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MAY 3, 2001

Thank you for the opportunity to appear before you to present the Department of Commerce's fiscal year (FY) 2002 budget request. Our focus, first and foremost, is funding the core missions of the Department and its bureaus. Thus, the President's budget.request proposes increases only in those areas that are critical to promoting economic growth, technological competitiveness, trade monitoring and compliance, and natural resources management.

The FY 2002 budget request for the Department of Commerce is $4.75 billion, $381 million less than in FY 2001. The request includes $97.6 million for adjustments-to-base. We are also requesting $9.7 million to restore security funding in each of the bureaus. This request will ensure adequate funding to provide nationwide security services including guard contracts, background investigations, information security, and counterintelligence activities.

Departmental Management (DM) requests $37.7 million to provide headquarters policy and oversight for the bureaus. Although no program increases are proposed in FY 2002, $4 million in the base will fund the following digital department projects: $2.5 million to provide real time computer help desk support; $1.25 million to allow for digital signature capability on electronic documents; and $0.25 million for a voice over Internet protocol pilot that would utilize one telephone line for voice and data transmission. These requirements are important not only to fully utilize the new technology infrastructure funded in FY 2001, but they also allow the Department of Commerce to capitalize on cutting edge technologies.

The DM account contains the first of four major reductions in the FY 2002 budget. The President and I strongly believe that these reductions are necessary to focus the Department on


its core missions and to contain the overall spending of Federal discretionary programs. In

FY 1999, $125 million was appropriated for the Emergency Oil and Gas Loan Guarantee Program to assist companies in this struggling industry. Loans totaling less than $5 million have been made, and oil and natural gas prices have rebounded, thus we are requesting a rescission of $115 million. The Emergency Steel Loan Guarantee Program was appropriated $145 million, and two loans have closed totaling $129.5 million. We are requesting a rescission of $10 million

for this program.

The Office of Inspector General (OIG) requests $21.2 million. This includes a program increase of $0.5 million to increase financial statement audits by the OIG. This work will be contracted out, thus no additional full-time employees are requested.

The Economic Development Administration requests a total of $365.6 million. The Salaries and Expenses (S&E) request is $30.6 million, and this includes a program increase of $1.7 million to develop and implement the Economic Development Communications and Operations Management System, a grants management system that will automate the entire grants cycle from needs assessment to performance measurement. The Economic Development Assistance Programs request is $335 million, a $76 million decrease from FY 2001, and the second major reduction requested for FY 2002 in our budget. No funding is requested for Defense Economic Adjustment grants, as the last BRAC round was authorized for 1995.

Two of the most important program increases which I am proud to endorse in the FY

2002 budget are requested for the Economics and Statistics Administration. Of the $62.5 million account request, $3.0 million is proposed to continue to improve core statistics including Gross Domestic Product and related measures, and $3.5 million is proposed to update information


technology systems that support the provision of key economic data.

The Bureau of the Census requests $543.4 million, consisting of $168.6 million for S&E and $374.8 million for Periodic Censuses and Programs (PCP). This appears to be a significant increase over FY 2001, however, PCP realized a carryover of $300 million from FY 2000 into FY 2001, and this reduced our request in FY 2001 for new funding. The PCP request includes funding for several critical programs: cyclical increases for the 2002 Economic and Government Censuses; planning for the 2010 Decennial; implementing the American Community Survey; and redesigning the demographic survey samples to incorporate the results of Census 2000.

The International Trade Administration (ITA) requests $329.6 million. This funding level eliminates $13.5 million in grant programs, however, our request continues full funding for program increases provided in FY 2001 for trade compliance and monitoring. Trade compliance is my highest priority for ITA, and I intend to focus ITA's efforts in this area.

The Bureau of Export Administration requests $68.9 million in FY 2002. This request includes a program increase of $1.6 million for the redesign and replacement of the Export Control Automated Support System, which will enable better and faster decisions on license applications to accelerate U.S. competitiveness in global markets. An increase of $0.5 million is also requested to achieve efficiencies in processing export licenses.

The Minority Business Development Agency requests $28.4 million, and this includes a program increase of $0.8 million for expansion of the Phoenix Database. This electronic portal will operate as an on-line business information center, and will provide electronic links to state and local governments, community development organizations, and strategic partners, significantly increasing business and economic development activity for the minority business



The National Oceanic and Atmospheric Administration (NOAA) requests a total of $3.1 billion. This includes an increase of $136.9 million to provide for critical weather warning and forecast services and climate research. Within this request is a net increase of $96 million to continue the acquisition of NOAA satellites, mainly the joint DOD/NOAA National PolarOrbiting Operating and Environmental Satellite System (NPOESS) for weather, search and rescue, and oceanographic products for both military commanders and the civil community. An increase of $40.2 million is designated to continue and expand coastal conservation and ocean exploration activities, which will build on the progress that NOAA has made to preserve the Nation's coasts and oceans, as well as promote undersea missions of science and discovery.

I want to emphasize that NOAA is requesting a total of $243.8 million for global climate change activities. Included in this funding level is $34.7 million for NOAA's Climate Services Initiative, which focuses on enhancing climate observations, supporting carbon dioxide research, and climate change assessments. NOAA's contributions to long-term atmospheric measurements and research modeling are essential to our ability to analyze global climate change. NOAA requests $61.6 million to support the agency's long-term commitment to the management of the nation's marine fisheries, including improvement of the accompanying science, management, and enforcement activities. An additional $36.3 million is required to maintain NOAA infrastructure, including its facilities, vessels and aircraft, and to support other program requirements.

The third major reduction in the Department's request is $149.7 million for NOAA's Coastal Impact Assistance Fund (CIAF). Created in FY 2001 to address the impacts of coastal


development in the seven states involved in off-shore oil and gas production, we feel that this funding duplicates efforts of the Coastal Zone Management (CZM) program, in which all 33 coastal states are eligible to seek funds. In addition to elimination of the CIAF, NOAA also requests terminations and reductions of unrequested projects from FY 2001 of $245.9 million in order to fund proposed program increases and adjustments-to-base.

The Office of Technology Policy requests a total of $8.2 million to continue its activities with the Office of Space Commercialization, the National Medal of Technology Program, the Experimental Program to Stimulate Competitive Technology (EPSCoT), and the Commerce Science and Technology Fellowship Program.

The fourth major reduction requested for the Department falls under the National Institute of Standards and Technology's (NIST) request of $487.4 million. The request for NIST focuses on the core functions and basic mission of NIST. We propose a decrease of $132.4 million from the FY 2001 funding level for the Advanced Technology Program (ATP) and the suspension of granting new ATP awards in FY 2002. Furthermore, NIST proposes to utilize funds made available in FY 2001 to pay for prior-year commitments in FY 2002. The Department is in the process of evaluating the program to determine whether a need still exists for Federal funding to assist U.S. industry in conducting applied research and development. NIST is requesting a total of $20.9 million for the maintenance and repair of its facilities in Gaithersburg, Maryland and Boulder, Colorado.

The National Telecommunications and Information Administration (NTIA) requests $73.0 million. This includes a program increase of $2.1 million for the Radio Spectrum Measurement van and suitcase necessary for NTIA's analysis of critical new wireless

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