient care. In just one of VA's 22 networks
savings of $130 million have been made this year alone. VA has
actually managed to do more with less, a real success story of
which you and your team can rightfully be proud.
In addition, VA has overhauled its allocation methodology,
vastly improving the fairness and appropriateness with which
resources are allocated to facilities. While some fine tuning
may be needed, the new system is a tremendous step forward.
The changes have occurred in large part due to the
leadership and vision particularly of Dr. Ken Kizer. He
deserves accolades for bringing these important and long-needed
changes about.
Before Dr. Kizer's arrival at the VA, the idea of such
dramatic changes would have been considered heresy, and Dr.
Kizer I hope still you are not being tried for heresy in the
Department, but I am afraid a funding freeze would do more than
force efficiencies. A funding freeze could have the effect of
eviscerating some of the improvements which are now underway.
The American Legion has advised us that the flat
appropriations levels recommended in the fiscal year 1998-2002
medical care budget proposal are far beyond what the system can
absorb without jeopardizing the quantity, quality, timeliness
and access to care.
Mr. Secretary, if you recall, at last year's hearing you
stated VA could not operate on flat funding. You said it would
force VA to eliminate about 60,000 physicians and deny care to
about one million veterans and would force you to close the
equivalent of 41 hospitals. We raised questions about that at
the time, and I still have some questions about the adequacy of
the budget request before us.
In addition, the President's budget is predicated on the
assumption that VA can achieve a 30-percent reduction in per-
patient cost, a 20-percent increase in the number of patients
served, a 10-percent increase in revenues from nonappropriated
sources by the year 2002. It would be a great feat if you could
do it. Again, I am from Missouri. You are going to have to show
me.
PREPARED STATEMENT
VA's 30-20-10 goal is based on enactment of the cost
recovery proposal, and the Medicare subvention proposal, both
of which are controversial and problematic. In addition, we do
have some concerns about whether VA's projections are overly
optimistic. GAO has submitted testimony for the record today,
and unlike most GAO reports, it notes with approval many of the
changes that have been undertaken, and I again commend you on
the favorable report from an agency not always prone to give
favorable reports.
[The statement follows:]
Prepared Statement of Stephen P. Backhus
Mr. Chairman and Members of the Subcommittee: We are pleased to
contribute this statement for the record for the Subcommittee's
deliberations on the President's 1998 budget request for the Department
of Veterans Affairs (VA) health care system. With a 1997 medical care
appropriation of $17 billion and a declining veteran population, VA
faces increasing pressure to contain or reduce spending as part of
governmentwide efforts to achieve a balanced budget. Last year, we
reported that VA's health care system had the opportunity to reduce its
operating costs by billions of dollars over the next several years.\1\
---------------------------------------------------------------------------
\1\ VA Health Care: Opportunities for Service Delivery Efficiencies
Within Existing Resources (GAO/HEHS-96-121, July 25, 1996) and VA
Health Care: Opportunities to Increase Efficiency and Reduce Resource
Needs (GAO/T-HEHS-96-99, Mar. 8, 1996).
---------------------------------------------------------------------------
VA's 1998 budget proposal requests a medical care funding level of
$17.6 billion, consisting of an appropriation of almost $17 billion and
a legislative proposal to retain insurance payments and other third-
party reimbursements.\2\ VA characterizes this as the first step in a
5-year plan to reduce its per patient cost by 30 percent, increase
patients served by 20 percent, and finance 10 percent of its
expenditures using nonappropriated revenues by the year 2002. VA
proposes to use appropriations of about $17 billion over the next 5
years and supplement this with increases in third-party reimbursements
that are estimated to be $1.7 billion in 2002.
---------------------------------------------------------------------------
\2\ This includes $123 million of administrative costs for third-
party insurance recoveries and $68 million of reimbursements for
veterans compensation and pension examinations.
---------------------------------------------------------------------------
Our comments focus on VA's 5-year plan, including the outlook for
attaining the stated targets and the potential effects on veterans and
others. In addition, as requested by the Subcommittee, we also offer
our preliminary observations on VA's progress on two major initiatives:
developing a method to more equitably allocate resources and
establishing a decentralized management structure to more efficiently
and effectively deliver services. We plan to provide the Subcommittee
more detailed information on these two initiatives at a later date.
Our comments on VA's budget proposal are based on past and ongoing
work to assess operating policies, procedures, and practices of VA
hospitals and clinics.\3\ We spoke with hundreds of VA officials and
examined a wide array of documents, including VA's budget submission,
annual reports, and studies done by VA's Office of Inspector General
and others. Our comments on VA's decentralized management and resource
allocation initiatives are based on information obtained from
discussions with officials at headquarters and seven networks as well
as a review of documents they provided.
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\3\ A list of related GAO testimonies and reports appears at the
end of this statement.
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In summary, while VA's budget goals may be attainable, they also
carry implications such as limited deficit reduction contributions and
potential risks to low-income, uninsured veterans. Achieving increased
efficiency is not contingent on either increases in patients served or
resources. VA's ongoing efforts to restructure its health care system
could yield billions of dollars in savings during the next 5 years. A
large part of these savings would be realized through more efficient
use of its workforce, which will allow the existing patient base to be
served with fewer employees. In fact, sufficient savings could be
generated to afford VA an opportunity to increase patients served
without new resources or increase its contribution to deficit
reduction. Furthermore, VA can significantly decrease its reliance on
appropriated resources by using its existing authority to sell excess
capacity to help other federal agencies meet their beneficiaries'
health care needs.
VA's proposal to generate billions of dollars in new revenue to
serve 20 percent more patients intensifies VA's direct competition with
the private sector and potentially leaves low income, uninsured
veterans vulnerable. VA may be able to attain its revenue goals only by
attracting thousands of new users who have higher incomes or public or
private insurance. And such new VA users are likely to be drawn from
private providers who may see their revenue base erode as patients
shift to VA care. Moreover, VA may spend unreimbursed resources on
these veterans that could reduce the availability of resources for low-
income, uninsured veterans.
VA also faces a difficult challenge as it takes steps to implement
a new resource allocation method to improve veterans' access to VA care
and a decentralized management structure to improve resource
utilization. These initiatives promise improvements in equity and have
stimulated significant changes in efficiency. However, VA's challenge
will be to adequately monitor these changes to identify and correct
unintended effects such as those that limit equity of access.
BACKGROUND
VA's role in providing for the health care needs of veterans has
evolved over time. During its first 50 years, VA predominantly served
veterans who had disabilities caused or aggravated by military service
and other low-income, uninsured veterans in need of a health care
safety net. Over the past 10 years, VA has also served higher income
and insured veterans with nonservice-connected conditions. Over time,
however, VA's patient base has been shifting from serving primarily
veterans with service-connected conditions to those without service-
connected conditions. Currently, VA operates over 750 facilities,
including 173 hospitals and over 400 outpatient clinics. These
facilities serve 2.6 million of the nation's almost 26 million veterans
as well as about 300,000 nonveterans.
In 1995, to promote greater efficiency and services to veterans, VA
created a new decentralized management structure, forming 22 Veterans
Integrated Service Networks (VISN). These networks replaced the
previous structure's four regions and expanded their authority. The
VISN is now the basic budgetary and decision-making unit of VA's health
care system and exercises management authority over VA facilities in
its geographic area. This system of networks clearly places value on
efficiency and customer service, and the networks are empowered to make
a wide range of decisions regarding care delivery options. Under the
recently enacted eligibility reform legislation (Public Law 104-262),
for example, networks can contract with a broader range of private
providers to purchase services at prices lower than VA's costs and
generate revenue by selling excess services. In April 1997, VA
implemented the Veterans Equitable Resource Allocation (VERA) system to
allocate medical care appropriations among the 22 VISN's. VERA is
intended to improve the equity of resource distribution throughout VA's
health care system.
efficiency savings not dependent on increased number of veterans served
Last year, we testified that VA could save billions of dollars over
the next 7 years through improved efficiency. As noted before, the
Congress subsequently gave VA the two additional tools-eligibility
reform and expanded contracting authority--that VA said were key to the
success of its efforts to increase efficiency. With these tools, VA can
help veterans prevent costly hospital admissions and access lower cost
services, regardless of where veterans reside. VA's 1998 budget
request, however, suggests that VA will be able to achieve 30 percent
efficiency savings over the next 5 years only if it has the additional
resources to serve 20 percent more patients.
Over the past 18 months, VA has taken aggressive steps to change
the way it operates to reduce costs and improve services to veterans.
These initiatives are expected to save billions of dollars by avoiding
unnecessary expenditures. Most of the initiatives involve a resizing
and more efficient use of its workforce, which accounts for over $10
billion of VA's medical care budget. For example, VA is shifting
patient care from inpatient to outpatient settings as well as reducing
average lengths of inpatient stays. It is also consolidating management
and clinical services of nearby hospitals to reduce costs. Moreover, VA
is exploring opportunities to contract with other health care providers
for services at costs lower than VA's.
These restructuring efforts should save billions of dollars without
attracting new users as the following examples indicate:
--VA established a pre-admission screening process for hospitals
that, if effectively implemented, could save $8.4 billion over
the next 5 years.
--VA integrated the management of two or more nearby facilities in 26
different locations, which should result in savings of $230
million over the next 5 years.
--VA shifted substance abuse treatment from an inpatient to an
outpatient setting in one service location, which is expected
to result in savings of $10 million over the next 5 years.
Currently, VA has teams exploring additional opportunities for
streamlining operations and reducing workforce needs. Many of these
teams are identifying ways to use lower cost methods for delivering
services within individual facilities. For example, many facilities are
--reducing patient bed-days of care, including one location that
would close seven medical wards and generate potential savings
of almost $50 million over the next 5 years, and
--shifting inpatient surgeries to ambulatory settings, including one
location that shifted enough workload among facilities to close
two surgical wards and potentially save over $15 million during
the next 5 years.
VA also has many teams exploring ways to consolidate services at
nearby facilities. Such actions should result in significant savings
over the next 5 years as shown by the following examples:
--Facilities in one service area are planning to integrate eight
pathology and laboratory medicine services into a single
business unit with two central laboratories. This integration
is expected to save about $10 million over the next 5 years.
--Facilities in another area are exploring ways to consolidate small
purchases into one location, which is expected to save over $20
million during the next 5 years.
Additional savings opportunities could be available in later years
from the closing of hospitals whose workloads may be shifted to nearby
hospitals that have sufficient unused capacity to efficiently and
effectively meet veterans' needs. For example, closing a facility with
about 300 beds could save over $100 million in overhead costs alone
during a 5-year period.
EFFICIENCY SAVINGS COULD PROVIDE OPPORTUNITIES TO SERVE MORE VETERANS
WITHOUT ADDITIONAL RESOURCES
VA could expand its current patient base if its efficiency savings
exceed payroll and other cost increases. These costs are expected to be
about $637 million in 1998 and to increase by a rate of about 4 percent
a year over the next 5 years.
The effect of VA's efficiency savings is to increase its purchasing
power each year. For example, most of the savings are attributable to
reductions in VA's workforce, which currently numbers about 189,000
full-time equivalents. VA may need to reduce its workforce by about
6,800 full-time equivalents to realize an annual savings of $637
million. This level of reductions would decrease VA's resource needs by
comparable amounts in succeeding years. Thus, an annual appropriation
of $17 billion could be sufficient to serve 2.9 million patients in
2002 if efficiency savings and cost increases approximate $637 million
a year, on average. Moreover, VA could increase its patient base if its
efficiency initiatives yield greater savings.
ADDING RESOURCES FURTHER ENHANCES VA'S OPPORTUNITY TO SERVE MORE
VETERANS
VA's 1998 budget proposes reinvesting all efficiency savings and
using additional resources to expand its patient base. VA expects to
add a total of $5.8 billion in new resources over the next 5 years
(from public and private insurers and others), starting with $737
million in 1998 and increasing to $1.7 billion in 2002. VA expects that
these additional resources will allow it to increase the number of
veterans served by 587,000 which would increase its patient base from
2.9 million to 3.5 million in 2002.
If the targeted resource levels are attained, VA appears capable of
attracting 587,000 new users by 2002. Recent expansion of VA's
contracting authority and veterans' eligibility for care should
facilitate creation of new access points, referred to as community-
based outpatient clinics, which along with VA's efforts to improve
accessibility of existing hospital-based clinics are likely to attract
new workload.
For example, VA has opened or developed plans to open 86 new
community-based clinics over the last 3 years. These clinics provide
only primary care and refer veterans to VA hospitals for more
specialized care. Last month, we surveyed the 12 clinics that had at
least 2 years' operating experience and found that they had attracted
3,000 new veterans. These clinics experienced the largest growth in
their initial year and smaller growth in subsequent years. VA estimates
that the remaining 74 clinics will serve over 128,000 users a year but
has not estimated how many will be new VA users. Twenty-two of the new
clinics estimated that between 5 and 60 percent of the patients served
will be new users, while the rest expected to serve no new users or
were unsure whether new users would be served.
Although it plans to open many more clinics, VA told us that it is
too early to estimate how many or where they will be located. Our
analysis suggests that VA could need between 1,200 and 1,800 additional
clinics to attract 587,000 new users if each clinic attracts between
250 and 500 new veterans. The first 12 clinics averaged 250 in their
initial years. These clinics also appear to provide an affordable way
for VA to attract new users.
In addition, VA's efforts to improve veterans' access to existing
facilities should also attract new users. These initiatives include
expanding primary care by extending operating times for hospital-based
clinics to night and weekend hours as well as ways to reduce waiting
times. For example, one hospital-based clinic reported enrolling 3,000
new veterans for care during the first year after having made such
accessibility improvements.
EXPANDING VA'S RESOURCE BASE POSES CHALLENGES
VA's revenue goal of $1.7 billion in 2002 includes estimated
recoveries of about $902 million from private insurance, $557 million
from Medicare, and $178 million from federal agencies and others.
Attaining these targets may present a challenge as VA would probably
have to attract thousands of new revenue-generating veterans. VA has
provided, however, little information on the numbers of new veterans
needed to meet revenue goals or how much of the revenue will come from
inpatient or outpatient services. This lack of information creates
uncertainties about VA's ability to achieve its revenue goals.
Increasing Recoveries From Private Health Insurance May Be Difficult
VA currently serves insured veterans and recovers some or all of
its costs of care from insurers. Presently, VA returns all recoveries
to the Treasury, except those needed to cover VA's billing and
collection costs. In 1996, VA deposited $455 million into the Treasury
and used $119 million for administrative costs. VA's recovery of $574
million represents a decline in recoveries from 1995, despite an
increase in the number of users.
VA's ability to increase future recoveries from its current insured
patient base is uncertain for several reasons:
--Veterans are increasingly covered by health maintenance and
preferred provider organizations from which VA generally cannot
recover.
--As an increasing proportion of VA users become eligible for
Medicare, their private health insurance becomes secondary, so
potential recoveries drop.
--As VA shifts from inpatient to outpatient settings, insurance
recoveries decrease and the cost of recovery increases.
--VA found that Medigap insurers have been paying VA too much, which
will result in decreased future recoveries and refunds of about
$150 million a year.
--VA's authority to recover from private health insurance for care
provided to service-connected veterans for non-service-related
conditions expires September 30, 1998.
As a result, to meet its revenue projections of $902 million from
private insurance, VA will probably have to focus its marketing efforts
on attracting veterans with fee-for-service private health insurance.
In addition, the Congress would need to extend VA's authorization to
recover for certain services provided to service-connected veterans.
VA officials told us that they do not know how many veterans in
their 2.9 million patient base have insurance or how many insured
veterans receive billable care. This lack of information on key
elements affecting its projections creates considerable uncertainty
about the number of new insured users it would need to attract in order
to generate its target revenues.
Attaining Medicare Recovery Target May Be Difficult
VA proposes to collect about $557 million from Medicare in 2002 for
services provided to about 106,000 additional higher-income veterans
who are covered by Medicare. VA currently attracts only about 1 out of
every 100 higher-income Medicare-eligible veterans--about 41,000
veterans in 1992. It thus appears questionable whether VA will be able
to attract an additional 106,000 higher-income Medicare-eligible
veterans by the year 2002.
VA expects to recover from Medicare, on average, about $5,300 for
each of the 106,000 additional Medicare-eligible veterans it expects to
serve in 2002, a target amount that seems achievable based on average
Medicare spending levels per patient nationwide. However, it may be
difficult for VA to achieve this collection rate if Medicare-eligible
veterans use primarily VA services that are not covered by Medicare,
such as prescription drugs, inpatient psychiatric care, and long-term
nursing home care. Our assessment of Medicare-eligible veterans' use of
VA services in 1994 suggests that most of these veterans use VA, at
least in part, for services not covered by Medicare.\4\
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\4\ Veterans' Health Care: Use of VA Services by Medicare-Eligible
Veterans (GAO/HEHS-95-13, Oct. 24, 1994).
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Increasing Recoveries From Other Sources Appears Attainable
VA proposes to collect $178 million in 2002 through sales of excess
services to federal agencies, affiliated medical schools, and others.
This amount represents over a 300-percent increase over VA's
collections of $43 million in 1996.
Since 1966, the Congress has expanded VA's authority on several
occasions to sell excess services in an effort to encourage VA
facilities to generate revenues in addition to those appropriated. Over
the last 5 years, VA's sales have increased by about 37 percent, with
most sales to the Department of Defense (DOD) and affiliated medical
schools. Last September, the Congress took another step to expand VA's
ability to generate revenue by authorizing VA to sell excess health
care services to any health care plan, insurer, or other provider.
VA could meet or exceed its goal of $178 million in 2002 if it
markets its excess capacity to other federal agencies. DOD and VA
reached agreement in 1995 that VA can provide health care services to
active duty and retired members of the military and dependents enrolled
in DOD's TRICARE program. While some VA facilities have become TRICARE
providers, most have not. Similarly, few VA facilities have generated
revenue by serving beneficiaries of other federal agencies, such as the
Indian Health Service and the Bureau of Prisons, even though these
agencies have expressed interest in buying VA's excess services.
expanding va's resource base may place some veterans and others at risk
Over the last 25 years, VA has served an increasing number of
veterans without service-connected conditions, generally those low-
income veterans in need of a health care safety net. During the last 10
years, VA has also served higher-income and insured veterans with its
resources that were in excess of those needed to provide care to
service-connected and low-income veterans.
Allowing VA to retain nonappropriated revenues may change VA's
perspective. This is because the veteran population is, in effect,
likely to represent two distinct groups--non-revenue-generating
veterans and revenue-generating veterans. Within this later group are
several potential target populations: privately insured veterans;
Medicare-eligible veterans; higher-income veterans; and higher-income,
privately insured, or Medicare-eligible veterans.
Non-Revenue-Generating Veterans May Be at Risk of Having Access Limited
VA may encounter difficulty attaining its revenue goals unless a
significant number of new users have higher incomes or insurance. This
could create a strong incentive for VA to market services to attract
revenue-generating rather than non-revenue-generating veterans. This
incentive could manifest itself in several ways, including where VA
decides to locate new community-based outpatient clinics. For example,
VA recently proposed locating a community-based clinic in a homeless
shelter that VA expects could attract 2,040 new users in need of VA's
safety net and therefore not likely to generate revenue. By contrast,
VA has also proposed opening a new clinic in one of the country's more
affluent counties. While the clinic is intended to improve access for
current users, it is also expected to attract patients who could
ultimately generate revenue.
Non-VA Providers May Be at Risk of Losing Workload
Marketing VA services to generate revenue has the potential to draw
higher-income insured veterans from private providers who may then see
their revenue base erode, depending on the number of patients who shift
to VA care. If VA has to aggressively attract new users who are now
receiving health care elsewhere, it will intensify the competition
between VA and other state, county, and private providers for a larger
share of a shrinking veterans' health care market.
VA's success in attracting revenue-generating patients will be
likely to result in a shifting of health care costs from other
financing organizations to VA and to exacerbate financial hardships for
those competing health care providers that have excess capacities. For
example, our interviews with 115 veterans using new access points last
year revealed that 70 percent had Medicare coverage, 50 percent had
private insurance, and 7 percent had Medicaid.\5\ Most said they paid
for their own primary care or used insurance coverage to obtain care at
other providers before they switched to VA care.
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\5\ VA's Health Care: Improving Veterans' Access Poses Financial
and Mission-Related Challenges (GAO/HEHS-97-7, Oct. 25, 1996).
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VA's Proposal Could Lower Contribution to Deficit Reduction
VA's proposal to retain revenue generated from nonappropriated
sources would also affect VA's contribution to deficit reduction. VA
currently returns recoveries to the Treasury, which, in effect, reduces
the government's cost of VA health care. For example, VA expects to
return $438 million in 1997, which would reduce the amount of
government resources needed to serve VA's patient base from its
appropriated amount of $17 billion to $16.6 billion. By contrast, under
VA's proposal it would retain insurance recoveries of $590 million in
1998, increasing the government's cost to finance VA health care to
$17.6 billion, or $1 billion more than in the previous year.
In addition, VA's proposal to reinvest efficiency savings and use
additional nonappropriated resources to increase the number of patients
served could affect VA's contribution to deficit reduction. For
example, VA would need an appropriation of $17 billion a year to serve
2.9 million users if savings equal payroll and inflation costs between
1998 and 2002. By contrast, VA may be able to contribute up to $1
billion more in 2002 toward deficit reduction if annual efficiency
savings exceed cost increases by $200 million, on average, over the 5-
year period and such excess savings are returned to the Treasury.
NEW ALLOCATION METHOD AND DECENTRALIZED MANAGEMENT SHOW PROMISE BUT
RISKS EXIST
VA is using a new resource allocation method and a decentralized
management structure to address two long-standing issues: equity and
efficiency. These initiatives are intended to improve the equity of
veterans' access to care and produce cost savings.
Allocating Resources Equitably Seems Achievable With New Methodology
VA is using the Veterans Equitable Resource Allocation (VERA)
system to allocate 88 percent of the $17 billion medical care
appropriation to the 22 networks. This approach is a major shift away
from VA's historical process for two reasons. First, it funds 22
networks rather than hundreds of facilities. Second, it allocates
resources on the basis of costs per veteran served rather than on the
basis of facilities' historical budgets. Funding networks sends a clear
message that each facility is a part of a larger regional enterprise
charged, in part, with a mission of achieving equity of access. VERA
recognizes that networks are the vehicles for fostering regional
change, eliminating redundancies, and facilitating cooperation among
medical facilities. Network officials have the authority to tailor
their VERA allocations to facilities and programs, within the
parameters set by national policy and guidelines, and to integrate
services across facilities for equity and other purposes.
The goal of VERA is to provide networks with comparable levels of
resources per veteran served. VA implemented VERA in an attempt to
allocate patient care resources on the basis of differences in patient
needs and regional differences in the price of their care. To do this,
VERA classifies patients into two groups--basic care and special care--
as a simple case mix adjustment. Basic care patients generally receive
routine services that are less expensive than those received by special
care patients. Special care patients often have complex or chronic
conditions, such as spinal cord injury or end-stage renal disease, or
require care in settings such as nursing homes. The VERA special care
category also includes some adjustment for age to account for the
higher medical demands of older population groups.
VERA allocates resources to networks based on two key components:
network workloads and national prices. VA patient workloads are the
estimates of the number of patients--basic and special--a network may
serve. VA also calculates workloads for research support, education
support, equipment, and nonrecurring maintenance. To determine a
national price for each workload category, VERA divides national
resources available by the national workload for that category. VERA
allocates funds to a network by multiplying the network's workload
numbers by their respective national prices. In addition, VERA adjusts
for differences in regional labor costs for patient care.
To the extent that VERA allocates comparable levels of patient care
resources for each veteran served, it provides incentives for networks
to obtain these resources by increasing workload and decreasing costs.
Networks that increase their patient workload relative to other
networks gain resources under VERA; those whose patient workloads
decrease relative to others lose resources. Networks that are more
efficient, that is, have patient care costs below the national price,
have more funds available for local initiatives. However, those with
patient care costs above the national price (that is, less efficient
networks) must increase efficiency to have such funds available. Thus,
these incentives can result in cost savings and enhanced access for
veterans.
VERA will not be fully implemented until fiscal year 1999. As a
result, few resources will move among networks this year. (See fig. 1.)
Five VISN's will receive fewer dollars and 17 will receive more.\6\
VERA generally moves resources from the Northeast and Midwest, where
per veteran costs have been higher than the national average, to the
South and West where per veteran costs have been lower than the
national average. If VA had fully implemented VERA this year, shifts in
funding among the networks would have ranged from a reduction of 14
percent to an increase of 16 percent.
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\6\ In VA's Veterans Equitable Resource Allocation System Briefing
Booklet, March 1997, VA shows that 6 networks will lose funds and 16
will gain funds in fiscal year 1997. However, VA excludes allocations
for equipment and non-recurring maintenance. We included those amounts
in our calculations to show the impact of VERA more fully. Neither we
nor VA includes funds not allocated by VERA in these comparisons.
[GRAPHIC] [TIFF OMITTED] T05MA01.000
VERA, like any allocation model, has limitations. First, VERA may
shift some resources inappropriately because it may not fully account
for justifiable differences in regional cost variations. Although VERA
adjusts for differences in regional case mix with its basic and special
care patient categories and adjusts the allocations for differences in
regional labor costs, it assumes that all the remaining differences are
based on differences in efficiencies. While inefficiency is a major
factor in these cost differences, other factors may play a role. For
example, to the extent that veterans are sicker and need more health
care services in different parts of the country, additional case mix
adjustments may be necessary to fully explain regional cost
differences. As we have said in the past, VA needs to provide more
information on why costs vary throughout the country.\7\ VA officials
told us they plan to examine this further.
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\7\ Veterans' Health Care: Facilities' Resource Allocations Could
Be More Equitable (GAO/HEHS-96-48, Feb. 7, 1996) and Department of
Veterans Affairs: Programmatic and Management Challenges Facing the
Department (GAO/T-HEHS-97-97, Mar. 18, 1997).
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Another potential issue is that basing VERA on veteran-users may
result in underallocation of funds in areas with low usage rates. If
these rates result from past inequities in access to services, VERA may
need to incorporate population-based data on veterans with highest
priority for receiving services rather than relying solely on user
data.\8\ However, other factors, such as number of veterans with health
insurance coverage, could also affect usage rates. Because adequate
data were not available and VA wished to implement VERA as quickly as
possible, it did not include population data in VERA. VA continues to
examine the utility of doing so.
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\8\ Category A veterans have the highest priority for receiving VA
health care services. Included in Category A are veterans with service-
connected disabilities and those with service-connected disabilities
whose income falls below certain thresholds.
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VERA's incentives for lower per veteran costs and higher workload
numbers could lead to unintended consequences if not properly monitored
and corrected. In our discussions and visits with network and medical
center officials, we found efforts under way to increase the number of
veterans served. VA indicators for the first quarter of fiscal year
1997 generally show increases in the number of high-priority veterans
(that is, Category A veterans) seen, and the increases for some
networks are dramatic. We have concerns about whether the data
accurately depict changes in workload. If the data are reliable, we are
concerned that some networks may be inappropriately increasing their
workload numbers to get more resources under VERA. For example,
networks may be increasing workload by increasing the number of one-
visit patients. This may be good primary or preventive care, or it
could distort VERA allocations because only minimal services are
provided to get credit for increased workload. In the short time since
the indicators were published, however, we have been unable to
determine the accuracy of the data and the services the new users
received. VA officials told us that they recognize the importance of
monitoring, identifying, and correcting unintended consequences. They
said they will monitor data used in the allocation model, including
workload increases, to ensure that they reflect changes at the network
and medical center levels that are consistent with VA-wide policy and
guidance.
Although VERA is a step toward to a more equitable allocation of
resources, it does not specifically address equitable access to
services. Networks are ultimately responsible for allocating funds to
ensure that veterans have equal access to VA services. Each of the
networks we contacted differs in how it allocates funds. One funds its
facilities using a flat rate for each veteran-user. Another uses a
combination of historical funding and negotiation with medical center
management regarding new initiatives. Still another includes a feature
in its allocation method that provides payment for each additional
veteran served. VA officials told us they will examine these processes
to ensure that different allocation mechanisms increase equity of
access to services while addressing other national VA goals.
Networks Have Made Significant Progress. But Decentralized Management
Poses Oversight Challenges
VA has taken a page from private sector organizations and empowered
the network directors by delegating broad decision making authority
over network budgets, facility staffing, health care delivery, and
administrative functions. This has resulted in notable accomplishments
at VA, including significant cost savings and improvements in access.
Decentralized decision-making at VA places a premium on effective
headquarters guidance and monitoring of VISN activities. The challenge
is to ensure that networks have a common understanding of VA-wide goals
and legislative requirements while permitting them flexibility in how
to achieve the goals. The challenge in monitoring network performance
is to have reliable, appropriate, and timely indicators to ensure that
problems are identified and corrected.
VA has provided guidance to managers and staff since the beginning
of its reorganization. For example, the Under-Secretary for Health
issued two volumes, ``Vision for Change'' and ``Prescription for
Change,'' delineating the type of organization he intended VA to become
and the goals VA would strive to attain. Network and medical center
staff told us that these publications and other communications, such as
monthly meetings between network and headquarters managers, help
develop their understanding of the structural and operational changes
being made.
VA's new performance measurement process also plays an important
guidance role by underscoring VA-wide organizational priorities. These
measures include key indicators such as reduced bed-days of care and an
increased percentage of surgeries performed on an ambulatory basis. The
measures are the main components of the network directors' performance
agreements. In networks we visited, medical center directors'
performance agreements also included these measures. Medical center
directors we contacted told us that network directors were exercising
closer oversight of their progress in achieving VA-wide goals than had
occurred under previous organizational structures.
Another strategy for reducing unnecessary variation has been the
use of clinical practice guidelines. These are intended to enhance the
quality and appropriate utilization of health care services by reducing
variations in the way a health condition--for example, stroke--is
treated. Networks are required to adopt 12 practice guidelines by the
end of fiscal year 1997. They can choose from those identified by
headquarters or other sources.
Providing national guidelines but offering networks discretion on
when to follow these guidelines can create opportunities for local
innovation but problems for national oversight. If discretion results
in variation across the system, it will be difficult for VA to assess
the impact of the guidelines. Network flexibility may produce tension
between headquarters and networks. For example, officials in one
network we visited told us that they preferred the American Medical
Association guidelines to the national diabetes guidelines VA adopted.
Headquarters, network, and medical center officials told us that
national guidance had not been sufficiently clear on whether to notify
headquarters of significant program changes at the network level. They
told us that they had not always been clear on what constituted
``significant'' changes. In a few instances, headquarters officials
were not notified of impending network-initiated changes such as
closure of a surgical program at a medical center. In May and September
1996, headquarters issued guidance for networks on prior notification
and consultation with headquarters for network actions such as
restructuring clinical services--including closures of major programs--
and proposed changes to special emphasis programs such as those for
spinal cord injury and prosthetics. VA has additional measures planned
to ensure that headquarters is involved in significant network-
initiated program changes.
Performance measures and standards developed by headquarters are
the key components of VA's monitoring process. Headquarters holds
network directors accountable for making progress toward VA goals by
including measures and standards of performance in the directors'
contracts. Headquarters lengthened its list of measures for fiscal year
1997; it now includes about two dozen indicators. In networks we
visited, directors are monitoring medical centers on these measures as
well.
CONCLUDING OBSERVATIONS
VA's 1998 budget presents the Congress with a fundamental choice
about the future course of VA health care, a choice that will have an
effect on veterans, other health care providers, and efforts to achieve
a balanced federal budget. In general, VA's proposal to reinvest all
savings and generate additional nonappropriated revenues may intensify
the direct competition between VA and other providers. By contrast, a
decision to limit VA's retention of nonappropriated revenues will set
VA on a course to becoming a more cost-efficient safety net for those
non-revenue-generating veterans who have no other health care options.
Currently, there is insufficient information to understand the full
implications of VA's budget proposal. VA states that the key elements
of its proposal--namely, a 30-percent per patient cost reduction, a 20-
percent increase in veterans served, and a 10-percent reduction of its
reliance on appropriations--are inexorably linked but, in our view,
this is not so. It seems plausible that any number of different
scenarios could occur, depending on the magnitude of cost savings that
VA will realize through its ongoing restructuring.
For instance, VA could operate as a health care safety net for
several years, with an appropriation of about $17 billion or less,
given VA's progress in identifying and implementing efficiency savings.
Such efficiency savings could equal or exceed the potential
nonappropriated revenues that VA estimates it can generate over the
next 2 years if authorized to do so. For this reason, there appears to
be time to obtain critical information from VA and others so that VA's
budget proposal may be more clearly understood and fully debated. In
this regard, several critical issues could be addressed, including the
following:
--Should VA reinvest all efficiency savings to expand the number of
patients served? If so, should VA's expansion be limited to
certain target groups of veterans, such as service-connected,
low-income, or uninsured veterans in need of a health care
safety net?
--Should VA use nonappropriated revenue sources to help finance
increased services to higher-income and insured veterans who
have no service-connected conditions or continue relying solely
on appropriated resources to finance increased services for
service-connected and low-income veterans without service-
connected conditions?
--Should VA reinvest savings in excess of those needed to maintain
its current patient base in order to serve more veterans or
should it return some or all of the excess savings as a
contribution toward deficit reduction?
It would be less difficult to make such choices at this time if VA
had provided a road map that clearly articulated (1) what operational
changes would be needed to move along its newly proposed competitive
course and (2) what consequences such competition would have for
veterans and others. For example, additional information would be
helpful about how different choices may affect (1) service-connected
veterans and those in need of VA's safety net; (2) VA's existing
hospitals, clinics, and other facilities; (3) VA's workforce; and (4)
other health care providers.
Delaying a decision on VA's legislative proposals until such
critical information is available--including a plan describing how the
system will look and operate in 2002--may result in a better
legislative decision on VA's budget proposal. It will also afford VA
and the Congress time to better assess how VA's future resource needs
may be affected by the new decentralized management and resource
allocation initiatives.
VA's new resource allocation process and decentralized management
structure hold promise for improved operational efficiencies and
equitable access. Responding to VERA's incentives and VA's goals, local
managers are already producing substantial savings and increasing the
number of veterans served. VA, however, needs to continue examining how
price and workload data are determined under VERA to improve equity of
resource allocation. VA also needs to carefully monitor the impact of
VERA's incentives on network and facilities performance. This is
particularly important given the variation resulting from local
managers' flexibility in the decentralized system. We believe that
identifying and correcting problems is essential to the success of VA's
proposed 5-year plan.
RELATED GAO PRODUCTS
Department of Veterans Affairs: Programmatic and Management
Challenges Facing the Department (GAO/T-HEHS-97-97, Mar. 18, 1997).
VA Health Care: Improving Veterans' Access Poses Financial and
Mission-Related Challenges (GAO/HEHS-97-7, Oct. 25, 1996).
VA Health Care: Opportunities to Significantly Reduce Outpatient
Pharmacy (GAO/HEHS-97-15, Oct. 11, 1996).
VA Health Care: Issues Affecting Eligibility Reform Efforts (GAO/
HEHS-96-160, Sept. 11, 1996).
VA Health Care: Opportunities for Service Delivery Efficiencies
Within Existing Resources (GAO/HEHS-96-121, July 25, 1996).
VA Health Care: Challenges for the Future (GAO/HEHS-96-172, June
27, 1996).
VA Health Care: Efforts to Improve Veterans' Access to Primary Care
Services (GAO/T-HEHS-96-134, Apr. 24, 1996).
VA Health Care: Approaches for Developing Budget-Neutral
Eligibility Reform (GAO/T-HEHS-96-107, Mar. 20, 1996).
VA Health Care: Opportunities to Increase Efficiency and Reduce
Resource Needs (GAO/T-HEHS-96-99, Mar. 8, 1996).
Veterans' Health Care: Facilities' Resource Allocations Could Be
More Equitable (GAO/HEHS-96-48, Feb. 7, 1996).
VA Health Care: Issues Affecting Eligibility Reform (GAO/T-HEHS-95-
213, July 19, 1995).
VA Health Care: Challenges and Options for the Future (GAO/T-HEHS-
95-147, May 9, 1995).
VA Health Care: Retargeting Needed to Better Meet Veterans'
Changing Needs (GAO/HEHS-95-39, Apr. 21, 1995).
Veterans' Health Care: Use of VA Services by Medicare-Eligible
Veterans (GAO/HEHS-95-13, Oct. 24, 1994).
Senator Bond. But the VA does raise the question: ``It
appears that efficiency savings could equally equal or exceed
the $700 to $850 million in potential nonappropriated revenues
that VA estimates it could generate over the next 2 years'' but
we have not seen the hard data to back up the VA's 5-year
projection of the 30-percent reduction in per-patient cost.
Nor have we been given justification for the increases
projected in user fee collections. GAO believes that VA may
have a tough time increasing recoveries from private health
insurance for a variety of reasons outlined in their testimony.
Outside of the medical care proposal, we have serious
concerns with the President's request for the VA research
program. This program, which has served to bring the best
physicians to the VA--and to keep them there--would be slashed
11 percent, or $28 million.
VA's research program has resulted in tremendous
discoveries and improvements in health care to veterans and the
general population. It is an integral element to the veterans'
health care system, and I am concerned about the implications
of such a significant cut.
In a recent letter, the chief of the pulmonary disease
section at the Kansas City VA hospital told me,
The opportunity to conduct basic and clinical research
relevant to my clinical interests was a major factor in my
joining the VA staff and in remaining here. Only in the last
year have I felt the need to explore other employment
opportunities. One of the major factors in this decision has
been the continuing decrease in funds available to support the
VA research program.
Unfortunately, the President's budget would also cut the VA
State home construction program by $6 million, a cost-effective
program which results in the provision of vitally needed
nursing home care to our Nation's veterans. There is almost
$200 million worth of priority projects awaiting funding, so
the President's proposal to cut this important program is very
disappointing.
In my own State of Missouri, there are proposed projects in
Cameron, Warrensburg, St. Louis, and Mount Vernon. I strongly
support funding of these projects and will do my best to
increase the budget over the President's proposal.
For the Veterans Benefit Administration, funding would be
held close to fiscal year 1997 levels, factoring out the
proposed shift of funds for the cost of medical examinations in
connection with compensation and pension claims, formerly
funded from the medical care account. VBA's staff would decline
543 FTE's, or 5 percent.
I am pleased to see that VBA's budget would allow for the
implementation of reengineering efforts which are intended to
result in significantly faster and less expensive compensation
and pension claims processing by 2002. I am concerned, however,
that productivity is not improving, and we have seen little
data to back up VBA's assumptions that it could reduce
processing time for an original compensation claim by more than
one-half.
In addition, the National Academy of Public Administration,
which has been studying the VBA claims processing system at
this subcommittee's request, found fundamental problems in
VBA's leadership and management structures, and a lack of
capacity to undertake sound review, analysis, and evaluation of
ongoing operations.
NAPA states in testimony, which, again, is provided for the
record, and I assume you have received copies of it today:
The NAPA study team has discerned little improvement in the
VBA's ability to develop a clear prioritized business plan
within which resources are allocated only to critical
priorities, nor has there been any improvement in the staff's
ability to plan and manage software projects. These management
failures underlie a significant part of my concern about VBA's
ability to meet its year 2000 needs and deliver on its BPR
promises.
NAPA calls for strong and decisive leadership in VBA,
strengthen strategic management capacities, consolidation of
VBA's 58 regional offices, and other changes which are more
profound than the business processing reengineering effort,
which VBA seems to believe is the answer to its problem.
So while I am pleased the VA is proposing some changes, it
would seem they are not sufficient to address the core
management and organizational issues NAPA has identified.
We are pleased to see no new hospitals proposed and a
relatively modest major construction request. The President's
request would fund two cemetery projects and the completion of
a seismic correction project in Memphis. Perhaps the
administration has come around to our view that major medical
projects should be put on hold while the new Veterans Health
Administration organization restructuring grows roots.
PREPARED STATEMENT
Clearly, Mr. Secretary, we have much to discuss this
afternoon. I look forward to hearing your opening statement,
but first it is my pleasure to turn to the distinguished
ranking member, Senator Mikulski.
[The statement follows:]
Prepared Statement of Milton J. Socolar
Mr. Chairman and Members of the Subcommittee: My name is Milton J.
Socolar, and I am a Fellow of the National Academy of Public
Administration. I am serving as the chair of the Academy's panel on
claims processing at the Department of Veterans' Affairs. As I will
describe in a minute, the Committee has tasked the Academy with
studying and making recommendations on the claims process, and our
study will be completed at the end of June. Because the panel has not
yet fully reviewed the initial staff findings and recommendations, I am
addressing you today in my own capacity as chair and am not speaking
with finality on behalf of the panel.
THE SENATE'S TASKING TO THE NATIONAL ACADEMY
This Committee has expressed ongoing concerns about of the
compensation and pension (C&P) claims adjudication and appellate
process. In 1995, in its report accompanying the fiscal year 1996
Department of Veterans Affairs appropriations bill, the Committee
expressed concerns about the backlog of claims at the Veterans'
Benefits Administration (VBA) and shortcomings in its computer
modernization effort. Congress tasked the Academy with making `` * * *
a comprehensive assessment of the Veterans Benefits Administration with
particular emphasis on specific steps necessary to make claims
processing more efficient and less time consuming.'' Specifically, your
subcommittee instructed the Academy to evaluate: The computer
modernization initiative and its link to strategic goals and
priorities; efforts to reengineer the claims processing methodology;
efforts to simplify rules and regulations; performance measures for
critical program areas and systems modernization efforts; the regional
office structure; and the roles of the Board of Veterans Appeals and
the Court of Veterans Appeals.
You stated that the Academy needs to build on and not duplicate
previous or ongoing evaluations. In 1996, you amplified the tasking in
the subcommittee's report accompanying the fiscal year 1997
appropriations bill adding that the Academy ``* * * should provide
specific recommendations for comprehensive, strategic improvements to
the organization and the many problems which have been identified.''
THE CHALLENGE AHEAD
The VBA is under great pressure to improve the performance of its
C&P program. Long-existing problems have been chronicled by a series of
reports, the most recent of which is the December 1996 report to
Congress by the Veterans' Claims Adjudication Commission (VCAC). The
panel relied heavily on this excellent report in guiding its own
research and recommendations. With the exception of those
recommendations related to program policy, on which the panel takes no
position, the panel accepts or takes even farther the VCAC's
recommendations.
In thinking about VBA's administrative difficulties in delivering
C&P benefits, it is well to keep in mind the size of the program and
complexity of the process involved. Following are some complicating
program imperatives:
1. VBA's C&P workforce must manage a ``portfolio'' of about 5.3
million service-connected disabilities, which is growing in volume and
complexity, for over two million veterans.
2. In addition to statements filed by veteran claimants,
corroborating or new evidence to support claims must be collected from
numerous sources not controlled by VBA--the Department of Defense, VA
hospitals for medical data and claim-specific medical examinations,
other federal agencies, private medical practitioners, and others.
3. Under the program's concept of rating disabilities in ten
percent increments, assessing the degree of disability for many
injuries and diseases often requires the exercise of sophisticated
judgement complicated by the growing body of opinions from the Court of
Veterans' Appeals (COVA).
4. VBA is required, if necessary, to assist each claimant in
perfecting his or her claim which can contain many alleged
disabilities.
5. The claim is kept open for the receipt, at any time up to final
decision, of additional supporting evidence or evidence of additional
entitlement.
6. Within a year after VBA's decision on a claim, the claimant may
file a notice of disagreement to initiate the administrative appeals
process, requiring additional consideration and processing.
It is also well to keep in mind that, despite delays occasioned by
the foregoing, claimants to date have tended to formally appeal to the
board of veterans' appeals (BVA) in a relatively small percentage of
cases--less than five percent of VBA's decisions on compensation
claims. Nevertheless, considering the overall large volume of cases
handled, this small percentage translates into a significant number of
cases. They clog the system, which results in backlogs and further
delays in disposing of claims filed--from an average of three to as
long as five years for a significant number of cases.
The department and VBA have been administering the C&P program
within a narrow, insular perspective. VBA tends to address issues as
they arise, very much on an ad hoc basis. Although there have been
times when VBA has shown signs of a desire to raise C&P operations to
new and more efficient levels, it has not yet succeeded in realizing
the more important of its stated aims for improving service. In
essence, VBA has been ``administering'' the C&P program; it has not
been managing it.
Although VBA's problems have been tolerated to a degree through
previous years, it is now essential, even critical, that it undertake
and meet the management challenge to achieve greater efficiency and
provide better service. Medical issues underlying many disability
considerations now require deeper analysis to resolve. Harnessing the
boon of advancing information technologies is enormously complex and
difficult. With the arrival of judicial review in 1988, BVA is no
longer the final arbiter of statutory obligations to claimants and both
VBA and BVA must meet more stringent requirements as interpreted by
COVA. Perhaps, most significant, funds to cover inadequacies will
surely not be so freely available in the future as they have been in
the past.
Briefly stated here--I will return to the point later in my
statement--VA and VBA leadership must develop greater management
capacity and discipline to meet future demands. VBA's leadership and
management structures and systems do not embody essential analytic and
planning capacities. With poor analysis and planning, it is small
wonder that there is not sufficient discipline to carry out controlled
implementation of approved initiatives. And finally, VBA must develop
the capacity and will to do good review, analysis and evaluation of
ongoing operations. Even though some regional offices (RO's) operate at
high levels of performance, the VBA nationally operates in too
permissive a manner with little accountability for the achievement of
specific results across all 58 of its regions.
THREATS TO SERVICE
Fixing the Year 2000 Problem.--A good example of the consequences
resulting from inadequate management structure and discipline is the
risk that VBA was going to assume in resolving the critical ``year
2000'' computer problem embedded in its payment system. Should that
problem not be resolved, VBA would not be able at the turn of the
century to issue benefit checks to millions of veterans.
Notwithstanding that computer expertise was clearly spread too thin and
that its record of managing complex computer projects was poor, VBA was
poised to simultaneously undertake (1) development of VETSNET to
replace the existing payment system, (2) implementation of complex
legislative changes into the system, (3) reprogramming of its benefit
delivery network, (4) consolidation, at the department's behest, of the
Hines and Philadelphia benefit delivery centers with the Austin
automation center, while (5) also working on a number of programs to
cure the year 2000 problem.
We became alarmed during our study over the disastrous consequences
should VBA's risky approach fail, as well it might have. We met with
deputy secretary Hershel W. Gober to point out the risks involved and
explain our concerns. Subsequently, the deputy secretary changed the
direction of VBA's approach to significantly reduce the risk to the
payment system now and to support year 2000 operations. VBA has now
initiated action to hire the necessary systems integration contract
support, procure other resources and put in place the management
required to sustain payment system operations and achieve year 2000
capabilities.
Staffing Is Being Reduced By A Third While Workload And Other
Resource Demands Are Rising.--The fiscal year 1998 President's budget
reduces resources by 1,335 full time equivalent (FTE) staff or 31
percent between fiscal year 1996 and fiscal year 2002. While
recognizing the pressures for balancing the budget and that future VBA
budget estimates may be revised, I am concerned that inappropriate
reductions will only serve to make a bad situation worse, engendering
the need for larger expenditures in the future.
We are exploring some questions we have about VBA's workload
forecasting generally. A large percentage of these reductions is
premised in fiscal year 1999 and beyond on the success of the business
process reengineering (BPR) plan to change the way C&P claims will be
processed. The C&P service bases its staffing estimates on a series of
assumptions about programmatic and legal changes that will allow
reductions while at the same time achieving ambitious timeliness and
quality of service goals. These assumptions have not been evaluated in
an operational setting, and pilots intended to test their validity,
just now getting underway, will take up to 18 months to complete. Of
particular concern are VBA's assumptions about future workload,
projected levels of participation by veteran service organizations, and
the benefits of information technology.
Unmanaged Appellate Workloads In VBA Regional Offices May Reach
Crisis Proportions.--I am also concerned about growing appellate
workloads in VBA RO's. Since the end of fiscal year 1995, the number of
BVA remands pending in RO's increased by 69 percent to more than 23,000
and had been pending for an average of about a year. Over one-fourth of
the cases pending in RO's are in appellate status.
VBA has not treated this workload as a nation-wide problem needing
concerted attention. It has neither established 19 performance goals
for processing this work nor regularly tracked progress in their
accomplishment. I am concerned that, without adequate attention, the
RO's will continue to focus on new and reopened claims and that
appellate workloads and lead times will reach crisis proportions.
major claims and appeals problems continue to degrade service
Apart from these potential threats to program integrity, the VA
continues to struggle with major problems that continue to degrade
service.
Regional Office Adjudication Decisions Are Too Slow And Not Well
Enough Prepared.--While showing some improvement in the last several
years, processing time for claims continues to be far higher than the
BPR goal of 60 days. The VBA continues to have difficulty making
quality decisions early in the adjudication process, and quality
remains a point of major concern and contention. The rate of remands by
BVA peaked at a level of 50.5 percent of cases considered in fiscal
year 1992, and has come down only slightly to 45.6 percent at present.
The combined total of allowances and remands by the BVA peaked at 67.1
percent in fiscal year 1995 and is down to 62.6 percent at present, far
higher than the BPR goal of 25 percent.
Information Resources Management--Failure To Manage Effectively Has
Led To Current Crises.--VBA's has shown little ability to learn from a
1995 study by the CNA Corporation and a series of harshly critical GAO
reports about problems in managing VBA's information resources. The
study team has discerned little improvement in the VBA's ability to
develop a clear, prioritized business plan within which resources are
allocated only to critical priorities, nor has there been any
improvement in the staff's ability to plan and manage software
projects. These management failures underlie a significant part of my
concern about VBA's ability to meet its year 2000 needs and deliver on
its BPR promises.
VBA NEEDS TO DEVELOP MANAGEMENT CAPACITIES FOR MAKING MUCH NEEDED
CHANGES
I was initially puzzled as to why the sustained criticism VBA has
endured had not led to the reforms required for improving operations
but have now concluded that the reason is two-fold. First, VBA is
bounded by a culture that looks only to short-term needs without
concern over long-term implications. Second, this short term outlook
has led inevitably to the failure of leadership to develop capacities
that are essential to the successful management of complex programs in
a large organization. VBA has long felt that it could manage the
increasingly complex adjudication and appellate process on the basis of
past and existing organizational capacities and practices. While VBA
staff and executives are dedicated and hard working, enlightened
leadership and new approaches are critical to solving the
organization's problems and significantly improving program service.
The Institution Lacks Capacity For Strategic Management.--VBA lacks
the management capacities that would enable its leaders to define long-
term direction and provide the resources to follow through. At the same
time, it is leadership's function to see to it that those capacities
are established and maintained at high levels of competence. These
include: the capacity to plan, integrate and execute complex
programmatic activities; the evaluative and information capacities to
measure performance and hold executives accountable for results; and an
annual plan, implementation, and review cycle to integrate all parts of
the organization into a comprehensive operational effort to fulfill the
VBA's goals.
VBA Ne