>> middle and high school students, it's time to get those cameras rolling for this year's c-span student cam video competition. make a 5-8 minute video on this year's theme, "the constitution and you," and get it to c-span by the deadline of january 20th, and you could win the grand prize of $5,000. for complete details, go to studentcam.org. >> next, a joint senate hearing on the environmental protection agency's brownfields redevelopment program. the project provides resources to states and local communities to revitalize land contaminated by hazardous waste and other pollutants. senators heard from the ipa's program director -- epa's program director along with leaders whose communities are impacted by brownfield sites. this 90-minute hearing is led by senator frank lautenberg who chairs the committee on superfunds, toxics and is environmental health.

>> here in spirit and very much supporting our interest and our efforts on the brownfields opportunity. and so i thank you, witnesses, for being here. and senator inhofe is here, i know, as well. [background sounds] >> i welcome everyone to today's oversight hearing. we're going to focus, obviously, on environmental protectiong. agency's brownfields program. brown teelds are blighted properties that have been a drag on local economies because of

contamination or the mereg perception of contamination. off these are abandoned industrial -- often these are abandoned industrial sites where participants don't want their -- parents don't want their kids to play and few businesses will take the chance to locate in one of these, with one of thesepl sites.and now, the epa started its brownfields program more than a decade ago to transfer, transform these communityram eyesores into community assets. and since then epa has cleared up more than 600 brownfields in commitments across our -- in communities across our country putting more than 20,000 acres back to productive use. and much of that is urban, but also in rural areas as well. and when you think about that kind of opportunity to havein property available for community use, it's a wonderful gain.a

these clean-ups have created more than 72,000 jobs, attracted more than $17 billion in private investment. once brownfields are rehabilitated, they often spark neighborhood revitalization, boost property values and make communities more attractive o places toft live, work and dore business. in my home state of new jersey, elizabeth, a city in our state, used a federal brownfields gran, to help transform abandonederal trillion land into new affordable housing in trenton, new jersey, our state capital. housing. in trenton, new jersey, our state capital, our fish are using brownfields funding to clean up a site where lead asset batteries were once made and stored. the property is safe and usable.

hudson county, one of our more crowded counties, is using brownfields funding to attract new investments, that's what we'll hear when we're joined by betty spinelli, hudson county's economic development chief. she'll tell us about these new investments. successful projects like these demonstrate why we should reauthorize the brownfields program and invest more in it. congress first authorized the brownfields program in 2002, while the authorization ended four years later, congress has continued to fund it because we recognize that it's good for ongoing business. success. it's time to reauthorize the program because we still have a lot of work to do, and a lot of opportunity to gain. there are 450,000 brownfield sites across this country and

the communities where these are located need help to reclaim them. and we also should take this opportunity to strengthen the brownfields law. for example, some have suggested that the law should explicitly allow ep, to award assessment and cleanup grants at the same time which conceivably could streamline the process and make sure that the resources reach communities faster. in addition, non-profit organizations want to compete for a wider variety of brownfield grants. and i believe that we've got to do more to encourage renewable energy on brownfields. it just makes sense to put new solar or wind facilities on properties unused properties, blighted, that they might have been, rather than open space or sensitive lands. so, i believe both parties can find the common ground that we

need to reauthorization and improve the brownfields program. the program is a proven success, and a magnate for community investment and we should not hesitate to renew it. and i look forward to moving this issue forward in this congress beginning with today's hearing and i'm pleased to be here with a good friend, different perspective. my area is much more open and expansive than senator inhofe. here we are, senator inhofe. >> thank you. this will be a shock to a lot of you. i hate to do it at this time of the morning. but frank lautenberg and i don't always agree.

in this area i think we do agree. except for one thing. you said a minute ago on what they should be doing with property that comes back. i think that should be left to the cities and the states to make a determination as to what's best for them. but i think this is one of the programs, and i've been critical of the epa, one that i think has worked well, the brownsfields program is an example of a program that epa add ministers which does increase economic opportunities. there are many more opportunities for improvement. i'm pleased with the reforms we passed in 2002. that was the small business liability relief and brownsfield revitalization act. however, more needs to be done on the liability. for example, under current law if a city or municipality has acquired a brownfields property prior to 2002, they are ineligible to apply for

brownfields grant unless they have performed, quote, all appropriate inquiry, unquote. this means that properties that a city has acquired through no action of their own prior to 2002, are ineligible to apply to the brownfields program unless they are able to prove that they have provided, quote, all appropriate inquiry, unquote, into the previous owner's use of the property. this cannot be done in many cases. the end result is that a number of these properties that are sit stagnant and vacant because cities are unable to demonstrate that they have performed all appropriate inquiries and thus they are unable to apply to the brownfields program. we should allow these cities and local governments to be eligible to apply for the program and not require them to prove that they performed all appropriate inquiry providing -- provided that they did not cause or contribute the contamination.

in other words f this happened through no cause of their own they should be able to do this. by providing this liability relief we would bring a number of these vacant and stagnant properties into meaningful use. this would create needed jobs and a new stream of revenue for local governments already short on revenue. given our current economic situation this is not the time to push for an authorization increase for the brownfields program. we need to do more with less, one example to decrease the amount of funding that goes toward administrative costs. and redirect those funds to be spent on the ground. although the epa made a conscious effort to balancing rural and urban needs with the program, smaller communities, that's what we have in oklahoma, smaller communities, and very rural areas, are still in need of better access to this program. this is an area i'd like to work to improve.

finally i would like to extend a warm welcome to, on the second panel, one of our witnesses is the mayor of oklahoma city, nick kornet. he has done an incredible job and has a great story on how the brownfield program can and does good work. oklahoma city has been particularly successful in using that program to improve their community and increase economic opportunities for the citizens. i'm not the only one impressed with the mayor's work. he was awarded the u.s. epa phoenix award for oklahoma city's work with the dell center project, a former landfill that has since revitalized and now employs a number of oklahomaens. also welcome aaron schiff, the brownsfield programs manager for idaho. i think about what's happened in oklahoma city, i was mayor of tulsa, at that time i think most people would look at it and say tulsa actually did a better job than oklahoma city. these are the two largest cities

in oklahoma. but starting back i guess it was kirk humphrys, then ron and then nick kornet have come through and put this program together. you go through the oklahoma city area right now, mr. chairman, you are looking down at brick town, the use of the waterway in there. and a lot of this is tied to this program. so, i congratulate oklahoma city on the great work they have done, and i hope that we'll pay particular attention to mick kornet when he makes his presentation. thank you, mr. chairman. >> thank you, very much. mr. lloyd, we look forward to hearing from you. mr. lloyd is the director of the brownfields program for environmental protection, for the environmental protection agency, and in this role mr. lloyd oversees epa's efforts to

review applications, issue brownfield grants to communities, states and nonprofit organizations so. mr. lloyd, we welcome you and you may begin your testimony now please. >> thank you, good morning, mr. chairman and members of the committee. my name is david lloyd, as was said, i'm the director of epa's office of brownfields and land revitalization in the office of solid waste and emergency response. i'm here to talk about the brownfield program and i would like to thank members of this committee and the subcommittee for their long term bipartisan support of the epa brownfields program. as you know and has been said, brownfields are all around us really in the smallest towns and in the largest cities. empty warehouses, abandoned deteriorating factories, vacant gas stations and junk filled lots, often in town and city center locations. both in small and large cities. and they are visible.

but they are and have the efficiency and benefit of often being located near existing infrastructure such as road access, power and other utilities. epa's brownfields program can provide resources for the assessment, cleanup, technical assistance and job training that can ep move these properties to productive use. since the program's "inception" in 1995, as senator noted, we have continued to provide tools and have been able to help in the assessment, fund the assessment of 17,500 properties, made over 24,000 acres ready for reuse, more than 72,000 jobs for cleanup and redevelopment and leveraged more than $17.5 billion in economic development, working with communities, states, tribes and other federal agencies we think the program has really become a coordinated national effort that is community-based, looking at the

needs of the communities and not the desires of the federal program. in addition to the grant programs we conduct targeted brownfield assessments and fund those through contracts with small and large businesses and interagency agreements. these single property assessments really help communities particularly smaller and rural communities to look at their sites and figure out what the next path forward a. good example is the ma riddian creamery in idaho. epa funded a targeted assessment and we're following that, the property was redeveloped, has 100,000 square foot facility used as the new municipal contract. epa began a pilot program that provides research and technical assistance support for brownfield's area wide planning. brownfields area wide planning looks at individual brownfields sites or collections of sites and helps the community decide what is needed to get those

properties cleaned and back into reuse. they might be a neighborhood, a commercial corridor, a downtown district or a greenway but they help them develop clean-up and reuse strategiesment we had 23 recipients including several small rural communities that received this funding. some examples, would include a project, a large project ongoing in tulsa, oklahoma which we'll focus on 59 sites but will benefit -- >> let me, without losing his time ask him to repeat what he said. i was distracted. >> i was describing a program that we put in place last year using our existing authority, called brownfields areawide planning. what we're doing is funding -- we'll be moving forward, we're funding, we selected 23 communities of many sizes, rural and urban, to help them plan around either a group of

brownfield sites or one large brownfield site and look not at just cleaning up that site but looking at the connectivity to what infrastructure is needed, business planning, economic planning, to help revitalize that whole area. so, for example, we have a project in tulsa, oklahoma, that is looking at 69 brownfields sites in the northern part of that city. and really, they are touching a wide range. ran son, west virginia, kalispell, montana, newark, new jersey, and also tribal lands. we have a project on the reservation in washington state to name a few. as other wngss will point out that are on the second panel, states and tribes are critically important partners and at the forefront of brownfields cleanup and redevelopment. the majority of cleanups are supervised and overseen by state response programs. since 2006, nearly 44,000

properties have enrolled in state and tribal response programs and more than 549,000 acres made ready for reuse through those programs. additionally t state and tribal response programs provide assistance. in 2012 epa is going to continue to focus on streamlining our grant application process, strengthening our state and grants a were referenced, providing broader assistance and expanding land revitalization across the programs. in closing, really our continued success will require collaboration among all levels of government. the government sector and non-governmental organizations. epa will implement the program to protect human health and the environment. enhanced public participation needed to build saef and sustainable communities through public and private partnerships and demonstrate environmental cleanup can be accomplished in a way that promotes economic

redevelopment. i'm happy to answer questions. >> thank you, mr. lloyd. i ask question about renewable energy products. those cited on brownfield locations can spur community development, and while cleaning up pollution and reducing our dependence on other fuels. as we consider reauthorizing the brownfields law, what might we do to better encourage using contaminated lands for clean energy production? >> first i would note, i think you -- you mentioned there's nothing in the current statute that would prohibit that end use and in fact, we actively encourage renewable energy on brownfields and other

contaminated lands as a positive reuse. there is an initiative that the office of solid waste is leading called the repower initiative. essentially that provides funding to and technical assistance to projects to help them see how renewable energy can be used and many of those are brownfields. a great example, technical assistance we provided to help a community develop solar arrays on a landfill and do that in a way that not only is protective but will produce the energy results. i think generally, as i've said in different forms, we like the community to decide what they need at a brownfield site, and it new try to direct them toward any specific end use. i think what we can do, senator, to help expand this area that you've expressed interest in and i think is a positive area s continue our technical assistance, i think strengthen it. and i think really, we have to

provide the kind of technical assistance to communities that help them solve some of the more complicated problems relatable to renewable energy. it is in some parts of the country still a challenge to find connectivity to the grid. that's where we could shep by robust technical assistance on projects. >> because i don't know what -- how you measure the amount of contamination existing in a place like that. is there an easier mark if it's going to be used for non-direct personal human use, if it's an energy site? >> well, i think as i understand your question, i think i mean, this is one of the reasons i think contaminated sites in many instance do lend themselveses so

well to renewable energy uses because they can be protected from direct contact by large numbers of people and still be providing a productive benefit for the community or broader. >> funding for the brownfields program has stayed roughly flat since the program was first authorized. are we turning away proposals that have merit as a result of lack of funding each year? can you give any indication at all how many you have to say no to as a result of the limited funds? >> well, first of all i would reiterate what i said earlier that i think the funding that we are able to provide and looks like in the near future will be able to provide is still going to do the things we want to do in terms of supporting state and tribal programs, helping communities clean and redevelop these sites.

the program is very popular and i think part of the reason is because it really is a program where communities are sort of in charge what if they are doing. so, it is somewhat over subscribed. we have rougherly between 700 and 800 applications each year for our grant funding, and we typically award between 200 and 300 grants depending on the types of applications we get and our specific funding level. we are continually thinking of ways we can get resources out to communities that either aren't able to apply or aren't successful in applying. >> the estimates are there are 400 -- you said this in your comments, 450,000 brownfield sites across the country, the number is hard to conceive of.

yet since the program's "inception," 1995, only 17,500 sites have been assessed. what can we do to change the law to help epa make properties safe and productive more quickly? >> i think, one, that figure 17,500, is -- would be assessments that were completed, completed entirely with epa funding. i think you know, looking and i reference the state and tribal response numbers, there's vastly more assessment and cleanup activity going on both at a state level as well. but i think that really, we're looking at ways that we might make our grants more efficient to make it faster both in the process by which we assess and evaluate grant applications, then also the process by which we get the money out there. that's a priority of my administrators that we move the

money out as quickly as possible. we do have plan there is to help do that. >> i'm going to ask senator inhofe for his questions. but we'll keep the record open and send our requests to you in writing and ask that you give us a response. >> thank you, mr. chairman. i'm trying to think of ways that we might be able to, without expanding the funding for the program, get more from it. and we've talked about -- i mentioned this in my opening statement. i know that each year there is a conference called the brownsfield conference. it costs some in excess of $2 million. i don't understand why -- first of all, it's a good conference and i'm all for it and it's well attended, very popular. i support it. but i'm thinking that we, since a lot of the stuff you're doing

is partnership type of thing that we ought to be able to maybe have that program underwritten in the private sector. have you thought about that? >> yes, senator. in a couple of ways. first, we -- the program a few years ago moved away from the annual conference to an 18-month conference. >> year and a half. >> now we are going to move to every two-year conference, that's one thing we think will help. secondly, we recognize also that while it's an extremely valuable training conference. we need to spread the cost of that more efficiently so we are looking at, for example, i think a modest reasonable fee structure that will still give the ability of nonprofits and community groups to participate. but will spread the cost more appropriately and also we are in the process of we will recompete the grant that we used to

provide our content management, look at how conference vendors and companies that come into advertise there at the conference that they pay a fair share. we understand your concern and we are also under pressure to make sure we reduce expenses. >> i think it's a good idea but let me volunteer something i'm willing to do. during the planning stage of your next conference, i'd be willing to go to the private sector and list people who are willing to come in and to promote this. i believe we can get the entire conferences paid for in the private seconder. i'll be glad to assist. the only other thing i mentioned in my opening statement in terms of the percentage of the program is funded, that goes to administration, i understand about $24 million does out of a total -- i hope my figures are right, 165, which is about

one-sixth of the total amount. i think that's a little too high in terms of percentage allocated for administration. do you have thoughts on that? >> well, yes. your numbers are basically correct. approximately correct. one reason that administrative cost is higher, just the machinery of accepting that many grant applications, not just in our assessment revolving loan fund but job training grant and other competition there is is fair amount of labor. we do that with assistance from a contract support. so a good part of the cost goes to things like that. but, we also are looking at you know, we recognize, too, the need to reduce that because every penny we spend on administrative costs is one less dollar or penny that goes to a community directly. for example, the data that we collect is critically important.

our grantees are truly partners in that in that all of our data t data i read off in my opening statement comes from grantees reporting their progress. so we have a system in place that data base that collects that directly which is not the typical way to get data but it's worked well. but we are really looking and have looked and continue to look at ways to make that as inexpensive as possible. >> i appreciate that, in this day where we're talking about billions and tril lions this is nothing. i understand that. i've seen in oklahoma, for example, which you're going to hear from the mayor, some of the great things. it doesn't cost much money, i figured if we could squeeze and get one more project. i know mr. lloyd that you want to do that and we'll look forward to working with you on that. >> thank you. >> now thank you, mr. lloyd.

i welcome our second panel, we'll hear now from a range of experts who have significant experience with the brownfields program. they include mayor mick kornet of oklahoma city, betty spinelli from my state, my home state, executive director of hudson county economic development corporation. in new jersey plxt aaron scheff, brownfields program manager for the idaho department of environmental quality. and evans paul is the executive director of the national brownfields coalition. and mary buchholz,ment of the environmental consulting -- environmental consulting solutions. and she previously worked at epa to help establish the groundfield program and now

works in the private sector identifying the way to use renewable energy on brouwnfield. we welcome all of you. i would ask senator inhofe if he has a special welcoming .. >> first of all, i think i stated that in my opening statement. but i would say that he's done a miraculous job. let me clarify something i said. oklahoma city, any objective person would look at oklahoma city and say you know, they really have done great things. as mick knows i used to use an airport, sorry that they closed, called downtown airport. and on my final approach i always went over that area of brick town and the waterway

there and the ball park. i looked down. i've watched that develop and it's been amazing. i defy, i don't think there is any city in america that's done a better job. a lot is due to our witness sitting before us. i mentioned two of his predecessors also involved in that. i think that we or that he and oklahoma city provided an example what if we should strive for. he has done a great job. with that i'm delighted to have him as our witness before this committee. >> senator, appreciate the opportunity to testify before you today. i'm the mayor of oklahoma city and trustee for the conference of mayors. i'm pleased to be here to discuss the impact that brownfields redevelopment had on the city. we've been very successful in being able to use a lot of the epa programs including the revolving loan fund, assessment grants and epas to provide assistance. these programs have all helped us to leverage additional funding, create jobs and made a lot of improvements.

i'm going to highlight a few of the examples. first of all oklahoma city has had a successful and recognized brownfields program where the recipient of two phoenix awards and national renewal award. our relationship with the epa program began in 2003 with a $225,000 cluster grant which was used to evaluate reuse. our early program involvement was with a hotel. this is a preservation effort that has been really a poster child of the regionnal andnalnal program. we used the brownfields loan funds in the president of $717,000 to clean up the asbestos which eliminate add barrier in making the numbers work and reopening that hotel. clean-up was completed in 2005. the restoration completed in february 2007, and this week it's celebrating its 100th anniversary as a property in oklahoma city. keep in mind for 20 years it was shuttered until we got the epa money. that restored hotel celebrating

the centennial this week, serves as a mottle for successful public private corporation. 22 million of which were public funds. the resoxing funds offer low interest loans to qualifying property owners, this has been very helpful in our gap financing, the traditional lenders won't risk funding. oklahoma city filed three grants that have been helpful and supplemental funding for more than $6 million. these funds have leveraged about 4.5 million in private funds for every federal dollar spent. the city funded the dow center in the north part of oklahoma city, the loan total 1.7 million, we expect the private leverage to be 8.25 million. that was built in 1926 but had been vacant since the early 1 0 1990s. it was purchased in '96. it had asbestos issues.

once the abatement was completed the building is now being redeveloped. the cleanup created 40 temporary jobs. and expected another 16.5 construction jobs. we've dawn project at community college, the grant was $200,000. we expect the total of local dollars to be nearly a million. ccc purchased that in december 2008 and is renovating it to host the capitol hill center. that center will provide a quality educational experience to the city's his span in community. that created 26 temporary jeremy bondermans. we've used assessment funds. since 2006 we've been awarded five $200,000 grants w these funds we performed about 60 assessments. these are often well leveraged. some of the assessments have been for properties acquired for major public projects paid

through through bonds and sales tax measures. we've had some acquisition properties, we had a fire station open in the brick town area. as well as sites involving the good will company and also the u.s. postal service. others supported nonprofits, such as educational buildings a faith-based charity organization and a hospital. i'd like to speak about the national impact of brownfields. the laws had a positive impact. in a survey by the conference of mayers 84% of the cities that responded said they redeveloped a brownfield site and 150 reported that their sites have been redeveloped and 187,000 jobs created. every survey the top three impediments were the same. a lack of funds t need for environmental assistance and liability issues. i've also bringing ways we can improve the program. the brownfields law and program has a proven track record of

leveraging investment and improving the environment. there is additional work we'd like done f.gao estimates there are about 40 to 600,000 brownfield sites in the u.s. the challenge that communities face, a lot of the easier sites have been developed. and the economic condition is challenging. we believe there are minor changes that would help allow additional redevelopment in economic growth that would be realiz realized. we like to see full funding, see the creation after multipurpose grant. we'd like to see the cleanup grant amounts increased and like to clarify the eligibility required 2002. i hope in some of the question and answer period we can get into that. i'd like to thank the committee for allowing me to testify. we believe that brown fields is a -- we believe it cleans up the

environment, pro business, pro community, and i thank you for the opportunity to speak about the reauthorization opportunities. >> thanks very much, mayor. now we'll hear from this betty spinelli. the executive director of hudson county economic development corporation. and has seen some awards for projects that she's managed in hudson county. her program was awarded the new jersey department of environmental protection's first environmental excellence award. we congratulate you for that and welcome you here. and await your testimony. >> thank you, senator. thank you for the opportunity to come and speak today about the brownfields program. in hudson county, there are 600 -- over 600,000 people 1846.6 square miles. with over 1,000 brownfield known

contaminated sites on our local epa website, that gives us 21 sites per square mile. there's a brownfield site for everyone that lives in hudson county. the tragedy is we're always learning more and more about sites every day. it's not like there is a definitive number that we can just go clean up and walk away and say job well done. it's as we discover them we must take care ever them. in hudson county we were lucky enough to receive the first grant in 1998. and we had the opportunity at that time, being a not for profit and not a municipality to good out to the municipalities and offer our help to clean up sites at a time when people were not speaking about brownfields. we put together a work force group. that group is still together today and still working toward brownfield clean-ups, including bankers, developers, educators,

individuals who are just interested in brownfields, and it's open to the public. we get every kind of person from every walk of life who wants to find out more about brownfield funding, sites and how to pastor the challenges that are brownfields. we have mastered it to some degree. not as well as some other towns but to the point that in harrison, new jersey, we put up a hotel which was one of the first hotels in the stagecoach days, a hampton inn and suites. at the same time there was no other development going on in the town of harrison. since then there has been a 257 redevelopment area ever harrison, new jersey where many old factories laid abandoned for years. now taken down and red bull stadium was put up. a soccer stadium that now

attracts large number of people to come and to watch games and to use it for open space. the leveraging of funds for that stadium alone was 200,000 -- $200 million toward development of that private money. so the leveraging of funds against the brownfield's money is ten-fold. for every dollar spent we end up receiving more money for the development of the area. in the area right now we have housing going up. jobs have been created at the hotel. 45 full time positions. that site laid fallow over 30 years so once where you had a fenced site on a water front, you now have a hotel that is thriving and welcoming and has contributed tax revenue and major jobs in an area so lacking in jobs at the moment.

we also had the opportunity to work with the town of carney to put up a senior affordable senior housing. in the town unfortunately there was no opportunity for affordable senior housing. now seniors do not have to leave the town that they love in order to live the rest of their lives, they now have a place where they can go and call their own that is a beautiful situation. it has a view of new york city. when you was there at night it's not uncommon to see many of the residents sitting down on what we term in hudson county, a stoop. and having the camaraderie of friendship and knowing that they are safe in a good entirnment. we were lucky enough to win the first environmental excellence award, senator, and we want it for open and effective government, we won it because we are inclusive of the communities around us, we are very sensitive to the fact that the people in

the towns want to know what's going on. we host many open public meetings and that had been one of the suggestions, working with the epa, they have lock step with us. been there every moment. encouraging, educating and helping. it's been a wonderful collaboration. the epa has done more to help us find economic ground to stand on and i say that in the best possible light because without those funds, all of the mayors would be glad to say there but for the funding from the epa, many tfr projects would never have been done. i thank you for your time. >> thanks very much. i hayes tune point out the fact in our densely populated state one of the most densely populated counties is hudson county. but it had a wonderful history and it's the beginning of

economic development of new jersey and that share the east coast, the harbors, the transportation, et cetera, is just created a place where lots of people want to live and work and so forth. the problems became one of lots of abandoned sites as a result of companies having been there so long and finding better or newer places to go. it's good to hear your report, miss spinelli. we welcome you, mr. scleff, from the beautiful state of idaho. it's hard to imagine idaho with its expansive mountains and forests, the natural beauty, that there are brownfield sites that need attention. give us your testimony. >> ranking member inhofe and

senator, thank you for your invitati invitation. i manage the hide who response program and i appreciate the opportunity to present a rural state's perspective on implementing the program in small communities. since late 2003 our program conducted assessments and cleanups over 100 properties and dozens of rural communities making thousands of acre ready for redevelopment leading to community revitalization and job creation. we helped rule communities turn land fills and abandoned mines into parks and trails, a wood mill into a water park, historic grain silo in an arts theater, a laundry into an events center and a methamphetamine lab in a former church into a children's arts academy among many others. these led to job creation, community development and protection of human health and the environment. there are two main sources of epa brownfield funding

available. those are the epa competitive grants and the epa funded state assistance grant which funds our program. there are also two worlds in brownfield's program. there's the rural communities and the metropolitan areas. in our experience, state assistance grants are greater benefit and accessibility to rural communities seeking to assess and clean up brownfield sites. there are 39 metropolitan areas in the united states with populations greater than the state of idaho. these areas with their staff grant writers, grant managers and experts are competing for grants against rural communities without the same level of staffing or experience. absent the state's help in applying for and implementing these grants small communities either don't apply or become overburdened trying to manage them. for rural states expertise needed to implement the brownfield program does reside at the state level. state programs are effectively

losing federal funding as more participants apply for the same source of funding. statistics show that rural states and communities are left out of the competitive grant award process when you consider of all competitive grants awarded each year, approximately 50% of those awards are made in epa regions 1 and 5 alone. predominantly in metropolitan areas. epa region 10 on average receives 4% of the competitive epa grant awards despite comprising over 25% of the land mass. rural communities need brownfield funds. they just can't compete for them under the current system. instead they turn to our state program for assistance. our program is able to assess properties in basically one third the time and one third the cost when compared to an epa competitive grant. we can remove environmental barriers to redevelopment with a

total expenditure of generally under $50,000 depending on the site. these costs would largely be unattainable to most rural communities due to limited resources and most of the sights would not be able to successfully compete in the grant competition. it generally takes two to four years to complete an epa competitive grant project from application until final report. and at least 300 hours of staff time to manage. our state brownfield program completes assessment projects in under six months from the time we receive an application and deliver a final report with no burden on our local communities. if you can imagine shepherding the exact same project through the epa competitive grant process, and idaho's brownfield program simultaneously, the result would be that our state-led project would reach completion before the competitive grant proposal was even selected for funding. if it were an epa grant.

while the current allocation of federal funding for state programs remains static, the addition of new states and tribes receiving epa assistance is increasing. the result is that our annual state assistance funding is being effectively reduced. this reduction is native limb pacting the amount of direct assessments and cleanups we perform for rural communities not able to compete for funds on the national level. there is a solution to this dilemma without the need to appropriate additional funding at the federal level. funds can be moved from the epa competitive grant program into the epa funded state assistance grants without a change in the brownsfield law or increase in total appropriation. utilize some funds from the competitive grants to stabilize state assistance programs will ensure we can effectively target and directly assist rural communities with assessment and cleanups. based on the current performance of idaho's brownsfield programs such a shift would be a bargain

for taxpayers given our performance to date and would represent more brownfield funds dedicated to redevelopment projects on the ground rain shower than administrative costs. this has been a great program. it has been a great program for idaho and has been a great program for alaska, washington, oregon, states that i represent on the brownfields task force. it has been an excellent collaboration with epa and local communities and i do think that there are some ways that we can tweak the law to increase the effectiveness and efficiency of the program and i really look forward to seeing what the committy comes up during the re-authorization process. thank you and, of course, i welcome any questions. >> mr. paul? we ask you now to give your testimony. >> good morning, mr. chairman and members of the committee. my name is evans paul. i have the privilege of speaking to you today on behalf of the

national brownfields coalition. national brownfields coalition represents national, state, local, and public, private and nonprofit organizations that share the common goal of promoting brownfields redevelopment as a means of achieving community economic revitalization, sustainable growth and development, and the environmental restoration of land. some of our diverse national members include the u.s. conference of mayors, smart growth america, and the commercial real estate development association, and the trust for public land. i wanted to call your attention to several brownfields community turnaround projects that have been carried out in some of the states represented on the committee today. there are two recurring themes that i want to stress. first, epa brownfields funds, although modest in the larger picture of multimillion dollar redevelopment projects, are often the first funds in to help

communities lay the groundwork for turning blighted contaminated properties into new community assets. it would be hard to overstate the importance of these critical resources. the payoffs from these modest investments in leveling the playing field are enormous because it is not just about cleaning up and redeveloping x, y, z sites. it is also about enabling communities to reposition their economies, failed industries of the past and destroying those sites to enable future growth and improved quality of life. second, i want to emphasize it really -- that actually admits -- makes perfect sense for brownfields investments in the middle of the -- of a real estate recession. public expenditures and set assessments and cleanups are far sighted investments in future responsible growth. more brownfields sites will be development ready in the future growth can be steered to land where infrastructure is in

place, existing communities can be revitalized and negative ex-the earnalities involved with sprawl can be avoided. to illustrate, in omaha, nebraska, epa site assessments work -- three key waterfront properties and have paved the way for 750 jobs and 140 million in new investment and including the gallup corporations, word operational headquarters, and a riverfront trail that will enable local populations to enjoy 64 miles of newly accessible riverfront property. in -- little rock, arkansas, and epa site assessment of the unit pacific rail yard near downtown paid dividends in 2006 and when heifer international, nonprofit international anti-poverty organization, chose to locate their world headquarters on a 4.2 acre site bringing 225 jobs and 225,000 visitors to little

rock. in new orleans, louisiana, an epa site assessment helped unlock the hidden potential of the false staff brewery which had been vacant for 30 years. the dilapidated property would be transform flood 147 mixed income apartments in 2008. this pioneering investment helped lead to the revival of the two-lane corridor as more redevelopment projects lane 700 units took form between 2008 and 2010. these are samples where epa investments have been instrumental in transformative redevelopment projects helping communities achieve a new division and new vision for outmoded industrial corridors. but as important as that point is, the takeaway i want to stress is that in each case, the epa funds were injected several years before the actual redevelopment. this reinforces the previous

point that we have to keep making these investments even in an economic slowdown. then when the economy picks up, we will have development ready sites and reward will be community altering projects like heifer international, gallup headquarters, and the brewery. these projects are just a few of the brownfields investments that are replacing lost jobs and revenue with vibrant new uses on sites where closed industrial plants left a legacy in play and contamination. we strongly recommend that congress reauthorize the program however re-authorization represents an opportunity for improvement. many of the other panelists and senator lautenberg as well mentioned some of those improvements and i won't repeat them here since i'm out of time. we look forward to working with the committee as we move forward with re-authorization. >> thank you very much.

i mistook your first name for being mary. marjorie, sounds good with buchholz. >> thank you. good morning. senator lautenberg and members of the committee, thank you for the opportunity to discuss the epa's brownfields program. as one of its founders it remains a subject close to my heart. during a 25-year epa career i was lucky. i was often sent to communities where epa had the opportunity to effect the most significant change. i saw that super funds prioritization of war sites first meant that lesser contaminated sites fell outside of federal purview. some of that properties fell below the cut line for souper

fund or state programs and yet they were too polluted toation tract investments. epa needed a new approach and so we began thinking that -- about tailoring a program that had assessment cleanup and redevelopment elements to serve across the range of rural, aush an and tribe am communities. that was the start of the brownfields program. at its core was the emphasis that local solutions work best under local stewardship. the new model that was born was different from super fund and several important ways. first, many of the sites were perceived to be contaminated rather than actually contaminated. seed money for local site assessments solves that mystery. eventually one-third of the sites to the super-fund inventory were proven not to be contaminated at all and were ready for reuse. there's still a need for a strong souper fund program, for sites with major technical issues and high levels of

contamination. brownfields program complements those efforts. epa's job training program in the brownfields program from the very earliest beginning emphasized local employment. with the program -- when the program began i was shocked the communities needed to ship in workers because they lacked people with the from training. in response, the brownfields job training program was created in concert with local community colleges and work force development groups. as you heard from david lloyd, the successful program continues and thrives. this year it has been expanded to cover many of epa's cleanup programs. i respectfully urge the committee to protect the viability of this program. brownfields project flourished in ways unimaginable to me 20 years ago. there's still work to be done. to improve this program, i would respectfully recommend several things in addition to the job

training. david lloyd talked about areawide planning and i would like to emphasize its importance. nonprofit eligibility for all types of brownfields grants is very important. because in many communities, especially small towns, and rural areas,inging nonprofit development corporations and community development corporations drive the economy and carry out redevelopment. ea launched the repowering america's land program as in september 2008 to encourage the citing of renewable energy facilities on currently and former contaminated lands across the country. i know that i am preaching to the choir, mr. lautdenberg. when i say that language for repowering on ground field sites is critical for re-authorization. your forward thinking proposal last year on the energy bill is exactly what is needed to jump start productive use of brownfields as renewable energy facilities in the u.s.

my recent consulting work with brownfields llc, massachusetts solar firm, has focused on the conversion of community liabilities like closed land fills into assets. from this experience, i have seen that repowering works and needs to be emphasized and continued. i would like to close with just a couple of let ons learned. the cooperation evidenced on this committee is a heartening reminder of brownfields popularity. this spirit will be the key to successful re-authorization and an effective program. second, leveraging and partnerships are at the heart of the program. there have been attempts to make it a block grant program which would have destroyed our efforts. it works because it provides technical support and leverages local resources. third, please remember that real people thrive or suffer as a result of our actions. brownfields began to extend hope

and prosperity to those unlucky enough to live and work near contaminated sites. countless citizens of once forgotten communities have benefitted from these efforts. we must resolve not to forget them again. thank you. >> thank you very much. do we hear a resounding round of applause and congratulations for the brownfields program. i thank you for your encouragement because i believe it is -- so essential that we get on with doing what we can to make these sites available, for community use, and for the well-being and health ofsy sense in the area. so -- as miss buchholz said,

senator imhoff, this shows bipartisan at its best. i guess we ought to say there are other brownfields we saw before those, clean up and get going on with, too. i asked the witnesses -- here today, across the political spectrum and from states and local governments, nonprofits, private sector, and it is amazing what -- when the -- one hears the universality of interests in states that are highly populated, less populated, to -- from the urban setting to the more rural kind of thing. when we of some of the most beautiful parts of our country, we think that always of the mountains and the lakes and parks and all of those things.

but there lies brownfields sites that are a problem and could be used effectively in all states if we can make the program generally more available and with more funding. and you -- going down the line, start with the mayor, do you believe that the question is oh, almost answered. the -- that epa's brownfields program have provided the kind of benefits that really matter and vote to continue and expand it if possible? >> yes. it made a remarkable difference in oklahoma city. if you can see the -- the hotel which was built 100 years ago this week, and shared for 20 years with no hope of ever being able to be reopened without some level of government assistance, we used brownfields money to get

in there and help close that gap. we have an environmental site along our river with 60 years ago had been a city dump and we were able to address the -- the environmental needs there and currently dell computerers built a campus with 1,500 employees. we have future needs down the line. we have success stories to tell you about but we also have a number of sites that we believe with some more additional help could really continue to improve our nation's economy. >> anybody disagree with that? no? epa estimates that brownfields project raised the value of surrounding properties by -- 3%. i think that's marginal by twice its value or three times the value as it sits there.

abandoned. do you agree with that, the value improvement? >> push your button. >> thank you. we saw sites that laid -- for 30, 40 years. with the epa money being able to go in and do the assessments, we were able to attract developers, two sites that they would have never considered in the past. so the moneys that have come in, amount of money that has been leveraged between the brownfields assessment moneys and moneys that have come in from developers and putting these sites back to good productive use is totally immeasurable. i want to reiterate what marjorie said. least we ever forget there are people, citizens, living around in all parts of the country, whether it be hudson county or in the midwest. people need to be thought of in this process because it is very important that our citizens be

entitled to a healthy safe environment to grow and to have their children grow up in and it is a -- on our cities and our areas to have these ground fill sites be there just fenced in behind bars and not be put back to good productive use. it is very important that the epa continue to put these programs forward and we all realize in these hard economic times, it is almost -- very difficult to sit here and say don't give it more money. give it all the money you can. because this doesn't go to any one particular group. it goes help strengthen america and bring our country and all of our communities back to good productive use. bringing in jobs. making beautiful sites that were once -- wonder supply and wonderfully used back into good productive use within the communities. >> thank you. in short form, how might current

law be changed to better promote renewable energy development? >> i have a lot of thoughts on that. only 30 seconds. so -- i will tell you the first thing that i would recommend is working closely with the energy committee to create a renewable portfolio standard that is consistent across the country and that's the single most important thing that would drive redevelopment of solar on to brownfields sites. ing the second thing, you mentioned in your bill last year, triple credits. that would be a triple win. that would be more than enough to get people really investing in these sites. the second thing to present for extension of sections 1603 of the energy bill. i adjusted to the extended solely for those properties to incentivize the utilities to work on contaminated lands.

30% cash grant incentives for new repowering projects have a huge potential to drive reuse. the last thing i would just say is that epa the in this economy is not expecting a broad infusion of funds. the brownfields program was built on doing more with less. a steady state budget that would emphasize leveraging and new initiatives would build repowering to a new level without a major budget increase. >> thank you very much. senator imhoff and i owe you a couple of minutes in which you can easily recapture. >> thank you, mr. chairman. it is my hope that we don't turn this successful program around to -- into a program to enhance green technology and all of this stuff. it is working well now. let's don't mess around with it.

let me ask you, first of all, you would be the one, i think, would be -- responding to one of the concerns that i mentioned in my opening statement. that's oklahoma has a lot of this small rural communities. and have you -- i had to leave during part of yours but i did read your written statement. do you have any comments how we can enhance this program in terms of usinging greater amount of it for the smaller, rural communities? i do have thoughts on that. for one thing, i need to point out that -- for every epa competitive grant awarded to a small community, it -- it does seem to skew more towards metropolitan areas. these rural communities don't have staff grant writers. they don't have grant re-enactors and don't have experts in groundfields law or guidance. they have to come up to speed very rapidly on all the different federal requirements that are tagged on these grants.

myriad of things that these folks have never heard about before and don't even know where to go to get assistance. they needily go to the state which is great. that's part of our roles to assist these folks. but -- for us, it makes a lot more sense when we have the content and field experts at the state level through our state assistance grant program, we can crank these things out and really get into the communities, do outreach, help figure out the scope and nature of the program, and projects and go in and quickly and efficiently remove the environmental barriers to their projects. >> can you not do that now? >> we can, senator, but -- the problem is that year to year, additional states, additional tribes, additional territories, are asking for funding from the at the same time pot we get our funding from now. that funding source doesn't go up or down. it stays the same. so as more people come in, our

funding is reduced. to further complicate that, the amount of site specific assessment work that we are -- able to do currently through our grant is limited to 50% of the grant itself. so as that expenditure shrinks the amount of money we can spend on the ground in the small communities shrinks as well. >> okay. and i appreciate that. mr. chairman, i -- i have nothing against the profession am grant writers but when you go into one of my small communities in oklahoma and talk about how do you do this and put this together, yes, they do have access to the state -- we are going to be working with them to get more help for them. but they will -- they will say we are paying and they will -- to them it is an astronomical amount of money. you pay to someone to do this and they don't have it. so i'm -- i -- what i would like to have you do, for the record, is to put -- write down recommendations that you can make in this program that would allow easier access to the small communities. why don't you do that for the

record for us. the rest of my time, i would like the mayor to -- i just wish, mr. chairman, that you could come to oklahoma and stay in the hotel and now -- new jersey's not like oklahoma. oklahoma that is 100 years old is ancient. and in new jersey it is new. so -- it is totally -- i remember when i was a state legislator, many years agree, it is a palace that deteriorated over this period of time and did a masterful job of putting together that together the way it was originally. we are doing the same thing in tulsa with the mayo hotel. it is -- just really -- it is when you see the things that they have done in oklahoma city, and that's what i only wish that during your presentation we had some big pictures to hold up because that would better show

before and after contrast of what we have. now, i guess i -- like to ask you that is there anything that we would be able to do when i -- pointed out the problem of the pre-2002 problem we have. is there anything in -- your city in oklahoma city that you would be able to do that you would not be able to do with that restriction that's there? >> we do have a number of sites that acquired prior to the tweet legislation. i can think of one site specifically at -- northeast fourth and laudy which would be in a -- an underperforming section of our city that would fall into the category of site that would need some assessing and at the environmental issues and it is probably right for development if we had this legislation that allowed us to go in and work on. >> it that's good. mr. chairman, we ought to really look seriously at that and see what obstacles are there to keep us from doing that and maybe correct it.

i think the director who is on the first panel would probably agree with that. lastly, in the time that i have, if you could kind of -- when you -- when you look at dell city, the hotel, all these projects that you talked about that were so successful, what -- have you -- have you put an employment figure down that would cover these as to how employment has been enhanced as a result of that? i have to say that we are fortunate in oklahoma, unemployment rate is 5.5%. we have -- we are very fortunate with that and understand that. but how has this enhanced our employment situation? >> well, i don't have a number for you. i have asked my staff to try to answer that question specifically. i can tell thaw we have the lowest unemployment in the united states among large metros with the 5% flat. >> why don't you do that instead of -- for the record in writing so i can use that up here and try to help sell this very successful program.

>> we will be glad to, senator. >> thank you, thank you, mr. chairman. >> despite the fact that you have the good fortune to have that kind of an unemployment rate, nevertheless, mayor, you can use help in the brownfields program. and extend job opportunity and economic opportunity for your city or your state. >> absolutely. >> that's a noteworthy thing in this environment. >> thank you, mr. chair map. we appreciate all of you being here. the -- federal and state brownfields program really has been very successful. i think we all agree with that. and we appreciate you being here to help us sort out some of the problems we -- we need to fix perhaps in the future as we reauthorize the arkansas

department of environmental quality administers in arkansas and you mentioned the great job that they have done with the heifer program in little rock and we have another -- most recent one that's going to come online is -- an area in downtown hope, arkansas, where they are going to very soon, i think, within the next year or so have a charitable clinic that will be at that size. so there's really a very -- just a lot of positive stuff that's going on as a result of the program. i would like to ask you, why do you feel that funds should be moved from the epa competitive grant program and into the state assistance grant programs? >> yes, senator. simply put. our smaller communities and -- we are talking about -- communities largely under 10,000 people simply they don't have the capacity to look at and understand the scope of the 53-page competitive grant line

guideline booklet. a lot of the concepts that are scored as part of the competitive grant systems and they don't necessarily understand how to answer a lot of the things that are asked for. for instance, support from community based organizations and -- information on disease registries and things like that, just do not exist in those small communities. additionally a lot of the projects that they are involved in are fairly small projects. they may only yield one, two, three, four jobs. but four jobs in a town of 3,000 people is incredibly significant. a lot of it, i think, a lot of times epa grant reviewers are looking at projects and larger cities of maybe a million and they say oh, this is going to get us 50 jobs. when crunch the numbers, the 50 jobs in 1 million person community is -- not nearly as significant as five jobs in a 2,000 3shgs,000-person community. simply put, it really does come down to capacity.

most of the folks have real jobs, walmart, and then they come back to the city at night and they are the treasurer and clerk and they are actually helping perform the city functions while they are not working. they don't have the many, many, many hours that you have to put into applying for and managing the grants. >> i think you make a very good point and -- you know, that point is being made over and over again. i just want to kind of reiterate it. can you tell us perhaps, you know, if we did that, if we -- you know, you are not asking for an increase in the -- you are asking for the shift of funds, can you tell us specifically what kind of, you know, you mentioned jobs. can you tell us some specific examples of what creates those five jobs that would come about as a result of doing that? >> absolutely. i can give you a specific

example and project just finished and relatively inexpensive project and cost us $30,000 to go in and aes and do a targeted cleanup apartment an old gas station site. the folks purchased the site and a site that had been abandoned for years and was no longer on the tax role. it was not paying any property taxes. nobody was working there. but some folks went in and purchased the site and they opened it up as if it is a funky place but it is a combination, you know, bakery, cafe, plus photography studio in -- you go there and, you know, people have their artwork out and every month it is sort of circulates out there, there are different people that can come in and have their artwork purchased. there's someone working the counter. there's a couple of cooks, bakeries. then there is somebody that's always in the photo shop part of the establishment doing either digital or old school dark room

photography. it is interesting -- >> sounds like there is a little something for everybody there. >> yes. yes, senator. it is also an n a community of 5,000 people where, you know, there is not a lot of opportunity for photography clubs and things of that nature. it really has become an interesting kind of place for people to con fwre gate. total employment, five full-time employees work there. >> thank you, mr. chairman. i yield back. thank you. >> thank you all very much for your -- testimony. and while we kind of joke for a couple of minutes about the fact that we are agreeing, it shows you the power of the value of the brownfields program. >> thanks very much.

mayor, can i ask you a question? thinking of past mayors of larger cities in oklahoma, have any of them ever turned out well? anything -- amounted to much? >> i'm fortunate to have a long string of promising mayors that preceded me, absolute. >> i all right. all right. how about over in tulsa? >> i can't remember tulsa ever having specifically any good mayors. you will forgive me. that rivalry is extremely strong, senator. >> all right. >> will he me respond to that. >> during the time i was mayor of tulsa, i was mayor for three terms. three terms or four terms? a long time ago. but anyway during that time, we put together programs that others didn't -- it was back during the reagan administration, second reagan administration, he used my low water dam which we did with no

public funds whatsoever. through the private sector as this is -- greatest single public project totally privately funded in america. my case rests. >> my time has expired. thank you. all right. first question, if i could of all the witnesses. i would like to talk about funds like the brownfields. other federal programs. i would like to find out and ask what's working with well with respect to the program. i would also like to ask what could -- we do better, what could we change or take away in order to get a better result. i would like to say everything do i i know i could do better. that's true. let me ask if you can think of a thing, one or two things, that might need some tweaking. as we take up re-authorization of brownfields. >> $200,000 limit on sites would be helpful in f that could be increased. there are a number of sites that just still don't quite work and a lot of the easier-to-do sites

have already been done. also, the length of time that it takes for the funds to actually arrive at the city level can sometimes be a year or more and sometimes that development window can shut, you know, within that one-year time period. you apply for the grant and takes maybe six months to find out if you are going to receive the grant, it takes another six months perhaps to receive the money. and if that time frame can somehow be -- shortened i think that would be helpful. >> let me ask the other panelists. just by showing -- do you agree with what the mayor said? two do and two are silent. okay, good. do any disagree? all right. thank you. let the record show nobody disagrees. anything that you can bring to our attention and might need improvement. >> i have to concur with what he said. more importantly, if it is possible to raise that 200,000,

you can't get a gallon of gas for what you used to get a gallon gas for ten years ago. and we are looking at the $200,000 in an economy to have an ingeneral earring firm to come in and do the work it is not costing the same now it did for white house we first started this program. things do go up. it is just -- it is just the way the economy works. i realize there's little money out there and -- it is very tough. but it has to be looked at objectively because we -- it is -- i wish we could take the loads and fishes and do more with them. but with everyone asking for more on the other side of this equation, and only that 200,000 to work with becomes very difficult. >> all right. thank you. >> i noticed your raised your hand. >> yes, senator. so far i agreed with everything that's been said so far on the panel. a couple of other areas -- >> that doesn't happen every

day. would you say that again for us? it warms up the room when you say that. >> aside from the things that have been mentioned and aside from my testimony i would highly recommend lining the current eligibility for petroleum sites with hazmat substance sites. the two sites are treating completely differently and in order to be eligible to spend brownfields funds on petroleum sites and an applicant has to be two owners removed from the last owner who dispensed petroleum at the site and therefore may be considered a responsible party. that's a really tough metric to hit. really tough especially in small communities where people tend to own land in their familiar less essentially forever. that's -- that's one that i would definitely focus hard on. the other one -- >> before you move on, anybody else on the panel concur with what he has said? is that -- yes. you do. all right. >> feedback on that.

>> excuse me. we get feedback on the specific issue all the time and -- given that congress designated 25% of the funding to go to petroleum sites, obviously congress views that as an important element of the program. we are also handicapping our communities and addressing petroleum sites because of the extra eligibility hurdles. >> thanks. anybody else want to comment on this particular point? yes, ma'am. >> not speaking dwrektly to poe tr -- speakinging directly to petroleum sites i would like to be the devil's advocate and say when we started this program we intention will did not fully fund the site assessment process or the cleanup process. what we were trying to do was put feed money in to leverage local communities to invest in themselves.

i understand that the prices for everything are much higher than they were when we started the program. but -- >> not for everything. cell phones. >> that's a good point. >> there are some exception. >> and televisions. but the point is i think that it is really important to -- federal government can't go into every community and fix everything. that's not an appropriate role. what they have to do is provide technical assistance at my view and the tools to get it done. i'm not sure that raising the ceiling on the grants would get us where we are -- where we want to be and it is not in keeping with the original intent of the program. >> okay. thank you. let me come back. let me come back to you. another point up wanted to make. >> thank you, senator. the other item i would look at is raising the limit that state funded programs are under right now -- we are limited to only 50% of our grant which can go to

on the ground site specific projects. it would be nice to see that limit raised or potentially go away altogether. what that effectively does is say that 50% of your grant now has to go to administrative and paramedic functions versus taking the funds and putting them directly on the ground, especially in rural communities where it is important and i also would like to mention that in our program those site specific activities generally take place through private contractors and so those funds that we do devote to on-the-ground projects are going straight into private sector and are being administered by the private sector on the ground. >> thank you. do you have another point? >> yes. a couple of -- panelists mentioned multipurpose grants. i would like to put a little bit more of the meat on the bones with that. multipurpose grants would be a great tool to kind of expedite how things work in the brownfields program. there are -- there are two

problems with the -- sort of boxing up of the three grant programs. we have site assessments involving funds and cleanup grants and further bifurcate flood hazardous substance and petroleum. so oftentimes communities as things change, they put in a grant application one year but a year or year and half later number one site that they are trying to move is in -- not in the category they originally applied for it. it might need cleanup funds where the -- city has funding for site assessments. this -- a great deal of lag time in fault thing if you have to do everything in order, if you are putting in a site assessment application, that -- involves a lag before you actually get the funding in, then you are probably missing another round of -- because the funds come in late in the year and you have to get your application in shortly after you were funding comes in,

you are probably missing another year. it is actually a three-year process to get from site assessment through cleanup. if you had multipurpose grants where you can move the pointy back and forth between the three categori categories, it would be a huge advantage and would help expedite the process. >> thank you. mayor, didn't your mention about something like this in your testimony? >> yes. we just have a number of success stories in that regard. >> okay. anybody else? comment for or against what mr. paul said? i will wrap up with that point. >> i would agree with what mr. paul said. additionally add it would also help in states like ours and areas likes ours where our field season can be extremely limited. if we are in sun valley or north idaho, we are under, you know, two to three feet of snow, it is really hard to do site work. during those periods of time. and dash literally we can end up with only four, five months out of the year where we have a window to do appropriate field

work. that would -- multipurpose grant would help to assist in moving those projects along without having a separate possible necessary between. >> good. thanks. mr. chairman, thanks forgiving me a few extra minutes. our thanks to the panelists. good points. we love it when there's gash a convergence of views. this is very, very helpful. >> i add my thanks. and make mention of the fact the record will be kept open for some time. you my get a letter request questions that -- that are raised. we would ask you to answer promptly, please. and once again, thank you. it was so nice to have a panel that has bipartisan character and where people agree. i thought that wasn't allowed here. >> thank you.

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[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> coming up on c-span2, a discussion on increasing gas prices and their impact on the middle class. and later, the congressional republican health care caucus hosts a live briefing on states' initiatives to cover the

uninsured. >> also today a speech by harvey levin, creator of the celebrity news site tmz.com and producer of tmz tv. he'll talk about his background in television as a reporter and legal analyst and discuss the changing nature of entertainment news coverage. you can see his remarks to the national press club live beginning at 1 p.m. eastern over on c-span. >> our review, which we issued last week in our report identified that weaknesses existed in key security controls at each of the 24 major federal agencies and departments. >> sensitive personal and classified data stored by the federal government is at high risk of cyber attack. that's the finding of a just-released gao report. find out more with the gao's head of information security issues, greg wilshusen, tonight on "the communicators" at 8 eastern on c-span2.

>> next, a discussion on the impact of high gas prices on the middle class and u.s. energy policy. this forum, hosted by the new america foundation, conducted a study that found that americans will spend $100 million more on gasoline by the end of this year than they did last year. speakers included a former chief economist and economic policy adviser to vice president biden, jared bernstein. this runs about 90 minutes. >> a yearlong project called the energy trap which has been looking at how middle class families pay for gasoline, and we're very grateful for the support of the new america foundation. this project was funded, um, by the rockefeller foundation, and, um, we have kind of a very exciting discussion today about the role of gas prices and energy policy. and i'm going to kick off by sort of talking about some of the things we found through the energy trap. i want to remind you of what's

happening today. c-span is in the room, and we're also videoing this for, um, new america's web site. so there's a couple of things to remember about that. first of all, everything you say is on the record. everything -- every sneeze is on the record too. um, and when you have a question, please, wait for the microphone, and we'll hand you the microphone, and that way you'll be clear on all of the audio. um, the speakers that we have today are john "skip" laitner from the american council for an energy-efficient economy. he has done the survey for the energy trap on the consumers' response to gasoline prices since 1970. it's a very interesting, very detailed report. he'll be going second. and then our respondent today is, um, jared bernstein who's with the center for budget and policy priorities. he also was, um, the chief

economist for the middle class task force done by the white house, and we're just very delighted to have him here. um, people who talk about energy and environmental issues, um, they tend to sort of stay this that silo, and we're very excited to sort of cross, um, cross-pollinate with people working on income issues, and we're looking forward to working more with, um, people on the assets or credit issues in the future because energy is such a cross-cutting, um, issue. so thank you very much for coming, and i'm going to, um, start the show now. so, you know, the energy trap grew out of a lot of anecdotes. i ran across, i've been studying gasoline for years, and, um, i ran across people who kept talking about how much they were spending, particularly in rural areas. and at first the quantities of money that they were spending on their commute when you added the gasoline to the cost of their

car, um, or listened to the story of how far they had to go for two jobs, they were kind of jaw-dropping. and, in fact, oftentimes i'd do the math a couple of times. what we tried to do with the energy trap was to understand who those people are and where they fit into the big sort of tapestry of american fuel use. and we tried to move from the anecdote towards, um, towards real data to understand how deep this was, how pervasive this is. and, um, and to understand what it means to be sort of trapped into be paying in-- into paying increasing amounts for gasoline and what that feels like particularly at the lower end of the middle class. um, so we have the study by skip, and we also had another study done, um, which looked at the behavior of 2,000 households. it was a very elaborate survey, and we're actually not finished with tabulating all the data.

so what we have in here is some preliminary results which offer some food for thought. so i'm just going to play you one of these anecdotes so that you understand kind of what we're talking about. this is a guy named darren. he is a, um, he's a security guard in california. he has a very long commute. i'm going to play it for you now. [background sounds] >> my name's darren, i do security work, and i work seven days a week. my commute time is 560 miles. i spend about $500 a month on gas. my car payment, i spend $515 a month. car insurance, i spend $80 a month.

car -- [inaudible] i spend $180 a month. total expenses, $1,275. oh, gas prices, it just -- middle class is going through tough times right now. gasoline goes up $5, we have to pay it. >> okay. um, i wanted to show you that video so that you can sort of see this, what the energy trap looks like in action. um, one of the things that's really interesting about darren's case is that he department do -- he department do anything exceptional. he had a very well paying security job in 2004. he made a lot on overtime, his salary was over $50,000 a year. for years, for 20 years he's been working.

he really wanted to buy a house. um, he bought a condo that was much further from his job, um, and then he began to commute to there in 2006. in 2007 he traded in his car that had 200,000 miles on it because there was a rebate on an suv. and the rebate was a $6,000 rebate. now, gas prices were going up at the time. the rebates were designed to offset the increasing price of gasoline, um, and allow consumers to sort of consider the rebate in the context of the car and assume that they weren't going to be hit that badly by gas prices. so he bought it. actually, two days after he bought it he tried to take it back, but they'd already sold his own car, so he was kind of locked into this. in 2008 he lost that security job because of the recession, and he was rehired in two separate part-time jobs. so that's why he now works seven

days a week. and that's, actually, a very common story this terms of replacing full-time jobs with part-time jobs, sometimes one part-time job, sometimes multiple. we have people commuting really extraordinary amounts of time for very limited jobs. another person who i interviewed here in montana was commuting, um, 60 -- so she's commuting six hours a week for 12 hours worth of job. that gives you aceps of -- in montana. that gives you aceps of the sacrifices that people are willing to put up with to keep these jobs. no. sorry. um, what i want to show you is what this, the change in gas prices looks like across the country. so this is on a, this map shows on a household-by-household basis what the range that people were paying for gas in 2010.

when gas prices went up in 2011, um, this is where the household, the average household cost of gas went to. we have a lot of states over $400 for household monthly cost of gasoline. in texas that meant an increase of $90 a month. in new mexico that meant an increase of $100 a month. this is coming straight out of family budgets to go towards gas. there's really no way to plan for this. and on a macro level, this is $100 billion more than last year. so it's equivalent almost exactly to the middle class tax break. it is really regressive and moving across the country. um, vermont surprisingly enough was an extra $148 between 2010 and 2011. um, you can play with this web

site later. there's much to play with on here. the conventional thinking about high gas prices is that when gas prices rise, consumers respond by using less. so skip is going to talk later about this analysis that he did, um, showing that, in fact, since 1970 consumer response to high gas prices has been incredibly flat, really strikingly flat. and, in fact, the, um, amount of gas that we use seems to rise with income. so we have this tension between, on the one hand, the rising use of gas with income and this kind of static response of consumers to price. this is really striking because so much of our energy policy on the left, the right, the center is all based on price. we believe in putting a carbon tax into change behavior, we believe that rising prices will change the way people spend on cars. there's a lot of belief in price. and what it looks like when you look at consumers' inability to

respond is that our energy policy is, in some ways, some kind of bankruptcy policy. on the household level. and it's something that we really need to deal with. the other thing to remember is that, um, that the rise in energy use with income is a very complex relationship, and skip will get into this a little bit more. this woman, laura, who's pictured here in an anecdote, um, commutes 120 miles a day because she wants to maintain her salary. she moved to a rural part of georgia. she was used to a salary of around $60,000. she could have gotten a job closer that paid less, but she wanted to maintain that salary, and so she's driving 120 miles a day. her total commute costs are about $17,000, so it absorbs the increase in potential income, but that wasn't actually something she thought much about until we talked. um, and i think that the, we

really need to think about other interventions in price and changing behavior. the average annual cost of transportation is quite a large and complex number, but, um, the government estimate is that the cost of a car and be fuel together is $7,900 for families of four making about $50,000. by our estimates, it looks like they're probably spending ant, more like 10,000, and some of them are probably spending closer to 12 or 13,000. it's a significant chunk of money. the good news -- the bad news about that is this is a massive amount of money that's, basically, your ticket to participate in the economy. a lot of people don't have the choice of riding mass transit or switching out. the good news is that that cost has a lot of components, so you can change the car, you can change the financing on the car, and you can increase the mileage of the car. you can -- there are a lot of different ways to, um, to change this number and reduce the total

overall hit that transit takes on a household. um, and, obviously, one of the things that would be great, most families will say they need two cars to have a ticket to work in the economy, is if you could get rid of one of those cars, you'd free up, perhaps, 5 or $6,000 that the family could spend on something else, and that really resonates with people when we talk to them. the other thing that's happened over the past couple of years is that the, um, amount of family income that goes towards gas has really risen. this is a, the graphics in this this -- the graphics in this presentation were all done in-house by new america's crew, andy and troy sitting in the back. this is this incredible view of the little circles stand for states, and they, when they're blue, they indicate the

percentage, a low percentage of family income or median household income from that state that's going into gas. what's striking is how much this has changed. the set point in people's minds is that gas is taking up a small amount of family income. and what happens is after 2003, 2004, this starts to rise really extraordinarily. um, states like mississippi and montana with very, very high transit burdens where people have to drive many more miles a year are, um, striking. you see it goes up to red. that's about 19% of median income is going towards gasoline in that state. that's just an incredibly high burden. and you have to wonder what it's doing to those economies. in those areas. and be i think one of the things to think about for the energy trap is really focusing geographically on places that are in particularly squeezed by this. i really want to bring to your attention this tiny, tiny blue

ball. [laughter] that's washington d.c. [laughter] um, that is in washington, d.c. the amount of transit and, also, probably the fact that a lot of people buy gas outside the city means that, um, in these numbers the washington, d.c. is about 2% of household median income. um, that's really kind of extraordinary. um, the other thing about the energy trap is that it particularly affects a certain segment of the middle class. and, um, this is information from our survey. it's, basically, income segregated from 15 to 20,000 up to 75 or 80,000. the segmentations are a little eccentric, it's a part of how the surveying firm actually broke them up. but what i want you to look at is the percentage of household

income that's being spent on gas according to people's self-reporting. but these people in the red area in particular are spending a very high percentage. they have certain other barriers that make their, um, spending more complex and that make them more locked in if to a spending pattern and unable to change it. one is the miles per gallon of their cars. this is an average. and this is, actually, not self-reported data. we actually got all their cars in the years, and we filled in the data from the epa on what their actual mileage was. you can see that this crowd has a senately higher burden -- significantly higher burden. the difference between here and here which is, admittedly, somewhat magnified by the way we're displaying it, but it's actually more than $350 a year this year. so it's a significant spread in what that means for family gasoline spending. um, the people at the low end of the middle class also drive

further to their jobs. this is jobs worked. um, and significantly, they also have very high repair bills, so they have much older cars which puts them really at a lot of economic risk. the other thing here is insurance, um, which is all over the map. the thing about insurance, someone who i'd interviewed wrote to me yesterday, and i'd never actually -- i've always been a fan of increasing the price of insurance for how much you drive. and she was saying, look, they're squeezing us again because, obviously, if you have to drive further, you're going to be squeezed by, um, by the pricing of insurance. and i think that that kind of reveals how a lot of policies that we designed to try to rationalize -- make people behave more rationally around income, i mean, around gas prices may, in fact, be punishing some parts of the community. um, the other thing to recognize is that we have a lot of policies around fuel efficiency,

um, and we have incentives. and we have, also, mass transit policies. some of these policies tend to benefit the people of the upper end of the scale. for example, um, tax credits for hybrids and more efficient vehicles. cash for chunkers, in some ways, really reached the people who had credit and were able to purchase a new car. mass transit, a recent brookings study found that more mass transit ended at high-skilled jobs than ended at low-skilled jobs. this is, we really need to sort of focus clearly on the middle class and in particular the lower middle class and think about ways to give them choices in their spending. um, one of the big questions is why doesn't everybody drive a more fuel efficient car? because ten or fifteen years ago the cheapest cars in the market were the most efficient. i at one point had a thousand

dollars toyota that got 35 hills to the gallon. -- miles to the gallon. used car markets now fluctuate with gas prices. and you have this wonderful and bizarre situation in which the compact cars during times of high prices, the prices of compact cars are now eclipsing -- this is used cars -- are now eclipsing the cost of the mid sized. and you also have suvs falling in price when prices are high. what this means is that if you're strapped for cash and, um, you're buying a car from a used car dealer, you may find that a very old -- this is, actually, for relatively good condition cars at the early stages of the used car market. you may find that the cheapest car for you is the least efficient, and so the market incentives are not aligned. the other thing that really blocks people in this market is access to credit that keeps people from, in the lower tiers of the middle class from

choosing exactly which car they want and which car would be most appropriatement um, this woman, tammy, is from new hampshire. her story's really interesting. she, um, had to buy a -- she had gone through a divorce that had, basically, ruined her credit. she lived 55 miles from a pretty good job, and she couldn't move her kids out of school. she couldn't move because she couldn't rent a new place because of this credit situation. so she bought this suv which seemed appropriate for the new hampshire winters. it was $9,000. by the time she was done paying for it seven years later, she'd paid $25,000 for a $9,000 car. so this is finish the interest rates at the lower end of the credit market are just punishing. and by the time she was done paying for this used car that she'd been paying for for seven years, it needed tremendous numbers of repairs. it also was using $500 worth of gas a week. and when it finally broke down -- well, before it broke down, she was transferring all

sortses of funds to get to work. the kids dropped out of sports which has long-term implications in terms of health. she stopped buying her asthma medication which landed her in the emergency room twice. she changed the way she bought food, they would oftentimes eat peanut butter or mac and cheese boxes to get her through the week until she got her paycheck. all of this sounds very extreme. she also had three other jobs. it's actually not that extreme. and the wonderful thing about tammy's story is she had this horrible final breakdown with the car, and she was steered towards a new hampshire program called more than wheels which got her into a to toyota with vy good fuel mileage and, um, and a good 5% loan on that car. and, you know, her whole family has sort of returned to stability. and the kids do not worry that she's not going to be able to come and pick them up because the car's too broken to go. i think one of the things about when we talk about gas prices,

when we just talk about gas prices, we tend to leave out a lot of the existential effects this has on families. this is very, very demoralizing. and, you know, the sort of revolution in tammy's wife and in control of her finances when she gets a toyota, for heaven sakes w a decent rate of interest, it shows how you could target programs at people who are really in distress. i think one of the things we tend to believe and take as a given, that americans are very, very attached to their cars. they don't want anyone messing up that relationship. we asked people in our survey how they felt about their cars. when they talked about what they disliked about their cars, it really wasn't about the cars, it was about all the costs that they were tied to. and in this graph they -- also, they took every opportunity to vent about how frustrated they were with the state of the economy, the state of jobs, their dependence upon gasoline, their inability to choose. this combination of sort of

helplessness and anger and frustration was something that they really wanted to get out which is, you know, when you're looking through 2,000 written responses and sort of scanning them, it's striking to see necessary evil so many more times than freedom. when people are talking about cars. and i think what this indicates, um, and be our interviews also indicate is that people are ready for a bit of a change, and they want to be able to spend their income the way they want to spend it. and they're starting to see cars as something, as sort of a sponge that absorbs an e enormos amount of their income. that doesn't mean they're going to give up their cars. [laughter] so we should stop thinking that way. what it does mean is that people might be willing to make some lifestyle choices if they were really convenient for them. and there's a really interesting project in california, there's an office park in san ramon that is quite far from public transit. so they started a very aggressive transit program.

so this would be an employer-centered transit program. they have a woman named marcy, and she's very concerned with getting people to leave their cars at home and take transit. so they've arranged, of course, all the transit schedules and bus stops so that they land at the job, they give people rides in taxis home if they need it if a carpool situation doesn't work out. they've gotten 30% of their workers to leave their cars at home which is 10,000 people. it's a tremendous number of cars off the road. and, um, the reason that people do it is that they enjoy the lifestyle change after the first couple weeks of stressfully taking transit, it starts to become something that they do, some time they have to reflect. they combine it with exercise so they spendless time on the treadmill. it's a very different way of thinking about transit. this is more figuring out how it really fits into people's sense of who they are. the last thing i want to show you is, um, people's feelings about what makes for a

reasonable gas price. i love this chart. it's, actually, very wacky. we asked people what was a reasonable gas price and what was an unreasonable gas price. now, obviously, an economist is going to choose the one, they're going to try to choose something that hurts enough to get people to stop using it. but a politician is absolutely going to freak out with how many people don't like this price. so, you know, as we try to use the political system to set prices, to influence people's behavior, we're really caught in this tension between what might work and what works politically. and i think one of the things that we really need to do is try to change the conversation away from specifically price and specifically freaking out about high prices. i think we're going to see a lot of high prices in the future. we need to sort of switch away from that to talking about that total cost of transit and how we can bring that down. a lot of the promises that people are making about high-priced political leaders are falling on deaf ears. we found that over 95% of people

said that their elected representatives were doing nothing to deal with their costs of transportation. so very, very high numbers. um, you know, pretty close to unanimous. the things that we these to think about going forward, i think, are how do we figure out ways for people to not be helpless. how do we find ways for people to respond to high gas prices, to feel like they're actors in this economy. and i think there's a couple things to think about. one is focusing on geographic areas and areas that have very high transit costs and figure out things that work for that community. i think the other thing is really to focus programs at the middle class and see what they need and see what can be done to change behavior be and reduce the burden on them. um, and finally, i think we're really just beginning this study, and that's part of what this event is about, is kicking this off. but what we want to do is really start thinking about this because we're really looking at

very high prices in the future or a lot of volatility in the prices, and we need to be prepared because this is really hurting people's families, it's hurting their ability to respond, um, it's hurting our economy as a whole. um, and with that, i'd like to introduce skip laitner who is, um, going to present his work that he's done on how consumers respond. to prices. >> thanks, lisa. good morning, everyone. i have the unfortunate pleasure of moving there compelling stories about humanity to the data. data sometimes can be a four-letter word, and i'm hoping that maybe, if nothing else, we can make this converge with insights that really do support a better way of looking at the problems we face and the opportunities that may be yet ahead. so i'm going to talk about what we refer to as the price-ind.c.ked policy trap or new observations based on data that's emerging or analysis

we've been pulling together. these are views of my own, they don't represent either the new america foundation or aceee, but, rather, a study i've pulled together and hopefully the insights will become more compelling. i thought, what the heck, i'd draw from gary larson from "the far side," he's no longer publishing, but there we have a father who's lecturing his son, and the caption reads: eventually, willie came to dread his father's lectures over all other forms of punishment. hopefully, we can avoid that particular problem today. let me get the context established to see the numbers in a better way. the u.s. economy is, clearly, lagging with anemic growth over the next two years. we're used to about a 3% growth, that's what we feel is a good, robust level of annual activity in the economy. but the world is moving ahead at over 3% a year, so even while we're lagging, the world is

moving a little bit bigger than we are. and as a result, we're going to see worldwide demand for oil up, and that's going to drive up -- as lisa has suggested -- prices of gasoline and oil decidedly up. despite our decline in the use of gasoline, just under 2% a year, we're going to find overall expendtures for gasoline increasing from $390 billion in 2010 to about $490 billion. i'm using constant dollars here. with consumers incomes already shrinking in the aftereffects of the recession, gasoline and everything associated with transportation will become a huge drag on the economy. and slumping gains in energy efficiency will weaken a previously robust economy, we're suggesting, and that in turn also weakens consumer income. so on the one hand, we have the expenses that are pulling down the well being of families, but we have an economy because of huge costs associated with use of gasoline, inefficiencies at

all levels pulling down the income at the same time. rising expenses, diminishing incomes. key drivers in quick summary that impact the u.s. economy, rising and highly volatile gasoline prices, to be sure. that's an emerging future for us, no question. but also, a form of lock-in, a lock-in of infrastructure, a lock-in of technology, a lock-in of consumer behavior that actually may freeze be us into a more costly and less productive pattern of economic activity and overall well being. and related to the second item above, a lagging improvement in energy efficiency that imposes a huge array of costs that further constrain that more robust economy and, therefore, constrains consumer incomes. so, again, rising expenses, diminished incomes. with this context we might imagine how policymakers may help us navigate this future. for decades, as lisa's already suggested, we've had what we call a policy by price signal that's been the focus of most attention.

that is to say policymakers have tried to keep prices low by subsidies and then let the market, that is to say those prices, suggest how consumers might change their habits or change their buying patterns or automobiles. and we may have, yes, added cafe standards. cafe standards to drive up the fuel economy of our vehicle fleet. increasing a fuel economy while still allowing prices to steer us towards the more efficient cars. i have to acknowledge, yes, caée is a critical overall start in our policy, so driving, if you will, from 27.5 miles a gallon to over 50 miles a gallon by 2025 is a big deal. it must be done. but it's a long run strategy, and it's insufficient. we need a short run strategy that addresses total consumer costs, total ownership costs of vehicles and covers the overall price of transportation as a family income. to insure that gasoline prices

reflect their full external costs, policymakers will advocate that we, yes, impose new taxes, that we might impose carbon fees and highway user fees. all of this is a price-driven perspective. but this caveat, all streams of the policy assume that consumers can and that they actually do respond to those higher prices in very significant ways and that they reduce the demand in an economically rational fashion. but what lisa suggested, what the data shows, yes, the evidence does indicate consumers can respond to rising prices only in a very limited way, so we're stuck. it becomes a trap, if you will. higher prices, but no ability to respond to those prices means that you're stuck. so the big conclusion, relying on the price signal to rationally allocate resources to drive us towards a more robust economy is, in fact, a flawed economic and social policy. indeed, it is possible that a largely price-based policy paradoxically may be increasing or at least freezing energy consumption patterns into high

levels of inefficiency. this in turn enables the gas pump to capture more of the workers' disposable income even as the continuing inefficiency weakens the size of that income over time. so let's look at some of the indications here, some of the evidence suggests that we actually had a fairly robust family income in the '50s up through the mid '70s, and the economy per capita continued to grow, but median family household income flattened quite a bit. and some of the reasons for that can be talked about a little bit later, but it's clearly evidence that we are slumping as an economy, not providing the well being. that delta here is significant. had we grown at the rate of per capita gdp, families would be earning more like $97,000 instead of about $60,000. and you pose on top of that rising prices, you can begin to see the bite that it's taking out of their lives. what's interesting about this chart, we've taken a look at the consumer expenditure allocation for a number of types of purchases that consumers face

whether you're talking about the average consumer, the working poor, below poverty level and the highest income, what's really significant is that housing and transportation together on all levels consume over 50% of the household income. and, obviously, much more for the working poor. so we have, excuse me, oops. we have a problem here with the, um -- this we go. there we go. oops. the -- uh-huh. my apologies. yeah. i'm trying to make it go back. i jumped a slide inadvertently. >> okay.

>> yeah. we'll move to there. we're plotting here from 1992 using the e energy information short-term outlook. a number of variables, we're looking at things like growth in population as well as per capita income. here this blue line is the expenditures of gasoline as of a society, and we've seen almost two doublings since the early 2000s of gasoline expenditures that households bay and that -- pay, and that businesses pay as well. and the prices significantly jumping compared to the income here. we have seen a dramatic increase in the cost of transportation at all levels. and this is imposing serious constraints to overall economic activity even as population, even as vehicle miles traveled stays relatively flattened. that increases a significant problem for the economy moving ahead. and how that looks in terms of what we call elasticities. elasticity is nothing more than responsiveness given a

particular variable like price increase, how does the economy as a whole respond as a percent change. so we have a 10% change in price. what's the percent change in driving or percent change in gasoline or energy use. similarly, if we have a percent change in income, how does that affect overall energy use. so we can see that, interestingly, prices as a short run within the year the prices are issued, very little changed. so less than 10% change for, say, a 10% increase in income, or price, rather, we see a 1% change in gasoline consumption or energy consumption over time. it stays flat. on the other hand, income is driving up the consumption of energy over time as we have more be, we're becoming more locked into the transportation pattern that lisa talked about where we have little choice, but we continue that drive towards greater consumption because of having to move further away from the work that we, that we're able to enjoy or in terms of the

household pattern of living, sports and things like that that we're used to consuming or participating in. looking at transportation, we see a different pattern because we're looking at all expenditures of transportation. not only the gasoline consumption, but also things like insurance, car repairs, all kinds of parking tolls, fees that we have to pay. interestingly, a much wider gap here so that we see the income elasticity rising a little bit over time, but the price elasticity leaving us relatively unchanged. this suggests a serious lock-in. we have very few choices so that when prices jump, then we're forced to pay those expenditures to the detriment of the family income and the larger economy. here's how we might look at it. if we assume, for example, an income elasticity based on the numbers of about .5, that is to say a 10% increase in income, increases consumption of energy by about 5% compared to, say, a

price elasticity where a 10% increase in price reduces demand by about 1%. what does it have to do to keep us even with overall gasoline consumption? so on a yearly basis we might -- oops, there we go again. [laughter] uh -- >> i think you can just, um, talk about what's going on -- >> so, yeah, i think we can actually. looking at the transportation price e elasticities by income level, we would expect to see a fairly ordered way of people responding, that is to say the higher income you have, you'd have one level of response. the lower income you have in a very ordered fashion. here we have a surprising result here where the working poor, the fourth quintile, has a much different pattern -- higher. a similar pattern, but much higher elasticity than the first quintile. now, the first quintile earns

probably on the order of $125,000 a year. but a very similar pattern. and it's not all following a sequence here. we'd expect to see maybe one, two, three, four, five down like this, but instead we see four, one. the average consumer third, fifth and second. what's going on here? we can imagine that the working poor respond because they might lose a job, they may lose hours of work, they might have to effect their commute, so their energy consumption comes down whereas the fairly well-off family has choices. they can make choices and still maintain the quality of life and, therefore, reduce their consumption of gasoline. this tells us if we want to inform an informed policy, we have to actually match what's going on in people's lives, not assuming that one price meets all expectations or gets the job done. some very dramatic changes if we look at the breakdown by income. but here's what's interesting from my standpoint as a macroeconomist, how this lock-in continues the inefficiency and

constrains overall economic activity in a fairly significant fashion. i'm looking at this notion we call used energy, not the total energy we consume when we drive a car, but the amount of energy in that gallon of gasoline that actually moves the car forward, that moves the family from the house to the school. and that amount of energy is hugely wasted, so we have very little actual energy being con assumed while -- consumed while a lot of energy being wasted. and this particular chart is showing us from the eerd of 1950 to 1980 when we had a fairly robust economy in the u.s. and we began increasing efficiency over time in such a way that allowed the economy to expand by about 2.25% a year as we were improving our efficiency by about 1.5% a year. that was in the '50 to 1980 range. but look what happened in the 1980 to 2010 range. was ea got locked in to inefficiency, we dropped from a full percent of efficiency improvements on an annual basis of the economy-wide productivity, the per capita

income, if you will, slumped. you can see that very flat signal over time. this greatly diminished overall economic activity, so as expenditures rose, incomes came down, and we felt this particular energy trap. crude oil prices really can be the story of the future in many ways, and it's an unfortunate future unless we address it in a fairly aggressive sort of manner. so looking at the cost of oil, since 1900 -- taking a step back in history does sometimes inform -- in constant dollars for a barrel of oil we can see two lines here. this is the actual data as published by bp in their statistical report, and we might think these particular spikes in the prices are an anomaly. but when you look at the trend of the future, we see that, in fact, the trend is clearly up moving over to the year 2030 suggesting it's going to do nothing but rise. the interesting part for me is that, indeed, is what the economists, what the energy information administration is now forecasting to happen. world oil prices, therefore, gasoline prices are going to

rise over time. we're going to be stuck in a rut unless we take steps to address that particular set of problems. thinking -- this is john wheeler, he's probably the physicist you've never heard of. he died recently. he may be more familiar to you by the phrase he coined, black hole. i first came across the him in the '70s responding to questions by reporters, how in the heck are you thinking about these new ideas, and his comment was we shape the world by the questions we ask. so i want to ask a different question about how the opportunity might look if we really got serious and really began to promote efficiency and help people break out of that energy trap by giving them the means to respond to these prices. so in typical fashion, 1980, looked at how the u.s. was using energy, and we were looking at about 80 quads of energy. the amount doesn't matter, but here's where we were. and they were saying we're going to maintain an aggressive economy, and we're going to grow the energy requirements up to about 150 quads by the year 2000 in order to maintain a robust

economy. but we had a number of people saying, well, we could look at it differently. a 1980 report said we could imagine an economy that used a lot less energy, still maintained a level of robustness. at the same time, look what really happened. it turns out that the historic use of energy followed not the economists' look at the future, but because we did respond to things like prices with different legislative policies, different standards, different kinds of programs and policies in a wide array, our overall use actually followed what we then in 1980 thought was a low energy future. but now we're beginning to return to a future that says we have to begin increasing energy use again as if energy consumption is an inevitable way of life instead of realizing that we could reduce demand by new smart infrastructure be, providing better transportation facilities, new materials, more innovative behaviors, all catalyzed by smart policies and investments. so our ultimate inefficiency resource, i'm going to go back to lisa, a blog she posted not

too long ago. i think this nails it. usually, when we talk about addressing big problems like climate change and stagnant wages, we talk about the big fix. high-speed rails, climate change bills. we don't talk about the little personal things like auto loans and the total cost of automobile ownership. we should. the auto's all-consuming role in our lives is given an extraordinary leverage either to weaken or strengthen both the economy and the environment. that's a critical perspective. we need to address the total deal, not simply the price of energy. and for those of you interested, you can go her web site and check out that particular blog. need, therefore, becomes simple. for policy to do more than merely signal the need to act, in other words, economists say provide the right signals, consumers will act, we also need policies that enable people, households, families and even businesses to be able to act. policies that reflect their specific income needs and that give them both the information and the opportunity to positively make a difference in

their lives and that by doing so end able our economy to move -- enable our economy to move forward. or, again, gary larson, a couple of spiders on the playground have woven a web across the bottom of the slide. if we pull this off, we'll ceet like kings. [laughter] or more formally, the difficulty lies not with the new ideas, but in escaping the old ones. and with that, i'm happy to turn the podium back over, lisa. >> thank you, skip. um, what we'd like to do now is have jared bernstein come up and respond to that, and then we'll take questions, and what we'd really like is for you all to, um, you know, see this as a chance for a discussion. um, but first we're going to have jared bernstein. >> i'll stand here, yeah, sure. thank you, lisa and skip.

um, hmm. oh, that's that. okay. [laughter] let me start out by saying how much i really like this project. i don't know, for those of you who are at all familiar with my work, i very much try to get out of the kind of traditional boxes that economic analysis usually starts from, and i think lisa and skip have done reicely that with -- precisely that with the project. in fact, my comments are uncharacteristically going to go back the other way, get us a little bit back inside that box, um, and i want to pose just a couple of basic questions about, about the research. but, um, i do want to begin by saying, um, i very much agree with and endorse the themes that you've heard so far.

i think the energy trap is real, i think it is taxing the middle class, and i think it's posing obvious challenges for our, not just our economy, but the environment that we're going to leave to our kids. um, the first issue i want to raise and talk most about in my comments is a fundamental question that i had reading all this material and listening to lisa and skip's excellent presentation with all those amazing graphics. i particularly liked the little bubbles that went up and down. [laughter] that reminded me of, you know, drinking champagne or something. [laughter] yeah. it's not as clear to me as it should be, so these are some critical comments, basically, asking a big question that i'd love you to deal more with in your work going forward. it's not, it's not clear enough to me where the market isn't working here. i'm not convinced -- and i see

market failures around every corner -- i'm not convinced enough that the market and consumer preferences, that kind of intersection, is as dysfunctional as you think. um, i see in much of what you're describing and writing about, um, consumer sovereignty, consumers doing what they want to do and sometimes spending a lot of their hard-earned money to do so, perhaps too much as a share of their income based on what's left over. but, and, again, i'm being a very square, regular economist here which is not a hat i usually put on, but i think it's a useful one. the, there's an interesting finding that somebody once came up with, um, comparing the way people think about their relationship to each other in the u.s. versus europe. first of all, the u.s. has a lot more physical space, of course,

than europe, and some of their -- while our cities can be very crowded, obviously, they tend to be more so over there. and someone went and looked at, walked around museums and found that in europe people are just more comfortable being close, physically closer to each other than they are in the u.s. in the u.s. we like more distance between each other. if you put a meter on someone and you just have them get close to another person, the meter goes a little more into the red here in the u.s. than it does in europe, and it, and there's an amazing, you know, there's a really interesting thing that happens here. doesn't, you don't see it as much in other advanced economies here where we get into our cars by ourselves -- not everybody, but a lot -- we get into our cars, if we can afford to, we get into our cars by ourselves, and we commute to work. i mean, i do it myself. and sit there in the car stuck in traffic while on the other side of the road, you know, there's just nothing happening and taking a very long time to

get into work, sometimes clenching one's teeth with all the traffic and dysfunction, but then getting in the car and doing it again the next day. if it's, if it's true that, um, we are revealing -- if it's true that we're essentially revealing our preferences by putting ourselves through this expensive, time-wasting process, um, then the lift here for lisa and skip and the energy trap project is really heavy. you're not just pushing against price fundamentals, you're pushing against the revealed preferences of people who view driving in their car, you know, by themselves each long distances -- even long distances as if not part of the american dream, kind of a reward for getting where they're going, getting where they want to go. now, that flies in the face of some of the things lisa found in the survey, so i want to be fair in my presentation.

if people truly say, well, driving's a necessary evil, that's different. that suggests if i had choices to do otherwise, i would undertake those choices. lisa also said people are ready for change, and i think that may be true. there does get to be a point where the ridiculousness and the waste and the cost is too highment but a lot of what -- high. but a lot of what i saw in the presentation particularly in some of skip's data, you know, i think does support this hypothesis that people are doing what they want to do. um, the fact that the price elasticity is so flat, the fact that people don't, you know, i still, again, i'm probably enough of an economist to think that generally people kind of respond to prices in fairly predictable ways, generally, and the fact that the price elasticity is flat has always been taken to suggest that, again, people are responding to price increases by just buying

more gas, not changing their behavior that much because they want to drive around in their cars. and i thought the quintile results sort of suggested that finding as well. um, so that to me is a conventional economist kind of interpretation of what we've seen and a fundamental challenge to the project which is despite the fact that some people call this a necessary evil, i don't see enough evidence to lead me to believe that people want to get out of the trap because i don't know that they feel like they're in a trap. so now let me say a bunch of reasons why i think what all i just said is maybe wrong. um, first of all -- and skip made this point, and he's 100% right -- you know, the price doesn't reflect the cost. it doesn't reflect the social cost. certainly in an environmental sense. so it's, you know, you mentioned the subsidy in gas. one of the things we talk about around here in d.c. is the, something like 50 billion over

ten years subsidies that we give to our oil and gas producers. so you know right there that the cost is low and be subsidized, certainly the price of gas is a lot more, is a lot lower here than it is in europe. that has a lot to do with taxation. um, so if price suspect reflecting the -- isn't reflecting the social cost, my theory that people are responding to prices rationally is a little bit tweaked because they're not facing the true cost of their behavior. um, housing is just not close enough, affordable housing's not close enough to work. this i know to be a fact. i've done this research myself, but it's kind of obvious if you think about it. affordable housing not being near work makes this idea that people are revealing their preferences a little bit suspect. if you can't afford to live near where you work, that's an area where the market's not working. oh, let me be very clear. my first set of comments are, gee, it looks like a market's

working here. my second set of comments are where is the market not working. so it's not working in that prices don't reflect social costs. housing isn't near adequate maas transit. i live in alexandria. we happen to be one of the richest cities in the country and the world, and i can't get home using mass transit after about 7:20 at night. which is an amazing thing. and, you know, because i have this job that sometimes requires long and odd hours, i often can't avail myself of mass transit. so that's pretty amazing when you think of it. this is the capital of the largest economy in the world, and we have inadequate mass transit. um, so that's another way, i think, in which we can't really just say, well, people are revealing their preferences. i think, i think that's a really key finding. i mean, to me if i were e just going to wave my wand and get one solution out of the energy

trap, it would be adequate mass transit. and i'll say more about that in my concluding comments. credit constraints. and i wanted, the combination of credit constraints and information problems around auto purchases. i thought lisa's data on this was quite compelling. people don't necessarily have the information they need to know about fuel, the fuel efficiency and be how much it will cost them over the course of the year. i thought some of those numbers were quite dramatic in terms of low income people spending a lot more on transportation. and one of the things you see is a very elastic, i thought we saw this in some of the data, a very elastic response to prices of gas in car ownership. um, people, when gas prices go down, all of a sudden people are out there buying suvs, and i would consider that to be pretty much an information problem. i think if you're able to explain to someone that this is very likely it's a tick down, and it's going to tick back up, and you're going to be stuck

with this -- i thought it was interesting the guy who wanted to sell it two days later, so i think there's information problems and credit problems. so, you know, there are obvious ways, i think, in which the market isn't working. so on one hand i feel the project needs to deal a lot more with fundamental point that i do fear people are revealing their preferences in ways that skip, me and lisa might not love but in a way which is real. on the other hand, some of those preferences are distorted by bad price signals, housing and inconvenient locations, inadequate mass transit. let me just finish with kind of combining some of these comments particularly in the area of mass transit. ..

>> could engage in more employer-centered transit. that began to get you closer to that role. maybe it's vans as lisa mentioned, of course, you're sitting in a van with a bunch of other people and according to her research actually folks after a couple of weeks got more used to that. but the idea is to -- is to take both of these factors and reveal preferences and market failure, put them together and think about a mass transit system that provides a kind of more personalized service. and connects people with work more effectively. and get them -- yet, at the same time gets them out of their car and their dependence on gas. i'll stop there but thank you very much. [applause] >> thank you very much.

that was very interesting. it's always great to hear you're both right and wrong. [laughter] >> got to meet in the middle of the road. i think at this point we shou should -- do you wish to discuss anything? >> i want to pick up on one point jared made and that is whether price unveils preference here. as we look at the data we might conclude that as americans we don't like to commute all that much and i'm wondering if the response doesn't actually reveal our constraints, or our lack of opportunity. and if we begin looking at it from the human perspective very much in the way, lisa, you presented some of those early stories, the energy trap stories looking at it problems consumers actually face, households or families are confronted with it's revealing of their lack of

choice and their lack of alternatives. tammy, i remember you said she spent $25,000 for a car that cost her $10,000 that cost her $3,000 a year on repairs all that siphoned money out of her wallet, she had no other choice until she had a helping hand with getting to jared's point how is the market breaking? it took a helping hand somebody not really to address their glean problem but their total lifestyle so she had counseling to help work through the credit problems to learn how to manage to learn how to make different choices and then be able to borrow money for a new car where the repair costs are lower, where the transportation costs are much lower and she's able to afford it with -- i think it was a 3.5, 4% interest loan in that particular example. you need to address the complete problem not a piece of the problem. >> what's interesting about tammy is that she actually -- when she was purchasing the new car was not given the option of

buying the standard car in new hampshire, which is not a yaris. it's something big that's not going to slide so much on the ice. i actually should check with her in january to see how she feels about it. actually her choices were limited in what she could buy. the terms of the loan said we're not going to lend you money unless we know that your total cost of transit is going to be within your means. and that's actually not the way the traditional auto loan works. the traditional auto loan is we're going to get, you know, the maximum from you that we can given your ability to negotiate in the credit market. it doesn't actually combine the total cost of the gasoline into the future. i really -- i'm very intrigued by jared's comment about sort of taking these -- the two notions of the consumer preference a and -- and consumer constraints

and trying to combine them as we think of mass transit or think of other solutions for getting people out of their cars if they want to get out of their cars. one thing i spent some time in new york riding around with the dollar vans. these are about 850 vans that drive around brooklyn and queens and give people a rides for a dollar or two piece. it turns out to be the nation's 20th largest bus service. it moves 120 people a day and it's entirely for profit and presumably profitable although i didn't get into the finances of the individual vans. what's interesting about it is that they provide services for people they can't get from a bus. so, for example, the -- their cars will -- i mean, their advances will take -- pick up a parent and take the parent and the child to daycare, let the parent walk up to the door and bring the child in, which obviously in new york you want to bring your kid right into that door. turn them over and then go back -- get back in the car.

which is pretty incredible. and you could imagine that working in other locations. you could imagine people in smaller rural communities who have a large network of friends or a large network of relatives. i come from maine where there's town where everyone is a cook center, everyone is a pinkam. and there's certain people who have massive numbers of connections who could actually figure out how to get those people back and forth and make a job on the side. what i think is kind of cool about the van program in new york -- one barrier to it is it's somewhat illegal but one of the positive things about it is that it's counter-cycleal with the economy it's like avon where people with connections get bumped out of the regular economy and they go into working their connections and driving a van. so the worse the economy there is, the more vans there are on the road and more transit

options for people. it actually runs counter to the way we behave around mass transit. >> that sort of underscores my point, i think, right, like people -- the economy gets better, they get out of the van. i'm not saying it's a good thing but it does kind of point in that direction. >> that's true. >> or the van drivers stop driving. [laughter] >> anyway, i would like to -- did you have a response to -- >> no, i think both -- i think what you both said is exactly right. and i really do believe that the answer lies in the intersection of the two sides that i try to present. >> i think we would like to open up the floor to questions now. be sure to get the microphone first. >> thank you. i wanted to take issue with a concern about pay as you drive insurance and more generally the whole strategy about taking fixed driving costs and making them variable which is different than rising gas prices which is

increasing overall the cost people are paying for transportation. brooks did a fairly major study a couple years ago and the average household -- the average vehicle insurance costs would go down with pay as you drive insurance by $270. you're already showing in your -- with your working poor which is the group indicated some of the most concern about in some of your examples were from the facts of that group. they were shown to be the most in chip's chart. so they're very responsive. what they're doing is they're getting ready of discretionary trips. they are taking the absolutely most important trip but they're not saving in insurance. and they could. you're not having a case where rural drivers will be paying more. quite the contrary. the zip code ratings and

insurance companies do now -- they're not losing money anywhere. they're not losing money in the rural areas. there's a lot of freeway travel which is relatively safer on a per-mile basis than other travel but the idea of offering that kind of savings is tremendous. and i would -- i would pose to you the following. if we had pay as you drive insurance that was universally adopted here and somebody came to you and said i have a better idea let's get rid of that and the consequences of that would be that we're going to raise on average the insurance cost for people by $270 per vehicle we would be rightly screaming that it's a terrible policy and so i think the goal should be to try to make that happen. >> i really appreciate your comments. i've always been a huge fan as pay as you drive insurance and i think what struck me was the optics for the middle class, people who feel that they are forced to drive a really long

way and -- i think there's an interesting issue here which jared's comments bring up which skip's data brings up, what extent are people not seeing their choices and to what extent are people not able to choose choices? and i think the issue as pay as you drive insurance is really important. it's a way of giving people a very explicit signal about the cost of extra driving. and it's a way of kind of quantifying that. the issue is, is that if people perceive it to be punishing them for things that they already can't change, it needs to be articulated perhaps in a different way. i have to say i was quite shocked when i received the email -- i think it was yesterday about pay as you drive insurance being punishment for this middle class person who couldn't change her driving.

it struck me as just odd and something that i hadn't really thought about from that perspective because i'd always seen if you can drive less you'll benefit tremendously 'cause we're all sort of paying for the high-level drivers. so part of this, i think, is figuring out a better education package and one of the -- there's a little lump in skip's data on elasticity after the iranian oil crisis. people did reduce driving dramatically. we reduced gasoline consumption by 12%. we also integrated cafe standards and prices were quite high for a while but what's interesting is the political establishment really reacted to that and said we have high prices. they might be here to stay. we have the moral equivalent of war. we're going to put on cardigans, president nixon back 1973 unplugged the white house christmas tree which is really a

major bummer of a move and probably didn't do him any good but it really sent a powerful signal and this time when we have high prices what we have is the political system is saying, oh, they'll be back down soon. this is the result of conspiracy. this is the result of this. and i think as we move -- there's really no question that we have to make the price of fuel and the price of highway driving more accurately reflect its cost. but the problem is, is if we move in that direction without giving people the sense of option and actual option i think we end up punishing certain people and i really fear for these people, the tammies, the people -- the darrens, the people at this who really cannot move economically. >> can i make one quick comment on this really quick is -- it sounds like more like the drive by the mile. what i find unsettling, 20 years

ago my colleague dean baker -- i was working at the national policy institute was pushing this idea and we had a conference here in d.c. on it and everybody -- you know, a lot of people thought it was -- it just made sense. is there any insurance company that offers that? okay. so it seems like that would be worth looking at its impact both in the positive attributes that you mentioned and also this punishing point that lisa makes that i think is relevant. i really would like -- it's kind of a head scratcher why it's not much more widely available. >> just for a background, companies are using data and pricing based with a product called snapshot. unfortunately, they're not sort of communicating to you what the details are. >> yeah, that's what i'm talking about. i'm saying as a shopper for insurance i would like to be able to go out and say here's an

option for you. >> they'll put something on your car. they'll calculate a rate they won't tell you about. the real key from an behavioral economic standpoint is to tell people to reduce their driving is to make sure their relationship is salient. the incentive is continuous so on and so forth. >> yeah. some of the things i like about progressive's experiments was that there was one to have a device in the car that would measure how fast you went so if you were driving in the most fuel-efficient zone of 55 or so, you were rewarded for that as well because you were theoretically safer. >> texting while driving should make your rates come up. >> i think what lisa has quite eloquent which is pay as you drive which i also endorse. one consumers not seeing their full array of their choices or seeing the full impact in their lives by the choices they make, that's one thing. so the optics matter. the second is not being able to make the choices. you may be able to see

opportunities but if you have high interest rates or you're locked in many other ways you might not be able to make those choices so having the market really in a number of dimensions make those choices easier to pursue and finally it's got to be a complete package. it can't be just pay as you drive but it's got to be an amalgam of things that bring the costs down and build efficiencies to the well-being of the households and the economy. >> let's take more questions. yes. over here. thank you. >> the pay as you drive is part of a bigger cost subsidy as well. so i'm curious what your opinions are on how much can or should energy policy correct inequalities that are already exists so, for example, as you pay as you drive, i guess, i'm willing to pay a little more to cross-subsidize who really need -- not subsidy but not people who are just driving for

fun and have disposable income but i would be willing to pay more in taxes for the same purpose. how -- >> there's some other 1%. [laughter] >> so how do you request what energy policy can do to correct inequalities and how much should it do? >> i might just comment that even the huge array of costs already imposed in the economy if we can move in a direction that reduces those costs substantially, we have much more wiggle room to correct some of these inequities at different levels and that's part of the happy solution to the extent that we have more efficient cars on one hand to the extent we have pay as you drive that spreads the insurance out over a number of -- in fact, the entire driving population to the extent we have low interest loans made available to consumers we then are able to address a lot of these inequities in a much smarter fashion but that also improves the robustness of the

economy but we have nowhere to go but up. but i think we can have the best of both worlds we can improve the overall costs and control some of the inequities that are confronted by some of the consumers that are stuck. >> i don't have a great answer to that very good question and it's one that i struggle with. i recently did an entry on -- i have a block. i recently did an entry on my blog and i was talking about -- in fact, if you look at gas prices over the last six months or so, they've come down by around 30 cents and if you kind of take the economists' rule of thumb that every cent of gas prices is up or down about a billion dollars multiplied across the economy in thinking in terms of the current economy and all the slack they're in, i was talking about this is a stimulus in the sense that people now have, you know, $30 billion more disposable income. and in the same -- and then i said a paragraph much more in

the context of what we're talking about today, you know, is this a good thing? it essentially means folks are back to -- back to driving more. and if you kind of follow that through, you get to right what i think is a pretty conservative ideology. i'm not saying it's right or wrong but it's one that's quite dominant in this town that, you know, our goals should be to diminish the cost of fossil fuels so that people have, you know, more disposable income, drill, drill, drill. and so one of the things that happens when you start getting into measures that i think are very important, a price on carbon, for example, is you have cbo studies who say here's the distributional impacts and they really take a whack out of those who are at the bottom of the income scale and have less ability to escape the incidents of the tax. and so you start -- and so the liberals -- the progressives in

the carbon tax debate talk about taking some of the income of the carbon tax and rebating it to low-incomed people to offset it and now you're into a pretty complex thing. in some ways you're dampening the very price signal you're trying to create by giving people a rebate to offset the higher prices. so i think it's a very tricky thing and i think the way around it, again, is very robust investment and adequate mass transit. that are paid for by -- in part by a taxation on fossil fuels. to me that kind of squares the circle and solves the problem that i just raised. >> i think this is maybe one of the places where we disagree to a certain extent. i think that one of the issues as we put more prices into more costs into the price of fuel is that we really need to address the financial impediments to change and that means very

robust financing program to -- that steers people pretty clearly towards more efficient vehicles. i also think as we see a large number of electric and hybrid vehicles coming into the market, we're sort of moving towards a two-tiered system in which the people who have money can move away as gas prices rise. they can move away to a radically different consumption level and the people who don't are pretty much stuck behind and we have this kind of, you know, segmenting of reaction. i also want to pose kind of a question which is that over the last year the obama administration has tried to teal with high gas prices in a couple different ways. one of the most striking i think was the use of the strategic petroleum reserve in trying to use that with international petroleum reserves to try to give a signal back to the

market. one of the uncompletely unexplored areas for policy is what if you got consumers to respond more? what if you were saving them money and -- at the same time that you are sending this signal to the market. one question we didn't really ask in this, in skip's data is how much is consumers sort of numbness to prices actually involved in the upward trend of pricing? if we could sort of build in reaction from consumers, would we be be able to moderate these prices a little bit? i don't know. but i think it's worth exploring. i think it's also worth exploring for different metropolitan areas to think about kind of teaching people to be more elastic. teaching people to reduce their spending when prices are high because it will preserve those family's ability to spend

locally. and it also gives people -- it gives people a feeling of efficacy basically. it makes them -- this whole thing that people say again and again if gas prices go up, i've got to pay it. the first -- the first guy in the -- the first guy in this presentation -- or the second guy whose named saying they got us by the gonads that is really -- there is a strong -- people have a strong personalized feeling towards the gas prices and i think that on a local level and at a broader financial level we can actually give people the tools to respond where we might actually see very dramatic changes in prices as well. are there other questions? ye yes. >> sort of changing the subject a little, i'm very interested in this chart about world oil prices where we have this huge

spike in the '70s and we have a huge spike in the last decade and then we had steadily declining prices in between for close to 20 years, and it was a time of rapid economic growth relatively speaking and, in fact, the last decade was an area of slow growth. and i'm old enough to go back to the early 1980s in the wake of the oil shocks of the 1970s. and i suspect if you looked at eia reports back in that era, they would have projected as you have done this continued -- because of global demand increasing prices in the future and, of course, that proved to be absolutely wrong. not that i believe in drill, drill, drill. the question i want to ask is, industrial structure has something to do with all this. this structure of the oil industry, the amount of oil that's out there and recoverable at near term -- you know, forget about the long trend. in the short and medium term, the oil industry in my lifetime's experience is a

manipulative market in which you have cartels that control price behavior and can exercise their cartel power in order to lower prices in order to achieve political and other things. and so i'm -- the question -- as i listen to all of this, we have these goals that we have, whether it'd be, you know, efficiency, getting more income into people's hands, getting people out of their hour-long commutes. putting less carbon in the air and you take all of that becoming a more efficient economy and you have this other thing out there which is that all of those policies trying to manipulate them can be undermined by this industrial structure that we have in energy markets so i'm curious about what policies you think need to be taken there in order to achieve any of the other goals that you'd like to achieve? >> i might open up that thought by recalling that i take a look all the way back to 1900 for the long-term pattern for actually reasons that you raised. that is to say in '73, '74 with

the embargo at that time and the iranian shutoff in 1979 or more recently we saw -- you're exactly right a lot of political manipulation, a lot of market play that drove up the prices, some of it had to do with constraints, a lot of uncertainty that drove up the prices but overall, the trend is pretty clear when we look at that 1900 to the current debut and we're seeing increasingly harder resources to tap into. colleagues at boston university consultler cleveland are suggesting that in the 1900, for example, that we used a barrel of produce more oil we got energy return. >> in 1950, 1960 that began diminishing so we were looking maybe more like 45 barrels, 50 barrels of return in that production of that petroleum and more recently we're starting to see returns of maybe marginal units 8 to 10 barrels of oil per barrel invested. so it's getting harder and

harder to produce even as the demand is going up and as refiners' capacity has flatlined or the ability to explore and produce more oil has flatlined compared to the demand, there's nowhere to go but up. it may not be as dramatic depending but it could be and that's why you're seeing our colleagues at the energy information suggesting that we will see a increase in real dollars. obviously, the way to deal with that which is the industrial structure that is twofold. one is the composition of the economy and how it uses energy and then the second is, what is efficiency in which we pull our energy into our economic process and both of those need to be addressed and that's the way forward. the third might be alternatives to the petroleum both all three of those can begin to push down and moderate the price over the long haul to the benefit not only of families but the larger

economy as well. >> i have only a small point to add. i think that the premise of your question is correct and there are large competitive inefficiencies associated with the political power of this industry. and there are a couple of ideas that i think that are on the table that can help. the one i like the most is clean energy standards. this is where states require that by "x" year 20% of the energy produced by our utilities has to come from clean energy. california has been a leader in this and it's turned out that at least as i understand it, you may -- others may have different information that it's actually been pretty effective in generating more activity in clean energy and aligning of the prices basically rising the prices of fossil fuels and i

think there's pretty much a parity in terms of energy production in terms of fossil and renewable. and various states have been talking about imposing these energy standards and i think they make a lot of sense in the way i like the cafe points. skip notes in his footnote that this is a longer term solution and i think those kind of things put competitive pressures on the fossil fuel industry that are currently lacking. >> okay. yeah, we have to end in about a minute because of c-span. i need to ask if there's any other questions. ye yes. >> i'd like to suggest that it isn't the differential costs of living in the suburbs versus the cities that causes people to move to the suburbs.

it seems to me that especially when you add in the commuting costs of living in the suburbs, the differential perhaps is in favor of living in the cities and most people i think move to the suburbs when they start to race a family and have to think about the educational systems in the suburbs compared to the city schools. so it seems to me that quite apart from this really very excellent discussion of prices of gas versus types of cars and the amount of commuting, it seems to me and this is beyond what your data has talked about, that increasing the educational cities' opportunities and levels would keep many more families in the cities and cutting out all these long costs and have more time to be together also without the long commuting. >> right. i think that's actually a wonderful point to end on in

that what starts off as a discussion of gasoline -- when you really broaden it out it becomes broadly partly about the kids and the reason why they move is partly because of the education system and it's also part of why they will live quite far from their job because they're looking for something for their kids. the same thing happens -- but basically, i think the underlying thing is that we use gasoline to overcome other sorts of barriers in our system. and those overcome the lack of credit. we drive further to overcome lack of credit. we drive further to deal with different sorts of school systems. we also end up with home health care workers driving further to take care of people and gasoline has always been, as you mentioned, you know, for 20 years it was relatively cheap it has been the elasticity in the system that allowed us to get things done even as things were getting kind of out of control.

and what we really need to start doing is figuring out how to put the elasticity back in the elasticity. i suppose. which is a good enough way to end this whole conversation thank you very much. if you have thoughts about where this research should go, please come and talk to me or contact me by email. i really see this as an ongoing conversation and ongoing project to look at this issue. thank you. [applause] >> and thank you very much to jared and to skip. this was really interesting. [inaudible conversations]

[inaudible conversations] >> our review which we issued last week in our report identified that weaknesses existed key security controls at each 24 major federal agencies in the department. >> sensitive personal and classified data stored by the federal government is at high risk of cyberattack. that's a finding of a just released gao report. find out more with the gao's head of security greg wilshusen tonight on c-span2. middle and high school students it's time to get those cameras rolling for this year's c-span studentcam video competition. make a 5 to 8-minute video on this year's theme the constitution and you and get it

to c-span by the deadline of january 20th and you could win the grand prize of $5,000. for complete details go to studentcam.org. >> capitol hill has a meeting for the congressional republican health care caucus. today the group will hear from a former american medical association lobbyist and a health insurance broker. you're watching live coverage on c-span2. >> okay, let's go ahead and call this forum of health caucus together. welcome to everyone who's here today. welcome to all who are watching on the internet and i would remind those who are watching the live stream of this, that

your questions can be tweeted to health caucus and they will be included in the question and answer period. we have two very informed and informative panelists today. we're going to hear from them in just a moment. and then as always there will be an opportunity for questions. i would ask, as we always do, at health caucus for to you identify yourself and if you're with a news organization, tell us which organization you're with. or if you're here from a member's office, let us know as well, and we'll be happy to take your questions. the issue of what will happen at the state level as we watch the affordable care act go through its implementation and also we watch some of the challenges that are coming to the affordable care act in the courts of leaves the states in a tough position.

and, in fact, we heard in this very room from governor herbert from utah in february or march of this year when he talked about how he was building his own state exchange in utah and then the affordable care act came along and he literally did not know what to do. he said he felt like he was walking on shifting sands but, unfortunately, the landscape has gotten rocky and less stable since then. so perhaps today with this forum we can at least provide a little stability and give people an idea of some of the things that they might expect regardless of what happens with the implementation of the affordable care act. today we're going to specifically talk about state efforts for helping the uninsured. and we're all aware of the costs. we're all pretty well conversant with the numbers that have been talked about. in fact, both sides of the presidential election in 2008 talked about those numbers. and the number of people have increased in the last 10 years

going from 19% of the population -- or now at 19% of the population up from 16 points percent in 2007. and the things people who are uninsured understand that they need health insurance, that it would be a benefit to them but most are concerned about the cost. and some, quite frankly, find barriers that they just cannot access or do not know how to access health insurance if it's not provided by an employer. the research has found the main reason people are uninsured or remain uninsured is because of the cost rather than the lack of desire to have the coverage. now, under the affordable care act, individuals will be required to have health insurance with an exception if no affordable premium is available. however, this in combination with those who opt out of the individual mandate and instead pay the penalty mean we will still have an uninsured population in this country. the uninsured pay for about a

third of their care out-of-pocket. 30 billion in 2008. unfortunately, the remaining cost of the care, the unexpended cost remain to about $57 billion that same year. and about three-quarters was paid by federal state and local funds appropriated for care of the uninsured. hospitals incur 60% of the cost of unexpended care because of the high cost of medical needs requiring hospitalization, despite the fact physicians and community clinics see more uninsured patients. in addition, being uninsured leaves individuals at an increased risk of actually amassing unaffordable medical bills, uninsured adults are three times as likely as insured to have been unable to pay for their basic necessities such as food and housing due to medical bills. there's reasons such as these we want to encourage the uninsured population to find affordable coverage. and here's the good news, what we're going to hear today. it is there. it is available. the question of accessing it and

the question of knowing where to go and who to ask. joining us today are two experts on this issue who have looked into innovative ways that the states are helping their uninsured populations find affordable coverage. first, mr. phil lebherz committed to reframing the issues affecting the brokerage committee. in 2004 he founded the foundation for health coverage education, a nonprofit organization with the mission to simplify public and private health insurance eligibility in order to help more people -- more people access coverage. his input on the health care debate, the uninsured and group health trends are featured regularly in numerous health care publications including the "wall street journal," abc news, "the washington post" and cnn. peggy tighe a partner in the washington office, peggy specializes in legislative and regulatory matters and has significant expertise working

with physicians, hospitals, patient group such as medicare payment systems also i might add working with members of congress. a graduate of nursing education, liability reform patients safety and genetic nondiscrimination. so we're very fortunate to have both of these panelists here today. i look forward to what they have to share and as always, for those of you who are watching, if you know of someone who would have benefited from watching this exchange today but, unfortunately, missed it, it will be archived in perpetuity at healthcaucus.org. peggy, why don't we start with you and then we'll go to phil. >> great. [inaudible] >> okay. thank you. i'd like to do two things today. one is to give you an overview of the uninsured and also to

tell you about an innovative program in nevada called access to health care network. but first, news flash, hhs tells us just a couple months ago that the uninsured can't pay their hospital bills. is this news to anybody? and those bills are passed on to all of us, again, news flash. not news. this is just a couple months ago. who are the uninsured and i'll go through this quickly because i think dr. burgess as usual did a fabulous job of this. the kaiser urban institute has told us that there are 50 million uninsured as of 2009. just over half of those are under 138% of the federal poverty level and if you look at my slides you'll see in the orange section, that's about half. the other half are between 139 and 400% at the federal poverty level. where are the uninsured? unfortunately, they're in the

southern part of our country. they're also scattered throughout. how much does it cost? if you're paying for your own health insurance so you're not getting it through your employer, how much is it? well, according to our friends at kaiser, just over 10 years ago, it was about $2,000 per individual and about $6,000 for families. now it's more than doubled for single and tripled for families. so that means over $5,000 for single coverage. and $15,000 for a family. think about paying that bill a year. so we know who are uninsured. why do we care that people can't or don't buy insurance? well, they're less likely to receive preventive care. they're more likely to be hospitalized. they're sicker and they have much higher mortalities. and hearkening back to good hhs our uninsured problem costs all of us more, hospitals, health

care professionals and consumers. i love this. i don't know if you can see it in your slide deck but it's the greatest little note that came out of -- it's not a note. it's a billboard, a giant billboard that a hospital paid for. it says er wait times you can trust. are you kidding? this is what hospitals are advertising right now. emergency room wait times and there's a little note here at the bottom that you can probably see better when you're driving in your car and you can see this and you can text us to find out what the wait time is at your er. i think that's pretty sad. but wait a minute. here comes health care reform. isn't this going to solve all of our problems? let's say we start with 50 million people and for argument's sake, for argument's sake let's say they're right when they say about half of those people are now going to be covered under health care reform. those roughly 23 million, again, according to the urban institute, those 23 million, 40%

of them are eligible for coverage. and not accessing coverage. i remember during health care reform i went into a meeting with some high level officials at hhs and told them about what i'm going to tell but in a minute, this access to health care program in nevada. and they said to us, what if we put you out of business? and the answer from sherry rice who was the head of access the ceo said that would be wonderful. health care reform isn't capable of doing that. not in its entirety and it took about two or three years for people to start to admit that. so where are the solutions? we've been wrestling with this issue for decades, especially, the last two. i posit that there are solutions. where? you should look to the states. the problems are complicated, the solutions need not be. look at the state solutions as

pieces to the puzzle. finally, let's talk about access. access is the only not-for-profit medical discount plan in the united states. it's not health insurance. it's not an entitlement program. it's a public/private partnership. in nevada, in only three short years access has helped 11,000 people, 3 years, 11,000 people get comprehensive health care. and access signed up 1800 providers to do that. it gets better. the model is self-sustaining. it pays for itself in just three years. that's in reno where it began and they're expanding it to las vegas. also, it's important about access to know and this is a big also is only 1.5% of access members go through the emergency room unnecessarily.

1.5%. and i'll tell you how they did that. the way they did this in a nutshell is what they called a shared responsibility model. sarah is going to kill me for putting her picture up but i'm going to do it. as access -- as sherry likes to say, we ask something for everybody and try not to overburden anyone. who makes it work? again, i told you it's a public/private partnership. lots of people make it work. the members make it work because they pay a monthly membership fee. they take the responsibility if there's a no call or no-show to your doctor when you have an appointment set up, you are kicked out of the program. that is made very, very clear when you meet with your case worker when you come and -- when you come in to access as a member. that's part of the deal. if you don't show up to your doctor's appointment, you're out. providers, how they have skin in the game is that they offer

enormous discounts. and i'll tell you what those are in a moment. the community has given a tremendous amount of money through a patient care fund and also through direct care dollars that they contribute. so, for example, with these huge discounts if there's a small amount, it takes less money to cover more people, your donation is going to go a whole lot further. you're going to be able to care for a lot more people. government programs also put funding into access because there are some things government can't cover. by the rules, by their nature ryan white is a good example. access will cover the things they can't cover. employers, the banking and the insurance industry are also heavily involved in access. so it's everybody. it's everybody in the picture of health care. employers can put their employers on access. the banking industry developed an hsa so people can save money for when that time comes when they need health care. and the insurers have a

referral. they have a separate thing to give to their -- to people who come in and say i can't afford your insurance. well, go to access. in your packets again is the shared responsibility depiction. i think it's very useful take a look at. so who are access members? how do you get to be a member of access? you must be currently uninsured. you must be able to show proof of all income such as a pay stub, income tax form, child support and other money received from any other source. you have to live in nevada and show proof of a residency and that proof can come in the form of a utility bill or a rental agreement and you must show photo id. also incredibly important and, again, if you look in your packet there is eligibility income guidelines in this form. so how does it work? members pay their membership fee and they show up. access gets low rates, the members pay in cash.

that's right. i said it. they pay in cash at the time of service. because of access' excellent work they have also become the one stop shop in nevada for referrals. they have a 1-800-line and they take all these people together and phil will tell you a little bit about how his group does it as well. but that's what they do. they're so good at it that they're referring everybody to where they need to go, whether it's through access or government programs. there's a cartoon that recently caught my eye, it says everyone agrees to help reduce health care costs and the patient says to the doctor, i can't afford the diagnosis. do you have a cheaper one. that's plenty for us. we're laughing and this and thinking about it. in nevada that's exactly what's happening. that's exactly what access does. they find a cheaper diagnosis. so, for example, for an inpatient hospital stay nonaccess members would pay about $50,000. out of your pocket, right?

you usually go into debt. $50,000 for a 10-day hospital stay. with access members pay 3. 3 compared to 50. that's a huge discount. a hysterectomy, 20 to $45,000 off access. on access 1800 to 3500. for a broken ankle, 25 to 35 grand in nevada for a broken ankle. it's a lot of money when you're uninsured. access, $1500 to $2200. huge, huge savings. you're probably asking yourself, what doctor in his right mind would offer these kind of discounts? people show up. people come to their appointments, the doctors can give the care and the hospitals would much rather have somebody paying part of the bill than none of the bill, 1800 doctors think this is a good enough idea that they signed up just in

reno, nevada. so i think this is pretty cool. i happen to be fortunate enough to represent access to health care network and sheri rice their ceo and their fabulous board of directors you can read their testimonial and if it's okay to you i would like to read a couple of those. from one of the providers. i've been most impressed with how access helps people return to a normal life. many of my patients basically are nonfunctional. because of a problem they can't afford to have fixed. they can get that problem solved through access. they can go on to live a full life. employers, an owner of 15 mcdonald's stores. access provides us affordable health care solution that is simple and easy for us to administer and with a very diverse workforce of 400 plus, that's saying a lot. from a member, the whole package of access to health care has given my wife and me new hope. the access staff, the providers

everyone at access treats us with respect and care. it has been a truly positive experience. so to summarize, why does access work? everyone in the game has skin in the game. they're all giving something and receiving something. hospitals and doctors took an absolute leap of faith that has paid off in the end. members are held responsible to the access rules and fees. and, again, they retain their dignity. the care coordinators that work with access also learned how to specialize in certain diseases. so you get people who have much more knowledge about who the cancer doctors are and whatever it is that you need. also with the enrollment process with members, it has to be face-to-face. so this is a community member who is meeting you, not just on the phone, some random 1-800-number who's meeting you face-to-face to enroll you in

the program and they got technologically savvy and doing skype face-to-face. they also have an incredible staff and a leader in sherry rice and sherry likes to say when we saw a need we did one more thing. and then we saw another need and then we did another thing. we saw another need and we did another thing. that's how you solve the problem of the uninsured. at least that's how it's working in nevada. thank you. >> here representing the health care education foundation program nonprofit that was put together in silicon valley, our advisory board is leonard schafer who started wellpoint from scratch and is the 32nd largest economy. dave who was the ceo of

wellpoint anthem and an he is -- oh, i got to start over. i didn't have it on. starting over. [laughter] >> okay. i'm here representing the foundation for health coverage education. we're in the silicon valley in california. we put together a very high tech low tech solution to the uninsured problems in the united states. our board of directors includes carlie fiorio who is the ceo of hewlett-packard and leonard carter who started wellpoint from scratch, became the 32nd largest company in the united states. dave hellwig who ran that company and allen an esteemed colleague at stanford and who is undersecretary of defense. the problem we saw is that a lot of the uninsured are eligible for programs and they're not aware and so what we did is we

put the entire united states health care system online. over 3 million americans have used it. and it's been around for a long time. through the power of technology, fhce enables people who need health care obtain it. there's 16.9 million americans who are eligible for programs and have not signed up. they are using the emergency room and they get taken care of and then they leave and the emergency room cannot collect because they're not there and they don't have the money to pay anyway. and so with a mission to provide a simplified public and private health insurance eligibility information the fhec enables us as a nation to prevent waste fraud and abuse and allocate the total cost of health care properly and accurately and we do this because we do eligibility at point of care.

and when someone comes into the hospital it takes 2 minutes, 2 minutes, the whole united states is online all 50 states in the district of columbia, the administrator asks the questions. they see what their eligible for. they can be confirmed online and then the hospital or doctor gets reimbursed immediately. in california, we have 27,400 employees whose job it is to sign people up for medicaid, which is called medical in california, welfare, and food stamps and it's based on what county you live in and also how much money you make or don't make at the federal poverty level. those 27,000 employees across california about $110,000 each per year. that's $3 billion being spent on administration, not one nickel of which goes to health care. the point of care reimbursement

and point of care eligibility we empower the individual to understand that they have coverage if they're eligible. they no longer need to go to the emergency room for everything. all they simply need to do is show up at a doctor's office or a clinic. it takes 2 minutes to figure out. and then we know what's going on. once we collect all that data for the very first time in american history, we're going to be able to budget our health care costs. we're going to know what we're spending money on. we're going to know if all the procedures and everything that are being done are worth it. and we'll lower immediately the uninsured by 17 million people to go on this program. right now we have 50 states trying to create the exchange. the exchange is already done and we've it had on there for 7 years. and it worked and people love it. hospitals, doctors. in fact, some of our partners are the most prestigious names

in health care. we have the american cancer society who works with us. they take 1.2 million calls per year from people who find out they have cancer. one of the questions they asked is, do you have health insurance? and before they became -- started working with us they really had no answer. they said oh, that's too bad. maybe we could -- you know, but now the american cancer society either refers them to our 800 u.s. uninsured help line where we answer the phone for people and do it on the phone for the people who don't have access to the internet, but -- and so they're referring anybody who has cancer who's uninsured to us and we find coverage right away. the american diabetes association, heart, lung, blood all of them referred to us but what's really is interesting is the hospital started using it. so now the hospitals when they come in the emergency room are doing the 2-minute quiz and they're seeing for the very

first time not that this person who came in the emergency room was uninsured, but who should have been liable. who didn't pay when they were supposed to pay. in california, sharp hospitals -- that's four hospitals in san diego with four emergency rooms over a period of year asked 20,000 uninsured patients the eligibility quiz as they came in the emergency room. 82% were eligible for public programs and were not signed up. 80.2%. amazingly, 99.7% were eligible for something and this is before health care reform. so people don't know what they're eligible for. not all the other people who would have had to buy a plan could afford it but we do need policy. we do need to confront these issues but 80.2%. so we called the medicaid office in san diego 50 times during working hours. after all, we're spending $3 billion a year in california.

they answered the phones 15 times during 50 times during hours. 13 times you can't leave a message. the 15 times they did answer you had an average time of hold with 22 minutes with the longest time on hold with $48 minutes. rebillion a year, 80.2% of the people who come in the emergency room cost five times what it cost to go to a doctor or clinic are eligible for these programs and are not signed up. it's wrong. with our technology, we can do eligibility at point of service, at point of care. and then you carry that one step further and we do reimbursement point of care and all the 17 million people from all across the united states will have health care access. this is 100% already set up. and it's working. thanou