I want to begin by thanking Chairman Lott for holding today's hearing on S. Res. 173, a resolution I introduced last month, along with Senators Kyl, Sessions, and Feingold, to amend the Senate Rules in an effort to eliminate wasteful pork barrel spending and earmarking from the appropriations process. I also want to extend my appreciation to the Committee Members in attendance today. I fully recognize that the majority view of this Committee may not be in full support of the rules change, but I do appreciate your willingness to consider the proposal at this hearing. I ask that a copy of my full statement be made part of the Hearing Record.

S. Res. 173, which was introduced on June 17, would amend the Standing Rules of the Senate to create a 60-vote point of order against unauthorized appropriations and general legislation on appropriations bills with the intent of ensuring that taxpayers' interests are elevated above special interests, and that national interests take precedence over parochial ones.

The responsibilities of authorizors and appropriators is expected to be distinct. The role of the authorizing committees is to establish policy directives and funding levels, and to oversee federal agencies and programs. The role of the Appropriations Committee is to allocate funding based on directives provided by authorizing statutes. The Appropriators' function today, however, has expanded dramatically and the Appropriations Committee now engages in significant policy decision making and micromanagement.

Our current economic situation and vital national security concerns require that now, more than ever, we prioritize our federal spending. With a $400 billion deficit, we simply cannot afford business as usual, and continue the pork barrel spending that represents an ever growing proportion of our federal budget. We cannot afford to earmark $1 million for bear DNA sampling studies; $500,000 for the gasification of switchgrass in Iowa; and $280,000 for asparagus technology and production in Washington. While the cost of each project may not seem like a lot of money, collectively, earmarks such as these significantly burden American taxpayers. [Refer to Charts]

According to information compiled by CRS, which examined earmarks for fiscal years 1994, 1996, 1998, 2000, and 2002, the total number of earmarks has grown from 4,126 in Fiscal Year (FY) 1994 to 10,540 in FY 2002. That's an increase of over 150 percent. The level of funding associated with those earmarks has risen from $26.8 billion in FY 1994 to $44.6 billion in FY 2002, which is an increase of over 66 percent. I ask that a copy of the report prepared by CRS be made a part of the hearing record.

I recognize that the failure of authorizing committees to pass authorizing legislation contributes to the broken system and that often appropriators have no choice but to fund unauthorized programs, and take it upon themselves to make policy determinations. As the Chairman of an authorizing committee, I have made a concerted effort this session to authorize programs under our jurisdiction and will continue to make this a top priority of the Commerce Committee. Of course, this is somewhat of a chicken and egg problem: authorization bills are held up in large part because members know that authorization measures don't really have to pass because the appropriations vehicles are always available to carry legislative riders.

I commend Senator Lott and this committee for their interest in addressing the problem that anonymous holds pose to the legislative process and the enactment of authorizing legislation. As we work to improve the system, one of our top priorities also should be to address the massive collective action problem that is presented by innumerable special interest requests to appropriators, due in part to the full Senate's inaction on authorizing legislation. That is the underlying goal of our proposal.

S. Res. 173 would establish a new procedure under Rule XVI, modeled in part after the Byrd Rule, which would allow a 60-vote point of order to be raised against specific provisions that contain unauthorized appropriations, including earmarks, as well as unauthorized policy changes in appropriations bills and conference reports. If the point of order is sustained, the unauthorized provision would be extracted from the measure and the overall cost of the bill would be reduced by the corresponding amount.

Let me make clear that under our proposal, if a point of order is sustained against a provision in a conference report, the legislative process could continue, unlike under the current situation whereby the conference report effectively dies if a point of order is sustained. Instead, the objectionable language would be stricken, and the conference report language would revert to a non-amendable Senate Amendment (which would be the conference agreement without the objectionable material), allowing the measure to then be sent back to the House.

Our proposed rules change also seeks to provide more consistency than is currently provided under Rule XVI. It would retain two exemptions to points of order that currently apply to amendments to appropriations bills: appropriations that (1) had been included in the President's budget request; or, (2) would be authorized by a bill already passed by the Senate during that session of Congress. Our proposal would extend similar treatment to provisions that are included in the underlying bills reported by the Appropriations Committee.

Further, because Rule XVI also provides that a point of order may be raised against amendments that legislate on appropriations bills, our proposal seeks to treat the underlying appropriations bill in the same manner, and therefore would make legislative riders contained in bills reported from the Appropriations Committee, and not just the amendments proposed to such bills, subject to a point of order.

Because the elimination of statutory earmarks would have little effect if the Senate continues to earmark funds in reports, which, while not technically having the effect of binding law, are treated that way by agencies, any appropriations bill or conference report that is accompanied by a report that contains unauthorized earmarks would not be in order.

Finally, to ensure that Members are given enough time to review appropriations bills, our proposal reinstates Members' ability to call for the reading of a conference report, and further permits them to call for the reading of the accompanying report.

In summary, this proposed rules change, if adopted, would allow any member to raise a point of order in an effort to extract objectionable unauthorized provisions from the appropriations process. Our goal is to reform the current system by empowering all members with a tool to rid appropriations bills of unauthorized funds, pork barrel projects, and legislative policy riders.

As I said earlier, I am fully aware that this proposal will not be overwhelmingly supported by some of my colleagues. I also know that there are many other possible solutions to curb the excessive earmarking that has become the norm. I am certainly open to any and all ideas, and welcome a spirited debate on what can be done to restore fiscal discipline and accountability, and strike a more appropriate balance between the responsibilities of the appropriations and authorizing committees. But I do not believe the status quo is acceptable nor is it in the interest of the American taxpayers. Something must be done.

I am not alone in the opinion that the earmarking practice has reached the breaking point. Consider the Administration's recently submitted proposal to reauthorize the multi-year highway, transit, and safety programs. When testifying before the Commerce Committee, Secretary Mineta explained that the Administration was recommending radically reducing discretionary grant programs because "[u]nfortunately, Congressional earmarking has frustrated the intent of most of these discretionary programs, making it harder for States and localities to think strategically about their own transportation problems."

To further illustrate the enormity of the earmarking situation, my colleagues need only consider the transportation earmarking that has occurred during the past five years. According to the Department of Transportation Inspector General, Congress appropriated $18 billion in discretionary funding for highway, transit, and aviation discretionary programs during fiscal years 1998-2002. Of that amount, approximately $11 billion, or 60 percent, was earmarked by Congress.

I would like to mention some specific examples of recent earmarks, many of which do not promote or protect the collective interests of the American taxpayers:

From the FY 2003 War Supplemental Appropriations Conference Report (H.R. 1559):

• $110 million for modernization of the Agricultural Research Service and Animal and Plant Health Inspection Service facilities near Ames, IA. The President did not request funding for this project and specifically objected to the inclusion of such funding as part of this war supplemental bill, citing the non-emergency nature of the project.

The conference report included a significant policy change that altered the ownership requirements for military airlift services, despite the opposition of the authorizing committee Chairman and Subcommittee Chairman, the Department of Defense (DOD), the DOT, and the Office of Management and Budget (OMB) to changing current law in this manner. Reportedly for the benefit of certain companies, the provision restricted the DOD's ability to contract for airlift service to only those companies that are "effectively controlled" by citizens of the United States.

What makes this policy change even more egregious is that it was effectuated at a time when our country was engaged in a military action with Iraq and the DOD expressed concerns with a provision that could restrict its ability to move aid in a timely manner. OMB and DOT also expressed concerns with changing current law without a full examination of the effects.

The conference report also authorized the Department of Agriculture to label wild caught seafood as "organic" food. Previously, wild caught seafood could not be labeled as organic because one cannot document what it has eaten. This provision was not requested by the President, not reviewed by the authorizing committee, and certainly was not related to any wartime or emergency need.

From the FY 2003 Omnibus Appropriations Conference Report (H.J. Res 2):

• $1 million for a bear DNA sampling study in Montana;
• $280,000 for asparagus technology and production in Washington;
• $220,000 to research future foods in Illinois;
• $250,000 for research on the interaction of grapefruit juice and drugs;
• $50,000 to combat "feral hogs" in Missouri;
• $2 million for the Biomass Gasification Research Facility in Birmingham, Alabama;
• $90,000 for the National Cowgirl Museum and Hall of Fame in Fort Worth, TX.
• $500,000 for the gasification of switchgrass in Iowa;
• $1 million for the National Agricultural-Based Industrial Lubricants Center in Iowa; and
• $202,500 to continue rehabilitation of the former Alaska Pulp Company mill site in Sitka, Alaska.

The conference report also included an agriculture policy change to make catfish producers eligible for payments under the livestock compensation program, even though hog, poultry, and horse producers are not eligible.

Despite the fact that the U.S. Department of Agriculture had implemented new organic food standards after lengthy negotiations, language was added to the conference report to permit livestock producers to certify and label meat products as "organic" even if the animals had not been fed organic grain. Without any consideration or debate, this last-minute rider was added to override these standards. Interestingly, a few months later, the Congress approved legislation as part of the War supplemental to repeal this provision and restore the prior organic food labeling standards.

The conference report included language to cap the number of U.S. Coast Guard flag officers at 37, which is below the authorized level of 48.

It also included legislative language to increase physician reimbursement rates under Medicare. Such a modification in the fee schedule was also part of several Medicare provider reimbursement packages in the House and Senate, which were too costly to pass. I recognize the importance of this provision for doctors and Medicare patients across the country, but regardless of the importance of this provision, it is clearly another example of legislating on an appropriations bill for a cost of approximately $900 million.

In addition, language was included to amend existing law to establish a long-term stewardship contracting program within the Forest Service and the Bureau of Land Management that allows the federal agencies to enter into 10-year logging contracts with the timber industry without the application of the environmental review and public process provisions of the National Environmental Policy Act (NEPA).

The conference report designated the administrative "record of decision" for the Trans- Alaska pipeline, rights-of-way, and related facilities to be sufficient for purposes of compliance with NEPA so as to preclude any appeals or legal challenges otherwise allowed by the law. It also exempted decisions regarding Alaska's Tongass National Forest Plan from NEPA's administrative appeals or judicial review provisions.

Finally, the conference report contained provisions which allow a subsidiary of the Malaysian-owned "Norwegian Cruise Lines" the exclusive right to operate several large foreign- built cruise vessels in the domestic cruise trade. This provides an unfair competitive advantage to a foreign company at the expense of all other cruise ship operators, and creates a de facto monopoly for Norwegian Cruise Lines in the Hawaii cruise trade. Interestingly, this provision stems from another earmark in 1998 that went awry.

The FY 1998 Department of Defense Appropriation Bill granted a legal monopoly for American Classic Voyages to operate as the only U.S. flagged operator among the Hawaiian islands. After receiving the monopoly, American Classic Voyages secured a $1.1 billion loan guarantee from the U.S. Maritime Administration's (MARAD) Title XI loan guarantee program for the construction of two passenger vessels known as Project America. Project America's subsequent failure four years later resulted in the U.S. Maritime Administration paying out over $187.3 million of the American taxpayers' money to cover the project's loan default, and recovering only $2 million from the sale of some of the construction materials and parts. It is one hull and miscellaneous parts from these never-completed ships which cost the taxpayers nearly $200 million which are now going to be used in a foreign shipyard for building the Norwegian Cruise ships that will operate in Hawaii under this latest special interest provision.

From the FY 2002 and 2003 Defense Appropriations Conference Reports

BOEING

During conference negotiations on the Department of Defense Appropriations Act for FY 2002, unprecedented language was inserted into the final bill to allow the U.S. Air Force to lease 100 Boeing 767 commercial aircraft and convert them to tankers, and to lease four Boeing 737 commercial aircraft for passenger airlift to be used by congressional and Executive Branch officials. Congress did not authorize these leasing provisions in the FY 2002 National Defense Authorization Act or in any other bill, and in fact, the Senate Armed Services Committee was not advised of this effort by the Air Force Secretary during consideration of the authorization measure.

Legislative language was again included in the Department of Defense Appropriations Act for Fiscal Year 2003 to modify the previous year's bill language on the Boeing 767 tankers. The sweeping changes in procurement policy was made by the Appropriators without the input of the authorizing committee. These policy changes regarding Boeing 767 aerial tankers and Boeing 737 VIP aircraft include:

Modifications to a provision in the FY 2002 Department of Defense Appropriations Act which permit the Air Force to circumvent standard leasing arrangements as provided in law and, with respect to the 100 Boeing 767s, allow the Air Force to extend the termination liability costs over the full term of the lease. In multi-year contracts such as leases there is a statutory requirement to obligate money for termination liability payments in the first year of the contract. The waiver of termination liability payment is an unfunded federal liability and unprecedented in leasing arrangements according to leasing experts. The reason, I presume, that the Appropriations Committee included this provision in the bill, was to circumvent established leasing policy so the Air Force would not have to program funds in their budget, thus giving the appearance that the lease costs the taxpayers less than it really does. Furthermore, programming termination liability payments would take away from other Air Force priorities.

Another provision authorized the Air Force to pay annual advance payments, up to one year in advance, for leasing Boeing 767 tanker aircraft. The provision is not in the best interest of the government or the taxpayer. The truth is there is no benefit to the government for this provision. The benefit is all on the side of the ledger of the Boeing Company. This Boeing leasing scheme is projected to cost $20 billion - that means the Air Force may have to pay, up front, literally billions of dollars to Boeing with the promise to deliver aircraft later. As a senior member of the Armed Services Committee, I would liked to have had the opportunity to hear testimony regarding this significant change in acquisition policy. The Armed Services Committee is the proper committee to make recommendations concerning defense procurement policy reforms, not the Appropriations Committee.

Yet another related provision authorized the Secretary of the Air Force to use operation and maintenance funds to enter into a long-term lease of 100 Boeing 767 tankers and 4 Boeing VIP aircraft. Operation and maintenance funds are provided in law for those costs associated with flying hours, ship steaming hours, fuel costs, depot maintenance, spare parts, etc. DOD weapons and equipment programs, according to law, are funded out of the procurement accounts -- and have to compete against other requirements which are important to our military strategy. The Appropriations Committee has, through a new precedent, chosen to fund a new start tanker program from the operation and maintenance accounts instead of the procurement accounts.

The Boeing 767 tanker provisions have not benefitted from authorizing committee input, nor is there a clear understanding of the Secretary of Defense's views on the need for this large procurement plan, or his views on the use of a lease to obtain equipment. I am very concerned that the impact of these provisions has not been adequately scrutinized, and the full cost to taxpayers has not been sufficiently considered. I believe this expensive aerial tanker lease program to be a new start that has been estimated by the Office of Management and Budget to cost between $20-$30 billion over six years. I hope one day soon we will get to the bottom of the true costs associated with these special interest provisions. I intend to do all I can to ensure that occurs.

From the FY 2002 Supplemental Appropriations Conference Report (H.R. 4775)

• $2,000,000 was designated as emergency funding for planning, design, and construction of an alcohol collections storage facility for animal specimens at the Smithsonian Institution Museum Support Center.
• Legislative language was added in conference to allow the Forest Service to expedite forest treatments to address the risk of fire and insect infestation in the Black Hills National Forest, South Dakota, and designated a portion of land as wilderness to be added to the Elk Wilderness area within the forest. Of course, the risk of catastrophic fire and infestation affects many western states, which also pose critical threats to life and property. However, this provision circumvented administrative and judicial review to expedite thinning activities for a specific forest area in South Dakota.

From the FY 2002 Labor, Health and Human Services, and Education, and Related Agencies Appropriations Conference Report (H.R. 3061):

• The conference report included language directing the National Institutes of Health (NIH) to extend application deadlines for research programs and institutions located in Houston, Texas, including Baylor College of Medicine and the University of Texas at Houston Health Sciences Center. All other institutions applying for funds from the NIH for that year were required to have their applications in to NIH on time.

From the FY 2002 Agriculture Appropriations Senate Bill and Conference Report (H.R.2330):

• A provision was added in the Senate manager's amendment to prohibit the labeling of fish or fish products as "catfish" unless the fish have a certain family name. This protectionist measure to create barriers to the imports of Vietnamese catfish into the United States was adopted at the same time the U.S. was finalizing the historic U.S.-Vietnam Bilateral Trade Agreement. By restricting imports into the United States and reducing foreign competition, this provision served to benefit domestic catfish industries by killing competition from Vietnamese catfish imports.

From the FY 2002 Transportation Appropriations Conference Report (H.R. 2299):

Nearly $1 billion in highway program funding authorized to be distributed to the states by formula or at the discretion of the Secretary, was instead, for the first time, redirected and earmarked for projects such as:

• $1.5 million for the Big South Fork Scenic Railroad enhancement project in Kentucky;
• $2 million for a public exhibition on "America's Transportation Stories" in Michigan; and
• $3 million for the Odyssey Maritime Project (a museum) in Washington.

The National Corridor Planning & Development & Corridor Border Infrastructure Program was authorized at $140 million, but the Appropriators provided an additional $333.6 million over the authorized level, for total of $492.2 million in funding. The conferees then earmarked 100% of the funding for 123 projects in 38 states. Earmarks included:

From the FY 2001 Agriculture Appropriations Conference (H.R.4461)

The Continued Dumping and Subsidy Offset Act of 2000, also known as the "Byrd Amendment," was inserted at the last minute in the Conference Report to the FY 2001 Agriculture Appropriations bill. This provision enabled anti-dumping and countervailing duties collected on foreign products found by the International Trade Commission and the Department of Commerce to be unfairly subsidized or dumped in the U.S. to be redistributed to private companies that lodged the complaint. Prior to enactment, funds collected were placed in the general fund of the U.S. Treasury.

The Byrd Amendment effectively provided domestic companies that lodge and win a complaint a double benefit. In one hand, the domestic companies' foreign competitors must pay the tariff, and in the other, that tariff is redistributed to the complainants. The Byrd amendment was found to be in violation of global trade rules by the World Trade Organization (WTO) in 2002. In January 2003, an appellate body of the WTO upheld that finding. This significant change to trade policy is a blatant case of corporate welfare that unfairly benefits corporations at the expense of the American taxpayer. Despite assurances that the program would cost no more $40 million per year, a total of $500 million was disbursed to private companies during FY 2001 and FY 2002.

The conference report also included a provision to change federal policy for the federal sugar program by reversing the recourse loan provision in the 1996 Farm bill that required full repayment in cash of federal loans.

The conference report also re-instated the federal subsidy for honey producers, previously repealed by the 1996 Farm bill, effectively reversing the legislatively-mandated reforms required by the authorizing legislation.

BUY AMERICA PROVISIONS

Every year, the appropriators include "Buy America" language in the Defense Appropriations Bills. Such directive language provides a significant policy directive and forces the Department of Defense to buy certain products solely from American sources, at a cost to taxpayers of $5.5 billion annually.

NASA

Congressional earmarking not only impedes the ability of similarly situated programs and locations to compete for federal dollars, which, by their nature, should be awarded based on need and merit, but these actions also can have enormous impacts and possibly very unintended consequences. Just consider, for example, the potential impact of the earmarking over the years of NASA's budget.

Congressional earmarks of NASA funding have increased from $24.7 million in FY 1998 to $167 million in FY 2003, an increase of 576 percent over just five years. And, while the level of Congressional earmarks has grown, NASA's overall budget has remained relatively constant. As a result, NASA has been forced to do more with less funding flexibility, while facing concerns about its commitment to safety and a deteriorating infrastructure. While money clearly is not all that ails NASA, several hundreds of millions of dollars can have a major impact on improving both NASA's safety and infrastructure. The Space Shuttle Columbia Accident Investigation Board, which has been working to determine the cause of the accident, is also reviewing the impact of Congressional earmarking on the space shuttle program. The Board's report is expected to be completed later this month.

STATEMENT OF MANAGERS

Earlier, I mentioned the extent to which statements of managers and committee reports are filled with unauthorized directives and locality specific earmarks. I will now highlight just some of the statements of managers directives over the years:

From the Statement of Managers accompanying the FY 2003 Omnibus Appropriations Conference Report:

Agriculture

• $4,214,000 for shrimp aquaculture research in Arizona, Hawaii, Massachusetts, Mississippi, South Carolina, and Texas;
• $6,170,000 for wood utilization research in Alaska, Idaho, Maine, Michigan, Minnesota, South Carolina, and Texas;
• $1,900,000 for the United States Vegetable Laboratory in Charleston, South Carolina;
• $900,000 for Satsuma orange research in Alabama;
• $33,000,000 for the National Animal Disease Center in Ames, Iowa;
• $210,000 for hoop barns in Iowa;
• $100,000 for the Trees Forever Program in Iowa;
• $750,000 for ornamental crops research in Mississippi;
• $500,000 for catfish health in Stoneville, Mississippi;
• $1,200,000 for seafood harvesting, processing, and marketing in Alaska;
• $200,000 for seafood waste in Fairbanks, Alaska;
• $160,000 for feed efficiency in West Virginia; and
• $8,400,000 for the Cereal Crops Laboratory in Madison, Wisconsin.

Commerce/Justice/State Appropriations

• $100,000 for the Mason County Sheriff's Office to investigate and respond to Oxy Contin abuse in West Virginia;
• $72,000 for the Lewis County Sheriff's Department for an upgraded records management system and an automated dispatching system in West Virginia;
• $100,000 for culinary education training for an at-risk youth program at Johnson and Wales University in Miami-Dade County, Florida;
• $6,000,000 over the President's request for Hawaiian sea turtles; and

Interior Appropriations

• $750,000 for sea otter research in Alaska;
• $150,000 for the Alaska Whaling Commission; and
• $118,000 for fish surveys at the White Sulphur Springs National Fish Hatchery in West Virginia.

Labor/HHS/Education Appropriations

• $750,000 for the National Baseball Hall of Fame in Cooperstown, New York;
• $350,000 for the Rock and Roll Hall of Fame in Cleveland, Ohio;
• $800,000 for the GRAMMY Foundation in Santa Monica, California; and
• $400,000 for the Pennsylvania Trolley Museum in Washington, Pennsylvania.

Veterans Affairs/Housing and Urban Development/Independent Agencies Appropriations

• $1,800,000 to complete renovation of the library at Potomac State College in Keyser, West Virginia;
• $202,500 for the National Peanut Festival Fairgrounds for construction of the National Peanut Festival Agriculture Arena in Dothan, Alabama;
• $90,000 for the American Film Institute in Los Angeles, California;
• $270,000 for Where Toledo Grows/Greenhouse Row for construction of a welcome center in Ohio;
• $81,000 for the county of San Bernardino, California for facilities expansion of the Big Bear Zoo.

I should add that the statement of managers listed 885 "targeted grants," under the Economic Development Initiative (EDI), within HUD. The funding for this one-time "competitive" grant program is now earmarked 100 percent. Interestingly, the total level of the so-called targeted grants actually exceeded the level of funding provided in the conference report.

From the Statement of Managers accompanying the FY 2001 Interior Appropriations Conference Report:

• $176,000 for the Reindeer Herders Association;
• $1.5 million to refurbish the Vulcan Statue in Alabama; and
• $400,000 for the Southside Sportsman Club in New York

From the Statement of Managers accompanying the FY 2000 Agriculture Appropriations Conference Report:

• $1.75 million for manure handling and distribution in five states, including Mississippi, Iowa, Nebraska, Texas and Arizona;
• $200,000 for sunflower research in Fargo, North Dakota;
• $1,000,000 for peanut quality research in Athens, Georgia;
• $500,000 for the Montana Sheep Institute;
• $100,000 for the Trees Forever program in Illinois; and
• $100,000 for the Weed It Now initiative in Massachusetts, New York, and Connecticut.

I could go on and on citing examples of arbitrary earmarks, both statutory and report language directives. Clearly, something must be done to put a halt to the alarming increase in earmarking that has been occurring in the annual appropriations measures. That is why we have introduced S. Res. 173, to amend the Standing Rules of the Senate to give every member the ability to raise points of order in objection to unauthorized appropriations or locality-specific earmarks that would circumvent the authorizing or merit-based process.

Again, I thank Chairman Lott and all the members of the Committee for their courtesies this morning. I know that there are many other possible solutions to curb earmarking. I am certainly open to any and all ideas, and welcome a spirited debate in the weeks ahead on what can be done to restore fiscal discipline and accountability, strike a more appropriate balance between the responsibilities of the appropriations and authorizing committees, and put our national interests above parochial ones.