```

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
LOCAL ECONOMY, ENVIRONMENT, AND INTERGOVERNMENTAL COOPERATION: WHAT CAN 
                       BE LEARNED FROM FORT ORD?
=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT EFFICIENCY,
                        FINANCIAL MANAGEMENT AND
                      INTERGOVERNMENTAL RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            AUGUST 28, 2001
                               __________
                           Serial No. 107-76
                               __________

       Printed for the use of the Committee on Government Reform

  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

                     U.S. GOVERNMENT PRINTING OFFICE
80-374                       WASHINGTON : 2002
________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800  
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida         EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California             PATSY T. MINK, Hawaii
JOHN L. MICA, Florida                CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia            ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia                    ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida                  DANNY K. DAVIS, Illinois
DOUG OSE, California                 JOHN F. TIERNEY, Massachusetts
RON LEWIS, Kentucky                  JIM TURNER, Texas
JO ANN DAVIS, Virginia               THOMAS H. ALLEN, Maine
TODD RUSSELL PLATTS, Pennsylvania    JANICE D. SCHAKOWSKY, Illinois
DAVE WELDON, Florida                 WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              ------ ------
C.L. ``BUTCH'' OTTER, Idaho                      ------
EDWARD L. SCHROCK, Virginia          BERNARD SANDERS, Vermont 
JOHN J. DUNCAN, Jr., Tennessee           (Independent)

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                     James C. Wilson, Chief Counsel
                     Robert A. Briggs, Chief Clerk
                 Phil Schiliro, Minority Staff Director

    Subcommittee on Government Efficiency, Financial Management and 
                      Intergovernmental Relations

                   STEPHEN HORN, California, Chairman
RON LEWIS, Kentucky                  JANICE D. SCHAKOWSKY, Illinois
DAN MILLER, Florida                  MAJOR R. OWENS, New York
DOUG OSE, California                 PAUL E. KANJORSKI, Pennsylvania
ADAM H. PUTNAM, Florida              CAROLYN B. MALONEY, New York

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
          J. Russell George, Staff Director and Chief Counsel
                Darin Chidsey, Professional Staff Member
                          Mark Johnson, Clerk
           David McMillen, Minority Professional Staff Member

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on August 28, 2001..................................     1
Statement of:
    Albert, Dan, mayor, city of Monterey; James E. Perrine, 
      mayor, city of Marina; Jerry G. Smith, mayor, city of 
      Seaside; Michael Houlemard, executive officer, Fort Ord 
      Reuse Authority; and Jeffrey Simon, past president, 
      National Association of Installation Developers............    14
    Farr, Hon. Sam, a Representative in Congress from the State 
      of California..............................................     5
    Holman, Barry W., Director, Defense Infrastructure Issues, 
      U.S. General Accounting Office; Patrick O'Brien, Acting 
      Director, Office of Economic Adjustment, Department of 
      Defense; Raymond J. Fatz, Deputy Assistant Secretary of the 
      Army; Keith A. Takata, Director, Superfund Division, 
      Environmental Protection Agency; Steve Thompson, Acting 
      Manager, California and Nevada office, U.S. Fish and 
      Wildlife Service; and Edwin Lowry, director, Department of 
      Toxic Substance Control, California Environmental 
      Protection Agency..........................................    64
Letters, statements, etc., submitted for the record by:
    Albert, Dan, mayor, city of Monterey, prepared statement of..    18
    Farr, Hon. Sam, a Representative in Congress from the State 
      of California, prepared statement of.......................    10
    Fatz, Raymond J., Deputy Assistant Secretary of the Army, 
      prepared statement of......................................   122
    Holman, Barry W., Director, Defense Infrastructure Issues, 
      U.S. General Accounting Office:
        Information concerning environmental cleanup costs.......    97
        Prepared statement of....................................    67
    Horn, Hon. Stephen, a Representative in Congress from the 
      State of California, prepared statement of.................     3
    Houlemard, Michael, executive officer, Fort Ord Reuse 
      Authority, prepared statement of...........................    38
    Lowry, Edwin, director, Department of Toxic Substance 
      Control, California Environmental Protection Agency, 
      prepared statement of......................................   150
    O'Brien, Patrick, Acting Director, Office of Economic 
      Adjustment, Department of Defense, prepared statement of...   103
    Perrine, James E., mayor, city of Marina, prepared statement 
      of.........................................................    23
    Simon, Jeffrey, past president, National Association of 
      Installation Developers, prepared statement of.............    51
    Smith, Jerry G., mayor, city of Seaside, prepared statement 
      of.........................................................    30
    Takata, Keith A., Director, Superfund Division, Environmental 
      Protection Agency, prepared statement of...................   134
    Thompson, Steve, Acting Manager, California and Nevada 
      office, U.S. Fish and Wildlife Service, prepared statement 
      of.........................................................   143

LOCAL ECONOMY, ENVIRONMENT, AND INTERGOVERNMENTAL COOPERATION: WHAT CAN 
                       BE LEARNED FROM FORT ORD?

                              ----------                              

                        TUESDAY, AUGUST 28, 2001

                  House of Representatives,
  Subcommittee on Government Efficiency, Financial 
        Management and Intergovernmental Relations,
                            Committee on Government Reform,
                                                      Monterey, CA.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
the Monterey City Council Chamber, Monterey, CA, Hon. Stephen 
Horn (chairman of the subcommittee) presiding.
    Present: Representative Horn.
    Also present: Representative Farr.
    Staff present: J. Russell George, staff director and chief 
counsel; Mark Johnson, clerk; Darin Chidsey, professional staff 
member; and David McMillen, minority professional staff member.
    Mr. Horn. The Subcommittee on Government Efficiency, 
Financial Management and Intergovernmental Relations will come 
to order.
    Among its oversight responsibilities, this subcommittee is 
charged with overseeing how efficiently and effectively 
Federal, State, and local government agencies work together. We 
have come to Monterey to learn how these agencies are handling 
the many challenges posed by the 1994 closure of Fort Ord.
    Since 1988, the Federal Government has closed 97 of 495 
military facilities across the Nation through the base 
realignment and closure process. Although these closures were 
deemed necessary, it is the local community that bears the 
economic burden of these decisions.
    Fort Ord, which encompasses more than 27,000 acres, was an 
active Army post from 1917 of the First World War to 1994. It 
served as a training facility for infantry, as well as other 
branches of the Army, both active and Reserve in the 1930's, 
and then full capacity in the Second World War.
    Although the facility was officially closed 6 years ago, 
several important issues in the reuse process are still 
unresolved. The 1994 closure of this installation cost the 
community an estimated 2,835 civilian jobs, in addition to 
secondary job losses attributed to the area's lost revenue.
    In 1995, the California State University system began its 
classes on Fort Ord land, and that has resulted in the 
California State University at Monterey Bay. Although this has 
brought some 1,100 new jobs to the area, the local economies of 
adjacent cities, such as Seaside, Marina, and Del Rey Oaks have 
not enjoyed the same economic growth as those of other areas in 
Monterey and Monterey County.
    The subcommittee also wants to examine the Federal 
Government's effort to cleanup the environmental hazards 
associated with Fort Ord's closure, primarily the removal of 
unexploded ordnance. Although most of the cleanup efforts 
involve used artillery shells, live ammunition still remains 
from the facility's former firing range.
    The Army had proposed using controlled burns to explode the 
live ammunition and clear the surrounding flora, which made 
extraction of the artillery shells both easier and safer. 
However, local environmental concerns over the smoke created by 
the fires resulted in a lawsuit and a preliminary court ruling 
that temporarily halted the burns.
    Although the court ultimately ruled that the controlled 
burns could take place, the U.S. Fish and Wildlife Service is 
currently conducting a new study to determine the most 
environmentally suitable method to accomplish the cleanup 
effort.
    The subcommittee wants to know the status of this study and 
what efforts are being made to implement its recommendations. 
The community is understandably concerned over the delays 
involved in the base reuse process, and indeed, until these 
issues are resolved, redevelopment plans will continue to be on 
hold.
    They're needed, however, to restore the local economy. This 
is neither efficient nor effective governing.
    Today the Subcommittee on Government Efficiency, Financial 
Management and Intergovernmental Relations will hear testimony 
from leaders of the communities and various government 
agencies. The subcommittee wants to learn about the successes, 
as well as the failures that have occurred during the Fort Ord 
base closure and what actions the Federal Government can take 
to expedite the process.
    We would also like to learn the degree of the decisions 
possible by many State, regional, county, and city agencies.
    We welcome our witnesses. We have a wonderful group of 
public officials at all levels, and we look forward to your 
testimony.
    [The prepared statement of Hon. Stephen Horn follows:]
    [GRAPHIC] [TIFF OMITTED] T0374.001
    
    [GRAPHIC] [TIFF OMITTED] T0374.002
    
    Mr. Horn. And we will start, as a courtesy, with your able 
Representative Sam Farr, who has been in on this situation for 
years, and when I had problems in my city due to the closure of 
the most effective and efficient shipyard in the United 
States--they closed it because it was too efficient--and Sam I 
talked, and he had some very good suggestions.
    We are delighted to have Representative Farr here today as 
an opening presenter, and then I will ask him as the Ranking 
Democrat to come and sit to my left, as a matter of fact. 
[Laughter.]
    I just thought about that, Sam, and we are delighted to 
have you here because you have done so much to be helpful in 
bringing the community and agencies together.
    So, Sam, give us the overview, and then the rest of the 
individuals will have 5 or 10 minutes or so, and I will get 
into that later.

 STATEMENT OF HON. SAM FARR, A REPRESENTATIVE IN CONGRESS FROM 
                    THE STATE OF CALIFORNIA

    Mr. Farr. Well, thank you very much, Mr. Chairman.
    I really appreciate you coming back to the region where you 
were raised, over in San Benito County, our next door neighbor 
in Hollister. You will find that almost every one of the 
panelists has some connection with Hollister. Even our Mayor 
coached teams that played against the Hay Balers to our other 
mayor, Jim Perrine----
    Mr. Horn. Yes, we remember it well. Usually we were mauled. 
[Laughter.]
    Mr. Farr. Jim Perrine, who works for the city of Hollister.
    So we are all very fond of your home and again, welcome to 
Monterey where California's government began.
    I would like to submit my written testimony for the record 
and just kind of speak off the cuff, if you do not mind.
    Mr. Horn. Without objection, it will be in the record as 
will all statements. The minute the person is recognized their 
statement is automatically put into the record.
    Mr. Farr. Thank you.
    I think that if you look at Fort Ord, as the press keeps 
asking me, ``How do you sum it up?'' The Fort Ord experience, 
and probably for many military bases, could be summed up in two 
ways. We did some things right, and we did some things wrong.
    Basically, we did the wrong thing, and I will get into more 
specifics, but the process is now too chaotic. There are just 
too many cooks in the kitchen. There are just too numerous 
agencies at the Federal level, at the State level, and some at 
the local level, all having independent legal jurisdictions and 
different budgets and different timeframes. To get them all on 
the same vision at the same time is practically impossible.
    It takes too long. This base closed about 9 years ago. We 
should be finished and be out of there. We are not.
    Last, one of the reasons we are not out of there is that we 
just have not put enough money into the cleanup process. That 
process is one that is low-ranking in the military's mission of 
things they have to do, but it is a strict liability 
responsibility. The difficulty is that they are only 
responsible, strictly liable in a sense, for what is 
underground, not for anything that they have built above 
ground.
    And so the local community is left with the responsibility 
for cleanup of a base above ground with no revenue to do it. 
Essentially this was Federal land. There is no private 
ownership. There are no property taxes. There are no sales 
taxes. There is no revenue coming in to help pay for the 
cleanup of above-ground hazards.
    And if you are going to have to do cleanup by speculating 
what can we reuse the land for, you drive up the prices of 
reuse for the private sector, for the community sector, and 
this area of California is where you really need affordable 
housing. We have to factor in the cleanup of about $70 million 
just to get rid of buildings out there that are contaminated.
    That $70 million then has to be folded into the price of 
which they sell housing. So I think one thing we need to do 
right away this year is we have got to help bases like Fort Ord 
with some money for above-land disposal of facilities.
    Now, let me just go into a couple of things. One of the 
right things we did is that we used the best of Federal and 
State government to say there are missions out there that we 
need to accomplish jointly. We created a new 4 year university, 
one that you can be proud of as being former president of 1 of 
the 21 campuses.
    The front page of the paper has today the success of the 
student enrollment, of the freshmen enrollment in this school 
that is up to about 3,000 students now and growing very rapidly 
as the word gets out that this is a good school to go to. It 
has small classes, good instruction, high-tech, nice dormitory 
buildings, and so on. So that was done right.
    The UC, University of California, also has a research park 
at Fort Ord. That was done right too, to combine both Cal. 
State and UC in one location, colocating them so that the best 
of both can be utilized for this State and Nation.
    The new BLM, Bureau of Land Management park, is also well 
done. The Dunes out at Fort Ord will be dedicated to the public 
through a State park system. Again, well done.
    Developing new schools, developing new childcare centers, 
developing the privatization of military housing, selling the 
golf courses which have been upgraded and are very, very 
popular, the commercial airport and more, those are the things 
that were done right.
    Now, what was done wrong was in the process of the 
conversion. It is too much of a top-down process for the most 
part and really ignores local needs. If you think about it, all 
development in America is local, and the building permits and 
the planning process is local.
    I think we have got to get away from the military thinking 
of top-down to realizing that even though they develop the real 
estate with top-down, they cannot dispose of the real estate 
without going bottom-up. We have to redesign the system that 
puts more emphasis into that.
    The cleanup process is a major problem. It creates conflict 
rather than resolution. The difference is in how you cleanup 
each of the contaminates. You have one set of laws and rules 
for unexploded ordnances and totally different for groundwater 
pollution, for landfill sites, and so on.
    As I said, the lack of funding for local reuse is a big 
problem. I think that what happened with Fort Ord--and this is 
what we have got to dispel if we are ever going to have another 
BRAC around--is that local communities are fearful of the 
Federal Government coming in, the big Army, the big Navy, the 
big Air Force because they bring in a lot of big Federal 
agencies. These agencies really have not instilled confidence 
in the reuse, particularly when it goes to cleanup.
    This was not just an Army problem. It was also EPA's 
problem, sort of misguided turf building. EPA essentially 
blocked an orderly cleanup process under the RCRA laws because 
it was using Fort Ord to build a case for EPA jurisdiction over 
base activities, including base closure.
    The EPA fought and joined a lawsuit to force the Army to 
cleanup Fort Ord to Super Fund specifications, which prolonged 
the process, driving up the cost.
    But out of this chaos come really good leaders, people that 
got in and rolled up their sleeves and realized that leadership 
is about getting results.
    I mean, I think when Ray Clark, who at the time was the 
principal Deputy Assistant Secretary of Installations, came on, 
he took the unique nature of the problems at Fort Ord and 
decided that there were ways to handle it separately.
    Out of that sort of desperation, what to do about Fort Ord, 
came the idea of a SMART team, SMART standing for Strategic 
Management Analysis Requirements and Technology.
    This group basically worked on finding consensus among a 
myriad of agencies overseeing Fort Ord one issue at a time, and 
for that one person in the audience here today who really 
deserves credit, is Dick Wright. He heads up the SMART team, 
and has done a tremendous job of being able to sensitize the 
local needs, the State needs, and the Federal needs, and 
bringing in everybody to a one-stop consensus building process.
    Keith Takata at the U.S. EPA plunged into the SMART team 
and with only one goal in mind, to make the conversion work. I 
think when you have people who are dedicated and have this idea 
that, look, we are all here for the same reason, to get this 
base cleaned-up and get it converted as fast as possible, the 
attitudes change tremendously.
    I would also like to praise Pat O'Brien at OEA. Pat and I 
met when I was running for Congress and the base was being 
closed. He has really stuck through all of these years in our 
mission to build a new community out there.
    I think these are the kind of people--and there are 
others--who really get base conversion. They understand you 
just cannot throw your hands up in the air in frustration and 
walk away from the problem. They know that lawsuits and threats 
do not build new communities. Only hard work and perseverance 
do.
    Making it work is what I have been trying to do every 
single day I have been in Congress. There is just one real 
estate problem after another, day after day. As you said, the 
fort started in 1917. Things were built then, and things were 
built all along the way.
    Some of the things meet modern standards, but most of it 
does not. Buildings were not built to code. We found out, as 
the California delegation, that the military is the biggest 
user of energy in California, and when you move to conservation 
efforts, which you and I are doing in our own homes, you cannot 
transfer that to the men and women in uniform because they do 
not have any meters on their houses.
    The way the military has built these houses not to be like 
other communities has got to change. I think we have got to get 
the military out of the land disposal process. Their job is to 
train our men and women in uniform, not to serve as real estate 
brokers.
    I think we need to make it easier for locals to receive the 
land. These no cost EDCs are really a valuable tool. There is 
the carrot with the no cost EDC, but it does not come with any 
cleanup money, and we need to add cleanup money to the EDC.
    I think we need to provide seed money for local reuse 
authorities to use in rebuilding infrastructure so that 
economic development can take place. Everybody looks at Fort 
Ord and says, ``You are getting an awful lot of real estate 
free,'' but when you come down to it--this was just so classic 
for me to be out there--to look at this housing that was built 
in the 1980's, this is modern housing. But that housing was 
built under military specifications.
    And so going through it with the local fire chief, he said, 
``You know, these windows do not meet California fire 
standards.''
    I said, ``Well, they are modern windows. Why can't you 
leave them in there?''
    He said, ``Because then we cannot get fire insurance on 
these buildings.''
    Then you go to the local water guys, and they say, ``You 
know, this is the wrong size pipe to bring the water in, and it 
does not meet code standards, and there is no meter on the 
house for watering. There is no meter on the house for gas and 
electricity, and the piping coming in has to be changed.''
    And then you have, of course, none of the housing was built 
for ADA standards. So you get into all of these issues, and 
people think, well, you know, at the outside, they think this 
is a Washington thing. We are going to give all of this real 
estate.
    But they do not realize that this real estate comes with an 
incredible number of liabilities that are not difficult to fix, 
but that requires money. In a closed base there is no pot of 
money at the local level. They do not have that much 
discretionary funding.
    So we have got to figure out how we can get funding to get 
the infrastructure approved, and once it does, you build it and 
they will come. I hope we could continue a policy at the 
Federal level from a public standpoint that the first people in 
these houses that have been lived in by men and women in 
uniform, essentially a middle class payroll, that those houses 
ought to be preserved for like kinds of people in the civilian 
sector, people who can pay $500 to $800 a month rent. We should 
not allow this just to be turned over to developers who would 
take that same housing and rent it out to high-income earners 
so that the local communities have a bigger tax base.
    That is the fear of what is happening out there. I 
sympathize with the local community because they say we need 
this higher income in order to pay for the cleanup. So if we 
can play a better role in the cleanup, they can bring their 
housing prices down.
    I think that if we streamline the process, we clean it up 
faster, we are smarter about it, one size does not fit all, 
then we can, indeed, turn over these military bases to nothing 
but success to the local community.
    But Fort Ord is not the model for how it should be done, 
nor is it the model for how it should not be done. It is a 
little bit of both, and we need the Fort Ord models and the 
Long Beach models in order for Congress to learn how to do its 
job better.
    I thank you for coming back to the area of your origins, 
and I appreciate your coming to the city of Monterey, and I 
look forward to joining you on the dais and hearing from my 
colleagues.
    [The prepared statement of Mr. Farr follows:]
    [GRAPHIC] [TIFF OMITTED] T0374.003
    
    [GRAPHIC] [TIFF OMITTED] T0374.004
    
    [GRAPHIC] [TIFF OMITTED] T0374.005
    
    [GRAPHIC] [TIFF OMITTED] T0374.006
    
    Mr. Horn. We thank you very much, Sam, and without 
objection, Mr. Farr will be a member of this panel, able to ask 
questions of the various witnesses.
    Now, let me bring panel two, which is the Honorable Dan 
Albert, the mayor of the city of Monterey, and, Mr. Mayor, we 
appreciate having this wonderful historic room in which we 
could have this hearing, and your people who have been the city 
manager and all the staff have just been very helpful with us, 
and we thank you for that.
    We also have the Honorable James E. Perrine, mayor, city of 
Marina, and the Honorable Jack Barlich, mayor, city of Del Rey 
Oaks, and the Honorable Jerry G. Smith is mayor of the city of 
Seaside.
    Michael Houlemard is the executive officer of the Fort Ord 
Reuse Authority.
    Jeffrey Simon is the past president of the National 
Association of Installment Developers.
    Now, let's see how many we have here. Mr. Barlich could not 
make it. Anybody else?
    OK. Let's see. We have got Mr. Simon, and Mr. Houlemard, 
and Mr. Smith, and Mr. Perrine, and Mr. Dan Albert.
    Now, let me tell you the ground rules here. We have your 
statements. I have read every one of them, and we appreciate 
that. What we would like you to do is just look us in the eye 
and summarize it. We are going to install the 5-minute portion, 
and we want to get a dialog between you, and the next panel, 
panel three, the experts from the Federal side. We would like 
to have you at the same operation that they are going to talk 
about, and we will get some dialog there.
    And since we are an investigating committee, gentlemen, if 
you will stand and will raise your right hands.
    [Witnesses sworn.]
    Mr. Horn. Thank you.
    And the clerk will note five witnesses have taken the oath.
    And we will now start with the mayor of Monterey, Mr. 
Albert.

  STATEMENTS OF DAN ALBERT, MAYOR, CITY OF MONTEREY; JAMES E. 
PERRINE, MAYOR, CITY OF MARINA; JERRY G. SMITH, MAYOR, CITY OF 
 SEASIDE; MICHAEL HOULEMARD, EXECUTIVE OFFICER, FORT ORD REUSE 
    AUTHORITY; AND JEFFREY SIMON, PAST PRESIDENT, NATIONAL 
             ASSOCIATION OF INSTALLATION DEVELOPERS

    Mr. Albert. Yes, Mr. Chairman. I would like to welcome you 
to the city of Monterey and to remind everyone that is here and 
also to let you know that this is really where California 
government began, just right next door, and that we are very 
proud that the constitution of California was developed right 
here and signed right here. We became part of the United 
States.
    So we are proud of that, and we are proud of that history, 
and also to let you know that we are very, very proud to call 
ourselves the language capital of the world. We have tremendous 
language assets that are here. Approximately 15 percent of all 
of the languages that are taught and interpreted in the world 
are done right here on the Monterey Peninsula with the Defense 
Language Institute, the Monterey Institute.
    So I just briefly say that because it is important to us, 
and I will get on with what I have to say, but that is 
important to us because of the installations that are still 
here that play a dominant role in the U.S. Government and our 
defense.
    Mr. Horn. I might just want to add that in the back stairs 
leading to the House of Representatives, there is a wonderful 
painting by the German painter Berstadt, and the Congress gave 
him $10,000 on that particular painting. And it is the landing 
of the explorers at Monterey, CA.
    And most people do not even know that because they do not 
go up the back stairs, but we all look at it when we are going 
to get a vote, and Monterey and dually represented.
    Mr. Albert. We are going to have to move that to the front 
part of the building. [Laughter.]
    Mr. Horn. Well, you would displace George Washington. So we 
are not going to do that. [Laughter.]
    Mr. Albert. Well, you have asked us not to read this, but I 
think what I would like to do is I would like to read, and then 
maybe as we move along make some comments.
    I have been actively involved with the base closure 
deliberations in 1988, 1991, 1993, and 1995. And later on 
Michael Houlemard will give you the specifics of the Fort Ord 
closure and our recovery efforts there.
    What I would like to do is address the more general 
subjects that I think should be kept in mind by the Congress 
and by the Defense Department as we move toward what appears to 
be the next round of base closures.
    The environmental cleanup of the property is critically 
important. I have a growing sense that the Military Department 
may look at a dollar spent on cleanup support, the base reuse 
plan, as a dollar not spent on its core missions. If there is 
an unwillingness on the part of the military departments to 
budget for and Congress to appropriate the sufficient funds to 
adequately cleanup the defense sites, we should postpone 
another round of base closures until we are able to do it the 
right way.
    Basically, we are talking about another round of base 
closures, and the sense that we have here is that they are 
pretty good at closing down the base, but where we really have 
the big problem is once that base is closed, it then becomes 
the communities that are mostly affected. Then we have the 
problem then of what do we do with those bases.
    It seems to me what Congress should be doing, first, 
instead of talking about closing bases what you should be doing 
is let's move on with the bases that are closed. Let's get 
those fixed. Let's get that right, and then you could start 
talking about more base closures.
    What I would say as your process and as you are going 
through the process and saying we want to close more bases, 
along with that there should be some kind of legislation; there 
should be something out there that says not only are we going 
to close them, but this is what is going to happen after. This 
is how we are going to help the local community.
    I think that is important. You can imagine the city of 
Monterey and what we are thinking now and the region, what we 
are thinking now. We have got a base that has been closed. We 
have got two other bases, two great schools here. I do not even 
want to think about them closing because they add so much not 
only to this community, but to the Nation and what they bring 
to the Nation.
    But if you can think what a community like we are going 
through now, when they are talking about other base closures, 
we still have one in the situation that Fort Ord is in. It does 
not raise the comfort level of a community at all.
    The environmental cleanup of the property is critically 
important. Here in Monterey, for example, we are still dealing 
with the cleanup of a closed World War II, Korean War Navy 
activity, our local airport. Currently the groundwater under 
the residential and neighborhood is contaminated with TCE.
    The discovery of this contamination was far too late in 
coming, but worse now that it is known. The cleanup is being 
driven not by the technical cleanup process, but by the dollars 
available in our community from the formerly used defense site 
program.
    This is causing tremendous pain in our community and is an 
unacceptable way to do the public business. Please insure that 
the resources necessary to cleanup previously closed bases are 
available prior to closing more bases. I mean that just seems 
like it should be an essential part of a base closure, is how 
are we going to deal with the cleanup process after. I mean, 
that should go right along with the idea that we are going to 
clean a base, and then what is going to happen with it.
    Future reuse planning must be centered on the community's 
priorities, not on the Federal Government's. Federal agency or 
agencies they sponsor should not be allowed to cherry pick high 
value properties unless the proposed uses are consistent with 
the community's reuse plan.
    All the work done by the military departments' 
environmental work, cooperative agreements, and so on, must be 
done in coordination and consultation with the community. There 
should be no secrets from the community. There should not be 
environmental impact statements done by the military 
departments that are separate from the community's 
environmental work.
    The services should not be allowed to develop their own 
view of what is appropriate. Reuse should be studied in the 
department EIS as happened at Fort Ord. NEPA should be waived 
for the purpose of the BRAC's property disposal action.
    The State requires an EIS/EIR for the reuse plan as strong 
as at NEPA. This one act will save millions of dollars that are 
spent by services, and basically what we are saying is, is 
there an overlap. I mean, I am always asking my constituents to 
be aware of the warning on the red light, and now I am getting 
the red light.
    Mr. Horn. No, go ahead.
    Mr. Albert. But it is OK. It is all right, and there is a 
lot here, but I will try to summarize that by saying that there 
should not be that overlap. We do not need that, and that is 
when the communities become confused, and it becomes not a 
positive thing, but it becomes a negative thing.
    So it seems like the overlap just does not work, and every 
open base should be allowed to form partnerships and 
collaboratives with its adjunct communities as we have done 
here in Monterey.
    Through special demonstration legislation, we now provide 
almost all public works and some recreation services in the 
procedure at Monterey and Ord military community on reversible 
contract basis. The Army Audit Agency reported that the Joint 
Power Agency of Monterey and Seaside saved the Army 41 percent 
of its second year of operation. This $2.5 million saving 
allowed the Army to start addressing their backlog of deferred 
maintenance at the Presidio.
    A side benefit of this program is that the community is now 
very familiar with the maintenance requirement of the 
installation infrastructure. Compare this to the situation at 
Fort Ord where buildings and utility systems continue to 
deteriorate and go unmaintained 7 years after closure.
    If the community is involved in the operation and 
maintenance of the installation before a closure decision is 
made, the DOD saves money and, more importantly, the community 
is in a position to more rapidly recover from the closure if it 
were to happen. If you're allowed to do that, and we have had 
assistance from our Congressman for that special legislation; 
we think that is important.
    Excess capacity seems to be the base closure driver. All of 
DOD's excess capacity should not be disposed of. We are not 
smart enough to know what we will need the day after tomorrow, 
much less 10 years from now. The capacity once disposed of will 
almost never be obtainable again. Therefore, we must be much 
more aggressive in exercising the enhanced authorities of 
Section 267 of Title 10 allowing the lease of excess capacity 
to local communities, private industry, universities, and so on 
in such a way that the capacity complements current missions, 
and it is preserved for future DOD missions.
    To give you an example, the Defense Language Institute, 
there is a section that was forested, and basically leased to 
the city. The Federal Government still owns it, but its been 
leased to us. We maintain it. We take care of it.
    We also have a lease on the lower portion of the Presidio, 
but it is still owned by the Federal Government in case there 
was a kind of emergency where they might need it. But that 
reduces the cost because we are able to take care and maintain 
it.
    Well, I know that I have run over my time, and I have got a 
lot more to say here, but anyway----
    Mr. Horn. Well, we will be glad to not just have your 
statement, but if you are driving around Monterey and you have 
got a new idea, please send it to us. We will put it in the 
record, and that includes all of the witnesses here.
    Mr. Albert. OK.
    Mr. Horn. We are going to have to really keep moving.
    Mr. Albert. I understand that.
    Mr. Horn. Or we are not going to get anything----
    Mr. Albert. No, I understand that perfectly. Thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Albert follows:]
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    Mr. Horn. Thank you.
    We now have the mayor of Marina, the Honorable James E. 
Perrine.
    Mr. Perrine. Good morning, Chairman Horn and Congressman 
Farr. I am Jim Perrine, mayor of the city of Marina and chair 
of the Fort Ord Reuse Authority.
    I have worked with the Fort Ord closure and reuse process 
since the day of the closure announcement in 1991. During this 
period I have served either as a marina council member, mayor 
pro tem, or the mayor.
    I believe that thus far the local reuse process has served 
certain areas and constituencies well and others closely, 
little, or not at all. In my impression, those well served have 
been the habitat and endangered species, the homeless programs, 
and specialty consultants. In general, safety from unexploded 
ordnance and explosives has been a priority, and the Army has 
effectively dealt with it.
    There has been a focus on the remediation of groundwater 
contamination as well. I also believe that we have made strides 
to move rental housing into the marketplace. We have, indeed, 
developed some jobs; far fewer in this term than most people 
originally envisioned.
    In addition, the community economic base has been modified 
from one supporting a military installation to one supporting 
educational and research facilities.
    The areas where we have not had successes at this point are 
equally numerous. They include developing new homeowner 
occupied housing, which is needed to support a significant 
emerging regional employment base.
    Also, we have developed little retail base for taxes and 
commercial diversity in our communities. As an example of that, 
between 1990 when Fort Ord was running full speed and 1999, 
Marina's retail sales have grown only 23 percent. By way of 
contrast, the county of Monterey has achieved a 50 percent 
increase, and the State of California has attained 41 percent 
growth in retail sales.
    In general, the private marketplace has not yet taken over 
on the former Fort Ord. With limited exceptions what has been 
accomplished has been supported by Federal, State, and local 
tax moneys or loans obtained by nonprofit housing providers.
    What do we need then to achieve the investment of private 
dollars on the former Fort Ord? Time does not permit me to 
comment on all that is necessary, but I do suggest the 
following six elements that must be incorporated or reinforced.
    Most importantly, we need to transfer the property, and 
during any interim period, the military must fully and actively 
secure and maintain the property.
    Second, we need specific assistance and remedies within 
Federal law. Regulatory agencies both at the Federal and State 
level must be mandated to facilitate reuse in manners that are 
effectively safe yet efficient.
    Third, a partnership with the local community at the 
infancy of base closure is vital to eventual reuse. Quite 
simply, some DOD personnel see only a mission of base closure. 
Others, particularly the local communities, have to shoulder 
the reuse.
    Fourth, processes must be expedited in Federal law, and 
specific coordination with State officials must be mandated. 
When implementing reuse, the Federal Government should define 
uniform standards.
    Fifth, a more coordinated and grounded reuse assistance 
organization must evolve and should have leverage to make the 
process work.
    And the final element, financial and training assistance is 
needed to insure that local resources can be effectively 
provided. OEA, EDA, and others need more funding appropriated 
for reuse assistance.
    We then need effective regulations to facilitate the 
distribution of the funds to the local jurisdictions. I do 
believe, given the size of the elephant, reuse of the former 
Fort Ord is succeeding. I do not believe, however, that the 
public concurs. They don't agree because the common sense of 
the matter is that there should be a direct and easy way to 
transfer the military facilities to civilian use.
    We have also found the costs are considerable. In Marina, 
the 1,600 barracks we received will cost an estimated $70 
million to remove. This is a mind-boggling number for the 
Federal Government. Can you imagine how that translates to my 
city of 25,000 souls?
    These barracks were constructed in the 1940's as temporary 
structures to win World War II. Sixty years later they remain, 
and they serve only as visible blight and a pressing liability 
to the local communities that will inherit them.
    I ask you to work with the reuse agencies and local 
governments to change the process so that it effectively 
engages the market economy in its early years. This can be 
done, but it will require discarding the present model and 
creating a new system.
    I offer for consideration my six elements and support my 
colleague's suggestion for a new system. I believe the 
perspective needs to change to empower local communities for 
future utilization of historically Federal facilities and how 
the military mission's of relocation or change will be required 
to achieve that.
    I thank you for the opportunity to testify and would be 
pleased to answer your questions or further elaborate on my 
comments.
    [The prepared statement of Mr. Perrine follows:]
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    Mr. Horn. Thank you very much, Mayor.
    Our next presentor is the Honorable Jerry G. Smith, mayor 
of the city of Seaside.
    Mr. Smith. Good morning, Mr. Chairman and Congressman Farr, 
members of the committee.
    It is a pleasure to have the opportunity to address you 
today to discuss the city of Seaside's perspective on this 
important topic.
    I am Mayor Jerry Smith, city of Seaside. I have been a 
lifelong resident of the Monterey Peninsula and very familiar 
with the long history of Fort Ord and its effects on our 
community, both before and after its closure.
    I would also note that I was once stationed at former Fort 
Ord. So my perspective includes the fond memories of my 
experience in the Service serving my country.
    The city of Seaside certainly agrees with many of the 
points you will have already heard today from other speakers. 
My purpose in speaking with you is to emphasize a few key 
issues.
    We have experienced a drastic impact in the city of 
Seaside's efforts to recover from the closure of Fort Ord. In 
summary, those issues are: Delaying access to buildings and 
properties slated for transfer to the city of Seaside; conflict 
with Federal and State agencies concerning methods and 
standards for removal of unexploded ordnance and explosives; 
the over-reservation of water and waste water resources by the 
U.S. Army for Federal purposes; the costs imposed upon our 
community for long-term risk management associated with 
transfer of the properties.
    Speaking first to the issues of gaining access to the 
buildings and the properties on the former Fort Ord--let me say 
that the presence of so many of the empty buildings at a time 
when local housing problems have reached a critical or crisis 
proportion is a source of great consternation in our local 
community.
    For over 8 years in vacant, boarded-up structures with the 
former Hayes Housing, clearly visible from Highway 1, have 
offered torment. These are all illustrations of the problems 
created by the Army's denial of access to this property.
    As the city of Seaside has sought to obtain property from 
the Federal Government, the buildings, streets, infrastructure 
have deteriorated before everyone's eyes. Had we been able to 
gain access to these buildings promptly after the closure of 
the base, we may have been able to create affordable housing, 
which would now be available to our community and to the 
residents of the Monterey Peninsula.
    The bureaucratic processes which have endured by just 
buying 100 acres of land now extends over 5 years, and we have 
not yet received the signatures on a document that the city of 
Seaside's council approved last April.
    The impact of these delays not only creates a condition of 
worsening deterioration, but also makes the overall development 
process that much more uncertain. In an atmosphere of 
uncertainty, we have found that the development community is 
more cautious, more less likely to make commitments to the 
city, further inhibiting the reuse of the base.
    Another problem that we face are conflicts among the 
Federal and State agencies having jurisdiction over the Fort 
Ord properties. As you know, the reuse of Fort Ord includes 
conservation of substantial land for the protection of 
endangered species. In fact, over 60 percent of the former 
installation is set aside for the perpetuity of this purpose.
    A significant portion of the land lies adjacent to the city 
of Seaside's boundaries, including areas designated for future 
housing. One of the requirements for underlining the 
conservation documentations for the Fort Ord installation--
multiple species, habitat, and natural management plan--
requires the conservation agencies to utilize controlled, 
prescribed burns as a method of managing this unique habitat.
    The very reasonable provision is required by the U.S. Fish 
and Wildlife Service for the management of maritime chaparral 
further prescribes fire as required as the safe means of 
removing vegetation that impedes the clearance of dangerous 
unexploded ordnance projectiles left on this land.
    However, other agencies following Federal laws protecting 
air quality object to the U.S. Army Bureau of Land Management's 
method of prescribing fire burns.
    On a personal note, I want to emphasize that I do not 
disagree with the need for burning. As a young man growing up 
in this area adjacent to Fort Ord, I can still vividly remember 
an incident where two young men were injured when they 
trespassed onto this land adjacent to the city of Seaside.
    This land lies within a quarter mile of most of the 
residents of the city of Seaside. These two classmates of mine 
climbed over a fence, the barricade between the residents and 
the military unexplored land, and ventured in there. I was 11 
years old. The two individuals were 12 and 14. One is dead, and 
the other one lost his legs as a result of the unexploded 
ordnance that exists on this property.
    The presence of unexploded ordnance so close to the 
residents' area presents a continuous, unattractive nuisance to 
the young people of our communities. This should be addressed 
by the Federal Government in a most expedient manner.
    One of the most significant challenges we face for economic 
recovery here on the peninsula is the lack of sufficient water 
and waste water capacity, to support new development. For most 
communities on the peninsula, new development does not occur 
without the removal of some of the land use simply due to the 
fact that there are no new water resources. Not so in the 
former Fort Ord, there is a substantial, 6,600 acre-feet of 
water potentially available for development. Unfortunately, in 
closing the base, the Army has decided to retain a large amount 
of the water, 1,729 acre-feet for its future use.
    As a result, all of the jurisdictions who will receive land 
from former Fort Ord will receive far less water than needed to 
fully achieve effective build-out of the land.
    In the city of Seaside's case, this means that the ability 
to build new housing, to create new jobs will be limited. The 
initial reservation of water by the Army was originally 
designed to insure that adequate water was available for 
remediation of hazardous materials, including: asbestos and 
lead paint on Fort Ord.
    With the assumption that this is a responsibility of FORA, 
the Army should have a level of confidence to evaluate their 
need for water and relocation of the portion of the retained 
water resources to local jurisdictions.
    Finally, I want to mention the tremendous, long-term risks 
which remain with the ordnance and explosives on former Fort 
Ord to the city of Seaside and the jurisdictions. Although the 
Federal Government is responsible for cleaning-up the 
unexploded ordnance because of regulations prepared by Federal 
and State environmental agencies, the local agencies will still 
be required to implement a variety of programs to insure that 
future users of the properties are aware of the risks of 
remaining exploded ordnances and explosives.
    There is no Federal funding of any of these programs, 
leaving the obligation for the cost of implementation to these 
local jurisdictions. These programs include educational 
efforts, long-term monitoring and notification to subsequent 
property owners, and specific special steps to be taken during 
the construction activities.
    In some cases records of conveyances providing notification 
of these risks will be required on the property. The 
implementation of these programs represents unfunded mandates.
    In closing, Mr. Chairman, I would like to express my 
appreciation to the committee for its interest in our community 
and the tremendous challenges we face as a city and in the 
county achieving the reuse of Fort Ord. I hope that the result 
of this and other hearings you will conduct, we can find ways 
to remove the obstacles I've discussed.
    Thank you very much.
    [The prepared statement of Mr. Smith follows:]
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    Mr. Horn. Well, thank you, Mayor Smith.
    We now have Michael Houlemard, the executive officer of 
Fort Ord Reuse Authority.
    Mr. Houlemard. Chairman Horn, Congressman Farr, thank you 
for this opportunity to provide testimony today regarding our 
experiences at the Fort Ord Reuse Authority with respect to how 
local, State and Federal agencies have worked together to 
implement reuse, and I say work together because sometimes we 
do not work together, but that was the idea of this session 
today.
    As you may know, the former Fort Ord was designated a model 
base reuse project some time ago, and as Congressman Farr noted 
earlier today, it has become a unique example of what can both 
go right and what can go wrong in military base reuse.
    In our written testimony, we talked about the many layers 
and the deep morass of bureaucracy and the amalgam of 
regulatory controls that have resulted in inefficiency, extra 
cost to our taxpayers and significant redevelopment delays for 
the local communities.
    Diverse working class communities still struggling with the 
heavy demands to recover from the Federal Government's closure 
and inadequate funding and other support, we must emphasize 
today as the other speakers have cleaning up these former 
military bases or now contaminated ghost towns are a critical 
part of being able to recover from the substantial economic 
devastation the communities have suffered.
    While Fort Ord is just one of the many examples of this 
scenario, the scale of the circumstances here at the former 
Fort Ord are substantially larger than most. At the former Fort 
Ord, as you've heard, we have thousands of acres of ordnance 
and explosives that have yet to be discovered. The U.S. Army, 
as the responsible entity for remediating this contaminant, 
which continues to be a significant safety issue for our local 
community, has struggled mightily to work through the morass of 
bureaucracy that allows them to be able to finish this work.
    In our view, the removal of ordnance and explosives 
surfaces significant safety issues for us all. In particular, 
the first concern includes how to remove the OE itself in a 
safe way because of what Mayor Smith has talked about in terms 
of its danger to the adjacent community, but also how to remove 
the vegetation and to do that in a safe way for the workers 
that are involved on the former Fort Ord, that very dangerous 
activity of identifying and removing these projectiles.
    But also the safety questions of what happens when you use 
certain forms of vegetative clearance for the surrounding 
community. As the father of a child that has asthma, we have 
concerns about what happens with smoke. While we're not 
objecting to the smoke, we want to make sure that when the 
burning is done it's done in a safe way.
    This isn't a question about our wiping the slate clean and 
saying, ``Just do anything willy-nilly,'' but we must use 
things that safely protect our workers, safely remove ordnance 
and explosives, and protect the health of the residents that 
are nearby.
    The consequences of failing to do this call into play an 
array of Federal, State, and local efforts seeking to interpret 
a myriad of Federal laws that purport to resolve the issue, 
but, in fact, windup inhibiting the resolution.
    The ambiguities and conflicts that these laws have surfaced 
put the reuse of portions of former Fort Ord into a State of 
gridlock, while the existing ordnance and explosives still 
remain on the land and is a danger to the youth. The situation 
cries for a solution. I think Mayor Smith has proposed one. I 
think we could propose many to you, and we'd like to work with 
the committee in identifying ways we think can help to resolve 
this outside of the courts, as Congressman Farr has reminded us 
repeatedly.
    Also with respect to OE removal, Fort Ord is in a unique 
circumstance in that the Department of Justice has agreed to 
perform or to process the removal of OE as though it were a 
CERCLA contaminant, which has added nearly 5 years to the 
transfer dates of many of the properties on the former Fort 
Ord.
    While we were not consulted during the decisionmaking 
process the Department of Justice entered into, the impact on 
us and one of our communities has been substantial and just 
short of devastating. In fact, to a certain degree, the impact 
that a closure of this type has on any community with OE, 
ordnance and explosives, removal as a part of it is very 
similar to what we have found across the Nation that the 
country does when there are natural disasters.
    The economic devastation, the loss of jobs, the physical 
ghost towns that are left to communities are economic natural 
disasters that should be addressed in a similar way as the way 
we bring in all of our resources to help communities recover 
from natural disasters, if there is another round of closure.
    Conservation of habitat for protection of endangered 
species is a critical and important piece of what we have at 
the former Fort Ord. All of the communities recognize the 
importance of having a conservation area and to protect the 
natural beauty that we have in this area as part of an amenity 
of the reuse of the former Fort Ord.
    As a consequence, the communities have all agreed to set 
aside more than 60 percent of the 28,000 acres of the base for 
habitat and to provide substantial funds from the development 
of the property for managing and maintaining these significant 
parcels.
    However, despite every effort we have made over nearly 5 
years of efforts, we have not been able to get an agreement or 
an approval from the U.S. Fish and Wildlife Service of our 
habitat conservation plan, of our agreement to set this land 
aside for the conservation of endangered species.
    The end result is still a significant cost to us, delays to 
our reuse projects, difficulties with the U.S. Army in 
proceeding with certain cleanup activities, and the prevention 
of key transfers of property.
    Another item of great importance to us are the conflicts 
between State and Federal standards for lead/asbestos cleanup. 
You have heard about the 1,600 contaminated buildings, and as 
Mayor Perrine noted, the cost of removing these 1,600 buildings 
now exceeds $70 million if we are to comply with our State and 
local requirements.
    However, because of the Federal law, we are left with 
asbestos and lead by the U.S. Army with no visible method of 
being able to finance this necessary removal.
    In addition to the 1,600 buildings that are at the former 
Fort Ord, what we understand from the State of California, 
there are about 100,000 of similar kinds of buildings in the 
State of California, and nearly half a million in this country; 
many occupied by soldiers today.
    All of this should be addressed as a national priority for 
cleanup as well as the appropriate funding to find an 
appropriate mechanism and proven methodologies for disposing of 
these contaminants.
    Today you may not have direct yes or no responses from 
those that will follow us. Typically regulators have regulatory 
answers to questions. That is their job. In fact, one of the 
regulating agency executives revealed to me last week about his 
frustration at not being able to provide front-end, 
cooperative, advance kind of assistance because the structure 
of the regulation says that they respond to actions rather than 
be an advocate at the front-end.
    So that is sort of a frame of mind that we deal with with 
regulators. We accept that because their police function is one 
that we recognize, but would wish that you could think of a 
regulatory resolution for.
    While there are literally dozens of examples of these kinds 
of interagency conflicts, I am not going to use the limited 
time you have, or we have today, to give the anecdotal issues, 
but I would point to our written testimony which details five 
or six different areas where we have issues.
    But rather I would like to propose some solutions. I 
believe there is an inherent problem in the structure of the 
way this country handles military base reuse that is part of 
many of these individual and anecdotal problems.
    The core problem is that we face a multi-faceted, multi-
regulatory, multi-agency implementation of a varied array of 
Federal laws about reuse in both disparate and directly and 
distinctly different interpretative policy exchanges. That is 
the standard we operate under every day.
    Rather, we would propose that there needs to be more of a 
single use, single focus, directive approach. Instead of the 
multiple interpretations of intent of reuse, we could maybe be 
better served by addressing reuse in the same way it addresses 
major disasters as I mentioned earlier.
    In fact, when a military installation, I believe, closes, I 
believe it has the impact of a natural disaster as I mentioned 
and, therefore, a national emergency. We have FEMA when we have 
a natural disaster. Why can't we have an agency that is 
professionally structured to address these kinds of issues?
    We have other professional Federal agencies tasked with 
certain responsibilities in the case of base reuse. We have 
multiple agencies within a larger agency that is not tasked 
with reuse, as Congressman Farr noted, but tasked with 
defending our country. While building upon the successful 
partnerships we developed with other Federal agencies and even 
some of the regulators, I think this might be an overall or 
global solution that might bring about a successful transition.
    I thank you, Mr. Chairman and Congressman Farr, and I want 
to congratulate the great professionalism of your staff in 
conducting this hearing.
    [The prepared statement of Mr. Houlemard follows:]
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    Mr. Horn. Well, we thank you, and you have made some very 
useful recommendations, and we will put them to use hopefully.
    And we now go to Mr. Simon. Jeffrey Simon is the past 
president of the National Association of Installation 
Developers.
    You might want to explain the purpose of that group.
    Mr. Simon. We will do that.
    Mr. Horn. Thank you.
    Mr. Simon. Good morning, Mr. Chairman and Congressman Farr. 
My name is Jeffrey Simon. I have come from Boston, and as the 
chairman said, I am the immediate past president of the 
National Association of Installation Developers [NAID].
    James Meadows, who is my successor as president, could not 
be here today and asked me to represent our organization. Jim 
is the CEO of Presidio Trust up in San Francisco.
    NAID is the only national organization made up of more than 
350 members who are communities, authorities, private real 
estate development companies, and other professionals who are 
exclusively involved in the reuse of closed military properties 
and facilities, and like here in Monterey, with active 
installations.
    NAID is an organization that just last year celebrated its 
25th anniversary.
    While I know the primary intent here today is Fort Ord, let 
me try to provide the national perspective of our members. I, 
personally, am extremely aware of how critical the topics from 
this hearing are today, having been involved in the 
redevelopment of closed military properties since the mid-
1970's in Massachusetts, then as head of a State agency created 
to deal exclusively with military redevelopment.
    I contrast that with my more recent experience as director 
of the redevelopment of Fort Devens located about 40 miles west 
of Boston, which was a 1991 BRAC closure.
    In recent years, I have been working with my own private 
development company, Simon Properties on a number of projects 
involving closed and active installations and thus have seen 
both the public side and the challenges faced by a private 
developer trying to redevelop closed military bases.
    Let me give you some idea of what you find when you try to 
redevelop these properties. You find buildings that don't meet 
local codes. You find road patterns meant to discover 
efficiency through transportation. You find utility systems 
that are outdated, meet no codes, and typically need tremendous 
investment to be useful.
    You find land uses that defy any rational site planning 
contest. You would have tremendous quantities of lead paint and 
asbestos, none of which is covered by the environmental 
responsibilities of the services, and as you have heard today, 
that great underwriting challenge, unexploded ordnance.
    And, last, you find environmental issues which sometimes 
have been cleaned-up and sometimes subjected to what are 
referred to as, ``institutional controls,'' which means build a 
fence around it or put a deed restriction on it, and we will 
pretend that we do not have to deal with it.
    But in spite of all that, there are tremendous 
opportunities. You need look no further than right here at Fort 
Ord at CSU, Monterey Bay, and the housing activity that has 
taken place. But you can go to Arizona and look at Williams, go 
to Denver and look at Lowry, Chicago and look at Fort Sheridan, 
up in Maine at Loring Air Force Base, or in a small project 
that I am working on in Annapolis across from the Naval 
Academy, to see public officials, such as those here today, 
working with private developers to try to work their way 
through this myriad of complexities that Michael has described 
to breathe new life in these communities where soldiers, 
sailors, and airmen once lived.
    I have three points to make today. First, the central focus 
of redevelopment efforts should remain the community based 
redevelopment plan. This reuse plan, usually produced through 
the hard work of many volunteer citizens and supported by a 
broad range of consultants, becomes the guiding document to 
efforts at the Federal level, such as the preferred option 
under the Federal and State environmental review processes.
    Any attempts to dilute that will be counterproductive for 
the reasons that Congressman Farr talked about in terms of 
local regulation of land use.
    Second, the no cost economic development authority must 
remain. This tool, together with the environmental indemnity 
offered a former military property, have broken the logjam of 
deed transfers that existed until the late 1990's. These are 
the two most important tools that must be conserved in the 
conveyancing process.
    Third and last, probably the largest frustration among 
local redevelopment authorities trying to redevelop these sites 
is when one military branch takes a hard line against the 
policy or legal interpretation which we know has been allowed 
by another military branch.
    The members of NAID feel that the incredibly frustrating 
situation of differing legal interpretations and policies all 
derived from the same law or regulations must end.
    We support competition among the services. We would hope, 
however, that this competition would become one to see which 
model works the best to aid redevelopment, and that the 
starting point would be a set of authorities that all 
departments agree are legal.
    I want to echo just one point made by Congressman Farr. The 
services make it awfully hard for themselves. They reinvent the 
wheel each time each a new division of each service tries to 
deal with a closure and try to get their people educated on how 
real estate development really works.
    Property development at this scale is not new in this 
country. There's a well established system, locally based, that 
we need to collectively fit into and which should be adopted as 
military practice. We need to focus on deed transfers 
expeditiously.
    In closing, the Department of Defense has expressed its 
desire to see a new round of closures beginning in 2003. While 
the final decision is uncertain and rests with Congress, I 
commend you for giving us the opportunity to express our 
feelings and hope you consider these quality recommendations in 
any further action.
    Thank you very much. I appreciate the opportunity to be 
here.
    [The prepared statement of Mr. Simon follows:]
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    Mr. Horn. Thank you. That is very helpful.
    Now, that is the last formal presentation, but will some of 
you be here when the government officials come next? Because we 
would like to have a dialog, and we would like an interaction 
here between the good ideas you have prepared, and then let's 
see in terms of the Federal Government and perhaps the State 
government side how can we improve matters. That is basically 
what we are here to do.
    Mr. Simon, please list the three most successful base 
closures, meaning those with the least disruption to the local 
community in the long-run, and the three worst closures.
    Mr. Simon. Well, you know, Mr. Chairman, I was elected by 
my members, and while it is certainly not the same as you, it 
would be a little bit like saying give me the three most 
successful constituents and give me the three least successful 
constituents. [Laughter.]
    So I am always a little bit loath to do that quite so 
definitively.
    But if you look around the country, there are some bases, 
Fort Sheridan being one, Lowry being another in Denver, which 
have many people, thousands of people living on them today, 
working on them today. If you look to the north of here, 
Sacramento, McClellan Air Force Base in the last 18 months has 
really leaped forward in terms of reemploying thousands of 
people in what was essentially, as Michael said, a ghost town 
when it was taken over.
    Conversely, you have heard about the problems at Fort Ord, 
and I have to tell you since I was running Fort Devens at the 
same time that the Fort Ord experience was happening, I spent a 
lot of time with the Fort Ord people, and it just seems like 
every conceivable roadblock--I see the Congressman laughing--
that could have been thrown up has been thrown up at Fort Ord.
    Michael is a very good friend of mine, and we talk all the 
time about the frustrations of trying to do that, I on the East 
Coast in Boston and he here in California.
    And I think though if you look around at properties which 
have transferred and which are under development, you will see 
that where the committee of the service is there to make a deed 
transfer quickly you really get the quickest development. So I 
would really encourage that.
    Mr. Horn. How many State, local, and Federal agencies are 
involved in the reuse of Fort Ord? Could you give us an idea, 
Mr. Houlemard?
    Mr. Houlemard. I had a feeling one member of your staff 
might be interested in the answer to that question. In our 
written testimony, we noted that there were some 36 agencies 
that had some involvement one way or another on the part of the 
former Fort Ord. That came from some testimony that I did a 
couple of years ago, and I asked one of our key staff members, 
Mr. Steven Endsley, to quickly draw up a list of those that we 
work with on a weekly basis, and I have the list for you, 
Congressman.
    There are 53 agencies, in fact, that we work with on a 
weekly basis, some more than a dozen different Federal agencies 
that have some rule of law having to do with the former Fort 
Ord, and about the same amount of State agencies.
    But, in effect, there are 53 agencies that have some call 
or some influence or some rule of law related.
    Mr. Horn. Without objection, that exhibit will be put in 
the record at this point.
    Mr. Houlemard. Certainly.
    Mr. Horn. And before I yield to Representative Farr, I 
would like to know, Mr. Simon, as you look at the Fort Ord 
situation and what you have heard this morning, how are they 
on, say, the curve? Are they in D plus, C plus, B plus, A, 
whatever and based on what you see in the rest of the country?
    Mr. Simon. To be quite honest----
    Mr. Horn. You are under oath. So we hope you are.
    Mr. Simon. It has already been established. I have nothing 
further.
    Mr. Horn. Usually when a witness comes he says, ``It is a 
real pleasure to be here,'' and I remind him that he is under 
oath. So go ahead.
    Mr. Simon. I think that it is incredible to me, quite 
frankly, that a property with that much potential in this 
market, in this State, coming through the best real estate 
market that we have ever known in this country, is not booming, 
quite frankly.
    I worry for my friends at Fort Ord that if the market gets 
worse, the problems will get worse because the end that we are 
all working for is private investment and private development.
    So I would have to say that Fort Ord really is a 
frustrating situation that is behind the curve.
    Mr. Horn. OK. Colleague, Mr. Farr.
    Mr. Farr. Thank you.
    Mr. Horn. Five minutes to question.
    Mr. Farr. Mr. Chairman, I just have one question.
    Mr. Simon mentioned that one of the bases that he thought 
was a model was Sacramento.
    Mr. Horn. McClellan.
    Mr. Farr. McClellan.
    Mr. Simon. The Air Force base. I would just like to shy 
away from the word ``model.''
    Mr. Farr. OK. My curiosity is that I think we have to 
compare apples with apples, and if you are going to do like 
bases, you have to do it in California because local laws, and 
State laws particularly, and we have a lot of State agencies 
that are second guessing the process at the Federal level.
    Here is a base that was closed in California under Federal 
law. Is the difference then between the way the Air Force 
handled it versus the way the Army handles it at Fort Ord?
    Mr. Simon. There is somewhat of a difference. The Air Force 
set up one agency, the Air Force Base Disposal Agency, which 
handles all of the dispositions for the Air Force. The Army and 
the Navy dispose of property either through the local division 
of the Army Corps or the local division of NAVFAC, Naval 
Facilities Command.
    Mr. Farr. So in your testimony you stated that there ought 
to be a one-stop office in DOD to handle all of these, that you 
should not have the differences between the services. Even 
though the laws are the same, the process is different.
    Mr. Simon. That is absolutely correct. I have had firsthand 
the situation of knowing situations where the Army and the Air 
Force have allowed a certain situation and the Navy saying this 
is absolutely not possible.
    Mr. Farr. Yes. Well, I concur with that.
    You mentioned also in your testimony that you thought that 
you ought to create the presumption that communities will serve 
as cooperating agencies and all base environmental analysis 
under existing CEQA guidelines. This would be similar to the 
joint Federal, State, local dialog conducted at Fort Devens and 
at Long Beach.
    You suggest the requirements for LRAs to act as legal 
entities in the State would be eliminated as a result. Could 
you explain that?
    Mr. Simon. Sure.
    Mr. Farr. I do not know the difference between the Federal 
attitude of a cooperating agency versus a legal entity of the 
State.
    Mr. Simon. There are certain people who have a right to be 
at the table in the environmental review process at the Federal 
level. There is a process for allowing additional members to be 
at the table besides the regulators, and those additional 
people are called cooperating agencies. They have some interest 
in the property.
    When I was running Fort Devens, we were successful for the 
first time in the United States in being able to get that seat 
at the table by being formally designated as a cooperating 
agency, meaning we got the environmental information right at 
the beginning and could help. Quite frankly, it was a help to 
the Army because people always imagine the worst.
    And so when we could state, ``No, we have seen the data, 
and you do not have to worry about this particular groundwater 
plume migrating over into your town because we have seen the 
data and we believe the data,'' but by the same token, when 
there were parts of the data that we thought were insufficient, 
we had an opportunity right at the beginning to say, ``This is 
not right. This is not complete.''
    We think that the presumption should be that every LRA is a 
cooperating agency. I discussed this at length with former 
Deputy Assistant Secretary Sherry Goodman. Is that the right 
title? Under Secretary, who was responsible for this in the 
last administration, and she agreed, but it was never 
implemented. I am not exactly sure why.
    But in terms of the California experience, I would only 
tell you that when I look as a private developer at submitting 
a proposal on Treasure Island, for example, I called up the LRA 
director, Steve Proud, and I said, ``Steve, I have got to tell 
you between all the things that you cannot do on the property 
and all the things that you have to do on the property, I 
cannot just figure out anything that economically works. So we 
are not submitting a proposal.''
    And that was a very frustrating experience for a property 
that throughout the BRAC process has been considered a jewel of 
the redevelopment opportunities.
    Mr. Farr. Thank you. That is very helpful.
    Mr. Horn. Just to the mayors generally, you suggested the 
Federal Government could do more to support the local economy 
immediately after a base closes. Specifically what would you 
recommend succinctly? What is the most important thing you 
would like to see done?
    This is a 30 second answer, I might add. This is Mayor 
Albert.
    Mr. Albert. I think there has to be a system that is worked 
out that creates an urgency. There has to be an urgency that is 
created by the Federal bureaucracy at the local level, 
something that is going to move it.
    I do not know what that tool is, but it cannot be something 
with a date uncertain. There has to be some constraints. We 
have got to help those people get the job done, and whatever 
that takes, whatever tools you have, that should be used so we 
can move forward with it.
    Mr. Horn. No, I think there are a number of ways that I 
would like to see a little revolutionary thinking. If they have 
not done it by a certain date, something happens, and they are 
out of the game, and that is what we ought to be thinking 
about.
    Mr. Albert. Yes.
    Mr. Horn. And if they want to play games, bureaucratic 
games, fine. Take away some of their budget.
    Mayor Perrine, what about it?
    Mr. Perrine. Mr. Chairman, I think that fundamentally at 
the very beginning that it would be beneficial to have 
financial assistance and training knowledge transfer assistance 
for the local agencies, the local reuse authorities.
    You take jurisdictions that have no experience or knowledge 
on this process and thrust this tremendous liability upon them, 
and we all have to take resources away from other basic 
services, basic community services, in order to get up to 
speed, to learn what this is all about, get people trained, and 
to commit the effort to this activity.
    And as I say, it dilutes other basic local community 
services, and so we need assistance with that.
    Mr. Horn. Mayor Smith, any thoughts on this?
    Mr. Smith. Mr. Chairman, I think that the decision to close 
bases is just so narrow in its perspective that there should be 
more consideration given to the reuse component, more 
consideration given to allowing communities access to those 
properties within a military installation that historically 
have not had the presence of unexploded ordnance.
    More consideration should be given and more resources 
should be directed to protecting local communities from the 
hazards of a military institution. These things seem to be an 
afterthought as opposed to a forethought.
    So to sum it up, I would say the resources of reuse should 
be a more vivid part of the thought of closure.
    Mr. Farr. Mr. Chairman.
    Mr. Horn. Mr. Farr.
    Mr. Farr. Mayor Smith, I mean, what you are really saying 
is that it ought to be daily use, ought to be best management 
practices so that they do not become a problem in reuse.
    Mr. Smith. That is correct.
    Mr. Farr. That is, if you are doing good environmental 
management now, you would not contaminate the land. Obviously 
we are going to have unexploded ordnances, but if you kept 
better records and you cleaned-up periodically, you would not 
have this huge liability at the end.
    Mr. Smith. That is correct.
    Mr. Horn. Mayor Smith, when you recalled those accidents 
based in your youth, how often has that happened where some 
child has gotten over the fences? What do you know on that and 
what does Fort Ord know on it?
    Mr. Smith. You know, Mr. Chairman, that incident was so 
vivid in my mind because it was a part of my childhood. There 
have been other incidents on the former Fort Ord. That is not 
saying that the Army did not take steps to outreach to the 
community in terms of making the community aware of the 
unexploded ordnance hazard.
    There have been many incidents in regard to that. I think 
that we are getting back to what Congressman Farr just stated, 
is that if we would work more on the daily usage of management 
and documenting these unexploded ordnances, we would have less 
incidences of this nature affecting the lives of the citizens 
of our communities.
    Mr. Perrine. Mr. Chairman, if I could add to that response, 
I think the most recent incident that I am aware of that I can 
recall, documented incident, was only 3 or 4 years ago where 
children, school age children, entered the restricted area, 
obtained training devices, and took them with them back to the 
community and to an elementary school, and were discovered 
there throwing them against the walls of an elementary school 
within Mayor Smith's community.
    Fortunately, none of them were harmed either in obtaining 
those devices, and they only obtained training devices which 
were lying on the ground immediately adjacent to the live 
devices, unexploded devices, and through some miracle they 
picked up safer ones than the ones that could have exploded and 
ended their lives immediately.
    Mr. Farr. Mr. Chairman, the issue here is that Mr. Smith as 
a child witnessed two children who were seriously injured. That 
event was brought into my life because my father was retained 
as their lawyer. A bill had to pass through Congress to up the 
limit that you could sue the Federal Government. The limit was 
capped at $10,000 at the time, and that is all that they could 
have sued for for this injury. Just the medical bills way back 
then cost more than that.
    What Jim Perrine is talking about is that same thing that 
is happening today. The difference between the issue then and 
today is that it doesn't need to happen today, we know how to 
cleanup this space. We know how to handle unexploded ordnances.
    We are fighting over process. It is all on paper and 
whether you ought to do an environmental impact statement or 
whether you ought to do other process is outside of that it is 
not about debating the actual cleaningup of the base. It is 
debating about whether you should burn the plants off so that 
you can get to the ground.
    Our community and these regulatory agencies out there are 
not collaborating. They are not getting the process of just 
doing the deed of getting the base cleaned-up, which is caught 
up in the morass of questioning the process, not the method of 
cleaning-up.
    Mr. Albert. Mr. Chairman, if I could just add something 
just to highlight something, I remember we were going through 
the BRAC process, and we were testifying in San Francisco, and 
one of the Commissioners on that, and we were talking about 
Fort Ord at the time, and he would just say, ``you know, that 
beautiful piece of property overlooking that bay, I mean there 
should be a land value. I mean it should just''--and I think 
that is the thinking. We will close it down and that will 
happen.
    And I guess what I keep emphasizing is it is fine. It is 
not fine, but you are going to close bases, but alongside of 
that, there has got to be that process that helps communities 
do something with that land that is there. There is more to it 
than just, well, it looks good.
    Mr. Horn. Well, I agree with you on that.
    We are going to have to adjourn now with this particular 
panel, but I certainly hope that you will be around so that we 
can get a dialog between the Federal and State officials. If 
you will take the first row behind you, and then you can come 
to the table.
    So if panel three will come forward.
    Panel three, there are six witnesses, and we will give the 
oath because this is an investigating subcommittee.
    We have read your documents. We are going to give license 
to the GAO because of the overall picture they have provided in 
a very fine brief, but I do not want the documents read. I want 
you to boil it down to what is important.
    You have heard the mayors, and you might want to think to 
yourself because I am going to ask them to come back and say, 
well, what about the State and Federal Government, and so 
forth.
    When we call on you, your record is automatically in the 
hearing that the two court reporters are making, and you do not 
have to ask us. It is there.
    So if you will stand and raise your right hands.
    [Witnesses sworn.]
    Mr. Horn. The clerk will note that the six witnesses 
accepted the oath.
    We will start with Mr. Holman, the Director of the Defense 
Infrastructure Issues, U.S. General Accounting Office.
    For a little explaining here, the U.S. General Accounting 
Office is part of the legislative branch starting way back in 
the 1920's, and they are headed by the Comptroller General of 
the United States, Mr. Walker, and we use them usually after a 
6-month study or a year's study. We use them as the lead 
witness on an issue such as this.
    And Barry Holman, the Director of that Defense 
Infrastructure Issues, has seen all of the problems across the 
country.
    So Mr. Holman, proceed.

STATEMENTS OF BARRY W. HOLMAN, DIRECTOR, DEFENSE INFRASTRUCTURE 
ISSUES, U.S. GENERAL ACCOUNTING OFFICE; PATRICK O'BRIEN, ACTING 
DIRECTOR, OFFICE OF ECONOMIC ADJUSTMENT, DEPARTMENT OF DEFENSE; 
RAYMOND J. FATZ, DEPUTY ASSISTANT SECRETARY OF THE ARMY; KEITH 
    A. TAKATA, DIRECTOR, SUPERFUND DIVISION, ENVIRONMENTAL 
 PROTECTION AGENCY; STEVE THOMPSON, ACTING MANAGER, CALIFORNIA 
 AND NEVADA OFFICE, U.S. FISH AND WILDLIFE SERVICE; AND EDWIN 
    LOWRY, DIRECTOR, DEPARTMENT OF TOXIC SUBSTANCE CONTROL, 
           CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY

    Mr. Holman. Thank you, sir.
    Mr. Chairman, Mr. Farr, I am glad to be here today to give 
you an overview of the four rounds of base closure processes 
that have taken place.
    Mr. Horn. We need to move the mic.
    Mr. Holman. Again, what I want to do is just give you an 
overview of the process, the transfers that have taken place 
during the past four rounds of BRAC.
    Mr. Horn. Is the mic on? Do you see the green lights?
    Mr. Holman. Yes, sir, it is on.
    Mr. Horn. OK. Move up.
    Mr. Holman. OK. What I would like to do is just highlight 
three areas for you, one being the economic recovery of 
communities affected by BRAC, DOD's progress in implementing 
the recommendations of the closure commissions in transferring 
property, and accomplishing environmental cleanup, a subject 
that we have already heard about as being very important.
    Let me just quickly highlight the results of what we want 
to talk about. Again, first, the short-term impact of BRAC. 
BRAC can be very troubling to communities and can be very 
traumatic. However, we have seen as we tracked this issue over 
time that with some exceptions, most communities are recovering 
from the economic impacts of base realignments and closure. Our 
analysis tended to take a very broad view, looking at 
metropolitan statistical areas.
    It is good to have a hearing such as this in Monterey where 
you can see so many different communities and see that there 
can be some unevenness in terms of how communities do fare.
    We have seen that BRAC actions are essentially completed. 
Unfortunately, however, title to less than half of the property 
has actually been transferred to the Federal sector and other 
users.
    Environmental cleanup is progressing, but as we have seen 
and heard, it will require many years to be fully complete.
    One of the things that we have done over the years as we 
have looked at DOD's progress with base closures, is to look at 
what are the factors that help communities recover from a BRAC. 
I will not go into all of them, but I would like to highlight 
just a few of them for you today.
    Base reuse and government assistance in planning and 
executing base reuse are very important to BRAC communities. 
Along with that are leadership, teamwork among participants at 
the Federal, State, and local level--they are essential to 
reaching agreement on key issues, such as property transfer, 
base reuse, and environmental cleanup.
    Having said that, I also want to emphasize the very strong, 
positive impact that we have witnessed in recent years of a 
strong national economy and what that has done to help 
ameliorate the impact of the base closing process.
    Again looking to the impact on communities, back in 1988, 
we did a review and report where we looked at a couple of key 
economic indicators to get a sense of what was happening with 
communities that were affected by BRAC. We looked at 62 
communities--metropolitan statistical areas--where job losses 
had totaled 300 or more involving civilian or contractor 
employees.
    We have updated that data for purposes of this hearing 
today, and we found as we did in 1988 that although some 
communities are faring better than others, the economic data 
suggests that the majority of communities are faring well and 
show improvements since the BRAC process began.
    I say that is the case even though, as we have seen here 
today with the case of Fort Ord, much remains to be done to 
fully utilize former BRAC sites for their potential for 
economic development purposes.
    Of the two indicators we looked at, one was unemployment 
rates. What we have seen is that based on average unemployment 
rates for fiscal year 2000, we found that 43 or 68 percent of 
the 62 communities we looked at had unemployment rates at or 
below the U.S. average of 4 percent. The percentages are 
comparable to what we found in the past, although this time the 
unemployment rate is even lower.
    If we look at the community surrounding Fort Ord, we've 
seen that the unemployment rate has been a little bit higher 
than many of the communities, but even so, it decreased from 
1997, when it was 10.3 percent, now to 9.7, although I hasten 
to add that while I've looked at some statistics in the past 
couple of months, it looks like the unemployment rate in this 
area has gone down even more.
    We've tried to look to see to what extent there has been a 
down-turn in the economy, whether the unemployment rates are 
tending to go up. So far we haven't seen this. So there appears 
to be a lag factor at play there, and we will keep our fingers 
crossed that it stays that way for some time.
    The other indicator that we had looked at was the growth in 
per capita income. As we looked at the per capita income 
increases for the period 1996 through 1999, we found that 33 of 
the communities or 53 percent had average annual per capita 
income growth rates that were at or above the U.S. average.
    An additional seven communities, or 11 percent, had average 
per capita income growth rates that were in close proximity to 
the U.S. average.
    And, again, as we have heard here today, if you look at 
communities around Fort Ord, you can see there can be variances 
within individual communities of a large area.
    Let me turn quickly to the BRAC actions and DOD's progress 
there. Again, DOD reports that of the BRAC recommendations that 
it had to implement, they have essentially completed those in 
terms of taking down flagpoles, transferring units to other 
locations, and so forth.
    They have made decisions on what to do with most of the 
518,000 acres of property not needed by the military. Of that 
property, about 230,000 acres are to be retained by the Federal 
Government, most by the Department of Interior and Justice. 
Title to about 46 percent of that property has been 
transferred.
    Another 286,000 acres are being transferred to non-Federal 
users. There, however, title to only about 37 percent of the 
property has been transferred. If you put the two together, 
about 41 percent of the property has been transferred.
    An additional amount has been leased, but again, as we look 
at the area around Fort Ord, we see that an issue like 
environmental cleanup remains a factor that can greatly stymie 
efforts to get title transfer of that property.
    Now, having said that, environmental cleanup is 
progressing, perhaps certainly not as fast as many would like 
to see, particularly with efforts that have been made in recent 
years to provide special transfer authority--that is early 
transfer authority, for instance.
    Environmental baselines have been completed for many 
installations. Many installations have cleanup activities 
underway orremedies in place. Many more cleanup activities 
remain, but DOD projects that most of it will be done over the 
next few years, but a lot of it will require long-term 
monitoring.
    The issue that is very vivid here in the Fort Ord area is 
the unexploded ordnance, and questions remain as to just how 
much of that will be cleaned-up, how much time it will take, 
and what the standards for cleanup will be over time.
    Let me put this in a bit of perspective as I close in terms 
of the cost for the environmental cleanup in relationship to 
the overall BRAC closure activities. Of the $22 billion 
estimated for implementing the BRAC program through fiscal year 
2001, about $7 billion, or 32 percent, is associated with base 
closure environmental activities.
    Further, DOD estimates that $3.4 billion will be required 
after fiscal year 2001. Now, we see some fluctuations over time 
in what the environmental costs are going to be. Sometimes we 
have seen them go up. We have seen them go down, but I think we 
still have some uncertainty as to what the total out-year 
environmental cost will be.
    Mr. Chairman, I think I will stop at this point. I will be 
glad to entertain any questions you or Mr. Farr might have.
    [The prepared statement of Mr. Holman follows:]
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    Mr. Horn. Leave that particular presentation up. I want to 
ask you. Congress appropriates the cleanup money.
    Mr. Holman. Yes, sir.
    Mr. Horn. And it goes to the Department of Defense. Now, 
what do we know about what happens after we spend hundreds of 
millions to try and get this done, and then there is an overall 
Department of Defense function, and that is my concern.
    They are so slow in providing this money out to the 
services. Could we get a chart out of GAO to put in this 
hearing record at this point? Well, let's look at it this way. 
How much did the Office of Management and Budget that reports 
to the President on the budgets and look at the Clinton 
administration and the Bush administration, and when that money 
goes to the department of Defense, I would like to know how 
fast are they in using that money.
    And here is the Air Force: 52 percent, and yet Defense 
Logistics Agency is 1 percent. Army, 23 percent; Navy, 24 
percent. And that is what is worrying me. People are just 
asitting on money balancing the books is the end we now 
require.
    So if you could get that kind of a chart, without objection 
that will be in the hearing record at this point.
    Mr. Holman. I will see what I can do in that regard, Mr. 
Chairman.
    One issue you may be aware of, in the past few years we 
have done some budget analysis of DOD's the BRAC budget 
requests, and I guess one of the issues we have raised in the 
past few years is just the sizable amounts of unliquidated 
obligations and unobligated balances that are there to be used, 
and for whatever reason, you know, there was a slowness in 
cleaning-up those accounts or using those funds. I think it 
goes to the issue you are raising.
    But I will see what I can do in terms of giving you a 
chart.
    [The information referred to follows:]
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    Mr. Horn. Great. I appreciate it.
    So we now move to our next presenter, Patrick O'Brien, 
Acting Director, Office of Economic Adjustment, Department of 
Defense.
    Mr. O'Brien. Mr. Chairman, before I begin, I would like to 
recognize Congressman Farr's contributions to the local 
recovery support here at Fort Ord. The community often under 
his leadership has repeatedly reached beyond the envelope of 
the status quo to realize its reuse objectives.
    The department's overall reuse program has been responsive 
to local needs, resulting in the creation of nearly 76,000 new 
jobs, or nearly 60 percent of the total civilian jobs lost 
through last fall. This reflects progress at over 75 major 
closure locations.
    Numerous reuse efforts continue to be cited across the 
Nation as examples of successful economic recovery, including 
some here at Fort Ord. Our Secretary commends the many 
successful efforts to date, including those at Fort Ord, and 
commits to assist in the resolution of outstanding impediments 
to successful civilian reuse.
    Let me begin by providing an overview of the defense 
economic adjustment program and OEA. OEA was created by the 
Secretary of Defense in 1961 to help alleviate serious local 
impacts resulting from defense program changes, including base 
closures. OEA assistance consists of technical and financial 
resources. These resources are managed and delivered through an 
OEA project manager directly with local leaders, the involved 
DOD components, and local, State, and Federal agency 
representatives to help communities help themselves.
    Facilitating the redevelopment of former installations also 
requires the coordination of numerous Federal assistance 
programs. These range from technical guidance and grant-in-aid 
to discounted property transfers for authorized public 
purposes.
    OEA project managers work as functional ombudsmen who know 
the types of assistance programs available and can facilitate 
interaction between local officials and representatives of 
these various programs.
    As the leading Federal agency partners, the Economic 
Development Administration with $549 million, Federal Aviation 
Administration with $386 million, Department of Labor with $210 
million have collectively provided over $1 billion in 
adjustment assistance.
    Interagency coordination has also facilitated the Military 
Departments transfer property at 92 former bases, with some 
multiple conveyances for public purposes.
    Beginning in the mid-1970's, several Presidential actions 
sought to enhance the Defense Economic Adjustment Program, 
including the creation of a Federal interagency organization 
called the President's Economic Adjustment Committee.
    These efforts were all focused on supporting the Secretary 
of Defense's actions to assist impacted communities. As 
chairman of the committee, our Secretary is strongly committed 
to assuring that the interagency partnership works to support 
community transition needs.
    Thus, OEA will work to reinvigorate the President's 
Economic Adjustment Committee to focus its efforts on 
prioritizing requirements and resolving regulatory and property 
disposal conflicts.
    It should be noted that since its inception, the overall 
Defense Economic Adjustment Program has assisted more than 350 
communities, over 110 of these arising from the recent four 
base closure rounds.
    Beyond these sources of assistance, the Department has also 
sought to make base closure and disposal supportive of 
community-based reuse. Initially efforts to convert former 
facilities to productive civilian use, such as airports, 
science research parks, industrial manufacturing, schools, 
hospitals, and recreational areas were routinely frustrated by 
laws and regulations, some over 50 years old, which were 
inadequate for the contemporary real estate market.
    Property screening was not responsive to local planning and 
consensus. Environmental analysis and cleanup requirements were 
often not consistent with community plans. And early access to 
property to generate lease revenue, vital to help pay for 
redevelopment, was almost nonexistent.
    Communities could also only acquire property for business 
development through purchase at fair market value, consuming 
essential local resources needed to pay for redevelopment.
    In the mid-1990's, Congress made significant changes to our 
closure and disposal authorities, specifically empowering local 
communities to plan and implement a strengthened community 
based reuse program. These changes allowed communities to learn 
earlier in the process what property would become available, 
which in turn afforded them the opportunity to start reuse 
planning activities sooner. They could simultaneously address 
the interests of community, nonprofit, public, private and 
homeless assistant provider organizations when developing their 
reuse plan.
    Most importantly, they could also acquire the property from 
the military services at no cost for purposes of job creation 
and redevelopment through an economic development conveyance or 
EDC.
    Prior to this change, the Department sought to convey 
property for purposes of job creation for consideration at or 
below the property's estimated fair market value. The EDC, as 
we call it, has enabled the Department to complete 57 separate 
transfers of real property, accounting for over 92,000 acres of 
land and facilities that are projected to support the creation 
of 350,000 new jobs.
    The reuse effort at Fort Ord, similar to most other 
locations, is incremental, building upon opportunities as they 
occur. To date, over 10,000 of the 27,000 available acres have 
been transferred. Considerable Federal assistance has been 
provided to assist with planning and reuse, including $4.2 
million from the Office of Economic Adjustment for local 
planning and organization needs, $29.1 million for project 
planning and infrastructure work from the Economic Development 
Administration; $64.5 million transferred from DOD to the 
Economic Development Administration to carry out provisions of 
past Defense Appropriation Acts; nearly $5.2 million to assist 
approved homeless providers, establish onsite programs from the 
Department of Housing and Urban Development; and $800,000 in 
worker adjustment assistance from the Department of Labor.
    The communities represented at this hearing have taken the 
opportunity base closure presented and made the most of what 
they had to work with to date. Let's look at that once.
    They have crafted a feasible reuse construct in spite of 
the fact that over 60 percent of the former facility, because 
of its slope and the habitats contained therein, must be 
preserved and not made available for any revenue generating 
purpose.
    Furthermore, much of the reuse activity on base today is 
institutional, meaning they are generally public entities 
without any obligation to compensate the communities that 
provide police and fire protection and other public services. 
As a result, the 5,000-plus acres the community will receive 
through an approved, no-cost EDC, which is really the primary 
piece that is outstanding here, is necessary so that local 
jurisdictions will be compensated for their public costs 
through developer fees and property tax payments. In essence, 
it makes the local community whole.
    The challenges presented by the witnesses include some that 
test the boundaries of federalism and demand fundamental 
changes in Federal-State partnerships focused on support to 
local economic recovery.
    Clearly, we need to seek consistent support from the 
Federal partners in this effort through the common goal of 
local economic recovery. Within the State of California, we 
have seen the Department of Trade and Commerce work on behalf 
of community adjustment and the California Environmental 
Protection Agency and its departments carry out their 
regulatory mandates on the process.
    The local air and water boards represent another layer 
beyond the Federal Government, adding to the complexity of the 
local efforts. Just as we will work to encourage the 
President's Economic Adjustment Committee to focus its 
activities on prioritizing requirements and resolving the 
regulatory and property disposal impediments to reuse, we call 
upon the State of California to consider the same with its 
agencies and local boards.
    In closing, Mr. Chairman, I thank you for the opportunity 
to come before you to describe what we at the Department of 
Defense believe to be an important program, one that benefits 
both the department and communities we serve. The Department's 
primary mission is the defense of our Nation and way of life, 
and we recognize the responsibility to help communities adjust 
to significant impacts that may result from changes in our 
programs.
    I would be pleased to answer any questions you may have.
    [The prepared statement of Mr. O'Brien follows:]
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    Mr. Horn. Thank you. We will be asking questions once 
everybody testifies.
    The third presenter is Raymond J. Fatz, the Deputy 
Assistant Secretary of the Army.
    Thank you for coming.
    Mr. Fatz. Mr. Chairman, Mr. Farr, thank you for the 
opportunity to appear before the subcommittee today.
    For the last 5 years, I have developed Army environmental 
policy and guidance and overseen implementation of 
environmental programs at Army installations. Since 1988, the 
Army has closed or realigned 139 installations. We have 
realized a one time savings of over $3 billion and will realize 
additional savings of almost $1 billion annually.
    BRAC allows the Army to divest itself of unnecessary 
infrastructure so the Army can focus more on fighting and 
winning the Nation's wars and allows local communities to 
redevelop much of this surplus property for their benefit. BRAC 
makes sense. It is good for the Army, and it is good for the 
Nation.
    The Army has made considerable progress in cleaning-up Fort 
Ord and making it available for redevelopment. Of the 28,000 
acres at Fort Ord, the Army has transferred over 10,500 acres 
since it closed in 1994 to five educational institutions, the 
Fort Ord Reuse Authority, the Bureau of Land Management, and 
other guarantees.
    We have investigated or removed ordnance and explosives 
affecting over 3,000 acres. We have remediated other 
environmental contamination at many other locations. We have 
maintained habitat to protect endangered species, and we have 
conserved land and natural resources.
    Our progress has been in the face of many challenges. We 
will find some of these when any base closes and some are 
unique to Fort Ord because of its location, the presence of 
listed or endangered species, including the largest 
concentration of maritime chaparral on the West Coast, its 
listing on the Superfund's national priority list, and the 
presence of ordnance and explosives on thousands of acres.
    Closing bases is not cheap, and it takes time. We have 
spent over $267 million at Fort Ord in the last 7 years. The 
cleanup of groundwater and ordnance and explosives will cost 
$326 million more. The $30 million budget for this year is 
almost $11 million more than originally programmed.
    Complex Federal and State environmental laws and 
regulations and their extensive opportunities for consultation 
and regulatory oversight complicate our cleanup, especially 
when applied to a place like Fort Ord where ordnance and 
explosives are the most difficult and costly cleanup 
requirement.
    While detection technologies have improved, they are 
imperfect, and finding ordnance and explosives are costly and 
dangerous. The thick chaparral habitat of Fort Ord which 
supports endangered and threatened species hides buried 
ordnance. While burning it makes the ordnance accessible and 
promotes habitat management and conservation, recent legal 
action has frustrated our ability to conduct prescribed burns.
    Other lawsuits have also slowed cleanup and transfer. One 
suit was resolved when we volunteered to undertake a remedial 
investigation and feasibility study under CERCLA that will take 
several years to complete.
    In another suit, a 1999 decision of the Ninth Circuit Court 
of Appeals exposed us to an increased risk of further 
litigation by finding wider jurisdiction to attack Federal 
facility remedial cleanups. Delays caused by litigation 
frustrate both the Army and the members of the local community 
and the regulatory community.
    In the face of all these challenges, progress requires 
imagination, collaboration and innovation. All three are 
combined in strategy management analysis requirements and 
technology teams. We created the SMART team in 1999 after the 
EPA in California's DTSC agreed with me that we needed a tool 
that would get beyond the day-to-day problems and find 
solutions. The SMART team's success is due in large measure to 
the personal investment of Congressman Farr, Mr. Lowry from 
DTSC, and Mr. Takata from EPA.
    The SMART team is exactly the kind of intergovernmental 
cooperation BRAC demands.
    The Army's No. 1 priority at Fort Ord is to clean it up to 
a level that protects health, safety, and the environment. And 
do it so that we support the community's reuse goals and 
objectives. Our considerable progress has been the product of 
the goodwill and cooperation among the Army, conscientious 
regulatory agencies involved and formed in committed 
communities, the Fort Ord Reuse Authority, and support of 
public servants like Congressman Farr.
    The Army continuously seeks ways to streamline the process 
to support reuse priorities and to leverage resources, 
technologies, and innovation whenever we can find it. The Army 
will work with the regulatory community to resolve the 
important issue of vegetation clearance.
    We are continuing our ordnance and explosive remedial 
investigation and feasibility study, but we will continue to 
transfer property in the meantime. We will transfer 86 more 
acres this summer to the city of Marina for further development 
and another 2,200 acres this fall to various recipients.
    I am optimistic about the future and will work hard to 
realize the hopes we all share about the former Fort Ord. I 
appreciate the opportunity to testify and provide the Army's 
view, and I look forward to your questions.
    Thank you.
    [The prepared statement of Mr. Fatz follows:]
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    Mr. Horn. Thank you.
    Next is Keith A. Takata, the Director of the Superfund 
Division of the Environmental Protection Agency.
    Mr. Takata.
    Mr. Takata. Good morning, Chairman Horn and Congressman 
Farr.
    I will not say it is a pleasure to be here because I am 
under oath, but I do thank you for the opportunity to talk 
about how the base closure is going.
    I do not intend to repeat my written testimony here, but I 
would like to spend a few minutes talking about what has worked 
and what has not worked. But let me start by going back a 
little bit in time here.
    You mentioned that in the four rounds of base closures we 
have had, about 100 bases closed nationwide. Twenty-six of 
them, about a quarter of them, were in California.
    Of those closing bases 39 are on the Superfund national 
priorities list, 12 of them in California, including Fort Ord 
here in Monterey. So as you can see, California took kind of a 
disproportionate share of the impact of base closure.
    And I think from the beginning all of us that worked on 
this, DOD, EPA, the States, all of the local governments have 
had two really overriding concerns. One of them is just the 
sheer size and scope of both the health and environmental 
problems of the closing bases. Each one of these bases are like 
little cities really.
    At Fort Ord, for example, we had over 40 sites, a large 
landfill, groundwater problems, lots of soil contamination 
problems. Plus we have 9,000 acres of unexploded ordnance.
    But obviously the other large concern was the economic 
impact on the local community. At the time of the first 
closures in California, it was estimated that California could 
lose thousands of jobs and lose billions of dollars annually. 
So all of us knew what was at stake if cleanup and reuse got 
bogged-down by the process. So we really tried a different 
approach here, which was more team oriented and less 
adversarial.
    DOD tried to work closely with the local governments on 
their reuse plan, and at the same time DOD, EPA, and the State 
got together in these base closure teams to try to expedite 
cleanup.
    How did things work? Well, as you have already heard, we 
have had both successes and challenges. I think the bottom line 
for me is things work the best when decisions on cleanup and 
decisions on reuse are closely coordinated and all the parties 
are involved up front.
    I think the best example at Fort Ord is the cleanup of the 
more traditional hazardous waste problems: the landfill, the 
groundwater problems, the non-unexploded ordnance problems. We 
have had a lot of experience at sites like this. We know how to 
clean them up. We are able to fit the reuse to the cleanup, and 
this has led to the successful transfer of thousands of acres 
as people have already mentioned, especially the California 
State University.
    On the other hand, I think the most difficult issue at Fort 
Ord is what people have already talked about, which is the 
cleanup and reuse of unexploded ordnance. The basic problem 
here is that the reuse plan got way ahead of the cleanup plan, 
and while the Army has transferred 7,000 acres to the Bureau of 
Land Management, the parcels that were slated to local 
government for their reuse were held up until we could figure 
out how to detect and cleanup UXO, which is something that we 
really have not done very much of in this country before Fort 
Ord.
    The creation of the Army's SMART team and Congressman 
Farr's personal involvement has really helped us get back on 
track, and FORA and the local governments have been extremely 
patient and very constructive in the process. And I think this 
is what makes Fort Ord different from McClellan.
    McClellan was not only an Air Force base. There is one 
difference there, but I think the big difference is that 
McClellan did not have a UXO problem. It had more traditional 
hazardous waste problems.
    Our biggest challenge nationwide, I think, is that if we 
want to safely reuse property that contains UXO, the cost of 
cleanup, as everybody mentioned, is going to be really high. 
The DOD budget already exceeds EPA's budget for Superfund, just 
as an example, and it does not even count all of the cost of 
cleaning up UXO.
    I think the GAO report said that the UXO problems could 
cost anywhere from $14 billion to $100 billion. Just in 
contrast, the DOD's present budget for UXO at formerly used 
defense sites is only $40 million a year. So you can see it 
would take many years to cleanup all of the sites at that cost.
    In closing, let me just touch on three things that some of 
the earlier panels talked about. One is I think it is really 
important that we factor the cost of reuse and cleanup into the 
original decision to close the base in the first place. I do 
not think that was really done as well as it could have in the 
first rounds.
    For example, had we known how much it would have cost to do 
all of the UXO cleanups, that might have made us look 
differently at closing some of the bases that had UXO on them.
    Second, I think it is really important to factor cleanup 
considerations into reuse and vice versa. So it is very 
possible for us to do a better cleanup in some soil areas to 
enable the local governments to do whatever they want in terms 
of reuse, housing, residential, etc.
    On the other hand, sometimes something is so contaminated 
that it does not make sense to use for a particular use. For 
example, no one would ever recommend that we would build houses 
on a landfill.
    And then last, I think it is really important to adequately 
fund both the cleanup, which is what some of the local folks 
already talked about, but also all of the reuse activities, 
including some of the costs that aren't covered by any of our 
programs, asbestos, lead based paint, etc.
    So thank you for the opportunity to testify, and I would be 
happy to take questions when the panel is finished.
    [The prepared statement of Mr. Takata follows:]
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    Mr. Horn. Thank you very much.
    Next is Steve Thompson, the Acting Manager for California 
and Nevada, the U.S. Fish and Wildlife Service.
    Mr. Thompson. Thank you, Mr. Chairman and Mr. Farr.
    The Fish and Wildlife Service has been involved in Fort Ord 
since about 1991, and I am going to focus on a couple of things 
on burning and the habitat management plan, and we will save 
the rest of the testimony for the official record.
    In 1994, the Fish and Wildlife Service and the Army agreed 
upon a habitat management plan.
    Mr. Horn. Could you talk right into the mic?
    Mr. Thompson. The habitat management plan provides 
conservation for federally protected species while allowing the 
cleanup of unexploded ordnance at Fort Ord. The foundation of 
that conservation plan was for the use of prescribed fire.
    Burning of the vegetation was identified in the habitat 
management plan as the most efficient and the safest method for 
clearing certain sites of ordnance.
    In addition, burning is the most ecologically sound 
practice for conserving federally protected species on these 
sites and other species that are in decline in this area. 
Recurring fires are an important part to maintaining a healthy 
ecosystem in the maritime chaparral.
    The recent lawsuits brought by the State of California Air 
Resources Board and the resultant court orders have resulted in 
delays in implementing the habitat management plan and the 
burning.
    Conveyance of these remaining properties was based on the 
strategy of cleanup using burning as our major management tool. 
If we are asked to revisit the burning as a preferred tool for 
cleanup and for habitat management, we would have to reevaluate 
which lands are needed for conservation of federally listed 
species.
    The configuration and the amount of land to offset the loss 
of endangered species by development was based on a healthy 
chaparral maritime ecosystem. We have three major concerns, and 
I'll try to summarize those quickly for you.
    If the Army or the BLM are unable to burn, then we would 
have to rely on mechanical methods. The Monterey area maritime 
chaparral community might degrade and decline, impacting listed 
species and also other declining species that have a high 
probability of highly listed in the future.
    The primary management tool in the habitat management plan 
was burning. If we have to emphasize mechanical, we would most 
likely have to reinitiate consultation under Section 7 of the 
ESA.
    The switch from burning to mechanical may also impact the 
habitat conservation plan, which is based on the burning part 
of the habitat management plan. The habitat management plan is 
based on the foundation of burning.
    The Army and the Fish and Wildlife Service, the State 
agencies and local communities have been working together for a 
number of years to realize a transfer from Fort Ord. All of the 
parties have invested significant amounts of resources and time 
and effort, and we share in that desire to move forward with 
the cleanup, the transfer, and the reuse activities as 
described in the habitat management plan, and the goals of the 
habitat management plan could then be achieved.
    We are committed to working through these issues to ensure 
the lands are transferred in a timely way so that we meet the 
needs of the community, the Army, and the affected species.
    Thank you.
    [The prepared statement of Mr. Thompson follows:]
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    Mr. Horn. Thank you.
    And our last presenter is Edwin Lowry, director, Department 
of Toxic Substance Control, California Environmental Protection 
Agency.
    Glad to have you, Mr. Lowry.
    Mr. Lowry. Thank you.
    Good morning, Mr. Chairman and Congressman Farr and other 
members of the panel and the community.
    I can say under oath it is a pleasure to be here. It is 104 
degrees in Sacramento today and considerably nicer here. 
[Laughter.]
    I wanted to touch on a few of the items which are in my 
testimony rather than reading the testimony. First of all, the 
Department of Toxic Substances Control is a department within 
the California Environmental Protection Agency. We are the lead 
agency for environmental remediation and environmental 
compliance in the State of California for military base 
closures. We cooperate with other agencies within that agency, 
including the Water Resources Board, which has a significant 
role as well.
    We have toxicologists, public participation specialists, 
geologists, environmental scientists, and others who work very 
hard on these problems and have a good, cooperative 
relationship with the Federal and local folks who are also 
working on the problem.
    I wanted to emphasize or reiterate Mr. Takata's point--and 
a point which was made by others--which is that the estimates 
for funding in environmental cleanups and the estimates of the 
cost of base closures are made before many of the problems 
which are discovered.
    I note that McClellan Air Force Base has been mentioned 
today. There is a $44 million additional cost there, which was 
the result of digging-up a landfill which has drums which have 
been there for 50 years.
    We simply do not know at the beginning of the process what 
it is going to cost, and if we can find a way to either 
estimate that better at the beginning or to build in mechanisms 
to adjust when we learn about these additional costs, we will 
do much, much better.
    Second, the way in which funding is now done for BRAC 
cleanups and for FUDs and so forth is there is no fenced-off 
line-item within the Department of Defense budget, which is, 
``this money is for environmental cleanup and remediation and 
nothing else.''
    So what can happen is that these funds can be reprogrammed 
for other uses as the fiscal year goes on, and indeed, one of 
the problems and perhaps mysteries of the Federal budgeting 
process is it goes on year to year, and the numbers which we 
think we will have 3 or 4 years down the line we do not have 
those funds.
    If you look at the proposed budget for the next fiscal 
year, you will see, depending on how you do your calculations, 
between 5 and 10 percent cut on some of the Defense Department 
cleanup moneys for closing bases, and that will not be helpful.
    We also have a significantly greater cut planned for UXO 
cleanup and technology investigation within the Department of 
Defense. We need to fund these programs adequately so we can do 
the job which is necessary to cleanup the bases so that they 
are good and safe for civilian use and transfer.
    I wanted to also emphasize a couple of things which have 
not been brought up here but might be useful to you, Mr. 
Chairman, in the overall context of base cleanups. We have 
participated in several early transfers of military bases where 
title is transferred, but the cleanup is not yet complete. I am 
sure you voted on that legislation about 5 or 6 years ago to 
allow that process to happen.
    This has been a successful model in the State of California 
for transferring facilities. What it does is it gets the 
military out of the business of cleaning-up the property, and 
it is my opinion that their best job is defending us, and they 
have real challenges in the cleanup process.
    The early transfer process allows them to continue their 
main mission and to transfer the authority and, frankly, the 
problems to those who are experts at the cleanup and conversion 
of the facility. There are some innovative public-private 
scenarios which are underway in the State of California. Mare 
Island is a principal example of that, where a private 
developer, as outlined in my testimony, is taking over 
virtually all of the responsibility for the cleanup. They are 
also paid by the Navy to do that, but they negotiated a price, 
purchased insurance, and now have both the responsibility, the 
authority, and the incentive to get that job done.
    In summary, what I would like to say about this entire 
process is when I was appointed by the Governor in 1999, I did 
not know a whole lot about environmental remediation of closing 
bases, but also, I think at that time we had a fairly 
adversarial relationship with the Federal Government and with 
the Army.
    When we came to the table, I think the question was: Who 
are you and why are you here?
    And in the past 2 years, I think we have done a terrific 
job of working together to resolve these problems, and Mr. 
Fatz, I think, hit the nail on the head. The SMART team process 
has really furthered that mechanism and that spirit and goal of 
cooperation between us.
    Thank you.
    [The prepared statement of Mr. Lowry follows:]
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    Mr. Horn. Well, thank you, and I want to thank the 
California Environmental Protection Agency. I sit on the 
subcommittee of transportation, and in the mid-1990's they told 
us about a plan they had where they worked with business and 
let business work on some of the paperwork where you had 
warehouses filled with reports that the press could not look 
at.
    I said to the Assistant Director of EPA at that time, ``Do 
you think you can do that for the national group?''
    Well, here we are, mid-1990's. They have not done a thing, 
and maybe, Mr. Takata, you can tell me they have made some 
progress, but they had not then, and California was way ahead 
of what the national agency was doing.
    What do you think, Mr. Takata? Have they been able to get 
these reports on Superfund and everything else and work with 
business?
    Mr. Takata. Well, I think that we have really tried hard to 
make Superfund work. When Superfund was first passed by 
Congress, there were a lot of problems with maybe studying 
things too much, a lot of lawsuits.
    We have gone through several rounds of trying to reform the 
statute administratively now, and I think you can begin to see 
the progress of Superfund nationwide and in California.
    We have a measure which we call construction completion, 
but it is basically a point where everything is done at a site, 
and I do not have the figures right in front of me now, but 
after a very slow start, both nationwide and in California, we 
have over half of the sites in that construction completion 
phase. So, I think we are making progress.
    Mr. Horn. I know mostly on the Superfunds, the word was, 
``Well, we have put more money in lawyers' pockets than in 
cleaning-up the Superfund.''
    How are we now on that?
    Mr. Takata. Well, we have made a number of reforms along 
that, with that problem as well because it is such a powerful 
law, to begin with, and it should have been a powerful law, I 
think.
    These sites were around for years and years. Many of them 
started as a result of World War II, but some of them, you 
know, from the earlier century, some of these mining sites, for 
example. And all of the existing environmental laws, both State 
and Federal, were not adequate to clean them up. So Congress 
passed a very strong statute that allowed EPA to use 
enforcement authorities to clean these sites up and to fund the 
cleanup if we had to, if the parties would not agree to 
cleanup.
    That has worked very well in getting those sites cleaned-
up. The trouble is and the point that you make is that same 
strong legal authority has led to lots of lawsuits between 
parties, between parties and insurance companies, between 
citizens groups and EPA, citizens groups and industry. So it 
has led to lots of legal problems.
    What we have tried to do is focus on the cleanup and focus 
on making parties pay for what they caused. I think one of the 
problems in the past is we would tend to try to get a party to 
pay for more than they caused, which made them feel unfair 
about the process and made them feel like--you know, they felt 
litigious.
    Now, by focusing on getting parties to cleanup what they 
cause, I think that has really cut down on the lawsuits and cut 
down on some of the money going to legal fees.
    Mr. Horn. Well, I am glad to hear that.
    Mr. O'Brien, in your testimony you mentioned the creation 
of a Presidential committee in 1961. Is that--go ahead.
    Mr. O'Brien. Mr. Chairman, while the Office of Economic 
Adjustment was created in 1961, the President's Economic 
Adjustment Committee was actually created in the mid-1970's 
after recognizing that responding to community impacts has to 
go beyond the Department of Defense.
    I think overall we are one of the only non-war fighting 
components within the Department of Defense, and we are focused 
on assisting communities, but our expertise is limited. So we 
need to call to the table these other Federal resources.
    That committee was reestablished in January 1992 by 
Executive Order 12788 by then President Bush. It established 
and reemphasized the need for the coordination of this 
assistance, and basically directed the Office of Economic 
Adjustment to be managing that program and providing staff 
support to it.
    Shortly thereafter, with the reorganization of the 
Department in 1993, the committee basically did not function, 
and it is now our intention to reinvigorate it and attempt to 
address some of these issues to the extent we can do so 
federally.
    Mr. Horn. Does your Office of Economic Adjustment do the 
staffing for the Secretary of Defense on these issues?
    Mr. O'Brien. On economic adjustment, yes, sir, and we have 
gradually become advisors on the implementation of reuse policy 
for the Secretary. We have also from time to time gone out to 
craft and organize the implementing regulations for the new 
community-based provisions which I referred to in my statement.
    Mr. Horn. Are you the ones that then assign the budgets to 
the various services based on the Secretary signing off on it?
    Mr. O'Brien. No, Mr. Chairman, we are not. The budgeting 
process actually originates each service, and perhaps my 
colleague, Mr. Fatz, can describe, for instance, the budgeting 
process within the Department of the Army.
    Each service is responsible for crafting their respective 
obligations in the form of a budget, and it is then vetted-up 
their chain to our Comptroller.
    Mr. Horn. But the money does come from Congress. It goes to 
the Department of Defense. Now, does that go to your office, 
and how does it get down to the services?
    Mr. O'Brien. Yes. I can only speak to our separate 
appropriation. We are a field activity under the Secretary, and 
we are focused solely on the reuse. The funding for cleanup, in 
addition to the other activities that support the closure and 
disposal of properties, is a separate process, and again, 
perhaps Mr. Fatz can address that.
    Mr. Horn. Mr. Fatz, what about it? Where do you find the 
money? Where is the money?
    Mr. Fatz. It comes from you, sir. [Laughter.]
    It comes from Congress.
    Mr. Horn. And we send it over there across the Potomac. 
Now, who do you get it from over there?
    Mr. Fatz. Yes, we get it from the OSD Comptroller.
    Mr. Horn. Yes.
    Mr. Fatz. And we build our budget from the bottom up. We 
put in our requirements for what we need. There is no fence 
line in our budget like Mr. Lowry stated. Sometimes the BRAC 
cleanup line like any other line item is identified, but it can 
be used for other higher priorities, like a quick deployment to 
Europe.
    Mr. Horn. OK. Well, Mr. Holman is going to look at all of 
this, and we will have this in the record at this point.
    The gentleman from California, Mr. Farr.
    Mr. Farr. Thank you very much, Mr. Chairman, and I 
appreciate this panel.
    Essentially what you heard in the first panel were the 
local folks who said that the process is too slow, the process 
is too many agencies, and the process is too top down, and this 
panel is that enemy that creates all of that.
    The frustration that I have is that I do not know whether 
we are really in dialog here or just kind of, as so many of 
these hearings often become, it is just everybody sort of 
telling their own story without allowing us to glue it all 
together.
    Mr. Holman pointed out, and I read your report, one of the 
things you do not do is look at what other people said. GAO 
ought to take a look at the total cost of cleanup of the base 
and all the other factors weighing into the COBRA model and 
then have DOD say if you are going to really look at base 
closure, you have got to look at everything, not just the 
savings you are going to have from payroll and base maintenance 
and base operations from closing a base because that is all 
they are looking at.
    They claim the savings that Mr. Fatz talked about, that 
they have saved all of this money from base closure. What they 
do not talk about is the fact that somewhere else somebody had 
to pick-up some of these costs, and the military did not do it.
    I really think that we need to do that. I was very 
interested in your report where you talked about the impact on 
the local labor force and used Merced, CA as one of the 
communities where there was a negative impact caused by the 
base closure.
    But you pointed out that was offset because of other 
economic factors in California. The biggest was the building of 
a prison. There were a lot of Federal and State expenses in 
that. I mean, that was money, taxpayer dollars, and the opening 
of a new university or at least the commitment to open up a new 
University of California.
    The third factor you mentioned was the fact that there was 
so much overcrowding of the Bay Area, which is a lack of 
affordable housing, a lack of government attention to the 
problem.
    So in all three cases, the factors that helped Merced were 
essentially controlled by government, and so, we sort of say, 
``well, we have saved money because it was not our account,'' 
but indeed, the taxpayers pay for it.
    So I think we need to get a more realistic cost balance of 
our base closure.
    I think that the first panel could also indicate--I mean, 
Mr. O'Brien is in a position where he is the good guy because 
he comes with the checks and passes them through. I will have a 
question for that at the end.
    But, Mr. Fatz talked about the fact that we spent $267 
million on Fort Ord so far, and the idea in Washington is that 
we have been there, done that. Fort Ord is a success for all of 
the reasons that we outlined earlier.
    But I think the most shocking thing you said today is it is 
going to cost even more than that between now and at the end, 
another $326 million more to cleanup the fort.
    Where are we going to get that money? This process has been 
too slow. It is too slow already, and I do not see any money in 
site for making it faster.
    Mr. Takata came in with this idea that, we know that Fort 
Ord is more expensive than McClellan because of the cleanup, 
and we know how to cleanup the land, but still EPA participated 
in that lawsuit that slowed the process down, and that again 
goes back to the local government's complaint about it is too 
slow.
    Mr. Thompson said something shocking. That is that if we do 
not burn, then we are going to have to go back and redo the 
whole thing about what is the habitat management plan. We start 
all over, begin at square one.
    Let me ask you this. If we start at square one, would your 
department, with the knowledge you now know about habitats, be 
able to downsize the management plan because you would not have 
as much habitat to manage? I mean, the critical mass is there 
and do you have to have it all?
    Because you have a lot of people in this room who will tell 
you that they are not going to allow this to burn. They are 
going to file lawsuits. They are going to do everything they 
can to stop burning, and you just said if we do not burn, it 
all stops.
    This is one of these problems where the right hand does not 
know what the left hand is doing.
    Mr. Lowry, I mean, are you ready to allow it to burn? Is 
that OK with you? You are the Office of Toxics, and people are 
claiming that the smoke is toxic.
    I got from your testimony that the fastest way--I do not 
think this is what you meant to say--but in many ways it was 
like if we did not close bases, we would not know all of this 
stuff was here, and we would not be involved. If we just did 
not ask, we do not tell, your office does not get involved 
because it is still Federal ownership, Federal land, and the 
States do not have a role on military bases.
    So if we just did not close anymore bases in California, we 
would not have to worry about cleanup.
    See, I am sitting here. I just see that the first panel say 
that what we heard from the second panel is the reason that we 
are just where we are, kind of stuck. How can we do this 
faster, smarter? We need to change Federal law, and we need to 
commit more money.
    But I just kind of addressed the whole panel there, and I 
would like to feel that there is some response. Maybe my one 
question, the only one I did not say something about, Mr. 
O'Brien. You go around watching all of these bases close in the 
United States, not just here in California. Have you noticed 
any difference between those bases that are closed in States 
which have less State law?
    I mean, are there unsuccessful or successful transfers 
because of State law? I mean, does State law hurt or help in 
the transfers? And are there States that have been less 
involved and, therefore, the transfer went a lot faster?
    Mr. O'Brien. In the States that we work with, Congressman, 
which number just about all of them, we have an active State 
regulatory function in a handful, including Massachusetts, 
Florida, and California. They are regulatory in the sense that 
they might have something like an environmental impact review 
process, which is either replicative of the Service's EIS, 
environmental impact statement analysis and/or a very detailed 
Environmental Protection Agency-type function.
    And on that latter one, perhaps Maine and a couple other 
States would come to mind as well.
    I can sincerely state that we have not seen the type of 
what appears to be intractable issues that we have found here. 
I cannot explain the reason for that. Perhaps it is UXO. 
Perhaps it is a preponderance of not just Federal regulations, 
but also State regulations and local boards.
    You stopped short of asking about local functions. I do not 
believe we have the type of local layers elsewhere that we do 
here in California. We would have to do a more detailed look, 
though, to say what causes these issues to occur.
    But clearly, and I think the record speaks for itself, that 
across these different sites, we have a very active State 
review process in California, and we do not see things flowing 
perhaps as quickly as they could from the process.
    Mr. Farr. Does anybody else want to comment?
    I wonder can I get Mr. Thompson and Mr. Lowry? Mr. Thompson 
indicated that if we do not burn according to a habitat 
management plan, you're going to have to go back and revisit 
the whole habitat management plan. I do not expect us to go 
there, but if we did--can you downsize it?
    Mr. Thompson. Well, first of all, I would like to express 
that we are also very frustrated with the process here and that 
we have been working with the community since 1994. We thought 
we had a good habitat management plan, which is the basis of 
our process to grant the incidental take permit so that we 
could allow permits for the take of endangered species.
    So if we do have to switch to mechanical, that does force 
us to reevaluate the process. I do not think it completely 
stops things, as you characterize it, but we do have to go 
back, try to figure out a new----
    Mr. Farr. Going back stops.
    Mr. Thompson. Yes.
    Mr. Farr. You have got to stop before you go back, you 
know. You cannot just shove it in reverse.
    Mr. Thompson. That is correct. And we would have to find a 
new process, a new way to reinvigorate the habitat so that we 
would take care of the endangered species that are there, and 
that also includes a whole host of other species that are on 
the verge of being listed as endangered.
    This was, according to everybody's best effort, the best 
way to conserve this natural habitat out there and protect 
endangered species and allow for incidental take.
    Now, it would be pre-decisional for me to tell you that we 
could give the permit in so many days, but in similar projects 
like this one or this closure, you know, we could be within 45 
to 60 days of the public process that we need to have in place 
and permits issued.
    So I think we are very close, and we, too, are frustrated.
    Mr. Farr. Will Mr. Lowry with the Office of Toxics allow 
that to take place?
    Mr. Lowry. The lawsuit which we have discussed earlier was 
filed by the Air Quality Management District, which is a local 
board, and I think the members of that district are actually, 
the members of the board----
    Mr. Horn. Speak a little closer, please.
    Mr. Lowry [continuing]. Are members of local government, 
elected officials. So we would not have a role in that. What we 
have been looking at are issues related to if you do the burns 
is the smoke created any more toxic or dangerous because you 
are adding explosives which would be blowing up weapons and so 
forth.
    I am not sure we are completely done with that, but I do 
not believe it is a significant additional risk. So the issue 
is more a local air district problem with smoke than it is a 
toxics issue.
    You also asked, perhaps a bit facetiously, but I think 
realistically, well, if we do not close the bases, the 
California Environmental Protection Agency is not here and we 
will not have these problems.
    And I guess the answer to that is we do have authority over 
active military installations, but one of the rules which we 
operate is that the military is required under laws which 
Congress passed to leave the property or clean it up to a 
reasonably intended use.
    And as long as they are using ranges to test weapons and so 
forth, that is the intended use, and you will expect unexploded 
ordnance to be there.
    Once you try to convert it to some other use, then there is 
a role for us to play.
    Mr. Farr. Have you been playing that role on an active 
military base?
    Mr. Lowry. With respect to?
    Mr. Farr. Any changed use so that it triggers that the 
State come in on an active military base?
    Mr. Lowry. Not on a changed use. We do regulate the 
treatment, storage, disposal, and generation of hazardous 
waste, for example, and we do inspections and file enforcement 
actions against the military and work with them on compliance 
issues throughout the State.
    Mr. Takata. Congressman, may I clarify something?
    Mr. Farr. I did not mean to pick on you. You have been a 
hero in moving the process along.
    Mr. Takata. Thank you. Thank you very much.
    And I do not mind being picked on, but I want to clarify 
something. First of all, I do not want to leave anybody with 
the impression that EPA actually opposes burning per se. In 
fact, we were not a participant in either one of the lawsuits. 
It was the local Air Board and the local community group here.
    But here is the thing. In order to do the cleanup, you have 
got to clear the vegetation. In order to get the vegetation 
out, you either have to burn it or clear it by some other 
means.
    Now, burning is cheaper. So the Army would rather do it 
that way, and the Fish and Wildlife Service supports it because 
it helps with the habitat management.
    But the fact of the matter is it is very controversial 
among some community members, and the Air Board has taken up 
that issue and filed the lawsuit, and that issue is the safety 
of burning vegetation, but also vegetation that has UXO on it. 
I think it is a legitimate issue.
    Mr. Farr. But sitting behind you, you heard from Mayor 
Smith, who had two friends who actually you might say did 
manual cleanup. They picked it up, and it blew them apart. I 
mean, there is a risk to the people on the land, too, not just 
the endangered species.
    Mr. Takata. Absolutely, and so it is our job, I think, as 
government agencies working on this to try to work through all 
of these problems, and here is what we are trying to do.
    You know, we have been working with the Army to come up 
with this strategy. First of all, they are presently looking at 
all of the alternatives to vegetation clearance, including 
burning, and this is going to be helpful because maybe not 
everything needs to be burned, and also it will be helpful in 
explaining the decision to the residents and community in the 
Monterey Bay area.
    As Mr. Lowry stated, we are trying to look at what are the 
health impacts of burning. Do you add anything more from 
burning UXO to vegetation?
    And then last, if the Army does end up choosing burning, we 
all want to make sure that we have a really good burn plan in 
place.
    Now, I think we are on course for that now. We got set back 
by the lawsuit, but we are now back on track. We have a couple 
of symposiums coming up, one this month and I think one several 
months later, and the Army hopes to make a decision on whether 
or not to burn or use other methods of clearance some time next 
year.
    The thing I want to stress though is in the meantime, the 
vegetation can be cleared mechanically. None of the parcels 
that were slated for reuse by the local governments have been 
held up because of this issue. We have been able to work 
through each one.
    Now, the one that is possibly held up, but we still are 
right in the middle of that discussion is Parker Flats, but all 
of the other ones were moved forward without burning.
    Mr. Farr. Last, Mr. Fatz, are we going to commit the Army's 
resources to this cleanup, this $326 million? Can we get a 
commitment that as this is needed, it will be there? Are you 
not going to leave us hanging dry?
    Mr. Fatz. That is $326 million over approximately 15 years, 
and we will put in that request.
    You know, sir, in Congress the ordnance issue has gotten a 
lot more attention. We have a number of Members of Congress 
trying to get special legislation to create line items just for 
ordnance removal because it is so costly, and it is dangerous 
out there.
    But we expect to have in Fort Ord's case the remedial 
investigation and feasibility study done on the burning and 
have an interim arrive by next summer.
    Mr. Farr. But you are not changing the way you cleanup 
unexploded ordnance. A lot of this whole debate has been not 
what you do once you get in the land. It is how to get on the 
land.
    Mr. Fatz. Yes, sir. Here it is the chaparral that hides the 
ordnance. And the burning is less costly, but it is much safer 
to the operators that have to go out with manual or mechanical 
devices to take down the chaparral, and it is still a hazard.
    Mr. Farr. Well, I think that is what is missing in the 
debate. This is a debate about the impact of the smoke, not a 
debate about the impact on human risks and cleanup.
    I appreciate the panel, and I appreciate the Chairman.
    Mr. Horn, I have to really tell you that you and I have 
been friends for a long time, but you are the first Member of 
Congress to come here, and sitting on a committee with this 
kind of jurisdiction, to have the responsibility to do the 
oversight, and I really appreciate your bringing the committee 
and your staff out here.
    Mr. Horn. Well, thank you. We appreciate it.
    I would like to hear from the mayors before we wind it up. 
If there were questions that were not asked by either Mr. Farr, 
myself or each other, we have got a little chair down there at 
the end of the table, and you can borrow Mr. Holman's mic if 
anybody wants to just raise it.
    We are not going to have any great extension on it. We just 
want to know if you have listened to this, and maybe while the 
ideas are hot, why, we would like to get it on the record, and 
then the staff of both the minority, professional here, and the 
majority will probably be sending all of you questions that we 
could not get to. And you are under oath in answering those 
questions.
    So we certainly appreciate your taking the time today.
    Mr. Perrine. Mr. Chairman, Jim Perrine again.
    I do have a question for this panel. We did hear about the 
potential reinitiation of the Economic Adjustment Committee, 
and as I understand that organization, that committee would be 
more or less a topdown coordinating agency for the Federal 
process.
    I am concerned that we need a bottoms-up coordination as 
well. We need some representation of the local interest and 
some opportunity for remedies to be provided to the local 
jurisdictions whenever we have conflicts.
    And I am interested in knowing if the panel members could 
foresee some type of an ombudsman type of program that could be 
initiated at the Federal level to facilitate the assistance for 
the local agencies.
    Mr. Horn. That is a very good suggestion, and I think one 
way to solve this kind of thing would be an assistant to the 
President or whatever that coordinated all of these things that 
are going on.
    Any other comments?
    Mr. Smith. Mr. Chairman, the question I have for the city 
of Seaside is that it was implied that there would be a 
reprioritizing of the cleanup effort on the former Fort Ord, 
and you have heard my testimony in regard to the horrible 
incident that affected two lives, and yet we are talking about 
one of the areas that has the unexploded ordnances immediately 
adjacent to the residential area of the city of Seaside.
    I think that we are reacting to local agency, the Air 
Board, U.S. Fish and Wildlife, and possibly the threat of U.S. 
Fish and Wildlife talking about reopening up the environmental 
or the natural habitat plan. I guess what I am asking is that 
this burn plan should take into consideration that the lawsuit 
is really brought about through a mishap of a control burn that 
got out of hand as opposed to the many years that burning on 
the former Fort Ord took place without an incident.
    So I would like to see the agencies, BRAC, U.S. Fish and 
Wildlife, U.S. EPA, come up with a plan, a burn plan, that 
would still not threaten the lives of the citizens that live 
east of Fort Ord, and that is basically one of the major 
concerns.
    This threatening to set us back years by opening up the 
management or the habitat plan is a little terrifying, to be 
perfectly honest with you.
    Mr. Horn. Well, we thank you very much, Mayor. You and your 
colleagues have been very helpful just as we have had the help 
from the governmental groups.
    This is the first in a series of hearings the subcommittee 
will hold on the efficacy of the process for closing military 
installations. The problems described today are certainly 
emblematic of concerns in communities that have been the 
subject of realignment of military facilities.
    It is our hope that the lessons we learn today and we will 
learn as we review other closures will help us avoid the 
mistakes that were obviously questioned by the mayors and 
others.
    And I want to thank each of the witnesses. You have all 
been very helpful, and again, the record will remain open for 
the next 2 weeks. If people in the audience and others have 
something, please send it to Mr. George, the chief counsel and 
staff director of this subcommittee.
    And J. Russell George is right behind me there, and to my 
right is is Darin Chidsey, the professional staff member that 
worked on this, and our clerk, Mark Johnson is over here, and 
we thank him, and Dave McMillen, who came out here for the 
minority, the professional staff member.
    And then we really thank the people that helped us with the 
Monterey Council Chamber contacts, and that is Elaine Ramos and 
Fred Cohn.
    And then our court reporters are Nancy Palmer and Susan 
Palmer, and we thank you for taking down this transcript.
    The City Manager's office and many people have helped in 
this wonderful, historic building.
    And with that we are adjourned to the next hearing.
    [Whereupon, at 12:40 p.m., the subcommittee was adjourned, 
subject to the call of the chair.]
    [Additional information submitted for the hearing record 
follows:]
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