there are, there is chaos in the country under the slogan of reform. this chaos under the title of reform, then the sects will, will clash, and then the defeat of syria will take place. we thwarted this plan in 2005 through popular awareness. today it is more difficult because their techniques are better, but the popular awareness that we have seen this time around was good enough to react very quickly. but we cannot be complacent. we have to reinforce the national popular, popular awareness because that is the real protection, the shield of the syrian nation. there is a major point. we are talking about the changes that took place in the region. we talk about wave.

everybody's calling this a wave. whether it is a wave, positive or not. if this wave is carrying us, or are we carrying it? if this wave comes into syria, we have to determine whether if it comes, it's an energy. in this energy needs to be -- this energy needs to be channeled toward the good for us, not otherwise. what we announced on thursday when we talked about increasing the salaries, etc., and the political party laws, etc., and the emergency law i am not adding anything new. but you have to understand how we think. and when you do, then we are, live in harmony, and we communicate in harmony. you have to know how the government thinks. sometimes we have a problem of communication. we're not marketing the good ideas and the good intentions that we have or sometimes what we do and what we say is misinterpreted.

these reforms that we, are we opting for these reforms because there is a problem or because there is a crisis? if question is, yes, then this government is opportunistic, is an opportunist state, and this is not good. [applause] [speaking in native tongue] >> translator: mr. president, we are so proud that you are leading us toward further victory. [applause] [speaking in native tongue] >> translator: but if we said

that these reforms are taking place under pressure, popular pressure, this is weakness. i think that people who are helping pressures against their own country means that their country is going to yield to those pressures from the outside. so reforms are not built on pressure, they are built on popular needs, social needs that the state needs to respond to and fulfill. these are rights of the citizens. the needs are rights of the citizens. so it is, therefore, important that the state needs to gladly fulfill, if it can't, then it says, i'm sorry, i can't. let me correct, i wanted to correct this con cement. the pleasure that -- concept. the pressure that the leader comes under is the trust that the people put in them. the pressure is of the function

of the leader, and the pressure is the pressure of the awareness of the people that have surprised us as it did every time. this makes us think how to be grateful to this trust and the quality of this nation. [applause] [speaking in native tongue] >> translator: the marketers say our blood shed for you. -- markers say our blood will shed for you. [speaking in native tongue] >> translator: so what was announced on thursday were not decisions. decisions are not made twice. decisions are made once, and those are the decisions that we made back in 2005. why did we talk about them again last thursday? for two reasons. one is about the practice and another. the first one is not related to

the crisis, it's due to our need for reform. when we talk about this in 2005, there were no pressures. in 2004 and in the tunis summit, it was the first after the invasion of iraq. there was a total collapse and surrender to the americans, and there was, there were parties that were -- the americans were trying to impose reforms on us. and we fought very adamantly against these in the submit in tune in addition, and we brought it down. the same as the country in 2005. we suggest these reforms for our country, our democracy, democratization, and these are pressure that have to do with iraq, with resistance and can others. these were the regions behind the pressure that syria came under. when we talk about the link between the crisis and reform,

we said do you want, you want reform? okay. we're going to do it. we're going to do it really. those who want reform, all right, we're going to go towards reform. those who want something else, of course, you are going to be isolated. i think that popular awareness was good and was enough to stop it. but why we as a state, we also need to be part of this and be proactive. the fragmentation is dealt with, of course, through popular awareness. the reform, of course, is something that is a process that will take some time. the government, the state has promised reform it did not fulfill, and to understand this let me quickly go over the

reform path since the year 2000. i came to this same assembly in 2000 in my oath speech, and i talked about what was going on in the minds of the syrians, and we talked about it. but it was just with the titles and headlines, it was not clear what kind of reform that beared in 2005. then intifada took part. after that speech the pressure started, then the september 11th attacks in new york, the pressure that the arabs and muslims took place after that. the invasion of afghanistan, the invasion of iraq, then the pressure on syria to stand with the occupation, the war and what's happened in '05, the war

in lebanon in '06, the war on gaza and then four years of drought that really hurt the economy of syria. what's happened in that period was the change or a shift in priorities. we, i talked many times in interviews and maybe in foreign press, and i said that what we went through pushed us, what happened pushed us to change our priorities. we have to separate between what is objective and what is not. when i say there is a drought that is beyond my power, it's not in my happeneds -- hands, i cannot -- does not mean there are no other things i can do to help my economy. i know that generations are coming, coming around, those who were 10 in 2000 are now 20. so the priorities have changed. what matters is stability of syria, and we are living with stability.

the second priority that is as important is the livelihood of people. i meet with people all the time. 99% of what i talk about is about the livelihood of people. there are other problems, but livelihood is the most important, employment, etc. but that does not justify the lateness in other reforms; emergency law, political parties law, etc. the problem is we can postpone a statement by a political party, we can postpone it by months and years, but we cannot postpone feeding a child in the morning. [applause] [speaking in native tongue] >> translator: we can postpone some kind of suffering that the emergency law or other laws that the people suffer, but we cannot postpone the pain or providing

health care to a child. of course, you all face this, these hardships. so this is a matter of priorities. but this does not prevent us at least in 2009 and 2010 situation was better, we were able or we could have did that. but be frank, the political party law is present, is under study, and the emergency law also is there as a draft. but we have not discussed -- we cannot say they did not do their job. they did. of course, we were late in the implementing, but we led this to the evaluation. these reforms if, these reforms are not new. the reform is probably lack of maybe it's bureaucracy. we are all human beings, and we

know how we work. but i'm trying to explain the situation to understand where we are. the reform, of course, is positive, but we these to know what is the content of such reform. what we were planning, there is a new parliament after the elections. there is a new administration, there is a new government. it was planned that the government resigns. so we were saying that 2011 we will have new blood into the government, and we moved to a new step. and then we had the regional congress. and you say how did you take decisions in the tenth congress and then the 11th congress? you have still not implemented any of them. of course, that's what we are trying to do now. now, what i want to say about how to deal with this way, what

i want to say that the reform is not a seasonal thing. so if it is only a reflection of a wave that the region is going through, it is, of course, meaningless. and i told "the wall street journal" when things started happening in this egypt and i was asked about reform in syria, i said -- they asked me, are you ready to do reform? and i said, and i said, if you have not started reforms before, then you are late. [applause] [speaking in native tongue] >> translator: we -- if we didn't have this plan before, then it is late. the question is, we had this plan from before. and as you know me, i am always frank with you. many, many foreigners ask me. they want to say that the president is a reformist, and those around him are preventing him.

and i said, no, this is not true. [applause] [speaking in native tongue] >> translator: in fact, they are pushing me. in there are no obstacles. there is delay, but there are no one is against. those who are against are a minority of corrupt people. you know them by name. but there are no real obstructions or obstacles. the challenge is what kind of rewe want to achieve -- what kind of reform we want to achieve. therefore, we have to stay away from submitting reform to the present circumstances which might be just circumstantial. reform need to be planned on ten years in the past and planned on ten years in the future. this is how we think. the current situation might delay, something might accelerate, something might correct the direction.

the tiew nice experience was helpful figure us. there were many positive things. we're sending experts to learn from the experience. of it's not about distribution of wealth, but distribution between the regions. these points we have overcome in syria, and we have a more, more equal and more balanced distribution of wealth in syria between regions. if we say that we don't want reform, we say we cannot stay without reform. staying without reform is a destruction of a country, and this is what the creativity that we are going to prove as syrians. when we start talking about the new laws very shortly. the package of decisions that were announced on thursday did not start from scratch. as i said, the regional

leadership had prepared drafts of laws regarding the political party's law and emergency law more than a year ago. in addition to other laws, draft laws that will be put into the general discussion and then to the concerned institutions until they are adopted. there are other measures that were not announced on thursday, some of them are to reinforce the national unity and others are to fight the corruption and, also, for the media and increasing the employment opportunities, and they will be announced as soon as they're finished, finalized. the previous government has started, and it's going to be priority of the new government. for example, raising the salaries. we are discussing it with the economic team. i was there, we discussed a number of measures just some of them have been announced. and by the way, let me add

something about the 1500 lira salary raise that some people are asking about. the government in its last meeting yesterday really got this initiative. they received the complaints about an hour ago, i received the amendment and, of course, i have, we have to tell those to say that it was a -- their initiative, not me. i did not intervene in this. [applause] [speaking in native tongue] >> translator: the plotters have failed. our president, bashar, holds on his shoulders the glory of our history. all the arab region, we are the

protectors of the arab region. [applause] [speaking in native tongue] >> translator: in any case, i am going to ask the parties and the institutions, and i hope that when we -- i prefer to talk about the details when all is done. we are going to ask for a timeline for each one of the measures. and you as the parliament and the coming parliament will determine these timelines because the timelines are the pest thing -- best thing, best way to make sure that reforms take place. giving a timeline in this assembly, in this speech, of course, i can't do that now. of course, it's a logistical question, so i think that it is in our duty to give to this salary -- to the syrian people what is best, not what is fast.

[applause] >> translator: in any case, some on satellite tvs are going to say, this is not enough. tell them that we don't have enough to destroy our country. [applause] [speaking in native tongue] >> translator: and by the way, don't be angry to what satellite tvs are, have done or will do. they always fall in the same trap. because they lie and lie and lie until they admit, and they fall into their own lies. [applause] peek speak tongue. >> translator: -- [speaking in native tongue] >> translator: in the name of our nation, when they came out yesterday -- young and old -- to express, mr. president, their loyalty to your wisdom.

god is with you, and we are with you. our soul and with our blood we sacrifice for you. [applause] >> translator: the people want bashar assad. [cheers and applause] [applause] [speaking in native tongue] >> translator: you show me so much love when you work so hard for the syrian people. [applause]

speak speaking tongue. >> translator: the arab world is not enough for you. you should be an internet world leader. [applause] [speaking in native tongue] >> translator: dear brothers and sisters, you might hate something that is good for you, words of god. but we are humans. we cannot love what happened, we

cannot like dissent, we cannot like blood, we cannot like tension. but crises are a positive opportunity if we can control it and get out of it victorious. the secret of the success of syria is the many crises that it has faced in the past, particularly after independence which gave it more protection and more power. so we have to face the crisis with great confidence and with great commitment to succeed. fear has to become a positive feeling, not a negative one that pushes us forward. not to flee forward, not to escape forward. when we escape forward, we are, we will end up by falling. many people during crisis want to find a solution no matter how, no matter what. so some things are better without a solution than with a bad solution.

if you -- unless you know that your solution is a solution, you're better if you don't do anything. so killing or thwarting the fragmentation of those who want to participate in the division, the division is worse than murder as the koran says. those who take part in it are willing to kill their own country. so the question is not the state, but the nation, the country. the plot is big, the conspiracy is big, and we don't want battles. the syrian people are a peaceful people, but we will not blink in defending our principles and our rights. if the battle is forced on us, then welcome. [applause]

[speaking in native tongue] >> translator: god is with you, and the nation is with you, and you will take us from one success to another, and we are with you. [applause] in every battle. [speaking in native tongue] >> translator: let me remind you of the concept of domino that came after the invasion of iraq. the previous administration in the u.s. said that the arab countries are domino zones, domino pieces and that they will fall one after the other. what happened is that these projects fell like a domino effect. [applause] seek speak tongue. >> translator: -- [speaking in native tongue] >> translator: and because some have very short memories on the satellite channels, let me remind them not everything that happens are conspiracy. [applause]

because now they are ready in the studios to comment on this speech. but you, sons and daughters of this nation, your dedication to your country that you express day after day and more clearly in times of crisis and that you expressed yesterday with those mass rallies in all parts of the country give me more confidence and make me steadfast and that your work in face of the division give me hope for the future. and if you said with our soul and with our blood sacrifice for you, bashar, the right thing to say is that, bashar, sacrifice -- bashar sacrifices for his country. [applause] [speaking in native tongue]

>> translator: and i answer you, god, syria, the people. [applause] [laughter] [speaking in native tongue] >> translator: i will always remain the prodigious son of this nation, will keep walking among his people. syria is the resistant, syria is the resistance, and god bless you all. [applause]

[cheers and applause] [cheers and applause] finish [cheers and applause]

[cheers and applause] >> president obama's on the road today in landover, maryland, not too far from the white house, and he's scheduled to speak to employees at a ups facility here about his energy policy that he announced earlier this week encouraging reliance on more renewable energy sources. ups is partnering with the federal government to reduce fuel use in their fleets. earlier this week the president made a pledge to cut oil imports by one-third by the year 2025, and he's scheduled the speak in just a couple of minutes, and we'll have it here. the president might also talk about the unemployment numbers that were released by the labor department earlier today. the unemployment rate is down to 8.8%. last month 216,000 jobs were

created. we'll have live coverage when the president arrives here on c-span2. z >> and as we wait for the president to arrive, we want to let you know that we will go back to the longworth house office building on capitol hill where a ways and means committee hearing is underway since this

morning at 9:00. they're holding a hearing on the organizational structure and finances of aarp. it's expected to last until, well, it was expected to last until 10:30. they've gone over time, and they are resume with a second panel after a break that's underway. members are voting in the house on extending faa programs. you can see live coverage of the house on our companion network, c-span. [inaudible conversations] >> while members are still voting, we'll bo go back to -- go back to hear q&a during thiso hearing on the structure of aarp. >> chart detailing aarp's sources of revenues. .. aarp's consolidated financial statement, aarp's royalty revenue which comes primarily from insurance companies was $240 million in

2002, and grew to $657 million in 2009, an increase of nearly 200%. during this same period, aarp's revenue from membership dues, advertising and federal and other grants, have remained relatively flat. it is safe to say that aarp could not operate or function as it does today without the money it makes from its insurance business, which certainly raises the suspicion about where aarp's modus why. did not have the nearly one quarter of a billion dollars in royalty payments coming in, most of which are from insurance companies, what sort of changes would aarp need to make?

>> quite frankly aarp is very proud of the fact that its membership dues are keptt low. we work at keeping them low. in fact that the director from the board we want to keep membership dues low.t we don't expect to extract incremental dollars from our membership. we invest in it. so we're proud of thati particular fact.re now, royalties. royalties from health insurance companies, royalties from financial products, royalties from other products, lifestyle products, we believe that part of the solution to meet the unmet needs of the 50 plus population -- >> mr. rand, if you could answer my question. if you did not have these huge profits from the insurance company, what would you do? t what would that do to your

your -- >> it would decrease our ability to serve 100,00050 plus and 37 million members. all of our revenue, all of our revenue goes toward our mission. >> so in other words, this is very important, the revenues that you're bringing in from the profits that are made, the royalties that areng made from your insurance companies, is that not correct? >> it is very important to our members and it is very important to the 100,000, 50-plus. let me give you --.1 >> therefore you have au great in those revenues,re those royalties being highs as we have seen the hugeb increases that have taken place in a relatively short period of time? >> as you know, royalties are tax-exempt but let me tell you what we do with the money.re >> but, just answer my

question. you have a great interest in a that those royalties be high because, because they basic, your dues would be higher if they weren't?b so is that correct? >> would you like me to tell you where our interests lies? >> just yes or no, is thatr correct?e >> obviously -- >> if you would answer the question, please. >> the answer is we have an interest in meeting the unmet wants and needs of -- >> this hearing will resumet shortly here.of we're planning to return to live coverage. right now we'll leave it at this point as president obama is at a ups facility in land over, maryland to talk about a renewable energy strategy. -- landover. >> thank you. hello, everybody. thank you so much, everybody please have a seat.

i am thrilled to be here. proud to be joined here today by two of our outstanding cabinet secretaries, stephen chu and ray lahood. where are stephen chu and ray? they're over here. we're here for a simple reason. ray wasn't home when they tried to deliver a package yesterday. so we would thought we would just grab it and be on our way. [laughter] i've been working them too hard. in addition to steve and ray, we also have the attorney general of maryland, doug genzler, is here. [applause] and we've got one of the finest senators in the united states, senator from maryland, ben cardin, is in

the house [applause] we actually didn't come here for to grab the package. we're actually here to announce an exciting -- between the federal government and the -- that will help reduce our dependence on oil that will protect our -- spur economic growth. i gave a speech about this earlier this week. and i laid out a blueprint that will put america back toward a clean energy future. -- prices lately, whether filling up your tank or running a business like ups. and usually, it is times like these when everybody starts saying, we should do something about our dependence on oil. and when price go back down, we forget about it and we

move on. price --. the point i made earlier this week. we can't keep on doing that. that's not how we should conduct our energy policy in this country. we can't go from shock to rushing to propose action when gas prices go higher and hit the snooze button when they go back down. we have to have a steady, sustained, smart strategy. at a time we're addressing instability overseas we know this is a national security issue. and it's a huge economic issue. nearly two years after one of the worst recessions in our history, certainly the worst one in our lifetimes, our economy is, showing signs of real strength. today we learned that we added 230,000 private sector jobs last month.

and -- that's good news [applause] that means more packages. [applause] right? that makes 1.8 million private sector jobs created in the last 13 months and the unemployment rate has now fallen a full point in the last four months. the last time that happened was during the recovery in 1984 where we saw such a significant drop in the unemployment rate. now, despite that good news, everybody here knows we've got a lot more work to do. there are still millions of americans out there that are looking for a job that pays the bills. i know there's a lot going on in the world right now and so the news has been captured by the images of the middle east and what's

happening, the tragedy to our friends in japan. and i'm focused on those issues but you should know that keeping the economy going and making sure jobs are available is the first thing i think about when i wake up in the morning and it is the last thing i think about when i go to bed each night. i will not be satisfied until every american that wants a good job can find one and every american get as shot at the american dream. that's what we're focused on. that's what we're fighting for. [applause] so although we got good news today we have to keep the momentum going and making the transition to a clean energy economy will help us do that in two very important ways. first, it reduces the chance that our families, our businesses, our economy will be held hostage to the whims of the oil market. will be held hostage to something that happens on the other side of the world.

second, investments in clean energy have the potential to create an untold number of new jobs and new industries right here in the united states. so for all these reasons i set a new goal for america. when i was first elected to this office, america imported 11 million barrels of oil a day. 11 million barrels. a decade from now i want us to cut that by one-third. that is achievable, it is necessary, it is good for your future. and we're going to get it done. i'm confident we're going to get it done. [applause] now to meet that goal we're going to need to pursue a broad range of policies. new incentives for natural gas fleets. new research on advanced biofuels and my hope is that members of both parties, republicans and democrats,

will support these kind of proposals. this shouldn't be a partisan issue. this is an american issue. making sure that we have got energy security and energy independence. but one of the best ways to reduce our dependence on oil is by making our cars and trucks more energy efficient because transportation accounts for more than 70% of america's oil consumption. and by the way, using energy efficient cars and trucks can also make economic sense because transportation is one of the biggest costs for many businesses and certainly for many families. so energy efficient cars and trucks won't just cut our dependence on oil, it can save us money day-to-day. if we're serious about making the transitions from gas-guzzlers to hybrids, then we've got to show automakers and truck manufacturers that there's a real market for these incentives.

they're not going to build them if they don't think anybody is going to buy them. we need to show them that if they manufacture fuel-efficient cars and trucks, people will buy them. we need to put our money where our mouth is and i'm proud to say that one group that's actually leading by example on this is the federal government. right now the government's fleet includes more than 600,000 vehicles, which means that we have the largest fleet in america. and that means we've got a lot of purchasing power. so what we're doing is we're using it to boost clean energy technologies. we've already doubled the number of federal cars and trucks that are hybrids. and i'm directing our departments and our agencies to make sure 100% of the vehicles they buy are fuel-efficient or clean-energy cars and trucks by 2015. not 50%, 75%, but 100% of

our vehicles. so the government can lead by example. that creates a market. that means they're manufacturing more of it. that means the unit cost may go down which makes it cheaper for businesses and consumers. but if we're going to upgrade all of america's fleets then our businesses are going to need to step up as well and that's why i am very proud of what companies like ups, fedex, at&t, verizon, and pepsico are doing. along with secretary chu and lahood, i just have a chance to see some of these fuel-efficient cars and trucks they're adding to their fleets including hybrids and all-electric vehicles manufactured right here in the united states of america by ford and gm. [applause] right here in the u.s. of a. as owners of some of our

nation's largest private fleets, these companies are leading the way when it comes to building clean fleets and we need to make sure all our businesses are following their example. so that's why we're launching a national clean fleets partnership. if you're a business that needs to transport goods, then i'm challenging you to replace your old fleet with a clean energy fleet that's not only good for your bottom line but good for our economy, good for our country, good for our planet. and if you accept this challenge and you join our clean fleets partnership we'll make a number of tools available, from technical assistance to cutting-edge research and development that will help you make the transition to a clean energy fleet. and chu and lahood will also come and wash your car or truck. [laughter] wasn't that part of the deal? absolutely.

a little armor-all. it will look good. just to give you a sense of the kind of difference this partnership can make, every single year year millions of commercial vehicling travel america's roads and highways burning nearly 4 billion gallons of fuel along the way, 4 billion gallons. with this partnership we'll help make sure those vehicles are energy efficient so we cut the amount of pollution they pump in into air, cut the amount of gasoline they need to fill the tank, cut the amount of imports to america from abroad. this clean partnership is part of a broader effort we've been making over last couple years to promote fuel fish envehicles and build a clean energy economy. last year after going 30 years without raising fuel efficiency standards we finally put in place a national fuel efficiency standard for cars and trucks

and as a result our cars will get better gas mileage and ultimately they're expected to save 1.8 billion barrels of oil. our consumers will save money from fewer trips to the pump. our automakers will build more innovative cars and trucks. and later this year as we finalize the first-ever fuel standards for heavy-duty trucks, we'll announce the next round of fuel standards for cars that builds on what we've done. now beyond raising fuel standards for our cars and trucks, we're also working to build the next generation of vehicles. i mean, it was wonderful seeing some of these trucks and cars and that were back here and i was getting to the, input from folks about how we can advance the technologis. soon after i took office, we set a goal of having one million electric vehicles on our roads by 2015 which would make the united states the first country in the

world to reach that milestone. to help meet that goal we need a $7500 tax rebate bait that is -- rebate available directly at the leadership for those who want to buy electric vehicles and we should launch a new program to reward communities that make it as easy as possible for families and businesses to use electric vehicles. one of the things that heard repeatedly at some of the folks already driving some of these cars will tell you or these trucks will tell you and that is, making sure we've got stations, charging stations, if we're talking about electric vehicles, making sure we've got fueling stations that we're talking about natural gas, conversion, that's critical and we don't have the distribution platforms right now. that's something we've really got to work on. meanwhile we're also investing in the advanced batteries that can power these electric vehicles. investments that are already making a difference. you know, a couple of years ago, america produced less than 2% of the world's

advanced batteries. these are the batteries that go into these hybrids and electric cars. we produced less than 2% of them. over the last few years we've made investments in a homegrown american advanced battery industry and partly because of the investments that we've made we're going to be able to produce 40% of the world's advanced batteries. so we've helped jump-start a big new industry right here in the united states of america. and that's a smart investment. [applause] so that's at kind of partnership between business and government that's always made our economy strong. and i think there's a lesson in that. you know, it's not the role of government to be the engine of innovation and prosperity in america. that's the job of entrepreneurs and executives and you know, the outstanding workers at the companies that are represented here. you're the ones who are

really making innovation happen but government does have the ability to spark innovation, to support the research, the scientific discovery, that has always led to break throughs in new products. and it is in our national interest to make these investments. for example, we were just talking about some of these trucks, there is still work to be done to make the fueling faster, to, you know bring down the price and all of these things require some innovations and some new technologies so that in the end it's not only as cheap to run a truck like this or purchase a truck like this but it's cheaper than a traditional engine. there's going to be more work to do on this and historically individual companies may not be able to make all those investments

on their own. government has to make those investments. now, this is tougher to do in light of the deficit that i inherited when i took office. we're all concerned about our debt. we're all concerned about our deficit and that's why i proposed deep cuts in spending so we can live within our means and focus on the investments that are most likely to help grow our economy and create jobs. investments in education, investments in our infrastructure, investments in research and development. investments in clean energy technologies of the kind that i have talked about today. we've got to make those investment, otherwise we'll fall behind other countries. china is making those investments. germany is making those investments. south korea is making those investments of the we can't afford to fall behind. so the key issue here is how do we pay for all this at a time when we've also got to shrink the deficit. that means we've got to make some tough choices. we've got to stop spending on things that we don't need to spend on things that we

do. right now there is a debate about all this going on in washington as congress puts together a budget for this year. then we'll have to put together a budget for next year. so far after a few eaks -- weeks of negotiations between democrats, republicans and my team at the white house it appears that we're getting close to an agreement between the leaders of both parties on how much spending we should cut. there's still details and differences to work out. and what i said is, neither democrats or republicans should get 100% of what they want. they're going to have to compromise. they're going to have to figure this out. both sides are close though. and we know that a compromise is within reach and we also know that we can't afford not to have congress work out these budgets and make sure we're investing in the right things. if these budget negotiations break down, we could end up having to shut down the

government, just at a time when the economy is starting to recover. that could, that could jeopardize the economic recovery. it has an impact on everybody's bottom line. ups i know deliver as lot of packages to the u.s. government. you don't need a shutdown right now every business here could be impacted. we can't allow that to happen. so given the encouraging news we received today on jobs it would be the height of irresponsibility to halt our economic momentum because of the same old washington politics. that's not what we need. [applause] the american people, they don't want us to go to our respective corners and then just have the same battles we've been having for decades now. it can't be my way or the high bay. they want their leaders to come together and right now i believe we have a real opportunity to do just that. in the same way that we did back in december when we cut

taxes for the american people in a bipartisan way. so it's time to agree on a budget that makes us live within our means while still investing in our future. that's how these businesses operate. that's they're successful. businesses have gone through tough times during this recession and had to make some cutbacks on things that weren't needed but that made those companies stronger. the same can be true for america as a whole. that is how we'll keep our economy growing. that is how we're going to put our people back to work. that is how we're going to keep the american dream alive for the next generation. so i just want to say to all of you, thank you for the extraordinary work you've done. thank you for your help. we've got to get busy. god bless you. god bless the united states of america. thank you. [applause]

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♪ . >> ladies and gentlemen, please remain seated. >> the president talking about an energy policy, that he announced earlier this weaken couraging the use of more renewable energy sources. from the ups facility in land dover, maryland. that is live picture from capitol hill. as we resume shortly, our coverage of a house ways and means joint hearing on the financial structure of aarp. we're planning to return to live coverage of this hearing when it gets underway. very quickly with the president's appearance he talked about the economy as

unemployment numbers were released today. the unemployment rate dropping to 8.8%. 216,000 jobs created last month. president also making some news during his appearance today saying democrats and republicans are close to agreement on spending cuts and budget talks but differences do remain. again we expect this hearing on health care law and the impact on the aerp to get underway -- aarp to get underway in couple minutes. members are returning after a series of votes in the house on faa reauthorization. we will resume our live coverage of the hearing when it gets underway here on c-span2.

[inaudible conversations] . .

[inaudible conversations] >> again waiting for the resumption of the house ways and

means subcommittee hearing on the aarp tax and status structure financial growth over the last decade. most of the committee members are in the room. we are still awaiting the arrival of committee chair molly her. there is an article in roll-call about this particular hearing taking place. republicans launched an assault on aarp which joined the growing list of group supportive of the democrats' agenda targeted by conservative. they released a report that accuses the influential senior citizens' organization of having a conflict of interest because of financial benefit from the health-care overhaul group lobbied for last year. aarp collects royalties from health insurance and other products. elson notes the generous benefits of executives and questions tax-exempt status of the organization. members are forwarding the report to the irs for review.

gop lobbyists suggest this is part of the pattern of groups going after that work against them on key legislation when they were out of power. this hearing is set to resume in knowledge and we will have it live for you when it does start on c-span2. [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> are we down to sarah? >> the committee reconvened with. i would like to recognize the chairman of the committee the digital mr. manchin for a brief comment. >> i want to make clear previous comment i made about the approval of the irs detainee and spoke of earlier in our discussion and the want to be clear about this so there's no

confusion about when he requested from the irs commissioner sheldon and assigned a republican staff committee, he would be looking into, quote, areas related to tax-exempt organizations and other matters of interest to the ways and means committee. he was not aware that the detail we would be working on investigations specifically with aarp. i yield back. >> thank you for yielding time and i thank chairman boustany for the clarification which leads to more confusion. the reality is we are looking at a document that was prepared

without the knowledge of most every member of this committee. it appears to be a document that was prepared without the committee staff's full participation. nowhere does it indicate this is an official report, subtly not an official investigative report by the ways and means committee and in my 12 years of being on this committee this is the first time i have seen business done this particular way. we are a week away from a government shutdown where this house has been unable to reconcile its differences with the president and there are members on the other side of the aisle talking about the need to shutdown the government to make the case. we are watching as this discussion about a budget has become more and issue about a social agenda and some members believe should be a catch to a

fiscal bill. i would think most people watching this would wonder with us just a week away from seeing this government shutdown and the services that would be provided to all the seniors interested in this in jeopardy as a result of a government shutdown that they probably look at this and wonder is this the way that those who took control of the house of representatives in 10 to govern? i don't believe this is any way to run the largest economy in the world or the smallest business on main street. i hope we get to the real business which i thought -- i remember on idboth people campaigned in november talking about job creation. i don't know how having this hearing today where we have requested mr. rand and mr.

hammond to testified does anything to create jobs and to some degree it is better that this is the way the house of representatives will operate this is all we do because with the work that was done in the last two years with the president, this congress was able to get this economy back on track. we just heard this morning that the economy was able to generate another quarter of a million new jobs in the last week to months. 550,000 jobs created in the private sector but then again when you recognize in january of 2009 when new president barack obama was handed the keys by outgoing president george bush we averaged 787,000 jobs. in this committee which is perhaps the most important committee in the house to help the private sector stimulate the agency we find ourselves essentially engaged in a

discreet, aggressive attack on an organization that represents and has for many decades, perhaps the population in america that deserves the most respect. those who made it possible to be here. this is the business of the day. we will conduct the business of today. i do hope, and chairman boustany has said this, we will continue to do oversight. whether brand or mr. hammond or any other organization which is to get favorable treatment from the taxpayers of this country we have an obligation to do oversight and make sure no one abuses the opportunity to be treated differently in the tax code or any other paying his or her full share of taxes. i think it would have been appropriate to have aarp or any other non-profit explain itself. if we legitimately thought there

was something going on. i hope, mr. chairman, we will conduct oversight because i can tell you about any number of organizations that have swindled the american public out of precious contributions and very few things are done. the biggest concern i have, as i realize i was walking back. today is april fool's day. if it were not for the effect we have been at this for four hours it would be a joke but this is not a joke. my sense is it is not a joke because what we're trying to be here with summer -- perhaps silence voices instead of have full participation in this process. i hope this is not an effort to silence the voices of people who represent seniors in america. with regard to medicare, medicaid and social security

there are efforts to get the benefits for seniors in america and i hope -- [talking over each other] >> the gentleman's time is expired. >> to so the american people we're working for them, not against them. >> mr kinds is recognized for five minutes. >> it has been a long time and your presence is appreciated. to recognize what my colleague said you may think this is some sort of cool april fool's joke coming before a congressional committee but it really is. whenever you are subjected to prosecutorial inquiry in the united states congress committee it is a serious matter and is unfortunate because i don't want to ascribe motives to the other side but on the surface this appears to be a form of selective retribution or political retribution. there are many organizations and individuals who could be sitting up there answering the same

questions and inquiries you have been subjected to over the last few hours that they are not. that is unfortunate because of there's anything that works for the tax code is the feeling that it is being applied and addressed fairly to everyone in this country and not being used as a political weapon. we could go through a litany of organizations that are collecting royalties and fees that are tax exempt from television stations to universities, the chamber of commerce, association of health insurance plans and on and on and on. the same question is directed here. on the surface it smacks of political retribution. everyone on this committee i am sure has not been in complete agreement with aarp and where they are on policy issues. i wasn't with you when you were supporting the medicare modernization act which created the new prescription drug benefit plan for seniors. the main reason i wasn't is it was the largest expansion of the

entitlement spending since medicare was created in 1965 and not a nickel was paid for. it went to deficit financing. it inhibited price negotiation with both companies in that bill. significant policy differences. republicans in control of congress that was a bill they offered you would support it. they were not coming back the next week or the next months objecting this type of questions. it was only after you had the audacity to support the affordable care act that they want to question your royalty payments. again a list of organizations could very well be subjected to the same line of inquiry. former rep wrote an article for the political capital the publication titled don't play politics with aarp and in that article, one paragraph, quote, the fact is the organization aarp gets significant revenue from licensing its name to

others and selling products but that isn't unusual. many nonprofit health insurers like and are a, trade associations like the american bankers association and human service activities like the red cross get significant revenue from products, sales and name licensing. maybe you could inform the committee how many paying members does aarp have today? about 37, just shy of forty million yet my understanding is they do not spend a nickel directly advocating the election or defeat of any candidate running for office of the united states. >> that is correct. and we don't have a pact. >> you are not contributing campaign funds to any person because the republican or democrat running for office. i don't want to put you on the spot but the 60 plus association that had conservative alternatives, do you know how

many dues paying members the association has? >> i don't know. >> let me answer. none. zero. they take all their contributions from wealthy interestss that don't have to be disclosed and turnaround and run negative attack political ads against candidates for of the country and they are tax-exempt organization. it is not surprising we don't find them sitting here next to you because basically they went on the attack against democratic candidates in the last election cycle. let me also ask you, get to the crucial question here. i think aarp supported the affordable care act because there was direct financial benefit for you of what was in this legislation that was passed or based on substantive policy reasons why you support the affordable care act. >> it was 100% focused on our

mission and what our seniors and 50 plus populations said they needed for the american dream. >> what more specifically is the in the affordable care act that made sense for your members to support that? >> we talked about no preexisting conditions which is what they wanted and advocated for, stopping of age discrimination -- >> the gentleman's time is expired. >> i want to thank our witnesses. you, mr. rand, mr. hammond for participating in today's hearing. that will conclude our first panel and i would like to call our second panel. >> mr. chairman? the gentleman would like to raise a question on committee procedure. according to the hearing advisory least march 25th and the organization has until april

fifteenth, 2000 eleven, to submit written comments as long as they follow the process. is that correct? >> that is correct. >> are there plans for any organization. is that correct? >> that is correct. >> would that also apply to our witness before us today? aarp? >> our with this today have had an opportunity to submit their testimony for this committee so they already had that opportunity. >> if i may respond to that, mr. chairman. >> again. aarp had their opportunity to submit their testimony and submit for the record, that is already -- [talking over each other]

>> it is my understanding the report is 26 pages long with 243 footnotes released on wednesday. that is not sufficient time to review and develop written comments. there should be the benefit of a full record to get to your question and all our questions answered. >> we met without aarp two weeks ago and went over this report because they have two weeks to submit to us a report. i would like to move on to our second panel. >> that i correct that? we went over four pages. [inaudible] >> i object.

>> the witnesses provided testimony. >> i referred to the advisory, a direct quote from the advisers. a person or any organization whishing to submit must follow the appropriate link on the hearing page of the committee and complete the information from the committee home page. >> that his testimony -- >> just a quote from our advisory. in view of limited time to hear from witnesses, testimony at this and hearing will be the invited witnesses only.

any individual organization not scheduled for an oral appearance, and for inclusion in the record with a list of invited witnesses will follow. the chairman and would like to thank the witnesses and we will move to the next panel. they you for your patience and for the hour that you did and i would like to call up the next panel please. >> thank you.

[inaudible conversations. [inaudible conversations] [inaudible conversations] [inaudible conversations] >> i would like to introduce the

second panel's witnesses, mr. william josephson, an expert on tax exempt and non profit organizations. is currently counsel at shriver and jacobson. he joined the firm in 1966, became a partner in 1967 and retired in 1999. he was appointed assistant attorney general in charge of the new york state law department charity bureau in 1999. he served in this capacity for five years under then attorney general paul f. spitzer. his opinions on nonprofit issues are frequently reported in the new york times, washington post, chronicle of philanthropy and

other newspapers. i would also like to recognize frances hill of the university of miami school of law. she has a ph.d. in government from harvard university where she majored in political theory and comparative politics and j.d. from the yale law school. professor hill teaches courses in taxation including corporate tax, bankruptcy tax and taxation of exempt organizations, and constitutional law and election law. her current scholarship focuses on bankruptcy tax and constitutional issues and election law. you will have five minutes to present your testimony, your entire written statement will be made a part of the record.

mr. josephson chris dudley recognized for five minutes. >> i am happy to be here today. i am not a health care person. if the complaint had been filed with my office at a time when i was counselor for the peace corps or government agencies or head -- from the point of view of whether or not the contents of the report would, in my judgment, warned further inquiry or investigation, my answer to that question is yes. what i would have done if this was a complaint filed with me, would have solicited the cooperation of the organization,

ask it to make available information, much of which would be similar to the information committee staff is asking for. i would go much deeper than the committee staff asked. if i did not receive that kind of cooperation, i would regrettably use my subpoena power to acquire. because the totality of information contained in the report raises the question into my mind as to whether or not this organization is truly a nonprofit or in fact is a business. in that connection there are many areas that was particularly examined. i try to understand the complexity of the organizational structure. i would examine the extent to which officers exercise their fiduciary responsibility of due

diligence, of prudence, of candor. the same would be true of the fiduciary, each of the eight affiliate's of aarp. i would look at their expenditures especially those with exempt purposes as a percentage of total expenditures. i would ask how much aarp actually spends not just that the federal level but at the state and local levels. i would try to find out the adequacy of aarp's internal control of documentation, retention policies and whistle-blower protection policies, the scope of external audit functions and any management letters aarp has received. aarp classifies much of its income as the committee knows as

royalty. when the congress exempted royalty income from the unrelated business income tax it did not define royalty. that was a grievous error. consequently the irs and the courts have struggled to apply the concept of royalty to various kinds of non-profit income to determine if it was pulte which i understand conditionally to be a percentage of gross income which goes up or down considering how successful the product is or whether or not in fact as the report may suggest, i emphasize may suggest the amount characterized by aarp's royalty, closer to ensuring the commissions which i believe would be a subject and related to this income tax.

this is a factual inquiry that is not necessarily resolved by questions of law. this is an issue in which i agree 100% with professor hill's statement and she is a highly respected colleague of mine in a not for profit taxpayer area where she too talks in her statement about the uncertainty involving the application of pulte to various situations. aarp's compensation and benefits are issues including to what extent of his fiduciary officers, managers receive compensation from multiple sourcess. unfortunately in conclusion i would like to say that the resources that the irs has available to itself with respect to the oversight of tax-exempt

organizations are completely inadequate. i can cite two examples the committee should be familiar with. the pretension that act of 2006 produced within a year, a study of supporting organizations. >> conclude your testimony and the rest will be submitted for the record. thank you very much. miss hill, you are recognized for five minutes. >> thank you, mr. chairman and ranking member louis. i am a tax lawyer and as a tax lawyer we live in a world of uncertainty at every turn. corporate tax consolidated return, tax turns on the facts and circumstances of each particular case and that phrase resonates through all the regulations and all the guidance we have.

hot what i was asked to do today was talk about 50 one c 4 organizations from the perspective of a student of exempt organizations and that is what i propose to do. i want to note a couple developments. the exempt sector as a whole, all types of them organizations, 5 phone 1 see public -- business league, all have grown enormously over time since the 1950s. they have grown in size and scale and scope. they all conduct a broad range of activities that would not contemplate full the when the law was written. on the other hand, this is part of the dynamic vibrancy of the sector. certainly exempt organizations have become complex structures of multiple types of exempt

entities and taxable entities and joint ventures, 527 political organizations of two types. but no one has thought that this was a necessarily alarming facing. schedule are of the form 990 will teach us all about a great deal of complex structures because it is going to allow for the orderly reporting of information that has never been available to scholars like me or indeed many policymakers. the central issue in complex structures is not whether they are big or not. some are really really big. i come from the world of universities and we are very big. most universities are bigger than mine. harvard university, yale university are enormous. they have many resources and they certainly harbor hundred

affiliated entities in the larger harvard structure. hospitals tend to be very large and have multiple structures. this recognizes this modern development and the need for information about them. i want to say a few things about the complex structures. overlapping boards are not themselves a problem. they don't lead to the attribution of one entity's activities to other entities. sharing of staff if properly documented and paid for is not a problem. the problem is if one organization controls the daily operation of another. i want to talk about royalty income. there is uncertainty about what is a royalty but generally we know what a royalty is. it is a payment pursuant to the licensing of a rite of generally

intangible property for a defined use. the irs and the courts have for unrelated purposes focused on the issue. isn't this kind of payment for the use of this right in intangible property or is it the provision of services? it is taxable. there have been a variety of cases but not two lines of cases, cases that reach different results about the facts and circumstancess. 501 c 4 organizations engage in lobbying. this has become the basis that the irs decided lobbying was in fact an exempt purpose of 501 c 4 organizations. this is an unfortunate but

long-term development. we have now seen organizations that are heavily engage in pursuing their rights under citizens united under the first amendment and interpreted by our supreme court to make independent expenditure from their general treasury's office. they can show they satisfied 501 c 4 by showing lobbying activities exceed their independent expenditures. it is possible that this new form that is emerging may simply be a tax-exempt lobby shop defying first amendment rights. i am not referring to specific organizations but the possibility of the new legal form. i have written in my testimony discussion congressional brief but a longer one in the books that i have done and tax-exempt organizations.

un section 4958 which the irs has spent a great deal of time and resources -- >> your time is expired. could you conclude quickly and submit for the record? >> i will wrap this up. >> thank you very much. mr. josephson, thank you for your testimony and sharing your expertise with us. one of the many fact i find troubling in the report released by the committee is the overlap between the boards of aarp's for profit and not for profit affiliate's. do you think it is appropriate for seven members of aarp's board of directors because the 501 c 4 that establishes aarp's advocacy divisions to also

comprised the entire board of aarp's for profit side that aarp's insurance plan, a granted trust that processed $6.8 billion in insurance premiums in 2009? >> interlocking directives always raise concerns about the duties and loyalty, diligence because there are inherent conflicts of interest. as i said in my statement, were i in charge of this investigation i would look through it carefully. the composition of each board and officers, at the meetings of their minutes and determine how frequently they are attended. >> could you move the microphone a little closer please? thank you. >> is that better?

>> yes. >> i would try to determine how frequently the committee needs to set the agenda. is there independent leadership to the committee meetings? a whole host of good government issues that are equally applicable to for profit and nonprofit organizations that cry out inquiry in this. >> do you think it is appropriate for an additional two aarp board of directors members to serve on the for process aarp services, negotiate the lucrative contract with insurance companies? >> i can't speak directly to that issue. i can say for example, if my former colleague, head of the bureau of consumer protection sitting with me, we would both be looking very carefully at the procedures the for profit board

follows in ensuring competition and consumer protection and value for money. i do not understand on the present record the basis of the choice of the insurers of each product that aarp makes. >> i share your concern. in your testimony you stated the royalty payments aarp receives might be more properly characterized as commissions. as you know aarp royalty payments are not subject to tax. however if these payments were considered to be commissioned, would they be subject to taxation? >> yes. that is a factual inquiry that needs to be made and if i may say so, congress when it enacted, did practitioners --

did this service on not declining royalty as a result of courts and the irs's struggle to make sense of that concept. >> if the $657 million in royalty payments aarp receives in 2009 largely from insurance companies were then taxed as unrelated business income, what sort of tax liability would aarp it be subject to? >> i can't speak to that because i don't know what the state of the proper deductions would be. that it would be subject to unrelated business income tax is quite clear but what the ultimate tax burden would be, one would have to know a great deal about the organization and expenditures. >> with that i recognize the gentleman from georgia, mr. lewis pleaded the for five

minutes. >> thank you for being so patient. the republican report points out the aarp and its subsidiary -- to you see this large nonprofit organizations? >> i have and so has the irs. in my written testimony i went to some effort to talk about board overlap. when there is an overlap of less than a majority the irs has been interested and doesn't think it leads to the purpose of determining whether the activities of one organization should be attributed to another and that is important to tax lawyers which is the role i am testifying in today because that can jeopardize the exempt status of the organization to which the

activities are attributed. the question of a total overlap raises questions for inquiry. the irs has looked at situations of overlap or potential 100% overlap and following facts and circumstances that the case available in the form of a private letter ruling that in that one case it did not lead to attribution. the idea of the overlap report can in fact be the way that the core mission of an organization is built into all the other entities. these inquiries are always fact will. if the question is is it such a red flag that when we see any overlap we must immediately

investigate. the irs has not taken that position and i personally do not see that unless we find something strange and unexpected and schedule our information that we could be the best use of the irs's resources. >> you are very familiar with the great and distinguished law firm caplin and drysdale. one of its lawyers -- not anything in this report really add up to the laws of texas. do you agree with this? >> of the six pages of the report, pages 21 to 26 that touched in some way on tax issues i saw nothing in that section of the report that would cause me to think the revocation

of exemption is likely, probable or warranted. not from what i saw in those six pages in the report. >> nascar drivers to promote a campaign to fight hunger. does this sound like a reason an organization should have tax exempt status? >> it doesn't to me. if i had been there a lawyer i would have asked and i am sure there lawyer did a thorough examination of why they are doing it and how it relates to their mission but i have always thought there was some latitude to organizations to promoting their mission and making people aware of a mission and generate donations. i am not a follower of nascar and not aware of the implications of supporting a

nascar driver. >> you are not alone. >> i am not the best person to ask about the nascar driver. i am certain there would be some reason in their minutes and deliberation, any organization would. >> thank you very much for your testimony. i yield back. >> the gentleman yields back. the gentleman from louisiana, dr. boustany is recognized. >> let me start with mr. josephson. you stated in your written testimony that i read, that aarp's organizational structure is unprecedented in your years of experience. you specifically mention how uncommon in it is for a tax-exempt organization to have so many affiliate's.

some for profit and some not for profit. what red flags would be raised by such a structure? >> i have never seen anything in the non-profit bariatric complex as aarp's structure. as i said in my testimony i would ask to examine the justification for each of these separate organizations in charge of any investigation. and asked to examine the nature of the control that aarp exercises over the organizations that are its affiliates. i agree with our colleagues that the existence about the interlocking situation is not necessary a bad thing. it is not something that needs to be looked at. with references not only to

control but indirect control. in direct control, the actual numerical composition of each government body. >> has questions to the first panel, loyalty income and royalty versus and related business income that should be taxable. clearly the report we have issued leaves a lot of questions unanswered in this regard but what information would you be interested in renewing to understand how the royalty income is controlled and allocated? >> to review each contract in detail with respect to any royalty payments. >> is that your opinion as well? >> every lawyer would be quiet

and refused to give an opinion without reading the document. we read things and we are careful. we would read the document but we would also want to know if documents are being implemented. >> the core issue is whether or not the use of in tangibles, i understand it. we have mascots, we have all that sort of stuff. we put it on t-shirts and everything we could sell and receive royalties for selling it. the question then is are we promoting those sales through services that are improper. a written testimony about how the courts had services to protect our good name.

nothing disgusting. that is the state of the law. [talking over each other] >> slightly different line of questioning. in your testimony, should work for the common good to promote social welfare for the community. could not expect to satisfy requirements of tax exempt status. if they excluded writers. and limited access to only members. and the plan that aarp has. could that lead to loss of

status? >> it is going to depend. in the cases of community television antenna and bus service those were small communities and fairly small programs. one corp. recreational facility and female members, there were at least a thousand female employees of this one corporation. the irs said too few. sea-tac court said enough. and therefore eaton hall kept its exempt status. shea question of number enters into this. this is what i mean by fact and circumstances. what makes tax law so interesting and challenging to do. those of the presidents that are

out there. the program might be under the eaton hall precedence thought to qualify whereas for smaller like the television antenna, different outcomes. >> what you suggest is we need more information. >> what i am suggesting is the tax base on circumstances. >> the gentleman's time is expired. >> let me thank our witnesses. you have impressive backgrounds, professor hill, harvard, university of texas. thank you for taking time to share your views with us. my fellow new yorker, always good to see someone from new york testified. have been in charge with the attorney general's office in new york. the peace corps. i am glad to see you associated

with that. and george washington university. you went out of your way to explain you had no particular knowledge of health care providing institutions. i assume you didn't think that was necessary in order to testify about aarp. >> i did not think it was necessary to express the opinions i was asked to expressed with respect to the report. hypothetically i am in charge of any further investigations this is a subject i would have to become an expert in and i would become an expert. >> you are not familiar with what aarp really does. you're given a hypothetical and give your professional opinion. >> a treated my report as if it were hypothetical. >> it is the practice down here that republicans and democrats select different witnesses to

support their case and you are the democratic election. did you know that you where the so-called republican witness? >> ado know i was contacted by the current majority staff but i am sure they also knew that i am a democrat and member of no organized political party. >> based on the fact that you had no knowledge of aarp, you are retired now? >> you might say so. i seem to be busier than ever. >> that is encouragement for me. >> we are virtually the same age. >> that is good to know that people can be as active and intellectual as you. you referred to the majority party when you talked about the

report. >> i believe it is the majority party in this spot. >> do you have a copy anywhere near you? >> i do. >> is there anything on that report that would allow you to believe party affiliation because the republican or democrat or a majority or minority? >> yes, there is. it identifies representatives herbert and reichard -- dave reichert as republicans. >> that doesn't mean the report is republican. >> do you see any congressional seal on that? >> i did not. >> did you see anything this report was prepared by the ways and means committee? >> i did not nor did i see a committee document number. >> everything you testify to is based on the hypothetical. >> that is correct.

>> and two members of congress to happen to the republicans gave it to you. >> the staff gave it to me. >> and you assume they did it on behalf of two republican members. so if indeed the information is not accurate and you base your testimony on that hypothetical you would have to revisit everything you testify to. >> i would revisit each issue with where the information might turn out to be accurate. i would revisit each issue with respect to the information turned out to be inaccurate. >> as you testify today, the only evidence that it is accurate is your confidence in the staff of these two members. in other words there's nothing to indicate that it is official

or congressional or if indeed you found the hypothetical problems and testimony based on the hypothetical would have to be different. >> correct. >> the gentleman yields back. there are 243 footnotes which are documented which anyone can look and verify and see what information has come from. recognized for five minutes the gentleman from washington, dave reichert. >> i really appreciate the way you answer your questions, mr. josephson. >> i have been around a long time. >> as you probably heard when you were sitting here earlier today i spent 33 years in law enforcement. i am one of those that have been on the witness stand before and raised my right hand and given straight answers to the questions i have been asked and had the opportunity to interview

and in some cases interrogate suspects who sometimes are not quite so forthcoming in their answers. i appreciate your straightforwardness. it makes the process much easier and more credible when we have with thises who are cooperative and supply those answers. you and i do have something in common. i am guessing investigators at heart. i would just ask this question first. you stated in the state of aarp's organizational structure merits investigation and an extensive document production from aarp maybe could be provided to us. i am interested in what types of documents should this committee request for aarp so we can

understand the relationship between aarp's numerous for profit and tax-exempt affiliate's. >> that is a long list. i would start with the composition of the governing bodies of each of the affiliate's. i would want to know to what extent they operated through subcommittees' just as i want to know that aarp operates through subcommittees. i would like to see five years of minutes of each of the governing bodies and subcommittees. i would be very interested in flows of cash among the affiliates. i would be interested in the internal control that aarp applies and the auditor's opinion as to those in turtle

controls, very interested in looking at not aarp's consolidated 990 but in the audit process, each auditor audits separately the books of each of iliad and then become blind for purposes of consolidated reporting. i would be interested in looking at the elements of each consolidated financial statement controls. >> hopefully could you give me the rest of the list? you looked through the report you have before you. i am sure you had time to look at it. >> not much. >> the committee called on monday and i read it tuesday and prepared my statement tuesday night. >> from what you heard today the report, you had time to look at

even briefly. would you agree that there is some interest that should be followed up? ..

>> is an unusual element. i have never seen in the context of profit or nonprofit affiliates a grantor trust playing such a key role. >> mr. chairman, i yield back. >> the gentleman yield back. the gentleman from oregon, mr. blumenauer, is recognized for five minutes. >> thank you, mr. chairman. i guess i would just posit for just a moment that aarp does a whole range of activities that are not a part of their foundation. this is the revenue stream that deals with people that i'm working with on a healthy communities programs, with health policy, that this is part

and parcel of what they do, that is part of the revenue structure, which he seemed to feel was so complex. as i understood, professor hill correctly, you mention part of university has over 100 affiliated institute. i wonder if either if you're familiar with the aaa program? >> i am not. >> no, not specifically. >> here we have a pro gun that operates in about a dozen countries. it has an affiliate in i think every single state, and some large states are divided, there's a aaa of northern california and southern california. they are involved with roadside service. they are involved -- they have programs that are involved with combination.

they have a travel service. they sell insurance for cars, boats. and i think it's a fair assertion that you have all of those entities involved in all those lines of business, that it would not look substantially different than what is being waved around here for aaa year ms. hill, would you agree? >> i would just -- yes, i would agree as a hypothetical matter. i would just like to reiterate how important it is for all of us, and possibly the committee might choose to do this, to look at the schedule going forward. these are the information returns filed, signed by the organization under penalty of perjury. this new schedule our really is important in understanding complex structures. it would help provide baselines to see what is unusual and what is not unusual, better than any

of us could with her own observations from practice or scholarship, but i have to say that just even in teaching my class, i have this new schedule our really is board structures that are more complex than what we saw in the report because your lawyers have to know about those structures. but the schedule our is so helpful to an inquiry like this. >> thank you. i don't want to prolong this but i think it would be useful for people who are raising some what i think are rental -- rather bizarre notions, just look at some of the complex organizations. i do a lot of work with aaa. they have advocacy programs for public safety. they are part of a group that we're working with to try to deal with how we actually

finance infrastructure in this country. they have played an integral role in public policy in my state and nationally. they lobby, they get involved with politics. but as i mentioned, they are also involved with banking and loans. they offer insurance on autos, boats come home, life, health, long-term hair, rvs, trip cancellation and trip delays. with all due respect to whatever the majority is going with this, i do think as i mentioned earlier there is some legitimate areas where there are people who across the line and need to be looked at. there are real questions about what happens in some universities where you talk about skewing, where the top 10 salaries are one football coach, thank you very much, and how much tax exempt and business activities intermix.

these are all legitimate areas for inquiry. but to single out aarp for legitimate policy differences and on balance i think the evidence will suggest that they were better attuned, and it wasn't anything wrong with being concerned about health care for children or for people with preexisting conditions, and advocating their position. i think that is unfortunate. i would suggest take a look at aaa and compare that to see if this is somehow bizarre, unwarranted, or worthy of investigation. >> the gentleman's time has expired. the gentlelady from kansas, ms. jenkins, is recognized for five minutes. >> thank you, mr. chairman, and thank you for joining us today. mr. josephson, you referenced irs enforcement and audit capabilities in the tax exempt arena in your testimony. you also note that there is a

lack of guidance in several areas related to tax exempt organizations, especially involving 501(c). i have a series of questions for you. do you think the lack of a irs oversight in this area is related to the lack of guidance? what type of changes at the irs would improve the situation? and finally, what additional guidance do they need to issue help to ensure the tax exempt organization is probably -- properly served their mission? >> the irs in its work plan for the next year, that it releases in december announced that it has decided to take a careful look at the whole question of 501(c)(4) organization. this in my some 50 years of express and the law is the first

time the irs has ever said this area of the exemption would be the subject of administrative scrutiny. and i can't say for a good time to hopeful immediate product. i was saying at the end of my original five minutes, the pension protection act asked the irs to produce in a year a report on supporting organizations which it hasn't produced. and asked it to produce a report on donor advised fund. i haven't seen hide nor hair of that report. and i'm sympathetic to the irs because, as i said in my statement, it really, the exempt organization every has been starved of resources because the excise taxes originally conceived of and supporting oversight in that area data was

actually appropriated for that purpose. so i have to be skeptical. >> okay. i can appreciate that. you also stated and the compensation and benefits paid by aarp and its affiliates are worthy of further legislative and regulatory attention. do you think it is appropriate for aarp ceo to have received $1.6 million in compensation in a single year? and additionally, is it appropriate for aarp is a volunteer board holding provinces at the resort described as a beacon of grandeur and refinement among vacation destinations in southern california and the world? a definitive example of what a luxury resort should be, and is also named as one of the top 10 resorts in the world. by "usa today." >> during the 1972 political campaign, i was sargent

shriver's campaign manager. we stayed at the coronado one night in the course of the campaign. i can attest to the quality of the resources in the coronado. i have never thought of spending that kind of money that would be required to return. [laughter] >> thank you. i will yield back. >> the gentlelady yields back. the gentleman -- mr. kind is recognized for five minutes. >> thank you, mr. chairman. i want to thank a witnesses for being here and for your testimony today. ms. hill let me start with you. more organizations it seems are registering as see force. talking about that a moment ago and they're doing primarily if not exclusively political activities now. do you think this is an area that is right for more irs and congressional inquiry compared to the c-4 status and what is

going on? >> just want to be clear about why. i did not at all question the first amendment right to express themselves by making independent expenditures from organizational general treasury. this is what the supreme court decided. this is now a first amendment right. the question is, is that a tax exempt activity? my problem is not with the advocacy. i think it is important to keep nonprofit tax-exempt organizations in the advocacy mix, and not to get -- it's so expensive to be an advocate of ordinary size cannot even afford to play in that arena. i do think it is important. my tactical problem, if i can just talk about the technical tax of this, is the following. can do a lot of independent expenditures. fine. but what is the c-4 activity that is the primary activity? now, my take runs from taking vacant lots in turning it into

playgrounds but i would love to see political operatives of both political parties to devote themselves of that. but let's not fantasize. because of the way the irs has in fact interpreted the law, then the lobbying could be the sole exempt function of these kind of organizations that are springing up like mushrooms in both parties. and i have always had trouble with the irs treating lobbying as an exempt activity. because i think the original point was they would be converting vacant lots to playgrounds and had to lobby the zoning board or the city council to get done. the lobbying was related to that kind of permit. but now it is clear that you can use your lobbying as your exempt purpose. that is a powerful, powerful money raising machine that has all sorts of implications for

advocacy and public policy, for the dollar amounts involved with the expectation of supported in the pending expenditures, and i think that we need to look at, not with us or bring court has decided because they decided that, we have to look at whether lobbying is an exempt purpose, or only a permissible purpose in furtherance of and related to some other 501(c)(3) exempt activity. and that i think is really important for the use of 501(c)(4). >> mr. chairman, i might propose this could be right for a future congressional hearing for us to get into it a little more detail fashion. and i think this is an area that does deserve greater scrutiny. mr. josephson, let me -- >> may i comment on your first question? >> i am limited in time. >> i will be very brief. i also teach exempt organizations with in why you and i asked my class the other night in light of the citizens

union case, how long they think it would take before a 501(c)(3) brings an action similar to citizens union to exercise its right to intervene in a political campaign, and whether not the trade off between the exemption and a first amendment right, which would, first? >> interesting and quick. i don't think it will take long at all. mr. josephson, i was surprised where you testify, we had a couple days to look at the investigative report that was the chief or testimony this week, but in your testimony you stated you thought it was unprecedented in your experience for tax-exempt organization to have eight affiliates, is that right? >> it's unprecedented in my experience, that's correct. >> have you of any limit? >> have not. >> would it surprise you if i told you that broadcasting network, the largest organization here in the united

states list nearly 100 related entities on its form 998 schedule? >> i would be flabbergasted. >> i was just looking at that myself. a bit flabbergasted as well. the fact that harvard university entity has over 145 related entities listed on its form 990? and there are other organization. larger than aarp that have a lot more affiliate entities that their listing on their schedule r. that i think will deserve more attention as we move forward. >> i agree. >> everything back to the original point. why aarp? y. under the circumstances quick there could be a whole host of organizations sitting up there vital and within subject to the same line of questioning. again on the surface it does smack of political recognition. >> the gentleman's time has expired. >> you didn't haul them in front of us in because they were supported.

>> the gentleman's time has expired. the gentlelady from tennessee, ms. black, for five minutes. >> thank you, mr. chairman. before i begin my remarks, i will once again say thank you to this committee doing what it is to be doing. and that is oversight. regardless of where we started, this committee is doing what the goals and responsibility are. and that is oversight. i hope we'll have more of this. i encourage those who are trying to characterize this as a witchhunt will bring about those concerns that they have that they're mentioning right here today. but let me go to my question. attacks against as a 501(c)(4) and expected for the benefit of the community, though evidence suggests that aarp may have strayed from that nation, besides the extent of aarp insurance related business activities compared to their social welfare programs, and the executive compensation suggests that maybe aarp may be operating

primary for the benefit -- not be operated primarily for the benefit of the community. indeed, aarp's royalty revenue primarily for insurance companies nearly tripled from 2002, $280 million, to 2009 at $656 million. they also route report have $2.2 billion worth of assets, and $1.4 billion worth of revenue for 2009. yet at the same time aarp's cash and in kind contributions to the foundation only increased by 11%, 3.1 million, and their cash contribution to the legal counsel for the elderly actually decreased by 9%. and in the last session, i noted that as mr. rand spoke about when questioned whether dollars are going four for the advocacy, he started out by making a

statement about percentage of the revenues, and he very quickly changed that to say the percentage of their expenditures. and so as i look at the amount of revenue and how rapidly it has grown by the various ways that they have allowed their label to be used and been able to see the royalty on net, it doesn't appear that what they getting in the royalty also matches what they're doing in the advocacy. would that be something that the irs would be looking at? and either one of you, ms. hill or mr. josephson, whichever of you would like to answer that. >> i'll start. here's the way i look at the chart and the discussion this morning. the measure of whether the c-4 entity -- remember, i know

nothing about this particular case, he and i didn't come here claiming to know about this particular case. but a c-4 that has an affiliated and 501(c)(3) public charity is not obligated to contribute a dime to the affiliate public charity. that affiliate public charity could raise always money from outside. so anything they contribute to the c-3 is voluntary and is not a measure of their own exempt activities. one has to look at whether they are pursuing their own 501(c)(4) purposes an exempt activity as a measure. and then one can discuss whether that becomes larger commensurately. but there's no requirement in fact that the c-4 income, from something like a wealthy, actually matched than a commensurate increase in its c-4 activities because 501(c)

organizations, tax-exempt organizations heretofore have had broad latitude in defining programs, saving money or later times, i making these decisions. congress is free to legislate otherwise. but they have not done so. or states would be free to do that, but states have not done so. so i think the looking at how many contributions, the scope of the contribution the c-3 is not the measure, and one has to look at the c-4. there's no benchmark and no requirement under current law. >> i agree but i would make a further comment if i may. and that is listening to the testimony this morning, aarp's certainly made a point about the section five '01 activity, see the activities of the c-3 organizations. yet assumed the chart is correct, while it is not

required to fund its c-4 monies with those organizations, certainly it appears not to have done so, commensurate with the increased and its revenue. and if i may also say so, its return on equity this report is correct is astonishing. >> i'm curious and i know my time is up but i'm curious, mr. chairman, even in looking at the legality of this, but the morality of it, also, and with the organization is telling itself one way to those that are seniors that are getting the services and actually -- >> the gentleman's time has expired. again, i want to thank our witnesses for your testimony today. as a reminder, any member wishing to submit a question for the record will have 14 days to do so, to all of today's witnesses if any questions are submitted, i ask that you respond in a timely manner. with that the subcommittee are

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>> let's get another top when an issue student can competition. the issues being as producers about an issue event or topic that help them better understand the role of the federal we go to knoxville, tennessee, where mickayla stogsdill is an eighth grader at fair that middle school. >> tell us what you chose the environmental protection agency to focus on in your documentary. >> we didn't really choose the epa specifically. the documentary contest was about how the committee is affecting us in our daily lives.

so since the kingston ashville directly affected us in our whole city, the epa kind of went with that because they drove the whole cleanup process. >> how many people were directly affected by the coal ash spill? >> we know the honest -- which went into three rivers and consumed about 12 pounds. we know that the total amount of people in the city that was affected was about 750 families total. and it reached up to the whole united states because epa had regulatory hearings on it. >> you showed some of the series in your documentary. what were the outcomes of those? >> the true outcome was just to hear the opinion of the people. but whether they will take either subtitle c. or d., they haven't chosen that get.

>> what does that mean? >> subtitle c. means that coal ash will be treated as a hazardous waste, and that the federal government will regulate it. subtitle d. means ill be treated as a non-hazardous waste and states will regulate it. >> what progress has been made in the affected area? >> from since it happened like midnight on december 22, about 2 million cubic yards of coal ash has been taken away from the site. and basically every day they're working on it. >> you should video from the bp oil spill. how would you compare what happened to the gulf coast with what happened in your comedic? >> i think the bp oil spill was a data representation of the kingston coal ash spill. they both affect our whole country and cost billions of dollars of damages and ruin countless homes and societies. but i think the government did treat these two disasters the same day they came in to help them and it really did help.

>> how would you grade the government on the role that they played in entire middle issues? how are they doing? >> i think the government is doing a pretty good job. there are situations where they fell flat, but regarding the kingston coal ash spill they really did come in and help us immediately. >> what's next for the epa and your community? >> the next deputy chief clean up the coal ash spill. they haven't chosen whether they will do subtitle c. or d. yet. but the main goal is to help the right now. >> what you do it in the process of making your documentary? >> not only did i learn all about the statistics of the kingston transfixed by to learn how to work on a team for the documentary. and i learned that the federal government really does help us every single day. i couldn't have worked as hard as i did without my teammates either, make it on caroline, because i wouldn't be here if it

were not for them. >> thanks a lot and >> thank you so much. >> here's a portion of her documentary, ashes to ashes. >> coal ash contains arsenic, a poisonous substance and other heavy metal. basically it can be done that with your household trash. spent coal ash i found the proposed regulation by the end of the calendar year and we're on track to meet goals expect the federal government is nothing without its citizens. without our voices and concerns the government is basically gone. ..

>> this year's studentcam competition has students from across the country to consider washington d.c. to their lands. today's arid prizewinner focused on an event that better help them understand the role of the federal government. >> well, it is something that i face everything obey. when i go home i have to pass it when i go to work, i have to pass it. it is is there, every single dal ash. >> what do you do when tragedy strikes? you can call the police or even the fire station to get reinforcement for your problem. a while would have to happen for the federal government to come

to your community and help you? the kingston coal ash spill did just that. this bill was a result of a federal agency, the tennessee valley authority, which release 5.4 million cubic yards of coal ash and to the emory river and surrounding areas, including rome county which is where she resides. >> this is the largest in our rental disaster, right in a county and it is totally visible, so people that is built million-dollar homes that are my neighbors, build 100,000 dollar homes that remind neighbors, their houses were not valued as much simply because of the economic but they had to take this environmental disaster and nobody wants to live there. we are kind of stuck. tba bought 75 properties. do you live in a subdivision or

self? >> i do. >> imagine going home tonight and the first 175 homes are empty and owned by corporations. that is what we are facing. so we have this town that is economically in them are mentally really taking a toll on on the county. >> the government said amber metal protection agency to help our town recover from another federal emergency failure. >> i truly am grateful for the opportunity to speak about how the good people at the environmental protection agency have been making this. we have restored the rightful place which is the first factor in all of our decisions. implemented rules that will protect children and help help stabilize. >> and early 70s the federal government created the environmental protection agency. it was created by a democratic congress and a republican president. the two parties were together through thick and thin for one reason, to protect citizens of the u.s. for our years to come.

>> in 2009 the rain would push the coal lashed down into the tennessee river downstream. that is when the epa became involved and in a lot of ways the epa was instrumental in helping us move the process along and get a set plan. >> most people denigrate the first step is the cleanup. >> i know that they removed massive amounts of material out of the river, and to a disposal site. >> we took big gallons of coal ash in our coal plant in tennessee when it stopped burning coal, but we tried to figure out how we will never have that happen again and epa will take over that kind of regulation. >> coal ash contains arsenic a poisonous substance and other heavy metals.

right now coal ash spill snow regulation, so basically you can throw it out with your household trash. >> coal lashed will have proposed relations by the end of the calendar year and we are on track. >> the federal government is nothing without its citizens. with that are voicing concern the government is basically gone so naturally the environmental protection agency helps humans across the nation to listen to the pains of the people. one of our senators, lamar alexander, even requested the epa to extend the comment period which is the reason we were able to participate in the national hearing in knoxville. hundreds of people came into it because. we saw passionate people. they argued with their hearts because they knew they were taken apart in the federal government, just like we did. >> clearly madam speaker the failure of the tennessee valley authority and in the kingston facility which started all of this review and called important

attention to this particular issue, and reinforce the need of cooperation all changes to avoid future accidents. the federal government must absolutely work to ensure safety and environmental protection for contaminants are concerned. >> some have labeled coal lashed as a hazardous waste. they berman to protection agency will be left to regulate. >> personally i believe that subtitle c. is the bare minimum that we need to protect public health and i have spoken with several health professionals, board-certified doctors and nurses, to say that subtitle c would be barely enough. >> coal lashed as a wide range of -- just like cold does. when it is burn it can release gases. the coal lashed it is left over from the burning of the coal. those medals range from mercury, arsenic. >> subtitle c -- it would make

it easier for construction companies to recycle coal lashed. and as of right now, 43% of coal ash is recyclable. >> madam speaker regulating coal ash is a hazardous materials overkill putting precious jobs at stake in what cost $1.5 billion a year to implement according to epa's own estimates. these costs will be absorbed by american families who are already facing constraints of tough economic times. [inaudible] we would not be putting our employees in contact with us simply because it is a hazardous waste. >> they both have positive and negative aspects. what if there was a compromise? >> some people are arguing or suggesting that are there you give them, you get the

legislatures -- max legislators to amend the conservation recovery act law which will give authority to subtitle c and not material -- or come up with possibly a new subtitle. >> epa definitely does have action groups. can anything improve that? >> i think that there can be changes made in the way it operates. >> if you expanded to put pressure on the epa, to satisfy the need of all the environmental problems out there >> the kingston coal ash spill was a tragedy that affected our town in many ways. the tennessee valley authority authority -- the community and the federal government. the government showed its concern by sending another one of us -- the impairment of

protection agency and to help our community recover. through this process we learned the government really does care about is an originally our opinion lead to a subtitle c but when we took the time to research the other side, our thoughts change in alley believe in compromise for our community and our nation as a whole. we don't know what the future will hold regarding a subtitle in the state of our nation but we can't wait to find out. >> go to studentcam.org to watch all the winning videos. and continue the conversation about today's documentary and our facebook and twitter pages. >> house oversight committee chair there'll issa says the homeland security department's response to freedom of information request reeks of them at nick sony and the enemies list. he made a comment yesterday at the committee's hearing on foia. dhs political appointees for partisan lyrical reasons. we will hear from agency

officials in this two-hour portion of the hearing. [inaudible conversations] [inaudible conversations] speak this hearing will come to order. now don't you do the same thing i did and not turn on your mic. we all forget. this hearing will come to order. the full committee hearing is on weiss of the department of homeland security meeting the presidential standard for foia? i hope by the end of today we will find that it wasn't, but it is f now. it is the policy of the committee to have our mission statement in our opening, so

withn that, the oversight committee, we exist to secure to fundamental principles.en first, americans have a right to know the money washington takes from them as well spent, and second, americans deserve an efficient effective government our duty on the oversight and government reform committee is to protect these rights. our solemn responsibility is to hold government accountable to taxpayers because taxpayers have a right to know what they get from their government. we will work tirelessly in partnership with citizen watchdogs to deliver the facts to the american people and bring genuine reform to federal bureaucracy. this is the mission of the oversight and government reform committee. today's hearing follows an eight month investigation into what we believe were abuses of procedures of department of homeland security.

this matter could have been resolved in july 2010 when dhs first was confronted with allegations of political interference with foia process. the came from the associated press and others to look into this. the chief privacy officer we believe misled committee staff in 2010 briefings. if not for whistleblower, the truth of the matter may never have come to light. that whistle-blower was asked to clear her office, lost her job, and title and responsibilities and was moved to a smaller narrower th you responsibility the day after she testified. that concerns us the department is not taking their responsibility to the hard- working men and women in the department to this day. the truth of this matter is the

secretary's political staff did approve significant releases. they delayed responses, they withheld documents, they conducted weak searches. nonprofessionals searched their own documents using their phone keywords and did not avail themselves of career professionals who were there long before them and know the system. documents in witness testimony shows that she privacy officer of's statements from september 2010 are indefensible. yet several of them appear in her testimony at this hearing today. she continues to insist policy implemented in september 2009 was intended to make political staff aware of significant releases. the bottom line is, responses could not go out the door until

a political appointee said so. the problem at the department has -- that the department has not accepted accountability for. the disparity between the promise is stark. the committee is committed to getting to the bottom of the abuses of dhs and making sure the politicalization of the transparency issue does not metastasize throughout the federal bureaucracy. the chair is concerned further that there was a requirement we discovered through whistleblower and documents that one of the most important issues that came was not just the document related to foia but who was sending it? whether it was a political individual or the press.

that reeks of nixonian enemies list and this committee will not tolerate that. >> think you for calling this hearing. i've said it again and i will say it again -- before and i will say it again. let me start with what we agree on. i think you and i agree with president obama's decision on his first day in office to reverse eight years of previous administration policy. to adopt the presumption in favor of disclosure and to renew the federal government's commitment to foia. the process to review certain responses in 2009 and two dozen town was not efficient. sometimes led to delays, and cause confusion about roles and

responsibilities that resulted in interoffice tension at dhs. i think we can agree that since then, dhs has made significant improvements but it must continue to take additional steps to fully address these concerns and i am convinced we can always do better. despite some areas of agreement, we part ways when you make extreme accusations that are not supported by the documents. not supported by the interviews. and not supported by the investigation conducted by dhs. over and over again, you claim that dhs officials are making decisions based on partisan political considerations. in july, you claimed dhs ignore the intent of congress and politicized the process. in august again, you claimed political appointees at dhs had

inappropriately injected a person -- partisan considerations into the process. you continue to make these accusations even though the committee has concluded interviews -- conducted interviews and gathered documents that show the opposite to be true. the report released yesterday accused dhs officials of illegal politicize asiaation. it claimed political considerations were important in the process. without requesting a single document from the previous administration, the report concluded the process is more politicized than when president obama took office. these extreme accusations are and substantiated -- not substantiated. staff reviewed the documents to the committee as well as transcripts of interviews

conducted by committee staff. we found no evidence that dhs withheld any information for partisan political purposes. we found no evidence that requests received different treatment based on their political affiliation. we found no evidence dhs officials implemented a process to advance partisan political objectives. in every instance we examined, information was withheld only with the approval of either the or councilice 's office. this is the conclusion of the dhs inspector general. which they published yesterday refuting these allegations. this is what the investigator said. after reviewing information and interviewing experts, we determined the significant request review process did not

prohibit the eventual release of information. it goes on to say none of this information demonstrated the office of the secretary prohibited the release of information under foia. obtained creditsttemp this assessment. no officer said the request is for disadvantaged because of their political party or area of interest. our committee has the great opportunity to help federal agencies as they strive to achieve president obama's high standard. we also have an obligation to conduct oversight that is responsible and fair. i and the long run, as i have said many times, we are just as concerned about government running well as you are. it is just as important to us as

it is to you. because we are americans also. we want our constituents to be served well. that is what this is about. this is the all-american way. it is not about the republican way or democratic way. it is about the american way. with that, i will thank you again for holding this hearing and with that, i yield back. >> i thank the gentleman. members may have seven days in which to submit opening statements and include extraneous information into the record. pursuant to khomeni rules, all members are to be sworn. would you please rise to take the oath? do you solemnly swear or affirm the testimony you are about to give will be the trutruth, the whole truth, and nothing but the truth? both witnesses are in the affirmative.

in order to allow time for discussion, this committee has a longstanding policy of asking you to -- that you're opening statements be placed in the record. please stay within five minutes. i do not cut people off midsentence. if i think you get to the end of a paragraph, i will. we expect to have only one round of questioning unless there is a specific request for second round. our goal is to make this factual and succinct. i will be pretty heavy-handed with people on this side. if someone runs to where you see a red light and they still have not gotten to the question, you may see a gavel. it will not have to answer. fair warning to both sides. we want to keep you within your time. what members to ask questions so you have the proper time to respond. -- we want members to ask

questions so you have the proper time to respond. we're not permitted from having votes. if we have boats, we will wait five to 10 minutes after the vote has been called. if the first one is 15, we will recess. as soon as there is a two-person working group, we will reconvene. even if i am not back here, whoever the senior republican is will commence a weekend the, of your time and schedule. one second. i did not want to make any mistakes on the name even though they are in front of me. the chair recognizes our first

panel. mary ellen callahan, mr. ivan fong, the general counsel to the department of homeland security. these first. >> thank you. the morning. -- good morning. i am the chief foia and privacy officer. my office and the minister's policies, procedures, programs to ensure the department complies with the freedom of information act and the privacy act. i appreciate the opportunity to appear before you to discuss the department's freedom of information act processing and policies, past and present. two years ago, the department faced a backlog of more than 74,000 requests. we began to work to address the issue and have had success. under this administration, we

have reduced the backlog by 84%. more than 63,000 requests. in fiscal year 2010 alone, the judge reduced the backlog by 40%. eclipsing the government instruction to reduce the backlog by 4% as well as the goal of a 15 s -- 15% reduction for the fiscal year. less than one-half of 1% of the 138,000 foia request processes were deemed significant. the requests include those relating to ongoing litigation, but it too sensitive topics, requests made by the media, and requests related to presidential or agency priorities. in these few cases, department management was provided an

opportunity to become aware of the contents of the release fought -- prior to its issuance. to enable them to respond, to enable them to respond from -- and to engage the public on the merits of the underlying policy issues. the significant requests -- review process came after several significant foia's released without notice to senior management. there were related to ongoing litigation, records from the previous administration, and records from other departments. that basic lack of awareness of significant responses hindered the department's abilities to manage and oversee the department. the transition of where we were then and where we are now was not seem less. there were management challenges in implementing the awareness process initially.

however, we recognize these problems at the time and have taken significant actions to address them. i believe that transitioning to the share point system last year represents a significant step forward and i believe it is now a system that works effectively and efficiently for professionals in my office and the department. at the same time we were implementing this process, the average number of days it takes the department to process a request has decreased significantly. from 240 days to 95 days. there have been allegations that political appointees redacted foia's and restricted their release. to my knowledge, no one other than a foia professional or attorney made a substantive change to the proposed release. further, to my knowledge, no

information deemed replaceable by the foia office or -- general counsel has been withheld. documents have near the been abridged or edited. i would point the committee to the analysis that makes critical findings including the significant review process did not prohibit the release of information. no requestors were disadvantage because of their party or area of interest. the office of the secretary is responsible for overseeing dhs operations and is within its right to oversee the process. and dhs has made important progress in sharing openness including through proactive disclosure. we concur with all six of the i.t. recommendations. i am heartened to see the inspector general sees the progress we have made. we're committed to doing more

and we look forward to working with the committees on these issues. i would be happy to take questions. thank you. >> thank you. mr. fong. >> i am ivan fong, i am the general counsel for the department of homeland security. i appreciate this opportunity to appear before you and discuss the department, securities freedom of information act policies. as general counsel, i lead and oversee a lot department of more than a tree hundred lawyers -- 1800 lawyers. i and my leadership capacity, i emphasize the important role dhs lawyers play in advising on and in ensuring compliance with the law. and setting high standards for professional and personal integrity across the department. in the course of performing their duties, headquarters attorneys as well as lawyers in

our offices may be called upon to interpret the statute and to apply its provisions to records collected and processed by the office of privacy for possible disclosure in response to foia requests. foia establishes a mechanism that makes records held accessible to members of the public access to the extent the records or portions thereof are protected from disclosure from -- by one of nine statutory exemptions or by one of three special law enforcement record exclusions. the nine exemptions included reflect congress's recognition the goal of an informed citizenry, vital to the functioning of a democratic society, must sometimes be balanced against other important societal goals such as protecting the confidentiality of sensitive personal, commercial, and government information. this administration has taken

significant steps to increase openness in government. in january 2009, president obama issued to important memoranda to the heads of executive apartments -- departments and agencies concerning transparency. in his memorandum, he committed this administration to unprecedented levels of openness in government. and in his freedom of income act -- information act memorandum, he stressed the importance of foia, saying it was a commitment to ensuring an open government. to reinforce this commitment, the attorney general in march 2009 issued a guidance memorandum that among other things, reiterated the president's call for a proactive disclosure in anticipation of public interest. required agencies to consider making partial disclosures whenever full disclosure is not possible, and urged agencies to create and maintain effective

systems for responding to requests. against this backdrop, department lawyers provide day- to-day level of vice to the chief officer, staff, and others in headquarters and components for -- who are responsible t responding to requests for it will provide legal advice on specific request and they do so based on their understanding of the facts and best legal analysis and interpretation of the statute, developing a case law and guns. with respect to the involvement of the office of the secretary and other senior department leaders in being informed of significant offense, including the release of information, the secretary and her staff have clear statutory authority to ask questions of, review, and manage the operations of all parts of the department, including the privacy office and its elements that handle the process.

similarly, the attorney general's 2009 guidance statement said the responsib ility belongs to all this. it is not only legally permissible but sound practice for the office of the secretary to be informed of, and in coordination, to oversee the process. as my colleague has just described, a significant foia review process has become more streamlined and more efficient. despite challenges in the early implementation of the review, and those problems have been acknowledged and remedied, the office of the general counsel will continue to engage with the chief foia officer and staff to make sure we disclose properly and promptly in the spirit of cooperation that adheres to the letter and spirit of the

president's direction. thank you. >> thank you. i will recognize myself for five minutes. is ap on your enemies list, ms. callahan? i will take that as an know unless you want to answer. there has been this talk in your opening statement about political, there were members of d'sress who have r's and after your name. you wanted days to pre release if ap wanted something or to spin or to decide to take information that was sensitive or embarrassing and get it out in some format you wanted days before the associated press would have what they waited weeks or months for. let me understand this. the words you used because i want to make sure the words are careful. what you said to the committee turned out not to be completely

accurate some time ago. you used the word eventual repeatedly. the eventual means that -- eventual means that a right delayed is not denied. do you stand by that position, three or six or 90 days, they are ok as long as you eventually comply? yes or no, please. his eventual good enough? is away of three days, 30 days, or 90 days ok and compliant with foia in your opinion? >> the initial process -- the initial process -- >> is this acceptable as compliant? you use the eventual but there were clear delays produced by this policy of pre-alerting so political appointees could do what they wanted before i got out in some other way. is three days, 30 days, or 90

days and acceptable to lay and complying with foia? yes or no? >> it did not. >> you were causing delay and eventual should not be a with a word in your statement. the fact is, there were delays. the ig said it did not change the fact you were delaying and if the if were doing -- ig were doing their job, you'd have to stop the bench will and make a prompt. you were aware there were delays produced. did you do anything about it? did you consider it a problem that three days, 30 days, or 90 days occurred because political appointees were evaluating the sensitivity of a piece of may be embarrassing information or politically sensitive information becoming public?

>> i believe it is important for foia responses to be promptly disclosed. i believe also the secretary's office has a legitimate interest. >> you believe a delay in order to evaluate the political ramifications and potentially release something someone has waited for 90 or 100 days, release it before you give it to them is ok under foia? that is what was possible as a result of this policy, wasn't it? >> that is not what i said. it is important for releasable records to be released. i believe also, the secretary's office has an interest in knowing what is -- >> i asked about the interference. i did not ask about the interest. nobody on this dais will assert

that as a request was going out, simultaneously, even the evening before the morning, it was sent to the offices so they would be aware and be able to develop appropriate responses if it appeared on the front page of "the new york times". your offices have them days or weeks or months before hand and in some cases could have spawned the store before the facts were given out. let me move to one other thing. put up slide number one. there will be more slides today. this one -- is hard to read that. do we have a copy? would you give the witness is a copy? -- witnesses a copy? you have a exemption. on the left, you will see the redacted version. on the right, you will see, and

this was the type of information the ap was looking for they felt this policy confound it. -- confounded. this is for you, ms. callahan. were you concerned that the forwarding of a request to political staff would burden the staff? that is one of the things redacted or more specifically, not sure what the confusion is. please note this request is coming directly from the front office. noaa is brief. -- briefed. could you could you please have them forward the reports so they are needed. that was redacted, so basically you have made a decision. the decision was to forward it.

a newspaper agency wants information. what i read here is we are redacting -- it is not about a pre-decision process, but a decision was made. the ap wanted to know and had the obligation to know under freedom of the press if you were doing exactly what you were doing, and that information was redacted. you have a copy of that. please respond. >> with regard to the ap request about foia, my office was recused, as is the normal process if my office is the direct subject of the foia request. >> mr. fong, the redacted actual substantive information that was clearly exactly what the ap was looking for, you redacted it

when they tried to get their information. it was not executive privilege, but it clearly was what they had a right to know and we're finding about here today. would you explain why? >> i was not personally involved in making the decision. my staff, though, has expertise in this area. i cannot speak to this particular redaction or other reductions that were or were not made. i can say there is an administrative appeals process that exists precisely to correct such issues and such mistakes. my understanding is these records are going through such an appeal, and i believe it would be premature to a pine. -- to opine. >> my time has expired, but i will have copies of all of this delivered to use the you could look through them and know them in advance. i think the ranking member would

agree that, quite frankly, it is hard to appeal a reduction because you don't know what you don't know. i yield to the ranking member. >> thank you very much, mr. chairman. one of the things i have seen in this committee before, and it is something i am very concerned about, is when people come before us, you don't allow them to you answer the questions that have been asked. i will go to you, mr. callahan. i realize this is not an easy process. -- i will go to you miss callahan. i realize this is not an easy process, and you are probably a little more of this and people are watching this, and there is a lot after this moment, and you have a reputation. i want to give you a chance to answer the question, tried to, but you were not permitted.

you stated that the delays did not meet your high standards, and during the delays that were discussed, or officials weighing partisan political concerns? -- were officials when partisan political concerns, to your knowledge? >> to my knowledge, they were not, and that was confirmed by the inspector general's report. >> what were they doing, to your knowledge? >> the front office wanted to know about significant foia activities and the underlying merits of the debate. they may not have had an opportunity to review them in a timely fashion. >> was the general counsel reviewing documents for legal sufficiency? so they could meet the standards? >> there were at times some documents that had been identified as being insufficiently or

inappropriately processed, and for that they went to the office of general counsel for review as is the typical process. >> were you taking your time in order to "spins stories" prior to the release of documents? >> no, sir, they just wanted awareness of the underlying issues in the foia releases. they just wanted to know what was in the documents. >> i want to thank you, and i know you mean it, that you have high standards. we understand that you are one person and you have people who work with you, correct? >> that is correct. >> it has been repeatedly said that these individuals make decisions on partisan political factors. last summer he said political appointees were injecting partisan political considerations into the process. in his report yesterday, he said

political considerations were an important factor in your foia decisions. these are serious, very serious allegations. but based on our reviews, we could not identify any instances where this actually happened. let me ask you directly, are either of you aware of any thing in the way that dhs withheld information from foia. quaestors based on partisan considerations? -- from foia requests based on partisan considerations? >> no, sir. >> i am not, either. >> the inspector general said after reviewing information, we determined that the significant request review process did not prohibit the eventual release of

information. he also said this, no foia wasicer said request youors disadvantage because of their political party or interests. are you familiar with that? >> i am familiar with that, and i agree with them and i appreciate their injection into this matter. >> our review found that your two officers were not working together as efficiently and effectively as they could. we found there was real tension between the foia office and the general counsel office. let me give you an example. on march 3, we interviewed a captain to works in miss callahan's officer. -- in ms. callahan's office. she said she had serious concerns about an attorney who

handles foia requests, and when she was asked to describe the problem, she said this, "i do not consider him to have expertise in foia. there have been several times i have had to educate him on basic concepts." mr. fong, how the respond to that? -- how do you respond to that? >> i disagree with the view that this attorney in question was not qualified to respond to her request. as you know, foia is a technical and complex area. it is true that she does not practice in this area full-time, but she oversees a group of lawyers who does, and they have very good judgment and applied his best understanding of the statutes and exercised good faith and reasonable judgments

to the questions he was presented with. >> this has nothing to do with political issues? these are two career employees who seem to have difficulty working together, which we see all the time, even on the hill. ms. callahan, how can we expect the process to work when career officials cannot work together? >> we are working to address what are reasonable disagreements among others, and i think it is important to make sure that we put personalities aside and try to work to solve this problem. we recognize it could be a concern and we are working diligently on it. >> as the leaders of your two offices, it is it your job to get these employees to rise above this and rebuild the trust level? and what is the plan to do that? and how you plan to resolve substantive disputes between the offices in the future?

>> i strive to be sure i am a good manager and make sure these issues do not impact the effectiveness of our offices, and i will work diligently to attempt to address that through individual consultations as well as perhaps collective ways to resolve personality issues not dealing with substantive issues. >> mr. fong? >> those who work with me know that i take my leadership and management responsibilities very seriously. i have spent a lot of time in my almost two years at the department ensuring that our lawyers to work well with their clients and others around them. i have taken specific actions to remedy issues that have arisen. and as you said earlier, this is not unusual for career professionals who care deeply about what they do and are very

dedicated, hard-working professionals who disagree at times. and as you said, i believe they should try to rise above their disagreements. >> thank you very much. >> thank you. for the record, we have been informed that the ap's 9-month- old application under the administrative objection has not yet been heard. with that, we recognize the gentleman from utah. >> thank you, mr. chairman. i will refer to the associated press reports, read statements from that, and get your reaction to them. tell me if you believe they are true or false. if a member of congress sought such documents, employes were told to specify a democrat or republican. >> sir, that is how congressmen are referred to. >> this is a new policy, correct? >> actually is not. it was a policy established in

2006. it is during the weekly report in which we report these elements. >> to the white house? >> actually, to the department, and they may or may not report specific elements to the white house. >> i want to clarify this report. the second sentence of the july 7, 2009, from you, the privacy office foia leadership integrates this into the white house liaison. >> and by integrating it, i don't know what goes on with the integration process. it may or may not include it. house?was for the white o >> that is a front office process. in the two years i have been here, i believe a member of congress has been listed on it once. >> first paragraph, for at least a year, only security d quarter

requests for political records -- be toward requests for political records. >> i disagree with that assessment, as demonstrated in my written testimony. it was a process to provide awareness to the senior leaders. >> probing for information about and deemed itoors, too politically sensitive. >> as i discussed with the ranking member and in the inspector general's report, there were management challenges with the initial way we tried to do this awareness process. political affiliation, parties of interest but not play a factor. it was logistical issues rather than management challenges, and that was demonstrated. >> it seems to be inconsistent with your directive of july 7, 2009. "the department abandon the practice after the associated press investigated."

is that true? >> it is not true. >> let me keep telling, thinking. you have answered the question. i have a short amount of time. "career employees were ordered to provide secretary janet napolitano's political staff with information about people who asked for records, such as where they live, whether they were private citizens or reporters, and the organizations were they worked." true or false? >> this is a process since 2006 to provide awareness into significant issues that may be going into the public domain. >> "two exceptions require white house review -- spending under the $862 billion stimulus law and the calendars for cabinet members." is that correct? >> anything that has white house equities requires white house review. >> white house equity, what does

that mean? >> to the extent the secretary was in the white house, disclosing some sort of the element, this is a typical process of referring foia requests to different departments. that is a standard process. >> "under the e hundred $62 billion stimulus," was that part of it -- under the $862 billion stimulus," was that part of it? is that correct? >> ithat is correct. >> why? >> i am not a policy person in this area. >> is that a directive from the white house? >> i believe i was instructed by the office of the secretary to do that, and we processed it. >> who directed you to do that? is that a document that you can provide?

>> i believe is the deputy chief. >> if it is not in the record, would you provide that? >> certainly, but i think it is in the record with the deputy chief of staff, and we did so. >> my time has expired. >> would the gentleman yield? >> yes. >> who was that one member of congress? >> it was not sent to the white house. >> who was it? >> i believe it was senator grassley when he was asking for a request. we modified it and answered it three different process. members of congress did not often file foia requests, so it is a relatively moot point. >> we now recognize the former chairman of the full committee, mr. towns, for five minutes. >> thank you very much, mr.

chairman. at the meagan, -- let me begin, first, ms. callahan, think fee- for-service. -- thank you for your service. you have asked many questions about the laser responding to foia. can you please explain to this committee what circumstances, with situations might delay you in responding to foia? >> yes, sir. as you know, we take our responsibility seriously. at the same time, there are several steps that i detailed in my written testimony that describe the process that every foia -- of the 130,000 we received last year, each foia must go through the steps to identify the federal records, the parties who may have information, that we have applied the appropriate exemptions, we have looked at legal issues, and the process

has been reviewed to make sure that there is not any information that is inappropriately disclosed or redacted. despite having high standards, the average processing time for foia's in the department is 95 days. that is right now several days more efficient than the department of justice, at 113 days, but it is a standard that we are trying to achieve and surpassed. delays are not appropriate for any foia, and we are trying to mitigate that problem. >> are any of these delays called by -- caused by political involvement? >> as i described in my initial testimony and written testimony, there were some processes that were involved in the awareness review for the department, but did not involve political activities or instigations as the inspector general indicated.

the initial way we started to give the front office of the secretary awareness into some of the significant foia that may make media attention were not up to my standards and we have modify that process. i believe now we have a best practice in terms of providing awareness not only to the front office but also to the other foia officers if there are requests that may impact their equities. >> ms. callahan, can you explain the 2006 directive in which foia requests are referred to the secretary's office? can you explain that? >> sir, i cannot explain that, because i was not here in 2006, but i understand it is the ordinary process of all administrations to have awareness into significant activities each component. my privacy office provides two weekly reports, one on the

activities of the entire office and separately on foia's that may meet the standards for awareness for the front office. but i understand it is typical practice, not only across the administration but the federal government. >> thank you. mr. fong, what can be done to eliminate the delays? >> i think a lot of what can be done has been done in terms of the significant review process, having it on the share point system one day gives time for awareness, but does not add to the delay of the process of releasing the documents. i think in general, if we were more coordinated as a department, we spend a lot of time as a relatively new department trying to figure out who may be relevant components

program individuals, what documents need to get to whom for the foia professionals to review. our lawyers are very busy, hard- working, but their plates are full. it takes time to do an analysis, to gather facts, make judgments. i would also said that while i agree it is important to be prompt, there has been much made of the 20 business days time line, which, in my view, is a misnomer. if one thinks of it as a violation, it merely provides that the agency must make a determination within 20 business days, after which a requestor may appeal or seek judicial redress if such a determination is not made. there are provisions that permit an agency to request an extension, and, as miss callahan

indicated, many agencies take on average longer than 20 business days to respond to a foia request. while we have an interest in releasing promptly, this is a process that courts and others have recognized as the federal government has become more complex, it's inherently takes time. >> thank you very much and thank you both for your service. i yield back. >> i think the former chairman. >> thank you both for your appearance here today before the committee. ms. callahan, thank you for your service. if you do not have an easy job. it is a complex job, with a great scope of information associated not just with the free flow, but also, at .. job.

but the ap has reported that in december, 2009, you found a level of scrutiny that we have had the base established through prior testimony. you understand what i am talking about in terms of the oversight of political appointees. you say this level of attention is crazy. i really want somebody to foia holddamn process. what did you mean? -- i really want somebody to foia this whole damn process. >> that was to my staff. the initial review was not sufficient, and it had its management challenges. at the time, -- therefore, that is why we had moved to the share point system that mr. fung referenced an i.d. tell that my

testimony. we were not technologically able to do that in december of 2009. share point did not come into my office until march, 2010. at the time, i was discussing not the awareness review, because i continue to believe the sector has important equities and having awareness into this -- the secretary has import equities and having awareness into this, but the level of detail and paying attention to what was perhaps not where i would have put my emphasis. >> is it your testimony that was purely process? >> yes. >> it is just a question of process? >> not questioning the review itself, but the level of detail. >> we have established there is a level of review that goes on in the form of responsibilities for political appointees to have to affirmatively indicate as to whether or not inflation is to be released? >> let me be clear, that process

has been modified and we no longer have that at all. that was the initial process, and that has significant management challenges. that did not meet my standards and that is what the process was modified. >> this does not happen at all now? there is no affirmative review? >> absolutely not. barry a fyi -- there is a fyi review. previously, we had no way of sharing them between the front office and through the components through e-mail. >> are you making the calculations as to sensitive information? let's assume there is no politics but there is a security interest. are you responding to this based significantly on the issue from a foia perspective, or reduction or other issues? at the current system, it may help explain it. -- the current system, let me

explain. we have an internet-based system where we up loaded. then the people's with equities review it and other foia officers review it, so it is accessible in a centralized base. in that way, we send out notification and say the request has been made. >> it is a notification process. there is no more thumbs-up, or affirmative, but any kind of person above you? >> that is correct, sir, and that was changed in july of 2010. this is a notification process. people can look at the underlying documents. that has happened a couple times were people have caught the their decision information that may have -- people have caught decision information that may have been sent out. it has only happened a handful of times since july. that is a better process. >> there is no longer any delay

as there was in the past or something would have been prepared for release by you and would have taken an additional amount of time to go up the chain before you got the affirmative approval by the political appointee? >> the new share point system has the documents but loaded the next day -- one day, and then it is moved on the next day. that is to make sure that we did not disclose all enforcement sensitive or other decision information inappropriately. >> mr. fong, what level of training or engagement do you have with those political appointees about their responsibility and their obligations under the freedom of information act who participate with you in the review of these documents? >> i just want to be clear what your question this. when you refer to the political appointees. >> those who in the past had to affirmatively indicates. it is a complex.

and you appreciate that. they were doing affirmative indication, and now, presumably, that is no longer the case. my concern with moving forward, notwithstanding if you are still participating, to what extent do those individuals have any say, may be able to reach back and say, do not release that yet? >> of course, that is part of the process then and now that the attorneys in our office who have experience and expertise in this area stand ready to be consulted at any time, whether it is the foia professionals or the political appointees or program managers to have a better sense of the impact of the disclosure as is required be assessed under the attorney general's guidance manual. all of that information is

relevant to making a legal determination, and our lawyers are involved in making those determinations. >> the gentleman's time has expired. >> thank you, mr. chairman. i am a little surprised where we have allegations of politicization being made, and i see nothing but pure politics and nonsense. i would hope to be taken seriously as a committee that the majority would begin to act that way and take down that material and approach this with a degree of seriousness with which it deserves. that said, ms. callahan, i think you and mr. fong for your testimony. i know eventually the ap story said they were not able to substantiate the most serious allegations made in the story are subsequent comments. just to put that in context. but i was concerned what i thought at one point in the ents involvingevtn

the recovery act. i asked the interview, and she basically said at one point she thought she was advised that all requests needed to be sent to the white house, but was advised that was not the case. does that conform with your understanding? >> thank you for that, and that reflect -- that refreshes my recollection that is indeed the case, thank you. >> last year you receive 130,000 freedom of information act requests. is that accurate? >> that is correct. >> about 6 under were significant enough to require additional review? -- about 600 were significant enough to require additional review? >> 85 of the responses had passed

the processing deadline before there were submitted to the office of the secretary. he also said about the delays the one that were under the review process were short, one to four days. it still caused delays. have modified that process to make it a notification only system. we have mitigated the inspector general's concerns in that way. >> also, when this administration took office, they already had a backlog in the department of more than 74,000 requests. >> is that correct? >> the highest in the federal government's history. we have done it down to 11,000 foia requests.

>> it strikes me at a time of fiscal austerity, you had to hire 40 more full-time positions to do with this enormous number of requests for an affirmation. >> i believe that in case the department's commitment to foia, to increase the number of hires. >> we have a lot of challenges to make and a lot of choices to make with respect to the budget and there seems to be a commitment there to take 40 full-time positions allocated. the thing that strikes me is the bill put forward by the majority would make across-the-board cuts to the office of the secretary, significant cuts. 9%. the president was going to raise it and h.r. 1 would make more

cuts. what will that do to get to the transparency issue? >> it could significantly hinder it. i have been able to double the size of my staff since i have been there. the department has shown commitment around foia across the board. i am concerned these cuts will significantly impact our processing. the foia officers discuss that with me. do you agree?a >> i concur with ms. callahan's judgment. we're trying to make processes as efficient as possible but there is an inevitable draft of reductions. >> thank you for testimony. i yield back.

>> mr. langford is recognized for five minutes. thank you for being here. the sheer point system seems like that is working and you're comfortable. i understand it will be better than the mailing documents back and forth. you'll be able to review them there. does that increased and efficient -- efficiency help in the budget? you have seen an increase of efficiency. is there an increase anywhere else? >> have not thought about it but because it is a centralized system and labor is disbursed because the component officer will upload the information and my office will do the notification to across the department. it probably does make it more efficient for labor as well as for awareness. >> you mentioned before there was a one day that -- the day

before from office gets it and they can have this applauded before it gets sent out to the request your. have you had any moment once the notification has been made there is a contact back and saying hang on to that, we need to check it for for whatever reason, have those slowed? >> yes. the share point system started in july 2010. it was a three day notification system. we had moved to a one day notification system. since july, we have had a handful of times including one i caught last month that involved international equities that were inconsistently redacted. i said wait a second, this needs to be reviewed and check for consistency. i did a reply oil and set the stage to be checked and i instructed my director to have it reprocessed and it has been a

handful of times by my recollection since the share point system started. each time, there has been good catches and we have confirmation that would have been inappropriate to disclose. >> none of the times it was caught and slowed down, it was not for political reasons or we need to get our story straight before this goes out issue. >> absolutely not. >> the issue you brought up about catching up. people want to request information and it is great to start getting caught up on the backlog that has been there. the document i have received, talking about a report to dhs and the annual freedom of information reports makes a comment about the length of time it takes in 2009 against 2010. are you familiar with that and the timing? >> i issued the report. i am not familiar with that except quotation. >> it talked about the medium number of days.

it is now to 93 in 2010. in 2009, the average number of days was 74 days and 2010 was 120. it is processing through where the share point system is coming on line. there's a lot of the backlog. in 2010, it is catching up and getting better. you mentioned we are getting faster. it looks like it is slowing down somewhat. >> if i could clarify. with regard to the awareness review. it was a small number of requests that were impacted. they should have no impact on the processing. the number of days you quoted is not -- that does not -- that is not consistent with my recollection. perhaps there was some numbers i am not familiar with. >> we will share this with you. we can get a response back.

you can give us a written response and say here is what the actual numbers are, that would be terrific. >> i would be happy to clarify that. >> what is the decision on making a significant request? what is the criteria that is set? >> the criteria for a significant reporting has stayed the same since 2006. it is issues that will be discussed in the media so we know they are going on. as has been discussed several times, we received an extraordinary amount of requests. weekly report is sent to the firstfront office. this component of the same request as another. it is for awareness purposes. sensitive topics, priorities, and litigation. >> if a private citizen made that and handed it over, that

may not rise up. some of it is the request your or the topic. >> it is the topic that would be of interest. if the media requested it, it is assumed it is a topic of media interest. the media is included for notification purposes. >> we will recognize mr. welch for five minutes. you arrived at the correct time. >> thank you. this question of transparency is an important one. mike understanding is you get overwhelmed with requests and to position is you are transparent, you are doing your job as best you can, is that right? >> i tried. >> i want to give you an opportunity to explain why you believe you are meeting that standard. let me share in what you have been doing and what your responses are to the assertions

that have been made about your failure to do that. >> thank you. the department and the professionals there have made herculean efforts to get the backlog down from its high of 98,000. they are under amazing pressure and they do amazing work all the time. in addition to reducing the backlog, in addition to providing -- >> i will interrupt you. here is what will be helpful for us and you. to explain -- the backlog was x and now is it is x-minus. all of us respect and appreciate the hard work that you and your fellow workers are doing. the more concrete you can be with us, the more hopeful it is

for the khomeni to be able to come to the right conclusion. >> as i indicated, in fiscal year 2009, we had a backlog of 74,000 requests. that has been reduced to 84% in the past two years to an 11,383 backlog request. in addition, we have received 102,000 requests in fiscal year 2009 while processing 160,000 foia requests. that is the work of the u.s. citizenship and immigration service. in addressing and getting more efficient. this accounts for 70% of foia's that process. received between 8010 thousand

foia requests and have been able to commitment by uscis to reduce that. >> there are some allegations in the report that the front office that dhs was interfering with requests by correcting errors without going foia -- with outgoing foia responses. i wanted to have you tell the committee what type of specific errors to the front office to review how to correct? >> as i have detailed, the front office reviewed the cover letter as well as the underlying response. they did not make any changes to the responses, but they did identify several times where there were typographical errors and other elements that were not consistent with professionalism

standards i would like. they have caught those in their awareness review of the documents. >> ok. according to the inspector general's report, the ig provided -- stated, we were not able to substantiate the most serious allegations made by the ap story or subsequent comment. we determined the review process lead to inefficiencies and slower processing of certain responses. what were some of the inefficiencies you observed and what steps were taken by dhs management including your front office, general counsel's office, and your office to reduce these inefficiencies and has the response time improved? >> absolutely. we take these issues seriously. we had identified these problems and have self corrected it. the initial original awareness

process was done via e-mail and it was a relatively cumbersome process. as soon as we had a technology solution we could provide an internet based system where everyone could access, we move from the e-mail system to the internet based system and that process has been more efficient. i believe it is a leader in the federal government. >> think you. -- thank you. i yield back. >> thank you. >> i wanted to point out to my colleague, he questioned the posters behind the chair and the and he said why are there political statements on the back wall? if the tillman read the briefing document, he would know that political statement is the title of the hearing. i wanted to point that out so folks who are in the audience have looked at the title of the

hearing and see it on the wall and that is not a coincidence. although some of my colleagues may think it is. i would be happy to yield the balance of my time. >> thank you. ms. callahan, what is the purpose of foia? >> to inform the public of the elements of the federal government. >> tell me whether or not something where discoverable or not. >> discoverable is not quite the right term. >> this administration applies a presumption of disclosure unlike the previous administration. >> i was not asking for political comment. i'm asking for the elements. that you applied to determine

not which administration is better than another, the legal elements you applied in determining whether or not you should turn something over. >> foia applies to all federal records and we seek to find all responsible records and we look at them as -- those records in case there are specific exemptions. there are nine exemptions that may need to be applied to documents or alamance. >> it should be turned over unless there is an exception. >> yes. >> why with the employment of the person seeking the rec matter? >> it does not matter. >> what what that have been part of the calculus that was used? >> it was not. the weekly report that summarizes anything that may be of media interest -- >> how do we know that it was not part of the calculus that was used? >> the inspector general's

report indicates political calculations were not part of the process. >> i am asking about residency and employment. what does it matter if they are private or a reporter? >> it does not matter. >> can be both? >> yes. >> why would you track that information? >> it is only summarize because it may become part of media interest or tension. >> why? why keep whether or not it is a private citizen that is requesting the information or a reporter? >> it is a requirement to disclose who is requesting. the log say the name of the person who is requesting it unless it is a privacy act request. >> the employment of the person is part? >> sometimes the media affiliation may be part of a lot. -- log. >> what about the political

affiliation? why is the part of the calculus? >> it is not. >> you do not track whether it is a republican or democrat requesting the information? >> under foia, we hvave gotten only one request during my tenure. >> you said when senator grassley, when his had gone to the process, it was delivered to the political review system in the office of the secretary, you took care of his request your other fashion. >> i am sorry if that is what you interpret it. >> that is what you said. you said you took care of it to another system and you did not know about it until you were rough -- informed that a republican senator had a request that was ready to go up. >> the initial in coming.

the weekly report summarizes the incoming requests that come in so they are summarizing what the request is. senator grassley may or may not have been on the report. we never processed his response pursuant to foia. >> i apologize. i yield back. it is clear that you take care of politicians differently in the one case. >> if a member of congress -- that is inaccurate. >> we are supposed to indicate which is that democrat or republican. >> ? >> that is the way that you are addressed. i do not know what it -- why it was a recommendation of my career staff. the standards from 2006 were modified slightly based on your recommendations. >> my time has expired.

>> we now recognize the distinguished gentleman from illinois. date yesterday i deeply appreciate this and thank you both for being here today. i am not quite sure frankly why we're here today because, mr. fong form is callahan, but the effect to her general's report found actually there was a lot more transparency at dhs and this administration than in the previous administration.is is that true? >> i believe that is one of ther conclusions by the inspector hineral. t when it thinks things my officee established in augustes of 2009s a policy of disclosure to

attempt to put out the frequently requested documents, -lements that may be part. people may want to seek for your loss. -- foia loss. we put our foia was up for the entire department for 2009 andt. 2010. >> thank you which by the way ie continue to find the science behind the chairman and ranking member o offense to the propagandist. of and one of the sciences for you and ofthese is framed in an course as concerned about transparency and backlog and politicization.

what w the was it true that the backlog from the previous administration had 98,000? >> that is correct. >> by the time they left it was down to 74,000. >> that is correct. >> what is it now? >> 11,000. one-ninth of its previous high under the previous administration. the idea that someone's political affiliation, when did the practice began? >> it was a recommendation from my career staff to added. i do not think it is material. we do not usually differ for requests from members of congress. >> that is correct. in terms of notifying political leadership if that is what you can call it.

the non-career political appointees leadership picked by the president, often confirmed by the senate, notifying them of the status of requests, when did the practice began? >> in terms of notifying when responses one out, that has been a longstanding process. >> it began in the previous administration? >> the awareness review and having a systematic process started in this administration. >> this administration. >> we have a state of their solution to it. >> i was the chairman of fairfax county, one of the largest counties before i came here. the va has one of the most open sunshine laws and vigorous laws in the united states. e-mail, phone logs, and the correspondence, all memos are subject to foia and strict time lines in terms of getting requests fulfilled by the media

or others. i was the chairman of the county. it was routine practice our legal counsel would notify the political leadership of pending requests so we were not surprised. i find it shocking that some of my colleagues think that is done -- and on toward development. i think that is responsible management. is there any evidence and maybe this is the nature of their concern of political interference once made aware in responding to requests? >> i have no knowledge of any political interference with regard to the awareness review. i believe the inspector general made the same conclusion. >> thank you. are you aware of any such political interference? >> i agree that the report which took a close look at this issue did not find any evidence of improper interference. >> would it be fair, looking at

the backlog of progress and the policies regarding transparency and a lack of political and your ferrets, one could conclude the transparency of dhs in this administration has improved over the previous? >> that is a fair statement. >> thank you. we have answered that question of the chairman's head. i will yield back. >> thank you. if i can summarize this. there is a presumption in favor of disclosure. there are exemptions. you do not believe there has been any political interference. wod you .. that slow walking are taking your time in complying with an otherwise legitimate request could be interference? >> there are many steps and that could create delay. >> including slow walking something. taking your time and reviewing

it and deciding when to disclose it? >> i hope that would not have happened but that could be one of the many possibilities of delays. >> that would constitute interference, you would concede. >> our professionals take their responsibility seriously. >> that was not my question. is even simpler. is slow walking or delaying the disclosure of information interference? >> it is delayed. -- delay what about an overuse of exemptions in the redaction process? i >> that is also something that would give me pause. the inspector general's report raises an issue that i had not previously identified which is that the department has been using the exemption b5, perhaps more -- has been using it

increasingly throughout the past several years starting in 2006. >> perhaps.tart you used the word, "perhaps." >> it has been increasing since 2006. >> where in b5 do you find an exclusion or exemption for the phrase, "this is bananas"? >> sir, i'd be happy to defer to my legal colleague, but b5 is for predecisional and deliberative -- >> can you see any way where a b5 exemption would apply to an e-mail that said, "this is bananas"? >> i think we'd have to look at the context, sir. >> well, would -- >> would the gentleman suspend? >> yes, sir. >> we provided documents to you -- >> these right here? >> yeah. i would ask that the gentlelady be given an opportunity to review the document you'rety b asking, and then we'll restart. thankve you. >> yes, sir.

>> do you know where in the package it is? i'm sorry. >> one of the -- slide 3, i'm told. >> slide 3. okay. i have -- [inaudible] i don't have have slides here, sir, i'm sorry. >> yeah, make sure of taking care they have them. >> congressman, if question is about the foia production, this looks like this is the foia production to the associated press.ucti as i've indicated to thepres chairman, my office did not process this request under typical process, typical standards. we were recused from the process in, and the office of the general counsel made the determination in the specific foia. >> well, i can still ask you,osi right? your still the -- you're still the expert. >> part of the purpose of b5 is to have a vigorous and dialoguer

debate, and a reasonable dialogue. and perhaps it was a termination of the office of the general counsel that that was part oftde the deliberative process rather than a final decision. but i, as i said, i wasn'tdeci involved in this redaction. >> what about, "nope, they entirely changed our response. spoke with jordan, and he is going to confer with ogc."n an would that be a b5 exemption >> sir, that also was part of the foia request from the associated press. i was not part of the process, a but i do know the underlyinghe facts in this circumstance. the office of the secretary had initially made somethe recommendations to modify our boilerplate foia responses to make them more streamlined, and they did not understand that,hey indeed, several of the paragraphs were required by law. and, therefore, after consulting with the office of the generalo, counsel, we decided to use the same standards. so, therefore, that was, indeed, a predecisional document because

we did not make the changes that were recommended by the office of the secretary. so in that case, again, i did not make the determination, but i thought exemption would bedi appropriate. >> do you agree -- you do think a b5 exemption would be appropriate for the phrase, "they entirely changed our response. spoke with jordan, and he is going to confer with ogc." >> in this factual circumstance, that's because they did not -- the response, indeed, was not changed. >> for those that may not be familiar, what is the process ii youli are redacting an impermissible way, who gets to review that?who >> uh --view >> i mean, how do we know what we don't know? if you're redacting something, who gets to decide whether or not the redaction was appropriate or not? >> inno my written testimony, i detail the entire foia process including the possibility of p consulting with counsel, and then once the requester receive. the response, they have several alternative appeal options. an administrative appeal ands

also going to court. >> i can't see edits. are they useful. now why would that be a b5 exemption? >> i'm sorry, sir. again, i am concerned about the overuse of b5 in this department. mr. fong and i have cutsed it, and -- discussed it, and we're going to look at a solution with respect to the issues raised with regard to b5. c >> we knew itom was coming, they are trying to substantially edit our letters why is that a b5 h exemption? >> sir, again, i do not have knowledge for this element so, i'm sorry, i won't be able to continue to answer these questions.nue >> would you agree with me that that's not an appropriate use of the b5 exemption? is.no >> again, sir, this was not my processing. w >> gentleman's time has expired. now we go to the distinguishedte gentleman from illinois for five minutes. >> thank you very much,nois chairman, and, you know, since i sit next to the other gentleman

from illinois, i just wasn't certain. but since both ms. callahan and mr. fong have testified that neither are aware of any political interference inawar responding to foia requests, i'm going to yield the balance of mi time to the ranking member,e mr. cummings. >> i want to -- thank you very much. thank the gentleman for yielding. ms. callahan, i want grow, you know, one of the -- first of all, i think you admit and the ig will agree that the system, things are not perfect. by the way, none of our offices are perfect. we've got great people, but they're not perfect. and i am concerned about this, you know, as the ig was concerned he said, his recommendation number five, it says to recommend the secretary that the secretary issue written guidance to the department on

the president's reiteration -- [inaudible]ritt fears and exposure failure are not grounds to exempt information under the foia. and you just said that you mr. fong were working onwork addressing the issue ofssin exemption number five -- exemption number five. tell me what you are planning to do.ion i mean, what do you see? you expressed concern, you said you're trying to do some things. how do you address that? because one of my colleagues on the other side said how do we to forward now. >> yes. >> and i've got to tell you, when you said that you all had reduced by 90%? >> [inaudible] >> whatever, 80%. let me tell you something, that's phenomenal.that now, but we want, we want to do even better. this president has said he wants to do better. and i want you to address that issue. >> sir, i want to do better as well. and one way with regard to this

identification of b5 and the department, as i said, i had not identified this as a systemic problem until the inspector general brought it to my attention. mr. fong and i have not had a chance to do a thorough plan, hd but i think it, obviously, is going to look at the specific hadn'ts of b5 -- elements of b5, how it's being applied and also, obviously, training and materials and education will help to make sure that when exemption b5 is being used, it's being used appropriately. and it should not be used to, for -- for embarrassment purposes and so on. so i completely concur withmb that.ar >> how long have you been in your position, ms. callahan? >> two years, sir. >> were you in that department before then? >> no, sir.io i was in the private sector.n? >> with well, let me ask you this, you referred back to 2006 tw or three times. >> yes, sir. >> and i was just looking at some guidelines, foia section of

dhs cabinet report to the white house -- >> yes, sir. >> -- dated august 4, 2006, andd it talks about, it says select foia requests for submission in one of the following criteria. one is the foia request forria congressional correspondence, the foia request is from a member of congress, the foia request is from a member of the media. so that's been a policy sincey 2006? >> without change. yes, sir. >> and when you came in and you're trying to do this more transparency, an effort to make things more transparent, i takeh it you go back and review these kinds of things so you know what the guidelines are? is.re? >> i did, sir. and i relied heavily on my career foia professionals on this regard. we looked at the 2006 guidance, decided to issue it as a memorandum from me to show itsts importance, but also added some ministerial elements to it to

be, quite frankly, more professional and consistent wits how we refer to things. but the substance of the submission guidelines have not changed since 2006. >> so, in other words, there wag nothing in between 2006 and when you came in. bet >> yes, sir. that's correct. >> so that's what you had to go back to. >> yes, sir. >> so is it safe to say that during the latter, i guess the bush years, president bush's years -- 2006 through 2008 -- that these were the guidelines, is that right? >> that is correct, sir.uide and they remain, essentially, the guidelines today. >> i see. um, now, mr. fong, the attorney, the ig made some complaintsorne about your department such as the department's commitment to producing documents is in question. dhs about resources dedicated to -- que [inaudible] suspect made a number of allegations. and since you are not going to be here to answer those butons.

you're familiar with them, iente think it would benefit the entire committee for us to know what your response is to those. because they were rather serious. >> so to clarify, you may have inadvertently refer -- >> i meant the inspectoray h general. i apologize. >> you meant the -- >> the gentleman has an additional one minute. >> the republican staff report. i apologize. >> thank you for giving me an opportunity to respond. i have not had an opportunity to read the entire report in depth, but i did carefully review the allegations made concerning attorneys in my office. including career attorneys who have worked there with great success for some time. i confess that when i first saw the section headings, my initial reaction was one of concern because, as you indicate, they make very serious allegations about lawyers i know well. and i take very seriously, as i should, any allegation of wrongdoing by my staff.

upon further examination of the portion of the report dealing with the ogc lawyers, however, my concern, frankly, turned into indignation because i believe the report paints an unfair and, if i may say, an irresponsibleua portrait of certain people and events. the report reads more like an advocacy piece rather than a sober, substantive, dispassionate investigative report. in that sense, the portion ofubt the report that focuses on the office of the general counsel is quite unlike the inspector general's report which resulted from a serious fact-finding effort and makes six constructive recommendations, all of which the department has concurred with. >> thank you. con we've gone two minutes past. i think he's pulley answered his -- fully answered his opinion. we now go to the gentleman from michigan, mr. walberg, for five minutes. >> thank you, mr. chairman.

ms. callahan, in your written testimony -- and i hope i'm not going back over a question that i missed while i was out in another committee for a brief period of time -- but in your written testimony you state that two years ago the department faced a backlog of more than 74,000 foia requests. under this administration you g7 on to state we reduced the backlog by 84% or more than 63,000 requests. in his interview with the committee, william, a member of your staff, pointed out that about 30,000 records were transferred to the department of state. according to william, and i quote, literally boxes on palettes were dumped on the state department when we hadt the our portion of processing. de dopr you feel that it's fair to take credit for backlog y reductions that have simply been transferred to another agency?ru and the records remain in ther

federal government? >> if i could clarify exactly in what that process is, i, um, am familiar with the incident as i had testified earlier. the u.s. citizenship andesti immigration services has done an amazing job of processing their files. they receive between 8,000 and 10,000 foia requests a month for, primarily, immigration files and alien files. under foia each department processes their own records, so once u.s. cif had finished processing the documents, they then go through a process that is typical in the federal government of referral. so because the u.s. cis was soeh successful in getting their backlog down in fy-2009, and fuc that for that i commend them, unfortunately, the department ot state was thmee beneficiary of that was in some of those -- because in some of those records there were -- we are attempting,

that is, i think, a one-time circumstance. one way we could mitigate this is for cis to sign a memorandum of understanding with the department of state to process o the department of state documents. and i believe that's in discussion. >> but, again, this backlog wasn't reduced by your department, by your office.by >> no.r of and it's been reduced throughout the department by all the foia professionals, the 420 foiasion professionals that work hard every day. >> well, that may be the case, but the credit seems to be at a different spot. in addition, according to a recent ap report, a significant portion of the reductions achieved across dhs was the result of a federal contract signed under the previous administration, the bush administration. in light of the fact that a private company completed this work under contract signed duringac the previous administration, is it not somewhat disingenuous for you to credit these reductions to this

administration? red >> the reductions are the reductions, and as i indicated, u.s. cis has made an incredibles effort, and they have done so in coordination with contracts,ma that's certainly the case. and i applaud them for applying such a significant priority toni getting that backlog down. they have done an amazingg effort. >> well, credit where credit is due. >> yes, sir. and politics where politics is due. let me ask, let me ask another question here. during their interviews, yourntr foia officers stated that the front office approval was needei before they could release foia responses. your deputy chief foia officer testified, and i quote, they -- front office -- were, well, reviewing and then approving, yeah, absolutely. because if we couldn't send. something out the door until they gave the thumbs up, that's approval.

do you agree -- disagree that that approval policy was, in -- fact, in place? >> the original part of the>> awareness process was, indeed, an affirmative acknowledgment of that they have received the foia and that they have reviewed the foia. that had management challenges. i have admitted that, and i believe we attempted to mitigate that immediately. we have now moved to a notification that i believe is much more efficient.is m >> thank you. i yield -- >> would the gentleman yield? >> i yield. >> so just to review -- >> yes, sir. >> you took credit for a big reduction, $7.6 million worth of bush era money, took a contract and reduced it. you took credit for 30,000 records that were transferred tt another workload of othertr people. now, you have some really hard working people, and i appreciate that, but how do those peopleope feel about the day after our whistleblower and others giving testimony, the whistleblower gets taken out of her office,

moved to an inferior office, an inferior title and has her job narrowed in scope and then, quite frankly, i'm told she's now on, basically, health leave? i'm listening to all of this, and i'm saying, isn't that theie most chilling effect anyone could ever have to, to see thate if you tell the truth to congress, the next day your job's reduced and your office is changed? job and it's not called a demotion, but it sure as hell looks likets one?ed a >> sir, um, there are several elements of the, um, the process that i cannot speak to here, but happy to have a nonpublic briefing about certain personnel issues. with that -- >> my time, my time has expired. we don't do nonpublic issues when a whistleblower is penalized, and hundreds of hard working people see the effect of testifying honestly under oath before congress.f >> sir, if i could -- >> time's expired, i yield back.

does the ranking member request a second round? okay, we'll have a second round. and i'll begin. mr. fong, basically, ms. callahan has said she was recused in the process. but you were not recused. your department were not recused, your political appointee, many of the people in your department are political appointees, and the general counsel's office regularly does redacting, including 5b.s isn't that true?n' >> i'm not familiar with the specifics of the process. i believe -- >> no, first of all, i'll make it simpler. you're a political appointee, right? >> correct. >> other people are? >> a few. >> okay. other people does redacting. that's already been testified to, right? >> the department does. >> you -- the general counsel's office. >> we may adjudicate or

interpret the statute to -- >> you add things which gettatu black lines over them, isn't that true? >> we may make -- we provide legal advice to determinations made by the office of privacy. >> okay.>> so in the case of the ap'sivac fairly sensitive request, constitutional first amendment in addition to foia, they, in fact, found you doing the redaction of the material delivered.e your office, headed by a political appointee, did the actual redactions that are being talked about here today, isn'tab that true? your office, people under your control? >> >> uh --ed >> yes or no is all we need to no. >> no. >> okay. who did the redactions that we're talking about today that ms. callahan is saying she was recused from, but we're seeing some pretty absurd redactions here. the who made them? >> i do not know who made the specific redactions.educ i do know that a senior career lawyer was involved in giving legal advice to those who made

the redactions. i can't speak to the specifics,t i'm not -- >> okay. well, i'm going to ask kind of l closing question on this subject. the president said and was unambiguous on his first day in office that he wanted to err on the side of disclosure. of if you had a recused department on a particular request, the ap request, why wouldn't it have been appropriate to meet the spirit of the president's own words to simply say to the foia career professionals, we're not going to second guess this one. we'll err on the side p of openness. you do what you think is right, and you deliver it, and we won't have it further reviewed by those in your office and others that might have suggested further redaction, some of which looked like simply covering up embarrassments or, if you will, deliberative cover hum conversations. -- cover-up t conversations. u the meaning of these items which we are releasing today, it's aia very small part of the

discovery, have never been given to the associated press. they've been denied the associated press for nine months. why is it it wouldn't have been appropriate in either one of is your answers, yes or no, to have erred on the side as the president said and had the career professionals do it and take your chances that maybe just once something would get out that wouldn't be perfect, s even though it was done by the career professionals?gh i >> mr. chairman, it would not have been appropriate because the president' memorandum did not say to ignore the law.s the law includes exemptions. we are duty-bound -- >> okay.we a look, i've heard enough of a political appointee, political o appointees who sewer -- interfered, clearly, with career professionals. we have a whistleblower who your organization has punished that was part of an overallion disclosure that we've become aware of.eral let me just close because my time, too, is limited. we're not done with this. the minority may think that this is not right.

our expectation is from this day forward we want the rest of the documents that were requested, o we want to see them all. additionally, i'm putting you on notice that as we view the ap request which is nine monthsp delayed, they have not had theie day in court to get some of theo things that we're seeing here te today.thin we're going to have additional hearings so that we fully understand line item by line item each redaction that they're waiting to see nine months later and haven't seen. so i would ask, quite frankly, that you do what you need to do to insure that we don't have another hearing. make an expeditious decision on this appeal. you know, nine months for the associated press to want to know your ownething that in words have led to changes, material changes in how you do business in the foia section.oud and nine months later the ap is still waiting on responses to these, and the only answer we

got here today is, well, i didn't review them. i was recused. i didn't actually work on it. but we can't actually explain why it's bananas, in fact, gets redacted. that's something the american people, they expect every day that the press ask and the press gets aned.ge and the foia -- answered. and the foia statute is unambiguous that, in fact, it's only through narrow exemptions. and if those exemptions have been abused once and it's deliberate, then they've been abused. with that, i yield to the ranking member. >> thank you very much.ber. mr. fong, as a lawyer i, and i used to represent lawyers when they got in trouble, and i know that license to practice law is very, very important. and we are, we are held to a very high standard as officers of the court. and i could, when i asked you about the allegations in thisbot

report, i could tell that you got a little bit emotional. tel and probably you share what i share. i know the feeling.are i want to give you a chance to, to respond to some of these allegations because there's something that while the chairman, and rightfully so, is concerned about people beingd demoted, i'm concerned about that too. but i'm also concerned aboutabou people's reputations. and lawyers, we have a high standard to set. you started talking about the lawyers in your office. there have been allegations that have been made that couldions possibly lead down the road to some serious problems for those lawyers. so i want you to respond. and by the way, most of the lawyers, i would guess, could bf making a lot more money if theyo were in private practice or doing something other thanivat government work. but they're dedicated employees, and i refuse to allow them to r

just be just a blanket of negative allegations to be placed upon them without at least giving you a chance toave respond. >> thank you very much, congressman, for giving me this opportunity to supplement my answer to your earlier question. it is, as you indicate, truly unfortunate that the attorneys who are the subject of theys majority report are, in fact, career attorneys, a line attorney in one instance and a senior attorney for the department. names dragged into a public report simply for performing their duties as attorneys for the united states department of homeland security. i've reviewed their performance in representing the agency in this investigation and continue do so. i have not found any indication of unethical activity or

improper practice of law. the dhs attorneys i know are hard working, dedicated professionals. the report has some salacious headlines, but this report simply does not describe the attorneys i know and work with. i also want to underscore that i believe we have fully cooperated and acted in good faith with respect to this investigation. thank you for this opportunity to respond. >> i would like you to finish what you were saying. the chairman talks about fairness and people's reputations and demotions. there have been serious allegations made here. i do not know what the truth is. i would like for you to able -- be able to answer the question. >> thank you.

she competed for a promotion, a new position i was given by the department demonstrating the importance of foia. it was a laborious and detailed process. she was not selected and that was confirmed by the office of personnel management. >> where was that decision made? >> the initial selection of the proposed ses was december 17. she was informed she was -- had not received a promotion on january 10. we were working on him on board -- working on onboarding.

it was not released from her department until march 2. we received notification that her department had released her. we were informed by the office of the chief human capital officer that her start date would be march 14. we took the first opportunity to notify her on march 4 which would have been the day after testimony. it was in order to give her notice this was happening. she was aware it was coming on board and she did not know the date certain. we were attempting to tell her with as much time as possible so she could move offices. the office moves are comparable. i had made a decision to have the new ses closer to me. they're one of two people who report to me. >> will take a five minute recess to set up for the next

panel. did you want a second round? i apologize. >> i did and i appreciate the opportunity. >> and you do. i want to go to exhibit 7 if you could have that shown. in this e-mail, the deputy chief of staff, you explain why the office must repeat the request ears language verbatim to minimize legal liability. she responds by saying or writing, we have to repeat allegations in foia's. can we get a reading prior to

tomorrow? what did she mean? >> i am not sure. i was not copied on this portion of the email. >> you responded to it. >> i was the original e-mail. she forwarded it on to colleagues asking for their response. >> what do think she might mean? >> hsu was asking whether or not my summary was complete. >> you are the chief privacy officer. and a liar. >> i am not a lawyer in this position. i need to clarify that. >> i am a minister and i am always the minister. why did she have to go to the office of general counsel? >> as with any office, there are reasonable disagreements and she

was confirming what i have said. she was making sure that was accurate. she received that confirmation. >> do you believe the staff had an appropriate understanding or appreciation of statutes and processes? >> they have a much more robust understanding then when they first arrived. >> that is changing. >> i hope so. >> i yield. panel will be different. this hearing has never been about the reduction in the backlog. whether that was produced by contractors, paid over $7 million, buy new equipment or by transferring to other departments. this has been about somewhere north of 1000 requests that were politically sensitive that

involved the press in most cases. a member of congress in one case. those are the ones we have never really talked about. the receive them and make decisions and send them out. those are the ones this committee received. i want to make clear in closing, this is not about the reduction or increase. it is not about the very great and positive towards the president obama said on day one when he wanted to make a statement there would be more errness and effectively weer

on the side of disclosure. hopefully we will understand that we want to limit this to only the portion which is by definition controversial. sharepoint is a great piece of software supporting it so someone can make a decision which we can only know in their minds, there process, has to be scrutinized by this committee. we are the committee of all the questions of abuse and we are the overseer of the hatch act and other laws designed to keep politics out of the policy of the executive branch. thank you for yielding. we will take a five minute recess.

[inaudible conversations] [inaudible conversations] >> the committee is investigating allegations that the homeland security departments political appointees are stonewalling freedom of information act requests for partisan political reasons. darrell isa says it could violate the law. this portion is just under 40 minutes. [inaudible conversations] [inaudible conversations] [inaudible] >> okay, there we go.

when you wiggle it, the light goes off, so sorry about that. thank you for your patience as we reset. we now recognize the second panel of witnesses, mr. charles edward inspector general of the department of homeland security. welcome. mr. john verde is senior counsel and director of open government project at epic. pursuant as he saw the first charge of the committee rules, would you please raise your right hand and take the oath? do solemnly swear or affirm that the testimony you're about to give will be the truth, the whole truth and nothing but the truth? at the record reflect that all witnesses answered in the affirmative. please be seated. since you are a patient for the first round, i won't recite anything. with that, recognize mr. edwards for his opening statement. cnet good morning, chairman

issa, ranking member cummings and members of the committee. contrast k. edwards, acting inspector general for department of homeland security, dhs. thank you for the opportunity to discuss the efforts to disclose information under the freedom of information act also known as foia. when permission focuses on the foia program as well as the march 2011 report and the dhs implementation of the freedom of information or. during the review, we found the office of the secretary's involvement creates delays and cost the department to violate a response requirement. dhs has a substantial caseload. in fiscal year 2009, he received 103,093 foia requests or 18% of

the federal government 557,825 requests. in fiscal year 2010, the number of requests increased by 26% to 130,098. under the guidance of the chief foia offset from the chief staff requested privacy office and had orders office while most of the department's major components processed requests under the guidance of their own officers. the privacy office also had the most proactive disclosure which increases the department level of trans and he will potentially decreasing the number of foia requests at the agency receives. however, despite of the positive finance, there were certain aspects of the dhs process that caused concern. specifically determined that the office of secretary's

involvement in the process created inefficiencies that have full implementation of the process. although components have been required to notify the office of the secretary of searching cases since 2005, the house he did not require that the office of the secretary reviewed the releases. instead, the process for with the information of always being disclosed. however, in september 2009, with respect to these cases, components were required to provide all the materials for these to the office of the secretary for review and concurring. at such time, the components prohibited from releasing the foia responses. this additional level of review and concurrence delayed the release of materials and in some cases cost the department to violate the statutory timeline.

department officials have stated that advance knowledge of significant releases can improve the dhs responds. that's often followed with public release of information about dhs activities. although we understand the department's reasoning, we do not consider delaying release is the best public policy, particularly when such delays seek a violation of the statutory deadline. we make several recommendations in a report and promote privacy officer's proposals. we recommend that dhs first of additional policies and proactive disclosure, second, formalize the roles and responsibilities of the public liaison and third, implement the internal review function to maximize efficiencies and improve the administration of foia operations. in addition, we recommend the

chief officer regularly make recommendations to the secretary for adjustments to agency practices, policies, personnel and funding as necessary to improve implementation of the dhs foia program and reduce legal risks as articulated in the 2009 canadian. in conclusion, the department has made some important progress in its administration said then. we recognize challenges in processing a large number of foia requests in a timely manner. implementing our recommendations, we trust that the privacy office can include the overall efficiency and the ths foia disclosure program. look forward to collaboration during the process. mr. chairman, this concludes my remarks and it would be happy to answer any questions that you are committee members may have. >> thank you, mr. edwards. mr. verdi. >> thank you, mr. chairman,

thank you for the opportunity to testify today. my name is john verdi, senior counsel at time i called up it. i am director of ethics of the government project. we have a long-standing interest in government, particularly the power of transparency to ensure accountability for executive agencies heard since ethics establishment in 1994, we filed the freedom of information request with agencies including the department of homeland security concerning domestic surveillance programs and emerging the turnip privacy. the foia is hoped to guarantee the public's right to know for generations of americans. president obama made government and transparency hallmark of administration on its first day in office, stating that the freedom of information should be administered with the clear presumption. in the face of doubt, openness prevails, unquote. political review is antithetical to the fundamental values of the art. an ethics history practice, we

have never never encountered policies that the dh program it issued at today's hearing. epic often clashes with agencies of the options. without agency's failure to comply with statutory deadlines and frequently litigate challenging agencies, a legend for withholding records, but we have never observed practices that flag foia requests for political review. we're not aware of any other program that is single-dose foia requests based on politically sent their content or the identity of the requester. in our experience, this program is unique and it is uniquely harmful. political review raises spectrum for wrongful withholdings. ethics experience in 2009 husband almost exclusively characterized by improper delays. since 2009, the department of homeland security has failed to comply with the foia deadlines

and 100% of requests filed by update. it has failed to comply with multiple deadlines regarding some single requests. these delays post-real frustrations for even the savviest foia requesters. are the majority of foia requesters, and prevent records in useful timeframe for complete disclosure at all. federal law simply does not permit agencies to select foia requests for political scrutiny for either request for requester. the political review process raises political influence over disclosure and is unlawful. unless records fall within one of nine narrow statutory exemptions, anyone who seeks documents is entitled to receive them. the provision of the act allows an agency to deny a request or delay its response for political reasons. in fact, the law requires processing of records and activities, just the sort of disclosures to lately dhs's

political review. although ths alleges political betting no longer occurs. no formal publication with the policy and the inspector general describes ongoing political reveal. we are troubled for political betting apparently continues to dhs. we are deeply concerned it might be other agencies. finally, i wish to highlight another dhs policy. unilateral administrative closures that contravene sub 10 by reducing transparency and hindering accountability. based on ethics experience, that the cuts were recommendations. first, dhs should immediately cease local review for requests. second, dhs should immediately to close all agency records responsive to foia requests that were subject to political review. third, i'll executive agencies should immediately cease

political review of foia requests report to committee the extent to which they engaged in such review. in fourth, all agency should certify as part of their annual reporting requirements that no requests were reviewed by political appointees. i thank you for entries that i'll be pleased to answer your questions. >> thank you. i think he boasted a record. each of these data under the five minutes. i'm going to recognize the gentleman from michigan for his last-minute of questions. >> thank you, mr. chairman. i'm surprised to be sitting this far down and have the opportunity to question first. it's great. >> sir, your number one with me. >> thank you. thank you. >> i shared on homeland security is also this is very interesting to me. not only are responsible for making sure our homeland is secure, but that those make the homeland secure persecutor and the fact that we want to know

and not to have that information. thank you two witnesses for being here today. mr. verdi, you made several statements about the political appointee review process. he used some words like antithetical, harmful, but the word that really caught my attention was unlawful, that you believe it is unlawful for political appointees to be involved in the foia review process. why? >> i believe it to be unlawful for political appointees to be involved in the political review process at dhs for this reason. the criteria under which those appointees were reviewing requests includes criteria with the identity of requester and subject matter in the supreme court in two cases, one is national archives and when his doj versus reporters committee in 1989 have felt neither the

identity of the requester, nor the content of the request is relevant to the agency's obligations under foia. so these political criteria, identity of the requester, whether it released to rate agency priority, content of the request, supreme court has spoken instead of months the request implicates documents of nine exemptions and records must be disclosed and that's why i believe the political review process to be unlawful. he considers factors that the united states supreme court has stated are said irrelevant. >> mr. edwards, would you concur? and why? >> can you repeat the question. >> on the political review process been unlawful. i mean, we heard the words antithetical harmful, all negative. but unlawful steps up to a higher plane.

>> well, unnecessary your critics have no place. so we think that the sophisticated reviews process just delays and there should be no delays. the secretary has overall authority over the personnel. so we don't think it is unlawful, yet we don't like any delays because when the careerist foia personal has finished, it should be going out the door. >> thank you. mr. verdi, would you consider the dhs awareness process the review? >> my understanding of the quote unquote awareness process as described today as it continues to flag foia requests for such rule consideration based on political factors can affect yours that have nothing to do with the florida statute for exemptions. as far as i can tell that's a

review. the committee's report and inspector general's report and i believe ms. callahan's testimony earlier today indicates that this political staff identifies issues that they want to see resolved before a foia requests goes out, that they can hold disclosure during the one-day review period. that strikes me as constituting a review would not simply an awareness process. >> did the july 2009 correct did from callahan and i pose this to mr. verdi. dr. wreck to reference and at the cluttered 20 gis, specifies the foia office must provide to the requester's name, city, state, affiliation and inscription is not widely known. is it lawful for dhs to require

information about foia requesters? >> ido believe it's been awful. i believe under binding supreme court precedent at the requesters named, city, state, affiliation, description of lesser known organizations is relevant to disclosure. whether the information is infinitely collected throughout the process i'm obviously a foia requester must identify him or herself to the agency and typically they identify city and state so they may receive record. but the use of this criteria for the processing redaction or withholding of records is plainly unlawful. >> thank you. the ranking i was recognized for five minutes. >> mr. edwards, do you -- can you tell us whether, you know, as the chairman said earlier today, he said that this whole

thing reeks of a nixonian enemies list. and now she's wondering in your review and in fairness to everybody, did you find that communication? did you find any evidence of that kind of adversary? >> no, i'd like to expand a patriot. >> yes, please. the scope of our investigation was to look at the process. we looked at the process from the beginning to the end and we had some heart earner with a significant review processes. and the job that you had me to do is to the sea at dhs programs and operations add value and that's how i did. >> let me ask you this. did you find the question concerning the identity of the requester were asked in order to impact the amount of information that would be disclosed?

>> only without the process, sir. i cannot comment on that. >> well, want to be fair to everyone again. on page 11 of your report, you said this. after reviewing dhs foia, we determined that the significant request review process did not prohibit eventual base of information. is that correct? >> vaskevitch because if you look at the attorney general's memoir, they have no place in the new era of open government is the president has proclaimed. if you look at the january 2009 in responding to requests under foia come executive branch agencies should act promptly in the spirit of servants of the public, so we should not have any delays. but however, we did not find anything that was changed and

are obstructed from sending things out. >> did you find anyone was disadvantaged, to your knowledge? >> you're exposing the department to go beyond the 20 day statutory timeline and also disposing the department to legal risk. i haven't done any illegal analysis on it. >> clinically white masking. and your report of the chinese say no foia were disadvantage because of political party area ventures. is that accurate? >> that's accurate. >> alchemy report highlights initiatives that dhs has taken to implement the president and attorney general foia guidance on proactive disclosure and presumption of disclosure that are not fully discussed in your written testimony. can you elaborate on steps the department has taken to improve the foia operations since january 2009 as discussed in your report? >> as commissary.

dhs privacy officer's have taken several steps towards the proactive measure. they have biweekly meetings because it is a decentralized sub 10 process. components have their own offices and had quarters as well as privacy offices service as a chief officer. they have training. they have conference calls. they send staff to help out. there's another things the subway takes into consideration to improve the process and also disposing counselors and historic information. all of them are posted and they all have the electronic reading room in place as well. there's a number of things of the credit them for that, but they need to go even further. >> mr. verdi, one question. you were saying that certain