ASSOCIATE AG WEST'S REMARKS ON RESIDENTIAL MORTGAGE-BACKED SECURITIES (RMBS) MISCONDUCT

FROM:  U.S. JUSTICE DEPARTMENT 

Associate Attorney General Tony West Outlines Justice Department’s Approach to Toxic Mortgage Cases

~ Wednesday, July 16, 2014

Two days after the historic Citigroup settlement, Associate Attorney General Tony West outlined the Justice Department’s approach to resolving the remaining cases related to Residential Mortgage-Backed Securities (RMBS) misconduct that contributed to the financial crisis.  West declared that the department would not hesitate to bring litigation against these firms if these principles were not met.

Associate Attorney General West detailed three general principles that will continue to guide the Justice Department’s approach in all future RMBS cases: accountability, transparency and redress.  These principles will comprise of civil penalties, a robust statement of facts and consumer relief for the American people.

“If an institution is unwilling to admit its wrongful conduct in a statement of facts; or balks at paying a substantial penalty that reflects that conduct; or refuses to do right by those affected, then we will not shrink from litigating as long as we must to fulfill our law enforcement mandate,” said Associate Attorney General West.

Please see below for the Associate Attorney General’s prepared remarks:

Thank you, Mike [Bresnick] for the generous introduction.  We miss your wise counsel at the department.

I am quite pleased to be with you here this afternoon at the Exchequer Club.  For more than 50 years, this club has served as an important forum for the frank exchange of ideas on the most pressing economic and financial issues in the country.  And, having spent more than two years as the nation's Associate Attorney General and more than five years as a member of this administration's Department of Justice, I particularly appreciate the opportunity to be with all of you -- an impressive group of leaders from the public and private sectors.

The people in this room are making important contributions that enrich our nation ’s economic life.  You are grappling with the challenge of improving the financial health of this country -- in the work you do, the words you write, the ideas you debate and put forward.  And in the wake of the Great Recession, I believe we share a common goal of ensuring that our nation is economically strong, fiscally sound and financially fair.

Today, I thought I would share some thoughts on the last of those three elements -- financial fairness -- and the Justice Department's role in helping to achieve that goal by targeting fraud in our financial system.  First, I'll talk about some of our recent financial fraud efforts, and particularly the work of the Residential Mortgage-Backed Securities Working Group.  Next, I'll share a couple of brief observations about how we approach these RMBS cases.  And finally, I'll discuss some of the factors we consider when determining whether to sue or settle these large, often multi-billion dollar RMBS-related fraud matters.

Let me begin with the observation that much of my tenure as Associate Attorney General has been focused on executing the department's financial fraud priorities, particularly through the use of civil enforcement tools, as my office manages the civil litigation side of the Justice Department.

Part of this focus grows out of the precedent set by my predecessor, Tom Perrelli.  He, along with HUD Secretary Shaun Donovan and several state attorneys general, negotiated a landmark $25 billion National Mortgage Servicer settlement with several financial institutions that was designed to bring some relief to consumers hurt by unfair and, in some cases, illegal loan servicing tactics.

And part of it comes from my own experience: I grew up professionally in the Justice Department, serving first as young lawyer on then-Deputy Attorney General Jamie Gorelick's staff in the early '90s, then for several years as a federal prosecutor in the Northern District of California where my caseload included white-collar crime.

When the president nominated and the Senate confirmed me as the Civil Division's Assistant Attorney General in 2009, I returned to the department and made, as one of my primary priorities, the aggressive use of the civil statutory authority Congress provided us to fight fraud in the pharmaceutical and health care industries.  During that time, I also launched an investigation of Standard & Poor’s Ratings Services for allegedly issuing RMBS ratings that were not objective and independent.

And during 2009, that first year of the Obama Administration, you'll recall we were all preoccupied with addressing the wreckage left by the financial crisis.  As part of that response, in November 2009, President Obama created the Financial Fraud Enforcement Task Force, or FFETF, on which I serve as a co-chair and which Mike Bresnick led as Executive Director before returning to private practice.  And since its inception, the FFETF has brought together a broad coalition of agencies, enforcement tools and resources to fight fraud.

A critical component of the FFETF's efforts is a targeted group formed, as the president said in his 2011 State of the Union Address, to “hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.”  That group – the Residential Mortgage Backed Securities Working Group -- comprised of several state agencies and state attorneys general -- is charged with investigating fraud in the packaging, marketing, sale and issuance of these securities -- conduct that was a major contributing factor to the financial crisis.

To date, the efforts of the RMBS Working Group have secured $20 billion in penalties, compensation and consumer relief to investors, victims and the American people.  Those results include the $13 billion resolution with J.P. Morgan last November -- the largest settlement against a single defendant in the Justice Department's history -- and a $7 billion resolution with Citibank announced just two days ago, which made history by including a record-breaking civil penalty of $4 billion.

Now, resolutions like these -- notwithstanding their record-breaking size or historic significance -- always seem to spark a debate between those who say we're being too easy on the big banks and those who say we're being too tough.  To some, no penalty is high or harsh enough; to others, we insist on settlement terms that are unfairly punitive.

I welcome this debate because it is part of a long, democratic tradition of questioning the activities our government takes in the name of the people it serves.  And while I am quite certain there is little I can say to persuade the most ardent partisans on either side of this debate, let me offer the following observations:

First, the RMBS Working Group settlements we have announced to date are civil resolutions; they do not preclude the possibility of criminal prosecutions.  Importantly, neither the J.P. Morgan nor the Citibank settlement agreements absolve either institution or its employees from possible criminal charges.  And as the recent criminal pleas of BNP and Credit Suisse –  as well as the more than 37,000 individual white collar criminals we have prosecuted over the last five years – demonstrate, we do not hesitate to aggressively investigate allegations of financial wrongdoing, and, if the evidence warrants, to demand accountability.  Because, as the Attorney General has said before, no institution, no matter how large, and no individual, no matter how powerful, is above the law.

Second, while most of the attention has been focused on these multi-billion dollar settlements, let me be clear: we do not investigate these matters intending to settle them.  Through the RMBS Working Group, we have assembled an enforcement apparatus to vindicate those who fell victim to the financial crisis, and that apparatus continues to grow.  Resolving these cases will require more than simply seeking a meeting with the Attorney General.  It will require taking true responsibility for misconduct that contributed to the Great Recession, which I will discuss more in a moment.  If an institution is unwilling to admit its wrongful conduct in a statement of facts; or balks at paying a substantial penalty that reflects that conduct; or refuses to do right by those affected, then we will not shrink from litigating as long as we must to fulfill our law enforcement mandate.  Our RMBS-related cases against S&P in California and Bank of America in North Carolina demonstrate this, and I would not be surprised if we were to see additional RMBS lawsuits in the future.

And that observation leads me to the next topic I wanted to discuss today: those factors we consider when determining how and whether we will sue or settle a RMBS fraud case.  And let me note here: I'm talking about whether we will pursue or settle a civil RMBS case against an institution, not a financial fraud case that's being considered for criminal prosecution against an institution or individual, so my comments are limited to that context.

Now, as a general matter, it should be no surprise that the primary drivers in any RMBS fraud case will be the facts and evidence of that particular case.  The conduct at issue; the egregiousness of that conduct and who was involved; the quality of the evidence and what we can prove in court given the applicable law -- those are the scene-setters for any discussion about how we will resolve any given case.

And long before discussions get to my level, there have usually been months of back-and-forth conversations between the investigators and Assistant U.S.  Attorneys who will try the case and the potential bank defendant to make sure our facts are right and our theory of the case is sound.

So by the time I am sitting across the table from a financial institution to discuss whether we will settle or sue, there aren't generally many facts that remain in dispute.  The main question on the table is whether we will be able to satisfy three general principles that guide us in all of these cases: accountability, transparency and redress.

Let me discuss each one in turn.

First, accountability.  The main question here, of course, is whether the financial institution is willing to be held accountable for the harmful conduct our investigation has uncovered.  In other words, now that we have developed an evidentiary record of wrongdoing, is the institution willing to step up and accept responsibility for the unlawful activity, be it the conduct of the parent or a subsidiary?

In the RMBS-related cases we pursue, the only remedy under FIRREA (Financial Institutions Reform, Recovery and Enforcement Act of 1989) that the government can seek, besides injunctive relief, is a civil penalty.  As many of you know, FIRREA was passed in response to the savings and loan crisis 30 years ago, and under that statute, civil penalties are our only recourse.

So it follows that in many of these cases, accountability has taken the form of record-breaking civil penalties.  And our approach to calculating the appropriate penalty in any given case involves taking into account a number of factors, including but not limited to:  the egregiousness and pervasiveness of the conduct, and amount of harm caused by that conduct; the strength of the evidence; whether the penalty is of such a level that it could be regarded by shareholders and management as merely the “cost of doing business”; whether the institution has failed to fully cooperate with our investigation; and whether any steps have been taken to remediate meaningfully the harm caused by the harmful conduct.

Now, some have argued that other considerations, such as a firm’s market share, should outweigh the facts and evidence in a given case.  We disagree.  While a firm's market share footprint may be among the informational data points we consider, it is not determinative.  The facts and evidence of a particular case -- they are what will ultimately matter the most.

Let me turn to the second principle, transparency.  In every RMBS Working Group case where there is a negotiated resolution short of trial, we will demand a statement of facts in which the institution admits the conduct at issue.

Attorney General Holder has made this a non-negotiable term of every RMBS Working Group settlement for two reasons:  First, it's an important component of accountability.  It requires the institution to articulate to its own employees, its shareholders and to the public that it engaged in conduct that is both unacceptable and wrong.  Second, it explains to the American people what our investigation uncovered and allows them to see for themselves the building blocks of our case against the institution.

In both JPMorgan and Citibank, the Attorney General and I believed it was imperative for each institution to acknowledge publicly its conduct, and we believe that obtaining a statement of facts in any negotiated resolution is as important as any monetary penalty.

Finally, let's talk about redress. 

As we all know, the packaging up of defective loans into mortgage backed securities, and the misrepresentations made to investors about the quality of those securities not only caused financial losses to investors; it contributed to the near-collapse of our entire economy.  Millions of Americans who had no idea what an RMBS was felt the pain of this conduct.  Families lost homes.  Communities were ravaged by foreclosures.  You had neighborhood streets that had vacant house after vacant house, like a mouthful of missing teeth.  This debacle hurt everybody.

So when the president announced the formation of the RMBS Working Group, he gave it two main objectives: seek accountability where the facts warrant, and pursue efforts to remediate the harm where possible.

That is why the pre-trial resolutions of these cases to date have contained, as a major element, relief for consumers.  In the J.P. Morgan resolution, we insisted on the bank providing $4 billion of relief to underwater homeowners and potential homebuyers, including those in distressed areas of the country.  Half of that total will go towards forgiveness and forbearance of principal for qualifying homeowners who are currently paying a mortgage.  The other half will go towards rate reductions or refinancing, low-to-moderate income and disaster area lending, and neighborhood stabilization programs.

In the Citibank settlement , we have required $2.5 billion in consumer relief.  In addition to loan modifications and refinancing assistance, as we did in J.P.  Morgan, we worked with Citibank and our colleagues at the Department of Housing and Urban Development to include innovative measures that will create affordable rental housing for families who were pushed into the rental market by the financial crisis; significant investments in community development and neighborhood stabilization efforts around the country; and interest rate reductions for those responsible borrowers who have responsibly kept current on their mortgages but for whom it's been a struggle because their rates are so high.

Now, we know these measures won't cure every ill or solve every problem created by the financial crisis; but they are significant steps, and we are optimistic that they will bring some much-needed relief to those who are still feeling the ill effects of what the president called "an era of recklessness" in our financial markets.

So let me close by saying that I believe we have achieved a great deal in fighting financial fraud since the formation of the RMBS Working Group: record civil penalties; factual statements that evidence an unprecedented level of accountability from the financial institutions and transparency to the marketplace; and consumer relief for the American people.

But equally important is the fact that we are not done yet.  As I said on Monday, we're not letting up, and we're not going away.  We will continue to pursue these cases and follow the facts wherever they lead and enforce the law fairly but aggressively should we uncover evidence of unlawful conduct.  Because a level financial playing field requires that type of oversight and the American people deserve no less.

Thank you.

DOD REQUESTS $58.6 BILLION FOR OVERSEAS CONTINGENCY OPERATIONS FUNDS FOR 2015

FROM:  U.S. DEFENSE DEPARTMENT

Contingency Funds Support Operations, Recovery, New Missions

By Claudette Roulo

DoD News, Defense Media Activity

WASHINGTON, July 16, 2014 – The Defense Department’s request for $58.6 billion in fiscal year 2015 overseas contingency operations funds is nearly one-third less than it received the previous year and is part of a continued downward trend in war-related spending, Deputy Defense Secretary Bob Work told Congress today.

But even as the war in Afghanistan ends, the department will continue to seek OCO funding for the repair and replacement of worn-out and damaged equipment, a process that will continue well beyond 2015, Work said at a hearing of the House Armed Services Committee.

The funds also support the costs associated with the broader presence in Southwest Asia and the Middle East, and with responses to unforeseen contingencies, he said.

The requested OCO funds will support troops who already are serving in harm’s way in Afghanistan and elsewhere in the U.S. Central Command area of operations and “who every day are conducting operations on behalf of our nation’s security in what is becoming a very volatile, complex and dangerous world,” he said.
“The requested funds for 2015 would provide $53.4 billion for Operation Enduring Freedom,” the deputy secretary said. “This funding will support the responsible drawdown of forces in Afghanistan as announced by the president.
“It will pay for the retrograde of equipment and personnel and the continued reset of forces,” he continued. “And it will enable a really vast range of support activities in theater, including logistics and intelligence. And it will support a portion of the temporary Army and Marine Corps end strength that supports OEF.”
The costs in Afghanistan and the greater Middle East region remain substantial, Work said. In Afghanistan, the U.S. military is transitioning from a combat role to a support and counterterrorism mission, the deputy secretary told committee members.
“This will require high-end intelligence, surveillance and reconnaissance assets, close air support, force protection, and logistics into next year,” he explained. “We also must return thousands of pieces of equipment from Afghanistan to our home stations and close down hundreds of combat facilities there.”

The OCO request also provides continued support and assistance to Afghan security forces, the deputy secretary said.

“Over the last year, these forces have demonstrated tactical superiority over the Taliban, and have prevented the Taliban from gaining momentum, as demonstrated by their professionalism in the most recent national elections,” he said. “We believe it is critically important that we maintain sufficient financial support for these forces so they can sustain those gains and continue to assume full responsibility across Afghanistan.”

The 2015 request also includes funding for two new presidential initiatives, Work said.

The $5 billion requested for the counterterrorism partnerships fund is intended to underwrite training, capacity-building and facilitation of partner nations battling terrorism.

About $4 billion from the counterterrorism partnerships fund will go to the Defense Department, he said. “The overall goal is, one, to increase the ability of our partner countries … to conduct counterterrorism operations, and, two, prevent the proliferation of terrorist threats from neighboring states, and, three, participate in multinational counterterrorism operations, including countering [the Islamic State of Iraq and the Levant] and other terrorist groups in the region.”

A separate $1 billion request for the European reassurance initiative will fund increased exercises and training, as well as a beefed-up rotational presence across Europe, particularly in the territory of newer allies.

“We believe that a more temporary increase in rotational U.S. air, land and sea presence in Europe, especially in Central and Eastern Europe, along with more extensive bilateral and multilateral exercises and training, are necessary and appropriate demonstrations of support to our NATO allies and partners who are deeply concerned by Russia’s occupation and attempted annexation of Crimea and other provocative actions in Ukraine,” Work said.

DOD VIDEO: FIGHTING WILDFIRES

WHITE HOUSE FACT SHEET ON 21ST CENTURY INFRASTRUCTURE

FROM:  THE WHITE HOUSE

FACT SHEET: Building a 21st Century Infrastructure: Increasing Public and Private Collaboration with the Build America Investment Initiative

Today, the President will deliver remarks at the Port of Wilmington in front of the I-495 Bridge in Delaware. With 90,000 cars moving over it per day before repairs began, this bridge is a key example of the importance of infrastructure, which keeps the economy moving, spurs innovation, and bolsters our national competitiveness. At the port – and in this Year of Action – the President will announce a new executive action to create the Build America Investment Initiative, a government-wide initiative to increase infrastructure investment and economic growth. As part of the Initiative, the Administration is launching the Build America Transportation Investment Center – housed at the Department of Transportation – to serve as a one-stop shop for cities and states seeking to use innovative financing and partnerships with the private sector to support transportation infrastructure.

The President’s visit and announcement today are a part of the Administration’s continued push to highlight the importance of investing in our nation’s infrastructure so that we can build on the progress our economy is making by creating jobs and expanding opportunity for all hardworking Americans. The steps announced today continue the momentum the President has made using his executive authority – his pen and phone – to invest in modernizing our infrastructure, including speeding up the permitting process for major infrastructure projects to create more jobs.

The President supports the steps that Congress is taking in the short-term to avoid a lapse in the Highway Trust Fund, and he will continue to push for long-term solutions for our nation’s infrastructure and the American economy.

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Investing in a 21st century American infrastructure is an important part of the President’s plan to build on the progress our economy is making by creating jobs and expanding opportunity for all hardworking Americans.  Modern and efficient infrastructure – whether moving goods to our harbors and ports or connecting people to services or gigabits to our offices and homes – helps small businesses to expand, manufacturers to export, investors to bring jobs to our shores, and lowers prices for goods and services for American families.

The President has been very clear that we need to do more to improve our infrastructure in order to create jobs, provide certainty to states and communities, help American businesses, and grow our economy.  He has put forth a long-term proposal that would do just that and pay for it by closing unfair tax loopholes and making commonsense reforms to our business tax system, while providing the certainty of reliable federal funding to states and communities.

And while the President is encouraged that Congress is heeding these calls by taking action in the short-term to prevent transportation projects across the country from grinding to a halt, the President will continue to act on his own to promote American economic growth where there is need or opportunity.  And right now, there is a real opportunity to put private capital to work in revitalizing U.S. infrastructure.

That is why today, the President will sign a Presidential Memorandum to launch the Build America Investment Initiative, a government-wide initiative to increase infrastructure investment and economic growth by engaging with state and local governments and private sector investors to encourage collaboration, expand the market for public-private partnerships (PPPs) and put federal credit programs to greater use.  Starting with the transportation sector, this initiative will harness the potential of private capital to complement government funding.

Ø  As part of the Initiative, the Administration is launching the Build America Transportation Investment Center:  Housed at the Department of Transportation, this center will serve as a one-stop shop for state and local governments, public and private developers and investors seeking to utilize innovative financing strategies for transportation infrastructure projects.  Additional details are below.
Build America Interagency Working Group: To expand and increase private investment and collaboration in infrastructure beyond the transportation sector, a federal inter-agency working group, co-chaired by Cabinet Secretaries Lew and Foxx, will do a focused review with the best and the brightest from the public and private sector.  This group will work with state and local governments, project developers, investors and others to address barriers to private investments and partnerships in areas including municipal water, ports, harbors, broadband, and the electrical grid. The effort will include a particular focus on improving coordination to accelerate financing and completion of projects of regional and national significance, particularly those that cross state boundaries.
Infrastructure Investment Summit:  As part of the drive toward innovative infrastructure solutions and to highlight the opportunities for infrastructure investment, the Treasury Department will host a summit on Infrastructure Investment in the U.S. on September 9, 2014.  This session will bring together leading project developers and institutional investors with state and local officials and their Federal counterparts, and will focus on innovative financing approaches to infrastructure, and highlight other resources that support project development.
***

Build America Transportation Investment Center: Housed at the Department of Transportation, this center will serve as a one-stop shop for state and local governments, public and private developers and investors seeking to utilize innovative financing strategies for transportation infrastructure projects. This center will provide:

‘Navigator Service’ for the Public and Private Sector: Through hands-on support, advice and expertise, the center will make DOT credit programs more understandable and accessible to states and local governments and leverage both public and private funding to support ambitious projects.  The center will also provide private sector developers and infrastructure investors with tools and resources to identify and execute successful PPPs.

Improved Access to DOT Credit Programs: The center will encourage awareness and efficient use of existing resources at the Department, including the Transportation Infrastructure Finance and Innovation Act (TIFIA) program.  TIFIA provides long-term, flexible financing to highway and transit projects that feature dedicated revenue sources.  Each dollar of Federal TIFIA funding can support about $10 in loans, loan guarantees or lines of credit.  In many cases, the lower cost of capital and flexible terms offered by TIFIA are critical factors in determining whether a PPP is a viable and cost-effective option for a project. The center will also focus on the use of key DOT programs including the Private Activity Bond program (PABs), and the Railroad Rehabilitation and Improvement Financing Program (RRIF).

Technical Assistance: The center will share best practices from states that are leading the way on private investment to states that have not yet adopted innovative financing strategies, encouraging a more robust national market. Today, the top six states for PPPs have nearly two-thirds the value of all U.S. PPP projects. Twenty states have no PPPs in transportation at all. The center will provide technical assistance to help remove barriers to ensure the public and private sector can come together to complete projects that make sense. Through a website and on-demand technical assistance, the center will provide information about DOT credit programs, case studies of successful projects and examples of deal structures, standard operating procedures for PPP projects and analytical toolkits. It will also help interested investors better understand how DOT credit and grant programs can be used together to support project development.
Information to Reduce Uncertainty and Delays: The center will work in partnership with the interagency Infrastructure Permitting Improvement center to provide visibility for local and state governments, project sponsors and investors on the permitting process.

Case Studies and Additional Background

The Build America Investment Initiative taps into the opportunity to increase the pipeline of effective public-private-partnerships and other innovative financing mechanisms:

High Demand: Institutional investors, both domestic and international, recognize the strength of our economy and want to invest in America. In 2013, the U.S. was the top destination for foreign direct investment with over $230 billion.  The global investment community has over $83 trillion dollars with a growing appetite for infrastructure. That is potentially hundreds of billions of dollars to fund the building of U.S. public-private infrastructure.

Proven Approaches: Some states and communities have established successful PPPs and have developed strong institutional knowledge of how these projects are best structured and managed.  Expanding that know-how to other states has the potential to increase the flow of capital by tens of billions of dollars over the next few years. Today, for example, the top five states in PPPs have nearly twice the per-capita value of projects as the next 20 best states – and if those states caught up, it could mean up to $30 billion worth of infrastructure projects.

Building on Models of Success: Some states and localities across the country have developed successful track records utilizing PPPs and other innovative financing approaches for infrastructure projects.  The Build America Transportation Investment center will use the lessons-learned from these leaders to help other communities and private project sponsors understand and better use federal financing programs and to structure deals that incorporate best practices and avoid pitfalls.

Case Study: Colorado FasTracks Project

Denver, Colorado is a community that has shown how transformative, multi-modal public infrastructure projects can be brought to fruition by integrating multiple financing sources.  Denver was able to utilize a PPP as part of the FasTracks development – combining light rail, bus rapid transit, development of Denver Union Station, parking, and other improvements – alongside state and federal funding.

The FasTracks Eagle project in Denver is a $2.2 billion public-private partnership to construct two new commuter rail lines.  The project combined several DOT funding and financing mechanisms – Federal Transit Administration’s New Starts, Private Activity Bonds, and a TIFIA loan – in addition to other Federal, State, and local resources and private investment.

The Eagle project is using a “design-build-finance-operate-maintain” contract under a 34-year concession.  Denver will retain ownership of the assets, set fares and fare policies, and keep all project revenues.  Denver will make payments to the private investor and operator (“concessionaire”) based on performance metrics.


Case Study: Florida

Florida has been leading the way on PPPs since 2001. In 2007, the State of Florida established the Office of Public-Private Partnerships; since then the state has completed over $6 billion in innovative projects.

Florida is now using a public-private partnership to complete the $1.1 billion Port of Miami Tunnel Project that will link the Port of Miami with the MacArthur Causeway and I-395 on the mainland. The project, like many PPPs around the country, took advantage of DOT’s TIFIA loan program for a $340 million loan, which in turn leveraged private dollars – a great example of the kinds of partnerships that the new Build America Transportation Investment center will bolster.

THE GROW AMERICA ACT

The Highway Trust Fund – which funds a significant portion of the construction and capital repairs of our surface transportation system – is projected to be insolvent by the end of the summer barring Congressional action.  In addition to preventing the Trust Fund from expiring in the short term, the President has clear that we need long-term action and predictable funding to provide certainty to states and communities, help American businesses, and grow our economy.

In spring 2014, President Obama transmitted to Congress his vision for a long-term solution.  The GROW AMERICA Act, a $302 billion, four-year transportation reauthorization proposal provides increased and stable funding for our nation’s highways, bridges, transit, and rail systems, ends the cycle of short-term, manufactured funding crises and builds confidence in the public and private sector.

The Administration’s proposal is funded by supplementing current revenues with $150 billion in one-time transition revenue from pro-growth business tax reform.  In other words, the President’s proposal is fully paid for without increasing the deficit. The President’s proposal will also keep the Trust Fund solvent for four years and increase investments to meet the transportation priorities and economic needs of communities across the country.

The proposal also contains a series of legislative proposals to improve the return on transportation spending and improve safety, including a title on improving project delivery, and the federal permitting and regulatory review process.

CLAYS STUDIED FOR SUPERBUG KILLING PROPERTIES

 FROM:  NATIONAL SCIENCE FOUNDATION 

New answer to MRSA, other 'superbug' infections: clay minerals?

Researchers discover natural clay deposits with antibacterial properties

Superbugs, they're called: Pathogens, or disease-causing microorganisms, resistant to multiple antibiotics.

Such antibiotic resistance is now a major public health concern.

"This serious threat is no longer a prediction for the future," states a 2014 World Health Organization report, "it's happening right now in every region of the world and has the potential to affect anyone, of any age, in any country."

Could the answer to this threat be hidden in clays formed in minerals deep in the Earth?

Biomedicine meets geochemistry

"As antibiotic-resistant bacterial strains emerge and pose increasing health risks," says Lynda Williams, a biogeochemist at Arizona State University (ASU), "new antibacterial agents are urgently needed."

To find answers, Williams and colleague Keith Morrison of ASU set out to identify naturally-occurring antibacterial clays effective at killing antibiotic-resistant bacteria.

The scientists headed to the field--the rock field. In a volcanic deposit near Crater Lake, Oregon, they hit pay dirt.

Back in the lab, the researchers incubated the pathogens Escherichia coli and Staphylococcus epidermidis, which breeds skin infections, with clays from different zones of the Oregon deposit.

They found that the clays' rapid uptake of iron impaired bacterial metabolism. Cells were flooded with excess iron, which overwhelmed iron storage proteins and killed the bacteria.

"The ability of antibacterial clays to buffer pH also appears key to their healing potential and viability as alternatives to conventional antibiotics," state the scientists in a paper recently published in the journal Environmental Geochemistry and Health.

"Minerals have long had a role in non-traditional medicine," says Enriqueta Barrera, a program director in the National Science Foundation's (NSF) Division of Earth Sciences, which funded the research.

"Yet there is often no understanding of the reaction between the minerals and the human body or agents that cause illness. This research explains the mechanism by which clay minerals interfere with the functioning of pathogenic bacteria. The results have the potential to lead to the wide use of clays in the pharmaceutical industry."

Ancient remedies new again

Clay minerals, says Williams, have been sought for medicinal purposes for millennia.

Studies of French clays--green clays historically used in France in mineral baths--show that the clays have antibacterial properties. French green clays have been used to treat Mycobacterium ulcerans, the pathogen that causes Buruli ulcers.

Common in Africa, Buruli ulcers start as painful skin swellings. Then infection leads to the destruction of skin and large, open ulcers on arms or legs.

Delayed treatment--or treatment that doesn't work--may cause irreversible deformities, restriction of joint movement, widespread skin lesions, and sometimes life-threatening secondary infections.

Treatment with daily applications of green clay poultices healed the infections. "These clays," says Williams, "demonstrated a unique ability to kill bacteria while promoting skin cell growth."

Unfortunately, the original French green clays were depleted. Later testing of newer samples didn't show the same results.

Research on French green clays, however, spurred testing of other clays with likely antibacterial properties.

"To date," says Williams, "the most effective antibacterial clays are those from the Oregon deposit."

Samples from an area mined by Oregon Mineral Technologies (OMT) proved active against a broad spectrum of bacteria, including methicillin-resistant S. aureus (MRSA) and extended-spectrum beta-lactamase-resistant E. coli (ESBL).

What's in those rocks?

Understanding the geologic environment that produces antibacterial minerals is important for identifying other promising locations, says Williams, "and for evaluating specific deposits with bactericidal activity."

The OMT deposit was formed near volcanoes active over tens to hundreds of thousands of years. The Crater Lake region is blanketed with ash deposits from such volcanoes.

OMT clays may be 20 to 30 million years old. They were "born" eons before deposits from volcanoes such as Mt. Mazama, which erupted 7,700 years ago to form the Crater Lake caldera.

Volcanic eruptions over the past 70,000 or so years produced silica-rich magmas and hydrothermal waters that may have contributed to the Oregon deposit's antibacterial properties.

To find out, Williams and Morrison took samples from the main OMT open pit. Four types of rocks were collected: two blue clays, and one white and one red "alteration zone" rock from the upper part of the deposit.

Blue clay to the rescue

The OMT blue samples were strongly bactericidal against E. coli and S. epidermidis. The OMT white sample reduced the population of E. coli and S. epidermidis by 56 percent and 29 percent, respectively, but the red sample didn't show an antibacterial effect.

"We can use this information to propose the medicinal application of certain natural clays, especially in wound healing," says Williams.

Chronic, non-healing wounds, adds Morrison, are usually more alkaline (vs. acidic) than healthy skin. The pH of normal skin is slightly acidic, which keeps numbers of bacteria low.

"Antibacterial clays can buffer wounds to a low [more acidic] pH," says Williams, like other accepted chronic wound treatments, such as acidified nitrate. "The clays may shift the wound environment to a pH range that favors healing, while killing invading bacteria."

The Oregon clays could lead to the discovery of new antibacterial mechanisms, she says, "which would benefit the health care industry and people in developing nations. A low-cost topical antibacterial agent is quickly needed."

Answers to Buruli ulcers, MRSA and other antibiotic-resistant infections may lie not in a high-tech lab, but in ancient rocks forged in a hot zone: Oregon's once--and perhaps future--volcanoes.

-- Cheryl Dybas, NSF
Investigators
Lynda Williams
Related Institutions/Organizations
Arizona State University

SECRETARY KERRY'S REMARKS ON CRASH OF MALAYSIA AIRLINES MH17

FROM:  U.S. STATE DEPARTMENT 

Crash of Malaysia Airlines Flight MH17 in Eastern Ukraine

Press Statement

John Kerry

Secretary of State

Washington, DC

July 17, 2014

---

We are horrified by the crash of Malaysia Airlines flight MH17. There are no words adequate to express our condolences to the families of the nearly 300 victims. We offer our sympathies and support to the Governments of Malaysia and the Netherlands at this difficult time, as well as to all those whose citizens may have been on board. We are reviewing whether any American citizens were aboard the flight. The United States Government remains prepared to assist with a credible, international investigation any way we can, and we will continue to be in touch with all relevant partners as we seek the facts of what happened today.

COUNTERFEIT DRUG SMUGGLER SENTENCED TO 41 MONTHS IN PRISON

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, July 17, 2014

Illinois Man Sentenced for Smuggling Counterfeit Goods and Drugs into the U.S.

An Illinois man, who previously pleaded guilty to trafficking in counterfeit goods and introducing counterfeit drugs into interstate commerce in violation of the Food, Drug and Cosmetic Act, was sentenced today to serve 41 months in prison.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson for the Southern District of Texas and Special Agent in Charge Brian Moskowitz of Homeland Security Investigations (HSI) made the announcement.

Fayez Al-Jabri, 45, of Chicago, Illinois, was sentenced by U.S. District Court Judge Nancy F. Atlas in the Southern District of Texas.  In addition to his prison term, Al-Jabri will serve three years of supervised release and ordered to pay $15,066 in restitution and forfeit $47,750.

According to court documents, Al-Jabri conspired to smuggle more than 26,000 counterfeit Viagra tablets from China into the United States for further distribution.   As part of that conspiracy, between July 2011 and October 2012, Al-Jabri and his co-conspirator shipped thousands of counterfeit Viagra tablets from Chicago to an undercover agent in Houston, Texas.  HSI submitted all of the tablets seized during the investigation to both the U.S. Food and Drug Administration (FDA) and Pfizer, Viagra’s manufacturer, for analysis.  Both the FDA and Pfizer identified the tablets as counterfeit and misbranded Viagra.

Al-Jabri and Jamal Khattab, 49, of Katy, Texas, were indicted on Aug. 22, 2012.  On March 21, 2014, Al-Jabri pleaded guilty to one count of conspiracy to traffic in counterfeit goods, to introduce misbranded prescription drugs into interstate commerce and to import such goods contrary to U.S. law; one count of trafficking in counterfeit goods; and one count of introducing counterfeit drugs into interstate commerce in violation of the Food, Drug and Cosmetic Act.   Khattab pleaded guilty on Dec. 3, 2013, to the same charges, and his sentencing is scheduled for Aug. 14, 2014.

This matter was investigated by HSI, the FDA’s Office of Criminal Investigations, the Department of State - Diplomatic Security Service and police departments in Houston and Chicago.  The case is being prosecuted by Assistant Deputy Chief for Litigation John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Kebharu Smith and Jennifer Lowery of the Southern District of Texas.

U.S. DEFENSE DEPARTMENT CONTRACTS FOR JULY 17, 2014

FROM:  U.D. DEFENSE DEPARTMENT 

CONTRACTS

NAVY

Insight Pacific LLC,* Anaheim, California (N62478-14-D-4000); Bethel-Webcor JV-1,* Anchorage, Alaska (N62478-14-D-4001); Dawson-Hawaiian Builders I,* Honolulu, Hawaii (N62478-14-D-4002); JSR-ECC LLC,* Schertz, Texas (N62478-14-D-4003); CT JV,* Bargerville, Indiana (N62478-14-D-4004); and Environet Inc.,* Kamuela, Hawaii (N62478-14-D-4005) are being awarded an indefinite-delivery/indefinite-quantity multiple award design-build/design-bid-build construction contract for construction projects located primarily within the Naval Facilities Engineering Command Hawaii area of responsibility. The maximum dollar value including the base period and four option years for all six contracts combined is $240,000,000. The work to be performed provides for but is not limited to labor, supervision, tools, materials and equipment necessary to perform new construction, repair, alteration, and related demolition of existing infrastructure based on design-build or design-bid-build (full plans and specifications) for infrastructure within the state of Hawaii. No task orders are being issued at this time. Work will be performed at various Navy, Marine Corps, Air Force, and miscellaneous federal and other facilities in the NAVFAC Hawaii area of responsibility. The term of the contract is not to exceed 60 months, with expected completion date of July 2015 (base period). Navy working capital funds in the amount of $60,000 are being obligated on this award and will not expire at the end of the current fiscal year. This contract was competitively procured via the Navy Electronic Commerce Online website, with 22 proposals received. These six contractors may compete for task orders under the terms and conditions of the awarded contracts. The Naval Facilities Engineering Command, Pearl Harbor, Hawaii, is the contracting activity.

Geographic Information Services Inc., Birmingham, Alabama, was awarded a $29,884,815 firm-fixed-priced, indefinite-quantity/indefinite-delivery contract to provide software maintenance, database development, engineering support, integration services, and training for foreign military sales purchasers to use the Weapon Danger Zone Tool. Work will be performed in Birmingham, Alabama, and is expected to be completed by July 1, 2017. This contract will be funded with foreign military sales funds. No contract funds will expire by the end of the current fiscal year. No funds were obligated at the time of award. Funds will become available on individual task orders. This contract was competitively procured via the Federal Business Opportunities website with two offers received. The Marine Corps Systems Command, Quantico, Virginia, is the contracting activity (M67854-14-D-9501). (This contract was awarded on July 2, 2014.)

EDO Professional Services Inc., Alexandria, Virginia, is being awarded $24,864,130 for one-year modification (P00012) to a previously awarded indefinite-delivery/indefinite-quantity, cost-plus-fixed-fee contract (N66001-09-D-0032) for continued technical services in support of Space and Naval Warfare Systems Center Pacific unmanned maritime systems. An accelerated timeline and increased operational requirements for unmanned maritime systems performing fleet mine countermeasures and force protection necessitated this modification to increase the cost ceiling. EDO Professional Services Inc., will provide engineering, logistics, configuration management, research, depot maintenance, system administration, and tactical and strategic management. Work will be performed in Manama, Bahrain (65 percent) and San Diego, California (35 percent), and is expected to be completed by July 21, 2015. No funds will be obligated at the time of award. Fiscal 2014 and 2015 operations and maintenance, (Navy) and research, development, test and evaluation funds will be incrementally obligated at the task order level. Fiscal 2014 operations and maintenance, (Navy) funds in the amount of $16,000,000 will expire at the end of the current fiscal year. This is a modification to a contract competitively procured via Space and Naval Warfare Systems Center Pacific solicitation N66001-09-R-0032 and published on the Federal Business Opportunities website, with one offer received. Space and Naval Warfare Systems Center Pacific, San Diego, California, is the contracting activity.

Huntington Ingalls Inc., Ingalls Shipbuilding, Pascagoula, Mississippi, is being awarded a $23,499,948 modification to previously awarded contract (N00024-13-C-2402) for early industry involvement associated with the LHA(R) Program Flight 1 (LHA 8) ship design to initiate an affordability design phase. The early industry involvement contracts were awarded to U.S. shipyards that have the facilities and resources to build a large deck amphibious assault ship without major re-capitalization. Work will be performed in Pascagoula, Mississippi, and is expected to be completed by May 2015. Fiscal 2014 research, development, test & evaluation contract funds in the amount of $19,740,760 will be obligated at time of award and will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity.
BAE Systems San Diego Ship Repair, San Diego, California, is being awarded a $15,178,728 modification to previously awarded cost-plus-award-fee contract (N00024-10-C-4407) for USS New Orleans (LPD 18) fiscal 2014 selected restricted availability (SRA). An SRA includes the planning and execution of depot-level maintenance, alterations, and modifications that will update and improve the ship's military and technical capabilities. Work will be performed in San Diego, California, and is expected to be completed by December 2014. Fiscal 2014 operations and maintenance (Navy) and fiscal 2014 other procurement (Navy) funding in the amount of $15,178,728 will be obligated at the time of award. Contract funds in the amount of $14,689,549 will expire at the end of the current fiscal year. The Southwest Regional Maintenance Center, San Diego, California, is the contracting activity.

ARMY

General Dynamics Land Systems, Sterling Heights, Michigan, was awarded a $65,256,769 modification (P00010) to foreign military sales contract W56HZV-13-D-0015 for specialized training, contractor logistics support, and base life support for the Iraq M1A1 Abrams program. Funding and work location will be determined with each order. Estimated completion date is Feb. 28, 2015. Army Contracting Command, Warren, Michigan, is the contracting activity.
Kongsberg Defence & Aerospace, Kongsberg, Norway, was awarded a $43,000,000 modification (P00115) to contract W15QKN-12-C-0103 for depot support for the Common Remotely Operated Weapon Station. Fiscal 2014 operations and maintenance (Army) funds in the amount of $43,000,000 were obligated at the time of the award. Estimated completion date is July 15, 2016. Work will be performed in Johnstown, Pennsylvania. Army Contracting Command, Picatinny Arsenal, New Jersey, is the contracting activity.
Watts Constructors LLC, Honolulu, Hawaii, was awarded a $36,441,000 firm-fixed-price contract with options for designing and building the Special Operations Forces Battalion Operations Facility Complex. Work will be performed at Fort Carson, Colorado, with an estimated completion date of June 15, 2016. Bids were solicited via the Internet with fifteen received. Fiscal 2013 military construction funds in the amount of $36,441,000 are being obligated at the time of the award. U.S. Army Corps of Engineers, Omaha, Nebraska, is the contracting activity (W9128F-14-C-0024).

Walsh Federal JV St., Chicago, Illinois, was awarded a $34,748,000 firm-fixed-price multi-year contract with options for new construction for the Marshall Elementary School at Fort Campbell, Kentucky. Work will be performed at Ft. Campbell, Kentucky, with an estimated completion date of April 1, 2016. Bids were solicited via the Internet with five received. Fiscal 2014 military construction funds in the amount of $34,748,000 are being obligated at the time of the award. U.S. Army Corps of Engineers, Louisville, Kentucky, is the contracting activity (W912QR-14-C-0025).

AAR Allen Services, Garden City, New York, was awarded a $23,507,990 firm-fixed-price contract for 60-520 gas turbine power units for the Blackhawk weapon system. Funding and work location will be determined with each order with an estimated completion date of July 30, 2019. Bids were solicited via the Internet with four received. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity (W58RGZ-14-D-0089).

Aerojet Rocketdyne, Camden, Arizona, was awarded an $18,507,839 firm fixed-price contract with options for Stinger flight motors, 1,000 each. Base Option: Stinger flight motors, 1-1,500 each. Option 1: Stinger flight motors, 1-505 each. Option 2: Stinger flight motors, 1-545 each. The Stinger flight motor contract is required to support the Service Life Extension Program (SLEP) of 850 Stinger Block I Missiles at McAlester Army Ammunition Plant, McAlester, Oklahoma. The SLEP will replace all Stinger missile components susceptible to degradation due to aging (to include the flight motor) providing a missile with a 10 year shelf life. Work will be performed in Camden, Arizona, with an estimated completion date of Dec. 31, 2016. One bid was solicited with one received. Fiscal 2014 other procurement funds in the amount of $18,507,839 are being obligated at the time of the award. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity (W31P4Q-14-C-0090).

Northrop Grumman Technical Services Inc., Herndon, Virginia, was awarded a $9,859,646 modification (P00002) to contract W9124E-14-C-0003 to continue key and essential logistics requirements at the Joint Readiness Training Center and Fort Polk, Louisiana. Fiscal 2014 operations and maintenance (Army) funds in the amount of $9,859,646 were obligated at the time of the award. Estimated completion date is Dec. 29, 2014. Work will be performed at Fort Polk, Louisiana. Army Contracting Command, Fort Polk, Louisiana, is the contracting activity.

Intelligent Decisions Inc., Ashburn, Virginia, was awarded an $8,569,058 firm-fixed-price contract with options for information technology operations and maintenance support for U.S. Southern Command Joint Task Force-Guantanamo Bay. Work will be performed in Cuba with an estimated completion date of July 22, 1019. Bids were solicited via the Internet with 13 received. Fiscal 2014 operations and maintenance (Army) funds in the amount of $7,969,059 are being obligated at the time of the award. Army Contracting Command, Fort Sam Houston, San Antonio, Texas, is the contracting activity (W912CL-14-C-0018).

AIR FORCE

Northrop Grumman Systems Corp., Information Systems Sector, Defense Systems Division, C2S, Herndon, Virginia, has been awarded a $9,922,486 modification (P00020) to cost-pl
us-fixed-fee FA8750-13-C-0120 for software enhancements, testing, integration and maintenance. The contract modification is to provide support to the National Air and Space Intelligence Center to operate, maintain, and enhance the databases, tools, dynamic web-based products, and related systems and capabilities. Work will be performed at Beavercreek, Ohio, and is expected to be completed by June 12, 2015. Fiscal 2014 operations and maintenance funds in the amount of $6,439,147 are being obligated at the time of the award. Air Force Research Laboratory/RIKE, Rome, New York, is the contracting activity.

Vision Systems International LLC, Fort Worth, Texas, has been awarded a $7,768,862 firm-fixed-price task order (0024) to FA8522-09-D-0012 for F-15 and F-16 sustainment in support of the Joint Helmet Mounted Cueing System. Work will be performed at Wilsonville, Oregon, and is expected to be completed by July 15, 2015. This award is the result of a sole source acquisition. Funds in the amount of $7,768,862 from Fiscal 2014 Consolidated Sustainment Activity Group Working Capital Funds under the Fiscal 2014 Contract Depot Maintenance Direct Cite Funds Program Authority are being obligated at time of award. This contract is not multiyear. Air Force Sustainment Center, Robins Air Force Base, Georgia, is the contracting activity.

DEFENSE LOGISTICS AGENCY

CORRECTION: The contract announced on July 14, 2014, for AvKare Inc.,** Pulaski, Tennessee (SPE2D2-14-D-0004), for $9,728,923 was announced with an incorrect award date. The correct award date is July 17, 2014.

*Small Business

**In HubZone Service Disabled Veteran Owned Small Business

PRESIDENT OBAMA ORDERS NEW SANCTIONS AGAINST RUSSIAN INTERESTS

OBAMA-PUTIN CALL MENTIONS DOWNED PASSENGER JET NEAR RUSSIA-UKRAINE BORDER

FROM:  THE WHITE HOUSE 

Readout of the President’s Call with President Putin of Russia

President Obama spoke with Russian President Putin today about the situation in Ukraine and the additional sanctions on Russian individuals and entities that the United States announced on July 16.  President Obama emphasized that he remains committed to a diplomatic solution and that sanctions were not his preferred course of action.  President Obama noted, however, that in the face of extensive evidence that Russia is significantly increasing the provision of heavy weapons to separatists in Ukraine and Russia’s failure to take other steps set out by the United States and Europe to de-escalate the crisis, it was necessary to impose additional sanctions, consistent with the clear statements from the United States and our allies following the G-7 meeting in Brussels.  President Obama also reiterated his concerns regarding the buildup of Russian forces near the Ukrainian border.  President Obama called on President Putin to take concrete steps to de-escalate the situation, including to press separatists to agree to a cease-fire, support a roadmap for negotiations, halt the flow of fighters and weapons into Ukraine, obtain the release of all hostages still held by the separatists, and work to establish an effective OSCE border-monitoring mechanism.  He noted that Russia would face continued costs and isolation unless it takes these concrete steps.  The President emphasized that Russia and the United States have a shared interest in supporting a stable and prosperous Ukraine.  President Obama and President Putin agreed on the need for a peaceful resolution to the Ukraine crisis achieved through diplomatic means.  During the call, President Putin noted the early reports of a downed passenger jet near the Russia-Ukraine border.

The President Meets with His Climate Task Force

DEPUTY AG COLE TESTIFIES REGARDING ALLEGATIONS IRS TARGETED CONSERVATIVE GROUPS

FROM:  U.S. JUSTICE DEPARTMENT 

Testimony by Deputy Attorney General James M. Cole Before the Subcommittee on Economic Growth, Job Creation and Regulatory Affairs Committee on Oversight and Government Reform

~ Thursday, July 17, 2014

Good morning, Chairman Jordan, Ranking Member Cartwright, and Members of the Committee.  I am here today to testify in response to the Committee’s oversight interest in allegations that the Internal Revenue Service targeted conservative groups seeking tax-exempt status.  

When the allegations of IRS targeting surfaced in May of 2013, the Attorney General immediately ordered a thorough investigation of them.  That criminal investigation is being conducted by career attorneys and agents of the Department’s Criminal and Civil Rights Divisions, the Federal Bureau of Investigation, and the Treasury Inspector General for Tax Administration (TIGTA).  I have the utmost confidence in the career professionals in the Department and the TIGTA, and I know that they will follow the facts wherever they lead and apply the law to those facts.  While I understand that you are interested in learning about the results of the investigation, in order to protect the integrity and independence of this investigation, we cannot disclose non-public information about the investigation while it remains pending.  This is consistent with the longstanding Department policy, across both Democratic and Republican Administrations, which is intended to protect the effectiveness and independence of the criminal justice process, as well as privacy interests of third parties.  I can, however, tell you that the investigation includes investigating the circumstances of the lost emails from Ms. Lerner’s computer.

In response to your requests, we have undertaken substantial efforts to cooperate with the Committee in a manner that is also consistent with our law enforcement obligations.  We have produced documents relating to limited communications regarding 501(c) organizations by Criminal Division attorneys with Lois Lerner, who was the head of the Exempt Organizations Division at the IRS.  We have also taken the extraordinary step of making available as fact witnesses two career prosecutors from the Department’s Public Integrity Section, who explained these contacts with Ms. Lerner.

In 2010, for the purpose of understanding what potential criminal violations, related to campaign finance activity, might evolve following the Supreme Court’s decision in Citizens United v. FEC, a Public Integrity Section attorney reached out to the IRS for a meeting, and was directed to Ms. Lerner.  In the course of that meeting, it became clear that it would be difficult to bring criminal prosecutions in this area and, in fact, no criminal investigations were referred to the Department of Justice by IRS, and no investigations were opened by the Public Integrity Section as a result of the meeting.

A separate contact between the Public Integrity Section and Ms. Lerner occurred in May 2013, when the Department had been asked both in a Senate hearing and in a subsequent letter from Senator Sheldon Whitehouse whether the Department and the Treasury Department had an effective mechanism for communicating about potential false statements submitted to the IRS by organizations seeking tax-exempt status.  An attorney in the Public Integrity Section reached out to Ms. Lerner to discuss the issue.  Ms. Lerner indicated that someone else from the IRS would follow up with the Section, but that follow-up did not occur.

In sum, these two instances show that attorneys in the Public Integrity Section were merely fulfilling their responsibilities as law enforcement officials:  they were educating themselves on the ramifications of changes in the area of campaign finance laws and ensuring that the Department remained vigilant in its enforcement of those laws.    

As we have explained to the Committee previously, in 2010, in conjunction with the meeting I previously described, the IRS provided the FBI with disks that we understood at the time to contain only the public portions of filed returns of tax-exempt organizations.  As we have indicated in letters to the Committee, the FBI has advised us that upon their receipt of those disks, an FBI analyst reviewed only the index of the disks and did nothing further with them and, to the best of our knowledge, they were never used for any investigative purpose.  Pursuant to the Committee’s subpoena, we provided you with copies of the disks on June 2, 2014, when it remained our understanding that the disks contained only publicly available information.  Shortly thereafter, the IRS notified the Department that the disks appeared to inadvertently include a small amount of information protected by Internal Revenue Code Section 6103, and we promptly notified the Committee of this fact by letter of June 4, 2014.  We promptly provided our copies of the disks to the IRS, and suggested that the Committee do the same.  In order to provide you with our best information regarding the disks—including the fact that they were not used by the FBI for any investigative purpose—we have now written the Committee several letters regarding the disks, and the Director of the FBI answered questions about them from Chairman Jordan in a House Judiciary Committee hearing on June 11, 2014.
           
We recognize the Committee’s interest in this matter.  We share that interest and are conducting a thorough and complete investigation and analysis of the allegations of targeting by the IRS.  While I know you are frustrated by the fact that I cannot at this time disclose any specifics about the investigation, I do pledge to you that when our investigation is completed, we will provide Congress with detailed information about the facts we uncovered and the conclusions we reached in this matter.

I will now be happy to respond to your questions.

RECENT U.S. MARINE CORPS PHOTOS FROM AFGHANISTAN

FROM:  U.S. DEFENSE DEPARTMENT 

U.S. Marines troubleshoot an AH-1W Cobra helicopter before a mission on Camp Bastion, Afghanistan, July 3, 2014. U.S. Marine Corps photo by Sgt. Frances Johnson.

U.S. Marine Corps Staff Sgt. Kenneth Morris scans the area for any suspicious activity on the ground during a mission over Helmand province, Afghanistan, July 3, 2014. Morris, a crew chief, is assigned to Marine Light Attack Helicopter Squadron 467. U.S. Marine Corps photo by Sgt. Frances Johnson.

THE BIG, BAD & BEAUTIFUL UNIVERSE WITH CHANDRA

GSA DEPUTY COMMISSIONERTESTIFIES ON HOW GOVERNMENT PRIORITIZES INVESTMENTS

FROM:  U.S. GENERAL SERVICES ADMINISTRATION 

Port of Entry Infrastructure: How Does the Federal Government Prioritize Investments?

Statement of the Honorable Michael Gelber

Deputy Commissioner, Public Building Service, General Services Administration

Before the Committee on Homeland Security, Subcommittee on Border and Maritime Security

July 16, 2014

Introduction

Good morning Chairwoman Miller, Ranking Member Jackson-Lee, and members of the Committee. My name is Michael Gelber, and I am the Deputy Commissioner of GSA’s Public Buildings Service.

GSA’s mission is to deliver the best value in real estate, acquisition, and technology services to government and the American people. As part of this mission, GSA maintains a close partnership with the Department of Homeland Security U.S. Customs & Border Protection (CBP) to meet that agency’s space needs along our nation’s borders. CBP is our primary partner of the Federal inspection agencies stationed along our land borders.

I look forward to outlining the importance of Land Ports of Entry, our partnership with CBP, how the Federal government jointly prioritizes and executes port projects, and the challenges facing these investments.

The Criticality of Land Ports

GSA works closely with CBP to design, construct, maintain, and operate land ports of entry along more than 1,900 miles of border between the southern United States and Mexico and more than 5,500 miles of border between the northern United States and Canada. These ports are integral to the nation’s trade and security.

On a daily basis, about $2 billion in goods, 350,000 vehicles, 135,000 pedestrians, and 30,000 trucks cross the border at one of these 167 ports. Since 1990, the combined value of freight shipments between the U.S. and Canada and the U.S. and Mexico has increased 170 percent, growing an average of 8 percent annually. Additionally, approximately 23 million U.S. citizens cross the land borders into Mexico and Canada a total of nearly 130 million times each year. These statistics highlight the vital role of safe, secure, and modern land ports along our borders.

GSA owns 102 land ports of entry along the northern and southern borders, leases or partially owns 2. GSA’s land port of entry inventory amounts to more than 5.5 million square feet of space. Additionally, CBP owns and operates 40 primarily smaller locations, mostly in remote, rural areas. The U.S. Department of Agriculture and U.S. Forest Service mutually own 1 land port of entry, and the National Park Service owns 2 ports.

GSA’s Ongoing Partnership with CBP in Support of Land Port Modernization

Given the crucial importance of these ports, GSA, in collaboration with CBP, has prioritized investment to modernize and upgrade these ports.

To ensure these investments address CBP’s highest priority needs, GSA relies on the priorities established in CBP’s 5-year plan for portfolio upgrades. CBP employs a multi-step process to develop its 5-year plan. This list of priorities can include expansion and modernization of existing land ports along with new port construction.

As CBP has outlined, its process includes gathering data through Strategic Resource Assessment, scoring identified needs at each port, conducting a sensitivity analysis on the initial ranking of needs, assessing project feasibility and risk, and establishing an executable capital investment plan.

In the current 5-Year LPOE Construction Plan, CBP has identified six construction projects at land ports of entry totaling more than $830 million in facility construction along the northern and southern borders.

During the past 15 years, GSA has invested more than $1.5 billion to deliver more than 20 new land ports along our northern and southern borders. In the past four fiscal years, the Administration has requested more than $740 million in support of modernization of land ports to address CBP’s most pressing needs. Unfortunately, Congress has provided approximately $295 million of these requests, all of which came in Fiscal Year 2014. This has stalled critical modernizations and delayed land port upgrades that would secure our borders and improve the efficient flow of commerce with our partners in Canada and Mexico.

When a critical modernization project receives needed funding and, if required, the State Department issues a Presidential Permit, GSA and CBP work in close partnership with key Federal, state, and local stakeholders to construct and operate GSA-owned land port inspection facilities.

GSA and CBP consult with stakeholder agencies at the onset of project planning and continue this relationship throughout project development and execution. If a project involves a new border crossing and or a substantial modification of an existing crossing, GSA works closely with the State Department, which must determine whether the project is in the national interest justifying issuance of a Presidential Permit.  GSA also works closely with the U.S. Department of Transportation’s Federal Highway Administration (FHWA)  and the transportation departments from the 15 Border States when planning border infrastructure projects. GSA and CBP are partners in the Border Master Planning process on the U.S. - Mexico border.  In addition to coordination with State and local agencies, the border master planning process also includes Mexican (federal, state and local) governments as well as other federal agencies including State Department, DOT (FHWA, Federal Motor Carrier Safety Administration, etc.) and sometimes private partners as well (railroads for example).  The connectivity of highways with the land ports of entry is critical to the safe and efficient flow of traffic and trade across our borders. In addition to working closely with domestic stakeholders, GSA also works closely with the Department of State to coordinate with federal and local governments in Mexico and Canada.

Alternative Resources in Support of Land Port Projects

Especially given the consistent cuts to the port program that I have previously mentioned, we have seen intense interest in finding alternatives to Federal appropriations to deliver high-priority port projects. Importantly, when assessing any options, GSA and CBP must look comprehensively at the full life-cycle cost of a port. This includes the land where construction takes place, the infrastructure that supports the mission, the funds to staff the facility, and the sophisticated technology and equipment CBP uses to ensure the nation’s security. If an alternative resource exists for one or more of these items, GSA and CBP likely still must find funding to address the full range of costs.

GSA has had some success in using alternative delivery methods to support land port projects in the past. For instance, GSA has long-standing authority to accept unconditional gifts of real and personal property from other public or private entities. GSA has used this authority multiple times when state or local governments, and in a few cases private sector entities, have elected to donate land or other real property to GSA in order to realize the economic benefit that comes with a new or expanded land port of entry.

For instance, at the San Luis II port in Arizona, GSA received a donation of land and utilities in support of the site to help make progress on the modernization. In Donna, Texas, the City donated money for design, land for the site of the port, and 180,000 cubic yards of fill dirt for construction. In Columbus, New Mexico, a private landowner donated approximately 10.2 acres of land to GSA near the port site for construction and a bypass road for commercial trucks.

Additionally, Congress has sought to support these efforts by providing for additional donation and reimbursable service authorities. In Fiscal Year 2013, CBP received limited authority to enter into reimbursable service agreements with private sector entities for the provision of certain inspectional services.[1] Congress expanded CBP’s ability to execute these reimbursable service agreements in addition to broadening GSA’s and CBP’s donation acceptance authority in Fiscal Year 2014.[2]

These authorities present valuable opportunities to support port development. However, these resources have generally been utilized to make modest improvements to existing ports or defray the cost of a major modernization, not to deliver a full-scale upgrade of the type the Administration has requested consistently in the President’s budget.

We look forward to working with Congress to further explore these and other flexible authorities and to continue to highlight the importance of these investments.

Conclusion

Thank you for the opportunity to speak with you today about our ongoing partnership with CBP and other federal agencies to address the nation’s security and economic needs along our borders. I welcome the opportunity to discuss GSA’s commitment to strategic investment in the nation’s land ports. I am happy to answer any questions you may have

RETIRED ADMIRAL PAPP APPOINTED U.S. SPECIAL REPRESENTATIVE FOR THE ARCTIC

FROM:  U.S. STATE DEPARTMENT 

Retired Admiral Robert Papp to Serve as U.S. Special Representative for the Arctic

Press Statement

John Kerry

Secretary of State

Washington, DC

July 16, 2014

---

Earlier this year we decided to appoint a Special Representative for the Arctic for a simple reason: President Obama and I are committed to elevating these issues in America's foreign policy and national security strategy because the United States is an Arctic nation, and Arctic policy has never been more important, particularly as we prepare to Chair the Arctic Council in 2015.

We set out to find the right American official for this assignment, a distinguished and senior, high-level public servant with broad foreign policy experience and a passion for the Arctic.

I could not be more pleased to announce that Admiral Robert J. Papp, Jr. will lead our efforts to advance U.S. interests in the Arctic Region as the State Department’s Special Representative.

Admiral Papp served with great distinction as Commandant of the Coast Guard, retiring this May after a stellar thirty-nine-year career. As Commandant, Papp navigated a difficult budget environment to recapitalize the Coast Guard’s fleet, working with Congress to secure funding to complete five of eight National Security Cutters and to refurbish and restore the Polar Star heavy icebreaker to service. I could not be happier that he agreed to postpone his well-deserved retirement and join our effort in a cause about which he is both passionate and wise.

I am also extraordinarily grateful that in our efforts, I will be able to rely on senior advice from a remarkable Alaskan, former Lieutenant Governor Fran Ulmer who, as President Obama's Chair of the U.S. Arctic Research Commission, will provide invaluable counsel as a Special Advisor on Arctic Science and Policy.

We have a great deal of work to do, and that work starts right away. Admiral Papp will soon travel to Alaska to consult with policy-makers on the front lines of America's Arctic state. As we have throughout this process, we will rely on the close consultation of Senators Begich and Murkowski.

The Arctic region is the last global frontier and a region with enormous and growing geostrategic, economic, climate, environment, and national security implications for the United States and the world. With the team we're building at the State Department, we will make sure that the United States is in the strongest possible position to meet these challenges and seize these opportunities.

WHITE HOUSE FACT SHEET ON PROGRESS OF HIV/AIDS STRAGEGY

FROM:  THE WHITE HOUSE 

FACT SHEET: Progress in Four Years of the National HIV/AIDS Strategy

On July 15, 2010, President Obama released the first comprehensive National HIV/AIDS Strategy, which envisions that “the United States will become a place where new HIV infections are rare and when they do occur, every person, regardless of age, gender, race/ethnicity, sexual orientation, or socio-economic circumstance, will have unfettered access to high quality, life-extending care, free from stigma and discrimination.”

The goals of the Strategy are to reduce new HIV infections; increase access to care and improve health outcomes for people living with HIV; and reduce HIV-related disparities and health inequities.  Achieving these goals requires partnerships and coordination among Federal agencies, state and local governments, community-based organizations, and health care settings.

To further the implementation of the Strategy, last year, President Obama signed an Executive Order establishing the HIV Care Continuum Initiative, which outlines the pathway to accelerate and optimize health outcomes for those living with HIV.  This update outlines just some of the major accomplishments and progress made over the last four years towards achieving the Strategy’s goals and highlights new action steps taken today. 

New actions to support the National HIV/AIDS Strategy: 

• Today, to support the goals of the Strategy, the Department of Health and Human Services (HHS) announced the availability of $11 million in funding to enhance Community Health Centers’ HIV efforts in communities highly impacted by HIV, especially among racial and ethnic minorities.  This initiative, funded through the Affordable Care Act and the Secretary’s Minority AIDS Initiative Fund, aims to build sustainable partnerships between public health and health centers to help achieve the goals of the Strategy.
• Additionally today, the Department of Justice (DOJ) released a Best Practices Guide to Reform HIV-specific Criminal Laws to Align with Scientifically Supported Factors. As noted in the National HIV/AIDS Strategy, many states have criminal laws that have not keep pace with our current understanding of best public health practices for preventing and treating HIV and that, instead, may make people less willing to get tested, disclose their status, and undermine the public health goals of promoting HIV screening and treatment. This guide is intended to share best practices for aligning criminal law with the public health goal of reducing HIV-related stigma.

Implementing the National HIV/AIDS Strategy:

Reducing new HIV infections over the last four years: Ensuring that individuals know their HIV status is a critical step to reducing HIV infections.  People who don't know they are infected miss an opportunity to access the life-sustaining care and treatment that can now lead to normal life-expectancy. Undiagnosed individuals can also unknowingly pass the virus on to others. 

• HIV testing: Screening all persons between 15 and 65 years of age is now a grade “A” recommendation of the independent United States Preventive Services Task Force. This means that, as of April 2014, new health plans under the Affordable Care Act must offer HIV screening without cost sharing.
• The number of people who know their HIV status increased:  The overall number of people with HIV who know their HIV status increased to 84.2% in 2010, approaching the Strategy goal of 90% by 2015.  Serostatus awareness was 90% or higher among persons 45 year or older and among injection drug users. 

• Reduction in new HIV infections in some sub-populations:  Black women saw a 21% reduction in new HIV infections from 2008 to 2010.  In 2010, there was a 22% reduction in new HIV infections among injection drug users. However, there has been a 12% increase in new HIV infections among men who have sex with men (MSM) and 22% increase among young MSM aged 13 to 24. The Administration is committed to enhancing outreach to young, black, gay males.
• Reduced transmission of HIV: One of the most successful scientific advances in HIV prevention, treatment as prevention, shows that people living with HIV who have a suppressed viral load due to effective HIV treatment, reduce their HIV transmission risk by up to 96%.
• Pre-exposure prophylaxis (PrEP): In May 2014, the Centers for Disease Control and Prevention (CDC) released clinical practice guidelines on HIV risk and eligibility for PrEP use.
• Research for an effective vaccine and cure: An effective vaccine remains a critical component of any long-term strategy.  In 2014, the President announced that the National Institutes of Health (NIH) is redirecting $100 million for development of new therapies toward a cure and will continue to strive to be on the forefront of new discoveries.  

Increasing access to care and improving health outcomes over the last four years: To end the epidemic, in addition to providing prevention strategies, access to health insurance coverage and other key supports are essential. 

• Making coverage affordable: The Affordable Care Act has expanded access to affordable health insurance coverage for millions of Americans, including thousands living with HIV.  Thanks to the Affordable Care Act, people can no longer be denied coverage based on pre-existing conditions, including HIV.  The Administration will continue to focus on the Ryan White HIV/AIDS Program and Affordable Care Act coordination.

• Housing for people living with HIV: Since 2010, over 56,000 people with HIV receive housing assistance from the Housing Opportunities for Persons with AIDS (HOPWA) program annually. In keeping with the goals of the Strategy, the President’s Fiscal Year 2015 Budget proposes modernizing HOPWA’s funding formula to better reflect the current state of the epidemic.
• Increasing access to life-saving HIV treatment: Thanks to targeted investments by the Administration, waiting list for the AIDS Drug Assistance Program (ADAP) have been nearly eliminated from a high of over 9,000 in 2011.
• Commitment to ensuring access to care for people living with HIV: Together, the Affordable Care Act and the Ryan White HIV/AIDS Program are improving and expanding access to care for people living with HIV/AIDS.  Federal leaders have taken steps to ensure this collaboration, including providing guidance to Ryan White grantees to help them effectively interact with new coverage provided under the Affordable Care Act, and strengthening Ryan White data and information to improve program management.  

Reducing health disparities over the last four years: Gay and bisexual men, transgender women, and Black and Latinos continue to bear significant disproportionate burden of new HIV infections and poorer health outcomes. Black gay youth aged 13 to 24 have been identified in the National HIV/AIDS Strategy as a principal group facing HIV/AIDS-related health disparities. 

• Improving care continuum outcomes among people of color: In 2012, HHS funded a $44 million Care and Prevention in the United States (CAPUS) demonstration project to reduce HIV and AIDS-related morbidity and mortality among racial and ethnic minorities in eight cities.  This project focuses efforts on improving outcomes along the HIV care continuum.
• Addressing the concerns of the communities most affected:  In June 2014, Office of National AIDS Policy (ONAP) held listening sessions in areas most impacted by the epidemic in the southern United States (Jackson, Columbia, and Atlanta).  Additionally, ONAP convened a meeting at the White House focusing on HIV and the southern United States, and will host another meeting to address HIV and gay men, particularly young black MSM, in fall 2014. 
• Reducing stigma and discrimination: In May 2014, CDC launched the latest communication campaign under its Act Against AIDS initiative: “Start Talking. Stop HIV.” aiming to eliminate stigma and discrimination and promote open communication between gay and bisexual men about a range of HIV prevention strategies. Additionally, DOJ launched ADA.gov/AIDS, a portal for individuals to directly report cases of HIV-related discrimination.
• Integrating behavioral health for people at high risk: The Substance Abuse and Mental Health Services Administration (SAMHSA) piloted a number of the Minority AIDS Initiative Continuum of Care programs focused on integrating HIV medical care into behavioral health programs designed for racial and ethnic minority populations also at high risk for behavioral health disorders and HIV. 

Achieving a more coordinated national response over the last four years: The National HIV/AIDS Strategy recognizes that a core principle of reaching its identified quantitative targets requires Federal agencies to coordinate efforts, along with coordinating across State and local government and the private sector.

• Intersection of violence against women and girls, HIV/AIDS, and gender-related health disparities: In 2012, President Obama signed a memorandum forming a Federal working group and directing agencies to coordinate efforts on these key issues.  Federal agencies and community partners are investing time and resources to provide co-screening for HIV and intimate partner violence as well as learn more about the benefits of trauma informed care. 
• Implementing common core indicators: In 2012, HHS approved a set of seven common core indicators to monitor HHS-funded prevention, treatment, and care services in an effort to standardize data collection and grantee reporting requirements, thereby reducing burdens and increasing efficiency.
• Public-private partnerships to facilitate access to HIV treatment: In 2012, a convening of funders by HHS and the MAC AIDS Fund led to the development ofHarborPath, an online portal for health care providers to help connect uninsured individuals with HIV to access medications and/or medication assistance programs through a streamlined common application.
• Investing in future research:  NIH expanded their investment in research to address gaps and opportunities in the HIV Care Continuum, including investigations of the effectiveness of methods to identify HIV-infected people earlier and to link them to care; community-level interventions to expand HIV testing and treatment; interventions to improve HIV outcomes among substance users; and evaluation of innovative network approaches for HIV testing and referral for persons in the correctional system. 

Toward the Goals of the National HIV/AIDS Strategy:

The Administration, led by Office of National AIDS Policy and HHS Office of HIV/AIDS and Infectious Disease Policy, in partnership with other Federal agencies, state and local governments, communities and people living with HIV, have made tremendous progress in addressing HIV/AIDS in the United States over the last four years. Together, we are committed to accelerating our efforts to reach the Strategy’s goals and, eventually, attain an AIDS-free generation. Smart investments and collaborations will provide opportunities to scale up effective efforts so that every community affected by HIV can contribute to achieving the goals of the Strategy.