S. Hrg. 103-956
NOMINATIONS OF DAVID J. BARRAM TO BE
DEPUTY SECRETARY OF COMMERCE AND STE-
VEN 0. PALMER TO BE ASSISTANT SECRETARY
FOR GOVERNMENTAL AFFAIRS OF THE DE-
PARTMENT OF TRANSPORTATION
Y 4. C 73/7: S, HRG. 103-956
Koninations of David J. Barran to b. . .
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED THIRD CONGRESS
SEPTEMBER 15, 1993
Printed for the use of the Committee on Commerce, Science, and Transportation
U.S. GOVERNMENT PRINTING OFFICE '■'"li-r,
72-503 CC WASHINGTON : 1995 ■"•'"^rf>r-j^"'v'^ •
For sale by the U.S. Government Printing Office
Superintendent of Documents. Congressional Sales Office, Washington, DC 20402
S. Hrg. 103-956
)MINATIONS OF DAVID J. BARRAM TO BE
DEPUTY SECRETARY OF COMMERCE AND STE-
VEN 0. PALMER TO BE ASSISTANT SECRETARY
FOR GOVERNMENTAL AFFAIRS OF THE DE-
PARTMENT OF TRANSPORTATION
4, C 73/7: S. HRG, 103-956
nlnations of David J. Barran to b. . .
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED THIRD CONGRESS
SEPTEMBER 15, 1993
Printed for the use of the Committee on Commerce, Science, and Transportation
U.S. GOVERNMENT PRINTING OFFlci'^'ftrrr^^^OQ^i^ . ^
72-503 CC WASHINGTON : 1995 **^*'^(rrt2!^f?V
For sale by the U.S. Government Printing Office
Superintendent of Documents. Congressional Sales Office. Washington, DC 20402
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ERNEST F. HOLLINGS, South Carolina, Chairman
DANIEL K. INOUYE, Hawaii
WENDELL H. FORD, Kentucky
J. JAMES EXON, Nebraska
JOHN D. ROCKEFELLER IV, West Virginia
JOHN F. KERRY, Massachusetts
JOHN B. BREAUX, Louisiana
RICHARD H. BRYAN, Nevada
CHARLES S. ROBB, Virginia
BYRON L. DORGAN, North Dakota
JOHN C. DANFORTH, Missouri
BOB PACKWOOD, Oregon
LARRY PRESSLER, South Dakota
TED STEVENS, Alaska
JOHN MCCAIN, Arizona
CONRAD BURNS, Montana
SLADE GORTON, Washington
TRENT LOTT, Mississippi
KAY BAILEY HUTCHISON, Texas
HARLAN MATHEWS, Tennessee
Kevin G. Cuhtin, Chief Counsel and Staff Director
Jonathan Chambers, Republican Staff Director
Opening statement of Senator Ford 1
Prepared statement 23
Opening statement of Senator HoUings 1
Prepared statement of Senator Boxer 3
List of Witnesses
Barram, David J., Deputy Secretary-Designate, Department of Commerce 8
Prepared statement, biographical data, and prehearing questions and
Daschle, Hon. Thomas A., U.S. Senator from South Dakota 7
Eshoo, Hon. Anna, U.S. Representative from California 4
Feinstein, Hon. Dianne, U.S. Senator from California 2
Mineta, Hon. Norman Y., U.S. Representative from California 5
Palmer, Steven O., Assistant Secretary-Designate for Governmental Affairs,
Department of Transportation 23
Prepared statement, biographical data, and prehearing questions and
Pressler, Senator, prepared statement of 31
Question asked by Senator Danforth and answers thereto by Mr. Palmer 33
Questions asked by Senator Burns and answers thereto by Mr. Barram 31
Questions asked by Senator Pressler and answers thereto by:
Mr. Barram 32
Mr. Palmer 33
NOMINATIONS OF DAVID J. BARRAM TO BE
DEPUTY SECRETARY OF COMMERCE AND
STEVEN O. PALMER TO BE ASSISTANT SEC-
RETARY FOR GOVERNMENTAL AFFAIRS OF
THE DEPARTMENT OF TRANSPORTATION
WEDNESDAY, SEPTEMBER 15, 1993
Committee on Commerce, Science, and Transportation,
The committee met, pursuant to notice, at 11:15 a.m. in room
SR-253, Russell Senate Office Building, Hon. Wendell H. Ford,
Staff members assigned to this hearing for Mr. Barram: Beth
Inadomi and and Rebecca A. Kojm, professional staff members; and
Emily J. Gallop and Susan Adams, minority professional staff
Staff members assigned to this hearing for Mr. Palmer: Rebecca
A. Kojm, professional staff member; and Emily J. Gallop and Susan
Adams, minority professional staff members.
OPENING STATEMENT OF SENATOR FORD
Senator FoRD. Thanks for your attention. Good morning, ladies
and gentlemen. We are a little late, but our chairman is testifying
on a very important piece of legislation as pertains to the North
American Free Trade Agreement and I have been called on to sub-
stitute for him. The only thing that I can do that Senator Rollings
would do is I can pound the gavel. Everything else, he is bigger
and better at. Mr. Chairman, your comments, please.
OPENING STATEMENT OF SENATOR ROLLINGS
The Chairman. Today the Committee on Commerce, Science, and
Transportation is holding a confirmation hearing on Mr. David R.
Barram, the administration's nominee for the Deputy Secretary of
Commerce. Mr. Barram is being nominated for an important posi-
tion, involved in many critical policy issues.
Traditionally, the Deputy Secretary of Commerce has served as
the Department's chief operating officer, or its internal manager.
Management of the Department of Commerce's operations covers a
wide range of complex activities, from the development of trade,
technology, and telecommunications policy to oceans and atmos-
pheric issues. While managing DOC has always been challenging,
the Department's diverse programs are particularly important
today to the U.S. economy as the world moves away from military
confrontation and focuses more on economic competition and new
international alliances. DOC must be prepared to play a key role
in this changing world, and the Deputy Secretary of Commerce cer-
tainly is an important player in this effort.
This administration has taken significant steps to promote eco-
nomic growth, specifically advocating investment in technologies
that will encourage the efficient use of resources, foster new indus-
tries, and create new jobs, and facilitating a shift in investment
from defense to civilian technologies. DOC has a prominent role in
implementing these initiatives and promoting U.S. competitiveness.
On the edge of the 21st century, DOC stands as the lead Federal
agency for major economic and technology initiatives. Managing
these diverse programs in the postcold war era with tighter budg-
ets will require an innovative and experienced manager. The Dep-
uty Secretary of Commerce must be prepared to assume such a
I look forward to hearing from Mr. Barram on these and other
important issues facing DOC.
Thank you, Mr. Chairman.
Senator Ford. Thank you, Mr. Chairman. We are very pleased
this morning to have Senator Feinstein, Senator Boxer, Congress-
man Mineta, and the Honorable Anna Eshoo, if that is correct.
Ms. Eshoo. Eshoo.
Senator Ford. Eshoo.
Ms. Eshoo. Eshoo. It is like a sneeze.
Senator FORD. Well, well. For a country boy from Yellow Creek,
getting close anyhow.
So, we are delighted to have all of you here this morning to sup-
port David Barram as Deputy Secretary of the Department of Com-
merce. The confirmation hearing is for Mr. Barram for Deputy Sec-
retary of Commerce. The position of Deputy Secretary, in my opin-
ion, is critical to implementing the economic policies and programs
of the Department of Commerce and the administration.
The committee notes that Mr. Barram has been cleared by the
Government Ethics Office and cleared by the General Counsel s Of-
fice of the Department of Commerce. So, not to appear to be preju-
diced, I will recognize Senator Feinstein.
STATEMENT OF HON. DIANNE FEINSTEIN, U.S. SENATOR FROM
Senator Feinstein. Thank you very much, Mr. Chairman.
I am very pleased to be here to introduce to you David Barram
for the No. 2 job at the Commerce Department. This is an impor-
tant job, and it is important, I believe, that David Barram is a Cal-
ifornian. Because, after all, one out of eight Americans today lives
in California. And it is a State whose economy is troubled and it
is a State whose economy affects the rest of this Nation.
I believe that through this important position, Mr. Barram will
have a direct impact on the economy of the entire country. And I
am confident that he will be an asset to Secretary Brown, the
President, and the Nation.
Mr. Chairman, Senator Boxer Joins with me in this statement.
She is delayed on the fioor in a debate and, if I may, I would ask
for your consent to introduce her personal remarks into the record
of this committee.
Senator Ford. Without objection, her statement will be included
in the record as if given.
[The prepared statement of Senator Boxer follows:]
Prepared Statement of Senator Boxer
Thank you Mr. Chairman. I am proud to come before your Committee to introduce
David Barram. I believe that David will be an excellent Deputy Secretary for the
U.S. Department of Commerce.
David has lived all of his adult life in the great state of California. He has contrib-
uted a tremendous amount to California's economy during his 25 years of experience
in various businesses. He served in the senior management of Hewlett-Packard; he
worked as Chief Financial Officer at Silicon Graphics; and, most recently, he served
as Vice President at Apple Computer.
I believe that David will be able to use the lessons he learned while running these
top California companies to prepare the Commerce Department for the 21st century.
He has a vision for what American industry can and should be. He talks about en-
couraging worker productivity by enhancing worker participation. He talks about
tailoring products and services to the needs of the consumer. He talks about the
need for innovation, and the importance of a speedy decisionmaking process. And,
by witnessing the struggles of the U.S. semiconductor industry, he understands the
important role that the government can play in helping U.S. industries to cope with
unfair foreign competition.
I believe that his vision — fostered by his years in the Golden State — will set the
Commerce Department in the right direction. A direction that will mean business
creation and expansion, greater U.S. exports and more jobs for America's workers.
David is committed to reinventing the way the Commerce Department works. This
means new ideas and new hope for America's industries.
Senators and Members of Congress can look forward to working with David on
many issues that are of critical importance to our future economy. We will be work-
ing together to provide economic conversion assistance to help workers and busi-
nesses to make the transition from a military to a civilian-based economy. We will
be working together to revise and streamline the U.S. export control regime so that
our high-tech companies are not unduly burdened by limits on their exports. We will
be working to promote and encourage exports of America's cutting-edge technologies,
including medical devices and environmental monitoring equipment.
I believe that David knows what needs to be done to get our businesses and our
country back on the road to prosperity. In his position as Deputy Secretary of Com-
merce, he will be able to put these ideas to work. I urge this Committee to approve
Senator Feinstein. Thank you. Mr. Chairman, after 13 years at
Hewlett-Packard, Mr. Barram moved over to join the senior man-
agement of Silicon Graphics. Both of these companies are major
companies in the Silicon Valley area of the State of California,
which has about one-third of all of the high-technology industry in
the United States. When he started at Silicon Graphics he was No.
30 of 30 employees in the whole company. When he left, the com-
pany employed over 200 people and had raised over $20 million in
venture capital. Of course, today it is a much larger company.
In 1985, Mr. Barram finally joined Apple Computer as its chief
financial officer, and then became Apple's vice president of world-
wide corporate affairs and public policy. Within a month of joining
Apple as chief financial officer, he presided over a complete reorga-
nization of the company and managed the company on a day-to-day
basis for the next 3 to 4 months.
He has also served on the United States Competitive Policy
Council and has devoted time to the State of California's Public
School Operations Committee. He was actively involved in the
rapid economic growth of Silicon Valley by serving on the Sunny-
vale Charter Review Committee and the planning commission of
So, he brings both public policy in terms of Government, as well
as public policy in terms of business. He knows the complexity of
global trade and global competitiveness. He knows how to deliver
results on time. He knows the importance of the customer and will
treat the U.S. taxpayer as a customer, and he knows how to man-
age people and large organizations.
I might say that this is a very important post. I am particularly
glad to have someone who is familiar with the high-technology in-
dustry. One of the major items that Commerce has before it today
is export controls on supercomputers. And I happen to be one of
those that believe that, in this postcold war world, the time has
come to really dramatically change how we look at these exports.
Because to prevent their export is only to say to countries go to
other nations to make your purchases.
So, David Barram, I think, will bring to the Department a new
postcold war philosophy which is based on three major companies,
Apple, Hewlett-Packard, and Silicon Graphics, and his experience
in a major high-technology area. I am very proud to introduce him
to this committee, and to join with my colleague and friend, Sen-
ator Boxer, and with Congressman Mineta and Congresswoman
Eshoo, both of whom know him very well. And I thank you for the
time, Mr. Chairman.
Senator Ford. Thank you. Senator. Representative Eshoo.
STATEMENT OF HON. ANNA ESHOO, U.S. REPRESENTATIVE
Ms. Eshoo. Good morning, Mr. Chairman. I am very pleased to
come before your committee today to introduce an outstanding indi-
vidual, Mr. David Barram. He is here, of course, to seek your con-
firmation to become the next Deputy Secretary of Commerce.
I have known Dave for a major part of his 25 years in Silicon
Valley, which I am privileged to represent, my district being the
14th Congressional District in California. During this period Dave
has worked, as Senator Feinstein just stated, for three American
companies who have revolutionized the global computer industry:
Hewlett-Packard; Silicon Graphics, which I might add back in Feb-
ruary, our President and Vice President visited that very company
to see firsthand what they are doing; and Apple Computer.
Mr. Chairman, I am here today, obviously, to offer my full and
enthusiastic support for Mr. Barram's confirmation. He was raised
in New England. He brings the best of New England values to the
west coast. I would like to think that I do too; we are both
Mr. Barram moved to California 24 years ago. In his own words,
he was lured to California's Silicon Valley where he saw an oppor-
tunity to be out there inventing the future. And that is exactly
what he did. He is one of several outstanding executives who re-
ceived training at Hewlett-Packard.
When he later joined Silicon Graphics he was employee No. 30.
When he left 2 years later, Silicon Graphics had grown to 200 em-
ployees, accumulated a venture capital base of $20 million, and was
actively selling its first product. You have seen the results of Sili-
con Graphics technology in everything from sophisticated tech-
nology employed in Desert Storm to mass media special effects like
those used to make the recent film Jurassic Park.
After Silicon Graphics, Dave Barram continued to develop his
reputation as an industry innovator at Apple Computers. In many
ways, Apple Computers and Dave Barram were the perfect match.
With its heavy emphasis on product innovation and research, Apple
provided Mr. Barram a user-based priority structure that placed
the customer experience above everything else. If there is anyone
that needs the benefit of this, it is the Federal Government and
Commerce. So, within this structure, Mr. Barram helped keep
Apple on the leading edge of technology development.
Mr. Chairman, and to all the committee members, I believe I
represent one of the most extraordinary congressional districts in
our Nation. It has vibrant and highly educated people who are pio-
neering new advances every day. The high-technology industry and
our Government are at a critical crossroad. Each must understand
the tremendous possibilities, and also the limitations that we both
Dave Barram can bring to Commerce a knowledge of these issues
faced by the industry that he has served so well, and the need for
unprecedented market speed, trade law reform, and intellectual
property rights. He is also a strong signal to the high-technology
community that this administration wants to address these prob-
lems and, indeed, take action on them and be a leader in the global
marketplace, which is what this country, in terms of its economic
future, needs to demonstrate.
So, I am so very proud to both represent the district that I do
and to sit next to a man that has come from and is a product of
the 14th congressional district, the private sector experience. And
by the way, I think most important as well, he and his wife Joan
have been an integral part of the community in which they have
resided. They have not simply been part of the private sector not
knowing what our communities need. His wife Joan has served
with distinction on one of our local school boards and we are sorry
to lose her leadership in the valley there on education, but we are
going to welcome her here to Washington, DC, following your swift
confirmation of Dave Barram.
Thank you very much for the opportunity to be here this morning
to recommend him to you.
Senator Ford. I like your positive attitude. [Laughter.]
Now it is my pleasure to recognize a friend, the distinguished
chairman of the Public Works Committee — I guess we could call it
almost a sister committee — Congressman Norm Mineta. Norm, we
are delighted to have you here this morning.
STATEMENT OF HON. NORMAN Y. MINETA, U.S.
REPRESENTATIVE FROM CALIFORNIA
Mr. Mineta. Thank you very much, Mr. Chairman. It really is
a great honor for me to have this opportunity to be before you, and
to join Senator Feinstein, Senator Boxer, as well as my very fine
colleague, Anna Eshoo, in introducing you to Dave Barram, Presi-
dent Clinton's nominee to serve as Deputy Secretary of Commerce.
As Anna has indicated, she represents the 14th congressional
district, and I represent the 15th congressional district, which is
the adjoining one, sharing in the honor of representing Silicon Val-
There is no question this Nation is at a crossroads in keeping our
economy moving forward and competing in the global marketplace.
And I can think of no more outstanding choice to help move our
economy into the 21st century than Dave Barram. I have known
Dave since his early days at Hewlett-Packard. David's achieve-
ments in the private sector are well known and have made him a
highly respected figure in the high-technology industry. David also
understands the relationship which exists between the public and
At Hewlett-Packard, David learned and practiced two very im-
portant ideas. People are the key to productivity and providing a
contribution to the customer is essential to economic success. David
Barram was the first CFO and 30th employee of Silicon Graphics,
as has already been mentioned, and yet in 2 years they had over
200 employees and raised over $20 million in venture capital.
David then became the chief financial officer for Apple Computer.
Again, you have heard of his exploits there where he had to, within
the first months at Apple, be in a position to reinvent their com-
pany in order to survive. David was a vital component in the reor-
ganization of a company where there were layoffs of 25 percent of
the workforce and where they had to manage the day-to-day oper-
ation of the company. David understood there was now global com-
petition, and that this was more important than a "price is all that
The public-private sector relationship is very important to David.
I have worked with David on many community issues, and have
found him to be a man committed to helping society.
David also experienced firsthand the roller coaster ride taken by
the semiconductor industry, and as a member of the Science,
Space, and Technology Committee I was vitally involved as we
were going through that whole issue. At the time, as you will re-
call, Mr. Chairman, the industry wanted no part of Government as-
sistance until the Japanese Government began to affect the global
position in the semiconductor industry.
The high-technology industry then came to you and to all of us
to create the U.S. -Japan semiconductor agreement, and pushed the
Government to place sanctions on the import of Japanese chips.
This act was unusual for the entrepreneurs who founded this in-
dustry. David understands that there must be an ongoing dialog
between the public and private sectors to ensure our country's eco-
nomic growth and prosperity.
In closing, Mr. Chairman, there is no individual more qualified
to fill the position of Deputy Secretary of Commerce than David
Barram. As has already been pointed out, Joan was an active elect-
ed official in our community, and now this great team will be here
in Washington, DC, through the good graces of this committee. And
so I urge you and the members of your committee to move quickly
on David Barram's nomination. And thank you, again, Mr. Chair-
man, for this opportunity to be here on his behalf.
Senator Ford. You are mighty nice, Mr. Chairman, and I appre-
ciate your statement this morning. If you all care to go, I will as-
sure you that the hearing will not be very long. With such elo-
quence this morning from your support, it would be very difficult.
And so I do thank you all very much. If you wish to stay that is
fine, otherwise you can go.
Uh-oh, we are going to kissing and hugging here now. [Laugh-
That is California style, I guess, and I just live in Kentucky.
I noticed the chairman did not kiss you and hug you, Mr.
If you do not mind, Mr. Barram, we have one of our colleagues
here that needs to go to another meeting, and he wishes to present
the next nominee. And Senator Daschle is here and I would like
to recognize him, with your permission.
Senator Daschle, if you wish to say a few words about the next
nominee, I would be more than pleased for you to do that.
STATEMENT OF HON. THOMAS A. DASCHLE, U.S. SENATOR
FROM SOUTH DAKOTA
Senator Daschle. Well, thank you very much, Mr. Chairman.
And let me say I am not a member of this committee, but were I
a member I would vote for David Barram, given what I have just
I want to thank you for accommodating me. I know we have a
vote at 11:30 and the chairman himself whI have to excuse himself
from the committee.
I have the very distinct pleasure, and probably the easiest task
I will have all week long, in recommending to this committee Ste-
ven Palmer to be Assistant Secretary for Governmental Affairs of
the Department of Transportation. I have had the distinct pleasure
of working with Steve for a number of years. He is probably well
known by everybody in this room, and well respected for his exper-
tise in aviation, transportation, space, and budget matters.
He has been someone that we have all had the opportunity to
work with on a number of these issues. He is particularly knowl-
edgeable on transportation issues, and I think it is fair to say he
has become well acquainted with those people in the legislative and
executive branches of Government who work on these issues. He
knows those who have testified at this table this morning. He
knows the members of this committee and he certainly knows the
staff. And so he brings to this particular position the rare blend of
knowledge of the issues as well as a good recognition of the impor-
tance of communication with the people who oevelop the policy on
What the members of this committee may not know is that Steve
is a South Dakotan. And as a South Dakotan, I am very proud to
recommend him to this committee, first because of the qualities
that I have just outlined, but second because of the talent that
South Dakotans can bring to Government. He is a person that we
are proud of
He was bom in a town not too far from the town I was bom in,
Bowdle, SD. His parents just told me this morning they call him
the Bowdle Baby. Given the fact that only three or four are born
each year in Bowdle, SD, that makes him a very unique individual.
So, I hope you will treat him with the respect that he deserves
in that regard alone.
Senator Ford. Is that somewhere near Mobridge?
Senator Daschle. Very close to Mobridge. Very close. In fact
Senator Ford. They have championship chili in Mobridge, SD.
Senator Daschle. There you go. Spoken like a true South Dako-
Senator Ford. You get buffalo or beef, either one.
Senator Daschle. That is right. But let me conclude by saying
I am confident Steve Palmer will indeed serve us well as the As-
sistant Secretary for Governmental Affairs in the Department of
Transportation. I am enthusiastic about his nomination, and I cer-
tainly hope the committee will see fit to support it.
Thank you very much, Mr. Chairman.
Senator Ford. Thank you, Senator. Mr. Barram, if you would
like to go ahead and make a statement. I would like to complete
this hearing before we have votes.
STATEMENT OF DAVID J. BARRAM, DEPUTY SECRETARY-
DESIGNATE, DEPARTMENT OF COMMERCE
Mr. Barram. I am honored to be here, nominated by the Presi-
dent and honored to come before you, and I appreciate the commit-
tee scheduling my hearing so quickly. Not everything worked this
quickly in the process.
I am part of a very close, extended family. My wife, my kids, my
mother, my father, and my four younger brothers and their fami-
Senator Ford. Do you have any of them with you here today?
Mr. Barram. No. They would have flown here, I think, from the
west coast if I had let them. I wish I could introduce them all, and
especially my wife Joan, that Anna and Norm have mentioned.
She, by the way, is waiting by the telephone to find out if I get con-
firmed so that she can pack.
I am personally very excited about the chance to be the Deputy
Secretary of Commerce in the early stages of a new administration,
one with such a strong commitment to fundamental change. This
is truly an amazing time in the history of the world, and therefore
an amazing time in our country's life. When I left the Navy almost
24 years ago I left New England, the Midwest, the Southeast where
I had grown up and educated and served in the military, to try this
alluring place called California.
The State was rich, the school system was the best, the weather
was wonderful, and dreams were being fulfilled every day. And Sil-
icon Valley by itself was a startup venture. In 1969, although beset
by the tumult of the sixties, America was very confident of itself.
We could do and be whatever we wanted to. And in California we
had that in an extra measure. We saw ourselves as being out there
inventing the future.
Then the world changed. We no longer dominated economically.
Simply being able to say "made in the USA" was no longer enougn.
Now we have to make better products that thrill customers at good
prices, and it all happens faster than we are used to. I think we
should all have a plaque on our desk with the word "speed" facing
us every morning or every day. Airlines, banks, auto companies,
aerospace companies, computer companies, communications compa-
nies all know they have to get product ideas to market this, make
organization changes fast, and be good at telling the world quickly
what they are marketing.
I have experienced the trauma of managing in this climate of
change, and it is tough. I have experienced the situation where
critical parts of an organization are behind other parts, and the re-
sult is a serious loss of competitive strength. Fortunately, I have
many more times been in a situation where we have tied together
the parts and made the whole greater than the sum of the parts.
But never was that possible without an emphasis on speed and on
Today, in the fall of 1993, this administration and this Congress
seem to be intent on moving ahead on many fronts with more
speed than ever before. And I am sure your constituents tell you
how much we need change and yet how scared they are about its
effect on them. And I am sure there are things that you will wish
the Commerce Department would move faster on, and it is possible
we may someday wish you might move faster on something.
Industry also wants us to move faster. The people want us to
move faster, but they both want us to do so with great wisdom and
without messing up their lives.
I want to help the Department of Commerce develop a mentality
of speed as much as I possibly can. I also want to help us all find
a way to do that so employees of Commerce and in general can
minimize the scary and demoralizing effect that instability has on
The Department will have a busy fall, among them many items
on our plate is the report from the trade promotion coordinating
As you know, this TPCC, comprised of 19 Federal agencies that
are involved in trade promotion and that Secretary Brown chairs
will be reporting to Congress and the public by September 30.
Using the TPCC, we hope to effectively harness the Federal Gov-
ernment to increase U.S. exports and create jobs. At the same time,
as we focus on trade, we will focus at least as hard on technology.
I appreciate the efforts of this committee to help the Department
develop a technology policy that will provide an umbrella for the
many things we need to do. In fact, today, the Vice President and
Secretary Brown are announcing the administration's agenda for
action for how we can work together on the national information
infrastructure. This is an enormously complicated set of issues. I
believe that how we work on this set of issues will be a good test
of our ability to work in a balanced way with the marketplace.
This Government is not going to build this network of networks.
The private sector is. We can facilitate, we can remove obstacles,
we can sometimes prod, but we will only succeed as a society and
an economy if the private sector makes this potentially huge mar-
ketplace a profitable and customer-thrilling business.
I had the great fortune to visit the NOAA labs at Boulder in Au-
gust and will be visiting part of the fleet this Friday. I am greatly
impressed by both the quality of the science being done and the va-
riety. In fact, Under Secretary of NOAA Jim Baker says he thinks
I may be the first Deputy Secretary to ever have dropped a BT off
the stern of a ship when I was in the Navy.
Today, we use new radar and satellite technology to observe
winds, waves, and temperatures. We know so much more, and we
are beginning to have the technology to turn that knowledge into
predicting ability. As I learn more about NOAA's capability to help
American commerce I expect I will become a strong advocate of ef-
forts to make sure we invest in the ideas that NOAA is bringing
to the forefront.
The Department of Commerce is a large and varied organization.
We have a lot to be proud of. We have outstanding technology in
NOAA, NIST, NTIA. We have widely used and valued products
from information about the economy to census data to trade assist-
ance to patent information to new technologies, and we have a real
commitment to reinventing the way we work.
If I am confirmed, I am looking forward to learning much more
about the Department and making a real difference in its progress
as I do so.
Thank you, Mr. Chairman. I would be happy to answer any ques-
tions that I can.
[The prepared statement, biographical data, and prehearing
questions and answers of Mr. Barram follow:]
Prepared Statement of David J. Barram
Good morning. I am honored to be nominated by the President and honored to
come before you.
I am, personally, very excited about the chance to be the Deputy Secretary of
Commerce in the early stages of a new Administration — one with such a strong com-
mitment to fundamental change.
THIS IS A VERY CHANGED WORLD
This is truly an amazing time in the history of the world and therefore an amaz-
ing time in our country's life.
When I left the Navy almost 24 years ago, I left New England, the Midwest, and
the Southeast (where I had grown up, been educated, and served in the military)
to try this alluring place called California. The state was rich, the school system was
the best, the weather was wonderful and dreams were being fulfilled every day.
And, Silicon Valley was, itself, a start-up venture. In 1969, although beset by the
tumult of the 60's, America was very confident of itself. We could do and be what-
ever we wanted to. And, in California, we saw ourselves as "out there" inventing
Then the world changed. We no longer dominated economically. Simply being able
to say "Made in USA" was no longer enough. Now, we have to make better products
that thrill customers at good prices. And, it all happens faster than we are used
to. We should all have a plaque with the word "speed" facing us on our desks each
day. Airlines, banks, auto companies, aerospace companies, retailers, computer com-
panies, communications companies, know tney have to get product ideas to market
fast, make organization changes fast and tell the world quickly what they are mar-
I have experienced the trauma of managing in this climate of change. It is tough.
I have experienced the situation where critical parts of an organization are behind
others and the result is a serious loss of competitive strength. I have, many more
times, been in the situation where we have tied together the parts and made the
whole greater than the sum of the parts. Never was that possible without an em-
phasis on speed and on the customer.
Today, in the fall of 1993, the Administration and Congress seem, intent on mov-
ing ahead on many fronts — with more speed than ever before. I am sure your con-
stituents tell you how much we need change and yet how scared they are about its
effect on them. There are surely things you wish the Commerce Department would
move faster on and we may someday wish Congress would move faster on some
matters. Industry wants us to move faster, the people want us to move faster, and
they both want us to do so with great wisdom and without messing up their lives.
I want to help the DOC develop a mentality of speed as much as 1 possibly can.
I also want to nelp us all find a way to do that so employees (of Commerce and
in general) can minimize the scary and demoralizing effect that instability has on
TRADE AND TECHNOLOGY
The Department will have a busy fall. Among the many items on our plate is the
report from the Trade Promotion Coordinating Committee. As you know, this TPCC,
comprised of 19 federal agencies that are involved in trade promotion, and that Sec-
retary Brown chairs, will be reporting to Congress and the public by September 30.
Using the TPCC, we hope to effectively harness the federal government to in-
crease US exports and create jobs.
At the same time, I appreciate the efforts of this Committee to help the Depart-
ment develop a technology policy that will provide an umbrella for the many things
we need to do. Today, the Vice President and Secretary Brown are announcing the
Administration's agenda for how we can work together on the National Information
Infrastructure. This is an enormously complicated set of issues. I believe this will
be a good test of our ability to work in a balanced way with the marketplace.
The government isn't building this "network of networks." The private sector is.
We can facilitate, we can remove obstacles, we can sometimes prod, but we will only
succeed as a society and economy if the private sector makes this potentially huge
marketplace a profitable and customer thrilling business.
THE ENVIRONMENT, THE WEATHER; THE SEAS, THE FISH
I visited the NOAA labs at Boulder in August and will be visiting part of the fleet
this Friday. I am greatly impressed by the both the quality of the science being done
and the variety.
Today we use new radar and satellite technology to observe winds, waves and
temperatures. We know so much more and we are beginning to have the technology
to turn that knowledge into predicting ability. As I learn more about NOAA's capa-
bility to help American Commerce, I expect I will become a strong advocate of ef-
forts to make sure we invest in the ideas that NOAA is bringing to the forefront.
The Department of Commerce is a large and varied organization. We have a lot
to be proud of. We have outstanding technology in NOAA, MST, NTIA; we have
widely-used and valued products (from information about the economy, to census
data, to trade assistance, to patent information, to new technologies); and we have
a real commitment to reinventing the way we work. If I am confirmed, I am looking
forward to learning much more about the Department and making a difference in
its progress as I do so.
Tliank you, Mr. Chairman. I would be happy to answer any questions that I can.
Name: Barram, David John; address: 1515 Redwood Drive, Los Altos, CA 94024;
business address: Apple Computer, Inc., 10431 N. De Anza Blvd., Cupertino, CA
Position to which nominated: Deputy Secretary — Commerce; date of nomination:
September 7, 1993.
Date of birth: December 27, 1943; place of birth: Keene, NH.
Marital status: Married; full name of spouse: Joan Ceder Barram; names and ages
of children: Edward Ceder (Ted) Barram, 23; and Diane Elizabeth Barram, 21.
Education: Santa Clara University— S.C. CA, 9/70-6/73, MBA; and Wheaton Col-
lege, Wheaton, IL, 9/61-6/65, BA.
Employment: 4/85-7/93, Apple Computer, Inc., Business Management; 4/83-^/85,
Silicon (jraphics, Business Management; 1/70—4/83, Hewlett-Packard Co., Business
Management; 9/66-12/69, U.S. Navy, Navy Officer; and 8/65-9/66, Price Waterhouse
& Co., Staff Accountant.
Government experience: 1992, U.S. Government, Conipetitive Policy Council,
Subcouncil on Workforce Training; 1987-89, State of California Schools Operating
Committee; 1981-82, Sunnyvale, CA, Charter Review Committee; and 1980-82,
Sunnyvale, CA, Planning Commission.
Political affiliations: Delegate to 1992 Democratic National Convention.
Political Contributions (over $100) — Revised September 11, 1993
U.S. Senate, Lloyd Bentsen
Cupertino School Board, Elaine White
Santa Clara County Supervisor, Ron Gonzales
Cupertino School Board, Steve Chell
President, Michael Dukakis
Democratic Victory Fund
Congress, Anna Eshoo
California State Assembly, John Vasconcellos
U.S. Senate, Don Bonker
Santa Clara County Supervisor, Ron Gonzales
Fremont School Board, Doug Stone
Fremont School Board Nancy Newton . .
Congress, Anna Eshoo
Congress, Bob Matsui
California Superintendent of Public Instruc-
tion, Bill Honig.
Californian Governor, Dianne Feinstein
Santa Clara County Democratic Forum
Santa Clara County Supervisor, Trixie John-
State Board of Equalization, R. Wallack
Presidential Primary, Bill Clinton
Californian Insurance Commissioner, John
Santa Clara County Supervisor, Mike Honda
Santa Clara County Supervisor, Dianne McKenna ..
Congress, Anna Eshoo
Congress, Norm Mineta
California Assembly, Elaine White
Cupertino School Board, Steve Chell
Congress, Anna Eshoo
Democratic National Committee (Presidential
California State Senate, Rebecca Morgan
Superior Court Judge, Esau Herrera
California Assembly, John Vasconcellos
Fremont School Board, Nancy Newton
Santa Clara County School Board, Andrea
Congress, Anna Eshoo
California Governor, Kathleen Brown
Virginia Governor, Mary Sue Terry
CSBA PAC Anti-voucher
Memberships: Board Member, San Jose Sports Authority, San Jose, CA; Founding
Vice President, Kids in Common, a public-private partnership for kids, San Jose,
CA; and Board Member, National Center on Education and the Economy, Rochester,
Honors and awards: Association of California School Administrators, Distin-
guished Service Award, 1989.
Published writings: "California at the Bottom: Picking Up Public Schools," LA
Times Op-Ed, October 30, 1988; "Partners for the Nineties: Business and Edu-
cation," Educational Horizons, summer 1988, vol. 66, No. 4.
Questions Asked by the Committee and Answers Thereto by Mr. Barram
Question. If confirmed, what will be your major objectives and priorities as Dep-
uty Secretary of Commerce?
Answer. If confirmed, my major objectives and priorities would be to support the
Administration's strong commitment to fundamental change, help the Department
develop a mentality of speed, and assist the Secretary in directing the Department
in such a way that we can marshall its full competitive strength.
Question. Please describe the qualifications tnat you bring to the position of Dep-
uty Secretary of Commerce.
Answer. I believe I come prepared to assume the role of Deputy Secretary in a
Department that will surely assume a greater role in rekindling the economic dream
of all Americans.
Specifically, I have served as part of senior management at three outstanding
American companies — Hewlett-Packard, Silicon Graphics, and Apple Computer. I
also had the good fortune to have done this in the midst of Silicon Valley's explosive
growth and its emergence as an important player in the global economy.
Through these experiences and others, I have gained a great deal of experience
and insight into managing systems and large organizations. As we all seek to
reinvent the American government, these skills will be especially valuable.
Question. What do you believe should be the role of the Department of Commerce
(DOC) in Administration programs and decisions regarding such areas as business,
trade, technology, and the environment?
Answer. President Clinton has made clear his commitment to changing the gov-
ernment's fundamental approach is these areas and making the Department of
Commerce a leader in doing so. But this Administration is well aware what complex
problems we face and what a high degree of cooperation is necessary. There are
many ways these four areas can be given governmental assistance.
In business, we will strengthen our support of export efforts and improve our co-
ordination among agencies. This Administration is also determined to provide tax
credits to encourage investment in new plants and equipment; make special loans
and grants available to small businesses; and help entrepreneurs by offering tax ex-
clusions to those who take risks.
In trade, we must avoid protectionism, but respond to other nations' unfair trad-
ing practices and protect America's interests; favor free trade agreements that are
fair to American workers; better utilize the talents at the national laboratories; and,
help develop a commitment between business and labor to make world-class prod-
In technology, we should encourage investment in a 21st century infrastructure;
establish education and training programs for a high-skilled workforce; stimulate in-
dustry to provide continuing, high skills training to its workers; and, refocus R&D
programs on critical technologies such as advanced materials and new manufactur-
We will balance environmental and development needs. We should also foster the
development of new technologies to create systems to recycle, treat toxic waste and
clean the air and water; direct funds to the development of new, clean, efficient en-
ergy sources; and, encourage the use of fuel sources other than nuclear energy in
order to avoid the staggering costs, delays and uncertainties of nuclear waste dis-
Question. DOC has many programs which can help U.S. industry and workers to
compete successfully in worla markets, including the compilation of economic infor-
mation, the exercise of trade enforcement authority, export promotion activities, pat-
ent operations, and programs to assist industrial tecnnology. How can these pro-
grams be best integrated and used to help U.S. companies to improve their competi-
tiveness in international markets?
Answer. I am impressed with the array of policy and program tools, institutional
skills and capabilities, and individual expertise and experience available in the De-
partment of Commerce. As your question implies, they are located in different orga-
nizations and places, and management action is required to bring together just the
right combination for the job to be done. My sense of the situation is that the De-
partment's capabilities can best be harnessed by providing appropriate leadership
and policy guidance, specific competitiveness improvement targets and goals, and
the motivation to work together to develop integrated approaches to problems.
Commerce, like most large organizations, normally operates vertically, receiving
input at the bottom, converting it to product, and sending output back out the top.
In this system, things simply don't move from one assembly line to another; they
stay on one vertical track. I have heard this referred to as the "stovepipe" method
of operation. The Patent and Trademark OfTice, for example, examines applications
to determine whether a patent grant is warranted. That is their main job. Competi-
tiveness concerns are secondary to this primary mission. Similarly, export adminis-
tration employees focus on examining export license applications and enforcing ex-
port laws, not on the competitiveness aspects of what they do. The same can be said
for most of our operations.
As an institution, however, we need to learn to do more than one job — to be aware
of and concerned with our potential to affect broader goals while still accomplishing
our primary mission. Making sure that happens is a management responsibility. As
managers, we must provide leadership and policy guidance that will focus our exper-
tise on matters that cut horizontally across organizational missions and responsibil-
72-503 - 95 - 2
ities. We can set up teams that bring together the knowledge and expertise from
various parts of the Department to assemble information, help set new goals, de-
velop policy recommendations and plan program initiatives that will get the goals
Question. If confirmed, what role will you play in working with American indus-
try to identify Federal actions, including technology activities, that can boost U.S.
Answer. Part of President Clinton's national economic strategy is to make the De-
partment of Commerce a focal point for civilian technology through the close co-
operation of business and government. Secretary Brown has stated that economic
growth in America is powered by the engine of technological progress. DOC will ful-
fill its mission to work with industry to create public/private partnerships that will
couple governmental assistance with the vigor of the marketplace.
This builds on DOC's extensive contacts with industry via its technology, economic
development, trade, manufacturing, and information infrastructure programs. Our
nation's preeminence in manufacturing demands an integrated approach: One that
addresses the continuum from R&D through manufacturing into the marketplace;
one that appreciates that the tangible problems facing American industry today in-
cludes financing, business practices, intellectual property protection, and fair trade.
But technology is more than machines and markets. It's also people. Our infrastruc-
ture must be modernized. Our workforce must have new skills. And I believe that
our economic future also depends on a strong and efTective Department of Com-
If confirmed, I plan to work with industry to forge new partnerships that will help
to create new jobs, ensure long-term growth and improve government.
CIVILIAN TECHNOLOGY POLICY
Question. Does the Administration continue to believe that the DOC should be
the lead Federal agency for civilian technology policy?
Answer. Yes. This view has been reiterated to the public and to both the Sec-
retary and me, most recently by the President and Vice President last week during
a visit to California. Commerce has the experience and connections to U.S. industry
which allow it to understand and effectively respond to the barriers to U.S indus-
SECTOR-SPECIFIC TECHNOLOGY PROJECTS
Question. Recently the Administration and some in Congress have proposed in-
creased industry-government technological cooperation in areas such as clean auto-
mobiles and aircraft. If such cooperative projects were pursued, what criteria do you
believe DOC officials and others in the Administration should use to judge whether
the Federal government should contribute to a sector-specific technology project?
— How much cost-sharing should be required of industry?
— What assurances should the Federal Government require regarding the ability
of companies to commercialize any new technology developed through such projects?
— Should the Federal Government ask for assurances that resulting products will
be substantially manufactured within the United States?
— What trade policies must be in place before a technology project is determined
to have a realistic chance of success?
Answer. The criteria to be used in determining if the Federal Government should
contribute to sector-specific technology projects are very important. New industries
based on new technologies are continually being bom, while other industries need
to decline and even disappear. Helping existing industries, such as automobiles and
aerospace, therefore requires afiirmative answers to criteria such as
— the target industry must be important to the economy in terms of domestic
value added and jobs
— industry must have made concerted attempts to address the technological prob-
lems without success
— government contributions must be of limited duration
— benefiting industries or sectors must agree to certain performance goals (e.g.,
the clean car initiative)
— willingness of private-sector participants to cost-share an amount in proportion
to their financial capacity and their ability to directly capture at least the short-
term and intermediate-term benefits of the research
— the establishment of a diffusion/transfer mechanism to ensure that all eligible
U.S. firms have access to the resulting technology
Commercialization of the technology resulting from industry-government coopera-
tive research cannot be guaranteed, but the prospects are substantially increased
bv cost-sharing. When inaustry commits money, it also alters its strategic plans in-
cluding investment in plant and equipment, marketing, and follow-on R&D. Such
actions greatly enhance the probability of commercialization and subsequent market
Trade policies are a part of any technology -based economic growth strategy. Major
domestic economic growth investments pay off to a greater degree if foreign market
access is achieved. Therefore, industry-government cooperation should be under-
taken as part of a global competitiveness strategy, which Includes opening of foreign
Question. There has been some discussion of using DOC and National Science
Foundation (NSF) funds for sector-specific industry-government projects. However,
since DOC's Advanced Technology Program and NSPs grant programs can respond
only to proposals initiated by applicants and not to projects selected by agency offi-
cials, how would you envision the role of these programs in sector-specific tech-
Answer. The strengths of the ATP are based in its rigorous competitive process
and, most important, that the ideas come from industry, and that industry sets the
research priorities. The ATP selection process has been designed to provide a fair
and rigorous competition that considers both technical and business merit. We will
not deviate from these important concepts.
The challenge now for NIST is to scale the ATP to a major national program while
retaining its essential characteristics of objectivity, fairness and efficiency.
With greater resources, the ATP will be able to deepen support in selected, par-
ticularly significant areas of technology while continuing to provide an open door to
promising ideas from any area of technology.
To achieve maximum impact, the ATP plans to make use in the future of program
competitions which will focus on a specific area of technology or a cluster of related
technologies. This will allow us to cnannel significant support to groups of related
projects, each attacking a critical element, and reaping the benefits of synergy.
The process of selecting these program areas will be critical to the success of the
ATP. We intend to continue our strategy of relying on industry's input to set re-
search priorities. Specific selection criteria will include the potential of the program
to contribute to the long-term economic growth of the nation, potential for technical
excellence of the proposed research, the degree of industry interest in participating,
and the potential for ATP funding to make a major difference.
MANUFACTURING EXTENSION PROGRAMS
Question. By combining funds included in the fiscal year (FY) 1993 defense con-
version package and the funds requested for NIST by the Administration for FY
1994, how many Manufacturing Technology Centers, Manufacturing outreach Cen-
ters, and State Technology Extension Program awards would you expect DOC to
have in place by the end of FY 1994? What is the Administration's year-by-year
schedule for creating the 100 or more centers that the President called for in "A
Vision of Change for America'7
Answer. The Technology Reinvestment Project (TRP) competition is currently in
the evaluation stage, and any estimates on the type or number of potential awards
is not available at this time. However, I have been informed that based on prelimi-
nary estimates made before the TRP competition was closed, approximately live new
Manufacturing Technology Center-like entities and twenty Manufacturing Outreach
Center-like entities are expected to be funded through the TRP. have also been in-
formed that approximately $5M to $10M is expected to be used for State-level plan-
ning and implementation activities (STEP-like activities).
We expect to reach the President's goal of 100 centers by Fiscal Year 1997 as fol-
Fiscal year 1995
Fiscal year 1996
Fiscal year 1997
INDUSTRY-GOVERNMENT ADVISORY COMMITTEES
Question. In your view, what is the most useful way to structure industry-govern-
ment discussions regarding technology cooperation? Given the requirements of the
Federal Advisory Committee Act for open meetings, how can industry leaders and
government officials hold discussions about technology which allow for the protec-
tion of proprietary corporate information?
Answer. The Department of Commerce is already constantly interacting with in-
dustry on both formal and informal levels through Cooperative Research and Devel-
opment Agreements (CRADAs), meetings with the Secretary and other Department
officials, and a variety of other mechanisms. Because the President has issued an
executive order calling for a reduction in the number of non-statutory advisory com-
mittees, I beUeve we should review the need for these committees and the mecha-
nisms under which they operate.
OFFICE OF TECHNOLOGY POLICY
Question. What eventual role and set of activities do you, if confirmed, envision
for DOC's Office of Technology Policy (OTP)? For example, on what kinds of policy
issues will it focus? Will it become more involved in analyses of foreign technology
and foreign industrial policies?
Answer. I expect the Office of the Assistant Secretary of Commerce for Tech-
nology Policy (OTP) to continue its critical role in supporting the Department's ini-
tiative to harness the Nation's technological resources towards a strengthened pre-
eminence in U.S. competitiveness. I believe that our new Under Secretary for Tech-
nology, Mary Good, has outlined a strong program for the Off ice of Technology Pol-
icy. As the Department seizes every opportunity to work with the private sector and
other government agencies which affect the development and commercialization of
technology, and adoption of best manufacturing practices, the Office of Technology
Policy will be an integral part of the effort to achieve success.
One of the clear messages that we hear from industry is that our government
lacks the "benchmarking" of our nation's own economic base against both foreign
competition and potential capacity as a basis for developing policy and allocating re-
sources. The Office of Technology Policy is playing a lead role in responding to this
challenge. The technology monitoring and assessment functions included in the Na-
tional Competitiveness Acts will be a tremendous boost in getting this job done.
Question. In the past Administration, OTP played an important role in inter-
national negotiations regarding Japan's Intelligent Manufacturing Systems (INS)
Initiative. Do you envision DOC, and OTP in particular, continuing to play a role
in this area, and do you believe that DOC or other entities within the U.S. govern-
ment should provide matching grants to U.S. industry to help it participate in INS
Answer. DOC should continue to play a leading role in the IMS Initiative.
OTP played a leading role in the negotiations that established the EMS Feasibility
Study in response to tne initial Japanese proposal. This study will determine the
feasibility of international collaborative R&D in advanced manufacturing and its in-
dustrial deployment. Industry is leading the Feasibility Study with academia and
government participation from Australia, Canada, the European Community (EC),
five European Free Trade Association (EFTA) countries, Japan and the United
States. The two year feasibility study consists of: (1) a study of the four critical is-
sues for collaboration (methods of cooperation, intellectual property rights, funding
and technical project areas) and (2) R&D test cases to provide experience and infor-
mation for designing a full ongoing INS program.
Once the Feasibility Study is completed in January 1994, the international par-
ticipants will decide whether to recommend a full ENS program, and if so, the form
sucn a program should take. An international management structure of three inter-
related (Steering, Technical, and Intellectual F*roperty Rights) committees is con-
ducting the INS Feasibility Study. Each committee is industry led with academia
and government members.
OTP will continue to serve as the U.S. Secretariat during the feasibility study and
I assume it will maintain a leadership role in all ENS activities. I understand that
Under Secretary of Technology, Mary Good, has been working closely with our U.S.
private sector representatives to EMS since her confirmation.
There are currently six studies and test cases being conducted as part of the Fea-
sibility Study. These projects are Clean Manufacturing in the Process Industries,
Global Concurrent Engineering, Globeman2l: Enterprise Integration for Global Man-
ufacturing towards the 21st Century, Holonic Control Systems: System Components
of Autonomous Modules and their Distributed Control, Rapid Product Development,
and Systemization of Functional Knowledge. There are approximately 140 organiza-
tions participating in the projects worldwide, and organizations from the United
States participating in all six projects. NSF is providing limited funding to some
universities participating in the test cases.
The DOC or other entities within the U.S. government should consider leveraging
industry funding through a variety of mechanisms. Matching grants will be one
mechanism under review to achieve this goal.
FINANCING OF NEW TECHNOLOGIES
Question. There is general agreement that America's technology companies face
serious problems in obtaining patient capital. In this regard, there has oeen much
discussion and expression of differing viewpoints on a Congressional proposal to cre-
ate a new DOC financing program — one model led on the proven Small Business
Investment Company (SBIC) program but focused exclusively on the needs of tech-
nology firms. How do you view this Congressional proposal? Are there alternative
proposals for making patient capital available to technology companies?
Answer. I agree completely with Secretary Brown, who has made it clear that he
wants to work with his colleagues in the Administration to make absolutely certain
we are not duplicating existing programs or that the problem cannot be alleviated
through other means, such as capital gains tax relief for investment in small busi-
ness or through financial reform aimed at easing the credit crunch. [Regardless of
the vehicle that is eventually implemented, I strongly believe, as does the Secretary,
that DOC should play a role in oversight and leadership of the program.]
But I would not be candid if I did not observe that in recent days it has become
clear that achieving the President's budget goals will not be easy. At this time, a
Commerce venture capital program must compete for priority with supporting eco-
nomic diversification of communities affected by defense reductions, modernizing the
Weather Service, facilitating the development of an information superhighway, and
building NIST's Advanced Technology Program and Manufacturing Extension Part-
nership. Its place in these initiatives is still under review.
Question. Since 1988, there has been a fifty percent decline in the annual amount
of new venture capital funds. Many entrepreneurial firms that have developed new
products have faced increasing difficulty in obtaining capital to expand production.
This situation has become an increasingly stark reality in sectors that have been
"targeted" by foreign companies. What role should DOC play in encouraging the
availability of private capital for the development of new technologies?
Answer. I think DOC can make a contribution in at least four ways. First, we
will encourage private sector investment through well-managed programs such as
the ATP, througn which the Government cost-shares potentially risky technology de-
velopment projects with individual firms and consortia. Second, through efforts such
as the Commerce-Treasury Financing Roundtables, we can bring experts together
from the financial and technical worlds to achieve better understanding of the bar-
riers to investment and to devise appropriate strategies. Third, our Tecnnology Ad-
ministration will be an efTective advocate within the Administration for the adoption
of tax accounting and investment policies that will promote technology investment.
And fourth, we need to double and redouble our efTorts to build partnerships be-
tween the private sector and our federal laboratory system so as to encourage pri-
vate sector investment in commercializing taxpayer-funded R&D.
HIGH-PERFORMANCE COMPUTING AND COMMUNICATIONS
Question. What do you believe is an appropriate role for NIST and other parts
of DOC in the High-Performance Computing and Communications Initiative and re-
lated efTorts to help to accelerate the development and deployment of a National In-
Answer. NIST and NTIA are the two primary DOC organizations involved in the
National Information Infrastructure and they have complementary roles.
The NIST program for the Nil:
— is targeted at commercial, engineering, and scientific communities because
— has the unique mission to provide infrastructure support of industry (meas-
urements, standards, data focus);
— is recognized for impartial, third-part objectivity throughout its 90-year his-
tory of working cooperatively with industry, government, and university for eco-
nomic growth and development.
The Information Highways of the National Information Infrastructure
has three primary elements: hardware, software, and usable information;
plus the interoperability that makes them work.
NIST infrastructure support of industry (measurements, standards, data
focus) is necessary in eacn of hardware, software, usable information, and
the interoperability of these three elements.
— NIST has special expertise in research, standards development, and metrol-
ogy to advance manufacturing applications for the Nil.
— Performance measurement tools for parallel computers will facilitate
use in production by 1) determining performance bottlenecks and 2) improv-
ing utilization of the computers.
— Performance measurement tools for communications network will im-
prove the design of efficient networks, underlie standards for high perform-
ance network, and verify design goals.
— Protocol design, dynamic oehavior of communications protocols, and re-
lated performance measurements will support protocol standards develop-
— Lack of access to and knowledge of high quality software currently lim-
its further development of advanced applications using the Information
— NIST's program will provide immediate access to and distribution of
high-caliber software via the information Highway.
— The advanced manufacturing testbeds will permit demonstration and
testing of distributed software systems supporting manufacturing and other
— Testbeds will allow equipment producers to test and improve their
products in a real manufacturing environment, and thereby demonstrate
their usefulness to manufacturers.
— Information highways are only useful to the extent that the data that
moves along them are useful and usable. NIST research and standards de-
velopment in data storage, collection, exchange and visualization will en-
able software suppliers to produce and sell software products that will
make enterprise integration, concurrent engineering and agile manufactur-
ing a reality.
NTIA has a major policy role as the President's chief advisor on telecommuni-
cations policy. If the programs are authorized the NTIA program for the Nil:
— will be targeted at noncommercial telecommunications infrastructure
(schools, libraries, public health care); and at equipment grants for equipment
to establish "connectivity" into the NREN (i.e., on-ramps to the Information
TRADE AND TECHNOLOGY
Question. To what extent do you believe that there is a close nexus between trade
policy and technology policy? As we refine the national technology policy, to what
extent should we be focusing on tougher enforcement of U.S. trade laws and other
changes in the trade area? Are there any recommendations for change which you
would suggest in this area?
Answer. I believe we have a roll range of U.S. trade laws, both to ensure fair
trade and to help provide access to foreign markets when needed. Naturally, we
need always to ensure full enforcement oi U.S. trade laws in a way that best pro-
motes our interests consistent with our international obligations. As I look at our
interests in high technology trade, 1 believe we need to utilize our full leverage, in-
cluding our trade laws as necessary, to gain greater market access for American
products and services.
This is particularly the case in terms of ensuring better protection for intellectual
property and breaking down foreign government procurement barriers — notably in
such high tech areas as telecommunications, energy production and efiiciency prod-
ucts, and computers and other electronic equipment. We need to focus on Asia espe-
cially, which is where we have an unusually high proportion both of the problems
NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)
Question. Significant concerns have been raised about the impact of the NAFTA
on U.S. jobs. Mexico's wages are one-tenth of U.S. wages, yet in some plants in Mex-
ico, productivity is equal to or exceeds that of U.S. plants. Given the disparity in
labor costs, how can American manufacturers be encouraged to stay in the United
Answer. The fact is, NAFTA actually reduces incentives to move to Mexico.
NAFTA removes the high tariff barriers and market distorting regulations that have
encouraged U.S. companies that want to sell in Mexico to locate factories there.
Some U.S. companies have established plants in Mexico to avoid paying Mexican
tariffs that are 2.5 times higher than U.S. duties. All Mexican tarifls on U.S. prod-
ucts will be zero at the end of NAFTA implementation. As another example, U.S.
auto companies have had to produce in Mexico to sell there: 36 percent of their com-
ponents had to be Mexican, and any vehicles they imported had to be matched 2-
to-1 by their exports from Mexico. NAFTA phases out these requirements, paving
the way for a major increase in U.S. vehicle and auto parts exports to Mexico.
Wages alone don't determine competitiveness. We export more manufactured
goods to low-wage Mexico than to high wage Japan! In fact, our largest manufac-
tures trade surplus in the world is with Mexico — $7.5 billion last year. Labor pro-
ductivity, R&D, access to capital, quality of infrastructure — are as, or more, impor-
tant than wages when it comes to competitiveness.
That is why the authoritative July 1993 study by the Congressional Budget Office
(CBO) concluded that NAFTA was a winner for the United States — that it will cre-
ate jobs for our workers, income for our firms, and lower prices for our consumers.
U.S.-JAPAN TRADE DEFICIT
Question. The U.S. merchandise trade deficit with Japan remains unacceptably
high. In 1985, the devaluation of the dollar was supposea to correct the imbalance.
After a brief decline, the trade deficit with Japan is approaching $50 billion. Re-
cently, the yen hit an all time high — 110 yen to the dollar. Do you believe that this
change will have a significant impact on the U.S. trade deficit with Japan? How
should we address this trade deficit?
Answer. After the appreciation of the yen versus the dollar following the "Plaza
Accord" in 1986, there was a modest improvement in the U.S. trade deficit with
Japan, although it remained unacceptably high. The recent additional appreciation
of the yen is likely to have a similar affect on our bilateral trade balance. We are
addressing our trade imbalance with Japan through the U.S. — Japan Economic
Framework consultations, which are designed to address both macroeconomic and
microeconomic factors, including sectoral and structural issues, in an integrated
fashion — focusing on the need for results.
At the same time, the high value of the yen makes U.S j)roducts more price com-
petitive in world markets relative to Japanese products. This is particularly impor-
tant in Asian markets, where Japan is our principal competitor. I believe we should
utilize the Trade Promotion Coordinating Committee (TPCC) to assure that we help
U.S. firms take advantage of this situation and increase their market share in the
rapidly growing Asian markets.
Question. If confirmed as Deputy Secretary, what will you do to promote the de-
velopment of the nation's communications infrastructure?
Answer. I will work to ensure that the Commerce Department, working with the
Administration through the Information Initiative Task Force (IITF), encourages the
development of an interactive, high-speed National Information Infrastructure con-
necting the nation's businesses, residences, schools, health care facilities and public
information providers, as well as private citizens.
Today (September 15), NTIA is releasing an "Agenda for Action" for the National
Information Infrastructure. This Agenda describes the role of the government in
promoting the development of the telecommunications and information infrastruc-
ture by the private sector, and in ensuring that all Americans have access to this
As noted in the Agenda, the Administration will work with Congress to pass legis-
lation by the end of 1994 that will increase competition and ensure universal access
in communications markets — ^particularly those, such as the cable television and
local telephone markets, that have been dominated by monopolies. Such legislation
will explicitly promote private sector infrastructure investment — both by companies
already in the market and those seeking entry.
The Administration's program stresses a government-private sector partnership in
which the Federal government promotes development oi, and interconnection to, ad-
vanced privately-owned networks. The private sector will continue to drive infra-
structure deployment in the United States. The private sector currently invests ap-
proximately $50 billion annually in the U.S. telecommunications infrastructure. The
Administration does not intend to create a network that competes with private sec-
tor communications providers, nor do we plan to become the national network oper-
ator or manager.
Government will act as a facilitator of further development of this private sector
infrastructure. It will aid basic research and development in telecommunications
and information technology, stimulate efficient private sector investment, and pro-
mote interoperability among network providers. The National Information Infra-
structure will also integrate multiple private sector firms using a variety of tech-
nologies to provide communications and information services to the public. The Ad-
ministration will not favor any one firm or technology to the exclusion of others.
Most importantly, government will seek to ensure that all Americans have access
to the benefits of the National Information Infrastructure. For example, new net-
works could give rural and inner city schools access to the best instruction on all
subjects. Individualized health care could be available on-line, exactly when and
where it is most needed, to the benefit of minority groups, the poor, and the dis-
abled. Therefore, the Administration's initiative will fund demonstration projects in
which advanced telecommunications and computing capabilities are used to aid tra-
ditional social services (such as education and health care) as well as some forms
of basic research.
Question. The National Telecommunications and Information Administration
(NTIA), within DOC, is the President's principal advisor on communications issues.
What role will you, if confirmed, play in developing and shaping DOC telecommuni-
Answer. As you indicated, the Assistant Secretary for Communications and Infor-
mation is, by statute, the President's principal advisor on telecommunications and
information policy. In carrying out these responsibilities, the Assistant Secretary re-
ports to the Secretary and Deputy Secretary of Commerce. As Deputy Secretary, I
expect to play a significant role in DOC telecommunications policy formulation.
Question. Now that Congress has enacted the "Emerging Telecommunications
Technologies Act" which requires the Secretary of Commerce to transfer 200 mega-
hertz of spectrum to the Feaeral Communications Commission to be made available
for new technologies, what steps will you take, if confirmed, to ensure that this leg-
islation is enforced.
Answer. I will take all necessary steps to ensure that NTIA — the Commerce De-
partment agency charged with federal spectrum management — carries out all of the
requirements of the Act in a timely fashion. The Act includes strict time require-
ments that NTIA is working hard to meet.
NTIA must prepare a preliminary report within six months of the bill's enactment
to identify the Federal government frequencies to be turned over to the FCC, includ-
ing 50 megahertz that can be turned over on an expedited basis.
NTIA is holding meetings with other government representatives, through the
Interdepartment Radio Advisory Committee, to discuss pertinent issues. NTIA will
then present its proposal to the Secretary, who will issue a report to the President,
the Congress, and the FCC, after which public comment will be received.
NTIA will also work to meet the other explicit requirements of this legislation on
a timely basis in order to finalize the transfer of government spectrum to the FCC.
A final report identifying the frequencies for transfer to the FCC is due within 18
months following enactment of the legislation.
GOES WEATHER SATELLITE PROCUREMENT
Question. The National Performance Review (NPR) calls for the establishment of
a single civilian operational environmental satellite program under NOAA. How-
ever, the GOES-Next weather satellite procurement is now several years behind
schedule and hundreds of millions of dollars over budget. In addition, NOAA con-
trollers recently lost contact with a $67 million polar-orbiting weather satellite
launched earlier in the month. As Deputy Secretary, how would you propose to im-
plement the NPR recommendation? What steps would you take to get this program
Dack on track and to ensure accountability? Given your experience in the private
sector, what changes in the Federal procurement system would you propose to mini-
mize future weather satellite problems?
Answer. NOAA currently has two operational satellite systems, the polar orbiting
operational environmental satellite (POES) and the geostationary operational envi-
ronmental satellite (GOES). It is true that the GOES system experienced substan-
tial cost overruns and lengthy delays in its development phase, but, the first sat-
ellite in the new GOES series, GOES-I, is now scheduled to be launched in mid-
NOAA is currently studying, with NASA and DOD, options for the most cost-efTec-
tive national polar-orbiting system. We are optimistic that the results of the study
will bring together a system that will meet the nation's operational requirements.
Recommendations from this study will be available by the end of 1993.
While the NOAA polar program recently suffered a setback because of the appar-
ent failure related to a snort in the power system, this program has been highly
successful in meeting the operational environmental requirements of the nation over
the past 30 years. NOAA and NASA are jointly reviewing all aspects of the problem
to ascertain the cause of the failure and to determine an appropriate course of ac-
NOAA satellites are presently procured through NASA utilizing their expertise in
spacecraft system acquisition. Future weather satellite problems may be diminished
through greater risk sharing between the spacecraft contractor and the Federal gov-
ernment, and by establishing higher levels of in-orbit incentive payments.
NOAA TECHNOLOGY AND COMPETITIVENESS
Question. In recent years, NOAA has embarked on a $5 billion investment to
launch new satellites, upgrade national weather forecasting systems, and replace an
aging oceanographic fleet. At the same time, other parts of DOC have initiated pro-
grams to encourage U.S. technology and competitiveness. What suggestions do you
have for linking NOAA technology investments to broader DOC goals? What role
would you propose for NOAA in tne new Administration's national technology pol-
Answer. The President has assigned Secretary Brown the responsibility to lead
the Administration's development and implementation of a Technology Policy.
NOAA, as a major center of science and of technology development, is an important
partner in this with other Commerce bureaus, other parts of the federal government
and the private sector. NOAA's role is to be a demand driver and to foster relation-
ships. NOAA brings an understanding of the environment and sophisticated meas-
uring technology to this efTort. Each of NOAA's capital investments represents a
business opportunity for U.S. firms. In particular, NOAA's weather and hydrology
observing technologies should find ready markets in numerous countries faced witn
natural hazards similar to our own. For example, NOAA is working with Taiwan
to effect a sale of NEXRAD weather radar technology. NOAA's help in this impor-
tant area will greatly improve the foreign market climate for other U.S. tech-
nologies. In addition, NOAA, NIST, and ITA are working on a joint program in En-
Question. Within the next few months, NOAA will be required to address a vari-
ety of contentious issues, including budgetary shortfalls, reauthorization of major
fishery harvests in some states, major reductions in fishery harvests in some regions
of the country, and enforcement of international environmental agreements like the
International Whaling Convention. What do you see as your role in making deci-
sions in these critical areas? What do you believe should be NOAA's priorities?
Answer. My role will be to assist the Secretary in carrying out his responsibil-
ities. We will work to ensure we have adequate resources to carry out the Depart-
ment's mission, that our programs are well thought out and coordinated and that
they are implemented in an efficient manner. We intend to integrate our environ-
mental stewardship responsibilities with those for sustainable development of our
Nation's economy. We will demand balanced, informed decision-making.
NOAA's mission is many faceted. I attach the highest priority to its legally man-
dated programs, particularly those which are critical for stewardship of marine re-
sources and support of the national well-being of our citizens and their commerce.
Question. In 1969, the Stratton Commission released its final report, which con-
tained national ocean policy recommendations that led to the creation of NOAA and
to the establishment of many NOAA programs, such as coastal zone management.
Given the fundamental changes of the past twenty-four years, as well as the shrink-
ing portion of NOAA'S budget devoted to marine programs, what is your view with
respect to reexamining U.S. oceans policy? If confirmed, what steps will you take
to put the "O" (for oceanic) back in NOAA?
Answer. NOAA has a significant number of programs to deal with ocean policy
issues, including resource protection, monitoring, research, and prediction. The
question suggests that, in the past, NOAA may not have done as good a job as it
snould on merging these responsibilities to address the Nation's ocean policy needs.
NOAA is now developing a more comprehensive approach to its coastal and ocean
programs through its strategic planning process. These programs make up the Envi-
ronmental Stewardship thrust of N NOAA's programmatic strategy for the next 10
years and will contribute to the Department's goals in stewardship. By having such
a coordinated and comprehensive ocean/coastal program, NOAA will be able to con-
tribute significantly to the development of a national ocean policy. The Commerce
Department cannot meet its goal of increasing economic growth unless we have
sound management of our natural resources, including our valuable marine re-
Senator Ford. Thank you very much. I only have probably one
question that I would like to ask. And we will go from there.
Since 1988 there has been a 50-percent decline in annual income
of new venture capital funds. Many entrepreneurial firms that
have developed new products have faced increasing difficulty in ob-
taining capital to expand production. This situation has become an
increasingly start reality in sectors that have been — I use the word
"targeted," I guess, by foreign companies. What role should the De-
partment of Commerce play in encouraging the availability of pri-
vate capital for the development of new technologies?
Mr. Barram. Well, I think certainly one thing that we can con-
tinue doing is pushing for capital gains, tax differentials — we are
convinced that that works.
The R&D tax credit which the administration has managed to
get extended for a couple of years with the support of Congress is
Those are kind of the macro issues.
I think there are some more specific targeted things that we can
do in the Department. We can push for the kind of partnerships
between the public and the private sector that bring together some
money, some resources from the Federal Grovernment with the pri-
vate organization who has the idea and the resources to work on
it but maybe needs some help. If we do that we can — the other ben-
efit of that, it allows us to get these things commercialized faster.
So, there is a lot we can do, but it takes — it is like a lot of things
I think that we are seeing in 1993. It takes a balanced approach,
there are not too many sound bytes in the middle, and it just takes
a lot of work while we try to make all these things so that we do
not end up being ahead of the industry and yet we do not end up
slowing industry down.
Senator Ford. Thank you. I have no further questions. Senator
Pressler has arrived. Senator, do you have any questions you wish
Senator Pressler. I have just one question I will ask here, and
then I will ask my other questions on the record. I noted that you
have some background in small business, and there is a proposal
to create a critical technology investment company, CTIC program,
which as I understand would be administered over there in Com-
merce. Small Business has had the Small Business Investment
Company Program. Some have said that the SBA's SBIC program
and the Commerce Department's CTIC program will duplicate.
What is your view of that?
Mr. Barram. Senator, I am not familiar with the CTIC program,
and I will certainly get back to you on that.
Senator Pressler. You can answer the question for the record,
and I have several questions for the record I would like to place
in the record, Mr. Chairman.
Senator Ford. So ordered.
I am sure Mr. Barram will answer those in an expedited manner.
Mr. Barram. Absolutely.
Senator Ford. If there are no further questions, we are delighted
to see you and look forward to your confirmation. Other members
of the committee may have questions for this nominee and your re-
sponse, and so we hope that they will be given quickly and answers
can be expedited and that we can move quickly to your confirma-
Mr. Barram. Thank you, Mr. Chairman.
Senator Ford. We thank you this morning. I think your prede-
cessors here at the table helped you a CTeat deal this morning.
Mr. Barram. Thank you. I am really sorry my family was not
here to hear that.
Senator Ford. Well, my daddy would like it. My mother would
believe it. That is kind of the way it goes. [Laughter.]
Thank you very much.
Next, we would like to have Steve Palmer, who will be — ^his con-
firmation hearing to be Assistant Secretary of Transportation for
Government Affairs. Steve, we are delighted to see you this morn-
ing. I have a statement for the record in relation to Steve's nomina-
I want to commend Secretary Pefia for looking within our com-
mittees for a point person at the Department of Transportation in
this critical role as communicator with Congress, and I see this ap-
pointment as yet another clear signal that the Secretary is dedi-
cated to working with Congress and keeping his lines of commu-
nications open, and I would ask unanimous consent that the bal-
ance of my statement be included in the record as if given.
[The prepared statement of Senator Ford follows:]
Prepared Statement of Senator Ford
Mr. Chairman, you and I know that the staff on our committees put in long hours
and often don't get much recognition for all the behind-the-scenes work they do.
But, an occasion like this serves as an opportunity for members like myself to say
for the record, that their hard work didn't go unnoticed.
I don't need to introduce Steve Palmer to this committee, because his hard work
is well-known to members. And I feel certain there is no doubt in any of your minds
that he's qualified for the position of Assistant Secretary of Transportation for Gov-
I commend Secretary Pena for looking within our committee for a point person
at the Department of Transportation in this critical role as communicator with Con-
gress. I see this appointment as yet another clear signal that the Secretary is dedi-
cated to working with Congress and keeping the lines of communication open.
Steve's resume speaks for itself — from the legislative work he's done for us to his
trouble shooting work with state and local governments and the private sector. I be-
lieve these skills will serve him well in his new job.
And equally important, Steve will bring with him the commitment to family and
community that he holds close and cannot be summed up on a resume.
So, it is with my full confidence add pleasure that I participate in this confirma-
tion hearing to recommend Steve Palmer and look forward to working with Steve
in his new capacity.
Senator Ford. Steve, I understand you might have some family
here that you are proud of and you would like to maybe introduce,
and then we would be very pleased to have your opening state-
STATEMENT OF STEVEN O. PALMER, ASSISTANT SECRETARY-
DESIGNATE FOR GOVERNMENTAL AFFAIRS, DEPARTMENT
Mr. Palmer. Thank you, Mr. Chairman. I would like to do that.
I would like to introduce my family members and ask your consent
that this statement be included in the record, and I will try to
briefly summarize it.
First, I am fortunate and pleased that my parents were able to
join me today, Richard Palmer and Beverly Palmer, who flew in
last night from Detroit, as well as my wife Bo Palmer and my two
daughters, Kristin, who is 4V2 years old, and Lindsay, who is 2.
Senator Ford. That one is going to be a politician back there,
Of course, I understand grandchildren, with five and growing.
Mr. Palmer. Mr. Chairman, I want to thank you for scheduling
this hearing as quickly as you did and thank the committee as well
for holding it today. It is indeed an honor to be sitting on this side
of the table after having served on the staff of the Commerce Com-
mittee for the past 10 years. Needless to say, I have great respect
for you, the other members of the committee, and the staff of the
Commerce Committee. In total, I believe it is one of the finest com-
mittees and most respected in the Congress.
I also would like to thank you. Senator Ford, for your kind com-
ments, as well as Senator Daschle's comments this morning intro-
ducing me to the committee.
It is a great honor and privilege to have been nominated for the
position of Assistant Secretary for Governmental Affairs at the De-
partment of Transportation by President Clinton. I sincerely appre-
ciate the confidence and trust that he and Secretary Pena have
placed in me in recommending me for this position. If confirmed,
I will welcome the opportunity to serve them both as a part of this
During his confirmation hearing earlier this year, Secretary Pena
outlined the priorities for DOT, which included an absolute com-
mitment to ensuring transportation safety, to the importance of in-
vesting in our transportation infrastructure, and to preserving the
financial health and competitiveness of the U.S. transportation in-
dustries. I share those goals, and if confirmed will work with him
and with you in pressing for adoption of the Department of Trans-
portation's policies and positions.
Under the leadership of Secretary Pena this year the Depart-
ment of Transportation is undertaking initiatives in developing a
national system of high-speed rail corridors, implementing the
landmark Intermodal Surface Transportation Efficiency Act of
1991, preserving the strength of the U.S. Coast Guard and our
merchant marine, and working to increase the safety and efficiency
of our Nation's air transportation system. I share the Secretary's
commitment to these important objectives and am committed to
seeing them accomplished.
Of course, there is much more that DOT must do, and I pledge
to you my best efforts to work with the Congress as well as State
and local governments to address the issues that face our national
transportation systems. My experience in the Senate has provided
me with a keen appreciation of the difficult task facing you and
other Members of Congress. Please be assured that I will make
every effort to ensure timely and effective communication between
the Department and the Congress on the many transportation is-
sues that confront this Nation.
I am sensitive to the importance of keeping the Congress in-
formed of actions taken by the Department, and will do my best
to convey the interests and concerns expressed in the Congress to
Secretary Pena and his staff as policy proposals are being devel-
Mr. Chairman, before concluding I would like to personally thank
you for the opportunity of having worked with you and Senator
Rollings for the last 10 years on the Commerce Committee staff.
I consider myself very fortunate to have served as staff to you and
other congressional leaders in the areas of transportation and
science and technology, and without your help and support, and
that of Senator Rollings and many others, I would not have the op-
portunity to be here today.
Again, thank you for your consideration of my nomination, and
I will be pleased to attempt to answer any questions you might
have at this time.
[The prepared statement, biographical data, and prehearing
questions and answers of Mr. Palmer follow:]
Prepared Statement of Steven O. Palmer
Mr. Chairman, I want to begin by thanking you for your efforts, as well as those
of the Committee, in scheduling this hearing. It is indeed an honor to be sitting on
this side of the table talking with you, Mr. Chairman and the other members of the
Commerce Committee, afler having served for more than ten years on the Commit-
tee staff. Needless to say, I have great respect for you, the members, and the staff
of the Commerce Committee, which in total, make it one of the most widely re-
spected in the Congress.
It is a great honor and privilege to have been nominated for the position of Assist-
ant Secretary for Governmental Affairs at the Department of Transportation by
President Clinton. I sincerely appreciate the confidence and trust that Secretary
Pena has placed in me in recommending me for this position. If confirmed, I will
welcome the opportunity to serve them as a part of this Administration.
During his confirmation hearing earlier this year. Secretary Pena outlined his pri-
orities for the Department of Transportation, which included an absolute commit-
ment to ensuring transportation safety, to the importance of investing in our trans-
portation infrastructure in order to strengthen our economic well-being, and to pre-
serving the financial health and competitiveness of the U.S. transportation industry.
I share those goals and, if confirmed, will work with him in pressing for adoption
of the Department of Transportation's policies and positions by the Congress.
Under the leadership of Secretary Pena, the Department of Transportation is un-
dertaking initiatives in developing a national system of High Speed Rail corridors,
implementing the landmark Intermodal Surface Transportation Efiiciency Act of
1991, preserving the strength of the United States Coast Guard and our merchant
marine, and working to increase the safety and efiiciency of our nation's air trans-
portation system. I share the Secretary's commitment to these important initiatives
and am committed to seeing them accomplished.
Of course, there is much more that the Department of Transportation must do
and I pledge to you my best efibrts to work with the Congress, as well as state and
local governments, to address the issues that face our national transportation sys-
tems. My experience in the Senate has provided me with a keen appreciation of the
difficult tasks facing Members of Congress. Please be assured that I will make every
efibrt to ensure timely and efiective communication between the Department and
the Congress on the many transportation issues of concern to the Congress and the
Executive branch. I am sensitive to the importance of keeping the Congress in-
formed of actions taken by the Department of Transportation and will do my best
to convey the interests and concerns expressed by you and other Members of Con-
gress to Secretary Pen a and his stafi" as policy proposals are being developed.
As a former Mayor, Secretary Pena has conveyed his strong desire to work closely
with state and local governments. Having worked with state and local government
officials in both developing and implementing transportation policies, I understand
the importance of maintaining close contact T)etween Washington and the nation's
Governors, Mayors, and other local public officials.
Mr. Chairman, before concluding, I would like to personally thank you for the op-
portunity to have worked with you for the last eleven and one-half years. I consider
myself very fortunate to have served as stafi" to you and other congressional leaders
in the fields of transportation and science and technology. Without your support and
help, I would not have the opportunity to be here today.
Thank you for your consid.eration of my nomination. I will be happy to answer
any questions that you might have at this time.
Name: Palmer, Steven Otto; address: 2528A S. Arlington Mill Dr., Arlington, VA
22206; business address: 400 Seventh Street, S.W., Room 10408, Washington, DC
Position to which nominated: Assistant Secretary of Governmental Affairs; date
of nomination: September 7, 1993.
Date of birth: February 1, 1956; place of birth: Bowdle, SD.
Marital status: Married; full name of spouse: Laurel Beach Palmer; names and
ages of children: Kristin, 4- and Lindsay, 2.
Education: Kalamazoo College, 197^78, BA; and Iwndon B. Johnson School of
Public Affairs, University of Texas at Austin, 1978^0, MPA.
Employment: 8/93-present, U.S. Department of Transportation, Special Advisor to
the Secretary; 1/83-8/93, U.S. Senate, Committee on Commerce, Senior Professional
Staff Member; 4/82-1/83, U.S. Senate, Committee on the Budget, Budget Analyst;
and 6/80—4/82, U.S. Department of Transportation, Presidential Management In-
Government experience: Special Advisor to the Secretary, U.S. Department of
Transportation, 8/93 to Present; Senior Professional Staff Member, U.S. Senate,
Committee on Commerce, Science, and Transportation, 1/83 to 8/93; Budget Analyst,
U.S. Senate, Committee on the Budget, 4/82 to 1/83; Presidential Management In-
tern, U.S. Department of Transportation, 6/80 to 4/82; and Research Assistant, Of-
fice of the Governor of Texas, Texas Energy and Natural Resources Advisory Coun-
cil, 9/79 to 3/80.
Political affiliations: Precinct Representative, Arlington County Democratic Party;
1983 Democratic Senatorial Campaign Committee $51
1984 Arlington County Democratic Party 128
John Milliken (Arlington County Board) 35
Harris Miller for Congress 45
1985 Arlington County Democrat Party 60
Tom Daschle 100
Ellen Bozman (Arlington County Board) 10
1986 Tom Daschle 150
John Milliken for Congress 25
Arlington County Democratic Party 30
1987 Al Eisenberg (Arlington County Board) 25
Al Newman (Arlington County Board) 25
Jim Almand (Virginia House of Delegates) 25
Ed Holland (Viginia Senate) 25
1988 Dukakis for President 100
Charles Robb for Senate 100
Democratic National Committee 185
Virginia Democratic Party 170
John Milliken (Arlington County Board) 25
Bob Weinberg for Congress 25
1989 Doug Wilder for Governor 75
Democratic National Committee 50
Ellen Bozman (Arlington County Board) 25
Virginia Democratic Party 20
1990 Democratic Senatorial Campaign Committee 50
Democratic National Committee 50
Virginia Democratic Party 50
South Dakota Democratic Party 25
Arlington County Democratic Party 25
Mary Margaret Whipple (Arlington County Board) 25
1991 Democratic National Committee 10
1992 Arlington County Democratic Party 25
Democratic National Committee 100
1993 Democratic Senatorial Campaign Committee 35
Democratic National Committee 50
Mike Fernandez (Rochester, NY School Board) 25
Memberships: Women's Transportation Seminar, 1981-84; and Transportation Re-
search Forum, 1983.
Honors and awards: Student research paper award from Transportation Research
Forum; awarded in 1981.
Published writings: "Railroad Revenue Adequacy: The Movement of Captive West-
em Coal," in Transportation Research Forum Proceedings, vol. XXI, No. 1 (Trans-
portation Research Forum, 1980); "Analysis of Alternatives for Western Coal," Ap-
pendices A and B in The Economic Regulation of Western Coal Transportation, Pol-
icy Research Project No. 38, directed by Dr. Leigh Boske (Lyndon B. Johnson School
of Public Affairs, 1980); and "Energy Tax Act of 1978," in Texas Energy Issues,
1979, Policy Research Project No. 36, directed by Dr. Stephen Spurr (Lyndon B.
Johnson School of Public Affairs, 1979).
Prehearing Questions Asked by the Committee and Answers Thereto by Mr.
Question. What do you believe are your qualifications to be Assistant Secretary?
Answer. For more than eleven years, I served on the staff of two Senate Commit-
tees, working on transportation policy issues of interest to the Congress. During my
career, which also includes service at Department of Transportation (DOT), the Of-
fice of Management and Budget, and the Ofiice of the Governor of Texas, I have
worked on a wide array of transportation issues, budgets, and policies, notably in
the areas of aviation, highways, maritime, rail, and transit. This experience has pro-
vided me with a thorough understanding of the legislative process and the impor-
tance of ensuring a close working relationship between the Congress and the De-
partment of Transportation. Finally, having worked closely with States and local-
ities, I understand the importance of ensuring open and effective communication
with all levels of government to ensure that Federal programs serve the needs of
Question. What will be your specific duties if confirmed as Assistant Secretary?
What do you believe are the most significant professional skills you would bring to
Answer. If confirmed as Assistant Secretary for (jovemmental Affairs, my respon-
sibilities would be to serve as the Department of Transportation's principal advisor
on Congressional, Intergovernmental, and Consumer concerns. In attempting to ac-
complish this, it would be my responsibility to supervise and coordinate all Depart-
mental relationships with the Congress, direct the presentation of DOT's legislative
program, and advise other elements of the Department of Transportation on con-
gressional and intergovernmental matters. As Assistant Secretary, it also would be
my responsibility to maintain liaison with State and local elected ofTicials and with
State planning ofiicials regarding transportation matters.
The Assistant Secretary for Governmental Affairs at the Department of Transpor-
tation must have a strong understanding of the legislative process, both in gaining
enactment of legislation, as well as its implementation at the State and local level.
Having served as staff to the Senate Committee on Commerce, Science, and Trans-
portation for more than ten years, as well as Transportation Analyst on the Senate
Budget Committee, I have worked in virtually all areas of transportation. During
this time, I gained a thorough understanding of the congressional authorizing and
appropriating processes, worked with senior congressional leaders, as well as State
and local officials, and became familiar with a variety of transportation issues. The
combination of these skills will help ensure my success, as well as the success of
the Department in accomplishing its legislative agenda.
Question. How would you assess the state of relations between the Department
of Transportation and the Congress? Do you have any syggestions for improving
dot's relations with Congress?
Answer. Historically, the Department of Transportation and the Congress have
had excellent working relations. The programs administered by the Department are
the type that receive strong bipartisan support in the Congress. As a result, DOT
and the Congress typically work toward the same objective, that being the develop-
ment and operation of transportation systems that afford quality service to the
greatest number of people in a cost-effective manner.
In my brief tenure as a Special Advisor to the Secretary, it has become apparent
that the Department of Transportation must work more closely with the Congress
than it has in recent months. If confirmed, my first priorities will be to work toward
strengthening the lines of communication between DOT and the Congress. It is im-
portant that Members of Congress and their staff understand actions taken by the
Secretary and other policy makers. In addition, I will do all I can to quickly respond
to congressional inquires and requests. Given my background in the Senate, I am
aware of the importance of timely response to congressional mail and telephone
Question. If confirmed, what would be your first actions in your new positions?
What would be your priorities? Would you change anything in the existing Congres-
Answer. If confirmed, my first priorities will be to complete efforts to hire staff
capable of ensuring consistent and effective communication with the Congress. This
is an essential element of my commitment to advancing Secretary Peiia's initiatives
and policies, as well as those of the President. Just as importantly, these staff must
be added so that the Office of Congressional Affairs can respwnd in a timely manner
to congressional requests and inquires.
The priorities of the Assistant Secretary for Governmental Affairs will be to work
toward successful enactment of the transportation priorities established by Presi-
dent Clinton and Secretary Peiia. Toward that end, in his confirmation hearings
earlier this year. Secretary Peiia outlined his priorities for DOT, which included an
absolute commitment to ensuring transportation safety, to the importance of invest-
ing in our infrastructure in order to strengthen our economic well-beings and to pre-
serving the financial health and competitiveness of U.S. transportation industries.
I share those goals.
I have no plans to change the existing Ofiice of Congressional Affairs. I intend
to work closely with the incoming Ofllce Director to improve the efiectiveness of the
Department's liaison with the Congress.
Question. In your view, what is the appropriate mission and scope of responsibil-
ity to be undertaken by the Assistant Secretary for Governmental Affairs?
Answer. The mission and scope of responsibility for the Ofiice of the Assistant
Secretary for Governmental Affairs appropriately includes congressional, intergov-
ernmental, and consumer afTairs which are to be coordinated in support of the Presi-
dent and the Secretary of Transportation.
Question. If confirmed as Assistant Secretary, what legislative or policy efTorts
would you recommend that the Secretary of Transportation initiate or continue?
Answer. I believe that in his first year, Secretary Peiia has identified an appro-
priate agenda for the Department of Transportation. Under his leadership, DOT is
undertaking initiatives in developing a national system of High Speed Rail cor-
ridors, implementing the landmark Intermodal Surface Transportation EfTiciency
Act of 1991, preserving the strength of the United States Coast Guard and our mer-
chant marine, and working to increase the safety and efiiciency of our Nation's air
transportation system. If confirmed, I intend to work closely with Secretary Peiia
to ensure that the interests and concerns of the Congress are incorporated into
these and future legislative and policy initiatives.
Question. If confirmed, you will be responsible for answering Congressional re-
quests for information from DOT. What is your position on disclosure of agency in-
formation to Congress?
Answer. Understanding the importance of timely transmittal of Department of
Transportation actions, I will do my best to ensure that appropriate documents and
information are provided to the Congress in an expeditious manner.
Senator Ford. Thank you very much, Steve. We all know you
personally. We know your character, and we know your integrity.
And having given you my wholehearted support and endorsement
on the record, I think it would just be foolish if I started asking
you questions this morning because I know all the answers.
Mr. Palmer. Thank you, Mr. Chairman.
Senator Ford. I would yield to my colleague from South Dakota
if you have any questions.
Senator Pressler. Well, I do have some questions. I congratulate
you. We are very proud of you. We look forward to working with
you. I have some questions on essential air service and on the Na-
tional Commission to Ensure a Strong Competitive Airline Industry
Report and some other infrastructure questions. I will place them
in the record, and I wish you well.
Mr. Palmer. Thank you very much.
Senator Ford. On the National Airline Commission Report, we
are going to hold hearings as soon as we possibly can on that. But
I think it would be we should have a hearing where the adminis-
tration can come, and since they have not come forward with their
conclusions on that yet, but they should soon, I look forward in the
next 2 or 3 weeks to having a hearing and a very thorough hearing,
and we look forward to the Department of Transportation giving
Since there are no questions and you seem to be on your way to
being a member of the executive now instead of the legislative
branch, we look forward to the connection, Steve.
This hearing is adjourned.
[Whereupon, at 11:50 a.m., the hearing was adjourned.]
Prepared Statement of Senator Pressler
Mr. Chairman, thank you for holding this hearing today on the nominations of
David J. Barram to be Deputy Secretary of Commerce and Steve Palmer to be As-
sistant Secretary for Legislative Affairs for the Department of Transportation. I join
my colleagues in welcoming our distinguished guests.
QuE^ioNS Asked by Senator Burns and Answers Thereto by Mr. Barram
Question. I believe that a very important, but overlooked issue is the govern-
ment's role in establishing standards and protocols for information and tele-
communications network interconnection and interoperability. What is your view?
Isn't this especially important as we move to a communications world in which we
have multiple providers of facilities and services?
Answer. I think this question gets at the heart of the matter. We can make a
huge contribution to the progress of the National information Infrastructure if we
do a good job on the standards issue. I strongly support the Administration's Agen-
da for Action for the National Information Infrastructure, released on September 15,
1993, which states that standards for voice, video, data, and multi-media services
must be developed to ensure interoperability and openness of the information infra-
structure. I also believe that the federal government should participate more ac-
tively in current industry-driven standards-setting processes and work vigorously
with industry to overcome technical barriers to interoperability as they are identi-
fied. If we do a good job of winding our way toward a balanced posture on stand-
ards, we can help ensure that everyone gets to compete and that we don't stifle in-
If confirmed as Deputy secretary of Commerce, I look forward to working with
Commerce's National Institute of Standards and Technology and the National Tele-
communications and Information Administration in reviewing the government's role
in establishing the necessary network standards to promote the seamless operation
of the information infrastructure.
Question. I believe it's time to change our national telecommunications policy in
a comprehensive, holistic way. Do you agree? What changes would you suggest? For
instance, do you favor repeal or modification of the cable-telco and MFJ restrictions?
Do you favor opening up the local telephone exchange to greater competition? How
do you view those issues working in tandem — that is, do you favor a framework as
proposed by Ameritech which would result in the opening of the local telephone ex-
change to competition and in return giving telephone companies relief from cable-
telco and MFJ restrictions, among other elements?
Answer. I agree that the time is ripe to overhaul U.S. telecommunications policy.
Advances in telecommunications and computer technology are motivating firms to
compete in new markets and provide new services. At the same time, end users are
demanding less expensive and more sophisticated services. U.S. policy must keep
pace with these technical and market changes. I believe that government has a dou-
ole responsibility — to secure the benefits that can flow from increased competition
in this industry and to protect consumers while doing so.
As you point out, numerous specific rules and regulations govern the tele-
communications industry. While I do not now have a position on specific changes
to those rules, if confirmed I will help the Administration follow through on its com-
mitment in the Agenda F'or Action on the Nil to work with Congress to pass legisla-
tion by the end of 1994 to increase competition and ensure universal access in com-
munications markets — especially those, such as the cable television and local tele-
phone markets, that have been dominated by monopolies.
Question. It is my opinion that government should not be in the business of build-
ing, operating or managing information and telecommunications networks in com-
petition with those networiss available in the commercial, private sector. What is
your view? What is the appropriate role for the government?
Answer. I agree with you. The private sector, not government, should lead in the
deployment of the communications information infrastructure in the future. Govern-
ment action should complement and enhance the public benefits of that private ac-
tivity. I strongly support the Administration's specific goals for government action
discussed in the Agenda for Action, which begin by emphasizing the need to promote
private sector investment in the information infrastructure. I also support the Ad-
ministration's commitment to forge a partnership with business, labor, the academic
community, and the public to make an advanced information infrastructure acces-
sible to all Americans.
Questions Asked by Senator Pressler and Answers Thereto by Mr. Barram
Question. If confirmed, you will have a major role in shaping our nation's plan
for economic growth and global competitiveness. For decades, our nation's tech-
nology policy was driven predominantly by Cold War realities. Now the United
States has emerged as the world's one and only superpower. It is time for our tech-
nology policy to adapt to these changing political realities for a different kind of con-
test, one involving economic and commercial superiority. What are your priorities
in setting this agenda?
Answer. My first priority is to fulfill the mission given to the Department of Com-
merce by President Clinton, and make the Department a focal point tor civilian
technology through close cooperation between business and government. Secretary
Brown has stated that economic growth in America is powered by the engine of
technological progress, and DOC will fulfill its mission to work with industry to cre-
ate public/private partnerships that will couple governmental assistance with the
vigor of the marketplace.
The post-cold war world also demands that we adapt our trade policy toward
achieving economic and commercial superiority. We have a full range of U.S. trade
laws, both to ensure fair trade and to help provide access to foreign markets when
needed. As I look at our interests in technology policy, and particularly the commer-
cialization of new products, i believe we need to utilize our full leverage, including
our trade laws as necessary to gain greater market access for American products
and services. This is particularly the case in terms of ensuring better protection for
intellectual -property and breaking down foreign government procurement barriers —
notably in such high tech areas as telecommunications, energy production and effi-
ciency products, and computers and other electronic eguipment.
Question. Secretary Ron Brown plans to transform the Department of Commerce
into the lead civilian technology agency. Through expanding the programs of the
National Institute of Standards and Technology (NIST), the Administration seeks to
spur industrial innovation. 'Lou have spent your career in the private sector work-
ing for some of the most innovative high-tech firms (Hewlett-Packard, Silicon
Graphics, Apple Computer). What insights has your background given you about the
government s role in stimulating innovation?
Answer. The globalization of our economy means that if we are to compete and
be successful, we must forge partnerships. Our competitors are doing it, and we
must refocus our relationships — government, industry, academia — toward this new
reality. Government can be a partner in enhancing our competitiveness through a
variety of mechanisms: trade policy and law, technology commercialization and the
refocus of our federal R&D programs and worker skill training.
By focusing on these broader issues, an environment for innovation is created. In
addition, from my own private sector background, government also needs to focus
on the array of finance, tax, and regulatory issues that, if changed, could enhance
our innovation and entrepreneurial culture so as to promote economic growth and
Question. In your experience, have Department of Commerce programs helped in-
Answer. Yes. The Department of Commerce has many programs which can and
are helping U.S. industry and workers to compete successfully — including the com-
pilation of critical economic information, the exercise of trade enforcement authority,
export promotion activities, patent and trademark protection, economic development
financing, and programs to assist industrial technology.
Question. Some people criticize the government's attempt to fund civilian tech-
nology as "industrial policy." Everyone claims the government should avoid picking
winners and losers. In your opinion, what is the best way to enhance technological
competi;tiveness without distorting marketplace forces?
Answer. At the heart of the Clinton Administration's technology policy is a pub-
lic-private partnership to achieve competitiveness, economic growth and create jobs.
By working directly with the private sector, through jointly identified, cost-shared
projects, the Department avoids the useless and unproductive debate about picking
winners and losers.
Question. I know you have been involved in small businesses during your private
sector career and that you understand the importance of venture capital — especially
to high technology companies. Indeed, Apple Computer, for which you worked, re-
ceived earlystage financing through the Small Business Administration's Small
Business Investment Qompany (SBIC) program.
As you may know, some members of Congress and the Administration advocate
the creation of a new program within the Department of Commerce — the Critical
Technology Investment Companies (CTIC) program. The National Coinetitiveness
Act of 1993, 5.4, as part of its efforts to improve our nation's development and mar-
keting of critical technologies, would create a CTIC pilot program.
1) Are you familiar with tne SBA's SBIC program and the role it played in pro-
viding earlv-stage financing for such high-tech success stories such as Apple Com-
puter, Intel Corporation, Cray Research and Compaq?
2) Do you see a definable role for CTIC's that would not duplicate the existing
35-year-old SBIC program — a program that last year saw 25 percent of its total fi-
nancing go to "advanced technology" companies?
3) If you support a CTIC program within the Commerce Department, how would
you defend against the charge that this new program would represent duplication
in government services at a time in which many in Washington are focusing on
streamlining the federal government?
4) As you also may know, S. 4 contains no limit on the size of companies that
can receive assistance under the CTIC program. Given the current scarcity of fed-
eral resources, does it make sense for the federal government to be providing ven-
ture capital assistance to Fortune 500 ompanies, or should our efforts be tailored
more toward smaller companies that often produce good ideas, but Historically have
been shut out of traditional venture capital markets?
Answer. 1) I am aware of the SBIC Program and understand that a portionof its
financing assistance has gone to high-technology companies.
2) and 3) I have been told that we are working with the Small Business Adminis-
tration to determine whether it is advisable and feasible, without duplicating exist-
ing SBA programs, to create a joint program that would specifically target compa-
nies working in the areas of critical technologies.
4) I have Deen informed that the current version of S. 4 ^ves preference to eligi-
ble technology firms whose net worth is $50 million or less. 1 am also informed that
one of the points on which SBA and DOC have agreed in informal discussions is
that any program should target small and midsize companies and appropriate joint
QuE^ioN Asked by Senator Danforth and Answer Thereto by Mr. Palmer
Question. Federal Emergency Management Agency (FEMA) disaster/emergency
funds can be used only for clean up costs, not capital programs. What has the Fed-
eral Aviation Administration (FAA) done to coordinate with FEMA to make avail-
able adequate clean up money for public-use airports afTected by the midwest floods?
Answer. The FAA has met with FEMA to coordinate clean up and applicable as-
sistance programs so that they are readily available to airport owners. Various other
organizations also have played a key role in this effort, including the Small Busi-
ness Administration and the State aviation agencies in affected areas.
In addition, the FAA has sent letters explaining the FEMA and related assistance
programs to each airport which reported that a portion of its facility was afTected
by flood waters. Beyond that, several airports have requested that the FAA assist
in assessing flood damage or evaluation of financing options.
The FAA has advised me that it anticipates funding under the Airport Improve-
ment Program (AIP) will be available to support reconstruction of airports in the
National Plan of Integrated Airport Systems. For its part, FEMA is to fund clean
upon publicuse facilities owned by a public agency which are ineligible under the
ALP, such as hanger and general aviation terminal buildings.
QuE^iONS Asked by Senator Pressler and Answers Thereto by Mr. Palmer
Question. What are your views on the Committee hearing process? Do you believe
Committee hearings are a necessary medium for the Senate to address important
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and technical matters in efforts to develop sound legislative policies? More specifi-
cally, do you think subcommittee hearings provide needed insight into important is-
sues for which a subcommittee has jurisdiction, such as initiatives to enhance avia-
Answer. An important element of any legislative or oversight activity conducted
by the Congress is the receipt of information, whether it be through hearings, brief-
ings by government officials, consultation with interested industry, labor, and public
interest groups, or constituent mail. Having served as staff to the Senate Committee
on the Budget and the Senate Committee on Commerce, Science, and Transpor-
tation, I believe that committee and subcommittee hearings can provide information
to Members of Congress, staff, and other interested parties. However, they do not
operate in isolation. Congressional hearings represent one aspect of an extensive in-
formation gathering process that must be conducted throughout the Congress. If
confirmed, I will work to assure that Department of Transportation officials are re-
sponsive to the concerns and needs for information of the Congress.
Question. As you know, our nation's airline industry is in dire straights. On Au-
gust 19th, the National Commission to Ensure a Strong Competitive Airline Indus-
try issued its report which includes numerous recommendations designed to "fix"
many of the industry's problems. Congress and the Administration have not yet
acted on the Commission's report. What are your recommendations for Congress and
the Administration to consider — and act — on this important matter?
Answer. During the 60 days in which the National Commission to Ensure a
Strong Competitive Airline Industry was working toward completion of its report
and since its release. Secretary Pena has worked aggressively to achieve consensus
within the Administration on the 61 recommendations included in that report. This
has been a time-consuming process, as a number of the Commission's recommenda-
tions fall under the purview of Departments and agencies other than DOT.
President Clinton and Secretary Pena remain committed to taking action to ad-
dress the problems affecting the airline industry, including those considered by the
Commission. It is my understanding that in the very near future, the President will
be briefed by the Commission members, which will be followed by an initiative in-
tended to help strengthen the U.S. airline industry. If confirmed as the Assistant
Secretary for Governmental Affairs, I would welcome the opportunity to work with
you and your staff, ensuring that your views on the airline industry are considered
by the Secretary in such an initiative.
Question. Do you support continuation of the Essential Air Service Program? Do
you have any recommendations for how federal policies could improve air service to
Answer. While on the staff of the Committee on Commerce, Science, and Trans-
portation, I had the good fortune of working with you. Senator Exon, and other avia-
tion leaders in the Congress on the Small Community Air Service Improvement Act
of 1987, which extended and authorized funds for the Essential Air Service program.
Through this work and my first-hand experience of traveling in rural American, I
appreciate the importance of viable transportation services to areas such as South
DaKota. If confirmed, I will work with Secretary Peiia in securing continued funding
of the Essential Air Service program, which was included in the President's fiscal
year 1994 budget request.
At this time, I have no specific recommendations for you or the Committee regard-
ing federal policies that could improve air service to rural communities. However,
understanding the importance of such service, I am committed to working with you
and others in the Congress toward that objective.
Question. Do you believe the federal government should make an investment to
improve our nation's rail infrastructure, particularly in rural areas? What federal
transportation policies will you advocate to promote and ensure the competitive
health of the freight railroad industry?
Answer. Freight railroads in the United States are privately owned and operated.
In 1992, these private firms invested $3.6 billion in the nation's rail infrastructure.
While most rail carriers are generally in good condition, small railroads with light
traffic lines serving rural, particularly agricultural, markets or isolated factories are
sometimes unable to generate sufficient revenues to maintain and improve their
lines. There are a number of Federal programs to assist these operators, including
the Federal Railroad Administration's Jjocal Rail Freight Assistance program. This
very limited program has been instrumental in preserving jobs and stimiilating eco-
nomic activity in many rural areas. In addition, in disaster situations, such as the
tragic fiooding in the midwest this summer, I believe the Federal government
should assist small railroads which do not have sufficient resources to restore their
If confirmed, I intend to work closely with Secretary Pena and Federal Railroad
Administrator Jolene Molitoris to ensure that the freight railroad industry remains
healthy and competitive. Railroads are a vital element of our national transpor-
tation network and it is important that 'we ensure that shippers throughout the
country have access to guality rail freight service at affordable rates.