[House Hearing, 108 Congress]
[From the U.S. Government Printing Office]



REAUTHORIZATION OF THE U.S. DEPARTMENT OF JUSTICE: EXECUTIVE OFFICE FOR 
   U.S. ATTORNEYS, CIVIL DIVISION, ENVIRONMENT AND NATURAL RESOURCES 
    DIVISION, EXECUTIVE OFFICE FOR U.S. TRUSTEES, AND OFFICE OF THE 
                           SOLICITOR GENERAL

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   COMMERCIAL AND ADMINISTRATIVE LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 9, 2004

                               __________

                             Serial No. 79

                               __________

         Printed for the use of the Committee on the Judiciary


    Available via the World Wide Web: http://www.house.gov/judiciary


                                 ______

92-453              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
____________________________________________________________________________
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                       COMMITTEE ON THE JUDICIARY

            F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois              JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina         HOWARD L. BERMAN, California
LAMAR SMITH, Texas                   RICK BOUCHER, Virginia
ELTON GALLEGLY, California           JERROLD NADLER, New York
BOB GOODLATTE, Virginia              ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio                   MELVIN L. WATT, North Carolina
WILLIAM L. JENKINS, Tennessee        ZOE LOFGREN, California
CHRIS CANNON, Utah                   SHEILA JACKSON LEE, Texas
SPENCER BACHUS, Alabama              MAXINE WATERS, California
JOHN N. HOSTETTLER, Indiana          MARTIN T. MEEHAN, Massachusetts
MARK GREEN, Wisconsin                WILLIAM D. DELAHUNT, Massachusetts
RIC KELLER, Florida                  ROBERT WEXLER, Florida
MELISSA A. HART, Pennsylvania        TAMMY BALDWIN, Wisconsin
JEFF FLAKE, Arizona                  ANTHONY D. WEINER, New York
MIKE PENCE, Indiana                  ADAM B. SCHIFF, California
J. RANDY FORBES, Virginia            LINDA T. SANCHEZ, California
STEVE KING, Iowa
JOHN R. CARTER, Texas
TOM FEENEY, Florida
MARSHA BLACKBURN, Tennessee

             Philip G. Kiko, Chief of Staff-General Counsel
               Perry H. Apelbaum, Minority Chief Counsel
                                 ------                                

           Subcommittee on Commercial and Administrative Law

                      CHRIS CANNON, Utah Chairman

HOWARD COBLE, North Carolina         MELVIN L. WATT, North Carolina
JEFF FLAKE, Arizona                  JERROLD NADLER, New York
JOHN R. CARTER, Texas                TAMMY BALDWIN, Wisconsin
MARSHA BLACKBURN, Tennessee          WILLIAM D. DELAHUNT, Massachusetts
STEVE CHABOT, Ohio                   ANTHONY D. WEINER, New York
TOM FEENEY, Florida

                  Raymond V. Smietanka, Chief Counsel

                        Susan A. Jensen, Counsel

                        Diane K. Taylor, Counsel

                  James Daley, Full Committee Counsel

                   Stephanie Moore, Minority Counsel



                            C O N T E N T S

                              ----------                              

                             MARCH 9, 2004

                           OPENING STATEMENT

                                                                   Page
The Honorable Chris Cannon, a Representative in Congress From the 
  State of Utah, and Chairman, Subcommittee on Commercial and 
  Administrative Law.............................................     1
The Honorable Melvin L. Watt, a Representative in Congress From 
  the State of North Carolina, and Ranking Member, Subcommittee 
  on Commercial and Administrative Law...........................     5

                               WITNESSES

The Honorable Thomas L. Sansonetti, Assistant Attorney General, 
  Environment and Natural Resources Division, United States 
  Department of Justice
  Oral Testimony.................................................     7
  Prepared Statement.............................................     8
The Honorable Peter D. Keisler, Assistant Attorney General, Civil 
  Division, United States Department of Justice
  Oral Testimony.................................................    11
  Prepared Statement.............................................    13
Mr. Guy A. Lewis, Director, Executive Office for United States 
  Attorneys, United States Department of Justice
  Oral Testimony.................................................    17
  Prepared Statement.............................................    19
Mr. Lawrence A. Friedman, Director, Executive Office for United 
  States, Trustees, United States Department of Justice
  Oral Testimony.................................................    21
  Prepared Statement.............................................    23

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared statement of the Honorable Theodore B. Olsen, Solicitor 
  General of the United States, United States Department of 
  Justice, submitted for the record..............................     1

                                APPENDIX
               Material Submitted for the Hearing Record

Post-hearing responses from the Honorable Thomas L. Sansonetti...    38
Post-hearing responses from the Honorable Peter D. Keisler.......    43
Post-hearing responses from Mr. Guy A. Lewis.....................    66
Post-hearing responses from Mr. Lawrence A. Friedman.............    72

 
REAUTHORIZATION OF THE U.S. DEPARTMENT OF JUSTICE: EXECUTIVE OFFICE FOR 
   U.S. ATTORNEYS, CIVIL DIVISION, ENVIRONMENT AND NATURAL RESOURCES 
    DIVISION, EXECUTIVE OFFICE FOR U.S. TRUSTEES, AND OFFICE OF THE 
                           SOLICITOR GENERAL

                              ----------                              


                         TUESDAY, MARCH 9, 2004

                  House of Representatives,
                         Subcommittee on Commercial
                            and Administrative Law,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 3:05 p.m., in 
Room 2141, Rayburn House Office Building, Hon. Chris Cannon 
(Chair of the Subcommittee) Presiding.
    Mr. Cannon. The Subcommittee will come to order.
    The Subcommittee on Commercial and Administrative Law is 
meeting this afternoon to receive testimony from five 
components of the Department of Justice as part of the 
Subcommittee's continuing oversight efforts. These components 
are the Environment and Natural Resources Division, the Civil 
Division, the Executive Office for United States Attorneys, the 
Executive Office for the United States Trustees and the Office 
of the Solicitor General. However, no witness will appear at 
today's hearing on behalf of the Solicitor General's office. 
Written testimony has been submitted.
    [The prepared statement of Mr. Olsen follows:]

                Prepared Statement of Theodore B. Olsen

    Mr. Chairman and Members of the Subcommittee: Thank you for 
inviting me to submit testimony regarding the Office of the Solicitor 
General in connection with the Committee's hearing.

                   I. THE SOLICITOR GENERAL'S DUTIES

    When Congress created the position of Solicitor General in 1870, it 
expressed high ambitions for the Office: the Solicitor General is the 
only officer of the United States required by statute to be ``learned 
in the law,'' 28 U.S.C. Section 505. The Committee Report accompanying 
the 1870 Act stated: ``We propose to have a man of sufficient learning, 
ability, and experience that he can be sent . . . into any court 
wherever the Government has an interest in litigation, and there 
present the case of the United States as it should be presented.''
    In modern times, the Solicitor General has exercised responsibility 
in three general areas.
    1. The first, and perhaps best-known, function of the Solicitor 
General is his representation of the United States in the Supreme 
Court. The late former Solicitor General Erwin Griswold captured the 
nature of this responsibility in observing:

        The Solicitor General has a special obligation to aid the Court 
        as well as serve his client. . . . In providing for the 
        Solicitor General, subject to the direction of the Attorney 
        General, to attend to the ``interests of the United States'' in 
        litigation, the statutes have always been understood to mean 
        the long-term interests of the United States, not simply in 
        terms of its fisc, or its success in particular litigation, but 
        as a government, as a people.

    This responsibility, of course, includes defending federal statutes 
challenged as unconstitutional on grounds that do not implicate the 
executive branch's constitutional authority when a good faith defense 
exists. The Solicitor General also defends regulations and decisions of 
Executive Branch departments and agencies, and is responsible for 
representing independent regulatory agencies before the Supreme Court.
    The Supreme Court practice of the Solicitor General includes filing 
petitions for review on behalf of the United States. In this regard, as 
the Supreme Court has stated:

        This Court relies on the Solicitor General to exercise such 
        independent judgment and to decline to authorize petitions for 
        review in this Court in the majority of the cases the 
        Government has lost in the courts of appeals.

    The Solicitor General also responds to petitions filed by adverse 
parties who were unsuccessful in the lower federal courts in criminal 
prosecutions or civil litigation involving the government. Where review 
is granted in a case in which the United States is a party, the 
Solicitor General is responsible for filing a brief on the merits with 
the Court and he or a member of his staff presents oral argument before 
the Court. The Solicitor General also files amicus curiae, or friend-
of-the-court, briefs in cases involving other parties where he deems it 
in the best interest of the United States to do so. Although most 
amicus filings occur only after review has been granted, the Solicitor 
General also submits amicus briefs at the petition stage when invited 
by the Court to do so or, in rare instances when Supreme Court 
resolution of the questions presented may affect the administration of 
federal programs or policies. The Supreme Court requested the Solicitor 
General to file an amicus brief at the petition stage 24 times during 
the October Term 2002 and has done so 7 times during the current Term 
(2003). The Solicitor General generally seeks and receives permission 
to participate in oral argument in those cases in which the government 
has filed an amicus brief on the merits.
    2. The second category of responsibilities discharged by the 
Solicitor General relates to government litigation in the federal 
courts of appeals, as well as in state, and sometimes even foreign, 
appellate courts. Authorization by the Solicitor General is required 
for all appeals to the courts of appeals from decisions adverse to the 
United States in federal district courts. The Solicitor General's 
approval is also required before government lawyers may seek en banc, 
or full appellate court, review of adverse decisions rendered by a 
circuit court panel. Additionally, government intervention or 
participation as amicus curiae in federal appellate courts (as well as 
state or foreign appellate courts) must be approved by the Solicitor 
General. In addition, once a case involving the government is lodged in 
a court of appeals, any settlement of that controversy requires the 
Solicitor General's assent. In cases of particular importance to the 
government, lawyers from the Office of Solicitor General will directly 
handle litigation in the lower federal courts. Recent examples include 
the Microsoft antitrust appeal, important criminal procedural issues 
when addressed by the courts of appeals en banc, and cases involving 
enemy combatants.
    3. In the third category of responsibilities are decisions with 
respect to government intervention in cases where the constitutionality 
of an Act of Congress ``affecting the public interest'' has been 
brought into question at any level within the federal judicial system. 
In such circumstances, 28 U.S.C. Section 2403 requires that the 
Solicitor General be notified by the court in which the constitutional 
challenge has arisen and be given an opportunity to intervene with the 
full rights of a party.
    Although OSG's mission and strategic objectives will not change in 
FY 2005, the challenges it faces will. OSG is facing new expectations 
unprecedented in its history. It is being called upon to assume added 
responsibilities. For example, the Solicitor General was asked by the 
Attorney General and the White House to assume litigation 
responsibilities in the lower courts with regard to a number of 
challenges to the legality of detaining enemy combatants captured 
during the ongoing military operations in Afghanistan and other aspects 
of the global war on terrorism. These cases are being handled by a team 
of government lawyers headed by the Solicitor General.
          * * * * *
    The various decisions discussed above for which the Solicitor is 
responsible are arrived at only on the basis of written recommendations 
and extensive consultation among the Office of the Solicitor General 
and affected offices of the Justice Department, Executive Branch 
departments and agencies, and independent agencies. Where differences 
of opinion exist among these components and agencies, or between them 
and the Solicitor General's staff, written views are exchanged and 
meetings are frequently held in an attempt to resolve or narrow 
differences and help the Solicitor General arrive at a final decision. 
Where consideration is given to an amicus curiae filing by the 
government in non-federal government litigation in the Supreme Court or 
lower federal appellate courts, it is not uncommon for the Solicitor or 
members of his staff to meet with counsel for the parties in an effort 
to understand their respective positions and interests of the United 
States that might warrant its participation.

           II. ORGANIZATION OF THE SOLICITOR GENERAL'S OFFICE

    The Office of the Solicitor General has a staff of 48, of which 22 
(including the Solicitor General) constitute its legal staff and the 
remainder serve in managerial, technical, or clerical capacities. Of 
the 22 attorneys, four are Deputy Solicitors General, senior lawyers 
with responsibility for supervising matters in the Supreme Court and 
lower courts within their respective areas of expertise. Seventeen 
attorneys serve as Assistants to the Solicitor General. These lawyers 
are assigned a ``docket'' of cases presenting a wide spectrum of legal 
problems under the guidance and supervision of the Deputies. 
Additionally, OSG employs four lawyers who are recipients of the 
Bristow Fellowships, a one-year program open to highly qualified young 
attorneys, generally following a clerkship with a federal court of 
appeals' judge. Bristow Fellows assist the Deputies and Assistants in a 
variety of tasks related to the litigation responsibilities of the 
Office. All of the attorneys in the Office have outstanding 
professional credentials.
    The authorized personnel levels and budget of the Office of the 
Solicitor General have remained relatively stable in recent years. The 
Fiscal Year 2004 funding level is 49 workyears and $7,889,000.
    Most of these funds are committed for nondiscretionary items. For 
example, only two items, personnel-related costs and GSA rent, consume 
nearly 83 percent of the budget. However, the Office is employing 
various strategies to offset the otherwise rising costs, such as re-
engineering our brief preparation process, modifying service/
maintenance contracts and reducing overtime costs.
    The Office of the Solicitor General requests $8,538,000 for FY 
2005, including increases for inflationary costs, and $293,000 to cover 
two new attorney positions. These additional positions will assist the 
Office in managing its increasing work load and representing the 
interests of the United States Government.

                          III. OFFICE WORKLOAD

    The following statistics may provide a helpful way of measuring the 
Office's heavy workload given the relatively small staff of attorneys. 
During the 2002 Term of the Supreme Court (June 29, 2002 to June 27, 
2003), the Solicitor General's Office handled approximately 3,731 cases 
in the Supreme Court. We filed full merits briefs in 70 cases 
considered by the Court (and presented oral argument in 62 of those 
cases), \1\ which represented 81% of the cases that the Supreme Court 
heard on the merits in that Term. The government prevailed in 79% of 
the cases in which it participated. We filed 23 petitions for a writ of 
certiorari or jurisdictional statements urging the Court to grant 
review in government cases, 349 briefs in response to petitions for 
certiorari filed by other parties, and waivers of the right to file a 
brief in response to an additional 3,262 petitions for certiorari. In 
response to invitations from the Supreme Court, we also filed 24 briefs 
as amicus curiae expressing the government's views on whether 
certiorari should be granted in cases in which the government was not a 
party, and filed 3 amicus briefs without invitation at the petition 
stage. The above figures do not include the Office's work in cases 
filed under the Supreme Court's ``original'' docket (cases, often 
between States but involving the federal government, in which the 
Supreme Court sits as a trial court), and they also do not include the 
numerous motions, responses to motions, and reply briefs that we filed 
relating to matters pending before the Court.
---------------------------------------------------------------------------
    \1\ Of the 70 merits briefs filed, some were consolidated resulting 
in 1 oral argument.
---------------------------------------------------------------------------
    During this same one-year period, the Office of the Solicitor 
General reviewed more than 2,129 cases in which the Solicitor General 
was called upon to decide whether to petition for certiorari; to take 
an appeal to one of the federal courts of appeals; to participate as an 
amicus in a federal court of appeals or the Supreme Court; or to 
intervene in any court. Thus, during this one-year period, the Office 
of the Solicitor General handled well over 5,860 substantive matters on 
subjects touching on virtually all aspects of the law and the federal 
government's operations.

                             IV. CONCLUSION

    In carrying out the foregoing responsibilities, my staff and I have 
productively and efficiently adhered to the time-honored traditions of 
the Office of the Solicitor General--to be forceful and dedicated 
advocates for the government, as well as officers of the Court with a 
special duty of candor and fair dealing.

    Mr. Cannon. By the way of explanation, our oversight 
responsibilities require us to examine the performance of these 
Justice Department components, evaluate how well they are 
positioned to achieve their goals and determine both the 
adequacy of their funding levels and the need for changes in 
legislation to facilitate their mission. I should state at the 
outset, this has not and will not be the only encounter the 
Subcommittee has with the Justice Department components within 
our jurisdiction. It is our intention to continually monitor 
the activities of these components during the coming year. I do 
not anticipate that will entail unwanted confrontation, but 
rather it will be undertaken in the spirit of cooperation that 
I am sure will be shared by other Members of the Subcommittee.
    I believe that effective oversight requires that we must 
listen in order to learn so that we can intelligently question 
and suggest. We do not undertake this process, though, without 
expectations from the Department of Justice, expectations that 
are shared not only by the American people but also, I am sure, 
by the agency itself. We expect the Department of Justice 
should have and should continue to perform competently and 
fairly. It has been--it should be conscious of the awesome 
power of the Government that has been entrusted to it and of 
its responsibility to ensure that it is exercised in the 
interest of justice and for the common good. We will work with 
the components we hear from today and continue to critically 
study their activities and needs.
    I wish to stress the significance of today's hearing for 
both the Justice Department and Subcommittee Members. The 
information we receive from the witnesses today will be of 
immediate value in determining the adequacy of funding levels 
proposed by the President in his budget request for the 
Department of Justice. It also greatly influences the crafting 
of the Department's reauthorization legislation.
    The Subcommittee's oversight efforts were particularly 
instrumental in having several provisions included in the 
reported version of H.R. 3036, the 3-year reauthorization of 
the Justice Department, which is expected to be considered 
shortly by the House.
    One of these provisions mandates the use of Federal--as 
opposed to private sector--facilities for Justice Department 
employee training, unless specifically exempted by the Attorney 
General with an accompanying report to the Congress. The second 
provision requires a senior official in the Justice Department 
to be designated to assume primary responsibility for privacy 
policy. The third requires the preparation of an annual report 
to Congress on bankruptcy criminal enforcement and abuse 
prevention.
    The components that we will receive testimony from this 
afternoon account for funding that exceeds $2 billion. They 
discharge broad litigating, appellate, support and 
administrative responsibilities. So broad is their mission that 
the attention that we give to their performance can 
significantly improve the lives, safety and well-being of every 
American.
    I now turn to my colleague, Mr. Watt, the distinguished 
Ranking Member of this Subcommittee, and ask if he has any 
opening remarks.
    Mr. Watt. Thank you, Mr. Chairman.
    I appreciate the Chairman calling the hearing, and I will 
follow the Chairman's entreaty in his statement at the point of 
which he said we should listen and learn.
    So we have got four witnesses. I welcome all of you and 
look forward to your testimony and particularly welcome Mr. 
Friedman back. He was here more recently, I think, than some of 
the others, talking about bankruptcy and some other issues. So 
I look forward to your testimony and underscore the 
significance of it, given the magnitude of the budgets and the 
scope of responsibility that your particular divisions have on 
the American people.
    Thank you and yield back.
    Mr. Cannon. Thank you.
    Without objection, the gentleman's entire statement will be 
placed in the record.
    Also without objection, all Members may place their 
statements in the record at this point.
    Is there any objection? Hearing none, so ordered.
    Without objection, the Chair will be authorized to declare 
recesses of the Subcommittee today at any point. Hearing none, 
so ordered.
    I ask unanimous consent that Members have 5 legislative 
days to submit written statements for inclusion in today's 
hearing record. So ordered.
    Now, Mr. Coble, would you like to do an opening statement?
    Mr. Coble. I thank you and the Ranking Member for having 
called the hearing today and welcome our witnesses here. And 
not unlike you and my colleague and the colleague from North 
Carolina, I am prepared to listen and learn.
    Mr. Cannon. I suspect it is going to be a very interesting 
day.
    I would like to introduce our witnesses. The first witness 
is Thomas Sansonetti, who serves as the Assistant Attorney 
General in charge of the Environment and Natural Resources 
Division of the Department of Justice. Prior to his career 
appointment, Mr. Sansonetti was the Solicitor for the 
Department of Interior from 1990 to 1993. During his tenure 
there, Mr. Sansonetti signed the $1.1 billion Exxon Valdez oil 
spill settlement after serving as one of the six Federal 
negotiators. He was also appointed counsel to the Endangered 
Species Committee for the spotted owl hearings in Oregon.
    Previously, Mr. Sansonetti served as Interior Associate 
Solicitor for Energy and Resources from 1987 to 1989, which was 
just after I left the Interior Department as an Associate 
Solicitor there. He was Administrative Assistant and 
Legislative Director for Wyoming Congressman Craig Thomas 
during the 101st Congress. President George W. Bush also 
appointed him to chair the Presidential Advisory Council on 
Western Water Resources.
    Mr. Sansonetti received both a BA and an MBA from the 
University of Virginia and received his law degree from 
Washington and Lee University.
    Our next witness is Mr. Peter Keisler, Assistant Attorney 
General of the Department's Civil Division. Mr. Keisler has 
served in this capacity since July of 2003 and was previously 
the Principal Deputy Associate Attorney General and Acting 
Associate Attorney General. Prior to joining the Department of 
Justice in 2002, he was a partner in the Washington, D.C., 
office of Sidley Austin Brown & Wood. He also served as 
Associate Counsel to the President during the Reagan 
administration and was a law clerk to Justice Anthony Kennedy 
of the U.S. Supreme Court.
    Mr. Keisler graduated magna cum laude from Yale college and 
earned his law degree from Yale Law School in 1985.
    Our third witness is Guy Lewis, who is the Director of the 
Executive Office for United States Attorneys at the Department 
of Justice. Mr. Lewis is the former United States Attorney from 
the Southern District of Florida, where he had been an 
assistant since 1988 prior to being appointed as the United 
States Attorney in 2000.
    Mr. Lewis received his undergraduate degree from the 
University of Tennessee and his law degree from the University 
of Memphis.
    Our final witness is Mr. Lawrence Friedman, who serves as 
the Director of the Executive Office of the United States 
Trustees. This office provides direction and guidance to the 
United States Trustees Program, which is responsible for 
overseeing the administration of bankruptcy cases and private 
trustees. This program operates nationwide, except for the 
States of North Carolina and Alabama, through a system of 21 
regions, each of which is headed by a United States trustee.
    Prior to his appointment as Director, Mr. Friedman was a 
partner in the Southfield, Michigan, law firm of Friedman and 
Kohut, where his practice focused on consumer and business 
bankruptcy as well as commercial litigation. Mr. Friedman 
received his undergraduate degree from Hillsdale College in 
Hillsdale, Michigan, and his law degree from Thomas M. Cooley 
Law School in Lansing, Michigan.
    I extend to each of you my warm regards and appreciation 
for your willingness to participate in today's hearing. In 
light of the fact that your written statements will be included 
in the record, I request that you limit your oral remarks to 5 
minutes. Accordingly, please feel free to summarize or 
highlight the salient points of your testimony.
    You will note that we have a lighting system that starts 
with a green light. After 4 minutes, it turns to yellow; and 
after a minute, it turns to a red light.
    It is my habit to tap the gavel at 5 minutes. We would 
appreciate it if you would finish up your thoughts in that time 
frame. You don't need to stop. Sometimes when you are down 
there reading or talking, we forget the light. That is a 
general reminder and doesn't mean to cut you off in the middle 
of your statement or your thinking.
    After all the witnesses have presented their remarks, the 
Subcommittee Members in the order they arrive will be permitted 
to ask questions of the witnesses subject to the 5-minute limit 
and alternating between sides.
    Mr. Sansonetti, would you proceed with your testimony, 
please.

  STATEMENT OF THE HONORABLE THOMAS L. SANSONETTI, ASSISTANT 
 ATTORNEY GENERAL, ENVIRONMENT AND NATURAL RESOURCES DIVISION, 
              UNITED STATES DEPARTMENT OF JUSTICE

    Mr. Sansonetti. Chairman Cannon, Congressman Watt and 
Members of the Subcommittee, I am pleased to be here today and 
welcome this opportunity to tell you about the Environment and 
Natural Resources Division. I will summarize our work and then 
discuss the resources that the President and the Department are 
requesting for the Division for fiscal year 2005.
    If Congress approves our funding for the Hazardous 
Materials Transportation Initiative, which will help achieve 
the Department's strategic goal of protecting against the 
threat of terrorism, and, secondly, our Tribal Trust Fund 
Litigation Initiative, which will provide necessary resources 
to defend multibillion dollar claims against the public fisc, 
then the Division will receive the first real increase in its 
budget in the last decade.
    The Division's mission is to enforce civil and criminal 
environmental laws that protect the health and environment of 
our citizens and to defend suits challenging environmental and 
conservation laws, programs and activities. We also handle 
matters concerning Indian rights and claims and Federal 
property acquisition.
    We have approximately 400 lawyers handling over 7,000 
active cases, and we represent virtually every Federal agency, 
with cases in every judicial district in the United States. Our 
principal clients include the EPA and the Departments of 
Interior, Defense and Agriculture. Many of our cases involve 
defensive litigation regarding alleged violations of the United 
States of environmental laws, for example, in connection with 
Federal highway construction or an airport expansion. Another 
portion of our docket consists of nondiscretionary litigation 
involving land acquisition for important national projects.
    When our defensive and our eminent domain litigation is 
considered together, approximately one-half of our attorney 
time is spent on nondiscretionary cases. Now this fact has 
important resource implications as we can't always anticipate 
what our workload is going to be. Nevertheless, we are 
committed to ensuring that American taxpayers are getting their 
money's worth.
    Despite budget constraints and declining resources 
beginning in the 1990's, we have achieved significant cost-
effective results. Fiscal year 2003 was a record-breaking year 
for civil penalties in environmental cases, $203 million we 
pulled in; and we also saw the largest civil penalty against a 
single company in history, $34 million. In fact, we have 
secured civil penalties and criminal fines for the Treasury 
that far exceed our budget and obtained benefits for human 
health and the environment to provide an impressive return on 
the taxpayer's dollar. We have also protected the taxpayers 
from invalid or overbroad monetary claims, sometimes for 
hundreds of millions of dollars.
    One important way that we leverage our resources, we have 
forged partnerships with U.S. Attorneys' Offices and State and 
local officials across the Nation. My written testimony 
provides some examples that illustrate the success of these 
partnerships.
    We approach all of our work with the spirit of teamwork and 
cooperation in federalism that is the hallmark of effective 
environmental protection.
    Now, for fiscal year 2005, the President has requested a 
little over $105 million as part of the Department's GLA 
appropriation. Much of the increase over the fiscal year 2004 
appropriation is for required adjustments and allowances, but 
we are also requesting $14.6 million for two initiatives, the 
Hazardous Materials Transportation Initiative and the Tribal 
Trust Litigation Initiative. As I mentioned at the beginning, 
the funding for both of these initiatives is critical.
    The Hazardous Materials, or HAZMAT, Transportation 
Initiative will help the Department achieve the strategic goal 
of protecting America against the threat of terrorism by making 
it more difficult for terrorists and other criminals to 
transport hazardous materials illegally. It will also promote 
compliance with the HAZMAT transportation laws so as to reduce 
the inherent risks posed by the transportation of HAZMAT and 
boost the enforcement efforts of the United States Attorneys 
and the State and local law enforcement agencies. In fact, we 
have already partnered with the U.S. Attorneys Office in the 
Southern District of Ohio to successfully prosecute Emery 
Worldwide Airlines under this initiative, as is discussed in 
greater detail in my written testimony.
    Now the Tribal Trust Fund Litigation Initiative is 
essential for the Government to effectively defend itself in 22 
lawsuits brought by various Indian tribes alleging that the 
United States has mismanaged tribal assets and failed to 
provide an accounting of the money collected, managed and 
disbursed by the United States on the tribes' behalf. Some 
cases seek an order requiring the United States to perform a 
multi-million dollar, multi-year accounting, while other cases 
seek a money judgment for the claimed losses. In the cases 
filed so far, the tribes are claiming they are owed more than 
$200 billion, and there may be more claims coming.
    In conclusion, the Environment and Natural Resources 
Division's work is challenging and complex. I am proud of the 
people in my Division who consistently provide excellent, cost-
effective legal services to the American people.
    I would be happy to answer any questions that you have 
about the Division and its work.
    Mr. Cannon. Thank you, Mr. Sansonetti. I can assure we have 
some questions.
    [The prepared statement of Mr. Sansonetti follows:]

               Prepared Statement of Thomas L. Sansonetti

                              INTRODUCTION

    Chairman Cannon, Congressman Watt, and Members of the Subcommittee, 
I am pleased to be here today, along with my colleagues from the 
Department of Justice. I welcome this opportunity to discuss the 
Environment and Natural Resources Division, one of the principal 
litigating Divisions within the Department of Justice, and to answer 
any questions that the Subcommittee may have about the Division.
    In my testimony today, I will first summarize the Division's work 
and provide an outline of the scope of our responsibilities. Our work 
is essential to the implementation of Congressional programs to protect 
the nation's environment and its natural resources, and to defend 
federal agencies sued by others. We have a long and distinguished 
history, and the Division's attorneys have built a record that 
demonstrates their commitment to legal excellence. In the second part 
of my testimony, I will discuss the resources that the Administration 
is requesting for the Division as part of its fiscal year 2005 budget. 
In particular, I will focus on the monies we are requesting for two 
ENRD initiatives--the Hazardous Materials Transportation Initiative, 
which will promote homeland security, and the Tribal Trust Fund 
Litigation Initiative, which will provide resources to defend multi-
billion dollar claims against the public fisc. If Congress decides to 
approve funding for these two important initiatives, it would 
constitute the first real increase that the Division's budget has seen 
in the last decade.

       OVERVIEW OF THE ENVIRONMENT AND NATURAL RESOURCES DIVISION

    The Environment and Natural Resources Division's mission is to 
enforce civil and criminal environmental laws and programs to protect 
the health and environment of United States citizens, and to defend 
suits challenging environmental and conservation laws, programs and 
activities. We represent the United States in matters concerning the 
protection, use and development of the Nation's natural resources and 
public lands, wildlife protection, Indian rights and claims, and the 
acquisition of federal property. We represent virtually every federal 
agency in over 7,000 active cases in every judicial district in the 
nation utilizing the efforts of approximately 400 lawyers at the 
present time. Our lawyers are frontline litigators, approximately 10% 
of whom are located in field offices around the United States, and we 
are considering how to expand our field office presence even further. 
Our principal clients include the U.S. Environmental Protection Agency, 
and the Departments of Agriculture, Commerce, Defense, Energy, the 
Interior, and Transportation. We also recently added the Department of 
Homeland Security to our roster of client agencies.
    Many of our cases involve defensive litigation in which the United 
States is being sued for alleged violations of the environmental laws, 
for example in connection with federal highway construction, airport 
expansion, or military training. Effective lawyering in these cases is 
critical to agency implementation of Congressionally mandated programs 
and protection of the public fisc. This large defensive docket, which 
is non-discretionary, has important implications for the Division's 
resources because it means that we cannot always anticipate our future 
workload.
    In addition to these defensive cases, another significant portion 
of our docket consists of non-discretionary eminent domain litigation. 
This work, undertaken pursuant to Congressional direction or authority, 
involves the acquisition of land for important national projects such 
as the construction of federal courthouses and the construction or 
expansion of border stations for the Immigration and Naturalization 
Service. When our defensive and eminent domain litigation is considered 
together, approximately half of our attorney time is spent on non-
discretionary cases.
    The Division is committed to ensuring that American taxpayers are 
getting their money's worth. Despite budget constraints and declining 
resources beginning in the 1990's, we have achieved significant, cost-
effective results for the public. In December 2003, the Attorney 
General announced that Fiscal Year 2003 was a record breaking year for 
the recovery of civil penalties in environmental cases. Court awards 
and consent decrees achieved by ENRD and our colleagues in the United 
States Attorney's Offices resulted in more than $203 million in 
penalties for civil violations of the nation's environmental laws. The 
Division also obtained the largest civil penalty in its history against 
a single company for environmental violations when it settled a Clean 
Water Act enforcement action on the eve of trial against the Colonial 
Pipeline Company in exchange for a $34 million penalty. Colonial also 
agreed to implement a comprehensive repair and maintenance program for 
its 5,500 mile pipeline, which had spilled 1.45 million gallons of oil 
in North Carolina, South Carolina, Tennessee, Georgia, and Louisiana.
    Conserving the Superfund to ensure prompt cleanup of hazardous 
waste sites is also a top priority for the Division, which seeks to 
return money to the Superfund from responsible parties and obtain 
cleanup orders and commitments from those most responsible for the 
hazardous substances at the site. In fact, when court-ordered 
injunctive relief for Superfund, the Clean Air Act, Clean Water Act, 
and hazardous waste enforcement laws is combined, we obtained more than 
$7.9 billion in cleanup and compliance commitments in the first two 
fiscal years of this Administrations, our best years ever, and Fiscal 
Year 2003 was another successful year in that regard.
    Altogether, the Division has secured civil penalties, criminal 
fines, and cleanup costs for the United States Treasury that far exceed 
its share of the Department's budget, and obtained benefits for human 
health and the environment that provide an impressive return on the 
taxpayer's dollar. We also have protected the taxpayer from invalid or 
overbroad monetary claims against the United States, claims that 
sometimes involve hundreds of millions of dollars.
    But the Division's accomplishments cannot simply be summed up in 
numerical terms. The Division also achieves immediate on-the-ground 
benefits for the American people. For example, in a recent case in 
Massachusetts, a local power plant agreed to a settlement that will 
result in significant air quality improvements for Boston school 
children and North Shore commuters, as well as a restored salt marsh in 
Chelsea and construction of a new commuter bike path across the Mystic 
River that will link the cities of Everett and Somerville. Among the 
projects to which plant owner Exelon Mystic LLC committed is 
retrofitting 500 Boston school buses with pollution control equipment, 
which it will supply with ultra low-polluting diesel fuel. The project, 
which will benefit more than 28,000 school children who ride the buses 
every day, will reduce tailpipe emissions from the buses by more than 
90 percent, or more than 30 tons a year, and will make Boston the first 
major city in the country to have retrofitted its entire school bus 
fleet.
    One important way that we leverage our resources and enhance our 
effectiveness is by forging partnerships with U.S. Attorneys' Offices 
and state Attorneys General and other state and local officials across 
the nation. Through Law Enforcement Coordinating Committees and other 
task forces developed both by the Division and the U.S. Attorneys' 
Offices across the country, we have increased cooperation among local, 
state, and federal environmental enforcement offices. Our commitment to 
cooperative federalism has result in success after success, as shown by 
cases such as the far-reaching Clean Air Act settlement with agri-
business giant Archer Daniel Midlands in which eleven States and three 
counties joined, and another settlement with Nucor Steel involving 14 
steel mills in which four States joined. In each of these cases, the 
States that partnered with the Division to bring the actions have 
shared in the civil penalties as well as the benefits from the 
injunctive relief obtained. To assure continuity in these practices, 
the Division joined the National Association of Attorneys General and 
EPA in announcing and distributing our ``Guidelines for Joint State/
Federal Civil Environmental Enforcement Litigation,'' which will assist 
states and the federal government in the conduct of joint civil 
environment enforcement litigation.
    These are only a few of the Division's many cases, but they are 
representative of the high-quality, cost-effective work that the 
Division's staff performs every day on behalf of the American taxpayer. 
If you are interested in learning more about the Division's work, 
please visit our website at http://www.usdoj.gov/enrd/pressroom.htm.

               ENRD'S BUDGET REQUEST FOR FISCAL YEAR 2005

    The Division receives its annual appropriation from the General 
Legal Activities (GLA) portion of the Justice Department's 
appropriation. For fiscal year 2005, the President has requested 
$105,457,000 for the Division within the Justice Department's GLA 
appropriation. Much of the increase over the FY 2004 appropriation is 
due to required or inflationary adjustments and allowances, including 
pay raises, other salary adjustments, and increases for GSA rent, which 
will allow the Division to maintain its current level of operations. 
However, as part of his proposed budget, the President is also 
requesting $14,601,000 for two ENRD initiatives--the Hazardous 
Materials Transportation Initiative (for which the President requests 
$594,000) and the Tribal Trust Fund Litigation Initiative. These 
initiatives, if funded, will, respectively, promote homeland security 
and enable the Division to effectively defend the United States against 
a wave of claims for billions of dollars. They would also constitute 
the first real increase that the Division's budget has seen in the last 
decade. For the reasons that I will now give, funding for both 
initiatives is critical.
    The Hazardous Materials Transportation Initiative has two purposes. 
First, it will help the Department achieve its strategic goal of 
protecting America against the threat of terrorism by making it more 
difficult for terrorists and other criminals to transport hazardous 
materials (``hazmat'') illegally, thereby helping to prevent, disrupt, 
and defeat terrorist operations before they occur. Second, it will 
ensure that industries regulated under the hazmat transportation laws 
comply with those laws so as to reduce the inherent risks posed by the 
transportation of hazardous materials. The Hazmat Initiative is 
concentrated on three tasks: 1) development of strategy and 
coordination with other federal, state and local agencies; 2) 
development of criminal prosecutions and referrals for civil 
enforcement actions; and 3) development and implementation of a 
training program to assist federal, state and local prosecutors and 
investigators in uncovering and prosecuting such illegal activity. 
These measures will effectively marshal and focus all available 
resources, create an immediate deterrent effect, and ensure long-term 
effectiveness through training of United States Attorneys and state 
enforcement offices around the country, and will give state and local 
law enforcement agencies a considerable boost. In fact, we have already 
had one major successful prosecution under this initiative, involving 
Emery Worldwide Airlines, Inc., which fortunately did not involve 
terrorist activity, but did result in a $6 million criminal penalty and 
Emery's commitment to develop a compliance program to detect and 
prevent future violations.
    The Tribal Trust Fund Litigation Initiative is essential for the 
government to effectively defend itself in twenty-two current lawsuits 
brought by various Indian Tribes alleging that the U.S. has mismanaged 
tribal assets including the money collected, managed and disbursed by 
the U.S. on behalf of the Tribes. Some of these cases seek an order 
requiring the U.S. to perform a multi-million dollar, multi-year 
accounting, and others seek a money judgment for losses the Tribes 
claim they have suffered. In the twenty-two cases filed so far, the 
Tribes are claiming that they are owed more than $200 billion--and 
approximately 300 other Tribes may be preparing claims for similar 
amounts. These Tribal Trust cases are similar to the significant Cobell 
v. Norton lawsuit, a class action on behalf of 300,000 individual 
Indians. Although there are some significant differences between the 
tribal trust cases and Cobell in that the tribal trust cases concern 
tribal assets rather than individual assets and there is potentially 
much more money at stake, they are similar in that they both involve 
millions of historical accounting documents spanning more than a 
century of economic activity, and the issues are legally and factually 
complex.
    This initiative will enable the Department of Justice to 
effectively defend the United States in the first wave of cases filed 
seeking recompense for Tribal Trust accounts, and maintain an adequate 
staffing level in our remaining non-discretionary caseload. Failure to 
provide sufficient resources for these cases could lead to additional 
allegations of contempt, substantial and unnecessary monetary awards at 
taxpayer expense, and a public loss of confidence in the federal 
government in general.

                               CONCLUSION

    The work of the Environment and Natural Resources Division is both 
challenging and complex. It is vitally important to the implementation 
of Congressional programs and priorities regarding public health and 
the environment, to the protection of the public fisc, and to the 
advancement of the public interest generally. We have an exceptional 
record of assuring that polluters are made to comply with the law, that 
responsible private parties are made to cleanup Superfund sites rather 
than leaving the taxpayer on the hook, and that criminal defendants are 
punished appropriately. I am proud of the people in my Division, who 
consistently provide top-notch, cost-effective legal services to the 
American people and who dedicate their lives to assuring that the rule 
of law is met and complied with by all parties.
    I would be happy to answer any questions you might have about the 
Division and its work.

    Mr. Cannon. Mr. Keisler, would you give us your testimony.

STATEMENT OF THE HONORABLE PETER D. KEISLER, ASSISTANT ATTORNEY 
  GENERAL, CIVIL DIVISION, UNITED STATES DEPARTMENT OF JUSTICE

    Mr. Keisler. Thank you, Mr. Chairman and Congressman Watt 
and Congressman Coble. It is a great privilege for me to appear 
before you at this oversight hearing and to discuss the work of 
the Civil Division and to respond to any questions you have.
    The Civil Division, as you know, represents the United 
States in court in a wide variety of matters. We don't make 
policy, but we represent the people who do. Virtually every 
executive branch agency as well as Members of Congress are 
clients of ours at one time or another, and the cases we handle 
therefore touch upon virtually every aspect of the operations 
of the Federal Government.
    We defend the constitutionality of acts of Congress when 
they are challenged and the lawfulness of Government 
regulations. We seek to recover monies lost to the Government 
through fraud. We help to administer sensitive national 
compensation programs. We enforce important consumer protection 
statutes; and we represent the Government in a wide range of 
cases, contract cases, tort cases, immigration cases.
    We have 716 attorneys who do this, supported by over 300 
support personnel; and they work very hard. They work hard 
because, while we had pending cases numbering about 20,000 in 
2001, it has climbed now to 35,000, an increase of 75 percent 
in just 3 years.
    I am very pleased to be able to report that, 
notwithstanding the challenges that that kind of caseload 
imposes, we have had a very successful year and a lot of 
positive developments to report. We had record recovery last 
year in cases of fraud against the Government. We and the U.S. 
Attorneys' Offices, working together, recovered $2.2 billion of 
monies that otherwise had been lost. That is a partnership 
between Guy Lewis' U.S. Attorneys' Offices and the Civil 
Division that we are proud of.
    In the last 3 years, we exceeded the $1 billion mark each 
time, which is also a record.
    We also successfully defended the Government, which, as you 
know, is the largest commercial actor in the world, the largest 
purchaser of goods and services, in a range of commercial cases 
in which claims that we believe were meritless and the judges 
were convinced eventually were meritless in the billions and 
billions of dollars were dismissed.
    We successfully defended congressional authority and 
executive authority against numerous challenges.
    We convicted Internet pharmacy operators who were illegally 
selling prescription drugs.
    We successfully defended the Federal Trade Commission and 
Federal Communication Commission's Do Not Call registry to 
protect people who wish to be protected from the intrusion of 
telemarketing.
    We have helped administer sensitive national compensation 
programs like the Radiation Exposure Compensation Program, the 
Vaccine Program.
    We worked closely with Special Master Ken Feinberg to help 
implement the 9/11 Victims Compensation Fund. We were 
particularly gratified that, at the close of the deadline for 
filing in that program, upwards of 98 percent of the eligible 
families who lost a loved one to that attack participated in 
the program, which we regard as a strong vote of confidence in 
its fairness and sensitivity.
    We get involved in terrorism litigation when that happens 
on the civil side. We are particularly proud of the work we 
have done in the terrorist financing area, defending the 
Government's actions in court when they are challenged, to help 
the Government shut down the flow of money to international 
terrorist organizations.
    We are in the same position as the Environment and Natural 
Resources Division in the sense that most of our work is 
defensive. Ninety percent are not cases we bring or initiate 
but cases that are brought against the Government to which we 
must respond. That has, as Tom said, obvious budgetary 
implications; and it makes it difficult to predict the 
workload.
    What we do try to do is keep this Committee and your 
colleagues closely and promptly informed about where we see 
those trends going so you can consider what action you wish to 
take--budgetary, policy, whatever--and we can work together for 
solutions when problems like that arise. If there are spikes or 
trends and certain types of cases are going way up, as we are 
experiencing in the immigration area right now, where we had 
5,700 pending cases in 2001 and 12,000 in 2003, then we try to 
get that information to you promptly so we can work together to 
talk about how to address it.
    When in a compensation program there is a threat that the 
number of eligible valid claims will swamp the amount of money 
to pay them, as there is in the Radiation Exposure Compensation 
Program, we try to bring that to your attention quickly and 
work together.
    My testimony describes some of the areas in which we feel 
we need additional resources. Immigration and the radiation 
program are among them, and I would be happy to address that.
    Let me thank you, Mr. Chairman, for the opportunity to 
appear before you and to answer your questions.
    Mr. Cannon. Thank you, Mr. Keisler. We do have questions on 
those issues, and we will return to those.
    [The prepared statement of Mr. Keisler follows:]

                 Prepared Statement of Peter D. Keisler

    Chairman Cannon, Congressman Watt, and Members of the Subcommittee:
    I appreciate the opportunity to discuss the work of the Civil 
Division of the Department of Justice and our budget and resource needs 
for Fiscal Year 2005.
    The Division represents the interests of the United States in a 
wide range of civil matters. Our cases encompass virtually every aspect 
of the Federal government--from defending the constitutionality of 
Federal statutes to recovering money from those who have committed 
fraud in connection with government programs, to the administration of 
national compensation programs to the representation of Federal 
agencies in a host of matters that arise as part and parcel of 
Government operations--contract disputes, allegations of negligence and 
discrimination, loan defaults, and immigration matters. We have 716 
dedicated public servants who serve as attorneys in the Division and 
336 full and part time employees who provide essential paralegal, 
administrative, and clerical support.
    Over the last year and a half, the Civil Division has:

          Working with the United States Attorneys, recovered 
        more than two billion dollars lost through fraud against health 
        care and defense programs;

          Protected the public fisc from billions of dollars in 
        claims arising from the Government's commercial activities;

          Defended against challenges to Congressional and 
        Executive exercises of power;

          Convicted Internet pharmacy operators for illegally 
        selling prescription drugs;

          Defended the legality of the ``Do Not Call'' list; 
        and

          Played a major role in the administration of 
        congressional programs, such as the September 11th Victim 
        Compensation Fund; the Division has also continued its work 
        with the Vaccine Injury Compensation Program, and the Radiation 
        Exposure Compensation Act.

          Further, in the months since the September 11th 
        attacks, there has been a substantial increase in civil 
        litigation challenging the Federal government's coordinated 
        response to those attacks and the Administration's policies 
        designed to prevent future acts of terrorism. The Civil 
        Division currently handles some 100 pieces of litigation 
        directly related to the September 11 attacks and the country's 
        response to those attacks.

          The Civil Division also helped to secure convictions 
        in a court in Athens, Greece of 15 members of the notorious 
        Greek terrorist group 17 November.

                           NATIONAL SECURITY

    Among the laws and policies of most importance to the 
Administration, the Congress, and the public are those intended to 
protect our nation's security. Our leadership has committed itself to 
devoting all resources necessary to disrupt, weaken, and eliminate 
terrorist networks; to prevent or thwart terrorist operations; and to 
bring justice to perpetrators of terrorist attacks. And we in the Civil 
Division are privileged to contribute to this mission through our 
representation of the United States in litigation that relates to the 
Federal Government's efforts to protect against threats to our national 
security. In fulfilling our litigation responsibilities, we take 
seriously the Attorney General's charge to think outside the box, but 
never outside the Constitution.
    Indeed, civil cases related to the war on terrorism often raise 
unprecedented issues that require novel legal strategies. And the 
consequences are large, as litigation losses in this area could 
undercut policies crucial to the security of our citizens.
    Civil Division attorneys defend challenges to the USA PATRIOT Act 
and the AntiTerrorism Act, lead efforts to defend the decision to 
freeze the assets of terrorist organizations, and ensure that 
immigration hearings may proceed without risking harm to our nation's 
counterterrorism strategy. Our attorneys defend enforcement actions 
involving the detention and removal of suspected alien terrorists, 
defend designations of Specially Designated Global Terrorists, and 
defend our Commander-In-Chief in suits seeking to enjoin the country's 
military actions in Iraq. Of the 37 counterterrorism-related court 
decisions handed down in FY 2003, we prevailed in 35--a success rate of 
95 percent.
    In light of the increasingly crucial role that the Civil Division 
plays in the Nation's counterterrorism efforts, the President requests 
in his FY 2005 budget an increase of 11 positions (eight attorneys and 
three support staff), 6 FTE, and $856,000 for counterterrorism 
litigation.
          * * * * *
    While national security cases are paramount, they still represent a 
small fraction of the over 35,000 cases and matters pending with the 
Civil Division. This vast and diverse workload is handled by our trial 
attorneys who spend their time on the front lines of litigation--
preparing motions, taking depositions, negotiating settlements, 
conducting trials, and pursuing appeals.

                       PROTECTING THE PUBLIC FISC

    Our dockets are filled with cases that involve substantial monetary 
claims against the Government. The significance of these claims cannot 
be overstated.
    Our responsibilities have included: (1) the 122 Winstar suits in 
which hundreds of financial institutions have sought tens of billions 
of dollars for alleged losses that occurred in the wake of banking 
reforms enacted in the 1980s; (2) the Cobell class action--perhaps the 
largest ever filed against the Government; and (3) the Spent Nuclear 
Fuel cases, in which nuclear utilities allege a multi-billion dollar 
breach of contract against the Department of Energy for its failure to 
begin acceptance and disposal of spent nuclear fuel.
    In these and thousands of other defensive monetary matters, our 
mission is to ensure that the will of Congress and the actions of the 
Executive Branch are vigorously and fairly defended, and that meritless 
claims are not paid from the public fisc. Thus far, we have been 
largely successful. Fifty-five of the original 122 Winstar suits have 
been resolved without the government paying any money whatsoever. And 
in fiscal year 2003, we defeated, in total, $12 billion in 
unmeritorious claims asserted against the United States.
    In any given year about 15 to 20 percent of our cases involve 
affirmative litigation to enforce Government regulations and policies, 
and to recover money owed the Government from commercial transactions, 
bankruptcy proceedings, and fraud. In one such case, the hospital chain 
Columbia/HCA agreed to pay the government a total of $1.7 billion in 
criminal fines and civil penalties for systematically defrauding 
federal health care programs. The conclusion of this multi-year probe 
in June 2003 marked the largest recovery ever reached by the government 
in a health care fraud investigation. Rivaling HCA in terms of size and 
potential recoveries are numerous ongoing investigations against many 
pharmaceutical companies or other related entities, charging various 
allegations of fraud on the Medicare and Medicaid programs in the 
pricing or delivery of drugs. Recoveries in the last three years have 
already exceeded $1 billion with potential recoveries totaling $1.5 
billion in the next three years. In total, in fiscal year 2003, the 
Civil Division, working in concert with the United States Attorneys, 
recovered approximately $2.2 billion in fraud suits and investigations, 
thus setting precedents that will deter future efforts to defraud the 
American people.

                            WORKLOAD TRENDS

    In 2001, the Civil Division handled about 20,000 cases and matters 
with a staff of 722 trial attorneys. In just two years our pending 
caseload grew 75 percent to nearly 35,000, while the number of trial 
attorneys has actually dropped to 716.
    During this time we witnessed significant growth in appellate cases 
and matters--driven largely by the steep rise in challenges to 
immigration enforcement actions. Cases in the Court of Federal Claims, 
the Court of Appeals for the Federal Circuit, the Court of 
International Trade, and in foreign courts continued to account for a 
very significant portion of our workload--some 34 percent. In contrast, 
the number of trial cases assigned to district courts declined both 
numerically and as a proportion of our total workload. Most notably, 
the sharpest increases are attributable to our expanding 
responsibilities for administering compensation programs.

                       ALTERNATIVES TO LITIGATION

    The Vaccine Injury Compensation Program was created in 1986 by the 
National Childhood Vaccine Injury Act--to encourage childhood 
vaccination by providing a streamlined system for compensation in rare 
instances where an injury results. To date, nearly 1,800 people have 
been paid in excess of $1.4 billion.
    In FY 2003, nearly 2,500 claims were filed under the Program, 
compared with just 213 in FY 2001--a nearly twelve-fold increase 
largely attributable to claims alleging that a vaccine preservative, 
thimerosal, caused autism. As the Court of Federal Claims increases its 
staff of Special Masters, we expect further growth in vaccine-related 
work. By the end of FY 2005, more than 3,400 additional cases are 
expected to be filed.
    The Vaccine Injury Compensation Trust Fund derives its funding from 
an excise tax on vaccine manufacturers and is used to make compensation 
payments to eligible claimants and to reimburse the Court of Federal 
Claims, and the Departments of Justice and Health and Human Services 
for expenses related to the administration of the Program. The annual 
appropriations that set the Civil Division's reimbursement level have 
stayed flat at $4,028,000 since 1996. The FY 2005 President's Budget 
seeks an increase in reimbursable authority of $2,305,000 to handle the 
exponential growth in vaccine injury claims alleging injuries caused by 
thimerosal. Increasing the Civil Division's reimbursement level so it 
can adequately address this significant workload growth will help to 
assure that qualifying claims are paid while the long term viability of 
the Trust Fund is protected.
    Congress passed the Radiation Exposure Compensation Act (RECA) in 
1990 to offer an apology and compensation to people who suffered 
disease or death as a result of the nation's nuclear weapons program 
during the Cold War era.
    In July 2000, RECA Amendments were enacted. Major changes included 
new categories of beneficiaries; expansion of eligible diseases, 
geographic areas, and time period; and a reduction in the radiation 
threshold that miners must meet to receive compensation. As a result, 
over 3,800 new claims were filed in FY 2001--more than in the prior six 
years combined.
    Awards rose sharply too, from an average of about $20 million a 
year to over $172 million in 2002 alone. To administer the expanded 
program and avoid the development of backlogs, the Consolidated 
Appropriations Act for Fiscal Year 2004 earmarked an additional 
$1,000,000 for FY 2004 over the base of $1,996,000.
    The Amendments also precipitated a need for additional Trust Fund 
resources. In FY 2001, Congress appropriated an emergency supplemental 
appropriation to address immediate requirements. Long-term needs were 
addressed through the Fiscal Year 2002 National Defense Authorization 
Act. That Act made the RECA Trust Fund a mandatory appropriation and 
established annual funding caps through FY 2011 totaling $655 million. 
The caps set by the Act were based on the assumption that there would 
be a sharp decline in the number of claims approved each year. To date, 
the claims have not been declining as rapidly as assumed, and it has 
become obvious that these annual Trust Fund caps are insufficient for 
eligible claimants. The General Accounting Office recognized this 
problem in its April 2003 report to Congress. In FY 2003, approximately 
$10 million in awards could not be paid until FY 2004. For FY 2004, 
funds are projected to be exhausted this summer, meaning that almost 
$28 million, will not be paid until FY 2005. Without an increase, FY 
2005 funds are projected to be exhausted by December, bringing the 
cumulative shortfall to $72 million. Accordingly, to ensure that 
adequate resources are available to pay all eligible claimants through 
FY 2005, the President's Budget seeks a discretionary appropriation of 
$72 million.
    The most recent addition to the Division's responsibility for 
compensation programs is the September 11th Victim Compensation Fund of 
2001. The Air Transportation Safety and System Stabilization Act (P.L. 
107-42) created the Program to pay compensation to families of deceased 
individuals and to those physically injured as a result of the 
September 11th terrorist attacks.
    The sheer complexity of the determinations and the deep, emotional 
context of the decision-making makes the Program one of the Division's 
greatest challenges arising out of the devastation of September 11th.
    Under the law, all claims were to be filed by December 22, 2003. 
The success of the Program is borne out by the eligible claimants' 
phenomenal level of participation. Under the leadership of Special 
Master Kenneth Feinberg, the Program received a total of 7,357 claims, 
2,970 death and 4,387 injury. An extraordinary 98 percent of those 
eligible filed a death claim, far exceeding the Special Master's most 
optimistic projections in December 2001.
    The Program has already paid over $2 billion to claimants. The 
amounts approved for deceased victims range from $250,000 to $6.9 
million. Awards approved for physically injured (but not deceased) 
victims ranged from $500 to $7.9 million.
    There remains much work to be done before the last award is issued. 
Justice and compassion demand that claims be resolved as expeditiously 
as possible. For FY 2004, a total of $38.3 million was appropriated to 
ensure the Program has access to the resources needed to meet the 
administration's goal--to judiciously resolve all claims in FY 2004.
    Due to the volume of claims filed immediately before the deadline, 
some percentage of claims may not be finally closed in FY 2004. The FY 
2005 President's Budget seeks $11.4 million to ensure that each and 
every claim is fully resolved, each payment is made, and the 
substantial amount of administrative close-out operations is completed 
seamlessly.
    Because the enacting legislation provided an indefinite 
appropriation for making compensation payments, there will be 
sufficient funds to pay an estimated $5.4 billion in approved claims 
over the life of the program.

                         IMMIGRATION LITIGATION

    The Office of Immigration Litigation (``OIL'') defends the 
Government's immigration laws and policies, and handles challenges to 
immigration enforcement actions. At no time in history has this mission 
been so important, and never before has it consumed as large a 
percentage of the Civil Division's resources as it does today.
    Immigration attorneys have defended the government's efforts to 
detain and remove known terrorists and other criminal aliens. In 
addition, OIL has helped to preserve the government's policy of closing 
hearings for aliens who were deemed to be of interest to the post-9/11 
terrorism investigation. Vigorous defense of these cases is critical to 
the nation's counter-terrorism strategy.
    Immigration has been, by far, the fastest growing component of the 
Civil Division's docket. The Civil Division handles all federal court 
challenges to decisions of the Board of Immigration Appeals (the 
``BIA''). These challenges have more than doubled in the past five 
years. Whereas OIL handled roughly 5,700 cases in 2001, it handled over 
12,000 in 2003.
    The primary reason for this growth is that the BIA has reduced a 
56,000 case backlog, as a result of the Attorney General's initiative 
to streamline the agency's procedures. As the BIA's output has 
increased, so has our workload. Moreover, further contributing to the 
growth in immigration cases are three other factors: (1) an increase in 
new BIA cases as a result of heightened immigration enforcement; (2) 
the substantial increase in the percentage of BIA decisions that are 
appealed to the federal courts; and (3) the Supreme Court's recent 
decisions opening up additional avenues for judicial review that 
Congress attempted to foreclose just eight years ago.
    This enormous growth is driving the per attorney caseload to over 
130 cases in FY 2004, a more than doubling of the historic caseload of 
60 cases per attorney. Without additional resources in FY 2005, the 
attorney caseload is expected to exceed 160 cases per attorney, which 
is more than three cases per week. The Divisions's temporary, stopgap 
measure of assigning immigration cases to other Branches (such as Torts 
and Commercial)--which do not share OIL's experience in immigration law 
and which do not have the capacity to handle these cases indefinitely--
is not a permanent solution.
    OIL attorneys are the last line of defense in immigration 
enforcement. Any attempt to strengthen our borders and to protect 
ourselves from terrorists must ensure that OIL has adequate resources 
to defend the BIA's decisions. A failure to provide these resources 
would necessarily weaken our country's efforts to protect homeland 
security.
    The President therefore requests in his FY 2005 budget a program 
increase of 30 positions (22 attorneys and eight support staff), 15 
FTE, and $3,500,000 for immigration litigation.

                              PERFORMANCE

    By concentrating on the Civil Division's top priorities, this 
testimony provides little elaboration on the thousands of cases and 
matters that form the traditional core of our work.
    The Civil Division has a longstanding commitment to maximizing the 
effectiveness of scarce Government resources. It is with pride that I 
can report that performance targets across the board were met or 
exceeded in FY 2003--as we succeeded in recovering substantial funds 
owed to the Government, defeating unmeritorious claims and prevailing 
the vast majority of cases involving challenges to the programs of some 
200 agencies that are our clients.

                       PRESIDENT'S BUDGET REQUEST

    The President's FY 2005 request seeks 1,115 positions, 1,157 FTE 
and $193,110,000. Included in this request are the base resources 
required to maintain superior legal representation services that have 
yielded such tremendous success. Please note that the reduced funding 
for administration of the September 11th Victim Compensation Fund 
results in the overall request level being $19.4 million less than the 
FY 2004 appropriated level.
    The President's request includes additional funds to: defend the 
government in some of the most contentious terrorism-related cases; 
support the Office of Immigration Litigation's key role in protecting 
our nation's borders; handle the exponential growth in vaccine injury 
claims alleging injuries caused by thimerosal; and ensure adequate 
resources are available to pay all eligible RECA claimants.
    At this time, Mr. Chairman, I would be happy to address any 
questions you or Members of the Subcommittee may have.

    Mr. Cannon. Mr. Lewis.

   STATEMENT OF GUY A. LEWIS, DIRECTOR, EXECUTIVE OFFICE FOR 
  UNITED STATES ATTORNEYS, UNITED STATES DEPARTMENT OF JUSTICE

    Mr. Lewis. Good afternoon, Mr. Chairman, Congressman Watt, 
Members of the Subcommittee. Thank you very much for the 
opportunity to be here.
    I, too, am pleased to appear here with my colleagues from 
the Department of Justice. It is also my honor to be 
representing the outstanding men and women of the 94 United 
States Attorneys' Offices around the country, the prosecutors 
that are on the front lines trying cases, and the support staff 
that are making these cases happen.
    Let me thank you, Mr. Chairman, and this Committee and your 
staffs for your continued support of the important work being 
done by the United States Attorneys Offices around the country. 
The Nation's prosecutors are a critical part of the Department 
of Justice in fulfilling our promise to the American people and 
to protect them from terrorism, from corporate fraud, from the 
gun violence that occurs and basically enforcing the criminal 
laws as well as the civil law in each district.
    The U.S. Attorneys Offices are responsible primarily for 
investigating and prosecuting criminal cases as well as civil 
cases. We work with the FBI, the DEA, other departments like 
Homeland Security and our State and local partners. I said many 
times as a U.S. Attorney in South Florida, we couldn't do what 
we do without participation from State and local officials. 
U.S. attorneys serve not only as the chief Federal law 
enforcement agent, as I said, in their district, they are also 
the chief Federal civil litigator in their districts as well.
    Let me briefly outline our 2005 budget request. In fiscal 
year 2005 we are requesting a budget of just over $1.5 billion 
to support more than 10,000 positions. As part of that request, 
we are seeking an additional $12.4 million to support an 
increase of 148 positions.
    The President, the Attorney General, and the Deputy 
Attorney General have directed that we focus our efforts, and 
that we invest our monies in the programs that are critical to 
the Department's strategic goals; and we are doing that.
    Our request recognizes that prevention of terrorism and 
prosecution of terrorist acts are the most important 
responsibility of every U.S. Attorney. In fiscal year '03, the 
United States Attorneys responded to the Attorney General's 
directive to use the full array of antiterrorism statutes to 
detect and disrupt terrorist activities and to prosecute 
terrorist cases.
    Last year alone, the U.S. Attorneys' Offices around the 
country were involved in more than 1,000 terrorism and 
terrorism-related cases, last year alone, including many that 
you know of--John Walker Lindh, Zacarias Massaoui, the 
Lackawanna Six up in New York, the shoe bomber in 
Massachusetts, the Ernest James Ujama case in Washington State 
who was the defendant who pled guilty for providing material 
support to the Taliban.
    Another priority for the United States Attorneys in '03 was 
the prosecution of corporate fraud. We have spent a lot of time 
and effort trying to prosecute those cases that, again, many 
that you have seen in the news and otherwise.
    The President, as you know, formed the Corporate Fraud Task 
Force in '02, and a number of United States Attorneys Offices 
around the country have participated in that task force. Since 
'02, over 300 major corporate fraud cases have been brought, 
resulting in over 250 convictions. Again, very strong cases 
that I think send the right message.
    Another important priority for the United States Attorneys 
is the flow of illegal firearms. Project Safe Neighborhood, a 
very important program from the President and from the 
Department. Last year alone, we were up over 68 percent in 
terms of prosecutions of Federal gun crimes.
    The enhancement that we request is offset by a number of 
cost saving, managerial moves that we are making. We are going 
through and making some cuts because, frankly, we are--the net 
change to our program with the request and the offsets is a 
$5.8 million mark. So we are going through and tightening our 
belt in a number of areas. That has been difficult, but we are 
going to make that happen.
    In conclusion, Mr. Chairman, Members of the Committee, the 
men and women of the United States Attorneys Office and the 
Executive Office are dedicated to working hard to earn the 
public's trust. We appreciate your continued support. This 
Committee support has been very important to the people out in 
the field that really are making the cases, and we appreciate 
your continued support.
    I would be glad to answer any questions at the end of the 
hearing.
    Mr. Cannon. Thank you, Mr. Lewis.
    [The prepared statement of Mr. Lewis follows:]

                   Prepared Statement of Guy A. Lewis

    Mr. Chairman, and Members of the Subcommittee, I am pleased to 
appear before you today with my colleagues from the Department of 
Justice.

                              INTRODUCTION

    It is my honor to be here representing the outstanding women and 
men of the 94 United States Attorneys' offices, and I thank you on 
their behalf for your continuing support of their efforts. The 
Executive Office for United States Attorneys (EOUSA) provides 
administrative support for the United States Attorneys, their offices, 
and their staffs around the country. EOUSA provides leadership and 
support on every issue involving the U.S. Attorneys' offices, including 
their overall operations, budgets, management, personnel matters, and 
performance evaluations. In addition, EOUSA serves as the voice of the 
United States Attorneys within the Department of Justice.

                                OVERVIEW

    Each United States Attorney serves as both the chief federal law 
enforcement officer and the chief federal litigator, both criminal and 
civil, in their respective districts, and works closely with the six 
litigating divisions of the Department of Justice.
    The investigation and prosecution of terrorism continues to be the 
number one priority for every United States Attorney. The United States 
Attorneys are aggressively pursuing criminal investigations throughout 
the United States, prosecuting and, whenever possible, preventing 
terrorist-related activity aimed at the United States and its citizens. 
Some of the important terrorism prosecutions during the past year 
include:

          Eastern District of Virginia. Zacarias Moussaoui was 
        charged with six counts of conspiracy connected with the 
        September 11 attacks. John Walker Lindh pled guilty to aiding 
        the Taliban and was sentenced to 20 years in prison. Seven 
        defendants known as the Northern Virginia Jihad have been 
        charged with conspiracy to violate the Neutrality Act, a number 
        of weapons offenses, and in the case of one defendant, 
        conspiracy to provide material support to al-Qaida.

          Western District of New York. The so-called 
        ``Lackawanna Six'' pled guilty to providing material support to 
        Osama bin Laden and al-Qaida and have been sentenced to 
        significant terms in prison.

          District of Massachusetts. Richard Reid, the ``shoe 
        bomber,'' pled guilty to terrorism charges and was sentenced to 
        life in prison.

          District of New Jersey. Hemant Lakhani was charged 
        with attempting to smuggle shoulder-fired missiles into the 
        United States and sell them to a person whom he believed to be 
        a representative of a terrorist group.

    In fighting the war on terrorism, the United States Attorneys have 
been greatly aided by the tools made available by the Congress through 
the USA PATRIOT Act. The Patriot Act has been invaluable in allowing 
investigators to use in terrorism cases the same tools long used in 
organized crime, drug trafficking, fraud and other types of cases. The 
Patriot Act has also aided our efforts by allowing for the sharing of 
information among government agencies so that we can better ``connect 
the dots'' in the course of investigating terrorism cases. In addition, 
the Act has proven effective in updating the law to reflect new types 
of threats and technologies used by terrorists and by helping the 
government uncover, track, and freeze terrorist finances worldwide. The 
United States Attorneys very strongly urge the Congress to renew those 
provisions of the Patriot Act that are due to expire next year.
    The prosecution of corporate fraud also continues to be a priority 
for the United States Attorneys. Since the creation of the Corporate 
Fraud Task Force by President Bush in 2002, over 300 corporate fraud 
cases have been filed, with more than 250 convictions obtained through 
December 31, 2003. Some examples of the United States Attorneys' 
successes in this area during the past year include the following:

          Middle District of Pennsylvania. Five former 
        executives of Rite-Aid, Inc., the nation's third largest drug 
        store chain, pled guilty to various charges in connection with 
        a scheme to inflate the company's earnings. Five defendants 
        pled guilty and a sixth was convicted by a jury.

          Southern District of Texas. Three former executives 
        of Dynegy, Inc. were indicted on charges relating to a complex 
        scheme of accounting fraud intended to mislead the investing 
        public. Two defendants pled guilty and a third was convicted.

          Northern District of Alabama. Several former 
        executives of HealthSouth Corporation were charged with 
        offenses arising out of their scheme to artificially inflate 
        the company's earnings, misrepresent its true financial 
        condition, and mislead lenders. To date, fourteen defendants 
        have pled guilty.

    The Department's continued emphasis on prosecuting corporate fraud 
during 2003 also included investigations into mutual fund and hedge 
fund fraud. To date, more than 35 such investigations have been opened.
    Another important priority for the United States Attorneys is the 
aggressive enforcement of our nation's gun laws through Project Safe 
Neighborhoods (PSN). PSN continues to provide a multi-faceted approach 
to deterring and punishing gun crime by providing every United States 
Attorney with the tools they need to combat the gun problem in their 
respective districts. The number of federal firearms prosecutions has 
increased significantly every year that PSN has been in place, 
increasing 68% since the program began. In FY2003, the Department filed 
10,556 federal firearms cases, the highest number ever recorded. The 
United States Attorneys are committed to working closely with state and 
local authorities to ensure that those who violate our nation's gun 
laws are prosecuted to the fullest extent of the law.
    Prosecuting human trafficking cases is another priority for the 
United States Attorneys. Trafficking victims are being lured to this 
country in alarming numbers, with false promises of better economic 
opportunity, only to be forced to work under inhumane conditions in 
prison-like factories or as prostitutes. Examples of recent trafficking 
cases include the following:

          Western District of Texas. Several defendants have 
        recently been charged with, inter alia, transportation of 
        minors for sexual activity. According to the indictment, the 
        defendants participated in a conspiracy to recruit and smuggle 
        female aliens under the age of 18 from Mexico to the United 
        States.

          Southern District of Texas. Jose Ricardo Sanchez 
        Morales, of Honduras, was sentenced to 78 months in federal 
        prison for unlawfully transporting 11 undocumented aliens, one 
        of whom died when the vehicle they were being transported in 
        was involved in a roll-over accident.

          District of Nevada. Quinton Williams was sentenced to 
        125 months in prison for operating an interstate prostitution 
        business in which he transported women, including minors, from 
        various cities to Las Vegas for prostitution.

    The United States Attorneys will continue to devote considerable 
resources to aggressively prosecuting this most heinous of crimes.
    While we have achieved considerable success in the past year, more 
can and must be done to ensure the safety of our communities. Our 
Fiscal Year 2005 budget request will enable us to meet this challenge.

                    FISCAL YEAR 2005 BUDGET REQUEST

    To carry out our mission in Fiscal Year 2005, we are requesting a 
budget of just over $1.5 billion to support 10,262 positions. As part 
of our request, we are seeking $12.4 million to support an increase of 
148 positions.
    The President, Attorney General, and Deputy Attorney General have 
continued to ask that we look for opportunities to re-prioritize 
activities before seeking new resources, that we concentrate our 
investment in programs that are of the highest priority and greatest 
value, and that we abandon activities that are not effective. Our 2005 
budget request complies with these requests and includes savings to 
help us fund the enhancements we seek.
    The request before you recognizes that the prevention of terrorism 
and the investigation and prosecution of terrorist acts are the most 
important priorities of every United States Attorney. Our 2005 request 
also recognizes that, in addition to the pressing priority of 
terrorism, there are other crime problems that must be addressed at the 
federal level. To this end, our request also seeks the resources 
necessary for the continued support of the Corporate Fraud Task Force, 
PSN, and other important initiatives.
    As additional attorneys have been allocated to our offices in past 
years to address the strategic priorities of fighting terrorism, 
corporate fraud, and gun violence, a continuing need exists for 
additional support staff assistance. As a result, we are asking for 26 
new paralegal positions in order to address the current workforce 
imbalance and enhance attorney productivity.
    In addition to our role as the federal government's prosecutors, 
the civil divisions within the United States Attorneys' offices handled 
over d that, in addition to the pressing priority of terrorism, there 
are still other crime problems that we must address. One example of 
this is firearmsThe Administration, in partnership with state and local 
law enforcement agencies, is As a result, w191,000 civil cases this 
past fiscal year and collected money on behalf of the Treasury equal to 
over seven times the cost of our civil programs. Our request for 24 new 
civil defensive positions will ensure that our offices can continue to 
adequately defend the United States in civil actions brought against 
the federal governmentofficials and agencies,.
    Our Fiscal Year 2005 budget request for enhancements totaling 148 
positions and $12.4 million also includes $18.2 million in program 
offsets. As a result, the net change to our program is a negative $5.8 
million. The United States Attorneys will be reducing their Office of 
Legal Education travel by $1.8 million. Also, the Department proposes 
toWe will offset the additional $5.1 million in pay annualization 
through other management efficiencies, and. Finally, the United States 
Attorneys will be further reducinge their non-personnel expenses by an 
additional $11.3 million. in management efficiencies, such as 
reductions in legal research.
    We recognize that stewardship of appropriated funds is a serious 
responsibility, and our commitment to sound management runs deep. 
Consistent with As suggested in the President's Management Agenda, 
without proper planning, the skill mix of the federal workforce will 
not reflect tomorrow's changing mission. T the composition of the 
United States Attorneys' workforce recognizes that it must adapt in 
terms of size and competencies to accommodate changes in mission, 
technology, and labor markets. We are also in the process of offering a 
buyout available to 600 employees in specific job series , toin order 
to facilitate restructuring toward a more technological and efficient 
workforce. with attorneys and paralegals with information technology 
skills and budget analysts with auditing and accounting backgrounds. We 
expect to achieve substantial savings through these efforts.

                               CONCLUSION

    In conclusion, the men and women of the United States Attorneys' 
offices and the Executive Office for United States Attorneys are 
dedicated to fighting terrorism, protecting our neighborhoods and 
schools from gun violence and drug-related crimes, upholding civil 
rights, and prosecuting those who commit corporate fraud. We believe 
that our FY 2005 budget request is a responsible one that will allow us 
to maintain the important programs designed to carry out the 
Department's priorities within its strategic plan. We hope to build on 
our successes in cooperation with this Subcommittee and with its 
support for the President's FY 2005 Budget request for the offices of 
the United States Attorneys.
    Again, we appreciate your continued support for the United States 
Attorneys' offices, and I look forward to answering any questions that 
you may have.

    Mr. Cannon. The record should also reflect the attendance 
of Mr. Chabot from Ohio, our colleague and friend.
    Mr. Friedman.

 STATEMENT OF LAWRENCE A. FRIEDMAN, DIRECTOR, EXECUTIVE OFFICE 
FOR UNITED STATES TRUSTEES, UNITED STATES DEPARTMENT OF JUSTICE

    Mr. Friedman. Thank you, Mr. Chairman, Congressman Watt and 
Members of the Committee. I appreciate the opportunity to 
appear before you today to discuss the President's fiscal year 
2005 budget request and to update you on some of the U.S. 
Trustee Program's most recent accomplishments.
    Our mission is to enforce the bankruptcy laws, to protect 
the bankruptcy system from fraud and abuse and to supervise the 
administration of bankruptcy cases. We carry out broad, 
administrative, regulatory and litigation duties under both 
title 11, the Bankruptcy Code, and under title 28 of the United 
States Code.
    It is an exciting time in the history of the program. We 
are transforming the agency into a litigating component 
dedicated to combating fraud and abuse. With 1.6 million new 
bankruptcy cases filed last year, we are enforcing our civil 
bankruptcy laws and assisting prosecutors in obtaining criminal 
convictions.
    In fiscal year 2002, the program launched a National Civil 
Enforcement Initiative to identify and remedy debtor fraud and 
abuse and to protect consumer debtors against unscrupulous 
attorneys and others who prey upon those in dire financial 
straits. Our results are impressive. During fiscal year 2003, 
program offices took more than 41,000 civil enforcement 
actions, yielding more than half a billion dollars in remedies. 
The potential benefit to creditors due to these actions is more 
than three times the program's fiscal year 2003 appropriation.
    Examples of the type of abuses we have addressed include 
false statements and the concealment of assets in Kentucky, 
where a debtor failed to disclose various property interests, 
including an ownership interest in six companies, full use of a 
Lexus and a 401(k) and a brokerage account;
    Substantial abuse in Tennessee, where joint debtors earning 
$145,000 annually sought to discharge $184,000 in credit card 
debt while continuing to live an extravagant lifestyle, 
including a new Cadillac and a timeshare in Hawaii;
    Sanctioning of petition preparers in the Northern District 
of California, who preyed upon an elderly woman with dementia, 
attempting to use the bankruptcy system to gain access to 
equity in her home;
    Attorney misconduct in Indiana, where attorneys at a law 
firm there coerced their clients to pay fees without disclosure 
and without court authorization;
    And unscrupulous credit solicitations in New Jersey, where 
a finance company purported to have approval of the bankruptcy 
court to authorize automobile financing.
    I can tell you from my visits to more than 70 of the 95 
program offices that a significant benefit of the initiative 
has been the invigoration of the program staff. Field offices 
are sharing successful practices in their districts with others 
in the program, and there is an energy that is spreading 
throughout the country. Similarly, we have integrated the 
private trustees into this effort, and this has maximized the 
role they play in protecting the integrity of the system.
    Finally, I have attended hundreds of meetings throughout 
the country this year with judges, practitioners and others in 
the bankruptcy community and have found wide support for our 
efforts to improve the system.
    Some abuses of the bankruptcy system merit criminal 
sanction in addition to civil action. Bankruptcy fraud is also 
linked to other crimes such as tax fraud, mortgage fraud, 
credit card fraud and identity theft. The program identifies 
criminal violations, and assists in their investigation and 
prosecution of bankruptcy crimes. Program staff cooperate with 
and provide specialized expertise to other components of the 
Department, including U.S. Attorneys and the FBI.
    A key improvement in the criminal enforcement area has been 
the program's creation in July of 2003 of the Criminal 
Enforcement Unit staffed by experienced career prosecutors. A 
second key improvement has been the development of a new 
criminal enforcement tracking system to more accurately track 
allegations and referrals and to identify types of crimes and 
trends that are occurring.
    The program's fiscal year 2005 budget request of 
$174,355,000 is essentially a current services budget. It will 
allow us to continue our enforcement efforts and to provide a 
modest enhancement for our information technology program.
    In closing, I would like to say I am very proud of the 
effort of the dedicated men and women of the United States 
Trustee Program. Through their commitment and tenacity, they 
are transforming this agency into a professional litigating 
organization. I also want to thank the Members of the 
Subcommittee, your staffs and the rest of the Members for their 
support of the program.
    I am pleased to respond to your questions.
    Mr. Cannon. Thank you, Mr. Friedman.
    [The prepared statement of Mr. Friedman follows:]

               Prepared Statement of Lawrence A. Friedman

    Mr. Chairman and Members of the Subcommittee:
    I appreciate the opportunity to appear before you once again on 
behalf of the Department of Justice to discuss the important work of 
the United States Trustee Program, outline for you some of our 
accomplishments over the last year, and walk you through the 
President's FY 2005 budget request for the Program.
    The United States Trustee Program (``the Program'') is the 
component of the Department of Justice with responsibility for the 
oversight of bankruptcy cases and trustees. Our mission is to enforce 
the Federal bankruptcy laws, protect the bankruptcy system from fraud 
and abuse, and supervise the administration of bankruptcy cases. We 
carry out broad administrative, regulatory, and litigation duties under 
both title 11 (the Bankruptcy Code) and title 28 of the United States 
Code.
    It is an exciting time in the history of the United States Trustee 
Program. We are transforming the agency into a litigating component of 
the Department dedicated to combating fraud and abuse. Although 
estimates of the amount of bankruptcy abuse vary widely, it is clear 
that fraud and abuse add up to billions of dollars at stake for 
creditors, as well as added costs for consumers. Overseeing nearly 1.6 
million of the new bankruptcy cases filed last year, the Program is 
vigorously enforcing the nation's civil bankruptcy laws and assisting 
prosecutors in obtaining criminal convictions.

                     CIVIL AND CRIMINAL ENFORCEMENT

The National Civil Enforcement Initiative
    In FY 2002, the Program launched a National Civil Enforcement 
Initiative (NCEI) with two major objectives:

          To identify and remedy debtor fraud and abuse, and

          To protect consumer debtors against unscrupulous 
        attorneys and others who prey upon those in dire financial 
        straits.

    To accomplish these objectives, we are using existing statutory 
tools to combat fraud and abuse in the bankruptcy system and to protect 
consumers. Civil enforcement actions include taking steps to dismiss 
abusive filings, deny discharges to ineligible or dishonest debtors, 
limit improper refilings by debtors, curb unfair practices by 
attorneys, sanction unscrupulous bankruptcy petition preparers and scam 
operators, and attack identity fraud in bankruptcy.
    Since the inception of the NCEI in October 2001, civil enforcement 
related projects have included the development and implementation of 
annual enforcement strategies in all 95 field offices; the appointment 
of national civil enforcement coordinators who oversee the Initiative 
by issuing standard guidance, providing technical assistance and 
training, and coordinating multi-district litigation; the formation of 
a civil enforcement resource team consisting of some of the Program's 
most experienced attorneys, financial analysts, and litigation support 
personnel; and the marshalling of resources to assist staff in their 
enforcement responsibilities.
    The results of the NCEI are impressive. During fiscal year 2003, 
Program offices reported taking more than 41,000 formal and informal 
civil enforcement actions, yielding more than $500 million in debts not 
discharged in chapter 7, fines, and other remedies. The potential 
benefit to creditors as a result of these actions is more than three 
times the Program's FY 2003 appropriation of $155.7 million.
    The ability to measure the results achieved by Program staff in 
civil enforcement is possible through the Program's development of an 
automated Significant Accomplishments Reporting System that is 
available to our staff on their desktop computers. This new system was 
launched in May 2003, and provides a tool for managers to measure both 
the amount of civil enforcement activity in their offices and the 
bottom line results of their efforts.
    A significant benefit of the NCEI has been the invigoration of the 
Program's staff. Identifying abuse and successfully combating it is 
generating a feeling of pride and accomplishment among our staff at all 
levels. Field offices are sharing successful practices in their 
districts with others in the Program, and there is an energy that is 
spreading not only among the Program's regions and districts, but to 
the greater bankruptcy community as well. We are confident that our 
efforts to make this Initiative known to all parties in the bankruptcy 
system will increase voluntary compliance with the bankruptcy statutes 
and rules.
    Some recent examples of the Program's civil enforcement successes 
include:

          Substantial Abuse: In the Middle District of 
        Tennessee, joint debtors earned $145,000 annually and sought to 
        discharge $184,000 in credit card debt while continuing to live 
        an extravagant lifestyle, which included keeping a new Cadillac 
        and a timeshare in Hawaii. After the U.S. Trustee filed a 
        motion seeking dismissal for substantial abuse, the debtors 
        converted to a chapter 13 repayment plan.

          False Statements and Concealment of Assets: In the 
        Eastern District of Kentucky, a debtor failed to disclose 
        various property interests, including ownership interests in 
        six companies, free use of a Lexus, a 401(k) account, and a 
        brokerage account. After trial, the court denied the debtor's 
        discharge based upon the debtor's ``reckless disregard'' in 
        completing his bankruptcy petition and his failure to disclose 
        assets.

          Bankruptcy Petition Preparers (BPP's): In the 
        Northern District of California, an elderly woman with dementia 
        deeded her home jointly to herself and two Bankruptcy Petition 
        Preparers (BPPs). To delay her creditors, the BPPs placed the 
        woman in bankruptcy. The BPPs then sold the home below-market 
        value and attempted to dismiss the bankruptcy case to collect 
        their purported share of the equity. The Bankruptcy Court 
        granted the U. S. Trustee's request for relief under Sec. 110 
        and certified the case to the District Court. The District 
        Court subsequently awarded the elderly debtor $62,680 in 
        damages, based on a motion by the case trustee. The District 
        Court also ordered the BPPs to pay a $4,948 fine.

          Attorney Misconduct: In the Southern District of 
        Indiana, attorneys at a law firm were collecting fees from 
        clients without disclosure and without proper court 
        authorization. Based on action by the U.S. Trustee, attorneys 
        at the firm were barred from filing new bankruptcy cases in 
        Region 10 (Central and Southern Districts of Illinois and 
        Northern and Southern Districts of Indiana), removed as counsel 
        in approximately 100 pending chapter 13 cases, and the court 
        froze $20,000 in fees for distribution to replacement counsel 
        or overcharged debtors.

    The Program's civil enforcement efforts also have led to 
significant decisions by Circuit Courts of Appeal. For example, the U. 
S. Court of Appeals for the Sixth Circuit recently decided a case in 
favor of the U. S. Trustee. In In re Behlke (6th Cir.), ___F.3d__ (2004 
WL 314905 6th Cir. Feb. 20, 2004), decided on February 20, 2004, the 
Sixth Circuit affirmed the dismissal of a chapter 7 case on grounds of 
substantial abuse pursuant to 11 U.S.C. Sec. 707(b). The court ruling 
clarified existing law in a number of respects. Among other things, the 
court held that an ``ability to repay'' analysis could include a 
debtor's voluntary payments to a 401(k) retirement plan. The court also 
rejected arguments that there was no substantial abuse because the 
debtor could repay only a modest percentage of general unsecured debt. 
In Behlke, the Sixth Circuit held that it was not in error to dismiss 
the debtors' case when the debtors could repay 14 percent ($22,824) of 
their unsecured debt over three years and 23 percent ($38,040) over 
five years.

Debtor Audit Pilot Project
    Since bankruptcy, like the income tax, is based on self-reporting, 
the accuracy and veracity of bankruptcy schedules are pivotal to the 
integrity of the bankruptcy system. In September 2003, the Program 
started a six-month Debtor Audit Pilot Project to develop better 
techniques to identify the presence or absence of significant errors in 
bankruptcy schedules.
    The Program contracted with six certified public and forensic 
accounting and investigative firms to review an estimated 64,000 
chapter 7 consumer bankruptcy petitions filed in 10 districts around 
the country. These firms are conducting ``paper'' audits in an 
estimated 1,400 of these cases. The cases are being selected in one of 
two ways for audit from cases filed between October 1, 2003 and March 
31, 2004. First, one out of every 250 cases is randomly selected for an 
audit. Second, cases are targeted based on certain income and debt 
thresholds that have been defined for each field office during the 
pilot. While Program staff have long conducted these types of reviews, 
this pilot is the first time that independent public firms have been 
retained to conduct the reviews. The pilot project will be fully 
completed by the end of the fiscal year.

Criminal Enforcement
    Some abuses of the bankruptcy system merit criminal sanction in 
addition to civil action. The U.S. Trustee Program advances criminal 
enforcement by identifying criminal violations and assisting in the 
investigation and prosecution of bankruptcy crimes. Program staff 
cooperate with and provide specialized expertise to other components of 
the Department, including the U. S. Attorneys and the FBI. Bankruptcy 
fraud is often linked to other crimes such as tax fraud, mortgage 
fraud, credit card fraud, and identity theft. Consequently, the 
Program's efforts involve extensive collaboration with many other 
Federal and state agencies.
    In March 2003, the Department's Office of the Inspector General 
(OIG) issued a report regarding the Program's efforts to prevent 
bankruptcy fraud and abuse. The report generally endorsed our civil and 
criminal enforcement initiatives and provided helpful guidance on the 
implementation of those activities.
    A key improvement in the criminal enforcement area has been the 
Program's creation, in July 2003, of a Criminal Enforcement Unit (CrEU) 
to strengthen its criminal referrals; serve as a resource on bankruptcy 
fraud issues nationwide; train Program staff, private trustees, and law 
enforcement personnel; build relationships with the law enforcement and 
bankruptcy communities; and support the prosecution of and, in some 
cases, directly assist in the investigation and prosecution of 
bankruptcy crimes.
    The CrEU is headed by a veteran prosecutor, formerly with the 
Public Integrity Section of the Criminal Division. He is assisted by an 
Assistant U.S. Trustee, who has been active in our criminal enforcement 
effort for many years, and a team of three career prosecutors located 
around the country, who have devoted their professional lives to the 
investigation and prosecution of complex white-collar crime and have 
strong ties to U. S. Attorneys offices.
    Program staff assist the U. S. Attorneys in the prosecution of 
criminal referrals by participating in investigations and at trial by 
serving as expert witnesses or as Special Assistant U. S. Attorneys 
(SAUSAs). In addition, approximately two-thirds of the Program's 95 
field offices participate in bankruptcy fraud working groups headed by 
U. S. Attorneys.
    Most criminal cases identified by the Program involve the 
concealment of assets. For example, a Federal jury recently convicted 
husband and wife chapter 7 debtors in Des Moines, Iowa, of concealing 
approximately $6 million in real estate, equipment, livestock, and cash 
during their bankruptcy proceeding, United States v. Alfred and MaryAnn 
Ryder. This case was referred to the U. S. Attorney by the U. S. 
Trustee.
    Many different fraudulent schemes involve the bankruptcy system. 
Among other duties, the CrEU will focus on emerging bankruptcy crimes.

          One emerging fraudulent scheme targeted by the CrEU 
        is the credit card bust-out. The primary objective of a bust-
        out is to use multiple credit card accounts to obtain hundreds 
        of thousands of dollars through credit card cash advances or 
        the purchase of goods that are then sold for cash. In a credit 
        card bust-out, individuals run up large credit card debts and 
        then file bankruptcy to discharge the debt. Typically, the 
        purchases and cash advances occur within a two to three month 
        period. Often, individuals are recruited by others who promise 
        to split the cash and proceeds. After the fraud is perpetrated, 
        the recruiters may recommend a bankruptcy lawyer who files the 
        paperwork and arranges for the debts to be discharged. Possible 
        charges in these schemes include: Bankruptcy Fraud, 18 U.S.C. 
        Sec. 157(1); Credit Card Fraud, 18 U.S.C. Sec. 1029(a); Mail 
        and Wire Fraud, 18 U.S.C. Sec. 1341 and Sec. 1343; and Bank 
        Fraud, 18 U.S.C. Sec. 1344. Recently, the Program assisted the 
        United States Attorney for the District of New Jersey to obtain 
        a credit card bust-out conviction involving fraudulent charges 
        totaling $6.8 million over a 7-year span, U.S. v. Ali Qaraeen.

          Other emerging areas are the use of mortgage 
        foreclosure and equity schemes that utilize the bankruptcy 
        system's automatic stay provisions and schemes where 
        individuals use falsified or forged bankruptcy documents by 
        individuals in an attempt to persuade creditors that they have 
        either filed bankruptcy or received a bankruptcy discharge.

    A second key improvement in the Program's criminal enforcement 
efforts has been the development of a new, automated Criminal 
Enforcement Tracking System (CETS) that more accurately tracks 
allegations, as well as referrals made to law enforcement authorities. 
The new national system contains a number of important features:

          Preliminary Allegations: The new system permits the 
        tracking of pre-referral matters. For example, if a private 
        party notifies a U. S. Trustee of a potential bankruptcy crime, 
        a file can be opened in CETS in a ``pre-referral'' status, 
        allowing staff to track the matter until it is either referred 
        to law enforcement or closed out.

          Criminal Referrals: Using a national numbering 
        system, the system will track all actual referrals, from the 
        date of referral to the date of disposition. We will work with 
        the Bureau of Justice Statistics and the Executive Office for 
        United States Attorneys (EOUSA) to determine if it is possible 
        to match our referrals with official disposition data 
        maintained by EOUSA.

          Type of Crime: Field offices will identify the type 
        of crime that may have been committed (e.g., concealment of 
        assets, destructions of records). This new tracking system will 
        help us not only to measure the volume of our criminal 
        referrals, but also to identify types of crime referred and 
        trends.

    CETS is in the pilot stage and will be fully implemented in the 
field by the end of FY 2004.
Training
    Our civil and criminal enforcement efforts and our transition to a 
litigating component of the Department have been bolstered by the 
training we offered at the National Bankruptcy Training Institute 
(NBTI) located at the National Advocacy Center (NAC) in Columbia, South 
Carolina. Using the resources available at the NAC, we have reached out 
to many participants in the bankruptcy process to improve skills and 
share ideas and techniques that improve the administration of 
bankruptcy cases and help to combat fraud and abuse.
    Over the last three fiscal years, the NBTI has hosted more than 
1,800 students at 42 training courses in four major categories: civil 
and criminal enforcement; litigation; business and finance; and 
management and administration. Our enforcement classes emphasize proven 
field practices and methods for identifying fraud and abuse. In 
addition, all courses, including those for non-attorney personnel, have 
a unit on civil enforcement. Participants in the training have included 
not only Program staff, but also private trustees and individuals from 
other components of the bankruptcy system.

                        OTHER PROGRAM ACTIVITIES

    In addition to its focus on civil and criminal enforcement, the 
Program continues to carry out its many other duties. Other major areas 
of activity include our chapter 11 reorganization responsibilities and 
the oversight of private trustees.
Chapter 11 Reorganization Responsibilities
    The United States Trustee Program oversees the administration of 
chapter 11 debtors and enforces the Bankruptcy Code to help ensure that 
all parties, including small creditors, are protected in accordance 
with the law. As part of this oversight, the Program prescribes and 
analyzes periodic financial and operating reports, appoints official 
committees to represent the interests of large and small creditors, 
monitors professionals employed in the cases to protect against 
conflicts of interest, reviews professional fees, and takes action to 
convert or dismiss faltering cases.
    In the last three years, some of the largest bankruptcy cases in 
history have been filed. With the accompanying allegations of financial 
impropriety and fraud, the potential loss of confidence in our business 
infrastructure and its corporate leaders has increased exponentially. 
As a result, in appropriate cases, the Program has taken additional 
steps to ensure the accountability and transparency of the bankruptcy 
system.
    In the Enron and WorldCom cases, the Program appointed special 
examiners to investigate alleged fraud and mismanagement. In Enron, the 
Program appointed eminent bankruptcy expert Neal Batson and, in 
WorldCom, the Program appointed former Attorney General Richard 
Thornburgh. Over a period of approximately 18 months, each examiner 
completed exhaustive studies of the causes of the companies' collapse 
and identified those who may be liable to the shareholders and 
creditors.
    The Enron examiner identified $7 billion in pre-bankruptcy 
transactions that were improper and which contributed to the collapse 
of the company. He also identified $6 billion in improper claims 
against the estate by banks and other financial institutions which 
contributed to the fraud. Finally, the examiner identified lawyers, 
directors, and others whom he concluded may be sued by Enron or others 
whose investments and retirement savings were wiped out.
    The WorldCom examiner revealed gross corporate mismanagement, 
including alleged inappropriate conduct by some senior officials who 
remained employed by the company after the bankruptcy filing. The 
examiner's reports detailed tax avoidance schemes deemed improper and 
which continued long after the bankruptcy filing. The examiner 
identified accountants, officers, institutions, and others who may be 
liable to the debtor for their nonfeasance or improper actions, and 
estimated that that the company potentially may try to recover billions 
of dollars.

Oversight of Private Trustees
    United States Trustees are responsible for appointing and 
supervising about 1,400 private trustees who administer bankruptcy 
estates and distribute dividends to creditors. The Program trains 
trustees and evaluates their overall performance, reviews their 
financial operations, ensures the effective administration of estate 
assets, and intervenes to investigate and recover loss of estate assets 
when embezzlement, mismanagement, or other improper activity is 
alleged.
    The Program works closely with the various bankruptcy trustee 
associations to improve case administration and to address other 
matters of mutual concern and interest. These efforts have resulted in 
a marked improvement in the degree of cooperation and collegiality 
between the Program and the private bankruptcy trustees. Progress on 
this front is evident in a number of initiatives over the past few 
years, as exemplified by the following examples:

          The Program and the trustees are jointly focusing 
        their efforts on the National Civil Enforcement Initiative.

          The Program and trustee associations are working 
        together to provide educational seminars on meaningful topics 
        designed to improve core competencies, such as finding assets, 
        maximizing returns to creditors, and enhancing the integrity of 
        the bankruptcy system.

          The Program has worked jointly with the National 
        Association of Bankruptcy Trustees and the National Association 
        of Chapter Thirteen Trustees to develop Standards of Excellence 
        and to improve the quality and effectiveness of trustee 
        performance.

          Program staff and private trustees have worked 
        successfully to develop critical management reports, updated 
        standards for insurance and bonding, and a new information 
        technology security initiative.

                         FY 2005 BUDGET REQUEST

    The Program is entirely self-funded through user fees paid by 
participants in the bankruptcy system. Approximately 60 percent of our 
funding comes from quarterly fees paid in chapter 11 (reorganization) 
cases and 40 percent from filing fees, interest earnings, and other 
miscellaneous revenues.
    For FY 2005, the Program is requesting essentially a current 
services budget with a modest enhancement for information technology. 
The President's budget request transmitted to the Congress in February 
totals $174,355,000, 1,198 permanent positions (265 attorneys) and 
1,190 work years. The request represents an increase of $8.2 million 
over the FY 2004 enacted appropriation of $166,157,000. The increase is 
comprised of adjustments necessary to maintain a current services base 
level, and an enhancement of $2 million for our Information Technology 
(IT) program.
    We have made significant progress in the last few years in our 
efforts to modernize information systems and implement sound IT 
investment practices. The Program has hired a Chief Information Officer 
and implemented an Information Technology Investment Management (ITIM) 
process. We have established an IT advisory group of key Program 
managers and an Executive Review Board to review IT investment concepts 
in conjunction with Program priorities and available resources. This 
process ultimately ensures that the Program is spending its IT dollars 
wisely and in accordance with performance management goals.
    The requested FY 2005 increase will fund the following activities:

          Life-Cycle Replacement/Technology Refreshment of 
        Equipment ($1,375,000) This initiative will permit the Program 
        to replace a portion of its equipment in accord with industry 
        IT recommendations. The funding will replace our JCON and 
        Database Management Servers and 500 personal computers.

          Electronic Case Filing (ECF) Initiative ($625,000) 
        This request will enhance the Program's Automated Case 
        Management System to examine the feasibility of integrating the 
        management of electronic documents received from the bankruptcy 
        courts with the extraction of key data from those documents. It 
        is an initial step in developing the capability to streamline 
        the collection of bankruptcy case information, including 
        amounts and types of liabilities, as well as types and values 
        of assets. This information will be invaluable in our 
        identification of abusive filings.

    Our FY 2005 ECF Initiative builds on the Program's FY 2003 and 2004 
efforts to work alongside the courts and with the private trustees to 
transition to the courts' ECF System. As of the end of 2003, 
approximately 60 percent of the bankruptcy courts had converted to the 
new ECF system, with the remaining bankruptcy courts planned for 2004. 
The implementation of ECF has allowed the Program and private trustees 
to enhance and streamline the exchange of electronic data.
    In late 2003, the courts implemented a new ECF module, jointly 
developed with the U. S. Trustee Program that provides for the 
efficient exchange of bankruptcy data and associated electronic 
records. This new module paves the way for our FY 2005 request to 
enhance financial data extraction from electronic records and to 
further reduce manual review of bankruptcy petitions and schedules for 
potential fraud and abuse.
    Other Information Technology accomplishments include:

          The creation of a central repository of all 
        bankruptcy data that staff will begin to access in late FY 2004 
        to identify nationwide trends in serial filers, as well as 
        other potential civil and criminal abuses at the national and 
        local levels.

          With the migration to a centralized data system, the 
        Program is working to establish a remote ``continuity of 
        operations'' (COOP) site, which will serve as a back-up for all 
        the Program's electronic data. Should our primary IT operation 
        be compromised in any way, the COOP site would become fully 
        operational.

          Since May 2003, all Program staff have been entering 
        their civil enforcement activities in ``real-time'' mode into 
        the Significant Accomplishments Reporting System (SARS) readily 
        available through their desktop computer. This new system gives 
        Program managers a tool to summarize their offices' immediate 
        impact on the bankruptcy system and to monitor staff resources 
        to ensure activities are occurring in accordance with Program 
        goals.

          As mentioned earlier, the Program is currently 
        piloting a Criminal Enforcement Tracking System (CETS), which 
        allows the real-time tracking of criminal activities. This new 
        system will be available to all offices in late FY 2004.

    Our efforts to improve our IT infrastructure have enhanced the 
Program's ability to collect performance data and integrate it with the 
budget. This has led to the creation of a new outcome performance 
measure--``Potential Additional Returns to Creditors Through Civil 
Enforcement and Related Efforts.'' This new measure provides an 
indicator of the public benefit of the United States Trustee Program's 
work.

                               CONCLUSION

    I am proud of the efforts of the dedicated men and women of the 
United States Trustee Program. They have not only kept abreast of 
record-breaking filings and moved the cases through the bankruptcy 
system efficiently, but they have exercised creativity in identifying 
and addressing abuses. They also have demonstrated flexibility in 
streamlining procedures and processes so that they can devote their 
energy to addressing fraud and abuse. Through their commitment and 
tenacity, they are transforming this agency into a professional 
litigating organization that is being recognized within the greater 
bankruptcy community for its contributions to combating fraud and 
abuse.
    In closing, I would like to thank this Subcommittee for the 
assistance you have provided the Program through your support of 
resource requests and your foresight and guidance on substantive 
issues. I look forward to continuing to work with you on matters of 
mutual interest and critical importance.

    Mr. Cannon. You mentioned that your program cost has three 
times the benefit to creditors, and let me suggest to society 
and creditors you get a lot more than that because a lot of 
people don't commit fraud because they know you are going to be 
out there, and that is one of the reasons your program is 
important to us. This is an extraordinary, cumbersome process, 
and we appreciate your role in being here today.
    Let me assure the Members of the Committee, those here and 
not here, that you will have an opportunity to provide written 
questions. We are not going to get through a tenth of the 
questions that we have. We think it is important we get those 
questions to you and work through some of these issues.
    Mr. Watt, would you like to take 5 minutes?
    The gentleman is recognized for 5 minutes.
    Mr. Watt. Thank you, Mr. Chairman.
    Let me start with Mr. Sansonetti and Mr. Keisler, just 
because you all function a little bit different than the other 
two gentlemen, and inquire of you in this way. A lot of our 
representational assumptions are built on the fact that if 
people pay their own legal costs and companies pay their own 
legal costs, they will be incentivized to be more responsible 
for their actions. Our system is set up a little bit different 
here in the sense that we fund your operations independently of 
the agencies that you represent.
    I am wondering whether you could conceive of a system where 
that changed, where basically Federal agencies would come to 
the Justice Department, retain--in effect, retain the Justice 
Department's services for the legal needs that they have and be 
charged for that and have that included in their budget as a 
means of making them more cognizant of what the expectations 
are legally, more cognizant of the cost of litigation and 
particularly--I don't mean to signal one thing out, but this 
tribal trust thing, it seems to me if this were being done out 
of the Interior Department's budget or whoever has 
responsibility for administering those programs and the funding 
for the litigation was coming out of their budget, I wonder 
whether they might have been more responsible than they appear 
to have been in the handling of their fiduciary 
responsibilities. I know you can't assume that they did 
anything wrong, but I am talking about a theoretical model that 
would be modeled on the same set of assumptions that the 
private side of our life is modeled on, which I think works 
reasonably well and encourages more responsibility, more cost 
consciousness.
    Mr. Sansonetti. Peter, let me take a crack at that. We 
could spend a good hour or two just on this one subject. It is 
a great question. I am going to answer it for you from the 
standpoint of being the Assistant Attorney General For the 
Environment and Natural Resources Division.
    About a third of my cases come from the Department of the 
Interior, for instance; and once upon a time, having been the 
Solicitor at the Department of Interior for 3 years, from '90 
to '93, the fact is is that we have basically got the system 
set up right now kind of the way England runs. If you have 
folks that are solicitors, you handle everything up to the 
point of going into a court. You grab the guy with the white-
powdered wig, and he goes in there as the barrister and 
actually argues the case.
    So right now, for instance, in these tribal trust cases, 
there is a financial responsibility on Interior to come up with 
the money inside their budget to produce the documents for the 
accounting. So they have got a whole line item over there that 
is supposed to be for tribal trust help. I am sure they have 
one for Cobell as well, the difference being he is handling the 
Cobell case where the individuals are involved. I have the 22 
cases where we are talking about tribes seeking their money.
    Interior is actually involved from the get-go as far as 
having to spend its own money to protect itself because they 
have to come up with the witnesses, the documents and papers. 
It is their people that are being deposed, et cetera; and their 
solicitor's offices are the ones that got involved in this case 
immediately.
    When you get sued, though, no longer do they have the 
ability to go into court under our system to represent 
themselves. That is when they come to us.
    As far as an incentive is concerned, if they had to pay for 
my attorneys to defend them, obviously, the way budgets are, 
they couldn't afford it. One of the biggest incentives, though, 
that hung over the head of those at DOI, the Damocles sword, is 
actually whether or not, once a judgment comes out, that they 
did do something wrong. If any of the monies have to come out 
of an individual agency's account, that is when you get 
peoples' attention real quick. So it is not so much on the 
front end who is going to have pay money to help defend, 
because you are right. They could be innocent, too. The real 
stick comes in the back end.
    Mr. Keisler. Congressman Watt, it is a very thought--
provoking question; and I have two responses that I would like 
to share. One is that what Tom said is absolutely correct about 
how material it is whether an agency or Department is thinking 
a judgment is going to come out of its own budget or out of a 
judgment fund, which to an agency or a Department may seem like 
free money.
    I can tell you that the discussions I have about settling 
cases with departments and agencies are very, very different 
when the money is going to come out of the agency's budget than 
when it is going to come out of the judgment fund. One thing 
the Justice Department regards itself as is the protector of 
the judgment fund, to make sure that we only enter into 
responsible settlements. Because from an agency's perspective, 
you settle a case, if you don't have to pay the price tag--no 
depositions, no document discovery--a whole lot of trouble is 
taken off your shoulders.
    Having said that, there is one critical difference between 
the private sector model and our model. When I was in the 
private sector, the client would ask my advice. I would give 
the client my advice. And if the client directed me to do the 
opposite, as long as it was ethical, I would salute and go do 
it.
    That is not the relationship the Justice Department has 
with its client agencies. Under the statute, the Attorney 
General and the Justice Department control the course of the 
litigation. We consult very carefully and very closely with the 
clients, but if they want to settle a case and we don't, if 
they want to bring a case and we don't, if they want to appeal 
and we don't, it is ultimately our determination that holds. If 
they were paying for it, that could get in the way of that 
process.
    I think that process serves very important goals in making 
sure the United States speaks with one voice in court, that you 
don't have different departments and agencies taking different, 
conflicting positions and serves a very useful centralizing 
function within the Government and in speaking for the 
Government to Congress, the courts and the public. But it is 
certainly, as I said, a very thought-provoking issue and there 
are certain aspects of it that are attractive.
    Mr. Watt. I think I am well over my time, not because I 
used it in asking the question, but because of the thoughtful 
answers I got from these two gentlemen. If we go around, I 
might get to the other side with an equally provocative 
question, but I will let that go.
    Mr. Cannon. A very thoughtful question, and we appreciate 
the thoughtful answers.
    The gentleman from North Carolina, Mr. Coble, is recognized 
for 5 minutes.
    Mr. Coble. Thank you, Mr. Chairman.
    Mr. Lewis, you indicated that the '05 budget is $1.5 
billion. I was taking notes as you spoke, and I took the amount 
of $12.4 million. In my hurried effort, I assume that is for 
the support of proposed increased positions, is that correct?
    Mr. Lewis. Yes, sir.
    Mr. Coble. How many will there be?
    Mr. Lewis. One hundred forty-eight positions.
    Mr. Coble. That will bring you to 10,300 total?
    Mr. Lewis. Yes, sir.
    Mr. Coble. Mr. Keisler, I want to talk about whistle-
blowing cases, of which I am supportive, by the way. I have 
heard horror stories that in some cases the whistle-blower is 
the one that ends up being the victim. Could you elaborate or 
could you assuage my discomfort about that?
    Mr. Keisler. Any whistle-blower who comes forward to report 
some action of wrongdoing always takes a great personal risk. 
If you assume the classic whistle-blower case, an insider in a 
company, they are going against their colleagues, they are 
threatened with loss of a job, and sometimes it can be a long 
time before the case is ultimately proved. So there is at least 
a period of time of great uncertainty and jeopardy and 
financial difficulty for many whistle-blowers. There is nothing 
we can do to completely take that risk and cost and uncertainty 
out of the system.
    The one thing that has been done in these fraud cases since 
1986 with the qui tam amendments to the False Claims Act is 
that there are great incentives for those people to come 
forward. Because, at the end of the day, if they and we do 
succeed in proving a fraud, they get a substantial piece of the 
recovery, 15 to 25 percent in cases in which we participate, 
higher in cases in which we don't. When we are talking about 
fraud in the health care or the defense contractor area, which 
sometimes can be tens, even hundreds of millions of dollars, 
you know, at the end of that process, there can be some 
significant compensation. But it is true that as that process 
works its way through it can impose great costs.
    Mr. Coble. If you all learn of any abuse today, I am sure 
you will share it with us.
    Mr. Lewis, you indicated you all are tightening your belts, 
and I think all of us are tightening our belts in this fragile 
economic times. Give us some examples by which you all are 
doing that.
    Mr. Lewis. We have gone through and we have identified a 
number of areas where we are going to save money. One is in the 
Office of Legal Education. We have a wonderful facility down in 
Columbia, South Carolina, called the National Advocacy Center, 
which does a terrific job of training and teaching. Over 20,000 
students were trained there last year. We are going to have to 
cut back in terms of some of our training.
    We are trying to figure out how to use more effectively our 
Justice Television Network, our ability to go out from Columbia 
in a small television studio there to all the U.S. Attorneys 
Offices. Each Assistant U.S. Attorney has a computer on her or 
his desk that allows us to telecommunicate with that person. So 
we are trying to figure out ways to do that.
    We are trying to offset through management efficiencies. We 
are trying to reduce nonpersonnel expenses of the U.S. 
Attorneys and the offices by over $11 million. We are looking 
at a process of early buyouts for some 600 employees around the 
country. That is going to save us a lot of money. I believe the 
U.S. Attorneys understand how important it is for us to be 
fiscally responsible.
    Mr. Coble. I thank the gentleman.
    Mr. Cannon. I would like to yield another 5 minutes to the 
Ranking Member, Mr. Watt.
    We have a large group of students in the audience today. We 
appreciate you being here. We generally are a little bit more 
raucous than this, but we appreciate the fact that you guys are 
very, very quiet and the record would not know that you were 
here without an overt comment.
    Mr. Coble. They hail from where?
    Unidentified Speaker. The Close Up Foundation here in 
Washington, D.C. I have 22 high school students representing 
the honorable States of Alabama, Arizona, California, 
Connecticut, Michigan and Montana.
    Mr. Cannon. Thank you very much for that introduction and 
welcome today. This is a great program that you guys are 
involved in. We hope you learn a lot from it and get engaged in 
the political process and maybe even engaged politically 
running for office. Could we have a bipartisan agreement that 
that is a hard life?
    Mr. Watt, would you like to ask an equally thought-
provoking question?
    Mr. Watt. Thank you, Mr. Chairman.
    I just happened to hear a report the other day about what 
we are doing in Iraq, and I am wondering if Mr. Lewis could 
enlighten us on whether the resources that we are providing to 
assist with the preparation and prosecution of Saddam Hussein 
is coming out of Justice or is it coming out of Defense or how 
is that being handled. Then if I have any more follow-up 
questions I will ask him in writing. I just wanted to know 
where to direct the questions to.
    Mr. Lewis. The Department, as you know, has a 
counterterrorism section within the Department that is 
overseeing much of the Nation's litigation with regard to 
terrorism. I don't have the specifics or the details, but I 
will be glad to get them for you and forward to you some of the 
issues. But the Department is looking at issues in terms of 
prosecutors and others to assist the Iraqi government in terms 
of prosecution.
    Mr. Watt. I heard the figure $350 million in the news 
report. I have no idea whether that is an accurate figure or 
not. Whatever the figure is, would that come out of Defense or 
would it come out of Justice?
    Mr. Lewis. Frankly, Congressman, I am not 100 percent sure 
on where the source money is going to come from. I know that, 
as you know, the Justice Management Division, JMD, handles a 
large part of the Department's budget. We, the Executive 
Office, primarily focus on the field prosecutors. I will be 
glad to follow up on that.
    Mr. Watt. That would be helpful. I didn't mean to catch you 
off guard. If you could find out and give us some parameters 
within which either you all or Defense are operating and what 
the impact that is going to have as a budgetary proposition, 
that would be helpful.
    I yield back, Mr. Chairman.
    Mr. Cannon. Thank you, Mr. Watt.
    Let me just point out to the witnesses I am going to wrap 
up fairly quickly and try and stay within my 5 minutes. But I 
would like to start, Mr. Friedman, with a question of you.
    In light of last year's DOJ Inspector General's audit 
report on the United States Trustee Program's efforts to 
prevent bankruptcy fraud and abuse--which I think was critical 
of the program's efforts to detect criminal fraud and abuse--
what efforts has the program undertaken to respond to the audit 
report's findings?
    Mr. Friedman. Mr. Chairman, I appreciate the opportunity to 
respond to the question.
    The OIG report that came down about this time last year 
actually studied a period of time in the program prior to this 
Administration and my taking over at the program in March of 
2002. But what the OIG report has done is assisted us and given 
us guidance and confirmation of the steps that we had already 
implemented and continue to implement to move forward in our 
mission of identifying and detecting and prosecuting fraud and 
abuse within the system.
    For example, we created a significant accomplishments 
reporting system, a way of tracking the cases in which we are 
identifying fraud and abuse within the system and reporting 
that. We have recently rolled out a pilot program on the 
criminal enforcement tracking system in order to better track 
the cases that we have identified for criminal prosecution and 
the work that we do in conjunction with the U.S. Attorney's 
Offices around the country and Mr. Lewis' office as well, and 
that system will be rolled out nationwide this year.
    We have taken a number of other steps that, as I said, the 
OIG report gives confirmation to that we are headed in the 
right direction which has assisted us in the identification of 
41,000 actions last year and over half a billion dollars.
    Mr. Cannon. We would hope to--what you are doing is very 
important, and we hope to give you some assistance with a 
Bankruptcy Reform Act, which we hope the other body acts upon 
it sometime this year.
    Mr. Sansonetti, I would like to ask a couple of questions 
about the Endangered Species Act and the Equal Access to 
Justice payments that are going to plaintiffs. There is a lot 
of anxiety over here I think on both sides of the aisle but 
certainly out West where there are fewer people but a 
disproportionate number of actions on endangered species. Can 
you give us a little information on how many actions you have 
pending and the burden that is on you? In addition, what our 
payouts under the Equal Access to Justice were last year, if 
you know, and what do you anticipate about future payouts.
    Mr. Sansonetti. I will have to get back to you as far as 
the exact number of cases. I have mentioned we have over 7,000 
cases in my entire Division, but exactly the number of those 
that happened to fall into the area of our wildlife and marine 
resource section, I don't know off the top of my head, nor do I 
know the exact dollar figure. But I would note the nature of 
the problem, and you are very correct that it is a large one.
    The fact is that we have got about 25 to 27 folks that are 
dedicated to defending wildlife and marine resource actions 
nationwide. The number of dollars that are available for the 
Department of the Interior's Fish and Wildlife Service, for 
instance, and the number of dollars that are available for our 
National Marine Fisheries Service, which handles the endangered 
species cases and saltwater, offland at the Department of 
Commerce have not been enough to keep up with the demands on 
the system.
    For instance, under section 4, the Endangered Species Act, 
once a group comes forward with a petition that says that a 
particular plant or a particular animal should be listed as 
either threatened or endangered, what do you think about that, 
Fish and Wildlife Service, then they have a set amount of time 
to get back to those petitioners and say, our biologists or our 
botanists looked at this and the answer is, yes, we are going 
to propose it for threatened or endangered listings or, no, you 
are wrong. We don't think it needs to be.
    So many petitions are out there that the potential listings 
are overwhelming the number of people at the Department of 
Interior to look at each and every case. Consequently, they 
miss the deadline.
    The petitioner then files suit. Interior calls us. We have 
to send one of our folks in from our Washington, D.C., office 
to Spokane, California, whatever. These cases are, frankly, 
laydowns for the petitioners in front of a judge. He says, hey, 
you had so much time under the Endangered Species Act. Did you 
come within your 180 days? Well, no, we haven't gotten to it 
yet. Well, then you lose. Then he sets a timetable, and you 
have to come back with a response. Because the Endangered 
Species Act also says that the winner in those cases gets to 
prevail on attorney's fees, then we have little say.
    Of course, the judge is going to say, I grant you your 
attorney's fees. They submit their fees. We have to go over 
them to make sure they are reasonable. But in every event they 
end up taking those fees, turn around and file another lawsuit. 
It is a big problem.
    Mr. Cannon. I ask unanimous consent to extend my time by 3 
minutes.
    Hearing no objection, Mr. Lewis, could I ask you a couple 
of questions on your situation as currently being engaged with 
what U.S. Attorneys have done?
    We have had a couple of cases recently in Utah that were 
thrown out after the Federal Government made its case. In one 
case, the defendant was told by the FTC that they would settle 
with him if he would show them his financial net worth and then 
they would decide how much they wanted to take. He said, why 
don't you tell me what I did wrong and then we will work out a 
solution, which they refused to do.
    At the end of their case, they provided a list of 350 
witnesses they were going to call. That cost attorney time at 
$300, $400 an hour to check the witnesses out. They had to do 
it because they were given those witnesses and the witnesses 
did not make the case that the FTC said they would make and the 
case was dismissed. The man got $200,000, as I recall, in 
attorney's fees, leaving him a million dollars shy because the 
FTC had the opportunity to beat him up. Now you had a U.S. 
Attorney who was present during the presentation of that case.
    In addition to that, we had a very famous case in Salt Lake 
City with the Salt Lake Olympic Committee. That was a case 
right out of Washington, but you also had a U.S. Attorney from 
Utah present, did you not, at that case?
    Mr. Lewis. We actually didn't have anyone in the Olympic 
case from the U.S. Attorney's. Paul Warner had been conflicted 
out.
    Mr. Cannon. Dropping that case since you didn't have any 
involvement in it, this is a terrible problem when the 
prosecutorial authority is misused and dramatically misused. 
The three witnesses that were called in the FTC case didn't say 
anything near what it would take to make a case. I did not look 
at the record, but I looked at what the judge said afterward, 
and I looked at what the witnesses had said afterward. They 
didn't get in the ball park. So it looks like a terrific misuse 
of prosecutorial discretion.
    How do you deal with agencies like the FTC.
    Mr. Lewis. It is likely that the U.S. Attorneys Office 
itself wouldn't have been involved in a prosecution involving 
the FTC. I am not sure if it was a regulatory action where the 
FTC would have gone in to enforce a regulation.
    Mr. Cannon. You had a U.S. Attorney, I think, there with 
the FTC lawyers. They were presenting the case, and he was the 
local counsel. But do you train your U.S. Attorneys to look at 
those cases where they are sitting at the bar with members of 
the prosecution team?
    Mr. Lewis. We do, and what occurs often is, working with 
the gentlemen at this table, when a matter that is uniquely 
within the province of, say, the Civil Division, the U.S. 
Attorney will act as a local counsel where we try to go in. 
Many times, it doesn't happen; sometimes it does. We go in and 
attempt to participate in the case, attempt to assist in any 
way we can.
    I am not familiar specifically with this FTC case.
    Mr. Cannon. I am only using the FTC case because it is a 
pretty dramatic example. But let me focus the question more 
clearly.
    If a U.S. Attorney goes into a case brought by the FTC or 
another agency where the U.S. Attorney is acting as local 
counsel, how much authority or influence do they have over the 
case and how it is presented? Do they have the time to look at 
the case and say, wait, this is a stinker, or do they just have 
to walk in and sit down and hope the agency has a competent 
team?
    Mr. Lewis. I like to think that we, more often than not, 
perform the latter in terms of trying to work with the outside 
agency.
    Again, going back to my experience in Miami as a U.S. 
Attorney, it wasn't unusual that we would be working with the 
Tax Division, Civil Rights Division, very active with the ENRD, 
Civil Division where we would be working together. There were 
those instances where the U.S. Attorney's Office was not 
actively involved--Social Security cases, for example, that 
would be prosecuted. Because of the volume, we just didn't have 
the time or the opportunity to actively participate in those 
kinds of cases.
    I do know one thing that is important is that the U.S. 
Attorney who is in that district, she or he--as far as the 
judges are concerned, as far as the community is concerned, as 
far as the legal bar is concerned, she or he is responsible for 
the litigation that occurs in that district. So that is 
something I will be glad to look at and follow up on, because 
it is an important issue.
    Mr. Cannon. Actually, in this particular case, I would like 
that follow-up. Because this seems to me to be one of the 
cracks where we have a huge potential failure of the system. In 
the case where we have a million dollars this guy spent 
defending himself, heaven help the guy who doesn't have a 
million dollars to stand against the Government, the FTC and 
not the U.S. Attorney. I appreciate that.
    Without objection, the record will be left open 7 days for 
further questions. We do have many questions, and I wish we had 
more time today, but we are probably getting a good staffing 
out of this anyway. I want to thank my staff and the minority 
staff that do a marvelous job on this Committee. With that, we 
will adjourn.
    [Whereupon, at 4 p.m., the Subcommittee was adjourned.]


                            A P P E N D I X

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               Material Submitted for the Hearing Record

     POST-HEARING RESPONSES FROM THE HONORABLE THOMAS L. SANSONETTI



       POST-HEARING RESPONSES FROM THE HONORABLE PETER D. KEISLER



              POST-HEARING RESPONSES FROM MR. GUY A. LEWIS



          POST-HEARING RESPONSES FROM MR. LAWRENCE A. FRIEDMAN