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U.S. House of Representatives,
Subcommittee on Oversight
and Investigations,
and Subcommittee on Housing
and Community Opportunity,
Committee on Financial Services,
Washington, D.C.

    The subcommittees met, pursuant to call, at 2:20 p.m., in Room 2128, Rayburn House Office Building, Hon. Sue W. Kelly [Chairwoman of the Subcommittee on Oversight and Investigations] presiding.
    Present for the Subcommittee on Oversight and Investigations: Representatives Kelly, Tiberi, Gutierrez, Inslee, Schakowsky and Clay.
    Present for the Subcommittee on Housing and Community Opportunity: Representatives Kelly, Miller, Tiberi, Frank, Lee, Schakowsky, Clay and Israel.
    Also present: Representatives Conyers and Gonzalez.

    Chairwoman KELLY. This joint hearing of the Subcommittee on Oversight and Investigations and the Subcommittee on Housing and Community Opportunity will come to order.
    I want to thank all Members of Congress who are present today. There will be some more joining us. We have a vote on the floor of the House, which is why there are not so many people here just now, but they will be coming in, and I want to thank them for coming and for their presence today.
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    Without objection, all members present will participate fully in the hearing; and all opening statements and questions will be made part of the official hearing record.
    The Chair recognizes herself for a brief opening statement.
    In the preparation for this hearing, I have spoken to many of my friends and colleagues about the issue of mold damage in commercial and private properties and reports of adverse health effects. While there are many who are aware of the seriousness of this issue, there are also many who are unaware of the growing scope of this problem. In an effort to increase all of our knowledge, Chairwoman Roukema, Ranking Members Gutierrez, Frank and I have agreed to hold this joint hearing.
    In my view, one issue with this is the lack of scientific evidence as to the direct correlation between mold damage and adverse health effects. One of the reasons that I am personally interested in this is that my major in college was bacteriology, and I dealt a lot with molds and so forth. So this has a personal interest to me. In addition to that, I am an asthmatic, and so are my kids. So, because of this uncertainty, I think homeowners' fears grow sometimes without the definitive evidence of what is safe or potentially dangerous levels of mold.
    In addition, the uncertainty of this issue has created a window of opportunity for unethical lawyers and contractors to prey upon vulnerable populations. As evidence and without objection, I am going to make part of the record a copy of a May 17 New York Post article entitled, Costly Lawyer Cashes in on Mold Money.

    [The following information can be found on page XX in the appendix.]

    Chairwoman KELLY. This article tells the story of a lawyer who settled a class action lawsuit for $1.7 million, taking more than half of that money for himself; and he left the families with an average of $1,000 each. The part of the article that alarmed me the most was this: ''the money he offered me wasn't even enough to buy a decent tombstone for my daughter.'' this was said by an 81-year-old woman named Mattie Qualie, whose daughter, Lorraine Woods, age 58, died in 1998 from an alleged long exposure to molds.
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    All of us need to step back and look at the facts surrounding this issue and do so in a coordinated manner. The witnesses we have at the table today represent a broad cross-section of the interested parties in the mold debate. By working together, I hope we will be able to find some answers in an area where there are still large numbers of unanswered questions.
    Let me state unequivocally that all of us have great sympathy for those who are suffering health problems of any kind, no matter what the cause. I would personally urge property owners to do everything they can to protect their investments and, most importantly, the families, from mold infestation. At the same time, this Congress must assess the true nature of the mold issue before rushing into legislative action.
    In the process of preparing for this hearing, my staff interviewed numerous medical experts who emphasized that mold simply cannot be directly connected to so many of the serious medical conditions for which it has been blamed. There are many causes that can be cited for the symptoms people blame on mold, such as hypersensitivity, allergies, viruses and deficiencies of the immune system.
    As we will hear this afternoon, the Centers for Disease Control is currently working with other institutions to study this issue and provide more information on the true health effects of mold infestation. It is imperative that we look to the Nation's medical research institutions to help us separate legitimate claims from what some have termed ''mold hysteria.''
    Ultimately, we have got to have better scientific standards and better safety education to help consumers and the industry identify legitimate dangers to immediately begin for compensation and remediation. We are holding this hearing to help us separate the facts from the myths surrounding the recent dramatic rise in mold claims and its reported catastrophic effects.
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    While many Americans are unaware of potential dangers from untreated mold growth in commercial and private properties, the lack of scientific standards and documentation only adds to the confusion we all feel when confronted by potential dangers of substances that we grew up to believe were harmless. Who would have thought that when we shook pepper on our food, we were actually shaking on a mold? Who would think when we ate peanuts, we were actually ingesting a mold?
    I think it is very important that we distinguish what is myth from the scientific fact.

    [The prepared statement of Hon. Sue W. Kelly can be found on page XX in the appendix.]

    I am now going to recognize my friend from Massachusetts for his opening statement, Mr. Frank.
    Mr. FRANK. Madam Chairman, on a day when the House is going to be voting, since we are meeting during the House being in session, and given the large number of witnesses, I will waive an opening statement so we can get the benefit of what they have to say. I can submit remarks later for the record.
    Chairwoman KELLY. Thank you very much, Mr. Frank.
    Mr. Miller.
    Mr. MILLER. Thank you, Madam Chairwoman.
    I read a speech given at a gathering of attorneys, and the new quote is ''mold is gold.'' it reminds me of tort litigation in California on attached products for defects, where attorneys would go out and sue a builder and every subcontractor and the lender. Then they would go to the board of directors, and they would say, do you enjoin in this lawsuit, or you can be held personally liable for damages, which by law they could be. So then the board of directors enjoins in the lawsuit, and the associations have to pay attorneys.
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    The attorneys go in and buy one unit and gut it. If they can find nailing on drywall that is just an inch overspaced or half an inch over, they say that is a violation and it is typical of every unit. If they can find an oversized nut, they say that is typical of every unit. If they can find a crack in the concrete, they say it is typical of every unit.
    I know a developer who built a project in 1986 that lost a lawsuit in 1995 for $23 million, and it cost him $3.2 million to build the complex. I mean, it is a little outrageous.
    It reminds me when of when I was taking rhetoric in college. A professor referred to a post-hoc fallacy, and it is that A occurs; therefore, B occurs; therefore, A caused B.
    I think we are jumping to conclusions on some of these issues.
    I read some testimony that alluded to individuals having died from mold, Aspergillus growing in their lungs was the cause. Yet if you go to a wheat field, cornfield, a forest, a park, if you deal with mulch and you look at the parts per billion that you can receive just mulching your yard or walking in a forest so far supersedes what you could receive in the house with mold growing, it is just unbelievable. In fact, Aspergillus can be found in peanuts, pecans, peas, bread, cheese, rice, corn ears, barley grain, sorghum wheat and cottonseed, exceeding what you will find in a house.
    Some of the stuff I have read, I believe if there are legitimate claims, I don't have a problem with somebody being rewarded for legitimate claims. But it appears that some of this is just a way to get to an insurer or a builder and find a way to pull some money out of their pocket.
    Some of the claims that I have read, you would think there would have to be some liability on the part of the homeowner to do and perform basic maintenance on their home. When you have a leaky pipe, you don't wait a year to turn it into the insurer because your pipe was leaking, and then when your insurer pays you money to fix it and it far supersedes that money for other things, you still don't fix the leak—I mean, there is some point in time you have to look at yourself in the mirror and say, am I a little to blame here?
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    I think we are avoiding that, in some cases and in some points, individual responsibility seems to be overlooked and people look to others to blame for their own negligence.
    So I am looking forward to the hearing. If there is truly scientific evidence that people are being damaged and it is other people's fault, let's get to the bottom of that. But if somebody says, well, look, there is something there, and harm must be occurring to somebody because of that, and yet there is no scientific evidence that that be the case—in fact, in some of the court cases I read there were no damages awarded for health issues at all, and yet these outrageous dollars are being proposed out there.
    Madam Chairwoman, I applaud you for having this hearing today and look forward to the testimony.
    Chairwoman KELLY. Thank you very much, Mr. Miller.
    Mrs. Roukema was unable to be with us today, but, with unanimous consent, I would like to insert her statement in the record.

    [The prepared statement of Hon. Marge Roukema can be found on page XX in the appendix.]

    Chairwoman KELLY. We turn now to the ranking member of the Oversight Committee, Mr. Gutierrez.
    Mr. GUTIERREZ. Thank you very much, Chairwoman Kelley, and the ranking member, Mr. Frank, thank you for joining us this afternoon here and being part of this important hearing.
    We are gathered here to discuss an issue of great importance to thousands of Americans. The issue at hand is mold and the impact it has on property and people's health.
    In fact, believe it or not, mold is a growing problem, experiencing a five-fold increase in occurrences in homes. Thousands of Americans today are living in houses terribly infested by mold.
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    I am sure there are those that would argue that the five-fold increase is probably due to the fact that all the homeowners in the United States have decided to disregard and be careless about their water pipes and how it is they keep good conditions in their basement. Well, maybe that is the case, that homeowners across the country, specifically in the State of Texas, apparently, if that is the case, homeowners are being very, very derelict in their duty, as they have had a 500 percent increase this year over last year.
    So maybe it is all of the careless, unworthy homeowners who bought a home, it is their prize possession, it is their number one investment, and they just decided they were going to have mold in it, and there is no other good reason for the sudden surge and increase in that mold.
    With that, Madam Chairwoman, I have nothing further to say. I would like the rest of my comments to be inserted in the record.
    Chairwoman KELLY. Without objection.

    [The statement of Hon. Luis V. Gutierrez can be found on page XX in the appendix.]

    Chairwoman KELLY. Also, without objection, I have a letter to Chairman Oxley from the Associated General Contractors of America which, without objection, we will insert in the record.

    [The following information can be found on page XX in the appendix.]

    Chairwoman KELLY. We go now to Mr. Clay.
    Mr. CLAY. Thank you, Madam Chairwoman. I appreciate your having this hearing today, and I look forward to the testimony we are about to hear.
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    We are indeed facing a growing problem with mold in houses and buildings. Homeowners, insurance companies and building construction companies are encountering tremendous financial and health problems because of harmful molds.
    We have thousands of molds, and most of them cause no problems to humans. As a matter of fact, some are beneficial to man and are vital for use in medicines, food production, and many other aspects of our everyday lives. While we mostly stereotype molds as being only in damp, dark environments, they exist everywhere.
    Madam Chairman, I will cut my opening statement short so that we can hear testimony from the witnesses and ask that I submit my statement for the record.
    Chairwoman KELLY. Thank you very much, Mr. Clay.

    [The prepared statement of Hon. William Lacy Clay can be found on page XX in the appendix.]

    Chairwoman KELLY. Ms. Schakowsky.
    Ms. SCHAKOWSKY. Thank you, Madam Chairman. I will also submit my opening statement for the record.
    I do want to say that, on my way over here, I was telling some colleagues of ours that I was coming here, and, to a person, they told me of a situation of pretty devastating mold contamination in their district. One Member told me about a school that actually had to be completely shut down because of mold contamination. Another told me about a building across the street from the site of the World Trade Center, some 60 stories tall or higher, that now is shut down; and they are trying to figure out what to do with it because of this toxic mold infestation.
    So it was really interesting to me. I had been aware of it from some constituents in my district, but this is a growing problem that increasing numbers of Members of Congress are aware of. I look forward to the testimony today.
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    Thank you.

    [The prepared statement of Hon. Janice D. Schakowsky can be found on page XX in the appendix.]

    Mr. GUTIERREZ. If the gentlewoman would yield, as Congressman Schakowsky and I have both been made aware, in and around the City of Chicago in two different suburban locations they have had to close down two substantial high schools in the last 2 years because of the problem with mold. But maybe it was the kids coming to school ill-prepared those days that brought the mold with them.
    Chairwoman KELLY. Perhaps they came to school wet.
    Mr. Gonzalez.
    Mr. GONZALEZ. Madam Chairman, thank you very much for the opportunity and privilege of attending this subcommittee hearing. I am not a member of either subcommittee, and I do appreciate being here.
    Just a couple of observations. I hope this is not going to somehow end up again a big argument over tort reform and everything else. We are really here to be educated again with the facts. Unlike war, legislation doesn't have to have the effect of truth being its first casualty.
    As far as litigation, I am very aware of what is going on in the State of Texas, but I will remind my fellow members, addressing some of the remarks, that some of the claimants in my own community, I will tell you who they are, one of them is a Justice of the Fourth Court of Appeals, a Republican; a State Senator, a Democrat; and some very prominent families. I don't think it is going to fit the description that sometimes we have had some abuses out there.
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    But we really need to get down to the truth to see how serious it is, and in fact have we been handling it appropriately.
    Thank you very much, Madam Chairman.
    Chairwoman KELLY. Thank you very much, Mr. Gonzalez.
    Mr. Inslee.
    Mr. INSLEE. Thank you. I just want to express my appreciation for your holding this hearing. Just two brief comments.
    First off, I know this is a real issue in my district where we had the taxpayers have a problem because a contractor in a school left the situation that did cause an enormous amount of mold growth that made this building entirely uninhabitable. The taxpayers had to bring a claim against the individuals involved. The individuals ultimately accepted responsibility, as they should have; and the taxpayers were reimbursed hundreds and hundreds of thousands of dollars they had coming to them. So I understand this has a broad import for taxpayers, not just health.
    The other comment I want to make as far as the tort issue, everybody has their perspective, and I am very interested in what is going on out there in the legal claim field. But I will just share one little story for you, if you talk about this issue in tort reform.
    I had a friend, let's call him Jim for a minute. I used to be a lawyer. I handled a lot of cases on behalf of people who had been injured, and Jim and I for 10 years had a running argument every time we had dinner or a brew together. Basically, he said all these claims were manufactured, fictitious, ridiculous, and they were ruining the American economy.
    We had that argument for 10 years, until the night his son got hit by actually a driver who had pulled out of a stop sign and caused grievous injury to his son; and his attitude changed very, very quickly. And my son is a home builder, so you know where I am coming from. I will tell you, if you get this mold growing in your house, your view of tort reform changes very rapidly, because I know this is a problem for a lot of people.
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    Thank you, Madam Chairman.
    Chairwoman KELLY. We are joined by our colleague, Mr. Conyers. Mr. Conyers has a singular interest in this and, in fact, is the author of a bill, so we have asked him to join us today for this hearing, so he will be sitting in on this hearing.
    If there are no more opening statements, we will begin with the witnesses on our panel.
    Before us today we have Dr. Stephen Redd of the Centers for Disease Control and Prevention, a division of the U.S. Department of Health and Human Services. Dr. Redd, who is the Chief of the Air Pollution and Respiratory Health Branch of the National Center for Environmental Health at the Centers for Disease Control, is the institution's lead scientist on air pollution and respiratory health.
    Following Dr. Redd will be Mr. Gerald Howard, Executive Vice President and Chief Executive Officer of the National Association of Homebuilders.
    He will be followed by Thomas Tighe. Did I pronounce that right? Tighe, like the necktie, for all of us to remember. He is Executive Assistant to the General President and Director of Stationary Affairs at the International Union of Operating Engineers, both of whom will provide us with information on mold infestation in buildings.
    Then we will hear from Ms. Melinda Ballard, the President of Policyholders of America, who will discuss mold from the perspective of those whose homes have been affected.
    Following that, we will hear Mr. Gordon Stewart, President of the Insurance Information Institute, who will discuss the effects of mold claims on the insurance industry.
    Finally, we will hear from Dr. Howard Sandler, President of Sandler Occupational Medicine Associates, who will join Dr. Redd in discussing mold and health.
    I thank you all for coming. We are very pleased to have you join us here today to share your thoughts on this difficult issue.
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    Without objection, your written statements will be made a part of the record.
    If you have not been with us before, there are lights in front of you in that black box at the end of the table. You will be recognized for a 5-minute summary of your testimony. Your entire written testimony will be made a part of the record. But the lights will indicate, just the way they do on a stoplight on a street, green means go; when you get to the yellow, it means you have 1 minute left; and when it goes red, it means it is time to finish speaking. That means your time has expired.

    Chairwoman KELLY. So, let us begin with you, Dr. Redd. Thank you so much for joining us today.


    Dr. REDD. Thank you very much. I am Dr. Stephen Redd, the lead CDC scientist on air pollution and respiratory health at the Centers for Disease Control and Prevention.
    Accompanying me today is Dr. Thomas Sinks, Associate Director for Science of environmental issues at CDC.
    It is a pleasure to appear before you today on behalf of the CDC, an agency that serves by protecting the health and safety of the American people. I want to thank you for taking the time to examine the importance of mold exposure and its affects on people's health.
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    Today I will briefly summarize three issues for the committee: CDC's perspective on the state of the science relating to mold and health effects in people; CDC's efforts to evaluate health effects possibly associated with molds; and CDC's next steps in addressing this issue.
    Fungi are a kingdom of organisms that include mushrooms, molds and yeasts. There are between 50,000 and 250,000 species of fungi. More than 1,000 species of mold have been found in U.S. homes. Molds need moisture to grow and grow best in warm, damp conditions.
    Fungi and molds are known to cause several specific diseases. Fungi can cause infections. Ingestion of mold-produced toxins can cause liver and kidney tumors, and molds cause a rare, chronic lung disease called hypersensitivity pneumonitis in workers in industrial and agricultural settings.
    In addition, molds have been associated with allergies. Airborne mold allergens have been associated with hay fever, allergic conjunctivitis and allergic asthma. The Institute of Medicine recently concluded that there was evidence of an association between exposure to mold and exacerbations of asthma but insufficient information on whether mold exposure caused the onset of asthma.
    We do not know whether molds cause other adverse health effects, such as hemorrhage from the lungs, memory loss or lethargy. We do not if the occurrence of mold-related illness is increasing. Other than surveillance for hospital-acquired infections, there is no system to track the public's exposure to and the possible health effects of mold.
    CDC has undertaken a number of activities related to mold and its possible effects on people's health. CDC conducted two epidemiologic investigations of clusters of hemorrhage from the lungs of infants. In one investigation a possible association was reported between exposure to the mold Stachybotrys atra and disease. This association was not found in a second investigation.
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    In a review of that first investigation, CDC reviewers and an external panel of experts determined that there was insufficient evidence of an association between exposure to Stachybotrys atra or other fungi and hemorrhage from the lungs. CDC has plans to further evaluate this health condition, including tracking activities, investigations of disease clusters, and research studies.
    In recent years, we have conducted investigations in occupational settings, in schools, and in residences following flooding episodes. In addition to working with State health departments in North Dakota, Texas, and Connecticut, we have collaborated with the Federal Emergency Management Agency, the U.S. EPA, and the Department of Housing and Urban Development. My written testimony contains more details on these activities.
    CDC is also funding the Institute of Medicine to evaluate the relationship between damp or moldy indoor spaces and adverse health effects. In addition to conducting a comprehensive review of the scientific literature, the Institute of Medicine will provide recommendations for public health intervention and for future research. This work began in January 2002 and will be completed in the summer or early fall of 2003.
    In addition to these efforts, CDC is currently developing an agenda for research, service, and education related to molds. This effort will enable CDC to make recommendations for reducing mold contamination, identify conditions that contribute to the occurrence of disease following mold exposure, and assist State and local health departments in improving their capacity to investigate mold exposures.
    This is challenging work. Molds can be found almost anywhere, and individuals have different sensitivities to molds. It is not possible to specify a safe or a dangerous level for mold at this time.
    Because mold exposure can be harmful, CDC concurs with the recommendations of agencies such as EPA and FEMA that mold in indoor environments should be removed.
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    Thank you for the opportunity to testify. I would be happy to answer any questions that you may have.
    Chairwoman KELLY. Thank you very much, Dr. Redd.

    [The prepared statement of Dr. Stephen C. Redd can be found on page XX in the appendix.]

    Chairwoman KELLY. Mr. Howard.


    Mr. HOWARD. Thank you, Madam Chairwoman, Mr. Frank, Mr. Gutierrez. Thank you for holding this hearing.
    My name is Jerry Howard, and I am the Chief Executive Officer of the National Association of Home Builders. NAHB represents more than 205,000 member firms involved in home building, remodeling, multifamily housing and other aspects of residential and light commercial construction. In fact, it is not an exaggeration to say that our members produce 80 to 85 percent of all the housing units built in the United States.
    Our membership is united in its concern over the impact of this mold issue. Specifically, first and foremost, like all citizens, we are concerned about the health of our fellow Americans. NAHB, upon learning of the mold issue, immediately went to the forefront and began to study the impacts of mold and what we might be able to do about it.
    As a result of that study, with what we have done is, A, we began to educate our members about what they can do to decrease the amount of mold and housing in the construction process; and, B, to inform homeowners and home buyers about what steps they can do to remediate mold.
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    Specifically, we will be presenting a pamphlet, a bilingual pamphlet, on our web site and in hard copy to all of our home builder members who prefer to give it out to their customers, and we are encouraging them to do so.
    Secondly, NAHB is concerned about the potential impact of mold on the housing industry as a whole. As you are all aware, the housing industry has been the bellwether and the buoy of our economy over the last several years. In fact, depending on what numbers you choose to believe, NAHB's members in the housing industry produce 14 percent of the Nation's gross domestic product.
    Over the past year, low interest rates and strong underlying demand for housing has kept housing strong while the rest of the economy has struggled. Of the almost 1.6 million new housing units, again I say, NAHB members produced 80 to 85 percent of them.
    Unfortunately, the recent attention to indoor mold has the potential to negatively impact the housing industry and housing affordability. Specifically, I would point to increases in general liability insurance that our members are suffering. As an example, last year the general liability insurance on a 63-unit entry-level housing development in California, and by ''entry-level'' I mean a purchase price of $125,000 per home, the general liability insurance on that project was $93,000, and it included mold insurance coverage. This year, that same project is insured for $216,000; and mold is excluded from the coverage. Unfortunately, Madam Chairwoman and members of the committee, that cost will ultimately be passed on to the American consumer.
    We agree with Dr. Redd and others who are going to testify that this is a serious issue. However, our primary concern is that we not rush to judgment. To the best that we can tell now, mold, while it is harmful, is not linked directly to any serious illnesses, and specifically mold in well-constructed, well-maintained houses has not been an issue for most Americans and their health.
    A survey that NAHB handed out in 2002 showed that most of our members are facing similar insurance cost increases as those described in my earlier example in California. Our builders have seen these insurance companies begin with these mold exclusions, and 150 percent increases is not out of the ordinary.
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    Another potential adverse impact on the building industry are the calls for these new regulations and new building code requirements. NAHB has always sought to limit the economic impact of regulations on the cost of housing, and we will continue to do so. However, if it can be proven that there is a significant link between serious health risks and mold, NAHB would like to be part of the solution, and we look forward to working with the Members of Congress to implement appropriate regulations.
    Once again, we would suggest, however, that regulations generally do not fit the bill across the board for all types of construction and in all parts of the country. What may remediate mold effectively in California may not work in Vermont. What may work in South Carolina might not work in Idaho. So we would like to have the opportunity, if there is proven a nexus, to work with Members of Congress to develop the appropriate techniques to remediate mold, while at the same time taking care to preserve affordable housing and housing affordability.
    Again, let me reiterate that NAHB takes the health issue very seriously, that our members have been in the forefront of informing and studying, and we are prepared to work with Congress on this issue.
    Thank you, Madam Chairwoman.
    Chairwoman KELLY. Thank you very much.

    [The prepared statement of Mr. Gerald M. Howard can be found on page XX in the appendix.]

    Chairwoman KELLY. Mr. Tighe.

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    Mr. TIGHE. Chairwoman Kelley, committee members, on behalf of General President Frank Hanley, I would like to thank you for the opportunity to offer comments to your subcommittees.
    My name is Thomas C. Tighe, and I am an Executive Assistant to General President Frank Hanley of the International Union of Operating Engineers. I have been a stationary engineer and associated with the building industry for 34 years.
    The International Union of Operating Engineers is a progressive trade union with over 400,000 members. Of that number, 120,000 are stationary engineers employed in the field of facility operations and maintenance, providing a safe and efficient environment for the American public.
    Stationary engineers perform work in a multitude of facilities throughout the United States. Our organization has developed a sophisticated and comprehensive network of training centers. We have the capacity to provide craft and regulatory compliance training programs. The IUOE is uniquely qualified to offer comments on indoor air quality issues at commercial facilities. Our organization has been a national leader in providing indoor air quality training.
    Mold is a growing concern, and the confusion over the issue continues to expand. Our organization is interested in the development of future policy on this matter.
    Mold presents a potential workplace hazard for workers and facility occupants. Your deliberations at these public hearings are important to the American public.
    The IUOE has three specific concerns and would like to briefly comment on each.
    The first concern is education on overall mold issues. The general public and industry-wide personnel need to be educated about the facts related to mold.
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    Mold and IAQ-related issues are part of the new reality for the general public. Currently, media reports of litigation settlements are at the forefront of educating the public on the health hazards of mold. Without a consensus from the scientific community on the health effects of mold, speculation will drive this issue. There needs to be a comprehensive educational program with a clear understanding of the facts about mold and its potential health effects in our homes and workplace.
    The second concern is the lack of Federal mold standards. Due to the lack of Federal standards on prevention, investigation, testing and remediation of mold, the industry continues to be in a state of confusion. The lack of standards has multiple ramifications within a variety of industries.
    In commercial facilities, the manner in which mold complaints are handled are varied and lack uniformity. This could create a variety of inconsistent procedures that can lead to questionable practices.
    The Environmental Protection Agency should be commended on their work in producing guidelines on mold remediation in school and commercial buildings. The guidelines provide a general approach to a variety of issues when dealing with mold. The IUOE believes this is a good first step in addressing this issue.
    The problem remains, however, that until guidelines are transformed into standards, the industry-wide practice will remain non-uniform and, therefore, potentially unsafe.
    The third and last concern is that specific training on mold standards needs to be developed and delivered to a variety of industry personnel.
    With the establishment of Federal standards, training programs could be established to ensure a consistent and safe approach to mold issues. Standards would create specific procedures for the prevention, investigation, testing and remediation of mold. The development of comprehensive training for workers is imperative.
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    I have been involved in many aspects of curriculum development and training implementation over the last 10 years and can attest to the benefits of providing workers with detailed training on performance-based objectives. This approach, in our judgment, provides a cost-effective, results-oriented way of addressing complex problems such as mold prevention and remediation.
    The IUOE has experience in developing and delivering skill-based training programs and would be willing to explore the possibilities of assisting in any future projects or programs recommended by these subcommittees.
    I would like to thank the committee for their time and effort in this matter.
    Chairwoman KELLY. Thank you very much, Mr. Tighe.

    [The prepared statement of Mr. Thomas C. Tighe can be found on page XX in the appendix.]

    Chairwoman KELLY. Ms. Ballard.


    Ms. BALLARD. My name is Melinda Ballard, and I run an association of homeowners called Policyholders of America, or POA. Since we founded POA only 6 months ago, we have 18,763 American families in our membership, all victims of toxic mold. That number should demonstrate what a crisis the American homeowner is in as it relates to toxic mold infestations of their homes.
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    Our members range from welfare families to some of the most affluent in America. We are all active in politics not because we necessarily know anything about politics but we know that you all can and will make a difference for us. We also know that our problems are not your problems, and we don't want you or any other American family to suffer the financial turmoil and devastating health effects our families have suffered. This is why we are so passionate about this issue.
    I would like for everyone here to put themselves in the shoes of a young family who bought their first home after years of squirreling away enough money for a down payment. Imagine that a storm ravages your roof and driving rain enters your home. Imagine calling your insurance company to report this claim and being told it is not covered, even though the policy says it is. Imagine watching blood come out of your youngest child's ears and nose while she gasps for every breath and not having a clue as to why this is happening.
    Then imagine discovering that the roof leak that happened several months before, wrongly denied by your carrier, caused mycotoxin-producing molds to overtake several rooms of your house, including an entire wall in your child's bedroom.
    Now imagine that you and your entire family must abandon your home and all of your possessions because they are all contaminated; and continued exposure to these mycotoxins, now airborne, could cause your 5-year-old daughter irreparable harm. You get remediation bids and find that the cost of fixing your home is greater than the value of your home.
    Apart from losing your home and everything you own, your family also faces tremendous health care costs and will be burdened with the costs associated with renting temporary housing while you battle it out with your insurance carrier over the coverage that you, in fact, bought.
    You try to hire an attorney—and a lot of you all like to blame attorneys, and I don't much like attorneys, but I can't blame them for this. You try to hire one. They won't take it. They say that the damage to your life is only $200,000, and it is going to cost more than that to take the insurance company to trial. You can't afford to pay the out-of-pocket litigation cost, so you really have no recourse against your Goliath insurance company.
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    If you are that family, you have only a few choices: You can walk away from your mortgage and let the house go back to the lender; you can pay the tab for remediation by taking out a second mortgage, but, unfortunately, that would mean that the total loan is greater than what the bank will let you borrow; you can sell your home to some poor unsuspecting family and not disclose the problems; or, you can stay there, continue to expose your family to the health hazards, and rack up medical bills to the point you claim bankruptcy.
    These are currently the choices of every family in our membership. The economy suffers, builders and mortgage companies suffer, the family who knowingly buys the problem because of nondisclosure suffers, the medical profession suffers. There are no winners. There are just losers.
    I have asked the staff here to provide you with a handout which is done State by State and by year of the mold claims as of February 5, 2002. These numbers should have been updated, but I was too busy to do that.
    But as of February 5, 2002, there were over 16,000 first-party insurance cases. These are not legal cases, I want that to be understood. These are homeowners that have actually had to hire either an attorney or take their matter up with their State insurance department and get them to help resolve their claims.
    Chairwoman KELLY. Ms. Ballard, I want to remind you, you have 1 minute.
    Ms. BALLARD. Thank you.
    POA has outlined a few recommendations that we would like for you to consider. Hopefully, these recommendations will help you carve a solution.
    We would very much be in favor of a self-funded government pool that mimics the flood insurance program. A couple of years from today there will be no insurance policy that covers mold, and homeowners need to have somewhere to go. That is a fact of life.
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    We are not trying to bankrupt the insurance industry. We want them healthy and happy so that they can honor their policies in the future. But what we do need is a safety net to protect American families. The pool should not be considered an insurance bailout, it should be considered an American public bailout, and, by the way, a self-funded one.
    Because of the time restrictions, I will just submit the rest of my testimony as part of the written record.
    Chairwoman KELLY. Thank you. We have it, and it is already submitted as part of the written record. You will get another crack at this when questions come around.

    [The prepared statement of Ms. Melinda Ballard can be found on page XX in the appendix.]

    Chairwoman KELLY. We turn now to Mr. Stewart.


    Mr. STEWART. Thank you, Madam Chairman and members.
    The year 2001 was the worst in the history of the property casualty industry, but I am not here to ask for sympathy. That is the background. We estimate that in the homeowners sector the loss was about $8.9 billion.
    Mold is a major factor in these increased costs. Conditions have reached crisis proportions in Texas; and mold has become a serious problem in several other States, including California, Florida, Arizona and Nevada. Commercial and residential mold claims are now common in most other States as well, and we heard from some members about specific things going on in their districts.
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    We have submitted a large number of slides and bars and pies that will give you a background of mold's impact economically on insurance.
    A couple of quick numbers. Mold claims in Texas rose 1,306 percent between the first quarter of 2000 and the fourth quarter of 2002. The frequency of these claims per 1,000 policyholders rose 1,286 percent during the same period.
    Mold claims in Texas, the cost of these claims, rose 560 percent between 2000 and 2001. Now, up until the last few years, insurance adjusters routinely handled these in the context of sudden and accidental water damage, which is the only circumstance, as you know, under which mold is covered in the standard contract. Mold damage has been specifically excluded, unless it is a result of a covered peril, such as a burst pipe, et cetera. The simple presence of mold, the fact it is around, like termites or damage from vermin, is considered a home maintenance issue, not an insurance-covered issue. This has been true for a very, very long time.
    In homeowner's insurance today, the fear of litigation has led to great uncertainty about this long-standing coverage exclusion, and insurers are doing many things, as you probably know, to strengthen it, because it has always been there and now it is under some attack.
    Some reasons for this may be that, under the normal property insurance premise, property insurance makes people whole. It doesn't offer very much opportunity for significant recovery. If you can move into liability, if you can move into wrongful practices of some kind, if you can move into health, then that changes the economic possibility for litigation enormously.
    The result of this uncertainty is that costs are going up. Three years ago, the few claims that insurers did see were handled for a few thousand dollars. An average mold claim today costs about $35,000 and can easily exceed $100,000. That is just to look into the claim and deal with it. If you put that through the system, you can see what will happen to the cost and, therefore, what will be passed on to all of the other policyholders who don't have claims.
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    The average cost per policyholder went from about $23—this is in Texas—in the first quarter of 2000 to about $444. That is what everybody else pays now if we look at every mold claim as a ''white suit'' problem. That resulted in additional insurance costs in Texas of about $850 million.
    Now, the surge and frequency and costs of these mold claims in Texas cannot be explained by changes in the weather, they cannot be explained by population growth, they can't be explained because somehow all the houses are now different. There has not been, as far as anybody knows, a new strain of mold, wildly toxic. There is not a new plague abroad in the land.
    So, as a member earlier said, what is the variable here? Well, we are not entirely sure, but one variable we do know is the frequency and extent of litigation that has emerged and the number of people who have flocked to the mitigation, analysis, testing industry, some of whom were doing air conditioning before, and we do know that these things are new.
    Now, are there possible risks in mold that are serious? Yes, there could well be. As some doctors will tell you, certain individuals may be susceptible to certain health consequences. But by no means are all Americans at risk from the mold that has always been there. They can't be more at risk now than they were in 1999. What could possibly have happened here? That is one of the things we are looking at.
    Today we are faced with a lot more claims without effective Federal or State standards of what is an acceptable exposure level, are the real health consequences. Nobody knows. We have greatly increased costs for the average claim, driven in large part by remediators who are just saying, this is what it will cost. We have few ways of evaluating that, unlike lots of other home costs we are used to. We have more court cases and accusations of severe and permanent health damage; and there is no peer reviewed, scientific research about health effects.
    Health claims are coming under property policies that were never intended to cover health claims, as you know. And now, fearing bad-faith lawsuits, which is an area where you can really build up the legal costs, insurers are tending to throw money at mold claims because they don't want to be accused of not doing everything they could be doing and having a very expensive lawsuit.
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    The net of it is we have got these exploding costs, and the only thing to do is either cut back on coverage and pass on costs to policyholders. These things are going on in State after State, so we have a kind of insurance crisis developing as a result of the shock of this relatively recent occurrence.
    We are deeply concerned, and I say this not idly, about health consequences. If you think about property casualty insurance, you think of all the things we don't want you to do. We don't want you to drive drunk, we don't want you to smoke, we don't want you to do dangerous behaviors. We want you to live in a very sanitized, boring way. We are deeply, as you know, involved in air bags, seat belts, occupational safety, arson, fire, anything and everything to keep claim costs down. This is a mantra of insurers. That is one of the reasons we are considered to be boring to live around. We don't want bad things to happen to you.
    If there is a serious mold health problem, we would like to be able to deal with this, but we don't see that something is radically different biologically in 2001 than it was in the year 2000.
    Chairwoman KELLY. Mr. Stewart, you are over your time. Could you sum that up for us, please? We have your written statement as part of the record.
    Mr. STEWART. I would like to just tell you one story, since we heard an anecdote, and this happens to be my personal anecdote.
    We have an apartment. There was a water leak, a serious water leak. The ceiling came down. We came back, found it on the floor. Water damage. Lo and behold, we have mold.
    I have a 3-year-old daughter. We just heard about a hypothetical 5-year-old, or an anonymous 5-year-old. I have a 3-year-old who I love to the ends of this Earth.
    What I did, in addition to calling people to do something about the leak, was I got my old clothes, I got Clorox, I got up on a ladder, I put on a mask, and day after day, until something could be done, I cleaned up the mold. She is okay.
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    Chairwoman KELLY. Mr. Stewart, I am going to have to cut you off because you are really way over time, and I have not given anybody else this courtesy.
    Mr. STEWART. Fine. I wanted to end with my personal story.
    Chairwoman KELLY. Thank you very much.

    [The prepared statement of Mr. Gordon Stewart can be found on page XX in the appendix.]

    Mr. STEWART. We move now to Dr. Sandler.


    Mr. SANDLER. Good afternoon, Madam Chairwoman and members. My name is Howard Sandler. I am a physician specializing in occupational medicine and environmental health.
    I grew up in the D.C. area. My father was with the Department of Defense, and for the last 15 years I have lived in the great State of New York.
    I have served as a medical officer with NIOSH, I have been a consultant to OSHA, EPA, the Consumer Product Safety Commission, as well as local government agencies and private industry. I have investigated numerous indoor air quality problems throughout the country in a wide variety of buildings, homes and schools.
    Specifically, I am dealing with some of the buildings around the World Trade Center site, including some of those who have water damage and mold proliferation, as well as schools on Long Island and schools in the State of Illinois. Increasingly, these concerns have been around microbiologics, meaning bacteria, viruses, endotoxins produced by bacteria, the dampness associated with it, as well as dust mites and molds. I recently provided testimony before a New York State Senate hearing on proposed legislation on Long Island.
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    Molds are everywhere. There are molds in this room right where we are right now, and there is probably enough in this room that they would not meet the new New York City Department of Health ''guidelines.'' those guidelines, by the way, were produced not based on risk assessment on health, they were just pulled together as a consensus statement by a variety of different practitioners and specialists.
    The 100,000 species you heard from Dr. Redd certainly means we have a lot of molds. About 350 species produce mycotoxins. The diseases, as you heard about, that can be produced by molds are mycotoxicosis. In World War II the Soviet Union lost a lot of people and horses to ingestion of moldy grain and fodder. People died from this. If you have ever seen a case of mycotoxicosis, when it is real and based on ingestion, it looks like clinical radiation poisoning.
    But there are other disorders you heard about, such as allergies and hypersensitivity pneumonitis. I have allergies. My kids have allergies. We used to get allergy shots all the time. I understand, Madam Chairman, that you have asthma. Twenty to 30 percent of Americans have allergies, allergic rhinitis; and the most popular allergins, if you will, are dust, dust mites, pollens and molds.
    But, invariably, of all the schools and the different buildings that I have looked at, I rarely find somebody is allergic to the precise molds in those buildings. If you do skin testing on these people, you don't find a correlation, which is very curious.
    However, some people do walk into buildings, and there are studies that show, for example, that people who have allergies and asthma do worse in damp buildings. They try to correlate it with mold because we do know that mold will grow where there is moisture. But the studies don't show that. There are some equivocal studies showing yes, some showing no, which is typical in science, unfortunately.
    The present science, however, is limited; and the quality of the studies right now that have been done, for example, in the various buildings in New York, are not of the quality to give you dose response evaluation, nor specific mold type association with specific disorders.
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    The reality of the claimed health effects now on mycotoxins and what has been called MVOCs, microbial volatile organic compounds, organic compounds which give you your mildew smell in your bathroom or basement, such as my basement on Long Island, in fact we don't know if those are related to health effects because they are in the air. The doses that you see in ingestion are much greater than you see on airborne exposures; and while there are certainly people who have theories about this, it is far from being understood.
    I think the key issue on legislation from a health and safety standpoint are the following: Number one, let's use the right definitions. Toxic mold is brand new. It is not scientific. It is based on media, legal and other issues. Certainly molds do produce toxins, but you just don't refer to things as toxic mold.
    I urge you to be very careful. Just don't say ''harmful.'' harmful means nothing. Is it simply an aggravation of allergies or causing of allergies? So I think we have to be very careful how we do this.
    I think we also have to look at and be very careful with triggers like permissible exposure limits that OSHA sets or recommended, that NIOSH recommends. There is just no science there right now to do this.
    As far remediation, to what level? I don't know. Nobody knows, and that is the problem. While certainly, if you see a huge amount on the wall, you say, let's get rid of it, does that being on the wall produce enough in the air to cause a health problem? My studies of buildings all over the country just don't show it. However, I do see people who have illness.
    The bottom line is I urge the committee to address with adequate funding and oversight appropriate scientific research, assessment and recommendations. Let the legislation follow the development of sound science in this area.
    Thank you.

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    [The prepared statement of Dr. Howard Sandler can be found on page XX in the appendix.]

    Chairwoman KELLY. Thank you very much, Dr. Sandler. I very much appreciate your comments. I will remind all of our panelists that we do have your written testimony, it is a part of our record and we will take it into consideration. I would like to give myself 5 minutes for questioning at this point. Dr. Redd, the first thing I would like to ask you, if you would, in your testimony you listed a Web site that was available to everyone who might have questions about the mold situation.
    I am wondering if you would say that now so we could put it in as a part of the record and for anyone who might be in the audience who might be interested in that Web site, they would have the opportunity to copy that down. I believe that you will find that on page 2 of your testimony, at least that is where I found it.
    Dr. REDD. The Web site on page 2 is NTP-server.niehs.nih.gov.
    Chairwoman KELLY. Back slash. Would you say that again, please. Sorry, I want you to say it.
    Dr. REDD. It is ntp, dash, S-E-R-V-E-R, dot, n-i-e-h-s dot NIH dot G-O-V.
    Chairwoman KELLY. And then you have to use the slash, the back slash.
    Dr. REDD. That is right. I think you have to start with http period, or, sorry, colon double slash.
    Chairwoman KELLY. But that is usually on everybody's computer. It is the rest of it. And I believe someone may want to correct me, it is—I think that slash is important in order to get to the route. Is that correct?
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    Dr. REDD. I think it will—.
    Chairwoman KELLY. Dot G O V.
    Dr. REDD. I think just the G O V will get you there I think.
    Chairwoman KELLY. Just G O V will get us there. Thank you very much.
    I wanted to make sure, Dr. Sandler, you said toxic mold is a term that is scientifically inaccurate. That is very interesting, because I read the word toxic mold often in the press. When they describe mold, it is described as toxic. While all mold is not, those of us that like gorganzola and blue cheese are aware it is not toxic. Maybe it is. I would be very interested if you could define that, toxic mold.
    Dr. SANDLER. There are certain molds that produce microtoxins, about 350 species, just like any other chemical. If you are exposed in the appropriate manner either through inhalation or more probably ingestion, these type of microtoxins have been shown to cause problems. The mere fact that you just go from mold to ''toxic mold'' to me is more of a media event than a scientific event. All chemicals are toxic at the right dose. That is all it means.
    So I think you have to be very careful, though, to let the research determine what are the roots of entry whether it is inhalation, ingestion, and I don't think it would be skin absorption, as well as the levels at which each one of those produce the problem. Clearly, like I said before, the Soviet Union experienced that bad—we lost I think 100 turkeys in this country. Not human turkeys, the fowl type.
    If you look it up in the literature, you will find there are plenty of mold-related cases and usually from ingestion of moldy food products. By the way, though, if you look at, as I think people already mentioned, there are a variety of different food substances. There are levels of microtoxins that are available. And the FDA has allowed a certain level of aflatoxin, which is a potentially carcinogen in wheat and other wheat products. So I don't think we can ever get rid of mold nor should we look at that. I think we should try to find out what is a level that won't produce harm.
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    Chairwoman KELLY. Thank you. Dr. Redd, when the CDC finishes its literature review on mold, what are the potential next steps, and how likely is it that we are going to be able to separate the valid consumer risk from bad science? Dr. Sandler has brought this up. How are we, the public, going to understand this?
    Dr. REDD. The recommendations of the committee, the Institute of Medicine Committee, I think, is charged with doing exactly your last point. Separating the wheat from the chaff, the things that we know to be true from the things that we don't know to be true or not true. We are very much looking forward to the recommendations of that report, both from the public health intervention side as well as for guidance in the types of research that the committee recommends.
    Chairwoman KELLY. Mr. Tighe, one last question, what is your union doing to educate your members at large and the consumers about controlling indoor mold growth?
    Mr. TIGHE. We have trained stationary engineers that have the maintenance responsibility for about 2 billion square feet of commercial space to date. Unfortunately, when our course was written in 1995, mold was not a great issue in indoor air quality. Since then, it has been a growing issue. And we provide research, public research to our local union training programs and try to give them documents, as I referenced, the EPA remediation guide for schools and commercial facilities and try to establish best practices.
    Because the one thing that we have certainly heard today is that there continues to be the uncertainty as to the health effects of mold. But the one thing that is not uncertain is that there are very precise ways that you should deal with mold in order to not spread the mold. And just one example, if I may, Chairwoman, in most heating ventilation and air conditioning systems in the United States, they take the return air and rather than duct that air back to the system, they use the space that is above the ceiling. So there may be a 3-foot space above that ceiling, that return air is taken in and across that space and back into the system. Now, if you have leaks and you have moisture and you have mold, and somebody gets into that ceiling and disturbed that, that is picked up by the HVAC unit, put through the system, and dispersed into the occupant area.
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    Well, we try to stress to stationary engineers and maintenance people that have some effect on this is to use good preventive maintenance activities and standards to try not to spread the molds to various areas.
    Chairwoman KELLY. Thank you very much, Mr. Tighe. I am out of time and I turn now to Mr. Gutierrez.
    Mr. GUTIERREZ. Thank you very much. I guess what we have heard today, it is a very interesting panel, a very diverse panel, is kind of there is something dangerous out there, we don't know what it is, so let's not fret too much about it; it is there, but we can figure it out in some time. Lawsuits is what is causing everything, it is not the mold. It is really mold, but if it weren't for the all the lawsuits, the mold would go away, and these kinds of situations.
    But I think there is kind of little middle ground here, and that is that something is wrong. There is a problem. Some may want to diminish the problem, some may want to blame the problem on lawyers, but the fact is that we have somebody that is here that represents 18,000 people that got together that doesn't seem like they all have a lawyer. They all went to court and they are all suffering some damage.
    And you know, I know that many times we like to look at situations and I was talking to my friend, Congressman Conyers, and we were talking about when AIDS first came and everybody said well, you know, that is just consenting homosexuals, that is really not a problem that the public has to deal with. And we deal with a lot of different things. You know, if people would only drive slower but then we decided seat belts was a good thing and side safety—I mean all kinds of safety things, and we passed laws and we save lives by doing that.
    We took on the—you know, if people didn't smoke, well, they wouldn't get lung cancer, but we put it on packages. I can even remember learning about good old Smokey the Bear and not ever starting a fire. We certainly know how important that message is given the tragedies that are happening in the west in our country.
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    So it seems to me that there is a problem. I know that Mr. Howard from the home builders says yeah, there is a problem, get some standards. Let's figure it out so we can all use the same standards. It seems like Mr. Tighe also says let's figure this out. So I say let's figure it out because I think there is a problem out there that homeowners are having.
    I just have a problem with always blaming the victim, always saying well yeah people have a problem, but, you know, they are creating the problem so they can go to a lawyer and create a whole new industry. I don't know that people do that by and large. I find that the American public is honest, hard working, God fearing and is doing the right thing. And they are trying to keep their most valued asset, their home. So I guess, Dr. Redd, it is on you, when do you think we can have some answers that are, you know, scientific, objective, that we could look at so that we can create the kind of standards and legislation to help all of the home owners that Mrs. Ballard represents and that are suffering?
    Dr. REDD. I agree with your statement that we need some answers. As far as an exact timetable to have all of this figured out, I really can't give you that. What I can say is that in about a year, give or take a few months, we will have a report from the Institute of Medicine which will, more or less, provide with us a blueprint for things that we really ought to be doing now, and things that we ought to be studying. So I think that is going to be a real milestone in terms of getting the answers that we really need.
    Mr. GUTIERREZ. Do you have all of the staff and adequate funding that would you need to get an answer?
    Dr. REDD. I think that in terms of activity between now and the time that report is released, we do have resources to investigate clusters of illness as we find out about them. I think from the point of the—when that report comes out, it is going to depend on a lot of on what sort of recommendations there are. It is really impossible to say what might be in the report and whether, or whether we wouldn't have resources at that point.
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    Mr. GUTIERREZ. Given today and the kinds of things that we have learned today and the kinds of information that we have, I think it would be safe to say that there are molds, molds do cause problems, they are some relationship with molds and illnesses, but we are not quite sure what the relationship is between those illnesses and molds. But mold, I don't think it is an issue we should ignore.
    Dr. REDD. I absolutely agree with that.
    Mr. GUTIERREZ. Thank you. We will see if we can work with you to get that report as quickly as possible to get some solutions. Thanks.
    Mr. MILLER. [presiding.] Thank you. I award myself five minutes. I was reading the book Leviticus that said God put a spreading mold in the House of Aaron and Moses. I don't disagree with what my colleague said at all. We know there is mold, the only difference is we don't know what the problem is. I listened to every witness out here, and everyone acknowledges yes, there is mold, but is there necessarily a harmful affect on individuals from that mold. Is it a causal effect of the mold that happens to be there and an individual who might be sick.
    Just because there is mold does not mean an individual is sick from that mold. Yet the mold might be causing some damage. We don't really know. I have tried to research this as hard as I could and I have read everything I can get. I have talked to environmental scientists and I have talked about the parts per billion in a silo and this and that. We could argue mulch and all these things, but the problem is we don't know what the problem is.
    And I think, Mr. Gonzales, you said earlier we want to hear the facts. I can't agree with you more. I believe accountability and responsibility and when it came to the seat belt your car hits the wall, if a person flies through the window well, yeah, you know, a seat belt is going to stop you from flying through the window. But that is not what mold is. And you gave this very—Mrs. Ballard, you gave a statement and you painted this picture imagery, it was imagine the insurance company report that the claim, you know, you have, that it is being denied, and imagine watching blood come out of young child's ears and nose and the insurers denying a claim. That is terrible. Nobody would accept that. That is egregious. But was that your situation?
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    Ms. BALLARD. Yes, it was. We tried to make repairs. We had scheduled repairs in our home in January and February of 1999.
    Mr. MILLER. I wanted to ask you about that. What was your problem?
    Ms. BALLARD. We had a series of water leaks. It was several plumbing leaks.
    Mr. MILLER. It was in January?
    Ms. BALLARD. It was in December of 1998. Close to January.
    Mr. MILLER. In the testimony you had given, you had said it was in January of 1998. And then when did you notify your insurer of that?
    Ms. BALLARD. Immediately.
    Mr. MILLER. Your testimony said December of 1998 you notified your insurer of a leak and made a claim. You found it in January and you notified the insurer.
    Ms. BALLARD. No. No. No. I am sorry, let me clarify. The claim was made in December of 1998.
    Mr. MILLER. You notified the insurer that you had a leak in December of '98, but you found the leak in January. So almost a year went by between when you found the leak and notified them. You notified them in December and then 2 months later they gave you a check for $108,618. Is that correct?
    Ms. BALLARD. Not exactly. I think you are misquoting our—well, please, let me finish because I don't want you to misquote anything. We had 13 water leaks in our house. And our claim, what our insurance company thought was the source of the problem had been fixed 10 months before I had reported a claim. It appeared as though—not appeared, it was found out subsequent to that that there were 13 water leaks that were not discovered by the insurance company's plumbers.
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    Mr. MILLER. But what we gathered from the court text was that they were notified in December. And 2 months later they wrote you a check for 108,000. The point I am trying to make is if we are dealing—you painted this picture about negligence and the terrible insurance company. That is an egregious company to think an insurer would come out and deny a claim. But in your situation, they didn't deny your claim.
    In fact, when they paid you in February, your attorney notified them of mold April 7th of 1999. That is the first time the insurer knew about mold. April 8th the next day, they inspected your home.
    Ms. BALLARD. That is incorrect. Just so we go back and I don't want you to misspeak—.
    Mr. MILLER. I don't want to.
    Ms. BALLARD. The claim was made, they thought the cause was relating to a water leak that had been fixed 10 months before. They, in fact, were incorrect. It was there were 13 other ongoing leaks. Now, they did pay $100,000. We refused to accept the check telling them that that was insufficient.
    Mr. MILLER. But you cashed—but—one second. You cashed that check in late February, that month.
    Ms. BALLARD. We told them this was unacceptable because their own estimates were well exceeding that amount.
    Mr. MILLER. I accept that. And then in April you told them about the mold. And then you both agreed to an independent umpire. And they gave you a check for $1.2 million.
    Ms. BALLARD. Sir, that occurred about 18 months after we are talking. Mold does not stop growing because of an insurance company's delays. They—and the appraisal process was called for by the insurer, the umpire was later found out to have been—.
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    Mr. MILLER. I am running out of time. Did you ever make the repairs.
    Ms. BALLARD. Yes, we did. We repaired every water leak in the house.
    Mr. MILLER. I am going to have to reread the court document because it said they were never made.
    Ms. BALLARD. We repaired every water leak in the house.
    Mr. MILLER. I am going to close with the fact that if anybody has a claim and an insured does not cover it, there is not a person on this panel who would not want to hold the insurance company absolutely accountable and responsible for that. But what was the entire—there was—there was no award to you for health.
    Ms. BALLARD. No, sir, there was not.
    Mr. MILLER. What was the total award? 33 million?
    Ms. BALLARD. 32, and there was $6-1/2 million of actual proven property damage. Every one has focused on the health effects.
    Mr. MILLER. $6 million worth of property damage in a home that you paid $275,000 for 10 years before.
    Ms. BALLARD. And made a whole lot of additional improvements and had a lot—.
    Mr. MILLER. Must have been—thank you very much. Ms. Lee. I am sorry, Mr. Gonzales then. Mr. Inslee.
    Mr. INSLEE. I am sorry, I thought there was others who have been waiting longer than me.
    Mr. MILLER. You want me to pass you and come back.
    Mr. INSLEE. I will go ahead. I am trying to be gracious. That is a little unusual here so I was just trying. Mr. Howard, I think you heard me allude to my son builds houses on Bainbridge Island, Washington. That is just west of Seattle.
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    Mr. HOWARD. God bless him, sir.
    Mr. INSLEE. We are proud of our sons and daughters. He does great work. He really is a guy who takes a lot of pride in his work. That is one of the things I am so proud of in seeing his work. And I want to ask you about your sort of response to this issue. When an industry gets in a situation like this where you have obviously had an explosion in claims it sounds like listening to Mr. Stewart, any way, there is sort of a couple responses it can take. One it can try to educate the public about how to—maybe three kind of responses, educate the public on how to avoid problems associated with the product, that is one response.
    Second, to try to deny there is any losses associated with the product, that is the second response, and third, to try to reduce the occurrence of the problem by helping educate members of the association of your producers in how to reduce the exposure, reduce the number of incidents which do occur, I think everybody agrees, on occasion. Could you categorize how your engineers have been on those three efforts?
    Mr. HOWARD. We have been very aggressive in items 1 and 3, specifically we have, as I mentioned in my statement, prepared a Web site which would be mold tips dot com for consumer Web sites, for consumers to go on and look, and we have got a whole list of things that home owners can do to reduce the presence of mold and the presence of moisture which seems to be from our research the primary reason for mold in structures. So we have been very aggressive in trying to educate the consumers. I would point out again our efforts in that regard are bilingual.
    Secondly, we have a very well respected research laboratory here in suburban Maryland called the NHB Research Center. It is one of the preeminent laboratories for housing research in the United States. The research center has undertaken to study the building envelope as a whole to make determinations about what we can do in the construction process to minimize the possibility for mold in the home.
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    In addition to that, we study individual products to determine mold, their likelihood for providing a food source for mold, and we are also studying products that are also being touted as mold eliminators. So we are active in educating the consumer in researching products and the whole construction process so we can educate our members and in reaching out to our members once they that information and educating the public. We do not deny that there is a problem. We would like to see the problem studied.
    There is obviously a difference of opinion about the extent of the problem, what causes it. And until we know exactly what causes it, that is as far as I think we are prepared to go at this point. I would say, however, that we are prepared to assist the Congress, the CDC or anybody else in the research and we make our services available.
    Mr. INSLEE. What do you think is the most frequent reason for a problem of excess moisture that might end up in mold growth? If you are going, if you can just categorize it in the industry.
    Mr. HOWARD. I would have to, Mr. Inslee, respectfully ask to be able to answer that in writing. I am not an expert on that and I don't know the answer off the top of my head.
    Mr. INSLEE. If could you do that I appreciate that. I will get you my card.
    Mr. Stewart.
    Mr. STEWART. On the subject of public information and education, it really is the first line of activity of our organization. Because it is—anything related to any kind of insurance risk we are trying to do things with this workplace safety or anything that will help that. We have a Web site that has about 4 million hits a month. And we also do video news releases to news stations that have reached some 10, 15 million people. It is a major front line activity.
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    As I have said, my own personal example we encourage everybody else. The first line of defense is do something about it rather than wait for the problem to go. If it is hidden that is one thing. Obviously you can't. If there is negligence on the part of some party, that is something else. An overwhelming majority of cases simple behavior changes will fix the mold problem.
    Mr. INSLEE. Given your success, if I get a constituent with a mold problem, I will give him your home number.
    Mr. STEWART. We maintain a national consumer hot line.
    Mr. INSLEE. Thank you. I have one more question. Mr. Sandler, we have this case on my island where the school got a problem, $100,000 to fix the problem, sort of, I guess, everybody agreed there was a problem with excess moisture, excess mold and there were some pretty well documented health problems associated with it. And I haven't asked the people involved. But are there standards now that people do look to for some guidance as to what an acceptable level is in the ambient air? If I had a constituent who said I bought this house, I think it has got too much mold, my children are having asthma attacks, et cetera, what do I tell them as to what to decide whether there is too much or too little mold or what is the situation with standards in that regard?
    Dr. SANDLER. I think the first issue that you really have to look at is truly what is causing the problems. Remember in a school environment, for example the biggest health hazard you have are with the kids because of the viruses that they share to each other and the teachers. So that is issue. Why do people, for example, feel better during the summer? Is it because they are no longer in the school environment or is it because they are no longer being exposed to the viruses. Could it be the issues of bacteria and endotoxin? Could it be from dust mites? Could it be from a variety of different things? A lot of children or adults once they have asthma, they may have their symptoms exacerbated by odors. So sometimes it could simply be the mildew or some other odor that is present in the school. Certainly once you have a mold infestation, it is not pretty, can be structurally problematic.
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    Mr. MILLER. The gentleman's time has expired. We have to wrap this up. We have two votes on the floor. We are going to temporarily recess for about 20 minutes. But I would grant Mr. Israel 30 seconds to welcome one of the witnesses who is from his district.
    Mr. ISRAEL. Thank you, Mr. Chairman. I understand that Dr. Sandler's company is based in Melville, Long Island, my neck of the woods. I haven't had an opportunity to hear your testimony, I am sorry I was late, but I wanted the opportunity to welcome you to the Capitol and look forward to working with you.
    Mr. MILLER. The meeting is recessed for 20 minutes.

    Chairwoman KELLY. [presiding.] The hearing is going to resume now. Apparently some of the people are either stuck on the floor or had to go to other hearings. I am going to hold this hearing record open for 30 days so that the members who were not able to attend the hearing will be able to direct written questions to this panel, and you can respond within that 30-day period. Since there are no more questions, the Chair will note that there will be these additional questions. So without objection, this hearing record will remain open for 30 days for members to submit those questions and witnesses to respond.
    I want to thank all of you here today. This is a very thorny difficult problem. We need sound science and we need alternatives. We also need some insurance alternatives so that the insurance question is able to be met with some alacrity on the part of the people in the industry being able to take care of those people, like Mr. Tighe and the other people, Mr. Howard, your groups of people who are involved can get some protection. And also Ms. Ballard, we need to get you some protection too.
    So I thank you all very much for appearing here today. I am sorry that we kept you through the hearing. I had assumptions that some of the people were going to come back but apparently they aren't able to. So thank you. We appreciate it. And this hearing is adjourned.
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    [Whereupon, at 4:22 p.m., the joint subcommittee was adjourned.]