FINANCIAL SERVICES AND GENERAL 

GOVERNMENT APPROPRIATIONS FOR 2009 

HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

SUBCOMMITTEE ON FINANCIAL SERVICES AND GENERAL GOVERNMENT 

APPROPRIATIONS 

JOSE ́ E. SERRANO, New York, Chairman 

CAROLYN C. KILPATRICK, Michigan 

C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland 

DEBBIE WASSERMAN SCHULTZ, Florida 

PETER J. VISCLOSKY, Indiana 

ROBERT E. ‘‘BUD’’ CRAMER, JR., Alabama 

MAURICE D. HINCHEY, New York 

ADAM SCHIFF, California 

RALPH REGULA, Ohio 

MARK STEVEN KIRK, Illinois 

RODNEY ALEXANDER, Louisiana 

VIRGIL H. GOODE, JR., Virginia 

JO BONNER, Alabama 

NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full Committee, and Mr. Lewis, as Ranking 

Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. 

DALE OAK, BOB BONNER, KARYN KENDALL, and FRANCISCO CARRILLO, 

Subcommittee Staff 

PART 8 

Page 

Consumer Product Safety Commission ............................. 1 

National Archives and Records Administration .............. 107 

Office of Personnel Management ........................................ 151 

General Services Administration ........................................ 255 

Federal Communications Commission ............................... 333 

Small Business Administration ............................................ 429 

( 

Printed for the use of the Committee on Appropriations 


hsrobinson on PROD1PC76 with HEARING
Part 8 


hsrobinson on PROD1PC76 with HEARING
FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR 2009 


hsrobinson on PROD1PC76 with HEARING

hsrobinson on PROD1PC76 with HEARING
FINANCIAL SERVICES AND GENERAL 

GOVERNMENT APPROPRIATIONS FOR 2009 

HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

SUBCOMMITTEE ON FINANCIAL SERVICES AND GENERAL GOVERNMENT 

APPROPRIATIONS 

JOSE ́ E. SERRANO, New York, Chairman 

CAROLYN C. KILPATRICK, Michigan 

C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland 

DEBBIE WASSERMAN SCHULTZ, Florida 

PETER J. VISCLOSKY, Indiana 

ROBERT E. ‘‘BUD’’ CRAMER, JR., Alabama 

MAURICE D. HINCHEY, New York 

ADAM SCHIFF, California 

RALPH REGULA, Ohio 

MARK STEVEN KIRK, Illinois 

RODNEY ALEXANDER, Louisiana 

VIRGIL H. GOODE, JR., Virginia 

JO BONNER, Alabama 

NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full Committee, and Mr. Lewis, as Ranking 

Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. 

DALE OAK, BOB BONNER, KARYN KENDALL, and FRANCISCO CARRILLO, 

Subcommittee Staff 

PART 8 

Page 

Consumer Product Safety Commission ............................. 1 

National Archives and Records Administration .............. 107 

Office of Personnel Management ........................................ 151 

General Services Administration ........................................ 255 

Federal Communications Commission ............................... 333 

Small Business Administration ............................................ 429 

( 

U.S. GOVERNMENT PRINTING OFFICE 

42–551 WASHINGTON : 2008 


hsrobinson on PROD1PC76 with HEARING
COMMITTEE ON APPROPRIATIONS 

DAVID R. OBEY, Wisconsin, Chairman 

JOHN P. MURTHA, Pennsylvania 

NORMAN D. DICKS, Washington 

ALAN B. MOLLOHAN, West Virginia 

MARCY KAPTUR, Ohio 

PETER J. VISCLOSKY, Indiana 

NITA M. LOWEY, New York 

JOSE ́ E. SERRANO, New York 

ROSA L. DELAURO, Connecticut 

JAMES P. MORAN, Virginia 

JOHN W. OLVER, Massachusetts 

ED PASTOR, Arizona 

DAVID E. PRICE, North Carolina 

CHET EDWARDS, Texas 

ROBERT E. ‘‘BUD’’ CRAMER, JR., Alabama 

PATRICK J. KENNEDY, Rhode Island 

MAURICE D. HINCHEY, New York 

LUCILLE ROYBAL-ALLARD, California 

SAM FARR, California 

JESSE L. JACKSON, JR., Illinois 

CAROLYN C. KILPATRICK, Michigan 

ALLEN BOYD, Florida 

CHAKA FATTAH, Pennsylvania 

STEVEN R. ROTHMAN, New Jersey 

SANFORD D. BISHOP, JR., Georgia 

MARION BERRY, Arkansas 

BARBARA LEE, California 

TOM UDALL, New Mexico 

ADAM SCHIFF, California 

MICHAEL HONDA, California 

BETTY MCCOLLUM, Minnesota 

STEVE ISRAEL, New York 

TIM RYAN, Ohio 

C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland 

BEN CHANDLER, Kentucky 

DEBBIE WASSERMAN SCHULTZ, Florida 

CIRO RODRIGUEZ, Texas 

JERRY LEWIS, California 

C. W. BILL YOUNG, Florida 

RALPH REGULA, Ohio 

HAROLD ROGERS, Kentucky 

FRANK R. WOLF, Virginia 

JAMES T. WALSH, New York 

DAVID L. HOBSON, Ohio 

JOE KNOLLENBERG, Michigan 

JACK KINGSTON, Georgia 

RODNEY P. FRELINGHUYSEN, New Jersey 

TODD TIAHRT, Kansas 

ZACH WAMP, Tennessee 

TOM LATHAM, Iowa 

ROBERT B. ADERHOLT, Alabama 

JO ANN EMERSON, Missouri 

KAY GRANGER, Texas 

JOHN E. PETERSON, Pennsylvania 

VIRGIL H. GOODE, JR., Virginia 

RAY LAHOOD, Illinois 

DAVE WELDON, Florida 

MICHAEL K. SIMPSON, Idaho 

JOHN ABNEY CULBERSON, Texas 

MARK STEVEN KIRK, Illinois 

ANDER CRENSHAW, Florida 

DENNIS R. REHBERG, Montana 

JOHN R. CARTER, Texas 

RODNEY ALEXANDER, Louisiana 

KEN CALVERT, California 

JO BONNER, Alabama 

ROB NABORS, Clerk and Staff Director 

(II)


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(1) 

FINANCIAL SERVICES AND GENERAL 

GOVERNMENT APPROPRIATIONS FOR 2009 

TUESDAY, MARCH 11, 2008. 

CONSUMER PRODUCT SAFETY COMMISSION 

WITNESSES 

HON. NANCY A. NORD, ACTING CHAIRMAN, CONSUMER PRODUCT 

SAFETY COMMISSION 

HON. THOMAS HILL MOORE, COMMISSIONER, CONSUMER PRODUCT 

SAFETY COMMISSION 

CHAIRMAN SERRANO’S OPENING STATEMENT

Mr. SERRANO. The subcommittee will come to order. Mr. Regula, 

our ranking member, will be joining us in a few minutes, but he 

has asked us to go ahead and begin. 

I welcome you to this hearing of the Financial Services and General Government Subcommittee. Today’s hearing is on the fiscal 

year 2009 budget request of the Consumer Product Safety Commission. The CPSC’s emphasis is on protecting consumers from an unreasonable risk of injury and death that could result from faulty 

and defective products. 

The agency watches over 15,000 different types of consumer 

products. The actions of the CPSC have contributed to substantial 

reductions in consumer product-related deaths from fire, electrocution, carbon monoxide, poisoning and accidents relating to baby 

products such as walkers and cribs. However, as we have seen from 

the increase in recalls during the past several months, there is 

much more to be done. 

Until this year, the CPSC was an agency that was slowly bleeding to death from budget cuts and staff reductions, the Commission 

had 978 employees in 1980; at the beginning of this year, they had 

fewer than 400. At the same time, the number of imported consumer products has been increasing substantially. Over 85 percent 

of all recalled products are imports and over 85 percent of all toys 

sold in the United States are made overseas. Recalls of unsafe toys 

and other children’s products are making headlines, the CPSC 

clearly did not have enough resources, nor was it as aggressive as 

it should have been to keep up with the increases in imports and 

to effectively perform its mission. 

This subcommittee responded by providing the Commission with an $80 million appropriation in fiscal year 2008, which was an increase of $17 million, or 27.5 percent over the year before. This 

money is well spent. The Commission has started to replenish its 

staff and will be up to 444 full time equivalent staff by the end of 


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the fiscal year. Many of these additional staff will help begin an 

import safety initiative. This improvement of staff resources is just 

a start as the Commission is still well below historical levels of 

staffing. We need to continue to make sure the Commission is well 

equipped to do its job. 

The additional funds we provided will also modernize CPSC’s 

testing laboratory, which is antiquated and in dire need of upgrade. 

Information technology will also be improved so that the Commission will have the tools and databases to identify, track and take 

action to remove dangerous products from the marketplace and our 

homes. 

We need to build on the progress we are making toward restoring the strength of the agency. Fiscal year 2009 budget request for 

the Commission is the same as appropriated for this year, 80 million, but it does include some programmatic increases because of 

several one-time expenses occurring in fiscal year 2008. These increases include the funding of 24 staff for the import safety initiative and I commend the Commission for continuing this effort. 

I believe that there is much more to be done, and this subcommittee will work hard to ensure that the CPSC has the resources to meet the responsibilities. While the budget for this Commission is relatively small, the Commission’s mission is essential. 

I am pleased to welcome Nancy Nord, the acting Chair of the 

CPSC, and Thomas Moore, a member of the Commission. We have 

a lot to cover today in this hearing, so I ask that each witness observe a 5-minute maximum for their opening statements. Your 

complete written statements will be submitted for the record. We 

will follow your statements with a round of questions from members and the members, once Mr. Regula is through with his questions, will be reminded carefully and courageously by the gavel 

when your 5 minutes are up. 

Now it is my honor and pleasure to recognize my friend and colleague, Mr. Regula. 

MR. REGULA’S OPENING STATEMENT

Mr. REGULA. Thank you, Mr. Chairman. I think you covered it 

well and certainly protecting consumers should be the top concern. 

I often think we buy products, we use products and we always assume that somebody, somebody being government, is ensuring our 

food is safe, that our products are safe. We take a lot for granted 

in this country in the assumption that everything is being watched 

and supervised by somebody. So the somebody is each of you in the 

case of consumer products. We welcome you here this morning and 

look forward to your testimony. 

Mr. SERRANO. Thank you, Mr. Regula. We will hear first from 

Chairman Nord and then from Commissioner Moore, we welcome 

you again. Thank you. 

CHAIRMAN NORD’S TESTIMONY

Ms. NORD. Thank you so much, Mr. Chairman. I appreciate the 

opportunity to present the appropriation request for the U.S. Consumer Product Safety Commission for fiscal year 2009. As you 

know, we are a small independent bipartisan regulatory agency 


hsrobinson on PROD1PC76 with HEARING
3 

created by Congress to protect the public from unreasonable risks 

of injury associated with consumer products. As the Committee 

also well knows, our agency has been in the spotlight over the last 

year. Frankly, I am pleased with the national attention that we 

have gotten since this has greatly raised public awareness of our 

agency and our mission. 

In testimony before Congress last year, I said that if you give me 

more resources, I will put them to good use. Last December, the 

Appropriation Committees did precisely that, and significantly increased the CPSC budget for fiscal year 2008. I am proud to report 

to this committee that we are putting these funds to good use. For fiscal year 2009, we are requesting $80 million to carry out our safety mission for American families. This is an almost $17 

million increase over our requested funding level for fiscal year 

2008 and matches the Committee’s final appropriation for the current fiscal year. 

With these 2008 and 2009 funds, CPSC will be able to complete 

the modernization of our testing laboratory, overhaul our information technology infrastructure, fund our import safety initiative, expand our new early warning system and hire more technical and 

support staff. 

While the American home environment has never been safer, the 

American marketplace is dynamic and there is always more work 

to be done and new challenges to be met, the greatest challenge 

now being that of import safety, especially of imports from China. 

The Commission has taken aggressive steps to meet this challenge 

with strong enforcement of our laws, enhanced communications 

with the Chinese Government and industry, and proactive training 

and education on site in China. 

The CPSC is spending our 2008 funding on increased staff, work 

space and information technology resources. The CPSC’s number of 

actual FTEs at the start of 2008 was under 400. Our aggressive 

goal is to increase that number to 444 by October 1st, an increase 

of over 50 employees. Some of these employees will be working for 

the first time at the Nation’s largest ports of entry. Our new import 

surveillance division is designed to be the front line of defense, 

working to prevent dangerous products from entering the country. 

As you know, and your committee’s staff has witnessed firsthand, 

CPSC’s testing laboratory needs to be modernized to better support 

our product safety work, including the new work generated by our 

import safety initiative. I am pleased to report the Commission is 

now moving forward with the site selection process for a new laboratory, and we hope to move into a new facility in 2009. 

The agency is also spending new funding on important improvements to our information technology infrastructure. Achieving the 

agency mission is dependent on our IT systems and an increased 

emphasis on import safety demands greater reliance than ever before on integrating CPSC databases and accessing other agencies’

databases in a seamless fashion. 

As you can see, the expenditures for laboratory facilities and IT 

infrastructure are critical capital investments that must be made 

to accommodate current and expected future growth of the agency. 

An important part of our mission is educating the public about 

safety issues. This committee, and in particular, Representative 


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Wasserman Schultz has had a special interest in water safety. 

Building on past activities we have underway a focused effort to 

educate the public on the dangers of drowning as directed by the 

recently passed Virginia Graeme Baker Pool and Spa Safety Act. 

Before concluding my testimony, I should note that the House 

and the Senate have passed different versions of reauthorization 

legislation for the CPSC. The CPSC’s fiscal year 2009 budget does 

not include funding increases in the event that Congress finalizes 

its legislation and the President signs it. Since it is clear that the 

final legislation will impose new regulatory, enforcement and other 

mandates on the CPSC, we will, of course, be in further contact 

with you and your staff in that regard at the appropriate time. 

In conclusion, the CPSC is an agency that is undergoing change 

like no other agency in the government. As we make the transitions that will accompany this change, I look forward to continuing 

to work closely with the committee and welcome the opportunity to 

answer your questions about our budget. Thank you. 

Mr. SERRANO. Thank you. 

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Mr. SERRANO. Mr. Moore. 

COMMISSIONER MOORE’S TESTIMONY

Mr. MOORE. Thank you. Mr. Chairman, Ranking Member and 

members of the subcommittee. Thank you for providing me this opportunity to present testimony before you today on the U.S. Consumer Product Safety Commission’s fiscal year 2009 appropriations 

request. For our current fiscal year, 2008, Congress, lead by this 

subcommittee, took up the cause of the American consumer by focusing on, and addressing, the serious deficiencies at the Commission resulting from our most recent years of shrinking resources. 

Our agency was appropriated $80 million, a $16.75 million increase 

over the administration’s request. For fiscal year 2009, the President’s funding request for the agency is $80 million, which is equal 

to the level of funding provided by Congress for fiscal year 2008. 

With this amount of funding, we propose to hire up to a level of 

444 full-time employees. 

Additionally, we propose to continue our efforts to acquire a modern state-of-the-art laboratory facility and to acquire additional office space which we will need to accommodate some of our new 

hires. 

The fiscal year 2009 request, on its face, is a request from level 

funding from 2008. Level funding, because of recurring annual increases for staff salaries and rent, is ordinarily a cut for us, and 

I would not be before you in support of a de facto cut in agency 

funding at this crucial time. However, there are a number of onetime expenses occurring in 2008 that are not anticipated in 2009. 

Not having those expenses in 2009 allows the Commission to direct 

2009 resources towards activities which would give indications of 

growth as opposed to stagnation or movement in a negative direction. 

Given the timing of our appropriations for 2008 and our concentration on hiring qualified people to fill our crucial vacancies, 

our fiscal year 2009 budget request approach makes sense to me 

at this moment. Most important to me is our now present ability 

to rebuild our staff. CPSC is a staff-intensive organization, at the 

heart of CPSC’s organization is its staff, without question, our 

greatest and most important asset. Over time, we hope to be able 

to hire and train capable replacements, but the level of experience 

in crucial areas where we lost personnel will take years to recover. 

However, I am very optimistic and pleased that we can now 

move in a positive direction with respect to our staffing issues and 

therefore on product safety. In addition to Congress’ focus on Commission appropriations issues, both Chambers, the House and the 

Senate, have passed reauthorization legislation. Both bills provide 

significant increases in our authorization levels for future years at 

the Commission. The authorization levels reflect my own views on 

how growth should be contemplated for the Commission. And I am 

hoping that future appropriations will be in line with the Senate 

and House final agreed-upon authorization levels. 

The bills would also require the Commission to undertake a 

number of activities that I am not taking into consideration as I 

present this statement. I cannot say at this time what resources we 

would need to fully implement any new requirements. When a final 


hsrobinson on PROD1PC76 with HEARING
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package is agreed upon and signed into law, we certainly intend to 

communicate with this subcommittee with respect to any future requirements and their effect on Commission resources. 

Mr. Chairman, I want to thank this subcommittee for your recognition of the importance of our agency with respect to product 

safety for American consumers, the sale of unsafe consumer products remains a major national problem. Because of your attention 

and assistance, we are now on the way back to firm footing in preventing unsafe, potentially harmful, consumer products from causing deaths and injuries to American consumers. The continuous 

support of this subcommittee is essential to a successful fulfillment 

of our mission. I thank you again and I am now available to respond to questions you may have. Thank you. 

Mr. SERRANO. Thank you. 

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REAUTHORIZATION BILL

Mr. SERRANO. Both of you have commented on the fact that it 

will be difficult at this point to begin to speculate on how much 

funding you will need, based on the fact we have not seen the final 

reauthorization bill signed into law. Notwithstanding that point, 

what are your views on the House and Senate versions of the reauthorization bill and what are the different elements of the House 

and Senate bills that will better enable the Commission to safeguard consumers? 

Ms. NORD. I think that reauthorization of the Consumer Product 

Safety Commission is long overdue. Congress had not taken a thorough look at our agency and our statutes for 18 years, and they 

clearly need to be modernized. Back in July of last year, I sent up 

to the Congress a proposal that made 41 specific recommendations 

for changes in our statutes, and I am pleased that both bills include many of the things that I had asked for. I think cutting 

through to perhaps the most important thing that the Congress can 

do is give us certification authority across all our statutes. 

If you have manufacturers certify that they are in compliance 

with applicable safety standards, that forces an examination of 

those standards, it forces an examination of manufacturing processes. I think that that, in and of itself, goes a long way towards 

dealing with the issue of unsafe imports. There are a number of 

other very, very helpful provisions in both pieces of legislation, for 

example, making it illegal to sell recalled products. Most people 

think that that is already the state of the law, but it isn’t. And so 

that is a very helpful example of something in the legislation as 

well. 

Mr. SERRANO. Commissioner Moore? On the same question, you 

spoke about the inability to decide at this point how much money 

you would need to implement the provisions of the bill, but are 

there any thoughts you have on the bills as any stand now in the 

Senate and the House? 

Mr. MOORE. I would have to review it in that light, but right now 

the reauthorization process has been very successful as far as I am 

concerned and the amount of funding is going to be beneficial and 

help us to move forward. And I think that is what we are looking 

forward to. 

SALE OF RECALLED PRODUCTS

Mr. SERRANO. Let me ask you something, you just mentioned 

that there are recall items that are resold or that are sold. 

Ms. NORD. Yes. 

Mr. SERRANO. Who sells them? 

Mr. MOORE. That is a good one. 

Ms. NORD. Many people. The——

Mr. SERRANO. Not the person that originally sold it, right? 

Ms. NORD. No. 

Mr. SERRANO. Or was scheduled to sell it? 

Ms. NORD. No, what happens is when something is recalled, the 

retailers stop sale and they remove it from store shelves, but the 

challenge we have is to make sure one, that consumers become 

aware of the recall and what they should do about it; and two, that 


hsrobinson on PROD1PC76 with HEARING
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other products sellers, the Internet sales, the smaller stores, the 

dollar stores, secondhand stores also are aware of the recalls. 

That is one of the reasons that we put in place a program that 

we are calling Drive to One Million which allows people to sign up 

to get recall notices sent directly to their E-mail in-boxes. 

Mr. SERRANO. I signed up yesterday. 

Ms. NORD. I appreciate that. I encourage all members of the subcommittee to sign up and inform their constituents about this as 

well. That is an example of one way to talk to consumers directly 

about this issue. 

Mr. SERRANO. Incidentally, one of the things I would say at the 

end of the day, but I will say it now because I did sign up for this 

yesterday in English and Spanish, is that your agency, for I think 

some good reasons, and perhaps some that are still to be reviewed, 

has taken some heavy hits over the last few months, if not the last 

year. And we are all going to work hard to make sure that you do 

the job you are supposed to do, and I know that from some of the 

things you are talking about, the Commission wants to do the job 

that it is supposed to do. 

One of the things you could do is use us as allies in this fight. 

The more information you give us, the more information we can 

share with our constituents. There should be links of all kinds on 

our Web sites to allow us to put forth this information. On that 

particular one, I commend you on the fact that the information will 

be coming in Spanish and in English—I am sorry, in English and 

in Spanish, I don’t want any trouble to my left, not to my political 

left, of course, but to my left, and that is a good thing. 

PUBLIC COMPLAINT DATABASE

One of the more controversial issues in the reauthorization is a 

proposal to establish a public complaint database that would better 

enable consumers, government agencies, health care workers and 

others to report on unsafe products. This seems to me to be a good 

idea to give the public an opportunity to learn about potentially 

awful products sooner than that we do now. This increases information and transparency, and I believe that is beneficial. My understanding is that the Bush administration opposes establishing 

this database. 

Ms. Nord, you have been quoted as saying the database would 

be of questionable, if not detrimental, impact on consumers. What 

are your concerns about creating this database, and what is the 

fear that we have? Is it that folks will be able to share information 

ahead of the officials, if you will, finding out that something is 

wrong with a product? 

Ms. NORD. Well, I am certainly all for making sure that consumers have information they need to make good choices. And in 

that regard, sir, the CPSC is one of the most transparent agencies 

in the Federal Government. If you would go to our Web site, you 

would be amazed by the amount of information you can find there 

about product safety issues. 

My concern about the database is multifaceted. The agency gets 

into it a tremendous amount of information, probably half a million 

different pieces of information, that would be categorized as complaints or other kinds of information that would be qualified to go 


hsrobinson on PROD1PC76 with HEARING
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up on this database as it is described in the Senate bill. Much of 

that information is inaccurate, much of it is wrong. You end up 

with wrong model numbers, you end up with wrong manufacturers. 

So we do have a concern about putting that kind of information up 

on a database which may mislead consumers. 

The cure, of course, is to vet the information and have the CPSC 

staff go through and make sure it is accurate. That is not required 

or requested in the Senate bill, but it seems to me it is almost a 

public obligation that we would have to do that to make sure that 

consumers aren’t misled, and that would be a tremendous drain on 

our resources. 

My other concern about it is that this is going to be a very, very 

expensive undertaking for our agency; again, based on how information comes into the agency and what we would have to do with 

that information to get it up on line and searchable as described 

in the Senate bill. 

Our budget people have told me that we are looking at upwards of $20 million to set up the database. They are looking at a $3– to $4 million a year maintenance obligation. 

Mr. SERRANO. How much? 

Ms. NORD. $3 to 4 million. And for an agency with an $80 million 

budget, that is a tremendous amount of resources. So if you are 

going to take a large part of our budget and send it to maintaining 

this database, I would really, really ask you to be very sure that 

it is going to be a value to consumers in the way that it is contemplated, and I have some grave doubts. 

Mr. SERRANO. I understand. I just want to remind you though that the authorization speaks about the possibility of a $100 million allocation. Of course we would have to come up with that. 

U.S. TERRITORIES AND THE POOL AND SPA SAFETY BILL

Before I turn to Mr. Regula, in anticipation of questions or discussion with Ms. Wasserman Schultz, let me just ask, her pool and 

spa bill, which we supported, did not, in classic congressional form, 

nothing personal, did not include the territories. Would you be supportive of making sure that the reauthorization, as is the desire of 

this chairman, is expanded to the territories? Around here, as you 

know, every time we legislate, unless you include the territories, 

they are excluded. 

Would you have any problems with including the territories in 

the pool and spa bill? After all some of those tropical places have 

more pools than we think. Guam, Samoa, Virgin Islands, Puerto 

Rico, they have something in common. 

Ms. NORD. Of course, I would support that. 

Mr. SERRANO. Mr. Regula. 

FOREIGN MANUFACTURERS

Mr. REGULA. Seems to me your big problems is enforcement. Am 

I correct you have more tools with the U.S. manufacturer than you 

do with an importer; is that correct? 

Ms. NORD. Well, our statute makes the product seller responsible 

for the safety of the product they sell and this is defined as the retailers, the distributors, importers and manufacturers, it goes all 

the way down——


hsrobinson on PROD1PC76 with HEARING
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Mr. REGULA. Shouldn’t it be the manufacturer? 

Ms. NORD. Well, the statute, since the beginning, has made clear 

that everyone in the chain of distribution has responsibility for 

safety. Now the issue of course with this new world that we find 

ourselves in with much of our product being manufactured abroad 

is we don’t have the ability to reach the foreign manufacturer so 

therefore we do look at the importer, distributor and retailer. 

REGULATING IMPORTS FROM CHINA

Mr. REGULA. It seems to me a case of everybody’s business is nobody’s business, so you have all the people in the chain and they 

point to somebody else, but there has to be finality as to where that 

responsibility lies. Do the Chinese, which of course is subject to 

their goods, probably get most of the recalls? Is there any internal 

regulatory structure in China to govern what they send out in 

terms of health and safety? 

Ms. NORD. The Chinese tell us that there is. That is an excellent 

and really profound question, Congressman. We have regular conversation with our counterpart agency in China. They tell us that 

they do inspect factories, they tell us they have pulled hundreds of 

export licenses, they tell us that an export license is not granted 

unless the factory can certify that the products they make, if they 

are intended for export, meet the foreign country’s requirements. 

And while we are pleased to hear that, obviously we trust but 

verify in capital letters here. 

We have done a number of things to address this issue. We had 

a rather, actually I think, historic meeting last September with our 

counterpart agency from China where we signed agreements with 

them to do specific quality control procedures in four different 

product areas, toys, electrical products, fireworks and cigarette 

lighters. The Chinese also agreed to put in place a program to assure that lead paint was not used in toys for export. The challenge 

we have now is to make sure that we can hold them to those agreements. And the challenge they have is that they really do need to 

just undertake a systemic change in their manufacturing. 

Mr. REGULA. They must ship a lot of their materials to the European market. Do they get the same kind of pressure from the European counterparts of your agency for products coming into the European market? 

Ms. NORD. Yes, they certainly do and the Europeans are as concerned as we are about these issues. But frankly, the United States 

is the leader in product safety in the world so we are taking a lead 

here. Now, I have had discussions with my counterpart in Europe 

about the problem that we both face with respect to China. In fact, 

at the end of this month, I am going to be testifying before the European parliament on these issues, and we will be having ongoing 

conversations. So it is something that we need—the rest of the 

world needs to speak with one voice and we are trying to do that. 

U.S. MANUFACTURED GOODS

Mr. REGULA. It seems to me that the U.S. producers would be at 

somewhat of a disadvantage, because I assume that the safety laws 

and rules of toys and goods manufactured in the United States are 

perhaps enforced more strictly than those for similar merchandise 


hsrobinson on PROD1PC76 with HEARING
23 

coming from imports. And as a follow-up to that, is there any indication that manufacturing on toys and so on might be moving back 

to the United States, because if I were buying a toy, I would feel 

a little more comfortable if it were made in the U.S. versus an import? 

Ms. NORD. I think I would put it a little differently in that U.S. 

manufacturers are well aware of their product safety responsibilities. They know that if they are going to sell a product in the 

United States, there are certain obligations they have. 

Mr. REGULA. Right. 

Ms. NORD. And that is something that they have been familiar 

with since the agency was set up 35 years ago. There is not that 

same sort of sense of responsibility amongst foreign manufacturers. 

Mr. REGULA. So I would be more comfortable buying a similar 

toy made in the U.S. versus the import as far as safety and health? 

Ms. NORD. The U.S. manufacturer has been working with the 

Consumer Product Safety Commission for many years and understands their obligation. The challenge we have now is to make sure 

that products manufactured abroad and are imported into this 

country meet the same standards and that is the challenge that we 

have. 

INSPECTION OF IMPORTED GOODS

Mr. REGULA. Do you have the tools to do that? 

Ms. NORD. We are working to develop the tools. The budget that 

we put forth, both of us—— Mr. MOORE. Yes. 

Ms. NORD [continuing]. Unanimously starts to build those tools. 

We have, for example, created an import safety surveillance division. So for the first time we will have CPSC full-time presence at 

our largest ports. We have been developing a very good, strong relationship with Customs and Border Protection. One thing you 

should be aware of is under our statutes Customs has the ultimate 

responsibility to stop and seize shipments. And so we are working 

very closely with them to make sure that they understand our procedures and criteria. We, they and I, think that relationship is developing in a very, very helpful way. 

Mr. REGULA. Commissioner Moore, what would be your observation on somewhat of a double standard, if you will, of what is made 

in the U.S. versus what is imported? And should I as a consumer 

be as comfortable buying the imported product as I could buying 

the U.S. product? 

Mr. MOORE. Well, apparently what we are looking at now is 

where are the imported product coming from? And increasingly, of 

course, they are coming from China. I think something like 40 percent or more are coming from China. A number of issues have been 

raised with their products, but I think we ought to look more closely and lean more heavily on the retailers, because the bottom line 

is who is selling it. 

Mr. REGULA. But how could a retailer know whether there is 

lead in the paint or whether there is a danger with this toy. 

Mr. MOORE. They can come to us and try to find out, particularly 

since that issue has been raised so blatantly. They can come to us 

if they need to. We are looking to, for instance, putting in the marVerDate Aug 31 2005 20:57 Jun 07, 2008 Jkt 042551 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 E:\HR\OC\B551P2.XXX B551P2

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ketplace independent research laboratories that they can take their 

products to, the retailers, if they want to and have them examined 

and certified. We would like the retailers to take a stronger step 

in that area. They know the problems, so why ignore it? 

Mr. REGULA. I yield for the time being. 

Mr. SERRANO. Gentlewoman from Florida. 

Ms. WASSERMAN SCHULTZ. Thank you, Mr. Chairman. Mr. Chairman, given that I am only in my second term, I will hang the oversight of not having the territories included in the pool safety law 

on my inexperience. And I appreciate you pointing out that they 

absolutely should have been included, especially since like my 

home State, they are all warm weather States, which, I am sure, 

have a percentage of their population a drowning problem when it 

comes to young children. So I hope we can find a vehicle that we 

can add an amendment to so that we can make sure that the law 

applies to the territories. So thank you very much. 

Mr. SERRANO. It is a 110-year-old problem. 

Ms. WASSERMAN SCHULTZ. I know, and one I won’t make the 

mistake of again, I can assure you. 

POOL AND SPA SAFETY LAW IMPLEMENTATION

Ms. Nord, I wanted to talk to you as you might imagine, about 

your plans for the implementation of the pool safety law. In your 

budget request, you have proposed flat funding for the agency and 

you have a new mandate in this pool safety law, which is not included in your request. And I am concerned about that, and so I 

am wondering, A, why did you not ask for the funding to implement the pool safety law, because I guess it would be pretty difficult for to you do it without the funding or at least fully? And if 

you could talk to the committee about what the Commission has 

been doing since the law passed to begin its implementation? 

Ms. NORD. Thank you. First of all, I would like to begin by commending you and your staff, the Baker Family and Safe Kids 

Worldwide, for all the hard work that went into the passage of the 

Pool and Spa Safety Act. With respect to funding, it is my understanding that the Congress is going to be considering specific appropriation to implement that legislation and we would welcome 

that funding and work with you. 

Ms. WASSERMAN SCHULTZ. I am certainly going to press for that, 

but I am wondering if the law—the law passed before you submitted your budget request, why didn’t you submit—why didn’t you 

include this in the budget request? The budget request was due in 

February and the law passed in December. 

Ms. NORD. Well, it is our understanding that you all are contemplating a specific appropriation. 

Ms. WASSERMAN SCHULTZ. I am wondering why not include a request to implement this bill and the funding for it in your budget 

request, why isn’t it in there if you knew that you were going to 

have to implement it? Do you think you can implement within the 

resources of the agency? 

Ms. NORD. No, we certainly can’t do the grant program, and we 

certainly can’t do, I believe, a $5 million public affairs program 

within the budget that we have put out to you now. The Congress, 

it is my understanding, is contemplating specific appropriations. 


hsrobinson on PROD1PC76 with HEARING
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Ms. WASSERMAN SCHULTZ. I know, that is the third time. We 

aren’t, unless we add it to your request. Why did the Commission, 

knowing that the bill was law, not include a request for funding 

to implement the law? 

Ms. NORD. Because it was our understanding that this committee 

was going to proceed on a separate track for that funding and indeed we would welcome that funding. Let me just be very clear 

that we would welcome that funding. 

Ms. WASSERMAN SCHULTZ. I am glad to hear that it is just that 

usually we use your budget request as a guide; we take our queues 

from you on what your priorities are. I would think that a significant new mandate like this one as important as this, you would at 

least ask for us to do that instead of relying on the possibility of 

us doing that. I mean, it is not that we were not going to pursue 

that, we are going to pursue it because the chairman has graciously agreed to work with us on pursuing that, but it seems incumbent upon the Commission to have asked for the funding. 

Ms. NORD. Well, we have been in close conversation with your office about this. It was our understanding that this would be pushed 

on a separate track and we have made it very clear that we would 

welcome that additional funding. 

Ms. WASSERMAN SCHULTZ. It is just that there is no indication 

of that in the budget request so at least I am glad that you are indicating publicly that you are supportive of adding the funding to 

the budget. 

There are several States, Florida, Nebraska, California and Tennessee that have been contacting my office interested in how to go 

about accessing the grant funds if and when they become available. 

So can you talk to us about the Commission’s process for implementation, what you are doing with the education program and the 

grant program? 

Ms. NORD. With respect to the grant program, as you know, the 

agency really does not have any history or mechanism for administering grants. Therefore, we have opened a conversation with the 

Centers for Disease Control which does have that administrative 

infrastructure. They are very, very supportive of this. They are 

eager to begin work and as soon as the grant money is appropriated, we will be continuing to move in that direction. 

With respect to the public education aspect of the legislation, we 

are doing a number of things now even though we don’t have funding that was contemplated in the legislation. For example, we have 

a staff guidance document that is now being developed, that is 

being put out for public comment which will discuss how manufacturers can comply with the requirements in the legislation. We 

have created a multi-disciplinary team within the agency that is 

developing a public affairs program that will reach out and take 

advantage of the other stakeholders who have a role and an interest in this. And we have been in contact with them and are working to develop a program there. 

Ms. WASSERMAN SCHULTZ. In terms of the education program, 

how are you specifically planning to communicate to public pool 

owners and operators the drain cover mandate, which is the provision that requires that all pools be retrofitted with a drain cover 

or built from now on with a drain cover installed? 


hsrobinson on PROD1PC76 with HEARING
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Ms. NORD. I mentioned we are developing guidance documents 

for pool owners, industry, and State agencies that describe the specific ways in which pools will need to meet the drain cover and the 

anti-entrapment device requirements of the legislation. With respect to the other aspects of this, we are launching a major education and media campaign. We are planning to reissue TV and 

radio public service announcements. 

Ms. WASSERMAN SCHULTZ. Is that dependent on us providing the 

funding, or are you trying to that within existing resources? 

Ms. NORD. We are—— Ms. WASSERMAN SCHULTZ. I appreciate the effort the Commission has been making, I know you have been working very hard in 

developing what you can within the resources that you have. 

Ms. NORD. My concern here, of course, is that anything we do 

here we take from other things. And we have always seen water 

safety and drowning issues as one of our very important priority 

issues. So we have an ongoing program which we are implementing 

and we will continue to implement that. With the appropriated 

funds we will do more. We will enhance it and make it even more 

robust than it already is. I don’t want you to think that we are 

doing nothing now, because we have a long tradition in this agency 

of working on this issue. With those very welcome appropriated 

funds, we will do more. 

Ms. WASSERMAN SCHULTZ. I hope to welcome them with you. 

Thank you, Mr. Chairman. 

Mr. SERRANO. We always welcome funds. 

Mr. Regula and I have to figure it out, but then we welcome 

them. Mr. Kirk. 

CHINA

Mr. KIRK. Thank you, Mr. Chairman. In July, Congressman 

Larson and I introduced bipartisan legislation to increase your 

powers, and fines, and staff and you worked well with Chairman 

Dingell because of our concern over China. You remember, as the 

Queen of England would call it, your annis horribilis, your bad 

year. 

Ms. NORD. Not that bad. 

Mr. KIRK. 100 brands of pet food recalled, poison toothpaste 

found in Arlington Heights, Illinois, that I represent, Thomas the 

Tank Engine in the RC2 toys. 

In November, we went to my chairman here to urge a $20 million increase for the Commission, and he was able to find 17 million and that was good. In the middle of that, 4.2 million Chinese 

Aqua Dots recalled after a 20-month-old infant was killed. I note 

the Senate bill increases your fiscal year authorization of a request 

of $80 to $88 million. And I do see just in the last week for China, 

we have on March 4th, gas connectors for space heater that would 

trigger a leak and fire recalled, hooded sweat shirts and 

drawstrings posing a strangulation hazard from China recalled; 

March 5th, infant rattles presenting a choking hazard recall; 

March 6th, Hamilton Beach toasters that catch on fire recall—that 

is just 1 week of Chinese products. 

Now, Congressman Larson and I, we had a long discussion with 

our ambassador to Beijing, Sandy Rant, as you know, the U.S. emVerDate Aug 31 2005 20:57 Jun 07, 2008 Jkt 042551 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 E:\HR\OC\B551P2.XXX B551P2

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bassy there is about to be completed in time for the Olympic 

games. In the other subcommittee we have worked to keep our old 

embassy, as well as expanding the consulate in Wuhan, population, 

13 million. 

The question I have is you have announced plans to add 50 new 

employees to the Commission, who are you going to send on permanent assignment to Beijing? 

Ms. NORD. Well, that individual has not been identified as yet, 

sir. 

If I could digress for a moment—— Mr. SERRANO. A very lucky person. 

Mr. KIRK. You are going to have permanent CPSC employees in 

Beijing. 

Ms. NORD. At this point, that is not formally in our plans, because the commission has not voted on doing that. And this budget 

was sent up before the conversations that I know my staff has had 

with your office. To open an office overseas would be a very large 

thing for our agency. It would be something that the Commission 

needs to vote on. 

Having said that, however, I, for one, would certainly welcome 

having some sort of CPSC presence in Asia. And we would again, 

I am speaking for myself because this is something the Commission 

has not voted on, I would welcome additional funding to have both 

a foreign national as well as an American citizen resident in our 

embassy in Beijing to act as our liaison in Asia. We have got to 

make sure that we don’t look at this as only a China problem, because we are seeing more and more imports now coming in from 

other Asian countries, Vietnam is one that comes to mind. So having somebody on the ground would certainly be useful. 

Mr. KIRK. I am just worried that we have really known about 

this problem since July and the Commission hasn’t even come to 

a vote yet. 

Ms. NORD. Well, we have known about the issue of imports for 

quite some time. This didn’t come to anyone’s attention just in 

July, other than the media. The media figured it out in July. 

Mr. KIRK. Congressman Larson and I met with Sandy Rant, and 

then met with Deputy Mr. Wen of AQSIQ, your counterpart agency. 

Ms. NORD. Yes. 

Mr. KIRK. He described how his predecessor had been executed 

because of this problem. 

Ms. NORD. Well, not quite. 

Mr. KIRK. On the FDA side of their house. So this has been front 

and center. July, 8 months now. How long does it take to get a vote 

in the Commission? Does it take more than 8 months? 

Mr. MOORE. Probably. 

Mr. KIRK. Really? That would be stunning lethargy. 

Ms. NORD. Well, not really, sir. We didn’t have a quorum until 

August, and our quorum evaporated this past February, however, 

that is just a side piece. This agency has been working very, very 

hard to deal with this question. Starting in 2004 we negotiated a 

Memorandum of Understanding with China. We were the first 

agency, our tiny agency was the first. We had a safety summit in 

2005. And then in 2007, we negotiated some very significant agreeVerDate Aug 31 2005 20:57 Jun 07, 2008 Jkt 042551 PO 00000 Frm 00027 Fmt 6633 Sfmt 6602 E:\HR\OC\B551P2.XXX B551P2

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ments with the Chinese government. Again, our tiny agency was 

the first to do this. 

Mr. KIRK. Hold on. Your tiny little agency, but in your testimony, 

you say 85 percent of the toys and 59 percent of the electrical products coming notably from China. 

Ms. NORD. Sure. 

Mr. KIRK. Your mandate is to protect the American people, and 

so if 85 percent of toys and 59 percent coming from China, it 

doesn’t matter how tiny you are. You have got to deploy and protect us with the resources and then by adding 50 more people and 

not one identified for China yet. 

Ms. NORD. Again, I, speaking for myself, would certainly like to 

have somebody in the embassy. We have started those conversations with the ambassador. We have also discussed with you and 

your staff some of the issues that come about because of having 

staff in China. If we receive funding from this committee to have 

staff in China, I, for one, would be very, very pleased with that result. 

Mr. KIRK. When I brought it up to the chairman and said let us 

add $20 million, part of it was we know it costs $250,000 per year 

to deploy. So you already got $17 million with a lot of us wanting 

you to deploy to China. And so we are already had the discussions 

with Ambassador Rant, he already sent a notice to Secretary Rice 

saying if CPSC identifies the person, we will house them immediately. So could I say, get the lead out of toys and hiring? 

Mr. SERRANO. Ah, a pun. 

Ms. NORD. It is detailed in my presentation, and as Commissioner Moore did as well, that $17 million has been spent on additional staff at the ports, IT and our laboratory. 

Mr. KIRK. 85 percent of toys and 59 percent of electrical products, so I would say you probably have a China issue here. 

Ms. NORD. Again, it would be very helpful to have somebody 

there. 

Mr. KIRK. Thank you, Mr. Chairman. 

Mr. SERRANO. I could have sworn you asked for 16 in your letter 

and I was able to get 17. 

Mr. KIRK. Appreciate all 17. 

Mr. SERRANO. They are authorized to have three members and 

they have two, and they are both here. If we have a vote break, 

maybe they can have a vote while we are gone. 

Ms. NORD. We have no quorum. 

Mr. SERRANO. Just kidding, they had a heart attack in the back. 

Mr. Bonner. 

CPSC AGENCY SIZE

Mr. BONNER. Thank you, Mr. Chairman. Madam Chair, could 

you tell us how teeny tiny your agency is in terms of the number 

of employees and how has it changed over the past number of 

years. 

Ms. NORD. Our agency, like many agencies in government has 

gotten smaller. We currently have approximately 400 employees. 

Our budget was $62 million, you have increased it to $80 million 

and I appreciate that very much and thank you for it. 


hsrobinson on PROD1PC76 with HEARING
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Mr. BONNER. How would that compare with your counterpart 

agency in China, since so many of the headline stories we have 

read about over the last year or so have involved Chinese companies? How large is your counterpart agency in China? 

Ms. NORD. Our counterpart agency in China is known by the initials AQSIQ. It covers not only product safety but also FDA and 

other kinds of safety issues. So it is not a dead-on comparison, but 

when I asked my counterpart in China the size of his agency, I believe he said he had 120,000 people. 

Mr. BONNER. 120,000 people and we have 400. 

Ms. NORD. Yes. 

INDUSTRIES IN NEED OF REGULATION

Mr. BONNER. My colleague, Mr. Kirk and others, have outlined 

some of the issues that you obviously and Commissioner Moore 

know probably better than most people have caused us great concern over the last year. If you could look into your crystal ball and 

predict which industry that currently is not adequately regulated, 

that would pose the greatest threat to American households, where 

would you see the next area of concern that we need to provide you 

resources to put that fire out before it starts? 

Ms. NORD. Are you talking about imports? 

Mr. BONNER. Yes, ma’am. 

Ms. NORD. One thing that we are very concerned about is that 

we have seen a number of what I would call substandard imports 

of all terrain vehicles coming into this country without the kinds 

of safety equipment that you would expect to see and that you do 

see on products manufactured here. 

Another issue that I think we need to be thinking about pretty 

aggressively is the whole issue of generators. Our concern here is 

carbon monoxide poisoning. Our agency just put in place a very aggressive new labeling requirement that has gone into effect and 

that we are now enforcing and we are in the midst of rulemaking 

that would try to drive down the CO emissions of generators, but 

you are seeing more and more generators being imported from 

Asia. Obviously mattress flammability is something that we are 

concerned about because we have just put in place a major new 

rule dealing with mattress flammability issues. We are in the early 

processes of enforcing that regulation so we are very alert to making sure that any mattresses that are imported meet our requirements. Those would be three things off the top of my head, I would 

be happy to expand on that. 

Mr. BONNER. No. I just think it is good. We have seen before this 

committee several issues that it appeared that government was 

late in responding to. Last week we had a hearing on the subprime 

mortgage issue. And so it is good to know ahead of time if there 

are areas—I mean, you mentioned generators. I know the gentlelady from Florida and I are both from coastal States. So generators, 

especially during hurricane season, are very important. And if we 

are—we have had people die in the central Gulf Coast region because they were not adequately notified of the dangers of it. So we 

would just welcome some assurance that these are issues that you 

identify as areas that we need to put more attention to in the future. 


hsrobinson on PROD1PC76 with HEARING
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EMERGING HAZARDS

Ms. NORD. If I could expand on that. One of the challenges our 

agency has and it is so hard to deal with, and that is the whole 

issue of emerging hazards. If you have a regulation in place, you 

can pretty easily determine if somebody is in compliance with that 

regulation. But most of the consumer products that we all use don’t 

have some government regulation imposed upon them. The marketplace is too dynamic, and so what we see is products that are coming in that may meet regulations, or are not regulated, that might 

pose a hazard, and you don’t recognize the hazard is there until 

you start investigating, until, unfortunately, an accident occurs. 

And that is the thing that our agency is faced with all the time 

every day, and it is very difficult for us. 

Congressman Kirk referenced Aqua Dots. He said it killed a 

child. It did not. Anyway, that was a product that was a hazard 

that really couldn’t have been anticipated. Once we saw it, our 

agency moved very, very quickly to deal with it. But the challenge 

we have is dealing with issues as they come up over the horizon. 

Mr. BONNER. Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. 

Mr. Goode. 

Mr. GOODE. Thank you, Mr. Chairman. 

Let me ask you this. With regard to the lead-painted toys, which 

I know has been touched upon, how many of those 120,000 employees over there in China inspected the toys that were coming to 

Mattel and the other toy manufacturers in the United States? 

Ms. NORD. I have no idea. 

Mr. GOODE. Do you think any? 

Ms. NORD. I don’t have any idea. 

Mr. GOODE. There are 120,000 that they allegedly have over 

there. Did they inspect—you know, we are talking about a product. 

But do they inspect anything like food products, or do they have 

a different agency in China? 

Ms. NORD. No. AQSIQ has responsibility for food. It is much 

broader. 

Mr. GOODE. So if we were doing a little comparison, we would 

have to include the USDA along with you and probably several 

other agencies of the Federal Government? 

Ms. NORD. Yes. 

TRADE WITH CHINA

Mr. GOODE. All right. Let me ask you this then. Do you know 

what the trade deficit with China was last year? 

Ms. NORD. Significant. 

Mr. GOODE. Yeah. Probably over $300 billion. I am thinking 

about $350 billion. What is the trade deficit in getting toys in all 

the products you look at from China? 

Ms. NORD. You are getting beyond my—I can’t at this point. I am 

sorry. 

Mr. GOODE. But we are importing a whole lot more than we are 

sending over there, a whole lot more. 

Ms. NORD. Yes, of course. 


hsrobinson on PROD1PC76 with HEARING
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Mr. GOODE. All right. Let me ask you this. I know the administration, as was President Clinton before the current President, was 

a big advocate of permanent normal trade relations with China. 

From your perspective, as head of the Consumer Product Safety 

Commission, would you say that the permanent normal trade relations with China has been an outstanding success? 

Ms. NORD. I really couldn’t comment on the merits of that, other 

than to say that we have seen an increase in imports over the past 

10 years or so. And our responsibility is to make sure that—— Mr. GOODE. Have we seen an increase in unsafe imports? 

Ms. NORD. Our recalls are primarily of imported products, but 

most products that we use seem to be imports. 

Mr. GOODE. All right. Do you think that helps the economy in 

the United States, those jobs that we are giving them in China to 

make the tainted lead products and whatever else they are shipping over here? 

Ms. NORD. Well, I would have personal views on the economics 

of it, but my responsibility is the safety, and that is what we really 

focus on. 

Mr. GOODE. Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. 

I at least run the risk of getting involved in foreign affairs, which 

I do. The Commission took the big hit on China. That is a fact. But 

we were all responsible, Congress and administrations have always 

kind of given China a pass. I mean, we forget—in fact, if you read 

and listen to our commentators, communism is dead, supposedly. 

It ended with the end of the Cold War. Mathematically, that is totally incorrect if the largest country in the world, most populous, 

still is a very serious Communist country. I am all for trade and 

all. But in general, China has gotten a pass. I can’t help but think 

how upset we would be over these products if they had come from 

Venezuela. 

Mr. GOODE. Mr. Chairman—— Mr. SERRANO. No, no, no, present company excluded. You have 

always been pretty strong on that, and I say that publicly. But 

China has gotten a pass, and we are outraged now that the Commission didn’t catch everything. Well, I think every arm of government, every agency, has not been catching what has been coming 

from China both in that area and in other areas. 

REAUTHORIZATION FUNDING

We already spoke about the database and the cost for the database. What else do you see in the reauthorization that gives you 

funding concerns? What should you tell us about so that we are 

aware of it ahead of time? 

Ms. NORD. There are a number of directions in the legislation for 

us to promulgate regulations that are not contemplated right now 

in our regulatory agenda. So we will need to be starting new regulatory proceedings, and that will, of course, be a staffing issue. A 

management issue that I have is the whistle blower provision of 

the legislation. Right now our agency, like all other Federal agencies, is subject to the general whistle blower provision. The Senate 

bill does, however, overturn long-standing CPSC policy regarding 

our employees making decisions as to whether they will make 


hsrobinson on PROD1PC76 with HEARING
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themselves available to testify in either court proceedings or legislative proceedings right now. It is a decision that is made by their 

supervisors and their management and the legislation makes it 

very clear that the individual employee would have the ability to 

make that decision. That poses some concerns to me about how we 

are going to be able to manage our employees and projects. And 

that has fiscal concerns as well. Those are two things that come to 

mind immediately. What I would like to do if I might, sir, is pull 

together just a list of the new regulatory and administrative enforcement requirements and price them out for you. 

Mr. SERRANO. Sure. I am sure that you have done it to some extent, maybe to a full extent. But these issues are of such concern 

to us, that if you look at the first bill put together, last year’s bill, 

by this subcommittee, the preamble if you will, the opening statement of the report speaks strongly about this subcommittee’s desire 

to have a theme of consumerism and protecting consumers. So we 

directed that. That was purposely done. So if you see us with great 

interest in your Commission, it is because the whole committee has 

decided that this is an issue of great importance to us and we want 

to make it a theme of the subcommittee. That is what we did last 

year. We intend to do it again. 

Assume for a second that the reauthorization bill is approved 

and signed by the President. Do you expect the administration to 

send Congress a budget amendment that reflects that increased 

cost? And would you encourage them to do so? I know OMB gets 

in the way, but would you expect one to come? I mean, there will 

probably be another 20 supplementals before the President leaves 

office. 

Ms. NORD. I think it is going to be very difficult for our agency 

to absorb those new requirements without new funding unless we 

take things away from what we have said we are going to be doing 

this year. So I would not be surprised to be in front of you again. 

Mr. SERRANO. I know you would be in front of us again. Would 

you recommend—there is only us here. Nobody else has to know. 

The President won’t know if you say it out loud. Would you recommend that they send us a budget supplemental request? 

Ms. NORD. Again, without knowing what final legislation is like, 

I feel I need to be cautious here, sir. But I do not see how we will 

be able to implement many of those requirements without new resources. 

IMPORT SAFETY INITIATIVE

Mr. SERRANO. Let me talk to you about import safety. The 2009 

budget request includes an increase of $3.2 million and 24 full-time 

equivalent employees for an import safety initiative. I know you 

have spoken about it somewhat, but what are the goals? What do 

you see happening here? And if an inspector finds a shipment of 

unsafe products, what happens then? Does the Commission have 

the power to stop the shipment from reaching the marketplace? At 

what point do you exercise powers that you have? And, you know, 

I would like to see people yelling and screaming that the Commission is overstepping its boundaries on behalf of the consumer. That 

would be a great thing, and you would get a standing ovation from 

this committee. At least from Mr. Regula and I. 


hsrobinson on PROD1PC76 with HEARING
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Ms. NORD. What we intend is to have a division within our Office 

of Compliance that has focused responsibility for import surveillance. And we have created that division now with this new funding. We just did it at the beginning of the year and have appointed 

a head of it, the deputy, and we are now in the process of staffing 

that. What that means is that we will have a full-time person, permanent person assigned to this country’s busiest ports. And I 

would be happy in a closed session to discuss with you in more detail which ports those would be. We do see the phenomenon of port 

shopping, so I am reluctant to have our plans discussed fully and 

publicly, but would be happy to do that either in writing or——

Mr. SERRANO. I never thought there would be a top secret part 

of this committee. I am used to it in Homeland Security, where 90 

percent of what is discussed is discussed, you know, ‘‘oh, we can’t 

tell you that in public.’’ But I understand. You don’t want to alert 

people to——

Ms. NORD. Port shopping is a phenomenon that we do see. So we 

obviously want to minimize that. But those people will have on-theline responsibility to work with their counterparts with Customs at 

the ports specifically. 

We have had people at ports but not permanent full time. So 

that is one aspect of it. Another aspect of it is to really redefine 

our relationship with Customs and Border Protection through what 

is known as the ITDS system. We have now accessed Custom’s 

Automatic Commercial Environment System, which is a database 

of basically the charts, the cargo that is coming into our ports. And 

by the end of the year, we will have 18 people who will have had 

the specific clearances and the training in order to access that system. What that means is that they will know that these products 

are coming before they get there, so that they can, in a more focused and targeted way, pull shipments and identify shipments. 

The other thing that this does is allow us to track the exporter and 

the importer. So that if we have some bad actors that we are aware 

of and we see them having other shipments coming in, we can 

focus our attention on those kinds of shipments. There is so much 

product coming in to this country every single day that what we 

have to do is develop a risk-assessment process, and that is one of 

the things we are doing with the new IT funding as well. So that 

will hopefully allow our inspectors to focus on higher risk kinds of 

cargos in a very effective way. Finally, we have arranged with Customs to get them to also test some of the product——

Mr. SERRANO. Customs? 

Ms. NORD. They have laboratories and——

Mr. SERRANO. They will blame it all on immigrants, trust me. Be 

careful. They have a knack for blaming everything on immigrants. 

Ms. NORD. Thank you. I appreciate that word of warning. We 

have also now purchased something that are called XRF machines, 

which are able to screen products, at least with respect to the lead 

paint issue, in a more effective and efficient way. We now don’t 

need to send all of the product to the various labs for testing, only 

the product that fails the screening test. Again, that is another way 

of becoming more efficient. 


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Mr. SERRANO. Just one last question on this. What percentage of 

imported products do you think you will be able to review through 

this initiative? 

Ms. NORD. A miniscule percentage. Just a tiny percentage. 

Again, what we need to be working towards is a system that allows 

us to be focusing on the higher risk kinds of products. I mean, if 

I could give you what was a startling statistic to me, the FDA has 

well over 400 inspectors. I mean, their inspection corps is bigger 

than our agency, and they inspect 1 percent of the incoming product. We have more things under our jurisdiction than they do. So 

we have to make sure that we are focusing on high risk kinds of 

shipments, and that is one of the things that is my highest priority, 

to get that infrastructure, those mechanisms in place. That is a 

daunting task, sir. 

INDUSTRY-FUNDED TRAVEL

Mr. SERRANO. Let me ask you my last question. As you know, the 

subcommittee expressed serious concern over reports that members 

of the CPSC accepted industry-funded domestic and international 

travel. In fact, the subcommittee included provisions in the 2008 

bill to prohibit industry financed travel by any regulatory body 

funded in our bill. This is your first appearance before the subcommittee since the reports of such travel were publicized. Could 

you comment on the reasons why travel was accepted, financed by 

entities that the CPSC regulates? Could you also comment on the 

internal procedures used to review and authorize such travel? I understand that in one case, for instance, the approval occurred after 

the trip was taken. This, I think, added to the woes of the Commission. It gave a very serious impression, and I think well based at 

times, that some how you were not protecting the consumer, that 

you were hanging out with some of the culprits. What can you tell 

us? What happened? Why did it happen? Can it happen again? 

Ms. NORD. Okay. Well, I agree that it added to the woes of the 

Commission, and it was not helpful to us. The Product Safety Act 

has a specific provision that Congress wrote originally when it 

wrote the act that allows us to accept gifted travel from outside entities. So that is one aspect of it. Two, the agency has been complying with the regulations that apply government-wide that were 

put in place by GSA dealing with the acceptance of funding from 

nongovernment sources. Both Commissioner Moore and I have 

taken trips that were funded by nongovernment sources, not on a 

regular basis; certainly not on the scale that was reported in the 

newspaper. In my instance, I think it was three trips, and Commissioner Moore’s instance, it was two. All the trips were vetted before 

they were accepted. 

Mr. SERRANO. By? 

Ms. NORD. By our ethics officer and our General Counsel’s Office 

and were signed off by the executive director of the agency. You 

referenced one that was done after the fact. The vetting was done 

before the fact, and verbal approval was given. The paperwork in 

that instance was signed after the fact. But the vetting was done 

before the trip occurred. So we have in place a process that is fairly 

rigorous to look at these things. We certainly do not accept gifts of 


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travel from an entity that is being regulated by the agency. 

Now——

Mr. SERRANO. When you say you don’t accept, this is after this 

came to light last year? This is a new procedure or always? 

Ms. NORD. No, no. 

Mr. SERRANO. Because if it is always, then you are making it 

sound like there was no basis for the concern, and the concern was 

pretty serious, and I think, you know, baseball is 75 percent pitching. What we do is 75 percent perception. 

Ms. NORD. Sure. 

Mr. SERRANO. And the perception was that this was no good, 

that this was bad. 

Ms. NORD. Well, each of the trips goes through an ethics examination before it is approved. And to my knowledge, because a lot 

of this happened before I was even at the agency, each of those 

trips did go through that vetting; certainly for the trips that I was 

involved in they did. But as soon as it came to light and questions 

were raised, I put in place a policy saying that we would not accept 

any nongovernmental funded trips. We have had conversations 

with you about how that is going to impact our budget because one 

of the reasons we do this is that you can either spend taxpayers’

money to go and talk to manufacturers about their legal responsibilities or you can spend their money. 

Mr. SERRANO. I understand that. I told you we were on your side 

in trying to make the agency work well; right? 

Ms. NORD. Sure. I appreciate that. 

Mr. SERRANO. Let me give you some advice. Don’t use that reason. That is the old police department thing about cops are taking 

bribes because they didn’t make enough. And that was not a good 

reason for them to take bribes in the old days or in any time. I 

would hope that you understand that, first of all, this committee 

could not end this hearing today without bringing that issue up; 

secondly, that it does concern us, it concerns the public, concerns 

the media and that the perception was not good. And I hope that 

rather than spending time saying we did something that was under 

the rules at that time or within the rule, simply stick to this new 

plan that it can’t be done. You don’t leave that door open for any 

accusation, correct or not, that you are not on the side of the consumer. 

Ms. NORD. Well, I understand. And we tried to address it immediately when it came up. We recognized that you have recognized 

our need to be out there going around the country, policing the 

marketplace, and so very much appreciated the fact that you have 

designated specific funds for that purpose, and we will use them 

well in that way. 

Mr. SERRANO. Thank you. 

And now a man who has never turned his back on the consumer, 

Mr. Regula. 

PURCHASING SAFE TOYS

Mr. REGULA. Well, along that line, what would you advise a 

friend of yours who is going out to do a lot of shopping for toys for 

her children or family? How would you advise her what to look for 


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and use her power as a purchaser to try to ensure that these toys 

that he or she is going to buy are safe? 

Ms. NORD. What I would tell that mother is to look for age-appropriate toys, to be a label reader and make sure that the toy that 

she is purchasing is appropriate for her child. The toy market, 

where we see the most deaths and injuries from toys are children 

choking on small balls, children on skate boards and scooters, especially riding them into the street and into traffic. We saw several 

children die on trikes last year. In fact, two of them rode the trikes 

into the swimming pool. So there are dangers there. But parents 

need to make sure that the toys that they buy for their children 

are appropriate for their children. And that is the strongest piece 

of advice I could give. 

Mr. REGULA. That would be appropriate in the judgment of the 

parent, in a way, to not buy something that is beyond their age 

level and using, but that doesn’t address the problem of lead paint 

or possibly some of the manufacturing processes that might make 

these toys undesirable. I suppose there is really no way to get at 

that entirely. 

Ms. NORD. Well, there really isn’t unless you choose to turn our 

agency into an agency that inspects all product manufacturers. But 

that would mean that our agency would be very, very different 

from the one it is now. 

Mr. REGULA. Very large. 

Ms. NORD. It would be very, very large. So what we need to do 

is put in place procedures and processes to make sure that manufacturers know their obligations and comply with them; that we 

have the ability to police the ports; that we have the market surveillance operation in place; and that we enforce laws and do it in 

an aggressive way. 

Mr. REGULA. The best tool is well educated purchasers. 

Ms. NORD. That certainly is true. 

ROLE OF CUSTOMS

Mr. REGULA. One last question. What is your role vis-a-vis Customs? It seems to me like there is similar overlap here. How can 

you decide whether customs is going to be responsible for the safety 

of a product or your agency is going to be responsible? 

Ms. NORD. Well, our statutes are quite clear on that point in that 

Customs has the ultimate responsibility to seize and deal with the 

product. And we work very closely with them. If we can show a violation of a regulation, that is an easy call for Customs to make because then they will deal with the violative product. They will seize 

it. They will destroy it. They will send it back to where it came 

from. 

Mr. REGULA. But does Customs have laboratories to evaluate 

products like paint? Do they have that capability? 

Ms. NORD. Well, they do have some laboratories, but they have 

never really been used in that way up until this past year when 

we forged this new relationship with them so that they are now 

making their laboratories, some of their laboratories available in 

appropriate circumstances. But what we have done with respect to 

the lead paint issue specifically is that we have some new screening tools and devices in place at the major ports. There is a screenVerDate Aug 31 2005 20:57 Jun 07, 2008 Jkt 042551 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 E:\HR\OC\B551P2.XXX B551P2

hsrobinson on PROD1PC76 with HEARING
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ing machine called the XRF, please don’t ask me what that stands 

for because I can’t tell you. But it does allow us to screen for heavy 

metals right there on the spot very quickly. So that has been very, 

very helpful. But going back to the bigger question, we work with 

Customs. We consult with Customs. We ask Customs to do things 

for us, and generally they are very supportive and are helpful to 

us in that way. But, you know, at the end of the day, Customs’ main focus is Homeland Security. So, you know—— Mr. REGULA. Homeland Security would certainly include the security of the children. 

Ms. NORD. Well, it has certainly been defined that way this year, 

sir. 

Mr. REGULA. Do they have people in China, for example, that 

have some degree of oversight? 

Ms. NORD. Customs does have a big presence abroad, yes. 

Mr. REGULA. Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you, Mr. Regula. 

Now a member who will never, ever forget to leave the territories 

out of any legislation in the future. 

Ms. WASSERMAN SCHULTZ. Ever, ever again. 

Mr. REGULA. She did that? 

Mr. SERRANO. She did that. 

POOL DRAIN COVER MANDATE

Ms. WASSERMAN SCHULTZ. Ms. Nord, going back to the drain 

cover mandate that is in the Pool and Spa Safety Act, how was the 

agency planning on enforcing the mandate? And are you going to 

be hiring inspectors to make sure that pools are compliant? 

Ms. NORD. Well, at this point, what we are doing is putting out 

a guidance document that will outline what the responsibilities are. 

And as it goes into effect—— Ms. WASSERMAN SCHULTZ. Who is that being distributed to? 

Ms. NORD. It will be distributed to the manufacturers, to the retailers, to the product sellers and also——

Ms. WASSERMAN SCHULTZ. This is a retroactive provision? 

Ms. NORD. Yes. 

Ms. WASSERMAN SCHULTZ. So a pool owner, an existing pool 

owner isn’t going to have any interaction with those kinds of entities? 

Ms. NORD. No. 

Ms. WASSERMAN SCHULTZ. How are you supposing to make sure 

that existing pools retrofit their pools with drain covers? 

Ms. NORD. Private pools? 

Ms. WASSERMAN SCHULTZ. Yeah. 

Ms. NORD. I would like to come back to you with that because 

there is an ongoing debate within the agency about how exactly we 

are going to be able to do that. There are some issues that we have 

discussed with your staff about the legal ability for us to do that. 

So it is a subject of ongoing debate within the agency. 

Ms. WASSERMAN SCHULTZ. Okay. I mean, there isn’t any question 

that that is what is required in the law. 

Ms. NORD. I understand. But——

Ms. WASSERMAN SCHULTZ. And I would assume that because it 

is required in the law, the law gave you the authority to ensure 


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that the law could be enforced. I mean, that is what you are; you 

are an enforcement agency. 

Ms. NORD. There are going to be some legal issues with respect 

to retrofits that we are grappling with. And again, we have started 

the conversation with your staff, and we would like to continue. 

Ms. WASSERMAN SCHULTZ. Okay. Well, let us know how we can 

help you with that. 

POOL AND SPA SAFETY FUNDING

Commissioner Moore, you stated in your testimony that the 

CPSC was compelled to achieve staff reductions through nontargeted means, such as attrition, early outs and buyouts, resulting in 

the loss of key staffers and experts in areas including drowning 

prevention. Now, the testimony here today maintains that the flat 

funding that is being requested of $80 million is sufficient to meet 

the resource needs that the agency has. And I am not sure how 

that is true if you have a new mandate for pool and spa safety and 

you have lost your drowning prevention expertise. 

Mr. MOORE. Well, that issue is not covered under the—what we 

are working within this appropriation process is the amount of 

funding allocated to us by the President’s budget office. 

Ms. WASSERMAN SCHULTZ. Did you ask, did the Commission ask 

the President to include funding for the Pool and Spa Safety Act? 

Mr. MOORE. No. I don’t think we did. No. No, we did not ask for 

that. So that is the foundation of what we—— Ms. WASSERMAN SCHULTZ. I am still not understanding why the 

Commission didn’t ask for the funding to implement this if you 

have lost your drowning prevention expertise and you have asked 

for flat funding and you know you can’t really fully implement the 

law without additional funding. 

Mr. MOORE. Well, we expected that the Congress would make the 

increased funding available for us. 

Ms. WASSERMAN SCHULTZ. Every agency gets new mandates 

every year, and the agency is expected to signal to the Congress in 

the budget request that they need the funding. How are we supposed to know, other than I am on the subcommittee, that you need 

the funding and want the funding unless it is included in the budget request? It doesn’t just happen by osmosis. 

Mr. MOORE. No, you are certainly right about that. 

Ms. WASSERMAN SCHULTZ. Wouldn’t you think that you should 

send a signal to the Congress that after getting a new mandate like 

the Pool and Spa Safety Act that it should be asked for in your 

budget since you can’t fully implement it and not rely on the possibility of it being added on top of your budget request? 

Mr. MOORE. Well, there is some uncertainty there in terms of 

what would be the next step in the Congress in terms of funding 

that provision. 

Ms. WASSERMAN SCHULTZ. What uncertainty? It is authorized for 

the next 5 years, and then Congress should be appropriating it. 

Why wouldn’t the Commission ask for it? 

Mr. MOORE. I agree. 

Ms. NORD. A point of clarification. Our budget request went to 

OMB before the legislation passed. So we weren’t dealing with a 

piece of legislation at that point. 


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Ms. WASSERMAN SCHULTZ. There were 2 months that elapsed between when the legislation passed and when your budget was submitted to Congress. 

Ms. NORD. But our—— Ms. WASSERMAN SCHULTZ. It isn’t amendable after it goes to 

OMB? 

Ms. NORD. Our request went to OMB well before the legislation 

passed. 

Ms. WASSERMAN SCHULTZ. When did your request go to OMB? 

Ms. NORD. Before the legislation passed. 

Ms. WASSERMAN SCHULTZ. And is it not—— Mr. MOORE. We certainly agree with you and would very much 

like to see increased funding added. 

Ms. WASSERMAN SCHULTZ. No. And you have established that, 

and I appreciate it. It is just that you, in your testimony, Commissioner Moore, said that you have lost your drowning prevention expertise. So if you haven’t asked for the funding, and you have 

asked for flat funding for the whole agency, and we are not sure 

how much we are going to be able to give you to implement this, 

how are you going to do it without your drowning prevention expert? On top of the fact that last year you took this out—you took 

drowning prevention out of your list of strategic priorities. All of 

those combined are not very strong signals that the CPSC makes 

drowning prevention a priority any longer. Are you hiring a person 

to replace the drowning prevention expertise that you lost? 

Mr. MOORE. I don’t hire people for the Commission. 

Ms. WASSERMAN SCHULTZ. It is just that it was in your statement. That is why I am asking you. 

Ms. NORD. Commissioner Moore’s statement referenced one individual who did retire after many years of service. We have other 

people who have expertise in that area, and indeed, Congresswoman, our leading spokeswoman on this, who actually lost her 

child through a drowning accident, is out in California tomorrow 

giving a major speech on this particular issue. There are people 

within the agency who do have expertise dealing with this, as Commissioner Moore just referenced one individual who didn’t happen 

to retire. But there are—— Ms. WASSERMAN SCHULTZ. Are you going to be adding drowning 

prevention expertise in the event that you get funding to implement the Pool and Spa Safety Act? 

Ms. NORD. If we get the funding, absolutely, of course we will. 

Ms. WASSERMAN SCHULTZ. Thank you very much. 

Mr. CHAIRMAN. I yield back. 

WARNING LABELS IN DIFFERENT LANGUAGES

Mr. SERRANO. Thank you. I have one last question before we 

wrap up today, and we thank you for your indulgence. One of 

America’s probably best kept secrets is how much advertising is 

done in this country in languages other than English. I think the 

English-only movement would have a heart attack if they saw how 

much is spent on advertising in languages other than English. 

Now, consumer advocates have always held that there should be 

warning labels in languages other than English. Courts have said 

at times that there should be; other courts have said that there 


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shouldn’t be. But I think that if you advertise a product in a language other than English, you should have warning labels in that 

language. And I would like that to be the case. What is your 

thought on that? And I am specifically limiting it now, as bad as 

this may sound to the advocates of using many languages, I am 

specifically limiting to those who sell you the product in a language 

other than English. Should they not also give you the warning labels in that language? Big issue in New York and Florida and 

Ohio. 

Ms. NORD. That is something that we struggle with and have internal conversations about all the time in our agency. And indeed 

this issue came up most recently with our warning label that we 

are requiring on all generators. At the end of the day, the way the 

Commission addressed this issue was to say that we would encourage the use and allow the use of labels in languages other than 

English. There is a concern that when you put the label in different 

languages, the label size is impacted. The impact of the label is impacted, which I know is not at all what you want to hear in my 

response to this question. But I give it to you because I want you 

to be aware that this is something that we debate internally on a 

regular basis, and we have got actually a staff of human factors experts who advise us on these things. 

Mr. SERRANO. Well, keep in mind that they advertise, for instance, in the case of Spanish, there are hundreds if not thousands 

of radio stations that are totally in Spanish. You now have a new 

trend in the last 4 or 5 years of stations that are bilingual in nature where the disc jockey may speak in Spanish, the commercials 

are in English or vice versa or you go back and forth during the 

whole day. In fact, the number one stations in New York and L.A. 

happen to be Spanish radio stations. And that is what they do; 

they mix it up for the younger crowd and so on. 

But here is my point. If you are advertising in Spanish, in the 

case of Spanish, you are doing it for two reasons: One, because culturally it is a nice thing to appeal to that group. But also because 

you know that there are some other older folks perhaps, not the 

younger folks, older folks that you can sell your product to easier 

in that language. Don’t you then have a responsibility to warn 

them of the problems in that language also? And let me tell you 

that this is a big issue on another level, too. The Federal Trade 

Commission, I think, has no clue as to what is said on Spanish TV 

and radio when it comes to advertising and what is advertised. 

Ms. NORD. Really? 

Mr. SERRANO. Oh, I don’t think they really do. In fact, touching 

on a very touchy subject that I have done before, if you saw how 

many items are sold in Spanish that say, if you buy a particular 

crucifix, you will never be ill again—and I know that is a dangerously touchy subject—but I don’t think you could see that in 

English. Somebody would be questioning what they have seen. The 

latest one has five bottles of water that come from the Holy Land. 

Ms. WASSERMAN SCHULTZ. Will the gentleman yield? 

Mr. SERRANO. Yes. 

Ms. WASSERMAN SCHULTZ. At least 30 percent of my district is 

Hispanic, at least 25 to 30 percent. And the consumer products 

have even evolved to the point, as I am sure you know, where if 


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we have a warning label that is only in English when many, many, 

if not most, products now—you go into a toy store in Florida, and 

you have two different sets of labels on what the product is called. 

If you have a Dora Exploratory, it will say doll in English—I am 

sorry, Mr. Chairman—whatever doll is in Spanish. 

Mr. SERRANO. Mun ̃ eca. 

Ms. WASSERMAN SCHULTZ. Thank you. So it is kind of mind boggling that you can have the labels for the product themselves promoting and advertising to Latino families to sell you the product 

and then not give them the appropriate warning labels because we 

are worried that we logistically couldn’t figure that out. That 

means that, at least in my district, 30 percent of the people, we 

don’t care that they get the safety warning, but we want them to 

buy the product. That is really the wrong message to be sending. 

Mr. SERRANO. Getting back to the Federal Trade Commission, I 

don’t think they know what is advertised in Spanish, and some of 

it is scary. And like I said, I touch on a very touchy subject because 

some people would say I am touching on religion. They did bring 

in somebody who was selling a crucifix that supposedly would cure 

cancer, and they took care of that for a while. And, you know, 

again, faith versus selling you something for $29.99 I think are not 

the same issue. So I know internally you struggle with it. I think 

the message that we would like you to take back is, if someone is 

spending millions of dollars and the industry spends billions of dollars advertising in languages other than English, mostly in Spanish, if they can sell, as the gentlewoman has stated——I mean, depending on where I buy tooth paste, it is either in English or in 

two languages. And if I go to the south Bronx district, certain parts 

of my district, just about every product I buy, on the tube itself, 

and on the box, has two languages. Well, then why not warn me 

in two languages, too? 

Ms. NORD. I hear you. 

Mr. MOORE. But generally, the Consumer Product Safety Commission, that is not our focus. Our focus is to get a product, that 

is dangerous to the family, off the market entirely, not have a label 

that is saying there is a problem with it. Our job—we get it off the 

shelves. That is what we do. 

Mr. SERRANO. Well, I understand that. And we are all hopeful 

that you will keep getting unsafe products off the shelf. But you 

also do get involved in general consumer issues, and those issues 

have a lot of different tints to it, not just the simple one—or the 

dramatic one of taking a product off the market. We thank you 

both for your testimony. We thank you for your appearance before 

the committee. We thank the members of the committee, and we 

look forward to working with you to make sure that the Commission’s work is carried out properly on behalf of the consumers. We 

stand ready to support you in any way that we can. This hearing 

is adjourned. 


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(107) 

TUESDAY, APRIL 1, 2008. 

U.S. NATIONAL ARCHIVES AND RECORDS 

ADMINISTRATION 

WITNESSES 

ALLEN WEINSTEIN, ARCHIVIST OF THE UNITED STATES 

ADRIENNE THOMAS, DEPUTY DIRECTOR 

MARTHA MORPHY, CHIEF INFORMATION OFFICER 

CHAIRMAN SERRANO’S OPENING STATEMENT

Mr. SERRANO. Before we begin, I would like to announce that, 

unfortunately, this will be my last hearing as the Chairman. I will 

be resigning my seat. Senator McCain has asked me to run as his 

running mate in this Presidential—why is that so funny? 

Mr. REGULA. You are trying to get my vote. 

Mr. SERRANO. All right. You know. You were supposed to play 

along with the Chairman on the April Fool’s joke. I guess McCain 

would not be picking me, so I guess that did not sell too well. Who 

else? Who would have picked me? No one. 

So the hearing will come to order, and we welcome you. I actually thought of another April Fool’s joke where we would say we 

found $1 billion to give the Archives, but no one would believe that, 

so the intent is there, so you know. 

Today, we will hear testimony from the Archivist of the United 

States—I told Dr. Weinstein that, in Spanish, we say archivo for 

archives. The temptation to say ‘‘the archeevist’’ is really there, but 

I thought I would do it right—on the budget request of the National Archives and Records Administration for fiscal year 2009. 

NARA, as we all know, serves the vital role of the Nation’s 

record keeper. It works to preserve and to provide access to the 

records of Government, from the original copies of the Constitution 

and the Declaration of Independence, to the service records of military veterans, to immigration and naturalization records, and 

many more. NARA also serves the vitally important role of publisher of the Federal Register, the Code of Federal Regulations, the 

U.S. Statutes at Large and Presidential documents. 

In the area of Presidential libraries, NARA has been quite busy 

in recent years in adding both the Clinton and Nixon Presidential 

Libraries to its inventory while at the same time preparing for the 

upcoming Bush Presidential Library in Dallas, Texas. 

Another current challenge for NARA is the growth of electronic 

government records and the need for special computer systems for 

these records. The Electronic Records Archives program at NARA 

is aimed at preserving electronic records and at making them permanently accessible regardless of future changes in computer technology. The program has experienced problems over the past year, 


hsrobinson on PROD1PC76 with HEARING
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which NARA is addressing, and I look forward to discussing the 

issue further today. 

I am pleased to note that, using funds provided by this subcommittee, NARA will restore the evening and weekend hours that 

have been cut back as well as add to its workforce of archivists, although it is unclear if NARA’s fiscal year 2009 budget request 

would allow for these efforts to continue. I look forward to discussing this issue further as well. 

Professor Weinstein, we welcome you back to the subcommittee. 

We also welcome NARA’s Deputy Director, Adrienne Thomas, and 

NARA’s Chief Information Officer, Martha Morphy, who are here 

to help answer the subcommittee’s questions. Thank you all very 

much. We look forward to your testimony. 

Let me first say on a personal note that I was here this past 

weekend, working hard at my office. As I was driving down Constitution Avenue from Arlington, there were plenty of folks around, 

but the longest lines anywhere were in front of the Archives, and 

I kind of felt some kind of personal pride in that. 

Mr. Regula, the lines were incredible, especially those of the 

young people who were lining up. It was just wonderful to see. 

There were folks on the Mall. There were folks everywhere, but 

anywhere you went, the longest lines that were around the block 

were at the Archives, and that is a good sign for you, and it is a 

good sign for us, but it is also probably a greater sign for the country that there is interest in seeing those documents. So I congratulate you on that work. It is obviously part of the effort. 

Before we begin, I would like to recognize my colleague, a man 

who himself at the end of this year will have so many documents 

to turn over you cannot even begin to imagine. It is Mr. Regula. 

MR. REGULA’S OPENING STATEMENT

Mr. REGULA. Thank you, Mr. Chairman. There are not as many 

as you think, and the future is what we are talking about. I think 

the past is a prologue to the future. I believe that is chiseled on 

stone, and I use that often in speeches, but the past is a prologue, 

and we have to recognize that the past gives us the base on which 

to build our future as a Nation, and it is therefore very important. 

I think there will be three events that cause great focus on 

NARA this year: We have a Presidential candidate for whom 

NARA has preserved records from her time as First Lady. Of 

course, if she becomes the President, that will put the focus on 

those records more than there normally would be. 

Secondly, we have an upcoming Presidential transition, when 

you become legally responsible for President Bush’s records, and I 

suspect the lines will be maybe not as long as the Chairman described, but there will be a few lines down there to take a look at 

those, I would suspect. 

We have the upcoming launch of the Electronic Records Archives 

prototype to see if this massive undertaking will be operational. 

You will be pioneering in that respect, because if you have success 

in using electronic records in the Archives, it will set a standard 

not only across this country but across the world. I assume you 

have some contact with other countries. I am curious—and I will 


hsrobinson on PROD1PC76 with HEARING
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ask this in the question period—if other nations have archival 

records to the extent that we do. 

Thank you, Mr. Chairman. I will have some questions at the appropriate time. 

Mr. SERRANO. Thank you. 

Professor Weinstein, I want to congratulate the Archives on this 

publication you just handed me. That is really such an interesting 

one because those of us who know the history of Jackie Robinson 

know that he was not just a baseball player; he was a pioneer who 

took on issues. Very few people know about Lieutenant Jackie Robinson and the difficulties that he had in the military. This was 

quite an American. You know, he gets credit for integrating baseball. I submit that he integrated America, not just baseball. So I 

thank you for this. 

As you know, we ask you to hold your testimony to 5 minutes. 

However, your full statement will go into the record so we can have 

time to ask you questions. 

ALLEN WEINSTEIN’S TESTIMONY

Mr. WEINSTEIN. Thank you, Chairman. Thank you, Congressman 

Regula and members of the subcommittee. 

First of all, if I may, before I begin my formal testimony, I think 

your comment about April 1st and what announcement could not 

be made means that I probably should not submit my billion dollar 

budget. I believe that for the moment. 

Mr. SERRANO. That would be your joke on us. 

Mr. WEINSTEIN. Chairman Serrano, Congressman Regula, members of the subcommittee, and subcommittee staff, I am Allen 

Weinstein, Archivist of the United States, and it is my distinct 

pleasure to be with you today. I want to thank you, all of you, for 

the time taken from your busy schedules to meet with us on this 

year’s National Archives and Records Administration budget request and for holding this hearing today. 

I want at the outset to introduce my colleagues who accompany 

me at the table today. To my right is Adrienne Thomas, the Deputy 

Archivist of the United States, and who appeared before you last 

year in her role as Assistant Archivist for Administration. To my 

left is Martha Morphy, the Chief Information Officer at the National Archives. In that capacity, she oversees the development of 

the Electronic Records Archives, the ERA. 

I will provide a brief summary of my statement, and I will ask 

that my full testimony be included in the record, but I cannot forbear saying, Mr. Chairman, that here we have Serrano, Regula, 

Weinstein, Morphy, and Thomas. Is this an American blend or 

what? I am privileged to be with the subcommittee this morning. 

We are making steady progress towards an Electronic Records 

Archives that will ensure the preservation of and access to today’s 

electronic records far into the future. After setbacks experienced 

last summer, Lockheed has achieved each major milestone on ERA 

development over the last 8 months, and we will be prepared to 

take in the largest corpus of Presidential electronic records to date, 

from the Bush administration on January 20th, 2009, in short, on 

deadline. 


hsrobinson on PROD1PC76 with HEARING
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The National Archives is working with the private sector to 

digitize key archival series to ensure the widest possible access for 

the American public. Firms in the private sector are digitizing 

some of the most popular records in our holdings. As part of the 

Civic Literacy Initiative, we have created a public-private partnership with the Boeing Corporation and with the Foundation for the 

National Archives to develop a learning center at the National Archives in Washington to make the study of American history and 

civics more widespread and more engaging. My staff is working 

with the White House to plan a smooth transfer of the textual and 

digital records of the current administration to the National Archives in January 2009. 

During fiscal year 2007, the National Archives responded to 1.2 

million written requests; served over 135,000 researchers in Washington and across the country; hosted nearly 220,000 people at public programs; welcomed 2.9 million visitors to our exhibits in Washington and at our Presidential libraries; and received 35 million 

visits to our Web site. In 2 weeks, evening and weekend research 

hours in Washington, D.C., will return to their 2006 schedule 

thanks to the funds you provided in our fiscal year 2008 appropriations, for which we are deeply grateful. 

In those lines, Mr. Chairman, you saw surrounding the two 

blocks of the National Archives downtown building, every day, 

there are 5,000 people or more. It is unprecedented. Mr. Chairman, 

the National Archives building in Washington was built as a monument to the Charters of Freedom: The Declaration of Independence, 

the Constitution and the Bill of Rights. However, this building and 

the entire agency are much more than a series of monuments. We 

house the records of all three branches of the Government, and we 

respond to literally millions of requests each year from the executive branch, the Congress, the courts, and from the American citizens who own these records. Each day, we host area school groups 

visiting Washington; men and women seeking the stories of their 

parents and grandparents; scholars writing the evolving story of 

our Nation; and teachers anxious to learn how to better teach history and civics through the documentary evidence held in our National Archives. 

Our records management staff works with colleagues in other 

Federal agencies, in Congress, and in the courts to assure that we 

continue to hold the documents necessary for an accurate history 

to be written in the future. NARA’s preservation staff works to 

maintain the balance between preservation and public access to assure that these documents will be available for both research and 

display. Our museum staff and archivists assure that visitors and 

researchers alike find what they are looking for in the National Archives. The 1,350 people who work in the Washington, D.C., area 

and the 1,650 people who work in 17 States and 40 facilities 

throughout the country and in the District of Columbia are dedicated to our mission, which is to serve democracy by safeguarding 

and preserving the records of the three branches of Government, 

ensuring that the people can discover, use, and learn from this documentary heritage to promote civic education and to facilitate a 

historical understanding of our national experience. 


hsrobinson on PROD1PC76 with HEARING
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Mr. Chairman, as to the details of our 2009 request for funding, 

George W. Bush has sent to Congress a proposed fiscal year 2009 

budget that calls for $404 million for the National Archives and 

Records Administration. This request is framed in four categories: 

Operating Expenses; the Electronic Records Archives; the National 

Historical Publications and Records Commission; and Repairs and 

Restoration. 

For operating expenses, the President’s fiscal year 2009 budget 

request is $327,783,000, an increase of $12,783,000 over fiscal year 

2008. This includes funds to prepare for the George W. Bush Presidential Library, to accelerate public access to the Presidential 

records in our holdings and to provide storage for records and to 

continue working on reducing the backlog of unprocessed textual 

records. 

The operating expenses budget provides for the costs of the general operation of the agency, which includes rapidly rising energy 

and security costs; increasing operational costs of National Archives facilities around the country; and annual cost-of-living increases for the National Archives staff. Let me offer one illustration, one example, of a program funded within our operating expenses that is of particular interest to Congress, the Center for 

Legislative Archives. 

The Center houses the institutional records of the House and 

Senate, from the First Congress to the present, one half billion 

pages documenting the history of representative government in the 

United States of America. It delivers more than a million pages of 

records annually to support the current conduct of congressional 

business. 

As Congress moves from the paper to electronic preservation of 

its material, the Center faces a new challenge. Recently, the Center 

acquired over 900 DVDs of Senate hearings from the 108th Congress. These discs are the only copies of these hearings and are not 

reliable for long-term preservation. The challenge is to provide for 

the permanent storage and continued access to these important 

records. The answer to that challenge is Electronic Records Archives. 

The Electronic Records Archives, the ERA program, requests an 

increase of nearly $9 million. This higher funding level for ERA 

will allow the National Archives to accommodate a greater volume 

of electronic records; to bring more agencies into the world of electronic records scheduling; to provide public access with full content 

indexing and searching; as well as to provide a secure site for the 

Federal records. 

For fiscal year 2009, the President has declined to seek funding 

for grants for the National Historical Publications and Records 

Commission, the NHPRC, which is the National Archives’ grantmaking arm. The administration, instead, focuses the National Archives’ increases on its core activities for the preservation of Federal records. 

For repairs and restoration to facilities for which the National 

Archives is responsible, such as the National Archives at College 

Park, Maryland, the National Archives building in downtown 

Washington and the Presidential libraries, the President’s fiscal 


hsrobinson on PROD1PC76 with HEARING
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year 2009 budget requests $9,211,000 to maintain our facilities and 

to perform essential repairs. It is another vital part of our request. 

Mr. Chairman, in 2009, we celebrate the 75th anniversary year 

of the establishment of the National Archives. During the past 75 

years, the staff of the National Archives has found itself on the 

leading edge of change. Almost 30 years before the creation of the 

Freedom of Information Act, for example, archivists were making 

available—or ‘‘archeevists’’ depending on which you prefer—the 

records of the U.S. Government to the public in National Archives 

reading rooms. 

Beginning with President Roosevelt’s gift to the Nation and with 

Congress’s help, we shepherded the growth and development of the 

modern day Presidential library system. In the 1970s, we heralded 

the era of archiving electronic records by taking in the first permanent computerized records from Government databases. Today, we 

are taking the lead in archiving digital information with the development of the Electronic Records Archives. We have always embraced these types of challenges as part of our unique and important mission as guardians of the records. 

I will close, Mr. Chairman, with a little story that President Eisenhower liked to tell about a fellow who had just come to Washington in 1955. He was driving around and saw the National Archives building. He asked what happened in that building, and he 

saw carved on one of its pedestals the phrase ‘‘the past is prologue,’’ which you referred to. He asked the taxi driver what the 

motto meant. 

The reply was: Oh, that. ‘‘The past is prologue,’’ that is kids’ bureaucratic talk. What it really means is, you ain’t seen nothing yet. 

Mr. Chairman and members of the subcommittee, you ain’t seen 

nothing yet. We will continue to meet the challenges of the future. 

I thank you, Mr. Chairman. This concludes my remarks, and we 

welcome any questions you may have. 

[The information follows:] 


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HISTORICAL PHOTOS

Mr. SERRANO. We thank you so much. Before I begin my questioning, let me just ask you a fun question. 

This weekend, there were some publications that were put out 

for the opening of the Nationals Park. A lot of it had to do with 

Congress, with the House and the Senate’s involvement with the 

Washington Senators. There were games that were played to raise 

money a long time ago, and you see photographs, very old photographs, of Senators and of Members of Congress practicing right 

outside the Capitol for these charity games. We are talking about 

the 1930s and the 1940s. That kind of extracurricular activity, if 

you will, that is not legislative duty. The photographs of that, the 

films of that, who keeps that, if anyone? 

Mr. WEINSTEIN. Well, I would say it is probably divided between 

material kept at the Library of Congress and material kept at the 

National Archives. I would have to go check as to who, more precisely——

Mr. SERRANO. It was quite interesting. You know, as a baseball 

fan, it was interesting to me. It was also interesting to see how 

now the first pitch is thrown out as President Bush did so well, 

right over the plate, one on one with a catcher. In the old days, 

they would stand in the stands and throw it out to a catcher. Roosevelt threw it out to the whole team, and they were killing each 

other to catch the ball. It was really great. It was a great way to 

get a lot of Senators killed. 

Mr. WEINSTEIN. One point about that, Mr. Chairman, is there 

was a period when Members of Congress and their staffs spent 

much more time, if you will, in Washington; when moving around 

the country was much more expensive than it is today. Basically, 

you were here all the time, so there was much greater communal 

life going on with the Congress here, involving the Congress and 

the administration. 

Take the Supreme Court, for example. The Supreme Court building was not built until 1935 at least. So, basically, I remember Senator Moynihan was telling me that part of the fun of being a Member of the House or of the Senate was, if life got boring, you would 

just walk across the Capitol and watch a Supreme Court proceeding. So there was a greater measure of—I do not know what 

you would call it, but——

Mr. SERRANO. Now, it is a little different. If you want to see a 

real rush, just check the minute the last vote takes place when 

every Member goes running back to their districts. 

RESTORING HOURS AT THE ARCHIVES

Last year, one of the issues that we discussed was the extra 

hours, of restoring the hours. The subcommittee took care of that, 

and that was very important for this committee. Now we notice 

that there is no funding request for those hours. Does that mean 

that you might have to cut back again, or are we looking at a problem? Because, as you know, the subcommittee is very clear that we 

wanted those hours restored. 

Mr. WEINSTEIN. We not only have the funds to restore the hours 

this year, Mr. Chairman, but thanks to your generosity and to the 


hsrobinson on PROD1PC76 with HEARING
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generosity of the Congress, we also have the funds to hire a dozen 

new archivists and to establish a training program and basically 

improve the services available. So that will start on April 14th. It 

has taken some time just to gear it up, but all of this will begin 

on April 14th. 

Ms. THOMAS. Yes. As long as our base is funded at the level that 

was requested by the administration, then the extended hours and 

the restoration of the hours and the additional archivists are funded. 

Mr. SERRANO. Okay. That is good to know. 

FOIA MEDIATION OFFICE

Another issue, as you know, is that the President signed legislation late last year to establish an office to mediate disputes between government agencies and individuals requesting access to 

government information under the Freedom of Information Act. 

However, the administration’s budget request for fiscal year 2009 

includes no funding for this office at the Archives but instead requests funding to house the office at the Department of Justice. 

In order to establish this office at the National Archives as the 

law requires, how much of an increase would be needed in the operating expenses account? 

Mr. WEINSTEIN. Chairman, I think you can understand that, 

since the administration has basically taken another course in this 

regard, NARA cannot take action on this mission until there is the 

ability to—well, until we have been authorized to do that by law. 

We have not yet been authorized in that regard. The administration has gone in another direction. 

Mr. SERRANO. But you are authorized by law to establish it within the Archives. And the fact that the administration may be going 

another way, we still, I think, have to make provisions for the establishment of this office within NARA. 

Mr. WEINSTEIN. I think, if it comes to the fact of there being 

agreement on what the process is, you would find NARA capable 

of doing this. However, with the administration pulling this direction and with Congress pulling that direction, I can only guarantee 

one thing, which is that my arms are going to pull a little bit. 

Mr. SERRANO. I understand. We certainly do not want to put you 

in that situation, but I think it is pretty clear what the congressional intent is. I cannot for the life of me understand why the administration is funding it into the Justice Department. Since the 

Justice Department is the administration’s advocate in Freedom of 

Information Act disputes, wouldn’t it be, in your view, a conflict of 

interest to house this office at the Justice Department? Or would 

you rather not comment on that? 

Mr. WEINSTEIN. Well, with respect, I would rather not comment 

on that. 

Mr. SERRANO. I understand. 

Well, let me just, for the record, say that it was the intent of 

Congress to house it within the Archives, and we are going to follow that up because we do not want this to be handled improperly. 

We felt that this was something that needed to be done. The President signed it into law, and that is the way it should be implemented. 


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MISSING WHITE HOUSE E-MAILS

Professor Weinstein, I would like to ask you about the subject of 

the missing White House e-mails. As you know, a White House 

analysis of its records management system identified over 700 days 

in which e-mail records seem either impossibly low or completely 

nonexistent. Last September, the General Counsel of NARA wrote 

that NARA still knew nothing about the status of the missing 

White House e-mails. In late February, you testified before the 

House Oversight and Government Reform Committee on this issue. 

Has NARA made any progress since then in terms of getting cooperation from the White House on finding copies of the e-mail 

backup tapes or computer hard drives? 

Mr. WEINSTEIN. I would say that we have made progress but 

that we do not at this point have a complete accounting, and I 

would say that we are moving in that direction. If it is at all possible, Mr. Chairman, I would like to—Chairman Waxman has been 

very active on this front, as has Congressman Davis. We have met 

with them and with the White House folks on several occasions. It 

would be helpful to us—we have another meeting scheduled in the 

next week or two—if we see what happens between now and the 

next week or two before I make a firm statement on that issue. 

Mr. SERRANO. You are saying you would rather have a private 

meeting in the next couple weeks? 

Mr. WEINSTEIN. Let us see what happens in the next week or 

two. 

Mr. SERRANO. Professor Weinstein, I want to be clear that I understand what happens when an agency or the Congress is dealing 

with the White House, any White House for that matter, not just 

this White House—this one may believe in secrecy a little more 

than other past White Houses—but historically, any White House, 

any administration. So we do not want to put you in a situation 

of making statements you do not want to make. 

When you say you have made progress, is this progress in obtaining records or progress in obtaining knowledge about these 700 emails? 

Mr. WEINSTEIN. I would say progress in obtaining knowledge, but 

I would also say that it is my impression that Chairman Waxman 

and Congressman Davis have taken the lead in a bipartisan way 

in ensuring that progress should be made with monthly meetings 

between the White House and with NARA, and they are very firm 

on that point. We are prepared for these monthly meetings. NARA 

participated in one hearing and provided the committee documents 

and responses to requests, and it continues to meet and to work 

with the Oversight Committee. NARA also continues to work with 

the Executive Office of the President on this and related issues in 

anticipation of the January 20th, 2009, transition. 

I would simply say that the meeting we have coming up in midApril is a very important one to basically examine how much 

progress has been made and will be made. I would respectfully request that we provide you and committee staff with a fuller account of this as soon as the meeting has taken place. 

Mr. SERRANO. I accept that, and I appreciate your sensitivity of 

the issue. 


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Mr. Regula. 

INTERNATIONAL ARCHIVAL SYSTEMS

Mr. REGULA. Thank you, Mr. Chairman. 

Do other countries have archival preservation to the extent that 

we do? Do they have a similar agency? 

Mr. WEINSTEIN. Yes, they do, Congressman. There are similar 

departments. To some extent, some countries are ahead of us in 

certain areas. Some are not quite where we are. We have a newly 

active group called the International Council of Archivists, of which 

there is now a caucus of the major democracies within that group. 

We are part of that process. So, in the last year or two, we have 

made great progress in this regard, but my former deputy, Dr. 

Bellardo, as you know, is now our representative on that. 

Mr. REGULA. So there is a sharing of archiving techniques and 

information, et cetera, internationally? 

Mr. WEINSTEIN. No question. No question. I would say also, this 

is extended out to some new programs and new initiatives that we 

are developing, including one in which we have brought together 

the Israeli archivists and Palestinian archivists. We have never 

done that before. Each have problems and issues—training issues 

and other issues—within their own circles, and we have basically 

offered to work with them all on these issues. So we are taking an 

active role internationally. 

AMERICAN HISTORY EDUCATION

Mr. REGULA. There is much written about the inadequate level 

of American history being taught in our high schools today, partly 

because, perhaps, the leadership in education does not realize the 

value of history. This is a joke: What is the name of the history 

teacher in U.S. high schools? The answer is, Coach. I think that is 

a problem. Jokes aside, I am concerned. Yet, in this age of Internet, 

access is easy. 

What are you doing, if anything, to contribute to the history education of high school students? I think that is so important. Maybe 

the John Adams series has emphasized to some extent. 

Mr. WEINSTEIN. Every facility of the National Archives, from the 

Federal Register to the Presidential Libraries to the regional Archives to the Washington facilities, every one of these facilities has 

an educational program that has been expanded in the last 2 or 3 

years, and the programs are very varied. They range from the wonderful initiatives of the Truman and Eisenhower Libraries which 

mirror the White House situation room decision-making, these students find out how these issues were resolved and why; to the 

learning center that the Boeing Company in partnership with us 

helped put together, where we are bringing in dozens, hundreds of 

students to think through the historical issues that the country has 

faced; to the timelines, in our Johnson Library, Presidential 

Timeline, which is now a very important educational instrument 

nationwide. 

As to all of these instances, we are very grateful for the support 

we have received financially from the Congress and from the private entities like the Boeing Corporation. All of these entities are 

designed to show the focus on education, on history education, by 


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using documents to understand history, and they are having an impact slowly. 

Mr. REGULA. If I were talking to high school teachers, particularly history teachers, could I suggest to them that they might contact the Archives, and you would have interesting publications you 

could send them to illustrate how they could access this tremendous resource? 

Mr. WEINSTEIN. We welcome them 24/7, every day of the year. 

Just get in touch with us. We will have something that can be of 

use in their programs. We are now in contact with many of them. 

Mr. REGULA. That is very interesting. I think it is an important 

role. 

HISTORICAL INFORMATION PRIOR TO THE ARCHIVES

Incidentally, I am curious because of the John Adams series that 

has been playing on HBO, and we have these books by McCullough 

on 1776 and John Adams. Now, you said you are going to have 

your 75th anniversary. 

Mr. WEINSTEIN. Right. 

Mr. REGULA. What about the history, the information prior to 

that time? That is part of our Nation’s timeline. How do you get 

the material that covers the period prior to this 75 years? 

Mr. WEINSTEIN. Well, call Dr. Billington, and he will put you on 

to a great deal of this material. The Library of Congress, the 

Smithsonian. There are multiple sources of information. We do not 

rule out dealing with information that precedes 1934. That is just 

when the Archives was built. 

Mr. REGULA. So, even though you are only 75 years in existence, 

you reach back and gain as much of that period as possible in your 

archival records? 

Mr. WEINSTEIN. We have had a very good, cooperative program 

with our Canadian friends. I just went to Israel with our archivists. 

There is this collaborative effort. The Brits are now getting involved in this, as are other countries as well. But in the Canadian 

case, we are doing an exhibit that opens in May, and it will come 

here to Washington in October at the Canadian Embassy. It is on 

the Treaty of Paris and, basically, the result of that treaty is that 

the whole transformation of North America—— Mr. REGULA. Right. 

Mr. WEINSTEIN [continuing]. Kind of goes in this direction, and 

we go in that direction all at the same time, and it has never been 

understood as a whole. We are bringing a new perspective to that, 

and we are going to take on projects of this kind, which can train 

students and teachers as to how to use these historical documents 

and how to understand history more effectively. That is a major 

portion of what we are doing now. 

ARCHIVES AS A RESOURCE

Mr. REGULA. As to authors, such as David McCullough, or the 

film producers, such as those on HBO who produced the John 

Adams series, do they use your resources as a basis for what they 

do? 

Mr. WEINSTEIN. I hate to speak for David—he is a good friend—

but I think you will find, if you ask David or if you ask Ken Burns, 


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as to his World War II series, the answer would be yes, in a very 

strong way. 

Mr. REGULA. I would think it would be an invaluable resource to 

those that make historical series, such as Ken Burns and David 

McCullough. 

One other question, Mr. Chairman. 

REPAIRS AND RESTORATION OF PRESIDENTIAL LIBRARIES

In 2008, we provided $20 million for repairs and restoration to 

the Presidential Libraries of Nixon, Roosevelt, Kennedy, and Johnson. What is the status of these improvements that are undergoing, 

I assume, as a result of that allocation? 

Mr. WEINSTEIN. Well, we are finishing up the Nixon library. A 

new building of the Nixon library was called for, and that should 

be done a year from now. 

Ms. THOMAS. We are at the point with the Nixon addition of having—the bids were received, actually, this past week, and we are 

beginning to evaluate those bids now. We expect to let construction 

contracts in May, and it will take about 18 months to build the addition and then maybe another 8 to 10 months to get all of the 

records moved out to California. 

Mr. REGULA. Will this action go beyond making physical improvements to the facility? Will it include additional materials 

being put into the facilities of these four Presidents? 

Ms. THOMAS. For Nixon, it will allow us to ship the records that 

have been located at College Park at Archives II out to California. 

Mr. REGULA. Okay. 

Ms. THOMAS. Some of the artifacts have already been moved into 

space that the Nixon Foundation renovated, and they have provided storage area for it, but there was not enough room to renovate within the existing facility to take all of the textual records, 

so that is what the addition will provide, storage for the textual 

records. That will allow us to move all of the Nixon papers eventually out to the Yorba Linda facility. 

For the Johnson Plaza, which is another one of the projects that 

was funded in 2008, it is the last installment, the last Government 

installment on the repair of that area at the Johnson Library. I 

think that they anticipate that they will be finished by February 

2009, and we are basically doling out the funds as they need them 

to do the project. 

As for the Roosevelt Library, the funding in 2008 was to finish 

the design of the renovation of that library. Some funds had been 

provided before that to start the design process, and this will allow 

us in this year to complete the design of the renovation. 

Mr. WEINSTEIN. Let me say something about the Roosevelt 

records. I took a tour of that place not 2 years ago. It was desperately in need of repair at every level, just from one end of the 

basement to—just basic maintenance, and that is getting it now. So 

that is becoming done. In the Kennedy Library, we are getting 

started on the extension. Basically, that money has gone to purchasing the land that is needed. 

Ms. THOMAS. That is what this year’s project is, to buy the land 

that will allow us to build an addition onto the library. That will 

provide the records storage for a lot of the museum materials that 


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are now stored off site, and it will help us improve storage conditions of the papers within the library because they are, frankly, 

crowded. Sometimes they are in the aisles. It is not a good situation. 

Mr. REGULA. That would expand scholarly access, would it not? 

Ms. THOMAS. Absolutely. 

MILITARY CONFLICTS AND PERSONAL HISTORIES

Mr. WEINSTEIN. Let me make a point if I may, Mr. Chairman 

and Mr. Regula, about how one learns history. 

You were asking earlier about expanding the knowledge base of 

history. Last week, there was a story in all of the papers about 

bringing in a company called Footnote, which we work with, which 

digitizes a number of our Vietnam War records online, which is 

now basically managed by a technical process by which every name 

on the wall, on the Vietnam wall, has a file attached to it, which 

will expand and explain to relatives and friends and interested historians and scholars who that person was, what that person did, 

and what that person’s life was like. We are very proud of the fact 

that that has come together at no cost to those who use our facilities in that regard with the cooperation of the private sector, and 

that has expanded our knowledge base for the Vietnam era history 

significantly. We look for bargains, if you will, in that regard. We 

have to. We have to. 

Mr. REGULA. Thank you, Mr. Chairman. I will have questions for 

the record. 

Mr. SERRANO. Thank you. I may also say that the Archives 

played a role in, almost a mediation, when Ken Burns, who I think 

is just fabulous, did the piece on World War II. There was a lot of 

criticism that no statement had been made about the role of Hispanic soldiers during World War II, and he agreed and the folks 

agreed to go back. We know that the Archives played a major role 

in the addition, so what you finally saw on the screen was what 

had been edited, if you will, edited in the sense that they added 

information to it, and we know the Archives played a major role 

in that, and we thank you for that. 

I always say ‘‘our newest member.’’ Although, he is having a fabulous attendance year, and this counts. You may end up having a 

rookie season on our committee close to what Robinson had in his 

first year. 

Mr. BONNER. Thank you, Mr. Chairman. I was excited when I 

heard you were—not leaving the committee—but were going on the 

ticket, but I am sorry that I fell prey to your April Fool’s joke. 

Mr. SERRANO. Do you think I would help him? 

Mr. BONNER. I know you would in Alabama, yes, sir. 

Mr. SERRANO. Actually, he is more pro-immigrant than I am. No, 

I am only kidding. I am only kidding. That is the way to kill him. 

Just remind them he is pro-immigrant. Thank you. 

Mr. BONNER. Thank you, Mr. Chairman. 

Professor Weinstein, since so much has been mentioned about 

the National Archives’ role in Ken Burns’ film on the war, as the 

Member who represents Mobile, Alabama, one of the four cities Mr. 

Burns’ featured, I want to thank you for the role that you all 

played in that. It was a proud moment for the Nation to see so 


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many men and women from that important chapter in American 

history have a chance to put their voices on the record, and I think 

that what you provided certainly made it a much more comprehensive production. 

Mr. WEINSTEIN. Thank you. 

PRESIDENTIAL LIBRARY ATTENDANCE

Mr. BONNER. I think you indicated in your statement or I read 

somewhere that the Archives owns and operates 13 Presidential Libraries. What kind of attendance are we seeing at those libraries? 

I am sure some are, probably because of their locations, perhaps, 

getting more traffic than others, but what kind of records in terms 

of people coming in and out of those could we look at? 

Ms. THOMAS. Well, we may have to provide the numbers for the 

record since I do not think either one of us has got them on, you 

know, the tip of our tongues. However, libraries go through cycles. 

Obviously, some of the smaller and older Presidential Libraries, 

like the Hoover Library, evolve over time and become more of a 

service to their local communities and go beyond just the study of 

President Hoover to the community at large and the impact that 

he had on the area. The Eisenhower Library, too, is in that point 

in its history, I guess. 

You get, obviously, a lot of researchers coming into the most recent library, in the Clinton library, filing a lot of FOIA requests, 

trying to get access to the records as soon as they can. There is a 

lot of interest in the museum there, and I do not think that there 

has ever been a time when the attendance at the Kennedy library 

has dropped off. That is assisted by the fact that it is in a major 

city with a lot of population and in a city that draws a lot of tourists, so location does have a lot of impact on whether they continue 

to be a big draw or whether they tend to trail off a little bit like 

Hoover’s. 

Mr. WEINSTEIN. If you want your Presidential Library to be at 

the top of its form, attracting the maximum number of visitors, 

there are three things: 

First of all, it helps to keep your President alive, a live President 

who comes in from time to time and whose family comes in, who 

can mingle, who can raise interest in the general public nationally 

in the area. 

Secondly, location, location, location. It is the worst mistake one 

can make in picking his library without looking at the location. 

Can people get to the library easily? Are there other attractions in 

the area that other people can go to so that it becomes a day trip 

or a week trip and not simply some 500-mile out-of-the-way trip to 

the place. 

Finally, to what extent have you been creative, ‘‘you’’ being people at the Presidential Library, in using your foundations that call 

attention to the library and in developing relations with universities in the area? 

They are just matter-of-fact things. If one has paid careful attention to all of that, then you have done everything you can. 


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FUNDING OF PRESIDENTIAL LIBRARY FOUNDATIONS

Mr. BONNER. Well, the foundation part of your answer, Professor 

Weinstein, raises an interesting question because a lot has been 

written about who, prior to the National Archives becoming owner 

and operator of these libraries, helped pay for them during their 

inception. I know a foundation is often involved in funding the construction and in helping to run libraries while contributors to a 

foundation are sometimes kept confidential, and that has been the 

source of some controversy in recent months. 

Do you have an opinion about whether or not funding to a foundation should be more transparent and open, and whether or not 

donors should be disclosed? 

Mr. WEINSTEIN. I do not think we have any objection to identifying donors to foundations. I think, at some point, it becomes less 

than helpful to identify the donors of the Eisenhower Library, long 

dead and so forth. In the early years after a Presidential foundation takes shape, I think, if I am not mistaken, we would not object 

to that. 

RECOGNIZING THE MILITARY SERVICE OF HISPANICS

Let me, if I may, go back, because you and the Chairman said 

something before that I want to respond to. It had to do with whatever role we played in trying to get people talking to one another, 

getting a dialogue started between Mr. Burns and his colleagues on 

one hand and Hispanic leaders on the other. It was easy in this 

sense for us because both sides wanted to talk. They wanted to express their strong support for the purposes of the film, and they 

tried to make suggestions as to how it might be changed to make 

it more impressive. 

What we did more than anything else that, I think, sent a signal 

to people is that we invited two distinguished veterans—I will not 

mention their names here—to come to our Fourth of July celebration, which we do right on the steps of the Library. One was a 

decorated combat photographer, not Hispanic. One was an Air 

Force lieutenant colonel, Hispanic. They worked together to preserve the model for others to begin that discussion. I do not know 

what else happened, but that is what we did, and it worked from 

our point of view. 

‘‘NATIONAL TREASURE’’ FILM

Mr. BONNER. It did work. I guess the only thing I would add to 

what we have talked about this morning would be just a question 

that is sincere in its motive even though it may sound trite when 

I throw it out to you. 

The chairman indicated that this weekend he saw large crowds, 

and you have indicated there are large crowds here at the National 

Archives when people come to Washington, D.C. 

How has the movie ‘‘National Treasure’’ helped put you on a 

tourist map, say, compared to 3 years ago? Have you seen an increase in interest because of Hollywood? 

Mr. WEINSTEIN. Can we prove it? No. Have we seen it? Yes. Have 

we seen it in spades? Basically, the movie put us on the map for 

a lot of visitors. The question I had to answer more than any other 


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question the first year I was an archivist was, ‘‘Oh, you are the National Archivist. Do you work for the Smithsonian or for the Library of Congress?’’ I do not have to answer that question. So, yes, 

the movie ‘‘National Treasure’’ was an enormous help, and if we 

could step outside, I would tell you the things we would do if we 

could only get them to come back and do a sequel. 

Mr. BONNER. Well, as the father of a 12-year-old and of a 10- 

year-old who watched that movie repeatedly, when they came to 

see me in Washington a few weeks later, it was the first place they 

wanted to go. 

So, Mr. Chairman, thank you very much. 

Mr. SERRANO. Thank you. Thank you. 

ELECTRONIC RECORDS ARCHIVES PROGRAM

Let us talk about Electronic Records Archives program. 

With regard to the program, I understand that there has been 

some progress to report but that their initial operating capability 

has been pushed back from September 2007 to June 2008, that 

there has been at least $14 million in cost overruns and that the 

contractor has had to replace a significant number of his own staff 

working on the project. 

How confident are you, Professor, that the program will not experience any more setbacks, especially as NARA prepares to receive 

the electronic records of the Bush administration just over 9 

months from now? 

Mr. WEINSTEIN. Congressman, I am going to let my colleagues 

handle that, but I want to say, maybe, a few points of a general 

nature first. 

When we began experiencing difficulty and when it was brought 

to our attention, our first thought was not, how do we bury this, 

or how do we hide it, or how do we avoid having our overseers in 

Congress and appropriators not look at them? Our first thought 

was, who do we tell, the GAO, the congressional committees? You 

can check this out with your own staffs. Are we totally candid? 

What can we do to correct this in a minimum amount of time and 

with a minimum amount of damage to the system? That was our 

thought. That has been the impulse. 

This is a simple explanation. We meet every week. All of the senior leadership of the National Archives is involved in this. We 

meet. We go over things precisely. We demand the replacement of 

certain people. We have made a few changes in the staffing at 

Lockheed and with the rest. We have done that. Things, by and 

large, have gone fairly well. How confident am I? I am much more 

confident than I would have been a year ago. I would like Martha 

Morphy to replace me on the griddle and talk. 

Ms. MORPHY. I think one reason that we are much more confident about the program is because we restructured the contract. 

As a result of the restructuring, the way that the contract is set 

up is that there are small milestones or checkpoints that the contractor has to meet, and once they have met that checkpoint, we 

do extensive testing both functionally and technically to make sure 

that the pieces of the software are working and the funding is tied 

to the success of the testing. 


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So we have employed this over the past 8 months, and Lockheed 

has met every milestone. We do plan to deploy on time in June, at 

the end of June of 2008. At that point in time, we will be deploying 

the records management piece of the system. We will be working 

closely with four agencies to get their schedules in place and also 

to transfer records into the system. The goal of the first increment, 

besides getting the records into the system, is to make sure that 

they are stored safely. Then, in late November of this year, we are 

going to be deploying the additional capabilities that are required 

for the transfer of the Bush records, and that will include searchand-access capability down to the record level, and we will also be 

deploying the classified instance of the ERA system, but we really 

feel, just based on meeting those milestones, that we are on schedule and within cost. 

Mr. WEINSTEIN. The point, Mr. Chairman, I would like to make 

is that we are not waiting for some magic moment when things will 

be seen to be all in place or not. We are dealing with the detailed 

minutia of this process day by day, week by week, and we are 

happy to lead members and the staff of the committee—we are 

happy to take anyone through our facilities here, whether they are 

facilities in the College Park area or the ones in West Virginia, and 

I am happy to give them the most extensive briefings as possible 

and to answer any questions they may have. 

Mr. SERRANO. You are confident this time that this will work 

out? 

Ms. MORPHY. Yes. Because of the change in staff that Lockheed 

put in place, this is actually a very good thing. They are much 

more experienced and a much more technical staff than we had 

previously, and I think we are seeing a commitment on their part 

to get the project done as well. 

Mr. WEINSTEIN. Chairman, there will be no question as to whose 

responsibility it is if it does not move ahead on schedule. It is mine. 

It is mine. I am confident enough that it is moving ahead on schedule. 

Mr. SERRANO. Thank you. 

RECORDS PROCESSING BACKLOG

Professor Weinstein, you have noted in your testimony that the 

backlog of records processing continues to rise. How can NARA balance the need for backlog reduction and the need to have adequate 

staffing to pull records off the shelf and to provide other assistance 

for the public? 

Mr. WEINSTEIN. The short answer to that question, Mr. Chairman, is difficult because we have conflicting comparatives here, but 

we are hopeful that with some of the changes that we have proposed, particularly in the area of dealing with records that are classified, that we can have an impact on the backlog. Let me give you 

a small and, my staff tells me, oversimplified example of this. 

Until recently, if we were going to declassify records, we would 

have to talk individually to every person making a claim on that 

record, and we would have to do this step by step. For example, 

if there were an FBI file or a CIA file, we would have to spend 

months looking and going back and would have to go to any other 

agency that would have an interest in that. Now we are trying to 


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develop a system whereby we can collaborate with all of the agencies together. We can engage in dialogue as to whether something 

should be declassified or not. We classify way too much, and that 

has got to be dealt with. I think most of the agencies, interestingly 

enough, and others are very supportive because they, too, feel that 

they can develop a much more rational system for declassification, 

but step by step, we have no magic bullets here. 

Mr. SERRANO. You feel we have classified too much? 

Mr. WEINSTEIN. I think so over the years. I mean, you are talking to an archivist who for better or worse won the first freedom 

of information case for files of Government records from an Intelligence Agency back in the 1970s. It is now 2008. 

PUBLISHING THE FOUNDING FATHERS’ PAPERS

Mr. SERRANO. There is an issue that I know is of interest to Mr. 

Regula and also to Mr. Cramer and to this subcommittee. It is the 

amount of time it is taking to publish the papers of the Founding 

Fathers. For example, at the current pace, the papers of George 

Washington will not be fully published until the year 2023. The papers of John Adams will not be fully published until 2050. 

What can you report at this point about NARA’s plan to speed 

up the process for publishing these papers and for making them 

widely accessible? 

Mr. WEINSTEIN. Mr. Chairman, David McCullough and I and representatives of the Library of Congress and others testified to the 

other body recently on this issue. We have been charged by Congress, as you probably know, to deliver a report on how we may 

speed up production and make the papers more accessible, particularly online for those who use it online. We anticipate the delivery 

of that report by the end of April. That is the commitment we have 

made as to when we will have that done. We anticipate the report 

will address each and every one of these issues, but I think it will 

be unfair to people who are talking to us prematurely to discuss 

the issue now. Bear with us until the end of April. I will be happy 

to come in even before that to give you and your staff——

Mr. SERRANO. At the end of April? 

Mr. WEINSTEIN. Well, near the end of April. We will try to make 

it as early as possible. I will be happy to give you and members 

of the subcommittee and staff the full report once we have delivered it. 

Mr. SERRANO. Okay. My concern, Professor—and you know that 

I am one of the easiest people to get along with—is that too many 

things may be put off for further discussion because they cannot be 

discussed now. I just hope that at a certain point the subcommittee 

at least gets the information it needs to know where we are going 

with those issues. 

Mr. WEINSTEIN. You will have a full report this month. 

Mr. SERRANO. Thank you so much. 

There was a question also—I do not know if it is related to this, 

but there is an issue where some of these papers are being sent 

over to universities so that they can help in footnoting and in coming up with information. 

Am I on the right track here? 

Mr. WEINSTEIN. Yes. 


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Mr. SERRANO. But then that creates, maybe, a legal issue as to 

when they publish it. Does it belong to them or does it belong to 

you—to us? Or is that also under internal discussion now? 

Mr. WEINSTEIN. Yes. 

Mr. SERRANO. Okay. You are taking the Fifth on a lot of these, 

but that is okay. We will call it the Fourth. 

Mr. WEINSTEIN. All of these questions will be addressed, including the one about where we are going with the e-mails and so 

forth. 

Mr. SERRANO. Mr. Regula, I am sure you are aware that this is 

the issue where, if you just publish the papers as they are, the average citizen will not know what they were talking about in those 

letters or in those documents. So folks who know about these 

things look at them, and then they put them in the perspective of 

what happened at that time—‘‘he wrote to him about this because 

they were trying to talk about slavery and this is what resulted.’’ That is fine, but then they publish it at the local university press. 

There is a question there as to, do they now end up owning that 

stuff? They could be collaborators, but I do not think they should 

own it. These documents belong to the public. 

Ms. THOMAS. One thing to remember, though, is that most of the 

projects are not solely funded by Federal grant money. There are 

many private donors and contributions from universities that go 

into these projects, so you have got mixed funding sources, which 

complicates the issue. 

Mr. SERRANO. I understand that, but just because somebody—

and I am not being sarcastic but honest. Just because somebody 

takes the Constitution and cleans it up does not mean that they 

own it now because they cleaned it up. It is still my Constitution. 

They just helped clean it up as a public service. 

Incidentally, one of the big arguments—and we mentioned Mr. 

McCain before, Senator McCain—is how much we earmark to 

schools so that every so often they can actually do something for 

the good of the country and not just for themselves. 

Mr. Regula. 

PRESERVING RECORDS OF EARLY PRESIDENTS

Mr. REGULA. Thank you, Mr. Chairman. 

As I understand it, you have responsibility for 13 of the Presidents in the preservation of their archival materials; is that correct? 

Mr. WEINSTEIN. From Herbert Hoover to the President. 

Mr. REGULA. What about those prior to that time? Who takes responsibility for the preserving of records of the earlier Presidents? 

Mr. WEINSTEIN. Well, I am afraid that until the mid-20th Century when Franklin Roosevelt made this whole process fashionable 

by donating his own papers to the Government by building a facility for himself, before that, it was catch as catch can. In the case 

of the Founders, of course, there were people all too ready to collect 

their papers, but in the case of many Presidents between the 

Founding generation and the middle of the 20th Century, papers 

were disposed of in a very disorderly fashion. Some Presidents simply burned their papers. Others took them home with them. There 

is no, ‘‘What happened?’’


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Mr. REGULA. There was history made there that has not been recorded. 

Mr. WEINSTEIN. Yes, sir. I am afraid so. 

Mr. REGULA. As to the issue of publicizing the records of the 

Founding Fathers, I can understand it is a complicated process and 

that there are those who want NARA to take a leading role in 

digitizing these records. Is that possible? 

Mr. WEINSTEIN. We have digitized 28 million pages this year 

alone. 

Mr. SERRANO. Wow. 

Mr. WEINSTEIN. That is largely through public-private partnerships, through various firms that have basically met our specifications. We have been very clear as to public ownership, public use. 

We are not digitizing to lock up. We are digitizing to improve access by and large; 28 million online in 1 year. 

Mr. REGULA. I notice the President’s budget requests no funds for 

the National Historic Publications and Records Commission. I, personally, have felt that we should fund this. If there are no funds, 

that is one more step backwards in getting the historical records 

archived; is that correct? 

Mr. WEINSTEIN. Well, I guess what I can say, Congressman, is 

that, without funding, a great many projects would be delayed. 

Mr. REGULA. I am sure that is true. 

Mr. WEINSTEIN. We wish it were otherwise. 

Mr. REGULA. If we were to include money for this program, then 

you could achieve the goals of the National Historical Publications 

and Records Commission; is that correct? 

Mr. WEINSTEIN. From your mouth to God’s ear. 

Mr. REGULA. Well, we have to look at that, Mr. Chairman. 

Mr. SERRANO. We should. 

Mr. REGULA. I have a number of other questions for the record. 

Mr. SERRANO. I also have questions for the record. 

I would like to recognize a member who has never thrown away 

a piece of paper in her life. 

Ms. WASSERMAN SCHULTZ. You sound like my husband, Mr. 

Chairman. You do not know how true that is. If you look in the 

dictionary for ‘‘pack rat,’’ you will find Debbie Wasserman Schultz. 

CULTURAL HERITAGE MONTHS

It is good to see you, Dr. Weinstein. Thank you so much for all 

of your efforts, particularly on the highlighting of the cultural heritage months that we have adopted by resolution and that the 

President has issued via proclamation. The one that I am partial 

to, obviously, is the Jewish-American Heritage Month. You do such 

a wonderful job with each of those months in developing programming. 

I wonder if you can talk a little bit about how we might expand 

your ability to do more, what your outreach efforts are beyond just 

encouraging people to come to the Archives to attend that programming and just if we are doing enough to help you advance those 

months. 

Mr. WEINSTEIN. Congresswoman, let me start by saying all of 

you are doing enormous amounts for us. The fact is that the budget 

has increased significantly in the last 4 years, and I cannot tell you 


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how grateful we are. It translates into major stuff happening. So 

that is a big ‘‘thank you’’ for all of you and for all the staffs. 

One of the things I should have done this year and did not—at 

least not yet, but I will start now—is have meetings with those 

who represent the various heritages and who would like to be acknowledged and responded to. I do not know how many folks would 

turn up for things like that, but it is worth finding out. I am going 

to start to have those discussions this week. 

In connection with the Jewish Heritage issue, I think this was 

discussed before you got here, but one of the things that I started 

doing with my staff and with the Canadian archivists just last year 

is trying to develop a program that will bring together the Palestinian and the Israeli archivists, and we have done that. It is a 

positive, simple, constructive move designed to help technically 

both societies. So I do not know if that fits under Jewish Heritage 

or under Palestinian Heritage, but it fits somewhere. 

What else could we do? I just do not know. I am open to suggestions, hopefully to cost-effective suggestions, but I am very open to 

suggestions. 

Ms. WASSERMAN SCHULTZ. I look forward to hearing about your 

plans for the Jewish-American Heritage. 

Mr. WEINSTEIN. I would like to come see you and talk to you 

about it. 

Ms. WASSERMAN SCHULTZ. Please do. That would be great. 

Mr. SERRANO. Thank you. The Bronx will play a major role in 

that month. 

Ms. WASSERMAN SCHULTZ. I hope so. 

Mr. WEINSTEIN. There was a column on the Bronx in the New 

York Times just a few days ago. You probably noticed that. Those 

of us who went to Yankee Stadium as kids are very interested in 

this new prominence given to the Bronx. The chairman and I share 

a passion for Puerto Rico. My wife is Puerto Rican, and her heritage is Puerto Rico. I am sure we will have something on Puerto 

Rican heritage in this program. 

Ms. WASSERMAN SCHULTZ. Do you share the same passion for the 

Yankees? 

Mr. WEINSTEIN. Yes. I grew up with the Yankees. 

Ms. WASSERMAN SCHULTZ. Me, too. 

HISTORY OF INDIVIDUALS

Mr. SERRANO. Professor Weinstein knows how to get a good 

budget out of me. 

Before we let you go, we were just talking about history. It is so 

interesting. I know this is a very touchy subject if you do not prepare and say it properly. We all celebrate—and I mean this sincerely—the importance of Jackie Robinson. What is interesting 

about history is Larry Doby came up in July of that year, and it 

really proves the point of being number two. I mean, was the 

American League in the United States that Larry Doby found dramatically different from the one that Jackie Robinson found in 

April? Yet, you have to work hard to find information on Larry 

Doby. You know, it is very interesting. 


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Well, Professor, we thank you. We are not going to keep you any 

longer. We have some questions for the record. We applaud the 

work you do. 

On a personal basis, as you know, one of the things that I find 

that troubles me the most about our political system or the way 

people behave toward elected officials is, if you come from a certain 

district, people want to classify you as only being an expert on 

issues having to do with that district. So, when you represent the 

poorest congressional district in the Nation, people want you to 

talk only about social services and so on. Yet, one of my favorite 

issues is this concern of mine that our country just does not pay 

enough attention to its history, the history of individual people. I 

mean, what you have done, for instance, this month in showing 

Lieutenant Jackie Robinson and what he faced as a member of the 

military before he took on the incredible fight that he faced as a 

baseball player. These are American stories. 

I feel sadness to hear, as you told Mr. Regula, that before Herbert Hoover we basically kept no history. As I have told you, there 

is a lack of including the history of our territories—Puerto Rico, 

Guam, Samoa, the Virgin Islands—in the history of the United 

States. We need to know what role all of these people played—the 

Native Americans and so on. So some folks have questioned 

through our time: Why do you devote so much time to that? Well, 

I guess, if you do not know where you have been, you do not know 

where you are going. That is why I applaud the work you do. As 

long as I am on this committee, I will do whatever I can to help 

you do your work properly. 

Mr. WEINSTEIN. Mr. Chairman, is it now the time for me to ask 

you for that billion dollars? 

Mr. SERRANO. No. It would be your April Fool’s joke to me, and 

it would be not nice to do that. We thank you for your testimony 

today. We thank all of you and for the fine work that you do and 

for your service to our country. 

Mr. WEINSTEIN. Thank you to all of you. First of all, thank you 

for being here. You do not have to be here. There are many other 

places to go to, but you are here, and it shows an interest in history. It shows an interest in NARA and in the National Archives. 

We are all very grateful for that. We have 3,000 people, which is 

not a huge number, around the country, but I can assure you and 

this committee and Congress is getting valuable money out of this 

staff. These are not work-too-little people. These are people who 

work 24/7 throughout the year. 

I want to tell you that I never in my wildest dreams imagined 

that a kid who grew up in the Bronx, whose parents are immigrants like yours, would end up with the privilege of overseeing 

this agency. I can tell you that I honor that privilege and will try 

not to disappoint you in any respect. 

As to the heritage day, we have got to get started on that. I 

would like to see you and everybody here. Let us develop a robust 

program that does not have to be repeated year by year but which 

can be assumed. It is time for an event. 

Mr. SERRANO. Well, I feel the same way coming from where I 

came to where I am today. 

Mr. WEINSTEIN. Thank you, Chairman. 


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Mr. SERRANO. We thank you. Just remember that Ms. 

Wasserman Schultz is closely looking at Jewish Heritage Month— that is important—and that Mr. Regula has 1,357,000 volumes of 

papers. So we are very glad to have had you today. 

The hearing is now adjourned. 


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WEDNESDAY, APRIL 2, 2008. 

UNITED STATES OFFICE OF PERSONNEL MANAGEMENT 

WITNESS 

LINDA M. SPRINGER, DIRECTOR, UNITED STATES OFFICE OF PERSONNEL MANAGEMENT 

CHAIRMAN SERRANO’S OPENING STATEMENT

Mr. SERRANO. The subcommittee will come to order. I welcome 

you to this hearing of the Financial Services and General Government Subcommittee. 

Today’s hearing is on the fiscal year 2009 budget request of the 

United States Office of Personnel Management. The director of 

OPM, Linda Springer, is here with us and we welcome you. 

Director Springer has been at the head of the agency since 2005, 

and this is the second time she has appeared before the subcommittee. This is the second year of the subcommittee, so that 

makes a lot of sense. Last year you testified at our hearing on 

issues in the Federal workforce at which we discussed the many 

challenges the government faces in recruiting, training and retaining qualified employees. We hope to discuss these important issues 

again today well as get a better understanding of your fiscal year 

2009 budget request. 

The Federal workforce is changing and OPM has a leadership 

role in managing this change. We must therefore be certain that 

OPM has the capabilities and resources to do this job. 

OPM has asked for a discretionary budget in fiscal year 2009 to- taling $228,900,000, which is a $50 million decrease from the fiscal 

year 2008 appropriation. Aside from this relatively small discretionary budget, OPM also has responsibility for managing tens of 

billions of dollars in retirement, health, and life insurance trust 

funds for Federal employees. An important component of OPM’s 

budget request is $15.2 million to continue the retirement system’s 

project. The goal of the new retirement system, also known as 

RetireEZ, is to transform OPM’s retirement recordkeeping and annuity processing so that Federal employees and retirees are better 

served. 

The first stage of implementing RetireEZ occurred in February, 

and the subcommittee looks forward to discussing this as implementation is moving forward. I am sure we all share the opinion 

that the timely and accurate payment of employee retirement benefits is an extremely high priority. Do you handle the congressional 

pensions also? 

Ms. SPRINGER. Yes. 

Mr. SERRANO. So it is important that they deliver those checks 

on time. 

Mr. REGULA. Absolutely. 


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Mr. SERRANO. Especially next January for you. 

Mr. REGULA. Right. And I am on the old system. 

Mr. SERRANO. Don’t remind me of that. 

And we need to be certain that RetireEZ will deliver on this 

promise made to employees and retirees. The success of this new 

system is particularly important in light of the significant number 

of retirements from the Federal workforce that are expected in the 

near future. OPM’s retirement system needs to be ready to address 

this surge. 

The increase in retirements will also have an effect on human resource management across the government. The expected loss of 

experienced employees, or the brain drain, from Federal agencies 

means that agencies must work hard now to recruit the best and 

the brightest people. 

The capacity to recruit such talent will depend on the opportunities and work environment that agencies have to offer and also on 

the ability of this government to provide competitive compensation 

that is commensurate with employees’s abilities. Congress has an 

important role in this regard since we must ensure that the funds 

are available to offer competitive salaries and benefits. Congress 

must also support funds for employee training and investment as 

well as support policies that promote equality and fairness in the 

workplace. 

Unfortunately, the President’s discretionary budget request 

across most government agencies falls short of providing the resources that are needed to ensure a strong Federal workforce. This 

troubles me because I believe this budget lacks the recognition that 

we must invest in a strong Federal workforce now in order to avoid 

costly problems in the future. 

I know, Director Springer, that it is not your fault that the overall discretionary budget is, in my opinion, inadequate, so is this is 

not a criticism of you or OPM, and we want to be clear on that. 

However, I raise my concern to you because OPM needs to be a 

forceful advocate for Federal workers in all respects, including 

budgeting for human capital needs within the government as a 

whole. 

So we welcome you here today, we look forward to your testimony. We look forward to working with you to make sure that our 

Federal workforce is strong. We in this committee try not to bring 

personal items to the table, although before the Supreme Court 

Justices, I asked them whether a person born in Puerto Rico could 

run for President. They said if they settled McCain they could settle Serrano. Unfortunately, Mr. Regula is leaving Congress and 

come January, I want no problems with his payments. The man 

has been here long enough to earn every single bit of that money. 

He will be out there on the farm providing good milk and good beef 

for us in the city. And I am very happy. 

Mr. REGULA. What an introduction. 

MR. REGULA’S OPENING STATEMENT

Mr. REGULA. Thank you for the commercial, Mr. Chairman. Well, 

I hope I will be out there helping OPM recruit talented young people. Because the success of any enterprise depends on people, 

whether it is an education system, good teachers make all the difVerDate Aug 31 2005 20:57 Jun 07, 2008 Jkt 042551 PO 00000 Frm 00152 Fmt 6601 Sfmt 6601 E:\HR\OC\B551P2.XXX B551P2

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ference in the world. I used to say when I was funding the Department of Education, good principals, good schools, and good teachers, good schools. And effective agencies depend on talented people. 

The challenges of the Federal Government today are ever changing and ever new. Terrorism, we did not hear about that 15 years 

ago, pandemic flu, competitiveness, an aging workforce, all of these 

challenges are really in your department. And the agencies have to 

depend on you to help them recruit good people. 

And what I would hope to do is to make young people, particularly those that have a political science inclination, to realize the 

potential that exists in the Federal Government as well as State 

and local government. I remember, and I said this to any number 

of classes of students I have talked to, that you said when you were 

here last year, that 60 percent of the Federal workforce will be eligible to retire in the next 10 years. This is the baby boomers. And 

that is going to open up a lot of new jobs. It also it is going to create a huge need for qualified people to fill those jobs. And so your 

agency has an extremely important role to play in ensuring that 

there are good people available in the Federal Government to make 

this system work. 

I am interested that you are hosting a career fair in Columbus 

at the Ohio State University. I like that idea. I hope that I can help 

you get some more in Ohio. And perhaps some up my way. Because 

people need to understand the opportunities that exist. So we appreciate your leadership and I look forward to hearing your testimony this year. 

Mr. SERRANO. Thank you, Mr. Regula. Director Springer, we 

hope that you stay within the 5-minute testimony period. Your full 

statement will go in the record. And then we will be able to have 

a back and forth on the issues. Thank you for being here with us 

today. 

DIRECTOR SPRINGER’S TESTIMONY

Ms. SPRINGER. Thank you, Mr. Chairman, and members of the 

subcommittee. I do appreciate the opportunity to appear before you 

again this year to discuss OPM’s appropriation request for fiscal 

2009. As you know, OPM does provide a variety of products and 

services to nearly 1.8 million employees in the Federal Government. Some of our products and services include managing health 

insurance for about 8 million current and former Federal employees and their families, administering retirement services as you 

have noted for nearly 2.5 million retirees from all branches of Government, and completing 90 percent of background investigations 

for contractors and for Government agencies. 

We are requesting $20 billion to carry out our mission in fiscal 

2009. Of that total, about 99 percent, or 19.8 billion, is requested 

for mandatory programs with the balance of 228 million for discretionary activities. 

The discretionary request reflects 211 million for salaries and expenses and 18 million for the Office of Inspector General. The total 

discretionary request reflects a net decrease of 15.4 million compared to the fiscal 2008 enacted level. I also want to note that OPM 

operates a revolving fund for the administration and operations of 


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a number of our programs including the Federal investigative services and our Governmentwide training efforts. 

OPM’s request does include funding to improve services that we 

provide to Federal employee annuitants and their families through 

our retirement and benefit programs, most notably. On February 

25th of this year, OPM did begin the rollout of the automated new 

Federal retirement system, RetireEZ. This budget requests an additional 15.2 million for the continuation of that project. And we 

appreciate the support that you have given us in the 2008 budget 

and previously with respect to the program, and you will see a good 

return on your investment. 

These funds will allow us to continue the conversion of the paper 

records to electronic format as well as continued implementation 

and rollout of the technology and the new system. 

As administrator of the Federal Employees Health Benefits Program, one of the things we do is negotiate with all of the private 

insurance carriers to ensure the viability of the system. There are 

283 health care plans that cover over 8 million people, as I mentioned earlier. Over the years, we have been pretty good at negotiating and maintaining our benefit levels while we have kept premium increases on average relatively modest. Compared to the private sector we had an average increase of 2.1 percent in premiums 

compared to 8.7 percent for the private sector for the year 2008. 

In the area of human resources management, our 2009 budget 

will allow OPM to develop new workforce recruitment strategies 

and tools. It builds on the things that were mentioned as far as the 

on-site programs at colleges and universities, and we will be developing an end-to-end life cycle reform of the current recruitment and 

hiring process. 

We are particularly proud—I want to note—of programs that we 

have initiated at three of the Nation’s military hospitals across the 

country. In those programs, we provide on-site counseling, training 

and assistance to wounded warriors who are looking for job opportunities in the Federal Government. I get letters from those people 

saying that without this counseling, they were finding it difficult 

to break through the process. And so we are very proud of that. 

In the area of ensuring oversight of agencies, we will be using 

funds to implement best practices in human capital management, 

making sure that agencies are complying with merit system principles, veterans preference and other standards that are the hallmark of how the Federal Government treats its people. And as you 

say, people are at the heart of what the agency’s success is focused 

on. 

I can tell you at the beginning of fiscal year 2008, 15 of the 26 

major agencies that are scored in the President’s management 

agenda have met those standards. That was zero in 2003, so we are 

making good inroads there. And most people, 99 percent of Federal 

employees, are at agencies that are meeting those standards. But 

we have to continue to be vigilant. 

OPM will continue funding with this budget our HR line of business and enterprise human resources integration. Those support eGovernment efforts that have brought us things like the e-Payroll 

initiatives going forward. 


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Our 2009 request will also help us provide a variety of ongoing 

services that relate to security activities and other compliance that 

we need to do as an agency. 

Now, I mentioned the revolving fund. This covers ongoing services that are financed by other agencies through this revolving fund 

agreement. It is essentially a business service provision that allows 

us to provide various e-training products, professional development 

assistance, technical assistance in consulting on human resources 

management, as well as very notably the investigative services that 

we do for the purposes of security clearances and also making sure 

that people are suitable for employment. 

For those revolving fund responsibilities, the budget includes an estimated $1 billion in obligations; again, those are spread across 

other agencies’ budgets that, in effect, are our customers. 

The OPM budget request includes mandatory appropriations—as 

I have noted that is the biggest part of our budget—to fund the 

Government contributions to the health benefits and life insurance 

programs for our Federal annuitants. 

I am happy to take your questions, but I do want to conclude by 

saying that OPM is proud of the broad role that we have in supporting the Federal workforce. By doing our job well, we believe 

every other agency and department will be better able to carry out 

their mission because in the end it is a function of people as you 

have noted. So again, I thank you for the opportunity to testify and 

look forward to your questions. 

Mr. SERRANO. Thank you so much for your testimony. 

[The information follows:] 


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RETIREEZ PROGRAM

Mr. SERRANO. Let’s talk about the RetireEZ program. You unveiled it on February 25, 2008. How many retirements have been 

processed by the new system since it began operating and what is 

your assessment of how well the initial rollout of the system is 

going? 

Ms. SPRINGER. We believe it is going well. Since our rollout, we 

have had from the group that is eligible, wave 1, which is 26,000 

employees, we have received 37 requests for retirement. Of those 

37, there are three that are still pending, so that means 34 have 

actually been processed. 15 of those had functionality that was not 

yet programmed into the system, and as you know, we are doing 

a phased rollout of functionality that means the calculations. So 19 

could be calculated using the system. 

Of those 19, 13 matched completely. The other six had some element that did not match completely. So we have essentially a 70 

percent batting average on the new system for the retirements we 

have gotten so far. And that is why——

Mr. SERRANO. What was the percentage? 

Ms. SPRINGER. About 70 percent. So that is why we are continuing to calculate in parallel using our old process as well as our 

new process. Because we look at every case to make sure that it 

matches up. 

If we find that it does not, that tells us something that we need 

to fine tune. And what we are talking about are fine tunings for 

those that did not match 100 percent. 70 percent is about what we 

would have expected going out. But again, everybody gets that parallel safeguard quality control of the old system check. 

Now, even the old system goes faster, and this is important to 

note. Every single one of these people have gotten their checks the 

first month in the full amount. No interim checks for any of those 

34. And the reason is that even for the ones that are outside the 

system, we are now using automated data, not the paper data we 

had before. All of that paper data has been converted as part of 

this project. 

So all the data is there, the errors have been fixed and the holes 

have been plugged and that means, even in the old process, we can 

get this done faster because of this project at the same time that 

we are fine-tuning the other 30 percent. 

Mr. SERRANO. You said the batting average was 70 percent, 

which early in the season and people do hit 700 in the first few 

games easily. Now their batting average usually goes down to 300. 

Do you expect your 700 to go up? 

Ms. SPRINGER. Yes. 

Mr. SERRANO. Okay. So unlike the Yankees, yours will go up? 

Ms. SPRINGER. Well, we want to win the World Series. Let’s put 

it that way. 

Mr. SERRANO. Some reporter who just walked in would not think 

we were talking about something this serious. 

LEGACY SYSTEM

OPM issued a formal response on Monday to the Government Accountability Office review of retirement systems modernization. 


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The report notes that OPM has continued to use legacy systems to 

check retirement applications for accuracy and that the new system 

matched the legacy system in the majority of cases, was your wording. 

Could you describe the cases in which the new system and the 

legacy system did not match? How many such cases have there 

been and what actions is OPM taking to address them? Are you incurring any additional costs by processing retirements using both 

the new and legacy systems? And how long do you expect—the last 

part of this question is how long do you expect to be using both? 

Ms. SPRINGER. All good questions. We are not incurring any additional costs because, in effect, this becomes part of our testing protocol which is ongoing. All of the functions in wave 1 apply to 

waves 2, 3, 4 and beyond. So if we find something that does not 

match—and again, the percentage and the numbers, as I said, was 

a 70 percent match, 13 out of 19 cases, the others were ones that 

had functionality that hadn’t been programmed yet. So the example 

numbers I had in the report were 13 out of the 19. And so the people whose cases are running the parallel process, again, this is a 

very small subset of what we do. We process well over 100,000 

cases a year, so for this small sample to run in parallel is not incurring any extra cost to OPM. For those six cases that did not 

match precisely, we go back to our programmers on this team and 

say this is something that needs some fine-tuning. Build that into 

our test plans and, in effect, it becomes real live testing. 

Mr. SERRANO. Let me ask you a question on the issue of diversity 

in the workforce. And on the prior questions I would hope that you 

keep the committee informed as we go along as you go along as to 

how we are doing. 

Ms. SPRINGER. Absolutely. 

Mr. SERRANO. I want your batting average to be 1,000 for the 

whole season. 

Ms. SPRINGER. Yes. 

Mr. SERRANO. If you could keep us informed, that would be very 

helpful to us. 

Ms. SPRINGER. Yes, we will. 

DIVERSITY IN THE WORKFORCE

Mr. SERRANO. The most recent annual Federal equal opportunity 

recruitment program report to Congress notes that minorities continue to make gains in representation within the Federal workforce. However, the report also notes that women in general and 

Hispanics lag in representation within the Federal workforce as 

compared to the civilian labor workforce. 

How does OPM assess agency efforts at achieving a diverse workforce and how does OPM assist agencies to make these efforts successful? Why do women, in your opinion, and Hispanics continue to 

lag behind other groups in their representation within the Federal 

workforce? 

Ms. SPRINGER. The progress, as you note, has been very modest. 

It is going the right direction, but it is going very slowly, and in 

particular, in the areas that you mentioned. 

And how does OPM deal with this? There is a monitoring and 

oversight part that we do and then there is a guidance component. 


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The monitoring is related to our human capital assessment program that this budget funds and that requires agencies to report 

to us on their efforts with respect to diversity, with respect to hiring, training, development, professional development opportunities 

within the agency, because, as the report notes, this is an issue at 

senior level as well as through the General Schedule ranks, and in 

some cases more so at senior level. So there is an oversight piece 

of this. And those scores become part of what is reported on in the 

President’s Management Agenda, in addition to our own human 

capital assessment that OPM does for each agency. 

But more specific than just oversight and reporting is what guidance that we provide and how is OPM engaged with agencies and 

the broader community. There are a number of ways we do this. 

There are standards that we publish. You could see them at 

OPM.gov. We work with the chief human capital officers as well as 

within OPM itself to direct agencies on how to achieve greater diversity. This is one of the things we do regularly and keep up to 

date. 

We also are participating with the broader community, including 

individual nongovernment groups, running training sessions, and 

running things with respect to our candidate development program 

to try to get people to apply for opportunities to move into senior 

ranks. So, we believe that there are a number of fronts on which 

we are acting, both from the guidance and promotion standpoint as 

well as in oversight and ultimately reporting. But it continues to 

be an area where we have not achieved the level that we should 

achieve and want to achieve, and even though the progress is going 

in the right direction, it has been very small. 

OPM PROGRAMS TO ENCOURAGE DIVERSITY

Mr. SERRANO. Let me just do a—before I turn to Mr. Regula, a 

follow-up on this. Your 2007 annual employee survey asked employees to respond to the statement that: OPM’s policies and programs promote diversity in the workplace. That was the statement. 

Over 46 percent of the employees selected ‘‘neither agree nor disagree,’’ ‘‘disagree,’’ ‘‘strongly disagree’’ or ‘‘don’t know.’’ what programs are established or planned at OPM to encourage the recruitment and retention of a diverse workforce and how will OPM follow 

up on these survey results to ensure that employees are aware of 

the agency’s diversity initiatives and can actively participate in fostering their success? 

Ms. SPRINGER. Let me just add a little window into that. I want 

to make it a little more granular. The numbers that disagreed or 

strongly disagreed were less than 10 percent there, and I don’t 

have a basis of comparison from the previous to see if these have 

improved or not. But clearly, you know——

Mr. SERRANO. Well, it was ‘‘neither agree nor disagree.’’ 24.9 percent. 

Ms. SPRINGER. Yes. 

Mr. SERRANO. ‘‘disagree,’’ 4.7 percent. ‘‘strongly disagree’’ 4.7, 

‘‘Don’t know,’’ 11.9. 

Ms. SPRINGER. That is right. And each of those has significance. 

So what do we do? We have I would say just about every month 

some element of awareness and championing of diversity at OPM, 


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combined with people from outside the organization as well as inside. We have guest speakers, and promotion of people within the 

agency, and what they do, particularly with respect to their heritage. 

Also, if you look in important leadership positions at OPM we 

have a diverse group. I won’t say as diverse as some people would 

like it to be, but I know in hires that I have made that I have been 

mindful. 

But again, if half of our workforce is saying that either they are 

not sure or they disagree with that statement, then that is the 

value of the survey it helps us to say that we need to do more than 

what we are doing. 

Mr. SERRANO. Thank you so much. Mr. Regula. 

RETIREMENT PLAN INVESTING

Mr. REGULA. Thank you, Mr. Chairman. You manage the Federal 

retirement system. I assume that is every dimension. Do you do 

the investment policies or do you hire professionals to invest? 

Ms. SPRINGER. The Treasury Department handles the investment. That’s the one thing we don’t do. 

Mr. REGULA. So that the money that is set aside for these retirements like in the 401(k)s, Treasury does all of that investing? 

Ms. SPRINGER. The 401(k) is the Thrift Savings Plan and so that 

is separate. And that is essentially self-directed. We choose, each 

of us, that is, in the Thrift Savings Plan, choose our own options. 

OPM has nothing do with the Thrift Savings Plan. But with respect to CSRS and FERS and all the others, Treasury handles the 

investment. 

AGENCY RECRUITMENT

Mr. REGULA. Do you recruit for agencies or do they do their own 

recruiting of new people? 

Ms. SPRINGER. Agencies do their own recruiting. It is not centralized. However there are times that we will assist them. For example, the Department of Homeland Security at one point had a very 

large need for people in a short time, and we actually helped them 

with their recruiting. 

There are various things we do along the way, and we certainly 

operate the USAJobs Web site. That is an OPM responsibility. But 

the actual hiring and interviewing is decentralized. 

Mr. REGULA. Is that all done here or do you have satellite offices 

around the country? 

Ms. SPRINGER. That hiring is done throughout the country. 

Mr. REGULA. But they are an extension of your agency? 

Ms. SPRINGER. To the extent that OPM is involved, yes. 

Mr. REGULA. Yes, that is what I mean. I noted that you had a 

career fair in Columbus. I think it is over, perhaps. 

Ms. SPRINGER. I think it is going on today, right now. 

Mr. REGULA. Is this a first or have you done several of these? 

Ms. SPRINGER. We have been at Ohio State before and there are 

several locations, universities across the country, that we have developed a relationship with. And so we have found that it is good 

to continue a presence as opposed to hopping around from place to 

place. At the same time, though, we do have an annual Web cast 


hsrobinson on PROD1PC76 with HEARING
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that is interactive that we run from here with the Partnership for 

Public Service that covers thousands, essentially every college or 

university is able to join that Web cast. And so this is just one way. 

The Ohio State one is a continuing relationship. 

Mr. REGULA. In career fairs, you would make available information about the huge variety of careers that are potentially in the 

Federal Government; is that correct? 

Ms. SPRINGER. Yes, yes, and this is not just open. We have various agencies on campus. Agriculture, NASA, VA, Homeland Security, we expect that this particular one, about a thousand students 

will come. 

Mr. REGULA. So the agencies put some of their people in the career fair, you manage them, but they have their people there? 

Ms. SPRINGER. Yes. There are about 50 agencies overall that will 

have a presence. 

TRAINING PROGRAMS

Mr. REGULA. Do you have any programs to train or educate people coming into the workforce? 

Ms. SPRINGER. We do, and they are at various levels. Some are 

agency-specific. USDA for example has a whole host of programs, 

and there are other agency programs, too. But we have some programs that OPM runs. We have various e-learning programs, distance learning so you don’t actually have to be in a classroom. 

And at the supervisory levels, we have actually bricks-and-mortar management development schools on the east and west coasts, 

and at the highest level, we run the Federal Executive Institute for 

the Senior Executive Service. 

Mr. REGULA. Well, with a change in administration, many jobs 

change that are of a political nature but you don’t get involved in 

that do you? 

Ms. SPRINGER. No, I don’t. 

Mr. REGULA. Just the employees who are career employees, if 

you will? 

Ms. SPRINGER. Yes, which is the vast majority. 

REHIRING RETIREES

Mr. REGULA. I noticed you have some authority to rehire retired 

people who can take their pension and then come back to the agency, and in effect, they are drawing from two different sources. Is 

that commonplace? 

Ms. SPRINGER. It is not commonplace today. What we have today 

is the ability to grant a waiver to allow, under very specific limited 

circumstances, a retired Federal employee to come back and be 

able to get their pension, continue to get their pension and be paid 

for the work they are doing today. 

But that is very limited. What most organizations have is the 

ability to bring a retiree back and let them get paid for their current work. Under our proposal, if they are qualified to do that, then 

they would be entitled to be paid and not have to have an offset 

with their pension. We can’t do that generally. We can’t just do 

that because we have openings or we want someone to come back 

and train new employees. We can’t do that at Federal agencies 

today. 


hsrobinson on PROD1PC76 with HEARING
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Mr. REGULA. As an agency you can’t. 

Ms. SPRINGER. No agency can unless they have a waiver authority that Congress has granted specifically for them. And a couple 

of agencies have that. NRC has that for example, but most agencies 

don’t. They have to come to OPM for specific permission, but it is 

only in very narrow circumstances. 

What we have proposed to Congress, and it came last March, 

March a year ago, still working its way through, is a part-time 

availability to bring back retirees from the Federal Government 

who know these jobs better than anybody. This would still be in 

very limited circumstances, and I have offered some additional limitations to try and get this through, such as a cap on the number 

at any one agency, for example, or a sunset. 

But I hope we can get this done because we are in the position 

today where we can hire a retiree from General Motors who is getting their pension from General Motors, and we will pay them for 

their full salary for coming to work at the agency. They don’t know 

the agency. The person that retired from that agency 5 years ago 

that wants to come back and help us that knows the job won’t get 

paid the same way. And I think that is unfair. This bill would fix 

that. 

ELECTRONIC RECRUITMENT TOOLS

Mr. REGULA. Have you moved into using electronic devices to assist you in the recruiting and providing of qualified people for the 

agencies? 

Ms. SPRINGER. We are using it and we are increasingly using it. 

The biggest thing is probably the USAJobs capability that lets people apply online. It coaches them in their resume but lets them 

start the whole process electronically. We are doing things to make 

ourselves more visible on search engines like Google and others so 

if someone is looking for a job, a student or whatever, we will show 

up at a higher priority. We did not used to do that. There are other 

electronic tools along the way that will, I think, be employed over 

the coming year. 

Mr. REGULA. Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. Senor Kirk. 

Mr. KIRK. Mucho gusto, gracias. 

Mr. SERRANO. He probably just broke some Federal work force 

rule; right? 

Mr. KIRK. Habla Americano, no Espanol. 

ROLLOUT OF THE ELECTRONIC RETIREMENT SYSTEM

We have looked at the deployment of electronic retirement system as you described, and I would first like to ask for the 26,000 

employees that you have, those are GSA employees; right? 

Ms. SPRINGER. They are partially GSA. Also OPM, Railroad Retirement Board, National Archives, but GSA manages the payroll 

for that group. So, mostly GSA, but some others. 

Mr. KIRK. I am particularly happy that the rollout is OPM. 

Ms. SPRINGER. Well, we are too. 

Mr. KIRK. So that it is OPM first working out the kinks in the 

system. Can you briefly describe for us the rollout of the rest of the 


hsrobinson on PROD1PC76 with HEARING
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system, the other bureaucracies that will be encompassed in the 

schedule. 

Ms. SPRINGER. Yes. There are four other waves. Of those waves, 

three of the four are related to payroll systems, payroll providers. 

So where GSA was the first group, another one would be the defense group, with DFAS, their payroll provider. The National Business Center, Interior Department, has a group. That will be the 

third one. Then there is one run out of the Department of Agriculture National Finance Center. 

The fourth will be the Postal Service, and actually that is the 

next one that is to come. Postal Service by itself is about 700,000 

people, so that will be a very large group compared to what we 

have done. 

Mr. KIRK. When we talk about of the 37, we are talking about 

a very small number right now. Fifteen the functionality did not 

fit yet. Is there a set of functions that you saw from the 15 that 

were not foreseen that suddenly were foreseen? Why did those 15 

not fit? 

Ms. SPRINGER. Good question. And in the GAO report, our report 

back to GAO, I should say, and to Members of Congress just issued 

on Monday, if you look at appendix 2, what you would see, there 

is a list of 150 functions. And these 150 comprise the inventory of 

all the calculations that RetireEZ will have to do once everyone is 

in. 

Mr. KIRK. This is what the legacy system told you is everything 

that we do? 

Ms. SPRINGER. Yes, and our experts that do these calculations. 

So they are things that are rated on two bases. Would they apply 

to wave 1 and how frequently are they encountered? Of the 150, 

100 roughly would apply to wave 1. Some are related to congressional plans, by the way, and you are in one of those other waves. 

So they would not apply. 

Of the hundred, we said we can’t have all hundred on day one. 

What are the most frequently encountered functions? And so on 

that chart, you see that they are rated frequent, occasional and infrequent. We selected the 15 that we thought were going to be the 

most frequently encountered. But there are some others on there 

that can and do show up. 

Mr. KIRK. So you actually planned for a lack of full functionality 

in the rollout? 

Ms. SPRINGER. That is right. And this is one of the comments 

from GAO. You don’t want to put something out there if it has not 

been fully tested. 

Mr. KIRK. When do you think you will have all 150? 

Ms. SPRINGER. The first step is to get the rest of the wave 1 functions, the rest of the 100. We are planning to have those around 

late May, maybe early June. 

Mr. KIRK. Is this is an imminent issue that you are involved 

with? 

Ms. SPRINGER. Yes, absolutely. And it should be viewed as a continued rollout. We will, every few months, add something new. The 

next thing would be the balance of the hundred, the wave 1 

functionality. That is what we are shooting for. Is it possible it 


hsrobinson on PROD1PC76 with HEARING
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might be just 90 out of a hundred, but we are shooting for the balance of that. 

Mr. KIRK. It is very good that, first of all, we have this applied 

to OPM, and second, it is good is that we have this apply to Congress and we are experiencing what our Federal workers are. 

Which wave do you expect Congress to be included? 

Ms. SPRINGER. Congress is in a wave that is toward the end of 

this calendar year. 

Mr. KIRK. So would you be able to set up so that Members could 

walk through them and see sort of how the system works and how 

the legacy system works? Because what I want to do is get the 

awareness of what our Federal employees will see and go through 

and the best way to do that is to have Members of Congress look 

at their own. 

Ms. SPRINGER. Yes, the answer is yes, we can do that. What we 

are doing first, and this has actually been scheduled for, I believe, 

Monday, this Monday, is a demonstration of the functionality, not 

with specific Members of Congress as test cases, but just how it actually will work. And it is important to note that this tool will become available to every one of you. Right now it is available only 

to the benefit officers at the wave 1 agencies. 

But ultimately, as we get more data cleaned for the employees—

we don’t want people going on and finding that their data has problems—you will see what you will all be able to do with this new 

system, in modeling and in estimating. 

Mr. KIRK. So you think that an individual member would be able 

to see their own records sort of in the fall? 

Ms. SPRINGER. I am going to say later this year. That is our plan. 

Mr. KIRK. I want to be able to see what my military retirees and 

my postal workers are looking at because of how this program is 

rolling out. I am very aware of this system. But for all of my colleagues, I want to get them sort of up to speed. 

The last thing, when does the burden of proof shift from the legacy system calculating this to the automated system calculating it? 

When do you see that the legacy system then becomes advisory 

only? When does that happen? 

Ms. SPRINGER. Let me say when it won’t happen and then when 

I think it will happen. It won’t happen until we have all of our 

waves moved over, and that is scheduled for spring of next year. 

So I think it is some time after that. It most likely would be some 

time in 2010. However, in other words what I am saying is we 

won’t shut it off. But it isn’t as if it is actually a system, it is people. 

Mr. KIRK. Right. Last thing. I am trying to think critical mass 

for the experience of Federal workers. When do you think instead 

of 37 we have 100,000 who have gone through the electronic? When 

do we hit that number, do you think? 

Ms. SPRINGER. That is roughly the amount that we do in a year, 

in a full year. But putting in the population of 700,000 of Postal 

employees is going to mean that we get more like 2,000 requests 

a month as opposed to the 30 or so that we get out of wave 1. So 

that is going to accelerate pretty quickly in the summer. And so I 

think we will have achieved a volume that will be very informative 

to us in the summer. 


hsrobinson on PROD1PC76 with HEARING
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Mr. KIRK. Thank you, Mr. Chairman. 

Mr. SERRANO. Senor Bonner. 

Mr. BONNER. Thank you, Mr. Chairman. I am bilingual as well, 

but I speak South Alabamian, you might need a translator. 

Mr. SERRANO. I am from the south Bronx, I understand that 

well. 

HIRING ADMINISTRATIVE LAW JUDGES

Mr. BONNER. Madam Director, I appreciated hearing you tell the 

Chairman that you were looking forward to winning the World Series and I fully acknowledge that my question may be parochial so 

I don’t expect you to win it necessarily with the ability to answer 

these questions as this moment. But if you could work with your 

staff to get answers back we would appreciate it. 

As you may be aware the House Ways and Means Committee 

and the Social Security Administration were very critical of OPM’s 

efforts to facilitate the hiring of new administrative law judges, 

while more than 700,000 people awaited Social Security hearings 

last year. I understand that OPM is responsible for developing 

qualifications standards, conducting examinations and developing a 

register of candidates from which agencies can hire. And I know 

that litigation and the development of a new examination of candidates has delayed hiring significantly. 

Unfortunately, that does not change the fact that in my home 

district in Mobile, Alabama in 1996 we had a backlog of more than 

6,000 cases. Today that number has grown to almost 8,000 cases. 

Of the 12 ALJ positions in the Mobile office, only nine are filled. 

And with the nfew hirings announced by the Social Security Administration in February of 2008, some of these positions may be 

filled this month. But even those ALJs would not be handling a full 

docket until the end of the year, some 9 months from now. 

Last spring, I believe, OPM opened for the first time since 1999 

a registry for applicants. For 8 years, some of my most qualified 

constituents waited to apply for these ALJ positions. Unfortunately, the registry was shut down within a few hours after it 

opened. Of the 1,250 applicants reviewed, I am told that roughly 

600 were ranked and available for hiring in October of 2007. Of 

those 600, the Social Security Administration has announced that 

it will hire 175 new ALJs. And I have also been told that this was 

not a one-time opportunity and that the registry was the first in 

a series of vacancy announcements that will be posted. 

So here is the question. When do you anticipate that the 600 candidates will be exhausted and when will the next vacancy posting 

occur? 

Ms. SPRINGER. Okay. That is a good recap, I think, of how we 

have gotten to where we are. There was lots of litigation, most of 

it predated me, but partly as a result of the oversight of the Congress, we really did get into high gear last fall, and very quickly 

did open up and reestablish the register, if you will. And I can’t 

speak to all the reasons why Social Security disability claims backlogs have increased, and it is certainly not just a matter of ALJs 

but at this point as you said correctly, the register was refilled. 

The short period of time for applying was part of the fact that, 

for expediency, because Social Security did have an immediate 


hsrobinson on PROD1PC76 with HEARING
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need, we limited to the 1,200 plus amount the application pool from 

which we would interview, review, and rate and score and ultimately establish the new register. If we have kept it open longer, 

it would have delayed our ability to get people on the register and 

available for Social Security and others. 

So at this point, as you said, Social Security has hired off of that 

register. And we are in the process right now of polling Social Security and others as to what their need is going to be going forward. 

If the balance of the register is not going to be sufficient based on 

what they tell us, we will get ready to do another replenishing, if 

you will, and go through that process again. 

Obviously, we are in a position to do that quickly because we 

don’t have to go back and reestablish the credentials and the priorities and the questions. It is there. It is current as of last fall. And 

so it is just a matter of executing. 

So we will be able to do that, do that quickly, and it is a function 

of what our customers tell us they are going to need. 

Mr. BONNER. I think a follow-up would be that given that there 

was an announcement and it was closed a few hours after it 

opened, how can OPM assure us that the next posting will be open 

for a reasonable period of time in order to allow the receipt of some 

of the most qualified applicants. It is one thing, in my view, if you 

get 600 people in and say that is what we need to start the process, 

it is another thing to know whether those 600 are the most qualified applicants. 

Ms. SPRINGER. Of course, if we did not think they were qualified, 

the 1,200 wouldn’t get through the process. So we believe that the 

ones that were added were fully qualified. 

But I think there are two things that are going to make sure 

that people who want to apply get into it. One is that this has gotten so much publicity. We don’t have years and years that have 

gone by where it has been dormant and it has been off the radar 

screen. Now it is very much on the radar screen, and I think there 

are some things that we learned from last fall that will allow us 

to be very visible when that opens up again. I don’t expect same 

problems. 

Mr. BONNER. Would some of those things that you learned allow 

you to perhaps prepare for the next round, learn from some of the 

things that have happened in last time? And specifically, is OPM 

considering announcing that the current list of candidates would 

sunset in X number of years and do a total redo of the list or just 

periodically top off the list with new candidates? And if you were 

to do a redo, how often would that be? Every 5 years? Every 10 

years? 

Ms. SPRINGER. I would like to get back to you, Congressman, I 

don’t have that answer with me right offhand, if I may. 

[CLERK’S NOTE: OPM provided the following response:] 

OPM will reopen the ALJ examination to new applicants as the need arises. As 

part of its determination, OPM monitors the size of the current register as it responds to agency requests for new ALJs and regularly requests that agencies with 

ALJs projected how many ALJ hires they are likely to make over the next few 

years. In addition, it should be noted that the current examination can be opened 

for 10-point preference eligibles under 5 CFR 332.311. Those 10-point preference eligible veterans who successfully complete the examination are added to the register 

even while the examination is closed to other candidates. 


hsrobinson on PROD1PC76 with HEARING
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Mr. BONNER. Two more quick points, one more quick point. I am 

hopeful that OPM and Social Security Administration have established a better working relationship as a result of this and that at 

some point in the near future, we could see as you have indicated 

in your testimony that we will be getting things done. 

Ms. SPRINGER. Yes, I can assure you that we do have a better 

relationship. We have people that talk on a weekly basis. And as 

I say, we are proactively reaching out to them as we do our other 

customers to know what their needs are in advance as it relates 

to the ALJ piece of their overall process so that we can be more 

proactive. 

Mr. BONNER. Thank you. Thank you, Mr. Chairman. 

Mr. SERRANO. Mr. Ruppersberger. And no baseball jokes. 

Mr. RUPPERSBERGER. No baseball jokes. This is my 5 minutes 

and since you were strict—— Mr. SERRANO. No, no, I wasn’t strict. He went over. 

Mr. RUPPERSBERGER. I would hold back for the second one if you 

would like. 

Mr. SERRANO. Any comments I would make about the Orioles 

would never go off your time. 

Mr. RUPPERSBERGER. That is good. We are rebuilding. We are 

having a psychological issue in Baltimore right now. We cannot all 

be Yankees fans with all the money in the world. At least we don’t 

have Steinbrenner. 

Mr. SERRANO. I did not say a word. By the way, I got your earmark request. 

Mr. RUPPERSBERGER. Thank you very much. You are a really 

good chairman. I appreciate it. You have to have a sense of humor 

sometime. 

Ms. SPRINGER. I am just hoping that the Phillies get to the World 

Series this year. 

Mr. RUPPERSBERGER. Does Philadelphia have a baseball team? 

Ms. SPRINGER. This year we do. 

Mr. RUPPERSBERGER. National League though; right? 

Ms. SPRINGER. Right. 

SECURITY CLEARANCES

Mr. RUPPERSBERGER. I want to get into the issue of security 

clearances. I know it is a major issue. I happen to be on the Intelligence Committee and I chair the Technical Tactical Subcommittee 

that oversees NSA, and the overhead architecture, so I deal a lot 

with the clearance issue. It is my understanding that OPM does 

about 90 percent of the clearances. 

Ms. SPRINGER. Yes. 

Mr. RUPPERSBERGER. And that anything above top secret goes to 

the intelligence agencies. Do you agree with that? 

Ms. SPRINGER. That is essentially right. 

Mr. RUPPERSBERGER. Do you agree with that process? 

Ms. SPRINGER. Yes, I do. 

Mr. RUPPERSBERGER. Good, so do I. And the reason I say that 

from the Intelligence Community and what is really at stake with 

respect to penetration from China, Russia, Al Qaeda whatever, it 

is important that that clearance I think is handled within the intel 

agencies. 


hsrobinson on PROD1PC76 with HEARING
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On the other hand, when you look at the whole clearance process, I think it is a positive move trying to get reciprocity within and 

among clearances. If you have 25,000 government workers every 

year that move from one agency to another and yet their clearances 

don’t come to where they need to be, that seems to me to be really 

not a good system at all. Do you agree? 

Ms. SPRINGER. Absolutely. Absolutely. 

Mr. RUPPERSBERGER. Are you supposed to come out with a report 

April 30? 

Ms. SPRINGER. Yes. 

Mr. RUPPERSBERGER. Where are you now, can you give me a 

heads-up? 

Ms. SPRINGER. Yes, there are four of us that are champions of 

that effort. One of them is director McConnell. We both have significant responsibilities in this area. 

Mr. RUPPERSBERGER. McConnell is DNI, Director of National Intelligence. 

Ms. SPRINGER. Yes. And we have DOD and OMB as well. What 

we are doing there is looking at not just adding more people or 

automating certain pieces of what was previously a manual process, because those are things that OPM already is doing and can 

do. That is how we have gotten the backlog down and made things 

faster, but what we are looking at in this group under the President’s direction is a whole new way of doing this balance between 

risk and technology, and reciprocity and the governance over this. 

Are there too many steps? Who sets the standards? If we have separate standards for seeing if someone is suitable for a job versus 

whether they are executable for a security clearance, are we asking 

the same types of questions twice? 

Are we using the best automation possible? Are there things 

going on in the private sector, in financial services or other areas 

that maybe are doing things in the way of clearance technology 

that we need to use? That report on the 30th will identify areas 

that we need to look for and things that we need to do that will 

redo the whole process, and modernize the whole thing. 

CLEARANCE PROCESS

Mr. RUPPERSBERGER. How about the issue of implementation? 

We have so many studies on Capitol Hill and we don’t get to the 

implementation. This is very important for the national security. I 

would suggest to you that 50 percent of the clearances we have we 

don’t need. If you really looked at clearances that are necessary are 

the ones that involve our national security, things that are very, 

very classified and confidential. 

There are many, many workers whether it is NSA, CIA, Department of Energy, wherever they may be that probably don’t need 

the clearances that they are getting right now, now because they 

are really not into the area where you need to have that. And another thing, and I would suggest, and I ask if you are doing this 

now. That we look at the whole clearance process and see whether 

or not we need all the clearances being processed. I don’t think 

there has been a strong study or investigation into that. I know 

GAO had a hearing about 2 years ago before the Government Reform Committee and they were starting to examine the situation. 


hsrobinson on PROD1PC76 with HEARING
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But I think they were afraid to take it on, to be honest with you. 

Have you looked at the whole structure to see whether or not we 

need the clearances that we have now, which would save a lot of 

time. Then we could put more effort into the ones that we need. 

There is still a big backlog of contractors that costs us money and 

affects national security. And with NSA and NRO and a lot of 

these other places that we have to rely on the contractors, and yet 

we are not getting those cleared as quickly as we need. 

Ms. SPRINGER. The answer to your question is yes. That is something that is part of this. Do we need the level—not just the clearance, but which level of clearance is it? How can we look at the 

standards that go with those different levels to ensure that we are 

asking and investigating to the extent that we need to but not beyond that. That will help the process go. 

The other thing this involves is not just the investigative piece, 

but the adjudication piece. The adjudication piece today, which is 

where the agency takes the results of the investigation and makes 

the decision, that can range anywhere from 5 or 7 days to a year 

in the amount of time that an agency takes to make that decision. 

And so we could use all the technology in the world to get the 

information, but if it stays there at the agency that person isn’t 

going to get hired or get their clearance. It has to be an end-to-end 

review, and that is what we are looking at. 

CLEARANCE COMPLETION TIMES

Mr. RUPPERSBERGER. Sometimes it seems that we ought to look 

at where agencies do things right and agencies that are not doing 

as well as they should. I think the NSA does an excellent job in 

what they do. They can complete a clearance in 3 months and their 

investigation process is a lot more thorough because of what is at 

stake because their clearances are above top secret. 

Has your department looked at the NSA how they do it? And 

have you been able to learn from what they do versus where you 

are now? The problem is that you have a heck of a lot more volume 

than they do. 

Ms. SPRINGER. I believe we have, because I know we work with 

all of those agencies not only in this task force, but more broadly. 

One of the things that I know that we do as well though is we monitor how every agency’s doing in all the facets. We know who is 

doing well within our realm in adjudication. At OPM, for example, 

on average we get it done in 7 days. So it is a wide range, and with 

OMB’s leadership, all of those agencies are counseled on ways they 

could get faster. They are making progress, but you know they are 

not where they need to be. 

Mr. RUPPERSBERGER. You have been working on the timeline target of 90 days. Where you are actually as far as your average? I 

know that is your goal, but I assume you are not quite there yet. 

Ms. SPRINGER. We are on average end-to-end, for the Secret 

clearance, I believe—I will get back to you for sure on this but I 

believe we are around 112 days. 

[CLERK’S NOTE: OPM provided the following response:] 

The Intelligence Reform and Terrorism Prevention Act of 2004 requires 80 percent 

of the background investigations for initial security clearances to be completed within an average of 90 days. OPM is meeting and exceeding these statutory goals. Of 


hsrobinson on PROD1PC76 with HEARING
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the 586,569 initial clearance investigations OPM received during Fiscal Year 2007, 

80 percent were completed in an average of 67 days (92 days for 64,722 Top Secret 

and 63 days for 404,534 Secret/Confidential).] 

POLYGRAPH TESTS

Mr. RUPPERSBERGER. When do you use polygraph? 

Ms. SPRINGER. I need to get back to you on that. That is at a 

level that I don’t know. 

Mr. RUPPERSBERGER. I have tried because of the committee that 

I am on, the other committee, the Intelligence Committee, we look 

at a lot of these issues, and sometimes we track where we have certain individuals whether they are contractors or actual employees. 

And you have situations with it that polygraph is mandated because of the type of clearance that it is. And you have individuals 

that would take a polygraph, and they would fail the polygraph on 

an issue such as relationships with terrorists which is really kind 

of absurd if you look at somebody’s background. 

And then the polygraph examiner, you fail that polygraph, they 

say come back in 3 months or 6 months and we will redo it. And 

that is usually when we get calls to Members of Congress. They are 

told if they failed they must wait, that is ridiculous, this person 

should have another polygraph examiner. 

My concern there is the issue quality of the people who are giving the polygraphs. And when you have someone whose background is such that the polygraph is the last issue that needs to 

be done, yet they are put back 6 months later, when, in fact, we 

have gone this far, we have spent the money that we need to do. 

We need to have a consistent program and make sure we have a 

background on the quality of our polygraph examiners. 

In the one case, another polygraph examiner came in, they relaxed the person, the person passed. Now that is costing our government a lot of money. And are you evaluating that? Are you looking at that issue? I would like to hear you get back to my staff on 

the issue of polygraphs and how you handle that, how you make 

sure that we have consistency with polygraphs, and when somebody fails it and they have gone through all the background checks 

that we do not just put them in the queue for 6 months later. 

Ms. SPRINGER. Let me get back to you. That is out of my range. 

I am not even sure that we use polygraphs or to what extent. Let 

me get back to you. 

[CLERK’S NOTE: OPM provided the following response:] 

OPM does not conduct polygraph examinations as part of its personnel security 

investigations. Only an executive branch agency that has a highly sensitive intelligence or counterintelligence mission directly affecting the national security may 

use the polygraph for employment screening and personnel investigation of applicants and appointees. However, OPM approves and annually renews the use of the 

polygraph by these agencies under the authority of Executive Orders 10450 and 

10577, as ameded. OPM follows the standards it formerly presecribed in Federal 

Personnel Manual Chapter 736, section 2–6, title Use of the Polygraph in Personnel 

Investigation. Renewal requires the requesting agency to recertify that it continues 

to meet OPM’s standards for use of the polygraph in employment screening and personnel investigations. 

In addition to meeting OPM’s standards, agencies seeking renewal must meet the 

uniform personnel security community standards agreed to by the agencies in the 

U.S. Security Policy Board’s Polygraph Memorandum of Agreement. 

Finally, the Department of Defense’s Polygraph Institute (DoDPI), the executive 

agency for polygraph screening, conducts quality assurance reviews of agencies’


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polygraph programs pursuant to the procedures in the Federal Psychophysiological 

Detection of Deception Examiner’s Handbook. The reviews are conducted at least 

every two years, and the results are provided to OPM and the respective agency’s 

security office. 

Mr. RUPPERSBERGER. Probably more polygraphs are used in the 

Intel community. 

Ms. SPRINGER. I don’t think we do. I think that is strictly in the 

Intel. Let me get back to you. 

Mr. RUPPERSBERGER. I think it is. You don’t have to get back unless it isn’t. 

Ms. SPRINGER. Okay. 

RECRUITMENT IN THE TERRITORIES

Mr. SERRANO. Thank you. Part of what I have been doing Director Springer, is trying, since I became Chairman of this committee, 

to make our government aware of something that it seems not to 

be aware of at times, and that is outside the 50 States, we have 

territories where American citizens live and work and are covered 

by Federal laws and by the Constitution, as well as serve in our 

Armed Forces. So whenever possible, I try to inject the whole issue 

of how are you working with the territories. 

With the issue of recruitment, most agencies tend to recruit within the 50 states. What would it take for us to begin to recruit, 

something that I would encourage, outside the 50 States and recruit in the territories also? On the issue, for instance, of the lack 

of sufficient Hispanics in the Federal workforce, there are plenty 

of territories where you could certainly recruit. I use, as an example, my birthplace of Mayaquez in Puerto Rico. No one knows how 

this really happened, but a long time ago, NASA went there and 

recruited some folks. The success they had was such that they have 

come back and back and back. 

On many of these space flights the folks on the ground were folks 

who were born in Puerto Rico, educated in Puerto Rico, recruited 

in Puerto Rico, and like any other American citizen, moved to 

Maryland and to other places and they work at NASA. And for 

some good reason NASA keeps going back to recruit there. 

So can you encourage this governmentwide? This recruitment? 

And how could we put that in place? 

Ms. SPRINGER. You are right. Another agency that had good experience in Puerto Rico very specifically was VA. So how can we 

tell other agencies about that and promote it? One of the ways is, 

under an executive order, we have an interagency Hispanic council 

that meets twice a year at least and there are other interim meetings, and we have asked agencies who do a good job with this to 

come and tell us what they have done. 

I wasn’t aware of NASA, so that is one that I will ask to come 

to the next meeting. But I know that VA, for example, did a very 

lengthy presentation on their experience. And so we are showcasing those, encouraging agencies to do more of that, and there is 

someone there from every agency. Maybe the thing to do is to follow up to see if they have actually started to do it. 

But I will add NASA to the next meeting also. 

Mr. SERRANO. I would like to see something—I don’t know how 

possible it would be—where it is an initiative that we put forth 


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where the encouragement is more than an encouragement, but a 

semi-mandate that they include the territories in their recruitment. 

Keep in mind that we are talking about territories who are governed by these agencies, so to recruit folks to work here with 

them—and at their local places also—but certainly in the Federal 

agencies makes a lot of sense. 

FUNDING ELECTION OBSERVERS

Let me talk for a second about the voting rights observation. The 

fiscal year 2009 budget request proposes that the Department of 

Justice reimburse OPM for direct costs relating to providing 

trained election observers to monitor elections in areas designated 

by the U.S. Attorney General. Up to now OPM has received direct 

appropriations for this activity. 

What are the reasons for shifting the direct costs of deploying observers to election sites to DOJ? DOJ is funded under a different 

appropriations subcommittee. Is OPM confident that DOJ will receive appropriations for this purpose? What will be the impact if 

funding is not provided to DOJ? 

Ms. SPRINGER. The reason that we worked with DOJ and OMB 

on this change is that DOJ is responsible for determining where 

and when the observers are needed. Even when we had the funding, DOJ was the one that would tell us that observers are needed 

in New York or in this State or somewhere else. They would do the 

estimates, and so it was really out of our hands to know where the 

need existed and to what extent it would be. 

Our role, which we value candidly, is that we train people and 

make sure that those people are equipped to do that job. But the 

estimation of the need, and that drives the funding, is really something that we are not in a position to be knowledgeable of. That 

is a Justice function. So we felt that the budgeting for that was 

more appropriately placed with the people who have to do the estimate of the need. And that is Justice. 

The funding that we retain is just the funding for the training 

program. And so that is why we have a very small amount in our 

2009 appropriation. We are sure that Justice is requesting an appropriate amount, and if we ever felt that there was any jeopardy 

there, obviously we wouldn’t have done it. 

Mr. SERRANO. So Justice would always tell you where to send the 

folks? 

Ms. SPRINGER. They tell us where and to what extent. 

Mr. SERRANO. These were not decisions that you made? 

Ms. SPRINGER. No. 

Mr. SERRANO. I am aware that they sent for many years, they 

may still do, to my congressional district, to the whole county as 

the result of a race I was involved in for another office in 1985 

where they are still looking for some missing voting machines, but 

that is another issue altogether. I am glad I lost that and I am 

here. 

What changes then? There are some people who have said this 

could be a bad thing. Why? What changes? What problem could 

exist? DOJ you say gets part of the funding then. To do what? To 

do the assessment? 


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Ms. SPRINGER. DOJ gets the funding to pay the people, to pay 

the observers. 

Mr. SERRANO. Right. So you get the funding to train them? 

Ms. SPRINGER. Just to train them. 

Mr. SERRANO. Put yourself in the position—and this is a difficult 

one to put you in—of a good and fair elections advocate. Was it better the way it was before or will it be better now? Does it make 

a difference? 

Ms. SPRINGER. I would say to that person, it is better now, because before DOJ did the estimate, like they do today, that has not 

changed and they would give us the estimate, but they were never 

on the hook for the money. So the people who were requesting the 

budget at OPM were dependent on DOJ and we were not as close 

to it to be able to say this is really the right amount versus DOJ 

who is close to the courts. It is their area of expertise, and by including it in their budget they are going to be very attentive to that 

amount. So I think that it makes sense. 

Mr. SERRANO. Okay. That is one we are going to be looking at, 

because certainly as we get closer to November of this year, everything is up for grabs. And if what we see now is any indication of 

how tight races can be all over the country, how these races are 

conducted and who is there to observe become major, major issues. 

We will be staying close with that. 

Ms. SPRINGER. May I add one other thing, Mr. Chairman? If, for 

some reason, the DOJ estimate understated and it turned out there 

was a greater need, in the past OPM would have to find that extra 

money out of our small discretionary budget, a little over 200 million. DOJ has a much bigger budget from which they could go and 

pull that extra million dollars, $2 million. So I think that is an 

extra benefit to it being there. It is a lot harder for us if we would 

have to be in that position. 

Mr. SERRANO. I was ranking member of that committee and I 

know they have a much bigger budget. 

Mr. Regula. 

AGENCY RECRUITING NEEDS

Mr. REGULA. Thank you, Mr. Chairman. As I understand it, the 

agencies give you a heads up as to what their needs are going to 

be down the road in terms of personnel? 

Ms. SPRINGER. We, periodically, for certain professions, work 

with them on their gap analysis, particularly for IT, acquisition, financial and human resource positions. 

Mr. REGULA. So you could help to recruit for them to meet their 

needs? 

Ms. SPRINGER. We work with them. We work with them in identifying what their need is and working with the different councils 

to help go out, sometimes run workshops or job fairs or things like 

that to help meet those needs. 

STUDENT RECRUITMENT

Mr. REGULA. Do you get information out to colleges, universities. 

They have personnel people who counsel students graduating, et 

cetera, and for that matter, any new students as to what potentials 


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exist? Do you give them information they can have so that they can 

better advise students about the potential of Federal employment? 

Ms. SPRINGER. We do. And one thing that we are doing that we 

just started last year and we will be doing it again this year, is to 

actually create a Web-based set of information about those professions, about how to find Federal jobs. All of these things are almost 

like a how-to guide. Then we do the Web cast available to thousands and thousands, and we invite all the job counselors at the 

schools, to get on. Then we archive—— Mr. REGULA. They could watch it to get that information in the 

college library, could they not? 

Ms. SPRINGER. This way we know that it is up to date. So it is 

archived on the OPM Web site. Even if they missed that Web cast, 

they can come back to that again and again and again and be refreshed on how to find it. 

Mr. REGULA. So these students and the colleges have an opportunity if they take advantage of to determine what is going to be 

potentially available for them? 

Ms. SPRINGER. Yes, they do. And we think that is the most cost 

efficient way to do it using the technology on the Web. 

Mr. REGULA. Your job fairs are part of that too. 

Ms. SPRINGER. They are part of that. Those are actually on site, 

bricks-and-mortar type visits. But you can’t go to 8,000 colleges 

and universities, so that is why we do the broad approach as well. 

Mr. REGULA. I know one out of the 8,000 you might want to get 

to. 

Mr. SERRANO. You are not going to be a university President 

when you leave here are you? 

Mr. REGULA. Not yet. No, no, no. 

ATTRACTING AND RETAINING STAFF

Congress has provided many new personnel authorities to give 

agencies the flexibility to attract and retain staff. Bonuses, annual 

leave bonuses, reimbursing students. 

There are a lot of tools available to agencies to keep their particularly qualified personnel. Do you advise them of what they potentially can do to keep personnel? 

Ms. SPRINGER. We do. We do it several ways. And one of the 

things that we have done is for different types of people at different 

stages of their career, at different points in their life, different 

types of jobs, we actually put together a matching program between those criteria and the flexibilities that Congress has given 

us and which ones we think best serve those people at those points 

in their career. We constantly reiterate that to help the hiring officers and the chief human capital officers to understand it and use 

them more, and we track how they use it. 

You know, I don’t mean to be flip here, but you can lead the 

horse to water but you can only do so much in making it drink. 

So I don’t think it is a matter of getting more flexibilities. I think 

the flexibilities that we have are fine. I think we just need to help 

agencies to use them more fully. 

Mr. REGULA. Are most Federal employees members of a union? 

Ms. SPRINGER. I don’t have those figures for you. 

Mr. SERRANO. The President isn’t. 


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Mr. REGULA. No, he can set his own rules. 

Mr. SERRANO. Neither are we. 

PERFORMANCE-BASED PAY

Mr. REGULA. The pay for performance personnel systems in 

Homeland Security and Defense, I understand they have been disputed in court and are very unpopular. What is your experience on 

pay for performance? I am involved in the education side, and the 

education unions do not like pay-for-performance systems. What is 

happening or what is the attitude in government? 

Ms. SPRINGER. There are surveys that OPM does every year of 

areas of government, employees in government agencies that are 

under a performance-based pay system. We have had ones that 

date back for several decades that are mature and well run. 

What we find in those, and I am saying that that covers, I don’t 

know, well over a 100,000 people, we find that somewhere around 

70 or so percent would not want to go back to a system that does 

not give them the opportunity to be rewarded more fully for excellence. There are always going to be some people who are going to 

make less, get less than they would have in a fixed schedule where 

everyone gets exactly the same. But the vast majority would not go 

back. 

Now, the DHS elected, because of all their other organizational 

issues of a new agency coming together, to not go very far and to 

focus just strictly on the performance element and to not actually 

link pay. That was their choice. DOD, on the other hand, with all 

of its established training capabilities elected to go to the point 

where they actually brought people under a performance-based pay 

system. 

We have been in the process of evaluating how well they are 

doing, and it has been challenged in the courts. There was legislative direction that will limit, particularly in the union population, 

what DOD will be able to do. 

It is too early to tell, in my judgment, how they will rate it. But 

I can tell you that I think they are doing a good job, and I think 

that in time, people will get comfortable with this system there. 

But you are never going to get 100 percent. The systems that have 

been around for decades and decades said typically there will be 

close to the 70 percent range of satisfaction with it. 

Mr. SERRANO. Thank you. Mr. Bonner? 

SOCIAL SECURITY ADMINISTRATION BACKLOG

Mr. BONNER. Thank you, Mr. Chairman. Let me come back to my 

question and try to get two more quick questions in. Going back 

to the list of 600 qualified that was comprised last year, did this 

most recent list get added to the prior list of a decade ago or did 

this new list of applicants replace the old list? 

Ms. SPRINGER. It did replace that old list, because essentially 

that old list was, if you will, stale. 

Mr. BONNER. Okay. And then going—and you mentioned in your 

testimony or in your answer, I think that there are many reasons 

for the current backlog, and I certainly accept that. It is true. But 

the Social Security Administration’s Inspector General just last 

month issued an audit report on ALJ’s caseload performance. In a 


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nutshell, ISSA ALJs processed cases ranging from a low of 40 cases 

to a high of 805 cases per ALJ in fiscal year 2006. 

In my only district in Alabama, we have 55 percent of the ALJs 

that have fewer than 500 cases. And in my distinguished Chairman’s district in the Bronx in the office of the Bronx, 75 percent 

of ALJs have fewer than 500 cases. And when we talk about ALJs 

and cases, we are really talking about our citizens who come to us 

as their ombudsman to try to get the process issue system to work 

on their behalf. 

So what can and should be done about underperforming ALJs in 

your judgment? And if there are some 501 underperforming ALJs 

at the Social Security Administration, how would those positions be 

filled in a timely manner to ensure that the Social Security Administration can effectively work through the case backlog? 

Ms. SPRINGER. Ultimately, our role—I can only speak for our 

role—OPM’s role is to make sure that there are enough qualified 

ALJs available to Social Security. How they are geographically assigned—actually the importance for us in that one is to make sure 

that we do get people from the different geographic areas because 

if all the ALJs on our register are in Washington, D.C. but they 

need someone in San Francisco, we could have 1,000 qualified 

ALJs, but none where they need them. 

So that is one of the things that is important for us to find out 

from Social Security. What we are doing now is a more refined enlightened approach that says where do you need—not just how 

many, but where do you need them? 

To the extent that the caseload varies, it is up to Social Security 

to be sure that they have the right number of ALJs in a given location. Our role there is to make sure that we do the register with 

that foreknowledge of where they are going to need them. 

And from the standpoint of the performance or productivity of a 

government ALJ, we think our qualification standards are rigorous 

enough that we are weaning out ALJs that don’t have the qualifications that would allow them to be productive to the extent Social 

Security wants. But if Social Security, for whatever reason, thinks 

that is not there, then they—it is certainly within their power to 

say this ALJ isn’t the one that we want, isn’t the right one for us. 

They don’t have a pay-for-performance type system. So you don’t 

have that type of incentive-based approach. But we hope through 

our screening, we are eliminating ALJs that are not qualified to 

handle that. 

UNDERPERFORMING ALJS

Mr. BONNER. Madam Director, what about ALJs that are simply 

underperforming? Does Social Security have within their own authority the ability—we have had judges in my district that were 

hearing five and 10 cases, and then I get calls from constituents 

that are looking at 2 and 3 years to get an answer. Sometimes they 

die before the family gets an answer. Does the system allow for 

underproductive, nonproductive, poorly performing ALJs to be rooted out of the system so that your operation can bring in qualified 

candidates that will do their job well? 

Ms. SPRINGER. Let me get back to you for sure on this because 

I don’t want to be misleading. I think that the agency, whether it 


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is Social Security or any other, has the capability of taking action 

with respect to these ALJs, but let me get back to you. At that 

point, it is out of our hands. All we do is periodically reassess that 

they are still qualified. But let me get back to you because that is 

a good question. 

[CLERK’S NOTE: OPM provided the following response:] 

An agency may remove, suspend, or reduce in level an administrative law judge 

for good cause established and determined by the Merit Systems Protection Board 

on the record and after opportunity for a hearing before the Board as prescribed in 

5 U.S.C. 7521. 

Mr. BONNER. Okay. Thank you. Thank you, Mr. Chairman. 

HUMAN CAPITAL REPORT

Mr. SERRANO. Thank you. I have just have one more question on 

the issue of agency human capital officers. In a July 2007 report 

by the Partnership for Public Service, Chief Human Capital Officers and other key Federal human resource officials across government gave OPM mixed reviews. While there was acknowledgment 

that OPM ‘‘does many things well,’’ two-thirds of the interviewees 

reported that OPM does not fully understand or appreciate the 

needs and resource limitations of agency human capital officers. 

There was also concern expressed regarding the need for more 

consultation and better communication between OPM and agencies. 

Has OPM responded to this report by addressing the concerns 

raised by the human resource officials? And what actions has OPM 

taken to become more responsive? 

Ms. SPRINGER. I am aware of that report. And I chair the Chief 

Human Capital Officers Council. And so the answer is I would not 

disagree with the areas. I think I would take some exception with 

the extent to which they think those concerns are prevalent. 

However, we have done some things. First of all, I reorganized 

the Chief Human Capital Officers Council subcommittee structure, 

and I assigned people at OPM to be linked to and to work with 

each of those subcommittees. So there is much more collaboration 

and mutual goal setting. We have just finished setting goals for the 

council, including the Chief Human Capital Officers who were 

interviewed for this report, so that their goals and OPM’s goals are 

aligned in their areas of concern. 

I have also added deputies, and by the way, about half of the 

Chief Human Capital Officers are career officials. They are not political appointees. I think all of the deputies—and I established 

that deputy position—are also career because I want to make sure 

there is continuity on these people issues from year to year to year. 

This is not something that should have to restart when a new administration comes. 

So I think we are better linked; people are assigned; there is mutual goal setting and much more contact. I think if that survey 

were done in 2008, those scores would rise. I am not going to say 

they are 100 percent batting average but they would be better than 

they were in that survey. 

Mr. SERRANO. Did you say 100 percent? 

Ms. SPRINGER. Or 1,000. 1,000, excuse me. I am more of a basketball fan than a baseball. 


hsrobinson on PROD1PC76 with HEARING
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Mr. SERRANO. I understand. This committee is heavy on baseball. 

I have some questions that I will put on the record. 

Mr. REGULA. I have questions for the record. 

Mr. SERRANO. Without objection, those will be inserted in the 

record. 

Director Springer, we thank you for your testimony. We thank 

you for your work. We will continue to stay in touch with you, the 

committee will, on the issues we discussed. So that you could keep 

us—you can alert us to what the changes are. I would encourage 

you to see if we can come up with a plan for recruiting in the territories. That would make this committee very happy, and that is not 

a bad thing. And with that, we thank you for your service and we 

thank you for your testimony today. 

Ms. SPRINGER. Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. The subcommittee hearing is adjourned. 


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THURSDAY, APRIL 3, 2008. 

GENERAL SERVICES ADMINISTRATION 

WITNESS 

LURITA DOAN, ADMINISTRATOR OF GENERAL SERVICES, GENERAL 

SERVICES ADMINISTRATION 

CHAIRMAN SERRANO’S OPENING STATEMENT

Mr. SERRANO. The subcommittee will come to order. Good morning to all. 

The subcommittee will hear testimony today on the subject of the 

fiscal year 2009 budget request of the General Services Administration, GSA. GSA has been supporting Federal agencies and their 

workers since 1949 by acquiring goods and providing services and 

facilities to support the needs of those agencies. The GSA performs 

a wide range of services, from the construction of Border Patrol stations to the management of many e-gov initiatives. Additionally, 

the GSA coordinates and evaluates governmentwide policies related 

to the management of government property, technology, and administrative services. 

With all of these duties, it is important to ensure that GSA conducts itself in an unbiased and fair manner in negotiating and 

awarding contracts for the very services our government uses on a 

daily basis. I am especially troubled by the refusal of a vendor, the 

fairness of whose contract has been called into question, to cooperate with an inspector general investigation into the matter. Additionally, I am concerned about the recent court ruling ordering 

GSA to stop work on a $50 billion contract award. I believe that 

all of us here owe an obligation to ensure that money spent by the 

GSA is money well spent. And to do that, we must have cooperation from all sides, both at the GSA and by the private vendors 

hired. 

Today we welcome back GSA Administrator Lurita Doan to discuss her agency’s fiscal year 2009 budget. This is Ms. Doan’s second appearance before this subcommittee in support of her agency’s 

budget request. 

While much of GSA’s activity is driven by fees, approximately $8 

billion of the budget request will require action by this subcommittee. This year’s request includes some interesting proposals, 

including a new pilot program for real property disposal, as well as 

requests to reorganize some of the agency’s citizen services. Additionally, the request includes funding to assist agencies in the Presidential transition. 

Administrator Doan, this subcommittee looks forward to the remarks you will make today. I would like to ask you to please keep 

your opening statement to 5 minutes. Your entire written statement will be submitted for the record. 


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At this time I would like to remind you, Ms. Doan, that Mr. Regula will be leaving Congress at the end of the year. So, you know, 

renaming every building in his State is not improper since he did 

not ask for it. It would be improper if he asked for it. I am not asking for it either. I am just saying it is not a bad idea. 

Mr. SERRANO. Mr. Regula. 

MR. REGULA’S OPENING STATEMENT

Mr. REGULA. Thank you, Mr. Chairman. You said it just exactly 

right. I was kidding. 

Well, we are happy to welcome you, Ms. Doan, and you do have 

a very important responsibility. It is one of those unsung parts of 

the Federal Government that most people do not have any idea 

what is involved. Nine thousand different buildings, historic structures, management of government operations. It is really a management challenge. And I am sure one of the really great challenges you must have is maintenance. I chaired the Interior Subcommittee of Appropriations for several years, and that was one of 

the big challenges that we had; and also as a member of the Smithsonian Board for several years, the same thing. And I am sure you 

find this true. Fixing up buildings and doing the heating system 

and electric and all that is not glamorous, and I would suspect, and 

maybe you want to comment on this, it adds some real challenges 

to ensure that there is adequate maintenance of these 9,000 or so 

structures. 

I guess it goes back for me at least a little bit, having grown up 

and still living on a farm, if you do not fix the roof, the barn is 

going to fall down eventually because of the water damage. And 

you must have the same kind of a challenge of maintenance. And 

so we will do all we can to help your agency meet these challenges. 

And they are always expensive. 

Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. 

Mr. SERRANO. So if you do not fix the roof, the barn will leak? 

Mr. REGULA. Absolutely. 

Mr. SERRANO. Here I grew up and still live in an apartment 

building. If the guy upstairs overflows his sink, is that similar? 

Mr. REGULA. Yeah, very similar, although you do not have a 

mound full of hay underneath it that is going to rot. 

Mr. SERRANO. No. 

Mr. REGULA. There may be other dimensions to it. 

Mr. SERRANO. Just a rug, and it will stink for the next year. This 

is wonderful. It is a shame that he is leaving, because we could 

have made an incredible standup duo. 

Ms. DOAN. There is still time. 

Mr. SERRANO. There is still time. 

Ms. DOAN. Please. 

ADMINISTRATOR DOAN’S TESTIMONY

Ms. DOAN. Chairman Serrano, Ranking Member Regula, and distinguished members of the subcommittee, I am honored to appear 

before you today in support of GSA’s 2009 budget. I have submitted 


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a written statement, and I thank you for entering it into the 

record. 

A year ago I came before the subcommittee and reported that 

GSA had made some difficult, necessary, but innovative choices designed to improve our service to our customers and provide a better 

return on taxpayer dollars. I am pleased to report that GSA has 

made significant progress. The budget is balanced, we had a clean 

audit. Yesterday the GSA’s 2007 Performance and Accountability 

Report was awarded the Cetificate of Excellence from the Association of Government Accountants, and this is the highest recognition 

in Federal Government management reporting. We are really 

proud of that. 

We leverage the buying power of the Federal Government to provide quality workplaces, best-value products, services and solutions, and we also provide government services and information to 

citizens. Last year USA.gov and GobiernoUSA.gov received more 

than 100 million visits. 

GSA’s fiscal year 2009 planned total obligations are 20.973 billion, with over 20 billion of these funds coming in the form of customer reimbursements for purchases or rent paid for space under 

GSA jurisdiction, custody or control. 

GSA is a real bargain. We are requesting appropriations of 706.4 

million, which is really just 2.2 percent of the total budget. For the 

Public Buildings Service, GSA requests 8.387 billion in new 

obligational authority. And of these funds, 620 million are requested for the construction and acquisition of critical facilities for 

the Department of Homeland Security, the FDA and the Judiciary. 

We also request new obligational authority of 692 million to address the backlog of repairs and projects. 

I would like to urge the committee to support the consolidated 

DHS headquarters at St. Elizabeths West Campus in Washington, 

D.C. We believe that the consolidation is a high priority both for 

GSA and for the administration. We have experience as stewards 

of over 425 historic properties, and GSA can preserve this historic 

landmark, while providing DHS with a consolidated campus and 

home for the agency, and avoid hundreds of millions of dollars in 

rent payments over the life of the project. 

We also request 36.6 million for items that will conserve water 

and energy in Federal buildings between major renovations. GSA 

is doing truly exciting work in this area, and we have just completed a 1-megawatt solar power system located on 6 acres at our 

Denver Federal Center. We are going to be planning a dedication 

in June of this year at the solar park, and I invite all the members 

of this committee to join us for that ceremony. 

GSA is also the Nation’s premiere procurement agency. Since 

creating FAS, the Federal Acquisition Service, in May of 2007, we 

are recognizing the gains from our reorganization and the elimination of red tape, as well as the reassignment of underutilized employees to more demanding requirements. 

But our budget is important for what it does not contain. Our efforts to create a better working environment, to reward innovation 

and creativity is directly helping GSA to retain our existing contracting officers. So I am happy to report that as a result, GSA is 

one of the few agencies that will not be requesting new authorities 


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to hire a large number of new contracting officers. GSA has developed a more aggressive telework strategy that will encourage eligible government employees to telework. And GSA has expanded our 

offerings in State and local government, and for the first time these 

governments are able to save taxpayer dollars by leveraging the 

overall purchasing power of GSA. And I am pleased to say that our 

State and local government purchases are now one of the fastestgrowing programs in our portfolio, and the taxpayers are benefiting 

from these lower costs. 

Just to summarize, I began my tenure as the Administrator 

fighting against wasteful spending and duplicative costs within the 

Federal Government. We have submitted a fiscally responsible 

budget request, representing the minimum resources required to 

continue GSA’s commitment to excellence in the business of government. Where possible, we have returned funds and implemented planned savings ahead of schedule. And I am particularly 

pleased that GSA has identified a number of cost-cutting and 

wasteful sources of Government spending, any of which I will be 

happy to discuss in detail. 

I am committed to ensuring that the funds entrusted to GSA, 

which represent the hard-earned tax dollars of our citizens, are 

used in a prudent manner. We have a great workforce at GSA. We 

are doing innovative work on several important national initiatives. 

Approval of our budget is vital to help us achieve our mutual goal 

of providing superior service to our client agencies and, by extension, the public. I look forward to continuing the discussion of our 

fiscal year 2009 budget request with you and with the members of 

your subcommittee and with the staff. Thank you. 

Mr. SERRANO. Thank you for your testimony. 

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SPANISH-LANGUAGE SERVICES

Mr. SERRANO. Before I begin my series of questions I had 

planned to ask you, I look at the presentation board you have displayed. We have some folks in this country, I would call them misguided folks, who think that English has to be the official language 

of government and of the country. It is, but they think it has to 

be made official through a law. Do you catch any flak for having 

information in Spanish—do you get any e-mails, people telling you 

not to be doing this? 

Ms. DOAN. Absolutely not. This is probably one of our most popular Web sites, the GobiernoUSA.gov. When we launched it last 

year, it was widely praised. It is enormously popular, as you can 

see, from 100 million hits. This is no small achievement. I think 

it has been enormously successful. And I will say coming from New 

Orleans, where we, of course, consider ourselves a bilingual State, 

no problems there. 

Mr. SERRANO. Right. Right. So you have not gotten any e-mails 

or anything of people complaining? 

Ms. DOAN. Not to my knowledge. 

Mr. SERRANO. That is interesting. I will show you some of the email I have. But anyway. 

Ms. DOAN. If I could say, this is a site designed to aid the American public. 

Mr. SERRANO. We know that. Sure. 

Ms. DOAN. However we can reach out to them, whether it is in 

English, whether it is in Spanish, that is what is important, to get 

that information out to them in a way that they can use it. 

Mr. SERRANO. I congratulate GSA on that. It is very important. 

Ms. DOAN. Thank you. 

BUILDING PROJECT PRIORITIZATION

Mr. SERRANO. I would like to start with a few questions about 

construction and renovation of buildings. Your budget request includes $620 million for new construction projects, over $400 million 

of which is for the Department of Homeland Security. With the 

competing demands of other projects, such as courthouses and the 

headquarters for FDA, for example, how does your agency decide 

what project is a priority? Are the affected agencies engaged 

throughout the budget-formulating process, or is the decision-making process centralized at GSA or OMB? 

Ms. DOAN. GSA has always tried as much as possible to follow 

the priorities of our customers. As you know, we are an agency who 

gets most of its funding from our customers using our services or 

our goods. So when we compile these lists, we work very closely, 

for example, with the Department of Homeland Security, and they 

identify what their priorities are. They submit them to us, and 

then we incorporate them, wherever financially possible, into our 

budget. We do the same with the U.S. courts as well as with our 

other government customers. 

Mr. SERRANO. I see. So the decision is made in a joint effort. Who 

would advise you on which projects to move on? 

Ms. DOAN. It is very basic, because the customers, DHS, for example, has said that having a home, a home where everyone is colVerDate Aug 31 2005 20:57 Jun 07, 2008 Jkt 042551 PO 00000 Frm 00275 Fmt 6601 Sfmt 6602 E:\HR\OC\B551P2.XXX B551P2

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located, is their number one priority. For example, in this year they 

said their number two priority is the San Ysidro, the largest port 

of entry in the United States. It is very easy to know where you 

have to go when you have a customer who identifies for you what 

the priorities are. 

And the same is true with the Administrator of the Courts. They 

give us letters; we meet with them on a regular basis. Our PBS 

Commissioner and our Deputy Commissioner probably talk to them 

daily, on a regular basis, and they identify the priorities. It makes 

it very simple when you lay that out. At the same time, obviously 

we have fiscal constraints, and we have to balance those requirements within those fiscal constraints. 

Mr. SERRANO. Any complaints recently about folks who feel their 

project should be ahead of somebody else’s that you would be willing to tell us? 

Ms. DOAN. I think there are always folks who would love to be 

able to see their project move to the top of the list. There is no denying that we have an enormous number of truly important and 

critical needs throughout the United States, and that is why it is 

so important to go to our sister agencies and rely on their guidance 

and advice. 

REAL PROPERTY DISPOSAL PILOT PROJECT

Mr. SERRANO. Ms. Doan, I understand your budget request includes a proposal for a real property disposal pilot program. Please 

explain the details of this request and how it differs from other real 

property disposal programs requested as a governmentwide general 

provision, which the committee has rejected in past years. 

Ms. DOAN. I think what is really important about this is that one 

of the things that it offers is this new authority to allow for the 

redeployment services to other agencies. A lot of times it seems like 

some of the agencies are not willing to dispose of property because 

it actually costs money for them to do the assessment to determine 

whether or not the property should be disposed of, and so perhaps 

sometimes these properties are lying vacant, underutilized. 

This new authority allows us to provide this redeployment service, this assessment, to the agencies, and then we can then be refunded through the disposal process for any costs to do that assessment. At the same time, it also allows us to return a portion of 

those proceeds from the sales to the Federal Building Fund and 

sort of, you know, revitalize that fund, which, you know, is so critical to ensuring the continuity of all of our building projects. 

So I think these two significant kinds of authorities are truly important. I really do believe that we need to look at this entire portfolio of properties that we have. As you know, there are many, 

many properties in the United States that have huge maintenance 

costs, and we want to provide class A office space, top-of-the-line 

office space, to all of our government customers. 

Mr. SERRANO. Due to the fact the committee rejected similar proposals in the past, what would you say to the committee this year 

to try to convince us this time we should roll with this proposal? 

Ms. DOAN. I would say that if you have not been briefed by GSA, 

we are happy to offer a briefing. But the needed repairs and renovations, maintenance in this portfolio is huge. We are looking at 


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somewhere in the neighborhood of $7.4 billion estimated in 2007 

and growing. There are many properties that are underutilized, 

and this is a drain both on the Federal Building Fund as well as 

on the American citizens who pay taxes to maintain these empty, 

vacant, underutilized buildings. 

We have got to take a strong look and do something truly innovative to solve this problem. I think the return for the American taxpayer is huge, because when these proceeds revert back into the 

Federal Building Fund, we can then recycle that right back out 

again in new construction projects, additional renovations and alterations, or just maintenance on existing buildings. It is good for 

everyone. 

REAL PROPERTY DISPOSAL PROCESS

Mr. SERRANO. Without mentioning a specific site that might get 

Members of Congress, not necessarily on this committee, to react 

to it, give the committee an example of a piece of property you 

would dispose of and how would you get rid of it. Would you sell 

it to someone? What do you do? Is there an auction? How does that 

work? 

Ms. DOAN. I actually think there is a series of ways——

Mr. SERRANO. Are these post offices? 

Ms. DOAN. Sometimes they are just land. Sometimes it is land, 

sometimes it is vacant buildings. It is a lot of different types of 

properties. But I think what has to happen is when you do the assessment, you decide is it better to dispose of it by—we do auctions, 

and, in fact, we have had several auctions in the past year where 

we have been happy that the return from the auctioned property 

is actually even higher than our original assessment. So that is one 

way. And that money will then—funding will revert to the Federal 

Building Fund. 

Another way is that we could put it out for private development. 

It could be developed, and then after 20-plus years that property 

could revert back, the building reverts back, the renovated, new, 

brand new building could revert back to the Federal Building Fund 

for us, our portfolio. 

Mr. SERRANO. But these were all buildings that were being used 

by Federal agencies at some time? 

Ms. DOAN. Maybe in the very distant past, sometimes as many 

as 40 years ago. 

Mr. SERRANO. Really? 

Ms. DOAN. Many of them are very old buildings. A lot of them 

have serious environmental issues, maybe asbestos abatement 

which needs to occur, which is enormously expensive. I would be 

happy to follow up with you on all sorts. If you need the laundry 

list, we are happy to do that. 

Mr. SERRANO. Okay. We would like to see that. Forty years. 

Ms. DOAN. That might be a slight—they are probably going to 

correct me. Is it 40 or 30? Okay. It is 40. 

Mr. SERRANO. More than 5. 

Ms. DOAN. Oh, absolutely. 


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FEDERAL CONTRACTOR DATABASE PROPOSAL

Mr. SERRANO. Before I turn to Mr. Regula, I have one question 

in this round. The House Committee on Oversight and Government 

Reform is considering a bill which would require GSA to keep a 

database of criminal, civil, and administrative proceedings involving Federal contractors over the last 5 years. The bill is intended 

to give contracting officers more information when deciding on 

awards. Currently, does the GSA not know whether contractors are 

involved in criminal or civil suits when the agency accepts a contractor onto its schedules or when it awards a contract? 

Ms. DOAN. I think the database proposal is one that is going to 

be comprehensive across the entire government. Certainly with our 

Schedules, our GSA Schedules as well as our Multiple Award Contracts, in the process of making the award, there is a certification 

process where a vendor, a contractor is required to certify that he 

has adhered to all the rules and regulations, has not violated any 

laws of that nature. And so we certainly enforce that. I believe the 

database proposal is much more comprehensive because we can accomplish actions across the entire Federal Government. 

Mr. SERRANO. So there are moments when GSA—or you are 

speaking about other agencies, but GSA in particular would not 

know that a contractor is caught up in that situation? 

Ms. DOAN. Well, I think it would be hard—and I do not want to 

speak out of turn. The Department of Justice has a very—they 

have their own rules and regulations, and many times when they 

are in the process of looking into a matter, we may not be briefed 

on it until they are very, very far along or actually ready to follow 

through on an indictment or something of a legal nature. 

Mr. SERRANO. Right. 

Ms. DOAN. So very often we simply do not know. Oftentimes we 

are actually instructed by them not to take action until they come 

to the close of their investigation. So there is this sort of a 

‘‘limboland’’ you could almost describe it as where action may be 

being investigated, there may be a process happening with the Department of Justice, but we ourselves are not allowed to act on it 

because this is America, and you are truly, at least in contracting, 

innocent until proven guilty. 

Mr. SERRANO. No, I understand that. But let me just close by 

saying this: It just seems strange to me that when a person is 

going to be hired by the Federal Government, as folks you have behind you that work at your agency, the background check is so serious, and yet you would think it would be the same thing for a contractor. Yet it seems that we do not know as much about them as 

we do about the individuals we hire, and there is my concern. 

Mr. Regula. 

BUILDING GREEN

Mr. REGULA. Thank you, Mr. Chairman. 

And as you know, Ms. Doan, it is fashionable these days to build 

green. And your San Francisco building, which I was there for the 

dedication, is, perhaps your first venture into green building, at 

least on a major scale. I have two questions. One, how is it working 

in terms of the mission of being more efficient in fuel use, et 


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cetera? And secondly, what is the employee reaction to it? Because 

it had some unique characteristics, including requiring employees 

to hike the stairs a little more than using the elevators. So I would 

be interested in your observations, after having a year or so experience with that building. 

Ms. DOAN. GSA has an incredible record actually in green buildings, and, in fact, we have one very close to here, our Census building which we opened up last year, which is a LEED-standard green 

building. 

The San Francisco Federal Building has received enormous 

praise. It has won many awards. It is an interesting building because it is truly innovative. Yes, it does require the employees to 

take the stairs. I have not checked to see if everyone is slimmer 

after a year of climbing up and down the stairs, but I do believe 

that there has been the unintended consequence of this green 

building, which is pride of the Federal worker, because they see 

this building cited for all the awards and all the architectural magazines that featured it as the cover story. They know they are 

working in that building. They know it was the first of its kind. 

And there is a certain amount of pride that Federal workers perhaps have not had in many years of knowing that the government 

is actually the innovative entity. So it has actually been a great experience financially, I think, for the American taxpayer as well as 

psychologically for the Federal worker. 

LEASE RENTAL RATES

Mr. REGULA. That is interesting. I notice you mentioned, $7.4 billion backlog in maintenance. In theory the rents charged should be 

adequate to cover maintenance costs of a given building, as well as 

the fact that it is being occupied. Do you think rents are high 

enough? And do you have difficulty getting an adequate return to 

at least address the maintenance challenges? 

Mr. DOAN. Well, rents are normally—we are actually required to 

have them approximate the commercial charges. But at the same 

time, because these are government customers, we tried to make 

sure that we keep it within the bounds of a fiscally disciplined and 

conservative approach to rent. So our lease rental rates are based 

on the actual lease costs plus a very, very small fee. 

We have been trying to provide the rent estimates earlier, 18 

months in advance, so that they can get it into the budget. But we 

have actually reduced the gap so that the increase in rent is actually less in this upcoming year for our customers than it has been 

in previous years. And there is a cost to the Federal Building Fund 

for that. But we are trying to help our customers conserve their 

valuable resources. 

On the other hand, one of the things that we are trying to do is 

also work with receiving conditional gifts so that we are able to use 

these in public-private partnerships. And I believe that sort of innovative approach will help us also find new ways to replenish the 

Federal Building Fund. 

AUTHORITY TO DISPOSE OF PROPERTY

Mr. REGULA. You mentioned a lot of unused buildings, et cetera. 

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ing that would be, say, in a city and provide either a transfer or 

a rent to another government agency, i.e., city government or local 

government, that they could perhaps get a better rate or a better 

opportunity than you might do to a commercial entity? 

Ms. DOAN. We already do have that authority. And I do want to 

say that the legislation originally that Congressman Serrano and 

I were talking about was actually in that budget proposal actually 

was talking about other agencies having the ability to use us to 

dispose of the property. So we already have that authority to dispose of a property. However, as you may know, when we do go into 

that transfer or disposal, there is a certain hierarchy that we have 

to go through of offering it first to, for the McKinney Act, for the 

homeless. 

Mr. REGULA. I understand. 

Ms. DOAN. And then we have to get the exceptions. And yes, then 

ultimately we can share it if it is appropriate, and if price is right, 

with a city. There is a lot of different authorities—— Mr. REGULA. Under the right circumstances you could get less 

than fair market value, whatever that is, of an empty building for 

a local government that might be able to utilize that space. 

Ms. DOAN. I am not sure about that, Congressman. I actually do 

not think we are allowed to get less than the assessment that we 

normally go in and do an assessment. And that starts at sort of 

like the low threshold that we have to start with. We are not allowed to sell beneath market rate. And they are going to tell me. 

Okay. If you do not mind, I will just read this to you. The pilot 

program is very contentious in the current Congress, because it 

would allow candidate properties to go directly to the sale for their 

fair market value without being screened for other public purpose 

conveyances, which would be the McKinney Act. Thus, homeless 

providers, State and local governments, and other no-cost recipients of Federal surplus properties would not be entitled to the 

property until—unless they paid fair market value. 

So I think there is positive and then there is maybe a slightly 

more contentious approach to it. I think actually what has to happen is we need to look at it on a case-by-case basis. I do not think 

we can cookie-cutter across the board for all property disposals. 

ANTICIPATING RETIREMENT WAVE

Mr. REGULA. Yesterday we had the head of the Office of Personnel Management, and she pointed out there is going to be a 

wave of retirements in the next 10 years because the baby boomers 

will be retiring. How many employees do you have in your agency? 

Ms. DOAN. We have 11,773. 

Mr. REGULA. And have you taken any steps to anticipate meeting 

the challenge of filling these spots with talented people in the future? 

Ms. DOAN. Yes. First and foremost, it is making sure that employee morale is high, and so that they want to work at GSA. And 

we can do that in a whole host of ways. We have put in place several innovative programs over the last 2 or 3 years, not the least 

of which is the most robust mentoring program that we have ever 

had at GSA, which we started last year, and we have just come 

across our first anniversary. We have an Advanced Leadership DeVerDate Aug 31 2005 20:57 Jun 07, 2008 Jkt 042551 PO 00000 Frm 00280 Fmt 6601 Sfmt 6602 E:\HR\OC\B551P2.XXX B551P2

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velopment Program that takes someone up to an SES to encourage 

that growth in the management. 

But a lot of it has to do with the retention of valued employees. 

Our student loan repayment program is really important on that. 

We have a student career employment program where we try to attract new people into it. 

So it is both helping the exiting folks as well as, you know, growing that new generation of people in government service. And part 

of it actually is our One GSA, One Voice Initiative, which I have 

asked my folks never just say, I work for PBS or I work for FAS. 

Tell them the 2-minute commercial about GSA, which is, did you 

know that we are the largest credit card service in the world at 27 

billion dollars in transactions? Did you know that we are one of the 

largest purchasers of environmentally, you know, friendly products 

for the Federal Government? Are you aware that we are the Nation’s landlord? In other words, let people know, young people 

know, the full gamut of services and goods that GSA provides as 

a way to attract them into the Federal workforce. 

Mr. REGULA. Well, I think you are right. I daresay that if I went 

down the street in a bar in Ohio and said, what is the GSA, I 

would be probably get very few—maybe New York would be different. 

Mr. SERRANO. Good Service Award. I got it once. 

BUILDING SECURITY

Mr. REGULA. Okay. One last question. In today’s world, security 

for buildings is a tough challenge. Is your agency responsible for 

security; like if I go into a Federal courthouse or any building 

under your jurisdiction, do you provide the security, or is that up 

to another agency? And if you have to provide it, is this not a challenging responsibility? 

Ms. DOAN. Well, most of the security is provided by the Federal 

Protective Service, FPS, which used to be a part of GSA, but during 

the organization of the Department of Homeland Security, that division got transferred to them. 

But security is a challenge, and, in fact, I would say when I came 

on board as Administrator, that was one of the largest challenges 

with our relationship with the courts, because as the cost of security had increased, we were then required to pass that cost along 

at least in part in the rent that we then charged our customers. 

And, of course, those kinds of increases often make hiccups. But we 

are constantly trying to balance the need for additional security 

with the costs of the security. It is a huge challenge. 

Mr. REGULA. Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. 

Ms. Kilpatrick. 

Ms. KILPATRICK. Thank you, Mr. Chairman. 

Good morning Ms. Doan. Good to see you again. 

Ms. DOAN. Good morning. 

FEDERAL BUILDING FUND

Ms. KILPATRICK. Last we spoke of a Federal building in my district and the needed care and all the problems. I first want to commend you and the agency for correcting much of that. It is much 


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better looking inside and out. Employees are more happy and more 

effective, I would say. So I want to thank you, first of all, for that. 

Ms. DOAN. Thank you. 

Ms. KILPATRICK. In looking at the Federal Buildings Fund, I no- tice the appropriations, some $300-plus million, with the needed repairs that you have, and I understand that fund can be used for 

existing repairs and other kinds of things, along with the revenue 

that you receive from the tenants. Is that enough to meet the real 

need that you have? 

Ms. DOAN. No, it truly is not. As I said, we do have an estimate of backlog of over $7.4 billion, so obviously 350 million a year for 

the renovation, alteration, plus the larger identified renovation/alteration projects is probably not—obviously, we could not address 

it all at one time. However, I think what we have tried to do is 

to balance repairs, renovations on buildings with the need for some 

fiscal restraint, which is, I guess, what the American taxpayers, all 

of us, are looking to make sure our tax dollars are spent wisely. 

It is a constant and very delicate balance that we are always trying 

to achieve. 

Ms. KILPATRICK. So incrementally you hope to get there? 

Ms. DOAN. That is exactly what we are doing incrementally. But 

this is where I do believe that the new legislation that we have up 

requesting the ability to receive conditional gifts and to enable public-private partnerships, there are many, many groups which would 

love to contribute to important both historic and Federal buildings, 

whether it is at the land border ports of entry, it would be a way 

to address many of these needs. 

Ms. KILPATRICK. I agree. And that is pending, I know. 

PROPERTY DISPOSAL AND HOMELESS SHELTERS

The other Senate bill, 1667, the pilot project, I have some interest in that. I know the Senate acted in November. I like the 

amendment. I heard you discuss it this morning that some—I do 

not know if it is a problem or just how you make that association 

with homeless agencies. Can you talk a little bit about what the 

actual legislation says and what appears to be the problem in it, 

if there is one? 

Ms. DOAN. I cannot truly give you the details on what—because 

it is all perception. This is actually, I guess, within Congress and 

the discussions among Members, yes, no, is this good or bad? Obviously, if it is offered, if you are sponsoring homeless shelters, you 

would like to make sure that homeless shelters always get offered 

the properties first. If you are trying to do urban renewal, you 

would obviously like to be able to see it go directly to the private 

sector for refurbishment or renewal. So I think it has to do with 

the different priorities and interests of the individual Members of 

Congress. But I would be happy to have my congressional team follow up with you or—and I could come and follow up with you also 

on if there were specific objections, especially if you are looking to 

help us on that. 

Ms. KILPATRICK. I want to help you with the revenue side, first 

of all. So what you mentioned about the gifts, that is one part. But 

I see this as certainly another——

Ms. DOAN. Okay. 


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Ms. KILPATRICK [continuing]. With what did I write here, over 8,000 buildings, almost 9,000 buildings valued at almost $70 billion, some of them are old and not being used for whatever reason, 

if we could do that in legislation—and do both of those, by the way. 

I am not suggesting all of it be for homeless. I think some balance 

would be there. 

And I very much would like to meet with someone, because I 

think it is an important time for the agency to find additional revenue and also important for local communities, urban America as 

well, and the homeless population and those people who administer 

to them, to kind of come together and put something together. The 

5-year pilot, I think, is a great way to start. 

Ms. DOAN. Thank you very much. 

Ms. KILPATRICK. I would like to see some movement on that. 

Ms. DOAN. I would be happy to follow up with you and try to arrange a time that is convenient to you. 

Ms. KILPATRICK. Thank you very much. 

Mr. Chairman, I am also on Homeland Security, so please excuse 

me. And when I leave, it is for another committee. Please excuse 

me. 

Ms. DOAN. I appreciate that. 

Mr. SERRANO. I understand. 

Ms. KILPATRICK. It is your committee, too. 

Mr. SERRANO. Tell them that we are here and getting them nice 

buildings and stuff. 

Ms. KILPATRICK. I will do that. Thank you, sir. 

Mr. SERRANO. And they want a building. 

Mr. Bonner. 

NEW COURTHOUSE CONSTRUCTION IN MOBILE

Mr. BONNER. Thank you, Mr. Chairman. 

Madam Administrator, I would like to, first of all, offer a compliment, because I know oftentimes all you hear are criticisms. My 

district office in Mobile, Alabama, recently made a move, and it 

was not into a GSA building. But one person on your staff, Barbara 

Dranesfield with the Federal Acquisition Service office in Mobile, 

was extremely helpful and professional and very easy to work with. 

And I want to do a shout-out to Barbara because she singlehandedly ensured that our district office was up and running as 

soon as humanly possible. And I just think it is important to say 

thank you for a job well done. 

Ms. DOAN. Thank you. The only thing is we have to now persuade you to move into our Federal space next time. 

Mr. BONNER. I would love to have a chance to do that. 

That raises my second question. I was very pleased to see the Judicial Conference include construction of a new U.S. Courthouse in 

Mobile among their top five projects for fiscal year 2009. Unfortunately, I was not pleased that our President did not include this 

project or any of the other four projects in his budget request for 

fiscal year 2009. Since you are from New Orleans and I am from 

Mobile, you can appreciate the fact the Mobile metropolitan area 

has recently been listed as the fastest-growing area in our country 

for a metropolitan community our size. So over the next 5 years, 

we are excited about the growth potential and the population 


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change, but we are concerned about the lack of ability to get this 

project off of a wish list into reality. 

Now I am hoping that since I am a new member of this committee, I am going to be able to impress upon my good Chairman 

and Ranking Member that the construction of the Serrano-Regula 

Federal Courthouse in Mobile would be a high priority. 

Mr. SERRANO. Where is this? 

Mr. BONNER. Mobile, sir. 

Mr. SERRANO. Mobile? 

Mr. REGULA. You better learn to speak Southern. 

Mr. SERRANO. I am from Puerto Rico. That is the real South. 

Mr. BONNER. It is on the way home. 

Mr. SERRANO. Our Southern accent is so different, it is a whole 

different language. 

Mr. BONNER. But I am hopeful that we can have a chance to look 

at this before this committee. But I know you are focused on San 

Diego and the Los Angeles projects currently. I guess my question 

to you is that if funding were somehow miraculously available for 

the Mobile courthouse in fiscal year 2009, how soon would GSA be 

prepared to award a construction contract? And can we assume 

that GSA could award a contract in fiscal year 2009 since it has 

been a priority project not just this year, but for several years? 

Also, once awarded, how long would it actually take to build such 

a structure? And I know that is a question that you may not have 

the specific answers to today. 

Ms. DOAN. I have some, a little bit of an answer to that. First 

I would like to say that I think it is actually a very good sign that 

the Mobile courthouse is actually on the priority list of the courts. 

As I had discussed with Chairman Serrano, that is always the first 

step for our customers to indicate it as a priority. Yes, I know you 

were probably disappointed about the fiscal year 2009, but if the 

funding were made in fiscal year 2009, the additional site parcels 

could actually be acquired, the site could actually be prepared, and 

GSA could probably award a design build contract by the end of 

2009, fiscal year 2009, and the construction on that would probably 

be—it would be completed by fiscal year ’13, 2013, but that is only 

if the funds are made available in fiscal year 2009. And then, of 

course, there is always escalation every year after that. 

Mr. BONNER. We have artists working on the portraits of the two 

people for whom this building would be named already. 

INCREASED CONSTRUCTION COSTS

As you know, living in New Orleans and along the gulf coast, 

since Hurricane Katrina, construction costs have risen dramatically. And I believe just in 1 year the request for the Mobile courthouse increased by $43 million. Are construction costs the only reason for such a large increase? I know, or I believe I am right, that 

the San Diego project has seen large cost overruns as well, and I 

am wondering if that is due to construction cost increases or some 

other reason. 

Ms. DOAN. From what I understand, Congressman, it is mainly 

due to factors that affect the construction, whether it is the labor, 

it is energy costs; and then it is also the actual materials, espeVerDate Aug 31 2005 20:57 Jun 07, 2008 Jkt 042551 PO 00000 Frm 00284 Fmt 6601 Sfmt 6602 E:\HR\OC\B551P2.XXX B551P2

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cially steel, that go into the construction. The combination of those 

is what has caused most of the escalation costs that you have seen. 

Mr. BONNER. Last question about this is would it be possible to 

get your staff to provide us with a written justification for the Mobile project, since I am going to be appealing to my Chairman and 

Ranking Member for their consideration later this year? And since 

it is on the list, I was hoping I could get something in writing that 

could justify it. 

Ms. DOAN. We would be delighted to do that. 

Mr. BONNER. Great. 

Mr. Chairman, thank you. 

Mr. SERRANO. You are quite welcome. And the Bonner Courthouse in the Bronx is on the way. 

Mr. BONNER. Thank you. 

GSA CONTRACT EMPLOYEES

Mr. SERRANO. Ms. Doan, last year you testified that GSA has 

just over 12,000 employees. How many contractor employees currently work alongside and perform similar functions as federal civil 

service employees of GSA? 

Ms. DOAN. I do not have the exact number, and I can follow up 

with you on that, but I actually do believe it is about 47,000. 

Mr. SERRANO. About 47,000? 

Ms. DOAN. I think that is the last number we saw. 

Mr. SERRANO. And you have how many employees? 

Ms. DOAN. Right now we have 11,773. 

Mr. SERRANO. So you would have four times as many contractors 

as your actual staff? 

Ms. DOAN. Okay. But they are going—what they were saying in 

PBS, because of construction, it is a little bit different. I can probably follow up with the exact numbers. 

Mr. SERRANO. That brings up the question that we asked before 

about different sets of ethics rules. Do the contractor employees 

have to abide by the same ethics standards as your employees? 

Ms. DOAN. Absolutely. 

Mr. SERRANO. We all in government have to behave a certain 

way. Are they covered by the same rules? 

Ms. DOAN. Yes. They have to be held to the same standards and, 

in fact, the same background checks, and the process is the same. 

I mean, obviously they are paid differently. They are paid by the 

vendor or the contractor who they are hired from. I guess the Federal employees. The construction workers, the construction workers 

are actually a little bit different than, say, contractors who are 

working doing administrative support or analytical support. It 

skews the numbers a little bit. 

Mr. SERRANO. Okay. Because it seems strange that you would 

have four times the amount of your employees that are contractors. 

I know there are some folks in government who would like to see 

it that way, contracting out. 

Ms. DOAN. But I do think it depends whether you are in building, 

you have a lot more folks working for you. 

Mr. SERRANO. Sure. 


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Ms. DOAN. Obviously, if we were just looking at administrative 

function, that would be a different number. And that is why I say 

I could follow up with you later on. 

Mr. SERRANO. Please. I would appreciate that. And I would also 

appreciate if you could find the one e-mail I know you got saying 

you have an objection to GobiernoUSA.gov. 

Ms. DOAN. Okay. Did you send it? 

Mr. SERRANO. No, I did not send it, but you had to have one. I 

mean, I get dozens. 

Ms. DOAN. We will look. We will actually look, although I will 

tell you you cannot imagine how enormously praised and popular 

that Web site—— Mr. SERRANO. You are missing my point. There are still a group 

of people in this country who think that having government Web 

sites in Spanish is improper, and I am just curious as to why no 

one is condemning you for it. I should not have mentioned it out 

loud. There will be a GOPAC article tomorrow. Lou Dobbs will get 

you tonight. 

Ms. DOAN. One thing I can guarantee you, though, is like you 

say, because it will be on something tonight, and there will probably be scads of e-mails tomorrow, I am sure I can probably send 

thousands of them. 

Mr. SERRANO. It is okay. I would rather we do not have any. 

COURT INVOLVEMENT IN CONTRACT AWARD

In early March, a Federal judge ordered GSA to stop work on the award of a $50 billion contract for governmentwide information 

technology. The judge cited GSA failed to consistently apply award 

criteria when awarding the contract. What is GSA’s position on the 

issue, and how will the court order affect the award of the contract? How does this delay impact GSA’s customers? And what is 

the budgetary impact on those agencies? 

Ms. DOAN. It obviously affects our customers, but I think we 

have a mitigating strategy. This was a little bit of a slightly unusual approach in that normally protests go to GAO and are resolved there. The GAO actually found that GSA had behaved properly. The protesters took it outside of GAO into the civil courts. 

That changed how we had to handle the resolution of this matter. 

The civil courts found against GSA’s selection process, and what we 

have tried to do is come up with a resolution of this that is fair 

to all of the vendors who submitted bids, and at the same time is 

viewed as being compliant by the U.S. Courts. 

So it is a slightly different way that the protester handled it, and 

in that case we decided what we would do is review and take a look 

at, in light of what the judge recommended, all 62 of the applicants. We will be using his guidance, apply that over the analysis 

of the bid of all 62 vendors, and remake the awards. This is a way 

that we can expedite it, expedite the award process, but at the 

same time be fair. 

The good thing is that while there is impact, unfortunately, to 

the businesses who were waiting eagerly for the award, we do have 

contract vehicles in place to assist our government customers. And 

what I am simply trying to do is make sure that we are compliant, 

that we are fair, but we are doing it as quickly as possible, because 


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we want to make those innovative goods and services available to 

the government. 

Mr. SERRANO. When you say 62 vendors, this was not one vendor 

that was—— Ms. DOAN. I am sorry, 62 vendors submitted bids. There were 

awards I believe, to 29 of the vendors. 

Mr. SERRANO. Right. 

Ms. DOAN. There were eight additional vendors who then filed 

protests with GAO, and who then ultimately—— Mr. SERRANO. Who did not get the contract, that is. 

Ms. DOAN. Right. And then GAO said GSA behaved okay. And 

then they took that and they went to the civil courts, the same 

eight vendors. 

Mr. SERRANO. And the courts said that you hadn’t behaved okay? 

Ms. DOAN. The courts said they were not comfortable with our 

evaluation process, because they thought there was a level of precision that was identified and which might be hard to justify. 

Mr. SERRANO. So now you are opening up the bidding again to 

all 62 vendors? 

Ms. DOAN. Yes, the 62 originally submitted. There is no additional cost to them outside of time. The bids will stand as is, so 

that it is the same level playing field. The only difference is taking 

the judge’s guidance. We will now overlay that over the evaluation 

process. 

Mr. SERRANO. When do you expect or feel that the decision will 

be made on awarding? 

Ms. DOAN. I have asked them to do it as quickly as possible, but 

it also will be a few months. We will be happy to come and brief 

you on that because I know it is really important and affects many 

vendors. 

Mr. SERRANO. And one last point on that. Is the court out of it 

now, or does the judge still stay involved? 

Ms. DOAN. No. This is what makes it so challenging. When you 

take a protest into the civil courts, the statute of limitations is like 

actually no statute of limitations. So that is why it is so important 

what you do is compliant and that meets the approval of the 

courts. So we had to take our decision, go back to the judge, and 

run it past the judge and get his approval. And then we actually 

had to go to the Department of Justice and get them to approve 

also. 

Mr. SERRANO. But as this process continues, are the courts still 

involved? 

Ms. DOAN. No, hopefully that is it. 

Mr. SERRANO. Okay. So now you are on your own to do it based 

on the decision and the agreement, if you will. 

Ms. DOAN. That is what I believe, and unless someone taps me 

on the shoulder and tells me otherwise. 

Mr. SERRANO. No, no one is getting up. No one has gotten up 

with any paper. 

Ms. DOAN. Okay. 

BUILDING VERSUS LEASING

Mr. SERRANO. In January of 2008, the GAO reported that in 

2008 GSA will have more leased space than government-owned 


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space, and that it is more expensive in the long run to lease space 

rather than build. Do you believe scoring rules for operating versus 

capital leases force GSA into using long-term operation leases instead of new construction to meet Federal space requirements? And 

if you understand that question—this is one of those—I am looking 

at my staff. I usually review the questions. I work with them on 

questions. 

Ms. DOAN. I am grateful for that question. 

Mr. SERRANO. But I do not understand that question, and I will 

be the first one to admit it. 

Ms. DOAN. I will tell you I am not the world’s expert on scoring, 

and he is actually sitting right here, Tony Costa. But I will tell you 

that what you said is absolutely true is that it is the scoring. 

Mr. SERRANO. I did? I do not know what I said. 

Ms. DOAN. The challenges of scoring and trying to balance the 

scoring is exactly why oftentimes folks go into the leasing rather 

than engaging in the public-private partnerships or the design 

build or things that would actually save the government money in 

the long run. And while I do not have a lot of control over that because that is obviously in the hands—a lot of that is in the hands 

of Congress, I do believe that some of the things that GSA has 

tried to do, which is bring more oversight into the leasing process, 

we have pulled back on many of the lease delegations that had 

been provided to all of the departments, and we are trying to have 

our experts weigh in far more heavily to determine, because what 

we want to do is get people out of the leased space and into our 

Federal building spaces. It really is the best thing for the taxpayer 

and helps with the Federal Building Fund. But the scoring is really 

the big elephant in the room. 

Mr. SERRANO. I guess, and I know this has to do with what 

money is available, and we are not committing ourselves to moneys 

we do not have, but as we look at this economy, certainly building 

helps the economy more than leasing. 

Also on a totally different but perhaps somewhat related subject, 

one of my gripes in New York City is that with such a large student population, the New York City Department of Education is always looking for available space to turn into schools. And, just as 

an example, it is not related at all, it is so sad that these children 

are put into not nice-looking buildings that were never meant to be 

schools, and they are turned into schools, when in other communities you get a football field in the back, and you get a track, and 

you get this beautiful building that you have to believe the teachers feel better teaching in and the children have to feel better. 

And so I am not crazy about leasing just for the sake of saving 

some dollars. The question is, does it really save dollars in the long 

run to build or to lease, aside from what it does for the economy? 

Ms. DOAN. I believe one of the most important things we could 

do for this country, and I have actually been going around the 

country and talking about it, is GSA has the ability to ignite a 

building boom in this country. The work that we do at our land 

border ports of entry is just the very beginning step in that building boom, because when we do that, we go into districts all along 

the northern and the southern border. I am happy to say we do a 

lot of work in New York. 


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Mr. SERRANO. You say you do not? 

Ms. DOAN. We do a lot of work in New York. We have several 

absolutely critical and huge ports of entry in New York State. But 

what that does is that helps the economy, because building is local, 

and the local citizens are the workers who are participating in 

those construction projects. So every dollar that we spend in building is actually a dollar that is used three times over, because, yes, 

it is Federal funding that builds it, but then it is the communities 

that benefit from it. It is the businesses who ultimately pay taxes. 

It is the workers who receive that funding, and then they go pay 

taxes. It all goes into our education system so we could build those 

really great schools that are exciting. 

But I think what GSA is trying to do with the building boom at 

the borders is at least a first step to show that we have an ability 

to make a difference. They did want me to mention for schools, and 

especially maybe in New York, that we actually have a Computers 

for Learning program that would be something that I think New 

York City in particular could benefit from, which is the disposed 

computers, you know, computers that we dispose of in the Federal 

Government. And as you know, we are on a 2-year cycle, sometimes 

3-year cycle, so these are actually really great systems that could 

go into the school system. 

Mr. SERRANO. We will be glad to talk to you about that. 

Ms. DOAN. And the other thing I have to—because it is once 

again unfortunate Congresswoman Kilpatrick left before I could 

pitch her one more time on St. Elizabeths—but when we start talking about the difference between leased space and building, you 

know, of course, that right now the Department of Homeland Security has like 60 different leases, 40 different locations. And when 

we have the chance to build, it is good for the government, and it 

is actually good for our Nation. 

Mr. SERRANO. As you know, St. Elizabeths was just the victim—

not just, it was the sad victim of some very serious fiscal constraints at the end. 

Ms. DOAN. Yes. 

FUNDING FOR CONSTRUCTION

Mr. SERRANO. Which brings me to the followup on this. Is GSA 

always dependent on the appropriations process, or are you looking 

for ways, innovative new ways, to provide for construction? And 

what would you need in terms of changes in law or in the way Congress allows you to function? 

Ms. DOAN. Obviously, the Federal Building Fund and the appropriations we receive from you guys is simply not sufficient, although when we are trying to be fiscally conservative, we do what 

we can with what we receive, and we are very grateful for what 

we get, so please understand that. 

On the other hand, right now our GS Enhancement Act that we 

have put forth the legislation, being able to receive conditional gifts 

would be a huge development for GSA because that would allow us 

to really do some truly innovative things and enormous goodwill in 

the private sector for the Federal Government. And I believe, you 

know, communities recognize the need. And there are many businesses as well as city and local governments that are also willing 


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to contribute to address these needs if we were allowed to receive 

those funds. 

FEDERAL JUDICIARY RENTAL DISPUTE

Mr. SERRANO. Let me bring up an issue that I would put under 

the heading of a family fight. This subcommittee also oversees the 

Federal judiciary, and Federal judiciary is one of your largest rental clients and also an agency for which this subcommittee appropriates funds. Judiciary spends a great deal of time and energy on 

cost-containment strategies, one of which is a rental verification 

process. The judiciary has found that it has been overcharged in recent years due to the GSA’s incorrect records of the square footage 

used by the judiciary. 

Can you explain why it is so difficult to maintain accurate 

records of the space utilized in Federal buildings and courthouses? 

This Chairman and Ranking Member do not desire to have one 

member of the family get done in by another member of the family. 

Ms. DOAN. First, I would like to say that was then, this is now. 

Our relationship with the courts truly has improved over the last 

22 months. And frankly, it is because I, the Commissioner of the 

Public Buildings Service David Winstead, and the entire Public 

Buildings Service set of employees, we have made a concerted effort to make sure that we are working with this customer. 

There was a problem with the rents. There is no doubt about it. 

But when we actually got together with the Administrator of the 

Courts and looked at the rents, we actually found it was located 

not across the United States and all the courts, as was originally 

thought, but actually centrally located in one region, and I think 

two, but maybe it was three, specific courthouses that had that 

issue. We have addressed that issue with them. Of course, it goes 

a long way if you rebate the money that was overcharged, and that 

helped with that relationship enormously. 

But the other thing I am happy to report is that we have actually 

cut the rent for the courts in this upcoming year, and I think we 

are seeing the reflourishing of that relationship as a result of the 

reduced rent. 

The other thing that we did was provide more transparency into 

the invoices that are presented to the courts. And when we 

itemized it, they were startled, frankly, to see that their increased 

demand for security actually translated to an increased cost. They 

had not realized that the cost of security escalated so dramatically, 

because, you know, obviously they had several very serious situations where judges’ lives had, you know, been put in jeopardy, and 

they required additional security at all the courthouses. And the 

problem is that also costs, and that got rolled into their rent, but 

unfortunately we had not done a good job of explaining that to 

them. And when we were able to actually present them with the 

data and show them the breakout of where the increases came 

from, that also helped restore our relationship. 

And I think we have a lesson that we learned at GSA from that, 

which is we have to be better at communicating with our customers 

when changes happen and notify them in advance rather than 

retroactively. 

Mr. SERRANO. Thank you, Ms. Doan. 


hsrobinson on PROD1PC76 with HEARING
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Mr. Regula. 

PRESIDENTIAL TRANSITION

Mr. REGULA. Just a couple questions. You have an $8 million figure for the Presidential transition. What is your role in the transition that would require 8 million? 

Ms. DOAN. In the Presidential transition we help prepare for the 

incoming Presidential team and whoever he or she may be, and 

their people. And then we also prepare the exiting, the current 

President and his team. And they exit. And so the funding is divided between those two particular endeavors, and that is everything from they need space, obviously, because they are going to 

need—in the transition process the new team is going to have to 

work very closely with the exiting team so that we have a smooth 

transition for our country. Obviously, there is security. There is 

the—you know, the computers, the technology, everything that goes 

into that. And actually, what we have requested is only a very 

small part. We actually take a large part of that out of hide. And 

if you look at the second row, they are probably frowning and 

grimacing even as we speak, because our Federal Acquisition Service along with GSA’s Chief Information Officer provides all the 

technology. 

Mr. SERRANO. They have done that throughout the hearing. I do 

not think that is directed at us. 

Ms. DOAN. They provide the technology, the communications, the 

phones, everything. We take that out of hide through the Federal 

Acquisition Service. So the 8.5- or whatever we are asking, that is 

actually only part of the price for the Public Buildings Service. Because in D.C. at least, we do not have a lot of available space. And 

just to be frank, over the last two decades, the space requirements 

have gone up dramatically. So I believe this year they need a little 

over 100,000 square feet. This is not a small amount to be looking 

for for having to pay market prices. So it is actually very costly. 

But we are actually eating a lot of the Presidential transition costs 

that you guys never see. 

COST-EFFECTIVE AGENCY HOUSING

Mr. REGULA. Which do you find the more efficient way to provide 

housing for agencies, where you go in and build to lease versus actually owning the building and constructing and owning it as a 

GSA property? Which do you think is the more cost-effective way 

to deliver that service? 

Ms. DOAN. I think it varies depending upon the location. Obviously, we are biased in favor of GSA-built buildings that are in our 

portfolio from day one. But I think it would be naive to think that 

we could satisfy all of the government’s needs by pursuing only 

that one strategy. 

And I would like to think that what we are trying to do at the 

Public Buildings Service is have an entire portfolio, a quiver where 

we have many arrows in that quiver, different ways that we approach the needs. So depending upon where the location of the 

building is sometimes, you know, design build is a better option, 

but always it should revert to the portfolio of the Federal Government. 


hsrobinson on PROD1PC76 with HEARING
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Mr. REGULA. One advantage, of course, of build to lease is that 

property is on the local tax roll, which then, if I understand it correctly, would pay taxes to the schools or whatever might be the 

case in the local government. Is that correct? 

Ms. DOAN. I think there is always a tension between when a 

Federal building comes in, we do not pay taxes, and obviously other 

entities would. But I think if you look at the broader picture for 

the entire Federal Government, when we have that building, and 

those rents go directly into our Federal Building Fund, we are then 

able to send them back out again in other new projects that benefit 

the entire country. 

GSA PROVIDED FACILITY SERVICES

Mr. REGULA. Last question. When an agency, let’s just take Social Security, and you are providing a facility, I am talking about 

a private facility, can they negotiate with you about the condition 

of the building and the kind of services you would provide in the 

building? 

Ms. DOAN. They can, and they do. And the one thing that I have 

been working with all of our team on, and when I say team, I mean 

all 11,773 people at GSA, we have a new One GSA approach, which 

is to try to provide that very best value. Rather than just going in 

and only talking about the actual lease, it is much simpler for us 

to go in and say, oh, by the way, we can put your conduit in, we 

can do your networking, we can do your drops; do you need a phone 

system, do you need IT, carpeting, furniture. GSA provides all of 

that. And if we have our Federal Acquisition Service and our Public Buildings Service working as one GSA going in to the customer, 

that is absolutely the best value for the government customer and 

the best value for the American taxpayer. 

Mr. REGULA. Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. 

DISTRICT OF COLUMBIA

Let me just interject something here. Mr. Regula and I are big 

fans of the District of Columbia, and this committee oversees the 

District of Columbia. In fact, I stated one of my roles is to undo 

that part of my job. I do not need to be the Governor of D.C., or 

the Mayor of D.C. They have a Mayor, and we are big fans of the 

Mayor, and we want to see him succeed and the people succeed. So 

we are asking every Federal agency that has anything to do with 

the Presidential transition to try as hard as possible to make sure 

it does not cost D.C. any money. They are a host city and they have 

not always been treated well by the Federal Government, and all 

these things that will be taking place. So for your role, the part 

GSA will play in that Presidential transition, it would make this 

committee very happy if it does not cost D.C. any money. 

Ms. DOAN. We try to work very closely with D.C. I think we have 

a very positive and productive relationship. And we work with 

them regularly and consistently and very collegially. I think it is 

a very good relationship. 

Mr. SERRANO. I appreciate that. 

Mr. Schiff. 


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LOS ANGELES COURTHOUSE

Mr. SCHIFF. Thank you, Mr. Chairman. 

Madam Administrator, I want to talk with you about the Central 

District Courthouse in Los Angeles. I understand you recently initiated discussions with the Administrative Office of Judges in the 

Central District about a potentially new construction proposal for 

the courthouse that would build a stand-alone courthouse with only 

20 courtrooms and 20 chambers, and expand and renovate the existing Roybal Federal Building for an estimated cost of $700 million. 

I have not looked through a detailed report of the proposal, but 

I think there are serious questions about the cost assumptions in 

the proposal and the construction schedule. And it looks like there 

is at least as good a chance that the new proposal would cost more 

than the existing proposal that has been out there since May of 

2007 to build a 36-courtroom, 45-chamber building so that we can 

consolidate all the courts in one building. 

I spent 6 years working in that building. I know it well, at least 

one of the two Federal courthouses. It is in dramatic need of consolidation. And the scenario that I understand now is under consideration is very different than the one that has been under consideration for years. And I am concerned that it will not meet the courts’

long-term space needs, it will not solve the operational inefficiencies that we already have of multiple facilities. 

As I understand it, the new proposal is universally opposed by 

the judges in the Central District and does not take into account 

the cost of relocating, building out lease space for the Federal agencies that are currently involved that would be evicted from the 

building. It does not consider the difficulty of bidding two construction jobs of this size at the same time in the L.A. construction market, which is a very hot and expensive market right now. 

But my most significant concern is that you could have basically 

a worse situation than we have now. You could have the judges 

and courthouse operations spread among three buildings if you are 

not careful. And the whole idea was to consolidate for security reasons and efficiency reasons the courts in a single building. 

And so I would like to know what feedback you have gotten from 

Los Angeles, whether you have considered the costs of relocating 

these Federal agencies and multiple construction projects at the 

same time. And, you know, I would like to see if you could provide 

us for the record the cost estimates, the fact sheets and the prospectus documents that could be used by Congress to compare what 

we have been operating on, a 36-courtroom, 45-chamber proposal, 

to what I guess is being floated now. 

Ms. DOAN. We are happy to provide that information. 

Ms. DOAN. And as you said, there are many developments, some 

of which just happened a day or two ago. But I will share with you 

where I believe we are at right now. 

I do know that there have been extensive discussions. I have 

been on the job for 22 months, and I can say for the entire 22 

months on the job as Administrator, I have been having discussions 

with Chief Judge Morrow, and she has come to D.C. many times. 

We have been out to L.A. working with the U.S. courts. The judges, 


hsrobinson on PROD1PC76 with HEARING
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you are absolutely right, in L.A. sent a very strong letter, I believe 

we got it either yesterday or the day before yesterday, opposing a 

letter that I had sent them the week before indicating that the 

courts, the AOC, the Administrative Office of Courts, and GSA 

have worked together very carefully to consider what would be in 

the best interests of the judges and their requirements, the U.S. 

courts, the financial considerations that have to be taken into account, as well as the timeline that we were trying to look at. And 

they worked together with us to come up with a proposal so that 

they believe—and I am now talking about the Administrator of the 

Courts—they believe is in the best interests of the judiciary, and 

that is that we renovate the Roybal existing courthouse and bring 

it up, take into account what the judges say, and at the same time 

build a second, smaller courthouse on the site that the new one—— Mr. SCHIFF. You say they have taken into consideration what the 

judges say. The judges say this is a terrible idea. 

Ms. DOAN. No, no, I am saying taking into consideration the 

judges’ demands for space and the space requirements. And so 

what has been proposed is actually the combination of the two facilities actually gives them, I believe, 70,000 more square feet of 

space than what they originally required. But most importantly, 

right now we have a requirement for over $1.5 billion in order to 

complete a brand new facility. Right now only a portion of that has 

been appropriated, and therefore, under the rules we cannot begin 

any kind of construction, development, or whatever. With the way 

that it is right now, with the funding that has already been appropriated and with an approved plan from the U.S. courts, what we 

could then do is we can start work immediately on making a difference for the L.A. judges. And frankly, I think this is a situation——

JUDGES’ OPINION OF NEW COURTHOUSE PROPOSAL

Mr. SCHIFF. If I could interject, this is not an approved plan by 

the U.S. judges. 

Ms. DOAN. By the Administrator of——

Mr. SCHIFF. The judges of Los Angeles think this is a terrible 

idea. And, I mean, we are in a situation where for years the highest courthouse construction priority in the country has been Los 

Angeles. The need has been there, the security needs have been 

there, the inefficiencies have been there; but because there has 

been delay occasioned upon delay, and construction costs have gone 

up, that project has laid fallow while others have gone ahead. And 

the judges have made every effort to reduce the number of courtrooms, to share chambers, to reduce—you know, take whatever 

they can out of the cost of the building to bring the cost down. And 

after doing all that and still, you know, waiting for action here, 

they are now being greeted with a wholly new idea that basically 

makes the problem that they have now worse in the sense of they 

should be housed in a single building. They should not be spread 

out among two or three buildings. 

And so I think it is a tremendous disservice to the public that 

has to utilize the courthouses and the jurors, and I cannot imagine 

the nightmare of trying to organize jury pools in three different 

buildings or two different buildings. 


hsrobinson on PROD1PC76 with HEARING
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So, you know, what I would like to see is I would like to see the 

facts, because I do not think they are going to be borne out. I do 

not think you can build a whole new building and do the massive 

renovation of an existing building at a cost that is going to be 

cheaper than building one whole new building and relocating everyone into that building. That is a smaller amount of space, where 

you can utilize the other space for other agencies. I am not sure 

that all pencils out. 

And what I am afraid of with this new idea being floated is it 

is going to mean yet another delay with dealing with this problem, 

rather than sticking with the concept that had been agreed on and 

focused on for years and reducing the cost of that by bringing the 

number of courtrooms down. We are going to now look at something else that is only going to cause more dissension, more delay, 

more costs as the delays go on. That is the concern I have. 

So I would like to see the breakdown of what you think the new 

building costs and why you think somehow that you can do this 

cheaper. And take into consideration all of the peripheral costs of 

relocating the agencies that are there, the increased inefficiencies 

you are going to have of the courthouse being in two locations, 

maybe three, in terms of the administrative functions of the court. 

So I would like to get those cost figures. 

Ms. DOAN. We will be happy to provide that. And in fact, I will 

ask our Commissioner to see if he can get Jim Duff, who is the Administrator of the U.S. Courts, to accompany us when we come up 

to brief you on that. That way you can hear from the courts’ perspective as well as GSA. 

Mr. SCHIFF. Okay. I would probably want to have the judges 

there, too. 

Ms. DOAN. That probably would be wise. Judge Morrow comes 

here pretty frequently. 

Mr. SCHIFF. Okay. Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. I understand you have some questions 

for the record. 

Mr. REGULA. Yes. 

Mr. SERRANO. And I have some questions for the record. 

Mr. SERRANO. And with that I would like to thank you for your 

testimony here today before us. I hope we stay in touch on the 

other issues and please keep the committee informed. 

On a personal level, if you could supply my office, not the committee, with a listing of the properties that you have in my congressional district, either leased or owned in the County of the 

Bronx. So it’s the 16th district in the County of the Bronx. 

Ms. DOAN. I would be happy to do so. 

Mr. SERRANO. Thank you so much. Thank you for being here 

today. 

The committee hearing is adjourned. 


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hsrobinson on PROD1PC76 with HEARING
(333) 

WEDNESDAY, APRIL 9, 2008. 

FEDERAL COMMUNICATIONS COMMISSION 

WITNESS 

KEVIN MARTIN, CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION 

CHAIRMAN SERRANO’S OPENING STATEMENT

Mr. SERRANO. The subcommittee will come to order. Good morning to all. 

Kevin Martin, we welcome you to this hearing on behalf of the 

committee; and we bring you special greetings from Howard Stern. 

I thought you would appreciate that. [Laughter.] 

Welcome to this hearing of the Financial Services and General 

Government Subcommittee. Today, the subcommittee will take testimony from the Chairman of the Federal Communications Commission, the Honorable Kevin Martin. Kevin Martin has been a 

member of the Commission since 2001 and has been chairman 

since 2005. 

Chairman Martin, we welcome you to this hearing once again. 

The purpose of this hearing is to review the FCC’s budget request. The Commission requests a budget for fiscal year 2009 of 

$338.9 million, which is a $25.9 million or 8.3 percent increase over 

the current year. We look forward to discussing this budget request 

with you. 

However, as was the case with past FCC hearings, we expect this 

hearing to cover a range of issues, including some policy matters 

that are now or have recently been before the Commission. There 

is always a great deal of interest in what the Commission does because your decisions touch nearly all of us in our daily lives, especially the chairman, like me, who owns three different satellite radios; and we will talk about that later. 

You have authority over radio, television, telephone, satellite and 

cable services. You regulate one of our most precious assets, the 

public airwaves. You are required to ensure that all Americans 

have available telecommunication services at reasonable charges 

without discrimination on the basis of race, color, religion, national 

origin or sex. 

The importance and breadth of the FCC’s authority places it 

squarely in the middle of some of the most important and controversial issues facing our Nation. Some of these issues include 

media ownership rules, cable regulation, net neutrality and an 

issue that is of great concern to me, the transition to digital television scheduled for February of 2009. 

The FCC’s budget request for 2009 includes $20 million, which 

is the largest single increase, to expand DTV transition education. 


hsrobinson on PROD1PC76 with HEARING
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There is no question in my mind that more must be done to inform 

and prepare consumers for this transition. 

A recent survey estimated that more than 30 million households 

are currently unprepared for the transition because their televisions receive only analog signals. The survey also found that African Americans and Hispanics make up a disproportionate share of 

these households. I am concerned about how these families will 

successfully manage the transition. 

And I must say, Chairman Martin, just as an aside, I don’t know 

for sure but I know there is an effort being made on Spanish television to inform folks that this change will come. I don’t think I 

have seen the same kind of output—and maybe it is not needed or 

maybe the networks feel it is not needed—in the English language 

media. In Spanish, I have seen Univision and Telemundo do a pretty good job of letting people know that something dramatic is coming. 

With regard to media ownership, in December, the FCC approved 

on a 3–2 vote a media ownership rule change that would allow 

newspaper and broadcast company consolidations in the 20 largest 

media markets. This action by the Commission troubled many in 

Congress and in the public. There is concern that the new rules 

will impede diversity and that it is an ill-advised step towards consolidating the voices of media among the larger and wealthier outlets. While this is not a budget issue, you can be certain that this 

is a topic of interest among some members of this subcommittee, 

I would say probably all Members, one way or another. 

We look forward to your testimony, Chairman Martin. And I 

know you have a lot on your plate, and we will certainly perhaps 

add more to it as we finish this hearing today, but before we begin 

your testimony, I would like to hear from a man who invented 

cable television in Ohio. In fact, he brought it to Ohio before it 

came to the Bronx. 

Mr. REGULA. That is true. 

Mr. SERRANO. Very few people know this but, as you know, just 

to remind these folks who feel that these hearings are too boring, 

some people have claimed that cable television, amongst two or 

three reasons, was invented to bring New York City stations out 

West and to the South. Because of that, New York City thought it 

had great stations; and we got cable television in the Bronx in the 

last decade, really. I mean, it is hard to believe. I don’t know why 

I am whining. But, anyway, Mr. Regula. 

Mr. REGULA. Well, with a little bit of luck, you may get it in 

Puerto Rico. 

Mr. SERRANO. We get it in Puerto Rico. It is satellite radio that 

I am working on. 

MR. REGULA’S OPENING STATEMENT

Mr. REGULA. Well, okay. I think the point you make there, these 

are services that touch almost every American citizen and business 

every day. I think the whole age of communications is mind-boggling; and what lies ahead, I have no idea. But I think there is a 

lot more that will be fascinating for other generations. 

You have the challenge of balancing between providing enough 

regulation and oversight to ensure that the American people have 


hsrobinson on PROD1PC76 with HEARING
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communication services, while not slowing technological progress or 

impinging on individual rights. And I think that is always a challenge in a democracy, to balance these things out. 

And you have a lot of watchdogs that are looking over your 

shoulder because of the challenges you have. You have the business 

world; you have the techies, the technology and the consumer 

groups, that are all watching every move you make; and so that is 

a real challenge. And we look forward to hearing your testimony 

today. 

The change from analog to digital will be, for some, rather traumatic, I think. So we can buy a converter box with vouchers. I understand that, but how does that mean they are going to get it 

hooked up? Because not everybody will be able to hook up the box 

once they get it. And I suppose there will be an industry that will 

grow up that—with an ad in the paper will come out and hook up 

your box so that you can get digital, if that be the case. 

But, anyway, we look forward to hearing your testimony and 

what you see is the challenges ahead in your industry. 

Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. 

If I may say, Chairman Martin, that there are many times when 

agency heads come before a committee, when the press wonders 

how much of what we are dealing with at a particular hearing we 

participate in ourselves. I can assure you from my conversations 

that Members of Congress carry at the minimum, most of us, one 

cell phone, if not two, one personal and one congressional or otherwise. That so many of us have satellite radio at home, portable or 

in the dashboard of the car, that we play around with the DVR at 

home to try to figure out how to record that show while we are 

here in Washington or vice versa. 

So we are not totally unaware of what is going on. What we are 

in need of is knowing how all this fits into the lives of all Americans and, in fact, is it available to all Americans. 

And we welcome you today. We remind you that your testimony 

should be held to 5 minutes. Your full statement will go in the 

record so that we can grill you for the next 7 hours. 

CHAIRMAN MARTIN’S TESTIMONY

Mr. MARTIN. Well, thank you; and good morning to you, Chairman Serrano and Ranking Member Regula and all the members of 

the committee. 

I appreciate the opportunity to discuss the FCC’s fiscal year 2009 

budget request and, of course, the broader issues as well, which I 

am certain we will spend some time on this morning. 

I am pleased to work with the subcommittee on our fiscal year 

2009 appropriations. The appropriations process is certainly an exercise in fiscal responsibility. It enhances our internal systems of 

financial checks and balances——

Mr. SERRANO. Is your mic on? 

Mr. MARTIN. Hello. Can you hear? Is this better? 

Mr. SERRANO. Yeah. 

Mr. MARTIN. I am pleased to work with the subcommittee on the 

fiscal year 2009 appropriations process, and the appropriations 

process is an exercise in fiscal responsibility. It enhances our interVerDate Aug 31 2005 20:57 Jun 07, 2008 Jkt 042551 PO 00000 Frm 00335 Fmt 6601 Sfmt 6601 E:\HR\OC\B551P2.XXX B551P2

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nal system of financial checks and balances by bringing into focus 

for the Commission priorities of the subcommittee. I welcome your 

oversight and input and look forward to working with you to ensure the Commission is financially able to perform its mission. 

Since I have assumed the chairmanship, the Commission has 

been working to strengthen the budget-related functions. I am 

pleased to report these efforts have paid off. For example, for the 

last 2 years, the Commission’s independent auditor has provided 

an unqualified opinion and found no material weaknesses in the 

Commission’s financial operations. The Commission has never received such high marks from its outside auditor for 2 years in a 

row. 

The Commission is requesting spending authority of $338,874,783 for fiscal year 2009. As in prior years, the Commission proposes to receive a direct appropriations for $1 million and 

to raise the remainder through regulatory fees. 

To continue to operate at our current level, the Commission re- quires $311 million, which would represent a decrease of .3 percent 

below the level set for fiscal year 2008. Of the total requested for 

the next fiscal year, $7.7 million is designated for these nondiscretionary operating increases to maintain fiscal year 2008 service 

levels. This includes employee salaries for all projected full-time 

equivalents, inflationary increases for office space rentals, supplies, 

printing, postage and contractual services. Of the additional 

money, $6.6 million is designated for employee salaries and $1.2 

million is designated for other nondiscretionary inflationary 

increases. 

The Commission is also requesting an additional $26 million to 

implement five specific initiatives. First, $20 million will continue and expand an outreach campaign to educate consumers about the upcoming transition to digital television. For the Commission’s fiscal year 2008 appropria- tions, Congress authorized $2.5 million for consumer education 

about the DTV transition. The additional money would allow the 

Commission to continue and expand a wide range of outreach 

projects to help educate consumers about the DTV transition. 

Second, the Commission is requesting $1,050,000 to fund a public 

safety clearinghouse program that would significantly expand our 

coordination and outreach efforts targeted to the public safety community. The Commission would also use these funds to establish 

a public safety fellowship program to attract experts in the public 

safety community to work for the Commission for a temporary period. This would help the Commission strengthen its ties to the 

public safety community. 

Third, the Commission is requesting $1.9 million for the Inspector General to increase its efforts to fight waste, fraud and abuse 

in the Universal Service Fund and other Commission programs. 

These moneys would allow the Inspector General to further increase oversight of the $7 billion Universal Service Fund as well 

as other Commission programs and activities. 

Fourth, the Commission is requesting an additional $200,000 for 

travel expenses to cover official travel. Starting this fiscal year, 

Commission employees are prohibited by law from accepting payment for travel from entities that are subject to Commission reguVerDate Aug 31 2005 20:57 Jun 07, 2008 Jkt 042551 PO 00000 Frm 00336 Fmt 6601 Sfmt 6601 E:\HR\OC\B551P2.XXX B551P2

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lation. These funds would cover official travel that was formerly 

authorized to be paid for by non-Federal sources. 

And, finally, the Commission is requesting $3.7 million for three 

modernization efforts. The Commission proposes to use $900,000 to 

complete the lifecycle replacement for vehicles the Commission 

uses to support police, fire departments and other public safety organizations. This would allow us to purchase 10 special vehicles 

that are used to investigate and resolve harmful interference to the 

communications system of public safety and other organizations. 

The Commission also proposes to use $1.5 million to consolidate 

the information technology systems used to process license applications. In addition, the Commission proposes $1.375 million to complete the replacement of the Commission’s antiquated accounting 

system. 

We are also requesting legislative authority to permit the transfer of up to $25 million from the Universal Service Fund in fiscal 

year 2009 for the purpose of monitoring the Universal Service 

Fund, again, to prevent and remedy waste, fraud and abuse and 

to conduct audits and investigations by the Commission’s Office of 

Inspector General. This subcommittee granted a similar request for 

the current fiscal year. These moneys would be used to build upon 

the oversight work done to date, to continue strengthening the controls intended to safeguard the Universal Service Fund and to 

maintain a staff of 19 limited term employees in the Inspector General’s Office dedicated to these matters. These moneys would also 

permit the Commission’s Office of Inspector General to obtain contract support to perform audits of the Universal Service Fund beneficiaries and its contributors. 

One of the Commission’s important functions is using auctions to 

assign special licenses. On March 18, 2008, the Commission announced the close of our 700 megahertz auction, which raised a 

record $19.6 billion in revenue and helped advance new open platform policies. The Commission has additional auctions projected to 

take place within the next year. 

The Commission is permitted by law to use a portion of the revenues raised through spectrum auctions to help run that program. 

During the past five funded cycles, the final appropriations bills set 

a cap of $85 million on auction expenses. We believe we can continue to run the auctions program at this level of funding for fiscal 

year 2009. 

I am continuing to work with my colleagues on the Commission 

and with Members of Congress to develop plans for promoting 

broadband services, protecting consumers, ensuring the viability of 

the Universal Service Fund, enhancing public safety, and promoting the efficient use of spectrum. 

Thank you again for the opportunity to work with you on our 

budget request for this year. I respectfully request the subcommittee grant the Commission its full funding request for fiscal 

year 2009, and I am pleased to answer any questions about our 

budget or any of the other policies during our discussion this morning. Thank you. 

Mr. SERRANO. Thank you so much. Thank you. 

[The information follows:] 


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FUNDING FOR DTV EDUCATION

Mr. SERRANO. The FCC’s 2009 budget request includes $20 million for digital television education and outreach. The 2008 request 

was only $1.5 million, and Congress increased that to $2.5 million. 

I commend you for seeking more resources for DTV. However, the 

2009 appropriations bill probably won’t be enacted for quite a while 

this year, if at all. There are even rumors about a possible—if we 

get stuck, a possible resolution just to keep the government going, 

and then the next administration will deal with the appropriations 

issue. 

So since the DTV transition is planned for 2009, February of 

2009, has your request for additional funds come too late? When 

do you need the funding in order for it to be helpful in your DTV 

outreach efforts? And could you provide a spending plan for the $20 

million that shows how the funds are expected to be allocated 

among various activities? 

Mr. MARTIN. Well, obviously, with the transition occurring in 

2009, it is critical that we get the remaining money that would be 

utilized for the education efforts as soon as possible. To the extent 

that the Commission will operate under a continuing resolution, I 

think there would be a few options for us to try to seek additional 

funds for next year. The continuing resolution can include additional revenues for a specific purpose if Congress so wanted, so 

deemed it, so they could do that in the continuing resolution context. 

The Commission has also in the past gone back to this subcommittee and asked for permission to be able to use—to be able 

to be authorized to use unspent revenue from previous years. We 

have already begun working with OMB to be able to go back and 

utilize some of the unspent revenues that the Commission has still 

in its resources and be able to be authorized to use those for educational purposes. It wouldn’t be the full $20 million, but we can 

go back and ask for some additional resources. 

So I think we have got two other options to the extent that we 

don’t operate under a continuing resolution. Of course, the Commission could end up providing as detailed a plan as you would 

find helpful on what we would end up utilizing those additional 

moneys for. 

As you have indicated, we have just received $2.5 million from 

the committee in December. We immediately began the contracting 

process. We have hired Ketchum as a public relations firm to help 

us begin a more widespread public relations and public information 

campaign, which includes both satellite media tours so that we can 

get on local news and local television news stations around the 

country. We have done one satellite media tour. They have helped 

us with beginning the additional distribution of materials at grassroots communities; and we are working with other organizations, 

began the production of billboards and posters that will be able to 

be displayed as we are approaching the transition. So we can provide significantly more detailed information as you would need to 

see what we would do with the additional resources. 


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INDUSTRY ASSISTANCE IN DTV EDUCATION

Mr. SERRANO. I am still concerned, however. And you seem to 

paint a picture that says everything will be okay, but time is running short here, and there is still not the knowledge necessary out 

there in the community. Have you found the industry to be responsive in helping out? I mean, it is in their best interest. 

Mr. MARTIN. Oh, sure. I think it is important to understand that 

what the Commission is trying to do is ask for additional resources 

that could be supplemented to target very particular communities 

that we think could be at risk for not making the transition successfully. 

But the industries are taking significant steps. So you have 

broadcasters that have committed to about a $700 million campaign that they will be undertaking that started in February 

through the following February with increasing amounts of information that is going to be provided in terms of the PSAs and 

screen crawls and information. 

Mr. SERRANO. You said $700 million? 

Mr. MARTIN. Yes. The cable industry has committed to providing 

another $200 million in public information campaigns. The consumer electronics industry is similar and participating in an industry-wide effort to increase consumer awareness. So what we are 

asking for is a small supplement, compared to what the industries 

are ending up doing. 

And, as you said, there are different industries that have already 

taken an active role in it. The Spanish broadcasters have been very 

active already, for example, in beginning to run public service announcements. We have been coordinating with them and with the 

Hispanic Chamber of Commerce, for example, to do town hall meetings in the largest towns that have very large Hispanic populations. So we will be able to hit about 80 percent of the Spanishspeaking homes in those towns, in those town hall meetings. 

So the industries are becoming very active. So this is only to supplement that, but I do think that it is a critical and important entity. 

And I have worked with all the commissioners in coming up with 

this request. All the commissioners on the Commission have said, 

how much did you all think would be necessary for us to try to supplement our efforts; and the request that we put forth was what 

had been recommended and was the most money that we could 

possibly need over the next year. 

EDUCATING MINORITY COMMUNITIES ON THE DTV TRANSITION

Mr. SERRANO. Let me ask you, based on that, what specific effort—since you did touch on it, what specific efforts would you promote to let minority communities know of this change that is coming, in view of the fact that the most recent surveys indicate that 

they are the last to know what is going on? 

Mr. MARTIN. Well, with respect to the minority communities, it 

is not only important to make sure we are getting the message out, 

but they are much more likely to rely on over-the-air broadcasting. 

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air broadcasting, as opposed to subscribing to cable or satellite. So 

it is critical that we are reaching out to them. 

As I have said, we have already begun making sure that all of 

the information is being distributed and in multiple languages. We 

have been working on public service announcements with the 

Spanish broadcasters. We are going to be doing town halls with 

them and with the Hispanic Chamber of Commerce, for example, 

trying to target Spanish-speaking homes, as they are disproportionately likely to rely on over-the-air broadcasting. 

Those are just some of the initial efforts. 

Mr. SERRANO. Well, can you please keep the committee informed 

of what you are doing in that area? This committee would be very 

much interested in how we are moving along. 

MEDIA OWNERSHIP CONSOLIDATION

Let me ask you one more question here. In December, 2007, the 

FCC voted to relax media consolidation rules to allow newspaper 

and broadcast company consolidation of the 20 largest media markets. My concern with this action is that we should be encouraging 

more diversity, independence and local perspectives in the media, 

rather than setting up greater consolidation and ownership by 

media giants. 

I would also note that there were bipartisan calls in Congress for 

slowing down the FCC’s consideration of this issue. But you have 

decided to proceed with the vote in December anyway. How do you 

respond to concerns in Congress and elsewhere regarding media 

ownership consolidation? And what is the FCC going to do to encourage greater diversity in media ownership, including ownership 

by minorities and women? 

Mr. MARTIN. Well, let me respond in two ways, first in explaining 

why I thought it was important for us to proceed with the vote at 

the end of last year, and then also respond to the concerns about 

increasing minority ownership in the broadcast area. 

First, I think that you have to put into context that this decision 

that the Commission issued in December of last year actually was 

quite different from the decision the Commission had issued in 

2003, which infinitely increased the media ownership rules. In 

2003, we increased most of the media ownership rules, allowing for 

increased consolidation in radio, television, television stations 

around the country in terms of the national cap. This decision, in 

contrast—that decision was ultimately overturned by the Third 

Circuit, sent back to the Commission with one exception; and that 

exception was that the Third Circuit upheld the Commission’s decision in 2003 to remove the ban on newspapers being able to own 

broadcast properties. 

That decision had been sent back to us in 2003 and had been 

pending for us to issue a new decision. There were, as you said, significant concerns that were raised by Congress. Congress actually 

overturned the Commission’s decision in 2003 to raise the national 

ownership cap directly through the appropriations process. And 

this time the Commission, as I said, only raised one issue, only altered one rule and that was the ability of newspapers to own 

broadcast properties; and we did so in a very limited way. 


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The newspaper industry has been under significant financial 

strain as a result of the advertising dollars that are increasingly 

flowing to the new media platforms. You have seen about 300 

newspapers go out of business since the Commission’s original rule 

was put in place. Newspapers in some of the largest markets in the 

country were having significant financial difficulty. The San Francisco Chronicle, for example, was reported last year as losing $1 

million a day. 

The newspaper industry is suffering significant problems, and 

one of the things that they thought could help their industry would 

be the ability to take the cost that they were spending on news 

gathering and help recoup those costs through the additional distribution of that news through other outlets, not only on the Internet but also through broadcast. 

Because of the concern that people raised about that, that it 

would lead to increased consolidation, we limited our relief to the 

top 20 markets in the country in which we determined there are 

a significant number of media outlets that would already be available; and we said that newspapers would not be able to purchase 

one of the top four television stations in that market. So they were 

going to have to purchase one of the weaker or smaller television 

stations in those markets if they wanted to purchase a television 

station. So they were going to be limited to one broadcast property, 

they would not be able to purchase from the top four television stations in that market, and they would only be able to do that as long 

as there were eight remaining large voices in that market. 

So I think that we put in place both adequate controls to make 

sure that we had a diversity of opinion in those markets but, at the 

same time, try to take into account that both the courts and the 

facts indicated that the newspaper rule that had been put in place 

in the 1970s had to be modified in some way to take into account 

the changes in the media marketplace today. 

Mr. SERRANO. Well, let me just close by saying to you that we 

could discuss this all day. There are really two views on this. One 

is that we have to do something about the fact that the newspapers 

are folding up, so many of them. But, on the other hand, one would 

argue that it is the control by media giants that is forcing newspapers out of business, too. So, you know, it is a matter of opinion 

as to which one is causing which. So the more power you give to 

the giants, the more you might see local newspapers close down, 

local radio stations close down, local everything close down because 

they just can’t compete. 

I will recognize Mr. Regula; and then, because we have such a 

good turnout of members, we will adhere to the 5-minute rule. But 

not for Mr. Regula, of course. 

D BLOCK AUCTION

Mr. REGULA. Well, just a few things. I have some questions on 

the spectrum auction. What went wrong with the auction of the D 

Block? And what does FCC do now? 

Mr. MARTIN. Well, the Commission had tried to put in place a 

plan on the D Block——

Mr. REGULA. Yeah, I understand that. 


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Mr. MARTIN [continuing]. That would have allowed for whoever 

won that to work with public safety to try to solve interoperability 

problems, public safety challenges. 

I think that, obviously, there wasn’t enough certainty in that 

process of what those obligations were going to be or those obligations were too great for a private entity to be willing to purchase 

that spectrum and develop a partnership with public safety. So I 

think the Commission at this point has to go back and revisit those 

obligations, making sure that they are as clear as they can be 

about what the requirements will be on the person who wins and 

revisit whether they were too burdensome in terms of the amount 

of build-out that was required, the time frames for that build-out 

and the kind of services that they were going to be required to provide to public safety in order to establish that kind of a partnership. 

I think that what is important there were lots of aspects of our 

auction rules that were controversial. That was one—the Commission was, you know, uniform on. It was 5–0 in support of trying to 

do something to try to solve the public safety’s interoperability 

problems. 

Obviously, the D Block didn’t end up accomplishing that goal; 

and we have to try to figure out a way to revisit it to still try to 

accomplish that goal. 

FIRST RESPONDERS’ SPECTRUM

Mr. REGULA. Well, how would the sale of the spectrum help first 

responders’ ability to communicate? And, as I understand it, the 

portion that was set aside for first responders had no takers. So we 

haven’t solved the problem. 

Mr. MARTIN. That is right. We haven’t solved the problem. 

The first responders were given 10 megahertz of spectrum to try 

to solve—by Congress and by the Commission—to help try to solve 

their interoperability problems, and what we were doing was auctioning off the piece of spectrum that was right beside it to a commercial provider with the hope of being able to form a joint partnership. What we heard from public safety is that one of the challenges for them in solving their interoperability problem was not 

only having access to spectrum but the fact they didn’t have any 

resources to try to build out a nationwide network. So our hope 

was that whoever purchased the commercial spectrum right beside 

the public safety spectrum could form a joint partnership with 

them and allow public safety to utilize that network that they were 

building out. But, obviously, no one wanted to purchase that spectrum with that obligation, with the obligations we have formulated. 

Mr. REGULA. Do you have a plan to somehow ensure that the 

first responders ultimately will have a piece of the spectrum? 

Mr. MARTIN. Oh, I think that what we need to do is go back 

and—absent some other kinds of legislative change from Congress 

that would give them more direct resources, we would have to go 

back, I believe, and try to reformulate the current kind of joint proposal with the commercial sector and the public sector and then 

utilize that joint venture again. But we have to reduce, obviously, 

the uncertainty and the obligations to try to see if we can attract 

someone to take on that obligation. 


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DEMAND FOR SPECTRUM

Mr. REGULA. As I understand that, the $19.6 billion raised was 

substantially higher than the $10 billion congressional estimate. To 

what do you attribute this demand? And what happens to the $19.6 

billion? 

Mr. MARTIN. The $19.6 billion all goes into the Federal Treasury. 

So all of it is directly deposited into the Treasury. So it is to the 

benefit, you know, of the taxpayers and of the country. 

And I think the demand can be attributed to several factors. I 

think, first, the Commission, it talks about the importance of this 

piece of spectrum. This is the spectrum that the broadcasters are 

giving back as a result of transitioning to digital next year, and the 

characteristics of the spectrum allow it to carry a lot of information 

and that information to travel more easily through walls. 

Mr. REGULA. The digital requires less spectrum, is that what you 

are saying? 

Mr. MARTIN. When they are able to switch over from analog to 

digital, the broadcasters can do it in less spectrum overall because 

of some of the technical aspects of digital. So we took that extra 

spectrum we got back and auctioned it off for other wireless commercial services, wireless broadband services predominantly. So 

the demand for it was great because of these technical characteristics; and, also, I believe that the demand was great because of some 

of the other changes we made in setting up the auction. 

One of the most important changes we made was adjusting the 

power limits to make sure that all of it could be utilized and provide broadband services. We put in place a condition that a piece 

of the spectrum had to be open to any kind of device or any kind 

of application to try to further incentivize the innovations that 

were occurring on the edge of the network. 

And, finally, for the first time at a significant auction the Commission actually required there to be blind bidding so that you 

didn’t know as you were going through the bidding process who the 

other parties were that were bidding. There were some allegations 

that companies, when they saw that they were up against one of 

the biggest or largest wireless companies in the country, Verizon 

wireless or AT&T wireless, that they would just stop bidding. So 

we implemented a mechanism of blind bidding so that when we 

were auctioning off each geographic area you didn’t know who the 

other person was bidding against you, and we think that that also 

contributed to raising significantly more revenue. 

DISTRIBUTION OF AUCTIONED SPECTRUM

Mr. REGULA. Did the independent providers get a piece of this? 

Or did it pretty much go to the big ones? 

Mr. MARTIN. Well, the largest providers certainly purchased 

some of the largest cities. But of all of the licenses that we auctioned off, there were about 99 other carriers or other participants 

in the auction who won about 70 percent of the licenses; and someone else other than one of the four big wireless companies today 

won licenses in every market in the country. So other people did 

get pieces of it. Indeed, about 55 percent of the people who won 

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ignated entities under our rules, where they actually got a bidding 

credit for being a small business entity. 

PUBLIC SAFETY NETWORK

Mr. REGULA. One last question. And, obviously, the first responders are a very important element of public safety; and I assume you 

are working on some way to ensure that this happens, is that correct? 

Mr. MARTIN. That is right. We are. 

You know, this was a critical part of the 9/11 Commission’s report that said we need to solve this interoperability challenge. This 

is the only tool the Commission has to try to solve it. We can’t provide direct support. We can’t take, for example, any of that $19 billion. We are required by law to provide it into the Treasury. We 

can’t take it and say we are going to help public safety build out 

a network. So, as a result, our only option is to try to solve it 

through this joint public-private partnership. So, absent some other 

effort by Congress, I think this is the only idea that we have within 

our authority to solve this problem. 

Mr. REGULA. Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. 

PIRACY AND CHILD PORNOGRAPHY ON THE INTERNET

Ms. WASSERMAN SCHULTZ. Thank you, Mr. Chairman. 

Chairman Martin, we all care about the Internet; and I want to 

focus on peer-to-peer file sharing and piracy and child pornography 

for a second. I am one who took a position in the 109th in favor 

of network neutrality, because at that time I really believed there 

was not enough competition to warrant letting Internet providers 

cordon off bandwidth to that significant degree or spectrum for premium access. And to me the principles of network neutrality make 

sense when we ensure that Internet service providers don’t strike 

up deals that favor certain companies over others or prohibit consumers’ ability to access lawful content. 

But the idea of network neutrality should never force ISPs to actively ignore what is unlawful or speech that they know is unprotected, and what I mean by that is incidents of piracy and child 

pornography. The piracy challenge, obviously, you are familiar 

with; and it is a significant one. But child pornography is not as 

widely known. 

You might not know this, but there are literally more than 

500,000 individuals in the United States who are trading and trafficking in images on the Internet in child pornography, and I mean 

that is images of young children being raped. That is not free 

speech or something that is legal. They are crime scene photos. 

There are people trafficking those images all over the country in 

the shadows with peer-to-peer file sharing programs like 

BitTorrent. And law enforcement knows who these individuals are, 

but, for lack of funding, they are not able to go and get them. 

I sponsored legislation that passed the House already which you 

may be familiar with which we are hoping to have move soon in 

the Senate, but we can’t begin to contain this problem until we use 

every resource that we have at our disposal. And I was really glad 

to read in your statement that there was an agreement between 


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Comcast and BitTorrent and your comments that network managers have the important ability to block the distribution of illegal 

content, including pirated movies and music and child pornography. 

It is difficult to craft rules managing computer networks that 

have become indispensable to our lives, but whatever management 

practices that we have, have to be limited and practicable and 

implementable but at the same time be effective in blocking unlawful content like pirated music, movies and child pornography, and 

that is not an easy balance. 

What I want to ask you is what ideas do you have for giving network managers the ability to block the distribution of illegal content and how do we fashion principles that will continue Internet 

innovation but that also will not prohibit corporations from addressing the dangerous threats of online product piracy and child 

pornography? 

Mr. MARTIN. Well, first of all, I am somewhat familiar with some 

of your other efforts of trying to address things like child pornography; and I certainly commend them. And I completely agree that 

all of the network neutrality principles that the Commission has 

adopted only go towards lawful content. There is no protection for 

the distribution of any kind of unlawful content whatsoever when 

you are talking about either child pornography or even content that 

doesn’t have appropriate copyright terms for it. So it is only lawful 

content that is protected. 

So, in the context of lawful content, some carriers have announced, for example, that they have been looking at and exploring 

options for putting on the kind of filters that would try to distinguish between lawful and unlawful content. I think AT&T had 

made some announcements about that earlier in the year where 

they were looking at whether filters like that could be put in place. 

But any kind of network management issues that go towards distinguishing between lawful and unlawful content don’t violate any 

of the Commission’s principles and don’t raise any issues. 

FILTERING ILLEGAL CONTENT

Ms. WASSERMAN SCHULTZ. Are you using the bully pulpit of your 

position to encourage the development of filtering software and 

making sure that you raise the level of priority on that? 

Mr. MARTIN. Oh, I think that—yes. And I don’t think it is any 

problem whatsoever for network operators to engage in those kinds 

of practices. However, but I do think it is more of a challenge if 

they start trying to address particular applications; and if they just 

start saying that they are going to discriminate against a particular application, I think that raises different issues. And it goes 

more towards the concerns that were embodied in our network neutrality principles and that were embodied in the network neutrality 

legislation that you referenced also in your comments. 

Ms. WASSERMAN SCHULTZ. If you could address my second question, how do you strike a balance between not stifling Internet innovation but not prohibiting corporations from making sure that 

they can stop online piracy and child pornography? 

Mr. MARTIN. I think, first, we strike the right balance by making 

clear that there is no problem in whatever actions they want to 


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take in stopping child pornography and other forms of illegal content. But I think when we are looking at that, obviously, their efforts have to have a fit or they can’t be overinclusive and underinclusive. In other words, they can’t just say they will try to stop 

all content because they are trying to stop the illegal content. 

CLARIFYING PROTECTED CONTENT

Ms. WASSERMAN SCHULTZ. Do you expect that you would craft 

language that would clarify as we move forward what could be protected and what the companies could do? 

Mr. MARTIN. Sure. I think in our network neutrality principles, 

we have already said all of this only applies to lawful content and 

any request by law enforcement to stop any kind of content needs 

to be respected. So I think we have already said that, but we will 

continue to reiterate that at every chance whenever we are dealing 

with this issue. 

Ms. WASSERMAN SCHULTZ. Mr. Chairman, before my time expires, I would just encourage the Chairman of the FCC to, like I 

said, use the bully pulpit that you have to ensure that we can continue to push these providers to ensure that we have the ability to 

block piracy and illegal content and child pornography. 

Mr. MARTIN. Oh, sure. 

Ms. WASSERMAN SCHULTZ. Thank you. 

Mr. SERRANO. Thank you. 

And now a future Spanish language broadcaster, Mr. Kirk. 

E-RATE PROGRAM

Mr. KIRK. I am looking forward to my job at Telemundo. 

Mr. Chairman, first of all, I want to just thank you for the quick 

deployment of the Do Not Call rule. I think you have restored 

peace to the American household, and I really want to thank you 

for that. 

I was struck by the indictment of a school official in my district 

for fraud committed against the E-rate program; and I then began 

to look into this program and found that the GAO reported that the 

FCC’s establishment of E-rate with an organizational structure unusual to the Federal Government and never conducting a comprehensive assessment to determine its requirements, policies or 

practices, that the corporation that administers it has struggled to 

determine fiscal accountability requirements under the program. 

The Inspector General says, obviously, while all U.S. programs 

have the potential for mismanagement, E-rate, due to its materiality and initial assessment for potential of waste, fraud and abuse, 

has been singled out for particular attention. GAO says FCC’s oversight mechanisms contain weaknesses that limit the management 

of the program or the ability to understand any fraud, waste and 

abuse within it. 

Of course, this is all funded by a tax on telephones; and so all 

of this fraud makes our phone bills go up. The OIG in its look at 

USF programs cites erroneous payments: Contributor payments erroneously made, $385 million; erroneous payments to schools and 

libraries, $210 million; erroneous payments for high cost, $618 million; erroneous payments for rural service, $4.4 billion. You know, 


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hundreds of millions of dollars the OIG has said have been made 

through erroneous payments. 

Now I know, you know, you have principal enforcement authority 

with the Enforcement Bureau under section 254. But I would note 

apparently now the furious action by the Department of Justice 

that has an antitrust division and task force already nailing people 

connected to this program for fines totaling over 40 million bucks. 

Now you have got an increase before the subcommittee that you 

are requesting a $1.9 million increase and a transfer of 25 million 

bucks. But I would say if this large amount of Federal funds is incorrectly designed, no amount of oversight funded by this committee can prevent that record of mismanagement. 

I understand that we are going through looking at the procurement process under E-rate. But under USAC’s recompete, there is 

no proposal to increase or modernize the fraud, waste and abuse 

provisions of the contract. So, given all those problems, can you 

talk about what is going on with E-rate? 

Mr. MARTIN. As you indicated, the GAO has found that the way 

the Commission had set up the Universal Service Program and the 

E-rate program back in the late 1990s was unique in that we were 

requiring the collection of revenue——

Mr. KIRK. I think the technical term would be ‘‘funky.’’

Mr. MARTIN [continuing]. But the collection of revenues and that 

was being distributed not by the FCC itself but by a separate corporation that had been set up. I would have to get you exact details, but there were both congressional issues related to it—Senator Stevens I think had requested the GAO audit originally in the 

late 1990s. There were lawsuits that were brought against the Erate program originally, that it was an unlawful tax. So there were 

lots of issues that arose in the late ’90s about that program and 

the way that it was originally set up and structured and the legality of it, and the program changed in certain ways both to respond 

to court cases that had been brought and congressional concerns. 

The program has been structurally set up in basically the same 

way since that issue settled down in the late ’90s and in 2000. 

What has increased is the concern by the Department of Justice 

and by others that that structure and the fact that the E-rate program is a grant award program, as opposed to a reimbursement for 

cost by carriers program, has led to increases in fraud in that program; and that was what led the Inspector General several years 

ago to request a significant increase both in his budget and what 

the committee ultimately appropriated was taking money from the 

E-rate and was allowing the Inspector General to use it for its 

waste, fraud and abuse investigations. 

I think that we obviously support the Inspector General’s request 

and think that that has had somewhat of an important difference 

in both him identifying waste, fraud and abuse and him working 

with the Department of Justice going forward. 

Mr. KIRK. If the program is fundamentally flawed and you have 

got dozens and dozens of criminal indictments for people who have 

illegally removed money from the program, can we appropriate our 

way out of this through IGs? Or don’t we need a basic restructuring 

of the accountability? 


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Mr. MARTIN. I think that there have been those in Congress who 

have argued for a basic restructuring of the Universal Service Program, particularly the E-rate for years; and I—— Mr. KIRK. I guess I am not looking—because I know how difficult 

a legal legislative change would be in an election year. When we 

look at the re-procurement under USAC and oversight of fraud, 

waste and abuse, that is now directly within your jurisdiction. We 

don’t need legislation to do that. 

Mr. MARTIN. I don’t think, besides what we have done through 

the Inspector General’s office, we probably have the authority to 

make some kind of changes. 

The one change that I would say and I have advocated for a long 

time that the Commission has tried to make is to change the program from a grant program to one that distributes money based 

upon a formula response like we do lunch money to schools and 

that we base that distribution instead of upon grants that people 

are applying for money and say this is what they will do with it, 

which I think leads to waste, fraud and abuse, and rather change 

the structure of the program so it distributes that money based 

upon a formula of how many poor children and how rural your area 

is. And I think that would allow schools more flexibility and, at the 

same time, get away from the grants which I think have led to 

those challenges. 

Mr. KIRK. Thank you, Mr. Chairman. 

Mr. SERRANO. Ms. Kilpatrick. 

EXPANDING DTV EDUCATION PROGRAMS

Ms. KILPATRICK. Thank you, Mr. Chairman. 

I like the E-rate program. I think it has helped education institutions all over America, certainly in Michigan. Not without problems, and I think we correct those as we go, and I am happy that 

the Auditor General is taking a look at it and is doing what needs 

to happen. I notice your budget is $25 million more than it was last year 

with fewer employees. So my first question is, where is the $25 million going to be distributed? Is there one, several places or what 

is——

Mr. MARTIN. The bulk of that increase is actually going to be for 

an expansion of our DTV education program. So $20 of the $25 million is actually going to be focused exclusively on trying to provide 

additional resources to educate consumers throughout the country 

as we are approaching the 2009 transition. 

Ms. KILPATRICK. Which was where I was going next, to DTV, 

February, 2009. 

Mr. MARTIN. So the bulk of it is going towards that. 

Ms. KILPATRICK. Okay. And how will that be disseminated? How 

does that work? 

Obviously, education. It is my understanding that cable TVs will 

continue to operate. Analog, which a lot of people still have. So 

what kinds of things? And how can we plug in to help get that message out? 

Mr. MARTIN. I think that there are several different things that 

we have begun trying to work on to try to educate consumers, and 

I think these kind of funds could help supplement dramatically. So 


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Congress and through this committee we were appropriated $2.5 

million last year to begin the education campaign, and that allowed 

us to get a contract with Ketchum, a PR firm to begin that education process. 

Ms. KILPATRICK. Was that bid? Was that contract bid? 

Mr. MARTIN. That was put out for bid. Absolutely, put out to bid 

through the normal contracting process. The only thing we did, the 

only change in it at all, was it was a shorter time frame than sometimes contracts are put out but only because we had such an urgency to try to get that money put into place to be able to utilize 

to start educating our consumers as we are fast approaching that 

deadline. That is going to be utilized both for media tours, for increasing education and awareness by getting public service announcements and other kinds of media done at the local level. 

We have already had one media tour, and we are working on 

doing public service announcements that then will be placed and 

also through more grassroots kind of education efforts through billboards and particularly in communities that have high over-the-air 

television populations, that have high numbers of consumers that 

have over-the-air television, as opposed to subscribing to cable and 

satellite. Through working, for example, with the distribution 

through companies that put the flyers in advertising at grocery 

stores, on the back of grocery store carts, working with the Postal 

Service. We are going to be putting out thousands of posters starting this coming summer in every post office throughout the country. 

We are going to be working to get posters and information that 

is going to be delivered to over 25 States throughout the country 

to every division of their Department of Motor Vehicles. Every time 

someone goes in to get a license renewed or to renew their, you 

know, license plate or their license tag, we would have information 

that we would provide to them. 

Ms. KILPATRICK. Okay. Thank you. 

I think that is an excellent way to start. I really want you to consider helping to set up in our offices. I am sure all 435, probably 

all 535, would like to be of help as you disseminate some of that 

if we can partner. It not only gets the information mobilized, but 

it also increases better relationships with us and the FCC. I hope 

we will do that together. 

Mr. MARTIN. Absolutely. We will work to make sure we work 

with yours and all of the offices. 

INTERNET BLOGS

Ms. KILPATRICK. Finally blogs on the Internet. The reality is, it 

is what it is. And I just don’t see much—or maybe you can, maybe 

it is free speech, say anything if its right or wrong or whatever. 

What is your take on the blog generally, the Internet in particular? 

Actually, it could be another excellent education tool. 

My 6-year-old grandson is a whiz. He can do all the stuff. But 

I am concerned that it doesn’t have much regulation, kind of like 

my colleague on this side. How do we keep it growing and growing 

and be a positive tool? And what might be the FCC’s role in seeing 

that it doesn’t get out of hand, used negatively? 


hsrobinson on PROD1PC76 with HEARING
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Mr. MARTIN. Well, I think that obviously, as I was discussing 

earlier, making sure that we clarify that any kind of illegal content 

is—it doesn’t have any kind of protection in terms of limitations on 

what the operators can end up doing to manage their networks I 

think is important. But in terms of if it is legal content but there 

are blogs that people have information out there. There are lots of 

blogs that criticize me for everything the Commission does. 

REGULATING BLOGS

Ms. KILPATRICK. Join the club. We are part of that. 

Mr. MARTIN. Those are difficult. But, at the same time, I think 

we have to put that in the context of, unlike the mass media, which 

has certain kinds of rules and limits as to how you can put information out, like what you can say on broadcast TV or broadcast 

radio——

Ms. KILPATRICK. Okay. And that came as a result of its being formulated. Now that we have another entity, how can you do likewise with this? Or can you? 

Mr. MARTIN. I think it is difficult, and I think that this medium 

presents other kinds of challenges. Unlike the mass media, where 

there was one person who was producing information and then trying to distribute it to everyone, this information is stuff that is frequently—you are pulling down—people are searching it out and deciding they want it and pulling it down. So that creates different 

first amendment standards than it does when someone is pushing 

content to you versus when it is something that you have chosen 

to go do a search for and find. So that raises more difficulties when 

the government talks about trying to have any kind of standard of 

what is appropriate and what is inappropriate, the terms of content. Not when it is illegal but in terms of its content. 

I think that what I would say is that you do see increasingly developing the Internet on its own ways in which the Internet and 

technology is trying to find ways to solve the problem, if what you 

are talking about is reliable information. So that things like 

Wikipedia, which is the encyclopedia online, is something that the 

users themselves can update and change to the extent that they believe that it is something that is inappropriate—or it is not inappropriate, it is incorrect. 

Ms. KILPATRICK. Or unreliable. 

Mr. MARTIN. So what you are seeing is a different kind of approach that is developing with these new technologies to try to 

solve the reliability problems where things that are being put up 

are able to be altered. So what you rely upon are users in a different way being their own monitor and actually making sure that 

the information is reliable, but it is a very different medium, and 

it presents different challenges. 

Ms. KILPATRICK. And almost impossible to regulate. 

Thank you, Mr. Chairman. 

Mr. SERRANO. See, I was just going to do this. 

Ms. KILPATRICK. I saw the motion. 

Mr. SERRANO. Mr. Alexander. 

Mr. ALEXANDER. Thank you, Mr. Chairman. 


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INFORMING PEOPLE OF THE DTV TRANSITION

Mr. MARTIN, MS. Kilpatrick asked what I know about the digital 

transition. For those of us that represent large rural areas where 

people don’t have access to Internet, so they certainly wouldn’t benefit by going on a Web site, what can we, as Members of Congress, 

do to get that message out there? 

Mr. MARTIN. Well, certainly I think it is important that the Commission try to work closely with you all to help get the message 

out; and we will help to provide any kind of information to actually 

go into people’s districts and make sure that we are participating 

in getting information out to community centers and town hall 

meetings. We would be happy to work with any Member who wants 

to. 

The Commission has already tried to start doing that on its own. 

Our field offices have gone through almost 45 different States and 

have distributed information, for example, to every senior center 

and community center there. So we have visited over 4,000 senior 

centers and community centers throughout the country where we 

have provided information; and we could be providing more information, putting up more posters to the extent that we are able to 

get some additional funds. And that is the kind of thing that we 

could be doing; and to the extent that we can work with you to 

make sure we have hit the most important parts of your district, 

I think that is one thing that we would be happy to end up working 

on. 

We have also tried to figure out ways to work with local grassroots organizations that focus and/or companies that focus and target on rural areas. So, for example, we have been trying to work 

with the people who receive universal service funding to make sure 

that they are putting flyers or billing inserts in their bills to make 

sure that they are telling people that this transition is coming. Obviously, that is money that frequently focuses on people that live 

in rural areas. 

We have also partnered with the Department of Agriculture and 

4–H to try to emphasize, and we have actually worked with them 

so that we have made one of the 4–H programs for young kids one 

of their public service requirements. They can fulfill their service 

requirements by participating in the local DTV education efforts. 

And we have also been working with them to try and make sure 

we are distributing information at all the local county and State 

fairs throughout the country this year, which often targets rural 

populations. Those are some of the efforts we are trying to focus 

on in rural communities in particular. 

FCC PRIORITIES

Mr. ALEXANDER. Senator Stevens said yesterday that this should 

be a top priority. But I am assuming from your testimony and the 

amount of money that you are putting into this that it perhaps is. 

Mr. MARTIN. Absolutely. And in response to Senator Stevens’

questions yesterday, I said it was. 

Obviously, it can’t be our exclusive. There are some other critical 

issues. For example, solving the public safety interoperability issue. 

I would have to say it is at least as equal priority for us this year. 


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I think that there are other priorities, and public safety is always 

one that I put at the very top of our list. But certainly the digital 

transition over this past year will be at the very top. 

IN-FLIGHT USAGE OF CELL PHONES

Mr. ALEXANDER. Okay. Dealing with another line of communication, I saw a news item the other day perhaps that the airline industry is going to offer to its passengers in the near future the ability to use your cell phones while in flight. Do you know anything 

about——

Mr. MARTIN. The Commission had opened—there are two sets of 

rules that prohibit consumers from using cell phones on flights. 

Both the FCC and FAA have rules on that. The Commission 

opened a proceeding several years ago asking, should we eliminate 

our restriction? And we decided not to. We left it in place. Our restriction is concerned with interference, that it could create actually also on the ground to existing wireless providers on the ground 

as planes were above. 

I think the article you might have seen in the paper talked about 

the changes that European regulators were making to allow people 

to make use of cell phones on flights. At this point, the Commission 

doesn’t have an open proceeding on it; and, more importantly, the 

FAA I think indicated that they have no plans to change their role 

here in the United States. So I don’t anticipate that changing anytime here in the near future. 

Mr. ALEXANDER. Okay. Thank you. 

Mr. SERRANO. Thank you. 

Mr. Hinchey, early January of 1975, we got sworn in together to 

the State assembly; and here we are 35 years later, trying to get 

it right. 

Mr. Hinchey. 

CONCENTRATION OF MEDIA OWNERSHIP

Mr. HINCHEY. You obviously have gotten it right, Mr. Chairman. 

We very much appreciate that. 

Chairman Martin, thanks very much for being here; and I want 

to express my appreciation to you. You do a very, very important 

job. 

One of the problems that I think we are having, though, is an 

example of a conflict with the basic principles of the Constitution 

of our country. The First Amendment makes it clear that openness 

and freedom of expression and the availability of various forms of 

information are critically important for the future of any democratic republic and certainly very critical to ours. Over the course 

of the last 20 years we have seen this diversity very much restricted, beginning in 1987; and, as a result of that, now we have 

a handful of major corporations that control more than two-thirds 

of all the media in the country. So you have about six people in 

effect who are making the decisions as to what kind of information 

goes out. 

That was a very, very big mistake; and it is something that the 

Federal Communications Commission should be focusing its attention on to alleviate, to open up, to make it less restrictive. 


hsrobinson on PROD1PC76 with HEARING
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But in November of last year, November 13, you posted a notice 

on your Web site that you were going to engage in increasing concentration of ownership, newspapers and broadcast stations; and I 

believe it was just over a month later that you actually put that 

process into play. There is a lot of that that I find troubling and 

very worrisome in the way that that has been handled. 

I think these rules that just passed recently were done so under 

a flawed process, and I think the consequences of that is likely to 

substantially undermine, and increasingly, the independence and 

diversity of journalism in our country. There is a whole host of 

things that I would like to talk to you about with regard to that. 

The conditions of news protection and editorial expression are 

something that has become melded in the context of most of the 

broadcasts in our country, particularly television, where you have 

people who are alleging to present the news but what they are 

doing is presenting editorials, presenting their viewpoints, their 

point of view. Will the FCC be prepared to reject the license renewal application if the conditions of news protection and editorial 

separation are not met? And, before you answer that, would you 

describe what those separation elements need to be? 

Mr. MARTIN. I think you might be referring to the separation elements—you are talking about in the waiver process in the rules 

that we adopted? 

Mr. HINCHEY. Yes. 

WAIVER PROCESS

Mr. MARTIN. I think that what you have to put into context for 

me to answer that is the situation that you are describing. The 

Commission said that in markets that were smaller than the top 

20 markets we would allow someone to apply for a waiver to still 

purchase a newspaper and a broadcast property if they could demonstrate that they were going to increase the amount of local news 

on those properties. So that to the extent that, for example, a 

broadcaster was not putting on any news at all anymore, that to 

the extent—and we added specific amounts of what they would 

have to do, the amount they would have to increase. And we said, 

to get credit for that amount of increase, you will have to demonstrate that you had a separation of the editorial function. 

And we actually looked towards Congress’ previous act when 

they had passed the Newspaper Preservation Act in which they 

had said that there were certain structural limitations they put in 

place when they allowed two newspapers to merge that were trying 

to preserve editorial content separation, and so we said we would 

kind of mirror those standards, and we were looking at making 

sure that that editorial content was——

Mr. HINCHEY. Well, the expression of that idea in the context of 

that waiver gives you the idea that you have some intention to separate what is supposed to be news and what is supposed to be opinions. 

Mr. MARTIN. It was in the context of separation between the two 

entities to make sure that there were going to be two new—if the 

idea was we would allow a waiver in those circumstances, because 

there would be a new increase or the new voice in the market, then 


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that had to be a true new voice so they had to have a certain 

amount of minimum content. 

SEPARATION OF THE EDITORIAL FUNCTION

Mr. HINCHEY. Do you think that the FCC should engage in any 

insight into the way in which broadcasters behave now with regard 

to the difference between broadcasting information and providing 

opinions on that information? 

Mr. MARTIN. I think that, outside of the particular waiver process you were—I was just describing just in general. 

Mr. HINCHEY. Not in the context of the waiver process. In the 

context of the existing standard set of circumstances that exist out 

in the media right now, where you have so many broadcasts that 

allegedly are giving information, but, at the same time, they are 

really driving home their opinion of what the circumstances ought 

to be. 

Mr. MARTIN. I think that it becomes very particularly dangerous 

as it relates to the first amendment responsibilities the Commission has if we are going to start reviewing their news content and 

determine whether they are distributing news and information or 

distributing an editorial opinion. One of the areas the Commission 

has been most hesitant to get involved in, even with broadcasters 

who have more limited first amendment rights, is in their distribution of news. 

Mr. HINCHEY. Have you ever said that to any particular broadcaster, that they should separate the broadcast information from 

opinion? 

Mr. MARTIN. I don’t believe that the Commission has, no. I don’t 

believe the Commission has a standard on that. 

Mr. HINCHEY. I would be surprised if you had. 

So the whole question of this waiver process and the idea that 

you are now going to focus attention on the difference between providing factual information and providing some kind of bogus opinions and alleging that they are connected in some way doesn’t seem 

to make any sense because there is nothing like that that you have 

ever done in the past, not just you but prior commissioners, going 

back now for more than 20 years. 

Mr. MARTIN. I think it only makes sense in the context of why 

we were granting the waiver. This process was actually something 

that had been advocated by some of the consumer groups in saying 

the only circumstance they would see in which they should allow 

cross ownership——

Mr. HINCHEY. I understand that. Consumer groups are trying to 

get their opinions paid attention to. And so, in response to that, 

you put this information in saying that you are going to do this examination. But there doesn’t seem to be any confidence that should 

be applied to that statement, because nothing like that has been 

done, either under your chairmanship or under the chairmanship 

of anyone who proceeded you, basically, over the course of the last 

22 years. 

Mr. MARTIN. Well, I think that is one of the reasons why it would 

only be in the waiver context where we would be looking at the 

exact facts of what someone was proposing and ended up doing. 

Mr. HINCHEY. Time flies, Mr. Chairman. 


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Mr. SERRANO. Thirty-five years. It is incredible. Mr. Bonner. You 

thought we would never get to you, right? 

Mr. BONNER. Mr. Chairman, I am just amazed that your State 

doesn’t have a minimum age to begin public service. You could not 

have been in public service 35 years. 

Mr. SERRANO. If I had learned to speak English earlier, I could 

have been elected at 22. But it took a while. 

DO NOT CALL PROGRAM

Mr. BONNER. Chairman Martin, since Representative Kirk threw 

out a comment, a positive comment, about the FCC’s role in the Do 

Not Call issue a few months ago, let me follow that up by asking, 

is there any practicality in extending the Do Not Call restrictions 

to benefit businesses and not only residents? I have had a number 

of constituents in my district who have expressed concern about 

the number of calls that their businesses receive, some of which 

they consider to be fraudulent solicitations. And is that something 

that y’all have considered? 

Mr. MARTIN. I don’t think that the Commission has been actively 

considering that in the context of extending our Do Not Call system. I think more and more of it has been focused on the consumers. Obviously, that is something we will take back; and we 

will see how many complaints we are getting in that regard. 

Mr. BONNER. That would be great. 

LOCALISM RULES

I don’t know if you have received it yet or not, but you will soon 

receive it if you have not, a letter signed by many Members of Congress circulated by our colleagues, Representative Mike Ross of Arkansas and Representative Marsha Blackburn of Tennessee, expressing some concerns that we have about the Commission’s consideration of a radical, in our view, re-regulation of our Nation’s 

broadcast system and impending localism proceeding. 

Let me just say at the outset, I have taught a journalism class, 

broadcast journalism class, in Springfield College in my hometown 

of Mobile, Alabama, on Mondays, spoke with 17 future journalists; 

and I am a great believer in the role and the sanctity, if you will, 

of local broadcasting. And I am concerned by what it appears to be 

the Commission’s consideration of what I would deem potentially 

severe economic impact of some of the proposed localism rules, including, for example, reinstating the main studio rule that the FCC 

concluded was too restrictive more than two decades ago. Any initial thoughts on this? 

Mr. MARTIN. There were three main points that the Commission 

considered making changes to that I think that you are referring 

to that many of the broadcasters are concerned about. One of them 

was requirements about broadcasters having local studios, one 

making sure that broadcasters had someone who was available 24 

hours a day potentially, and another—well, I will let you create the 

others, but let me respond to those two, for example. 

Those two were concerns that had been raised at the Commission 

as it resulted in an increasing amount of local broadcasters who actually were putting on content that was just getting piped in from 

somewhere else and whether we should make changes as a result 


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of that because it was no longer local content; and even though 

they had a DJ on the radio who was potentially talking about what 

occurred in the local community, he was actually someone who 

wasn’t living in that local community, was actually living on the 

west coast somewhere with that information being piped in from a 

distance and that that wasn’t reflective of the character of local 

broadcasters. And that was one of the reasons we asked about—

was the main studio rule, for example, a way to try to address that 

concern that was being raised increasingly by the viewing public. 

Similarly, there were instances that happened, one in Minot, 

North Dakota, in which there were allegations that there was a 

train wreck, there were some chemical fumes that were released in 

the community. They were trying to tell citizens in the middle of 

the night not to leave their homes, and there was no one at the 

local broadcast station to put out the emergency alert. It has been 

back and forth. The broadcaster says it wasn’t their fault. It was 

the local first responders. It was the local police department’s fault 

for not triggering the right alarm that brought the—that they say 

it was the broadcaster’s fault. 

Without getting into that, it certainly highlighted a concern to 

the extent that local broadcasters don’t have anybody there. When 

the police went and knocked on the door and said, hey, we need 

to get the emergency alert out, there was no one there. 

Mr. MARTIN. And I understand that they are saying someone has 

to be there 24 hours a day to increase the cost; but at the same 

time, I think an important public interest obligation of broadcasters is that they are actually in a position that, under all circumstances, they can tell the people in that community that there 

is an emergency and they need to be prepared to respond to it. And 

I think that is probably not too much to ask of local broadcasters. 

Mr. BONNER. I would agree. It may not be too much to ask in 

terms of the public service they provide, but it is going to be a tremendous additional burden. Again, the only reference point I have 

is in my district, but the major affiliate stations in my district have 

had to shave off, everywhere they can, cost. And it seems like to 

me that we are now giving them a burden of an additional cost 

that may not, 365 days out of the year—I mean, I live on the gulf 

coast, so we know a little bit about hurricanes. And there are certainly times when it is incumbent upon the station to provide that 

24-hour emergency technician, if you will, there. 

But in any event, I just wanted to raise that issue with you, because the broadcasters are not the only ones who are concerned 

about the additional burden it would have. And I think you will see 

that in that letter. 

NEW RENEWAL PROCESSING GUIDELINES

As a follow-up to that, the localism report, do you have any concerns about the first amendment issue with regard to this? When 

the Commission eliminated content-based renewal processing 

guidelines in the 1980s, it did so in part because of concerns that 

these guidelines raised serious first amendment issues. 

So my question would be, do you think that your proposed new 

processing guidelines, which appear, at least to me, to be more onVerDate Aug 31 2005 20:57 Jun 07, 2008 Jkt 042551 PO 00000 Frm 00387 Fmt 6601 Sfmt 6602 E:\HR\OC\B551P2.XXX B551P2

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erous in detail than those guidelines previously eliminated by the 

Commission, are appropriate under the first amendment? 

Mr. MARTIN. I do. I think there are only two related issues. The 

Commission has had, for a while, that broadcasters are required to 

fill out certain kinds of forms about the kind of content that they 

are putting on, responding to local community concerns. We did 

alter the form to make it more detailed. We didn’t set any minimal 

amounts that broadcasters were required to put out on any different kinds of information, but we did alter the form to say we 

wanted them to provide more information about how much of what 

they were doing was local, local public affairs and local news, 

versus—and local-originated content. But there weren’t any minimums, so I don’t think it violates the first amendment. 

The only minimum was we did ask, should there be some minimum requirement on broadcasters during their entire 8-year license term to do something local for your community? And I actually believe that that is incumbent upon the local broadcaster to 

say he is willing to do something local. But I think that that is the 

only one bit that I think implicates it. 

Mr. SERRANO. Thank you. 

You must be the luckiest man in the world, Mr. Schiff, because 

you are next. 

Mr. SCHIFF. Mr. Chairman, if I could have just a minute, if you 

could go to one of my colleagues. 

INTERNET RADIO

Mr. SERRANO. Right. Well, I wanted to ask the Chairman if I am 

violating any kind of rules. You know, I have one of those Internet 

radio stations, and if you call right now, I am not there. The music 

is just playing by itself, if you click on. 

Mr. MARTIN. I can send the enforcement bureau out to check it 

out. [Laughter.] 

No, but there aren’t any requirements on the Internet radio. But, 

of course, all of these public interest obligations attach to the extent that their broadcasters have to use the public airways. So the 

idea of all of our public interest obligations is that the broadcasters 

are receiving a very valuable public resource, the airwaves, and 

they have actually received that for free. We just auctioned off 

some of the airwaves that were returned by the television broadcasters for about $20 billion. And that gives you a sense of how valuable these airwaves are that the broadcasters were able to get 

originally for free. 

So we don’t have the same kind of public interest obligations attached to your radio station. 

Mr. SERRANO. For the members of the press who are here who 

may now write that I own a radio station, what it is is you go online to some of these Web sites that play music and you pick a 

name for a station, you put in some personal info, then you pick 

songs from a library they have, and anybody who clicks in listens 

to the music. And I don’t own a radio station. 

Are you ready, Mr. Schiff? 

Mr. SCHIFF. Yes. 

Mr. SERRANO. Mr. Schiff. 

Mr. SCHIFF. Thank you, Mr. Chairman. 


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Mr. SERRANO. Now that I am out of jail. 

BLOCKING DISTRIBUTION OF ILLEGAL CONTENT

Mr. SCHIFF. I wanted to focus on an issue that is very important 

to a great many of my constituents who work in the entertainment 

industry. In particular, I wanted to ask about the ISP management 

and responsibility in terms of unlawful content. 

FCC policy statement principles state that consumers need access to lawful content. In your statement, on the dialogue between 

Comcast and BitTorrent, you noted that the hearing at Stanford 

will explore more fully what constitutes reasonable network management practices, including the important ability for network 

managers to block the distribution of illegal content, including pirated movies and music, as well as child pornography. 

And I understand one of my colleagues asked a question on the 

child pornography issue, but I would like to focus on the pirated 

movie/music issue in particular. 

Do you believe that taking action to block the distribution of that 

kind of unlawful material is consistent with network management 

and the FCC’s policy statement principles? And how do we encourage parties to work together to block that kind of illegal material? 

Mr. MARTIN. Sure. I think that, as I talked about when we were 

talking about other forms of illegal content, that the network operators don’t violate any of the Commission’s principles to the extent 

that they are limiting access to illegal content. Illegal content isn’t 

content that is protected in any way by either our network and 

charter principles. So any kind of attempts by a network operator 

who wants to say that they are limiting illegal content doesn’t invoke any of our principles. As you read, our first principle only protects legal content. So I don’t think that that is something that 

raises a particular issue in front of the Commission. 

I don’t think that that means they can stop an entire application 

or an entire user from using any kind of content or any kind of access, just because they have done something illegal. They have to 

focus their efforts on stopping the illegal content. 

As I also mentioned, I think you talked about the content creators, the studios in California. I think AT&T announced earlier 

this year they have been trying to work with them to engage in filters they wanted to put in place to try to screen out legal versus 

illegal content that was copywrited. And I don’t think there have 

been any complaints that the Commission felt—I don’t know if they 

have even implemented that, but I don’t think there are any complaints at the Commission. That doesn’t violate any of our principles, if an ISP wants to end up engaging that. 

Mr. SCHIFF. Do you have any thoughts about how the Commission can better encourage exactly that kind of conduct that will rigorously go after unlawful, pirated content while letting the legal 

content flourish? 

Mr. MARTIN. I think that focusing on those kinds of filters, I 

think, is much more appropriate than trying to shut down entire 

applications, you know, particularly because filters can try to 

screen out illegally or not appropriately copyrighted content, both 

video and music, for example. 


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And I think that that would be an appropriate kind of a response, as opposed to just trying to shut down a particular application that they think might be being utilized for illegal content, or 

it might actually be utilized at times for illegal content and other 

times for legal content. 

Mr. SCHIFF. And when they receive reports of illegal content, 

they receive notice, are there any limitations in terms of FCC policy about how quickly they can operate to either take down that 

material or make it inaccessible over their network? 

Mr. MARTIN. Not in terms of any FCC limitations or making that 

illegal content inaccessible, no. 

Mr. SCHIFF. Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. 

SATELLITE RADIO IN THE TERRITORIES

Chairman Martin, let me skip to my last question, so I make 

sure I get it in on the record. 

I have said to many folks who come before this committee that 

if there is a trend that you will see from the work we have done 

in the last year and a half, it is the issue of consumerism and, personally, the issue of involving the territories in everything we do 

in this Congress and providing the same services to the territories. 

So, with the looming possible merger of satellite radio companies 

Sirius and XM, I bring to you for the record and for the public 

what I have written to you about, the fact that the territories are 

not covered by satellite radio. The signal does not get there. We 

had been told that it was a matter of getting the signal there. And 

the answer is almost one that a teenager would give you: Duh, it 

is a satellite; it can reach anywhere if you direct it to go there. 

And so, as we look forward to this possible merger, which I support—I think it would be good, and I am personally a user of satellite radio—is there something the FCC can do to encourage, if 

you will—I don’t know if you are allowed to mandate—but encourage satellite radio, as they merge, to make sure that they provide 

services to all folks who live under the American flag? 

Mr. MARTIN. When we are considering any particular transaction 

in front of the Commission, we are able to balance the potential 

benefits to the public versus those potential harms. And certainly 

the concerns that have been raised by people on the record and by 

people like yourself, that satellite radio is not being offered to everyone, particularly to residents in Puerto Rico, and their commitment, so to speak, if they were going to offer that kind of service, 

would be a benefit that we would consider when we were weighing 

the benefits and the harms. 

Mr. SERRANO. How did that happen, for instance, that they set 

up shop without including everyone? It didn’t come up? No one 

brought it up? No one thought of it? 

Mr. MARTIN. And I could get you some of the technical reasons 

why. But as I understand it, I think one of the two satellite radio 

providers’ satellite, their look angle down on the U.S. and the territories doesn’t actually completely cover Puerto Rico. So they would 

have some technical challenges in providing service there. 

There are some ways to go around that. There are limitations in 

all kinds of places in the United States, where they don’t provide 


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coverage and they supplement that by having terrestrial repeaters. 

They put an antenna up just like a terrestrial broadcaster does, 

and it repeats the signal. 

So I think that there are ways, if they wanted to, to be able to 

provide service even if there were limitations on their satellite 

being able to do it. But I think that is why they would say they 

didn’t provide service originally. 

Mr. SERRANO. And that is the key: if they wanted to. And I think 

it is part—and I am not attacking anyone—it is part of a pattern 

of behavior that usually you don’t include the territories. 

I mean, in last year’s appropriations bill, in this committee’s bill, 

we were able to do something that people may feel was not important, but, to me, it was very important. To the people who live in 

certain areas it was important. That was to include the District of 

Columbia and the territories in the quarters program. And people 

are going to say, ‘‘Oh, he is bringing up the quarters program.’’ But 

think of it: The 50 States were going to get a quarter, and people 

who are American citizens who live in the territories were not involved. Now there will be folks from the District of Columbia who 

will get a quarter in January of next year. And, in my case, it will 

help because somewhere in 2009 some child is going to go to a 

mother and say, ‘‘Mom, why is Puerto Rico on a U.S. quarter?’’ and 

mom will either say, ‘‘ask your father,’’ or ‘‘we are going to go to 

a library and find out.’’ And, if nothing else, that will begin an educational process as to the fact that we have Americans who live 

outside the 50 States. 

So part of what you are saying is they probably didn’t pay attention to it. I am hoping—and this committee will certainly force the 

issue—I am hoping that when they sit down with you, should that 

merger come to be, even if it doesn’t come to be, for them to get 

their license renewed, they should include all Americans, that you 

forcefully say to them, ‘‘Hey, don’t upset the Chairman.’’

TELEPHONE SERVICE IN PUERTO RICO

Mr. MARTIN. We have included similar kinds of conditions. You 

know, when the Puerto Rican telephone company, their license was 

being transferred recently, about a year ago, we actually included 

very specific build-out provisions to make sure that they were increasing the build-out of both voice services and broadband services 

to the citizens of Puerto Rico, because Puerto Rico had lagged significantly behind in broadband services. 

So putting those kind of conditions on a transaction is something 

we have taken into account in the past. 

Mr. SERRANO. Incidentally, on that, I have a few constituents 

talking to me about something interesting that happened. Many 

folks who lived in New York, who lived in Florida, who lived in 

other places where a lot of Puerto Ricans lived, had purchased 

Verizon services for themselves and for their grandma or their 

mom in Puerto Rico, knowing they could do the Verizon-to-Verizon 

at no extra cost. Then Verizon sold it to somebody else, and they 

were all out of luck, when the reason they bought Verizon was for 

that reason. 


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SUPREME COURT REVIEW OF THE BROADCAST OF INDECENT MATERIAL

On first amendment issues, the Supreme Court recently announced that it will rule on the FCC’s rules governing the broadcast of indecent material over the airways. As you know, I have 

been concerned that the FCC application of its ruling in this area 

has been uneven and difficult for broadcasters to follow. I believe 

that the uncertainty over these rules raises concerns over what 

broadcasters can and should do, including the degree to which 

broadcasters must exercise censorship in order to avoid costly fines. 

I hope that the Supreme Court ruling will at least bring clarity to 

the issue, but I fear that it won’t and that the FCC’s enforcement 

in this area will continue to be controversial. 

Now, as you recall and your predecessors recall, I spent a lot of 

time on another committee in what some people in the media call 

the defense of Howard Stern. And what it was was my belief that, 

as bad as some of the stuff I hear on the radio could be at times, 

it is not a decision for someone to make that they can’t say it. 

Rather, we should have an even policy across the board, which we 

don’t. And at that time I used to say that, to some people, Stern’s 

locker-room humor may be offensive. To me, having a guy on TV 

every night blame immigrants for everything that goes wrong in 

this country is offensive, but he has a right to say it, and I want 

neither one to be taken out. 

So what do you anticipate will be the scope of the Supreme 

Court’s review of this issue? Do you believe that a decision on this 

matter will be helpful in clarifying what is considered indecent 

broadcasting, or will broadcasters continue to face uncertainty? 

Mr. MARTIN. Well, I certainly hope from both the Commission’s 

standpoint and the industry’s standpoint that the court’s ultimate 

decision will help provide additional clarity and certainty for what 

the rules are. But I think it is hard to predict what the court will 

end up doing with the decision. 

I can say that one of the reasons why we appealed the Second 

Circuit’s decision and asked the Supreme Court to take the case 

was because the Commission has an obligation to enforce the law 

that Congress has passed that tells us that we are supposed to prohibit indecent material from being on the public airwaves, on 

broadcast TV and broadcast radio. And that is an obligation that 

we take seriously and we are required to enforce. And, in so doing, 

I think that the Second Circuit’s decision, which said that we were 

not able to do that for the expletives but that we use the mask in 

those cases, put us in a position where we were required by the law 

to enforce it, but the Second Circuit was saying that we were not 

able to enforce it. And so I think we repealed the decision, again, 

seeking clarity for us and for the industry. 

BROADCAST REGULATION AND SATELLITE RADIO

Mr. SERRANO. On that point, I don’t know if you were the one 

I asked this question of, but I assume you were, and I want to see 

if the answer is still the same. The question was about satellite 

radio and the fact that, because people sign up for it, they are kind 

of buying the service and the content, and that the same rules that 

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ellite radio because I am buying it, therefore I am accepting what 

comes over the airwaves. 

Is that still the way we see it? 

Mr. MARTIN. That is. The subscription nature of the service, I 

think, lends itself to a different kind of first amendment analysis 

when you are talking about that—versus the free over-the-air 

broadcast services. 

And I would only highlight that I think that some recent proposals that have been put forth by satellite radio that would allow 

consumers to actually have additional and greater control over 

what they are picking and choosing, the channels they are buying, 

actually even further make it different from a broadcast, because 

it even provides additional protection. Because not only are you 

able to provide the whole service, but you are able to pick—you are 

able to buy packages that allow you to pick and choose individual 

channels. So I think that will provide additional certainty for them. 

Mr. SERRANO. Well, I agree with that analysis. And I think you 

did say the same thing last time, that there was a constitutional 

issue at that point. Thank you. 

Mr. Regula. 

A LA CARTE PRICING

Mr. REGULA. Just a couple of things. 

Last year we talked about a la carte. I don’t know whether you 

still have the same enthusiasm for that. I have detected among my 

constituents that are in the business that they are not as enthused 

about a la carte as you are. 

Are you still enthusiastic about it, or is it just a moot issue? 

Mr. MARTIN. No, listen, I think there are two different things I 

would say. Absolutely, I am still enthusiastic about it. I think that 

the problem that consumers face is that they have seen dramatically increased cable bills. In many areas of the country, cable 

rates have increased quite dramatically over the last 8 to 10 years. 

You have seen an almost doubling of those on average throughout 

the country. And at the same time, some cable operators are complaining that they have to include content that they think that 

their viewers don’t even want. 

And I think one of the answers to that is to empower viewers to 

be able to pick and choose more of the channels that they want and 

more of the content that they want. And I think that resolves some 

of the concerns they might have about the kinds of content that is 

on there, and it helps them control their own prices. 

So I absolutely think it is still the right thing. Technology would 

allow for it today for anyone who is a digital cable subscriber. I 

think it would allow consumers to reduce their overall cable costs. 

It would respond to that 80, 85 percent of people in recent surveys 

who say they are paying too much for cable services today. And it 

would allow it to do so in a way that is empowering consumers, as 

opposed to government-direct regulation. 

Mr. REGULA. What control is there on rates? At least my experience here in Virginia is that, just, boom, boom. 

Mr. MARTIN. Absolutely. There is no control on rates. And that 

is—I think that one of the reasons that I am advocating that is it 

empowers consumers to be in control of their cable rates and be in 


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the control of what they are having to purchase and buy, as opposed to the Government trying to put restrictions on cable rates, 

which is more of a price-control mechanism, which I think would 

be a bad thing for us to implement, especially when technology is 

providing an alternative which is more consumer-friendly and 

which will allow individuals to decide how much they want to end 

up paying for individual content. 

UNIVERSAL SERVICE FUND

Mr. REGULA. The other question I have is on the Universal Service Fund. This goes to schools. Do people apply for grants, like a 

school library? 

Mr. MARTIN. They do. Today, the school and libraries program——

Mr. REGULA. They apply with the FCC to get a grant from the 

Universal Service Fund? 

Mr. MARTIN. That is right. And then they say, this is the kind 

of things we are going to provide for it; we are going to buy telecommunications service from this service provider; we are going to 

buy a server to serve our school or library. So they are actually applying for grants and then detailing what they would use that 

money for. 

Mr. REGULA. There have been abuses of this program, what do 

you attribute that to? Is that because there is an intermediary between the school and you that is somehow cashing in on the USF? 

Mr. MARTIN. I think that it is whenever there are grant programs, there is the potential for people to be—with any Federal 

Government grant program, there is a potential for it. As Congresswoman Kilpatrick mentioned earlier, the program has done a lot of 

good. It has done a lot for schools and libraries across the country. 

But we need to increase our efforts to try to solve the potential for 

fraud. 

One of the things you could do, as I said, is move it away more 

from a grant program to a formula distribution, like you do school 

lunch money, where you would say, this is your demographic for 

your students, it is this rural and has this many students who are 

below the poverty line, so we give you this much money to spend 

on technology grants. 

Mr. REGULA. What do schools and libraries do, in your experience, with these funds? How does it enhance their service to the 

public? 

Mr. MARTIN. I think that what they do is try to integrate technology into the classrooms. When this program began, there were 

very few classrooms and fewer schools that were hooked up to the 

Internet, and certainly now you have 99 percent of schools and 

widespread connections to the classrooms. And I think that there 

are many schools that have then tried to take advantage of that 

technology to help educate their students, taking advantage of different learning opportunities. 

So I want to be clear, I think there are some great educational 

things that the schools have been able to do with that technology. 

The challenge is making sure we find ways to integrate that into 

their curriculum and that they can use it the most effectively and 


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to make sure that, obviously, there isn’t anybody who is applying 

for that money and not using it for that purpose. 

PUBLIC SERVICE PROGRAMS

Mr. REGULA. Is your experience that the cable industry puts on 

public service programs that schools can access for the benefit of 

their students? 

Mr. MARTIN. I think that there have been some that have been 

put on by that. I think that there have been a couple different television programs that have been put forth in trying to utilize it for 

educational purposes. But a lot of this money is actually going 

more toward, in that sense, utilizing students’ ability to connect 

things over the Internet. And while they can’t get computers in the 

classroom, they can get the connections for that classroom to be 

able to utilize the Internet access. 

Mr. REGULA. Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. 

Now we go to the happiest man in all of Maryland. Why? Because the Orioles are in first place. 

Mr. RUPPERSBERGER. Are we talking baseball? 

Mr. SERRANO. We always talk baseball on this committee. 

Mr. RUPPERSBERGER. Well, as we’re headed, the Yankees and the 

Red Sox. 

SENIOR LIVING FACILITIES

First thing, just two basic questions. And this really was based 

on a constituent call about someone who had a home, and it was 

designated commercial when it wasn’t, and they were told that 

they wouldn’t be able to get the waiver for the box. And then we 

looked into it further and found that when you have senior living— and in my district I have at least probably two, maybe three, senior 

living areas where we have 3,000 seniors living in a facility. What 

is the FCC position? What are we going to do about that? 

You have someone buying a condo a lot of seniors that are going 

to be very concerned if we don’t deal with that issue. 

How are we dealing with it? What is the policy going to be? 

Mr. MARTIN. I think what you are referring to is NTIA, under 

Department of Commerce actually, is running the grant program 

for those boxes, and they had disallowed certain kinds of community living that I think you are raising was the problem. 

NTIA, I was testifying with them before the Senate. They actually announced that they were reconsidering that rule, to try to 

change it so that even those people with PO boxes who are living 

in those kind of community organizations could still qualify to get 

a converter box. 

But I can’t give you any more of the details. I can make sure that 

the NTIA folks get in touch with you to explain——

Mr. RUPPERSBERGER. Will you make sure that happens and follow through with that? Because it is extremely important. And I 

think there is a major issue that we need to deal with, or we are 

going to have a lot of problems throughout the country on that 

issue. 

Mr. MARTIN. Sure. 

Mr. RUPPERSBERGER. Okay. 


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A LA CARTE PRICING AND DIVERSITY PROGRAMMING

Just the a la carte—I know your position on a la carte. There is 

a lot of diversity in programming, a lot of programs probably 

wouldn’t exist if they must compete with the major ESPNs or the 

network stations, the very popular stations, and especially for those 

of us who represent some areas where you have a population that 

does not have a lot of money. And it seems that the a la carte will 

really—I know the Chairman referred to ‘‘what is a mother going 

to say’’ or ‘‘what is a father going to say’’ or whatever. I am saying, 

if we just go a la carte, we will have a lot of people who won’t have 

a diversity of stations, whether they are cooking stations, education 

channels, whatever. 

And that is the other side of your a la carte. And I am concerned 

that the education point of view, and even entertainment too, will 

be lost. 

Mr. MARTIN. I would say, I am actually concerned about the people who can’t afford it, as well. That is the reason why I think that 

an a la carte mechanism would be helpful. Because, right now, 

what you are seeing is that those same people are faced with a 

choice of getting nothing or having to pay cable rates that have 

gone up 100 percent in the last 8 years. So we are seeing dramatic 

increases in people’s expanded cable rates throughout the country, 

and it is for, oftentimes, programming that some of the cable operators—the Small Cable Association was in town yesterday, and they 

were highlighting this issue, for—sometimes it is for content that 

they don’t even want. 

And I think that the concern I have is that those same consumers should be able to have more control over their bills, and 

that that is actually going to allow them to decrease their overall 

bills. That is the concern——

Mr. RUPPERSBERGER. The little stations will go away, or unless 

someone can afford to have them all come in. And that is part of 

why I think cable did very well in the beginning, because there was 

such diversity, so many choices that were there, from educational 

and entertainment media. 

Mr. MARTIN. Educational programs would all end up still being 

there. What you are talking about is, are there programs that they 

are——

Mr. RUPPERSBERGER. It is not just Hispanic. You have cooking, 

and you have a lot of things. 

Mr. MARTIN. The Hispanic issue, for example, is a good example——

Mr. RUPPERSBERGER. Or African American. 

Mr. MARTIN. And I think it actually cuts the way. You actually 

have Hispanic homes that are disproportionately relying on overthe-air broadcast because they don’t feel like they get a good value 

for paying $80 for 120 channels, most of which are English-language. Instead, if we allowed them to pick and choose the Spanishlanguage programming, I think you would see an increase in the 

number of Spanish-speaking homes that would be willing to purchase cable. Because, right now, they are having to buy ESPN in 

English as a basic part of the package before they are allowed to 


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buy ESPN in Spanish. And I don’t understand why they should 

have to do that. 

Mr. RUPPERSBERGER. And that is a good argument, too. There 

are arguments on both sides. I hope you understand there is another issue there. 

A LA CARTE PRICING AND CABLE RATES

Mr. MARTIN. Certainly, I think there are. But I think that the 

concern, the overwhelming concern that we have to put a focus on 

is the dramatic increase we have seen in cable rates over the last 

few years. And I think we have to find a way to resolve that, and 

I think that empowering consumers is the appropriate way. 

Mr. RUPPERSBERGER. Because it will change, I think, the scope 

of where we are. 

Thank you, Mr. Chairman. 

Mr. SERRANO. Thank you. 

That is an issue where you do have arguments on both sides. 

There are some folks, for instance, some members of the Congressional Hispanic Caucus who will say a la carte is no good, as you 

know, because then some of the programming that comes not from 

networks but smaller broadcasters in Spanish won’t be included. 

On the other hand, you are right. I mean, I—and you should 

never use yourself as an example, but I am a consumer. I pay a 

lot of money to Comcast here in Virginia. Half of my channels come 

in that mosaic, what is that called, digitalized? 

Mr. MARTIN. The digital package, whatever they—— Mr. SERRANO. No, no, no, that they don’t come in right. They 

come in all broken up. And try to get some service, it is ridiculous. 

Why do I think I will get 10 calls from Comcast this afternoon? 

And maybe that is an improper use of the chair, but I am sure I 

speak for a lot of other folks who are going through the same thing. 

But you are right. Some people think I am not telling the truth 

when I say that I find time to do other things that are outside of 

politics. And I know the arguments against a la carte. But I also 

would like to be able to choose one less channel of that kind and 

one more channel of this kind and to include the Mystery Channel, 

whatever. Those things don’t happen all the time. 

So I think you might be going in the right direction. You just 

have to look out to make sure that, in the process, you don’t leave 

out the ability for some smaller broadcasters to also have their 

wares available on the market. 

Mr. MARTIN. One thing that—and I have suggested this in the 

past—one thing we could end up doing is implementing a la carte 

for a certain price point. In other words, anybody who wants to 

charge consumers more than 50 cents a month. If you have 100 

channels in a package and they all want to charge 50 cents, that 

adds up pretty quick. But what if you just say—I think you could 

implement it on that kind of a mechanism, where you say anything 

over a certain price, then if you want to charge consumers that, 

that is fine, but consumers have to be able to opt out of that channel as well. 

The other thing that I think that addresses some of the concerns 

that are raised by smaller broadcasters or smaller channels that 

are getting on is I don’t think it has to be that people pick and 


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choose the channels up front. It could be that people can opt out 

of channels, and you should tell people how much they get back. 

Well, if someone is only charging 2 cents for a channel per month 

and you decide you are going to opt out of that channel, then many 

consumers won’t bother to because it is not a significant amount. 

On the other hand, if you are starting to charge someone 75 cents, 

$1, several dollars in some cases by some channels, I think consumers have to be able to say that this is a purchase they won’t 

end up making. 

Mr. SERRANO. Right. 

LOW-INCOME ACCESS TO TELECOMMUNICATIONS

Low-income access to telecommunications, this is the question we 

deal with all the time. I mean, every day we see how this country 

is getting more and more and more involved in the modern technology. Yet, at the same time, there is still a segment, a certain 

part of the community which is not involved at all. 

What is the FCC doing to foster access to and affordability of 

telecommunications and Internet services for low-income communities? 

And I know there are various programs that reach out to schools 

and libraries and so on. But, you know, if I could wave a wand and 

do something in this country, it would be to have senior citizens 

who are alone, who are living alone, who are lonely, able to use the 

Internet and realize that that will probably open up a whole new 

life for them. We don’t pay enough attention to that, and we are 

all heading toward that age. We may not all be heading there with 

15 people around us in a big family; it might be all by ourselves. 

We have to plan for those folks, too, as we do in other areas. But 

we seem not to have planned for them in this particular area. 

Mr. MARTIN. There are certain programs in the Universal Service 

Fund. Most of the time we talk about the program for schools and 

libraries in the rural areas that receive the bulk of the money, but 

we do have a certain fund set aside or a certain portion of the funding set aside for what we call our Lifeline and Linkup program 

which directly provides support for people to be connected who are 

low-income. So we have a separate program that supports that. But 

that is only for our voice side. It doesn’t address the Internet issues 

you have. 

I would say that the Commission did a year ago, in the context 

of some of the large telecommunications mergers that were in front 

of us, we did impose as a condition of public interest benefit that 

they provide a lower cost to DSL broadband connection offering, 

might be at a more limited speed, but that they did—I think they 

were supposed to provide it initially at a $10-a-month cost. 

So we have imposed certain kinds of conditions to try to provide 

a low-cost access entry point to broadband services try to address 

some of the concerns that people are raising. 

Mr. SERRANO. Thank you. 

One last question, and then I will turn it over to the rest of the 

committee. I will submit all the rest of my questions for the record, 

Mr. Regula. 

When it reaches that point where negotiations get—they are 

going on now, but for this merger between Sirius and XM, one of 


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the issues that I am concerned about is on-air personalities, where 

these folks are coming from, how diverse is their employee pool, 

and how diverse are their employees right now. 

DIVERSE COMMUNITY PROGRAMMING

Again, these are issues that, at times, no one can force anyone 

to be aware of or to deal with. But more and more, I am hearing 

folks on air that I know are not recruited within the 50 States or 

the territories, especially in the case of Spanish programming. And 

there are plenty of folks who can handle some of those jobs around 

here. Just as well as the programming at times could be a little 

more directed to certain communities, although they have done a 

pretty good job of that; there is more that can be done. 

Are these the kind of things that also can be part of the conversations for the approval? 

Mr. MARTIN. Those would certainly be the kind of concerns that 

people are raising in conversations that we would have about making sure that, if they were going to be allowed to end up moving 

forward, that they would be making sure they were serving that diverse community and providing new ways of serving that diverse 

community. 

And, certainly, their willingness to put the Serrano radio station 

on nationally would go a long way toward achieving that goal. 

[Laughter.] 

Mr. SERRANO. Okay, fine. That is great. That is wonderful. 

I am just worried about one has the baseball package and the 

other has the football package. They shouldn’t drop one and keep 

the other. They should do both at two different times of the year. 

But I do have a legitimate question. 

Mr. MARTIN. I know. I think that is a good start, Mr. Chairman. 

But certainly what they are going to be doing to serve the diversity 

of listeners out there is an important part of the equation. 

SATELLITE RADIO MERGER AFFECT ON EQUIPMENT

Mr. SERRANO. I do have one last concern on this, and this is the 

one that I will be bugging you about a long time. 

Take my situation. I have a portable in my Bronx car, I have an 

in-dash here in my Washington car, and I have another portable 

in the house. The merger should not mean that I have to go buy 

new equipment. The merger should mean that there is a merger 

and everything comes in through one signal. 

Mr. MARTIN. I agree. 

Mr. SERRANO. And it should not be—and I personally will be very 

upset if this means that folks now have to go buy new equipment. 

Mr. MARTIN. Obviously, we would be very concerned if—and I 

think that would be something we would obviously look at and 

make sure and condition it if there was going to be some way that 

it was going to adversely impact the consumers who have already 

purchased and who already own those radios. 

Mr. SERRANO. Thank you. 

Ms. Wasserman Schultz. 

Ms. WASSERMAN SCHULTZ. Thank you, Mr. Chairman. I will note 

for the record that the Florida Marlins are also in first place. Moving on. 


hsrobinson on PROD1PC76 with HEARING
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Mr. SERRANO. Are they staying in Florida, or are they moving to 

Puerto Rico? 

Ms. WASSERMAN SCHULTZ. They are staying in Florida. No, no, 

not Puerto Rico. We have such a significant population in Florida 

that that won’t be necessary. We can keep them here and keep the 

fans. 

BATTERY OPERATED CONVERTER BOXES

Mr. Chairman, I have a DTV-related question, a couple, that are 

unique to my State. Florida suffers from devastating natural disasters, and we often, from between June and November, have a situation where the lifeline for my constituents is their battery-operated 

analog television. And my understanding is that there will not be 

an analog-to-digital converter box produced to accommodate battery-operated analog televisions. And that is a really serious concern. 

Is that accurate? And, I mean, how are we going to deal with 

that? Because the TV stations that provide the vital information 

that Floridians need and that people in the region need for natural 

disaster information, they still operate, unless their tower crashes, 

which normally doesn’t happen. So how are we going to deal with 

that issue? 

Mr. MARTIN. I think the issue is a significant problem, because 

the portable televisions, some of them will be able to be connected 

to the digital-to-analog converter, but the digital-to-analog converter still has to be plugged in to get power. So if it is a batteryoperated TV, it won’t do any good. 

Ms. WASSERMAN SCHULTZ. But they could make a battery-operated converter. 

Mr. MARTIN. They would have to end up making a battery-operated converter box. At this point, I don’t think that there—I know 

that we have been looking out for it. As I understand it, there are 

portable digital televisions that will have the capability of receiving 

the new digital signals that are available, but I don’t think that 

there is yet a converter that is separately battery-operated. And I 

know that we have been trying to look out for the issue, because 

I know that this is something that has been raised. 

Ms. WASSERMAN SCHULTZ. You have lower-income people and 

senior citizens in particular. I mean, we have one of the largest 

senior citizen populations in the country, well, the largest in the 

country in our State, and I have one of the largest in my district. 

Requiring them to go out and buy a new battery-operated digital 

TV——

Mr. MARTIN. It is several hundred dollars. It is going to be very, 

very pricey. 

Ms. WASSERMAN SCHULTZ. Is there any way that the Commission 

can address this so that there is a converter developed so that that 

doesn’t happen? It is a really serious problem. 

Mr. MARTIN. Sure. I know that we can certainly try to work with 

the manufacturers to see if we can find someone who would be willing to end up producing one, a converter box. We can’t require 

them. The converter box program is actually—the design of the 

converter box is actually what was done by the Department of 


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Commerce. It is under their jurisdiction of what is required and 

what is not to be required in the converter box. 

So we can’t require that. What we can do is try to encourage 

them. And I will be happy to try to work with them and let you 

know what their responses are. 

Ms. WASSERMAN SCHULTZ. If you could, because you know what 

is going to happen. I mean, next June when those hurricanes, and 

God forbid we get hit by some more, but we will inevitably, and we 

will have thousands of our constituents who are going to be literally in the dark without a lifeline if we don’t address that, that 

really large gap. 

ADDRESSING TRANSITION PROBLEMS

And the other issue, one of my colleagues mentioned the NTIAapproved converter box. If someone brings it home, connects it to 

their analog set and connects the box to whatever antenna they are 

currently using today, and they aren’t able to get all the digital signals from their local broadcast stations, there are going to be a 

bunch of different possible causes for that. 

How are they going to figure that out? How do they know what 

the problem is, how they can solve it? Is there going to be a tollfree phone number that people can call to get help with that? Will 

you have enough staff on hand to respond to questions? 

Mr. MARTIN. There is a toll-free number that the Commission 

has, and then we have information available. 

Ms. WASSERMAN SCHULTZ. Will it have a live person? 

Mr. MARTIN. There is right now but not 24 hours a day, 7 days 

a week. One of the things we are asking for with the additional 

funding is to be able to staff that, starting next fall through the 

transition, with someone 24 hours, 7 days a week for it. 

But you are right, I think that there will be a challenge. The 

Commission estimates that there will be a small number of people 

who will need to go out and get a new antenna as well, which is 

what I think you are referring to. There is a Web site that the consumer electronics industry has put forth that allows you to type in 

your address and identifies whether or not they estimate you would 

need a new antenna and what kind of new antenna would ensure 

you would be able to get all the local broadcast signals. 

Ms. WASSERMAN SCHULTZ. See, these are the kinds of technical 

transitional issues that, I mean, we could sit here all day and probably come up with a very long list. I am hopeful that you are going 

to develop a lot of aggressive focus and staff resources. 

Particularly, I have to tell you I am concerned about the distribution of your FTEs and resources and staff time to the a la carte 

issue versus how much time and resources and effort you are focusing on the transition and dealing with issues like this. 

Mr. MARTIN. I think one thing should be clarified, and I testified 

to this last year as well. I actually don’t think the Commission has 

any authority to require a la carte on the retail side. I think it is 

a good idea. I think consumers want it. I think consumers are concerned about their cable bills. But it is not anything that we have 

a proposal in front of the commissioners that is proposed, and I 

have actually testified we don’t have the authority to require. 


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So I don’t think you need to be worried about that, that particular aspect of it. But I certainly think we need to be making sure 

that we have all the resources dedicated to try. This is one of our 

top priorities over the next year. 

DTV TRANSITION AND PORTABLE TELEVISIONS

Ms. WASSERMAN SCHULTZ. So, if you could work with myself and 

my Florida colleagues and the colleagues in the region of the hurricane-prone zones to try to address the battery-operated converter 

issue, I would really appreciate it. 

Mr. MARTIN. Sure. 

Ms. WASSERMAN SCHULTZ. Thank you, Mr. Chairman. 

Mr. SERRANO. Now, Ms. Wasserman Schultz, I was going to 

make a sarcastic comment, and then I realized that my sarcastic 

comment actually leads to a real question, which was, were you 

talking about low-income people or people who have a TV set on 

their yacht, on their boat. Right? 

But then I would ask that question, too. What happens to people 

who have TV sets somewhere like on a boat or motor homes? How 

are they affected by this? 

Mr. MARTIN. All of the televisions are affected in the same way, 

because the broadcasters are actually shutting off their analog signals. So all of them are affected. They all either need to get a converter box or buy a new television. 

Mr. SERRANO. Let the folks in the country clubs there know that 

I spoke on their behalf. [Laughter.] 

Ms. WASSERMAN SCHULTZ. As a representative of the yachting 

capital of the world, we thank you very much. 

Mr. SERRANO. The guy from the South Bronx. Only in America. 

Mr. Hinchey. 

MEDIA OWNERSHIP RULEMAKING

Mr. HINCHEY. Thank you, Mr. Chairman. 

Just briefly to return to the ownership rulemaking that started 

in November. I think it is obviously very important for the Federal 

Communications Commission to set an example with regard to 

openness and communication, fairness, transparency. But when 

that process began, it began with a simple press release that was 

put on their Web site and, if I remember correctly, an op-ed piece 

in the New York Times. That was it. There wasn’t any other way 

of communicating that these changes were under consideration. 

Is that normal? Is that the way things normally work at the 

FCC? 

Mr. MARTIN. Well, that is not how we began the process to alert 

people that these changes were under consideration. We actually 

began the process a year and a half before that vote, when we 

issued the notice of proposed rulemaking saying that the courts 

had sent that issue back to the Commission and that we needed 

to revise our rules. 

And we received thousands and thousands of comments. We had 

six public hearings around the country where we received hundreds 

of people coming to comment in front of us. And we had studies 

that were conducted; we had peer reviews of those studies that 


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were conducted. All of that was put out for public comment, as 

well. 

As a part of that process, people wanted to make sure that the 

Commission took the extra step. Whenever we have been debating 

an issue or debating a rulemaking, eventually the Commission has 

to decide on the final order, and then that order is put forth by the 

Chairman. The Chairman proposes an order, and all the other commissioners vote on it. 

What there was was a request made of me to make sure that I 

was public about what I was proposing to the other commissioners 

to do, as a result of the rulemaking process we were engaging in 

that satisfied all the APA requirements. And to make sure that we 

were more open and transparent on issues than anything else, I 

put out a press release and said, ‘‘Here is what I am proposing the 

Commission adopt as the final rules.’’ And that was something that is not the normal process that is 

normally engaged in, and that was because we don’t usually put 

out a press release that says this is the item I have circulated to 

the other commissioners to vote. That is actually something that is 

not actually put out for the public until after they voted on it. 

So I was actually putting out my proposal to everyone to vote, 

and I did that in an effort to do exactly as you said, to try to be 

more transparent than normal. And that was why I put that out, 

so when I circulated it to the other commissioners, I also put it out 

in the press. And to make sure it was as open as possible, I did; 

I wrote an op-ed in the New York Times and said, this is what I 

think the Commission should do going forward. 

Mr. HINCHEY. So you think it was pretty much out in the open? 

Mr. MARTIN. Yes. I think so. Yes. 

Mr. HINCHEY. Was there any impact on the outcome that came 

about as a result of those hearings and the statements that were 

made by people at those hearings? 

Mr. MARTIN. Oh, absolutely. When we started this process, we 

were considering whether we should revise all of the media ownership rules. The broadcast industry wanted us to allow people to be 

able to purchase additional radio stations in every market; they 

wanted to be able to buy two or three TV stations in each market. 

There was an overwhelming concern that was expressed at a lot 

of the hearings that the concentration that has occurred in the 

media landscape, particularly since 1996 when Congress passed an 

act that changed those media ownership rules. And I think that the 

Commission, as a result of that, did respond. 

And that is one of the reasons why we didn’t change any of those 

other rules. Those rules are all still the ones that were in place just 

as they were in the late 1990s. We didn’t change any of them. The 

one rule that we did end up changing was, as I said, the newspaper 

broadcast rule. 

But I think that the hearings certainly had an impact. 

Mr. HINCHEY. Was there a vote by the Commission on the outcome of that rule? 

Mr. MARTIN. Yes, sir, there was. 

Mr. HINCHEY. There was a vote in the Commission? 

Mr. MARTIN. Yes. 

Mr. HINCHEY. When was that vote? 


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Mr. MARTIN. In December. 

Mr. HINCHEY. The full Commission voted in December? 

Mr. MARTIN. Yes. 

PUBLIC COMMENT PERIOD ON MEDIA OWNERSHIP RULES

Mr. HINCHEY. Just one last question. The Senate Commerce 

Committee just reported out a bill that mandates that the public 

should have 90 days to evaluate and comment on any media ownership rules. How do you feel about that? 

Mr. MARTIN. Well, I think that obviously the Commission, first 

of all, is going to follow whatever instructions we are given by Congress. All of our media ownership rulemaking is in the context of 

a law that requires us, every 4 years, to review our media ownership rules. So obviously we are going to follow it. 

But I don’t have any problems with that. We have put out our 

rulemaking for comment for more than 90 days. We started this 

process, as I said, the summer before that. And what I think the 

challenge is, frequently, it can end up that we can never get to a 

final order, because every time we approach that decision we have 

to restart the whole comment process. So, in general, we put out 

a notice of proposed rulemaking, asking what we should do, saying 

this is the issue that is in front of us, these are our options, ask 

for people to comment on it. And then we put an order out where 

we say, this is what we determined the right answer is. 

But, obviously, we will follow whatever process and direction 

Congress provides. 

Mr. HINCHEY. Okay. Thanks very much. 

Mr. SERRANO. Thank you, Mr. Hinchey. 

Chairman Martin, we have kept you now here as long as General 

Petraeus has been kept, except that I think you have issues we are 

actually going to win. But that is just my personal comment. 

We thank you for coming before us. We thank you for your testimony. The committee and I personally will stay in close touch with 

you, because we have issues coming up that are extremely, extremely important, and we want the proper outcomes within what 

is possible. 

So, once again, we thank you for your service, and we thank you 

for coming here before us today. 

Mr. MARTIN. Thank you. 

Mr. SERRANO. The hearing is adjourned. 


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(429) 

THURSDAY, APRIL 10, 2008. 

SMALL BUSINESS ADMINISTRATION 

WITNESS 

STEVE PRESTON, ADMINISTRATOR 

CHAIRMAN SERRANO’S OPENING STATEMENT

Mr. SERRANO. The subcommittee will come to order. We welcome 

you to this hearing of the Financial Services and General Government Subcommittee. 

Today, the subcommittee will hear from the Administrator of the 

Small Business Administration, the Honorable Steven Preston. Mr. 

Preston has been very kind to wait. This is the only hearing that 

hasn’t started right at 10:00 this year. 

Mr. REGULA. It is my fault. 

Mr. SERRANO. No. You had visitors, and I understand. 

Mr. REGULA. I had constituents, and they are number one. Sorry. 

Mr. PRESTON. The way it should be. 

Mr. SERRANO. I want you to note that, as part of his legacy, the 

gentleman is not running for reelection and yet he still takes time 

for his constituents. Some would say, what can they do to me? 

There is still a governorship there in the future. 

Mr. REGULA. It is just the right thing to do. 

Mr. SERRANO. That is right. 

Mr. Preston is the 22nd administrator of the SBA and has been 

in his position since July of 2006. 

Administrator Preston, we welcome you to this hearing; and we 

are pleased to have you. 

Mr. PRESTON. Thank you. 

Mr. SERRANO. Small businesses play a crucial role in the national economy. Firms employing fewer than 500 employees comprise about 99.7 percent of all businesses in the Nation and employ 

roughly half of all private sector employees. Small businesses are 

crucial to new job creation. Sixty to eighty percent of all new jobs 

created over the past 10 years have been created by small businesses. 

The SBA promotes small business development and entrepreneurship through lending guarantees, training, and counseling programs, government contracting programs, and advocacy. The agency also helps business and homeowners affected by disasters 

through its Disaster Loans Program. 

The agency’s budget request for fiscal year 2009 is $658 million. This includes an operating budget of $382 million, which is a $22 

million, or 6 percent, increase over the current year. I know ensuring that the agency has sufficient operating funds is a priority for 

you. The subcommittee looks forward to working with you this year 

to make sure your agency has sufficient operating funds. 


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Unfortunately, the budget request is not so generous to certain 

small business assistance programs administered by the SBA. 

There are a number of budget cuts and eliminations that concern 

me. For example, small business development centers would be cut 

by $10 million from the current level. This reduction is troubling 

not only because SBDCs need more funding for their core activities 

but also because recently enacted legislation establishes new SBDC 

grant programs that will need funding. 

I am also concerned about some of the budget’s proposals for programs that help the smallest entrepreneurs as well as programs 

that aid socially and economically disadvantaged owners of small 

businesses. Technical assistance under the micro loan program 

would be eliminated, and the budget would also eliminate the subsidy appropriations for micro loans. 

Additionally, funding for the Program for Investment and Micro 

Entrepreneurs, or PRIME, would be eliminated. This program provides grants to help with training and technical assistance for disadvantaged businesses, particularly those in very low-income 

areas. I am troubled that programs to help low-income populations 

are targeted for cuts. 

The SBA has an important mission, and this subcommittee 

wants to help you accomplish this mission. I look forward to working with you this year as our appropriations bill moves forward. 

And I want to reiterate that. It is in our best interests, all of us, 

that small businesses continue to grow. So any changes we want 

to make in the budget, any nudging that we make for the agency 

to move in certain directions is never intended to create a problem 

or confrontation but simply to help that community and to bring 

more people into the fold. 

With that in mind, I would like to present to you now the gentleman who still loves his constituents more than ever before, Mr. 

Regula. 

MR. REGULA’S OPENING STATEMENT

Mr. REGULA. Thank you, Mr. Chairman. And, for everybody here, 

the constituents are why we are here. 

Mr. SERRANO. That is right. 

Mr. REGULA. And we are here, and that is why we have a Small 

Business Administration, because that is part of our governing 

process. And I might say that every big business starts as a small 

business. 

I have got a classic in my district. I have the Smuckers people 

that do the jams and jellies, and the original grandfather of the two 

young men that run it now started out making apple butter in the 

backyard and selling it to his neighbors. Today, they employ thousands of people. They have facilities all over the United States and 

some overseas, and they are a major, major company. That is a 

classic example. 

And every big business has to start from a small business and 

somebody with an idea. The biggest one in my district is the 

Timken Company with 23,000 employees. An early Timken person 

said, there must be better wheels to move on a wagon; and he had 

the idea of roller bearings. That was his idea; and it has grown 

into, obviously, a big business. 


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So what I am trying to say is what you do in this administration 

and helping small business is the key to jobs and to economic development in the future. And, today, that is a big topic on 

everybody’s mind, is the economy and jobs and so on. But small 

business entrepreneurs are the place where all these things get 

started. 

So I am pleased to see that last year SBA assisted 88,000 businesses with 7a loans. You were involved in Katrina and helping 

people who had a lot of bad luck and are getting loans to get started again. So we welcome you. And the Chairman has done a good 

job of outlining your challenges, and I won’t reiterate them, but we 

look forward to your testimony. 

And I am interested in the definition of a small business. Is it 

employees or is it gross product? How do you define a small business? 

Mr. SERRANO. I was going to ask the same question. But I have 

another question as a big Smuckers fan. What is the difference between jam and jelly? I know one spreads better on bread. 

Mr. REGULA. Strawberry jelly would be clear, would be jelly. 

Strawberry jam would have little pieces of berry in it. 

Mr. SERRANO. I thought those were preserves. 

Mr. REGULA. Jams are preserves. 

Mr. SERRANO. I am from the city. What do I know? I am trying 

to get some help here. 

Mr. REGULA. I am going to send you over a package. 

Mr. SERRANO. Well, that was my next point. Under the House 

Ethics Rules, anything that you grow in your backyard within the 

law is allowed to be shared with Members. 

Mr. CRAMER. I don’t understand the difference, either, so I might 

need a sample. 

Mr. SERRANO. I am the guy who dares ask these questions. And 

these are all country boys here. 

Mr. PRESTON. As evidenced by last year’s hearing on the facial 

hair discussions. 

Mr. REGULA. I suppose he wants his jam, too. It is good. I have 

to say, they put out the best product. 

Mr. SERRANO. I love it. 

Mr. REGULA. And I have been in their plant in Orrville, Ohio, 

and you could eat off the floor there. They are so careful in their 

standards. In this day and age, we worry a little bit about sometimes products are not up to snuff. But they really run a good operation. 

Mr. SERRANO. I tell you, there is a place for the two of us on 

Broadway. I am between two country boys who can’t tell me the 

difference between jam and jelly. I love it. 

Administrator Preston, now that we have bored you with our 

town and country humor, we do welcome you. We appreciate the 

work that you do and the service that you give our country. And 

please keep your testimony down to 5 minutes so we can beat you 

up after that. But your full statement will go in the record. 

ADMINISTRATOR PRESTON’S TESTIMONY

Mr. PRESTON. All right. Thank you very much, Mr. Chairman, 

Ranking Member Regula, and members of the committee. I am 


hsrobinson on PROD1PC76 with HEARING
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pleased that I both know the Smuckers Company and the difference between jam and jelly. So I feel like I am starting out 

ahead of the game here, which is great. 

I think you highlighted a number of factors in our budget already, Mr. Chairman. There are a couple things I think I would 

like to highlight. 

We are coming off a year in 2007 where we have seen a lot of 

progress at the agency. In our lending programs we have seen 

record volumes, and we have made tremendous reforms there in 

working with the banking sector, which is very important to us 

right now, given what is happening in the credit industry. We have 

made a lot of progress in approving the quality of information in 

small business contracting and helping businesses advance there. 

We have fully reengineered our disaster operations. In fact, I have 

been around the country to see the evidence of that; and it is having an effect on the speed with which we are getting out loans. We 

are proud of the amount of help we are giving people through good 

customer service and getting them through that process. And we 

also supported over one million small businesses who used our resource partners this past year to get technical assistance. As you mentioned, this year we are requesting $657 million in 

new budget authority. That is a 15.5 percent increase off of the 

2008 enacted level. That really breaks down to a few pieces. As you 

mentioned, Mr. Chairman, it is about a 6 percent increase in our 

fundamental core operating budget; and that is really the money 

we use to run the agency. We are also requesting $160 million for disaster program admin- istration and $14 million for disaster program subsidy. That is in 

addition to about $150 million in subsidy that carries over from 

2007 to 2008, which would be added into our ability to fund that 

program. 

The noncredit programs are in line with our prior request, but 

they are below the 2008 enacted level, and we submitted our 2009 

budget in line with our 2008 requests. When the appropriation was 

completed, those programs were actually increased. So we are in a 

situation where the funding level for 2008 is actually higher than 

what we have requested in 2009. 

And the other thing I would just mention is we are asking for 

an authorization in our guaranteed business loan programs which 

shows about a 37 percent increase. That doesn’t require an appropriation because those are zero subsidy programs, but I think it is 

important to note we have asked you for that growth. 

The other thing I feel compelled to mention—you and I have 

talked about this, but it is such an important topic. I have been 

down to Colombia twice. I was in Florida last week doing a trade 

symposium with 400 small businesses on exporting. Most of them 

were exporters to Latin America. Exports to Colombia are about 35 

percent from small businesses. And I know that, right now, that 

particular agreement is caught up into a broad debate; and it is 

something that is very much in front of you. 

We are all very hopeful that this agreement will be able to be 

considered on the merits of the agreement and hopefully be advanced, because we do think it is a very important market for 

small businesses. It will level the playing field for them in terms 


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of tariffs. But, also, like many agreements, so many countries 

where we don’t have FTA’s, it is very hard for small businesses because the regulations are hard to understand, there is a lack of 

transparency, and a lot of paperwork. Our goods get to the borders. 

They don’t know what to expect when they get to the border. If 

they get in the country, they don’t have proper intellectual property 

protections. 

And I think what I have consistently heard from small businesses is, aside from tariffs, it is all these nontariff issues that 

make it so hard for them to move ahead in export markets. During 

a time when so many of them are challenged for finding markets 

for their products right now, this is an important way for them to 

be able to address the challenges in our economy and continue to 

add the two-thirds of the new jobs that you all mentioned. And so 

I just urge you all to do whatever you can to help let that agreement come to a balance so that we can address it on its own merits. 

But, other than that, I would love to open it up right now and 

answer any questions you might have. 

Mr. SERRANO. Thank you. 

[The information follows:] 


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COLOMBIA TRADE AGREEMENT

Mr. SERRANO. Fortunately, or unfortunately, you brought up the 

Colombia Trade Agreement. So let me just very briefly tell you 

what may be one of the problems. And there should not be—it is 

the rhetoric being used. 

For instance, I am a big supporter of having a better relationship 

with Venezuela; and to have my President say that if you don’t approve the Colombia Trade Agreement, you are aiding Venezuela in 

its desire to be a terrorist state of some kind, that is totally improper. That is not true, it is misleading, and that is not the way 

to get that trade agreement through. 

There are other issues, obviously, environmental and labor 

unions, the fact that Colombia is a great ally and because it is a 

great ally we don’t ask any questions about people missing in Colombia, people being killed on a regular basis in Colombia and all 

these other issues. 

So those are many of the issues to come. But I know you consult 

with the administration and vice versa. I would hope you just tell 

them that to make it a national security issue was a terrible mistake, because it is a trade issue, and we trade with people who disagree with us. We trade with China, and China is a totally different system. And no matter how much we are concerned about 

Tibet, we are not going to get rid of our trade with China. We can 

all bet on that. And we deal with the Syrians, and we can talk for 

days about them. We now think that other countries are great 

countries. It is just the approach. 

One last point on that when you advise the administration—and 

I am not being sarcastic. I know they talk to all of you folks. The 

President says the people in Latin America are watching and what 

we do on Colombia will let them know how much we care about 

them. In Spanish or in English, I can say this. They have been 

watching for the last 100 years, especially the last 40, but we have 

been totally indifferent about them. This trade doesn’t make or 

break how they feel about us. It is the last 40 years of indifference. 

I appreciated your comment on Colombia. I understand that that 

is, in many ways, the party line. And I want you to, for the time 

you are here at the SBA, if another President decides that they 

want you in the administration, or in any capacity, that you just 

take a little message that one deal doesn’t make a new relationship 

with Latin America. It is that they feel neglected. 

We have been paying a lot of attention to the Middle East, rightfully so, to the Far East; and we spend a lot of time worrying about 

the Russians and the Soviets and so on. But Latin America has 

been forgotten. So now when they get leaders we don’t like, we 

wonder why. None of those leaders in Latin America are an accident. Whether you like them or not, they are all the result of 200 

years of suffering. That is why Bolivia elected its first indigenous 

person. And instead of embracing him, we are worried that he may 

take over the gas production and do something as revolutionary as 

saying maybe some of that money should stay in my country and 

not leave the country. 


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NEW SMALL BUSINESS LAWS

Legislation that has been recently enacted affecting the 7(a) loan 

program and the small business development center program, such 

as in the areas of veteran-owned small businesses and small business energy efficiency. These new laws as well as other proposals 

that are being considered by Congress will place increased funding 

requirements on these programs. Does the President’s budget request reflect the increased cost associated with newly enacted 

laws? Can Congress expect a budget amendment from the administration that allocates funding to implement these laws? 

Mr. PRESTON. I think the President’s budget and certainly our 

submission of the budget preceded the energy bill and then the veterans’ bill passing; and, obviously, those two bills both had additional funding requirements both for technical assistance and for 

7(a) loan subsidy payments. So this budget does not reflect that. 

In the course of this year, obviously, as we work with this budget, we are going to have to talk with you all and work with our 

colleagues in the administration, to determine how to address those 

issues. But that funding is not in the budget request right now. I 

know that we have been working with your staff to give them a 

sense of the cost but we have estimates and we can provide those 

to you so that we understand, if we do go forward, what would be 

required in terms of the costs. 

Mr. SERRANO. So the possibility exists of coming to us for additional funding? 

Mr. PRESTON. I think the possibility exists. I think, in the case 

of the technical assistance requirements, there is probably a lot of 

latitude to scope it, especially since it is structured sort of as a 

pilot. 

On the subsidies side, I think it is going to require us to be much 

more open-ended. Because, effectively, if you say we are going to 

give you a break if you are a veteran or we are going to give you 

a break if you are doing energy loans, it is going to be dependent 

upon the volume that comes in the door. So we have to scope that 

volume. 

On the technical assistance side, I think it is a little bit easier 

to say we are going to get X amount of money that is going to be 

available for these programs and then design the program around 

the funding level. 

Mr. SERRANO. How close are you on an estimate of what you may 

need? 

Mr. PRESTON. I think we are pretty close. I think on the veterans’ side, we would expect something in the $10 million to $15 

million range per year; and that depends upon volume. 

Mr. SERRANO. $10 million to $15 million? 

Mr. PRESTON. Sort of in that range. It would be much smaller on 

the energy side. But that is very difficult for us to gauge, because 

we don’t track what loans are for energy efficiency now. 

We do track veterans loans. So we know how many are going to 

veterans now; and we assume, if we gave them a break that would 

grow because more people would be interested. A lot of our loans 

we don’t necessarily think people are actually identifying themselves as veterans, even if they are. So that is a little bit easier for 


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us to do. I don’t think, personally, that the energy loan costs would be as great as the veterans, because veterans receive almost $1 billion in loans through our programs today. 

I think on the technical assistance side it is more up to us as the 

Federal Government in conjunction with the industry to say, how 

big should this be? Do we want to allocate $5 million for these special veterans and energy programs? Do we want it to be 10? Do we 

want it to be 3? And what we can do with you all is to say, look, 

if we size it at 5, for example, we think it can reach this many centers and this many people. And that is kind of how I think we 

should engage it with you all. 

HURRICANE KATRINA DISASTER LOANS

Mr. SERRANO. Disaster loans. Two and a half years after Katrina, 

can you describe at what point in the recovery phase SBA now 

finds itself? Are loans still being made? Are most loans entering 

into the repayment phase? Is this the time when we will begin to 

see defaults on loans and reports of abuses of the program coming 

up? 

And last year in our hearing you said that the default rate estimate for loans was modeled after Hurricane Andrew, that you expected Katrina to be better due to the unprecedented level of Federal aid into the area. Do you still believe that to be the case? 

I know I gave you a few questions there at once. 

Mr. PRESTON. We are well past the point where we are approving 

loans in Katrina and really pretty much well past the point where 

we are actually disbursing loans. But we will give you the exact 

numbers for the record. 

[The information follows:] 

Question. Are Katrina Loans still being made? 

Answer. No. However, SBA will continue to consider new loan requests if the late 

filing results from substantial causes essentially beyond the applicants control. Disbursement of loans is 97 percent complete. The few loans still only partially disbursed are waiting for permits, contractors or other outside factors. 

Question. Are loans entering the repayment phase? 

Answer. Of the nearly 120,000 net approvals, all but approximately 3,700 loans 

are fully disbursed and are in the full repayment phase of their loan. Furthermore, 

most of the 3,700 partially disbursed loans also have entered a repayment phase. 

Question. Have we begun seeing any defaults? 

Answer. Yes, of the 119,802 Katrina disaster loans that have been approved, 

4,960 loans have gone into default and have been sent to the Treasury Department 

for collection pursuant to the Debt Collection Improvement Act of 1996. 

Mr. PRESTON. But just off the top of my head, we have over $6 

billion that we have disbursed in the Gulf. There are probably a 

few hundred million in available disbursements. And what I mean 

by that is people that have a loan commitment from us who are 

in the process of rebuilding their home but they just haven’t asked 

us for all the money yet because they might be partially through 

the rebuilding or—and this is a unique situation in Katrina—people who even 2 and a half years after the storm still don’t know 

what they are going to do. And there are those people where we 

have said, look, we will continue to let you have this commitment 

even though you haven’t asked for the funds yet if you show us a 

reason for that. 

So we still show committed funds that are undisbursed, but it is 

very much in the hands of the borrower to get that money. But, 


hsrobinson on PROD1PC76 with HEARING
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by and large, the money is out the door. It is in people’s hands. It 

has either gone to rebuilding homes and businesses or is in that 

process today. 

I don’t recall exactly what I said last year, but Hurricane Andrew 

and any number of other disasters would have been instructive in 

our estimating repayments. We wouldn’t have just looked at Andrew. We would have looked at a much broader experience. It is 

a little early for us to look at delinquency trends. Part of the reason for that is, even though the storm is 2 and a half years ago, 

a lot of people didn’t get their money until recently. So they are 

just now going into the process, many of them, where they are actually servicing the loan. So there is a big lag effect. 

So it is premature for us to get a sense for if there would be significantly different delinquencies in this disaster relative to the 

other disasters and what that means for our subsidy estimates. But 

we would be happy to keep you all apprised of that along the way. 

Mr. SERRANO. Please do. 

I know this is maybe a difficult question. What was the biggest 

complaint that you heard or that SBA got? 

Mr. PRESTON. There were——

Mr. SERRANO. If you had to look at it and say, next time, heaven 

forbid this happens, here’s what we need to do different, what was 

your biggest complaint? 

Mr. PRESTON. Number one, it took way too long to get responses. 

So if I submitted my loan applications, it took a very, very long 

time to hear from you. 

And then we heard some secondary issues like, we have sent in 

our documentation and you have lost it. We have to send it in 

again. We call your call center. We have called two times. They 

have given us different answers in terms of the status of the loans. 

So there was a lot of confusion out there. And if we have time 

and you would like to, I can take you through what we have done 

to address all those issues. But I can speak with full confidence 

that we have entirely redesigned how we make disaster loans and 

how we support people through that process, very much instructed 

by what we learned in Katrina. 

So I think we have a better disaster operation than we have ever 

had, and I think we are much more capable of not only effectively 

handling what we see today but a much larger disaster. 

Mr. SERRANO. Well, I appreciate the fact that, unlike other folks 

who come before us, when I ask you what are people complaining 

about you didn’t say ‘‘well, we are the greatest, nobody complains 

about us.’’

So you don’t have to take us through it, but I would appreciate 

it if you could supply the committee what steps have been taken 

to remedy that. 

Mr. PRESTON. Sure. 

[The information follows:] 


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Mr. SERRANO. We are running against the clock here, no fault of 

anyone here, because we have votes coming up soon. So I will hold 

the rest of my questions for now and turn to Mr. Regula. 

DEMAND FOR SMALL BUSINESS LOANS

Mr. REGULA. Thank you, Mr. Chairman. I will submit most of 

mine for the record. 

We are allegedly in a bit of recession. Has demand gone up for 

small business loans? 

Mr. PRESTON. No. Demand has gone down. And we have talked 

with literally hundreds of bankers, and I personally have spoken 

with dozens of them personally. 

We are seeing a couple things, sir. I think we all know that there 

was a pretty significant appetite for risk in the lending community. 

We saw it on the mortgage side. We saw it on the business side. 

So we are seeing banks pull back some on the much riskier loans 

that they were doing. But almost all the banks we are talking to 

are telling us that they are seeing less demand for credit. 

If you look at surveys of small businesses out there, what you see 

is small businesses saying they are less likely to expand right now, 

they are less likely to hire, they are less likely to invest than they 

were a year or two ago; and those are the things that typically 

drive the need for capital. 

I think the other thing that is happening is we are seeing less 

acquisitions of businesses, and that also is a driver of capital need. 

So that is what we have been seeing. 

There is also among some institutions a tightening of credit 

standards. 

RATE OF DEFAULTS

Mr. REGULA. What is your rate of default? How does it compare 

to conventional financial institutions? 

Mr. PRESTON. I would have to get you that. 

[The information follows:] 


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Mr. PRESTON. Our rate of defaults, there are a lot of different 

ways to cut this, but, effectively, if you look at the life of a loan, 

the amount of money we lose on a typical guarantee would be in 

the 3 to 3.5 percent range. And that is what our fees cover. We are 

a zero subsidy program. We have seen delinquencies trending up. 

Mr. REGULA. That is not too far off of conventional financing. 

Mr. PRESTON. My staff is instructing me we are about twice the 

industry average, which makes sense. 

Mr. REGULA. You get the tough ones. 

Mr. PRESTON. We get the tough ones, and that is what our fees 

cover. 

Mr. REGULA. And that is as it should be, in a sense, because it 

gives people who might not otherwise get the credit they need to 

start a business. It could grow. And you do take a higher degree 

of risk. 

Mr. PRESTON. If you look at our loans and you look at sort of the 

credit quality of the private sector, we kind of pick up the lower 

end and go a little bit beyond that. And then they also often use 

us for deals where there might not be quite as much equity or they 

might need to go out to 10 years rather than 5. So we help them 

reach a little bit further. 

VETERANS’ PROGRAMS

Mr. REGULA. Do you have veterans’ preferences? In other words, 

do veterans get a break on loan applications for small business? 

Mr. PRESTON. We have a couple of veterans’ programs. 

In our bank lending programs, they do not get a fee preference. 

But Mr. Serrano was asking about a recent piece of legislation that 

would provide them with a fee preference. Right now, it is an unfunded thing. We do have a program that provides a heavily subsidized low interest loan to small businesses that have been impacted by reservists getting called up for Active Duty, and they can 

get a 4 percent loan from us. They are effectively looking at that 

as being—it is a disaster loan, is what it is considered. And so if 

you own a business and you are a reservist or you are a significant 

member of the business and you get called up and you have an impact from that, you can come directly to us. 

EMPLOYEE RETENTION

Mr. REGULA. I understand that 34 percent of your staff will be 

eligible to retire in fiscal 2009. That is going to be a big hit for 

qualified people. Are you working to attract people? Because staff 

makes all the difference in the world. 

Mr. PRESTON. You are absolutely right. What I would tell you is 

34 percent aren’t going to retire. A lot of our people stay well past 

their eligibility. But, absolutely. We are, in the last year and a half, 

actually, the last year, we have dramatically stepped up our training efforts to bring people up to a higher competency level. We 

have rolled out an entire process where we are putting people on 

career development plans, and we know where those people are. So 

we know where the potential impact is. It is absolutely an issue 

that we understand, that we are trying to address. 

The flip side of that is many of the challenges we have had with 

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portunities haven’t been there because a lot have been at their jobs 

for a long time. So we are looking forward to making this a promotion opportunity for people if that top layer begins to retire. 

Mr. REGULA. Thank you, Mr. Chairman. 

In the interest of time, I will submit the rest of mine for the 

record. 

Mr. SERRANO. Thank you. 

Mr. Cramer. 

Mr. CRAMER. Thank you, Mr. Chairman and Ranking Member. 

I want to jump in, too, because time is short here. 

I appreciated your response to the disaster loan response system 

after Katrina. So I, too, would be looking forward to any information that you can supply us with. 

You made reference to a redesigned process. I assume by that 

you mean because of the experiences you had with that process—— Mr. PRESTON. Yes. 

Mr. CRAMER [continuing]. You have redesigned it since that time. 

Mr. PRESTON. That is correct. 

Mr. CRAMER. But I also would like know what your problems 

were during that process and who got money and what the process 

was like there. 

Mr. PRESTON. Okay. 

SMALL BUSINESS INNOVATION RESEARCH FUND

Mr. CRAMER. But I want to shift to the Small Business Innovation Research Fund. In my district, when I have my targeted meetings with my small business community, SBIR comes up regularly. 

In North Alabama, we have a lot of folks that live off of aerospace 

and defense contracts. We have a lot of innovative engineers and 

scientists in our area that are doing very valuable things and use 

that program. But you had a cap for the program, phase one and 

phase two, phase one at $100,000 and phase two a cap of $750,000. 

I would like to know, how long have those caps been in place? 

Mr. PRESTON. I don’t recall. It is a long time, and we are working 

right now on increasing them. 

Mr. CRAMER. Good. I would encourage you to do that, because I 

don’t think that has been adjusted for some time. 

And what other programs, or is there the opportunity to be more 

innovative with the SBIR funding so that you could encourage 

small businesses in innovative research like that? Or do you have 

other programs I am maybe not aware of? 

Mr. PRESTON. The SBIR program effectively requires anybody 

with a large research budget to designate 21⁄2 percent to small 

businesses. So it is a great opportunity for us to support small 

innovators. And there are great innovators. We do have programs 

that help them with training, with technical assistance. 

I think it is also important to note that even though that program effectively designates 21⁄2 percent of the Federal budget to go 

to small businesses, many more small businesses avail themselves 

of research grants. I can get the exact number, but I believe it is 

roughly 7 percent of the research budget. So there is a lot more 

funding going to those companies than just comes through SBIR. 

Mr. CRAMER. Thank you. 

Mr. SERRANO. Mr. Bonner. 


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DISASTER LOAN PROGRAM REDESIGN

Mr. BONNER. Thank you, Mr. Chairman. 

Mr. Administrator, 14 feet of water in downtown Mobile, my 

hometown, communities like Coden and towns like Dauphin Island 

and Bayou La Batre that truly felt they had seen and experienced 

a tsunami. So when we talk about Katrina, even though New Orleans and the Mississippi Coast received the brunt of the storm, we 

certainly had our share of it in coastal Alabama as well. 

Shortly after the storm, I think it is safe to say, the SBA program that you inherited when you came on the job was pretty 

much in a disaster. However, within months of your leadership, 

you helped to turn the program around. 

Mr. PRESTON. Thank you. 

Mr. BONNER. And at least from our experience I want to say 

thank you for doing that. 

Mr. PRESTON. Thank you very much. 

Mr. BONNER. You touched briefly on the issue in your testimony. 

Can you tell us a little bit more about how you accomplished some 

of your goals of revamping the program and specifically how SBA 

is now better prepared to deal with this in the case of a future catastrophe? And could you also tell us a little bit about your $160 

million request for the administration of a disaster program that 

would improve the abilities to submit electronic loan applications, 

which was mentioned in your written testimony? 

Mr. PRESTON. Real quickly, one of the important things is for 

people at the front end to have their applications expedited quickly 

for quick decisionmaking. Right now, people are sending in a packet of information. The electronic loan request would allow people to 

submit that through a Web site. 

Not only is it easier for the borrower, it is a lot easier for paper 

flow. Things don’t get lost. You don’t have people doing reentry errors. And we don’t think of those as being impediments, but when 

you have a large disaster and you have mistakes, these are huge 

time savers and ultimately result in huge benefits to the borrower. 

Let me just give you a couple of concepts around what we did, 

and I will try to keep it brief. A couple of things. We had a process 

where effectively a loan would go down the production line, and it 

would go from an input clerk to a loan officer to several people 

doing different things. And if there were errors or problems along 

the way, ultimately, those wouldn’t always get caught until the 

back end, and then they would have to go into a queue to get fixed 

and modified. Our attorneys and our legal people and our financial 

people didn’t always coordinate as well as they needed to. And the 

other thing we found is, because we had recently consolidated four 

centers, people weren’t always working off the same rule books. 

So we made all of our policies consistent. We blew up the production line. We put people in what we call integrated teams. So they 

have got lawyers, finance people, clerks, case managers all working 

together on one team. So when your loan comes to me, if I am a 

loan officer, I turn to my lawyer over here, I turn to my other experts over here, we get all the problems taken care of quickly. We 

can make a decision on the spot. 


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The other thing we did is, if you were a borrower, you didn’t 

have a human being to help you through the process. You called 

a call center and you sent documents back and forth. We now assign people a human being who calls you up and says, I am here 

to help you. Tell me what you need. Let me talk through your paperwork with you. And it allows our front-end people to be an advocate for the borrower. They know if they have a closing coming up, 

so they will do everything to resolve their closing. 

It also allows our front-end people to hear about the problems we 

are having and then tell the rest of the organization, which we 

gather data. We gather data now on every single customer, and we 

can turn that into fixing the process. 

And let me give you one example, and I can apply and do some 

of this in writing. 

But we called 100,000 people to ask them why they hadn’t gotten 

their SBA loan, in their mind. Were they waiting for us or were 

we waiting for them? We found people couldn’t get their title documents. Everything was backed up in New Orleans. We sent 15 people to the Parish Clerk’s Office in Orleans Parish to help them get 

through their workload to help borrowers when they came in the 

door to get their paperwork so we could get our work done. It 

wasn’t our problem, but we wanted to help them through that process. 

We would have never had that if we hadn’t started getting data 

from customers out of the system, calling them up, and learning 

from them how we needed to help them better. 

So one of the things I am proudest of is we have turned our people from paper processors to advocates for people who are disaster 

victims. And not only in helping them get what they needed done 

but helping us understand how to serve them better. 

Mr. BONNER. Again, it is that type of proactive leadership. You 

came on the job I think a year after Katrina, basically, but you 

turned it around. 

Mr. PRESTON. Thank you. I appreciate that. 

Mr. BONNER. And if I could get a quick second question in. 

FOREIGN INVESTMENT

Representing a port city in a State that the Port of Mobile is now 

the tenth largest port in America—and I don’t want to go back to 

the trade agreement that you and the chairman have already mentioned specifically, but just in general we talk about outsourcing 

jobs, about insourcing jobs. How important, in your judgment, is 

the insourcing of jobs, especially as it relates to small businesses 

and opportunities for small businesses? 

My understanding is that there are about 5 million direct U.S. 

jobs that are a result of foreign investment in this country and 

probably another 5 million indirect. Can you see a benefit to small 

business, Main Street America, to this because of the foreign investment? 

Mr. PRESTON. I absolutely can, and I think there are two ways. 

First of all, I think a lot of times we look at either small business 

exports or small business direct contracts, but we often forget that, 

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rounding small businesses, logistics, components manufacturers, 

other service providers. We don’t have an insulated economy. We 

have a very much integrated economy that goes up and down sort 

of the business sides. 

The other thing is often when we open up foreign markets, and 

this may be a little bit beyond your question, the little guys are the 

ones that have the harder time exporting because they can’t put 

people in the country that they are exporting to necessarily. They 

don’t always have the funds to figure out the regulations. All of the 

administrative barriers, is what makes it very tough for them. And 

simplifying the trade pathway for them is a big factor in opening 

up the floodgates, and I hear this time and again. I heard it from 

an exporter on Monday when I was in Miami. He went through 

chapter and verse what he had to deal with in going to a particular 

country, and he said it is just not worth it in certain countries because I just can’t handle all the stuff. 

It is not just the tariffs. It is all the other stuff. And that is why 

I think this often isn’t couched as a small business issue, but I 

think it very much is. 

Mr. BONNER. Thank you, Mr. Chairman. 

Mr. SERRANO. Mr. Goode. 

HUBZONES

Mr. GOODE. I want to say thank you for your personnel in the 

Richmond office. Ron Bew has worked very well with my office on 

a number of things. 

Mr. PRESTON. Good. Thank you. 

Mr. GOODE. They have held some forums to assist veterans, minorities, and others as to what the SBA has to offer. So I just want 

to say thank you for that, and then I wanted to ask you a little 

bit about hub zones. 

The largest city in my district is Danville, which is slightly under 

50,000 now. Adjacent to it is the largest county in Virginia, which 

is rural, which is Pennsylvania; and it gets knocked out of being 

a HUBZone because it is adjacent to Danville. I have introduced a 

bill that would cover Pennsylvania County and a number of other 

jurisdictions around the country that are situated like that, and I 

am just wondering if you all have a position on that or are you neutral? 

Mr. PRESTON. I apologize. I am not briefed on your bill. I will tell 

you that, in many cases, because of a mix in a county between sort 

of what is rural and what is not considered rural, we do get into 

some challenges in getting certain areas designated as a HUBZone 

when they might otherwise qualify. So I would love to take a look 

at what you are proposing and work with your staff. 

Mr. GOODE. I will tell you the number of it is 383. 

Mr. PRESTON. Okay. Thank you. We will be in contact with your 

staff. 

Mr. GOODE. And that is a situation with Pennsylvania and the 

area close to Danville, is urban. But, like I say, it is the largest 

county in Virginia, and the rest of it is really rural, and if they 

could get hub zone status, it would help us keep the few businesses 

we have got in that rural part and might let us get a few more. 

Mr. PRESTON. Thank you. 


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Mr. GOODE. Thank you. That is all, Mr. Chairman. 

PRIME PROGRAM

Mr. SERRANO. Thank you. 

The PRIME program is once again proposed by the President for 

elimination. As you know, elimination of the program troubles this 

committee, especially this chairman, greatly, because it targets 

low-income and very low-income business people with much-needed 

training and technical assistance. Now it would seem that if the 

economy is hurting more and more, and you have been very open 

here in telling us that some people are not investing, they are nervous, that this would be the time of an even greater need for a program like this one. Why does the administration dislike this program so much? Why do they think it should not exist? 

Mr. PRESTON. Mr. Chairman, I think it is more an issue of, in 

a time of tight budgets, we are trying to consolidate our technical 

assistance, spending in a handful of large programs and leverage 

them as effectively as possible. 

When you look at the micro loan program or you look at the technical assistance there or you look at the prime funding, I think we 

are taking the position in both cases that we would like those people to seek their technical assistance from places where we are getting a lot more leverage. And these are networks where we provide 

seed funding—I shouldn’t say ‘‘seed’’—foundational funding to 

where they expand their funding through other sources, State and 

other sources, rather than having a broader network of small programs. 

Mr. SERRANO. So your comment would lead us to believe, or that 

you believe, the administration believes, that these are similar programs. Yet it has a constituency—I don’t think just a constituency 

that says don’t cut anything but, rather, people that feel that this 

program has a specific mission. 

Is it the belief of folks in the agency that whatever support is 

being given by the PRIME program could fit into other programs? 

Is that what the suggestion has been? 

Mr. PRESTON. I think the answer is yes. And if you look at our 

spectrum of programs out there, they do cover a lot of different 

types of businesses. Many of them are businesses that are homebased businesses, people that are going from very low-income levels 

to something that can sustain them a little more effectively, all the 

way to businesses that are high tech and have a great growth opportunity to them. 

MICRO LOAN PROGRAMS

Mr. SERRANO. Now maybe I am missing something here, and I 

am not trying to be funny. But, for instance, my next question had 

to do with the micro loan technical assistance program, where also 

the administration wants to eliminate it. So, on one hand, you are 

telling me that we have programs that this can fit into. Yet we continue to try to eliminate some of those other programs that perhaps 

it could fit into. How do we explain that? 

Mr. PRESTON. Well, the three big programs we have are the 

Small Business Development Centers, Women’s Business Centers, 

and SCORE. And that is where we support over one million entreVerDate Aug 31 2005 20:57 Jun 07, 2008 Jkt 042551 PO 00000 Frm 00458 Fmt 6601 Sfmt 6602 E:\HR\OC\B551P2.XXX B551P2

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preneurs a year. The micro loan program, for example, I think we 

had a little over, I think it was, 2,200 new micro borrowers come 

into the program last year. So we have got somewhat over 2,000 

going into a network that supports one million. So the scale of 

these other systems is very significant relative to the number of 

people that are being counseled in the smaller programs. I don’t, 

off the top of my head, know what that number would be for 

PRIME. 

Mr. SERRANO. Now, also on the micro loan issue, the President’s 

2009 budget also proposes zeroing out the Federal subsidy for the 

micro loan program. The budget suggests doing this by increasing 

the cost of the SBA loans to non-profit lending intermediaries. 

Won’t this change make the program more costly, with the costs 

being passed on to small business borrowers? 

Mr. PRESTON. It will make the program more costly for the borrower, potentially. I think the difference is, because it is a heavily 

subsidized program, it is relatively limited. Every dollar that we 

put out there in a new business comes with an 88 cent cost, 88 

cents for technical assistance and for subsidy. Our view has been 

if we can make this a zero subsidy program we no longer limit our 

ability to put capital into the micro lending industry. We can go 

much bigger if we can make it a zero subsidy program. We can get 

a lot more dollars to micro borrowers. 

Now there is no doubt that the cost of those funds to the borrowers is going to be somewhat higher, but there would be a lot 

more funds available and at already what I think would be a low 

cost because it would be somewhat over a point over the Treasury 

rate. 

SUBSIDIES

Mr. SERRANO. That seems to be the ongoing argument here. As 

you know, in the 7(a) program there is the same thing, where the 

administration or the agency seems to feel that, without the subsidy, you can actually do some other things. And yet subsidies are 

very popular with the Members of Congress, especially that subsidy. And that is one, as the ranking member can tell you, that if 

we don’t provide it, I can guarantee you an amendment will put it 

in the bill on the House floor. That is not one where Mr. Regula 

and I can talk to folks and say don’t do this. 

Mr. PRESTON. Sure. 

Mr. SERRANO. If you were trying to analyze why this happens, 

if indeed the subsidies are not necessary in some cases or in many 

cases, why does it have such a constituency with Members of Congress from all over the Nation? 

Mr. PRESTON. You know——

Mr. SERRANO. And, again, it can’t be simply don’t cut a program, 

because there are many Members of Congress who are very much 

into the idea of cutting, yet they don’t want to cut the subsidies. 

Mr. PRESTON. On the subsidies side, if we are talking about the 

micro loan program, there is no doubt that there is a network of 

micro lenders out there today that we currently fund that reach 

businesses and that will have to go through a time of difficult transition if we pull back their technical assistance funding and increase their cost of funds. I don’t want to conjecture in terms of 


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what they have to do, but—and especially if our funds are going 

to pay for operating costs. 

But to the extent that our funds go for technical assistance, they 

are going to have to begin referring those people to somewhere 

else, and I think they are also going to have to look for transactions 

that can support a somewhat higher cost to capital or reduce their 

spreads. 

On the 7(a) side, which is a zero subsidy program, historically 

when we have talked about providing a subsidy for this program, 

just to put it in simple terms, as I view it we are looking at reducing the cost effectively to the borrower by taking a point or a point 

and a half off the upfront cost. It is almost like mortgage points. 

So if you said, instead of paying 2 and a half points they are going 

to pay 1 and a half points, that is effectively how we would change 

the cost structure, by providing a subsidy. 

When we run the numbers on an average SBA loan that is less than $1 a day. It is not that big of a cost to the borrower. And you 

also have to ask yourself, if another point or point and a half is 

the difference between taking a loan and not taking a loan, you are 

either—I get concerned that if that is what it takes to be able to 

pay for a loan, you are dealing with a pretty marginal borrower. 

So I view that as less of inflicting a pain point on anyone. I do 

acknowledge the pain point on the micro loan program, because I 

think the people we fund are going to have to go through a challenging transition. 

Mr. SERRANO. Thank you. 

Mr. Regula. 

ENCOURAGING EXPORTING

Mr. REGULA. Just one question. We are facing as a nation a $711 

billion trade deficit. Do you make any special effort to help companies that indicate they are in the field of exporting—— Mr. PRESTON. Yes. 

Mr. REGULA [continuing]. That would be helpful in reducing the 

trade deficit? 

Mr. PRESTON. Yes. And we are stepping it up. There are a number of things. 

First of all, our partners in the Small Business Development 

Center community and some of our other technical assistance partners provide support to businesses that are interested in exporting, 

kind of helping them think through how to do that. 

We work together with the Department of Commerce also in a 

number of places around the country called U.S. Export Assistance 

Centers, where people can come into those centers and get a lot of 

information about how to export to a particular country. And then, 

once those goods—if they want to have support in country, we coordinate with the Department of Commerce doing that as well. 

We provide working capital loans that allow people to, if they 

need to, if a small jam manufacturer needs to build its inventory 

to export, we will finance that. We will actually finance the actual 

export, and we will coordinate with exit banks on their programs. 

The last thing I would mention is we are kicking off a series of 

trade symposia around the country to bring small business exporters and potential exporters together to help them learn how to do 


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this more effectively. And I mentioned earlier we just had 400 people in the Miami area on Monday, and it was just a terrific success. 

So it is an important thing for our constituents, and we are 

working to expand our support for them. 

Mr. SERRANO. Mr. Goode. 

Mr. GOODE. I don’t have any more questions. Thank you. 

Mr. SERRANO. Mr. Preston, I want to pay you a compliment in 

public. When we thought we had votes at 10:30, we had decided to 

end the hearing at 10:30, rather than keeping you here, because 

your agency has a reputation and you personally of telling the committee what it needs to know when we are not doing it in public. 

Some folks have to be asked in public. It is the only way we might 

get part of what we need to know. So consider that a compliment. 

Mr. PRESTON. Thank you very much. 

Mr. SERRANO. And we appreciate your service to our country. We 

appreciate the work you do. We appreciate your willingness to 

work with us even during difficult times. And this coming year, 

this budget session could be a difficult one. We won’t hold you here 

any longer. Just please keep us informed on some of those issues 

we presented to you before. 

Mr. PRESTON. Thank you very much. 

Mr. SERRANO. The hearing is adjourned. 


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W I T N E S S E S 

Page 

Doan, Lurita ............................................................................................................. 255 

Martin, Kevin ........................................................................................................... 333 

Moore, T. H .............................................................................................................. 1 

Morphy, Martha ....................................................................................................... 107 

Nord, N. A ................................................................................................................ 1 

Preston, Steve .......................................................................................................... 429 

Springer, L. M .......................................................................................................... 151 

Thomas, Adrienne .................................................................................................... 107 

Weinstein, Allen ....................................................................................................... 107 


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I N D E X 

Consumer Product Safety Commission 

March 11, 2008 

Page 

Chairman Serrano’s Opening Statement ............................................................... 1 

Mr. Regula’s Opening Statement ........................................................................... 2 

Chairman Nord’s Testimony ................................................................................... 2 

Commissioner Moore’s Testimony .......................................................................... 12 

Reauthorization Bill ................................................................................................ 19 

Sale of Recalled Products ........................................................................................ 19 

Public Complaint Database .................................................................................... 20 

U.S. Territories and the Pool and Spa Safety Bill ................................................ 21 

Foreign Manufacturers ............................................................................................ 21 

Regulating Imports from China .............................................................................. 22 

U.S. Manufactured Goods ....................................................................................... 22 

Inspection of Imported Goods ................................................................................. 23 

Pool and Spa Safety Law Implementation ............................................................ 24 

China ........................................................................................................................ 26 

CPSC Agency Size ................................................................................................... 28 

Industries in Need of Regulation ........................................................................... 29 

Emerging Hazards ................................................................................................... 30 

Trade with China ..................................................................................................... 30 

Reauthorization Funding ........................................................................................ 31 

Import Safety Initiative .......................................................................................... 32 

Industry-Funded Travel .......................................................................................... 34 

Purchasing Safe Toys .............................................................................................. 35 

Role of Customs ....................................................................................................... 36 

Pool Drain Cover Mandate ...................................................................................... 37 

Pool and Spa Safety Funding ................................................................................. 38 

Warning Labels in Different Languages ................................................................ 39 

Questions for the Record: 

Chairman Jose ́ E. Serrano ............................................................................... 43 

Ranking Member Regula ................................................................................. 82 

Mr. Ruppersberger ........................................................................................... 86 

Mr. Visclosky .................................................................................................... 88 

Chairman Jose ́ E. Serrano ............................................................................... 92 

Mr. Visclosky .................................................................................................... 105 

National Archives and Records Administration 

April 1, 2008 

Chairman Serrano’s Opening Statement ............................................................... 107 

Mr. Regula’s Opening Statement ........................................................................... 108 

Allen Weinstein’s Testimony ................................................................................... 109 


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Historical Photos ...................................................................................................... 124 

Restoring Hours at the Archives ............................................................................ 124 

FOIA Mediation Office ............................................................................................ 125 

Missing White House Emails .................................................................................. 126 

International Archival Systems .............................................................................. 127 

American History Education ................................................................................... 127 

Historical Information Prior to the Archives ......................................................... 128 

Archives as a Resource ............................................................................................ 128 

Repairs and Restoration of Presidential Libraries ............................................... 129 

Military Conflicts and Personal Histories ............................................................. 130 

Presidential Library Attendance ............................................................................ 131 

Funding of Presidential Library Foundations ....................................................... 132 

Recognizing the Military Service of Hispanics ...................................................... 132 

‘‘National Treasure’’ Film ........................................................................................ 132 

Electronic Records Archives Program .................................................................... 133 

Records Processing Backlog .................................................................................... 134 

Publishing the Founding Fathers’ Papers ............................................................. 135 

Preserving Records of Early Presidents ................................................................. 136 

Cultural Heritage Months ....................................................................................... 137 

History of Individuals .............................................................................................. 138 

Questions for the Record: 

Chairman Jose ́ E. Serrano ............................................................................... 141 

Ranking Member Regula ................................................................................. 147 

Office of Personnel Management 

April 2, 2008 

Chairman Serrano’s Opening Statement ............................................................... 151 

Mr. Regula’s Opening Statement ........................................................................... 152 

Director Springer’s Testimony ................................................................................ 153 

RetireEZ Program .................................................................................................... 161 

Legacy System ......................................................................................................... 161 

Diversity in the Workforce ...................................................................................... 162 

OPM Programs to Encourage Diversity ................................................................. 163 

Retirement Plan Investing ...................................................................................... 164 

Agency Recruitment ................................................................................................ 164 

Training Programs ................................................................................................... 165 

Rehiring Retirees ..................................................................................................... 165 

Electronic Recruitment Tools .................................................................................. 166 

Rollout of the Electronic Retirement System ........................................................ 166 

Hiring Administrative Law Judges ........................................................................ 169 

Security Clearances ................................................................................................. 171 

Clearance Process .................................................................................................... 172 

Clearance Completion Times .................................................................................. 173 

Polygraph Tests ....................................................................................................... 174 

Recruitment in the Territories ............................................................................... 175 

Funding Election Observers .................................................................................... 176 

Agency Recruiting Needs ........................................................................................ 177 

Student Recruitment ............................................................................................... 177 

Attracting and Retaining Staff ............................................................................... 178 

Performance-Based Pay .......................................................................................... 179 

Social Security Administration Backlog ................................................................ 179 

Underperforming ALJs ............................................................................................ 180 

Human Capital Report ............................................................................................ 181 


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Questions for the Record: 

Chairman Jose ́ E. Serrano ............................................................................... 183 

Ranking Member Regula ................................................................................. 215 

General Services Administration 

April 3, 2008 

Chairman Serrano’s Opening Statement ............................................................... 255 

Mr. Regula’s Opening Statement ........................................................................... 256 

Administrator Doan’s Testimony ............................................................................ 256 

Spanish-Language Services .................................................................................... 275 

Building Project Prioritization ................................................................................ 275 

Real Property Disposal Pilot Project ...................................................................... 276 

Real Property Disposal Process .............................................................................. 277 

Federal Contractor Database Proposal .................................................................. 278 

Building Green ......................................................................................................... 278 

Lease Rental Rates .................................................................................................. 279 

Authority to Dispose of Property ............................................................................ 279 

Anticipating Retirement Wave ............................................................................... 280 

Building Security ..................................................................................................... 281 

Federal Building Fund ............................................................................................ 281 

Property Disposal and Homeless Shelters ............................................................. 282 

New Courthouse Construction in Mobile ............................................................... 283 

Increased Construction Costs ................................................................................. 284 

GSA Contract Employees ........................................................................................ 285 

Court Involvement in Contract Award .................................................................. 286 

Building Versus Leasing ......................................................................................... 287 

Funding for Construction ........................................................................................ 289 

Federal Judiciary Rental Dispute .......................................................................... 290 

Presidential Transition ........................................................................................... 291 

Cost-Effective Agency Housing ............................................................................... 291 

GSA Provided Facility Services .............................................................................. 292 

District of Columbia ................................................................................................ 292 

Los Angeles Courthouse .......................................................................................... 293 

Judges’ Opinion of New Courthouse Proposal ....................................................... 294 

Questions for the Record: 

Chairman Jose ́ E. Serrano ............................................................................... 296 

Ranking Member Regula ................................................................................. 320 

Mr. Schiff ........................................................................................................... 331 

Federal Communications Commission 

April 9, 2008 

Chairman Serrano’s Opening Statement ............................................................... 333 

Mr. Regula’s Opening Statement ........................................................................... 334 

Chairman Martin’s Testimony ................................................................................ 335 

Funding for DTV Education ................................................................................... 369 

Industry Assistance in DTV Education ................................................................. 370 

Educating Minority Communities on the DTV Transition ................................... 370 

Media Ownership Consolidation ............................................................................. 371 

D Block Auction ....................................................................................................... 372 

First Responders’ Spectrum .................................................................................... 373 

Demand for Spectrum ............................................................................................. 374 

Distribution of Auctioned Spectrum ....................................................................... 374 


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Public Safety Network ............................................................................................. 375 

Piracy and Child Pornography on the Internet ..................................................... 375 

Filtering Illegal Content ......................................................................................... 376 

Clarifying Protected Content .................................................................................. 377 

E–Rate Program ...................................................................................................... 377 

Expanding DTV Education Programs .................................................................... 379 

Internet Blogs .......................................................................................................... 380 

Regulating Blogs ...................................................................................................... 381 

Informing People of the DTV Transition ............................................................... 382 

FCC Priorities .......................................................................................................... 382 

In-Flight Usage of Cell Phones ............................................................................... 383 

Concentration of Media Ownership ........................................................................ 383 

Waiver Process ......................................................................................................... 384 

Separation of the Editorial Function ..................................................................... 385 

‘‘Do Not Call’’ Program ............................................................................................ 386 

Localism Rules ......................................................................................................... 386 

New Renewal Processing Guidelines ..................................................................... 387 

Internet Radio .......................................................................................................... 388 

Blocking Distribution of Illegal Content ................................................................ 389 

Satellite Radio in the Territories ........................................................................... 390 

Telephone Service in Puerto Rico ........................................................................... 391 

Supreme Court Review of the Broadcast of Indecent Material ........................... 392 

Broadcast Regulation and Satellite Radio ............................................................. 392 

A La Carte Pricing ................................................................................................... 393 

Universal Service Fund ........................................................................................... 394 

Public Service Programs ......................................................................................... 395 

Senior Living Facilities ........................................................................................... 395 

A La Carte Pricing and Diversity Programming .................................................. 396 

A La Carte Pricing and Cable Rates ...................................................................... 397 

Low-Income Access to Telecommunications .......................................................... 398 

Diverse Community Programming ......................................................................... 399 

Satellite Radio Merger Effect on Equipment ........................................................ 399 

Battery Operated Converter Boxes ........................................................................ 400 

Addressing Transition Problems ............................................................................ 401 

DTV Transition and Portable Televisions ............................................................. 402 

Media Ownership Rulemaking ............................................................................... 402 

Public Comment Period on Media Ownership Rules ............................................ 404 

Questions for the Record: 

Chairman Jose ́ E. Serrano ............................................................................... 405 

Ranking Member Regula ................................................................................. 417 

Mr. Visclosky .................................................................................................... 422 

Mr. Kirk ............................................................................................................ 428 

Small Business Administration 

April 10, 2008 

Chairman Serrano’s Opening Statement ............................................................... 429 

Mr. Regula’s Opening Statement ........................................................................... 430 

Administrator Preston’s Testimony ........................................................................ 431 

Colombia Trade Agreement .................................................................................... 445 

New Small Business Laws ...................................................................................... 446 

Hurricane Katrina Disaster Loans ......................................................................... 447 

Demand for Small Business Loans ........................................................................ 451 

Rate of Defaults ....................................................................................................... 451 

Veterans’ Programs ................................................................................................. 453 


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Employee Retention ................................................................................................. 453 

Small Business Innovation Research Fund ........................................................... 454 

Disaster Loan Program Redesign ........................................................................... 455 

Foreign Investment ................................................................................................. 456 

HUBZones ................................................................................................................ 457 

PRIME Program ...................................................................................................... 458 

Micro Loan Programs .............................................................................................. 458 

Subsidies ................................................................................................................... 459 

Encouraging Exporting ........................................................................................... 460 

Questions for the Record: 

Chairman Jose ́ E. Serrano ............................................................................... 462 

Ranking Member Regula ................................................................................. 488 

Æ 


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