WRITTEN STATEMENT ON THE COMMERCE DEPARTMENT'S FY 2004 BUDGET

BY COMMERCE SECRETARY DONALD L. EVANS

HOUSE APPROPRIATIONS SUBCOMMITTEE ON COMMERCE, JUSTICE,

STATE AND THE JUDICIARY

MARCH 6, 2003

Thank you for the opportunity to appear before you to present the Department of Commerce's fiscal year (FY) 2004 budget request. Our focus is on funding the core mission of the Department and its bureaus. As you know, the Administration faces great challenges in its commitment to fight and win the war on terrorism, while at the same time harnessing the resources of the Federal government to protect the lives and safety of all Americans. I hope to fully utilize the resources of the Department of Commerce not only to provide for the physical security of the Nation, but also to work with other agencies and the private sector to promote economic security.

The Commerce Department's budget request of $5.4 billion supports the President's budget plan to focus resources to strengthen our core Commerce activities. In particular, our request supports the Administration's economic revitalization and homeland security priorities and continues our commitment to fund important work of the Department to provide infrastructure for technological innovation and to observe and manage the Nation's oceanic and atmospheric environment. To complement the digital convergence in the private sector, we will be proposing legislation to modernize the technology and telecommunication entities of the Department.

The Commerce Department undertakes a wide range of activities designed to stimulate growth of the nation's economy. Commerce gathers and develops economic and demographic data for business and government decision-making; helps American firms and consumers benefit from open and fair international trade; issues patents and trademarks that support innovation; helps set industrial standards and performs cutting-edge scientific research; forecasts the weather to improve public safety; and promotes sustainable stewardship of the oceans, including ocean fisheries.

This diversity of activities is reflected in Commerce's five strategic goals:

• •Foster the Nation's economic growth.

• •Secure our homeland and enhance public safety.

• •Upgrade the Department's facilities, infrastructure, and safety.

• •Improve and streamline the Nation's fishery management system to better meet commercial, recreational, and conservation objectives.

• •Implement the Administration's Climate Change Research Initiative to reduce present uncertainties in climate science, and support policy and management decisions to benefit public safety and quality of life.

To enhance these activities, resources will be shifted from various lower priority programs.

Economic Growth

Economic growth is a central theme for the President and for the Department of Commerce's bureaus for FY 2004. The Economics Statistics Administration's Bureau of Economic Analysis (BEA) supplies the nation's key economic statistics, including gross domestic product (GDP), which are crucial ingredients for business and government decision making. BEA seeks to strengthen the understanding of the United States economy and its competitive position by providing accurate economic accounts data in a timely and cost-effective manner. BEA's request includes a $5.4 million increase to accelerate the release of major economic estimates, to incorporate new international economic data classifications, and to acquire real-time data to improve the quality and timeliness of economic statistics.

In conjunction with BEA's request, the Census Bureau's budget request includes an increase of $39.1 million in current economic and demographic statistics to fill gaps in data collection, to improve methodologies for collecting that information, and to improve the measurement of the Nation's service sector. The Census Bureau's budget for FY 2004 also includes funding to process and to review data from the Economic Census, and to continue planning and designing the 2010 Decennial Census.

The International Trade Administration (ITA) is responsible for assisting the growth of export businesses, enforcing U.S. trade laws and agreements, and improving access to overseas markets by identifying and pressing for the removal of trade barriers. ITA's budget for FY 2004 focuses on promoting U.S. exports and enhancing the competitiveness of U.S. businesses in the global economy, by fighting unfair foreign trade barriers and by negotiating and implementing multilateral and bilateral trade agreements.

The Economic Development Administration (EDA) helps communities across the nation create

economic opportunity by promoting a favorable business environment to attract private capital

investments and higher-skill, higher-wage jobs. EDA accomplishes this principally through infrastructure investments and capacity building. A program increase of $13.8 million is requested for EDA to assist communities that demonstrate a high level of economic distress.

The Minority Business Development Agency (MBDA) will continue to focus on accelerating the competitiveness and growth of minority-owned businesses by closing the gap in economic opportunities and capital access. MBDA is transitioning from an administrative agency to an entrepreneurial organization, and is driven by entrepreneurship and innovation. MBDA will continue to provide minority business development services, through its Minority Business Information Portal and local Business Development Centers.

For more than one hundred years, the Nation has relied upon the Technology Administration's National Institute for Standards and Technology (NIST) for scientific and technical expertise to promote economic growth, commerce and trade, and national security. The quality of NIST work is exemplified by the awards in 1997 and 2001 of the Nobel Prize, the world's ultimate recognition in science, to two NIST scientists -- Bill Phillips in Gaithersburg, Maryland, and Eric Cornell in Boulder, Colorado. The work they are leading in super-cold matter and the strange nature of quantum mechanics is driving whole new areas of science and technology, from atomic clocks that do not gain or lose more than a billionth of a second in thirty years, to the potential for unimaginably powerful computers based on individual atoms, to new forms of telecommunications that provide the ultimate in information security.

The President's request for the NIST Laboratories includes an increase of $12.7 million (for a total of $340.8 million) to strengthen the national measurements and standards infrastructure that enables innovation and economic growth. The request will enable NIST to expand its work in the areas of nanotechnology, advanced information technology, and health care diagnostics - all areas with broad economic impact.

NIST will expand its program in nanotechnology, the so-called "tiny revolution" in technology, with a $7.7 million increase (for a total of $62.0 million). Nearly all industrial sectors plan to exploit this emerging technology, and most of these plans call for appropriately scaled measurements and standards, which is NIST's specialty. NIST closely coordinates its nanotechnology work with other Federal agencies through the President's National Nanotechnology Initiative, or NNI. NIST appropriately has the lead in providing the measurements and standards infrastructure for the NNI.

The request also includes an increase of $3.0 million (for a total of $7.3 million) to build on NIST's world-class expertise in quantum computing and communications. This effort, with teams led by NIST's two Nobel laureates, is developing revolutionary means of making calculations much more quickly than traditional electronic computers will ever be able to do. NIST scientists already have made the working elements of quantum computers based on individual atoms.

The FY 2004 Budget also requests funding to allow NIST to strengthen its programs supporting health care diagnostics, which not only improve the quality of health care, but also ensure that U.S. manufacturers can compete fairly in the $20 billion global market for these products. The request includes an increase of $2.0 million (for a total of $17.1 million) to strengthen this effort.

Consistent with the President's emphasis on shifting resources to reflect changing national needs, the President's FY 2004 Budget proposes terminating the Advanced Technology Program (ATP) and requests a total of $27.0 million for administrative and close-out costs. The FY 2004 President's Budget also proposes maintaining the FY 2003 policy of significantly reducing Federal funding for the Manufacturing Extension Partnership (MEP), for which the budget requests $12.6 million. These programs have been well-run, but the scarce resources are needed for higher priority programs. The budget request focuses on NIST's core mission of measurements, standards, and laboratory research, rather than its extramural programs, by providing the 21st century facilities the NIST Laboratories need for success. Investment of limited NIST resources in the Laboratory programs and facilities will have the greatest impact on fostering innovation that leads to economic growth.

The U.S. Patent and Trademark Office (PTO) request will support the second year of the agency's strategic plan to enhance the quality of products and services and to keep pace with workload growth by promoting e-government activities and reducing pendency. We understand that intellectual property protection is paramount to the Nation's ability to innovate and move products into the marketplace. Concurrently, Commerce has recently proposed legislation to restructure PTO fees to better align the fee system with the work undertaken by PTO. The Department is also working to eliminate the practice of using USPTO revenues for unrelated Federal programs so that a greater share of the applicants' fees are available to the agency in the year they are collected.

Homeland Security

The Bureau of Industry and Security (BIS) seeks to advance U.S. national security and foreign policy interests by regulating exports of critical goods and technologies that could be used to damage those interests, while furthering the growth of legitimate U.S. exporters to maintain our economic leadership. The FY 2004 budget includes a $5.6 million increase for BIS to address vulnerabilities in regulating exports of critical goods and technologies. This budget increase will enable BIS to strengthen export enforcement with additional agents and capabilities and to enhance the bureau's analysis of U.S. export control regulations to ensure they reflect the dynamics of 21st century market and technological changes.

We request an increase of $13.3 million (for a total of $38.7 million) for NIST to address key national needs for homeland security measurements, standards, and technologies. This request will strengthen NIST's portfolio of more than 100 projects that address homeland security technology needs.

Included in this request is an increase of $7.0 million (for a total of $10.9 million) as part of a program to use lessons learned from the NIST-led investigation of the World Trade Center (WTC) collapse to make buildings, occupants, and emergency responders safer from terrorist attacks on buildings and other building disasters. NIST has the unique combination of technical expertise in a broad range of building and fire sciences and lengthy experience working with the building and emergency responder communities to provide the Nation with the maximum benefit from the WTC investigation and associated research.

The NIST homeland security request also includes an increase of $5.3 million (for a total of $26.8 million) to develop the measurement infrastructure needed to detect nuclear and radiological ("dirty bomb") threats, to improve the use of radiation such as x-rays and other imaging techniques to detect concealed terrorist threats, and to use radiation safely and effectively to destroy biowarfare agents such as anthrax.

Our homeland security request also includes a total of $1 million to develop standards and test methods for biometric identification systems, used to positively identify the approximately 20 million non-citizens who enter the U.S. each year or apply for visas. This will enable NIST to carry out the mandate of the USA PATRIOT Act, which requires NIST to develop technology standards for biometric identification, recognizing NIST's long history of expertise in this area.

Ensuring public safety remains a priority of NOAA and its National Weather Service (NWS). The budget request for NOAA includes an increase of $7.7 million (for a total of $65.1 million) to enhance homeland security. This increase includes new funding in the amount of $5.5 million to support a scaled upgrade of the current NOAA Weather Radio (NWR) operation to an All Hazards Warning Network. This upgrade includes systems to standardize and automate receipt and dissemination of non-weather emergency messages. The Administration is also requesting $2.2 million in new funding for emergency preparedness and safety to improve physical security at 149 NWS facilities to prevent unauthorized individuals from entering and/or tampering with NWS property.

The FY 2004 budget request also includes an increase of $3.7 million to secure core aspects of ITA's worldwide communications network, to defend against unauthorized access, and to create recovery mechanisms should damaging events occur.

Facilities, Infrastructure and Safety

The FY 2004 budget strengthens key Commerce programs that provide the infrastructure that enables U.S. businesses to maintain their technological edge in world markets. Important priorities for FY 2004 are to upgrade NIST's and NOAA's facilities and laboratories and begin consolidating PTO facilities. The NIST budget request includes $36.2 million to address inefficiencies and safety problems at its facilities in Boulder, Colorado and Gaithersburg, Maryland. Valuable research continues to be lost or interrupted by power outages, spikes, and fluctuations. This budget increase will enable NIST to protect critical research data from degradation, and to maintain employee safety and security. The budget also requests $8.2 million to equip, maintain, and operate NIST's Advanced Measurement Laboratory, and to fund time scale and time dissemination backup elements.

The budget includes a $47.7 million program increase for NOAA to address safety and security concerns associated with its buildings, aircraft, and ships, to upgrade weather forecast offices in the continental U.S., Alaska and the Pacific Islands, to modernize the primary NWS telecommunications gateway, to continue construction of the NOAA Satellite Operations Facility in Suitland, Maryland, and to plan the replacement of the World Weather Building to be co-located with a major research institution. During FY 2004, NOAA will also continue the tri-agency acquisition (with DOD and NASA) of the next-generation polar-orbiting satellites, and systems design and development for the next-generation geostationary satellite series (GOES R).

In FY 2004, the PTO will begin relocating its facilities from 18 buildings in Arlington, VA into a consolidated 5-building campus in Alexandria, VA with an initial move into two of the buildings this December. The new consolidated facility is designed to meet the PTO's operational needs, provide flexibility to future program or process changes, and fully comply with current fire, life-safety and accessibility guidelines. The budget includes a $44.6 million program increase for construction inflation costs that occurred during the project delay generated by litigation and maintaining dual rent and simultaneous operations during the eighteen-month move period.

To strengthen the spectrum management capabilities of the National Telecommunications and Information Administration (NTIA), to meet the increasing demand for Federal wireless communication systems and services, the Department of Commerce requests an increase of $1 million for NTIA to establish a paperless system for spectrum issue resolution, certification, satellite coordination and frequency authorization, and to intensify research aimed at expanding spectrum utilization through greater understanding of radio frequency interference. The FY 2004 budget also proposes to suspend the Public Telecommunications Facilities Planning and Construction (PTFPC) grants, a program reduction of $41.1 million for NTIA during FY 2004. Up to $80 million in funding for digital conversion grants for public television stations can be made available from within the Corporation for Public Broadcasting (CPB) $380 million appropriation, which has already been enacted. The FY 2004 President's Budget also proposes to terminate the Technology Opportunities Program (TOP) as funding within the Department of Commerce has been redirected to higher priority programs.

GSA, in coordination with DOC, is planning a major renovation of the 70-year old Herbert C. Hoover Building. This initiative will restore the great building to its original condition, bring it up to current code requirements, address the realities of post 9/11 security needs and extend the useful life of this historic building. It is essential to the optimal stewardship of the taxpayers money that we establish a Renovations Office in FY 2004. In addition, the Department will focus on safety issues by instituting a new Occupational Safety and Health Program targeted toward preventing accidents and injuries through incident tracking and proactive prevention.

Fisheries

NOAA's budget request for FY 2004 contains a $29.8 million program increase to modernize and improve the nation's fishery management system. Specifically, the requested funding addresses the need to improve socioeconomic data collection, to reduce bycatch in targeted fisheries, to increase fishery observer coverage, to streamline the current fisheries regulatory process, and to implement the Columbia River Biological Opinion effectively. New funds will also increase the understanding of the effects of climate change on marine and coastal ecosystems, and build a national observer program for the collection of high-quality fisheries and environmental data. The FY 2004 budget includes a reduction of $40 million for the Pacific Salmon Treaty for which all U.S. obligations have been met.

Climate Change

Finally, one of the highlights of the Department's FY 2004 Budget is the request of $295.9 million for NOAA's climate change research, observations and services. This amount includes an increase of $16.9 million as part of a total request of $41.6 million for NOAA's contribution to the President's interagency Climate Change Research Initiative (CCRI). The NOAA FY 2004 CCRI request supports NOAA's efforts to:

• •enhance ocean observations for climate;

• •augment carbon-monitoring capabilities in North America as well as in key under-sampled oceanic and continental regions around the globe;

• •advance the understanding of all major types of aerosols;

• •establish a climate modeling center within NOAA's Geophysical Fluid Dynamics Laboratory, which will focus on research, analysis, and policy applications for the development of model product generation; and

• •coordinate and manage the Nation's interagency climate and global change programs through the Climate Change Science Program Office.

The President's CCRI led to the creation of a new interagency framework in order to enhance coordination of Federal agency resources and research activities. Under this framework, thirteen Federal agencies are working together under the leadership of a Cabinet-level committee on climate change to improve the value of U.S. climate change research.

The President's FY 2004 Budget request for climate change activities reflects the President's priorities by focusing Federal research on the elements of the U.S. Global Change Research Program (USGCRP) that can best support improved public discussion and decision-making. Under the CCRI, various agencies will adhere to specific performance goals, including providing products to decision-makers within four years. The priorities of the CCRI are:

• •reducing key scientific uncertainties;

• •designing and implementing a comprehensive global climate and ecosystem monitoring and data management system; and

• •providing resources to support public evaluation of a wide range of climate change scenarios and response options.

Even in this time of difficult budget decisions, the President is committed to fully funding climate research so that we can continue to reduce the uncertainties associated with climate change.

As I previously stated, this budget request for the Department of Commerce has been carefully crafted to focus on those core functions that the American people rely on from this agency. We will focus on promoting innovation, entrepreneurship, exports, and safety, while spreading opportunity to all Americans and ensuring responsible stewardship of our natural resources.