COMMERCE, JUSTICE, SCIENCE, AND RELATED 

AGENCIES APPROPRIATIONS FOR 2012 

HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

SUBCOMMITTEE ON COMMERCE, JUSTICE, SCIENCE, AND RELATED 

AGENCIES 

FRANK R. WOLF, Virginia, Chairman 

JOHN ABNEY CULBERSON, Texas 

ROBERT B. ADERHOLT, Alabama 

JO BONNER, Alabama 

STEVE AUSTRIA, Ohio 

TOM GRAVES, Georgia 

KEVIN YODER, Kansas 

CHAKA FATTAH, Pennsylvania 

ADAM B. SCHIFF, California 

MICHAEL M. HONDA, California 

JOSE ́ E. SERRANO, New York 

NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full Committee, and Mr. Dicks, as Ranking 

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

MIKE RINGLER, STEPHANIE MYERS, LESLIE ALBRIGHT, 

DIANA SIMPSON, and COLIN SAMPLES, 

Subcommittee Staff 

PART 6 

Page 

Department of Commerce ..................................................... 1 

U.S. Patent and Trademark Office ...................................... 183 

National Institute of Standards and Technology ............ 269 

National Oceanic and Atmospheric Administration ...... 337 

Office of the United States Trade Representative .......... 465 

( 

Printed for the use of the Committee on Appropriations 


emcdonald on DSK2BSOYB1PROD with HEARING
PART 6—COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES APPROPRIATIONS FOR 2012 


emcdonald on DSK2BSOYB1PROD with HEARING
COMMERCE, JUSTICE, SCIENCE, AND RELATED 

AGENCIES APPROPRIATIONS FOR 2012 

HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

SUBCOMMITTEE ON COMMERCE, JUSTICE, SCIENCE, AND RELATED 

AGENCIES 

FRANK R. WOLF, Virginia, Chairman 

JOHN ABNEY CULBERSON, Texas 

ROBERT B. ADERHOLT, Alabama 

JO BONNER, Alabama 

STEVE AUSTRIA, Ohio 

TOM GRAVES, Georgia 

KEVIN YODER, Kansas 

CHAKA FATTAH, Pennsylvania 

ADAM B. SCHIFF, California 

MICHAEL M. HONDA, California 

JOSE ́ E. SERRANO, New York 

NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full Committee, and Mr. Dicks, as Ranking 

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

MIKE RINGLER, STEPHANIE MYERS, LESLIE ALBRIGHT, 

DIANA SIMPSON, and COLIN SAMPLES, 

Subcommittee Staff 

PART 6 

Page 

Department of Commerce ..................................................... 1 

U.S. Patent and Trademark Office ...................................... 183 

National Institute of Standards and Technology ............ 269 

National Oceanic and Atmospheric Administration ...... 337 

Office of the United States Trade Representative .......... 465 

( 

Printed for the use of the Committee on Appropriations 

U.S. GOVERNMENT PRINTING OFFICE 

67–061 WASHINGTON : 2011 


emcdonald on DSK2BSOYB1PROD with HEARING
COMMITTEE ON APPROPRIATIONS 

HAROLD ROGERS, Kentucky, Chairman 

C. W. BILL YOUNG, Florida 1

JERRY LEWIS, California 1

FRANK R. WOLF, Virginia 

JACK KINGSTON, Georgia 

RODNEY P. FRELINGHUYSEN, New Jersey 

TOM LATHAM, Iowa 

ROBERT B. ADERHOLT, Alabama 

JO ANN EMERSON, Missouri 

KAY GRANGER, Texas 

MICHAEL K. SIMPSON, Idaho 

JOHN ABNEY CULBERSON, Texas 

ANDER CRENSHAW, Florida 

DENNY REHBERG, Montana 

JOHN R. CARTER, Texas 

RODNEY ALEXANDER, Louisiana 

KEN CALVERT, California 

JO BONNER, Alabama 

STEVEN C. LATOURETTE, Ohio 

TOM COLE, Oklahoma 

JEFF FLAKE, Arizona 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

STEVE AUSTRIA, Ohio 

CYNTHIA M. LUMMIS, Wyoming 

TOM GRAVES, Georgia 

KEVIN YODER, Kansas 

STEVE WOMACK, Arkansas 

ALAN NUNNELEE, Mississippi 

————— 

1 Chairman Emeritus 

NORMAN D. DICKS, Washington 

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 

MAURICE D. HINCHEY, New York 

LUCILLE ROYBAL-ALLARD, California 

SAM FARR, California 

JESSE L. JACKSON, JR., Illinois 

CHAKA FATTAH, Pennsylvania 

STEVEN R. ROTHMAN, New Jersey 

SANFORD D. BISHOP, JR., Georgia 

BARBARA LEE, California 

ADAM B. SCHIFF, California 

MICHAEL M. HONDA, California 

BETTY MCCOLLUM, Minnesota 

WILLIAM B. INGLEE, Clerk and Staff Director 

(II)


emcdonald on DSK2BSOYB1PROD with HEARING
(1) 

COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES APPROPRIATIONS FOR 

2012 

THURSDAY, MARCH 17, 2011. 

DEPARTMENT OF COMMERCE 

WITNESS 

HON. GARY LOCKE, SECRETARY, DEPARTMENT OF COMMERCE 

OPENING REMARKS FROM CHAIRMAN WOLF

Mr. WOLF. Welcome, Mr. Secretary. Good afternoon. 

There are going to be a series of votes coming up pretty soon. So 

we will just proceed. 

We have a number of issues to discuss with you today with respect to the fiscal year 2012 budget. You are requesting $8.8 billion 

in a new budget authority that amounts to $868 million or about 

11 percent higher than the House-passed Continuing Resolution for 

fiscal year 2011. 

The largest increases in your budget include an additional $768 

million for the National Oceanic and Atmospheric Administration, 

$145 million for the National Institute of Standards and Technology, $70 million for the International Trade Administration, and 

these increases are partially offset by reductions in Census totaling 

$199 million. 

These funding changes are just a few within Commerce. Practically every account within Commerce is increasing in your request. You are also proposing a number of new initiatives in your 

budget as well as the termination of a few small but potentially 

significant programs. 

The Congress unfortunately will not be in a position to provide 

such increases. The fiscal crisis facing the Nation is real and will 

require a level of austerity that goes beyond the President’s budget. 

So we are going to ask you to help prioritize. 

And this is not in the statement, but I am sorry to see you go, 

frankly. And it is probably not a good appointment in all honesty 

because I think you are engaged in this thing and your ideas with 

regard to exports. And now you are going to have a vacancy there 

for a long period of time. 

But I want to congratulate you on your nomination. But when I 

heard it, I did not think it was such a good idea because of that 

very reason. But there are some questions we will have. These are 

not confirmation hearings obviously on China, but I will have some 


emcdonald on DSK2BSOYB1PROD with HEARING
2 

questions with regard to China, to encourage more job growth in 

manufacturing in this country. 

I will go to Mr. Dicks if he wants to make a comment and then 

we will go to your testimony. 

OPENING REMARKS FROM REP. DICKS

Mr. DICKS. Well, thank you, Mr. Chairman. 

And, Secretary Locke, it is good to see you and we congratulate 

you on your nomination to be Ambassador to China. We have 

worked together since you were King County executive and governor of Washington. And I think you have done a fine job as Secretary. 

We have some great initiatives, the National Export Initiative, 

the Manufacturing Extension Partnership, just to name two. And 

we were pleased with your work on comprehensive—with NIST’s 

effort on comprehensive cybersecurity. 

I am concerned, and I hope you will have a chance to discuss this 

during the hearing, on the effects of H.R. 1 on NOAA procurement, 

acquisition, and construction. And we are concerned about the tsunami that has happened in Japan and what the effect of these 

budget cuts would be on our weather satellites and our buoys out 

in the ocean which I know are very important. 

And I hope you could tell us what the impact of the $450 million 

cut will be in H.R. 1. I think you are in an ideal spot to be able 

to translate this, and this process is not over yet. We are still trying to make sure that we, you know, make appropriate cuts. And 

if there has been mistakes made, we still have a chance to review 

this in light of the current circumstances. 

Thank you, Mr. Chairman. 

Mr. WOLF. Thank you, Secretary. Proceed. 

OPENING STATEMENT BY SECRETARY LOCKE

Secretary LOCKE. Thank you very much, Chairman Wolf and distinguished Members of the subcommittee. I am really pleased to 

join you today to talk about the President’s budget request for the 

Department of Commerce for fiscal year 2012. 

Since I joined the Department of Commerce two years ago, we 

have focused on delivering our services more efficiently and at less 

cost to the taxpayer. Those efforts have paid off. 

The 2010 Census was completed on schedule and under budget, 

returning $1.9 billion to the taxpayers. 

Our Economic Development Administration has cut the time it 

takes to grant awards from 128 business days to 20 business days. 

Our Patent Office reduced an application backlog of almost 

800,000 when the President assumed office. We have reduced by 10 

percent last year even as applications surged by 7 percent. 

And next month, we will be rolling out and starting a program 

allowing applicants to have their patents evaluated within one year 

for a very small extra fee. 

Our efficiencies and cost savings are not one-time achievements. 

We have instituted comprehensive performance management processes throughout the Department which should help our reforms 

stand the test of time. 


emcdonald on DSK2BSOYB1PROD with HEARING
3 

And it is in this context of proven savings and performance that 

I hope the committee will consider Commerce’s fiscal year 2012 

budget request. 

Our 2012 budget request is lean. It cuts outdated programs, 

drives major efficiencies in others. And our budget incorporates 

$142 million in savings thanks to significant IT improvements, aggressive acquisition reform, and other administrative savings. 

At the same time, it contains key investments that will help 

America win the future by spurring innovation, increasing America’s international competitiveness, and supporting scientific research as well as supporting our coastal communities. These are 

core missions of the Department of Commerce. 

On the innovation front, the Department of Commerce is responsible for providing the tools, systems, policies, and technologies that 

give U.S. businesses a competitive edge in world markets. And that 

is why we are requesting additional funds for our National Institute of Standards and Technology including an increase of more 

than $100 million for research into advanced manufacturing technologies, health information technologies, cybersecurity, and interoperable smart grid technology. 

These investments in standards setting and in basic research, 

which are often too risky or too expensive for the private sector 

alone, have historically spurred waves of private sector innovation 

and job creation. 

To further support innovation, our 2012 budget request calls for 

the U.S. Patent and Trademark Office to gain full access to its fees 

so that we can expand the already substantial reforms undertaken 

by Under Secretary David Kappos, working with line staff, labor, 

and career managers. These reforms will help get cutting-edge inventions and technologies into the marketplace much more quickly 

which will then create jobs. 

The Commerce Department, through our International Trade Administration, is playing a lead role in the President’s National Export Initiative, which seeks to double U.S. exports by 2015. American companies, especially small- and medium-size businesses, rely 

heavily on the federal governmental support available under the 

National Export Initiative. I hear about it everywhere I go. 

These companies often face significant hurdles in getting access 

to working capital to produce the goods they want to sell abroad 

or simply finding reliable foreign customers and vendors for their 

American-made goods and services. 

Our International Trade Administration helps many companies 

clear these hurdles. And last year, we helped more than 5,500 U.S. 

companies export for the first time or increase their exports. We coordinated an unprecedented 35 trade missions to 31 different countries. 

These efforts are paying off with U.S. exports up 17 percent last 

year and indeed exports to China were up 34 percent last year. Our 

fiscal year 2012 budget envisions more funds for activities such as 

business-to-business match-making services and identifying and resolving trade barrier issues. 

Finally, I want to touch on the critical work done by our National 

Oceanic and Atmospheric Administration or NOAA, an agency that 


emcdonald on DSK2BSOYB1PROD with HEARING
4 

is a key source of scientific information which is also increasingly 

critical to America’s economy. 

Last year, NOAA played a pivotal role in responding to the BP 

Deepwater Horizon oil spill by providing targeted weather forecasts, oil spill trajectory maps, and by ensuring the safety of Gulf 

seafood. 

This past week, NOAA issued its first tsunami warning just nine 

minutes after the tragic earthquake struck Japan. NOAA was able 

to so quickly sound the alarm because of strong congressional support. 

In 2004, before the tsunami that struck Indonesia, NOAA had 

only six buoys in the Pacific to detect seismic and wave activity. 

Today thanks to congressional support, it has 39 buoys. 

So the work that NOAA does to predict and respond to weather 

and natural disasters saves communities, saves them money and, 

most importantly, saves lives. 

What I discussed is, of course, just a fraction of the work of the 

Commerce Department and I direct you to our written testimony 

for greater detail. 

In the meantime, we are happy to answer any questions that you 

might have. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
5 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 9 here 67061A.001
6 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 10 here 67061A.002
7 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 11 here 67061A.003
8 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 12 here 67061A.004
9 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 13 here 67061A.005
10 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 14 here 67061A.006
11 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 15 here 67061A.007
12 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 16 here 67061A.008
13 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 17 here 67061A.009
14 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 18 here 67061A.010
15 

Mr. WOLF. Thank you, Mr. Secretary. 

Mr. Fattah, you have a statement you want to—— 

Mr. FATTAH. I will reserve. Thank you. 

Mr. WOLF. Sure. Thanks. 

TSUNAMI WARNING NETWORK

A couple of issues and I kind of will jump around. But first we 

extend our sympathies to the citizens of Japan. The tsunami that 

struck there on March 11, 2011, has caused extreme devastation 

and we wish them the best in their recovery. 

I think I can speak for other Members, but I certainly speak for 

myself that we will support, and I think I speak for this entire 

committee, efforts to provide relief and technical expertise and 

other forms of support to Japan during this period of recovery. 

There has been much discussion since the terrible tsunami in 

Japan about our country’s ability to forecast tsunamis. I want to 

assure everyone that H.R. 1 does not cut funding for the tsunami 

network. 

In fact, there are no specific cuts to any program in NOAA. Rather, if H.R. 1 is enacted, the Department of Commerce will be required to submit a spending plan to the committee for approval. 

The committee will work with NOAA to ensure that life and safety 

programs are not cut. 

For the record, and I will give you a letter before you leave, Mr. 

Secretary, the funding levels for the National Oceanic and Atmospheric Administration in H.R. 1 is $4.4 billion. This amount is $456 

million or 12 percent above the fiscal year 2008 level but $410 million or nine percent below the fiscal year 2010 level. 

Between fiscal year 2008 and fiscal year 2010, NOAA funds increased by 22 percent higher than any other program in this bill. 

NOAA’s base funding for tsunami warning network has been about 

$28 million since fiscal year 2008. 

In addition to this base funding, following the Indonesian tsunami in 2004, NOAA received three supplemental appropriations to 

improve its tsunami warning programs and activities. The Congress provided $17.2 million in Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami 

Relief, 2005. That was Public Law 109–13 for NOAA to enhance 

tsunami warning capabilities and operations. NOAA received another $50 million in the Deficit Reduction Act 

of 2005, Public Law 109–171, for tsunami warning and coastal vulnerability programs. Finally, NOAA received another $10 million in the Security and 

Accountability For Every Port Act of 2006, Public Law 109–347, for 

outdoor alerting technologies in remote communities. 

I have been, and we are going to put a copy of the letter in, involved when frankly not many people did very much. We wrote— 

I believe you were governor. Were you governor in—when were you 

governor? 

Secretary LOCKE. From 1997 to 2005. 

Mr. WOLF. Yes. We wrote you. We wrote every governor all along 

the East Coast and the West Coast. We called the UN. And we are 

going to submit a copy of the letter we wrote urging the governors 

to act on tsunami activities, because many were not doing what 


emcdonald on DSK2BSOYB1PROD with HEARING
16 

they should have done, to move ahead aggressively with tsunami 

preparation. 

So I will personally tell you we did everything possible and the 

staff did, Mike and the staff, to make sure, because when I saw the 

scenes of what took place in Indonesia, we forced governors and we 

forced administrations and forced localities not only on the West 

Coast but also on the East Coast from all the way to Maine all the 

way down to Miami to aggressively move ahead. So we have been 

involved in tsunami funding issues for a number of years. And we 

will submit the letter in the record. 

And I believe very strongly in the need for this program and I 

personally will assure that these important life-saving programs 

such as the NOAA Tsunami Warning Network and associated programs are not cut. 

But I want you to take the letter. And if you would go back and 

check your files—if you have access to your files—you will probably 

find the letter that I sent you urging you as governor, because the 

governors were not doing a very good job, to move ahead aggressively. 

NOAA SATELLITE BRIEFS TO CONGRESS

The other thing I want to raise before we get into the questions, 

we have been told by the staff for the record no one from NOAA, 

and this is with regard to satellites, no one from NOAA or the Department of Commerce has spoken with the Republican side about 

funding for the satellites. 

We run this subcommittee hopefully in a bipartisan way. I was 

chairman of it in a different life for six years. We never made these 

issues partisan. We just did not. 

Now, I will tell you last year, there are many times the Democratic administration would not even come up and talk to me. I 

mean, I was really not approached. There was an election. It 

changed. Some people like it. Some people do not. 

But if we are going to have a bipartisan—really to go up and just 

talk to one side, which is very appropriate, and not talk to the 

other, it is inappropriate. 

So I am just asking you, and you ought to tell the head of NOAA, 

if they are going to come up and go to one side, they owe it to the 

Republican staff and if they are going to talk to the Republican 

staff, they ought to talk to the Democratic staff. But they ought to 

treat this in truly a bipartisan way. 

So for the record, and you are welcome to comment, no one for 

NOAA or the Department of Commerce has spoken to the Republican staff about funding for the satellites. The subcommittee with 

the allocation we receive for H.R. 1, the House passed year-long 

supplemental, provided anomalies to three only accounts, the Bureau of Prisons, the Broadband Technology Opportunities Program, 

and the NOAA satellites. So much for people even thinking about 

that. 

I must also point out that the Senate CJS Subcommittee, which 

received a higher allocation than we did, did not provide, and the 

last time I knew the Democrats were controlling the Senate, Mr. 

Reid, a person who I know and like, a good person, controls the 


emcdonald on DSK2BSOYB1PROD with HEARING
17 

Senate, and they did not provide any additional funding for the satellites in its failed CR bill. 

So if there’s going to be integrity on this thing, your office and 

your CFO and the people in congressional relations, when they 

come up to talk to the Republican side, I urge them to tell Mr. 

Fattah exactly what you told us. I mean, treat everybody fairly. 

And if you are going to come up to talk to Mr. Fattah’s people, 

then I would ask you out of respect to come up and do the same 

thing to our staff. And why didn’t they do that? 

Secretary LOCKE. Are you asking for—— 

Mr. WOLF. Yes, sir. 

Secretary LOCKE. Thank you very much, Mr. Chairman. 

I was not aware that there has not been reciprocity and I certainly would encourage our staff to talk with all sides because we 

need as many members of the congressional committees to understand the budgets and the programs and the policies of the Department of Commerce. 

Mr. WOLF. And would you not agree that this is not a political 

issue? 

Secretary LOCKE. Oh, very much so. I very much agree that it 

is a nonpartisan issue. The funding for any agency is a bipartisan 

issue. 

Mr. WOLF. Okay. And could you let us know what response you 

get from the head of NOAA when you talk or to your congressional 

relations office about this? 

Secretary LOCKE. I will very much let you know. 

Mr. WOLF. Good. I appreciate it very much, sir. 

Here is the letter which I will submit for the record. ‘‘Wolf urges 

Administration to take lead on tsunami early warning systems. 

Washington, D.C., Rep. Frank Wolf,’’—this is December 29, 2004— 

‘‘Chairman of the Commerce, Justice, State Appropriations Subcommittee sent a letter today to Vice Admiral Conrad 

Lautenbacher, Under Secretary of Commerce for Oceans and Atmosphere, urging the Administration to take the lead in developing 

an enhanced tsunami prediction and warning capability for the 

U.S. and the world. [ . . .] I am writing today in light of the recent 

tragic . . .,’’ and we will just submit it for the record. 

But this committee was very much involved and I personally was 

because when I saw those scenes, and when I watched what is taking place in Japan today, my heart goes out to those people. So we 

will make sure that that issue will be dealt with. 

And if there is anybody that thinks it is not being dealt with, 

just give us a call, area code (202) 225–5136. And if they cannot 

reach us, just call the Capitol switchboard and they can track me 

down. Now, we will just submit that letter for the record there. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
18 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 26 here 67061A.011
19 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 27 here 67061A.012
20 

FEDERAL BUDGET CONCERNS

Mr. WOLF. You know, I think you know, I think we all have to 

be careful when we come—I am going to get this—kind of cleanse 

this to get this off my chest, too, because I know it would have 

come out later on. Any cuts that are coming, some may be in areas 

that I do not particularly like. I gave a statement on the Floor of 

the House, and I said I worry about the poor. 

In Proverbs, it says when you give to the poor, you give to God. 

And I worry about the poor. But this Administration has failed to 

come forward to deal with the fundamental issue that Senator 

Warner and Senator Durbin and people like that, and Saxby 

Chambliss, are trying to do to get control of the entitlement issue. 

And Ruth Marcus from the Washington Post did a story titled 

‘‘Waiting for Waldo.’’ The President of the United States appointed 

the Bowles-Simpson or Simpson-Bowles Commission. I have said I 

will support their recommendation. There are some things in there 

that I may not completely agree with. Hopefully it will be done in 

such a way that we can have an amendment process to argue these 

things out knowing that we have to come to whatever numbers. If 

you want to change something, then you would have to offer something. 

But the President has failed to come forward, so to say—and last 

month in February, the shortest month of the year, we had the 

largest, I think, deficit we have ever had for one month. It is a deficit for one month that we used to have for years that people used 

to complain about. 

And I think you have done a good job. Personally I was really 

sorry, glad because I think you will be tougher in China than the 

current ambassador was and maybe the previous Administration, 

because we have had conversations, and I know what you care 

about, so I was kind of glad, but I was sorry to see you appointed 

as Ambassador to China because I think what you have done at 

Commerce and the idea of increasing exports, so you are going to 

be out of the Cabinet. 

But the next time you say, say there is this congressman named 

Wolf, maybe it is Fox, Wolf, say I forget his name, but he is saying 

the President has to come forward to deal with the deficit and he 

ought to do it by the end of this year. 

And if we come forward in a bipartisan way, if Tom Coburn and 

Dick Durbin can sign that, and I have listened to Mr. Fattah, he 

said he could and I could, if we could do that then, but we really 

need the President to provide that leadership. 

So as we agonize about some of these cuts, and some are difficult 

and some I am not anxious about doing, but until you deal with 

the entitlements—Willy Sutton, the bank robber, said he robbed 

banks because that is where the money is. The money is in Medicare, Medicaid, and Social Security. 

And also I hear the President, just to get it off my chest, talking 

about how great it was working with the Republicans and Democrats in September. We got this tax bill passed. It shows you we 

can work together. That is like giving candy away. Anybody can 

work together to give things away. 


emcdonald on DSK2BSOYB1PROD with HEARING
21 

In that, and one thing with regard to the payroll tax, with regard 

to Social Security, that will cost the Federal Government $112 billion. You gave Jimmy Buffett and Warren Buffett a Social Security 

tax break. Neither of them needed it. Neither of them wanted it. 

You would have been better giving it to the poor or putting it in 

math and science and physics and chemistry and biology. 

So the President has got to come forward on this issue and work 

with Speaker Boehner and work with Mr. McConnell and Mr. Reid 

and the Speaker and former Speaker, have everyone come together 

in a bipartisan way to get these ideas out. And if we do that by 

the end of the year, then I think we can resolve a lot of the issues 

that have come up. 

And I have taken more time. I am just going to go to questions 

and go to Mr. Fattah since he did not have an opening statement. 

OPENING STATEMENT BY REPRESENTATIVE FATTAH

Mr. FATTAH. Thank you, Mr. Chairman. 

And let me say just so there is no confusion, my office, you know, 

because we have not been on the subcommittee as long as the 

Chairman has been and we are trying to learn about these various 

agencies, so we are asking agencies—and I am traveling. Like I 

was out in your district. I visited the Center for Missing and Exploited Children. I am trying to see and learn as much as I can 

about all of the agencies. 

So if my staff invited NOAA up to talk to me, it was not as if 

NOAA was seeking to somehow just come see me versus see you 

or whatever. That was a request made. You know, as we are making it, I met with any number of people who are affected by the 

bill only so that I can be as prepared as possible to work in a bipartisan way with the Chairman, because I am convinced that we can 

have a bipartisan bill. 

So I do not want the Secretary to bear the burden for the zealousness of my staff trying to make sure that I am adequately informed. And I do not believe that in any way that NOAA would be 

seeking to give—if they were going to provide one side information, 

you would want to provide it to the majority because in this House, 

the majority has its way and in the minority, we get to have our 

say. 

So I do not think that they would be—they would be ill advised 

if they just provide information to me. So I want to clarify the 

record in that respect. 

And this hearing, Mr. Secretary, has been moved from 2:00 to 

1:30 and I was off campus giving a speech and we had some security issues getting back on campus with some traffic. So I apologize 

for being a few minutes late. 

I know that the Ranking Member of the full committee is here, 

and I know my seniority, so I will be glad to yield to Ranking Member Dicks first and then we will go on from there. 

Mr. DICKS. Let me just say there has been a lot of discussion 

about this, and I appreciate the Chairman’s leadership on this 

issue over the years. And he has always been extremely fair. 

What we are worried about is the level of these cuts in NOAA 

and whether that will affect the weather service. 


emcdonald on DSK2BSOYB1PROD with HEARING
22 

NOAA FUNDING LEVELS

Mr. DICKS. Okay. Here are the numbers. The request in 2011 for 

operations, research, and facilities is $3.3 billion. H.R. 1 cuts it to 

$2.8 billion. 

Will that have a negative effect on the weather service and on 

our buoys and on our tsunami early warning system? I am told 

that would be a 28 percent cut. 

Secretary LOCKE. Well, Congressman Dicks, let me just say that 

if we are looking at, for instance, just the 2010 enacted budget and 

if you exclude all the extra spending that was associated with the 

census, first of all, let me just say that the 2012 President’s request 

for Commerce is roughly $822 million above the 2010 enacted 

budget of which the President has requested almost $687 million 

for JPSS, the satellite program, which only leaves about $135 million for all other programs and activities within the Department of 

Commerce. 

Now, if we then look at H.R. 1 and to the operations, research, 

facilities portion of NOAA’s budget, that is where the weather service and other programs, tsunami programs are located, H.R. 1 specifically reduces the level of funding for that segment of NOAA’s 

budget by 16 percent from the 2010 enacted level and—— 

Mr. DICKS. And that number is $450 million? 

Secretary LOCKE. I would have to get you the exact figure. 

Mr. DICKS. Yes. We do not have your—— 

Secretary LOCKE. I do not have that in front of me. But obviously 

we can always try to prioritize and we will try to be as efficient 

as possible. But you just cannot avoid the math, 16 percent cut, 

and that includes not just—I mean, if we were to keep all the tsunami programs intact, we would have to make those cuts elsewhere, whether it is in hurricane forecasting or ocean navigation 

for ships, et cetera, et cetera. 

And right now, and I do want to thank the Congress and the 

chairman’s leadership in the past in the aftermath of the tsunami 

that hit Indonesia. As I indicated, at that time, we only had six 

buoys in the Pacific and now we have some 39, thanks to the leadership of the chairman and other Members. 

[The information follows:] 

NOAA FUNDING LEVELS

NOAA Operations, Research, and Facilities account is set at $2.9B, $454.3M 

(14%) less than the FY 2010 Discretionary Appropriation of $3.3B. 

Mr. DICKS. Seven of those buoys—— 

Secretary LOCKE. But seven of those are down for maintenance. 

And under the Continuing Resolution, we do not know if there is 

funding or what the level of funding will be as others come on line 

for maintenance and will they also have to go down. What do we 

do about—you know, tsunami warnings involve satellites. It involves the research centers, the stations. It is not just the buoys 

that have to be maintained and the interpretation of the data. 

If we ensure that nothing surrounding tsunami warning systems 

is touched, then we are going to have to take the 16 percent savings or reduction in costs some place else, whether it be on the hurricane forecasting, and the list goes on and on. 


emcdonald on DSK2BSOYB1PROD with HEARING
23 

Just from a math level, there is no way that we can avoid compromising the programs that safeguard our country. We are going 

to have to make some very, very tough choices if that is the decision of the Congress. 

But the 16 percent cut off of current levels and right now we are 

not even issuing contracts for the maintenance or the upgrading of 

the buoys that are out of commission. 

Mr. DICKS. The other account here in NOAA is procurement, ac- quisition, and construction. And in 2010, that was $1.3 billion. The 

President’s request was $2.1 billion. And the H.R. 1 amount is $1.4 

billion. That does not sound as bad to me, though it is a cut from 

the fiscal year 2011 request of $728 million. 

So that is another very significant—and does that have any effect—procurement, acquisition, and construction—on the weather 

service or early warning systems? 

Secretary LOCKE. Well, in H.R. 1, there is a slight increase—— 

Mr. DICKS. Is that where the satellite is? 

Secretary LOCKE. That is where the Satellite Program resides. 

And because the 2011 budget has really not been enacted or the 

President’s 2011 budget has not been acted on, there was a substantial increase for the next phase of the satellites contained in 

the 2011 budget. 

So assuming that there is nothing in the 2011 budget for the satellites, then that cost is now pushed on to the 2012 budget which 

is why the President has asked for $687 million for the phase of 

the Satellite Program. But under H.R. 1, we are only basically given $95 million extra 

to accomplish that task unless we cut back everything else in the 

rest of the procurement, whether it is on ships and other capital 

projects within NOAA. 

The problem with not moving forward, and we are already behind schedule on the Satellite Program, and your committee and 

other committees of Congress have looked at that Satellite Program 

extensively, we have had to cut back the number of satellites. And 

even with that reduced number, the costs have grown. 

And that is why a whole bunch of blue ribbon commissions have 

called for the complete restructuring of what used to be called the 

NPOESS Program, now called the JPSS, in which the Defense Department is no longer in charge. It is now a collaboration between 

the Department of Commerce and NASA. 

But we are already behind schedule and there will be a gap between the existing satellites that provide that weather forecasting 

and when the JPSS satellites will come on board. And our accuracy 

of—— 

Mr. DICKS. And that weather forecasting is important to early 

detection, right? 

Secretary LOCKE. We are now able to provide forecasting as far 

out as seven days, whether it is for hurricanes, major snowstorms, 

and so forth, especially over Alaska and other parts of the East 

Coast. 

Once that gap occurs, for however long it takes until the satellites are in orbit, our ability to accurately predict with confidence 

weather patterns, whether hurricanes or major snowstorms, will be 

reduced down to three to five days. 


emcdonald on DSK2BSOYB1PROD with HEARING
24 

Mr. DICKS. Thank you, Mr. Chairman. 

Mr. FATTAH. Thank you, Mr. Chairman. 

Mr. WOLF. Thank you. 

GULF OIL SPILL

Mr. Bonner. 

Mr. BONNER. Mr. Secretary, I echo the comments made by Chairman Wolf and the ranking member and others that we are grateful 

for your service to our country and we are proud that the President 

has asked you to take on this important role as our next ambassador to China. We wish you good luck during the confirmation 

hearings. 

I get a little concerned as I was thinking about focusing on the 

oil spill because you mentioned it in your testimony, and I am 

going to come to that, but I must tell you as tragic as it is, and 

it is of epic proportions, the story line that is playing out in Japan 

and our collective hearts of the country and prayers are with the 

people there, the earthquake, the tsunami, the nuclear issues that 

they are dealing with. 

And, yet, it is very frustrating to hear that we either have to 

support satellites for tsunamis or satellites for hurricanes because 

some of us live along hurricane alley. 

It is hard to believe Chairman Wolf mentioned this. I mean, last 

month, the deficit was $223 billion. And it was not that many years 

ago when that would have been the deficit for the whole year. 

And while you said the budget is lean and we have made cuts 

to outdated programs, I do not know if that is a part of the testimony or if you could provide us some of the areas that you have 

chosen to cut that are outdated, secretary after secretary, administrator after administrator comes up to this committee and other 

committees talking about the cuts that they are prepared to make 

and, yet, they still add up to pennies on the dollar in terms of what 

we have. 

In many ways, it is appropriate that we are sending one of our 

best over to China because you are basically going not only to represent our country, you are also going to the banker for us to plead 

our case as 42 percent of the money that we are spending right 

comes from other—not all from China, but much of it from China. 

So we are facing serious challenges here as well. 

You know, you know this because you were governor and when 

you are governor, you represent the whole state. And I guess when 

you are the county administrator or whatever Mr. Dicks said your 

earlier positions were, your jurisdiction has increased and now you 

represent the whole country. We represent the country and, yet, 

we—because of the body that we serve in and, yet, the people in 

our respective districts send us here, give us the privilege of representing them. And I will tell you, you mentioned it in your testimony about the Deepwater Horizon, as a Nation, we have a propensity to move on to the next tragedy, the next disaster, the next 

hurricane or whatever it is. But our area, the Gulf Coast is still 

struggling. 

And I hope that if you can speak for the Administration or, if 

not, you can carry this message or this request back to the Administration, I think all of us along the Gulf Coast will admit that LouVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00024 Fmt 6633 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
25 

isiana bore the largest environmental impact from the oil spill, but 

the economic impact, which the Commerce Department has been 

very focused on. 

My congressional district was Ground Zero. And I hope that as 

the different agencies and departments, the Homeland Security 

and Justice Department, all your colleagues around the cabinet 

table, I hope they understand that as we are looking at long-term 

recovery for an area, this is not parochial just to south Alabama. 

You know, a couple years ago, we were all wringing our hands 

about what might happen if Greece fails. And Greece is about a 

$356 billion GDP a year. 

But if you go from the Keys in Florida all the way to the tip of Texas, the five Gulf Coast states, it is $2.8 trillion impact one year 

GDP. So it is a big part of the national economy. 

And I just hope that you can convey the best—I hope it is something you believe as well, that as you are looking to make the area 

whole on the environmental loss, that we do not forget the economic loss because it has been substantial, especially in tourismdependent economies like mine and Congressman Miller’s from 

Pensacola, Florida, and others. 

So that is really not as much of a question as a request. Please, 

whatever you can do in your remaining days and weeks as secretary of Commerce, remind others in the Administration that the 

economic loss is critically important to address as well as the environmental loss. 

And the question part of this would be can you give us from your 

perspective what has been one of the lessons learned? 

I mean, not only are we watching the tragedy play out in Japan, 

but with what is going on in Egypt and Libya and the price of gas 

shooting through the roof, I know you are not the secretary of Energy, but we are all concerned about the fragility of this economy, 

of this recovery. And here we are. We have got moratoriums on 

deep water drilling. Nuclear policy may be up in question now. 

What would you say from your seat as a key member of the 

President’s cabinet would be a lesson learned from the federal response to the worst environmental oil spill in the history of the 

world last year? 

Secretary LOCKE. Well, thank you very much, Congressman Bonner, for that. 

And let me just say that having been a governor, having presided 

over the dot com bust as well as the huge recession that struck the 

entire country and the aftermath of September 11th and having 

been a budget chairman writing budgets for the State of Washington, we have had to make tough choices. And it is a matter of 

setting priorities. 

And I very much agree with Chairman Wolf and the other Members of the committee that we have to make these tough choices. 

There is not enough money. There will never be enough money to 

satisfy everyone’s wish list. 

And let me just say that the President is very committed to trying to reduce our deficits. You know, he did create those fiscal commissions. And I have heard him speak with Members of Congress 

and the governors saying that he is very serious about trying to 

tackle the issue of the entitlements. 


emcdonald on DSK2BSOYB1PROD with HEARING
26 

Then when we talk about the current debates over the budget, 

it represents really a very small fraction of the entire federal 

spending and that to really get to the deficits and to get our country on a path of long-term prosperity, we have to look at those 

other issues including Medicare, Medicaid, and Social Security. 

And he is very eager to do that in a bipartisan fashion working 

with the Members of the Congress. That is why his budget proposal 

for 2012 does call for a freeze on discretionary domestic spending 

and actually reduces spending by some $400 billion and as a percentage of GDP would be the smallest in terms of discretionary domestic spending since President Eisenhower was in office. 

Nonetheless if we are to really focus on making sure that American companies and the American economy can withstand some of 

these challenges from external forces, whether it is environmental 

disasters or other economies, we have got to make sure that our 

economy is strong and robust. 

And that means focusing on innovation, research, and development. That means, as the President says, we need to out-educate, 

we need to out-innovate, we need to out-build the rest of the world. 

And that, of course, in this tough fiscal climate requires some hard 

choices. 

That is why the President has really focused on enhancements. 

For instance, keeping the budget flat, making deep cuts in other 

portions of the programs, of the budget, the Federal Government, 

while having enhancements in other areas, or whether it is in education, expanded R&D, and making the R&D tax credit permanent, 

whether it is in collaborations with the private sector, to really 

spur some of the innovations that will create new jobs and new 

technologies that will help us. This includes regulatory reform, to 

try to simplify and redo some of the regulations that we have to 

make sure that they are not a burden on job creation. 

And I think what you see in the President’s 2012 budget request 

is that balance, holding domestic discretionary spending flat, not 

calling for pay raises for federal employees, making deep cuts in a 

whole host of different programs while putting investments in 

those areas that will actually create jobs down the road. 

And, you know, you talk about the Gulf states. We have had to 

put additional funds in there to try to stimulate the economy and 

to help the economies adjust to the Deepwater Horizon disaster. 

That may not have immediate payoff right away, but it is laying 

the foundation for job growth and economic diversification in the 

out-years, the same way with some of the programs in the Recovery Act. 

There were some projects that were immediate job creators and 

others were laying the foundation for job creation and competitiveness for American companies two or three years down the road to 

make sure that we are turning our economy around so that as we 

begin to recover, we are not focused on the same old industries or 

the same economic recovery as past recessions which turned out 

not to be very smart, focusing on debt and consumption and focusing on real estate speculation. 

And so now we are looking at the better industries of the future, 

like broadband, 120,000 miles of laying fiber optic cable so that 

people in the rural parts of America can sell their products and 


emcdonald on DSK2BSOYB1PROD with HEARING
27 

services and market their bed and breakfasts and their products all 

around the world and sell to the world instead of waiting for customers to come to them. 

Mr. BONNER. I hope we can count on you to deliver the message 

to the President. You know, he is the one who made a commitment 

to the Nation that they were going to stand by the people in Gulf 

Coast. And we are going to hold him to that commitment. And it 

includes economic loss as well as environmental loss. 

And I hope that we can also count—I mean, it is great to say we 

are concerned about the deficit and we are going to work with this 

there. It is good to have you reiterate those words, but I think 

Chairman Wolf, I think Mr. Dicks and others have said we really 

are going to need the President to step in that ring with us. It is 

going to require strong leadership from the White House as well as 

from Congress. 

Thank you very much. 

Secretary LOCKE. Thank you. 

Mr. WOLF. Before I go to Mr. Fattah—do you want me to go to 

you, Mr. Fattah? No. I am going to go to you. 

When are you leaving? When do you expect to be going to China? 

When are you stepping down? 

Secretary LOCKE. That is up to the Senate. 

Mr. WOLF. Oh. But, I mean, as soon as they confirm you, are you 

off and then—— 

Secretary LOCKE. Well, we are trying to work that out. 

Mr. DICKS. You cannot hold two jobs at once. 

Mr. WOLF. What is your expectation? 

Secretary LOCKE. We really do not have a date yet. The paperwork has not been filed, has not been completed. Plus I may be 

going to China before the rest of the family. The kids are in school 

in the Montgomery County school system until the third week of 

June. 

Mr. WOLF. Okay. But, I mean, you will be, as soon as you are 

confirmed to be ambassador to China, you will be gone and I think 

that will be controversial. So it would be within the next month or 

two do you think? 

Secretary LOCKE. I cannot give you a time frame, Congressman. 

I really do not know what their schedule is and how soon their 

processes will take. 

Mr. WOLF. Okay. Mr. Fattah. 

U.S. MANUFACTURING

Mr. FATTAH. Thank you, Mr. Chairman. 

Mr. Secretary, I wish you well in whatever position you are in 

and going to. And I know you will represent our country well. 

Let me start here on manufacturing. What is the leading manufacturing country in the world? 

Secretary LOCKE. The United States is. 

Mr. FATTAH. There is a belief that somehow we are not, that 

there are Members of Congress, there are people who write editorials who believe we do not make anything in this country. Now, 

I have over 5,000 manufacturers in the Philadelphia area alone. 

We were able and honored to have you visit one of our companies, 

Penn Reels. They make world-class fishing reels and have no comVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00027 Fmt 6633 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
28 

petitors anywhere in the world that can compete with them. It is 

in my district. But we also have—I mean, we have great manufacturers, but all over the country. 

And now the Department has a program called the Manufacturing Extension Partnership Program working with manufacturers in states like Michigan; I have heard from and all over the 

country. 

And I know that the President’s budget in fiscal year 2012 makes 

a request of, is it $140 million? And if you could just talk a little 

bit about the work of the Department to assist American manufacturers continue to lead the world in making products, that would 

be my first question. 

Secretary LOCKE. Well, first of all, we are very, very proud of the 

MEP Program, the Hollings Manufacturing Extension Partnership. 

And it has been shown that for every dollar of federal investment, we actually help generate some $32.00 in new sales growth. 

We actually helped some 34,000 manufacturers last year and more 

than 17,000 jobs were created. 

What we do is go in and partner with the states and look at the 

processes of manufacturing facilities to help them reduce their 

costs, to be more efficient, to be using less inputs, whether it is 

electricity or chemicals so that they are more lean and mean and, 

therefore, more viable and competitive. And then we also help them 

sell their products around the world. So the President has asked 

for a 12 percent increase in that particular budget. 

But the other things that we are doing to help American companies is, for instance, the Patent and Trademark Office. We are on 

a mission to get the—now it takes almost three years to get a patent. I mean, if you are a really small inventor, that is unacceptable. 

You cannot raise capital. You cannot get people to invest in your 

new idea, your invention. It could be a life saver. 

If you cannot prove to them and show them that you have a patent, it is like going to the bank and saying give me a loan to remodel the house, but I cannot prove to you that I have title to the 

property and you are going to have to wait three years. You are 

just not going to get that financing. 

So starting next month, we are starting a program in which we 

will virtually guarantee that for a small extra fee that we will issue 

a patent or make that patent determination within one year and 

that—— 

U.S. MANUFACTURING—EXPORTS

Mr. FATTAH. Mr. Secretary, I am sorry. Is it true that only one 

percent of American companies export? 

Secretary LOCKE. That is true. Only one percent of U.S. companies export and exports make up only about 12 or 13 percent of our 

GDP. It is significantly much lower than, for instance, countries 

like Germany which have high wages and strong unions and, yet, 

they export a lot more. 

One percent of U.S. companies export. And of that one percent, 

58 percent export to only one country, typically Mexico or Canada. 

So 58 percent of all U.S. companies that export export to only one 

country. 


emcdonald on DSK2BSOYB1PROD with HEARING
29 

And through our efforts of the International Trade Administration and working with the Export-Import Bank, Small Business 

Administration, Department of Agriculture, and other federal agencies, we are on a mission to especially help small- and medium-size 

companies export to two or three extra countries. 

Mr. FATTAH. Well, in my early life in the Congress a few years 

ago, we had all of these entities come together in Philadelphia to 

meet with some of our manufacturers. Peanut Chews are made in 

Philadelphia. They are the best candy in the world. And now they 

are sold in 45 different countries because of the work of some of 

these agencies. 

So it is something that all of our manufacturers need to learn 

about, these services that are provided. You know, we have the 

Overseas Private Investment Corporation. Export-Import Bank, I 

met with a manufacturer this morning from my district whose company was involved in providing the drill that got the Chilean miners out, but needed a loan guarantee to do some work in Iraq and 

got it done, got the insurance and the bonding through the ExportImport Bank. 

So these are entities that are available and we need to make 

sure that they have the kind of support that they need. 

NATIONAL DEBT

Let me move on. I do want to make some comments about this 

debt. Because I have been here for a minute. I was here when we 

voted to balance the budget under the Clinton administration. I 

voted to balance the budget then. We raised some taxes. We cut 

some programs. It was a bipartisan vote of Democrats and Republicans and Republicans were in the majority. And in the waning 

days of that administration, we were very proud of the fact that we 

were paying off the national debt. We had Alan Greenspan testify 

at the beginning of the Bush administration that at the end of that 

eight years we could pay off our entire national debt, and what 

that would mean for our economy. 

But the Bush administration took a projection of a $3 trillion 

surplus, it is like a weather forecast, and they decided they wanted 

to do a tax cut and gave away $1.5 trillion. And then we went to 

war. Two wars we have been in for a decade. And unlike any other 

time in our country’s history we did not pay for it. We did not have 

a war bond, or a war tax. We just added that to the debt. And then 

we increased domestic spending. 

So when President Obama was sworn into office the national 

debt was over $10 trillion. We were losing 800,000 jobs a month. 

So this is not a partisan, there is no partisan ownership of the 

debt. This is the United States of America’s debt. We should pay 

it off. We should not leave it for our children. We, and it is not just 

entitlements. We should reign in entitlements, but that is really 

about future obligations. That is not about the debt. The debt is already here and now. And we have the lowest tax rates, the lowest 

since 1950 because we have a generation of adults who decided 

that we want to have all of this and we do not want to pay for it. 

And that is why we are in debt. 

So even when we reign in entitlements, and I am for doing whatever we have to do, I can support the President’s Commission, I 


emcdonald on DSK2BSOYB1PROD with HEARING
30 

can support the Chairman’s Commission, it is not going to do anything about the debt. The national debt, this mortgage on our country that is, when Bush came into office it was $5 trillion. When he 

left, when the new President was sworn in, the one that they want 

to heap this blame on, it was $10 trillion. All right? And now we 

have to address it. That is our job. And as a Congress I have never 

heard this fidelity to a President’s budget. It has always been 

known to me that the President proposes a budget and we dispose 

of a budget. That is what we do. That is our committee. We decide 

what we are going to spend money on. 

And so I just want to, I want to thank you for your leadership. 

We have had twelve months of net increases in jobs. We need to 

get out of the partisan foolishness and focus on our responsibilities. 

One is to pay our bills rather than when you go over to China. I 

do not want you visiting our bankers, all right? Because we need 

to have a much stronger discussion with them. When I talk to 

manufacturers in my district they say that every time they get a 

product into the Chinese market they reverse manufacture it and 

before you know it they, because there does not seem to be a lot 

of adherence to this intellectual property notion, right? 

So we have to think about what we are doing as a country. I 

agree with the chairman on this, that whatever we have to do on 

NOAA we should do, and to make sure that we can deal with 

warnings. But we do not have to wait for a buoy out there to tell 

us about the debt. We do not have to wait for any NOAA satellite 

to tell us. We know what the debt is. We know how we got it. And 

we know that at the end of the day we have to pay the bill for it 

or our children and our grandchildren have to pay the bill. Thank 

you. 

Mr. WOLF. Thank you, Mr. Fattah. Mr. Graves? Mr. Yoder. 

DEPARTMENT OF COMMERCE FUNDING LEVELS

Mr. YODER. Thank you, Mr. Chairman. Mr. Secretary, thank you 

for being here today. I appreciate the opportunity to ask you a few 

questions. I was listening to your testimony at the beginning and 

was trying to understand your request for your 2012 budget submission through the President’s 2012 request. You say that was 

$822 million greater than your 2010 expenditures? 

Secretary LOCKE. That is correct. 

Mr. YODER. Okay. And—— 

Secretary LOCKE. That is if you take out the unusual spending 

for the Census that was part of that 2010 budget. So, I mean obviously, the 2010 Census is over and we are not going to be continuing that to the same degree that we had. So if we back out a 

lot of those extraordinary one-time costs so that we are not really 

comparing apples and oranges the President’s budget request for 

2012 is roughly $822 million above the 2010 enacted budget. 

Mr. YODER. And how much is the 2010 enacted budget? 

Secretary LOCKE. The 2010 enacted budget, if you take out the 

2010 Census, was $7.9 billion. 

Mr. YODER. Okay. So you are asking for, what is that? What percentage increase are you asking off of your current expenditures? 

Secretary LOCKE. I would have to do the math on that. I am 

sorry. 


emcdonald on DSK2BSOYB1PROD with HEARING
31 

Mr. YODER. But $822 million off of roughly $8 billion? 

Secretary LOCKE. Correct. 

[The information follows:] 

DEPARTMENT OF COMMERCE FUNDING LEVELS

The proposed FY 2012 Budget request of $8,761 million is $822 million more than 

the 2010 enacted budget level ($7,939 million) when the $6 billion is excluded for 

the Decennial Census. To clarify, the percentage increase is roughly 10.4% over 

2010 levels. 

Mr. YODER. So about a 10 percent increase, just—— 

Secretary LOCKE. Yes. 

Mr. YODER [continuing]. Roughing it here? And I, in entering 

into this conversation we have had—— 

Secretary LOCKE. Of which the vast majority is for the JPSS Sat- ellite System. $687 million, almost $700 million of that $822 million is for the satellite work. 

DEPARTMENTAL EFFICIENCY

Mr. YODER. Okay. Well in light of particularly some of my colleagues comments prior to my questions in relation to this horrible 

debt burden that we have, and many of the speakers have already 

laid this out, and I know you understand it and I know you are 

concerned about it as well as every American is, I am troubled by 

departments and agencies that come forward in light of these conversations asking for additional spending. And so I am wondering, 

instead of asking the Congress to borrow another $822 million from 

the next generation, have you done as a Secretary, or have you had 

your heads of departments, look for efficiencies? We all know businesses and families across this country have cut spending. They 

have had to do more with less. Most of our constituents are getting 

by with less money. And many of them would love a 10 percent increase, even if it was for a major project, a satellite project. Or in 

their regards, you know, some home improvement project. They 

would love to be able to increase their discretionary spending in 

that regard. 

So I guess my question is, what is the, what work have you done 

to try to find that $822 million internally? And do you feel that 

there is waste and inefficiency in the Department of Commerce? 

Secretary LOCKE. Well first of all let me just say that we are very 

proud of our emphasis on efficiency and trying to save money. As 

I indicated in the very beginning, we returned or saved the American taxpayers almost $1.9 billion on the 2010 Census. Some of 

that, of course, was because of reserves that we did not have to tap 

into. We did not have hurricanes or major natural disasters that 

impacted the Census. That was money that had been set aside in 

case of those catastrophes that did not have to be used. 

Also the 2010 Census was written up by the GAO and the Inspector General as perhaps the project most likely to fail in the federal government. It indicated that we had to set aside reserves to 

really look at things like the computer systems that were cobbled 

together because the previous administration had let out a contract 

for hand held computers. We paid out virtually all the money and 

got absolutely nothing in return. Absolutely useless for following up 

with households that did not mail back the Census form. And so 


emcdonald on DSK2BSOYB1PROD with HEARING
32 

we had to scramble and go back to a paper and pencil system and 

cobble together a new computer system. It had never been completely tested so there was a great fear that it would not work. And 

thanks to the incredible management of the folks at the Census 

Bureau, the system held together. We had to make a lot of adjustments in how we use the computer system but it held together and 

it worked. 

Then we embarked on an emphasis on management, and emphasized to the American public with advertising campaigns the need 

to send back the questionnaire. Virtually half the savings was from 

that, having a very successful effort of the American people to return the questionnaire so that we did not have to hire people to 

go door to door. And that is how we were able to achieve the $1.9 

billion savings, or returning it to the taxpayers. 

In the Economic Development Administration we have cut the 

time it takes to process an Economic Development Grant, whether 

for a scientific park, an industrial park, or wastewater treatment 

facility, or even a port project, from six months to one month without spending extra money. 

Our Patent and Trademark Office, has been able to reduce the 

backlog by 10 percent even though patent applications have gone 

up. 

And on program after program we are achieving savings. We are 

embarked on a major acquisition reform that we believe will save 

some $50 million in the next budget cycle. We have made savings 

of some, $255 million. Which includes, for instance, IT eliminating 

programs that we do not think really work. And for instance, on 

international trade we can help American companies grow, sell 

more of their products around the world, by focusing on international trade and export promotion. But the President has also 

asked for an enhancement so that we can staff some of these offices, foreign offices, where the people’s sole job is to find buyers 

and customers for U.S. companies. We are also proposing to close 

down and pare down some of the staff in those areas that are not 

areas that would see great growth or have great potential for exports. 

So we are trying to prioritize. We are really trying to go to our 

strengths and cutting back on those things that are not as productive. 

FREE TRADE AGREEMENTS

Mr. YODER. Mr. Secretary, I appreciate that answer and appreciate your thorough response and the work that you have been 

doing to try to find reductions. I just think it would be difficult to 

go home to constituents and tell them I know you having to cut 

back, and you have lost your job, but we have got to continue to 

increase spending. And so while it sounds like you have done a 

number of things in the right direction, my encouragement would 

be to continue to try to find that $822 million from additional savings. It sounds like you are heading down the right track. It just 

appears we need to go further. And I would find it difficult to support additional spending given the state of the debt and the state 

of many of our constituents who are some of them struggling to 

survive. So I appreciate that. 


emcdonald on DSK2BSOYB1PROD with HEARING
33 

My next question relates to trade and I noted in your testimony 

that you have expanded the amount of goods and services that 

have been exported, and you have taken some good credit for some 

things that you are doing in that regard. I guess my question 

would be, how much of the expansion in exports is related to our 

currency, the dollar value in the global marketplace, and in terms 

of when we are trading with other partners how much of that export is related to undervalued currency, such as in China? And how 

much is related to programs that we are doing as a Department 

of Commerce? And then with that as a follow up, where are we on 

the free trade agreements and why are those taking so long? A lot 

of folks ask me at home why those thing continue to lag within the 

administration. 

Secretary LOCKE. Well I cannot give you, I do not think any economist could actually attribute the growth in exports to the movement of the currency, the Chinese currency, to the various programs, or to just changing world conditions. I can tell you that, for 

instance, when the President was in India he was able to help land 

over $11 billion worth of trade deals and sales resulting in supporting some 50,000 American jobs. We have led a record number 

of trade missions bringing hundreds of companies with us and immediately they were able to report $1 billion of increased sales. 

But the federal agency and all the federal government’s, or all 

the agencies within the federal government are working at a very 

intensive and collaborative fashion to really help promote exports, 

helping especially small- and medium-sized companies. And we are 

not trying to do it using just federal dollars. We are actually 

partnering, for instance, with the National Association of Manufacturers, letting them identify their top companies that they think 

would benefit from assistance from the Department of Commerce 

finding buyers and customers for them. We were actually working 

with UPS and FedEx, where they are identifying their customers 

that they feel are most likely to take advantage and benefit from 

our programs to sell to more countries. It is in their economic selfinterest because the more their customers are shipping, the more 

revenues for those private sector companies. This enables us to 

meet our goal of helping double exports without having to use 

scarce federal dollars. 

These are all part of a collaborative effort. But we can tell you 

that we are on track to meet the President’s goal of doubling U.S. 

exports over the next five years. When the President first announced that there were many who were skeptical that it could be 

done. All it takes is a 14 percent increase in exports every year, 

and when you compound that, add that on top of the previous year, 

over five years you will be able to achieve that goal. Last year we 

were up 17 percent. Exports to China were up 32 to 34 percent. Agricultural exports are the second highest in U.S. history and we 

have a trade surplus there. Tourism, foreign tourists coming into 

the United States is considered an export. It is foreign money buying American products and services. Instead of occurring let us say 

in Germany it actually occurs on American soil when those German 

visitors come to America. Those were up 11 percent last year over 

2009 and expected to grow an additional 7 or 8 percent this coming 

year. So all of these things are having an impact. 


emcdonald on DSK2BSOYB1PROD with HEARING
34 

That is why the trade agreements are important and that is why 

we are very pleased that we were able to reach an agreement with 

Korea. You know, the President did set an initial timeframe, a 

deadline, a goal of concluding the Korea Free Trade Agreement in 

November in time for the G–20 meeting that was being held in 

Korea. But he walked away from that deal because he did not feel 

it was good enough. And thankfully he turned down what was then 

on the table because it enabled him to go back in a stronger position and get a deal that both the auto workers and the auto dealers 

support. And so it was a much better deal. And it shows that if we 

are not bound by an arbitrary deadline, or a linkage with other 

trade deals, that we are able to negotiate from a position of 

strength. And that is why the President wants to conclude an 

agreement with Panama and Colombia but does not feel that we 

should be tied to a particular deadline because that just gives those 

on the other side of the negotiating table greater strength. If they 

know that we have to reach a deal by a certain time frame then 

they will hold out and we will not get the best that we can get. 

TELECOM SPECTRUM

Mr. YODER. Well I appreciate that very thorough answer as well, 

and many have made the deadline argument as well in the issue 

over the Middle East and our military efforts there. And so it is 

interesting in some regards deadlines are useful and in other cases 

they are not. And so the next question I have I guess relates, and 

one more, Mr. Chairman, and then I will yield back, relates to just 

an issue with GPS. 

Recently the FCC allowed a waiver for a company to repurpose 

satellite spectrum immediately neighboring that of GPS for use in 

extremely high powered ground based transmissions. And I just 

want to, I know you have, I think it is the NTIA that manages the 

telecom spectrum, I want to sort of put this in your radar so to 

speak and see if you could help us with this. Because there are 

some companies that produce GPS products in the GPS industry 

that have serious concerns that this planned use is incompatible 

with existing GPS use. And I want to know if you are familiar with 

that, and if you have any comment? Or maybe you could get some 

information back to us? 

Secretary LOCKE. As I understand it, Congressman, that relates 

to a specific company. 

Mr. YODER. Yes. 

Secretary LOCKE. And I understand that the FCC did grant a 

provisional authorization in the issue at hand, provided that some 

of those technical issues could be worked out. And I do know that 

our folks at NTIA are working with that particular company to address that issue so that that provisional authorization can move 

forward. 

Mr. YODER. Thank you, Mr. Chairman. I yield back. 

WORLD MANUFACTURING LEADER

Mr. WOLF. Thank you. Before I go to Mr. Serrano? Mr. Serrano 

is not there? Okay, I think he came in, am I wrong? Or who should 

I go to? Okay. I was right? All right, I just wanted to, I have a comment here, on the manufacturing. Earlier this week the Financial 


emcdonald on DSK2BSOYB1PROD with HEARING
35 

Times reported that China officially has displaced the U.S. as the 

world’s leading manufacturer, the first time a country has topped 

America in 110 years. So you might want to take a look at that Financial Times report. And what we will do is get a copy of that and 

put it in the record at this point. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
36 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 64 here 67061A.013
37 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 65 here 67061A.014
38 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 66 here 67061A.015
39 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 67 here 67061A.016
40 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 68 here 67061A.017
41 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 69 here 67061A.018
42 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 70 here 67061A.019
43 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 71 here 67061A.020
44 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 72 here 67061A.021
45 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 73 here 67061A.022
46 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 74 here 67061A.023
47 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 75 here 67061A.024
48 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 76 here 67061A.025
49 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 77 here 67061A.026
50 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 78 here 67061A.027
51 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 79 here 67061A.028
52 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 80 here 67061A.029
53 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 81 here 67061A.030
54 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 82 here 67061A.031
55 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 83 here 67061A.032
56 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 84 here 67061A.033
57 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 85 here 67061A.034
58 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 86 here 67061A.035
59 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 87 here 67061A.036
60 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 88 here 67061A.037
61 

TSUNAMI WARNING NETWORK

Mr. WOLF. Mr. Serrano. 

Mr. SERRANO. Thank you, Mr. Chairman. I want to bring you 

back for a second. Let me join my colleagues in wishing you well. 

I know it is a great honor when any President calls on you to represent our country. And certainly for China that is a, it is not just 

any appointment. And it is a very important appointment to us at 

this time in our history and in their history. And so I congratulate 

you for your past service and what I know will be excellent future 

service. 

Let me take you to the Caribbean for a second. You know, for 

years I have been talking to folks about the possibility of creating 

a tsunami warning center in the Caribbean, specifically in Puerto 

Rico. And as recent as yesterday a 5.4 earthquake hit the northern 

part of the Caribbean creating tremors in the Virgin Islands, Dominican Republic and Puerto Rico. Also a center of that nature 

would serve not only to deal with the issue of the Caribbean but 

certainly in our coastal areas of the fifty states, the southern part, 

and the Gulf Coast. 

So to be very brief, the state government, the local government 

of Puerto Rico, has already allocated half of the dollars it would 

take to build the center. And yesterday Resident Commissioner Mr. 

Pierluisi, along with myself and Dr. Christensen from the Virgin 

Islands, put in legislation to try to accomplish this. So my question 

to you is, what are the chances that—on one hand we have been 

talking about cuts, cuts, and cuts, and I understand that—but I am 

asking you to spend a little money. What are the chances that 

within the existing budget we could find the dollars to pay for the 

second part that the state government has already allocated to create the tsunami warning center in the Caribbean and Puerto Rico? 

Secretary LOCKE. Congressman, I have to tell you that I am not 

familiar with that request or a proposal by that local entity to contribute half the cost of an additional tsunami warning center. I 

would be happy to look into it. 

[The information follows:] 

TSUNAMI WARNING NETWORK

NOAA currently manages a Caribbean Tsunami Program. The overall improvement strategy to enhance local response to local events is the following: 

• Accelerating the TsunamiReady Program for Puerto Rico (PR) & the U.S. 

Virgin Islands (USVI) by hiring an outreach manager for the Caribbean (accomplished in FY10); 

• Achieving TsunamiReady status for 46 communities in PR and USVI by 

FY14; improving Tsunami Detection and Forecasting by upgrading seismic networks, sea-level stations and communications by FY13, and accelerating Tsunami Inundation Mapping/Modeling for PR/USVI—to be completed by FY13; 

and 

• Working to improve forecasts and warning products, which are issued in 

three and half minutes (avg.) from seismic events for Puerto Rico and Virgin 

Islands, and eleven minutes (avg.) from seismic events for the Greater Caribbean. 

NOAA will further improve the Caribbean Tsunami Warning System based on 

recommendations cited in: 1P.L. 109–479 (Tsunami Warning and Education Act of 

2007); and the National Academies of Science (NAS) and NOAA Tsunami Program 

Assessment Reports. 

• Improve tsunami detection, forecasting, warnings, notification, outreach, 

and mitigation to protect life and property in the United States; and to enhance 


emcdonald on DSK2BSOYB1PROD with HEARING
62 

and modernize the existing Pacific Tsunami Warning System to increase coverage, reduce false alarms, and increase the accuracy of forecasts and warnings, 

and to expand detection and warning systems to include other vulnerable States 

and United States territories, including the Atlantic Ocean, Caribbean Sea, and 

Gulf of Mexico areas. 

• From NAS Report: NOAA should explore further the operational integration of GPS data into Tsunami Warning Center TWC operations from existing 

and planned GPS geodetic stations along portions of the coast of the U.S. potentially susceptible to near-field tsunami generation including Alaska, Pacific 

Northwest, Caribbean and Hawaii. 

Mr. SERRANO. Okay. Are you at least familiar with past requests 

to look at that area as a possible tsunami warning center? 

Secretary LOCKE. Yes. I am familiar with a request for additional 

tsunami warning centers throughout many parts of the country 

and parts of the region. 

Mr. SERRANO. Well after praising you so much I cannot take that 

back and I will not. So let me just say that I would love, before 

you leave, to put things in motion just to at least to have the discussion with the Commonwealth of Puerto Rico, with members of 

Congress, with this committee, as to the possibility of having this 

warning center. Because what we have seen in Japan and what we 

have seen in other parts of the world it is no longer a luxury. And 

as our chairman said, it is a necessity everywhere we can set on 

up. And that part of the world is really not taken care of, that part 

of the country. So could we at least set in motion some conversations? 

Secretary LOCKE. I am more than happy to have those conversations. But again, it all depends on the level of funding for the budget. Because if we enhance, you know, if the funding is under H.R. 

1 then it is very difficult to make enhancements in certain parts 

without making deeper parts in another part. Even protecting one 

area of the operations research facilities budget portion of NOAA 

which is where the tsunami and weather forecasting and National 

Weather Service all reside. Under H.R. 1 it is a 16 percent reduction from the 2010 enacted level. So if we keep one part completely 

whole it means deeper cuts in other aspects of our weather and operations programs. 

Mr. SERRANO. Thank you on that. Mr. Chairman, I see your hand 

on the—— 

Mr. WOLF. I was going to say, yes, that is an area. And when 

we did the letters, too, we checked in the East Coast. And it is a 

problem down in the Caribbean, and particularly because the 

beaches are flat, they are not up on bluffs. And so there is a problem there. And I was going to, but I am going to save it for some 

other time, to kind of comment a little bit more on that. But I 

would second what the gentleman says of having you take a look 

at that. 

POVERTY MEASUREMENT

Mr. SERRANO. Thank you, Mr. Chairman. Rather than read my 

statement here to the question, let me just ask you to comment on 

the new poverty measure that has been discussed at the Commerce 

Department. That is a continuing issue in this country. We find everyday that in the greatest economy in the world we still have 

areas of folks with issues of food availability and poverty in genVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00062 Fmt 6633 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
63 

eral. What can you tell us about this new way to measure, if you 

will? 

Secretary LOCKE. Well that is something that is under discussion 

and just trying to inform the American policy makers, whether it 

is state, local, federal level, to even nonprofit organizations, just 

trying to understand and look at different ways in which we understand the impact of poverty and what it means and how to measure that. I think it simply gives policy makers more ammunition 

in making very tough decisions. We are looking at defining what 

is considered poor in America, and revising a one-size-fits-all formula that was actually developed in the 1960s. It could change the 

estimates, actually lowering the estimates or even raising the estimates. So it is not with any prejudged determination or particular 

outcome, but just really having a more accurate way in which we 

understand what poverty constitutes. 

2010 DECENNIAL CENSUS

Mr. SERRANO. Right. Mr. Chairman, I know we are on close to 

some votes and I want my colleagues to ask some questions. Can 

I just ask you a quick question, Mr. Secretary? H.R. 1 and the cuts 

that are included in H.R. 1, could that in any way impact on the 

rest of the Census information coming out? I know that is already 

underway, or was that included in past dollars that we allocated? 

Secretary LOCKE. Well no, work is already underway for the 2020 

Census. Our goal is to make sure that the cost of administering the 

2020 Census per household is lower than it was for the 2010 Census. So that really means that we have got to look at the greater 

use of technology, and we need to start some of that planning. We 

need to start with the private sector on the viability of these technologies. We cannot get into the position like we were for the 2010 

Census when we contracted for handheld computers, and they did 

not work, and then we had to scramble to really make up for it. 

And that actually added to the cost. 

We also need to look at other ways of trying to get reliable information. And we also need to test some of these theories. And on 

the American Community Survey, that is something that the business community relies on heavily. And we want to be able to use 

some of the theories and methodologies and almost test them during the annual American Community Survey in preparation for the 

2020 Census. 

Mr. SERRANO. Right but I was, very briefly, I was referring specifically to the fact that you probably have the rest of the year to 

give out information on the 2010 Census. If H.R. 1 becomes law, 

heaven forbid, sometime soon, does that affect that? Or was that 

information included in dollars that have been allocated before? In 

other words, can you finish the work of the 2010 Census or will 

H.R. 1 impact that? 

Secretary LOCKE. Well actually what would be of greater impact 

would be if a continuing resolution were not passed. As long as we 

are continued at the existing levels then we quite frankly should 

be able to disseminate the information from the 2010 Census to the 

states for the redistricting purposes and for the reapportionment 

purposes. 

Mr. SERRANO. Thank you. Thank you, sir. 


emcdonald on DSK2BSOYB1PROD with HEARING
64 

Mr. WOLF. Mr. Honda. 

Mr. HONDA. Thank you—— 

Mr. WOLF. There is a vote. It just began. Mr. Honda. 

TSUNAMI WARNING NETWORK

Mr. HONDA. Thank you. Let me also add my congratulations to 

you, Secretary Locke. I am sure that, the community is very, the 

Asian American community is very proud of you. I am sure your 

family is too, and I acknowledge that your dad, he is watching and 

he is probably feeling real proud about you, too. So I just want to 

add that. 

And you have done a great job. You are going to do a great job 

as Ambassador, not because I am saying so, but because in Silicon 

Valley there was quite a few articles after the summit that had indicated that finally, they said, that we have a Secretary of Commerce that gets it. Meaning that the Secretary of Commerce gets 

what is going on in technology, and the businesses, and specifically 

in Silicon Valley. But I think in general across this country. And 

I think Congressman Wolf’s district is also a very similar district 

as mine in terms of technology. 

The question I had, Mr. Secretary, was around Census and I 

guess I just want some sort of a quick answer on to be able to be 

prepared for 2020 will there be a chart that is going to be used as 

a benchmark where we can pace ourselves and look at all the 

points that we need to hit before 2020? Having gone through the 

2010 the Administrator had to bear the brunt of the criticism on 

things that had not occurred prior to him being appointed. So I 

want to avoid that, and be assured that someone in the Department will lay out a, something like a PERT chart, program evaluation review chart. That is one question. 

The other one is about the tsunami detection. I appreciate Chairman Wolf’s letter that responded to the Indian Ocean tsunami, but 

also anticipated the future. And I think that that is a good thing 

to do. And I understand that there are thirty-nine buoys out there 

now? 

Secretary LOCKE. About thirty-nine, yes. 

Mr. HONDA. Yes. Seven down to be—— 

Secretary LOCKE. Seven or nine that are down for maintenance. 

2020 DECENNIAL CENSUS

Mr. HONDA. The question I would have is in order for us to provide the additional coverage globally and provide that early detection, do you have any numbers that would reflect the costs of doing 

that in order for us to be able to anticipate and avoid great costs 

to other countries and ourselves? And that in my mind is not cutting for savings, but it would be investing for future cost avoidance. 

I was wondering whether you had any sense about that? 

Secretary LOCKE. Well let me just first answer the question with 

respect to the planning for the 2020 Census. Planning is already 

underway and we are already trying to stand up advisory committees to really look at what needs to be done for the 2020 Census, 

what lessons can be learned from the 2010 Census? How do we 

really reduce the cost per household from what we spent on the 

2010 Census? And how do we really use technology, whether it is 


emcdonald on DSK2BSOYB1PROD with HEARING
65 

the internet, and other technologies to reduce the costs? So that 

planning is underway and I am sure that they are developing a 

timeframe or a time schedule of various deliverables and projects 

and we would be happy to share that with you. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
66 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 99 here 67061A.038
67 

Mr. HONDA. Thank you. 

Secretary LOCKE. That would be used as measurements or 

metrics. With respect to tsunamis let me just say that, while it is 

on a lot of people’s minds in light of the tragic events in Japan, we 

know that it is not just the West Coast but as Chairman Wolf indicated it is also on the Eastern Coast as well. And as Congressman 

Serrano indicated, not just the north but also down in the Caribbean. And we need obviously more buoys and more detection facilities, more centers. It is all a matter of budget. And we do know 

that obviously from what we saw, and thanks to Chairman Wolf’s 

leadership after the Indonesian tsunami, that when you have more 

buoys we were able to have faster response. We were able to issue 

the warning within nine minutes after that earthquake struck 

Japan last week. 

But it is not just buoys. It is not just the centers. It is the satellites. It is all the technology that goes with it and making sure 

that everything is maintained and up to date and all linked together. That is what makes the tsunami warning system effective, 

and helps save lives. 

IMPACT OF BUDGET CUTS

Mr. HONDA. Thank you. And I think the line of questioning here 

on this panel is along the lines of looking at deficits and debts. But 

I think my sense is in this committee, subcommittee, that there is 

also a sense that there is going to be a great return on investments 

if we make it properly. And with the current cut again on a 2011 

that will have a major negative impact not only on jobs that I am 

sure that the Department of Commerce is set and can create if we 

continue the 2011 without the cuts. I was just curious about if 

there is anything off the top of your head as to the impact on job 

creation and the kinds of things that we have talked about here. 

Not only saving lives and avoiding future costs, but the kinds of 

jobs that we would be looking at that we could be losing just because we are looking at cuts for cuts sake. 

Secretary LOCKE. Well I think that first of all with respect to the 

public safety aspects of the weather service, whether it is the satellites, predicting hurricanes or tsunamis, or just snowstorms, it is 

like a police department or a fire department of a local community. 

When you make cutbacks, there will be consequences. You cannot 

foresee those now, but you know that your response times will be 

down. You will have less police officers on the street to respond to 

incidents or reports of crime. Those are the consequences when you 

make those cuts. These are tough choices. And obviously you all as 

members of the Congress, the House and the Senate, in deliberation with the White House have to make these tough calls. 

Let me just say that that is why the President’s budget, 2012 

budget, is focusing on laying the groundwork and the conditions for 

job growth. So many of the economists have indicated that the Recovery Act did have an impact in creating jobs, or at least avoiding 

more layoffs of people and losses of jobs. And whether it is in farming, or in manufacturing, or in business sometimes you have to 

spend a little bit more in order to prime the pump and get more 

revenues and increase your business. You advertise a little bit 

more to get more market share. And what the President’s budget 


emcdonald on DSK2BSOYB1PROD with HEARING
68 

for 2012, while holding discretionary spending constant and freezing domestic spending over the next several years, does put selected enhancements and increases in programs that he believes 

will actually incentivize job creation and get our economy back on 

its feet faster. 

Programs in R&D, research and development, things that the 

private sector is not able to do on its own but with government assistance will create those next products and technologies that can 

be commercialized that can then create more businesses, help existing businesses grow, and create jobs, to investments in education. 

You know, you look at the number of engineers that other countries 

including China and in Asia are producing. Where are the engineers for America? And not every job requires a four-year degree. 

Some of it is community college education, which is why we have 

more investments in community college programs. Because for instance, when the President visited Silicon Valley he talked to some 

companies who said that they would be more than glad to move 

their manufacturing facilities back from China to the United States 

if they had engineers. Not four-year degree engineers, but the kind 

of the engineers that work on the assembly line that can help in 

the innovation and the production and the lean manufacturing of 

those products. 

So that is why the President is calling for investments in education, in R&D, including making permanent the R&D tax credit 

and expanding it. To encourage more manufacturing and more innovation here in America to create jobs. And I think a lot of the 

economists have indicated that many of the programs in the Recovery Act did in fact make a difference in avoiding further job losses 

and in fact creating jobs. 

Mr. HONDA. Thank you. And Mr. Chair, I appreciate the time. 

Mr. WOLF. Sure. Mr. Schiff may have to, if you want to ask another question, because you may have to leave to go back home to 

his district. So why do we not, go ahead. 

WEATHER SATELLITES

Mr. SCHIFF. Thank you, Mr. Chairman. Mr. Secretary, congratulations also on the new post. And I would just urge you as a representative of a district that relies heavily on intellectual property 

to urge the Chinese government to step up its enforcement particularly in the criminal law area on intellectual property theft. 

But what I wanted to ask you about today, you mentioned the 

central importance of the new JPSS in developing National Weather Service forecasts. The satellite will replace satellites currently in 

orbit that are aging fast. Due to problems in previous programs 

and delays in getting JPSS funding because of the continuing resolution we are likely to be going without this coverage for a year or 

more. Accurate long-term weather forecasts and storm warnings 

are such an integral part of so many sectors of our economy that 

this is truly worrying. What is the chance we will be able to maintain this coverage? And what will happen to our weather forecasts 

if we do not have a budget with the needed funds this year? 

Secretary LOCKE. Well, there will be a gap. I mean, even with 

the 2012 budget there will be a short gap. Even if it were funded 

at the full level there will be a short gap. And if it is not funded 


emcdonald on DSK2BSOYB1PROD with HEARING
69 

that gap will lengthen. And what does that gap mean? We have 

certain satellites in orbit now that are degrading. That will basically cease being operational. And so until the new satellites are 

launched and operational we will not have the information that we 

need to provide as accurate a forecast as we now provide. 

Mr. WOLF. Excuse me, Mr. Secretary? We are down to three minutes. So if you might, will you call Mr. Schiff, too? 

Secretary LOCKE. Yes. 

Mr. WOLF. Next week? And go through this. And then if you will 

come back, we are coming back. 

Mr. SCHIFF. Thank you, Mr. Chairman. 

Mr. WOLF. Thanks. Thank you, Mr. Secretary. We will be back 

in about twenty minutes. 

Secretary LOCKE. Okay. Thank you. 

[Recess.] 

CYBERSECURITY

Mr. WOLF. The hearing will begin and we will not be interrupted 

since they were the last votes. And we will try to move, you know, 

fairly fast. And I am going to jump around a lot because there are 

a number of budget issues. You know, we can work with your staff 

and get some answers, too. But your Bureau of Industry and Security is responsible for controlling the export of dual use goods and 

technologies. At the same time other countries are attacking Department computer systems to get similar types of information. 

Has the Department ever conducted a strategic analysis of where 

these breaches, like for instance China, and export control issues, 

are coming from? And who is trying to acquire what technologies, 

and why? And if you have not, and I sense that you have not, and 

I sense that the previous administration has not, would you do 

that? Would you do a study for us and report it to the committee, 

and maybe classified? And we would, you know, however you told 

us to treat it we would treat it. But if you could do that for us, but 

have you ever done one like that? 

Secretary LOCKE. Mr. Chairman, I believe that we actually have 

done a lot of analysis of the attacks on not just BIS but many of 

our other sites throughout the Department of Commerce. And— 

Mr. WOLF. And why they are doing it? Why they are going after, 

what they are going after, government-wide? 

Secretary LOCKE. Well I am not sure that, we could indicate to 

you, perhaps privately, all the research that had been assembled 

by all the federal agencies with respect to who is doing what, and 

perhaps what their motives are. But obviously it is of concern to 

us, the frequency of the attacks against our systems. Which is why 

the President’s 2012 budget does call for significant enhancements 

in cybersecurity. 

Mr. WOLF. But I mean, we are also looking at it as a way of 

knowing what they are targeting. Not only the cyber issue, but 

what they are targeting and what technologies they are trying to 

gain. 

Secretary LOCKE. That might, with respect, be more appropriate 

for other agencies that actually have technical information that 

others might want. We are understanding that the attacks against 


emcdonald on DSK2BSOYB1PROD with HEARING
70 

our systems are simply to understand and get all the information 

that we have, in terms of whether it is policy and—— 

Mr. WOLF. But are you, but is it, well let us, let us give you a 

letter and let us—— 

Secretary LOCKE. Sure. 

Mr. WOLF [continuing]. You know. But we would like to see you 

do a study to see why they are going after. I mean, are they going 

after NASA because they are trying to do something? I mean, obviously they may just be using a vacuum cleaner on certain occasions. But other occasions it is targeted. And what countries are 

doing the targeting? And we will also deal with the FBI, too. But 

what countries are doing the targeting? And what they are actually 

targeting, and why are they targeting it with regard to technologies? 

Secretary LOCKE. I believe that information does exist. It is not 

a study that has been initiated by the Department of Commerce 

with respect to why people are attacking the systems of, let us say, 

NASA or defense agencies. But I am sure, we would be more than 

happy to share whatever information the federal agencies have 

with you on that regard? 

MANUFACTURING AND THE ECONOMY

Mr. WOLF. Okay. General Electric CEO Jeff Immelt was recently 

appointed by the President to chair his Jobs Council, has publicly 

stated that for the U.S. to have a sound economy at least 20 percent of U.S. jobs should be from manufacturing yet we have less 

than half that number today. What level of manufacturing do you 

believe is healthy and necessary for a sound economy? 

Secretary LOCKE. Well I do believe that we do not manufacture 

as much as we can and that we should. That is why there are a 

host of initiatives within Commerce and the other agencies and 

throughout the federal government focusing on that. The President 

has called for, for instance, increasing the R&D tax credit and expanding that, making that permanent. 

Mr. WOLF. But do you have a percentage? Immelt said 20 percent of our workforce should be in manufacturing. 

Secretary LOCKE. I do not have that percentage. 

Mr. WOLF. Could you look and see if you can think about it, 

and—— 

Secretary LOCKE. Yes, we would be more than happy to get back 

to you on that. 

[The information follows:] 

MANUFACTURING AND THE ECONOMY

The U.S. is the world’s dominant manufacturing economy. One reason the U.S. 

has a lower share of workers in manufacturing compared to other nations is because 

U.S. manufacturing labor productivity has outpaced that of our competitors. In February, U.S. manufacturing employment was 10.8% of total private employment. Expanding employment in the manufacturing sector is a top priority of the Administration, as evidenced by the National Export Initiative. 

Mr. WOLF. We understand that the Director of National Intelligence has commissioned a classified study on the state of the U.S. 

manufacturing base. Are you working with him on this effort? 

Secretary LOCKE. Our folks at the Department of Commerce are 

working with the not only, well, we are part of a collaborative efVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00070 Fmt 6633 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
71 

fort on all of these assessments on manufacturing, including working with, for instance, Ron Bloom, who is the Special Advisor to the 

President within the White House, on manufacturing policy. 

Mr. WOLF. And will that be classified or not? 

Secretary LOCKE. I do not know. 

Mr. WOLF. Okay. Can you tell us, or—— 

Secretary LOCKE. We would be more than happy to report back. 

I do not know that off the top of my head if that assessment will 

be classified. 

HUMAN RIGHTS TRAINING

Mr. WOLF. Previously this subcommittee directed the Department to provide human rights training to ITA employees. The program lapsed for several years. What is the status of the human 

rights training program now? And how many employees got training last year? 

Secretary LOCKE. I believe that program is ongoing, and I believe 

that we have in fact stood up a 24/7 online training component as 

well. I believe almost two-thirds of our employees last year received 

that training and participated in those training efforts. But I could 

get you the exact training. Oh, actually I have it here. More than 

600 commercial service staff were trained out of about 900. And 

these were in commercial missions to fifty countries. And they participated, we had some twenty-six worldwide training events. But 

again, we also now have, for not all who can attend these training 

sessions, we now have a 24/7 access, an online learning module 

that all employees, that we are making available to all the employees. 

Mr. WOLF. Available, or is it mandatory? 

Secretary LOCKE. Well we do have comprehensive training protocols. And if they are not able to attend the in-person then we are 

making those online learning modules available as well. 

Mr. WOLF. But available, or mandatory? That was the question. 

Secretary LOCKE. I will find out for you there. 

HUMAN RIGHTS TRAINING

During 2010 and early 2011, 603 client-facing CS staff were trained (target for 

this timeframe was 300), representing 50 countries at 26 worldwide training events. 

To ensure global, 24x7 access to the content and to reach those that could not attend an instructor-led session, an online learning module was developed. ITA is requiring that all CS client-facing staff who have not taken the instructor-led course 

take the online module this fiscal year. 

DEPARTMENT REORGANIZATION

Mr. WOLF. There have been press reports that the White House 

will be proposing a major reorganization at the Department of 

Commerce and some related agencies. The committee has not seen 

any proposals so we are unsure exactly what will be included. However, one of the proposals is to move the U.S. Trade Representative 

into the Commerce Department. Some have voiced concerns about 

doing this. Would you tell us about the proposed reorganization? 

What are the goals? And what can you tell us specifically about it? 

Secretary LOCKE. Well there is actually no proposal yet. The individuals conducting the effort, Jeff Zients, who is the Deputy at 


emcdonald on DSK2BSOYB1PROD with HEARING
72 

OMB, is still talking to people and meeting with the various agencies and meeting with stakeholders. The reorganization is focusing 

on the export and trade promotion agencies of the federal government at this point. 

Mr. WOLF. Do you expect a legislative proposal will be sent to 

Congress this year? 

Secretary LOCKE. I cannot speak for Mr. Jeff Zients. I do know 

that the President has asked, or signed an executive order asking, 

that the results and the recommendations be delivered to him within ninety days. 

Mr. WOLF. And that would take legislation, is that correct? 

Secretary LOCKE. It depends on the extent of the recommendations and the proposed reorganization. 

Mr. WOLF. How do you, can you explain? 

Secretary LOCKE. Well there are some things that are executive 

agency. For instance, the Trade Representative’s Office. I mean, if 

nothing happens, if it is moving other things within the Office of 

the Trade Representative, that might be done by executive order. 

If it is dealing with the statutory agencies like Commerce or other 

agencies then I am sure that would require congressional action. 

But nothing has yet been produced. Nothing has been shown to any 

of the agencies now involved in export or trade promotion. Right 

now Mr. Zients and his team are simply talking to people and gathering facts and assessing people’s viewpoints. 

BIS FUNDING LEVELS

Mr. WOLF. Now the Department is, this is the Bureau of Indus- try and Security, the Department is requesting $111 million for the 

Bureau of Industry and Security. This amount is about $11 million 

higher than the 2010 enacted level. The increase of about $11 million will support thirty-seven additional positions on the Office of 

Export Enforcement. Of this amount $10 million will support 

counterproliferation and export enforcement activities with respect 

to their work with sensitive U.S. dual use goods and technologies. 

An increase of $3 million will support an increase in the number 

of staff involved in counterproliferation, counterterrorism, and national security programs. Both of these increases are in response 

to the recommendation of the 2000 Report of the Commission on 

the Intelligence Capabilities of the U.S. To what extent can you tell 

us in this open session what worries you more, rogue states or lone 

terrorists? 

Secretary LOCKE. Let me just say that we need to make sure that 

when U.S. companies export, they are not exporting to inappropriate destinations. And that even if they export to destinations 

that are deemed friendly to the United States that those exports 

are not reexported to countries that wish to do us harm. And that 

is why the President has called for enhancing our security measures to make sure that any items that might have military application do not go to those ultimately who wish to do the United States 

and our allies harm. 

U.S. PTO PLANNED FUNDING CARRYOVER

Mr. WOLF. The U.S. Patent and Trademark Office is again proposing language to allow it to spend fees in excess of appropriaVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00072 Fmt 6633 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
73 

tions, so-called buffer language. PTO is also requesting authority to 

collect $2.7 billion in fees while at the same time their spending 

proposal is for only $2.6 billion. The difference of about $107 million is being proposed by the PTO as a reserve to be carried over 

from fiscal year 2012 to 2013. PTO anticipates carrying over $342 

million in fiscal year 2013. Please explain why PTO is expecting to 

carry over this level of funding? Why would not PTO spend these 

funds to work now, and work down the backlog? 

Secretary LOCKE. We are trying to expend as much money as we 

can as fees come in. But we need to try to maintain a steady state, 

just like any company would have, to have a steady state of operations so that if the following year we suddenly have a drop in applications we do not want to rely on that money coming in the door 

at that point. Because we need to make sure that we have people 

and the staff available to handle all those applications that came 

in a year ago, two years ago, three years, and four years ago. So 

it is really trying to have an even flow of revenues and expenditures so that we can gradually ramp up and hire additional staff 

and use more technology to process all of these patent applications 

that have been waiting in a much faster timeframe. 

U.S. PTO PATENT AUTOMATION

Mr. WOLF. In 2005 GAO reported that PTO had spent over $1 

billion between 1983 and 2004 for patent automation activities 

which did not achieve a fully integrated electronic patent process. 

Between fiscal year 2006 to October of 2010 PTO spent another 

$47.9 million on another IT modernization effort on a system that 

has not been effective. So PTO is now developing its new end-toend patent system and its budget includes funds to continue these 

efforts. And we understand that Under Secretary Kappos, he said 

that he is confident that PTO is on the right path with this. The 

arrangement might be fine with him at PTO, or it might not. But 

if it is, what happens when he leaves? 

Secretary LOCKE. Well that is why we have undertaken a completely comprehensive review and change is how we are doing everything, focusing on both the line staff and career managers. The 

career staff who, you know, basically are the heart and soul of the 

Patent and Trademark Office. And the politicals come and go but 

we need to make sure that we have a highly energized, committed, 

dedicated career force that are people to sustain things. 

Mr. WOLF. But do you have the technical expertise? Because the 

same thing happened at the FBI on their computer system. They 

would bring somebody in, they would go. The cost overruns were 

very, very high. Are you confident? Have you the absolutely confidence in people that if he leaves, or should he leave, that it will 

continue? Because you have had these occasions where the money 

was pretty much not giving you what you thought you were going 

to get for it. 

Secretary LOCKE. And that has always been a concern of mine, 

and that is why we are embarked on a Commerce-wide review of 

our entire acquisition programs. Making sure that the people who 

design these and make these requests are actually realistic and 

that the people who go out and do the procurement are able to ask 


emcdonald on DSK2BSOYB1PROD with HEARING
74 

the questions as well and not just accept the wish lists of those 

seeking the systems. 

But going back to the Patent and Trademark Office, there has 

been a substantial change in the entire leadership, the top leadership at the Department, or the Patent and Trademark Office, with 

career people in place. We are very confident, very pleased with the 

caliber of people that we have. And if you look at it it is not just 

David Kappos but the line staff and the managers who have been 

really responsible for driving the organizational management 

changes that have resulted in a dramatic reduction of the backlog 

even as the number of applications has increased dramatically as 

well. 

We believe we have this new culture of career and line staff and 

even political appointees who are united in the mission of reducing 

the backlog, making sure that our investments in technology really 

work and pay off. So I am confident that even if Mr. Kappos were 

to leave that the reforms that he has initiated, with the support 

of line staff and labor and the management teams, will survive. 

Mr. WOLF. I want to go a few more, and Mr. Fattah will go over. 

But the PTO and China, I believe we are putting ourselves at a 

disadvantage by making U.S. patent applications available online. 

I understand that making applications available online is required 

by law. But I think we should be publishing abstracts only. Please 

provide me with the underlying authority whereby U.S. posts its 

patent applications online. 

Secretary LOCKE. I will have to get back to you and get you that 

legal authority, sir. 

[The information follows:] 

U.S. PATENT AND TRADEMARK OFFICE

Congress provided for publication of patent applications at eighteen months from 

their filing date in the Domestic Publication of Foreign Filed Patent Applications 

Act of 1999, Sec. 4502(a), now in statute as 35 U.S.C. 122(b). This publication requirement is consistent with other major Patent Offices around the world. 

Mr. WOLF. What thoughts do you have? How can we stop China 

from counterfeiting the products that they copy from the patent applications that are available online? 

Secretary LOCKE. Well I think that intellectual property violations in China and other countries is a major concern. American 

companies are losing billions of dollars of lost sales and opportunities as a result of piracy, counterfeiting, and/or lack of aggressive 

enforcement of intellectual property rights. It is a high priority for 

the Department of Commerce with respect to China and other 

countries. It is obviously going to be a major issue for the next ambassador to China. And we do have ongoing programs between the 

Department of Commerce, our Patent and Trademark Office, our 

General Counsel Office, in trying to improve the rule of law with 

exchange programs in China. But—— 

TRADE ENFORCEMENT WITH CHINA

Mr. WOLF. But Mr. Secretary, President Obama had a state dinner for Hu Jintao when he had the 2010 Nobel Prize Winner in 

jail. And his wife was not even allowed out of her apartment. She 

was under house arrest. So I hope you do not go there with a 


emcdonald on DSK2BSOYB1PROD with HEARING
75 

pollyannaish viewpoint that, you know, that we have these exchange programs, and we are doing this, and we are doing that. 

I mean as of now, two years ago when I was there, there was 

one person working on human rights and these issues in the embassy and they had fifteen people working on trade. To think that 

you can trust the Chinese just because you have a program, I 

mean, I hope you are going to go over there with a more hardheaded approach with regard to that. 

Secretary LOCKE. Well I think if you look back at everything that 

I have done at the Department of Commerce with respect to our 

negotiations, our actions against China in terms of the trade enforcement cases, to the sanctions against China on tires, all that 

we have done with respect to trying to get the Chinese successfully 

to back off on their government procurement contracts that favor 

their homegrown innovation, to our discussions at the Joint Commission on Commerce and Trade. I mean, we have not been 

pollyannaish at all. 

Mr. WOLF. Have you been successful? 

Secretary LOCKE. I think we have had success. Is it as much as 

we would like? No. Do we want more progress in China, and do we 

want faster progress in China? Obviously, yes. 

Mr. WOLF. Do you trust the Chinese government on these issues? 

Secretary LOCKE. It will always require constant vigilance and 

monitoring, sir. 

Mr. WOLF. Was that a yes, or no, or maybe? 

Secretary LOCKE. Well we are seeing progress in some fronts 

from the Chinese. Is it as much as we would like, no. Is it as fast 

as we would like, no. 

Mr. WOLF. Does it raise the little question if the Nobel Prize winner is in jail, and they have all the Catholic bishops in jail, and 

the Protestant pastors in jail, and they are doing that? That there 

is an element of concern with regard to what they are doing on economic issues? 

Secretary LOCKE. Well that is why we have consistently pressed 

the Chinese on these issues. That is why we have various forums 

by which we can raise these issues. We are making progress. 

Again, it is not as fast and as much as we would like. But that 

doesn’t mean that we give up. And certainly we go in with a very 

realistic eye and view of what is happening and what needs to be 

done. 

And, of course, that includes human rights. And you and I have 

chatted about this before. And the policy of the United States is 

very clear. We very much support more openness and democracy 

and respect for human rights, including people’s ability to worship. 

Mr. WOLF. I think you are going to get more letters from me in 

China as ambassador than you get as the Secretary of Commerce 

on these issues. Will you go worship at a house church when you 

are there? 

Secretary LOCKE. I look forward to the opportunity of worshiping 

in China. 

Mr. WOLF. But I said at a house church, at a non-recognized, not 

a government run but a house church. Will you go worship at a 

house church? 

Secretary LOCKE. That is something that I will consider, sir. 


emcdonald on DSK2BSOYB1PROD with HEARING
76 

Mr. WOLF. But why can’t you just say—I mean, can you imagine 

if you were to say yes, how that would inspire the 50 million house 

church Chinese who are yearning? I wrote the previous administration. Nobody there would go. Why wouldn’t you go to worship at 

a house church? You can worship at all churches. But why wouldn’t 

you at one Sunday go with a house church? 

Secretary LOCKE. Well, again, how I practice my religion is not 

something for the American people to examine. 

Mr. WOLF. It isn’t for the American people. It is to stand with 

those who are being persecuted, who are being hauled away. And 

the American embassy in China ought to be an island of freedom. 

And if the American ambassador won’t even—I will go to different denominations just to show up to be there. Woody Allen says 

up to 90 percent of life is showing up. Just in showing up and 

being there, particularly in a church where they are cracking down, 

and taking people away, and putting them in prison. 

It doesn’t raise my comfort. I am surprised. I knew it was a home 

run. You would have said, yes, I would be glad to worship at a 

house church when I go. So by your answer I get the indication 

that you will not worship at a house church. 

Secretary LOCKE. That is not what I am saying, sir. 

Mr. WOLF. What do you think your chances are, 50–50, 75–25? 

Secretary LOCKE. It is not something that I think I should be 

stating in public. 

Mr. WOLF. Mr. Ambassador, if you don’t publicly identify with 

the persecuted in China, then more people will be persecuted. To 

say that you raise this issue privately but not publicly is a copout. 

If you are a Catholic bishop in jail, you want the American ambassador to publicly speak out, not whisper privately in a private 

meeting. If you are in Tibet and you are in Drapchi Prison being 

tortured and you are a Buddhist monk or nun, you want the American embassy and the American ambassador to speak out publicly. 

If you are being persecuted as a Uighur you want the American 

ambassador to speak out publicly. 

What you have said raises serious concern with regard to me 

now for you going to China, because if you won’t stand publicly 

with the dissidents. Ronald Reagan said, ‘‘The words in the Constitution were a covenant with the people of the entire world.’’ The 

people in Tiananmen. The words that were in the Constitution in 

1787 really were the same words with regard to what should apply 

in China. 

But now if you are going to be politically sort of well I am not 

going to do this, I am shocked. I am shocked to say that you would 

not even go and attend a house church. Particularly when we know 

a particular house church is being persecuted. 

Secretary LOCKE. I did not say that, sir. 

Mr. WOLF. Well I am asking you. Will you go and attend? I take 

out the word ‘‘worship,’’ attend, show up, be there in a house 

church, one of the house churches that is being persecuted where 

they crack you down. 

Secretary LOCKE. That is something that I will seriously consider. 

Mr. WOLF. Will you advocate for the persecuted in China? 

Secretary LOCKE. Yes. 


emcdonald on DSK2BSOYB1PROD with HEARING
77 

Mr. WOLF. Will you visit the people that are picked up in prison? 

People who are dissidents who are picked up, had you been the ambassador now, would you have advocated for the Nobel Prize winner’s wife? 

Secretary LOCKE. I am not the ambassador now. 

Mr. WOLF. I said had you been the ambassador. 

Secretary LOCKE. That is something that I would have to consider. 

Mr. WOLF. That is weak. That is very, very weak. If you were 

in prison, if you were a Buddhist monk, if you were a Protestant 

pastor, if you were a Catholic bishop, you would want the American 

embassy to advocate for you. And if the American embassy doesn’t 

advocate for you. 

Your embassy ought to be an island of freedom. And if it is not 

an island of freedom, your time in China will have been wasted. 

It will be a failure. And this administration does not have a very 

strong record of advocating, speaking out for human rights and religious freedom in China and in other places. 

And I would hope, when I saw that you were appointed there, 

I thought well, you know, I think he understands that. I think he 

will be somebody who will advocate and speak out. 

Secretary LOCKE. I believe that the position of the United States 

government with respect to human rights around the world, including China, is very clear. We very much support as a government 

greater religious freedom, including the house churches. And we 

encourage people to attend those house churches and all forms of 

worship within China. 

Mr. WOLF. I am going to go to Mr. Fattah now. But, you know, 

during the Reagan administration, when the Secretary of State or 

people in the Reagan administration would go to Moscow, they 

would meet with the dissidents. They would invite the dissidents 

in to the American embassy. They would then visit the dissidents, 

the families of the dissidents who were in prison. They would even 

attempt sometimes to visit the dissidents that were in prison. 

Do you think that is a good model? 

Secretary LOCKE. I think that what others have done has been 

very commendable. 

Mr. WOLF. Mr. Fattah. 

WORLD MANUFACTURING LEADER

Mr. FATTAH. Thank you. I want to revisit something from the 

hearing before the break. Frank Vargo, the leader at the National 

Association of Manufacturers, says that, ‘‘The United States remains the manufacturing leader in the world. We are the largest 

manufacturer in the world despite the inaccurate reports that were 

referenced in the Financial Times.’’ 

And I am sure the Chairman was not aware of this when he referenced it, but that report in the Financial Times is built off inaccurate data. The United States still outproduces, substantially, 

China in manufacturing. We have 21 percent, they have 15 percent. And there is no possibility, even though there is some months 

of gap in the data, that they could overtake the United States. 

So I want to start here, because this is about the United States 

winning. We have been winning as has been the case for 110 years 


emcdonald on DSK2BSOYB1PROD with HEARING
78 

in manufacturing. And the objective here and the work of your Department, which has been extraordinary on behalf of manufacturers, has helped position us to continue to win. 

And I don’t mean win in a relative sense. I am not interested in 

300 million Americans doing as well or better than 300 million of 

some other country. I mean no matter the size of the country. 

China is a much larger country. We still lead them. And we still 

lead the world. And we lead India with a billion people. 

Now this is, you know, a competitive circumstance. And, you 

know, competition is great. But winning is the most important 

issue when we are talking about quality of life and wealth. 

And so I want to make the record clear that even though this inaccurate report was made, that not only is it inaccurate in that we 

lead but we lead substantially. And that the United Nations statistic division compiles global data on manufacturing and verifies 

that we have 21 percent of all global manufacturing output. And 

that when compared, for instance, in this matter to China, they 

have 15 percent. 

So what we want to do is we want to—I said this in the hearing 

the other day, and I will restate it now that the Manufacturing Extension Partnership program is my number one priority in this bill. 

And all of us have priorities. 

My Ranking Member is very interested in a lot of issues. But he is very interested in the salmon and, you know, the $65 million 

that is being allocated there in terms of the work that you are 

doing in a state that you are quite familiar with in terms of salmon. And you heard my other colleague talk about the Gulf and the 

importance there. 

So, you know, we all have our priorities. And the Chairman has 

his, which is admirable in the passion that he brings to the question of human rights in China. But if you are in the role of the Ambassador for the United States, you will be carrying the official position of the United States Government, which is set by the Administration. 

And we understand that you would not—you would at all times 

adhere to that responsibility as previous ambassadors have done. 

And I would also note that previous ambassadors have gone on to 

do great things. President Bush was the former ambassador to 

China. He became President of the United States. And I note that 

we have another ambassador who may be headed at least into the 

competitive realm for that. So great things for those who are ambassadors to China after they move on from their post. 

But notwithstanding all of this, I want to walk—go back to the 

issues of the Department relative to American business and commerce. It was reported in the Wall Street Journal in December that 

American businesses had their largest profits ever in the history 

that they have been recorded. 

And I want to commend the Department for your work. And I 

want to give you a chance to outline some of the things that have 

been done under your leadership to help American business do 

business, not just here at home but abroad. 

Secretary LOCKE. Well first of all let me just say that America 

still is the most productive manufacturing country in the world. 

When you look at the hundreds of millions of people in China that 


emcdonald on DSK2BSOYB1PROD with HEARING
79 

are involved in manufacturing and how we are able to have that 

same amount of output value of manufacturing with just a fraction 

of the employees, it speaks volumes about the productivity and the 

ingenuity of American workers. And that if on a level playing field 

we can outcompete just anybody else. 

Nonetheless, we need to focus on increasing manufacturing. And 

we need to focus on exports. And that is why the President’s National Export Initiative seeks to double U.S. exports just in the 

next five years, creating several and supporting millions of new 

jobs in the process. And we know that jobs related to export on average pay 15 percent more than the typical wage in America. So 

it is a source of good paying jobs, family wage jobs. 

The President is looking at corporate tax reform. He is working 

with many of the top people within Treasury and his economic 

council on corporate tax reform that would address some of these 

issues and create greater incentives for company’s to bring their 

foreign earnings back to the United States. 

But as the President indicated, he wants to do this without adding to the deficit, which means lowering the tax rate, and closing— 

expanding the base, and eliminating a lot of loopholes and various 

exemptions. 

COMMERCE REVENUE OPPORTUNITIES

Mr. FATTAH. Well I want to commend both you and the President 

for the appointments to the Competitiveness Council, because obviously Brian Roberts from Philadelphia was appointed and also 

Ellen Kullman who is the CEO of DuPont, which is our neighbor 

right there in Delaware. So I know you got two great people from 

our region of the country. And I know that the Competitiveness 

Council is really drilling down on some of these issues. 

You have done a lot of work on—the Administration has done a 

lot of work on helping small businesses. You have done 17 separate 

tax breaks, tax cuts for small businesses. And we see a real increase in small business activity. 

And so I think that there is a lot more that we can look to in 

terms of the work that has been done to really position this very 

significant increase in profits. Now we have had 12 months of net 

increase in private sector jobs. And today’s job numbers in terms 

of unemployment claims were very, very good, well below 400,000. 

So there is a lot of work that is being done. 

I want to say that in terms of the questions of the appropriations, your overall budget is less than three-tenths of one percent 

out of every dollar that we are going to spend as a Federal Government. And yet it is the—it is the kind of seed corn, if you would, 

for the world’s greatest economy. 

That is, at the Commerce Department you are really at the very 

forefront of trying to make sure that our ability to continue to generate well over 130 million jobs and have the kind of profits that 

we have seen really is, in many ways, you know, we are making 

a small investment as a country. 

But I want to ask you this question. Much of the services of the 

Department help business. Obviously it is the Commerce Department. I mean so even when we talk about the weather service, two 

thirds of our economy is weather dependent. I mean, it is very imVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00079 Fmt 6633 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
80 

portant about whether or not we invest in these satellites, because 

it is very important that we are able to forecast what is going to 

happen. 

I am interested as you are doing some of your portfolio inside the 

Commerce Department, whether there are opportunities to gain 

revenues from some of the services that you are providing and 

ways in which the Department can still provide the immediate help 

to businesses, as you do, for instance, in the patent office revenues. 

And whether you think that is a direction that we should move 

at least in terms of examining or given the fact that it is such a 

small amount in the federal budget, that that is really not something that we should focus a lot of our time on. 

Secretary LOCKE. There are a variety of fee-for-service programs 

within the Department of Commerce, even within our International 

Trade Administration on Export Promotion. There is a highly valued and very well spoken for gold key program that is a very intensive matchmaking service where our foreign trade specialists will 

actually go find and line up eight, nine, or ten potential buyers or 

customers for a U.S. company. 

We will actually do the pre-investigation due diligence work and 

make sure it is a reliable potential buyer or customer for that U.S. 

company. Then that U.S. company will let us go to the U.S. consulate or trade office in Belgium or in Budapest, Hungary, and sit 

there. We will bring those eight or nine or ten pre-vetted companies to that American company. It is almost like what we call 

speed dating. Many companies have said that their revenues and 

their sales have come from the matchmaking services that we provide. 

Now that is a fee-for-service program. And, in fact, it is so highly 

thought of that both UPS and FedEx are helping pay for that service for companies, some of their customers that they identify are 

really ripe for more exporting from the United States. And so those 

are some of the programs that we have. 

Now we, for instance have a lot of weather and other information 

and statistical data that we provide. And that is something that we 

are more than happy to look at and consider as to whether or not 

some of those should be on a fee for service. 

But, you know, some of the information that we also provide is 

very valuable to the public and is used not just by commercial purposes. That very same information might be used by independent 

researchers or scientists. And so how you draw a line between public safety purposes, independent researchers versus those who 

might want to use that to make a profit, that is certainly an area 

that should be considered. 

DEPARTMENTAL BUDGET CUTS

Mr. FATTAH. But it is not an area that I think we should rush 

into. But I do think that to the degree that we can make a—you 

know, that we can analyze it and that it makes sense. 

Now, again, I don’t think that the argument is that we are doing 

too much. I think that there is an argument perhaps that we 

should be doing more. I think we should be doing a lot more to help 

manufacturers. 


emcdonald on DSK2BSOYB1PROD with HEARING
81 

I think we should be doing a lot more looking at the demographics of the country to make sure that women and youth, all we 

are seeing over here two years is a significant uptick in the number 

of women going into business. But we have, you know, other demographic realities in which we have had sectors in African-American 

and Latino communities and Native American communities in 

which they have not always had the access to capital and the opportunities presented. But that could be a significant part of our 

economic base. 

So I think that we need to be doing—you know, we at least need 

to look at it. But I think we ought to be careful. You know, we don’t 

want to—you know, we have to take care of the goose. And American business is the most profitable ever. We have the lead in manufacturing in a substantial way over countries with much larger 

populations. The administration has set in place more than a dozen 

and a half tax cuts for businesses. 

So you have done a great deal. And with the Competitiveness 

Council, it has opportunities to do even more. I think that the regulatory reform that has been put in place will or at least they will 

look at regulations is an important one. 

I want to ask you this question. The President, and you sit in 

the cabinet, has asked for two rounds of cuts earlier in this process. 

He first asked for the departments to look. And you came back 

with some $20 billion in cuts. And then there was $119 billion in 

cuts found by the cabinet members. 

And even though Senator McConnell, at that point said that that 

was a paltry amount of cuts, I guess in comparison to the efforts 

that we are engaged in now, it was a very significant amount of 

cuts. 

I want to know in those earlier rounds when the—under the 

President’s direction, you know, rather they were—you already 

kind of cut some of the edges around at the Department. And now 

we are really getting ready to cut into very important areas. 

We are trading off tsunami warnings versus hurricane warnings 

from satellites. We are in a touchy area. And we do have a responsibility to the public that is beyond the question of whether we cut 

a dollar here or a dollar there. So if you could respond about the 

earlier round of cuts that were dealt with in the administration. 

Secretary LOCKE. Well let me just say that from day one the 

President has impressed upon all of us the need to really be as efficient and effective as possible, to be wise stewards of the American 

taxpayer dollars. And it is something that I have prided myself on 

as a former governor of the state of Washington where we had to 

go through some very painful budget exercises and make these 

tough, tough decisions. So I understand the dilemma that you all 

face. 

I think that we cannot ever take the approach of making across 

the board cuts. There are some things you want to enhance while 

you make deeper cuts someplace else. And you go to your 

strengths. And those things that are not as efficient, as effective, 

not really providing the results, those perhaps ought to be eliminated as opposed to across the board cuts. 

And I can tell you that in this 2012 budget we have made difficult decisions. But we have come up with almost a quarter billion 


emcdonald on DSK2BSOYB1PROD with HEARING
82 

dollars of cuts, of efficiencies through acquisition reform, taking advantage of IT but actually eliminating programs. And the proposal 

is to, for instance, on the Malcolm Baldrige Award to eventually 

move that off to the private sector and the foundation. But we are 

going to do that over a period of time. 

So we are willing to make those tough decisions. At the same 

time, I think that it is important that we, as the President has 

called for a freeze, a five-year freeze, on discretionary domestic 

spending. In that freeze there are enhancements. But those are offset by deep cuts elsewhere. 

And I think that what the President has proposed by way of focusing on education, research and development, innovation, working with the private sector to hasten the discovery of new technologies, oftentimes technologies that they are not able to do on 

their own or the research that they are not able to embark on their 

own. We are able to incite, excuse me, incent that discovery, hasten 

it, which leads to new products, benefits to our quality of life and 

creation of jobs. 

That is why I think that the President’s 2012 budget is very strategic, very focused. And his motto is we want to out build, out educate, and out innovate the other countries, because we know that 

our competitors are very focused. 

And that is why the President has also called for corporate tax 

reform that will lower the tax rate and provide the incentives for 

more manufacturing and economic growth to occur in this country. 

Mr. FATTAH. Well I am glad that we have moved away from the 

notion that we can have—you know, there were earlier administrations and opinion leaders who were trying to convince us that we 

were going to have an information-based or service-based-only 

economy and that manufacturing was somehow better done elsewhere. 

So to have an administration that is focused, and that is excited 

about manufacturing here in America, and is celebrating it, and 

that understands that it is connected to our long-term viability as 

a country. It is also connected obviously to our national security. 

I mean we can’t just give away all of our manufacturing capability. 

I think the work that you are doing is important. And I want to 

thank you. And, you know, I think that the work you have done 

both at the county level and as governor and obviously you have 

distinguished yourself as Secretary of Commerce. And I wish you 

well in your future endeavors. 

Secretary LOCKE. Thank you. 

WORLD MANUFACTURING LEADER

Mr. WOLF. I am going to read you something. And just because 

Mr. Fattah said he calls the NAM and he gets somebody to say 

something, it doesn’t make it true. And so we are going to check 

on this and put this in the record. 

Financialtimes.com, Financial Times, Peter Marsh, and we are 

going to get the full study. And I want it to be opposite. That is 

why I think this administration—we are looking for things where 

we differ. I think we differ strongly on this. This administration 

has not done a very good job with regard to manufacturing. This 


emcdonald on DSK2BSOYB1PROD with HEARING
83 

administration has done a miserable job when it comes to the debt 

and the deficit. 

But I read the article. It says, ‘‘China has become the world’s top 

manufacturing country by output, returning the country to the position it occupied in the early 19th century and ending the U.S.’s 

110-year run as the largest goods producer.’’ 

I don’t want it to be that way. I have a manufacturing bill that 

we are trying to move through this Congress. It goes on to say that, 

‘‘The change is revealed in a study released on Monday by IHS 

Global Insight, a U.S.-based economics consultancy, which estimates that China last year accounted for 19.8 percent of world 

manufacturing output, fractionally ahead of the U.S. with 19.4 percent.’’ 

China’s return to the top is the ‘‘closing of a 500-year cycle in 

economic history,’’ said Robert Allen of Nuffield College, Oxford, a 

leading economic historian. 

Deborah Wince-Smith, chief executive of the Council on Competitiveness, a Washington-based business group, said the U.S. ‘‘should 

be worried’’ by China taking over a position that the country has 

occupied since 1895. 

And then it goes on to say the figures were derived from data 

gathered by national statistic agencies around the world and have 

been published several months ahead of the equivalent comparative figures that will come out for government bodies such as the 

UN and the World Bank. 

So just because a guy at the NAM says it, I mean, we are going 

to put this in the record. So, Mr. Fattah and Mr. Secretary, you 

may not be right. I want you to be right, but you may not be right. 

And just because something is said at a Congressional hearing 

based on a telephone call does not—— 

Mr. FATTAH. Mr. Chairman, if you would yield for one second. 

Mr. WOLF. I will, but I want to finish. 

Mr. FATTAH. I didn’t make any telephone call. This is a statement that was made on March 14th. 

Mr. WOLF. Well maybe—— 

Mr. FATTAH. It had nothing to do with our hearing. 

Mr. WOLF. Maybe he was wrong. 

Mr. FATTAH. And I am just saying, I don’t want you to think that 

I went and made a phone call when I didn’t. 

Mr. WOLF. Well I did. But I don’t think it now if you tell me. 

Also I think the gentleman lives in my district, and he is actually 

a friend of mine. But he may very well be wrong on this. 

Also we having Rising Above the Gathering Storm, which I was 

involved with helping set up and working with Norm Augustine, is 

as United States share of global high-tech exports dropped from 21 

percent to 14 percent while China’s share grew from 7 percent to 

20 percent, so high-tech 21 percent to 14 percent drop. China goes 

from 7 percent to 20 percent. 

It says the national debt grew from $8 trillion to $13 trillion. 

Federal debt per citizen increased and then it goes on. China then 

talks about graduating more engineers, 700,000. We only graduated 70,000. 

For the last five years, we have been working on this issue. And 

as chairman of this committee, we reversed the decline with regard 


emcdonald on DSK2BSOYB1PROD with HEARING
84 

to the investment in math and science and physics and chemistry 

and biology, and all that. 

But the Gathering Storm indicates that really what the Secretary said may not be right. And we will get the full data that 

comes with this. 

But, Mr. Secretary, if you are the Secretary of Commerce, we 

don’t want China to be number one. But they may have surpassed 

us. And there is a Simon and Garfunkel song, The Boxer, that says 

‘‘a man hears what he wants to hear and disregards the rest.’’ 

We cannot disregard that. If somebody has a problem, you don’t 

want to go whistling through the graveyard saying, well, it is not 

a problem. We are always number one when we are falling. I don’t 

want to see us in decline. I want to see us ascend. I want us to 

be the dominant power for economic reasons and for freedom and 

liberty. 

So Mr. Vargo from the NAM may very well be wrong. And we 

will submit that in the record. 

Secondly, we will also submit points from the Gathering Storm 

with other data showing, expressing my concern with regard to the 

manufacturing base. I have a bill in. We have asked the administration to comment. We get no answer, so we are going to try to 

move ahead. Mark Warner is going to cosponsor it with me in the 

Senate. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
85 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 146 here 67061A.039
86 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 147 here 67061A.040
87 

Mr. WOLF. I have even raised it with you. We want a repatriation program to put a policy in to bring these jobs back. I can’t 

get anything out of the administration. I heard you talk about jobs, 

but I can’t even get a comment on it. I can’t even get anybody to 

write back. And then I will hear the President roll out and talk 

about jobs. 

We have a bill in. And finally Mark Warner is going to—we are 

going to push this bill. And we are going to try to pass it to bring 

real manufacturing jobs back. 

Secondly, on the deficit and the debt, the President has failed. 

Period. And I want to read for the record a letter that Senator 

Coats put in. Senator Coats today led a group of 23 Republican 

Senators in sending a letter to the White House calling on President Obama to show ‘‘strong leadership, address the financial crisis, and entitlement programs.’’ This letter comes on the heels of 

Coats’ return speech. 

In the letter to the President, the senators wrote, ‘‘Federal expenditures on Social Security, Medicare and Medicaid are expected 

to double over the coming decade and represent an unsustainable 

portion of total government spending. In order to ensure the longterm viability of this program, it is imperative that you lead a bipartisan effort to address these challenges.’’ 

And then it goes on to say, and I will quote at the end and put 

the full letter in the record, ‘‘last year’s National Commission on 

Fiscal Responsibility,’’ which I have said that I will support. I 

didn’t set it up. This idea came from Jim Cooper and Conrad and 

Gregg. And I hailed the President when he established it. But he 

has walked away from it. 

‘‘Last year’s National Commission on Fiscal Responsibility and 

Reform marked an important first step in identifying a potential 

path forward.’’ Durbin and Coburn together, ‘‘Strong leadership is 

needed now to advance possible solutions to ensure that our entitlement programs can serve both current and future generations. 

Without action to begin addressing the deficit, it will be difficult, 

if not impossible, for us to support a further increase in the debt 

ceiling. House Speaker John Boehner this month offered to partner 

with you in a nonpartisan effort. We join in the Speaker’s offer, 

and urge you to lead.’’ 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
88 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 150 here 67061A.041
89 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 151 here 67061A.042
90 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 152 here 67061A.043
91 

Mr. WOLF. It is time for the President to lead this Congress and 

this Nation in the critical efforts to strengthen our country’s longterm fiscal security. And the President has not led. And by not 

leading, he has abandoned the fight. He is walking away. He is 

walking away from the fundamental issue that will have an impact 

on our children, and our grandchildren, and all of us alive. 

And then lastly, and then I want to end this hearing, because I 

am going to submit the rest for the record. What I want to tell you 

I am disappointed in your answer with regard to whether you 

would go to a house church or not. 

China is the number one supporter of the genocide, the genocide 

in Sudan. I was the first Member of the House to go to Sudan and 

saw with my own eyes the genocide, what was taking place and 

still takes place against women, and men, and children in Darfur. 

China, the country that you are going to be the ambassador to 

is the number one genocidal supporter of the Darfur government. 

And Bashir, the head of Sudan, is under indictment by the International Criminal Court. The Congress in the previous administration said what is taking place in Darfur is genocide. Genocide. 

I am going to write you a letter after you get the ambassadorship. I am going to ask you where you are going. I will get a guy 

to call you. I don’t know if you will take his call or not, but his 

name is Bob Fu, to call you and invite you to go to a Catholic 

church, a non-recognized church, a church connected to where 

maybe a bishop is in jail or under house arrest, for you to show— 

to start to show up. And if you don’t want to worship, just to be 

there, to stand there, to identify. 

I am not Buddhist, but I go with Buddhist monks. And when I 

went to Tibet, I went back into the monasteries to identify, to let 

them know that I cared enough. I cared enough so I went. So we 

are not going to ask you to worship. And I am not going to ask you 

what your language is, what your religion is. But I am going to ask 

you to go to Tibet and stand with the Buddhists who are being persecuted. And go into a monastery in Tibet. 

And then I am going to ask you to go with the Muslims, the 

Uighurs, and go ride a triath of that area and stand with them. 

And then I am going to ask you to go to a Catholic church where 

there is a Catholic bishop in jail to stand with them. And then I 

am going to ask you to go to a house church. Where there is house 

church leaders who have been tortured, who have been taken away 

and are in prison. 

And then I am going to ask you to visit the Nobel Prize winner’s 

wife, to go visit her. And then I am going to ask you on the 4th 

of July to open up the doors of the embassy and let the embassy 

be an island of freedom where dissidents can come to stand with 

the American ambassador. 

And if you do that, I will hail you. But we are going to give you 

the opportunity. And we are going to wear you down. We are going 

to write you day in and day out. We are going to ask you when the 

dissidents come back from here to send people out to the airport 

to meet him. We are going to ask you to go into the jails, because 

if you don’t, you will have failed. If you do, you will be the most 

successful Ambassador. 


emcdonald on DSK2BSOYB1PROD with HEARING
92 

And lastly, and I am not going to ask you—embarrass you to ask 

this question. But I hope when you leave, you won’t do what many 

of the other American ambassadors do. I hope you won’t go out and 

represent the Chinese government. 

The hearing is adjourned. 


emcdonald on DSK2BSOYB1PROD with HEARING
93 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 156 here 67061A.044
94 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 157 here 67061A.045
95 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 158 here 67061A.046
96 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 159 here 67061A.047
97 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 160 here 67061A.048
98 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 161 here 67061A.049
99 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 162 here 67061A.050
100 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 163 here 67061A.051
101 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 164 here 67061A.052
102 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 165 here 67061A.053
103 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 166 here 67061A.054
104 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 167 here 67061A.055
105 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 168 here 67061A.056
106 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 169 here 67061A.057
107 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 170 here 67061A.058
108 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 171 here 67061A.059
109 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 172 here 67061A.060
110 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 173 here 67061A.061
111 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 174 here 67061A.062
112 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 175 here 67061A.063
113 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 176 here 67061A.064
114 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 177 here 67061A.065
115 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 178 here 67061A.066
116 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 179 here 67061A.067
117 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 180 here 67061A.068
118 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 181 here 67061A.069
119 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 182 here 67061A.070
120 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 183 here 67061A.071
121 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 184 here 67061A.072
122 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 185 here 67061A.073
123 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 186 here 67061A.074
124 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 187 here 67061A.075
125 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 188 here 67061A.076
126 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 189 here 67061A.077
127 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 190 here 67061A.078
128 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 191 here 67061A.079
129 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 192 here 67061A.080
130 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 193 here 67061A.081
131 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 194 here 67061A.082
132 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 195 here 67061A.083
133 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 196 here 67061A.084
134 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 197 here 67061A.085
135 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 198 here 67061A.086
136 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 199 here 67061A.087
137 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 200 here 67061A.088
138 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 201 here 67061A.089
139 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 202 here 67061A.090
140 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 203 here 67061A.091
141 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 204 here 67061A.092
142 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 205 here 67061A.093
143 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 206 here 67061A.094
144 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 207 here 67061A.095
145 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 208 here 67061A.096
146 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 209 here 67061A.097
147 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 210 here 67061A.098
148 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 211 here 67061A.099
149 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 212 here 67061A.100
150 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 213 here 67061A.101
151 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 214 here 67061A.102
152 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 215 here 67061A.103
153 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 216 here 67061A.104
154 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 217 here 67061A.105
155 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 218 here 67061A.106
156 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 219 here 67061A.107
157 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 220 here 67061A.108
158 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 221 here 67061A.109
159 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 222 here 67061A.110
160 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 223 here 67061A.111
161 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 224 here 67061A.112
162 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 225 here 67061A.113
163 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 226 here 67061A.114
164 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 227 here 67061A.115
165 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 228 here 67061A.116
166 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 229 here 67061A.117
167 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 230 here 67061A.118
168 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 231 here 67061A.119
169 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 232 here 67061A.120
170 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 233 here 67061A.121
171 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 234 here 67061A.122
172 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 235 here 67061A.123
173 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 236 here 67061A.124
174 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 237 here 67061A.125
175 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 238 here 67061A.126
176 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 239 here 67061A.127
177 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 240 here 67061A.128
178 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 241 here 67061A.129
179 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 242 here 67061A.130
180 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 243 here 67061A.131
181 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 244 here 67061A.132

emcdonald on DSK2BSOYB1PROD with HEARING
(183) 

WEDNESDAY, MARCH 2, 2011. 

U.S. PATENT AND TRADEMARK OFFICE 

WITNESS 

HON. DAVID KAPPOS, UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE U.S. PATENT AND 

TRADEMARK OFFICE 

OPENING STATEMENT BY CHAIRMAN WOLF

Mr. WOLF. The hearing will begin. We welcome Secretary 

Kappos. In fiscal year 2012 PTO estimates it will collect $2.7 billion in fees. Of this amount, $2.4 billion is from base fee collections 

and another $263 million represents an estimated 15 percent surcharge on patents that PTO would like to collect to address the current backlog. The spending estimate is about $819 million, or 43 

percent, higher than the 2010 level. Your fee collections will in part 

support 11,137 FTEs, including 1,500 new hires in fiscal year 2012 

to address the backlog. PTO anticipates that it will need to hire 

about 3,400 patent examiners between 2011 and fiscal year 2013 

to address the backlog. 

The PTO is clearly a driver for the economy but you certainly 

have some challenges ahead. We understand that as of February 

24, 2011 the backlog of applications that have not been touched is 

718,000 applications. We have a number of questions but before 

that I recognize the Ranking Member, Mr. Fattah. 

OPENING STATEMENT BY MR. FATTAH

Mr. FATTAH. Thank you, Mr. Chairman. And let me thank you 

for convening this very important hearing on a subject that is critically important to our economy and to the President’s call to focus 

on innovation. Obviously it is intertwined in its connections to the 

patent, and to having the Under Secretary here to testify. And I 

am very pleased to see that there is a compromise in the works 

around authorization, and moving forward, there probably are still 

a few hiccups down this road, and maybe even some questions that 

we will have about it. But it seems like it is essentially a growing 

consensus that what you have argued for, as people are not coming 

to grips with that. We need to move forward. And even in this time 

of discussion around cuts, I think there is broad bipartisan agreement that this is an area where we need to invest in terms of additional resources. And since it is a fee-generated operation, and 

those who are paying the fee are even for doing more. So it is a 

great day for us to come together and get into the details of this. 

And I know the Chairman is very interested, and I am interested, 

in your testimony. So I will yield back. And I thank the Chairman. 


emcdonald on DSK2BSOYB1PROD with HEARING
184 

Mr. WOLF. Thank you, Mr. Fattah. Secretary Kappos, you can 

proceed as you see appropriate. 

OPENING STATEMENT BY UNDERSECRETARY KAPPOS

Mr. KAPPOS. Well thank you, Chairman Wolf, Ranking Member 

Fattah, and members of the subcommittee. Thank you for this opportunity to discuss the USPTO’s operations and our programs and 

initiatives, and the President’s 2012 budget request to support 

those efforts. 

Innovation continues to be a principal driver of economic growth 

and job creation in the United States. We at the USPTO are proud 

of the role that we play in serving America’s innovators and granting the patents and registering the trademarks they need to secure 

investment capital, and to build companies, and to bring new products and services into the marketplace. The work that we do at 

USPTO directly contributes to strengthening our economy and creating jobs, and it helps us move forward toward the President’s 

goal of winning the future by out-innovating our economic competitors. 

To effectively carry out our mission, the USPTO must be wellrun and appropriately funded. Consistent with the directive from 

Secretary of Commerce Locke, our overriding goal is to focus our 

resources more effectively on improving overall operations and reducing the time it takes to get a patent. 

Now I am pleased to report that during last year the USPTO has 

increased patent production, reformed key processes, and improved 

quality. During this time we also developed and issued a metrics 

based strategic plan to strengthen the capacity of the USPTO to 

ensure that our resources are appropriately focused on our strategic goals. And these accomplishments have helped us to begin to 

reduce the significant backlog of pending patent applications. 

Mr. Chairman, the President’s fiscal year 2012 budget provides 

the USPTO with the funds we need to reduce the patent application backlog and pendency levels, improve patent quality, and 

make necessary investments in our information technology infrastructure. The budget requests authority to access the $2.7 billion 

in user fee collections currently projected for fiscal year 2012 to 

execute our multiyear operating requirements. This results in an 

appropriation of zero dollars budget authority. As a fully user fee 

funded agency, the USPTO’s requirements are addressed at no cost 

to the taxpayer. 

Our performance commitments for fiscal year 2012 assume enactment in March of the fiscal year 2011 President’s budget for the 

USPTO, including the interim fee increase on patent fees. Availability of these budget resources will promote America’s economic 

growth and competitiveness by enabling investments that are essential for reducing the current patent application backlog and 

pendency levels, maintaining trademark pendency at current levels, and moving to 21st century information technology systems, 

and helping improve IP protection and enforcement around the 

world. 

These goals briefly are supported by hiring 1,500 patent examiners, establishing a nationwide workforce focused on hiring from 

around the country, telework, and hiring patent examiners with 


emcdonald on DSK2BSOYB1PROD with HEARING
185 

previous IP experience, enabling patent applicants to fast track 

their most important applications, facilitating work sharing arrangements with foreign IP offices, updating patent and trademark 

IT systems, and enhancing our international programs. 

Fee collections are running very strong at USPTO as a result of 

an improving economic outlook, stronger patent renewal rates, and 

our increased production. We are getting more done and collecting 

more fees in doing so. As you know, to enable these efforts the 

President’s fiscal year 2011 budget proposes that the USPTO be 

permitted to spend all of the fees it collects and proposes a 15 percent surcharge on patent fees. Despite our strong fee collections, 

the USPTO has been forced to implement spending reductions as 

a result of the terms of the current continuing resolution, and these 

include delaying critical IT projects, slowing down hiring, and restricting examiner overtime. Should the continuing resolution be 

extended beyond March 4 and March 18, and hold the USPTO to 

its fiscal year 2010 spending authority level, we will be forced to 

halt all hiring, overtime, and IT improvements. This would unfortunately reverse many of the gains we have begun to make, and 

such continued restriction in appropriations would also result in almost $200 million of user fee collections being unavailable to support USPTO operations this year. 

Mr. Chairman, in conclusion, ensuring stable funding for the 

USPTO will continue to be a critical component of our success in 

serving America’s innovators. We wish to work with you to ensure 

that the job creating, deficit neutral work conducted at USPTO for 

the benefit of our Nation’s innovators is supported in whatever 

final spending package is enacted for the remainder of fiscal year 

2011 and, of course, into fiscal year 2012. Thank you very much 

and I am happy to take questions. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
186 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 252 here 67061A.133
187 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 253 here 67061A.134
188 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 254 here 67061A.135
189 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 255 here 67061A.136
190 

OPERATING RESERVE

Mr. WOLF. Sure, thank you. We want to ask you a couple of 

questions about your operating reserve. The supporting budget materials show the PTO’s operating reserve or carryover balances 

going into fiscal year 2012 are about $213 million. PTO carryover 

balances have increased significantly over the last several years, 

growing from about $72 million in 2008, $119 million in 2009, and 

$223 million in 2010. Most come from trademarks. Would that be 

accurate so far? 

Mr. KAPPOS. Yes, I believe it is. 

Mr. WOLF. Okay. A portion of the current carryover balances are 

a result of the fiscal year 2010 $129 million supplemental that PTO 

received in 2010. We understand that you have hired 350 additional patent examiners with this additional funding. Your operating reserve is essentially a carryover, or funds that you do not 

spend in one fiscal year which are carried over into the next year. 

PTO estimates its fee collection to be $2.7 billion. Your budget request, however, is built toward a $2.6 billion funding level. Would 

you please explain the differences between the $2.7 billion in fees 

you anticipate collecting and the $2.6 billion that you anticipate 

spending? Is the difference about $107 million to fund another operating reserve? I am waiting, yes. 

Mr. KAPPOS. Okay. Well thanks, Chairman Wolf, for that question. The difference, about $107 million, would go into our operating reserve. It is absolutely required, it is imperative that we 

carry that reserve going into 2013. And the reason is because our 

hiring in 2012 is going to increase our examiner count so that we 

will have to carry on our payroll throughout all of 2013. Those additional examiners are going to take time to come up to full production capacity. As a result, we are going to need that $107 million 

carryover in order to fund their pay during 2013 while they are 

coming up to production capacity. By the time we get into 2014 we 

will no longer be hiring anymore, and those people will be up to 

production capacity, so we will have the full benefit of their production producing income. But in 2013, it is a very critical year for us. 

We will be carrying our maximum head count in that year and 

many of those people will not quite be up to production capacity 

yet. So we do not anticipate that our fee income, unless we are able 

to have that carryover, will be adequate in order to enable us to 

carry through on all of our plans. So that is why we need that $107 

million reserve carrying over. 

Mr. WOLF. The PTO end-of-year operating reserve will be about $342 million, will it not, when you add them both together? And 

I do not quite understand the importance of not spending every last 

penny at the end of the fiscal year and allowing a bit of a cushion, 

but if PTO has such a backlog why do we have such a large carryover? Most Federal agencies do not have a carryover. Why do you 

differ than the Department of Defense? Or the IRS? Or some agency like that? 

Mr. KAPPOS. Well a couple of points. Number one, Chairman 

Wolf, as you pointed out before, a tremendous amount of that carryover is on the trademark side. And by statute we have what is 

a statutory fence—— 


emcdonald on DSK2BSOYB1PROD with HEARING
191 

Mr. WOLF. Would you rather not have the fence? 

Mr. KAPPOS. No, I am comfortable with the fence. 

Mr. WOLF. Why would you not spend the funds on overtime and 

hiring to reduce the backlog now, and not have such a large carryover for the following year? So if you broke the fence down, took 

the fence away, could you not do that? 

Mr. KAPPOS. Well, I cannot do that. It would require a change 

in the statute. 

Mr. WOLF. I understand that. But I said if that were done, if the 

statute and the law were changed. The Park Service takes money 

in from collections if somebody is going through a National Park. 

They also take money from other venues. They kind of merge them 

together, and the Director of the National Park Service can use it 

for whatever. Would it be helpful if that fence did not exist? And 

you could then deal with the backlog as soon as possible? 

Mr. KAPPOS. You know, I actually do not think that it would be 

helpful. I think Congress did the right thing by erecting the fence 

in the first place. 

Mr. WOLF. Why? 

Mr. KAPPOS. Because it enables us to operate the trademark side 

of the office, which is extremely efficient, extremely well-managed, 

and operating right in its appropriate pendency zones. It enables 

us to preserve the operating efficiency of that part of the office and 

never run into, what I consider to be not good management discipline, of breaking the working part of your business in order to 

fix the part that is not working so well, which in our case is the 

patent side. 

Mr. WOLF. But are you the only agency in the government that 

that is the case, that has that? Are there other agencies—— 

Mr. KAPPOS. Well, that I do not know. I only know that the 

USPTO, so long as I can remember, has had this trademark fence. 

And I think on policy, and business-wise, it really is the right 

thing. 

Mr. WOLF. I am not so sure. You are again requesting a 15 percent surcharge on patent fees. You anticipate that this will provide 

the PTO with an additional $263 million. What do you anticipate 

that this additional revenue will enable the PTO to accomplish? 

Mr. KAPPOS. Well the additional revenue is absolutely imperative 

to reaching the President’s and the Secretary of Commerce’s mandated goals of bringing our backlog down to an appropriate inventory level of about 350,000 cases in inventory, which requires cutting in half from where it is now, and bringing our pendency level 

down to the industry benchmark standard of about twenty months 

from where it currently is, which is about thirty-four months or so. 

Mr. WOLF. When is the last time it has been at twenty months? 

Mr. KAPPOS. Actually, it was at twenty months, I want to say 

about 1987, something like that. So it has been a while, but it has 

been there before. 

REVENUE PROJECTIONS

Mr. WOLF. According to a December, 2010 Commerce IG report, 

PTO does not have a documented process for projecting patent fee 

collections. This same view, however, also found that between fiscal 

year 2006 and fiscal year 2009 PTO overestimated certain fee colVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00191 Fmt 6601 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
192 

lections by as much as 30 to 55 percent, while another fee collection was under PTO’s estimate by 35 to 42 percent. Were those figures accurate? And would you explain? 

Mr. KAPPOS. So far as I know, what you have said is accurate. 

Mr. WOLF. And? Why the incompetency in projecting patent fees, 

what do you think the reason for that overestimate and underestimate was? 

Mr. KAPPOS. Well, projecting fees at an agency like the PTO is 

like projecting the future. It is like trying to anticipate what the 

stock market is going to do tomorrow. And, I am quite serious 

about this, there is no business in the world, and I have worked 

in business for twenty-six years, there is no business in the world 

that can project the future. We are making estimates about what 

is going to happen in technology investments as much as several 

years down the road here. We are making estimates about what 

patent filers in the U.S. and in other countries are going to be 

doing. There is absolutely no way we can be 100 percent accurate 

about those. We cannot anticipate financial downturns, like the one 

that happened a few years ago. And when those occur they are a 

surprise to everybody. They certainly were a surprise to me. I do 

not know if anyone else in this room was able to predict those 

downturns. They affect USPTO fee incomes. They are very dynamic. We do our best to anticipate. We actually are quite accurate 

overall. I think in the last couple of years we have been accurate 

to within about a percent, which is an amazing accuracy, actually. 

But we are never going to be perfect. 

PATENT INFORMATION

Mr. WOLF. Last summer you announced a new policy whereby 

PTO would provide China with full access to our entire patent 

database, including regular updates with new patents. Your own 

white paper you said as follows: ‘‘Under the new arrangement, the 

Chinese will have easier access to full text public documents, including the bulk back file of U.S. full text data on tapes followed 

by regular updates.’’ This decision will undoubtedly expedite Chinese state sponsored cyber espionage. I mean, why would you give 

the Chinese this? 

Mr. KAPPOS. Well that last part is not a quote from me. 

Mr. WOLF. No, that is my quote. Why would you give this to the 

Chinese? 

Mr. KAPPOS. China, like all other countries, already has access 

to all of that same information. 

Mr. WOLF. But why should they have any of the access to it, period? China is doing espionage against us, cyber attacks against us, 

stealing from us. We have had IGs from different committees, Commerce, NASA telling us about the cyber attacks by the Chinese 

government. Why would you cooperate in any way at all? I mean, 

your comment was, ‘‘Under the new arrangement, the Chinese will 

now have easier access to full text public documents, including the 

bulk back file of U.S. full text data on tapes followed by regular 

updates via file transfer protocol, all through the most comprehensive search system.’’ Why would you do that? 

Mr. KAPPOS. This is all public information. 


emcdonald on DSK2BSOYB1PROD with HEARING
193 

Mr. WOLF. But why should it be public information is the question I am asking you? Why should we give that to the Chinese government? The manufacturing base of this nation is eroding. What 

they are doing, and different small companies tell me, they are 

going in and seeing what ideas are out there, and they are taking 

them. Why would you make it easier for the People’s Liberation 

Army to access that material whereby that industry or that idea 

could be taken and used by the Chinese? 

Mr. KAPPOS. So patent files—— 

Mr. WOLF. You know what I am talking about. I think you, were 

you not in the meeting that we had before? We had some of your 

people come up to meet with Pat Choate and some other people 

with regard to the problem. Do you remember? 

Mr. KAPPOS. I actually do not recall that. 

Mr. WOLF. Did your people not tell you? 

PTO STAFF. We did, the Director was not in that meeting. 

Mr. WOLF. Excuse me? 

PTO STAFF. He was not in that meeting. 

Mr. WOLF. Did you tell him about the meeting? 

PTO STAFF. We did about the publication and your bill that you 

introduced. 

Mr. WOLF. And did that register with you? 

Mr. KAPPOS. I am not sure what the question is. Did what register? 

Mr. WOLF. Did you give him the full update of what Pat Choate 

said, the meetings, and the concerns? What were the Director’s 

comments based on the meeting that you had telling him about the 

meeting that we had? 

PTO STAFF. I will let the Director—— 

Mr. WOLF. But he does not remember. 

Mr. KAPPOS. I am happy to help if you could just explain the 

question a little bit more fully? 

Mr. WOLF. I think you ought to come by. One, I do not think you 

ought to give the Chinese anything, period. And we are going to officially ask you not to give the Chinese anything. China is taking 

jobs from the United States. The manufacturing base is eroding in 

the United States. As the manufacturing moves offshore, the research and development and innovation moves offshore. The Administration has said they want jobs here in America, not jobs in 

China. This material should not be given to the Chinese in any 

form, in any way. Do you have a comment? Or is this—— 

Mr. KAPPOS. Well, if you have a question, I would be happy to 

answer it, but I did not hear a question. 

Mr. WOLF. You do not understand the concern that I have—— 

Mr. KAPPOS. Well look, it is—— 

Mr. WOLF. Look? 

Mr. KAPPOS. We are required by law to—— 

Mr. WOLF. You are not required by—what law requires you to 

give this to the Chinese? 

Mr. KAPPOS. 35 United States Code, Federal patent law mandates that patents get published when they are granted. It is part 

of the original bargain in the Constitution based on the constitutional exchange of a patent for a publication. We publish all of that 

information. It is all made available on the internet. If we do not 


emcdonald on DSK2BSOYB1PROD with HEARING
194 

make it available on the internet, others will make it available on 

the internet. There is a large industry that does that. That information all becomes instantly available everywhere in the world. 

And it is just a fact of, frankly a fact of life in the 21st century. 

I do not see any way we can go back to not publishing patents and 

not having them become instantly available, full text searchable, to 

anyone in the world on the internet. 

Mr. WOLF. Okay. And, well, we will take a look at that. Mr. 

Fattah. 

PATENT APPLICATION FILINGS

Mr. FATTAH. Let me thank you. Let me go to the, what appears 

to be the compromise about how to reform the patent operation. 

And let me start from the generality and move to the specific. First 

and foremost, can you tell us about the level of activity, we know 

a little bit about the backlog, but the number of applications on 

whatever basis, quarterly or annually? And whether it is on the uptick or the downtick? And who is applying for patents? 

Mr. KAPPOS. Thanks for that question Ranking Member Fattah. 

Indeed, patent filings are increasing. They increased by over 4 percent last year. They are increasing so far this year by a rate of 

about 7.5 percent. And to the question of USPTO’s ability to make 

predictions, we predicted patent application rates would be up 

about 5 percent or so this year. They have exceeded our expectations. I do not know of any way we would have anticipated that 

they were going to be up as much as they have been so far this 

year. But it is causing fees to run quite strong because application 

filings are up so much. 

Mr. FATTAH. And who is applying? Who is making applications 

for patents? 

Mr. KAPPOS. Everybody is applying more. Americans are applying more for patents, and filers from outside of the U.S. are applying more also. 

Mr. FATTAH. Can you quantify the percentages in those two 

groups? 

Mr. KAPPOS. You know, I do not have exact percentages. I would 

be happy to go back and provide those. We have got all of those 

statistics back at PTO. 

Mr. FATTAH. Can you provide a general sense? I mean, are half 

of the patent applications Americans and half from overseas? 

Mr. KAPPOS. Oh, yes. A little more than half originate from overseas now. The last statistics I saw were somewhere around 51 percent or so originating from overseas. 

Mr. FATTAH. Is this not a rubicon that has never been crossed 

before in the country’s history, in which now we have a majority 

of the patents being applied for by people overseas? 

Mr. KAPPOS. It is, yes. 

Mr. FATTAH. So this is correlated to the President’s goal of trying 

to put innovation at the forefront of our efforts to restore the American economy, and the fact that this whole effort of the Administration, the focus on education, and science, and the like, so that we 

can return to a point at which perhaps the majority of patents 

being sought in our country were from American citizens? 


emcdonald on DSK2BSOYB1PROD with HEARING
195 

Mr. KAPPOS. We would love to see that happen. And as you say, 

Ranking Member Fattah, STEM education is a key enabler to increasing Americans’ patent filings, and also the education that we 

do at the USPTO is a key enabler. 

HIRING

Mr. FATTAH. So that is the general context of which, now we get 

to this question, one of the challenges in your shop is the backlog. 

And you have got a program in which I think there is bipartisan 

consensus that unlike the other discussion about cutting, that we 

actually want to hire more people over, was it 1,500? 1,100 new, 

right? 

Mr. KAPPOS. Yeah, about 1,500 this year. 

Mr. FATTAH. Total, but some of that is to replace people who are 

retiring? 

Mr. KAPPOS. Correct, attrition and retirements, yes. 

Mr. FATTAH. About 1,100 are new? 

Mr. KAPPOS. Correct. 

Mr. FATTAH. Patent examiners, right? 

Mr. KAPPOS. Correct. 

Mr. FATTAH. Now this will allow us to do what relative to the 

backlog over what period of time? 

Mr. KAPPOS. Well this will allow us to cut the backlog over a period from now, 2011, through 2015, when we will reach our optimum backlog level. So patent examining, at the end of the day, is 

enabled by information technology systems. It is made more efficient by good management, and we are working on all of that. But 

at the end of the day, it is intellectual work. Watson cannot examine patent applications. It takes human beings to do that. And so 

we are going to get to an optimal backlog and pendency level. It 

is clearly going to require more examiners and that is why we are 

hiring aggressively. 

REDUCING FEES FOR MICRO ENTITIES

Mr. FATTAH. Well I think there is agreement that we should hire 

more. And it is good to know that we can focus on what we need 

to do. Now there is going to be, in the compromise, there is a discussion about reducing fees for small and newly defined micro-entities. Can you illuminate, provide any information about what that 

might mean? 

Mr. KAPPOS. Ranking Member Fattah, that goes back to your 

question about enhancing the access to our agency for small and 

micro-entities, independent inventors, and very small companies. 

We already provide a 50 percent discount on many of our statutory 

fees for small entities. If we get this legislation, we would very 

much like to provide a 75 percent discount for individual filers who 

meet certain income levels, and for very small companies having 

very small numbers of people in them. This in turn will lead to 

greater access to the USPTO, and we hope and believe, greater 

numbers of filings by Americans in the infant stages of businesses—Americans who do not have any business but have a great 

idea, and Americans with very small businesses. 


emcdonald on DSK2BSOYB1PROD with HEARING
196 

PATENT APPEALS TO USPTO

Mr. FATTAH. Now there is, in the adjudication process, the agreement would replace the Board of Patent Appeals and Interferences 

with the Patent Trial and Appeal Board. What, other than the semantics, does that mean? 

Mr. KAPPOS. We have a Board of Patent Appeals and Interferences. It actually would stay in place. Those people evaluate 

about 20,000 appeals we have currently pending in our agency, appeals from the patent process. In addition, if this legislation goes 

through we would be creating this new board that you talk about. 

In terms of management discipline, it will be managed under the 

same roof, if you will, and under the same set of management disciplines as our current board. It will be more Administrative Law 

Judges (ALJs), of course, attorneys trained and skilled in the patent law. Their job will be to sit in panels of three and very expeditiously decide these new post-grant reviews and inter partes reviews that are called for by this legislation. 

Mr. FATTAH. And now I think the real difference is that the appeals will go directly to the U.S. Court of Appeals? 

Mr. KAPPOS. Well that is a difference. But right now our postgrant processes are managed in what is called our Central Reexamination Unit (CRU) at the USPTO, which is comprised of examiners and not ALJs. So it is a big difference to move much of that 

work from the CRU, to this new board. We are going to need a lot 

more ALJs as part of that board in order to handle that workload, 

which will be moving from the CRU into the board. As you mentioned—— 

Mr. FATTAH. Do the ALJs get any particular training? 

Mr. KAPPOS. Yeah, well—— 

Mr. FATTAH. Other than that they are lawyers? 

Mr. KAPPOS. You could think of them as judges. Administrative 

Law Judges—— 

Mr. FATTAH. But other than being a member of the bar is there 

some particular training? 

Mr. KAPPOS. Yes. They are trained essentially as judges. So they 

are not examining patent applications, they are adjudicating. 

Mr. FATTAH. Right. So when Kodak says that BlackBerry or 

someone did, you know, misuse matters that they had on the patent to create cameras on the BlackBerries, they come before them 

and they have a big argument, trials and whatever? And they 

make a decision, right? 

Mr. KAPPOS. Yes, exactly. 

Mr. FATTAH. I got you. I was just trying to understand whether 

they got any particular training relative to patent issues. 

Mr. KAPPOS. Oh, of course. 

Mr. FATTAH. And the answer is no, right? 

Mr. KAPPOS. No, the answer is yes. Yes. 

Mr. FATTAH. Okay. 

Mr. KAPPOS. Oh yes. 

Mr. FATTAH. All right. I got you. Well, it would seem to me that 

we would all be concerned if now the majority of the patents being 

requested in our country were no longer American citizens. Then 

we have a lot of work to do, this subcommittee under our chairman 


emcdonald on DSK2BSOYB1PROD with HEARING
197 

is going to be doing a lot of that work in the area of STEM education, and science. And so hopefully there will be future projections that are off base in terms of the percentage of applications 

filed. And maybe many more of them will be American citizens. 

You know, there is this overall issue of intellectual property in 

terms of our international competitors. And it is not just China. 

You know, others are involved in industrial espionage and other activities. And these are very significant issues as we go forward, 

particularly in terms of rebuilding our manufacturing base. I know 

it is above your pay grade actually about what our relationships 

are and how we conduct international affairs. But hopefully you 

can appreciate the Chairman’s passion on the matter. And I think 

it is logical for us as a country to think about, think anew about 

how we interact with those we are competing with. So I thank the 

Chairman. 

Mr. WOLF. Mr. Schiff. 

Mr. SCHIFF. Mr. Wolf, I think Mr. Honda was here first. 

Mr. WOLF. Okay, Mr. Honda. 

Mr. FATTAH. See how gracious my side is? You know, they want 

to get the order right. 

PATENT AND TRADEMARK OPERATIONS

Mr. HONDA. Thank you, Mr. Chairman. I appreciate it. And let 

me add my words to Congressman Fattah in terms of the passion 

of our leadership here. But let me start out with this question. 

What is the prime, core mission in terms of the concept of having 

a patent and patent offices? 

Mr. KAPPOS. Do you mean multiple patent offices? Or the Patent 

Office in general? 

Mr. HONDA. What is the purpose of the patent? 

Mr. KAPPOS. Well the purpose—— 

Mr. HONDA. It was conceived, it was conceived to do what? 

Mr. KAPPOS. The purpose of the patent system is to provide an 

incentive to innovation. It is a jobs clause, if you will, in the Constitution as originally written. It is about incentivizing Americans 

to innovate. 

Mr. HONDA. And then once you file for a patent, and you receive 

a patent, are there certain things that can be expected from holding a patent? 

Mr. KAPPOS. Yes, absolutely. The constitutional quid pro quo to 

get a patent is you have to disclose your invention and permit it 

to be published for the whole world to see. 

Mr. HONDA. And the inventor or the innovator, do they have protection on that? 

Mr. KAPPOS. Absolutely. You get twenty years of protection from 

the date of filing. 

Mr. HONDA. Against whom? 

Mr. KAPPOS. Against the whole world as to activities that occur 

in the U.S. So any other party making, using, selling, or offering 

to sell anything that infringes your invention, you have the right 

to prohibit them from doing that. 

Mr. HONDA. And if you violate that provision, are there sanctions 

to that? 


emcdonald on DSK2BSOYB1PROD with HEARING
198 

Mr. KAPPOS. Yes. A party who infringes a patent is liable to pay 

damages to compensate the patentee and is also subject in most 

cases to an injunction to prohibit further infringement. 

Mr. HONDA. And trademarks, are they different in nature? 

Mr. KAPPOS. Trademarks are very different in nature. Trademarks protect brands. So think Coca-Cola, think Microsoft, think 

Kodak brands. And trademarks have no time duration on them, so 

a trademark can persist forever. The Coca-Cola brand has been 

around more than a hundred years, I think. 

Mr. HONDA. And to process trademarks versus applications for 

patents, are there distinctions in the timelines? 

Mr. KAPPOS. Very different timelines. 

Mr. HONDA. Which—— 

Mr. KAPPOS. Trademark applications are very complex also, but 

they are processed much more quickly. The trademark applicant 

community wants a processing time of between two and three 

months for trademark applications, and a total of thirteen months 

processing time to final completion. We are right on those numbers 

at the USPTO. 

Mr. HONDA. And so the firewall that is created allows you to continue to do that work in spite of that fact that as far as budgetary 

concerns may lag a little bit this, this gives you the cushion to not 

fall behind and stay on top of the demand for attention in the 

trademark area? 

Mr. KAPPOS. Right, that is exactly right. You know, I think Congress appropriately wanted the USPTO to protect the trademark 

part of the operation and to keep its funds separate and that is the 

nature of the fence. 

REDUCING THE PATENT BACKLOG

Mr. HONDA. Now on to your reform, in I guess Senate 23, there 

is provisions for IT and other things like that. How will these 

things help the backlog? And what is your anticipation of cutting 

down the backlog time? I mean, can you give us a ballpark figure 

of what it might look like? 

Mr. KAPPOS. I can actually be quite precise about that. The backlog is currently a little bit over 700,000 applications on the patent 

side. The appropriate inventory level in the USPTO, in other words 

think like a factory. You have to have parts on hand for people assembling new things going through the factory. Similarly in the 

patent process you want each examiner to have an inventory of 

cases that they are working on. If you multiply out the appropriate 

inventory levels for all of our many, many areas of technology what 

you come to is about 350,000 total applications in inventory with 

the number of examiners that we will have in 2014–2015. 

So that is our optimal inventory. We are on a trajectory to actually get there. To get there in the timeline the President has asked 

for, 2014–2015, requires us to hire a lot of people this year and 

next year especially. So that is why we are in this big hiring bubble. 

Mr. HONDA. Right. So in the hiring of new folks, and the backlog, 

the backlog has been created by what, what factor? Is it lack of 

staff? Was it lack of technologies? Is it a change in technology that 

is more complicated so you need more time to figure it out? You 


emcdonald on DSK2BSOYB1PROD with HEARING
199 

know, what are, what are some of the factors that are involved in 

the backlog? 

Mr. KAPPOS. That is a great question. Like with all complex 

problems there were, in my estimation, a number of issues, some 

on the management side, some on the technology side, that have 

contributed to this backlog gradually building up over the last decade or so. And part of the problem was that we underestimated the 

growth rate of filings, which meant we did not have enough examiners in place to handle that accelerating growth rate. And to give 

you an example, this year alone at a 7.5 percent growth rate, we 

will have over 30,000 additional applications. We are going to get 

over half a million, in fact 528,000 applications this year. That is 

an enormous amount of work coming in. 

Mr. HONDA. So that change, that steep increase, and the increase 

in backlog, is that based upon the new technologies and the lack 

of skills, technical skills, that the folks have to be able to process 

it? They have to have knowledge of what they are looking at, is 

that correct? 

Mr. KAPPOS. Well yes, they do have to have a lot of knowledge 

of what they are looking at. Patent examiners require a lot of training. 

Mr. HONDA. How will you address that? In what way will you address that? 

Mr. KAPPOS. Well, we are addressing that in a number of ways. 

Number one, one of the changes that I have made at the agency 

is to move as much as we can to hiring people who have intellectual property experience when they start at the agency. We are hiring lots of attorneys, patent attorneys, patent agents, and even patent engineers—within weeks are able to start actually examining 

applications. They require nowhere near the amount of training 

time that a fresh graduate out of college requires when that person 

has no IP experience. 

Mr. HONDA. It seems to me that the technical training in terms 

of the law is one thing. The scientific understanding of what you 

are looking at in order to provide the patent and being able to distinguish between different applications would be a critical piece 

where you end up with lawsuits. And in San Jose when we had the 

first lawsuit against Microsoft there were no judges that understood technology. What is it, what is the, is there a ramp up time 

for your staff to be able to come up to snuff? Or are you hiring to 

that issue in terms of your staffing? 

Mr. KAPPOS. We are not what I refer to as skating to where the 

puck is going rather than skating to where the puck is. This is 

basic business discipline. We are using projections of the number 

of examiners we are going to need and factoring in the amount of 

training time that is needed, and calibrating our hiring to that 

number rather than to the number that we might have needed in 

the past. That is why we are starting to get on top of the backlog, 

even though the number of applications is increasing. 

SATELLITE OFFICES

Mr. HONDA. Well having satellites, you have one in Michigan? 

Mr. KAPPOS. We have announced, we have not yet started it but 

we have announced—— 


emcdonald on DSK2BSOYB1PROD with HEARING
200 

Mr. HONDA. What satellites are you looking at? 

Mr. KAPPOS. Well we do not have any firm plans to have additional offices yet. But I will share that in my view we need more 

than one satellite office. We should be experimenting a little bit, 

this is a pilot program after all. I have in mind, and would like to 

be able to subject to appropriations, have three satellite offices 

using slightly different models at each office, in different parts of 

the country, with different demographics involved and then test 

our results in terms of efficiency, retention, quality of the work 

that we are doing, ability to attract the workforce that we need, 

satisfaction of the applicant community, all of those criteria, and 

judge what is working well and then evolve our model. 

Mr. HONDA. I would probably anticipate there will be a lot of applications coming out of the chairman’s district because of the activities there, and my district, and possibly in Adam Schiff’s district. But I guess I would like to know—— 

Mr. SCHIFF. I should get priority. 

Mr. HONDA. It is going alphabetically and by power. But I was 

just wondering what your metrics would be in order to determine 

where are you going to be placing this? You know, you call them 

satellites, and satellites we use them to geoposition ourselves and 

figure out where we are going to be. I was just curious, will it be 

the number of patents? The complex, or the, what is the, the convenience of people being able to get to a satellite? Because I think 

that unless technology takes over and collapses the distance, so I 

would be interested in it. Because it does create activities in the 

area, and—— 

Mr. KAPPOS. The factors that we have been looking at, and the 

factors that we used in making the decision to put our first satellite office in Detroit, included indeed the number of patent applications originating from the area. Of course places like the valley, 

you know, Northern California as well as Southern California, and 

many other places score well against that metric. We also considered the number of skilled patent practitioners practicing in the 

area. Because after all, they are not only our candidate workforce 

since we are trying to hire experienced professionals into the agency, but they are also the practitioner group that is going to be 

wanting to come in and interact at the agency. So we considered 

those folks. We also considered the presence of universities in the 

area that would supply graduates that would want to come and 

work at the USPTO, plus would be available to help with training 

and other interactions with the agency. We considered cost of living, we considered housing prices, we considered access to major 

transportation hubs because we have to fly people around occasionally. 

INDEPENDENT INVENTORS SUPPORT

Mr. HONDA. My last question, Mr. Chairman. Given this is fee 

based, how do you prevent criticism on the fee based process where 

large companies who may have the wherewithal to apply for many 

patents, do they get special consideration? Do they have ways to 

get involved in the process of moving the patent through? Do they, 

or are, is it a fair fee system where you can create a firewall beVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00200 Fmt 6601 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
201 

tween those who are applying and the timelines and the attention 

that they get? Is my question clear? 

Mr. KAPPOS. It is a good question. We actually provide a tremendous amount of assistance for independent inventors and small inventors. We do not provide any breaks really at all for the large 

entities. The large entities pay full fees and they are expected to 

interact at a highly professional skilled level with the agency. Independent inventors get a 50 percent discount and as was asked before, I think by Ranking Member Fattah, if we are able to we are 

actually going to give independent inventors a 75 percent discount. 

We also have extensive assistance programs for them. We have an 

Independent Inventors Assistance Center. We train our examiners 

to help what is called pro se, or independent inventors, to get 

through the agency. We have a range of outreach and programs 

that are designed to help small parties, independent inventors, I 

will say people who are not familiar with the patent and trademark 

system, to help them get into the system. We provide those services 

to them for free. We do not provide any of those services to large 

entities. They are expected to fend for themselves. 

Mr. HONDA. Thank you. And Mr. Chairman, I appreciate your 

patience on my series of questions. 

Mr. WOLF. Sure. Mr. Austria. 

Mr. AUSTRIA. Thank you, Mr. Chairman. And I apologize for 

walking in late. Director, thank you for being here. If I could just 

follow up with Mr. Honda on his question about the backlog, just 

so I better understand, Mr. Director. What is the backlog now? Is 

it, I thought I read somewhere where it was maybe twenty-two 

months behind as far as the backlog on patent approvals? 

Mr. KAPPOS. Well that is pretty close. We are currently running 

with a backlog of a little over 700,000 applications. What that 

translates into in terms of the time it takes us to process an application is approximately twenty-four months. I think it is twentythree and change, but in that range, until we are able to first respond substantively to a patent application. And then about another year after that, I think thirty-four, thirty-five months we are 

currently running, until we finally finish work and grant the patent. 

INFORMATION TECHNOLOGY

Mr. AUSTRIA. And that is one of the concerns that I hear back 

in Ohio, is the delay or the timeframe of this process. And we 

talked a little bit about technology. Have you put a plan forward 

where we can help speed up using resources and understanding the 

budget that we are going through right now to be able to advance 

this technology, to be able to speed up that process? 

Mr. KAPPOS. Yes, absolutely. So technology, especially information technology, is clearly a key driver to efficiency at the USPTO. 

And I am on record as saying that our information technology system at USPTO is moribund. I came from the information technology industry. I am an electrical engineer. I have twenty-six 

years of experience in that industry and worked on some of the biggest projects every conducted. I know a broken IT system when I 

see one, and the USPTO system has major problems. 


emcdonald on DSK2BSOYB1PROD with HEARING
202 

We are on a multiyear program right now to completely reengineer the USPTO’s IT infrastructure. It started with the most basic 

building blocks. We literally did not even have the right power 

coming into our buildings. We did not have the right bandwidth 

across the fiber optical network that we use to run our what is 

called VOIP, or voice over internet protocol. We have gotten all of 

that basic work done so we have gotten the foundation laid. And 

we are now beginning to deploy new single work stations to our examiners, universal laptops, which is another key building block to 

basically enable people to be effective. We are building up the layers on top of that. It will take several years, but we are on the path 

now. 

Mr. AUSTRIA. And you feel comfortable, considering the budget 

process that we are going through right now, that you will be able 

to remain on target with that, and have the resources necessary to 

complete that? I know that is hard to predict that in the future. 

But based on your projections right now? 

Mr. KAPPOS. Well that is a great question. So far we are doing 

okay. So far we are on our plan. We have had to slow down some 

of our information technology efforts. But I will tell you I feel pretty good about where we are and we have been able to keep the 

most critical ones going. If we get our 2011 funding here fairly 

promptly, like in March, we will be able to keep going, running at 

pace. We are being extremely careful about spending money. The 

thing I am the most proud of is I stopped about $300 million in IT 

spending that was being considered, that was in plan when I started at the agency. So we are being very careful about our spending. 

But if we get our resources this year we will, no question, we will 

be able to continue on our plan. 

If we do not get our resources here in the month of March I am 

going to have to stop all of my IT improvement programs because 

I will just not be able to afford going forward with them any further that will start to have an impact. Unfortunately the impact is 

more than month by month because what I have found in working 

for the government is that when you stop projects the restart time 

is tremendously long. So, unfortunately, we are very much nearing 

a critical point here, where we either need to get our money, the 

fees that we are collecting, or I am going to have to stop the IT 

efforts and we are going to suffer a pretty considerable setback. 

INTELLECTUAL PROPERTY THEFT

Mr. AUSTRIA. I appreciate that. One other area, and I apologize 

if this has already been asked, that is brought up to me a lot is 

intellectual property, the theft of that. And I know you have 

worked very hard to strengthen both domestic and international intellectual property protection. But when we look at what is happening, both in the United States and internationally, as far as intellectual property theft costs that continue to go up. U.S. businesses, the numbers I am looking at, $200 billion to $250 billion 

annually. And we can go right on down the line, counterfeit merchandise is responsible for the loss of more than 750,000 American 

jobs. These are substantial losses to our economy. And I just would 

like to get your comment, or how you are proceeding as Director 

to try to deal with this issue? Because I know it is very important 


emcdonald on DSK2BSOYB1PROD with HEARING
203 

back in my state, and when I am talking to folks regarding this 

issue. 

Mr. KAPPOS. That is a great question. IP theft, counterfeiting, piracy is a huge problem. It is a problem in the copyright area. It 

is a problem in the branding area, trademarks. It is a problem in 

the patent area. So the USPTO has an overseas attache ́ program 

that has been very, very successful. We place employees in key embassies. We have got a couple in China, and I would like to put another one in China. We have got Southeast Asia covered. We have 

got Brazil covered. We have got Russia covered, and some other 

countries. What those people do is they work with U.S. businesses 

in the region, coordinating with U.S. business here in the U.S., to 

look for ways that we can strengthen the enforcement regimes 

overseas. So that is something that we are investing in and I think 

we need to invest more in that. 

On the U.S. side, it is our agency that leads in developing policies on a global basis that help our trading partners, in fact in 

many cases, that push our trading partners into adopting IP laws 

and enforcing them in a way that helps to counter piracy and counterfeiting. 

Mr. AUSTRIA. Well and I will just close by just saying that I 

think it is very important that we be dealing with this issue and 

taking on this war against intellectual property theft. Because the 

substantial losses to our economy, I mean, it is a trickle down effect. It impacts, because of the loss of tax revenues, it is impacting 

our schools, our hospitals, our local public departments, and other 

public services. So I think it, you know, there is a trickle down effect here and it is important that we do get a handle on that and 

we deal with that issue. And I appreciate your comment, and thank 

you Mr. Chairman, I yield back. 

Mr. WOLF. Thank you. I am going to go to Mr. Schiff, but that 

is what I was talking about and we will get back to it. Mr. Austria 

is right. I think you have a Pollyanna viewpoint to think that your 

person in Beijing has any impact on this Chinese government. If 

you think so it is naive. It is absolutely, positively, categorically 

naive. 

They have the Nobel Peace Prize winner in jail today, in jail 

today, and his wife cannot even get out of their apartment for 

house arrest. Does that trouble you, that maybe your person in Beijing may be having a difficult time? And we will get to it when I 

come back to the questions, but how successful have you been with 

regard to the Chinese government? And it is sort of a Pollyanna 

thing here with regard to that. They are spying against us. There 

are cyber attacks. My computer was stripped by the Chinese. How 

many times has your computer been hacked. We are going to ask 

you how many cyber attacks? But you just sort of speak in Pollyanna terms. They are stealing us blind. They are stealing us blind. 

They are taking jobs from Ohio, from all over this country. Mr. 

Schiff. 

USPTO RESOURCES

Mr. SCHIFF. Thank you, Mr. Chairman. Thank you, Director, for 

being here. And I wanted to follow up with you on questions about 

the patent backlog, which I have had a long interest in as you 


emcdonald on DSK2BSOYB1PROD with HEARING
204 

know. I think it really is key to our efforts to get our economy moving again and competitive that we reduce this backlog to an acceptable level. I want to make sure, though, I understand the fee diversion a little further, because this has been a particular point of interest of mine. I know there has been an issue in the past in terms 

of the appropriation process where if you come in and you estimate 

that the fees you are going to generate are going to be less than 

they turn out to be, the fees that come in above that amount, above 

the amount that we appropriate, end up getting diverted to the 

Treasury so the Patent Office loses the use of that money. On the 

other hand, if you overstate how much you will need and you come 

in under that, then not only do you not have the advantage of those 

resources but the subcommittee then cannot allocate them for other 

purposes. So I know that has been an issue. But I want to make 

sure I understand one thing about it in terms of the account you 

mentioned at the outset of the chairman’s questioning. And that is, 

if you estimate fees at $1 billion, let us say. And the subcommittee 

authorizes you to use $1 billion worth of revenues. And let us say 

that your actual expenditures are $900 million, and the actual fees 

coming in are $1.1 billion. Do I understand it correctly that the 

amount between the amount you use and the amount that is authorized, which would be $100 million, can go into a reserve for future years, for the use of the Patent Office? But the $100 million 

above that was generated by fees that was not within the authorized limit, that would go back to the Treasury? Is that right? 

Mr. KAPPOS. Exactly right. 

Mr. SCHIFF. Okay. There have been a couple of things we have 

looked at over the years. One has been ending fee diversion, such 

that you could use whatever revenues come into the Patent Office 

until you get to a point where you have eliminated the backlog. 

There has been another proposal where the Patent Office would 

have the capability of setting its own fees. And then of course there 

is the third proposal, which would be to have Congress approve a 

15 percent increase in fees. I know that among the stakeholders 

there has been concern with giving the Patent Office fee setting authority, that, or even the 15 percent increase. They are willing to 

pay more. They are willing for you even to have the authority to 

set fees. But they do not want to do it if they are going to be subsidizing somebody else. If you are going to raise fees and those fees 

are going to go to some other purpose. And, you know, I wonder 

in connection with the trademark question, which I think was a 

good question by the chairman, is some of the reservation that you 

have about using the trademark, the surplus in the trademark fees, 

is that owing to a concern that the trademark community, those 

that use your office for securing trademarks, are going to have the 

same concern that the patent users have? That they are paying 

fees for trademarks that are in excess of what you need and they 

are not going to want to do that if they see those fees going on the 

patent side. Is that part of the issue? 

Mr. KAPPOS. That is exactly right. 

Mr. SCHIFF. And how much are the users of both different users? 

I mean by and large are the trademark users not also patent 

users? Or is there heavy overlap between them? 


emcdonald on DSK2BSOYB1PROD with HEARING
205 

Mr. KAPPOS. There is some overlap, but you would find significant distinctions. I will give you an example. Louis Vuitton, I do 

not know if they have gotten any patent applications in the 

USPTO. They probably have hundreds of trademarks. You know, 

there are many, many other entities that have no patent filings 

and lots of trademarks. And then on the other side if you look particularly at the independent inventor community and small businesses they would have no trademarks or maybe one trademark 

and many, many patent applications. So clearly there is some overlap. But there is an enormous amount of distinct community between those two groups. 

Mr. SCHIFF. And the trademark fee is when they are in excess 

and you are able to carry them over. What has happened in the 

subsequent year? Is it a situation where the committee will reduce 

the appropriation the following year? Because you, let us say you 

had a $100 million surplus in trademark fees and that gets held 

over to the following year. And you normally get let us say $500 

million for trademarks from the committee. Will they then give you 

$400 million the next year because they see you have $100 million 

more that you can use? What generally happens in those circumstances? 

Mr. KAPPOS. You know, in my experience that has not happened. 

What is going on on the trademark side is that the reserve is obviously money paid by trademark applicants that is being used as 

part of our trademark next generation system, an IT project that 

requires substantial investments that we are making right now, although we are at the early stages of it, that is designed to very 

substantially upgrade the capabilities of the trademark community 

to manage trademark portfolios. 

We believe cutting management costs for U.S. businesses and 

significantly advantaging them over time, but it requires an investment on our part. That is what the trademark community wants 

done with the funding that they have paid in and that is what we 

are using it for. 

Mr. SCHIFF. Getting back then on the patent side of things, 

where was the backlog—how long have you been now director? 

Mr. KAPPOS. Eighteen months. 

Mr. SCHIFF. Eighteen months. And where was the backlog when 

you began, where is the backlog now, and how does that compare 

the trajectory you need to be on to eliminate all but the sort of acceptable norm by 2015? 

Mr. KAPPOS. When I started, it was somewhere in the 765,000 

range. It is now in the low 700s. We expect to go below 700 later 

this month. We expect to be down to about 655,660 by the end of 

this financial year. 

We actually are on trajectory despite the fact that we have been 

constrained in our spending this year and we were constrained 

most of last year. We are on trajectory to get down to the appropriate levels of 10 months to first action and 20 months to final action in 2014 and 2015. So if we get our funding, we will be able 

to make those targets. 

Mr. SCHIFF. Now, you have had an excess of applications in 

terms of what your expectations were. How much are you able each 

year thus far or every six months to not only keep up with the inVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00205 Fmt 6601 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
206 

coming but to reduce the backlog of those that are pending? Do you 

need to reduce the backlog 100,000 a year to meet your target? And 

it does not sound like you have been reducing it 100,000 a year. 

I mean, if you are at 700,000 now and you want to get down to 

what is it, 200,000? 

Mr. KAPPOS. Three hundred and fifty. 

Mr. SCHIFF. Three hundred and fifty. That means you need to reduce it by 350,000. 2015 is only 14 years away, so—— 

Mr. KAPPOS. Four. 

Mr. SCHIFF. What’s that? 

Mr. KAPPOS. Four years away. 

Mr. SCHIFF. Four. What did I say? 

Mr. KAPPOS. Fourteen. 

Mr. SCHIFF. Fourteen. Oh, God. Okay. So what does that mean 

in terms of how much you need to reduce it each year and are you 

on that pace? 

Mr. KAPPOS. Yes. We really are. So the requirement that the 

President and the Secretary of Commerce gave me was to get the 

patent pendency level to the right amount by 2015. 

To do that in that amount of time as a businessman—— 

Mr. SCHIFF. Right. 

Mr. KAPPOS. I have to resource up in the early years to get those 

folks trained, get our examiners trained and productive so that in 

the out-years, which in this case is 2013 and 2014 and then finally 

in 2015, those extremely productive examiners are taking the backlog down rapidly. 

So if you look at our projections, we have a model that projects 

given the number of employees we have and their seasoning, the 

GS levels they are at, the technologies that they examine, and how 

that backlog is going to move, if you look at it, it is going to go this 

year to, as I mentioned, about 655, 660,000 or so by the end of this 

financial year. By the end of the next financial year, that would be 

2012, end of financial year, it will be down about to 550,000. 

You can see, Representative Schiff, the rate of decrease accelerates over time, but it is not a surprise because more examiners are 

coming online and they are more highly trained and they are more 

seasoned. 

So we get 60,000 off this year, 100,000 off next year, something 

like 150,000 off the year after that, and that is why you see in our 

plan that we stop hiring. After 2013, we stop hiring altogether. We 

want to start attritting some examiners off so that we come in and 

have a smooth landing at about 350,000. 

Mr. SCHIFF. Isn’t the big variable in all this, though, that you 

have, I mean, what, 100 percent more applications this year than 

you thought? I mean, that is higher. But you had a substantially 

greater number of applications this year than anticipated. Someone 

has got to handle those. 

You know, hopefully, the recovery will continue to gather momentum, which I assume will mean more applications. How can 

your strategy take into consideration that growth if it was unanticipated? 

Mr. KAPPOS. Well, that is a great question. So we are experiencing about a 7.5 percent increase in filings this year which indeed has exceeded by about two and a half percent our projections. 


emcdonald on DSK2BSOYB1PROD with HEARING
207 

As the manager of the agency, that makes me nervous because it 

puts all of my plans at risk. 

Obviously we are going to have to recalibrate over time as we 

learn things, and we will come back to this committee with recalibration. I think it is a good thing, in fact, and a great thing that 

our patent application filing rates are going up. It shows that innovation really is where the action is. So I am very comfortable with 

filing rates going up. 

But clearly we are in a dynamic environment. We cannot perfectly predict the future. As things change, we are going to keep 

skating to where the puck is going. If we find out it is going to a 

little different place, we are going to start skating there. So I will 

readily agree with you that that is going to require recalibrating 

over time. 

Now, so far, it is looking like we are able to absorb the increases 

because, of course, other factors are working out a little differently 

too. We are hiring some of these experienced people. They are getting online quicker. 

We increased our efficiency by 20 percent last year. That is helping us considerably. The new IT systems are helping us somewhat 

or we think they will as they start coming into play. 

Mr. SCHIFF. In the scale of things, what would be of most value 

in terms of having the consistency of resources to stay on track 

with decreasing the backlog? Would it be a flat 15 percent increase? Would it be the capability of setting your own fees or would 

it be a policy here in the Congress to ensure that there is no diversion of fees because you could set fees all you want, but if we do 

not appropriate the money generated by those fees, then you just 

become a cash cow for someone else? What would be the most useful in terms of making sure that that downward trajectory stays on 

track? 

Mr. KAPPOS. The answer is all of the above. We really do need 

fee setting authority for the USPTO. We need to set and keep our 

fees reasonably in line with what is going on and the cost to deliver 

our services. Right now our fees are, I would have to describe them 

as arbitrary and bizarre relative to the cost to perform our services. 

So we need to set our fees in a rational way. We obviously need 

to keep that money. I would be very uncomfortable changing 

USPTO fees, increasing them in any way at all, if I was not able 

to assure the people sitting behind me here that I am going to be 

able to use that money to do what the American people are paying 

into the patent system for. So the ability to retain fees, to spend 

them on decreasing that backlog is extraordinarily important. 

The 15 percent surcharge is simply a financial vehicle that gets 

an infusion of money coming into the agency quickly so that we can 

continue to embark on the programs that we are on, the IT improvements, the hiring programs, et cetera, during the period of 

time until we are able to have a really thorough process with good 

oversight from this committee and others and the IP community to 

set fees at much more rational levels. 

Mr. SCHIFF. Do you have the authority within the current fee 

structure to set differing fees based on the complexity of the application or based on the multiplicity of applications filed by a single 

party? In other words, a massive user of the Patent Office that files 


emcdonald on DSK2BSOYB1PROD with HEARING
208 

a tremendous number of applications or tremendously complex applications, do you have the capacity now to discriminate in terms 

of fees for those? 

Mr. KAPPOS. The answer for the most part is no, we do not. We 

charge the same fee for an application that is three pages in length 

as for one that is 3,000 pages in length. That is one of the problems 

that we have. 

Mr. SCHIFF. Well, I mean, do you need authorization to do that 

and if you had the authorization, would you utilize it? Would it be 

good policy to do that? 

Mr. KAPPOS. We would need authorization in order to change 

those fees. We certainly would consider this is something where we 

need to consult with the intellectual property community, but we 

certainly would consider differential charges based on things like 

complexity and length of application. But those are perfectly rational criterion to consider. 

Mr. SCHIFF. Are you embarking on a new plan to allow companies to pay extra to have an expedited patent application? 

Mr. KAPPOS. Yes, we are. It is called Track One and—— 

Mr. SCHIFF. Was that authorized by Congress? How are you able 

to do that, but not differentiate—how can you differentiate fees 

that way but not based on complexity? 

Mr. KAPPOS. That is a regulatory fee and we are actually permitted under statute to set regulatory fees. So that is the way we 

did that one. The basic filing fees are set by statute and those fees 

we are not able to set. 

Mr. SCHIFF. And tell me the difference between the statutory fees 

and the regulatory fees. 

Mr. KAPPOS. Well, some number of our fees, I want to say 15 percent of them, something like that are regulatory and those are the 

ones USPTO can adjust. Some of our fees relative to continuing 

practice, what is called continuation applications, are regulatory. 

But most of our fees, a large majority of them and the most important ones are statutory. 

Mr. SCHIFF. And the last question, Mr. Chairman. 

Is there an independent agency like GAO, for example, who is 

currently overseeing the quality of the patents such that in the zeal 

to reduce the backlog we are not sacrificing the quality of the patent examinations for quantity? 

Mr. KAPPOS. There is not any such agency. We do, however, have 

our own quality metrics that we use at USPTO that are published, 

freely available for anyone to look at. And using those metrics, our 

quality actually increased last year because we started giving examiners more time to examine applications. Our quality metrics 

went up about a percentage point each. 

Mr. SCHIFF. Thank you, Mr. Chairman. 

Mr. WOLF. Mr. Yoder. 

Mr. YODER. No. 

Mr. WOLF. Mr. Serrano. 

Mr. SERRANO. I am sorry, Mr. Chairman. 

Mr. WOLF. We will come back. 

Mr. SERRANO. No, no, no. I just walked in. And we had a long 

hearing, so I am just glad to be here. 

Mr. WOLF. We are glad you are here too. 


emcdonald on DSK2BSOYB1PROD with HEARING
209 

Mr. FATTAH. Did you have a good hearing? 

Mr. SERRANO. It was wonderful. 

PUBLICATION OF PATENT APPLICATIONS

Mr. WOLF. Let me just put something right on the record. I am 

really disappointed that you did not get in detail and you did not 

understand. It almost seems like we were in the minority last year 

and you literally blew us off. You just did not really care. And I 

do not think that is appropriate. 

And, frankly, we had a good meeting. We brought a lot of people 

in. I thought you would be ready and, frankly, you are not prepared. And this is a big issue. It is an issue I am going to drive 

on, I am going to push on, I am going to force on until they tackle 

me and take me down. We are going to deal with this issue. And 

you did not even know anything about it. And so maybe this office 

ought to be abolished or you ought to get a new person in the office. And I am kind of disappointed. 

Now, if you can give me a list of when PTO did not have a backlog and when PTO did have a backlog each and every year up until 

current time. And, secondly, if we can get a list of how many patents per examiner are completed each year, also how many applications are examined by those who are at the headquarters and those 

who are now doing telework. 


emcdonald on DSK2BSOYB1PROD with HEARING
210 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 301 here 67061A.137
211 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 302 here 67061A.138
212 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 303 here 67061A.139
213 

Mr. WOLF. Would you please explain why the PTO makes patent 

applications available online some 18 months after they are filed 

and as they continue to wait in the backlog queue? Is that by constitution, by law, or by regulation? 

Mr. KAPPOS. That is by law. 

Mr. WOLF. By law. What year was that law passed? 

Mr. KAPPOS. That was in the AIPA, I believe 1999. It might have 

been the previous law in 1996 that instituted it. 

Mr. WOLF. What we were talking about in the meeting that you 

never heard anything about or either forgot about is, should there 

be an exception with regard to a national security issue or a dual 

use issue whereby when the person or company files it, they may 

say this may be something that somebody may want to make a nuclear bomb or the Chinese may take this and develop an industry? 

Has there ever been an exception whereby at the time, there 

could be an exclusion based on that? 

Mr. KAPPOS. Well, we already have that very system. A number 

of U.S. security agencies look at all patent applications filed at the 

USPTO and make that very judgment about national security risks 

and they do. 

The U.S. security agencies take some of the applications out of 

our agency and put them under what is called a secrecy order and 

that happens. Every single application that is filed at the USPTO 

goes through that process. So we are actually quite sensitive to 

that issue, Mr. Chairman. 

Mr. WOLF. Is that by the patent person who files it or is that by 

the National Security Agency and do they also look at economic 

issues in addition to national security issues? 

Mr. KAPPOS. It is the—— 

Mr. WOLF. If a plant closes in Ohio or a plant closes in Virginia, 

that is an economic security area because the company has left. We 

do not make any more television sets here in the United States. 

They are made in China and in Mexico. So it is an economic security issue. 

Is there a category for economic security? 

Mr. KAPPOS. Not that I know of. 

Mr. WOLF. Would it be a good idea if there were? 

Mr. KAPPOS. I would need to see what that looked like. I would 

be concerned to understand what such a category looked like before 

I tried to comment on that. 

Mr. WOLF. Well, so we do not take too much time, maybe you 

should come by the office and we can talk about it if we can get 

an appointment with you. 

I want to see us doing something like that. I think the jobs that 

are being taken out of this country and going to places like China 

both from the national security perspective with regard to a threat, 

but also the economic security perspective is very, very important. 

Do other countries make their patent applications available online? 

Mr. KAPPOS. Yes, many do. In fact, if not all—— 

Mr. WOLF. Give us a list of those who do and those who do not. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
214 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 307 here 67061A.140
215 

Mr. KAPPOS. Oh, absolutely. Sure. 

Mr. WOLF. Does China? 

Mr. KAPPOS. To my knowledge, they do. In fact, U.S. examiners 

have access to all Chinese patents and published applications at 18 

months. China, in fact, requires all patent applications to be published at 18 months. They have no carve out and we get—— 

Mr. WOLF. What about Russia? 

Mr. KAPPOS. Russia requires all applications to be published also. 

Mr. WOLF. And what about France and Germany? 

Mr. KAPPOS. Oh, of course. They long since have. 

Mr. WOLF. Does the PTO provide this information in a regular 

weekly update to China? 

Mr. KAPPOS. You mean—— 

Mr. WOLF. The information. 

Mr. KAPPOS [continuing]. Information about U.S. applications? 

Mr. WOLF. Right. 

Mr. KAPPOS. I believe that it is provided, that information is provided. Well, yes, in the sense that we publish patents on a weekly 

basis. Every Tuesday when patents issue, we publish them on the 

internet and American information providers publish them on the 

internet. So they are available to everyone in the world then. 

Mr. WOLF. Does it concern you that maybe China is taking them 

and using them for certain purposes? 

Mr. KAPPOS. I do not know what purposes you are thinking of. 

I think that every person in the world has access to our published 

patents at the same time and is able to use them for the disclosures that they contain. 

Mr. WOLF. And for taking ideas from them? 

Mr. KAPPOS. Yes. That is the purpose for the patent system. 

Mr. WOLF. Whereby they can then violate the patent? 

Mr. KAPPOS. No, not to violate the patient, right, but to learn 

from them. 

Mr. WOLF. Has there been any enforcement against China with 

regard to any violation of patents? 

Mr. KAPPOS. I believe in the U.S., there has been tremendous enforcement of infringement of—— 

Mr. WOLF. In China, have there been any sanctions with regard 

to activity in China? 

Mr. KAPPOS. Well, I am not, you know, an expert on the daily 

details there, but the Chinese do have patent laws that I would 

characterize as—— 

Mr. WOLF. Of course, they also have laws of freedom of speech 

and freedom of religion. It is in their Constitution. But there are 

30 Catholic bishops in jail today. There are several hundred Protestant pastors in jail today. 

If you need a new kidney, for $55,000, you can go over to China, 

stay in a four-star hotel, and they will take your blood type and 

they will go into the prison and they will then take the blood type 

of the prisoner. It may be a Catholic bishop or it may be a pickpocket. 

And so they have what is in their laws and regulations, but have 

there been any enforcements with regard to any violations of patent infringements by China in China? 

Mr. KAPPOS. Yes, I believe there has been enforcement. 


emcdonald on DSK2BSOYB1PROD with HEARING
216 

Mr. WOLF. Well, can you give us a list of them? 

Mr. KAPPOS. Yes, we can certainly provide what we know. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
217 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 311 here 67061A.141
218 

TELEWORK

Mr. WOLF. Let’s move to the telework. How many PTO employees are participating in your telework program and how many are 

eligible to participate? 

Mr. KAPPOS. Okay. I might need some statistics on that. We have 

I want to say as many as 7,000 of our employees are teleworking 

at least one day a week now. We have all of those statistics though. 

And if you want to bear with me, I probably—— 

Mr. WOLF. I definitely want it because I was the author of the 

law to bring about telework at the Patent and Trademark Office. 

Mr. KAPPOS. Thank you very much, Mr. Chairman. It has been 

enormously successful for us. 

Mr. WOLF. But you do not have those numbers available? 

Mr. KAPPOS. Well, I may have them here. Bear with me just a 

second. Let’s see here. IT improvements. Okay. Let’s see. I think 

I have—okay. So you are looking for total numbers of—— 

Mr. WOLF. Participating and eligible. 

Mr. KAPPOS. Yes. I am going to turn for a second to my CFO and 

see if he has got those exact numbers with him. 

Tony. Okay. No. That is the same document I have. And it does 

not have the exact numbers on it. It is thousands though. We 

have—— 

Mr. WOLF. But I wanted the exact number. Do you know how 

many were participating and how many were eligible? 

Mr. KAPPOS. We can get you the exact numbers. 

[The information follows:] 

As of the end of the First Quarter, 2011, Telework Statistics are: 

7,396 Eligible Positions 

6,119 Eligible Positions Teleworking (83% of eligible positions teleworking) 

Mr. WOLF. I thought you would have had that for the hearing. 

That is just a thought that I had. 

Those who telework outside of this region, how often do they 

have to return or do they have to return to Washington? 

Mr. KAPPOS. They currently still do have to return to Washington. 

Mr. WOLF. And how often per year and why? 

Mr. KAPPOS. Well, they have to return, if I recall right, once per 

biweek which means once every other week, they—— 

Mr. WOLF. So if they are in Montana or California, they have to 

come back? 

Mr. KAPPOS. Yes. And that is a problem for me too. 

Mr. WOLF. And what is the reason for that? 

Mr. KAPPOS. Well, the law as it was written until it was just recently changed last December statutorily required every employee 

to report to their duty station once per biweek. Now, thanks to 

your leadership, that law was changed. 

We are currently aggressively in the process of going through the 

steps that the law, that the new law required us to go through in 

order to waive that requirement for all of our employees. And I intend to pursue that and I am pursuing it extremely aggressively. 

Mr. WOLF. Have you conducted any studies to determine if productivity has improved or sick leave usage has gone down? 


emcdonald on DSK2BSOYB1PROD with HEARING
219 

Mr. KAPPOS. Yes, I have. And that information I have right in 

front of me here. And would you like me to—— 

Mr. WOLF. Sure. 

Mr. KAPPOS [continuing]. Share some of that information? So 

what we have learned from surveying our employees and looking 

at our own data is that the amount of examining time is approximately 3.5 hours per examiner greater per biweek for examiners 

who are on our teleworking programs. And the reason for that is 

that they use less leave, less sick leave and less other kind of leave 

because of the flexibility involved. 

We also know that our GS14 and 15 employees, which are our 

most productive examiners, average nearly 10 percent more examining time, those examiners who are working at home versus those 

examiners who work in the office. So that is an incredible increase 

in efficiency, 10 percent increased efficiency. 

We also have measured the rate of successful ratings of examiners who work at home versus examiners who come into the office 

and we have measured 15 percent higher rate of outstanding performance for examiners who work at home versus those who come 

into the office which means that 26 percent more work gets done 

by those people with 78 percent fewer hours. 

So statistically the legislation that you passed, Mr. Chairman is 

what we call a no-brainer from a business viewpoint. It pays. 

Mr. WOLF. With all the new employees you are seeking to hire, 

do you currently have the office space to absorb the new employees? 

Mr. KAPPOS. The answer is that we do to a limit, but we are dependent, very dependent on further expansion of our telework programs to be able to permit employees who qualify for telework to 

go work at home and then reuse their offices for some of the new 

examiners coming in. 

SATELLITE OFFICES

Mr. WOLF. I am going to go to Mr. Serrano in a minute or two. 

But on the issue with regard to the office in Detroit, why did you 

choose Detroit? 

And by having these regional offices, you are in essence arguing 

against the very purpose of the telework. There are many in Congress who very vigorously opposed this telework bill. And one of 

the arguments that we used is we said there would be less office 

space. We said it would do exactly what you said it would do. And 

now you are anticipating establishing a satellite office, what seems 

to work against the very purpose that we argued why we needed 

telework. 

What are your thoughts about that? 

Mr. KAPPOS. Well, the answer is that no, not at all. In fact, establishing satellite offices is not only consistent with teleworking, 

my vision is it is going to accelerate teleworking. 

What you get when you establish a satellite office is a place for 

people to go in to, applicants who want to conduct business with 

the agency and our examiners who need to conduct business with 

applicants there, especially to conduct interviews, and to meet with 

their managers and do the other things that you occasionally need 

to go into an office to do. 


emcdonald on DSK2BSOYB1PROD with HEARING
220 

Having an office in Detroit is like opening a giant door to new 

teleworking. It is going to enable us to employ potentially many 

hundreds of people if we are successful in Detroit, skilled IP professionals that we would never get to move to Washington, D.C. for 

the time that they need to spend training, then let them work at 

home in Detroit or in Montana or wherever else they want that is 

proximate to Detroit. They will be able to then commute into there 

when they need to do interviews with applicants but work at home 

other times. 

So I see having satellite offices as not only consistent but an 

accelerant to getting more qualified examiners in our agency and 

giving them the flexibility to go work at home but have a place to 

come into without having to get on an airplane when they need to 

do an interview with an applicant or conduct other business. 

Mr. WOLF. So currently now they have to come back into Washington to do the interview? 

Mr. KAPPOS. Yes, in many cases. Applicants on the patent side 

have a statutory right to have a face-to-face interview with an examiner. And the only way we can live up to the law is to require 

our examiners to come here to—well, to Alexandria to conduct 

those interviews. 

Mr. WOLF. You could not have a cooperative arrangement with 

a couple other Federal agencies? For instance, I am sure there 

must be an office of Department of Housing and Urban Development whereby a collocation, where you could use that because that 

takes place in a Washington, D.C. office. There are some telework 

centers whereby they have joined with other Federal agencies and 

that is basically a telework center in essence in another agency 

where they come and use the conference room. And you cannot do 

that? 

Mr. KAPPOS. We can. In fact, that is exactly what we are doing. 

One of the reasons among all the other reasons that I mentioned, 

one of the reasons we chose Detroit is because there is a Commerce 

Connect there which is a sister component of the Department of 

Commerce. We are able to capture efficiencies by having other 

parts of the government, especially other parts of Commerce there. 

So over time establishing these offices in conjunction with other 

Federal agencies to cross-use floor space, to capture efficiencies is 

entirely natural, entirely businesslike and completely in the plan. 

Mr. WOLF. How many satellite offices do you plan on establishing? 

Mr. KAPPOS. Well, I do not know. As was asked previously, there 

is not a plan. There is not a budget currently to establish more offices. In fact, we will not even be able to go forward with the Detroit office if we are stuck under the current continuing resolution. 

We are not going to have the funds for it. 

But my view is that we should establish several initial offices, 

three is the number that I have been discussing from time to time, 

in different parts of the country, very different areas so that we 

gain experience with different models. 

USPTO’S IMPACT ON INNOVATION

Mr. WOLF. Okay. Mr. Serrano. 

Mr. SERRANO. Thank you, Mr. Chairman. 


emcdonald on DSK2BSOYB1PROD with HEARING
221 

One of the things that President Obama said in his State of the 

Union which has stuck with me and I think is the challenge for the 

majority party as it sets out to have some very dramatic budget 

cuts and also a challenge for us as we decide to go or not go along 

with some of those cuts is how do we at the same time keep investing enough money so that our scientists and other folks can create 

and invent things. And he said that and I feel strongly about that. 

So as far as patents go, and I do not know and forgive me if you 

have already asked this question, is there a sign, is there a history 

in the last couple of years of where we are going? Are Americans 

inventing more or are most other people inventing and we are not? 

I mean, that was part of our strength. That has traditionally 

been part of our strength as a county. And, again, he said a couple 

of hundred things at that State of the Union. For some reason, that 

one stuck with me, the fact that as we go out to cut these budgets, 

we have to keep investing here and creating whether it is a new 

medicine or a new Velcro or a new Tang or whatever it is. I am 

giving credit to all these things NASA did, right? But, you know, 

let’s go out and be innovative again and be the world leader. 

Any signs in your office of where we are going? 

Mr. KAPPOS. So the good news in that regard, we did talk about 

it a little bit earlier, the good news is that Americans are innovating like crazy. They are every bit as innovative. Our country is 

every bit as innovative, if not more than we have ever been. We 

are getting more patent applications including more applications 

from Americans. 

As Ranking Member Fattah I think pointed out earlier, we are 

also getting more applications from overseas, so we are just getting 

more applications from everywhere. 

The indications that I get from both the statistics and the inventors that I talk to, thousands and thousands of them, is that there 

is no shortage of invention in this country. 

The thing that is in shortage right now is the other resources, 

access to capital, the mentoring that is needed in order to transit 

great ideas through the Valley of Death and into products and 

services. 

Mr. SERRANO. And is there a tie-in between people on their own 

being innovative or are universities still playing a major role? 

Mr. KAPPOS. Universities are playing a more important role all 

the time. 

Mr. SERRANO. More? 

Mr. KAPPOS. Absolutely. If you look at the statistics, you see university patent filings have increased very substantially. If you look 

at seminal inventions or what is called breakthrough inventions, 

many of them originate from universities. Universities are playing 

statistically a much increased role in technology transfer, in diffusing technology from labs into communities. Universities are 

playing an enormously important role. The Bayh-Dole legislation—— 

Mr. SERRANO. Right. 

Mr. KAPPOS [continuing]. Passed by Congress several decades 

ago was absolutely instrumental and it is, in my view, substantially responsible for our country’s economic leadership. 


emcdonald on DSK2BSOYB1PROD with HEARING
222 

Mr. SERRANO. I remember about 15 years ago, I was talking to 

some folks who were visiting the Hill from Virginia Tech and I said 

wouldn’t it be nice if we had a car that would park itself. And they 

said we are working on that. 

Mr. KAPPOS. We do. 

Mr. SERRANO. You know, and so, I mean, that is exciting when 

you see that happening which leads me to kind of a fun question. 

I do not know if you got into the details, but what are Americans 

inventing? 

We spend so much time on the iPad 2 coming out and the new 

nano iPad which will probably, you know, bring the singer out into 

your living room or whatever. And, you know, and you can then 

kick him or her out of your room. But what are we inventing that 

the American people do not know about? 

Mr. KAPPOS. So American innovation is up across the board. We 

measure it at the USPTO and we are, you know, lucky in that we 

are the first stop on the line for innovation. Every new invention 

first comes to the USPTO. So we see them all. 

We are seeing increases in patent filings across the board. So everything from the mundane, believe it or not, new ways to make 

wheels, still getting invented. We see those patent applications. 

Mr. SERRANO. The wheel is being reinvented? 

Mr. KAPPOS. Believe it or not. Composites that are used to make 

wheels, new manufacturing processes, those kinds of things. 

But the places where we are seeing the biggest inventions are in 

nanotechnology, you know, really serious materials technology, 

green tech innovation, think windmills, wind turbines, you know, 

gas, electric, those kinds of things. We are seeing big increases in, 

as we have for years, in the information technology sector, the 

iPads and the iPods and the mobile phone industry. All of the wonderful innovations in there continue at pace. And our patent filings 

continue to increase in those areas. 

Then I would point to the bio area as a key area of U.S. leadership. And, you know, we have a lot of folks from California here. 

Think San Diego. Think Silicon Valley. Think Boston. Think Research Triangle Park. The U.S. far and away leads in bio innovation and the patent filings show it. 

Mr. SERRANO. Again, I apologize if this has been asked, but people come to you. So I invent something and I bring it to you to get 

a patent. Do I have to first prove it works to somebody else? Is part 

of your role ‘‘get out of here, that does not work, stop wasting my 

time with that?’’ 

Mr. KAPPOS. Well, yes in the sense that you have to disclose the 

invention. And this is required by law—— 

Mr. SERRANO. Right. 

Mr. KAPPOS [continuing]. United States Code Title 35. You are 

required by law to disclose the invention and describe in sufficient 

detail for someone skilled in the area to actually make it and use 

it. So, yes, you are required to show that you know how to build 

this thing, you know how it works and how to construct it. 

Mr. SERRANO. And that it actually does what you claim it does? 

Mr. KAPPOS. Exactly, yes. 

Mr. SERRANO. All right. 

Mr. KAPPOS. Yeah. 


emcdonald on DSK2BSOYB1PROD with HEARING
223 

Mr. SERRANO. Thank you, Mr. Chairman. 

TELEWORK

Mr. KAPPOS. Mr. Chairman, I now have the statistics that you 

asked for before, if I can provide them to you. 

So USPTO’s fourth quarter 2010 teleworking statistics, we had 

out of a total of 9,778 employees as of the end of fiscal year 2010 

fourth quarter, we had 5,915 teleworkers. So those are people actually teleworking, 5,915 teleworkers. And that represented 83 percent of the eligible employees. So a very, very high rate of teleworking. 

Mr. WOLF. Do you have a patent that you want to—— 

Mr. SERRANO. I have a way that we can vote from our districts 

while attending a town hall meeting, although come to think of it, 

we might be better off here. 

By the way, Mr. Chairman, I say this with great pride and for 

the admiration I have for you, not only did you affect the workforce 

in the Federal Government with the telecommuting, but you also 

set the tone for Congress. 

And I can brag about the fact that I was one of the first Members 

of Congress a long time ago that set up the ability to get on my 

laptop in the Bronx or here on a no vote day in Virginia and just 

with the ID, the secure ID, be able to work as if I was there. 

When I used to go to schools and talk to people, I would say here 

is the best way to explain it. When I am in the office, I am sitting 

in front of a computer. Now I am in my living room sitting in front 

of the same computer with the rest of my staff and they think I 

am there. 

Mr. WOLF. No, I know. I have often said there is nothing magic 

about sitting before our computer or strapping yourself into a metal 

box and driving 50 miles to work. And you drive 50 miles if I recall. 

Mr. SERRANO. I did at that time, yeah. 

Mr. WOLF. At that time, yes. 

PATENT OPERATIONS STUDIES

I am looking here at the patent reform report by the Congressional Research Service, its patent reform in the 112th Congress in 

innovation and ideas report. And the last look, the last in depth 

look at this issue shows was the National Research Council, National Academy of Science, a patent system for the 21st century 

which was written in 2004. 

We are going to ask the NAPA, the National Academy of Public 

Administration, to take an in-depth look at the PTO operation, 

your operation. We will ask the staff to also look at the National 

Academy and see if maybe they may be the best. 

You sound somewhat like many other patent leaders have said 

and, yet, conditions continue to be worsening. So we want to make 

sure because the one figure that you said to Mr. Serrano, and you 

have said it several times, the number of overseas patents are increasing. 

If you could give us the number of patents that have been filed, 

let’s say from 1988 because we are using that year as the year of 

U.S. and foreign in 1988, 1989 right up to present time. And then 


emcdonald on DSK2BSOYB1PROD with HEARING
224 

if we could get a breakdown as to what countries they are coming 

from. 

But the conditions may be and based on your answer may be 

dramatically changing. So what we are going to do is ask NAPA, 

and we would ask you to cooperate with NAPA—— 

Mr. KAPPOS. Sure. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
225 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 329 here 67061A.142
226 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 330 here 67061A.143
227 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 331 here 67061A.144
228 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 332 here 67061A.145
229 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 333 here 67061A.146
230 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 334 here 67061A.147
231 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 335 here 67061A.148
232 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 336 here 67061A.149
233 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 337 here 67061A.150
234 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 338 here 67061A.151
235 

Mr. WOLF [continuing]. And the National Academy of Science as 

they take a look at your operation. Have you seen a trend that 

shows a reduction in the number of U.S. patent filings? 

Mr. KAPPOS. No, not at all. In fact, the opposite. 

Mr. WOLF. Is it a reduction in percentages or is it a reduction— 

an increase overall as well percentages? As the foreign ones are 

going up, are we going up as much? 

Mr. KAPPOS. Foreign filings have indeed increased in percentage. 

If you look back a number of years ago, fewer than 50 percent of 

U.S. patent filings were from or originated overseas. Now, as I 

mentioned before, slightly more than 50 percent originate from—— 

Mr. WOLF. When did you cross that line? 

Mr. KAPPOS. I want to say two, three years ago, we hit the 50 

percent point and went over that. 

Mr. WOLF. Okay. Mr. Fattah, I have a few more. You want to 

go back and—— 

Mr. FATTAH. Yeah. 

Mr. WOLF. Yes, go ahead. You go ahead. 

Mr. FATTAH. You want me to go? 

Mr. WOLF. Yes, you are next. 

Mr. FATTAH. Yeah. Within the last year of the Bush administration, we crossed this rubicon. But part of this is that basic science 

research—— 

Mr. WOLF. Was that a compliment or—I did not get—— 

Mr. FATTAH. Well, no. It is just a fact. It has nothing to do 

with—— 

Mr. WOLF. Oh, okay. 

Mr. SERRANO. What do you mean rubicon? 

Mr. FATTAH. Oh, that we crossed to the 51 percent mark. But it 

is a very important issue because of so called patents, so called engineers. But as the chairman has said, when we are producing 

70,000 engineers and China produces 700,000, there is going to be 

a differential over time. 

Now, we were at a moment where we led the world in scientific 

research. We now represent about a third of that. And, you know, 

about a third of it is in Europe and a third of it is over in Asia, 

in India and China. So it is a very different world map. And, you 

know, we could have a small country like Singapore investing $4 

billion in basic scientific research. 

And when we look at the National Science Foundation we are 

not—I mean, we are in a challenging situation to find the resources. And as we all know, until we get to some budget reform 

around some of the things that are really driving the budget, we 

are not going to be making these investments that we need to 

make in STEM. And it is a major issue. 

But I want to drill down for a minute. When someone applies for 

a patent, do they have to, other than the fact that they have this 

idea, do they talk about how they developed the idea? Do they talk 

about where they got the initial funding? 

Let me give you an example. I met with a 33-year-old young guy 

who is the head of material and mechanical engineering at a school 

in Philadelphia. He got a $20,000 investment from the university 

a few years back and he got, Mr. Chairman, an NSF grant for, you 

know, in the six figures. And now he has got a patent and he has 


emcdonald on DSK2BSOYB1PROD with HEARING
236 

got a company. And he has got about a $600 million product line 

that is helping make the world a better place. 

And this committee is involved in a lot of issues beyond patents, 

but through one of the STEM programs that the committee has 

supported in previous years, there is young lady over at Howard 

University now who has got a patent disclosure for a development 

of an idea to power underwater labs of NOAA and other entities 

by using material on the ocean floor. 

I mean, we have the talent. We have young people who have the 

talent to do almost anything. It is just a matter of creating the opportunities for them, and that is what we are interested in. 

So the work that you are doing is vitally important, and I think 

that we are going to have to work through the issues of the appropriations. The CR is another matter, but I think the Senate is acting on the CR today, for two weeks, and they passed it. Okay. And 

then we will go into what happens on March the 18th. 

But you are not the only agency to say. The Pentagon came out 

today and said if we keep operating under a CR, it is going to actually cost more money, and it endangers national security. So we do 

have to get to a resolution. 

And I hope that there is either a budget summit or there is some 

kind of resolution where we can get the spending at least set for 

the rest of this year and then the Appropriations Committee can 

do its work properly about next year’s funding because this is serious business. And we owe it to American industry that if we are 

going to have a patent operation, that it function in real time. And 

you have international treaty obligations, right? 

Mr. KAPPOS. Yes. 

Mr. FATTAH. So these countries, not only do we have obligations, 

but other countries have obligations. And we want to make sure 

that in order to hold them accountable that we are meeting the 

mark that we need to be meeting. 

So I want to thank you for your testimony. 

And I will conclude on that, Mr. Chairman. 

Mr. WOLF. Thank you. Well, I appreciate the comments from my 

good friend from Pennsylvania. I am from Virginia but was raised 

in his home town in Pennsylvania. 

I think there is an answer, but it is a relatively difficult solution 

to what is relatively easy. And it is really to adopt the SimpsonBowles or Bowles-Simpson Commission, changing things. And obviously there are things in there that I did not agree with. And I 

would have made a sincere effort. 

But when Tom Coburn and Dick Durbin can come together, I 

think it is going to take a bipartisanship. It is going to take the 

President to come forward. There was an editorial in today’s Washington Post, ‘‘Waiting for Waldo’’, meaning waiting for the President to step forward. It is important that we do this in a bipartisan 

way. 

And until you deal with the fundamental issues of the entitlements and those issues, you can come up here and testify all you 

want to testify, it is going to continue to be a problem. 

Mr. KAPPOS. Yes. 

Mr. WOLF. So I think the way to do it is to come together, find 

a rationality. And I think the beginning of it could be what the 


emcdonald on DSK2BSOYB1PROD with HEARING
237 

Senate is doing is a bipartisan effort. One of the senators from my 

State, Senator Warner, Senator Chambliss from Georgia, Senator 

Coburn, and Senator Durbin are working on something to sort of 

force the Congress and force the Administration to come together. 

Then I think if we can do that and I think we can do it in a way 

that is not painful to the Nation, adjusting around the edges, then 

I think all these issues to a certain degree free up a tremendous 

opportunity for the sciences and math and physics and chemistry 

and investments and have a renaissance. 

But until that comes you are going to continue to have budget 

cuts and you are not going to have the CR be ended quickly. I 

mean, I am not so sure, maybe I am wrong, but I do not know if 

two weeks will be enough. Who knows what? So you are going to 

continue to kick this can down the road. But I think if we could 

begin with what Senator Simpson and Bowles did, I think we can 

begin to make some progress. 

PATENT AUTOMATION

A couple of last questions before we end. In 2005, GAO reported 

that the PTO had spent over $1 billion, B billion, between 1983 

and 2004 for patent automation activities which did not achieve a 

fully integrated electronic patent process. Between fiscal year 2006 

and October 2010, PTO spent another $47.9 million on another IT 

modernization effort on a system that has not been effective either. 

Can you describe PTO’s proposed Patents End to End Program 

and when do you anticipate awarding a contract? 

Mr. KAPPOS. Sure. I would be happy to do that. So the Patents 

End to End Program is designed to take a completely different approach than the programs that previously failed. It is designed to 

start and we have started. We have been spending the better part 

of a year now starting without attempting to make architectural 

decisions, without attempting to choose servers or programming 

languages or any of that, without even attempting to choose contractors. 

Instead we started doing something that apparently is kind of 

new in the Federal Government but is actually pretty straightforward to me as someone who, as I mentioned before, has been 

doing this stuff for going on 30 years now which is to actually talk 

to your customers. In this case, examiners. 

So we put together task forces of examiners. We literally have 

engaged over this period thousands of our examiners at the agency. 

I mean, you can ask the folks at our unions who will say management never did that before and they absolutely love that management is engaging the employees. And we asked them the question, 

what do you want your IT system to look like. And that is where 

we started. 

We spent a lot of time collecting input. We brought three contractors in, very small contracts, to design the prototypes of what our 

user interface would look like. We finished with that work. We did 

extensive user input on it. We would love to show you the results. 

It is actually very, very engaging. Our users have chosen what 

their next system is going to look like. And we spent very, very little money so far. 


emcdonald on DSK2BSOYB1PROD with HEARING
238 

But this is about collecting the user input that you need so that 

you ensure that you are designing a vehicle that meets the needs 

of the people who are going to ride in the vehicle. In this case, primarily Patent and Trademark Office examiners. 

So we finished that initial prototyping work. We are now engaged in the process of lining up the contracts to get going on the 

first set of what is called Sprint using a programming methodology 

and a development methodology that again is—that I have been 

using for years in the private sector, but is new to the Federal Government, that is called agile development methodology. That is the 

approach that we are using. 

And we expect using that approach to have the first but I will 

caution initial pieces of programming for our Patents End to End 

Project by the end of this calendar year. We are going to deploy 

them initially using our Central Reexamination Unit. I mentioned 

that before. It is a part of our examiner core that focuses on patent 

reexaminations which is extremely important work but has the advantage that it is not automated at all right now. They are on totally paper processes. 

So there is very little risk in moving them to a new system. It 

is a small group of people, but it employs very similar processes to 

our large core. So you will see that rolling out late this year and 

then you will see the way agile works, a steady stream of vertical 

and horizontal improvements, in other words, filling in 

functionality on top of the initial system and more functionality 

across the whole patent examining process. It will take several 

years, though, to get this done. 

Mr. WOLF. What sort of technical expertise does PTO have to 

oversee the contractors? 

Mr. KAPPOS. Well, we have got a CIO who has many years, in 

fact decades of experience in the information technology industry. 

I personally, as an IT professional and electrical engineer from that 

industry, I personally spend a lot of time working with my team. 

We have now hired as we were requested by the President’s CIO, 

we have hired a project manager also from private industry with 

much experience managing projects to design and implement complex IT solutions. And so I believe we have actually got a robust 

team in place to manage contracts. 

Mr. WOLF. Is he an employee or is he a contractor? 

Mr. KAPPOS. Employee of the USPTO. 

Mr. WOLF. All right. Okay. For the record, Mr. Fattah, you have 

any other—— 

Mr. FATTAH. No. 

Mr. WOLF. Okay. With that, we thank you for your testimony. I 

hope you will come up and see me. I want to talk to you because 

I am going to do something on the China issue. 

And, secondly, if you would cooperate with NAPA and whoever 

it is to take a look. We will try to get that up and running. We 

will try to put language in the bill. But I think we will do a letter 

to them early and if they can begin early, I would appreciate it. 

With regard to that, I guess we will just submit the rest for the 

record. Thank you. 

Mr. KAPPOS. Okay. Thank you, Mr. Chairman. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
239 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 349 here 67061A.152
240 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 350 here 67061A.153
241 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 351 here 67061A.154
242 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 352 here 67061A.155
243 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 353 here 67061A.156
244 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 354 here 67061A.157
245 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 355 here 67061A.158
246 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 356 here 67061A.159
247 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 357 here 67061A.160
248 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 358 here 67061A.161
249 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 359 here 67061A.162
250 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 360 here 67061A.163
251 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 361 here 67061A.164
252 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 362 here 67061A.165
253 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 363 here 67061A.166
254 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 364 here 67061A.167
255 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 365 here 67061A.168
256 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 366 here 67061A.169
257 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 367 here 67061A.170
258 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 368 here 67061A.171
259 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 369 here 67061A.172
260 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 370 here 67061A.173
261 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 371 here 67061A.174
262 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 372 here 67061A.175
263 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 373 here 67061A.176
264 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 374 here 67061A.177
265 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 375 here 67061A.178
266 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 376 here 67061A.179
267 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 377 here 67061A.180
268 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 378 here 67061A.181
(269) 

THURSDAY, APRIL 7, 2011. 

NATIONAL INSTITUTE OF STANDARDS AND 

TECHNOLOGY 

WITNESS 

DR. PATRICK GALLAGHER, UNDER SECRETARY OF COMMERCE FOR 

STANDARDS AND TECHNOLOGY AND DIRECTOR OF THE NATIONAL 

INSTITUTE OF STANDARDS AND TECHNOLOGY 

Mr. WOLF. I want to welcome you to the committee. And in light 

of the time, I will not have any opening statement, but just welcome you, Dr. Gallagher. 

Dr. Gallagher, your full statement will appear in the record. You 

can proceed as you see appropriate. 

Dr. GALLAGHER. Thank you very much. 

And in the interest of the time, I will also try to give a quick—— 

Mr. WOLF. Oh, that is okay. Go ahead. 

Dr. GALLAGHER [continuing]. Oral sort of summary of the written 

testimony. Chairman Wolf, it is good to be in front of the committee. 

And, Ranking Member Fattah, it is good to see you again. 

And it is always great to have an opportunity to talk about the 

NIST 2012 budget. The budget request for NIST is best understood 

by its mission to promote U.S. innovation and industrial competitiveness and finds itself very well aligned with the President’s 

focus on supporting economic growth through innovation. 

The fiscal 2012 budget request for NIST is $1 billion. This does 

represent a 17 percent increase over our 2010 enacted level and I 

would like to briefly summarize the request. There are four major 

accounts in the NIST Program. 

For the NIST Scientific and Technical Research and Services account, which funds our laboratory activities, our budget request is 

$679 million which is a net increase of $174 million. These funds 

are to accelerate the development of standards, technology, and 

measurement science in areas as diverse as advanced manufacturing, cyber security, and advanced building infrastructure. 

The NIST Industrial Technology Services account budget request is $238 million. This is an increase of $33 million and also reflects 

a $1.9 million reduction to the Baldrige Performance Excellence 

Program consistent with the Administration’s goal of transitioning 

that program out of federal funding. The budget requests $84.6 million for the Construction of Re- search Facilities account. This is a $62.4 million decrease. The 

budget request also includes $25.4 million for the continued renovation of the aging Boulder Building One facility and funds for 

needed repairs and maintenance of our facilities on the two campuses. 


emcdonald on DSK2BSOYB1PROD with HEARING
270 

And, finally, NIST is requesting $100 million in the new mandatory account for the creation of a Public Safety Innovation Fund. 

This is NIST’s component of the Administration’s Wireless Innovation Infrastructure Initiative (WI3). 

So let me touch on a few of the major themes that are in the request: manufacturing, infrastructure, and education. 

The President’s fiscal year 2012 budget request for NIST includes a very strong focus on manufacturing and provides the 

measurement tools and other essential technical assistance that 

other U.S. manufacturers need to invent, innovate, and produce— 

and to do that more rapidly and more efficiently than their competitors around the world. 

With the laboratory budget, there are five manufacturing related 

initiatives totaling $85.3 million and these initiatives will enable 

NIST to bolster and diversify needed research and services in areas 

like nanotechnology, biomanufacturing, additive manufacturing, 

and advanced robotics that will position U.S. manufacturers to be 

competitive around the world. 

My written testimony includes more details of these initiatives. 

The President’s budget request also strongly supports manufacturing through our external programs: the Manufacturing Extension Partnership program and the Technology Innovation Program. 

For MEP, the budget request is $143 million, an $18 million increase. NIST MEP will use the funds to expand capabilities of its 

nationwide network of centers located in all 50 states in a number 

of critical ways to assist manufacturers to successfully compete 

over the long term. 

The request for TIP of $75 million will enable the program to 

hold a competition to fund high-risk, high-reward research in critical national needs like manufacturing. 

NIST is also requesting $12.3 million for a new program, the Advanced Manufacturing Technology Consortia or AMTech. This is a 

new public-private partnership that will provide grants to stimulate the formation of industrial consortia to address industry-driven 

technology challenges that any one company would not be able to 

do on its own. 

With regard to strengthening the U.S. infrastructure, the budget 

request contains $43.4 million in three initiatives for cyber security 

related programs and activities. This includes activities building 

upon our core cyber security work in support of the Comprehensive 

National Cybersecurity Initiative, to support a national program office to coordinate activities for the National Strategy for Trusted 

Identities in Cyberspace or NSTIC, and to expand the scope of the 

comprehensive National Cybersecurity Initiative on Education. 

In the area of interoperability infrastructure, this budget request 

proposes funds to support our work in emerging technologies which 

includes smart grid, interoperable electronic health records, and 

cloud computing standards for the Federal Government. 

The physical infrastructure work in NIST includes work to increase energy efficiency and reduce environmental impact for U.S. 

infrastructure and to improve our research activities in disaster resilient structures. 


emcdonald on DSK2BSOYB1PROD with HEARING
271 

This is particularly timely with the earthquake in Japan and the 

resulting damage to structures. And we are pleased that it has 

been included in this request. 

Finally, in wireless infrastructure, the Public Safety Innovation 

Fund that I mentioned earlier will focus efforts to support the development of an interoperable nationwide public safety broadband 

network. 

The education initiative, the post-doc research program initiative 

will enable NIST to offer at least an additional 23 positions per 

year. 

And I want to thank this committee for its support in eliminating 

the cap on funding for the NIST post-doc program in last year’s 

COMPETES Act that makes this opportunity possible. 

Beyond those initiatives, there are two areas in the budget which reflect savings. This budget request incorporates over $11 million 

in administrative savings and the proposed decrease for the 

Baldrige Program is an additional $1.9 million. 

Mr. Chairman, the fiscal 2012 budget request for NIST reflects 

the Administration’s recognition of the important role that NIST 

can play in innovation and the impact of NIST research and services that it can play in moving this Nation forward. 

And I look forward to answering any questions you may have 

about our request. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
272 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 386 here 67061A.182
273 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 387 here 67061A.183
274 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 388 here 67061A.184
275 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 389 here 67061A.185
276 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 390 here 67061A.186
277 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 391 here 67061A.187
278 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 392 here 67061A.188
279 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 393 here 67061A.189
280 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 394 here 67061A.190
281 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 395 here 67061A.191
282 

HOMELAND SECURITY: INFORMATION SHARING TECHNOLOGIES

Mr. WOLF. Thank you very much, Dr. Gallagher. 

You know, it is kind of interesting. I think, one, the subcommittee really, and I know Mr. Fattah shares this, too, really did 

everything it can to support NIST even in H.R. 1. I think you took 

less of a hit, you and the FBI. 

It is interesting. You probably run and have one of the most important agencies for the future of the country in manufacturing, 

education and, yet, I look at this. There are empty seats here. 

How many people here are with NIST? Raise your hand. How 

many people in the audience are not with NIST? Yeah. And are 

any of you reporters? 

Okay. Well, I mean, where is everyone—and, yet, NIST really is 

very, very, very important. 

I have a bill in that we are going to introduce in a week or two 

with Senator Warner of my State to deal with manufacturing. It 

puts together an incentive program. It is a repatriation bill to help 

bring back jobs from China and Mexico. 

And manufacturing and creating jobs is very, very important 

and, yet, you know, there are still empty seats here if more people 

want to come. 

But we have had other hearings that have been less important 

insofar as the future of the country and in an area that you could 

pretty much get a bipartisan consensus and, yet, I guess it is just 

the way life is. 

I would appreciate if you would look into NIST’s involvement in 

Information Sharing and Access Interagency Policy Committee and 

Watch List and Screening Subcommittee. That is quite a name. I 

wonder how they will give an abbreviation for that. 

But I understand that the Departments of State, Homeland Security, and Justice are working together to determine the requirements each would need before procuring name-matching software. 

As you are aware, NIST is involved in this process. I believe the 

agencies are asking NIST to compare and ascertain what software 

brings what strengths, weaknesses, capabilities when it comes to 

name-matching software. 

I understand that the work of the subcommittee is still in the 

early stages and that NIST is participating to gain a better understanding of the requirements. We understand that each of the 

agencies has significantly different operational requirements so 

achieving consensus will be a challenge for the subcommittee. 

However, as we approach the tenth anniversary of the 9/11 attacks, I think it is imperative for the government to work together 

on this program and that NIST should be an active participant. 

I would hope that NIST will be a leader in the effort considering 

the good work that NIST has done on a number of homeland security issues. 

And we had Director Mueller up here yesterday and, of course, 

on the 9/11 issue, a number of people from my congressional district died in that attack. And so we were looking forward to hearing from you of how this thing—you may not have to get in great 

detail here, but how we can kind of bring the three agencies together. 


emcdonald on DSK2BSOYB1PROD with HEARING
283 

Dr. GALLAGHER. So thank you. 

We are quite committed to this effort. NIST has long research experience in looking at text retrieval and these types of technologies. 

In fact, the Watson computer that everyone was watching on Jeopardy, some of that underlying technology that enabled that was actually based on some of that NIST research. 

So this is a very active interagency process. And I think you 

characterized the situation well. It is early enough that what we 

are trying to do is coordinate and develop a set of coherent technical requirements so we can turn this into some definitive actions 

within the agencies. 

And I know we are trying to get our technical people working 

with the agencies in that capacity. 

RADIATION DETECTION AND MEASUREMENT

Mr. WOLF. NIST’s physical measurements lab has developed expertise in radiation detection and measurement. 

Has NIST been asked to perform any analysis of the U.S. radiation detecting capabilities in response to the disaster that continues to unfold in Japan with their nuclear facility? 

Dr. GALLAGHER. The NIST program in advancing measurement 

science and radiation has been very active. It is one of the more 

concentrated efforts of the United States. NIST is very active at 

homeland security applications and screening and developing advanced screening technologies, nuclear forensic measurements. 

The types of measurements that are needed in the situation that 

is unfolding in Japan right now are not ones that are pushing detection limits. There is a lot of radiation in the area. 

And so these typically fall more in the kind of issues involving 

sort of sensor networks to measure diffusion. And those are really 

responsibilities of other agencies. 

In all these cases, there is a very active interagency process and 

we are offering support as requested to any of those sort of ongoing 

efforts. 

Mr. WOLF. And what about domestically here? I have seen the 

statement by the governor of New York with that one power plant 

that is up on the Hudson north of New York City. Has NIST been 

asked to engage in any studies with respect to the ability of U.S. 

nuclear facilities to withstand similar impacts, earthquakes, 

tsunamis, or other extreme weather events? 

Dr. GALLAGHER. So, of course, the analysis to look at safety or 

security consequences falls to the Nuclear Regulatory Commission 

directly. 

NIST works in partnership with the NRC to give them a technical basis for performing this type of analysis, so whether it is a 

fire risk, we do fire research that looks at flammability or degradation of electrical cables, whether it is looking at structural components in these types of buildings. 

So we play a role, but it is a secondary role. We are trying to 

provide them the measurement tools and information that supports 

their responsibilities to analyze. 

Mr. WOLF. So you have not been asked specifically by them? 

Dr. GALLAGHER. Not that I am aware of. 


emcdonald on DSK2BSOYB1PROD with HEARING
284 

NATIONAL EARTHQUAKE HAZARD REDUCTION PROGRAM

Mr. WOLF. Okay. We had asked the director of NOAA, the Administrator, I think she said yes, but we are waiting to get a definitive answer, to put together a conference both on the East Coast 

and the West Coast, bringing in NOAA people, the U.S. Geological 

Survey people together to talk about the potential impacts of an 

earthquake either on the West Coast or East Coast and a tsunami. 

And I think she said yes. I will have to read the transcripts. But 

the way that it was put, I think she said she will do it. 

Would NIST play any role in something like that? 

Dr. GALLAGHER. We likely would. NIST is actually the lead agency in the National Earthquake Hazard Reduction Program which 

is a program established in 1977 and includes FEMA, the U.S. 

Geologic Survey, and the National Science Foundation. And so we 

would be very interested in participating in a workshop like that. 

The main NIST role, of course, is to disseminate model codes and 

standards for adoption so that construction standards are brought 

up to a point where we have disaster resilient infrastructure. 

I think the other lesson here with the situation in Japan is that 

it is important to look across all different types of hazards. So a 

lot of the damage that was sustained in Japan was actually water 

related damage from the subsequent tsunami and not the damage 

related to the shaking of the actual earthquake. 

And this is a lesson that keeps coming up in the NIST work and 

it is important to look at all of the threats to structure and to make 

sure they are resilient across all of them. You could have an earthquake with a subsequent fire and you are actually looking at fire 

related hazards. 

And so we would welcome a workshop like that and be happy to 

work with NOAA. 

Mr. WOLF. Okay. Well, we will tell NOAA that. 

Have your people had any thoughts or comments, I do not want 

to get too far off some of the budget issues, but on that about how 

well prepared—this subcommittee six or seven years ago when the 

Indonesian tsunami took place, we sent a letter to every governor 

up and down the East Coast, we contacted the UN to make sure 

that every locality had the necessary standards and warning systems. So the purpose of this would be to kind of do the same thing. 

But any comments based on watching what has taken place, 

since you are the lead here, what has taken place? 

Your heart goes out to the people of Japan. It just is so painful 

to watch both the radiation and the death and the number of people that have not been found. 

As you look at that knowing what you know, your concerns with 

regard to here in the United States, both East Coast, West Coast, 

and the Gulf? 

Dr. GALLAGHER. So, yes. We actually do worry about this quite 

a bit and not just the situation in Japan which is an unfolding 

tragedy but also looking very carefully at the situation in Christchurch, New Zealand with that earthquake and also with Chile 

which has similar building standards that we use in the United 

States. 


emcdonald on DSK2BSOYB1PROD with HEARING
285 

And the answer is, yes, we do worry about that. In fact, one of 

my colleagues is testifying right now in front of the House Science 

Committee on the NEHRP Program. And to summarize what I 

think he is going to say about the program, we have made tremendous advances in being able to assess and predict risk areas. 

I think that the codes themselves have shown dramatic improvement and we continue to take lessons learned. I think the fact that 

the property damage we saw in Chile was nothing like we saw in 

Haiti is a real reflection changes in building standards. We have 

also learned the weaknesses in terms how buildings perform under 

severe earthquake conditions. 

One of the areas that I think we need to work on and an area 

I think I would like to work with you on is the Federal Government 

does not mandate building codes and standards. What we issue are 

model codes and standards. And the authority is actually at the 

state, local, and regional level. 

And so as we look at collecting data and rates of adoption in 

moderate to high earthquake zones, this is an area that we are 

probably not doing as well as we could. And it comes back to—have 

we set things up in the way to be most efficient and giving these 

local jurisdictions the information they need to adopt stronger 

building codes and to assess what percentages of their buildings 

are compliant with different codes? 

Obviously in older communities, they are going to be built to 

older building standards which may be much, much less resilient. 

The other major concern I have is that we have focused on buildings quite extensively, but we also need to focus on the resiliency 

of the supporting infrastructure which is often called life lines, getting power and water and other key telecommunication infrastructure rapidly restored or highly resilient to these types of effects. 

And that compromises the ability of a community to respond if 

there is an earthquake. 

GREEN TECHNOLOGIES

Mr. WOLF. Sure. Well, good. We will ask that NIST participate. 

You have your top issues of manufacturing, education, and infrastructure. The NIST budget includes references to greenhouse 

gases, green technology, increased energy efficiency, reduced environmental impact. 

How do these activities fit into NIST’s core capabilities and research activities and standards and measurements? Are these new 

initiatives as critical to innovation, the economy, and life and safety issues such as nanotechnology, neutron research, or disaster resistant building, for example? 

Dr. GALLAGHER. The activities in green technologies, if you will, 

at NIST reflect in some cases strengthening ongoing activities that 

we have had before. In some cases, they are new. But in all cases, 

they reflect industrial demand. 

What we are seeing, for example, in the building technology area 

is at the local level and state level requirements being placed on 

promoting green building technologies, whether commercial buildings or residential buildings, and a lot of interest on the part of the 

construction industry for tools to assess the effectiveness of these 

technologies. 


emcdonald on DSK2BSOYB1PROD with HEARING
286 

It turns out what we have done is a good job at looking at the 

performance of individual components. So we can look at how insulation performs or we can look at the efficiency of a particular window or door. We can look at the efficiency of a particular appliance, 

heating and cooling system. 

There is almost no information on how to bring all these together 

and optimize them into a working building and to see whether they 

have the type of energy savings impacts. 

And that is important to the industry because without that understanding by the consumer—they want to understand their return on investment—is this building going to save me money as I 

operate it and how soon will I realize the investments. 

And so what we are trying to do is provide the measurement 

tools to remove a barrier, for adoption for some of these new technologies. 

Similarly on the greenhouse gas monitoring, what is happening 

is commercial deployment of greenhouse gas monitoring networks. 

The company that was formerly known as WeatherBug announced 

a few months ago their intention to deploy commercial networks of 

sensor packages that would measure various greenhouse gases. 

And they want that data initially to be of use to the research 

community, but ultimately their business model would be to make 

that available to local communities and other areas that would be 

interested in knowing their emissions of greenhouse gases. 

If that data is not perceived as being reliable and interoperable, 

that you cannot compare a measurement taken in one part of the 

country with a package with another, so there is a lot of interest 

in how do we provide the measurement science to make sure that 

these technologies perform the way they are supposed to, which is 

a core NIST mission. 

NATIONAL STRATEGIES FOR TRUSTED IDENTITIES IN CYBERSPACE

Mr. WOLF. You are requesting an increase of $24.5 million to increase the national strategy for trusted identities in cyber space. 

We understand that this initiative is supposed to enhance security 

for people when they conduct business online, whether it is buying 

a book from Amazon or check their banking accounts or pay bills. 

They would only have one ID and password. Would you explain 

how this would work and could you expand on the statement in 

your budget materials that states that, ‘‘a user will no longer be 

required to maintain dozens of passwords from both public and private use?’’ 

Dr. GALLAGHER. The idea behind NSTIC is to provide a strategy 

for one of the real perplexing problems in information technology 

which fundamentally is a communication infrastructure between 

computers. 

And to use that infrastructure to carry out a transaction, whether you are just sharing information or whether you are going online 

to bank or submit your taxes, requires a transaction between your 

computer and the other device that you are using. 

And to establish a trusted connection, there has to be an establishment of identity. I am who I say I am. And, of course, the level 

of integrity of that depends on what you are trying to do. 


emcdonald on DSK2BSOYB1PROD with HEARING
287 

If it was accessing my bank account, I would want that to be a 

very strong form of negotiation, this is really me and nobody else, 

whereas if I am just posting some information on a site, I may, in 

fact, want the amount of information to be very low where I can 

ensure that I am anonymous. 

And what we are seeing in the market is a real proliferation. 

There is no common way of doing this and no understanding of how 

robust these technologies are. And as consumers, we know this because we struggle with individual passwords or tokens or various 

other devices with really no interoperability between these. So 

every time you go to a new site, you have to recreate that. 

The government’s interest, of course, is that we also work with 

citizens. For example, if you are e-filing your taxes, you would 

want to have some assurance that you are logging in saying who 

you are. In other cases, you want to be anonymous. 

So rather than have the government say this is the way it is 

going to be done, we do not think that is an appropriate approach 

for a number of reasons, the adoption would be low, the trust 

would be high for that type of a system, and we may not know the 

right technology. 

What we would like to do is turn to industry and say, look, here 

is the functional requirements, here is the type of capability we 

would like to have, a trust infrastructure, if you will, an identity 

management infrastructure that people can opt into. They can use 

these types of credentials in multiple environments and they can 

control how much information they are willing to share when they 

are setting up a transaction. 

So it is largely a standards effort. I think we are going to be 

working with industry to define these type of requirements, how 

will identities be established, how do you protect the privacy of the 

information you need—— 

Mr. WOLF. The privacy, I was wondering. The privacy issue is 

one that I think most people are getting very concerned with. 

Dr. GALLAGHER. Very concerned. And I would say the existing 

approach is the worst imaginable approach from a security perspective because every time you go to a new Website and create a new 

account, you have to share an enormous amount of personal information to establish your identity. 

And so we have all of this personal information about ourselves 

at all of these different locations. And the question is, if I am a 

small business and I want to set up a Web sales application, rather 

than have to collect all of that new information from all of my customers, can I use the fact that they can log on through some trusted, some identity management organization and basically rely on 

that. 

So we think that this would be privacy enhancing, that there 

would be much less of your personal information out there and it 

would be used to establish identity and then protected. It would 

not be held by the government. You know, we would like this to 

be private sector. 

If it is done correctly, the government can use these same technologies itself which is really, I think, the right approach rather 

than come up with something new. 


emcdonald on DSK2BSOYB1PROD with HEARING
288 

Mr. WOLF. Well, the privacy issue even, you know, I saw a piece 

the other day that companies are now able to notice what television 

station you are watching, whether it is ESPN versus another channel, and, therefore, begin to tailor ads in the mail or to you through 

your computer based on that. 

You really almost get the feeling from a privacy point of view, 

I mean, you go to the bank teller after the church, the ATM, and 

there is a camera there recording you. You get on the toll road out 

in northern Virginia to come into Washington—on the Greenway 

and the toll road—and use your smart pass. You then drive up to 

New York City with it and you go through the toll, through the 

tunnel. 

And pretty soon everything seems to be almost out there. And 

there is the ability to track and know what the person likes to eat, 

what time they go into work, what time they leave to come home. 

And I think from a personal privacy issue, I find it very troubling. I do not have the answer to it. And I do not bank online, but, 

I have five kids and they all bank online. They just think it is just 

the way to do it. So the privacy issue troubles me deeply. 

And if you can get a young high school graduate to crash into 

the Department of Defense computer system and knowing what the 

organized crime in Russia is doing and knowing what the Chinese 

system that they have set up, almost nothing is not able to be penetrated now if they really set out. 

Now, I am sure they are not going to set out to go after the individual consumer at Costco. But if they wanted to, they almost can 

do it now. 

Does that trouble you? 

Dr. GALLAGHER. Well, it does very much. I think that any powerful disruptive technology like information technology comes simultaneously with enormous advantages. I think back at just my 18 

years at NIST and it is hard to believe the extent to which information technology has permeated everything we do. 

Mr. WOLF. Yes. 

Dr. GALLAGHER. And so with all of those advantages, of course, 

and that ability to move information come all of the possible 

downsides with that. And I think the challenge we face is that the 

rate of technology change has exceeded our ability for the policy to 

respond to it. 

I mean, this has opened up new types of privacy concerns that 

we simply did not have before just because of how connected and 

how much information is being assembled. It just was not possible 

before. 

So one of the challenges I always am looking at is how do we try 

to respond, with everything we are doing, with cybersecurity standards, with privacy. 

The Department of Commerce has been very active in the privacy arena trying to basically at least articulate a set of guiding 

principles that we can start to address how we are going to think 

about privacy protection with internet-based technologies. And it is 

simply guiding what our actions will be going forward and being 

able to work effectively with private sector, with partner countries. 

So we worry about this all the time and it has just moved so 

quickly that it stresses—you know, it is hard to extrapolate someVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00288 Fmt 6601 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
289 

thing you did in the past that really made sense then. In some 

cases, you almost have to start over. 

Mr. WOLF. Yes. Look at the pain and suffering that WikiLeaks 

has created. I mean, what took place in WikiLeaks has resulted in 

the death of people and the fall of governments. It has done a pretty incredible thing. 

We will go to Mr. Fattah now. 

Mr. Fattah. 

Mr. FATTAH. Thank you. Thank you, Mr. Chairman. 

Thank you, Dr. Gallagher. 

Let me just for the record also acknowledge that you were educated in Pennsylvania, University of Pittsburgh, a doctorate in 

physics. 

And you have worked under a number of presidents. You started 

under the, I guess, the first Bush administration—— 

Dr. GALLAGHER. So I have been at—— 

Mr. FATTAH [continuing]. In your original role? 

Dr. GALLAGHER. So I joined NIST in 1993, so actually at the 

start of the Clinton administration. 

Mr. FATTAH. Okay. 

Dr. GALLAGHER. And then through the Bush administration as 

well. And I actually was director of one of our neutron research facilities up until 2008 and was made Acting NIST Director at the 

end of the Bush administration and then nominated—— 

NUCLEAR REACTOR SAFETY REVIEW

Mr. FATTAH. So you bring a great deal of competence to the work 

that you are doing. And you also have a constitutional mandate 

provided through the Congress to set standards and measurements 

for the country. And we want to thank you for your service. 

Let me start where the Chairman interestingly started at on this 

nuclear question. Now, the problem in Japan, as best as I can understand, is the most challenging part of it is the spent fuel in 

these pools, right, and the leaking thereof caused by the earthquake and then the tsunami? 

We have in our country lots of spent fuel. I am a proponent of 

nuclear energy. I am for nuclear energy. But one of the issues is 

what you do with the spent fuel, and you have to cool it for some 

long period of time. And under the NRC rules, you put in these 

cooling pools for five years. 

Now, we have some 63 metric tons of spent fuel in our country. 

Some of it has been in these pools longer than what is recommended and some of it is in dry cask. 

Now, I guess the standard at the moment is that it really does 

not matter whether or not it is a dry cask or whether it is in a pool, 

right? 

But the Sandia Lab has done some work in this regard and there 

seems to be on the science of this edging more towards, you know, 

because I am a layman when it comes to this, but to a common 

sense view that a dry cask might be a better circumstance, particularly from a security standpoint, you know, potential terrorist attack or something like that, but also even in the case of some other 

disruption like in the instance of Japan. 


emcdonald on DSK2BSOYB1PROD with HEARING
290 

So on the question of when there is a safety review that the Administration has ordered, and I support the President’s call for this 

safety review, when we get to the point of trying to figure out 

whether or not there is spent fuel in these pools well beyond the 

period that it needs to be there and whether it should go to dry 

cask, the question of dry cask or no dry cask, is this something appropriately for NIST to be in the loop on? 

Dr. GALLAGHER. So I think the answer is possibly, but it would 

be indirect in support of the NRC. I managed our nuclear facility 

for four years at NIST, so NIST does not have a specific role here. 

But speaking as a former manager of a nuclear facility, the one 

challenge you always face, and I think the challenge that NRC 

faces, that you have to look holistically at the problem. You want 

to look at overall the integrity, safety, and security of various options of storing fuel. 

And as you pointed out, the problem we face with a once through 

fuel cycle is the fact that there is a lot of decay product still in the 

fuel when you are done using it. And as the element continues to 

decay, it produces heat. 

And so the technical challenge everyone is facing is what is the 

right way to provide that cooling in various storage configurations. 

So it is easy to cool in a pool, but you see the disadvantages of 

that long term. It is a very active system of pumps and heat exchangers and various things. And there is no down side to leaving 

it in a pool longer than it needs to because it is pretty cool. 

So the challenge with dry cask, the advantage is that it is passive and can be made very hard, the disadvantage is how do you 

provide passive cooling that is adequate to preserve the integrity 

of the element. You want to keep the metallic, the fuel cladding because that is what holds those components in there to then maintain its integrity. 

So I think that for the engineers that will have to look at this, 

the best environment they can be put in is to step back from some 

of the policy consequences of these and just look at it from a technology perspective, what can be done to look at enhanced fuel cladding integrity, what can be done to look at advanced passive cooling technologies. 

I think what they can do if they do that is they can give us the 

technical options that let—because there is all sorts of tricky policy 

questions that I know you have to deal with as you look at these 

options and the impact of proliferation and various other things, 

but at least then we have all of the technology—— 

Mr. FATTAH. There are a lot of policy implications, but this is a 

safety review, right? So, again, I start over with the fact that I am 

pro-nuclear. I think we should be even more aggressive. I think we 

should look at small modular nuclear reactors. But I also think 

that we should act in intelligent ways to protect public safety. 

So this notion that it is an equal choice between a cooling pool 

and a dry cask to me, and I do not have a doctoral degree in physics, even from a distinguished university, but it does not sound to 

me like it is an equal choice either way. 

And I think that this is the kind of thing where NIST, if you are 

setting standards, it might be useful—so I would love for you to reVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00290 Fmt 6601 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
291 

view some of the work that has been done on this question and see 

what you think. 

I mean, I am not trying to jump in front of the NRC, but I just 

think that it is an important question because absent the spent 

fuel being in the pool, much of the calamity of the Japan nuclear 

reactors would not exist. And even if it was in dry cask and there 

was some rupture, the level of problem would be lessened in a very 

considerable way. 

But I do not know. The Chairman started on this. I just wanted 

to jump in. 

MANUFACTURING

I want to go to your other work. Now, as a state legislator, I was 

one of the sponsors of the Ben Franklin Technology Program in 

Pennsylvania which has worked very, very well in taking excellent 

research from our universities and bringing it to bear in terms of 

economic development. 

And now you are engaged in that in a number of different ways 

through the Manufacturing Extension Partnership and through the 

TIP Program. And TIP is an outgrowth of the earlier program, the 

advanced technology program, right, and it is focused on small and 

medium size manufacturers? 

So I have seen some of the work that has been done. I was out 

at a manufacturer in Pennsylvania in my district in Philadelphia. 

They make fishing reels. It is called Penn Fish & Tackle or Penn 

Fishing Reels. It is in North Philadelphia. 

They make the world-class saltwater fishing reels, Mr. Chair- man. They sell for about $1,500 a piece and they have no competitor in the United States at all. And people buy from all over the 

world. 

But the Manufacturing Extension Partnership helped provide 

some technical assistance in the manufacturing process through a 

grant and a collaboration. 

And I also know another manufacturer who is in bio-tech. It is 

a very different process. He is in Philadelphia, in the Spring Garden area, and he is making glass that you work with small chemical and biological formulations in the whole DNA area. 

And through the Manufacturing Extension Partnership, they 

hooked him up with some people in Chapel Hill who helped design 

how this little firm manufacturer of 14 people could be major players in a world that, otherwise, they would have been frozen out of 

by larger players. So the program has worked well. 

I know the chairman and I have gotten letters from Manufacturing Extension Partnerships from I think every State now and 

talking about the great work. And we are very interested. I have 

said that it is my most important priority. I notice that the Chairman has an important affinity for helping in this area. 

So you have a number of different programs in the manufacturing area. This is the largest of them, is that correct, in terms 

of dollar amounts? 

Dr. GALLAGHER. Probably not, only because such a large portion 

of the laboratory program also works towards manufacturing. But 

it is the largest program that is specifically focused on providing 

services directly to manufacturers. 


emcdonald on DSK2BSOYB1PROD with HEARING
292 

Mr. FATTAH. Okay, well if you could walk through all of the efforts that NIST is working at, and how they work together or separately to help manufacturers? If you could spend a couple of minutes on that that would be helpful. 

Dr. GALLAGHER. So thank you. The NIST role in manufacturing 

is interesting because it comes in sort of two major ways. One of 

them is through that core mission that the Constitution gave us in 

Article 1, Section 8 which is to establish a system of weights and 

measures and to deploy that system into commerce. And so a lot 

of the NIST laboratory work is actually not defining what the 

meter is and what the second is. That is an important part of what 

we do, but it is realizing active measurement in commercial environments. How do you measure deformation when you are trying 

to bend sheet metal to form cars? Or what are the materials properties of advanced materials if you are light weighting? Or how do 

you characterize new nanomaterials? Or how do we look at biological materials? 

So an enormous amount of our mission, core mission work in 

measurement science is removing measurement barriers to manufacturing. Similarly our role in standard setting. The United States 

is quite unique in that standards are not set by a government 

agency. Standards are set by industry. And that approach to industry-led technical standards is one that we support. So instead of 

having us issue standards, we have a supporting role. We coordinate federal agencies’ use, but we are also there to support the industry efforts to make sure standards are based on good methodology and so that in the end you want to measure something because you want to know that a standard was put into practice. It 

does not matter if it is on a piece of paper. You want to show that 

a product or service can, you know, can perform the way you wanted it too. 

So the NIST laboratories all the way through have these enormous efforts in providing unique measurement capability, lowering 

measurement barriers to manufacturing, and supporting technology standards. In addition to that the extramural programs in 

our ITS account provide a very special kind of service to industry. 

And as you pointed out, MEP is a great example. 

The MEP program only provides up to one-third of the funding 

for the MEP centers. What MEP really did is not set something up 

from scratch. It tied efforts that were in all fifty states together. 

It created a network of extension programs where they were working, often set up through a state university, or through a state-led 

program, working with manufacturers where they were trying to 

support their local business community. The power of networking 

similar state efforts together, though, is very real. And it allowed 

the states to both share information very quickly on best practices, 

what kinds of services were most effective. It also allowed us to collect metrics. You know, what worked? And what was the impact of 

these different services. And one of the things that happens then 

is we saw a surprising amount of uniformity across all of these 

fifty, these centers across all fifty states. 

And the reason I bring that up is that, you know, one of the 

issues that comes up every time we talk about manufacturing programs, and an area that I would like to work with this committee 


emcdonald on DSK2BSOYB1PROD with HEARING
293 

on, is this tricky question of the appropriate federal role. And I 

think it is tricky because states have always played a major role 

in economic development in this country. And so you end up in 

this, this decision about, you know, how far should the federal government get involved if the states are already there? 

One of the natural roles for the federal government, though, is 

helping the states work together. So this idea of networking and 

working across and sharing information, facilitating information 

across states is very powerful. And I think MEP may be one of the 

best examples of that. 

Mr. FATTAH. Well this biotech company in my district is a good 

example of that. I mean, we have some very fine universities and 

people who can be helpful to businesses. But in this particular case 

the expertise that was needed for this company happened to be in 

North Carolina. And it was through MEP that that connection was 

made. And so I think that that is very useful. Because, you know, 

as we compete on the world stage, we are not competing as an individual state or a parochial community. I mean, a lot of the business 

location decisions are either, is it North America, or is it some 

other place? And so it is very useful now. 

CONSTRUCTION OF RESEARCH FACILITIES

You talked about your lab program. Part of your budget request 

is for continued construction at the lab. Is this at the Colorado lab? 

Or which labs? Because you got some dollars through the stimulus 

program for construction, is that correct? 

Dr. GALLAGHER. That is correct. So the Recovery Act included 

funding for internal construction at NIST. Those funds have been 

obligated. And there is a lot of construction underway, if you were 

to visit either in Gaithersburg or in Boulder, Colorado. And that is 

one of the reasons the construction request is down considerably in 

2012 because we are dealing with this wave of ongoing construction. The situation in Boulder is that facility was in very poor 

shape. It was built in the 1950’s. It had the unfortunate accident 

in history, I guess, of being built before there were, you know, central air conditioning and air ventilation systems. So for a laboratory facility it was a real problem. 

So what we did is a study to show whether it was most cost effective to build new. For very high performance buildings it is cheaper 

to just build it from scratch. And that building is under construction now and will be done sometime next year. And what functions 

are most cost effectively addressed by just renovating the existing 

building. So the funds in the 2012 are to initiate and continue that 

renovation part of the project. And the reason I focused on it was 

the timing is really important. Because if you are going to do renovation you are displacing existing activities. And so the most efficient way to do this is to roll right after the completion of the new 

building and move through the renovation phase. If that is interrupted, you know, what will happen of course people will set up 

their equipment in these spaces and then we will later have to 

move them out and then move it back in. So we are trying to optimize the phasing of that project in Boulder. 

Mr. FATTAH. And this is a relatively small agency. What do you 

have, some 2,900 scientists? You can go out to one of the national 


emcdonald on DSK2BSOYB1PROD with HEARING
294 

labs like Sandia which has, you know, got 3,300 Ph.D.’s and another 4,000 or 5,000 workers there. So, you know, in comparison. 

So one of the questions is, I know we are dealing with kind of incremental questions about your budget from 2010 enacted to next 

year. But as you look forward over the next ten years, are we looking at a need to grow the entity in non-incremental ways in order 

to take further advantage of our resources and to compete better? 

Or are we about where we need to be with relatively small or, you 

know, not so small increases? I guess it depends on how one might 

look at it. 

Dr. GALLAGHER. So I think the Administration’s view is that 

NIST has to grow. It was one of the three agencies, and in fact 

Congress I think would agree because the COMPETES Act, which 

this committee supported very strongly, called for substantial 

growth in three agencies as well. The DOE Office of Science, NIST, 

and National Science Foundation. Looking at NIST—— 

Mr. FATTAH. For doubling them—— 

Dr. GALLAGHER. For doubling—— 

Mr. FATTAH. Right. 

Dr. GALLAGHER [continuing]. That is correct. One way to look at, 

you know, what is the optimal size, this is always difficult to do. 

But NIST is unusual in a couple of ways. One is its size, it is relatively small compared to the other major national laboratory activities. It is also, it is very diverse technically. It is probably the 

broadest collection of technical activities because the measurement 

science field does not confine it very much. So it is extremely 

broad. And if you look at serving industry as a primary mission 

area the amount of technological activity in industry has continued 

to grow over the last twenty years whereas the NIST laboratories 

have been flat or decline. So as a percentage of the industrial effort 

we have lost a lot of ground in the last thirty years. 

It comes back to this role of government question. I think, you 

know, we have tended, it has tended to be easier to focus on those 

areas where there is an overriding national need. Energy, defense, 

aerospace, where we can justify the stronger involvement. When 

you look at activities that are most crosscutting I think that has 

been the harder issue. And I think that comes back to a point the 

Chairman raised at the very beginning. Where we are looking at 

the enthusiasm gap maybe in the attendance of the hearing. But 

I think—— 

Mr. FATTAH. That is all right. The Chairman and the Ranking 

Member, we are very enthused. So even though no one else may 

be, we are enthused. But thank you, sir, for your testimony. Thank 

you. 

Mr. WOLF. Thank you. We are going to go to Mr. Aderholt in a 

minute. I just want to just ask one question, to give you time, 

okay? It will be good when we can remove this issue from the political attack and debate back and forth. I worry, my wife and I, we 

have five kids and I have fifteen grandkids. And I worry about the 

future of our country. And Norm Augustine made a comment at an 

event that I had on a bill to create a deficit commission to deal 

with that. He said in the sixteenth century, Spain was the number 

one country, and that is no longer the case. Seventeenth century, 

it was France. We used France at Yorktown to gain our independVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00294 Fmt 6601 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
295 

ence. The nineteenth century, the British century. The twentieth 

century, he said was the American century. But yet it was in 

doubt, in essence, what the twenty-first century would be. Would 

it be the American century, or would it be the Chinese century? 

I believe if we come together, we are going to have differences 

on a lot of different issues. But if we can come together with the 

American ingenuity, and the free enterprise system, it can be the 

American century. But I worry when I see the Chinese and others 

so cooperating with their government, in manufacturing, and doing 

things like that, that we could see us begin to decline. And as these 

jobs leave America, that the manufacturing jobs leave. And some 

have said, ‘‘Well, it is manufacturing but we have the R&D.’’ Well 

if all the manufacturing leaves the R&D begins to go. And we are 

seeing companies, American companies, opening up amazing facilities and beginning to move a lot of the R&D offshore. 

So for, you know, my grandchildren, and for the future of America. But this issue becomes so politically charged. So how do we 

take it out of that? And some have said on the MEP, ‘‘Well, it is 

too much government involvement.’’ Well, the internet came 

through the government. You know, and I would hold my credentials as a conservative Republican up against anybody in this Congress. But I want to help America. And on the bill that I have, with 

regard to repatriation of jobs, I have actually had somebody say, 

‘‘Well, would be an expenditure there?’’ We give tax credits to companies to return home. We also will reshape some EDA grants to 

go to a locality so that if they are going to bring a plant back from 

China that they can have an opportunity for a water and sewer 

grant. Or something like that. 

But so I would hope that we could, and I think it is important 

for your agency to stay totally out of these political debates. But 

hopefully we have to come together to fashion a policy that we can, 

and in the aviation area, much of the aviation with regard to Boeing really came out of much of what was done in the Defense Department. And we see the spinoffs in NASA. So some time I would 

be interested, and I want to go to Mr. Aderholt, to hear your comments. And not here at the hearing, but you can come by to tell 

me. What you think we can honestly, ethically, and morally do to 

enhance the manufacturing base of this country? 

When I see Apple, you know, many people have iPods, iPads, 

iPhones. A large number are being manufactured in China. Well, 

they ought to be manufactured in Alabama, or in Pennsylvania, or 

in Virginia. And it takes a certain technical skill to do that. But 

I would like to know what you think. And after I put in my bill 

with Senator Warner in a week or two maybe you can just set up 

a time to come on by. When you are going to be downtown, do not 

make a, and we can see what we can do to actually craft a manufacturing program that brings jobs back and creates jobs for American citizens, and yet can eliminate this debate that we are having 

so we can have a unified policy. So the twenty-first century will be 

the American century. 

MANUFACTURING EXTENSION PARTNERSHIP PROGRAM

Mr. ADERHOLT. Thank you. Thank you, doctor, for being here. 

The Alabama Technology Network, the ATN, is a recipient of MEP 


emcdonald on DSK2BSOYB1PROD with HEARING
296 

funds. And I think we have, and our district has been most impressed by the work of NIST through those funds. And the Alabama Technology Network, they tell us that for every dollar it receives in their MEP funds the government gets back about $76 in 

return. The Alabama Technology Network has attracted significant 

private investment and saved or created well over a thousand jobs 

in Alabama last year. What my question would be, can you tell us 

a little bit how those MEP funds are allocated? Just for our clarification? 

Dr. GALLAGHER. Thank you very much. It is always great hearing the success stories coming from the MEP program. It is a remarkable partnership with small- and mid-sized manufacturers. 

The way the funding currently works in the program is actually in 

two parts. The one-third, the maximum one-third federal cost share 

part that supports the day-to-day operations of the MEP centers 

constitutes up to about $110 million of the request level. The remainder is what we call next gen. It is basically the part of MEP 

that is working with centers. It is actually done competitively. We 

issue a call for ideas and the centers can compete for these additional funds to develop if they have ideas for new services. In other 

words, how to match small- and mid-sized manufacturers with new 

technologies. A very active area right now as manufacturers try to 

diversify their products and move into new markets. Or to work 

with small- and mid-sized manufacturers to increase their exports. 

Most of the growing markets are overseas and this is a barrier for 

many small- and mid-sized businesses. How do they work if they 

are going to start working with exports? Or how did they become 

part of an important supply chain? So we have been working with 

DOD and the defense logistic agencies so that when Defense needs 

parts in certain areas we can rapidly hook them up with manufacturers who are willing to supply those types of parts and components. Buy American Acts, you know, when there is a requirement 

under a certain type of construction to supply something that is 

Buy America to satisfy it what we can do is use this MEP network 

to get that request out to the manufacturers and say, ‘‘Hey, can 

you make this?’’ And provide that as an opportunity. 

Those types of, those are sort of new ideas that are coming from 

the manufacturers about ways that this programs can support 

them. And that is what the additional $30 million is used for. We 

use it as a competitive program to help them take an idea like that 

and develop it into a program. And then as I said, what happens, 

because the program ties all of these centers together through this 

network, is they can rapidly see what works and what does not and 

can adopt these programs for their own use. 

Mr. ADERHOLT. What as far as the state allocations, is every 

state guaranteed a certain amount? Or is it awarded on merit? Or 

how does that operate? 

Dr. GALLAGHER. I do not know the algorithm that determines, I 

do not believe there is a state cap for how much each state can get. 

What there is in the statute is the federal share can account for 

no more than one-third of the total funding. What the other twothirds are made of actually varies a lot from state to state. In some 

cases the states are directly investing in these activities and are 

full participants with funding. In other cases fees that are collected 


emcdonald on DSK2BSOYB1PROD with HEARING
297 

from the manufacturers make up part of it. So it is very diverse 

in terms of how states, you know, how the centers approach the remainder of the cost share. And they, the way we determine who 

runs a center is on a merit basis. So there was initially a competition and we evaluated that, and there is a regular review process 

that is carried out. And that is what the MEP staff are doing, is 

working with the centers. We want the centers to succeed, so it is 

not a punitive review. But we are trying to make sure that these 

centers are delivering the maximum benefit as possible. So if there 

is a center that is having problems we work with them as much 

as possible before we would go to a, you know, we would need to 

recompete. 

Mr. ADERHOLT. Well I think one reason it has been significant 

in Alabama is because we have lost a lot of manufacturing jobs in 

Alabama, which a lot of states have. And not to say that Alabama 

is the only state that falls into that category, but needless to say 

some states have fallen in that category more so than others especially when it comes to manufacturing. And you may not know this, 

but do you know if there is any way that those states that have 

lost more manufacturing jobs, is that taken into account when 

these funds are distributed? 

Dr. GALLAGHER. No, we have not been adjusting the distribution 

funding based on these changes in manufacturing levels. Because 

the programs themselves are saturated. In other words they are, 

you know, as effective as this program is it is not large enough to 

address all of the small- and mid-sized manufacturers who might 

desire these services. So even though there has been sizable manufacturing reductions in certain states it is not at a level where 

there is excess capacity in the MEP centers to our knowledge at all. 

Mr. ADERHOLT. So based on your comments when I originally 

mentioned the MEP program, you have seen a lot of successes 

through those funds, I take it? Throughout your time at the Department of Commerce? 

Dr. GALLAGHER. I have to confess, it is one of the most enjoyable 

parts of my job, is to go visit some of these manufacturers and see 

what they are doing. You get very excited that, you know, you are 

seeing all of the things that we care about. The American ingenuity, the excitement in moving into new areas. And anyone who 

has not done it should because you will realize immediately when 

you start visiting these companies that manufacturing is not what 

many people picture it to be. This is some cutting edge, high technology work in very small firms. This is not just sitting and doing 

repetitive manufacturing tasks over and over again. American companies, when they are succeeding, they are providing the highest 

performance products. They have some of the highest productivity 

levels in the world. And you see it all when you go into some of 

these centers. So it is some of the most exciting, it is one of the 

most exciting things I get to do in my job. 

Mr. ADERHOLT. Thank you. Thank you, Mr. Chairman. 

Mr. WOLF. Thank you, Mr. Aderholt. I just, the staff just gave 

me this thing here, an AP story. It is in Tokyo. Japan’s Northeastern coast has been rattled by a strong aftershock. The Japanese meteorological agency has issued a tsunami warning for a 

wave of up to one meter. The warning was issued for a coastal area 


emcdonald on DSK2BSOYB1PROD with HEARING
298 

already ravaged by last month’s tsunami. Officials said the quake 

was a 7.4 magnitude and hit twenty-five miles under the water and 

off the coast. And I just hope we can get the head of NOAA to tell 

us that they are going to put one of these conferences are. But 

what if 7.4 hit off the coast of California? Or off the coast of Atlantic City? What would the impact be? I know that is a different configuration, and but—— 

Dr. GALLAGHER. Yes, I do not have a detailed knowledge of the 

seismological conditions there. I know that the type of geological 

structures that we have on the West Coast in some cases are quite 

similar to the one that is causing these earthquakes in Japan. I 

know that USGS has risk hazard maps. That is one of the things 

that has developed under NEHRP. And what we are developing is 

a capability to look at the structural integrity of how we built 

things according to these maps. So our ability to start understanding the risk is improving. But off the top of my head I cannot 

project what it would be like. 

TECHNOLOGY INNOVATION PROGRAM

Mr. WOLF. You are requesting a total, this is the Technology In- novation Program, a total program level of $75 million and eighty 

FTEs for the Technology Innovation Program. This amount is $30 

million above, or 67 percent higher, than that which is in H.R. 1. 

What research efforts have been funded thus far under the program? 

Dr. GALLAGHER. Thank you. So the TIP program, of course, is 

one of a few that are called proof of concept programs in the federal 

government that are designed to look at high risk, high payoff advances in science and technology in a focused area. The program 

is fairly modest in size for a program that is trying to do that. So 

what we have tried to do to maximize impact is take advantage of 

the fact that the program calls for us to define what is called a critical national need. Justification for why we would make federal investments in a particular area. And we have tried to focus those 

so that within, we get high quality proposals in that area. 

The first of the competitions was held in 2007. It was in the area 

of civil infrastructure, looking at new technologies to assess the 

condition of road surfaces, bridges, this type of physical infrastructure that we rely on. We are taking this infrastructure well past 

its design lifetime and of course the big challenge is how do you 

assess condition to make meaningful maintenance or replacement 

decisions? And we think technology could play a role. 

All the other competitions that have been held since, in 2008 and 

2009, have been in the area of manufacturing. Either nanomanufacturing or biomanufacturing. We are looking at these emergent 

areas where as a country we have made deep investments in the 

underlying research and now we are beginning to see the real 

promise coming out in terms of technologies that are being made. 

And so we think that is, those have been ripe areas. 

So the program has focused, with the exception of the first call 

in civil infrastructure, in the areas of manufacturing, in advanced 

manufacturing. 

Mr. WOLF. Well in last year’s hearing the TIP program was discussed and you referred to it as a pilot then. The program was just 


emcdonald on DSK2BSOYB1PROD with HEARING
299 

begun in 2007. You reported that NIST would have to evaluate the 

results of the program to determine if it should continue. So have 

you taken that analysis? 

Dr. GALLAGHER. Well the discussions are certainly still continuing. My feelings have not changed since last year. That if the 

intent of the program is to have a broad national impact in looking 

at breakthrough technologies in all areas of national need, it is 

hard to imagine how we would do that with a program that has 

been funded at $70 million to $75 million a year. So what we have 

done is we have tried to create much narrower focal points for the 

program so we can have an impact there. And we continue to look 

at the size of the program whether this makes sense to do it. 

In the context of the 2012 request I think one of the reasons it 

has an increase has to do with the fact that these narrower areas 

of focus have been in manufacturing. So this is really reflecting the 

Administration’s desire to increase funding in breakthrough technologies for manufacturing. I do not think that means we have 

stopped looking at the effectiveness of the program. And we will 

continue to work with the committee as we have those discussions. 

Mr. WOLF. Because we have here, you stated last year that TIP, 

you could really not, you expected impact, unless the funding were 

significantly increased. And the climate that we are in now really 

will not allow that option, even if we wanted to do it. So does that 

make this relatively small program a lower priority in comparison 

with your core research activities? 

And as you know, I think, Mr. Fattah is supportive and I am 

supportive. I mean, we are not looking to rip the NIST budget up. 

And I think we would like to plus it up, if we could. But make sure 

that, you know, I can spend a little bit on this, and a little bit on 

that, and a little bit on this, and a little bit on that, and you get 

nothing. Whereas if you really hit. So if you had to prioritize programs given the fiscal constraints, you know, where does TIP rank 

in relation to other core NIST programs? And the MEP that we 

have been talking about? And I know it is hard to say what one 

of your children do you want to put out for, you know, but because 

of where we are now I think we have got to look at some of those 

things. 

Dr. GALLAGHER. So I, yes, this is always tough. And I think, your 

priorities depend on where you set funding levels. I think my feeling remains unchanged. That as TIP was designed, which was to 

have broad national impact in a broad set of areas of critical national need, it is underfunded to do that. And in fact the way the 

authority was put together requires a lot of program management. 

So we have a lot of staff managing this relatively small program. 

From that context, if the decision is made, as you do your very 

difficult job of optimizing these budget choices, that we cannot 

grow that program. It would not rank very high on my priorities 

because I think given a smaller amount of money I can think of 

programs that could have a much bigger impact. 

One of the reasons we proposed the Advanced Manufacturing 

Technology Consortia Program, AMTech, is precisely for that reason. It is a relatively small program. But what AMTech is designed 

to do is to bring competing companies together to not just work toVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00299 Fmt 6601 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
300 

gether but to fund the work they are doing together. The model is 

really SEMATECH. 

Mr. WOLF. Well then are there other programs? Assuming the 

committee had a conversion like Paul on the road to Damascus and 

said, ‘‘Well this is just, we have got to do this.’’ Are there other 

areas—and I am not going to pin you down here because I think 

you have to think about this because you are talking about real live 

programs and people. Are there other areas that you would say, 

‘‘This I think is so significant for the future of America that I would 

prepare to,’’ I mean I have got some other questions, some we will 

get to, some we will not, and we will just submit them for the 

record. But, ‘‘I would be prepared to give up there.’’ 

Again, we are not looking to take you down. And I think if you 

can just think about that and let the staff know. Are there some 

other areas that because you like to do this, I mean, I would like 

you to be able to move ahead and clean the clock of the Chinese, 

if you can. But, so where would we get that if we wanted to give 

you that increase? And I cannot speak for Mr. Fattah, but I think 

he would feel the same way as we were to—— 

SMART GRID

Mr. FATTAH. You can speak for me anytime, Mr. Chairman. 

Mr. WOLF. No, well I, no I cannot, either. But if you could sort 

of let us know, I do not know how close we are coming, but we have 

a smart grid question here. You are requesting $9 million to continue research on smart grid. What is smart grid? And why is this 

important research? And where do we rank with respect to other 

nations? 

Dr. GALLAGHER. So smart grid is the combination of information 

technology with the technology used to manage the distribution of 

electricity. What that means is pretty diverse. It goes all the way 

from equipment that is on the high voltage lines that manage the 

actual power management at the national and regional level, all 

the way to smart meters and smart appliances that could go into 

homes. So you could imagine within a given building you are enhancing your ability to manage when you consume electricity and 

can you take advantage of pricing. 

Mr. WOLF. Which is important. 

Dr. GALLAGHER. Which is very important, because if you do not 

do that, you cannot store electricity anywhere. So you have to build 

your system for where your peak loads are, and that is a very expensive proposition. So if we can enhance our ability to manage it 

there is a very large benefit. 

Mr. WOLF. How do we compare with other nations? 

Dr. GALLAGHER. Right now we lead the world, I believe, in the 

development of smart grid technologies. The challenge here is, 

there is some research challenge. But the real issue is you are developing something kind of like the internet. You are going to have 

a bunch of different devices that need to talk and work with each 

other. So coming up with a set of standards that industry can agree 

on, in terms of how they are going to share information, or how a 

certain device is going to connect and talk to another device, how 

that is going to be done securely so we do not introduce new 

vulnerabilities into the system as we increase its ability to do all 


emcdonald on DSK2BSOYB1PROD with HEARING
301 

the good things is an enormous challenge. It is very similar to creating a set of standards around, for example, 4G wireless technologies, or the internet. It is allowing this sort of very high degree 

of interoperability. 

At the present time my personal view is that the effort on working with industry, we have 600 or 700 participants in this effort. 

We are working with all the major companies, utility companies, 

utility commissions. And this, the level of complexity of a system 

like that is very high. And this is moving as fast as any technology 

of this complexity I have ever seen. 

Mr. WOLF. So this is important? 

Dr. GALLAGHER. This is incredibly important. 

CLOUD COMPUTING

Mr. WOLF. You know, I was the author of the bill to, called Journey Through Hallowed Ground, to preserve and protect land coming from Gettysburg down to Route 15, down to Monticello. Gettysburg Civil War, Monticello the Revolutionary War. VEPCO wants 

to bring, and some others, to take up, so the smart grid is important. I am not so sure that most of that power is not coming to 

Northern Virginia or the Shenandoah Valley. It is heading up to 

New York City. So I am for anything that you can do to kind of 

make sure that you can do whatever you would have to to protect 

and preserve, but at the same time. So I just wanted to get that 

on the record. But if you can keep us informed on that, too, because 

I am interested because of the impact that it is having on the State 

of Virginia. On cloud computing you are requesting an increase of $5 million. 

Would you explain what cloud computing is? Please explain, and I 

am going to combine some of these questions and then to go to Mr. 

Fattah. And how you are working to ensure that government information will be as secure as more and more information is 

outsourced? And then, I am combining, we have read that IBM is 

investing in a new cloud computing data center in Singapore. They 

have seven such cloud labs in the Asia Pacific region. Where do we 

stand with respect to our competitors in cloud computing? So what 

is it? And where do we stand? 

Dr. GALLAGHER. Cloud is a frustrating term because it is a little 

bit like manufacturing. It is one of these terms that is so broad 

that a lot of different things fit into it. In short, cloud is basically 

exploiting the internet to provide certain types of functions that 

you would normally now deal with in what is called an enterprise 

mode. 

So if I am an organization and I need certain computing capacity, 

I would need to buy the computers, buy the servers, buy the internal internet, buy the software that I run on those servers and everything would be controlled and run by my own organization. 

What being on the internet at very particularly high speed internet allows you to do is basically break that model. For example, I 

don’t need to buy the software. I might simply be able to let folks 

in my organization use web applications that would provide that 

service, so I don’t need to build a data server. I can actually store 

the information through the internet and somebody else can provision it. 


emcdonald on DSK2BSOYB1PROD with HEARING
302 

What it actually does is, it is the full use of the internet to provide either IT services, IT software or IT capacity. And the advantages are pretty significant because it is a change in business 

model fundamental. It allows for very great efficiency. They can 

rapidly deploy and you don’t need to write software and buy machines. You can very rapidly reconfigure information. 

Mr. WOLF. Why would IBM invest in a new cloud computer data 

center in Singapore? There are seven cloud labs in the Asian-Pacific region. Where do we stand? Where does America stand? 

Dr. GALLAGHER. Well, again, I think that in the information technology arena, American companies are still at the forefront, so I 

think in terms of—— 

Mr. WOLF. But, you know, it is like a guy in a race. You can be 

in front, but last time he would have been so far that nobody would 

have been near him but somebody’s near him now and so I think 

it is somewhat deceptive to say we are out in front. How far out 

in front? Are we gaining or are we falling behind? So I mean, why 

would IBM—I worry some of these companies—it is Asia, Asia, 

Asia, but how do we compare with abroad and why would they not 

build them here in the United States? And are U.S. companies 

making similar investments here in River City where we live, here 

in the United States? 

Dr. GALLAGHER. Well, the answer is yes. I think companies like 

Google and Gmail and Amazon, these are all very much cloud-service type activities. I think this is going to be a global phenomenon. 

This is basically a business model approach and most IT related activities are going to end up being cloud based, so I think you are 

going to see IT investments in cloud services all over the world because the market is growing all over the world. The challenge in 

this is that a narrower issue, which is if we are going to ask federal 

agencies to start preferentially looking at cloud before they make 

big investments in buying, what are the ramifications of doing 

that? 

If it is just a data service, where is that data residing? Do we 

still meet our obligations to protect that data? Do we, once the data 

is in the cloud, are we handcuffed to that one provider because if 

I change the company that is providing my service the data can’t 

get moved over there. 

Is it useable? Are these things still providing the same 

functionality we had before? So the NIST effort is really trying to 

address what the federal CIOs are dealing with. If I am going to 

look at cloud for either storing data or providing some applications 

or web services, how do they meet their obligations that are still 

there to protect the information to ensure data portability and ensure usability? 

Some of that, what we will do right now is we will leverage existing policy, but I think the thing that makes cloud so tricky is it 

basically breaks existing policy. Everything we tell agencies to do 

now in terms of how they manage their assets has to do with how 

they control all of the assets. It is their computers, their people 

running the computers, and all of the services are on their sites 

and that is no longer the case under various types of clouds, so how 

do they continue to meet their responsibilities under this? 


emcdonald on DSK2BSOYB1PROD with HEARING
303 

So we will use Scotch tape and bailing wire initially to develop 

in areas where we think it is okay to do that with existing policy. 

But the real challenge is, it tends to be a standards and a conformity assessment problem. How do we get industry to show us 

that they can meet our requirements in a way that is robust and 

it is a way that we can actually trust a particular cloud service 

that meets our needs to protect public information that we have in 

our systems and protects all of the requirements that haven’t 

changed? 

Mr. WOLF. Are foreign information technology firms investing 

here in the U.S.? 

Dr. GALLAGHER. I am sure they are. Again the question is, to 

what extent federal agencies are going to use those types of services, and I think that is what the Federal CIO community is actively struggling with now. How do they reinterpret their obligations to protect information in the context of all these new services? 

And we are doing everything we can to provide a basis for them 

to do that. 

Mr. WOLF. Mr. Fattah. 

Mr. FATTAH. Well, this is a very sensitive area, but I am not 

going to delve into it other than saying that we do have certain 

protections related to the ownership of broadcast and communications entities, and farm land, and I think we have to think anew, 

because that was done a long time ago, about what other areas 

from our own national interests we need to section off from, you 

know, significant foreign ownership because we are competing with 

economic competitors and we have to be careful that we don’t want 

them to understand our—you know, to be too kind of close in to our 

huddle either. So you have to kind of think this through and move 

in this internet age. 

But I want to go back to the original subject because I want to 

make a request of you, but I want to mention, and one day we will 

get you to Philadelphia and take you around, but Cardel Industries 

is a fascinating company in Philadelphia, a manufacturer, a couple 

of thousand employees, no competitor in the U.S. They make what 

are called refurbished auto parts, and a number of places have required them because they are cheaper to use these refurbished 

auto parts. This is 10 percent of the manufacturing job base in 

Philadelphia. It is a fascinating company, family owned. They have 

a chaplain service. They have prayer in the morning and they get 

to work. 

And they have been doing this so well that, you know, like I said, 

they have no other competitor anywhere in the U.S. Over in West 

Philadelphia is a place, we have a high school there called West 

Philadelphia High and it competed in the XPRIZE to develop a car 

that could go 100 miles on a gallon of fuel and they beat out Toyota 

and they beat out MIT and they beat out—they were the only high 

school among 110 teams. And they would have won the final, but 

their car only ran 80 miles, so they didn’t win, but they hooked up 

with the entity that did win, Edison, and now they are working on 

manufacturing this car. 

It is fascinating. It is not so much the kind of IQ only. The part 

of it is the desire and the enthusiasm to get something done and 


emcdonald on DSK2BSOYB1PROD with HEARING
304 

these kids have done a remarkable job of—I mean, all these companies have spent over $100,000,000 on their entries in this contest. 

So part of what we have to do is, we have to challenge ourselves 

and then we also need to find opportunities for us to demonstrate 

our interests in this area, which gets to my request. And I am sure 

that the Chairman will join in with me. I would be very interested. 

I am going to send you a letter, because I have done this for the 

Chairman, I am going to send you a letter asking if, through the 

MEP program, we could put together essentially a catalog of American manufacturers so that when people are looking to have something made, then we are trying to get something done, and they 

want to use an American company to make it, they have some 

sense about where they can go to get it done, you know. 

So you have this Cover Sports in Philadelphia. They make tarps, 

but they also have a little contract with DoD, just a little teeny 

$100,000 contract where they make these bags made of some of the 

tarp material for some of the nuclear waste on the subs. So, you 

know, we need to focus our efforts on making sure that the capabilities that exist here are utilized. 

So I am going to send you a letter, and I am going to get the 

Chairman and do—our staffs will work together to get it over, and 

I think it will be good because then, at least when people want to 

buy something who need a product or a widget made, there is really no reason for them to be looking some other place to get it made, 

and there are people here who can do anything, and I think that 

is part of how America is number one today, how it could be number one tomorrow, but we have to make sure that people know 

about these capabilities, and they don’t exist only in Philadelphia. 

We have 1,300 manufacturers. We’ve got 5,000 in the region, but 

there are manufacturers all over our country. Some are in the MEP 

program. Some are not, but I think at a minimum if we could get 

a, you know, obviously in this day and age they wouldn’t be in 

print, but it would be probably in some online format, so that companies and individuals and inventors who want to get their product 

made can find someone who can do it. 

BALDRIGE PROGRAM

Mr. WOLF. I think that is a good idea because I think when particularly some of the Fortune 500 are looking to, let us say in the 

space program, to do a certain thing, they have places they can go 

to. Maybe the MEP people could put that all together that they 

could look for an American manufacturer before—or even someone 

who is somewhere in the area who could then add on and do that. 

I think that makes a lot of sense. 

The Baldrige Program, is it core scientific NIST activity? And we 

are down so that is why we have been moving, so there is a vote 

on and we will have to leave in a minute. Is it a core scientific 

NIST activity? You are reducing it from $10,000,000 to $8,000,000 

with plan to transition out. 

Dr. GALLAGHER. It is not a scientific activity, but it has been a 

core NIST activity since it was first created in the late 1980s. 

Mr. WOLF. Yes, I remember it as being at Commerce, but how 

do you envision this transition to non-governmental funding taking 

place? 


emcdonald on DSK2BSOYB1PROD with HEARING
305 

Dr. GALLAGHER. I don’t know the answer to that yet. So what we 

have done is we have signaled that we would like to move in this 

direction with this request and what we are doing right now is engaging with the Baldrige Foundation. Baldrige is really already a 

public private partnership? 

Mr. WOLF. Is it? Is their funding, is it all private? 

Dr. GALLAGHER. Yes, there is a foundation with an endowment. 

They provide funding through the endowment. Of course, at the 

time it was set up, the cost share was set up one way and so the 

endowment size was limited to the size of the contributions into the 

endowment, so it lowered the barriers for doing that. 

So I think the name of the discussion now is—has the program 

matured to the point where it is worth reevaluating where you 

draw that public/private line, and that is the discussion we have 

started with the foundation. And I think until we see what the options are and what the consequences of the options are, it is premature to start talking about what the implementation would be 

towards a particular goal. 

Mr. WOLF. All right. And that is underway? 

Dr. GALLAGHER. That is underway. 

POSTDOCTORAL RESEARCH ASSOCIATESHIPS PROGRAM

Mr. WOLF. That is underway. You are also here on, we covered 

MEP pretty extensively. Is that the education one there? Page 9 on 

post-doctoral research. You are requesting an increase of 

$3,000,000 for a total of $14,400,000 for your post-doctoral research 

program. We are concerned. I am. I should say ‘‘I’’ rather than 

‘‘we.’’ But America is falling behind our competitors with respect to 

the number of students in technical fields. Would the additional 

funding enable NIST to hire up the authorized level of 120 associates? And with regard, if you can make that fast so I can then go 

to Mr. Bonner, he can ask whatever questions. 

Dr. GALLAGHER. The answer is yes. It was designed to restore 

the program to its full scale, so. 

Mr. WOLF. And are you concerned about America’s competitive 

edge falling behind? 

Dr. GALLAGHER. Yes. 

Mr. WOLF. You are. And if you have any studies where we have 

directed NSF to do a study on how do you get young people to be 

active and major in the sciences, and from maybe up to fifth, the 

numbers fifth or sixth grade to begin to go. What do you think we 

have to do to encourage more people perhaps on a longer-run basis? 

And maybe if you could call the head of NSF and see what they 

are doing and how you may cooperate with them, I would appreciate it. 

Mr. BONNER. Mr. Chairman, I don’t know where we are, and I 

apologize for being late. 

Mr. WOLF. That is okay. 

Mr. BONNER. I can put these question in the record. That’s fine. 

If you are close to concluding—— 

Mr. WOLF. No, you are fine. No, no. You go ahead. No, no. 

Mr. BONNER. Dr. Gallagher, forgive us, those of us who came in 

late for these—— 


emcdonald on DSK2BSOYB1PROD with HEARING
306 

Mr. WOLF. There are so many hearings and people bounce back 

and forth. 

Mr. BONNER. Not having the benefit of hearing the conversation 

between you and the Chairman and the Ranking Member, I wanted to just ask a couple of quick questions. In your testimony you 

identify only two proposed cuts, I believe, to the fiscal year 2012 

budget, and forgive me if this question has been posed and it has 

been answered, but in light of the serious financial situation that 

we are in, acknowledging that what you do at NIST is critically important to our country’s future, can we tell our constituents back 

home and the taxpayers of this country that that is all we can 

squeeze out of this funding request? 

Dr. GALLAGHER. This tension between looking at the fiscal situation, trying to get the budget deficit down and looking at, particularly in this request is dissident, and I think what the Administration did was to set a top level number that was fiscally responsible, 

but then optimize under it. 

What happens at NIST is that the mission of NIST to promote 

innovation and industrial competitiveness, basically, is exactly 

aligned with what the President put as the centerpiece of driving 

economic growth through supporting technology innovations. 

So it is hard to see in our programs that it is uncomfortable. I 

can tell you almost all of my programs are looking at increases, but 

it is really where the optimization took place. What we tried to do 

is, since all of our programs were ones that were aligned with this 

priority is, we certainly looked internally and have tried to target 

Administrative savings. We are trying to improve alignment with 

outside agencies who are doing similar things. We are trying to 

drive efficiencies that way. 

I think this is a very responsible request from that point, so I 

think you certainly can reassure constituents that we are doing everything we can. We are very cognizant of this need. It is quite 

real. 

MEP COST-SHARE

Mr. BONNER. Then the other question. The Hollings MEP has 

been successful in my home state, and I am from Alabama. In 

leveraging state and local funds to support efficiencies, especially 

in the manufacturing industry such as timber, pulp and paper, 

which has just been so devastated over the last, really over the last 

several years, but certainly over the last few years, of your other 

programs can you highlight which have such a significant state 

matching requirement and is this a model that should be better 

utilized where appropriate? 

Dr. GALLAGHER. So the MEP program sets a limit on the federal 

share, up to one-third. It doesn’t actually stipulate a state funding 

level. In fact, the approach across the United States is pretty diverse in terms of how the MEP centers provide the remaining twothirds. 

It does align very well with what states have always focused on, 

this type of outreach to business. So most cases the states are involved and frankly the success of the MEP centers is strongly related to how involved the states are. That is one of the key ingredients for success. 


emcdonald on DSK2BSOYB1PROD with HEARING
307 

Many of the programs in NIST actually work closely with the 

states, all the way from our laboratory program—because NIST 

has no regulatory authority where technical, non-regulatory agencies do. For example, even in weights and measures programs 

where we are defining how do you do certain measurements, we 

work with all 50 states because they are the ones that actually set 

the requirements, so we are working with every state in those 

areas. 

The TIP program, which provides funding for high risk, high 

payoff research has a mandatory 50 percent cost share requirement 

and the makeup of that requirement is quite diverse but often includes public universities and other funds. 

So we were talking about when you are in this area of innovation, you know, one end is pure research and we are very comfortable with the federal government. The other end is purely commercial and we know there is private sector activity. It is the area 

in the middle that is tricky but it is critically important because 

if you don’t connect the two sides, we don’t get the optimum efficiency out of our ability to take up new ideas and turn them into 

successful products and services. 

And I think one way of getting around that is to have public-private partnerships, cost sharing and other arrangements to make 

sure that that is handled correctly. It is a very important point. 

Mr. BONNER. Thank you. 

Thank you, Chairman. 

Mr. FATTAH. Mr. Chairman, can I follow up on that real quick? 

Is the one-third federal participation in terms of MEP, is that in 

the America COMPETES Act? Is that a statutory requirement? 

Dr. GALLAGHER. It was in the original authorization language for 

MEP. In fact, in the COMPETES Act there is a requirement to 

study that cost share, so the GAO was asked to specifically look at 

the cost share, determine whether it should be increased to as 

much as 50 percent. They just released a report this week that we 

will have to take more particular—— 

Mr. FATTAH. My point is that this is something that the Congress 

said. 

Dr. GALLAGHER. That is correct. 

Mr. FATTAH. That you are following. 

Dr. GALLAGHER. That is correct. 

Mr. FATTAH. And we also are studying whether we might make 

some changes in it, and that is important to note because I know 

a number of states feel burdened. They love their program, but obviously that is something that if we said it, we are going to have 

to change it. Thank you. 

Mr. WOLF. Thank you for your testimony. There will be other 

questions from probably a number of others submitted for the 

record. And I, personally, want to thank you for you and your people and for what you do. There has been a little concern that I have 

had quite frankly and I think if you just look in my voting record, 

I am a conservative Republican. I am pro-life, strong on fighting for 

strong defense and all the things, but I really get a little concerned 

when I see the criticism with regard to a number of federal employees. 


emcdonald on DSK2BSOYB1PROD with HEARING
308 

And I just looked at your bio. You were with the Agency for 19 

years. You can go out, as I said to Director Mueller yesterday, you 

could go out and make a lot of money. Are you married? You have 

family? Yes. You can make a lot of money. IBM, these guys would 

pick you up at a drop of a hat. And you have stayed, and so I appreciate the fact that you haven’t turned this into a coin operated 

thing where you can go out and work for the Chinese or do something like that or work with a maker online but stayed to do what 

is good for the country. So, thanks. 


emcdonald on DSK2BSOYB1PROD with HEARING
309 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 458 here 67061A.192
310 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 459 here 67061A.193
311 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 460 here 67061A.194
312 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 461 here 67061A.195
313 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 462 here 67061A.196
314 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 463 here 67061A.197
315 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 464 here 67061A.198
316 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 465 here 67061A.199
317 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 466 here 67061A.200
318 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 467 here 67061A.201
319 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 468 here 67061A.202
320 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 469 here 67061A.203
321 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 470 here 67061A.204
322 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 471 here 67061A.205
323 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 472 here 67061A.206
324 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 473 here 67061A.207
325 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 474 here 67061A.208
326 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 475 here 67061A.209
327 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 476 here 67061A.210
328 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 477 here 67061A.211
329 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 478 here 67061A.212
330 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 479 here 67061A.213
331 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 480 here 67061A.214
332 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 481 here 67061A.215
333 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 482 here 67061A.216
334 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 483 here 67061A.217
335 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert offset folio 484/600 here 67061A.218

emcdonald on DSK2BSOYB1PROD with HEARING
(337) 

FRIDAY, APRIL 1, 2011. 

NATIONAL OCEANIC AND ATMOSPHERIC 

ADMINISTRATION 

WITNESS 

DR. JANE LUBCHENCO, UNDER SECRETARY OF COMMERCE FOR 

OCEANS AND ATMOSPHERE AND NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION ADMINISTRATOR 

Mr. WOLF. We want to welcome you, Dr. Lubchenco for being 

here today. We want to discuss NOAA’s fiscal year 2012 budget request which is $5.486 billion. This amount is $723 million or 15 

percent higher than 2010. NOAA’s budget request represents about 

62 percent of the Commerce’s entire budget request for fiscal year 

2012. 

Between 2008 and 2010, NOAA’s funding increased by 22 percent, higher than any other program in this bill, more than the 

FBI, more than the National Science Foundation. 

As we have been telling all the agencies that are testifying before 

us this year, the Congress will not be in a position to provide such 

increases. 

The fiscal crisis facing the Nation is real and will require a level 

of austerity that goes beyond the President’s budget. 

We are going to ask, though, if you can help us, knowing that 

there are some things that you would not want to do, but I think 

you will have a better sense of what the priorities ought to be. 

And so it is kind of like if you are shaving, cutting back, or doing 

something, I think you can help us insofar as to say, well, you 

know, the committee, this issue is really one that will—and so we 

do not want to postpone this, but we will postpone that program 

to be able to do this. But if you can help us as we go through that. 

With regard to that then, I recognize Mr. Fattah for any opening 

statement. 

Mr. FATTAH. I will reserve my opening statement because of the 

advent of votes, and we want to move through this, so thank you 

very much. Welcome. 

Mr. WOLF. Thank you. 

Your full statement will be in the record. You can proceed as you 

see appropriate. 

Dr. LUBCHENCO. Thank you, Mr. Chairman. I appreciate that 

very much. 

Ranking Member Fattah, Chairman Wolf, thank you very much 

for your leadership and support of NOAA. Your continued support 

for our programs is greatly appreciated as we work within the Department of Commerce to improve science, products, and services 

that are vital to supporting America’s businesses, also its communities and its people. 


emcdonald on DSK2BSOYB1PROD with HEARING
338 

The vital role that NOAA plays in the protection of life and property has recently been exemplified by the actions that NOAA has 

taken in the wake of the tragic events in Japan earlier this month. 

The earthquake and resulting tsunami had far-reaching effects, 

and many of NOAA’s programs played a critical role in life-saving 

information, providing that to emergency officials and the public 

both here and around the world. 

Today I am honored to be here to discuss the President’s fiscal 

year 2012 budget request which promotes innovation and American 

competitiveness and lays the foundation for long-term economic 

growth while making responsible reductions. 

The budget recognizes the central role that science and technology play in creating jobs and improving the health and security 

of Americans and those abroad. 

I wish to highlight the following in our fiscal year 2012 request: 

key savings, climate services, weather, satellites, research and innovation, fisheries and protected resource management, and coastal 

and ocean services. 

The fiscal year 2012 request, as you noted, is $5.5 billion, a decease from the fiscal year 2009 request and an increase above the 

fiscal year 2010 enacted due primarily to our requirements to execute the restructured Polar Orbiting Civil Satellite Program. 

As part of the Administration’s Administrative Efficiency Initiative, NOAA analyzed its administrative costs and reduced nonessential spending by $67.7 million. 

The fiscal year 2012 request includes proposed budget neutral reorganization that brings NOAA’s existing but widely dispersed climate capabilities under a single management structure called the 

Climate Service. 

If approved by Congress, it would have a budget of $346 million. 

Our climate services demonstrate the utility of improving our scientific capability. 

Advances in science make it possible to provide useful information about the months to years time frame, data which is of potentially immense use to businesses, communities, and military operations. 

The National Weather Service provides critical information to 

communities and emergency managers and is the Nation’s first line 

of defense against severe weather. 

The fiscal year 2012 request of $988 million envisions using costcutting and cutting-edge technologies to deliver more reliable forecasts, reduced weather related fatalities, and improve the economic 

value of weather, water, and climate information. 

NOAA’s satellites provide data and information for forecasts that 

enable safe transportation, earlier response to severe weather, and 

smart construction, as well as emergency rescue operations. 

The fiscal year 2012 budget request for the satellite service is $2 

billion invested in multiple satellite acquisition programs. This includes an increase of $688 million for the Joint Polar Satellite System. This program is essential if we are to maintain the quality of 

our severe storm warnings, long-term forecasts, and receive emergency distress signals in a timely fashion. 

In parallel to creating a Climate Service, NOAA would strengthen and realign its existing core research line office. 


emcdonald on DSK2BSOYB1PROD with HEARING
339 

The Office of Oceanic and Atmospheric Research will refocus its 

work to be the innovator and incubator of new science, technologies, and applications within NOAA as well as an integrator 

across all of NOAA, consistent with the President’s call for science 

and innovation. 

NOAA’s request includes $212 million to continue strengthening 

core capabilities such as improving our understanding of ocean 

acidification and its impacts, and promoting conservation and use 

of coastal resources through our renowned Sea Grant Program. 

Rebuilding our Nation’s fisheries is essential to ensuring longterm sustainability and to protecting the livelihoods of fishermen 

and related industries. 

In fiscal year 2012, NOAA is requesting a billion dollars to support the National Marine Fisheries Service including investments 

to expand annual stock assessments and improve the timeliness 

and quality of catch monitoring in recreational fisheries. 

Complementing science with robust management, we will continue to support the voluntary establishment of catch share programs which have yielded significant financial and ecological benefits and the improved safety for fishermen. 

Over half of the U.S. GDP is generated in coastal counties and 

it is expected that the Nation’s coastal population will grow by 

more than 11 million by 2015. To continue delivering a dynamic 

range of services to promote safe, healthy, and productive oceans 

and coasts, the fiscal year 2012 budget includes $559.6 million for 

the National Ocean Service. 

In closing, I would like to note that I have a nickel in my hand. 

I believe that this nickel represents one of the best bargains that 

this country has. It costs each American less than five cents a day 

to run NOAA. 

This nickel gets you the world’s best weather information and allows us to save lives and property when severe storms strike. This 

nickel means that our coasts are more healthy and vibrant and in 

turn our coastal communities more prosperous. 

This nickel helps American business owners succeed from the 

fishermen on the coast to the farmer in the heartland and everything in between. This nickel helps keep our homeland secure. 

We take our work seriously because we know that citizens and 

businesses depend on us each and every day. I look forward to 

working with the Members of this committee and our constituents 

to achieve the goals that I have laid out in the fiscal year 2012 

budget. And I am happy to answer any questions you may have. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
340 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 609 here 67061B.001
341 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 610 here 67061B.002
342 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 611 here 67061B.003
343 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 612 here 67061B.004
344 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 613 here 67061B.005
345 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 614 here 67061B.006
346 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 615 here 67061B.007
347 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 616 here 67061B.008
348 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 617 here 67061B.009
349 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 618 here 67061B.010
350 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 619 here 67061B.011
351 

Mr. WOLF. Well, thank you very much. 

And I support your programs. I think they are very important. 

TSUNAMI WARNING PROGRAM

I want to cover an issue that I think is very important and I am 

going to give you a letter to this effect, but I will read the first 

question. 

I would like to talk to you about funding for NOAA’s tsunami 

warning activities which have been the subject of focus again after 

the recent events in Japan. 

NOAA’s base funding for its tsunami warning network has been 

about $28 million since fiscal year 2008. In addition to this base 

funding, following the Indonesian tsunami in 2004, NOAA received 

three supplemental appropriations to improve its tsunami warning 

programs and activities. 

I believe very strongly in the need for these predictions and 

warning programs. We discussed this when Secretary Locke came 

before us a few weeks ago. 

I inserted a letter in the record that I had written to the states 

back in 2005 urging them to help their coastal communities become 

tsunami ready. 

I wrote the then head of NOAA in 2004 urging him to review 

NOAA’s tsunami programs. 

I have drafted a new letter which we will give you so it is officially sent. And I want to discuss it with you today. 

I am asking NOAA to convene two summits this year, one on the 

West Coast, one on the East Coast—and as soon as possible—to 

bring together NOAA and the U.S. Geological Survey which is out 

in my area in northern Virginia. 

I used to work at the Department of Interior for five years. I was 

a deputy to Secretary of the Interior, Rogers C.B. Morton. And 

some of the best minds are out there in the U.S. Geological Survey 

with regard to earthquakes. 

To bring together NOAA, the U.S. Geological Survey, and state 

and local officials to talk about tsunami awareness, educational 

needs, and preparedness activities as well as a deep ocean assessment and reporting of tsunami programs is important. 

And the end to that, I would ask you as you do it on the East 

Coast to involve the nations in the Caribbean, too, because as we 

were checking on this back in 2004 and 2005, they were in danger 

and there was some concerns with regard to Puerto Rico and places 

like that. 

So we will give you the letter at the end of the hearing, and I 

will just read briefly the letter. 

But it said in light of the recent earthquakes in coastal regions 

of Haiti, Japan, and Burma and the devastating tsunami that 

struck Japan last month, I believe it is imperative for the National 

Oceanic and Atmospheric Administration to work closely with state 

and local officials in the United States to strengthen our preparedness for a tsunami. 

The tsunami alerts issued in Hawaii and the West Coast states 

immediately following the Japanese earthquake are a stark reminder of the danger U.S. coastal states face. 


emcdonald on DSK2BSOYB1PROD with HEARING
352 

In order to better prepare the U.S. for future tsunami events, I 

urge you to immediately begin planning two conferences including 

one on the East Coast and one on the West Coast and invite governors, all the governors up and down, and other state and local 

officials because we found in 2004 and 2005 that many localities 

really did not have a tsunami warning program. 

They did not have very much going. Some were participating and 

some were not. But to have the governors and local officials from 

coastal states in the region to discuss deep ocean assessment and 

reporting of tsunami, DART system alert and evaluation programs. 

I also believe it important to include the U.S. Geological Survey 

in the summit. Please provide a report to me within 30 days of the 

date of this letter regarding your efforts to plan and host these conferences. 

And I know you know a lot of people, some at universities and 

maybe people at Caltech and maybe people at other MIT who are 

experts. But I would like to see you do that. 

Dr. LUBCHENCO. Mr. Chairman, thank you so much for recognizing the importance of this very critical topic. 

NOAA has been working very diligently to raise awareness of the 

importance of tsunamis. We currently work quite closely with the 

USGS on—the tsunami warnings that we were able to issue following the Japan earthquake, the Haiti earthquake, and the Chili 

earthquake, all of those depend directly on our connections to the 

USGS. 

Mr. WOLF. Right. 

Dr. LUBCHENCO. We take that scientific information, run models 

that are appropriate to particular ocean basins and then utilizing 

our DART tsunami buoys to issue warnings and advisories appropriately. 

But equally important is your highlighting the communities’ understanding how to respond appropriately when there is a warning, 

to understand what it means for them and what they should do. 

NOAA has identified that there some 250 communities at risk 

around the coastal areas of U.S. states and territories. And we 

have a tsunami ready program that works with local communities 

to have signage, to have warning systems, to have trials, drills to 

have people understand what they are supposed to do so that they 

can act in a manner of minutes which is often what is required. 

We currently have 83 communities that have been certified as 

tsunami ready and part of our ongoing efforts involve adding additional ones through time to that number. We have seen the benefit 

of that. 

For example, in this last tsunami warning, both along the West 

Coast of the U.S. as well as in Guam and Hawaii, our tsunami 

warnings were issued. The first one was issued within nine minutes of the earthquake happening in Japan. And the response in 

U.S. states and territories was quite effective. No lives that I know 

of were lost. And many of the—— 

Mr. WOLF. Excuse me. You may want to check your microphone—— 

Dr. LUBCHENCO. Thank you very much. I apologize. I looked at 

it when I started and it looked like it was green, but obviously not 

enough. 


emcdonald on DSK2BSOYB1PROD with HEARING
353 

Mr. WOLF. I hear you fine, but apparently the reporter was having a problem. 

Dr. LUBCHENCO. Okay. So you are absolutely correct. This is a 

vitally important topic. 

We just had tsunami awareness week last week with a whole series of activities designed to help raise awareness, but it is such a 

timely and important topic we would be open to discussing additional ways to—— 

Mr. WOLF. Well, I would really like you to just put the conferences on to tell us that this is important. The fact is it would 

be helpful to just say today we will do this and not only with regard to the tsunami but also with regard to the earthquake issue. 

There is a concern with regard to the power plant up there in 

New York City, north of—up there on the Hudson River. I mean, 

I just would like you to say, ‘‘Mr. Wolf, it is a good idea and we 

are going to move on this and we are going to deal with this, one 

on the East Coast, one on the West Coast, not only on the tsunami 

issue but also on the earthquake issue.’’ 

I mean, you have the metropolitan New York City. You have millions of people that live there. And so I followed it. I do not represent New York, but I have heard Governor Cuomo. He has made 

a pretty powerful case. 

And so what I would like you to do is to agree, and I do not know 

why you would not—I mean, this ought to be something that we 

move ahead on. 

You know, there is a song that I sometimes quote by Simon and 

Garfunkel and they sang it in Central Park. It is called The Boxer. 

And the words say, ‘‘man hears what he wants to hear and disregards the rest.’’ Sometimes we may only be hearing what we 

want to hear. And I do not want us to disregard the rest. 

And I would like to see you, I have great respect for you and I 

think NOAA does exceptional work, to bring together a top team 

in the East Coast and a top team in the West Coast and invite all 

of the governors and all—I mean, your testimony almost indicated 

there are some that are not doing what they should be doing. 

Also I know Mr. Serrano who is not here has interests with regard to Puerto Rico, and involving also the Carribean nations because Haiti has been devastated with regard to that. 

So I guess the question is, not to put you on the spot, but would 

you do this, tell us that you will do one on the East Coast and one 

on the West Coast? 

Dr. LUBCHENCO. Mr. Chairman, I think that’s a terrific idea. We 

would be delighted to work with you and explore the possibilities, 

the timing, what it would look like. May we work with your office 

to do that? 

Mr. WOLF. Okay. Well, fine. Good. I appreciate that. And your 

people have done a good job. And I am just afraid of when something happens, the whole world focuses. 

I remember when the Indonesian tsunami hit. And then after 

about a year, it was a big issue at the UN and then it sort of just 

drifted away. And now you never heard about it until we saw what 

we have seen and feeling the hurt and the pain and suffering of 

the Japanese people. 


emcdonald on DSK2BSOYB1PROD with HEARING
354 

I know the French sent a team there and they are looking to see 

what lessons learned so they can come back, and I think it is important for us to do this. 

And I would assume that every governor working with the National Governors Association would be very interested to come and 

to kind of find out because particularly in these days of budget 

issues, people are focusing on different things to sort of force people’s minds back to focus on this, to make sure that everything that 

can be done is being done. 

So we will be glad to work with you, do whatever you think is 

appropriate. I do not have to attend but, I think I just want the 

very best minds that we have both on the East Coast and the West 

Coast. 

And I think Caltech has some pretty good people and I know 

that—I think we should hear what MIT and others have to say, 

okay, let’s bring the very best, and maybe you would have the same 

team do it for the West Coast as the East Coast or maybe you 

would even decide that, you know, because of variances, it would 

change. But I would hope we could do that and you can run it. 

Dr. LUBCHENCO. Mr. Chairman, we saw in the aftermath of the 

Indian Ocean tsunami, because that did raise awareness, it enabled us to—Congress acted as a response of that, in response to 

that. And that was what prompted our significantly adding to the 

tsunami DART buoy network that are very important in detecting 

tsunamis. 

So I think you are absolutely correct. This is a moment in time 

where people are focused on this and we need to capitalize on it. 

Mr. WOLF. And it was this committee that actually pushed it. I 

remember I said we are going to write a letter to every governor. 

We are going to force everybody to focus on this. At first, it did not 

seem that any one paid attention and then all of a sudden, the interest came and now until we see what unfortunately took place in 

Japan. 

So, anyway, I appreciate it very much. We will help you every 

way we possibly can. If you need approval to reprogram, I mean, 

you just tell us and we will be there and help you. 

Next we are asking everyone who comes before the subcommittee 

about the priorities for fiscal year 2012. Given the funding constraints that we are under and we will continue to be under, what 

are your top three appropriation priorities? 

And what I have been saying to most of the—hello, Mr. Bonner— 

what I have been saying to most of the witnesses is that I wish we 

could fund all of what you are asking for, but we are facing a fiscal 

crisis in the country. We have $14 trillion of debt. 

I was listening to the news coming in and there is a new report 

out on PIMCO.com about the unfunded liabilities of the Nation. So 

until we deal with the fundamental issues of the entitlements, 

Medicare, Medicaid, and Social Security, these tough times will 

continue. 

It would be my hope that we could have a bipartisan agreement. 

I personally was not appointed to the Bowles-Simpson Commission. 

It was an idea that Jim Cooper and a group of us came up with 

and the President appointed. But the Administration walked away 

from it. I would support the Bowles-Simpson Commission. I would 


emcdonald on DSK2BSOYB1PROD with HEARING
355 

try to make some changes in it, but we have got to do this thing 

hopefully by the end of the year. 

And so until there is a bipartisan agreement to come together to 

deal with the big entitlement issues, you are going to really find 

pressure on these programs and other programs. 

Once we reach that agreement to deal with the entitlements, 

then I think you will see a continuation and kind of a removing of 

the lid, if you will, on some of the fundamental programs and also 

including programs for cancer research and Alzheimer’s research 

and infrastructure, things that we need as a Nation. But you are 

going to have to deal with the entitlement issue and it has got to 

be done. 

So what are your three top appropriation priorities? 

FISCAL CHALLENGES

Dr. LUBCHENCO. Mr. Chairman, we take the current fiscal challenges that the Nation is facing very, very seriously which is why 

in constructing this budget we did a very careful questioning of 

every single item that is in our budget. 

I mentioned that we had achieved some actually quite painful administrative cost savings of $67.7 million. We have also reduced 

programs and other areas that under other circumstances I think 

would be very appropriate, very worthwhile, very important programs. And we just decided we could not do them this year. So we 

have already gone through a very serious exercise of questioning 

everything. 

The items that we are asking for in this year’s budget request 

represent things that are essential to our mission of saving lives 

and property, stimulating the economy, and they are ones that I 

believe will bring great benefit to the American people on the short 

term as well as the long term. 

The analogy that was used by the National Academy of Sciences 

in their report about when it comes time to lighten an air load, 

what you do not want, if an airplane is overweight and you need 

to jettison something, do not jettison the engines that enable the 

plane to fly. 

And, in fact, a lot of what NOAA does is comparable to that. 

Whether it is fisheries or whether it is coasts or satellites, those 

programs are all ones that directly serve the American public. 

JOINT POLAR SATELLITE SYSTEM

Now, the largest budget number in our request is clearly for sat- ellites, $2 billion. And of that, a very significant one is this Joint 

Polar Satellite System which provides us with the wherewithal to 

do severe storm warnings and long-term forecasts as well as search 

and rescue, all vitally important to the American public. 

We currently have a polar orbiting satellite that is in space now 

that is providing that information for us. If we do not have the 

funds in both fiscal year 2011 and 2012 to build the next satellite 

and the instruments that go on it to replace the one that is there 

now and the one that we are going to launch in the fall, we will 

have a data gap. 

In fact, because of the current situation in fiscal year 2011, we 

already have a delay in the launch of from 12 to 18 months. And 


emcdonald on DSK2BSOYB1PROD with HEARING
356 

that will likely result in a data gap starting in as early as 2015 

where we may have coverage—where we will not have coverage by 

a polar orbiting satellite run by the U.S. 

And the consequences of that are quite, quite serious. We will 

not be able to do long-term weather forecasts that we do today. Our 

severe storm warnings will be seriously degraded. 

And we recently took the exercise of looking back at some very 

severe storms of last year and asking the question what would our 

forecasts have been like if we had not had that polar orbiting satellite information. 

And with your permission, I would like to request entering into 

the record—— 

Mr. WOLF. Without objection. 

Dr. LUBCHENCO [continuing]. The analyses that we did for this. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
357 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 633 here 67061B.012
358 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 634 here 67061B.013
359 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 635 here 67061B.014
360 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 636 here 67061B.015
361 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 637 here 67061B.016
362 

Dr. LUBCHENCO. And we used two scenarios. One was for the 

snowmageddon which everyone will remember February of 2010 

and the forecast that we did for that was quite accurate. It predicted a horrendous storm and that is exactly what happened. That 

depended directly on the polar orbiting satellite information. 

If we take that out of the model and re-run the model, which 

would give us an idea of what would happen in the future without 

that polar orbiting satellite, we would have grossly underestimated 

the severity of that storm. We would have estimated it might have 

been off by 200 to 300 miles in terms of where it was and we would 

have underestimated the amount of snowfall by at least ten inches. 

So emergency preparedness would have been impaired. Aviation 

and surface transportation would have been much, much worse 

than it was. 

So that program which is one of our high dollar numbers in this 

budget is really, really important. And the longer we delay both 

with funds in 2011 as well as 2012, the longer this gap will be. And 

for every dollar that we do not spend even in 2011, it will cost 

three to five dollars down the road to bring that program back up 

to speed. 

Mr. WOLF. Well, this is not an entitlement hearing. You are not 

the director of OMB and I understand that. But it is the ‘‘man 

hears what he wants to hear and disregards the rest.’’ What the 

fundamental disregarding of this Administration is they are disregarding. 

And I am going to put in the record today at this moment the 

PIMCO report. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
363 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 640 67061B.017
364 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 641 67061B.018
365 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 642 67061B.019
366 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 643 67061B.020
367 

Mr. WOLF. I agree with everything you have said, maybe even 

more. I take my responsibility seriously. I mean, I worry about 

some of these things. My wife and I, we have 15 grandkids. But 

you have got to deal with the entitlements too. 

And so far, the President and the Administration has been 

AWOL. They appointed Erskine Bowles and Simpson and they 

have walked away. 

And I agree to the engine analogy. I agree with everything. I 

mean, let it be said that I agree with the administrator. But where 

we have differences, and, again, it is not fair and I am going to 

leave it because you are not Jack Lew at OMB, it is the entitlements. 

And if Tom Coburn and Dick Durbin can agree to come together 

to link arms, probably, you know, having a concern, but link arms, 

then the President ought to be able to do it. 

Now, Tom Coburn is being criticized by Grover Norquist, but he 

is not afraid of that. He is willing to say this is what I believe in 

and this is what I am going to do to save the country. And we expect the President to do the same thing. If Durbin and Coburn can 

do it, then the President can do it. 

And so I have said enough. But it is not enough just to say, you 

know, the engine story and we want to invest in every nickel. We 

are borrowing now 40 cents of every dollar from someone for every 

dollar that we spend. So of that nickel, we are borrowing it. And 

we are also borrowing from China, this fundamentally immoral nation, what they are doing to people insofar as religious freedom and 

human persecution and things like that. 

So until we deal with this issue of the entitlements, all these 

things are going to be squeezed. And so when they are squeezed 

and people come down and criticize on the forums, you say until 

you are—I have said I am prepared to vote for Bowles-Simpson or 

Simpson-Bowles, whatever they call it. 

Dr. LUBCHENCO. Uh-huh. 

Mr. WOLF. And I am going to say if you do not like the discussion, you tell me what you are prepared to do on the entitlement 

issue. If you are going to be AWOL and just talk about it and 

throw a rock at something, have a little cut, then that is that. That 

is not the way we are going to solve the problem. 

NATIONAL WEATHER SERVICE

Let me ask you about the Weather Bureau. I would place the National Weather Service at the top of NOAA’s priorities. The fact is 

before I go to bed, I always watch the weather. It is sort of just— 

yet, the Weather Service budget has not increased at the same rate 

as the rest of NOAA. 

Does your budget priority prioritize the Weather Service and 

what else among NOAA’s programs would you categorize as critical 

to life and safety? But where does the Weather Bureau come in? 

Dr. LUBCHENCO. The Weather Service is absolutely critical to 

saving lives and property. And they depend on the satellites, for example, which is one of the reasons why—in fact, 98 percent of the 

information that goes into our numerical models for weather come 

from satellites. 


emcdonald on DSK2BSOYB1PROD with HEARING
368 

So the Weather Service cannot do its job without having that information from the satellites, both the geostationary as well as the 

polar orbiting. So it is not really easy to separate out from a functional standpoint. They need one another. 

So the Weather Service is vitally important and they do a spectacular, magnificent job not only in providing basic information to 

citizens and emergency managers but also in providing opportunities for the private sector to add value and sell additional products 

or provide additional services. 

So AccuWeather, the Weather Channel, for example, take the 

basic information, add value to that. And so there’s an opportunity 

to grow businesses and we have seen that in this particular instance. So it is a priority. I would love to have even more in our 

budget for the Weather Service. 

What I believe is in our request is a responsible amount that will 

enable us to do what we need to do. And it depends on other parts 

of NOAA to do that efficiently. It depends on the ships and the 

planes to get information to service our tsunami DART buoys, for 

example. 

So the different parts of NOAA actually interact with one another and complement one another. 

Mr. WOLF. Okay. I am going to go to Mr. Fattah now. But with 

Mr. Bonner walking in, I just wanted to—I had asked the administrator to put together a conference on the East Coast and the West 

Coast to deal with the whole issue of the tsunami issue and the 

earthquake issue. 

But I would also say that I think the Gulf ought to be included 

because Mr. Bonner represents the Mobile area. So I would urge 

that it be not only the East Coast and the West Coast, I would 

amend my letter, but to also say the Gulf to make sure what impact it would have on them. 

Dr. LUBCHENCO. Mr. Chairman, when you were discussing that, 

you mentioned the Gulf and the Carribean, so I understood that to 

be the case. 

Mr. WOLF. Thank you. 

Mr. Fattah. 

Mr. FATTAH. Let me thank you, Mr. Chairman. 

And let me start with this whole question of life savings now. As 

I understand from the work of my staff, this work of people who 

are fishing for a living is the most dangerous work in the country 

and that there are over 118 deaths per 100,000 and that NOAA’s 

satellite services have helped rescue over 6,500 and saved the lives 

of people through these satellites. 

I am concerned about the satellite gaps that you mentioned. And, 

you know, we talk about the Gulf. Through your work, you have 

been able to cut in half the error rate on hurricane forecasting. 

Now, in the Philadelphia area, we do not get a lot of hurricanes, 

but I know my colleagues in other parts of the country do so that 

when we get to forecasting severe weather, you have been able to 

cut this margin in half over the last decade. And I understand 

there is a significant financial cost on the evacuation side of a million dollars per mile. 

So the satellite is development the largest part of the increase 

that you are asking for, right? So that is what I want to focus in 


emcdonald on DSK2BSOYB1PROD with HEARING
369 

on. So on one level, you are saving lives, but I want to talk—unfortunately, this is the Appropriations Committee, so I want to talk 

about money. 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH. The other thing that is happening with these satellites is that it protects and enhances financially a number of industries. 

And my question is, for instance, start with the National Weather Service, are there any fees that NOAA charges. 

So, for instance, we talk about the maritime industry and say, 

you know, 90 percent of the world’s trade is handled through this 

industry. You talked about AccuWeather and the Weather Channel 

and others who are valuable and taking this public information 

and using it. In the fishing industry, there is a lot of money made. 

Are there ways for NOAA, and I do not mean today, but over the 

near-term future, are there ways to look at where there are abilities to extract fees for services that you are now providing that are 

having a direct impact in terms of various industries that may at 

some point provide some of the resources that we need? 

SATELLITES

I mean, satellites are not cheap. They cost a lot of money. And 

if we talk about satellites, that we can cut the error rate on hurricane forecasts in half in a decade, that is saving lives, that is saving money. But in the meantime, there are other benefits that are 

being provided, and they are being provided in ways in which some 

people are making lots of money. 

And so I wonder if you could comment on whether there are 

ways to monetize some of the services that NOAA provides. 

Dr. LUBCHENCO. Thanks, Mr. Fattah. Thank you for highlighting 

the importance of those satellites to a variety of both issues having 

to do with life and property as well as economic issues. 

And let me give you a few numbers that are directly relevant and 

illustrate your point and then answer your question. 

For the search and rescue function that the polar satellites are 

involved in, in 2010, 295 lives were saved by the rescue beacons 

that are activated, that signals go to the satellites. And we estimate that if we do not have this Joint Polar Satellite System that 

the time for search and rescue, the response time would be at least 

doubled without our polar orbiting satellites. 

So that just gives you some sense of what the consequences are. 

And, of course, in an emergency, it is often minutes that are important to saving lives. 

Relative to the economic benefits, the maritime commerce sector 

represents $700 billion a year. And that sector depends directly on 

maritime weather information and that comes directly from these 

polar orbiting satellites. 

The fishing industry is hundreds of millions of dollars and they, 

too, depend on the weather information from these satellites. 

The aviation industry only for ash forecasting, our polar satellites save them $200 million a year, save the aviation industry 

$200 million a year for ash forecasting alone. 


emcdonald on DSK2BSOYB1PROD with HEARING
370 

And then if we look to on the land, equally important, providing drought forecasts is worth $6–8 billion to farmers, to transportation, to tourism, and energy sectors. 

So cutting across multiple different sectors of the economy, these 

polar orbiting satellites are vitally important. And, of course, they 

interact with and support the work of the National Weather Service, enable them to do all these, run the models. 

The research arm within NOAA develops the new knowledge 

that enables those improvements in weather forecasting. And so 

that is an interconnected part of NOAA that results in these economic benefits. 

Now, that said, your question is, you know, what is the business 

model for all of this and are there alternatives. The United States’ 

current model for this is to have essentially a partnership between 

the government, the private sector, and universities where each 

has a distinct role and where those roles are complementary, not 

in competition. 

And the basic philosophy is simply that the government provides 

the fundamental information that allows saving lives and property 

and economic benefit. And it is very difficult to tease out what part 

of a weather forecast enables somebody to operate safely on the sea 

versus what part of it is important to saving lives and property. 

So because it is fundamental to saving lives and property, that 

basic information is deemed to be appropriate to be provided by the 

government. 

The fee-for-service model is not one that we employ. The concept 

is that there is significant opportunity within the current model for 

businesses like the Weather Channel or AccuWeather to take the 

basic information and tailor it to add significant value and then 

sell that product. 

Mr. FATTAH. Well, you know, I would not be raising this question 

except that the question becomes this: Will the service be provided 

at all? You follow me? 

Dr. LUBCHENCO. I understand. 

Mr. FATTAH. If the point is that there is $2 billion in your budget 

for satellites, satellites are needed, they are needed to save lives. 

Dr. LUBCHENCO. Correct. 

Mr. FATTAH. And you have saved lives. 

Dr. LUBCHENCO. Correct. 

Mr. FATTAH. They are needed to forecast severe weather and to 

cut down the margin of error so that, for instance, our neighbors 

in the Gulf know when a hurricane is coming and you have cut 

that margin of error in half. These are all public spirited and very 

important things. 

In addition to all of this, you also are facilitating others making 

hundreds of billions of dollars. 

Dr. LUBCHENCO. Correct. 

Mr. FATTAH. So the question becomes, if we are going to have either no satellites or have significant gaps, as I would understand 

it, there is no substitute for this satellite program anywhere in our 

government. 

Dr. LUBCHENCO. That is correct. 

Mr. FATTAH. Okay. So either we are going to have the satellites 

or we are not. And then the question is dollars. And we have an 


emcdonald on DSK2BSOYB1PROD with HEARING
371 

allocation and, you know, we are limited to an allocation. We have 

got to figure out how to make all this work. And the Chairman is 

absolutely right that these are untenable options. 

So I was just wondering, because I know, for instance, some of 

our economic competitors do this a little bit differently. 

Dr. LUBCHENCO. They do. 

Mr. FATTAH. I mean, Germany has a different approach, right? 

So I was just wondering whether or not there were other models 

we could look at. And, again, we cannot create them overnight. 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH. It may be they are not even useful in the way that 

we function here in our country, but we should at least be knowledgeable because if the satellite is not there, then all of these industries are going to be impacted, and it is going to harm—for instance, the drought information, that is $6–8 billion, or the maritime trade which is another $700 billion. 

So, you know, we have to think through, these services and, I 

mean, we are putting a billion dollars just in terms of the fish side 

of this deal, right? 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH. People who go fishing, you know, they get fishing 

licenses. They do other things. They pay. I am just trying to figure 

out, if you are saving the lives of fishermen and rescuing people, 

whether there are ways in which there are opportunities for the 

government to get some of these costs reimbursed. 

So this is kind of a straight business question. And I know you 

have advised the Bush administration, the Clinton administration. 

So you have been at this for a long time. You are one of the most 

distinguished scientists in this area. 

This is not really a scientific question. It is a business question 

about whether or not the services that we now provide, are there 

ways to monetize that and ways in which those who are benefitting 

in a specific way that generates profit might also share the burden. 

Dr. LUBCHENCO. Congressman Fattah, I understand exactly what 

you are asking. And as you know, you mentioned Germany, other 

European nations also have different models. They do use a fee-forservice model. It is a very different philosophy. And there are other 

models out there. 

I believe that our model is actually one that enables and supports businesses and economic prosperity and growth. But these 

are fundamentally, you know, basic questions that deserve to be 

asked. Are there other models that would be an improvement and 

what do they look like? 

In the meantime, we are challenged with providing the services 

under the current model and still struggling to try to minimize the 

gap that is already going to be happening. So that is the challenge. 

Mr. FATTAH. I do not want to trade our economy for one of our 

European ally’s economies. You know, I think our model has obviously worked very well for us. We are at a point, though, where 

we are saying perhaps we will not have a satellite system there. 

You follow me? 

So if the question is, we cannot generate the money on the public 

side to finance the work of NOAA, if we have to make cuts that 

are untenable in either the Weather Service or in the satellites, in 


emcdonald on DSK2BSOYB1PROD with HEARING
372 

any of these programs, are there other ways to think about doing 

this because you are saving lives? 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH. And you are also helping industry. 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH. And so the only reason I ask the question is because 

whatever we are doing is now being overwhelmed by our fiscal circumstance. 

Dr. LUBCHENCO. I understand. 

Mr. FATTAH. Thank you very much. 

I will yield back. 

Mr. WOLF. Mr. Bonner. 

Mr. BONNER. Thank you, Mr. Chairman. 

Dr. Lubchenco, welcome. 

Dr. LUBCHENCO. Congressman, nice to see you. 

Mr. BONNER. Nice to see you. And I would say for the record 

while I appreciate the chairman’s recognition that the Gulf of Mexico needs to be considered in any survey such as that. 

The administrator has been to Mobile. She has been to the Gulf 

and was a frequent visitor during the oil spill last year for which 

we personally express our gratitude for your interest and your 

leadership in that. 

I am going to focus a little bit on the oil spill—— 

Ms. LUBCHENCO. Uh-huh. 

Mr. BONNER [continuing]. Because, and I say this very carefully, 

no one would say that what we have gone through compares with 

what the people of Japan are going through. That earthquake, tsunami, and then the issues with their nuclear plants is beyond comprehension. 

That said, many people along the Gulf Coast felt they went 

through an environmental/economic tsunami last year because it 

was the worst oil spill on record in the history of this country. And 

it may be years or decades before we know the full impact of that 

tragedy that we are approaching the one-year anniversary on. 

I thanked you earlier. I repeat not only your leadership but also 

the staff at NOAA for the work that you all did during the early 

period following the April 20th incident. Your satellite modeling capabilities came to full utilization during the crisis and offered our 

best hope that federal, state, and local responders had to track the 

movement of the oil in a timely fashion so that we could position 

the very limited resources that either industry or government had 

to try to protect sensitive wetlands, the coast, and the other areas 

of those states that were impacted. 

GULF OF MEXICO RESTORATION

As many of my colleagues in Congress have heard me say before, 

while we weathered the early storm, the long-term economic and 

ecological impacts remain in question. 

So along those lines, in your written testimony, you note that 

NOAA’s ongoing participation in the Gulf Coast Ecosystem Restoration Task Force, which I think is being led by Ms. Jackson of 

the EPA, that includes scoping the programmatic EIS as well as 

under the NRDA claims. 


emcdonald on DSK2BSOYB1PROD with HEARING
373 

Given the importance of the fisheries economically to our region 

and to the Nation and the impact the oil spill has had on that sector, do you believe apart from the mandate of the Oil Pollution Act 

of 1990 and Natural Resource Damage Assessment process that 

economic consideration should carry equal weight to environmental 

restoration? 

Dr. LUBCHENCO. Congressman Bonner, thank you for recognizing 

the ongoing challenges to the Gulf. I know that it is an issue that 

many people in the Gulf struggle with on a daily basis. And I know 

that they often feel the rest of the country has moved on and they 

are still in great pain. All of our folks that are in the Gulf recognize 

that. 

And as you indicated, there are long-term challenges for the 

Gulf. The Natural Resource Damage Assessment process is focused 

directly on the damage that was done to natural resources and the 

public’s loss to those natural resources. And that is the process that 

is underway now to evaluate what the impact was, not just the 

short-term, but the long-term impact. 

And economics plays into that. This is a scientific, economic, and 

legal process for determining the impact to the resources and the 

public’s loss to those resources. And that process which is a joint 

one between the states and the federal government, there are three 

federal trustees of which NOAA is one, and there are five state 

trustees. That trustee council works together to do the analyses. 

NOAA is providing a very significant fraction of the scientific information to enable understanding of what were the long-term impacts to different economically important species, to a variety of 

other species that are important to those species, and to other 

parts of the coastal and the open water portions of that ecosystem. 

That process continues to be underway. We have had on the 

order of I think 80 different, somewhere between 70 and 80 different research expeditions on ships to continue to take samples in 

addition to a lot of intense sampling along the shore. 

That process is ongoing and is obviously designed to build the 

most effective case possible against the responsible parties to ensure that they pay for the restoration of those natural resources 

and the public’s access to them. 

So that is just a short summary of what that process is all about. 

I want to emphasize that the NRDA process, the Natural Resource 

Damage Assessment process is completely independent of the 

claims process that Ken Feinberg is leading for individuals and 

businesses to file claims. 

The NRDA process is only about loss to natural resources and 

the public’s access to them, so it is a very different beast, if you 

will. Part of the NRDA process is not just determining the impact 

but determining the restoration that will address the impact. 

And so there is very active consideration of the range of possible 

restoration activities. Unfortunately, this is going to take time to 

play out and I think everyone would wish that we could, you know, 

push the fast forward button and be farther along, but many of 

these populations are ones that it is going to take a while before 

we know the full impact. So we do not want to pre-judge prematurely and not have the responsible parties pay what they actually should pay. 


emcdonald on DSK2BSOYB1PROD with HEARING
374 

Mr. BONNER. Well, the reason I asked about the economic is— 

and you mentioned Mr. Feinberg is leading the claims process. I 

would say he should be leading it. He got a pay raise to $1,250,000 

a month and, yet, we have got businesses that are struggling to 

survive that have been paid pennies on the dollar. But just—— 

Dr. LUBCHENCO. Fortunately, I do not have anything to do with 

that. 

Mr. BONNER. The chairman is not holding you responsible for 

OMB. I am not holding you responsible for Mr. Feinberg. 

Dr. LUBCHENCO. Appreciate you both. 

Mr. BONNER. Your agency has also been helpful, hats off, for the 

announcement regarding additional safety of testing Gulf Coast 

seafood. A recent poll, I hate to even repeat the numbers because 

it is very troubling, but 70 plus percent of the American people lack 

confidence in Gulf Coast seafood and, yet, it is probably the most 

tested seafood for safety of any seafood from the Pacific to the Atlantic to the Chesapeake. 

I doubt there is another—that is a good question. Is there any 

other seafood in our country that is being tested as thoroughly and 

closely as Gulf Coast seafood right now? 

Dr. LUBCHENCO. To the best of my knowledge, no, sir. 

Mr. BONNER. Well, can you tell us, and we are not competing 

against Chesapeake seafood, it is good seafood, especially with the 

chairman, but what steps can you, additional steps can you take 

to continue to communicate with consumers? 

I know the secretary of Defense indicated that they are buying 

more Gulf Coast seafood for our soldiers and sailors and airmen, 

but what steps can NOAA specifically do to communicate that Gulf 

Coast seafood is being tested, is safe, and people can purchase it 

and enjoy it with confidence? 

Dr. LUBCHENCO. Congressman Bonner, we, as you know, did 

close areas in response to the presence of oil and then reopened 

them only when our extensive testing showed that the seafood was 

free of any contamination by either oil or dispersants which some 

people were concerned about as well. 

And we do, in fact, continue to test. And we have announced an 

ongoing program to do exactly that. As you note, however, there 

continues to be suspicion. And, you know, I think this is a cognitive 

dissonance in the minds of many people. 

After seeing day after day images on TV of this oil flowing and 

on the surface and oiling birds, I think it is hard for people to understand how it could not be contaminating everything in the Gulf. 

And so I think that is just a matter of human nature, if you will. 

Fish can process hydrocarbons. They can cleanse themselves of 

it. And the testing that we have done is for twelve different compounds of hydrocarbons called polycyclic aromatic hydrocarbons, 

PAHs, and—— 

Mr. BONNER. I would ask you to spell it, but I bet you could. 

Dr. LUBCHENCO. I probably could. So we test for those twelve 

PAHs that are known carcinogens. We developed, as a result of the 

spill, a brand new test to identify a compound that was in the 

dispersants to be able to know whether it was residing still in flesh 

of fish and other seafood. 


emcdonald on DSK2BSOYB1PROD with HEARING
375 

So we know from that testing that the fish, the crabs, the shrimp 

that are being caught from the Gulf are, in fact, free of those hydrocarbons and the dispersants. But more has to be done than simply asserting that it is safe. That obviously has not been enough 

to convince people either in the Gulf region or around the country. 

NOAA has been working very carefully and closely with our Sea 

Grant Program in the Gulf states to help address this. Part of this 

is providing information, holding public hearings, holding sessions 

with folks so that they have access to people who have the information and can try to dispel much of the misinformation that continues to be out there. So we have been doing that throughout the 

spill and continuing now as a way of continuing to provide information to people. 

You also mentioned the recent announcement of the Programmatic Environmental Impact Assessment process, the PEIS, 

which is a formal portion of the NRDA process that involves public 

hearings. The major purpose of those hearings is to solicit ideas 

from the public, from academic scientists, from anybody with some 

great ideas about what restoration should look like. 

And a part of those seven, it is either seven or nine different 

hearings, I cannot remember which, around the Gulf, about half of 

which have now happened, part of those hearings involve opportunities for citizens to ask questions. And over and over and over, we 

are getting questions about seafood safety. So we are taking every 

opportunity even under the context of the NRDA process and this 

PEIS to provide additional information. 

On top of that, the seafood industries of the relevant states did 

receive some money from BP to launch a public awareness campaign about safety. We have not done that for them, but we have 

provided them information. 

So we have been working closely with the seafood industry to try 

to help get over the hump, if you will, and restore their credibility. 

This is an ongoing effort. We continue to be involved and we will 

support it to the best of our ability. 

Mr. BONNER. Mr. Chairman, I have a lot more questions, but 

could I get three more in? 

Mr. WOLF. Go ahead. Take your time. 

Mr. BONNER. And thanks for mentioning the Sea Grant Program. 

LaDon Swann in our area certainly does a good job. 

Dr. LUBCHENCO. Terrific. 

Mr. BONNER. He will be pleased to know that he got a shout out 

from the administrator. 

STOCK ASSESSMENTS

As we have discussed previously, I and others have called on 

NOAA to fund fishery independent—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. BONNER [continuing]. Data collection of the reef fishery in 

the central Gulf Coast. I want to thank you for committing additional funding in a tight budget environment to the Gulf for this 

purpose. 

I believe this data is vitally important to provide the most accurate stock assessments that we can arrive at. Can you share any 


emcdonald on DSK2BSOYB1PROD with HEARING
376 

information resulting from this effort and do you plan to continue 

supporting it if you can? 

Dr. LUBCHENCO. Congressman, we absolutely do plan to continue 

to support this. Fishery independent survey information is vitally 

important. And we have not had as much of it in the past as we 

need and we are very seriously committed to acquiring that information. That is true for both commercial as well as recreational 

fisheries. 

And one of the things that I know you are aware of is my personal commitment to build much better relationships with the recreational fishing community, to acknowledge how important they 

are. 

I think they felt for many, many years that NOAA was ignoring 

them and what they do and what they represent, their economic 

value to the country, but also just the importance that they bring 

to families and friends to just get out and have a good time, recreation. All of that is vitally important. 

And so one of our challenges with recreational fisheries is having 

adequate information about both the status of the stocks as well as 

what the activities are involved in and this year’s budget does reflect a serious commitment to improving the quality of the information both on the stocks as well as on who is catching what, when, 

and where. 

Mr. BONNER. You mentioned in an earlier answer referenced the 

fishery closures during the oil spill that were necessary obviously. 

During that time, there were no fish landed to provide data for the 

collection efforts. 

Was your use of fishery independent data collection increased 

during that time or do you have a data gap during those closures? 

Dr. LUBCHENCO. Congressman, I do not know the answer to that, 

but I am happy to find out and get back to you. 

[The information follows:] 

Representative Bonner: Was your use of fishery independent data collection increased during that time or do you have a data gap during those closures? 

Answer: Some data was lost due to the oil spill (Deepwater Horizon: DWH) and 

the diversion of vessels for response efforts. Less data invariably leads to potential 

decreased accuracy in stock assessments; however, it is difficult to determine the 

exact impact. The data that was collected was useful, thus still supporting stock assessments. See below for more details on the number of lost days at sea (DAS). 

FY10 SEFSC SURVEY IMPACTS

• The Southeast Area Monitoring and Assessment Program (SEAMAP) is a State, 

Federal, University program for collection, management and dissemination of fishery-independent data and information in the southeastern United States. NMFS 

conducts surveys in federal waters and the states conduct relatively the same survey in their state waters so the two surveys complement each other. The SEAMAP 

Spring Plankton Survey lost 7 DAS in the Gulf of Mexico from the usually 60 DAS 

that are used to cover the entire Gulf of Mexico and part of the Caribbean. The 

SEAMAP Reef Fish (i.e. red snapper) survey lost 8 DAS out of the 38 DAS that had 

been allocated. As a result, planned survey work was not finished in the western 

Gulf of Mexico. 

• The South Atlantic Reef Fish Survey was allocated 39 DAS and lost 5 due to 

DWH. It is not a component of SEAMAP. 

• The first SEFSC/NEFSC Cooperative Survey was canceled. This survey of both 

the southeast and northeast U.S. continental shelf ecosystems, would allow NOAA 

to understand how the resources (i.e. fisheries and protected species) in one system 

depends on the neighboring system. The loss of this survey will negatively impact 

NMFS’s ability to build a cohesive view of marine ecosystems along the east coast. 


emcdonald on DSK2BSOYB1PROD with HEARING
377 

• Summer groundfish, shark/red snapper longline and the SEAMAP reef fish surveys were used to collect DWH samples and at times had to be diverted to collect 

samples but for the most part were able to continue with the planned stations. 

CATCH SHARE PROGRAMS

Mr. BONNER. And then just a couple more. NOAA has dedicated 

a significant portion of the NMFS budget to the implementation of 

catch share programs which I believe have merit. 

One concern that some of the fishermen in my area have, however, is that you are aggressively moving forward with the National 

Catch Share Program in advance of a complete stock assessment. 

Can you comment on those concerns? 

Dr. LUBCHENCO. Certainly, Congressman. The stock assessment 

challenge is an ongoing one and we need the best possible and the 

most current possible information. And when you consider over 200 

stocks that are priority stocks, the ones that are caught most often, 

that is a significant challenge. 

And that is why in this year’s budget request we are asking for 

an increase and $15 million for stock assessments to be able to 

have better and more current information on an ongoing basis. 

That information is important regardless of the management 

tools for a particular fishery. Catch shares are a management tool. 

They are not imposed by NOAA. Each fishery management council 

makes decisions in the form of a fishery management plan for each 

different species or groups of species that are caught together. And 

we are encouraging councils to consider catch shares where they 

are appropriate. And councils are, in fact, doing that. 

And the funds that are in this year’s budget request in support 

of catch shares are to enable the catch share programs that have 

been approved recently, some of which, for example, the West 

Coast Trawl IFQ was seven years in the making, so it is a longterm process. It has to be carefully designed, carefully planned. 

And these funds will enable those programs to continue to happen. 

The one hallmark of catch share programs is that they require 

considerable information about catches on an ongoing basis. So observer programs and monitoring is vitally important to the success 

of these programs. And that is part of what the additional resources help support is this additional observer and monitoring 

coverage. 

So what the Federal Government is doing using this West coast 

program as an example, is helping with the majority of the costs 

for this additional monitoring and observing early on. So year one, 

90 percent of the cost the Federal Government is bearing. Year 

two, 50 percent. Year three, 25 percent. Year four, zero. 

So it is to transition the fishery into more productivity, less overfishing, more economic viability with the idea that then the fishery 

assumes the—this is the fee for service. They are paying directly 

for this additional monitoring that is needed. 

The benefits of are that it ends over-fishing. Overfishing typically 

does not happen in a catch share program. It also reduces by-catch, 

the unintended catch of other species which can—especially in the 

Gulf, there is very significant impact to many different species that 

are important for recreational fisheries that are caught as bycatch 

in a commercial program, for example. 


emcdonald on DSK2BSOYB1PROD with HEARING
378 

So a reduction of by-catch. It is also the case that in catch share 

programs, fishermen can choose—they know what their quota is 

going to be for the whole year, so they can choose to fish when the 

price is right, when the market price is right, when the conditions 

are safe so they do not have to go out and be competing against 

other fisherman under horrendous weather conditions. 

So the track record for catch share programs is very, very impressive which is why we are encouraging councils to adopt them 

where they are appropriate. But they are not a panacea. They are 

not going to solve all of our over-fishing and they are not appropriate for every particular fishery. 

So they need to be well-designed. They need to, for example, ensure that all the big guys do not buy out the little guys which can 

happen if you do not design it properly. 

So there are a lot of important design considerations that are 

very important and that is why it needs to be done well and carefully. 

Mr. BONNER. Well, I could go on and on, but we have got other 

colleagues. 

Chairman, thank you very much. 

And, again, Madam Administrator, thanks for your leadership. 

Dr. LUBCHENCO. Thank you, Congressman. 

Mr. WOLF. Thank you, Mr. Bonner. 

I am going to follow up on one of Mr. Bonner’s issues to ask you 

a question along that line. We are going to go to Mr. Austria and 

then Mr. Schiff. 

When I think in terms of the—we have some questions here 

which we hope that we will get to—aquaculture and where some 

of the seafood is coming in from Vietnam and from China with the 

other chemicals and it is just a disgrace. And then I think of the 

Gulf. 

Could we not and what would your position be if we in the committee directed you—and before I tell you what I would like to direct you to do, think in terms of when cranberries were hit very 

hard back in the 1950s. You may be too young to remember the 

cranberry issue. You were probably—maybe you were not even 

born. I will put it that way. 

Eisenhower made a major effort, had cranberries in the White 

House on Thanksgiving and they brought the cranberry industry 

back. The same thing happened in the 1960s with regard to tuna. 

Tuna went through a very difficult time. They found botulism in 

tuna. They put together a major program. 

Could we not direct you or what are your feelings to mandate BP 

to put together a major advertising program, particularly when you 

think of where some of the stuff from Vietnam and from China, 

some of the pits that their fish has come out of there, a major advertising program working with the Gulf from Florida to Alabama 

to Mississippi to promote Gulf seafood whereby BP would not do 

it because I do not think they have the credibility, frankly, whereby 

they would work with a consortium to advertise so that everyone 

when they are watching, instead of seeing some of these drug ads 

that you are seeing every other 30 seconds, you would see an ad 

to encourage Gulf seafood? 


emcdonald on DSK2BSOYB1PROD with HEARING
379 

What would your position be if we were to put language in directing the Administration to approach BP to fund the program in 

cooperation with the Administration and with the Gulf Coast states 

to promote seafood from the Gulf similar to what was done in many 

respects with regard to cranberries? 

Do you remember the cranberry case? 

Dr. LUBCHENCO. Not well. I remember it vaguely, but I love cranberries. 

Mr. WOLF. It devastated the industry. Massachusetts was heavily hit. The bogs were hit. Wisconsin was hit. President Eisenhower 

made a deal, made an effort at Thanksgiving time to have cranberries to show. And it came back. 

Do you remember the tuna fish botulism issue? 

Dr. LUBCHENCO. No, I do not. 

Mr. WOLF. Does anyone remember? Yes? And they brought it 

back. I bet everyone here. Who has had tuna fish in the last week 

here? I mean, everyone. And so I would like to see—— 

Mr. BONNER. Let the record show almost every hand went up. 

Mr. WOLF. Every hand went up. I would like to see if you would 

look at it working with Mr. Bonner’s office and working with the 

committee. We could put language in to direct, and we would need 

your cooperation, the Administration, because you are now looking 

at prosecuting cases with regard to BP, direct BP within the next, 

you know, quickly, 30 days, this is not something we want to drag 

out, we want to take advantage of the summertime, for a major advertising program and bid it out working with the governors and 

yourself to promote Gulf seafood throughout the United States and 

throughout the world. 

Would you be open to that? What are your thoughts about that? 

SEAFOOD SAFETY

Dr. LUBCHENCO. So I think there are a number of issues that are 

relevant to your suggestion, Mr. Chairman, one of which is that 

NOAA does test seafood, but—— 

Mr. WOLF. But it was so tested and so clean and clear and good. 

We have to tell other people about it. 

Dr. LUBCHENCO. I understand. I understand. The Food and Drug 

Administration, FDA, is the federal agency that has responsibility 

for certifying that seafood is safe. So what I am saying is NOAA 

and FDA have complementary but different roles. 

And so there are a number of agencies that have been involved 

and would need to be involved. All I am saying is this is not just 

a NOAA issue. 

Mr. WOLF. Well, I think it is a White House issue. 

Dr. LUBCHENCO. And the White House has already asked BP to 

fund this campaign that I mentioned with the seafood industry in 

the Gulf to promote awareness. 

Mr. WOLF. Beginning when? 

Dr. LUBCHENCO. It is underway now, but I do not know. Maybe 

Congressman Bonner has more knowledge about where it is. 

Mr. BONNER. Well, it is whatever is happening is not enough. 

Dr. LUBCHENCO. Exactly. 

Mr. BONNER. And I will give you a quick example. In Alabama, 

our governor, brand new governor that just got elected in NovemVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00379 Fmt 6601 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
380 

ber, was negotiating directly with BP to get some tourism dollars. 

We got I think $14 million. Louisiana and Florida got $30 million 

because their governors had negotiated a better deal. 

I think what the Chairman is saying is is that if the Administration will continue to put pressure on the responsible party, I think 

this is a great idea, Mr. Chairman, of trying to not necessarily— 

and the administrator is right. FDA, there are a lot of agencies 

that would have to play a role in this, but if you could continue to 

put pressure on the responsible party to do their part and then 

some—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. BONNER [continuing]. We could go a long way toward getting 

us over what could be even a more challenging summer if those 

claims and the other part of this process do not continue to pan 

out. 

Dr. LUBCHENCO. I believe we need to be doing more. And NOAA 

would like to be helpful in that process just understanding that 

there are others involved as well. 

Mr. WOLF. If you could work with the subcommittee and Mr. 

Bonner. And we would, if we could, carry language to tell them 

that we are going to carry it, but urge them to do it and develop 

a consortium. And I would urge you to look at the cranberry in the 

late 1950s—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. WOLF [continuing]. And the tuna fish issue and then anything we could do, you know, whether it be a letter, so I do not 

think we want to wait until we have a 2012 bill. I think we want 

to kind of move something quickly so it is in play—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. WOLF [continuing]. Ideally and you need one person to be the 

coordinator. I mean, personnel is policy—— 

Dr. LUBCHENCO. Absolutely. 

Mr. WOLF [continuing]. And the right person who can—well, 

thank you. 

Mr. BONNER. Thank you. 

Dr. LUBCHENCO. Congressman, could I just add one other quick 

thought to this? You were highlighting the need or an ideal situation where we would be eating more of our seafood from U.S. 

waters. 

Mr. WOLF. That is from a country that has 35 Catholic Bishops 

in jail, has plundered Tibet, has hundreds of Protestant pastors in 

jail, is shooting people, taking their kidneys and selling them for 

$50,000, and is spying on us. 

That would be my choice. I would rather take fish and seafood 

from the Gulf than from China who has the 2010 Nobel Peace 

Prize winner in jail and his wife is under house arrest. 

Wouldn’t it be better—or Vietnam where they got the consular 

U.S. embassy staff guy and shut his foot in the door and slammed 

it and slammed it and slammed it and, yet, we are taking all of 

that because many times you have these big law firms in this town 

that are representing the Chinese government and the Vietnamese 

government. 

Let’s take the seafood from Alabama, from Mississippi, from New 

Jersey, from places like that. And that is the point of trying to— 


emcdonald on DSK2BSOYB1PROD with HEARING
381 

not to punish China, although I would be certainly anxious to do 

that, but to enhance the American seafood industry. And if you 

look at some of the places that we are getting the seafood from, the 

shrimp, they are literally cesspools. And so if we can help our own 

people. 

Dr. LUBCHENCO. I wanted to connect what you were suggesting 

in terms of having more seafood from the U.S. waters with our current budget request because we, in fact, have a goal of recovering 

all of our fisheries and ending overfishing. And that is what much 

of our policies are designed to do. 

Based on estimates, if we recover all of our fisheries that are currently depleted, we could increase economic benefit of $2.2 billion 

from that industry from $4.1 to 6.3 billion annually. We are on 

track to end overfishing, but we have a lot more to do. And much 

of what we are asking for in this budget will give us more ability 

to do that economic recovery, end overfishing, and have more great 

healthy seafood from our waters. 

Mr. WOLF. Good. 

Mr. Austria. 

Mr. AUSTRIA. Thank you, Mr. Chairman. 

Doctor, thank you for being here. Thank you for your hard work 

and commitment. We appreciate it very much. 

Let me kind of switch gears here a little bit. I know you touched 

briefly on this earlier, but I just want to get some more clarification. 

It has been suggested that if adequate funding for the Joint 

Polar Satellite System is not provided quickly, there is the possibility of that data gap by 2017. I want to learn more about this 

data gap and the impact it is going to have. 

So could you please describe exactly what this data gap would 

look like and the possible effects it would have on particularly the 

military side and civilian use? In other words, what are the shortterm, long-term effects of such a data gap on our national defense? 

Dr. LUBCHENCO. Thank you, Congressman, for asking about that. 

JOINT POLAR SATELLITE SYSTEM

If we do not have adequate funds in both 2011 and 2012 for this 

Joint Polar Satellite System, the consequences will be multiple. Because of the Continuing Resolution in this year, we already have 

a delay in the launch of this Joint Polar Satellite System of at least 

12 to 18 months and it is likely to be longer depending on how long 

it takes to resolve the current budget situation for 2011. 

That delay in launch will likely result in a gap in time where we 

will not have a U.S. civil polar orbiting satellite in place and the 

consequence of that will be to our ability to do long-term weather 

forecasts, severe storm warnings, search and rescue, and weather 

for Alaska. Those are sort of four different categories. 

You asked specifically about consequences to the military. They 

depend directly on our long-term weather forecasts to make decisions about troop deployments, for example, or refueling in air. So 

those are two specific examples of how the long-term weather forecasts provided by NOAA are utilized by the military. 

So in addition to those direct impacts, having maritime weather 

information is vitally important to the Navy. And those polar orbitVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00381 Fmt 6601 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
382 

ing satellites provide the eyes on the water, if you will. They give 

us information about weather situations on the oceans all around 

the world. 

And so it is quite likely that the quality of our maritime weather 

information that supports naval operations would be degraded. So 

there are multiple consequences. 

Mr. AUSTRIA. Okay. And I know we are running short. We have 

a vote here shortly. 

One other area I wanted to touch on real quick was one of the 

most successful programs I think that NOAA has that connects research to the ground and on the ground challenges that our State 

in Ohio and in other states around Lake Erie, local entity space, 

is the Sea Grant Program which was discussed briefly. 

Dr. LUBCHENCO. Uh-huh. 

Mr. AUSTRIA. And I think one of them is run out of the Ohio 

State University back in Ohio. 

Dr. LUBCHENCO. Right. Correct. 

Mr. AUSTRIA. And it is obviously focused on the Great Lakes and 

the work that is being done there, Ohio State’s program leads binational efforts between the U.S. and Canada on Lake Eries and 

the Great Lakes. 

How do you plan to use the Sea Grant Program to help in running the new Climate Service proposed in your budget? In other 

words, how is that going to impact or what are your plans with this 

program as you restructure with the Climate Service Program? 

CLIMATE SERVICES

Dr. LUBCHENCO. Congressman, the climate services, many of 

which we already provide some of, and the proposal in this budget 

is to do a budget neutral reorganization so that we can provide climate services more effectively than we can now. 

And I should clarify that when I say climate in this regard, it 

is anything more than 14 days. So our weather forecasts are zero 

to ten-ish. Anything more than 14 is climate. So when I say climate 

services, it is information of the a couple months from now or next 

year. That is climate in the way that we talk about it. 

That climate information, the climate services are directly relevant to Sea Grant programs and enable them to add value to provide information to many of their constituents in making the decisions that they make and in turn, they provide a critically important flow of information in the other direction where they are eyes 

and ears on the ground, out in the field, working with folks all 

around the Great Lakes in this case to give us information about 

what do communities around the Great Lakes want to know about 

how conditions, you know, a year from now or two years from now 

are affecting their businesses or their lives. 

So they will help through a regional organization of regional climate centers. Sea Grant programs can help feed into that better 

understanding of what people’s needs are, so—— 

Mr. AUSTRIA. So do you envision with the Climate Service now 

using the established network relationships of—— 

Dr. LUBCHENCO. Absolutely. 

Mr. AUSTRIA [continuing]. Working together or are we now going 

to have a new competing set of outreach programs? 


emcdonald on DSK2BSOYB1PROD with HEARING
383 

Dr. LUBCHENCO. We have established regional climate centers 

that are collocated with our National Weather Service regional offices. And those will be tapping into existing networks like Sea 

Grant and other existing networks, many of which with our universities, to provide this tailoring. We are not going to set up a whole 

new structure. We are going to tap into existing networks and Sea 

Grant Program is a great one. 

Mr. AUSTRIA. Thank you very much, Doctor. I appreciate it. 

Thank you, Mr. Chairman. 

Mr. WOLF. Mr. Schiff. 

Mr. SCHIFF. Thank you, Mr. Chairman. 

I just wanted to follow up briefly on JPSS. I share the concerns 

about the delay in that program. 

In the Washington Post yesterday, there was a story about the 

importance of JPSS in making accurate weather forecasts. Looking 

at just the example of the February snowstorms in Washington last 

year, forecasts without the satellite would have seriously underpredicted the snowfall that closed down the city. Many businesses 

and families would have failed to anticipate the seriousness of the 

blizzard and people could have been put at risk. 

Under the current budget circumstances, what is your best estimate for when JPSS satellite will launch? The first phase of the 

project, the NPP satellite, is due to launch this fall. Is that still on 

track? 

JOINT POLAR SATELLITE SYSTEM

Dr. LUBCHENCO. Yes, the NPOESS Prepartory Project (NPP), 

Congressman, is still on track. The launch date for JPSS–1 is highly dependent on funding, funding in 2011. So the launch date because of the Continuing Resolution, the launch date for JPSS–1 has 

already been delayed by 12 to 18 months. It might be longer than 

that depending on when we have a budget. And the launch date 

for JPSS–1 was originally 2015, so it has been pushed back 12 to 

18 months beyond that. 

So we have a current satellite in the sky now that is providing 

the information we are talking about. NPP will be the next one 

that will be providing that information. It was originally designed 

not as an operational satellite but as an experimental satellite. 

This is a NASA satellite that was designed to test out some new 

instruments that would then be used by what is now the JPSS series of satellites. 

So its life span as a risk reduction NASA mission, was designed 

for five years. Originally NASA had assigned mission success criteria of three year for NPP. So there is some uncertainty in exactly 

how long this data gap would be. But if you do the math, it is looking like there is a very, very high likelihood that we are going to 

have a significant data gap when we have no polar orbiting civil 

satellite that the U.S. runs that is giving us this vital information 

for severe storms, for long-term weather forecasts, and for search 

and rescue. 

Mr. SCHIFF. That is a grave concern. If the, and I know this is 

still somewhat speculative given the budget situation, but if you do 

get the greater longevity of five years, what will the gap look like 

then or even under that best case—— 


emcdonald on DSK2BSOYB1PROD with HEARING
384 

Dr. LUBCHENCO. We would still have a gap under those circumstances. And I think just a couple of other things that are relevant for this issue. The amount that we need in 2011 is $910 million. So that is the $382 million that was the 2010 enacted level 

plus $528 million above that. So it is a very sizeable amount. And 

I fully realize that that is the case. 

But for every dollar of that that we do not have in 2011, it will 

take three to five dollars down the road to bring that program back 

up to speed and all the money in the world is not going to close 

that data gap. So this is fiscally, I think—well, there are fiscal 

issues here as well as public safety and economic consequences. 

Mr. SCHIFF. Thank you. 

And in the interest of time, I yield back, Mr. Chairman. 

Mr. FATTAH. And just one quick point before we go, Mr. Chairman, is that the other thing we are doing is we are paying for 

these satellites as if they are only being utilized in one budget year 

rather than looking at the cost over the number of years they are 

being in service, they are going to be in service. It is like paying 

for a house all at once—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH [continuing]. Versus paying for it over the life of its 

use. Thank you, Mr. Chairman. 

Mr. WOLF. Thank you. 

Mr. Honda. 

Mr. HONDA. Thank you, Mr. Chairman. 

I want to go over some of the other questions that were asked 

previously. You talked about the polar orbiting civil satellites. That 

is both polars that we are talking about? 

Dr. LUBCHENCO. Yes, sir. 

Mr. HONDA. Okay. I just wanted to know because you said it covers all the oceans, so I was trying to figure out how you did that 

without—— 

Dr. LUBCHENCO. So the polar orbiting satellites go around the 

poles. 

Mr. HONDA. Right. 

Dr. LUBCHENCO. And the earth is rotating under them. And so 

they see a different part of the earth every time they do a pass. 

Mr. HONDA. Okay. It is like peeling an orange with that little 

machine? 

Dr. LUBCHENCO. Repeatedly. Repeatedly. 

Mr. HONDA. Then I understand now the distinction between 

Weather Service and Climate Service. And I think that that is an 

important understanding in order for us to understand why we 

should be staying on top of the budget because you just mentioned 

that creating a data gap is the gap is a gap and it will never be 

recovered because it is oriented to the time that has elapsed and 

you cannot go backwards and capture that data that has already 

elapsed; is that correct? 

Dr. LUBCHENCO. The data gap that we would have, Congressman, where we would not have a polar orbiting satellite that the 

U.S. operates means that for whatever period of time that it is, we 

would not have information that would enable us to do severe 

storm warnings of the quality we do today. 


emcdonald on DSK2BSOYB1PROD with HEARING
385 

For example, two to three days advanced warning for hurricanes 

or severe storms. 

Mr. HONDA. I get that part. So the gap is created because? 

Dr. LUBCHENCO. Because there is no satellite that is giving us 

information about development of severe storms or—— 

Mr. HONDA. We are not putting up a satellite to replace one that 

is coming down? 

Dr. LUBCHENCO. That is correct. 

Mr. HONDA. Okay. 

Dr. LUBCHENCO. Sorry. I apologize. 

Mr. HONDA. I just wanted to understand that if we do not have 

that up there and we want to be able to predict in the future, a 

gap is a gap because once time has passed, you cannot go back? 

Dr. LUBCHENCO. That is correct. 

Mr. HONDA. You cannot bank it and go back and see if you still 

have it? 

Dr. LUBCHENCO. That is correct. Those polar satellites, both provide real-time information that enables us to do weather forecasts, 

but they also provide data about the earth that is irreplaceable. 

Mr. HONDA. And in terms of the budgeting process, what are the 

things that Congress is doing that creates the challenge for you to 

be able to be continuous or be able to—that is going to create the 

danger of having a gap? What is it that we are doing or not doing? 

Dr. LUBCHENCO. The challenge is in fiscal year 2011, the current 

fiscal year, lack of adequate resources will keep us from continuing 

the contracts. 

Mr. HONDA. So if we do H.R. 1 and cut more into the current CR, 

there will be less money to do what you need to do that was 

planned for 2011? 

Dr. LUBCHENCO. H.R. 1 would be insufficient to—— 

Mr. HONDA. H.R. 1 cut into your current planning, what you had 

done for the last CR, the CR that we are operating under right 

now? 

Dr. LUBCHENCO. So even the existence of the CR now has already 

delayed the launch. 

Mr. HONDA. Right. 

Dr. LUBCHENCO. If we do not have the full $910 million in this 

fiscal year, we will have to terminate contracts and not be able 

to—— 

Mr. HONDA. It does create a gap. 

Dr. LUBCHENCO. And that creates the gap. 

Mr. HONDA. And that creates the danger in the future as far 

as—— 

Dr. LUBCHENCO. Correct. 

Mr. HONDA [continuing]. Condition for satellites for weather Climate Service that we depend upon both military and commercial 

and domestic? 

Dr. LUBCHENCO. Correct. 

Mr. HONDA. Okay. 

Dr. LUBCHENCO. And every dollar that we do not spend this year, 

it is going to cost three to five dollars down the road. 

Mr. HONDA. I just wanted to make sure that we understood the 

gravity of not doing the work here in a timely manner with the 


emcdonald on DSK2BSOYB1PROD with HEARING
386 

necessary funds for us to maintain, maintain the kind of services 

that we expect for everything from domestic to national security. 

Dr. LUBCHENCO. That is exactly right, Congressman. It is a very 

grave situation. 

Mr. HONDA. Thank you, Mr. Chairman. 

Mr. WOLF. Thank you. 

We are going to try to, Mr. Fattah and I am going to try to keep 

going back and forth, so we do not break the hearing. There may 

be a point that we have to, but—— 

Dr. LUBCHENCO. Okay. 

Mr. WOLF [continuing]. On the satellite, a couple of fast ones. 

Given the current funding climate, there will be less funding. What 

contingency plans are you making to address the funding amount 

needed for the JPSS Program in order to remain on schedule? 

Dr. LUBCHENCO. Congressman, the original request for fiscal 

year 2011 was over a billion dollars and we have scrubbed that 

budget and brought it down to $910 million dollar. 

Mr. WOLF. But I guess the next question, and I apologize for 

breaking—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. WOLF [continuing]. I don’t want to keep you sitting while we 

are—— 

Dr. LUBCHENCO. I appreciate that. 

Mr. WOLF. Will Commerce reprogram funds in fiscal year 2011 

to minimize the schedule? 

Dr. LUBCHENCO. We have very little ability to do reprogramming 

at the scale that is needed to address the challenges of JPSS. 

Mr. WOLF. If you do not reprogram funds, when do you anticipate the first JPSS to launch? 

Dr. LUBCHENCO. That depends directly on when we get the resources and how much they are. 

Mr. WOLF. Well, then I guess the big question is, it is very possible that the level of funding you are requesting for the satellite 

program is just not going to be there in 2011 or 2012. 

Are there lower priority programs in other areas, because we 

would like to help you do this if we can, that you fund at reduced 

levels in fiscal year 2011 and 2012 in order to ensure that there 

is not a gap in weather satellite data? Are there other satellite programs that could be further reduced to provide more resources for 

this? 

I am just trying to figure the reality, and the reality is the reality. And I do not know how well this has been accepted in the 

Senate either. Do you have any indication of how the Senate is 

thinking? 

Dr. LUBCHENCO. I know that your counterparts in the Senate Appropriations are concerned about this, at least individuals with 

whom I have spoken. 

Mr. WOLF. So then what would you say if there is a gap? 

Dr. LUBCHENCO. Congressman, we just do not have—these are 

such big numbers relative to the rest of our budget. It is very challenging to identify anything that could make up this amount as important as this program is. 

Mr. WOLF. Well, I can see you do not want to answer the question and I understand basically what— I think it is something you 


emcdonald on DSK2BSOYB1PROD with HEARING
387 

are going to have to work with the committee on. And, you know, 

there is only going to be so much available. And I guess if you want 

to go ahead and we think this is such an important program—— 

Dr. LUBCHENCO. Chairman, we are happy to, you know, sit down 

and work through the numbers with you and your staff. I, frankly, 

do not see how we can manage this. I understand that it is a huge 

challenge and I am really pleased that you appreciate how important this program is. 

Mr. WOLF. Mr. Fattah, you want to and I will—— 

Mr. FATTAH [presiding]. Let me stay on our satellite focus here. 

And I know the Chairman may go down and vote, and then he will 

come back and I will go down and vote. 

Walk me through this, right? The length of the service of the satellite would be what, the polar satellite? 

Dr. LUBCHENCO. I am sorry. Say that again, the—— 

Mr. FATTAH. How many years will we get benefit of the data 

from the satellite? 

Dr. LUBCHENCO. From JPSS? 

Mr. FATTAH. Yes. 

Dr. LUBCHENCO. So typically our satellites, the polar orbiting satellites are expected to live five years. They have fuel enough for 

seven. 

Mr. FATTAH. Okay. So five years, right? Prepare for the cost all 

in one year? 

Dr. LUBCHENCO. Correct. Well, so the costs, we receive the 

money, for example, in this year. We build the instruments. We 

build the satellite. We test them. We refine then. We do all this 

stuff. And then we launch them years down the road. So the 

money, the big bulk of the money is in the years of construction. 

Mr. FATTAH. Yeah. What I am trying to figure out is I buy a car. 

Dr. LUBCHENCO. Right. 

Mr. FATTAH. I bought a Ford Explorer, right? 

Dr. LUBCHENCO. Right. 

Mr. FATTAH. I am going to drive it for a period of years. I am 

going to pay for it over a period of years. I am trying to figure out 

whether you are buying this satellite all cash on the front end—— 

Dr. LUBCHENCO. No. 

Mr. FATTAH [continuing]. Or whether there are costs associated 

in each year. 

Dr. LUBCHENCO. There are costs associated in multiple years, but 

the bulk of the costs are before the satellite is launched. There are 

continuing costs after it is launched. 

Mr. FATTAH. Okay. 

Dr. LUBCHENCO. But it is a multi-year budgeting. 

Mr. FATTAH. And there is no utility in looking at, for instance, 

leasing satellite space on other satellites that are commercial that 

are already in orbit or partnering up? I know you tried to partner 

with DoD. 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH. That did not work out. That marriage did not make 

it all the way through. Or are there efficiencies in terms of or duplications with NASA that help us and help the chairman try to 

think through these budget numbers? 

Dr. LUBCHENCO. Right. 


emcdonald on DSK2BSOYB1PROD with HEARING
388 

Mr. FATTAH. That is what I am—so that we can both get satellites and be able to afford them. 

Dr. LUBCHENCO. Yes. I understand. We do not have any duplication with NASA satellites. We partner closely with them, but it is 

not a situation of duplication at all. They do different things. 

We do already, excuse me, partner with many other countries. 

Mr. FATTAH. You partner with Taiwan? You have some partnerships with Europe? 

Dr. LUBCHENCO. With Europe. 

Mr. FATTAH. But in this particular instance, there is—— 

Dr. LUBCHENCO. We do not. 

Mr. FATTAH [continuing]. No substitute? 

Dr. LUBCHENCO. That is correct. It should be noted, however, 

that the Europeans have a polar orbiting satellite as do we and we 

all use data from both of them, but they are nicely complementary 

and we need both. They do not duplicate one another. 

Mr. FATTAH. On the dollars. The Europeans use data from ours 

and we use data from theirs? 

Dr. LUBCHENCO. Correct. 

Mr. FATTAH. Do we pay for data for theirs and do they pay? 

Dr. LUBCHENCO. No. We give them our data. They give us theirs. 

Mr. FATTAH. Free exchange of information? 

Dr. LUBCHENCO. Correct. 

Mr. FATTAH. All right. Okay. So there is no other—— 

Dr. LUBCHENCO. I like the way you are thinking. I wish I could 

be more helpful in identifying—— 

Mr. FATTAH. Well, you know, in many of the areas of the Commerce Department, which is the department you are situated in, 

they do charge fees—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH [continuing]. For services that are rendered for people who are making money? 

Dr. LUBCHENCO. Correct. 

Mr. FATTAH. So I am just trying to figure out whether there are 

some ways inside NOAA—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH [continuing]. For us to be as entrepreneurial. So this 

gap that we are going to have notwithstanding because of the CR, 

we are going to have a gap. Your plan in terms of data, and this 

has to do with both morning and afternoon and so on—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH [continuing]. Information, right? 

Dr. LUBCHENCO. Correct. 

Mr. FATTAH. What is the plan just to deal with the gap? It has 

nothing to do with the money issue. But—— 

Dr. LUBCHENCO. So we—— 

Mr. FATTAH [continuing]. Say we have a 12-month gap, no satellite data. How are we going to—— 

Dr. LUBCHENCO. So for the period of time for which there is a 

data gap, we have the European satellite that would be providing 

half of what we have now. So it is not as if we have—— 

Mr. FATTAH. Have morning or afternoon? 

Dr. LUBCHENCO. They have a morning orbit. 

Mr. FATTAH. Right. Okay. 


emcdonald on DSK2BSOYB1PROD with HEARING
389 

Dr. LUBCHENCO. Actually, they have a midday orbit. Sorry. And 

ours is afternoon. And so it is not that there will be no data. It is 

that there will be half as much data and, therefore—— 

Mr. FATTAH. But if you were trying to tell my colleague from Alabama in terms of challenges, the data is going to be off by a significant amount because of this gap—— 

Dr. LUBCHENCO. That is correct. 

Mr. FATTAH [continuing]. Right? 

Dr. LUBCHENCO. And, for example, our hurricane models, if we 

are going to pick on Alabama for a moment, our hurricane models—— 

Mr. BONNER. I am glad I came back. 

Dr. LUBCHENCO [continuing]. Are dependent on information from 

both of those satellites. And we will have half of that information. 

And so the models for that for other severe storm warnings for 

Philadelphia—— 

Mr. FATTAH. You are going to be off by a day or two? 

Dr. LUBCHENCO. They will be off by a number of days and they 

will not be as high quality. So the track of hurricanes, we will not 

know that track as well. So you will end up evacuating a much 

larger section of the coast or underestimating snowfall by ten 

inches. 

Mr. FATTAH. That is about a million a mile on the evacuation 

cost? 

Dr. LUBCHENCO. Correct. 

Mr. FATTAH. But this gap is going to happen. There is no sense— 

I mean, we are going to have a gap. 

Dr. LUBCHENCO. That is right. 

Mr. FATTAH. But what I am trying to understand is, are there 

other things that we can do? You know, NASA is under the jurisdiction of the subcommittee and the chairman. I mean, do they 

have satellites that could make up some of this data over the period of the gap? 

Dr. LUBCHENCO. They do not have satellites that have these instruments—— 

Mr. FATTAH. Okay. 

Dr. LUBCHENCO [continuing]. That are flying in this orbit. 

Mr. FATTAH. Okay. 

Dr. LUBCHENCO. This is unfortunately a unique satellite. 

Mr. FATTAH. All right. I will yield back. 

Mr. WOLF [presiding]. Thank you. 

We understand that the NPP is supposed to launch in October 

2011 and remain viable for five years. JPSS is supposed to launch 

in September 2016. I understand it takes about a year to calibrate. 

Really what would happen if the NPP launches unsuccessfully? 

What are the contingency plans, if any? 

Dr. LUBCHENCO. If NPP is unsuccessful, we would have an even 

longer data gap than we are currently anticipating. 

Mr. WOLF. You know, one of the problems of all the administrators, and I do not want to talk now, people come who run agencies 

and sign contracts and say they are going to do things that do certain activities within so many years. Then they leave. And then, I 

mean, you can see the cost overruns that people have looked at. I 

guess that is why the Senate has some problems. 


emcdonald on DSK2BSOYB1PROD with HEARING
390 

So I think you have to look at the whole big picture. And you are 

having fewer satellites at a higher cost and, yet, whoever signed 

this at the time had these optimistic projections. And that is what 

you are really faced with. What do you actually do now to kind of 

deal with it? 

Dr. LUBCHENCO. Mr. Chairman, when I came into this position, 

this committee and others challenged us to fix the flawed NPOESS 

Program which had many of the challenges that you identified, cost 

overruns, delays and many problems that were really, I believe, inexcusable. 

This Administration made a serious commitment to fix the problems with that program and this JPSS Program is a result of those 

fixes. This was to be a transition year. We are on target. We have 

fixed the management problems. 

And one of the reasons that we are up against a wall right now 

is simply the past problems with that program have given us very 

little wiggle room at this point. That is why it is so dire. 

So you are right. Part of where we are now is a function of history and it is very unsatisfying to all of us. 

NEXTGEN

Mr. WOLF. Okay. Some other questions we will have. Let me go 

to aviation weather forecasting. NOAA budget includes an increase 

of $27 million to fund Next Generation air transportation, 

NextGen. That represents a third year development. 

Would you please tell the committee what improvements to the 

Nation’s aviation weather system you expect as a result of this investment and describe the partnership you have with the FAA? 

Dr. LUBCHENCO. The Next Generation Program is a multi-year 

effort to significantly increase the quality and the timeliness of information for aviation. The request for this year is for NOAA’s 

part, our contribution to that NextGen Program. 

It specifically will develop what is called the 4D weather cube 

which is envisioning essentially a cube of air and understanding 

and being able to model what happens in that parcel of air through 

time. 

And so it is much higher resolution information that will enable 

much more accurate and more timely weather information for the 

aviation industry that is so heavily impacted by adverse weather. 

The FAA estimates that two-thirds of the weather delays by the 

aviation industry could be prevented with more timely and accurate information about weather. And that is what NextGen would 

do. 

Mr. WOLF. What is your partnership—I am going to run out and 

vote again—but what is your partnership with FAA and how much 

are they putting into this? 

Dr. LUBCHENCO. Mr. Chairman, I do not have that number, but 

I will get it to you. It is a partnership. We provide our part of it 

in a program that was jointly designed with them, you know, taking and drawing on our expertise and utilizing—you know, they do 

their part of it and we do our part. And I am more familiar with 

our part. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
391 

NEXTGEN ROLES—NOAA AND FAA 

In the NOAA hearing transcript, Mr. Wolf asked Dr. Lubchenco to provide FAA’s 

contribution, financial or otherwise, to the NextGen aviation weather program. 

To differentiate between NOAA and FAA contributions to the NextGen program, 

NWS is responsible for developing the 4–D Weather Data Cube infrastructure for 

NWS, populating weather information in the Cube, improving forecast accuracy and 

forecast capabilities, and connecting NWS infrastructure to the Federal Aviation Administration (FAA). FAA is responsible for developing the 4–D Weather Data Cube 

infrastructure for FAA, receiving weather information from the NWS, and disseminating and integrating weather information into decision support for effective National Airspace System management. This is in accordance with the NextGen Joint 

Planning and Development Office (JPDO) Integrated Work Plan (IWP). To minimize 

duplication, the NOAA NextGen Weather Program and the FAA’s NextGen Net-enabled Weather (NNEW) Program continue to closely coordinate and align program 

goals and requirements to meet NextGen weather needs. During 2010, the FAA and 

NWS developed the Joint System Specifications v.42 to ensure alignment of technology development between agencies for meeting the NextGen weather initiative 

goals. The FAA and NWS completed and adjudicated the Integrated Program Management Plan for NNEW and the NOAA NextGen 4–D Weather Data Cube in December 2010. Both programs are currently developing an Integrated Configuration 

Management Plan, due in draft in June 2011, and an Integrated Risk Management 

Plan, slated for completion in fall 2011. 

FAA does not currently provide any financial contribution to the NWS NextGen 

aviation weather program. NOAA and FAA do have an agreement that FAA will reimburse NWS for NextGen weather capabilities that are above and beyond what 

NWS would otherwise have a requirement to implement; however, as NWS starts 

to implement Initial Operating Capability (IOC), FAA does not reimburse NWS for 

its NextGen activities. 

Mr. FATTAH [presiding]. Can we just revisit for a second? This is 

a pocket of air? I know you are a great scientist, but could you help 

us? We are politicians. How do you—— 

Mr. BONNER. Speak for yourself. What about statesmen? 

Mr. FATTAH. You are going to take a pocket of air and study it 

over a period of how long? 

Dr. LUBCHENCO. So this is actually not my area of expertise, 

so—— 

Mr. FATTAH. Quantify a pocket. 

Dr. LUBCHENCO. So instead of modeling, let’s say, the entire U.S. 

or, you know, a city or a state, as weather systems are moving 

across the country, there are all sorts of dynamics that affect where 

the weather goes, where a storm goes, how intense it is, whether 

it is snow or rain. And obviously there are things happening at different altitudes and different places. It interacts, you know, when 

it goes over a mountain range. 

Mr. FATTAH. How much air are we talking about here in this 

pocket? 

Dr. LUBCHENCO. So I actually do not know the size of the cube, 

but I will get that to you. Why don’t I just get you a description 

of what that 4–D weather cube is? I would be happy to do that. 

[The information follows:] 

Representative Fattah: Dr. Lubchenco offered ‘‘So I actually don’t know the size 

of the cube, but I will get that to you. Why don’t I just get you a description of what 

that 4–D weather cube is? I would be happy to do that. 

Answer: As the lead agency for the Department of Commerce’s participation in 

the multi-agency Next Generation Air Transportation System (NextGen), National 

Oceanic and Atmospheric Administration (NOAA) is responsible for providing aviation weather information to NextGen decision makers and users. The 4-Dimensional 

(4–D) Weather Data Cube is a weather information management and delivery system designed to support the time critical decisions made by managers of the National Airspace System. The 4–D Weather Data Cube consists of an information 

technology (IT) architecture (software, hardware, and communications circuits) and 


emcdonald on DSK2BSOYB1PROD with HEARING
392 

advanced weather forecast information content. The Cube’s contents and its supporting services will provide users with access to global aviation weather information through a single access methodology. This concept allows each participating 

agency (Federal Aviation Administration (FAA), NOAA and Department of Defense 

(DoD)) to coordinate their existing, agency-specific efforts to fulfill aviation-weather 

requirements to provide a mutually supportable, national—and eventually global, 

construct. This Federal effort addresses a way to satisfy public and private sector 

aviation weather needs while allowing each agency to maintain various independent 

capabilities consistent with their own requirements. A foundational element of this 

effort builds upon and takes advantage of evolving information technology advances. 

Modernizing the nation’s current air traffic system, which is based on technology 

invented during World War II, is universally seen as critical to coping with the congested airspace over the United States and to accommodate growing traffic. Under 

NextGen, a greater level of automation will help air traffic decision makers manage 

a highly flexible system to maximize the use of available airspace. This system requires high resolution, accurate digital weather information that can be easily ingested by automated air traffic management systems. The NextGen 4–D Weather 

Data Cube will provide a consistent view of the weather relevant to aviation decision makers through a single access methodology, ensuring that all users have access to the same information. 

The NextGen 4-Dimensional (4–D) Weather Data Cube is fully described in the 

NextGen Concept of Operations and the NextGen Integrated Work Plan. This 

‘‘Cube’’ is characterized by: 

(a) Improvements to IT infrastructure comparable to those already employed by 

other governmental agencies and by industry to provide greater and easier access 

to NOAA weather information for aviation decision-makers. Greater access to aviation-relevant weather information will facilitate better integration of this information into aviation users’ decision-making processes. 

(b) More consistent aviation weather information, providing a common operational 

weather picture needed for consistent decision making across the National Airspace 

System. 

(c) Improvements to accuracy of weather information. The research and development (R&D) needed to meet the stringent weather requirements of NextGen will 

take an extended, multi-year effort to complete. This long lead-time R&D will improve the overall accuracy of aviation weather information and will provide forecasters with a more solid foundation upon which to add their expertise to move toward meeting NextGen requirements. 

(d) Improvements to aviation forecast generation techniques. NWS meteorologists 

require advanced tools and techniques to enable faster, more accurate generation of 

aviation weather information. 

While the 4–D Weather Data Cube is intended to benefit the aviation community, 

improvements to IT infrastructure, forecast accuracy and more advanced forecast 

processes will have wider reaching benefits to governmental and private sectors that 

require environmental information. These results will improve other NWS service 

areas, such as support to Emergency Managers and improved forecasts for severe 

weather notification or flood warnings to the public. NOAA, other governmental 

agencies, private industry, and the public will have more effective and efficient access to accurate, consistent, and timely weather information to drive their decisionmaking systems and processes. 

BACKGROUND

The air transportation industry is an important element of the U.S. economy and 

weather impacts to the National Airspace System result in significant economic 

losses. The industry generates 5.4 percent of America’s Gross Domestic Product, 

$640 billion in revenue and over 11 million jobs. The Congressional Joint Economic 

Committee estimates that air traffic delays cost the U.S. economy over $41 billion 

in 2007, of which 70 percent are related to adverse weather. The FAA has determined that two-thirds of these weather delays are avoidable; more accurate and better integration of weather information into decision-making can potentially reduce 

the number of delays by 46 percent and save $19 billion annually. As air traffic increases, delays and the associated economic toll will only increase. By 2025, US air 

traffic is predicted to more than double, which is not manageable by the current air 

traffic control system. The NextGen 4–D Weather Data Cube will provide the National Airspace System with authoritative and timely aviation decision support information in an effort to reduce air traffic delays from severe weather. By 2025, all 

aircraft and airports in the National Airspace System will be connected to the 


emcdonald on DSK2BSOYB1PROD with HEARING
393 

NextGen network and will continually share information in real-time to improve efficiency, safety, and enable the predicted increase in air transportation. 

NOAA is statutorily mandated by 49 U.S.C. 44720 to provide weather information 

to the FAA. In addition, the Vision 100—Century of Aviation Reauthorization Act 

(Pub. Law No. 108–176, 117 Stat. 2490 (2003)) directs the Department of Transportation (DOT), FAA, Department of Commerce, National Aeronautics and Space Administration (NASA) and NextGen Joint Planning and Development Office (JPDO) 

to conduct integrated planning for research to operations to support NextGen. This 

investment represents a coordinated effort spanning two NOAA line offices with 

linkages to numerous IT, observation, and service improvement projects. NOAA 

NextGen investments will result in a significant increase in weather prediction and 

dissemination capabilities with wide-ranging benefits across the spectrum of NOAA 

product users. The weather information in the NextGen 4–D Weather Data Cube 

will enhance decision-support systems by offering consistent information at high 

spatial and temporal resolutions. 

GULF OF MEXICO DISASTER RESPONSES

Mr. BONNER. Mr. Fattah, so you do not have to worry, I am going 

to ask a Mobile, Alabama question. 

Mr. FATTAH. I am going to come down to the experience of Trent 

Jones—— 

Mr. BONNER. Good. We want you there. 

Mr. FATTAH [continuing]. Little pocket of land. 

Mr. BONNER [presiding]. Madam Administrator, as you can appreciate with the vote series, I think we have got three or four additional votes, we are trying to be respectful of your time—— 

Dr. LUBCHENCO. I appreciate that. 

Mr. BONNER [continuing]. And trying to get the chairman an opportunity to come back and complete the questioning that he has 

and other Members might have. Since I am the only Member here, 

let me ask you. 

You came down in January of 2010 and we had the pleasure of 

welcoming you to Mobile for the groundbreaking of NOAA’s Gulf of 

Mexico Disaster Response Center. 

Do you have an update that you can share with us and, if not, 

could you give us one at your convenience that would give us some 

idea in terms of how the building is coming along, the staffing of 

it, and could we anticipate that it might be ready before the upcoming hurricane season? 

And since the chairman is back, I will just leave that on the 

record for a later response. 

Dr. LUBCHENCO. Perfect. I would be happy to give you that information, Congressman. 

[The information follows:] 

Representative Bonner in regard to Disaster Response Center: Do you have an update that you can share with us and, if not, could you give us one at your convenience that would give us some idea in terms of how the building is coming along, 

the staffing of it, and could we anticipate that it might be ready before the upcoming hurricane season? 

Answer: The DRC is scheduled to open in July/August 2011. The actual date of 

opening is dependent upon the remaining construction schedule. NOAA’s vision is 

to use the DRC as a regional integrative force for disaster preparation and response, 

and foster federal interagency cooperation, federal/state collaboration, and directly 

link NOAA capabilities to the emergency management community. 

Mr. BONNER. Thank you. 

Dr. LUBCHENCO. Thank you. 

Mr. WOLF [presiding]. Thank you. 


emcdonald on DSK2BSOYB1PROD with HEARING
394 

I think we have covered hurricanes. We will have some additional questions. 

CATCH SHARE PROGRAMS

Now, on the fisheries catch shares issue, you are seeking an increase of $37 million to implement additional fisheries catch 

shares. I understand this has been very controversial in some fisheries. 

If catch share programs have been used, in use since 1990, why 

are they so controversial and has NOAA changed the way that they 

are implemented? 

And obviously there was a vote on the House floor too. And I am 

glad Mr. Bonner is here too. I had a question. We were talking to 

the staff yesterday. 

If people are concerned that the catch shares program is harming 

small fishing operators, could you reserve a portion of the catch for 

these small operators rather than having them openly compete 

against larger fishing vessels, basically almost a small business 

set-aside that you have at SBA, but that you would have for fishermen so that you would take some controversy? Have you looked at 

doing that? 

Dr. LUBCHENCO. Mr. Chairman, yes, indeed we have. It is a very 

viable model and one that is used in some existing catch share programs. This is an assertion that is often made about catch share 

programs, but the reality is any particular catch share program can 

be designed to prevent that from happening. So the design is of 

critical importance. 

Mr. WOLF. But we have a quote from the Environmental Defense 

Fund report on catch shares and the Environmental Defense Fund 

is a strong proponent of catch shares. It seems to support the concerns stating that as a result of catch shares programs, ‘‘the total 

number of available crew positions decreased by half and the viability of some small scale operators in ports may indeed be reduced.’’ 

So, I mean, this is a concern that it fosters consolidation in the 

commercial fishing and drives out smaller operators. 

Dr. LUBCHENCO. Mr. Chairman, the real driver here is the fact 

that in many fisheries, there has been overfishing. And any attempts to end overfishing are going to have some consequences to 

some individuals. That situation exists regardless of whether catch 

shares is the management tool or traditionally managed other tools 

such as days at sea are used. 

Mr. WOLF. But have you not seen—I have seen a report that 

some of the smaller ones are having a harder time with this. The 

bigger operators can—— 

Dr. LUBCHENCO. So, again, some catch share programs in the 

past have not had provisions to prevent consolidation. 

Mr. WOLF. Well, you know there was a vote on the floor? 

Dr. LUBCHENCO. I am well aware of that. 

Mr. WOLF. So the sentiment is, and I am just saying I do not 

know what my—I do not come from an area that is heavily involved—— 

Dr. LUBCHENCO. Uh-huh. 


emcdonald on DSK2BSOYB1PROD with HEARING
395 

Mr. WOLF [continuing]. In that, but I respect both sides. And I 

think both make a legitimate case. The question is, would you be 

able to look at a—you know, and the Small Business Administration or DoD, they had small business set-asides—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. WOLF [continuing]. To do something whereby everyone 

knows they are somewhat protected because, I forget what report 

Leslie showed me, but it showed that smaller fishermen were having a hard time. And if they are, you know, you could bring a couple big guys in and knock them out. So that was the question of 

a set-aside. 

Dr. LUBCHENCO. Mr. Chairman, that is a very real concern. It is 

one that I share and is one that is fixable either when the program 

is designed or retroactively. And one thing that we have done in 

our Catch Share Policy is to require that the design elements be 

reviewed. 

Mr. WOLF. I am going to let Mr. Fattah finish. 

Dr. LUBCHENCO. Okay. 

Mr. WOLF. And then I will be right back. It is not a very good 

way to run a—— 

Dr. LUBCHENCO. I understand. 

Mr. WOLF. Otherwise, you would be sitting here without anything to do for about an hour and a half. 

Dr. LUBCHENCO. This is preferable. 

Mr. FATTAH [presiding]. If you want to finish the answer to the 

Chairman’s question for the record, that would be good. 

Dr. LUBCHENCO. Okay. I will do that. Thank you. 

I think that there has been a lot of misunderstanding about 

catch shares. There are a lot of assertions that are simply untrue. 

One of them is that NOAA is making fisheries become catch 

shares. This is patently false. NOAA encourages the councils to 

consider catch share programs, but it is the actual councils themselves that decide whether a catch share program is appropriate for 

any particular fishery or not. 

So they are voluntary programs. There is nothing mandatory 

about them. They are voluntary programs and they are chosen by 

the councils that include fishermen on them. And so there are 

many, many fishermen that are champions of catch share programs. 

I think a lot of the concern about catch share comes from two 

corners. One is individuals concerned about what the initial allocation of shares would be and it is sort of the devil you know versus 

the devil you do not know. If there is uncertainty about what your 

allocation would be, you are nervous and you think it might not be 

to your advantage, especially if you do not have a strong catch history. So that is one source of concern. 

The other source is simply many recreational fishermen do not 

see any utility in catch shares for them because they are more appropriate for commercial fisheries. 

And so I think for both of those reasons, there is a lot of confusion about them. But the track record for catch shares is actually 

very compelling in terms of the economic and the environmental, 

the safety benefits of them. 


emcdonald on DSK2BSOYB1PROD with HEARING
396 

Mr. FATTAH. Well, let me put into the record an article that appeared in the Boston Globe on this point. It is an editorial saying 

that this program has worked very well—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH [continuing]. In New England and articulates a little 

disagreement between my good friend, the governor of Massachusetts—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH [continuing]. The secretary of Commerce on the matter. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
397 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 714 here 67061B.021
398 

Mr. FATTAH. But it says that the fishermen in Massachusetts 

have had a 21 percent higher result than in 2010 under this program and that it is working very well and that the bugs should be 

worked out. 

I am not really a fisherman, so I do not know the details. I do 

know that you are spending about a billion dollars on this, the fish 

question, all of these various programs. 

And, again, I am going to be asking GAO to take a look at where 

there are opportunities for taxpayers to share in the burden but 

not carry the entire burden of any number of these programs. 

But I know that my ranking member, Mr. Dicks, would want me 

to ask you about salmon in Washington State so that you can put 

something on the record about where we are there. I know that 

your request is somewhere in the 50 plus million dollar range 

there, but if you could comment in his absence on both the hatchery efforts, and that would be helpful to me. 

PACIFIC SALMON

Dr. LUBCHENCO. So I suspect the program that Congressman 

Dicks is interested in is the Pacific Coastal Salmon Recovery Fund, 

PCSRF. 

Mr. FATTAH. Interested is an understatement. 

Dr. LUBCHENCO. Fair enough. He is, as am I, a strong champion 

of that program. It has accomplished some very good things. It is 

a program that we continue to support. 

The amount that is requested in the fiscal year 2012 budget is 

less than the enacted, but it is a respectable amount that can do 

some very important things. I am a strong champion. I have seen 

firsthand much of the good that has come from that program. It 

takes a watershed approach and works with communities to recover habitats that are important for salmon. 

And salmon are one of those species where you cannot just manage the ocean side. You cannot just manage the land side. You 

have to manage them in an integrated way. And this PCSRF Program really focuses on the land side. And it is the example of the 

kinds of programs we need for many other endangered species, but 

it is a successful program. 

Mr. FATTAH. Where are we at between where this is impacted in 

some ways by some of the treaties with sovereign Indian tribes and 

this hatchery issue between a more natural approach and some 

that takes a more, I guess, scientific approach for lack of a better 

term? How is that working out? 

Dr. LUBCHENCO. The hatchery program is very complex and 

there are lots of different dimensions to it as you indicated. So is 

that another understatement? Is that what you were going to say? 

Mr. FATTAH. Understatement. 

Dr. LUBCHENCO. There are tribal issues. There are genetic issues 

in terms of impact of hatchery raised fish on wild caught fish. We 

are currently in the process of reviewing the comments to the document that was out for public review and are on track to have a revision of those that we would be happy to share with Congressman 

Dicks and anyone else on the committee who would be interested 

once we have made those changes. 


emcdonald on DSK2BSOYB1PROD with HEARING
399 

Mr. FATTAH. And I guess you really cannot jump ahead and tell 

us whether or not there is some concern between how this is affecting the natural—I mean, you understand the Native Americans. 

Their assertion is that it is somehow, I do not know what the term 

would be, at least changing the species, I guess is the best way I 

would say it in a neutral way. 

Dr. LUBCHENCO. Congressman, there is good genetic information 

that hatchery fish in some instances have a negative impact on 

wild salmon. And so the management challenges are how do you 

get the best from hatcheries without the problems. That is the 

challenge. And that is the balancing act that we are trying to do. 

They can provide good benefit, but they also we now realize can 

have significant detriment. And so how do you have the benefit 

without the detriment? How do you minimize the detriment? 

Mr. FATTAH. Thank you. 

I am going to give it back to the Chairman and I am going to 

go vote. 

Mr. WOLF [presiding]. You do not want to miss this one. Thank 

you, Mr. Fattah. NOAA is proposing a $346 million reorganization with regard to 

the Climate Service. The House Science Committee, as you know, 

has raised serious concerns about the establishment of a Climate 

Service. And the amendment to H.R. 1 prohibits funding of it. 

And so your budget proposes a new NOAA Climate Service built 

largely by taking resources away from your Office of Oceanic and 

Atmospheric Research. There are significant concerns about the 

wisdom of this, as you know, the Hall amendment that Chairman 

Hall as the chairman of the authorizing committee, which passed 

by an overwhelming vote. I forget the exact number. 

But please outline for us how you intend to ensure that the 

science mission of NOAA will not be sacrificed for or driven by politics in a reorganization like the one you have proposed. 

CLIMATE SERVICE REORGANIZATION

Dr. LUBCHENCO. Mr. Chairman, the proposed reorganization that 

would result in the Climate Service is budget neutral. And what 

it does is take existing climate sciences and services that are now 

in three different parts of NOAA and brings them together into a 

single new line office. 

Bringing them together can have great benefit because then they 

can interact more directly and that is the intent of creating this 

Climate Service. It is simply an internal reorganization to make 

things more effective. 

Mr. WOLF. But have you talked to Mr. Hall, Chairman Hall, because, I mean, what was the vote? Does anyone recall what the 

vote was? It was fairly substantial. 

Dr. LUBCHENCO. I understand that there is a concern about anything that says climate. And this particular formulation has been 

through a very exhaustive review by the National Academy of Public Administration at the request of Congress. And the review of 

NAPA, the National Academy of Public Administration, took a very 

hard look at is this reorganization a good idea? Should it look like 

the way NOAA has proposed or something else? What is needed to 

make it most effective, et cetera? 


emcdonald on DSK2BSOYB1PROD with HEARING
400 

And their report which was issued last fall said a Climate Service is strongly needed, would be of great service to the country. The 

way NOAA has proposed is basically the right structure. There 

were a few things they suggested and we have adopted their recommendations. And they agreed with us that creating the Climate 

Service would be in the country’s best interest. 

One of the concerns that Mr. Hall has had has been that the 

science that remains in the Office of Oceanic and Atmospheric Research should remain strong. I could not agree with that more. One 

of my priorities is to ensure that NOAA is not only a strong science 

agency but continues to have strong, good science. 

Mr. WOLF. Well, we understand, though, that some of your outside stakeholders have opposed this. And I guess the question is, 

have you resolved this with Chairman Hall because, I mean, with 

the vote that you have now in opposition to it, I just—where are 

you with regard to that? 

Dr. LUBCHENCO. I have made every attempt to discuss the areas 

where there are disagreement. I believe that what we have proposed actually does address the concerns part from the word—— 

Mr. WOLF. What about the stakeholders? We have been told universities and others who currently receive funding have been somewhat concerned about the quality of science generated by NOAA 

knowing that it will decline as private sector research dollars are 

reduced. And some universities have expressed concern. Most of 

the stakeholders, are they for this or opposed to it? 

Dr. LUBCHENCO. Most are strongly supportive of this. In fact, I 

am unaware of the ones of which you speak. I think there was confusion early on because the size of the line office that is named 

Oceanic and Atmospheric Research will decrease. It looks as 

though we are funding less science. 

Mr. WOLF. Right. We have the question that, in fact, if you look 

at the budget, it looks like it is being cut in half. 

Dr. LUBCHENCO. Correct. But, in fact, that is not the case because the same science that was in OAR is now in or would be in 

this Climate Service. So it is the same science. It would still be 

done. It will still thrive. 

Mr. WOLF. You can appreciate the concern, though, that people 

would have. 

Dr. LUBCHENCO. I absolutely can. 

Mr. WOLF. Okay. I will be right back. 

Jo, you can do whatever you want to do and I will be back in 

about two minutes. 

Mr. BONNER [presiding]. As the chairman was saying, likewise, 

OAR’s Laboratories and Cooperative Institute programs are being 

cut nearly in half from about $109 million to $62 million. Again, 

this is fewer research dollars going out the door to scientists. 

Why the dramatic shift in resources toward in-house research 

and can you help us understand how some might question the results of in-house research? 

Dr. LUBCHENCO. Mr. Congressman, or should I say, Mr. Chairman—— 

Mr. BONNER. How about Jo? 

Dr. LUBCHENCO [continuing]. This is a matter of appearances. 

The reality is there is no change to the dollars that are going to 


emcdonald on DSK2BSOYB1PROD with HEARING
401 

science or to the dollars that are going out the door. The same 

science is being done. But instead of all being in a single structure, 

it is now split between two structures, the Office of Oceanic and 

Atmospheric Research and the Climate Service if this proposal is 

accepted. 

So the reality is we are not funding less science. We are not 

funding different science. We are not changing anything other than 

the fact that the climate scientists that were in OAR are now in 

the Climate Service. 

Other science remains there and will continue to thrive. The climate science would now be housed, I need to make this clear, we 

have not made these changes and we will not make these changes 

if they are not approved, but the proposal is to have the climate 

science be in this climate services line office specifically so that it 

can be more closely aligned with the delivery of services. 

So information to people, to communities, to businesses about 

what is happening months to years from now, that is climate service information. And if that is collocated with the climate scientists 

in this Climate Service line office, that interaction can be more productive and more effective. 

So what we are trying to do is in the best interest of good government, of reorganizing where there is a compelling need to do things 

in a way that is more effective, and, in fact, without any diminution of the amount, the caliber, the quality of the science that 

would be done. 

Mr. BONNER. So no less science, just—— 

Dr. LUBCHENCO. No less science. It is no less science, no fewer 

bodies of people doing the science. They are simply reporting to a 

different boss, if you will. 

Mr. BONNER. Okay. How would you, though, address concerns 

that would be raised about reducing the peer review standards that 

extramural research undergoes before ideas are awarded? 

Dr. LUBCHENCO. There will be no change in any of the peer review that we typically do. That is a hallmark of holding our own 

feet to the fire and making sure that we have robust, good science. 

Peer review is an integral part of that and that will not change. 

Mr. WOLF [presiding]. We are back. 

Dr. LUBCHENCO. This is definitely multitasking. 

Mr. WOLF. We are really multitasking. 

Mr. Fattah. 

Mr. FATTAH. Mr. Chairman, I know we have been around this a 

number of different times. I am not going to belabor it. But I would 

just reiterate that on the satellite issue and the gap, obviously it 

is a very problematic situation. 

And if there are other ways that you believe that there is any 

help in terms of the gap, you know, that the issue of shortening 

the gap is obviously that is totally in our control, but the gap itself 

and whether you think that there are other ways we can prevent 

or shorten this gap, I think that that information would be helpful. 

And, Mr. Chairman, I do not have any further questions for our 

witness today. 

Mr. WOLF. Okay. Thank you. 

Well, we have a couple more and then we will probably—I think 

there is a motion to recommit. It will be ten minutes, so a while. 


emcdonald on DSK2BSOYB1PROD with HEARING
402 

In February of 2011, NOAA released its draft aquaculture policy 

for public comment. According to this report, wild stocks are not 

projected to meet increased demand even with rebuilding efforts. 

So future increases in supplies are likely to come either from foreign aquaculture or increased domestic aquaculture production. 

According to NOAA’s draft, about 84 percent of the seafood consumed in the United States is imported. Is that accurate? 

SEAFOOD IMPORTS

Dr. LUBCHENCO. Yes, sir, I believe so. 

Mr. WOLF. And where is it mainly imported from? 

Dr. LUBCHENCO. Mr. Chairman, it comes from many other parts 

of the world. 

Mr. WOLF. What are the top five? 

Dr. LUBCHENCO. Asia. 

Mr. WOLF. I mean, countries rather than—— 

Dr. LUBCHENCO. I do not have a list, but I would be happy to 

get that to you. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
403 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 727 here 67061B.022
404 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 728 here 67061B.023
405 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 729 here 67061B.024
406 

Mr. WOLF. Is China high? 

Dr. LUBCHENCO. It is certainly up there. I do not know exactly 

where it ranks. 

Mr. WOLF. And is Vietnam high? 

Dr. LUBCHENCO. I suspect for shrimp farming, it probably would 

be. 

Mr. WOLF. Do our people go over there and inspect? The record 

will not pick up a shake. You are going to have to tell us yes or 

no. 

Dr. LUBCHENCO. Mr. Chairman, I actually do not know what 

kind of inspection happens, if any. I will have to get back to you 

on that. The Food and Drug Administration is involved here as 

well which is why I am a little uncertain. 

Mr. WOLF. Given our continued trade deficit, what effort has 

NOAA undertaken to ensure that domestic aquaculture can keep 

pace or even outpace our foreign competitors? 

Dr. LUBCHENCO. Mr. Chairman we believe that aquaculture is vitally important and that it can be done in a sustainable fashion 

which is why we released our draft aquaculture policy for public 

comment. 

We believe that there are good checks and balances that can be 

utilized to ensure that aquaculture is sustainable and that it is vitally important to the Nation to be able to have sustainable aquaculture so that we have more healthy seafood to address part of the 

trade deficit and to be a complement to wild caught fisheries. And 

that is exactly what this aquaculture policy has been designed to 

do. 

Mr. WOLF. Are we doing better today than we were five years 

ago or about the same or what? 

Dr. LUBCHENCO. I will have to get back to you on that. I think 

it is likely that we are importing more than we did, but I will double check. 

Mr. WOLF. That is why I am so sympathetic to what Mr. Bonner 

wants to do. If you are sitting in a seafood restaurant in south 

Philadelphia or southern Alabama or down in the Gulf Coast or in 

Maine and you had a choice of taking fish from the Gulf caught by 

Americans, processed by Americans or taking it from China or from 

Vietnam with the health conditions, almost every American would 

say—and I would hope you could really, particularly building on 

what Mr. Bonner is saying, that you could really take it upon yourself to really be the initiator in the Administration to do this. It 

is not a Republican or Democratic issue. It is an issue of our country. 

I am sure if you were to dig or if any of the reporters out here 

were to dig and they would look at the Chinese firms and the Vietnam, the Vietnamese firms that are exporting in and then tie it 

into their lobbyists here in town, tie it into the big law firms that 

they have, you will find there are probably some or the largest law 

firms. 

Some of his people in the Gulf are lucky if they can afford to hire 

law firms to draft their will. And it is just out of balance. 

And I would hope that, you know, I do not think the amount of 

money you want to put in for this is really enough, and I would 

hope that you could really spur it on and to build again on that 


emcdonald on DSK2BSOYB1PROD with HEARING
407 

to get back to the committee on the whole issue of putting together 

one person to advertise and promote, so we can create American 

jobs. The Administration wants to create jobs here. The same thing 

would hold true along the Atlantic seaboard and, you know, the 

New Jersey area and places like that. 

But if you can supply, and I am anxious to see even before it gets 

to the record, so if you can tell us maybe by the end of the day 

somebody to call, what are the top five and what percentage do 

they—and also whether or not those facilities are inspected by the 

Food and Drug Administration or by NOAA, and I am sure NOAA 

does not, and how many times a year they inspect them. And I 

would appreciate that. 

Dr. LUBCHENCO. And just to be clear, Mr. Chairman, you are 

asking about just seafood imports regardless of whether it is wild 

caught or farmed? 

Mr. WOLF. Yes, ma’am. 

Dr. LUBCHENCO. Uh-huh. 

Mr. WOLF. For your educational program, you are dramatically 

cutting NOAA’s education programs from $54 million in fiscal year 

2010 to $21 million in 2012. Why are you doing that? 

NOAA’S EDUCATION PROGRAMS

Dr. LUBCHENCO. Mr. Chairman, I will verify this, but it is my 

recollection that what is not in the current budget are the congressionally directed funds that were added in last year. And so the request, I believe, is similar to what it was last year. 

I am a very strong proponent of our educational programs. I 

think they are very—— 

Mr. WOLF. That is a big cut though. 

Dr. LUBCHENCO. I understand. 

Mr. WOLF. That is taking an engine off. You made the analogy 

earlier. That is taking an engine off if you are cutting the education programs. 

In the past, the ocean education activities of the JASON Project 

were funded through earmarks. Is the funding in your fiscal year 

2012 budget request for competitive opportunities for groups like 

the JASON Project to apply for support for science education activities? 

Dr. LUBCHENCO. I do not know, sir. 

Mr. WOLF. Have you ever met Dr. Ballard? 

Dr. LUBCHENCO. Oh, yes. And I am well familiar with the 

JASON Project. It is terrific. And I know a lot of teachers, my sister included, who is a teacher who has participated in that program. It is a terrific program. 

Mr. WOLF. Well, then if you could answer that and then tell us 

how they would compete because if you cannot have an earmark 

on an issue with regard to science, the ocean, how would they compete in order to promote exploration and education with regard to 

NOAA? 

Dr. Ballard has noted that we have better maps to Mars than we 

do of the earth’s oceans. And do you want to say something about 

that letter or give it to you? 


emcdonald on DSK2BSOYB1PROD with HEARING
408 

Dr. LUBCHENCO. I would, please. It is my understanding that 

JASON could compete for funding. I think the point is more that 

the funds are not as much as we would like them to be. 

Mr. WOLF. But if there is very little in the bank and everyone 

can compete, legally under the law, they would have the opportunity to compete. But practically speaking, they may be foreclosed. 

Dr. LUBCHENCO. Well, they would have the ability to compete. 

Mr. WOLF. Yes. 

Dr. LUBCHENCO. I think there are more good science education 

opportunities for oceans and atmosphere than we can possibly fund 

with the resources that we have. 

Mr. WOLF. I think the JASON Foundation has been funded for 

years through this committee. I think Mr. Regalua, if I recall, was 

the beginning. And I think they do tremendous work. 

I had an opportunity. I was invited to introduce Dr. Ballard at 

the Rachel Carson Intermediate School in Fairfax County. 

Dr. LUBCHENCO. Uh-huh. 

Mr. WOLF. And it was the same night I think of the seventh 

game of the world series. And I said to the people I will come, but 

I really do not think there is going to be very many people. When 

I walked into the school and into the auditorium, it was actually 

the gymnasium, it was packed and it was packed with young kids, 

some with their parents, but young kids who were really excited to 

listen to Dr. Ballard. 

We have very few programs that really bring young people in 

whereby they have that. So I would hope that you could be very 

sensitive as that goes on. 

Mr. FATTAH. Mr. Chairman, that is one reason why we should revisit this congressional directive spending issue and maybe one day 

we will in the future. 

Mr. WOLF. One or two other questions and we will have a lot for 

the record, but I know there is going to be a vote pretty soon. And 

I do not want to keep you away. The National Ocean Service is also proposing a new $8 million 

program called Working Waterfronts to assist fishing dependent 

coastal communities. Funds would support socioeconomic studies, 

community-based planning, and capacity building and economic development and transition projects. 

This sounds like an EDA program in NOAA. Should this be funded out of EDA and not out of NOAA? Shouldn’t you take that 

money and put it into satellites? 

WORKING WATERFRONTS

Dr. LUBCHENCO. Mr. Chairman, we at NOAA collaborate closely 

with EDA on a variety of our programs and this would be a nice 

complement to the things that they do. This particular program is 

really focused very specifically on fishery dependent communities 

that are undergoing transition. 

Mr. WOLF. But shouldn’t it really be in EDA, I guess? I mean, 

the question, how does this program rank in priority to the National Ocean Service program like Navigation Services? 

Dr. LUBCHENCO. They are both important. 

Mr. WOLF. Well, I know. Marine Sanctuaries. I mean, if we had 

to rank and—— 


emcdonald on DSK2BSOYB1PROD with HEARING
409 

Dr. LUBCHENCO. I understand. 

Mr. WOLF [continuing]. Somebody said, okay, Madam Administrator, I know you do not want to tell us what one, but how do they 

rank, Marine Sanctuaries or this program? What is the most important? 

Dr. LUBCHENCO. That is a tough one. They are so very different. 

Mr. WOLF. But if you had to answer. I am not going to make you 

answer, but if you had to answer. The answer is Marine Sanctuaries or Coastal Zone Management Grant. 

Okay. We have another vote. I appreciate your testimony. I think 

the satellite issue will be a difficult one. I think you are going to 

have to work the Senate hard. I think everyone will help. I doubt 

that will be the amount of money that you really think. And so I 

think it is important for you to be talking to the staff about the 

reprogramming and with Mr. Fattah and see how we do it. 

The last thing is, and I would hope that you could respond, I am 

hopeful, and we did not want to surprise you, but now that we 

have raised the issue on the conferences on the—here is the letter 

that, we will just give it to you, that you can get an answer to us 

on or not even, but just tell people that we are going to move ahead 

on this summit or whatever you want to call it, it is your thing, 

to bring together all the people that should be interested in it who 

may not be and who may be on the East Coast including the Gulf 

and also on the West Coast and including in the whole issue of 

earthquakes also—— 

Dr. LUBCHENCO. Uh-huh. 

Mr. WOLF [continuing]. Because I do not think you can talk just 

about tsunamis without earthquakes. 

Dr. LUBCHENCO. Correct. Right. 

Mr. WOLF. And hopefully someone from the media will call you 

by the end of the day to see if you are going to be doing it. But 

I hope you will. And we would be certainly open to, you know, the 

reprogramming. I do not think we are talking about a lot of money. 

I think you do have some of the best minds there, but to sort of 

sensitize communities that may not be sensitive to it and also involve in some of the Caribbean areas and also Mr. Serrano I know 

has an interest in Puerto Rico. So if you can get back to the committee and let us know what you are going to do with regard to 

that. 

Dr. LUBCHENCO. We will do that, Mr. Chairman. And as you can 

appreciate, you know, the budget uncertainties this year make everything a real challenge. And, you know, I think this is a good 

idea. We would like to work with you to figure out how we might 

do it. 

You know, simply reprogramming is not—the biggest challenge, 

I think, is just figuring out, given where we are this fiscal year and 

given the CR’s, especially just the uncertainty with planning is a 

challenge for everything. That does not mean we will not try to do 

this. It just means—and I know you appreciate how challenging 

this year is. 

Mr. FATTAH. Well, we can find, you know, the Pew Foundation 

or Rockefeller, someone to help. But I think the point is that we 

should probably do it versus have a calamity and wish we had done 

it. 


emcdonald on DSK2BSOYB1PROD with HEARING
410 

Dr. LUBCHENCO. I think that is a very good suggestion to look 

for partners. And I think that we should definitely pursue that 

idea. 

Mr. WOLF. Mr. Fattah has a good idea. Pew and the Council of 

State Governments funded the one on corrections. Did a pretty incredible job. And I think it would be good to partner with some of 

those groups on the outside. And I would imagine that you would 

be very, very anxious and very interested in doing that. 

Dr. LUBCHENCO. Uh-huh. 

Mr. WOLF. I thank you. 

Mr. Fattah, you have any other—— 

Mr. FATTAH. No. I think Rockefeller would also be interested, you 

know, but there would be plenty of, I think, people who would be 

anxious to support the Subcommittee’s interest in this matter. 

Dr. LUBCHENCO. Uh-huh. 

Mr. FATTAH. And I think the Chairman is right, which is that 

we need to get people together and talk and make sure that we 

are—— 

Dr. LUBCHENCO. It is the right time, the right time. 

Mr. FATTAH. It is a good time to talk before the problem. 

Dr. LUBCHENCO. Absolutely. 

Mr. WOLF. Good. Thank you. 

Thank you very much, and the hearing is adjourned. And, again, 

sorry. 

Dr. LUBCHENCO. Thank you so much. I appreciate your time. 


emcdonald on DSK2BSOYB1PROD with HEARING
411 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 741 here 67061B.025
412 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 742 here 67061B.026
413 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 743 here 67061B.027
414 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 744 here 67061B.028
415 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 745 here 67061B.029
416 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 746 here 67061B.030
417 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 747 here 67061B.031
418 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 748 here 67061B.032
419 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 749 here 67061B.033
420 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 750 here 67061B.034
421 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 751 here 67061B.035
422 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 752 here 67061B.036
423 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 753 here 67061B.037
424 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 754 here 67061B.038
425 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 755 here 67061B.039
426 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 756 here 67061B.040
427 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 757 here 67061B.041
428 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 758 here 67061B.042
429 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 759 here 67061B.043
430 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 760 here 67061B.044
431 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 761 here 67061B.045
432 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 762 here 67061B.046
433 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 763 here 67061B.047
434 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 764 here 67061B.048
435 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 765 here 67061B.049
436 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 766 here 67061B.050
437 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 767 here 67061B.051
438 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 768 here 67061B.052
439 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 769 here 67061B.053
440 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 770 here 67061B.054
441 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 771 here 67061B.055
442 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 772 here 67061B.056
443 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 773 here 67061B.057
444 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 774 here 67061B.058
445 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 775 here 67061B.059
446 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 776 here 67061B.060
447 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 777 here 67061B.061
448 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 778 here 67061B.062
449 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 779 here 67061B.063
450 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 780 here 67061B.064
451 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 781 here 67061B.065
452 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 782 here 67061B.066
453 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 783 here 67061B.067
454 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 784 here 67061B.068
455 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 785 here 67061B.069
456 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 786 here 67061B.070
457 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 787 here 67061B.071
458 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 788 here 67061B.072
459 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 789 here 67061B.073
460 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 790 here 67061B.074
461 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 791 here 67061B.075
462 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 792 here 67061B.076
463 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 793 here 67061B.077

emcdonald on DSK2BSOYB1PROD with HEARING
(465) 

TUESDAY, APRIL 5, 2011. 

OFFICE OF THE UNITED STATES TRADE 

REPRESENTATIVE 

WITNESS 

AMBASSADOR RON KIRK, U.S. TRADE REPRESENTATIVE 

Mr. WOLF. The hearing will come to order. We welcome Ambassador Kirk here today, and I thank you for being here. We are here 

to discuss the Trade Rep’s budget request for fiscal year 2012. Your 

budget request is $51.3 million, which is $3.4 million greater than 

fiscal year 2011. 

We have a number of issues to discuss with you today, and particular issues with respect to China. If you compare U.S. and Chinese manufacturing output at current dollars China has surpassed 

the U.S. in manufacturing. Chinese manufacturing has—do you 

agree with that, that China has surpassed us? All the indications 

are that they have. Secretary Locke said that they had not. But 

where do you stand on that? Has China surpassed us? 

Ambassador KIRK. Well output—— 

Mr. WOLF. We are going to put a lot of the information in the 

record so I just want, but where do you stand on that? 

Ambassador KIRK. I am sort of one of those ‘‘whatever the numbers, the numbers are what they are.’’ 

Mr. WOLF. Oh, okay. 

Ambassador KIRK. I think in raw numbers that they have surpassed us. On productivity we have still a huge competitive edge. 

Mr. WOLF. But Chinese manufacturing has exploded and particularly since it was accepted into the WTO in 2001. Our trade deficit 

remains lopsided, totaling $252 billion in 2010, the largest trade 

deficit in the world between any two countries. The committee 

would like to get your assessments of the impact of this deficit and 

what can be done about it. We will have a number of questions on 

other issues on pending trade agreements, and things like that. 

But with that, I recognize Mr. Fattah for any opening statement. 

And then we will go directly to the questions. 

Mr. FATTAH. Let me thank the Chairman and let me welcome the 

United States Trade Representative Ron Kirk, who has had an extraordinary career of public service, both as a mayor, and in a 

number of other capacities. But in this role, he has taken the lead 

in helping to increase in a positive way the exports of the United 

States around the world. I know you have done extensive traveling 

and a great deal of work and let me commend you for the work you 

are doing to help create American jobs and also the secure American jobs that exist now based on our trade with the rest of the 

world. And I look forward to your testimony. 


emcdonald on DSK2BSOYB1PROD with HEARING
466 

Mr. WOLF. Your full statement will carry in the record. You can 

proceed as you see appropriate, but welcome. 

OPENING STATEMENT OF AMBASSADOR KIRK

Ambassador KIRK. Mr. Chairman, thank you again for the invitation to come and discuss with you and members of the committee 

our proposed budget for fiscal year 2012; to Ranking Member 

Fattah, thank you for your kind words; other members of the committee. With over 95 percent of the world’s consumers now living 

outside of the United States increasing exports is critical to putting 

Americans back to work and the United States back on a path of 

sustainable long term economic growth. With just over 230 employees and a couple of dozen detailees, USTR plays a critical role in 

meeting these goals. 

Over the past two years our small agency has enforced America’s 

trading rights, held our partners accountable, negotiated agreements that will expand opportunities for American exporters and 

their workers. And we have accomplished these goals while maintaining strong fiscal discipline that saved or voided cost of more 

than $2 million last year alone. Mind you, this is against a budget 

of less than $50 million. 

We believe that the smart investment that the President’s fiscal 

year 2012 budget proposes for USTR will have significant bang for 

the buck, even as our work continues to produce results. I would 

like to share with you three areas of our work and how it is related 

to our budget. 

First, we are negotiating high standard job creating trade agreements. I hope you know that in December we successfully concluded negotiations with the proposed trade agreement with Korea 

that is much better for our auto and manufacturing industries, but 

more importantly, will support a minimum of 70,000 additional 

jobs and $10 billion to $11 billion in additional U.S. goods exports 

alone. We have made significant progress on negotiations in the 

nine country Trans Pacific Partnership, in which the U.S. has provided leadership in drafting what we hope will be one of the most 

dynamic regional trade negotiations in unlocking East Asia Pacific 

for U.S. businesses. 

We have also intensified, Mr. Chairman, our engagement with 

Colombia and Panama so that we can resolve outstanding issues 

relevant to those trade agreements and then submit them to Congress this year. As you know, Colombia represents an over $1 billion market in new export opportunities, as does Panama. But we 

believe Panama is also critical to providing and increasing our access to growing markets in Latin America. 

In the Doha talks, we continue to provide the leadership to seek 

a more ambitious outcome that will provide meaningful market access for all of the members of the WTO. And we look forward to 

working with Congress this year to grant Russia permanent normal trade status so that U.S. firms and workers can fully benefit 

when Russia accedes to the WTO. 

Secondly, I would like to address your concerns about enforcement. At USTR we have made holding our partners accountable for 

their commitments through enforcement of our rights, one of the 

hallmarks of the Obama administration’s trade policy. We have 


emcdonald on DSK2BSOYB1PROD with HEARING
467 

taken steps to stop China’s use of so-called indigenous innovation 

policies. We brought the first labor enforcement consultation ever 

under a U.S. trade agreement. And we have secured major wins at 

the World Trade Organization across the board for our farmers and 

ranchers. Just last week, for example, the WTO announced a second in a pair of decisions that constitutes the largest win ever of 

anybody at the WTO to the benefit of U.S. workers in the aerospace industry. This relates to our cases we have been prosecuting 

over Boeing. 

Third, we are creating new opportunities to strengthen trade relationships and eliminate barriers to U.S. exports. This include unexpected barriers, and I give you again an example. Last year we 

worked with the Department of Agriculture, and Commerce, and 

others to successfully reopen markets from China and Russia and 

Indonesia and others to U.S. pork exports after the H1N1 scare. 

These countries collectively represented over $900 million worth of 

exports to our pork producers in 2008. 

Through all of these efforts we are on pace to achieve the President’s ambitious goal established in the National Export Initiative 

to double U.S. exports by the end of 2014 and to support the creation of two million additional jobs here at home. 

Our budget provides us the necessary resources for USTR to implement a robust trade agenda that boosts American exports, and 

it does so in a fiscally responsible manner. The President’s $3.4 

million increase for this nimble agency in 2012 can have significant 

returns for our economy. As the President makes prudent investments at USTR we also ask Congress to join us in making smart 

investments in America’s workers. Trade adjustment assistance 

helps us do that by putting Americans back to work and providing 

training to help prepare them for the challenges of the 21st Century. Likewise our preference programs, the General System of 

Preferences and the Andean Trade Preferences Act, also merit renewal we believe for as long as possible. Both of these critical programs not only help foster economic growth among some of the 

world’s poorest countries but just as importantly they help create 

well paying jobs here in America. 

In closing, opening new markets, enforcing our trade rights, and 

addressing trade barriers in existing markets supports businesses 

and workers and communities all across the United States. USTR 

will continue to use the resources you provide us as wisely as possible to support these important objectives. I look forward to our 

dialogue today, Mr. Chairman. At this time I am welcome to take 

your questions. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
468 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 802 here 67061B.078
469 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 803 here 67061B.079
470 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 804 here 67061B.080
471 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 805 here 67061B.081
472 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 806 here 67061B.082
473 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 807 here 67061B.083
474 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 808 here 67061B.084
475 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 809 here 67061B.085
476 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 810 here 67061B.086
477 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 811 here 67061B.087
478 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 812 here 67061B.088
479 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 813 here 67061B.089
480 

VACANCIES IN IP ENFORCEMENT ATTORNEYS

Mr. WOLF. Thank you very much. One such shortfall that we 

have heard about in the past was intellectual property enforcement 

attorneys. Are all the vacancies filled in that area? 

Ambassador KIRK. I know that we have filled two of those, Mr. 

Chairman. I think we are at full capacity, but we may still be trying to fill one of those. Unfortunately, I think for me at least, one 

sign the economy is turning around is the speed at which the private sector is beginning to raid our very talented staff. And as you 

know, in IPR that is a critical area. But we have brought on board 

two very talented lawyers. I will, if I can check with my staff and 

maybe give you a more precise answer? 

[The information follows:] 

The Office of General Counsel has three GC attorneys assigned during FY 10 and 

11 to cover IPR issues: one GC staff attorney full time, one GC staff attorney part 

time, one detailee full time. 

The Office of Intellectual Property and Innovation has 7 policy staff, of whom 2 

are designated Attorney-Advisors. 

The overall staffing of 7 has been consistent for the past three years. The designation of 2 of the slots as attorney-advisors is a new development this year. 

Mr. WOLF. Sure. Would you outline for us USTR’s presence in 

China? How many positions are there? What are they doing? Does 

your budget seek to send any additional staff to the China office? 

Ambassador KIRK. China, we have a very modest presence, if I 

can be honest. We share space in a mission provided by the State 

Department. 

Mr. WOLF. How many? 

Ambassador KIRK. We have I think at most three or four fulltime employees in that office. But—— 

Mr. WOLF. Should that be beefed up? 

Ambassador KIRK. You know, if I can couch this with the recognition that I think the events going on outside this committee 

room today magnify the challenge before this Congress and administration to make sure we have a budget that lives within our 

means. And the easy thing for me to come and say, ‘‘Do we need 

more people?’’ Is yes to everything. But all of the work we do with 

China is not just contained in that office. So I think you have to 

balance that against the staff that we have within our office here. 

Mr. WOLF. But there is nothing like being on the ground at that 

time, seeing, feeling, listening, touching, speaking the language. 

And so we are not necessarily increasing. We are not talking about 

spending a lot. But would it be helpful to have more in China? Is 

this the high water, low water mark that USTR has had in China? 

Ambassador KIRK. Well for us it would be the high water mark. 

You know we, as you noted in your introduction, we are a very 

small agency. You know, literally roughly forty, fifty years old, and 

really only been over 200 employees within the past decade or so. 

And so we have gone from having just one employee in China to 

now having two or three. 

But I would say one of the things we do very well, we rely very 

heavily on the cooperation and resources we get with the State Department, with the Commerce Department, and with the U.S. Department of Agriculture as well. We often forget that the Department of Agriculture, I think, has over ninety offices around the 


emcdonald on DSK2BSOYB1PROD with HEARING
481 

world. So we try to be smart and economical about leveraging all 

the resources the United States has on the ground. 

HUMAN RIGHTS AND RELIGIOUS FREEDOM IN CHINA

Mr. WOLF. Earlier this month the USTR published its 2011 trade 

policy agenda and 2010 annual report. This report is 443 pages 

long, yet the committee did not find any references to human rights 

or religious freedom in China. Similarly, the USTR’s 2010 report 

to Congress on China’s WTO compliance does not reference human 

rights or religious freedom. Does USTR have any interest in promoting human rights in China? 

Ambassador KIRK. Well let me say the Obama administration 

has very strong interests in the issue of human rights in China. 

But as head of this agency we are expressly tasked in terms of our 

relationship with China at looking at the commercial relationship. 

As I am sure you know, the State Department heads up our dialogue with China as it relates to human rights. We do follow that 

in an ancillary manner, particularly through our participation in 

our strategic and economic dialogue. But my responsibility that you 

have tasked me with as a Congress is to make sure that we almost 

singularly focus on how we can expand economic opportunities and 

address barriers to U.S. businesses and exports. 

Mr. WOLF. But by comparison on the English language website 

of the Chinese Ministry of Commerce, their agency responsible for 

trade, there are over sixty references to human rights. If the Chinese can put up 13,000 pages mentioning human rights, should not 

the USTR at least have it as a factor? As I look through some of 

your testimony, you are very heavy into climate change. I read the 

testimony, looked through it last night, I have it marked up here. 

If you can get involved in climate change, could you not get involved in human rights and religious freedom, which has a major 

impact on trade and all these other issues? 

I mean, you probably were at the White House, I would assume, 

when Hu Jintao came? Were you not? 

Ambassador KIRK. Yes, sir. I was. 

Mr. WOLF. At the very time Hu Jintao came to the White House 

the 2010 Nobel Prize winner was in jail in China. And his wife was 

under house arrest. So trade dominates and drives a lot of that. So 

if the Chinese could reference it, over sixty references to human 

rights, would it not be appropriate for the USTR to at least factor 

this in? 

Ambassador KIRK. Mr. Chairman, first of all we very much share 

your concerns about human rights. And I know the President and 

Secretary of State have spoken not only to their concerns about the 

treatment of the Nobel Prize winner, but more recently the arrest 

of others. But I took an oath when I was given the privilege of 

being confirmed by the United States Senate to conduct myself in 

a manner consistent with the charge in the Constitution, and the 

mandates of this Congress. 

Now if this Congress were to expand the responsibilities of our 

office to include human rights, then we would do that. They are addressed, I want to make it plain, they are addressed by the administration. Our relationship, as you know, with China is complex 

enough that it involves the work that we do on the trade front at 


emcdonald on DSK2BSOYB1PROD with HEARING
482 

USTR, the work of Treasury on currency and macroeconomic matters, the work of our State Department, and Defense on security 

and others. And I mean, I can only state to you what I said. Within 

the overall construct—— 

Mr. WOLF. Did your oath deal with climate change? 

Ambassador KIRK. No, but our oath does give me the responsibility to carry out—— 

Mr. WOLF. But that is in, that is in your materials, though. 

Ambassador KIRK. But in our mandates and in the work that we 

do—— 

Mr. WOLF. I believe it is even in your testimony about climate 

change? 

Ambassador KIRK. I do not think I mentioned anything about climate change—— 

Mr. WOLF. In your submission to the Congress? 

Ambassador KIRK. I am not sure that we addressed climate 

change specifically as much as we addressed climate within the 

context of the work that we do to secure and address in our trade 

agreements to reflect those values we have on labor and the environment. It is contained within that context. 

Mr. WOLF. The USTR budget request places a large emphasis on 

labor rights. The request notes that the administration brought a 

labor case against Guatemala, worked with the Panamanian government on labor rights issues, and made progress on a plan to address labor issues in Colombia. Your budget submission appears to 

omit labor rights in China. What have you done with respect to 

labor rights in China? 

Ambassador KIRK. In every engagement that we have with 

China, whether it is through direct bilateral dialogue with, between President Obama and President Hu, or our participation in 

the strategic and economic dialogue, which is led by Secretary 

Geithner and Secretary Clinton, or our direct JCCT. When we have 

issues, labor issues as reflected in trade issues, we raise those with 

the Chinese in every one of those four occasions. 

Mr. WOLF. But your budget submission, the report request notes 

the administration brought a labor case against Guatemala, 

worked with the Panamanian government on labor rights, made 

progress on a plan to address labor issues in regard to Colombia. 

But it is silent on China. Now China has one of the worst human 

rights and workers rights records in the world, bar none. Probably 

at the very, very top. You have done activity in Colombia, activity 

with the Panamanian government, activity in Guatemala, and 

nothing with regard to China. 

That does not seem really appropriate. It seems almost—personally I believe, and if I, and I am not taking issue, we are not going 

to get into it, but I just want to, for the record, if anyone is listening or ever reads this record. This administration has a very poor 

record with regard to human rights and religious freedom in China. 

There are a number of Catholic bishops that are in jail today that 

no one speaks out for. There are hundreds of house church leaders 

that are in jail today that no one in the administration speaks out 

for. The person who designed the bird’s nest stadium in China, 

which I have seen, was arrested the other day, taken away. And 

only when it was quizzed at the State Department did a spokesVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00482 Fmt 6601 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
483 

man say anything. And no one in a political position, and no one 

in the administration, has said anything. They have pretty much 

plundered Tibet. They have destroyed the Tibetan culture. Hu 

Jintao was the one who put together that policy. They have persecuted the Uighurs, the Muslims. And so in some respects, the 

human rights record of this administration with regard to China is 

one of the worst, I think, since I have ever seen us be engaged with 

regard to human rights in China. 

But there was no, back to workers rights which I know is part 

of your effort, there was none with regard to China. Do workers in 

China have the right to organize independent labor unions? 

Ambassador KIRK. I am not sure if they do, but it would not surprise me if they do not. Mr. Chairman, and I do not want to belabor the point. I think you made your point and want to move on. 

One difference in terms of our engagement with China and the 

other cases that you reference in our budget is that we have free 

trade agreements with Guatemala, and we have proposed free 

trade agreements, as you know, with Panama and Colombia. And 

that dramatically increases the tools and resources that we have to 

pursue them under those. The engagements that we are pursuing 

under those are for violations of not complying with the standards 

with those FTAs. We do not have a free trade agreement with 

China. 

Mr. WOLF. Well we did not have one with the Soviet Union, and 

yet during the Reagan administration the Trade Rep spoke out on 

these issues of human rights. And every time someone from the 

cabinet would go to the Soviet Union they would attempt to meet 

with dissidents, they would raise these issues of workers rights. 

Lane Kirkland, who was head of the AFL–CIO, was one of the 

champions on this issue of workers rights. And so we did not, the 

Reagan administration did not have an agreement with the Soviet 

Union, yet advocated for human rights, religious freedom, and 

workers rights. And Lane Kirkland, with the AFL–CIO, was an advocate, one of the best we have ever had, on this issue. And yet 

we had no trade agreement. 

So I do not think we can just say simply because we have no 

trade agreement that we will never advocate. You know, silence is 

almost an advocation if you refuse to raise something when people 

are being persecuted. And silence of your friend is terrible. And so 

the dissidents who were speaking out, those who want to work, and 

organize, and have labor reforms, are looking for the United States 

to advocate. And I think with all due respect the USTR ought to 

be somebody who is advocating on those issues. And if you could 

do it in Panama for workers rights then I think you could certainly 

do it in China. 

I am going to leave this. I might come back to it. But a prominent human rights lawyer, and you do not have to answer this if 

you do not want to, who I personally know. His name is Jiang 

Tianyong, who appeared before a committee we had. He testified 

before the Human Rights Commission, which I cochair, has not 

been seen or heard from since he was grabbed by police in Beijing 

on February 19th. His wife and daughter do not know his fate, or 

if they will ever see him again. It appears to be part of a broader 

crackdown by Chinese authorities on human rights defenders and 


emcdonald on DSK2BSOYB1PROD with HEARING
484 

pro-democracy advocates in the wake of the revolution in Egypt. I 

know the USTR has representatives in China. I would ask that you 

or your representative at least raise the Jiang case at the highest 

levels. Would you be willing to do that if I give you this here, and 

raise, have somebody in your office in China raise this? 

Ambassador KIRK. I will certainly bring this to the attention of 

our representatives in—— 

INTERNET CENSORSHIP IN CHINA

Mr. WOLF. Thank you. I appreciate that. The great internet firewall of China is increasingly a favorite tool of repression and control. Limiting access to information has often been viewed as solely 

a human rights concern, delink them from any discussion of trade. 

But in November, 2010 a Google white paper pointed out, ‘‘The 

internet is the 21st Century trading route. And so when it is impeded the commerce that passes through it is impeded, too.’’ Is the 

USTR doing anything to address this issue? And is there any serious consideration being given to bringing a WTO case against 

China? 

Ambassador KIRK. Well let me first say that one, it is, just as 

a matter of policy, we do not publicly broadcast whether or not we 

are thinking of bringing a case with any of our trading partners, 

just because it, and particularly in cases with China, if I can be so 

candid. You telegraph that ahead of time, our ability to do the diligence we need to make that case is compromised. I can tell you we 

had extensive consultations with Google throughout their ordeal 

and worked with other partners in the WTO as well because of the 

very broad implications of the internet firewall, and have followed 

that closely. We did not get to the point where Google had asked 

us to pursue but we engaged them on that extensively and involved 

our partners from the European Union, Japan, and others in trying 

to get China to make sure that they kept that an open market. 

Mr. WOLF. Well maybe that answers this question, and maybe 

you can tell me offline. A recent Bloomberg Business Week article 

reported, ‘‘The Office of the U.S. Trade Rep has been reviewing the 

idea of internet censorship as a trade barrier at least since 2007.’’ 

Do you know what the status of that review is? 

Ambassador KIRK. That might be one of those that it would be 

more helpful to engage the committee off the record. 

Mr. WOLF. Okay. If you could, I would appreciate that. I have a 

number of others, but we will go to Mr. Fattah, and then back. So 

Mr. Fattah. 

PRESIDENT’S EXPORT INITIATIVE

Mr. FATTAH. Thank you very much. Can you talk to us about the 

President’s export initiative? And you indicated in your prepared 

testimony that we were moving towards meeting the goal that was 

set, to double exports. And can you talk about where we are on 

that and how that work is being done? And what more can be 

done? The committee has a number of entities under its jurisdiction, including the Commerce Department, for instance the Manufacturing Extension Partnership program, and a number of other 

entities that in certain ways are engaged in activities that could be 


emcdonald on DSK2BSOYB1PROD with HEARING
485 

beneficial to the export initiative. So if you could talk about where 

we are, and where you see us going? 

Ambassador KIRK. The good news is where we are. We are well 

on pace to meet that goal. Now I frame that, you know, with a bit, 

I may perhaps parentheses now just because of the extraordinary 

disruption of markets not just because of the horrific earthquake 

and tsunami in Japan, but if you combine that with the earthquake 

in New Zealand, and the floods in Australia, that creates a little 

bit of uncertainty there. But broad numbers, we are on pace. Last 

year was a very strong year for U.S. exports, up some 19 percent 

over the previous year. An incredible year in particular for our agricultural exports. We are on a pace, I think according to Secretary 

Vilsack if we can keep the pace this year we will have a record 

number, maybe $135 billion in agricultural exports. 

We have been working, the President has tasked us as you know, 

to have more collaboration than we have ever had before within the 

administration, recognizing that we cannot have any duplicating of 

effort or services. So within that, and part of I think our budget 

reflects that increase, is making sure that we have the ability to 

continue to do what we do best which is negotiate new market access. But particularly, I think, our budget reflects that we have 

then, people are beginning to see the value of the emphasis that 

we have placed on enforcement equal to what we do in opening 

new markets and when we enforce our agreements. For example 

when I came into office I sat down with our general counsel, asked 

him to give me a synopsis and review of every case we had pending 

at the World Trade Organization. And I know we spend a lot of 

time talking about China, but I was frankly stunned that by a 

huge margin it was not close. The largest single number of disputes 

we had were with the European Union. 

What troubled me more, particularly, and you were kind to mention my background as a mayor. In which, you know, I grew up in 

a world of retail politics. You do not have five years to solve something. We have cases pending seven, eight, nine years. We had a 

beef dispute that had locked us out of that market for twelve years. 

We got it resolved in three months. And since then our beef exports 

are back up almost 20,000 metric tons, which is about $200 million 

in value. I can give you more examples of those, whether it is—— 

PROPOSED REORGANIZATION OF TRADES AGENCIES

Mr. FATTAH. Let me drill down on this for a minute. Because 

both the administration, and I know that the Chairman has mentioned this a number of times, to think about how these agencies 

can be organized. There are a number of entities that are disconnected from your office or your department, like the Export/Import 

Bank and the Overseas Private Investment Corporation, that have 

a relationship to helping with exports. So for instance, in the Philadelphia area, you know, we took the Goldenbergs, they have a peanut chew, they make peanut chews. The world’s best candy bar, 

anywhere in the world. And we brought in the Export/Import 

Bank, OPIC, now they sell them in forty-five different countries 

around the world. And we want to open up more opportunities. But 

some of these other entities. 


emcdonald on DSK2BSOYB1PROD with HEARING
486 

So the question is, since the administration is looking at reorganizing Commerce, and there is some talk of your shop being moved 

into Commerce. I mean, there are all kinds of discussions that you 

may or may not be able to get into. But are there ways that we 

should be thinking about restructuring the federal effort to be more 

supportive? As I would understand it, less than one percent of our 

businesses export. And of that, 57 percent of that only export to 

one other country. So we need to build up the focus of American 

companies that, as you have said in your testimony, more than 90 

percent of the world’s customers are outside of the United States. 

So we have to have a view towards doing that. But share with me 

what your thinking is around this notion of reorganization. 

Ambassador KIRK. Well as you know, in the State of the Union 

this year the President as part of his approach to making sure that 

we are as a federal government are going through the same exercises that American families are, of having to cut the cloth to fit 

the pattern, singled out an effort to make sure we are streamlining 

our efforts. And he singled out trade because it is touched by nine 

different agencies as a place we would start. He has appointed a 

task force headed up by Jeff Zients at OMB to look at how we 

might rationalize that. 

I can tell you that as part of the export initiative we had begun 

doing some of this anyway. And you mentioned the Export/Import 

Bank. As a matter of course when we do export initiative road 

shows, which we have done, we always travel with Commerce, 

USTR, Export/Import Bank, and the Small Business Administration to try to bring a holistic approach to both educating businesses 

about opportunities and making them aware of the resources that 

are available. We have done that in New Orleans. We have done 

it in Illinois. We attempted to do it I know under Governor Rendell. 

He had a big export initiative. We are doing these all around the 

country and improving information access. 

With respect to government reorg my belief, and again building 

on my bias as a mayor, but more importantly my bias having 

served on three corporate boards, that if every three, four, five 

years you are not stopping and examining how you are doing it to 

see if you cannot be more efficient you are probably losing ground 

with your competitors. Now I say that within the broad framework 

that I think, and one of the reasons I have enjoyed my work at 

USTR contrasted to my work as mayor, it is a lot easier to get 

things done with 230 employees than 15,000, 90,000. We can be 

nimble. We can be responsible. We engage businesses every day 

and can attack problems that they face, try to solve them sooner. 

We welcome this review. If there are ways we can strengthen 

that by partnering more thoughtfully, whether it is with the International Trade Administration at Commerce or others, I think we 

should welcome that. But that is a judgment frankly—— 

TRADES BLOCS

Mr. FATTAH. Let me ask you my last question in this round, and 

it will be a more general question. So you see the world now in 

which the markets are kind of aggregated themselves together as 

trading blocs. You mentioned the EU, and they have gotten beyond 

language and other barriers to gather themselves together in a way 


emcdonald on DSK2BSOYB1PROD with HEARING
487 

in which they could be a force economically in the world, these European countries. And you see now in, as we look at the world, particularly as we think about China and India and countries much 

larger than ours in terms of population. So as we see South America, and even the African continent, how do you see us as a long 

term matter? Not in the short term, but over the next ten, fifteen 

years, how do we go about approaching our interactions in the 

world related to trade? Right now we have been doing these trade 

agreements, right? Country specific. Do you see that at some point 

moving to a broader platform in which we might engage markets 

that are not bound by these kind of, these individual national 

boundaries? 

Ambassador KIRK. Well as we say in Texas, my friend, that may 

not be a question as much as it is an answer. Let me, if I can do 

two things. One, part of our mission of the export initiative was to 

try to move away from a tactical approach, of just sort of obsessing 

on, ‘‘Are we going to do this FTA?’’ to taking that broad look. And 

one, just to be frank, is where are the markets? And the best example that I can give you is that is the rationale behind our efforts 

in this Trans-Pacific Partnership. Recognizing most economists tell 

us this is a region that is going to dominate and drive global economic growth for the next ten to twenty years. It is a region in 

which there have been almost 200 trade agreements done among 

other economies in the Pacific, none of which included the United 

States. We thought that was unacceptable. So our work in the 

Trans-Pacific Partnership is a part of that. 

Secondly, when you ask about our competitiveness relative to the 

EU, we examined that. We do not often think about it, and I know 

among some, depending on where you live in the United States, we 

think of NAFTA as a dirty word. But the reality, NAFTA created 

an integrated manufacturing model in North America. And if you 

look at it in terms of continental competitiveness, what we gained, 

what we have learned from NAFTA has been helpful to us as we 

export to other markets around the world. 

Third, when you talk about emerging markets, that is what we 

are focusing on as part of the export initiative as well. And maybe 

in the interest of time, we will be submitting a report to Congress 

both on our overall progress in some of these strategies. I think 

that will be coming to you in the next several weeks. 

Mr. FATTAH. We will look forward to your submission. Thank 

you, Mr. Chairman. I yield back. 

Mr. WOLF. Mr. Bonner. 

EXPORTS TO CHINA

Mr. BONNER. Thank you, Mr. Chairman. Mr. Ambassador, welcome. Let me pick up on I think an answer that you gave to Mr. 

Fattah, but also the original line of questioning about our relationship with China that was started by the chairman. I want to make 

sure that I have the numbers right. You said that the President’s 

goal of doubling our exports to China by 2014, that—I do not want 

to put words in your mouth. We are well on our way to that? 

Ambassador KIRK. The question was about our goal of meeting, 

in the national export initiative. Which is our exports everywhere. 

That is not country specific. The goal is to increase our ability to 


emcdonald on DSK2BSOYB1PROD with HEARING
488 

export and, you know, within the broad framework of the President’s strategy about winning the future. What he said in both this 

year’s State of the Union and last year’s is America has to make 

more. We have to save more, and we need to invest in our education, invest in innovation, and use that to sell more of what we 

make in these markets around the world. But I want to make it, 

that was not limited, that is not a China specific goal. 

Mr. BONNER. Well let us talk about China, though. Because 

China is certainly a big player in this conversation. Is it safe to say 

that we have a goal of increasing our exports to China? 

Ambassador KIRK. Absolutely. Yes, sir. 

Mr. BONNER. But how would that compare with the imports coming from China? 

Ambassador KIRK. Well that is our challenge. You know, it is one 

of those good news, bad news conundrums. Our exports to China— 

and look, I want to make sure, we absolutely share every one of 

your concerns, frustrations about doing business in China. But the 

reality is, it is a market, it is an economy too big to ignore. The 

good news, our exports have exploded to China. They are now our 

second largest market. Our ag exports are going in every area. 

Now, the challenge is there is almost this inverse relationship. The 

better our economy does, the more we tend to buy from China. 

Some of it is because we are buying, you know, cheaper consumer 

goods that they tend to dominate the production of. But what 

President Obama said, what we focus on at every one of our engagements with China through the strategic economic dialogue and 

JCCT, is we think there needs to be a healthier balance in that. 

And we have advocated that in every case. And we believe, just by 

raw science, I mean, you see in our Census numbers. I think we 

are, what, 309 million now? China is one-point-whatever billion. 

With their goal of moving 600 million people from an agrarian society in which they make in most cases less than two dollars a day, 

we think we offer them enough in a complementary way because 

of where we are in the manufacturing process and our productivity 

and innovation, if they will open up their markets and see us as 

a partner, and as they begin to develop more of a consumptive base 

model rather than an export model, we think within that that is 

a great way to help them grow, help us sell, and we should see a 

healthier, you know, rebalancing of that trade deficit. 

Mr. BONNER. Shifting gears but staying in the same area, you 

mentioned manufacturing. It is very important to every district in 

this country and to every state. Certainly to my district in South 

Alabama. But as a country we have lost thousands of manufacturing jobs in the last decade, tens of thousands, due in large part 

to unfair foreign trade practices. When we enter into trade agreements we expect our trading partners to live up to their obligations 

and to not dump their goods or provide government subsidies that 

distort trade or adversely affect American businesses. When these 

violations occur, and they do, we must stand up for our rates by 

aggressively enforcing our anti-dumping and countervailing duty 

laws. 


emcdonald on DSK2BSOYB1PROD with HEARING
489 

KOREA FREE TRADE AGREEMENT

However, it has come to some of our attention that there are 

some provisions in the trade remedies chapter of the Korean FTA 

that may affect our existing trade laws. Will these provisions— 

three questions. Will these provisions change in any way how our 

trade laws are enforced? Secondly, if not how do you intend to inform the members of Congress of this? And then third, would you 

include language on this issue in the statement of administrative 

action that will accompany the Korean FTA when it is sent to Congress? 

Ambassador KIRK. I have not revisited that language in a while, 

but broadly speaking we have not had any departure from our 

overriding policy on application of countervailing duties, and antidumping laws in course, or any other FTA. And if I find out differently, Congressman Bonner, I will get that to you. 

Second, I would say on the issue of enforcement I do believe very 

strongly this is an area that the Obama administration has distinguished ours from previous administrations, Democrat or Republican. We felt very strongly that one of the legitimate concerns that 

we hear from Americans all over the country, and parenthetically 

if I might, Mr. Chairman, last year I made the deliberate decision 

that as much, as engaging as it is for me to go to Geneva and Paris 

and Africa that we were not going to be able to move America’s 

trade agenda with me over there. And so last year I have spent for 

the most part traveling around the country. I think I have been to 

now sixteen states, and forty-five cities including in your state. And 

one of the biggest concerns I heard about trade policy, both from 

those of us who are more forward leaning, was people just felt like 

we were not enforcing the agreements and everybody else was gaming them. We have made enforcement a hallmark of our policy, just 

as we have negotiating new agreements. And I think we have a 

very strong record on that. 

But our frustration on the countervailing duties laws frankly is 

not here, but it is in Geneva. As you know we have had nine cases 

that we have rules against us in the manner in which we apply 

those. And we are 0 for 9 in those. And so Secretary Locke and I 

have been meeting with industries and others to see if we cannot 

fashion a remedy that meets the concerns of manufacturers but at 

the same time does not put us in jeopardy of being hammered the 

way we have been in the WTO. 

INCREASES IN PRODUCTIVITY

If I might also say, and I understand and I know there is the 

prevailing wisdom out there that most of the job losses in manufacturing have been from trade. I know there is an economist for everything but the reality. You have probably had five times as many 

job losses in the manufacturing sector due to the productivity than 

you have the trade, when you study all of the economic modeling. 

Trade has been a part of it, and that is one reason why we are so 

dogmatic about asking Congress to pass trade adjustment assistance. But the reality, one of our biggest challenges, we are very 

good at what we do. When manufacturing is up, and in the context 

of your question, Mr. Chairman, about China. Every American 


emcdonald on DSK2BSOYB1PROD with HEARING
490 

worker is about eight times as productive as their Chinese counterpart. We can produce with 11 million workers what it takes China 

100 million workers to do. And so part of our challenge is making 

sure we continue to innovate and invest so we create the next generation of industries that we can dominate and continue to sell to 

these new markets. 

Mr. BONNER. We can produce them, but not at the same price. 

Ambassador KIRK. Well but we are producing, if we are on the 

cutting edge and ahead of them, and at the same time doing as we 

are. Asking countries to improve their laws and respecting intellectual property rights, combating piracy, we can create a world in 

which we can own that. And again, that is one of the reasons the 

President is focusing I think wisely on making sure that even as 

we try to make very difficult budget decisions we do not want to 

do things that hinder our competitiveness in the future. We have 

to continue to invest and research in development and innovation. 

Because that is where we are going to win the future. 

Mr. BONNER. And I would add just as an observation, we also 

have to look at the burdens we are putting on American manufacturers and American companies. When I got elected to Congress, 

I was not intending to give this aside, but when I got elected in 

2002 I wanted to have some coffee mugs that had the seal of Congress and my name on it to give to our friends from Alabama who 

came up to see us. I had to pay $1.50 more to get a coffee mug 

made in America over one that I could have bought made in Mexico. I just did not think it looked good to put the Great Seal of the 

United States and made in Mexico at the bottom. But whether it 

is Mexico or China, therein lies part of the problem. Those companies have gone out of business because of added rules and regulations and burdens and mandates that we have put on them over 

the years. That is certainly not just during your tenure. Just finally, if you could share. You have been a mayor, so that is about 

as retail of politics as you can get in our country, and of an important city, obviously. How important, we talk a lot about exports 

and imports and trade imbalances. How important, though, in your 

current position is foreign investment? And I am going to go ahead 

and tee it up. 

FOREIGN INVESTMENT IN THE U.S. 

Ambassador KIRK. You know in Alabama better because of the 

strength, not just in Alabama, you look in Alabama, South Carolina, Texas. You know, the notion that we are not making cars in 

America is not true. We are making a lot of cars. We are having 

production move, Mercedes Benz, for example, is moving either the 

E or C class—— 

Mr. BONNER. C class. 

Ambassador KIRK [continuing]. Entirely to Alabama. Now our 

friends at Ford call me every week and remind me BMW sort of 

fudges the numbers because they exclude non-FTA partners. But 

one of the larger American automotive exports is the BMW X series, all made here in the United States. And then they export over 

100,000-something cars. So we like the idea, and welcome the idea. 

Whether it is Germany, China, Brazil, of our partners bringing 

money here and doing it. We talk a lot about China. One of the 


emcdonald on DSK2BSOYB1PROD with HEARING
491 

issues we have engaged them on is this race for green energy. And 

our frustration, this Congress wisely has done a lot to try to 

incentivize the next generation of development of clean energy. But 

China sort of owned the wind turbine production. Well we fought 

with them, nudged them, and they have agreed one of the bigger 

investments they are going to make here, they are now going to 

move that plant here. I think in this case it is actually going to go 

in Texas, but that now means those 1,500, 2,000 jobs are going to 

be here. And so you can find examples. 

We just came back from Latin America. The President had a 

very successful trip to Brazil, and Chile, and El Salvador. And the 

Brazilian businesses are very shrewd, but welcome the fact we do 

not have any constraints on their investments. And we probably, 

you know, in your state I would guess you have got 100,000 workers who are working for foreign-owned companies. That is good investment and we think that is a smart part of our trade policy as 

well. 

Mr. BONNER. Thank you. Thank you, Mr. Chairman. 

Ambassador KIRK. And you can correct me on whether it is the, 

I think, is it the Mercedes that is made in Alabama? Not the 

BMW—— 

Mr. BONNER. It is Mercedes, Honda, and Hyundai, and Toyota 

truck engines. And quite frankly, fifteen years ago we did not make 

any automobiles in Alabama. And so the conflict that many of us 

have is, probably everyone around this table is Buy American. And 

yet the Ford Explorer that I just traded a few years ago was actually made in Mexico. I am not knocking Ford. I believe it is a great 

company. But you do have to look at those foreign investments and 

put that in the equation when you are seeing those are jobs. 55,000 

people in Alabama have jobs in the automotive industry today that 

did not have them fifteen years ago because of those foreign investments. So it is part of the balance. Thank you, Chairman. 

Mr. WOLF. Thank you. Mr. Schiff. 

TRADE BALANCE WITH KOREA

Mr. SCHIFF. Thank you, Mr. Chairman. Ambassador, I want to 

ask you about a couple of areas, Korea and Russia. On Korea, what 

is your expectation in terms of the Korean Free Trade Agreement 

and its impact on our trade balance with Korea? You know, questionably our exports would grow to Korea but our imports would 

as well. Do you anticipate that Korean imports would outpace any 

increase in American exports to Korea? If that is the case, would 

the increased number of imports from Korea be displacing imports 

from other countries? And to what degree would they be displacing 

goods that would be manufactured here? And can you give us a 

sense of what industries you think win, and what industries you 

think are going to be adversely impacted by the trade agreement? 

Ambassador KIRK. Well if I can address Korea first. We believe, 

because the President was stubborn enough to not take the deal 

that we inherited on the table, that frankly a lot of people wanted 

us to just sign. And we went back and we got a better deal, in this 

case in the automotive sector. Because there was such an extraordinary imbalance in terms of the openness of our market and the 

access to theirs. But we think we have a much healthier agreement 


emcdonald on DSK2BSOYB1PROD with HEARING
492 

that is going to allow us, I think, and forgive me but when I get 

into numbers is when I get into the most trouble, Congressman. 

But I think our balance trade deficit with Korea is now about $10 

billion. But I will get you a more precise number. We think we 

have the ability to correct that and have a much healthier relationship because as the President expressed it, the United States is 

now supported in the unique position, because our economy is so 

open and our tariffs are so low. In just about every trade agreement that we are going to negotiate going forward, including 

Korea, they are going to be moving from a base where in agriculture, for example, their average agricultural tariff is in excess 

of 58 percent. Ours is at 6 percent. So that is going to be a huge 

win for farmers, ranchers, beef, soybean, across the board. We talk 

about—— 

Mr. SCHIFF. So Ambassador is it your expectation, or is it the 

analysis of your office, that with the trade agreement our deficit 

with Korea would go down? 

Ambassador KIRK. It would certainly go—— 

Mr. SCHIFF. Our exports to Korea would go up faster than any 

new imports from Korea? 

Ambassador KIRK. We believe they will, sir. And if I might say, 

the numbers that we have given you we do not produce. You know, 

the International Trade Commission does those independently. And 

in my opening I mentioned they estimate Korea is about an $11 

billion opportunity. If you want a comparison, that is larger than 

the last nine free trade agreements we have done. 

Now what it does not capture is the opportunity in the service 

market, since you asked about what sectors. And Korea has a half 

a trillion dollar service economy. And we are seeing a lot of interest 

from everything from our express companies, banking, finance, insurance, architecture. But manufacturing, to Congressman 

Bonner’s point, still dominates, is about 80 percent of our exports 

to Korea. So we think there is a great opportunity for growth 

across all sectors. 

Mr. SCHIFF. And you know, because every trade agreement has 

this, what industries do you anticipate are adversely impacted? 

Ambassador KIRK. On the—— 

Mr. SCHIFF. On the American side. 

Ambassador KIRK. On the, negatively? 

Mr. SCHIFF. Yes. 

Ambassador KIRK. Or positively? We did not revisit, to be honest. 

You will hear from some of your friends in Congress that they are 

still concerned about, they have grave concerns about the impact 

on the textile industry. But we did not reopen that particular provision. That is the one industry we have heard the most. You will 

hear from some discrete industries within ag. And just about every 

major agricultural association in the country has endorsed the Korean Free Trade Agreement. Some would have liked for us to get 

more in rice. There are some that wanted us to do more in fresh 

orange juice, I can go on. I mean, I can get to a level of detail that 

might numb you here. But we think on balance it is a very strong 

forward leaning agreement for the United States. 


emcdonald on DSK2BSOYB1PROD with HEARING
493 

INTELLECTUAL PROPERTY IN RUSSIA

Mr. SCHIFF. Let me turn to Russia. I understand that the administration may ask Congress to lift Jackson-Vanik as it applies to 

Russia, paving the way for PNTR. And that process is hand in 

hand with Russia’s WTO assession. When the Vice President visited Russia last month this was a major part of the conversation 

and I think many members of Congress, myself included, would 

like to support PNTR but still have many unanswered questions 

about Russia’s commitment to uphold its end of the bargain. And 

from my point especially, coming from a district that is so completely dependent on intellectual property. A lot of the studios and 

production houses are in my district. 

Russia has appeared on the priority watch list of special 301 reports every year since its inception. I wrote to him along with my 

co-chair of the Anti-Piracy Caucus urging him to raise this issue. 

And just as one illustration, our letter highlighted VKontakte, a 

notorious Russian website, that you mention in your notorious markets report, and I want to compliment you on those reports which 

I think have a great impact, as one of the five most visited sites 

in Russia. It is popular for social networking but also because it 

features copyrighted music and video without permission or compensation. And you know, for me there has to be a level playing 

field if this is going to happen. And where some of our dominant 

industries in the export business, i.e. the entertainment industry, 

cannot compete because you have these rogue websites it is not a 

level playing field. 

Have you seen any progress from Russia on IP? Is there any reason to think when we have been basically trying to hold Russia’s 

feet to the fire regarding WTO assession and PNTR that they need 

to improve their IP, and frankly I do not see much. Is there any 

reason why we should believe that if they do get PNTR they are 

going to change their behavior? Or frankly are they doing to feel 

that they got what they wanted, and did not have to change, and 

there is even less reason to do so after PNTR. Did any concrete 

steps come out of the meetings that the Vice President had with 

Prime Minister Medvedev? 

Ambassador KIRK. Well first of all Congressman, let me thank 

you. I know you were, you have been a leading advocate for stronger intellectual property rights enforcement. And we actually hosted 

a very successful roundtable with a number of your businesses that 

I understand you were helpful in facilitating. On Russia—— 

Mr. SCHIFF. And I want to thank you and your staff for that, who 

were excellent. 

Ambassador KIRK. I appreciate your support of that. 

Mr. SCHIFF. And your deputy administrator was wonderful. 

Ambassador KIRK. There is nothing I can say that will blunt any 

of your concerns about Russia and their behavior. Now I can tell 

you it may seem counterintuitive but one of the reasons we believe 

it is important to have the largest economy in the world not in a 

rules based system in is that all of the things you expressed your 

frustration about right now we are very limited in our ability to 

hold Russia accountable because they are outside of the WTO. And 

one of the factors that weighs in favor of us asking you to do this, 


emcdonald on DSK2BSOYB1PROD with HEARING
494 

at least if we get them in a rules based system, as we have done 

with China and others, then we have the ability where the facts 

are appropriate to go and hold their feet to the fire and make that 

case. 

Now I would tell you that not only did the Vice President raise 

this on that trip. More importantly, if you recall President 

Medvedev was here last June and met with President Obama. And 

President Medvedev has been, you know, perhaps the most vocal 

proponent of the need for Russia to join the global economic community. And President Obama directed our office to work over the 

next several months to resolve our bilateral issues with Russia. A 

number of them were around the IPR issue. I can tell you in that 

forum we were very successful in getting Russia to adopt the commitments we ask them to, to strengthen their intellectual property 

regime. Their Duma has in fact moved on many of those. And part 

of our reason for encouraging this conversation on granting them 

Permanent Normal Trade Status is because of the good work we 

have done it is now more likely than not that Russia will finally 

accede to the WTO. If not by the end of the year, next year. And 

if they do, not withstanding all of our concerns, we then would 

have the unique situation, the only businesses that would not have 

the full benefit of Russia being in that system would be ours. So 

yes, we have those concerns. We made very good progress with 

them in the bilateral fora. But if we want to really reap the benefits of them we need to get them into a rules based fora such as 

the World Trade Organization. 

Mr. SCHIFF. Thank you, Mr. Ambassador. 

CHINA PNTR

Mr. WOLF. I am going to go to Mr. Austria. But you know, and 

you are so persuasive when you say that. Except when you look at 

the reality our trade deficit with China until they got in, they got, 

in the old days they called it Most Favored National Trading Status. 

Ambassador KIRK. Right. 

Mr. WOLF. They changed it because they wanted to confuse everybody. But PNTR. But once they got PNTR it got worse. It is 

just, and the numbers, our trade deficit with China alone was 

$273.1 billion. Since 1999 our trade deficit with China has increased nearly four-fold. So what you say, and I know you believe 

it, and I know it is logical and makes sense, but the reality was 

that that is how China really took off. I mean, and we used to hold 

them every year. We would give them a one-year opportunity, and 

then we could open up the prisons, and have people released, and 

put pressure. Now there is no pressure. 

And the other, and then I want to go to Mr. Austria, but the 

problem is, and I am not going to ask you if you will ever go out 

working for China. I am not going to ask you that. But a lot of your 

predecessors have gone out. And a lot of the American people have 

lost confidence in Republican administrations. R–E–P, I can spell 

it, Republican administrations. I mean, Bush made a terrible mistake when he went to China. There were Catholic priests and 

bishops being tortured in jail. And he was sitting in the stadium 

watching the venue for the Olympics. 


emcdonald on DSK2BSOYB1PROD with HEARING
495 

Now the guy who just designed, I had a question for him. I am 

not going to ask you. Just designed the Olympic stadium is in jail. 

He is missing. And we don’t know where he is. So as a Republican, 

let me say, you don’t get too offensive and say this guy is a Republican. He is coming after us Democrats and both administrations. 

But the American people have lost confidence, because they have 

seen prominent people in both administrations. Clark Randt who 

was our ambassador in China I believe is now working for the Chinese government. 

So when an auto manufacturer, laborer, AFL–CIO guy, UAW guy 

in Ohio, in Pennsylvania says, ‘‘Hey, the powerful, the wealthy, 

they work in administrations and then they go out.’’ I mean, you 

look at the number of law firms in the city and in New York City 

that are representing the Chinese. It is immoral. Now some will 

say immoral? It is immoral. 

I mean, when you have Congressman Chris Smith took holy communion from Bishop Su, he has never been seen since, and you can 

represent that government? That government that are doing cyber 

attacks against us? And that government that has—we had a meeting in China. I went over there with Chris Smith a month before 

the Olympics. And we had a meeting one night, a dinner meeting, 

with a lot of religious leaders. Every one but one got arrested on 

their way there and before they got there. And the one who made 

it was arrested the next day. 

Well the embassy never really spoke out on it. They were interested in it. They were sympathetic to it. But I don’t think they 

wanted to sort of keep them from getting an economic opportunity 

later on. So the American people they see these numbers. And they 

say well I hear that same thing over and over and nothing ever 

changes. 

Apple, you probably have an iPhone; you probably have an iPod; 

you probably have an iPad, or if you don’t I am sure a lot of people. 

Why can’t Apple make them in the United States if the productivity—and you have been a very impressive witness. You seem like 

an awfully nice person. Every time I hear something good about 

you, it is a good—no, I mean it. 

Ambassador KIRK. I am going to try my best not to dissuade you 

of any of that for the remaining time I have—maybe I should—if 

you will give me permission not to speak for the rest of the hearing. Hopefully I won’t—I won’t do anything to dissuade you from 

that. 

Mr. WOLF. Why couldn’t Apple do those jobs here in America 

based on the statistics that you gave us? Why couldn’t they have 

them here? 

Ambassador KIRK. Mr. Chairman—— 

Mr. WOLF. And we see the administration, and I want to get to 

you, but I just got to get this off my chest to say this thing. President Obama appointed Jeff Immelt, the guy from GE, as his job’s 

guy. One they pay no taxes. GE paid no taxes. That is not good. 

That is not good. 

But secondly I saw an article in the paper three months ago, we 

will try to dig it out and put it in the record here, that GE signed 

an agreement with China to develop an avionics program that will 

really hurt Boeing. Now we want Boeing, and I appreciate the 


emcdonald on DSK2BSOYB1PROD with HEARING
496 

numbers you told me, we want Boeing to be the number one manufacturer, because I want to create jobs at Boeing. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
497 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 853 here 67061B.090
498 

Mr. WOLF. And so the American people see this. And so they say 

well here is Immelt. He is creating jobs in China. He is not paying 

any taxes. Steve Jobs and Apple now they are doing the iPad, the 

iPhone, the iPod in China. And they are taking it away from American workers, Republicans, Democrats, independents, people who 

just want to raise their family, educate their kids. 

And so I think there is a cynicism that really develops. And 

when they see high-level officials and people who came to town to 

do well, stay to do good, to make a lot of money, they get very discouraged. 

We find former ambassadors that are now working for the countries that they were supposed to be advocates for us for. We find 

it in the trade rep’s office. I bet your alumni, the number of people 

that are going out now working for—and I probably shouldn’t mention the law firms. I am tempted to but I won’t. And I think—I 

don’t know how you live with yourself. 

You know, I say when I leave here, and I have no intention of 

leaving soon, but when I leave here, I will never go lobby. And I 

am certainly not going to go on to lobby for a foreign power that 

arrests Catholic bishops, and puts house church leaders in jail, and 

has plundered Tibet. 

In 1997, I snuck into Tibet with a young Buddhist monk in a 

trekking group. And what they have done to Tibet. Hu Jintao, the 

guy that President Obama had that state dinner for, what he has 

done to Tibet. 

And there is the Simon and Garfunkel song, ‘‘The Boxer.’’ You 

know, ‘‘man hears what he wants to hear but disregards the rest.’’ 

And we can’t disregard. So when somebody goes out and goes with 

a big law firm to represent the Chinese that are also spying 

against us and doing it. 

The number one supporter, and then I am going to go to Mr. 

Austria, I promise, the number one supporter of the genocide in 

Darfur—I was the first member of the House to go to Darfur. Genocide. Congress says it is genocide. The Bush administration says it. 

The number one supporter of the genocidal government of the 

Bashir administration, who is under indictment by the war crimes, 

is China. 

So you can leave, not you, a person could leave and go out and 

work for China. And so I think the American people are just saying 

wow. So, you know, hopefully, you know, you will do these things 

and make sure that we keep the jobs here and bring the jobs back. 

Mr. Austria now. 

Mr. AUSTRIA. And I thank you, Mr. Chairman, because I think 

you are hitting on some very, very important points. 

Ambassador, thank you for being here. 

Ambassador KIRK. Thank you, sir. 

U.S. AND CHINA’S ECONOMIES

Mr. AUSTRIA. And I want to follow up a little bit on what the 

chairman has said from an economic standpoint, because I—let me 

ask you your opinion as to where China is economically compared 

to the United States. Have they passed us technology wise in your 

opinion? You know, they have now—I think most indicators show 

they have the second strongest economy. 


emcdonald on DSK2BSOYB1PROD with HEARING
499 

When you look at the deficits that we are running, if you look 

at the President’s budget. I think it reduces the federal deficit to 

a low I think roughly of $600 billion in 2015. But then it starts expanding after the years after that, which means more borrowing, 

more spending. 

And China, you know, obviously controls a large amount of our 

debt. And how is that impacting us economically? 

Ambassador KIRK. Well first of all, Mr. Austria, thank you for 

your questions. You asked a number of questions. Let me try to 

break them down. 

One, in terms of where China is, I think we have been—to some 

degree we don’t give ourselves enough credit for what we do. China’s economy is growing. We think that is a good thing. I mean, 

look they have got 600 million people in China, another 600 million 

in India, another 600 million in Africa, all living on less than $2 

a day. You can see that as a threat. You can see that as an opportunity for the United States to help them grow those economies, 

build the middle class. So it is nothing for us to fear. 

But by a wide margin, I want to make this plain, we are still, 

by an extraordinary margin, the largest and most dominant economy in the world. Now the chairman had asked earlier about reports that China had surpassed us in production, manufacturing 

and production. In raw numbers, yes; technology, no. 

The evidence of that, every American worker in a manufacturing 

facility is eight times more productive than their Chinese counterpart. I think the numbers that we showed that for what it takes 

11 million American workers to do, the Chinese have to take 100 

million. So, I mean, we have to be careful when we just look at a 

raw number. But what they have right now is the ability they can 

throw 100,000 people. And I don’t mean to make light of it. 

You know, I tell them in China you get promoted if you can take 

something that we do 10,000 workers in Mr. Fatah’s district and 

you can do 100,000 workers in China. The only way you get promoted is if you can figure out how to do it with 125,000 workers, 

because they have a premium on putting people to work in mass 

manufacturing where we have the edge. 

And where the President I think has wisely called for us, even 

as we make these tough decisions to continue our edge, is in innovation, in technology, in research and development in which China 

doesn’t excel. 

Now what we have to do and what we have done, and it addresses a little of your question and the chairman’s as well, we have to 

make sure we have a multi-pronged, very disciplined response to 

China in which we fight them on their lack of enforcement, of their 

intellectual property rights. We encourage them, as we have done, 

to make sure they combat piracy. We have to watch what they are 

doing on indigenous innovation. 

Our Treasury Secretary and the President engaged them on 

human rights, on currency, all of those things, because at the end 

of the day, with an economy with 309 million people versus a combined 3 billion people in India, Africa, and China, the United 

States is going to win by our ability to develop the products that 

services the technology that not only drive only growth but that are 


emcdonald on DSK2BSOYB1PROD with HEARING
500 

going to help them meet their objective to move people from poverty into a middle income. 

And we think our budget within the context of what I am here 

visiting with you about helps us drive our part of that. 

Mr. AUSTRIA. Let me ask you this. With those types of disputes, 

you are talking about intellectual property concerns, government 

procurement of market, the fact that we are so reliant on China to 

help finance our debt, is that—how is that impacting our ability to 

enforce and our ability to deal with them on these particular disputes, you know, on a level playing field or is it impacting it? 

Ambassador KIRK. Well it has not. And forgive me, I know I have 

a story for everything. The ranking member knows that I was a 

former mayor of Dallas. And most people—— 

Mr. AUSTRIA. I can tell by your voice. 

Ambassador KIRK. Like our friends from Alabama, if you are 

from Dallas, Washington, you tend to be more forward leaning on 

trade. And I am proud of the record we built. 

But I said to the President, and I say in every hearing, I think 

one of the greatest things I have brought to the job is I married 

an extraordinarily talented and good looking woman who got her 

degree from the Wharton School at Penn but grew up in Ohio. And 

all my in-laws, and I have been married 23 years, that means I 

have had 23 years of going to Detroit, and Columbus, and Cleveland, and honestly I think I can more honestly see the other side 

of trade and your frustration, Mr. Chairman, in which I hear people that don’t think our trade policy works. 

And when you ask China, our administration did something no 

other administration did with China, Democrat or Republican, we 

filed the first safeguard case last year over tires. And them dumping in this market. In seven previous cases, the International 

Trade Commission, separate us, had found similar circumstances, 

presented those to previous administrations. None had ever decided 

to pull the trigger. We did that. And the Chinese didn’t like it. 

And I will tell you we were pilloried in the press. We were going 

to start a trade war. But we thought it was the right thing to do 

to combat all the cynicism the chairman said. And we still believe. 

That is why I talk so much about enforcement. For us to have 

a holistic balanced trade policy, which the United States has to. We 

can’t grow our economy the way we want in the future if we think 

we can roll our self off from the 95 percent of the rest of the world 

who doesn’t live here. 

But we do have to honestly address that cynicism, that concern 

the chairman and you mentioned. We think that is one area the 

Obama Administration has distinguished our self. And I am happy 

to come back. I don’t want to drag it out. 

NAFTA

Mr. AUSTRIA. Well let me ask you about, you know, another important part of that, and I am sure you hear it in Ohio, is NAFTA. 

What is the administration’s position on NAFTA, or are what are 

your thoughts on NAFTA? 

Ambassador KIRK. We have worked under the directive of our 

three leaders to look at everything we can do in that to strengthen 


emcdonald on DSK2BSOYB1PROD with HEARING
501 

it and make it work better, particularly as it relates to our labor 

and environment provisions. 

I know in Ohio you are especially concerned about the labor—— 

Mr. AUSTRIA. Well excuse me, sir. Well you have the President. 

When he was campaigning there as a Senator he was opposed to— 

I believe in NAFTA. And that is where I want to make sure that— 

maybe if that is not correct, please, you know—— 

Ambassador KIRK. Well I will let you go back and speak for that. 

But I tell people I would like to believe his selection of me as U.S. 

Trade Representative, knowing the passion that I had for trade, 

was deliberate and not accidental. 

But what we have done, and we have worked with our Secretary 

of Labor, Hilda Solis, and our counterparts in Mexico and Canada, 

is looking at how we can strengthen that model and make it better. 

Beyond that we are doing a number of other things in NAFTA to 

recognize. There are a lot of ways we can increase trade. And 

NAFTA is still our largest trading partners, including for Ohio. 

For all of the criticism I know there is about trade in Ohio, and 

I have been there several times. I am going back with Senator 

Brown. I was there with the governor and others. A quarter of all 

our trade with Canada goes across that Ambassador Bridge in Detroit. 

So what we have heard—— 

AGRICULTURAL EXPORTS

Mr. AUSTRIA. The theory I wanted to get to, and I apologize because of time, manufacturing as you know, you have been to Ohio, 

along with agriculture, is our number one industry in Ohio. So I 

want to also talk a little bit about agriculture, because that is very 

important. 

I know some of the other members have talked about the manufacturing side. But in my district, you know, I have one of the 

strongest agriculture industries that are represented in Ohio and 

I think probably across the country. There is a lot of agriculture 

in my district and a lot of agriculture across the State of Ohio. 

I believe that America has the best farmers in the world. And I 

have had an opportunity to see the production. And I think they 

can outgrow, and outproduce, and out compete any of our foreign 

competitors. But we have to give them, in my opinion, the legal 

framework in order to do that. In other words, level the playing 

field to give them an opportunity to do that. 

What is your office doing to promote the passage of the free trade 

agreements with, for example, Columbia, Panama, South Korea? 

And what impact will the upcoming trade agreements between 

South Korea and the EU, Canada, and Columbia have on the U.S. 

agriculture or exports if our own FTAs are not implemented? 

Ambassador KIRK. Well the good news is you are right. And our 

agricultural exports are very strong, Congressman. We are at the 

highest level this year, I mean for 2010, than we have been in almost 15 years. 

Secretary of Agriculture Tom Vilsack is somewhat bullish that if 

we can continue on the path that we are going, opening new markets, being rigorous in our enforcement, we have the potential to 

hit $135 billion in agricultural exports this year, which is extraorVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00501 Fmt 6601 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
502 

dinary. That would be an almost, I think, a $17 billion increase. 

So we are doing well. 

Part of it is because we have brought a holistic approach to what 

we are doing in trade. And we work with the Department of Agriculture and Commerce every day. I mentioned the work we did to 

reopen markets after the H1N1 scare. I gave an example earlier of 

our resolving a long-time dispute with the European Union that got 

us back into that market. 

With respect to the three FTAs, as you know we have concluded 

our negotiations with the Koreans. That agreement is ready for 

this Congress to act on. And we have made that aware to our committees of jurisdiction. 

But the agricultural community, just about every sector of the 

agricultural industry, has supported and asked Congress now to 

move forward on course. Korea, I think the number are right, their 

average tariff on agriculture products in Korea is 58 percent. Ours 

is less than 6 percent. 

So I think you can see agricultural will be a big winner. About 

half of those will come to zero almost immediately. The rest are 

going to come down over the next several years. So with respect to 

Korea, the agriculture community is very, very happy. Not only 

beef, but grains, and seeds, and others. 

We have intensified our work with Panama and Columbia. We 

believe those are great markets for agriculture. And we are very, 

very close to be in a position hopefully we can resolve those as well. 

Mr. AUSTRIA. And, Ambassador, I thank you for that. And I do 

appreciate the hard work you are doing. And I agree with the 

chairman. I think you personally are working hard. I understand 

this. And I appreciate that very much and you being here to testify 

in this committee. 

Mr. Chairman, I will yield back. Thank you for your time. 

JOBS REPATRIATION BILL

Mr. WOLF. Thank you, Mr. Austria. 

I want to follow up on one or two issues that the congressman 

raised. But, you know, I have a bill that I have asked the administration for over a year to get back to me. We have actually given 

a copy to Secretary Locke. 

And now I know I am a Republican member. And so probably 

they don’t want to deal with a Republican member. But I have 

asked. And it is a good bill. It creates jobs. And what it does is it 

sets up a program of repatriation. We will repatriate jobs back. Not 

using punishment, but using a stimulus, and using taxes, and 

things like this. 

And so if you could take a look at it and see if it got lost behind 

a filing cabinet down there. Now the cosponsor in the Senate will 

be Senator Warner, Mark Warner. He is a good Democrat, good fellow. I can’t get an answer out of the administration. It has been 

over a year. 

So if you could take the bill back. We will give you the number. 

But we want to introduce it, reintroduce it again. And what we are 

doing is at three different levels, basically no punishment involved. 

At EDA they can have an opportunity for grants to a locality that 


emcdonald on DSK2BSOYB1PROD with HEARING
503 

wants to bring a company and let us say from Mexico or whatever 

that water and sewer or something like that. 

Secondly, we are asking governors to change their tax code to 

give incentives to a company that returns. They have to be an 

American company, and they have to return. It is the repatriation. 

And lastly, we are working with Chairman Camp at the Ways 

and Means Committee to do the same thing. But if you could have 

someone look at that and give us some comments. We have been 

trying to get some thoughts, ideas. And a job is a job. A job coming 

back from Mexico, or China, or Bangladesh will be good for whatever political party you are in. So if you could do that for me. 

Ambassador KIRK. We will pass on your concern. And I think 

since you mentioned Chairman Camp, I think he will tell you for 

me that I don’t particularly care a whole lot for partisanship. I care 

about fighting for America’s rights and creating jobs. We have 

worked with him, and we worked very well. 

I am proud of the fact that it was because of the partnership we 

had with Chairman Camp and Ranking Member Levin that we 

were able to get a Korea agreement. That we had both strong support. And for the first time not only the manufacturers in the 

chamber but forward in the UAW. 

NORTH KOREAN KAESONG INDUSTRIAL ZONE

Mr. WOLF. Okay. We will get that to you. 

Now you set up the Korean issue. I want to get and ask you a 

question about that. And I support the Korean Trade Agreement. 

Let me just state again. I am a strong supporter. 

But this information I was given, maybe you can clarify it, with 

regard to the U.S.-Korea Free Trade Agreement, which I continue 

to support, could you discuss the issue of the treatment of products 

from the North Korean Kaesong Industrial Zone, the duty free 

processing zone where South Korean companies pay the North Korean government to have their citizens produce products for export 

to South Korea? Keep in mind they are gathering nuclear weapons—— 

Ambassador KIRK. Right. 

Mr. WOLF [continuing]. And they have gulags there that when 

that government falls and the people see what they have done to 

the people it will be brutal. 

The employees in North Korea work under terrible conditions 

and are essentially used as slave labor. It is my understanding I 

have been told that the FTA currently would allow component 

products from Kaesong to be included in South Korean goods that 

would be eligible for export to the U.S. with preferential treatment. 

While the U.S. can stop products from North Korea from entering the U.S., that appears to only cover final products and not 

South Korean products from Kaesong products. Could you tell us 

if that is accurate or not? Because if we are taking something that 

we can import into the United States that was made by slave labor 

or violating workers’ rights, that would not be good. Are you aware 

of that? 

Ambassador KIRK. I am aware of that. And this is a bit confusing, so if you will just give me a minute. First let me start here. 


emcdonald on DSK2BSOYB1PROD with HEARING
504 

Nothing in the Korea FTA makes a provision for goods from 

Kaesong to come in. 

More importantly, nothing in the Korea FTA changes U.S. policy 

and law relative to goods coming from North Korea to the U.S. 

Now there has been in place a long-standing policy that basically 

you cannot have goods, component goods, from North Korea come 

to the U.S. except for on a very limited exception. 

And this is, as I understand it, it is language that is administered by the Department of Treasury. That provision expired I 

think in February of this year. Treasury and State are in the process of updating that. 

But even within that, whatever exceptions there are are exceptions that Congress would have to approve. We didn’t do anything. 

There is nothing I could do in an FTA that would override your 

congressional authority to say no goods from North Korea. 

Now the confusion, well not the confusion, one of the challenges 

there is language in the FTA that allows us to have a commission 

that would look at the issue of bringing components in from 

Kaesong. The commission would have to make a determination. 

They would want to ask for that exception. But the commission 

would only exist, and it would be essentially U.S. governmental officials and South Korean officials, but they wouldn’t have the ability to say the goods couldn’t come in. That commission would only 

exist for the purpose of saying we are going to recommend that 

Treasury hears an exception. And then Treasury would still have 

to come to Congress. 

The bottom line is unless Congress changes your mind and allows goods from North Korea to come in, nothing we do in the FTA 

changes that. The ultimate authority still resides in the U.S. Congress. 

Mr. WOLF. So those goods could not come in. 

Ambassador KIRK. Not unless this Congress was to make a determination. You would grant an exception under whatever this 

new standard that Treasury would present to you. 

Mr. WOLF. Well if you could give me a letter to that effect. And 

what I will do is send it to the Ways and Means Committee, and 

making sure, and give it to Mr. Camp, because we want to make 

sure that we certainly don’t import goods made. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
505 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 870 here 67061B.091
506 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 871 here 67061B.092
507 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 872 here 67061B.093
508 

If you could just explain it. Okay. And just explain it, and say 

pursuant to the question and this is—these are the circumstances. 

And unless Congress did, they cannot. And then I will pass it on. 

INTELLECTUAL PROPERTY PROTECTION

Intellectual property issue: In 2010 the three largest U.S. companies by market capitalization were Exxon, Microsoft, and Apple 

with a combined market capitalization of nearly a trillion dollars. 

When two of these three companies, the biggest companies in 

America, are in the IP business, protecting intellectual property 

rights is crucial. 

Could you provide the committee your plans with regard to IP 

with regard to China enforcement? As Mr. Schiff, he is not here, 

with regard to Hollywood, with regard to some of the recording devices and others, is there—can you sort of flesh out what you are 

actually doing on IP? 

Ambassador KIRK. Yes, we are. We are attacking this on a number of fronts, because it is so critical to us. And I know, and I appreciate your kind comments about me, but I appreciate your work. 

I know this has been a matter of concern for you. And you have 

studied this. 

We raised this and confronted China with this in every form, 

both the strategic economic dialogue, the Joint Commission on 

Commerce and Trade, and President Hu’s business. We had a number of we think positive steps forward. If I could give you three examples. 

One, I know you in particular have highlighted the use of pirated 

software by the Chinese government themselves. Well we have 

been banging on them to reduce that number to a more acceptable 

level if not have them use legal software for years. 

As a result of our advocacy on this, during President Hu’s visit 

for the first time, they have agreed. They are going to have a campaign to encourage. And they are going to audit the use of legal 

software by their government. But more particularly at the subcentral level. 

Now the important things we got this year, because they have 

made this commitment before but never done it because they never 

funded it. So this year we got a commitment they would agree that 

they are going to increase their use of legal software. They are 

going to extend it to sub-central governments. And they are going 

to give them money to purchase legal software. 

And this is a huge, again, lost opportunity, since you mentioned 

Microsoft, for Microsoft. If we could just get that number from 92 

percent down to 70 or 60, billions of dollars and thousands of jobs 

for us here in the U.S. 

Secondly, I mentioned the issue of indigenous innovation. It is 

one area that most concerns our American businesses, because 

China basically tries to force you to say you can have work, but we 

want you to move your factory here. 

Mr. WOLF. Right. 

Ambassador KIRK. Not only do we want you to move your factory 

here. Then we won’t allow you to sell anything in China unless you 

agree that it is made. It is a license transfer. We have gotten them 

to agree to do two things. One is to de-link their legitimate, you 


emcdonald on DSK2BSOYB1PROD with HEARING
509 

know, efforts in government to try to foster innovation. But de-link 

that from government procurement, which is where most of their 

purchasing is done. 

And secondly, one of the commitments that they made when we 

granted them most-favored-nation status, now PNTR, was that we 

wanted them to join the government procurement agreement within the WTO. And they have drug their feet on that. They have 

agreed. They will submit a revised offer and join, you know, make 

an effort to join the Government Procurement Act by the end of the 

year. 

And we had a number of other areas I can—I feel like I am going 

on too long. We would be happy to go through them. We worked 

with them to make an agreement in their energy sector. They have 

an exploding investment in that. One of the requirements was nonChinese businesses could only bid on that if they demonstrated 

that they had experience. But it had to be in China. 

Well we thought that was ridiculous. We have American companies that are building projects all around the world. They have now 

agreed they would take that relevant experience from around the 

world. And we made other progress on issues that—— 

Mr. WOLF. When did that go into effect? 

Ambassador KIRK. That one would go into effect immediately. 

That they will allow us to bid on that and demonstrate that. 

Mr. Chairman, we share your frustration. We know we are going 

to have to continue to stay on top of China and monitor these. But 

the intellectual property rights area is one that we pay particular 

attention, not only software but copyrights and patents. 

And they do have a campaign that is being run by Deputy Vice 

Minister Yang Xueshan who oversees both their strategic economic 

dialogue and ours in which they are really highlighting the importance of recognition of intellectual property rights. But they are 

going to enforce it and bring people to justice. 

Now the challenge is what they always do. It is a six-month campaign. We are pushing them to try to make that longer. But slowly 

our best ally is the fact China is beginning to develop an indigenous innovation community that is putting as much pressure on 

their government to respect and protect intellectual property. 

CYBERSECURITY

Mr. WOLF. Have your computers been hit with cyber attacks? 

Ambassador KIRK. Not to my knowledge. I hope not. 

Mr. WOLF. When, and I don’t want to put you in the spot here, 

but I want to ask you. When your people go to China, do they take 

BlackBerrys and laptops with them? 

Ambassador KIRK. We do not. 

Mr. WOLF. Good. And had there been instructions from the FBI? 

Have you been personally briefed by the FBI as to the activity? 

Ambassador KIRK. That might be a conversation perhaps we 

might more appropriately have in private. 

Mr. WOLF. Okay. 

Ambassador KIRK. But we are very, very careful. 

Mr. WOLF. Well let us have it if we can. 

Ambassador KIRK. Yes, sir. 


emcdonald on DSK2BSOYB1PROD with HEARING
510 

Mr. WOLF. So this is not just an okay. But okay I would like to 

have that with you. 

Let me go to Mr. Fattah. 

EXPORT PROMOTION

Mr. FATTAH. Thank you, sir. I am going to ask one question. I 

have to step out and take a phone call in a second. But let me ask 

this one question. And you can supply it to the Chairman or to the 

committee. 

But I was out a few weeks ago in a neighborhood that the chairman would be quite familiar with over around 70th and Elmwood. 

I was at a place called CoverSports. Now the last question actually 

was about this global aggregation, because this is—— 

Ambassador KIRK. You are not going to brief me in Cowboys 

and—— 

Mr. FATTAH. No, no, no. 

Ambassador KIRK. We are not going to go that far. 

Mr. FATTAH. We are not going into that. CoverSports has been 

in Philadelphia for 100 years. They make tarp out in southwest 

Philadelphia. And it is a great story of a family-owned business 

that has been out there. And they make the tarp for the Washington Nationals and for the Philadelphia Phillies. 

They only have one competitor, and it is in China. They got some 

new equipment under the small business depreciation—— 

Ambassador KIRK. The tax credit? 

Mr. FATTAH [continuing]. The deal that we did last year. And 

they bought some heavy equipment from Ohio that now allows 

them to make even larger pieces of tarp and do it more quickly. 

And they got some very significant innovation going on there. And 

they obviously are going to be here for another 100 years. 

But the point now is to get to the export side. You know, before 

they were getting beat from China dumping cheap tarps into the 

U.S. market. Now they are fine. And they are making tarp for a 

lot of the college teams. 

But this is the point, in terms of the President’s export initiative, 

is that making the opportunities available for them now to start to 

compete around the world and not just here. 

And what I want to know is, I know we have all these trade 

agreements, and we got all these things we can and we can’t do. 

We, through the Commerce Department, helped manufacturers 

with creating the efficiencies that you talk about when you compared the 11 million to the 100 million. 

But the question is, could you supply for the committee what it 

is that we can’t do to help the manufacturing sector because of 

trade agreements? You know, where we get too close to the line, 

or what we can do, or a little bit of both, because I think that we 

are very interested in what we can do. We have some 1,300 manufacturers in Philadelphia. The Philadelphia area has 5,000. 

Now we have lost—in 27 years, we have lost 200,000 manufacturing jobs. But we still have lots of manufacturing jobs. In fact, 

it was just reported last week that we had a 27-year high in Philadelphia of manufacturing jobs. In the last two years, the Philadelphia Fed has documented major increases in manufacturing. It has 

really led the recovery in our area. 


emcdonald on DSK2BSOYB1PROD with HEARING
511 

But those manufacturers need to have markets that go beyond. 

So we don’t have to get into the rhetorical jousting about it now. 

But it would be very interesting to me to know where the—where 

we can do more. And what, if any, legal restrictions we are under 

relative to these various trade agreements about how we can help 

our manufacturing sector continue to compete. 

Ambassador KIRK. I can give just a couple of quick examples. 

And frankly in your question again you mentioned one. In the tax 

compromise that Congress wisely passed last year—— 

Mr. WOLF. I voted against it. 

Ambassador KIRK [continuing]. But the extension of those depreciation, I have heard from small businesses all around the country 

that are using that ability to buy new equipment and depreciate, 

that is completely legal. 

Within the WTO, what is usually prohibited is if you are doing 

something expressly for the purpose of having a business export 

and not any domestic component. If you just—which is principally 

what a lot of other countries do. 

If you are giving a tax depreciation credit that is going to help 

you grow, and you are going to continue to expand your market 

like this company is here in the U.S., you happen to also export, 

that you can do. 

Part of what we are doing through the export initiative is to go 

to companies like that and say let us make sure you are aware of 

the combined resources we have to help you find customers 

through Commerce, to finance it through Export, and—— 

Mr. FATTAH. Because as big as baseball is in South America and 

Latin America, they probably could use some tarp. You know, so 

we could sell it. 

Ambassador KIRK. I was just in Austin. We did another one of 

these. I visited a company called Formaspace that you can read 

about. And they are a small company growing. 

But 30 percent of their market now are markets around the 

world. And the guy said a big part of him being able to stay ahead 

of the curve was he bought a very advanced cutting-edge machine 

that helps him make—he basically makes these tables that other 

manufacturers put components on. But they are exploding. But 

that depreciation credit was hugely important to him. And he is 

being financed through the Export-Import Bank. 

Mr. FATTAH. Thank you, Mr. Chairman. 

Mr. WOLF. Thank you. 

I think Mr. Fattah voted against it. And I think we both would 

have supported that provision. I thought the portion on the $112 

billion loss to the government on giving a two percent payroll tax 

to Jimmy Buffett and Warren Buffett was a little too much. And 

I think, if you recall, that was part of that package. And that, I 

think, creates a problem. 

TRADE PREFERENCES

On the trade preferences: the U.S. offers a program that is designed to encourage economic development in lower income countries by offering preferential duty-free income, U.S. duty-free, U.S. 

market access to imports from countries covered by these proVerDate Mar 15 2010 20:30 Jul 28, 2011 Jkt 067061 PO 00000 Frm 00511 Fmt 6601 Sfmt 6602 E:\HR\OC\A061P2.XXX A061P2

emcdonald on DSK2BSOYB1PROD with HEARING
512 

grams. The imports cannot be the same as any products manufactured in the United States. 

An example would be coffee from Ethiopia. So if imports total 

$80 billion in 2010, up 33 percent. What are the benefits? But I 

guess equally important, how do you ensure these imports are not 

hurting U.S. businesses? 

Ambassador KIRK. Because the program is reauthorized now by 

Congress every year, we go through a fairly exhaustive process 

with our committees of jurisdiction. And we are required to go 

through a notice and filing period in which we publish in the Federal Register that any industry for example that may say—that 

feels like they are being harmed because of these products has a 

right to petition us to say that product should be removed. 

Broadly it is a very valuable tool that we use to help some of the 

truly poorest countries in the world create some economy and create some wealth. And then as they mature hopefully they become 

markets for our products. 

One of the best examples is Colombia. Colombia is a preference 

country under the Andean Trade Preference Act. In that case not 

only are we helping them to send goods here we don’t make, but 

we have the added benefit we are getting farmers that otherwise 

might have been involved in growing crops that were used in the 

drug trade to go to a more productive behavior. 

In other cases, not only do we have the objective, I think the one 

legitimate one and humanitarian one, of helping these really desperately poor societies, but there is also a case that in many of 

these some of the inputs coming from these countries are used by 

American manufacturers. So it has a dual value and benefit. 

But there is a fairly structured process, Mr. Chairman, by which 

we examine the impact on American businesses. 

Mr. WOLF. Do you also look at their record on workers’ rights, 

and human rights, and things like that? 

Ambassador KIRK. We will remove that. We have three broad 

programs. The one, the generalized system of preferences, covers a 

number of poor countries. AGOA, which is the African Growth and 

Opportunity Act, covers I think 38 economies in sub-Saharan Africa. And then we have Andean. 

Our administration has removed a couple of countries from 

AGOA and others and one in South America where their behavior 

just gets to a point where they are engaged in activities that I 

think you or I would find—— 

Mr. WOLF. Could you supply the committee with the list of the 

countries? 

Ambassador KIRK. Yes, sir. 

Again, these usually go to our committees of jurisdiction. But we 

are required by law when we make those determination we provide 

notice to the Ways and Means and Senate Finance committees. 

And one of our concerns though in terms of the holistic strategy 

we are trying to bring to trade is just as much as we are being 

pressured. And we want to work with Congress to pass the pending 

free trade agreements with Korea, and Panama, and Colombia. We 

do think it is equally important that we pass these preference programs and fair trade. 


emcdonald on DSK2BSOYB1PROD with HEARING
513 

You know, just so you get both sides of it, one of the big challenges we have in our preference programs is because they are only 

authorized every year, it is hard for a business to go out and get 

capital, make an investment when you are not sure of whether or 

not Congress is going to allow that program to continue but on an 

annual evaluation. 

Mr. WOLF. It sounds good obviously. Gum arabic comes from 

Sudan. Is that part of this program? 

Ambassador KIRK. If I might get a more, I don’t recall that 

Sudan is a part of AGOA, but I’d like to get you a more precise 

answer. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
514 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 885 here 67061B.094
515 

MILLENNIUM CHALLENGE GRANTS

Mr. WOLF. The other issue on that is there was a program developed under the Bush Administration called the Millennium Challenge Grant. Are you familiar with the Millennium Challenge 

Grant? 

Ambassador KIRK. Yes, sir. I served on that Board by a matter 

of Congressional authority. 

Mr. WOLF. You served on the Board? 

Ambassador KIRK. The Millennium Challenge? Yes, sir. 

Mr. WOLF. Now we’re getting reports, which we’ll send you, when 

I say, I hope you’re going to look at these and get back to us because these are all serious questions. So sometimes witnesses come 

and they go but, so I would like you to look at this and maybe if 

you can give me a call. We’re giving about $600 million dollars to 

Morocco, in Millennium Challenge and Morocco just expelled about 

50 Christian missionaries. We also have had reports from the 

American companies that some companies in Africa, and I want to 

be sure that I have the right countries so I’m not going to say. 

We’ll share it with you. We have given them foreign aid through 

the Millennium Challenge grant and they then have turned around 

and these, the grants have gone to Chinese companies to do what 

they’re anxious to do. 

Ambassador KIRK. May I speak to that one? 

Mr. WOLF. Yes, sir. 

Ambassador KIRK. Because that one, that is one issue I raised 

directly and we got a report on it, and forgive the number, I want 

to, I think the numbers have less than three percent. 

Mr. WOLF. I don’t know that that’s accurate. We have an—— 

Ambassador KIRK. It’s a fairly, I was surprised. I was frankly 

surprised. 

Mr. WOLF. When was that given? When did you get that? 

Ambassador KIRK. This was within the last six months. I’ll get 

the report. We have studied that and I specifically raised that. 

Mr. WOLF. We have an idea, investigation now. They, the Millennium, I forget the director’s name. You would know him well. 

Ambassador KIRK. Daniel Yohannes. 

Mr. WOLF. Yes. 

Ambassador KIRK. Under our authorization, our statutes, we try 

to make sure, well first, we’re trying to help those countries create 

an infrastructure that helps them do more than just build roads. 

Mr. WOLF. But to give American taxpayer dollars to country X 

and then turn around and give those grants to China. 

Ambassador KIRK. It is a huge concern of ours. 

Mr. WOLF. Are you currently on the Board? 

Ambassador KIRK. I am on the Board and our general policy is 

unless you have a case where there’s no American company who 

bids on it, and there is no domestic capacity in that country, then 

there is a provision that they can go out and bid then those countries come in. 

Mr. WOLF. Well—— 

Ambassador KIRK. The numbers on China are much less than 

what they have been. 


emcdonald on DSK2BSOYB1PROD with HEARING
516 

Mr. WOLF. Well, I’m not, just not referencing China. I’m referencing all, I mean a country like China. We will send you a report. Maybe you can have someone from your office call Tom, Mr. 

Tom Culligan, and we’ll give you the IG at the Millennium Challenge Corporation is doing an investigation, and a number of companies have come forward, and we believe it is deeper. Also, since 

you are a voting member, have you looked at the numerous letters 

that I’ve sent over there with regard to Morocco? 

Ambassador KIRK. We get, usually we get a summary of those. 

But we do a fairly thoughtful review of all of our challenge grants, 

and part of what we’re doing with the Millennium Challenge 

grants is now more broadly wrapped up in the initiative President 

Obama started last year to have a more rational approach to what 

we call all of our aid in trade work. But it is a, on balance, I think 

it is a good program. It is well run and we have a number of criteria that we examine before we issue them. But we do look at the 

impact of labor rights and of the concerns you raised, say in a case 

whether it’s Morocco, or Philippines or others. 

Mr. WOLF. Well, but do you think that the test that they have 

to meet is only for that one year in order to get in on the challenge. 

Ambassador KIRK. No. We look at—— 

Mr. WOLF. Well, but we’re seeing slippage and I think once the 

grants are given out, it almost seems like they begin to look other 

places, and so you’re the person I should call. 

Ambassador KIRK. I’ll be happy to follow up with Tom and get 

him with our director on that. 

COLUMBIA FREE TRADE AGREEMENT

Mr. WOLF. Okay, and if you could comment on these cases with 

regard to the country, specific? Very good. Columbia has free trade 

agreement. Do you believe that Columbia has sufficiently addressed the concerns regarding the anti-labor violence? 

Ambassador KIRK. We are in the process. When I testified before 

Ways and Means Committee, I think it’s been about a month ago, 

we, I informed them that the President has asked us to undertake 

the same diligence that we used to produce the agreement with 

Korea with respect to Columbia and Panama. Since then I can tell 

you we have had very productive engagement with Columbia. 

President Santos, frankly, has made addressing the issues of violence, assassinations against labor leaders and strengthening 

frankly their administrative capacity of their labor ministry and 

looking at enforcement, and our work, we have engaged with them 

every week over the last five weeks and we are making very strong 

progress, and there was a press report yesterday in which frankly 

President Santos outlined many of what we had asked him to do, 

but highlighted the fact that he thought this was important for Columbia. So what I’ve said, and in many cases we feel like we’re 

pushing on an open door. But we are making very good progress. 

TRADE STATISTICS

Mr. WOLF. Okay. We have a couple on the commerce reorganization, but I, you sort of covered that. We’ll just submit that for the 

record. In December, the Wall Street Journal reported on a study 

that found that the U.S. and other countries do not accurately 


emcdonald on DSK2BSOYB1PROD with HEARING
517 

track balanced trade. They found that trade statistic models are 

outdated and do not reflect many complex modern trade flows. According to a subsequent editorial in the Journal that, ‘‘The study 

ought to be required reading on Capitol Hill. Most importantly, 

they raised the question how much anyone really knows what a 

meritous trade with China is.’’ Has your office studied this issue, 

and what were they conclusions, and do you believe we need to revisit how we collect and analyze those trade statistics? 

Ambassador KIRK. Well, my office does not have the responsibility. I haven’t seen this Wall Street Journal study, but as a general rule I try not to use the Wall Street Journal as my sort of 

guiding light on which direction because they usually whack us 

over the head. Particularly on, I love reminding them, they were 

the most critical of our efforts when we held China’s feet to the fire 

on the 421 case. 

Mr. WOLF. I’m glad, that I said the record, I’m glad that you did. 

Ambassador KIRK. Yes, we did. But let me say we are, part of 

what we’re doing through the National Export Initiative is reexamining every export of our trade. The ITC and Commerce do a pretty 

good job. We can track shipment of goods. Where we are deficient 

is in services, and we intuitively know that in the service sector, 

in which now over 80 percent of Americans work, we have a trade 

surplus with just about every country we have an FTA or strong 

trade relationship. But it’s very difficult to track, to track those 

numbers, and we are, I know that Commerce and others are looking at different models on how to strengthen that and better track 

it. 

TRADE DEFICIT

Mr. WOLF. Well, top ten countries for what’s U.S. trades, where’s 

the one that we have the negative? Top ten countries with U.S. has 

a trade deficit. China, wow. Off the charts. Off the charts. Japan, 

Mexico, Canada, Germany, Nigeria, Venezuela, Russia, Ireland, 

and Saudi Arabia, and that ought to be the target reach list. I 

mean, the Saudis want to help, friends help friends, if you will, and 

is this your target list—— 

Ambassador KIRK. Well, we, we’re looking both at the markets, 

we aren’t just looking at the deficits per se, but we’re looking at 

markets where we have an opportunity and we have a strength 

and they have a need, and that’s one reason, for example, we’re so 

strongly focusing on the Trans-Pacific Partnership. That’s one reason the President made the recent trip to Latin America. That is 

a huge opportunity for us that we haven’t built. We think the relationship allows us to explore that and what’s sounding with some 

of these countries, and you are right. China represents over half of 

our deficit. If you look at some of the rest of them, even Canada, 

Mexico, and Saudi, a big component of that, frankly, is oil, because 

we are so dependent on other countries for energy. But we are examining all of that and trying to take a more thoughtful approach, 

not just necessarily how do we reduce our deficit with those countries, that’s what’s component, but where are the best opportunities, where are the best markets? 


emcdonald on DSK2BSOYB1PROD with HEARING
518 

SANITARY AND PHYTOSANITARY BARRIERS

Mr. WOLF. I just have two more and then go to Mr. Fattah and 

Mr. Austria. The Chinese have indicated that one of their trade 

priorities is U.S. market for fresh apples. I’m concerned that the 

Administration’s decision to share a list of invasive pests and diseases associated with Chinese apples telegraphs the desire to 

quickly move an agreement, even though the Chinese have a terrible track record, even when approved sanitary import protocols 

are in place. For example in 2004, a researcher happened to discover quarantined pests on Chinese Ya pears while shopping at his 

local grocery store in Washington state. Sound scientific principles 

indicate that one should take a deliberate and cautious approach 

to allowing fresh apples into our nation. I strongly urge the Administration to be careful to make sure any fresh apple imports meet 

the SPS standards. In December you chaired a meeting of the U.S. 

China Joint Commission on Commerce and Trade. I understand 

that one issue on the agenda was our desire to import beef into, 

or export beef into China. Was it a Chinese request that that meeting, or have they talked to you about importing fresh apples into 

America? 

Ambassador KIRK. Yes. You, Mr. Chairman, many of our trading 

partners, one of our frustrations frankly in this business is they almost feed us as tit for tat. You let our beef in, I mean you let our 

apples in, we’ll let your beef. I will tell you, we do not yield on our 

basic principle in one. In order for a rules based system to work, 

everybody’s got to rule by the rules and live by the rules, and nowhere is that more critical as it relates to sanitary and 

phytosanitary standards, and for us, we just ask that everyone 

comply with internationally accepted standards, and that means if 

we meet them, you let our goods in. If your goods meet them on 

the other hand and they meet the requirements of APHIS, which 

is I think you know, separate from us through the Department of 

Agriculture, we should let them in. But we do not trade off one for 

the other in that sense. But just as we ask China to do things, 

they, you know, will come to us and say, ‘‘Well, you won’t let our 

apples in’’, and we usually direct them to APHIS and tell them if 

they meet their standards and meet the test. 

Mr. WOLF. Well, in most cases most of the apple concentrate that 

you drink comes from China, and they planted millions of apple 

trees now and basically the workers that are working on them are 

paid almost nothing, and so I would like if you could look into this 

apple issue and have somebody come by my office and sort of just 

tell me where we are on the apple issue and maybe at the same 

time bring somebody from the USDA to come along. 

Ambassador KIRK. I would, on that one, I mean I will be happy 

to take that to Secretary, but APHIS, we keep them, I mean Congress wisely has kind of kept that separate from us so that, you 

know, whatever our trade imperatives are don’t at all get factored 

into what should be purely an issue of science and health and good 

sanitary practices. So we stay out of APHIS’s way in that process. 

Mr. WOLF. Well, maybe this would be, let me cover this other 

issue too, then. For the last three years China has been rejecting 

poultry exports from the Commonwealth of Virginia in response to 


emcdonald on DSK2BSOYB1PROD with HEARING
519 

a single isolated case of Subtype H5N1, a low pathogen Avian Influenza reported in a commercial Virginia turkey flock. The flock 

was depopulated, the premise was cleaned and disinfected under 

Federal and State supervision, and the farm has long since been 

raising turkeys with no further incidence of Avian Influenza. I’m 

concerned that the research is contrary to the WTO. Do you know 

much about that? Have you been in contact with the Chinese with 

regard to the ban? 

Ambassador KIRK. We have been. We agree with you that we 

think that this is, that they are using their rules creatively to block 

our export. I’m not sure because I feel like I’m filibusting—— 

Mr. WOLF. No, I think you’re—— 

Ambassador KIRK. Well, I will tell you, Mr. Chairman, we are 

concerned enough about this, and it may not be to your attention. 

We just transmitted to Congress, I was concerned enough about 

this. You wisely require us to make a report to you every year 

called the National Trade Estimate, in which we have to kind of 

tell you how our partners are meeting their requirements. It has 

been a very good tool, particularly to get partners that we identify 

as being not compliant within intellectual property rights. It’s been 

a great tool, some say to name and shame them into doing with 

it. We made the decision last year to include two new reports, one 

on non-tarriff barriers in manufacturing, one on sanitary and 

phytosanitary issues, and so a lot of the questions you raise, I 

think if we can maybe get you an executive summary. We just submitted that report to you last week. But this is critically important. 

I would tell you we believe China moved to block our poultry, unfortunately based on two things. One when we did the 421 case, 

but second, we had a deal where Congress put a rider on the Appropriations bill in 2008 that blocked APHIS’s ability to do the 

study on Chinese poultry, and when Congress did that then they, 

we think, acted in a manner that wasn’t consistent with the WTO. 

We challenged them in the WTO, China challenged us, but we were 

able to show and demonstrate we worked with Congress to have 

that rider removed. So we’re still pressing this. We’re acutely 

aware of it. 

Mr. WOLF. Could you have somebody, when they come up on the 

apples, tell us also on the turkey, because that is Virginia. It’s not 

from my Congressional district but I, I am very, very interested. 

We have a number of questions we’re just going to submit for the 

record. Okay, I go to Mr. Austria, do you have any? 

Mr. AUSTRIA. I’m fine. 

Mr. WOLF. Well, I want to thank you. I appreciate it. I think 

you’ve done a very good job. I hope, and I’m not going to embarrass 

you, but I hope you do not go and work as effective as you are and 

as persuasive as you are, I hope you do not ever, ever, ever even 

consider representing the Chinese government. I would be very, I 

would be very disappointed in you. I was very impressed in your 

testimony. 

Ambassador KIRK. I would not want to disappoint you. 

Mr. WOLF. I looked at your background and so I would not. What 

we’re going to do is a letter to the CRS asking if they have the ability to go back and see where all our former trade reps are at this 


emcdonald on DSK2BSOYB1PROD with HEARING
520 

moment, and who they’re representing. But anyway, thank you 

very much for your testimony. 

Ambassador KIRK. Thank you, Mr. Chairman. Thank you, Members. 


emcdonald on DSK2BSOYB1PROD with HEARING
521 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 899 67061b.095
522 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 900 67061b.096
523 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 901 67061b.097
524 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 902 67061b.098
525 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 903 67061b.099
526 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 904 67061b.100
527 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 905 67061b.101
528 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 906 67061b.102
529 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 907 67061b.103
530 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 908 67061b.104
531 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 909 67061b.105
532 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 910 67061b.106
533 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 911 67061b.107
534 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 912 67061b.108
535 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 913 67061b.109
536 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 914 67061b.110
537 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 915 67061b.111
538 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 916 67061b.112
539 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 917 67061b.113
540 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 918 67061b.114
541 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 919 67061b.115
542 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 920 67061b.116
543 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 921 67061b.117
544 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 922 67061b.118
545 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 923 67061b.119
546 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 924 67061b.120
547 


emcdonald on DSK2BSOYB1PROD with HEARINGInsert graphic folio 925/1200 67061b.121
(i) 

W I T N E S S E S 

Page 

Gallagher, Dr. Patrick ............................................................................................. 269 

Kappos, David .......................................................................................................... 183 

Kirk, Ambassador Ron ............................................................................................ 465 

Locke, Hon. Gary ..................................................................................................... 1 

Lubchenco, Dr. Jane ................................................................................................ 337 


pwalker on DSK5TPTVN1PROD with HEARING

pwalker on DSK5TPTVN1PROD with HEARING
(iii) 

I N D E X 

Department of Commerce 

Gary Locke, Secretary of Commerce 

Page 

2010 decennial census.............................................................................................. 63–67 

BIS funding levels ................................................................................................... 72 

Commerce revenue opportunities............................................................................ 79–80 

Cybersecurity............................................................................................................ 69–70 

Department of Commerce: 

Budget cuts........................................................................................................ 80–82 

Efficiency............................................................................................................ 31–32 

Funding levels ................................................................................................... 30–31 

Reorganization................................................................................................... 71–72 

Federal budget concerns .......................................................................................... 20–21 

Free trade agreements............................................................................................. 32–34 

Gulf oil spill .............................................................................................................. 24–27 

Human rights training ............................................................................................ 71 

Impact of budget cuts............................................................................................... 67–68 

Manufacturing and the economy............................................................................. 70–71 

National debt ............................................................................................................ 29–30 

NOAA funding levels ............................................................................................... 22–24 

NOAA satellite briefs to Congress .......................................................................... 16–19 

Opening statements: 

Mr. Dicks ........................................................................................................... 2 

Mr. Fattah ......................................................................................................... 21 

Mr. Wolf ............................................................................................................ 1–2 

Secretary Locke ................................................................................................... 2–14 

Poverty measurement .............................................................................................. 62–63 

Questions for the Record: 

Mr. Bonner......................................................................................................... 93–97 

Mr. Fattah ....................................................................................................... 98–110 

Mr. Wolf ......................................................................................................... 111–181 

Telecom spectrum .................................................................................................... 34 

Trade enforcement with China ............................................................................... 74–77 

Tsunami warning network ...................................................................................... 15–16 

U.S. manufacturing.................................................................................................. 27–29 

U.S. PTO patent automation................................................................................... 73–74 

U.S. PTO planned funding carryover ..................................................................... 72–73 


pwalker on DSK5TPTVN1PROD with HEARING
Page

iv 

Weather satellites..................................................................................................... 68–69 

World manufacturing leader ................................................................................... 34–60 

United States Patent and Trademark Office 

David Kappos, Under Secretary of Commerce for Intellectual Property 

Hiring ........................................................................................................................ 195 

Independent inventors support ........................................................................... 200–201 

Information technology ........................................................................................ 201–202 

Intellectual property theft ................................................................................... 202–203 

Opening statements: 

Mr. Fattah ......................................................................................................... 183 

Mr. Kappos .................................................................................................... 184–189 

Mr. Wolf ............................................................................................................ 183 

Operating reserve................................................................................................. 190–191 

Patent and trademark operations....................................................................... 197–198 

Patent appeals to USPTO.................................................................................... 196–197 

Patent application filings..................................................................................... 194–195 

Patent automation................................................................................................ 237–238 

Patent information ............................................................................................... 192–194 

Patent operations studies .................................................................................... 223–237 

Publication of patent applications....................................................................... 209–217 

Questions for the Record: 

Mr. Aderholt .................................................................................................. 263–268 

Mr. Fattah ..................................................................................................... 255–260 

Mr. Schiff ....................................................................................................... 261–262 

Mr. Wolf ......................................................................................................... 239–254 

Reducing fees for micro entities ............................................................................. 195 

Reducing the patent backlog ............................................................................... 198–199 

Revenue projections.............................................................................................. 191–192 

Satellite office ....................................................................................................... 219–220 

Satellite offices...................................................................................................... 199–200 

Telework................................................................................................................ 218–219 

USPTO resources ................................................................................................. 203–209 

USPTO’s impact on innovation ........................................................................... 220–223 

National Institute of Standards and Technology 

Dr. Patrick Gallagher, Under Secretary of Commerce for Standards and 

Technology 

Baldrige program.................................................................................................. 304–305 

Cloud computing................................................................................................... 301–304 

Construction of research facilities....................................................................... 293–295 

Green technologies ............................................................................................... 285–286 

Homeland security: information sharing technologies ...................................... 282–283 

Manufacturing ...................................................................................................... 291–293 

Manufacturing Extension Partnership: 

Cost-share ...................................................................................................... 306–308 

Program ......................................................................................................... 295–298 

National earthquake hazard reduction program ............................................... 284–285 

National strategies for trusted identities in cyberspace ................................... 286–289 

Nuclear reactor safety review.............................................................................. 289–291 

Opening statement of Dr. Gallagher .................................................................. 269–281 

Postdoctoral research associateships program................................................... 305–306 


pwalker on DSK5TPTVN1PROD with HEARING
Page

v 

Questions for the Record: 

Mr. Fattah ..................................................................................................... 309–310 

Mr. Graves ........................................................................................................ 311 

Mr. Wolf ......................................................................................................... 311–335 

Radiation detection and measurement .................................................................. 283 

Smart grid............................................................................................................. 300–301 

Technology innovation program .......................................................................... 298–300 

National Oceanic and Atmospheric Administration 

Dr. Jane Lubchenco, Under Secretary of Commerce for Oceans and Atmosphere 

Catch share programs.......................................................................................... 377–379 

Climate services.................................................................................................... 382–383 

Fiscal challenges ...................................................................................................... 355 

Gulf of Mexico disaster response ............................................................................ 393 

Gulf of Mexico restoration ................................................................................... 372–375 

Joint Polar Satellite System................................................................................ 355–367 

National Weather Service.................................................................................... 367–369 

NextGen ................................................................................................................ 390–393 

NOAA’s education programs ............................................................................... 407–408 

Opening Statements: 

Dr. Lubchenco................................................................................................ 337–350 

Mr. Wolf ............................................................................................................ 337 

Pacific salmon....................................................................................................... 398–399 

Questions for the Record: 

Mr. Aderholt .................................................................................................. 460–463 

Mr. Fattah ..................................................................................................... 451–455 

Mr. Graves ........................................................................................................ 456 

Mr. Serrano.................................................................................................... 457–459 

Mr. Wolf ......................................................................................................... 411–450 

Satellites ............................................................................................................... 369–372 

Seafood imports .................................................................................................... 402–407 

Seafood safety ....................................................................................................... 379–381 

Stock assessments ................................................................................................ 375–377 

Tsunami warning program.................................................................................. 351–355 

Working Waterfronts ........................................................................................... 408–410 

Office of the United States Trade Representative 

Ambassador Ron Kirk, United States Trade Representative 

Agricultural exports ............................................................................................. 501–502 

China PNTR.......................................................................................................... 494–498 

Colombia free trade agreement .............................................................................. 516 

Cybersecurity ........................................................................................................... 509 

Export promotion.................................................................................................. 510–511 

Exports to China .................................................................................................. 487–488 

Foreign investment in the U.S............................................................................ 490–491 

Human rights and religious freedom in China.................................................. 481–484 

Increases in productivity ..................................................................................... 489–490 

Intellectual property in Russia............................................................................ 493–494 

Intellectual property protection .......................................................................... 508–509 

Internet censorship in China .................................................................................. 484 

Jobs repatriation bill............................................................................................ 502–503 

Korea Free Trade Agreement ................................................................................. 489 

Millennium Challenge grants.............................................................................. 515–516 


pwalker on DSK5TPTVN1PROD with HEARING
Page

vi 

NAFTA .................................................................................................................. 500–501 

North Korean Kaesong Industrial Zone ............................................................. 503–507 

Opening Statements: 

Ambassador Kirk........................................................................................... 466–479 

Mr. Fattah ......................................................................................................... 465 

Mr. Wolf ............................................................................................................ 465 

President’s export initiative ................................................................................ 484–485 

Proposed reorganization of trade agencies......................................................... 485–486 

Questions for the Record: 

Mr. Dicks ....................................................................................................... 546–547 

Mr. Fattah ..................................................................................................... 537–546 

Mr. Graves..................................................................................................... 536–537 

Mr. Wolf ......................................................................................................... 521–536 

Sanitary and phytosanitary barriers .................................................................. 518–520 

Trade balance with Korea ................................................................................... 491–492 

Trade blocs............................................................................................................ 486–487 

Trade deficit ............................................................................................................. 517 

Trade preferences................................................................................................. 511–514 

Trade statistics ..................................................................................................... 516–517 

U.S. and China’s economies................................................................................. 498–500 

Vacancies in IP enforcement ............................................................................... 480–481 

Æ 


pwalker on DSK5TPTVN1PROD with HEARING