and committee's investigation shows there's no basis for the allegations about the navigators. yesterday the minority staff released a supplemental memo supplementing the customer in its review. i would like to ask that be made part of the record. the investigation found that navigators would help millions of people obtain health insurance coverage that have extensive experience is

assisting individuals with federal and state benefit programs. most navigators are non-profit, non-partisan community service providers and have effective privacy provisions in place. those are the facts and the show good news. you talking your opening statement about the navigators were going from door to door and that is a concern. that's why we have to have the real navigators in place so they can sign people up. just yesterday hhs, doj and the ftc announced a massive antifraud effort. i would suggest we all work together to stop any kind of fraud in the system. with that i want to yield the balance of my time to the representative castor. >> i think the ranking member for yielding time. the enthusiasm i am hearing back home from so many of my neighbors, particularly when it comes to now the bar against

discrimination for our neighbors that have pre-existing conditions. just over the past few weeks i met with community leaders and multiple sclerosis and diabetes, hiv/aids, cancer that now see hope. they have hope because they will be able to get insurance for a change and not be discriminated against. since september of 2010, children with these chronic diseases and chronic conditions have been able to get insurance in the tampa bay area that has meant 237,000 children have been able to get insurance where before they couldn't. now, beginning january 1st, this will apply to adults said they are particularly enthused but at the same time they are very troubled by the republican obstruction and seven ghosh they don't understand why now people are going to block access to the

verbal care so i look forward to discussing that. >> we also want to recommend the chairman of the environment and economy and mr. shimkus is going to sit on this hearing. thank you. i will now swear in the witness. introducing mr. cohen is the director for consumer information and insurance oversight to serve as the general counsel for the benefits exchange and we will swear in the witness. you are aware the committee is holding a hearing and doing so is a practice taking testimony under oath to you have any objection, mr. cohen? under the rules of the house you are entitled to be advised by counsel do you deserve to be advised by counsel during the testimony today? use with the testimony you're about to give is the whole truth and nothing but the truth? thank you. your undergrowth and subject to the penalties of section 1 seeley 01 of the united states

code. you may now be five minute summary of your written testimony. >> good morning chairman, ranking member diana degette and members and look forward to discussing the work of the affordable care act of putting the navigator program. as we approach the beginning of open enrollment, cms and all of our partners across the country are focused on helping people sign up for affordable health care coverage that begins on january 1st. we are already seeing competition works. the creation of new marketplaces encouraging insurers to offer plans at competitive rates. as a result in the 16 states the rates are less expensive than the cbo projected. states are using their improved powers to help keep the rates affordable. and according to recent estimates as the congresswoman mentioned many consumers may be a bill to pay $100 or less per person per month for coverage in 2014. when open enrollment begins october 1st, it is one more step towards putting in place one of the core promises of the affordable care act.

affordable and accessible coverage that begins next year. we are working to ensure consumers have the information they need about their coverage options. healthcare.gov has received more than 3 million unique visits since launch this summer and is required by the loss ems has awarded grants to offer 100 organizations to serve as navigators. these are groups and organizations with a proven ability to reach out to likely marketplace consumers and the local communities. navigators and with the pennsylvania association of community health centers which since 1981 has been supporting the community health centers across the state in the mission of providing access to quality health care. the organizations like the nation's largest catholic and nonprofit health system. the martin luther king health center which has been serving the people lynch report louisiana since 1986. the university of mississippi university medical center, the united way of metropolitan county which will be collaborating with 17 other organizations and assisting

texas residents which has been helping people in the fort worth and arlington airy as for 90 years. and the university of georgia founded in 75 as the nation's first state charter university. i find the suggestion that these organizations at the united way or the university of georgia or any of the rest are going to purvey on people by stealing their identities to be utterly without foundation. helping people is the reason that these organizations take this. navigators are prepared to provide accurate and impartial assistance to consumers shopping for health insurance coverage would be required to the strict privacy security standards including how to safeguard a consumers' personal information. navigators will be required and individuals required to complete 20 hours to be certified or take additional training throughout the year and will renew their certification yearly. the work that we will be doing is similar to the work that has been done for years by the ships to help medicare beneficiaries

understand their options. i find it unfortunate that many of these organizations are facing distracting scrutiny while they began to prepare for this important work. one organization a group prepared to serve individuals in four states withdrew from the program as a result of the scrutiny. this creates the well respected organizations and institutions like food banks, large universities and united way chapters have done something inappropriate before they've spoken to a single consumer. they try to do the same work they've done in their communities for years and in some cases decades. but it's unfortunate that they are the subject to suggest they are doing something wrong by helping people in the communities of role in health care coverage. they are feeling obligated to spend time responding to increasing the insinuation that they are hiring unqualified staff or following the federal grant regulations instead of beginning the task of helping people in their communities.

it is disappointing that the resources and attention have been diverted at this critical time. i've been asked countless times over the last year whether we would be ready for day one and that often brings to my mind the implementation of medicare part b. i wasn't there during the medicare part c implementation but i read the stories like everyone else in my understand there were serious challenges. beneficiaries turned away about their medications. but they solve these problems and it's now a strong and successful. if you ask about part de today you won't hear that is the program that have so many problems when it launched. instead you will hear that is the program that helps me afford my medication. and i believe there will be the story of the affordable care act. the people benefiting might be talking about what happened october 1st or on january 1st. they will talk about how their

child can get health coverage even though he has a pre-existing condition. they will talk about how the no longer have to pay more for premiums just because they are women but how they finally decided they could retire because they can afford coverage to buy on their own. let's talk about the security not having to face bankruptcy deutsch a diagnosis. we may encounter some bumps that we will solve them because it is what we do. we are here to help people get health insurance and we take this responsibility very seriously. thank you putative i'm happy to answer any questions. >> i recognize myself and i want you to understand the functioning of the committee. lack of readiness or appropriation doesn't constitute the reason congress gives up its responsibility to have oversight so i hope you have an open mindedness. you have previously been here at a hearing before you told us everything was fine. it was like the scene in animal house the persons is remain koln all is well. let me ask you a few things. july 22nd members wrote to

secretary sebelius requesting information on a price of health insurance in the federal-state. hhs still hasn't announced the plans and premium prices. and i correct? >> that's true. estimate the was requesting but prices would be available in the federal exchanges. when will this information be made public? >> consumers will be able to go on line and see what plans are available on october 1st. >> are you able to provide any information on the prices and availability for the federal exchanges? >> my understanding is that we will be putting out some information on their rates soon. >> it's important for the navigators to know what kind of products they are selling and the training is essential for that city do not have this information? >> navigators' will not be selling products. >> they will be advising people about products they can choose for themselves, correct? >> they will be providing information, and partial information about the consumers

options for purchasing affordable health care through the marketplace is, yes. >> which advises them on things people can choose. now the reason the program was intended to cost 54 billion, correct? >> at one time we put out a funding opportunity for 54 million. >> than you spend 67 million, correct? >> in order to provide more outreach and help for people. >> june of 2013 the report stated they expected to spend 54 million on the program. are you familiar with that report? >> there have been a lot of reports to the >> this relates to what you do for a living. july 21st, 2013 the administrator route to this committee answering some questions we had about the navigator program and she stated the navigator program would cost 54 million. dhs announced a grant would total 67 million. so when did hhs make the decision to increase funding for the program? you have any idea?

>> i do not. >> what founding did they use for the increase in the budget for what you do? >> i'm sure we can get that information for you. >> you don't know where? >> i know that we have had an ongoing interest making sure we can do as much of preaching, as many people get the covered as possible. >> the administration announced to combat fraud under the health care law by creating a call center with rapid response measures to address privacy security issues. can you address with the slide in tale? >> i know we have a call center now. i think the announcement was there would be a way for people to report any instance of fraud and we are working interagency to work with the ftc for example to make sure the appropriate people get that information. >> see you agree to the potential of the fraud existence? >> there's actually been brought before the affordable care act. and so this is not the first program that has ever been subject and i imagine that there

will be fraud that occurs -- >> but it is a possibility and you are going to watch it very carefully? we will be following up on that. now, privacy is extremely important. are the navigators' found by the law with regard to the law for health care people? >> the navigators have no access to the personal health information. >> that they may get some in the process to say i have this kind of illness -- they may get that not necessarily soliciting it. would there be any mall binding them to confidentiality not keeping those records? >> in the terms of the grant and in a cooperative agreement that we have with the allegations -- >> i spoke to one that is going to do a good job on this because they already found five hippa at laws but what they will tell their employees to do my question is are there any legal and place that prevent people

from maintaining or sharing information that me be -- >> there are and the affordable care act in particular provides 25,000-dollar fine per occurrence if anyone uses any information obtained in the course of helping someone. >> and that is for the navigators? will they be going door to door? >> we will be issuing instructions to navigators they shouldn't be going from door to door. >> that will be the ruling that you would have? >> they can't be enrolling anyone now because no one can be enrolling now. in terms of going from door to door to solicit people to enroll in coverage they will be instructed not to do that and it's timely because no one can go from door to door enrolling anyone because no one can enroll today. >> i recognize you for five minutes. >> thank you mr. chairman. briefly what is the purpose of

the navigator program? >> the purpose of the navigator program is to educate people with respect to the benefits of the affordable care act and provide objective in partial help to them if they want in finding out what they are eligible for. >> can you move the microphone little closer? thanks. who decides who fees' certified navigators are going to be? >> we had a grant process much like every grant process -- >> you have a panel when the applications and they tried to choose people that had experience and some kind of presence in the community, correct? >> first they were screened by the office of management and then there was an independent panel that had scored -- >> in order to receive the navigator grant, the application has to demonstrate they have existing relationships or could establish relationships; is that correct? >> correct. >> and the navigators have to complete a training program

including 20 to 30 hours of an hhs developed program, is that right? and they have to pass an exam, is that right? >> yes. >> part of that includes understanding privacy and portability programs, is that right? >> yes. >> set to get the navigator grant, they have to certify that they are going to comply with any privacy. is that correct? >> right. >> under the affordable care act -- let me back up. right now when somebody finds up -- signed up for health insurance people often have to sell applications with 35 pages; is that correct? and those applications included divulging all kinds of personal medical information because there was necessary for the insurance companies to figure out the insurance rate because they could discriminate on pre-existing conditions and gender and all kind of other issues. but right now none of that

preexisting condition information is even relevant, isn't the right? >> that's true. >> to sign up on the marketplace exchanges people aren't even going to have to devote that kind of information. is that right? so even if a navigator went to the door and was trying to explain to somebody about the exchange's they wouldn't have to get that information from somebody, right? >> it's not part of the application, right. >> if somebody talked about their information, the navigator would be trained, right? >> right. >> i want to ask other questions about the market places. or the marketplace is to be up and going by october 1st? >> the well. estimate is the federal exchange going to be up and going? >> the well. >> as i understand people can go on the market place for a six month period to sign up; is that correct?

>> that's true. >> would somebody want a member of congress to go on the federal marketplace and the look and see what plans are available they could go on october 1st, right? but then they would have additional time to sort through those to figure out what they wanted; is that right? >> yes. >> if they sign up their coverage starts january 1st, 2013 is that right? >> that's the earliest they can start. >> 23 states as the district of columbia are either running their own market place is or they are doing a marketplace in partnership with the federal government; is that correct? would those states be ready for enrollment by the start of coverage and 331st? >> am i understanding is that all of them will be open for open enrollment on october 1st. >> can you give me a sense of the milestones and benchmarks that the subcommittee should be looking at to measure the

progress of the next few weeks and months because we keep pulling people in and of the pieces they are ready so i would like to know what are the benchmarks that we should be looking for? >> there are two types of benchmarks. one of the sort of internal benchmarks of the call center and response time working and how wise the website working and those kind of things. hauer the system is functioning and then of course the external how many people are getting enrolled. i would say we don't anticipate a huge amount october because as you pointed out the coverage starts in january and people have until december 15th to pay their premium. >> okay. >> and i guess you are prepared to address those quickly is that right? >> we are very well mobilized. >> i love to see one more thing. i said this before but when we get medicare part d even the white vote against it and i oppose it i ought reached to my constituents and i got my

newsletter that i set out to everybody and i will let you look at it and we can put it in the record but i would suggest everybody on both sides of the nile it's incumbent to all of us as officials to try to get as many people enrolled in this program as we can who don't have insurance now. i think it would be a good idea. i hope it works. >> i hope all those people have been cut from the insurance plan and will be able to look at that. i now yield five minutes to mr. burgess. >> thank you mr. chairman people that mr. cohen if i heard correctly three response you said navigators wouldn't be going from door to door, is that correct? >> of the federal guarantees would be getting instructions the navigators are not to go from door to door for the purpose of telling anyone. >> you have an evidence binder next to you can i ask you to turn for a moment to that winder?

-- binder? in that project abstract summary this is the summary that the company or the group provided you and the application to receive money from the navigator grant program. the second paragraph of that summary reads the proposed program will deploy 25 exchange navigators in each of the targeted counties to be exchanged navigators will seek an insured residents by going from door to door. is that consistent with your statement the navigators wouldn't be going door to door? we will be telling them they shouldn't be going door to door. >> but the applied for a grant and they told you that they are going to seek out of eligibility to the lone individuals by going from door to door. did you read the application? >> i want to say i've never seen

this before. i have no role at all in the grand award process. i'm seeing it for the first time now. i understand that's what they said -- i see those words. they are going to be instructed. i am confident that they will obey that construction. >> do you know how much money they received in the grand? >> i would have to look it up. >> my next question is can they have the money back? it provided an application which was approved and the navigator program and yet they outlined the activity which you said is going to be prohibited. >> i'm confident you will find other activities the will be very well suited to helping people get enrolled in coverage and that there will be a wonderful guaranty. >> i'm confident the taxpayer would like their money back of the grant application was approved based on information

which you said would make it ineligible for the approval. >> i didn't say that, congressman. >> let me ask you this and i have a series of questions for a yes or no response. will the enrollment process be ready on october of this year? consumers will be able to go on line and they will be able to get a determination what tax subsidies they are eligible for and they will look of the plans available where they lived and be able to see the premium net of subsidy that they will have to pay and they will be able to choose a plan and get enrolled beginning october 1st. >> let me rephrase. will it be ready by october 1st of this year? >> i yet nothing further to add to my answer. >> your answer sounded as if it could be yes but there is room for no and we will write down a response to that. will the exchanges be ready on january 1st 2014?

>> consumers -- it's the same answer. >> consumers will be able to go on line, get a determination of they are eligible for find out what the subsidy amount is and they will then be able to go and look at the plans that are available to them where they live and they will be able to -- they will see the premium net of subsidy and choose a plan and get enrolled in an october 1st. >> and there will be ready on january 1st? >> that is my understanding. >> i need a yes or no to this gimmick my answer is based on the people of the i.t. system so it is my understanding. >> of the income attention of the wall january 1st cause employers to offer coverage for their employees yes or no? >> i don't know. employers make lots of decisions for lots of reasons having to do with the affordable care act.

this chemical full implementation result in reduced cost for all americans as routinely promised by their president? >> without accepting the characterization of the president said i think what we are seeing is a competition of the market places is causing competitive rates to be available to many consumers. >> after full implementation of the lodging reversed all americans still be able to keep their current coverage if they like it as promised by the president? >> without accepting your characterization of the president said grandfather plans are allowed to continue to exist without change under the affordable care act in a private insurance company with products they offer in the market. >> i hope we have time for additional questions but i will yield back at this point. >> you are now recognized for five minutes.

>> i commend you. it's important that we have proper sympathetic and intelligent oversight to get this program of its feet and going in that direction that we wanted to go. the subcommittee has a longer record of such oversight and it has informed the full committee and the congress of the critical fact. the strong congressional oversight will lead to much good for the american people. i am cheerful that this investigation ended the navigator program like something less desirable and i am hopeful we will work together to avoid it. one of the navigator's is a community-based social services organization i've worked with for more than 40 years. there's nobody that knows our committee better than them and this is exactly the type of group that we should be aspiring

to help people find coverage. there's an institution which believe it or not serbs all parts of the society. all racial groups and religious groups and it does so without discrimination whatsoever. my question is regarding the strong production and protections that exist in the navigator program and the status of implementation. of my questions will elicit yes or no answers. i'm assuming, mr. cohen, that all of your navigators' speak all of the standards of any federal contractor is that right? >> it's a grant program, yes. >> in regards to the disciplines and integrity and proper behavior, is the right? >> yes. >> and i hope that you will submit additional questions and answers for the record.

they've recently awarded the navigators required by the of troubled care act yes or no? is the chang navigator more comparable to the training at agency brokers to sell health insurance, yes or no? >> does the navigator trading in put information as to how it will protect the privacy and security of its consumers? yes or no? >> yes. spingarn navigators subject to the careful screening as other entities seeking to do business with the federal government, yes or no? all in navigator guarantees be overseen in the same way as other guarantees are overseen and held to the terms of the grant? >> yes. >> now i but like to move to talking more about the opening of the new marketplaces which are less than two weeks away. in 2012 for the insurers much less likely that in the previous

year's to request their rate increases of 10% or more, yes or no? >> yes. >> would you submit for the record of why that is so? do you believe that the review provision in the affordable care act is a factor that led to this behavioral change on the part of insurers, yes or no? >> yes. >> do you believe the market places are working as intended by making the interest compete over price or the business of consumers, yes or no? >> yes. >> is it your expectation that consumers will have more and better information because of the structure of the marketplace is? >> yes. >> would you submit additional thoughts on that please? >> on the states that we have the data are the preliminary health insurance on the health marketplace 19% this expensive than predicted?

>> yes. >> when you submit additional comment on that, please? have some insurers submitted two príncipe to the marketplace only to revise the bid and reduce the prices when other insurers rates came in lower yes or no? >> yes. >> will you submit additional information on matt, please? well half of the consumers be likely to pay $100 or less per person for coverage in 2014, yes or no would you submit additional information for the record on that point please? is it correct eight and ten marketplace consumers are expected to qualify for subsidies to make health coverage more affordable, yes or no? will you submit additional comment on that, please? now we are just a few days away

from seeing the full implementation of the affordable care act. i know that there may be some bumps in the road but we are having the right direction. the american people are suggesting us to set politics aside and work together for the common good. i am hopeful we will take this as an opportunity to work together in a bipartisan manner. our constituents expect nothing less than that. one thing happened the other day to read a spokesman for the good friend the former member of the committee john colburn now in the senate says a government shutdown would be committed ritual suicide on the order of that strategy on the communication structure to the national journal daily. the idea that we can fully defund obamacare for the continuing resolution is a endemic to advance political funding. i yield back the balance of my time. >> we now recognize mr. olson

for five months. >> welcome again mr. cohen for returning to answer questions. i know it's a busy time for you so i appreciate your time this morning. appearing before this committee talking to people of 22 about defending the obamacare enrollment on october 1st. most hadn't heard of open enrollment. they haven't heard if their employer will continue to fund health care under obamacare. and now the ones working 40 hours per week are hearing the they may get their wages cut by 20%. but they have heard about navigators and they are scared.

they have a lot of questions as you can imagine they want me to ask you so please give me a direct response and not a filibuster. the first question there are now 104 entities that are navigators; is that correct? >> i know it's more than 100. that sounds right. >> how do they have hire people for the position currently people in place to be the navigators to fulfil these requirements they must fulfil? any idea? >> i don't have the answer for that but i'm sure we can get to the information. >> so there are several steps -- >> i don't know what we have officers in contact with the navigators on a regular basis weekly and i'm sure if we have that information i would be able to work with you to get it to you. >> about the ones that have been harmed how many are completed?

>> i do not know. >> can you find me some details for the 20 hour service is at a multiple choice some details about the qualifications process >> it is an open book, it's an online course and you ask questions about the material and you have to score 80% on each section in order to pass and get certified. >> like you didn't do they have to have background checks? >> they went through a very rigorous scrutiny process in order to receive the grants. we have not required the federal government hasn't required the

background checks for the individuals be given that some states have adopted that as the roel requirement. >> the people on the street you tell me that the entities dhaka on doors but given the information now require in the background check. >> people of helping with medicare for many years. no background check. states like the ship program are able to impose that requirement if they think that is something that is important in their communities. >> how about objective you can't get a job without a drug test how about an navigator? >> there is no requirement that individual navigators are subject to a drug test three >> how about deadline? >> it's determined by each of the guarantees. it's part of the budget that

they presented in the budget proposals subject to review by the office by every guarantee to make sure that the amounts being paid a reasonable. >> do they have some quality assurance like a so-called to make sure people get access to information to check up on that? >> we will be doing ongoing monitoring of the program that could include the secret chopper. >> i was on the board back, talking of a pullout of obamacare and we took of the representatives from texas on the panel with me. one said the navigators in the streets have registration cards. have you heard that true or false? the voter registration law requires the public programs like medicaid be offered

information about the voter registration for the federal law requirement and the application covers medicaid and chip and subsidies on the exchanges to require information about the voter registration. simic i recognize ms. castor for ten minutes. >> thank you for calling the hearing. mr. cohen, we are not even in the month of halloween and yet one of the favorite scare tactics that we year it's going to lead to higher health insurance premiums but while my friends have made every effort to convince americans that the health insurance premiums are going on january 1 now we have the data that demonstrates that

is untrue. these assertions that health insurance rates are going up simply is not going out by a number of analysis that have been conducted. so let's walk through the information on the affordable c.a.r.e. of pensions premiums starting at the beginning. when people shop for coverage through the marketplace is, they will the ball to compare plans and then select the plans and sign up for either private insurance or the state expanded medicaid, is that correct? and if they have a household income below 400% of the poverty level, so if you are an individual with about $46,000 or a family of for about $94,000 on a sliding scale you will be eligible for tax credits, is that correct? or medicaid possibly. correct. >> this week hhs released an analysis on the 41 million

uninsured americans, 25% of the floridians are uninsured. so you can see why these new marketplaces will be a godsend for them. 41 million uninsured americans who will be eligible to enroll in the marketplace is can you tell us in broad terms with the analysis is? >> the analysis has said about eight of ten will be eligible for tax credits in the marketplace. >> it is a 23 million will be able to purchase coverage for less than a hundred dollars a month? >> including the subsidy, yes. >> that's pretty remarkable. did you have any idea that the coverage would be that affordable? >> i think there were lots of predictions about what the rates would be. i think that we have been enormously pleased the market place and competition is working and we are seeing the availability of the low-cost affordable plans in many places throughout the country. >> the findings have been echoed

in recent studies by the nonpartisan corporation and the nonpartisan kaiser foundation, two of the most respected health analysts. are you familiar with these studies from rand and kaiser? tell us what those found. >> the kaiser family foundation are estimated that in the 18 leading areas that specific geographic locations that he looked at, 15 would have premiums below the latest projections the cbo had me that what the rates would be. and today talked about a premium for authority-year-old in the second lowest plan being $320 a month national league. that's before the application of the subsidies. >> and are the plans available on the affordable care act in the marketplace is are they a good deal for the quality of coverage that is being offered? >> that is one of the most important things because the plans have to have the essential

health benefits required by the affordable care act and they cannot have annual limit for lifetime limits. so, they are going to be there to provide coverage when people need it. >> at the beginning of the hearing i shared with you and my colleagues the enthusiasm at home, especially among many of our neighbors who have chronic conditions that have been barred from insurance coverage. if you have diabetes -- or i talked with a gentleman with multiple sclerosis, hiv/aids. we all have neighbors or family members that have been barred for coverage because of these pre-existing conditions. and this is really going. it's giving them hope they can finally obtain coverage. will this high-quality coverage that is available for the same price will it be available for the same price even for many of our neighbors that have those pre-existing conditions?

>> that's right they cannot be charged more because of a pre-existing condition. >> every republican and announces the premium under the ahca if you notice they ignored the fact that coverage has gotten better and that discrimination from neighbors that have these pre-existing conditions now will go away for 129 million americans. and if they ignore the tax credit. in my state of florida they conducted a study had said we will show you that it's not affordable but then they didn't built into the study the tax credits that are available. for the families and neighbors and small businesses, too. of the one that really takes the cake do you know that in my home state we need help when it comes to health care coverage. one of the things they did it probably wins the award for obstruction and seven tauscher is they actually took away the insurance commissioner's ability to regulate rates and negotiate

rates. is there any other state has done that? >> i don't believe so. and i was a state regulator in the california insurance department, and i know her very well and it's an excellent insurance department. and it's unfortunate that their authority was taken away. >> thank you very much. >> the time is expired. now mr. johnson of ohio for five minutes. >> thank you mr. chairman. mr. cohen, first of all, good morning. thank you for being here today. first question for you. whose department is responsible for overseeing and administering these grants to the navigators? >> it's a combination of my office and the office of brand management. >> okay. but you are responsible for overseeing the process, correct? the grant process? >> the process of selecting the

guarantees were overseeing. >> the process of overseeing and selecting. >> i had no role in the selection process. we do that on the independent panel. >> that you oversee it, correct? >> i had no role in the selection process. >> who oversees the grant process? what is your role in the process? what is your role in the current process? i didn't say the predilection. scaap my office is responsible for overseeing the guarantees performance. >> did you review the criteria for the grant applications to be previewed? >> i did. this gimmick because earlier when you were asked, you said i don't know. repeatedly, and you said i don't know. it didn't have anything to do with that. >> that's not what i said. i didn't review the applications people and i was part of putting

together with the program would be because that is part of my job. >> the criteria for reviewing the grants that you stated in your answer to dr. burgess when he asked you could we get the money back for those that are doing a process like a door-to-door that are going to be prohibited you said that you are confident that and they would find other activities. i find this a rather odd way of going about spending the taxpayers' dollars because if you don't know where you're going obviously any road will get you there. this is consistent with the theme of let's pass the health care law so we can see what's in it to that now you are telling the american people that we ought to award millions of dollars in grants and then find out how they are going to spend it. i would submit to you that that is exactly the kind of

irresponsible governments and the responsible administration that the american people have become so frustrated with. and leaders that report themselves to be directors, head of agencies that say i don't know and tried to shrug our shoulders and say i didn't have anything to do with that. it's disingenuous mr. cohen. first question, when you are evaluating -- reclaiming my time mr. cohen, let me ask you a question. when you were evaluating the navigator grant program, were their standards on the amount of grant spending per enrollee or individual contacted about enrollment? you told me you review the criteria. so were there any standards about that? >> i reviewed the criteria. >> then you should answer yes or no. >> i wasn't involved in the budget discussions over --

>> was there in the grant process -- you told me you review the criteria. you just got done saying that. were there any standards on federal week that is the very simple question. >> and you don't recall? this goes back to my first statement. were there any standards or minimums on the number of health affairs attended or individuals contacted through advertisements? >> i doubt that the funding opportunity -- >> tell me what you know about the criteria. >> we put out a funding of burton and the announcement that describes the program. >> i want you to tell me what the criteria was. what is the criteria for a grant? >> you don't know. >> i don't know how to answer the question to the >> you don't know it is appalling to me. >> turn to exhibit number one, please. >> i think it is reprehensible

that you would come before the american people as a director of the department, and you don't know. you told me that you reviewed the grant process, you reviewed the criteria yet you don't know. you can't give the first sentence about that criteria? turned to exhibit number one, please. >> i have it. >> okay this is a navigator grant application provided to the committee by the administration. it shows the navigator of what to expect to facilitate the enrollment of 312 people into qualified health plans. you awarded this organization approximately $80,000 of taxpayers' money for only 300 people. i acknowledge you said you didn't have anything to do with the award. but do you believe that this is an efficient use of taxpayers' dollars?

$266. >> the time is expired. >> you may go to a second round if you have additional questions. i will let you answer. >> i'm not even checking the clock. sorry, mr. chairman. we can go back. >> as i said, i literally hadn't seen this before today. i'm happy to go back and look at it and answer your questions. i just can't do that today. >> i'm not surprised -- >> i was not a part of the grant application and award process. for the reasons i'm sure -- >> we will follow-up on matt. mr. waxman is recognized. >> do you approve the budget of the navigator's? >> i did not. >> do you? >> no, i don't. >> so your agency does? >> yes. >> when you did this help establish the criteria for awarding these grant navigators who will help people know that there are insurance options available to them and help them

sort through the new law but there are still a lot of negative things about the republicans who want to demonize the idea that people will be able to get insurance treat i think the question as you just said or off the mark and not appropriate other than we ought to be up on people because you know what they don't like the law. to select people do can do the job as navigators you have something to do with that. then the grants are needed to different applicants to be the navigators who decides that? >> we have an process -- there were a lot of grants. every grant goes through a screening process they review the management of the applicant. the review the budget. they score them.

the independent review committee that makes the selections based on the criteria and the purpose of the program. >> so criticizing you for what an independent grant committee reviews and decides is in that correct? >> i don't even know what this hearing is all about. we've had so many hearings by the republicans to beat up on the affordable care act. they don't like it. i got the idea and they want me to repeal the they could have gotten the message out by asking to vote five times and instead they voted 41 times. it's because they have nothing else to do but attack the affordable care act and why do they want to do that? because they want to confuse people. that is what this hearing is all about and it's sad the people who are doing the work of the navigator's are now being intimidated by the republicans who are getting a long list of

questions asking them did they do something wrong. that seems unfair. we have a clinic and people that work in a homeless shelter and with an ethnic community. people who are there in the community and they've been selected and had to go through tests and clauses to be good navigators and they are going to do their job. now they get the members of congress asking them to chill out answers. do you know what kind of questions they have been asked? >> both about the application process and with the plans are before the season started work, before they hired a staff. >> this is one thing about the committee. congress has a lot of power. when the chairman or the member

gets the chance to ask questions that is a lot of power. but what we need to do is restrain ourselves from using that power and i haven't seen much restraint around here. i understand one navigator already dropped out of the program because they just said we do not have enough money to do the work of answering questions from congress as well as reaching out to the community. is their right? >> that's true and i've heard from others that are concerned. they don't know what to do in response to these increase. >> this is such an abuse of power to intimidate navigators that are going to explain this small to people. in california we are running for the program and we've license people who sell private insurance and the state has taken over the responsibility of approving the navigators, hasn't it? so they have a job to do.

they have been checked out to make sure people are capable of doing the job. we don't call the private insurance salesman to asked them a whole bunch of questions but when they try to just get the community to understand something new, the committee it uses the power and wants to ask all sorts of questions. at the time that they are trying to run this program. with a couple weeks left before the opening of the exchanges. schering get by without if i might any state that wanted to run the navigator program had the ability to do that either by operating its marketplace or being a consumer partner. they could have taken over the whole thing. >> am i steve is doing a good job. we will have a great success in california and success around the country unless republicans intimidate people, whether it is with the state level or the federal level about the idea that they can get insurance that

has been denied them in the past. and republicans said nothing about it but denied them in the past -- >> time is expired. >> -- or they couldn't for the insurance policy. i don't know the hearing is about except to intimidate people, and i resent, mr. chairman, the kind of questions that a witness has been suggested to by my colleague to be a disconnect to this mchugh said california has taken over these for insurance agencies. are you saying that would be under the same guidance or the rules of regulations could you clarify that for the record? >> california is given by the standard set by the federal government. >> because its operating its own market place and has its own

program and it is not requiring the navigators to the agents and brokers. we've issued them saying they may not do that but it has put in additional requirements beyond the federal requirements. the licensing test reagents is under and what be a part of the same set of rules? >> i'm not 100% familiar with the council was doing the they are requiring background checks and fingerprints. >> can you let us know, thank you very much. >> i now recognize mr. skill lease for five minutes. >> hopefully i can get to more than five questions but i will do my best to get to the questions i have and mr. chairman i want to thank you for holding this. i think it's important that we have oversight over the program this involving not only $67 million of tax payer money, that a new program with a

navigators will be going for about america trying to sign people up for the president's health care law that has had so many problems for somebody to kind of insinuates that we shouldn't be asking tough questions. the american people have tough questions. that's why they sent us here. i would hope that you are here to give straightforward answers to the questions people have and anybody thinks that the sunshine and transparency will undermine the law maybe they are right. the fact more people find out about this the more they don't like it. that's not our fault. that is the fault of such a bad all the more people find out about it they don't like it. >> i always do my best, congressman, to answer the questions. >> i appreciate that. as you think that any of these are unfair questions? >> i think i better not respond to that one. [laughter] >> not only under oath, the president -- the president that we work for me in on a campaign

promise to say he would be the most transparent president ever and all of a sudden we start asking basic questions and people are saying that we shouldn't be asking tough questions because that poor president, it might make his loan to look bad if we find out what's in it i have no problem. this is the seventh time i've testified before the committee since september. i've always done my best to answer questions and provide additional information when i wasn't able to answer to this and i just want to make sure the concern i have -- the concern i have any questions you have for me or us -- the concern i have is for the scrutiny the navigator groups were put under. >> get the name of any navigators that dropped out of the program because of the scrutiny i would ask you to get that information to the committee because if any navigator dropped out of the program because they didn't want to be held accountable for the tax payer money they were receiving the don't belong in

the program. they ought to get out of the program. >> if any of those people would fall of -- >> the reason -- >> we are asking real questions they ought to be providing answers to. i want to ask about the criminal background checks. this is a big concern of a lot of people i know in my district and i want to talk to colleagues and others. why is it you do not in choose to include back rent checks when we are going around asking people for very secure information about their health? >> they aren't going to be asking people information about their health. >> they are having conversations with navigators about their health care. >> we are not going to be having information about their health. they aren't good be asking them about health and it's not part of the application. >> let me ask you this if somebody just got released from

prison for a conviction on identity theft with that person be eligible to the navigator? yes or no, you are under oath. >> i'm confident that the organizations we have given -- are they eligible it is a yes or no question. i'm sure if you hope they are not eligible why don't you make that a rule? am i incorrect saying a person there was just released from prison on identity theft can be a navigator is that an inaccurate statement? your rules allow someone who committed identity theft to be eligible to be a navigator if i'm saying anything incorrectly correct me right now. >> we have had experience for many years of the program. there was no federal requirement for background checks to be a cynic if you correct me then i will stop singing and but i made a statement if i said anything

inaccurate correct me. if you don't i will keep making that statement. >> there is no federal requirement for background checks. >> was there a concern -- >> excuse me -- >> no, this is my time. >> the gentleman ought to be given the courtesy to answer to the estimate i will ask one final question -- >> i ask for your support in being able to answer these questions. >> were you concerned that evoke in criminal background checks might limit the number of people -- >> mr. cohen, you may answer the question. >> we want to get as many -- we had a number of factors but it wasn't clear to us that we have the authority to require the criminal background checks and we wanted to make -- we left it up to the states to determine whether there was a requirement. >> that was a yes or no question to but i would ask if you get a yes or no answer.

are you concerned it might limit the number of people that could be navigators? >> the cost and difficulty of doing criminal background checks yes we were concerned about that. >> would you be able to at some point in the future combined disinformation's you said some states have information and some states don't? the concern for the members on both sides of the ogle list to make sure people coming through our trustworthy. i now recognize you for five minutes. >> thank you mr. chair. mr. cohen, thank you for returning to the committee. and for your diligent work thus far trying to implement probably the biggest reform on the nation's health care system in our history. this is no small task so we all appreciate -- i hope we all appreciate the commitment that you have shown in taking on this work and ask questions and allow you to answer them and then talk over you. we've understandably heard a lot

already today of the exchanges which are the most difficult piece of the aca i want to ask about the other insurance reforms of the aca that your center is responsible for. under the aca the center is charged with providing support to consumers and insurance companies denied payment for a service or treatment, which had coverage guaranteed under aca. one example of the benefit under aca is the testing of genetic counseling for women meeting certain risk criteria for hereditary breast and ovarian cancer. i've heard reports from several women in new york to been denied the aca testing despite meeting the criteria for testing and receiving medical what fais to have the testing done. my understanding is that this shouldn't happen and your senator is charged with ensuring that it doesn't. what research and assistance as the senator offer for the consumers who need to appeal the

insurance claim decisions and where can they gain easy access to these resources? >> there is a requirement under the affordable care act for an external appeals process after someone goes to the process of their insurance carrier. new york is probably running that process. in some cases the federal government is doing it and they do not have a process that meets the required standard. in addition we work closely with the state department when we learn of something that is a systemic problem so it's not just one particular individual but looks as though a particular carrier or all the carriers in the market are not abiding by the provisions of the affordable care act we work to make sure that they do. >> perhaps if you could look

more closely at that specific situation i would appreciate it. as you know the implementation of the affordable care of it will extend protections from mental health parity in addition to more than 62 million americans. however given the final regulations the american people will enjoy the full protections of mental health care nettie with the spirit of that legislation as it goes into full effect in 2014. with another terrible tragedy this week in washington, d.c. the need for the robust commitment to national health has been highlighting it again. we've heard from the numerous officials the final medal hauls parity regulation would be finished by the end of the year at a date that is approaching. can you provide us any more details on any such parity rule? >> we have canada there will be able out by the end of the year and i'm confident there will be. i've been to meetings where we have been reviewing the

provisions of the final rule. it's moving through our process. i can't give an expected date but will be coming out by the end of the year. >> can you describe the current investigation and enforcement process that your office goes through when a received a complaint about the violations? >> sure. as with many federal law provisions, hippa, the states are the primary enforcer. what we typically do when we hear about problems and we do have a hot line people can call and tell us about problems they are having we generally will reach out first to the department of insurance. there have been some instances where the state told us they are not able to deal with the problem and we dealt directly with insurance companies to make sure that they are complying. i know that the requirements of

the health para dewaal are not as well-known and understood and so we have been doing some outreach education both to the community and state insurance department to make sure the understand the law. >> in these investigations of the violations are conducted are the results made public? >> it depends. what we try to don moly is compliance and if we are able to get compliance and there is no administrative action the untypically that wouldn't be public. if we go to the point of fact truly beginning administrative action and the monetary penalties that would be public. >> mi5 minutes are up and with fat -- thank you mr. chairman and mr. cohen, good to see you again. if i can get you to turn to exhibit number four for just a

moment, please. exhibit number for. if you will look at that, you will see that number 14 says incentives for quality connections and the sentence states they have the honor to detour and $200 additional per quarter if they made a stand of 300 iv screening starting the quarter. do you see that? >> i do. >> do you believe it is appropriate p navigators for the number of individuals enrolled? >> we are not permitting navigators to be paid. ander stat this is an application and might be what they thought they were going to do but we are not permitting that. >> what are we getting? just a straight salary so they get paid the same or saying that this isn't true? >> this is an application by telling you in the federal program navigators are not being paid by the number of enrollees.

>> didn't you approve this? >> there is a budget process. we did, so there is a budget process that goes through where the grant is awarded and i don't know the specifics of the particular applicant but i'm confident the budget that was worked out didn't include payments. >> can you check that to be 100% sure and get back on writing? >> i would be happy to. >> is there another application that we should be looking at? >> there is a grand award and a cooperative agreement between when the grantee. it's just the application. >> what me ask you this. if this were true would you believe that we should be incentivizing the navigators' to enroll as many people as possible? >> in the federal program and made the decision not to permit compensation based on the number of enrollees. >> but this is the document that

you provided to us if i'm not mistaken. >> it's an application. >> and that's what i'm referring to as the document. so just so that i am clear are you saying then that no navigators being paid additional money or bonus money by the number of people found out is that what you're saying? >> in the federal program. >> what about any other program or entity? >> there may be some states that are paying some portion of compensation. >> and you would know which states those are, correct? >> we can get that information. >> and if they are paying all of them a bonus based upon the numbers, i would want to know that. are you going to issue any type of statement or standard for navigators or to the states to direct them not to do this? >> no. i mean, the states throughout the affordable care act we have

given a lot of flexibility to design their programs in the way they think is best for their state so we are not telling states they can't do it in a federal program, navigators are not being paid parental leave. >> following up on other questions my understanding is the navigators are not subjected to criminal background check is not done, correct? >> there is no federal requirement for a background check given that some states are imposing a federal background check on navigators. >> your requirement to do that? >> that's right. >> the navigators are going door to door and some situations, correct? >> navigators will be told that they shouldn't go door to door to solicit people to enroll in coverage the >> they are being told not to? do you know if they are doing that on the state level? >> i don't. >> can you let us know that, please? >> i can try to find out. >> if i can get you now to turn to exhibit number eight.

exhibit eight is a work plan from one of proved navigator. if you look through, you will see the promise to complete 24,000 calls in the first quarter, 72,000 ruble calls in the first quarter and another 72 in the third and 72,000 more in the fourth quarter. do you see that document? >> yes. >> do you believe navigators should be using taxpayer dollars to fund bobo calls? >> i'm going to have to check to see what our instructions are going to be about that. my understanding generally is that our expectation is that when it comes to enrollment assistance we expect people are going to come to the navigators rather than going to them. >> but this was an application that was approved, so this was

and approve the application. >> this grant he was awarded a grant. it doesn't mean every single thing in the application ended up in the final -- >> but the award of a grant in that application did call for the bobo calls that you saw. all i yield back. >> now to mr. green for five minutes. >> thank you. mr. cohen, let me explain the district i represent. i have an urban district in houston with the highest of uninsured. in nye county in south texas the numbers are compared to some of the poorest counties in the country. some of the questions you are hearing and looking at the exhibits i know my navigators are not going from door to door. they are prohibited from doing it. but in an all-america which is a nonprofit group is doing that in fact i asked them to do that in my district. i want them out there making people know this law is available. you are hearing today folks that don't like the law and that's okay. they didn't vote for it.

but they are trying to keep it from actually working. and in a district like i have, this is the way those folks can go and have insurance for their families. so it's frustrating me when they were talking about, you know, fingerprinting. under state law may be my insurance agents are fingerprinted and do background checks to read i'm not sure but it's not in the federal law to do that. so in the state of texas that's not an issue. insurance agents may be able to but we don't hold these navigators to higher standards than the federal law. so the complaint is they really don't want the navigators to do their job to sign people up and cut and. it's also i would be offended if somebody asked -- if i had to ask my insurance agent do you have a background check? that's just amazing some of my colleagues would do it but again there point is they don't like the wall and they are trying to stop it any way they can to discredit it but it's working. we are doing more evens in the district because we want that outreach to be there. let me ask you something.

one of the questions about the navigator being paid incentives and by looking at exhibit number four on page ten. navigators are paid base wage of $10 an hour with the expectation of meeting basic performance guidelines and have the opportunity to run to hundreds of dollars more per quarter if they be 300 a moment screenings. federally qualified health center employees i know in my district actually have positions to be able to assign people love. we are talking about some of the folks that make the lowest wages that we can imagine. and it sounds like to me it would be a republican thing to incentivize them to actually go out and do it correctly and that's what i think welcome to congress. but let me talk a little bit about one of the issues that have come up and i've heard a lot on the floor last week we were forced to vote on a bill that could force the hhs to take an unprecedented role of certifying the marketplace

verification systems before people could get financial assistance. i want to ask you a series of questions about that. when an individual applies for financial assistance through the marketplace, what steps are taken on the front and to verify that they are not under reporting their income in order to get financial assistance? >> we checked against available sources of data and putting internal revenue service data and social security administration data and if necessary, a private employer data through a data base that serve as a part of that system to see whether -- >> so our data base and you also check against equifax for the current information. so there is up front verification. what about on the back end in individual taxes at the end of the year indicate they are not eligible for that financial assistance what do they have to do? >> the irs is going to require that they reconcile that at the end of the tax year and if they

have to pay money back they will pay money back. >> i know most folks the last thing they want to hear is the irs is going to audit you because you claimed less income than you actually learned and you are going to pay this back to it is there a penalty for them under the irs regulations there's a penalty that can be had it not only to the taxes but to the penalty. >> the information they provide it says right in the application is being provided under the penalty perjury and the penalties for submitting false information if it is done intentionally. >> my republican friends have asserted that the hca would be bright with fraud and people would be lining up to get financial assistance. first of all, the financial assistance provided through the marketplace can only be used to purchase health insurance. >> that's right. >> it's not correct to get a direct cash assistance or sent to people's homes. that's incorrect. islamic goes directly to the insurance company.

>> since they won't even see the money credit applied they can reduce insurance premiums. it seems unlikely people are all waiting to profit from the program to put money in their pockets when they won't even see the money. can you tell us about the uninsured or using the exchange's in particular and again in the state of texas we have to have a national exchange and i appreciate other states who took the incentives on their own but i'm also -- i know that hhs should put more resources into the states that don't have a partner so i appreciate that coming to texas and i want to address the obligation i heard the people that buy insurance and the exchanges are from esters and deadbeats. is there any information on that? all people are looking for is to be able to cover their families with health care and the opportunity to do it. >> they want to take care of themselves and their families. that's right. >> thank you. ms. elmer's you are recognized for five minutes. >> thank you mr. chairman and mr. cohen for being with us

again. i think you said this is the seventh time; is that correct? >> not before this committee that yes the seventh time i've testified -- >> on the hill. okay. i want to go back to one of the comments that you made about how you believe that there is competition that is being created among the insurance companies with the exchanges. you know very recently -- i believe as recently as last week in north carolina in my district, first carolina insurance company announced that they will not be part of the exchange. they supply health insurance to thousands in my district. this means less options for my constituents and now i believe for north carolina there are only two insurance companies. how does this provide competition? >> the results are different from state to state. in many states we have seen new entrants coming in and a lot of trees and in other states we have seen less. as i think you proline of the

existing market is extremely highly concentrated in some states. >> but reclaiming my time come for my north carolina constituents we will have less competition. >> let's move on because they live in north carolina. i would like for you to move to exhibit number seven. this is part of the approved application process. in exhibit seven, it says that the applicant basically is going to spend money on a participant incentives by purchasing and giving out gift cards to obtain consumer feedback on assistance provided and consumer knowledge from the satisfaction of the event. do you believe it is inappropriate use to file for the navigators to entice individuals with gift cards? >> it doesn't sound as though it is enticing. a sound as though they want to get feedback and encourage people to get them feedback --

>> so are you sure that the idea of the gift card -- so you know for sure that they would be, you know, basically given the information and then you don't see that as enticement? >> that's what it looks like from here. >> just to clarify you don't think this is enticement? >> it doesn't look like it, no. >> i would like to go back to a couple other issues. you know now we have seen repeatedly that there are many questions based on the letter that we put out asking the navigators and of course those on the header side of the nile are saying that this is intimidation and certainly they have quoted me as well, and i don't believe that congress asking questions and doing oversight is intimidation of all. we are charged with making sure

taxpayers' dollars are utilized correctly. and i know oversight for you is very important as well. i would like to also go to the point where it says in a response -- and i would like to submit this for the record ought we have a. basically the hhs report that we trust our responsibility addresses the questions about the navigator program and the guidelines and controls in place to monitor the work. now there are a number of situations where you are going to be getting back to us with answers; is that correct? some of the different applicants and questions posed to you it isn't clear at this point how it's being implemented and you have repeatedly said that he would get back with information and written statements? >> right. and i have no objection or question whatsoever about the program directed to us. >> okay so do you not see that as a basis for the delay at this point that we would continue to move on with this process even though it is very unclear as to

how these applicants are going to be utilizing the good hard-earned taxpayers' dollars? >> no i don't. >> you believe we should continue as it is regardless of being able to report back to congress on this issue so that we can make sure the taxpayers of the country know their dollars are being utilized? >> i don't think your questions e a basis -- >> so if i am a taxpayer obviously -- if you were speaking to one of my constituents right now, a little lady that lives down the street from me would you say based on all of these questions that have been posed that her tax payers' dollars are being utilized well? >> absolutely. >> thank you. you answered my question. but i would also like to submit to the record to the point about the issue of undermining and being aggressive in this effort. there's an article in the business journal thursday

september 12th, 2013 and i would like to submit this for the record where my office actually reached out to randolph hospital who is a navigator up with nt and let me read a quote from them. from my perspective and the hospital perspective we see this as them doing their due diligence making sure the organizations that receive these funds are going to be used and the funds in the manner in which they were intended. the vice president of care continuum supports the services. we do not foresee this as being a problem. i yield back the remainder of my time. >> thank you mr. trash. i appreciate the courtesy of the committee and i'm very honored to be a part of the committee even though it appears i just joined a game of trivial pursuit worried about $10 gift cards when we are talking about a law that will affect 300 million americans. before i get into a line of questioning i would like to plug

my home state of kentucky it has increased the affordable care act and our governor has taken the opportunity to provide insurance to 640,000 kentuckians who are uninsured. we have an exchange that is a model i think for the country called connect -- kynct. last month kynct had a both and a lot of people interested was available and after talking to the people at kynct they walked away saying this is better than obamacare. so that is kind of what we are dealing with. there were a couple comments earlier today related to the moves certain corporations have made. and republicans have pounced on them as kind of making an argument that they were somehow precipitated by the affordable care act and somehow resulted in a negative outcome. one of them as ups.

it's not based in my district but the global hub is there. they are the largest employer so when i heard about the fact that they were asking those employees who had espouses who were eligible for coverage through an of an employer to take their coverage there and they were going to stop providing and depending coverage to them that this was somehow something the affordable care act forced them into. republicans pounced on not like senator mitch mcconnell did so i talked to the executives about this and they actually said no, we are very upset about the way republicans have used this because what the affordable care act did was allow us to make this business move for a number of companies have done and preserve our coverage of the current rates and contributions for our employees about 16,000 of the 770,000. so basically it was nothing that the affordable care act resulted

in the negative outcome. but my question to you is the for the affordable care act could the ups have done what they did? >> i'm not familiar with that particular circumstance, but i don't believe so. >> but ups could have dropped their coverage entirely? ..

take, expand the options available for our employees right now. they said there are only two high deductionable plans. so we can improve their situation. you could make an argument i think, i will make the argument, because of affordable care act and creation of exchanges and the success the exchanges seem to have project in terms of increased competition, lowering costs that this gave waa greens an opportunity to improve the situation with their employees? would you agree you could make that argument? >> i agree. and i think it is important to recognize for many, many years employers have been struggling with the ever increasing cost of health care and health insurance. double-digit increases year after year. what we've seen in the last few

years are significantly lower increases in the cost of health premiums. i think we'll continue to see that even more when the affordable care act is fully implemented and a lot less uncompensated care all businesses have to pay for in the rates because more people will have coverage. >> as a reminder when we would go back to the year this law was being debated in 2009, premiums for businesses were boeing up in many places as lie as 38%. in california, blue cross and blue shield said everybody is geting a 3% increase. we've seen dramatic improvement at this time? >> yes that's right. >> i thank you very much for the testimony. chairman i yield back. >> go to dr. gingery. for five minutes. >> mr. chairman, thank you. >> mr. cohen i will read out to you some statistics which you may or may not agree with, but a number of years ago the united

states census bureau came out with an estimate of 47 million people, 47 million people in this country without health insurance. they got this information basically by calling and saying, do you have health insurance? yes or no? if they had just lost their job and had been off of health insurance for one week, the answer was no. if the call had been received two weeks later, the answer very well may have been yes. so 47 million people without health insurance is one thing but if it were for a full year without health insurance, that would be a horse of an entirely different color. and in that 47 million, let's sues assume there really were 47 million people who went uninsured for a full year. 18 million of those people make

more than $50,000 a year. 18 million of the 47. 10 million, it is estimated, of those 47 million are in this country illegally. 14 million are eligible for a safety net program, s chip, medicaid. they just don't bother to fill out the paperwork. or maybe they don't know. maybe they haven't been informed. but when you get right down to it, there are probably no more than eight to 10 million people in this country that do not have health insurance because they're nearly poor. they're not eligible for medicare. they're not eligible for medicaid. so the number was so grossly inflated, and so when i hear from the other side of the aisle that we republicans were totally opposed to this bill, well, yeah, we were and that's one of

the main reasons we were. now another statistic, 1950, the average individual spent $500 a year on health care. in 2006 the latest year that i have statistics for, the average individual probably spent $7,000 a year for health care. but look at the life expectancy. the life expectancy in 1950 was the late 50s. the life expectancy in, in 2006, 2007, indeed, today is, is 80 years old practically. so the value, yes, health, costs in this country is too high and we need to constantly fight to lower it, find ways to eliminate waste, fraud and abuse, anything we can do to bring it down but what is the value of each

additional year of a person's life because of what we have done? yes, because it is costly but, that's because of research and development, durable medical equipment, medical devices, well-trained physicians, super specialists, outstanding drugs, ant bottom ticks -- antibiotics, sixth generation because of the gain act. of course we were opposed to this bill. now look, let me get directly to a question for you. in two weeks the rules say that the sign-up period on the exchanges commences. will individuals be able to sign up for a health insurance plan on october the 1st, 2013? >> yes. consumers will be able to sign up for a health plan on, beginning on octoberness. >> they will actually be able to pick a plan, whether it is cigna, aetna, blue cross blue

shield, platinum gold, silver, bronze, whatever, they will be able to do that on october the 1st? >> that is my expectation based on the progress we have made and what i'm told will be in place october 1st. >> thank you. this will be my last question. because i'm running out of time. most of obamacare is based on the premise, forcing younger people into the market they will help lower the cost for older and sicker individuals but because the penalty is so weak, there's a real problem if all those young people don't show up. and i'm afraid they won't. in my home state of georgia, the insurance commission announced that for the average 27-year-old, no longer on their parents policy, out of the basement, living on their own, premiums are set to rise anywhere from 85 to 198%. it seems that a 95-dollar penalty would do little to incent young people like that to purchase coverage when faced with huge, huge, premium

increases. mr. cohen, a lot of the premise of obamacare is based on getting these young people to enroll, to help broaden the pool, lower the cost, for the older and sicker. have you heard any concerns that because the penalty for obamacare is so weak, young people may stay out of the program in the first year and if they do opt out, what will this do to the cost of the others? >> so, yes, i have read things, you know, speculating that the penalty is low and will not be a reason for people to sign up but i think our research shows that most people want health care and the barrier has been the cost and at that with subsidies, care will be, the coverage will be affordable and it will be high quality care and we're looking forward to people, including young people enrolling in coverage. >> thank you. >> thank you, mr. chairman. thank you for your indulgence and i yield back. >> thank you, doctor. mr. grif is next but yield his time to mr. shimkus to ask question and then mr. griffith.

mr. shimkus, you're recognized. >> thank you. i thank my colleague. ii want to thank the chairman fr letting me sit in. i'm not on the subcommittee. i want to thank the ranking member. mr. cohen, welcome. you're trying to dot job presented to you and this is a tough committee so let me ask a couple questions because i've been trying to get my, like, regardless how we feel on the law, if nothing changes and it gets enacted members of congress will be, we're going to have to address our con sit wants concerns and deal with it. what i tried to do is couple things. i tried to meet with migrantees. i have met with one but. gregg: some are making themselves available to me. i'm trying to do it to get information. so i don't know what we can do from the administration's perspective to encourage the

grantees to talk to the elected members of congress and regions they're going to representative but i would personally appreciate it. i'm trying to develop a relationship because constituents will come to us. they do for medicare. they come to us for medicaid. they do for social security, veterans affairs. and i just need help. i say that a member appealing to the administration. >> i think we would like to work with you for a process of getting you the information you want and are entitled to, that won't be disruptive of the work that needs to happen, particularly, particularly at this critical moment when they're just getting ready to start their work. >> i get it. because i did meet, meet with one, and it was, it was very helpful. the other request, that i have is, we've asked, if we can get, especially our, our staff member who deals, most of us have,

constituent service people in our congressional districts. i have one she is expert now on medicare and medicaid. i have another one who is an expert on veterans affairs. we put forth a request to say can i get this person trained? can they sit through the training? >> yes? >> we were told no. so -- >> you were told no by? >> i can give you the answer but we were told, they wouldn't allow us to be trained. so -- >> doesn't sound right to me. >> no, that's fine. i want my staff every to know as much information as they can, as they're going to have to deal with, hopefully not. >> no absolutely. >> my guess is they might have to deal with this so when i talked to the one grantee, this was the point that they made. they have got 33 navigators. they're all dispursed throughout health care. we vetted that out in this hearing today.

you but they have only two slots for training. there is 20-hour, there is online training, i learned that much, and i'm from illinois, so there's two-day training, probably an overnight. and that is kind of where we were researching to get our staffer involved in both those trainings, but the real answer -- >> state-required training? >> that is why i'm trying to figure it out. so, but my, my point is, this one grantee will be, before the operational date of october 1st, will only be able to get two of his individuals through the training. i'm just, and i can tell you, and i don't want to air, but i would be glad to talk to you. >> if our folks can get in touch with the staff i would be very happy to look at that in particular. >> and he also, they also raised the issue geting a clearance for these people is, basically, the

state of illinois providing clearance, they will not be ready to handle this information because of the clearance process. so, i'm just using this opportunity to show you some of the concerns that i have. and i'm very concerned because i want to, i don't like the law. i voted against the law but i know i'm going to get calls about how we can help my constituents and i want to be ready to do that. >> so i appreciate that very much. i have to say that i am concerned that some states have put in requirements which they're entitled to do. you know, but that are making it a little bit more difficult for the navigators to get ready in time for october 1st. maybe we can work with you and try to work through some of those issues. >> i appreciate it. let me go to the final question. it was kind of based upon listening to the testimony today about, you know, whether you're going door-to-door. i don't have a dog in that fight but i am concerned that, as we have people who are trained and

qualified, that we have a process that, someone go back to a government website and say, they're legit. they're not legit. have you call considered puting a list of names of the navigators on a dot-guff gov site or something? >> so, are working through that i think the latest discussion is that we will provide the list to the state insurance departments. so there will be a local place people can go to make sure folks are who they are supposed to be. >> and it is up to them they put it online or not. >> right. >> mr. chairman, thank you very much. ranking member, thank you very much. i yield back my time. >> i thank the gentleman from illinois. many would like to know how our staff can log on and get the training. finally, mr. griffith is recognized for five minutes. >> mr. chairman, thank you very much. let me follow up. this would be good to get folks

i.d.es. in this morning's blue "daily telegraph." there are people going door-to-door looking for prescription information. we have a group running around in taswell county, virginia, pretending to part of appalachia community. word is out there some people will do door-to-door. would i now draw your attention to the, exhibit 2. you will notice in that proposal in the second paragraph it says that they proposed going door-to-door. so, even some of the proposals and some of the people who are supposed to be doing this apparently have a misunderstanding they're supposed to go door-to-door. one other questions i have for you and you i will come back to exhibit 2, you might leave that open. state corporation of virginia, bureau of insurance or approved or certified as acceptable plans, plans at the end of july.

it was their assumption they would have some information by now. they as of this morning don't know whether or not they have their plans, virginia is not doing their own exchanges, going to the federal exchanges. state insurance were sending plans up that were approved. they haven't heard anything back. as of this morning so they don't know whether these plans are actually going to be approved or not. i would ask to you check on that please and get us some help. we have seven business days left to go and the state of virginia doesn't know what plans will be approved by the -- >> that surprises me because i know we've been in contact with the states on a regular basis. i will absolutely follow through. >> i will tell you we checked with them this morning. another concern is, this happens in a lot of rural areas i'm sure, there is not going to be competition in 10 of jurisdictions i represent. there is only one shop plan or only one individual plan and in five of those jurisdictions the counties of buchanan, grayson, lee, scott and the city of bristol, there's only one shop

plan and one individual plan. so a lot of my constituents do not have a whole lot of choices to choose from. obviously if there is monopoly may affect prices as well, wouldn't you think? that being said i point you back to exhibit 2, just so you will know that what we're looking at this. you see on the first page the project abstract for the navigator and it will cover two counties, one in florida, one in texas. on the next page you will see further that the application says that they will have 50 exchange navigators. then you have to follow through and we've done some of the math for you. my time is running out. i will lead you through some of this and ask you to come men. on the next page you will see there are enrollment goals and they state, in the second bullet point that they want to enrollment goals of 75% of those they're trying to reach. and they indicate that through provision of literature, et cetera, a total of 288, 750 per targeted county by the end

of the program year or a total of 577,700 and so what we've got. we've got a navigator in their statement saying saying that soy in our office approved, that they're going to enroll 577,000 people, plus, by the end of the year. and that works out to, 11,500 enrollees per navigator. when you take that 577,500 people and divide it by 50 navigators, remember these are the folks not only going to be doing fairs and so forth but we're saying they are going to go door-to-door, do you really believe that one navigator can enroll 11,500 people, taking the time that they have originally when this was done until the end of the year? looks like 31 people a day counting weekends and holidays. that is not really very realistic, is it? i've done door knocking before and done a lot of voter

outreach. to reach that many people today and actually get them to say yes is not an easy accomplishment. >> so, i would say, again, i mean this is clearly a proposal, an application. it was approved. this grantee was approved. they got a grant. there is a budget process that happens as part of that approval i don't, i can't tell you, i will commit to you find out more information about this grantee if you like but i can't tell you if this is how it ended up or were there any changes and i don't feel comfortable commenting on it i literally just seeing it now so -- >> i understand that if you give me some comment later i would appreciate that very much. these are, these are concerning numbers, and obviously there are some people out there, at least thinking they're supposed to go door-to-door. that is of concern, when people start going door-to-door makes it much easier particularly for senior citizens to be victims of

bad actors. not real navigators. will not be a describe that to navigators. and they know people are going door-to-door. people are coming by. next thing you know they're finding out whether they have prescription drugs. what they're doing in that particular county or what the sheriff fears they will go back and rob the house and more interested in getting drugs than tvs. trying to figure out which is of prime targets. that is of concern. i will tell you, i'm not sure this falls under your jurisdiction, we're having a real problem with doctor shortage in commonwealth of virginia. article about people in the eastern part of the state having a problem. i don't represent that particular part of virginia and i will tell you recently one of my hospitals closed. their number one reason was obamacare. and the aspects, cuts to medicare, the double, i call it the scissor where the states under the original plan were supposed to but didn't have to under the supreme court ruling, expand medicaid and then the final straw for this particular folks, besides the war on coal which lowered the economy in the

area, less insured people. final straw was the fact that they couldn't get doctors to staff the hospital in adequate fashion. and so now i've got folks traveling hour, hour 1/2 to get cardiac care. very serious concern. i'm very worried about the people who live in my district and whether or not they will be able to get adequate health care under this obamacare program. like others that spoken i hope you educate us how to enroll people because we'll get calls. >> gentleman's time expired and with that, mr. cohen, we appreciate you coming before this committee again today and, i ask unanimous consent that the written opening statements of other members be introduced in the record if they wish and without objection those will be entered into the record. i ask unanimous content to enter document binder into record subject to appropriate redactions by staff. also asking unanimous concept for article business journal, september 12th, 2013. without objection so ordered.

mr. cohen, thank you for coming. we appreciate your timely response to members request for assistance and their staff and others providing that information. and for the testimony that you and other members have asked here and devotion of members to this hear tag. committee rules provide members have 10 days too submit additional questions for the record. to for the witness. with that this hear something now adjourned. >> thank you. >> the hoisthouse earlier today voted to extend temporary funding beyond the september 30th deadline taking steps to avoid a government shutdown. the bill includes language that would stip funding for the nation's health care law, the vote weighs 230-189. here is how it breaks down. 228 republicans and two democrats voted in favor of cr. one republican and 118 democrats voted against the bill heads to the senate where it stand little

chance of passage. the white house also promised to veto the measure. senate is back to work on monday but work on the legislation is not expected to start until tuesday or later, settings up the possibility the government will shut down on september 30th. senate majority leader harry reid reacted to the house vote today in a statement saying in part, the senate will not pass any bill that defund or delays obamacare. the affordable care act has been the law of the lan for three years. democrats stand ready to work with reasonable people who want to improve it but republican attempts to take an entire law hostage simply to appeal tea party anarchists are outrageous and irresponsible and futile. the senate could take up the legislation sometime next week. >> many have said that our report would either advocate mere reinforcement of for the embassies or closing down our presence. no conclusion like that could be farther from the truth. we recognize that perfection in protection is not possible.

and that fine and good men and women will still come forward to serve their country and risk their lives on of the front lines of danger. we should continue to do all that we can to protect them as they go about such challenging tasks. that was the sole purpose of our report and it was produced with the deep sense that we had to get it right. politics, elections, personal controversy and all other external factors aside. >> this weekend on c-span, house oversight examines the obama administration's response to the terror attack on the uss consulate in benghazi, saturday at 10:00 a.m. eastern. all weekend on booktv, from washington d.c., live coverage of the national book festival with your chance to talk to the authors, including scott berg, former senator kay bailey hutchison, david nassau on joseph p kennedy. brothers at war author, and pulitizer prize winner rick atkinson.

many more live on c-span2, starting at 10:00 eastern and sunday at noon. on c-span3 american history tv, from converted horse tracks converted gyms, life for half million german p.o.w.'s detained in america during world war two. sunday afternoon at 1:00. >> this is it a garden that ellen wilson originally designed when she was a resident proves speck house. i will len wilson was in the white house, she brings the white house gardener back to the house at prospect house. she said to the gardener, recreate the rose section of this garden at the white house. this becomes the famous roads

garden at the white house. ellen tragically doesn't live to see the rose garden completed. she dice in the summer of 1914. she is wheeled out into the space outside in her wheelchair and watches as the gardener work but she doesn't live to see the completion of this vision she had for roses blooming at white house. >> in a moment we'll show awe hearing from yesterday with energy secretary ernest moan knees and epa administrator gina mccarthy. they testified before a house subcommittee. epa administrator mccarthy talked about new standards for limit as coal power plants. that came at the national press

club. that is sheer here is what she said had to say. >> we're here to announce epa is taking one of the important steps to eliminate carbon pollution of new power plants. power plants are the single largest source of carbon pollution. both natural gas and coal-fired can minimize their carbon emissions by taking advantage of available modern technology. these technologies offer them a clear pathway forward today, and in the long term. let me get to the details of the proposal just a bit. these proposed standards are the first uniform national limit on carbon pollution from new power plants. they do not apply to existing power plants. now it might be well if i repeated that one more time so that everybody gets it. these proposed standards are the first uniform national limits on

carbon pollution from new plants. they do not apply to existing power plants. today's proposal does set separate national limits for new natural gas power plants and for new coal power plants. new large natural gas plants would need to meet a limit of 1,000 pounds of co2 per megawatt hour while new smaller, natural gas plants would need to meet a limit of 1100 pounds of co2 per megawatt hour. new coal plants would need to meet a limit of 1100 pounds of co2 per megawatt hour. coal plants could choose to also have some additional flexibility if they want to average their emissions over multiple years, by meeting a somewhat tighter limit. >> that was just a portion of epa administrator mccarthy's remarks from had this morning. you can see the entire event in our video library at c-span.org.

to a hearing from yesterday with ms. mccarthy and energy secretary ernest moniz. they testified before a about global climate change before a house energy subcommittee. >> i would like to call this hearing to order this morning. today the subcommittee is having this hearing to explore president obama's climate change action plan. and i certainly want to thank secretary of energy mr. moniz and gina mccarthy, our new administrator at the environmental protection agency, for joining us this morning. and -- i want to be sure, we start the

clock. so that i don't speak forever because that would be pretty boring for everybody but i do want to thank you two for being with us this morning. i will tell you that i am extremely disappointed that we sent letters to the department of agriculture, department of defense, health and human services, department of the interior, department of state, transportation, xm bank, national aeronautics and space administration, national oceanic and atmospheric administration and science and technology policy and u.s. agency for international development because they're very much involved in this action plan as well and they did not send witnesses to testify. now in june of this year president obama went to georgetown university and he gave his speech in which he announced a climate change action plan for america and in

that speech he mentioned that he was tired of excuses for inaction. now i'm just going to tell you, i take exception to that because in his action plan he included many of the component parts of the cap-and-trade legislation that was considered by this, by the congress in 2009. the waxman-mark can i bill. -- markey bill. that legislation passed house but did not pass the u.s. senate. rather than inaction on the part of congress, congress made a decision and that was that it did not want to adopt that legislation. so, i understand the president's view on climate change. now i would like to predicate this by saying, worldwide co2 emissions last year amounted to 800 gig a tons much. of that 30 gigatons were caused

by humans. that is 3.57% of all worldwide emissions come from human activity. so the question becomes, if you have a broad spectrum of action on this plan, and we know that it is one of the president's priorities, and we know that in the last our or five years we spent $70 billion on an action plan, or climate change, this year we expect to spend $22 billion, so what we're focused on this morning is, we want to know more about the plan. is it going to contribute to higher energy costs? is it going to raise unemployment rates? is it going to create obstacles to economic growth? is it going to have an impact on our ability to compete in the global marketplace? and i specifically wanted to read from some headlines in newspapers around europe and elsewhere about this issue.

all of these were within the last three months. support for the european union's climate and energy policy eroded further friday as the czech republic became the latest member to denounce subsidies for clean but costly renewable energy and pledged to use more fossil fuels. your on are's -- europe's industry is being ravaged by exorbitant energy costs. europe's quixotic dash for urinable asto pushing electricity cost to untenable levels. we can't sacrifice europe's industry for climate goals that are not realistic. the european union energy and climate policy is in disarray and losing credibility. utilities are turning to coal and cheap lignite emitting more co2 than ever. europe face as crisis in energy

costs. as you know the new government in australia is the first order of business have decided to repeal the, carbon tax legislation. they also plan to abolish the climate commission, the clean energy finance corporation, and the climate change authority. now, so far this year, 2012, in the year 2012, 375 coal units at power plants in america are closing. 294 of them because of the epa regulations. the first half of 2013151 coal mines in america have closed. so this is a discussion today. we recognize we have different views on this but we are trying to make a sincere effort to understand the ramifications, the impact, of climate change. as a congress, we have the

responsibility with all of this money being spent, to get a better feel what is the government really doing because it is comprehensive, it spreads throughout the entire government and this hearing is about, we want to know what's going on and we're going to go back to everyone of those agencies that i mentioned earlier, whether we sit down with them individually, or as a committee. we want to know and understand precisely what is going on. so, once again, mr. secretary and, madam administrator, thank you for being with us. at this time i would like to recognize the gentleman from california, mr. waxman, for his opening statement. >> thank you, mr. chairman. today's hearing is the first time in a long time that this committee is holding a hearing on climate change. and i welcome this hearing and i want to commend chairman upton and chairman whitfield for holding it. climate change is the biggest

energy challenge we face and a clear and present danger to the united states and to the world. i also commend the administration for sending energy secretary earn any moniz, and epa administrator gina mccarthy to testify. it is unusual to have two cabinet secretaries

working to circumvent congress through the back door, seek being to regulate what it was unable to legislate. no matter what the cost to jobs and economy really is. thought fowl oversight is necessary so the public can understand more clearly what is happening and what the impact, i believe, it is a disservice it o the public to suggest a policy approach will meaningfully address climate risk despite the fact of tense and billions in countless jobs lost. with the u.s. indeed is the envy

of the world as it rights to energy access and the safe and responsibility development of energy resources. we stand at the very thresh hold of profound economic opportunity for the nation and future generations. so we should pursue constructing a new architecture of abundance as a central feature for future economic strength and to provide the economic foundation to address climate risks. there should be no question that the economic wherewithal fostered by america's energy resurgence will provide a wide avenue for innovation, that will answer energy and environmental challenges of the future. yes, it is good to have secretary moniz and administrator mccarthy before us this morning. you two stand at the center of energy policy in this nation and your agencies will play either positive or negative roles to insure a strong, vibrant and innovative energy sector in the

future. my interest is to understand how you tend to address the new realities american energy abundance and what your agencies should do to promote access to abundant energy resources toso necessary to meet future challenges to make our nation more competitive. i look forward to having that discussion. i yield back my time. >> gentleman yields back. recognize the gentleman from new york, mr. ttonco for opening statement. >> thank you, mr. chair and chairman whitfield for holding this very important international hearing. the international plan nell on climate change will summarize the findings of recent climate science. that report is likely to reiterate the message they sent us five years ago. green house gases continue to rise in the atmosphere. planet is warming sea level is rising and significant degree of the change is attributable to human activities. we're seeing the impacts already. higher sea levels create more

perilous conditions when hurricanes approach the coast. higher temperatures enhance drought conditions, creating significant losses for farmers an ranchers and set the stage for more intense, widespread, forest fires. our infrastructure, our communities and our economy are all vulnerable to these changes. add to these facts that our infrastructure is aging. we are neglecting to maintain the very civiles that we rely on to support a modern, thriving society. we can continue along our current path leaving states and local governments to fend for themselves, patching things together as they wear out our damages or our are destroyed or we can use the tremendous intellectual and entrepreneurial resources we have to address the challenge of climate change. our current path of inaction leaves tremendous opportunities for job creation, for social progress and for economic growth untapped. it wastes resources, especially

human resources. president obama realizes this and has offered a modest, balanced plan to reduce green house gases and to rebuild and redesign the modern and resilient infrastructure that we require for the future. the administration's plan seeks to realize the potential of new, cleaner, energy technologies. at the same time, the plan recognizes the important role that fossil fuels play in our economy. we continue to use these fuels as do other nations but that does not mean we need to use them inefficiently or without regard to the increasing risk they pose to the future of our planet. we need to build the 20th century energy and water infrastructure. our manufacturers could be supplying parts and equipment for a modern electric grid, high-speed rail, wind farms, combined heat and power systems, energy efficient vehicles and fuel cells and advanced

batteries. other nations are moving forward incent sizing and their industries and positioning themselves and their citizens for future. they're thinking long term while we subject our nation to unnecessary austerity and endless series of stopgap funding bills. this is not the bold and inspired thinking that created this nation and made it the great nation that it is. no one set out to change the chemistry of our atmosphere and set our planet on a new climate trajectory but it has happened and we must act, act now to slow this process and adapt to the new conditions. the president's plan is a fine start. i'm very pleased that we have secretary moniz and administrator mccarthy here with us today. these two officials and their agencies are tasked with great deal of responsibility for making this plan a success. thank you both for being here this morning. i hope this is not our last hearing on this topic and that we will have a additional opportunities to hear from other federal agencies.

there's a lot of work to do. and we have wasted too much time already. thank you, again, chair whitfield, for holding this very important hearing and with that, i yield back. >> chairman yields back. at this time i like to recognize, we'll begin with secretary moniz, five minutes for his opening statement. once again, mr. secretary, thanks for joining us this morning. be sure and turn your microphone on. >> thank you. thank you again, mr. chairman and ranking member waxman. members about committee. thank you for the opportunity to speak about the president's climate action plan and in particular the doe's role in its implementation. i'll start with saying that again the evidence is overwhelming, the science is clear. the threat from climate change is real and urgent and the basic science behind climate change is simple. carbon dioxide makes the earth warmer and we are emitting more and more of it into the atmosphere at a rate long

understood to have material cumulative impact on a scale measured in decades, not centuries. this increase in atmospheric increase of green house gases is affecting the climate 69 carbon dioxide is particularly important both because of magnitude of emissions because it is long lived in the atmosphere. all of this was known a long time ago. what was not anticipated is the pace which energy needs grow to serve 7 billion people on the planet with rapid industrials nation. every ton we emit irreversibly commits our children and grandchildren to the risks of climate disruption. while we can not attribute any particular storm to climate change, cumulatively we say rising sea levels, increasing droughts, heat waves and wildfires and major storms are amplified by warming climate this is already costing our economy billions of dollars a year around common sense and prudence demand we take action. so that the driving force behind the president's climate action

plan and three pillars are to cut carbon pollution domestically, prepare for divorcenning impacts of climate change and lead international efforts to combat climate change and its impacts. my main focus what the u.s. can do domestically to reduce carbon pollution and doe's role in the climate action plan. many other agencies have critical roles as well. first we must use our energy more intelligently. i'm committed to to energy efficiency both to achieve reductions in carbon emissions and to reduce energy bills for families and businesses. the department of energy also play as central role developing the low carbon technologies of future. coal and natural gas will remain significant sources of energy in the years to come and that's why doe issued a draft solicitation for $8 billion in loan guaranties for advanced fossil energy technologies that reduce carbon emissions. in addition, d.o.e. is already committed $6 billion on clean coal technologies, all with the goal of enabling the use of fossil fuels in a

carbon-constrained world. some of the most impressive energy developments in recent years have been in renewable energy technology. d.o.e. recently release ad paper called revolution now that outlines some of these critical clean energy developments for wind, solar, leds, and ev batteries. the key message is the pattern of dramatic cost reductions, strong government rd and d and supportive policy and rapidly increasing deploy, much like the story of unconventional natural gas production that unfolded over the last 30 years. a clear, indicator of the nascent energy system transformation is the business model evolution taking place in the utility sector in response to energy efficiency and renewable energy market trends. changes in energy technologies take time, sustained investment and stable policies. even in this age of budget austerity we need to insure that we continue to invest in clean energy. as part of the president's climate action plan the

department of energy will also assist in the development of the quadrennial energy review. now while we must take action to reduce the carbon pollution that causes global warming, impacts from climate change are already here and more are on the way. let me highlight one project that demonstrates how we are approaching this in terms of infrastructure resilience. in the aftermath of sandy the vulnerability of our electricity and fuels infrastructure, to severe storms and flooding was evident. recently i was in new jersey to sign an mou with governor christie and the new jersey transit corporation to design a micro grid that will provide reliable distributed power for a critical transportation corridor. this is an example of the sort of smart infrastructure we will need throughout the country and this can be, this can provide a first-of-its-kind example for the nation. it also exemplifies our commitment to work more closely with states and local governments. the third part of the president's plan is leading international efforts to address climate change. a global effort will be required

to limit future climate damages. here at d.o.e. we are focused on helping countries around the world expand the use of clean energy, improve energy efficiency and strengthen global preparedness and resilience to climate change. while the state department has the lead on international negotiations such as phasing down hfcs, domestic clean energy success will allow america to lead by example and at the same time, to open up business opportunities for u.s. companies as a huge global market for clean energy opens up over the next decade. in conclusion, history has repeatedly shown that we can grow the economy while making tremendous strides reducing pollution. we'll need our smartest scientists, our brightest engineers and visionary policymakers to get this done the president put forth a smart and prudent plan to slow global warming, to prepare for worsening climate impacts and to insure a safer, healthier future for our children and grandchildren. i might add, my grandchildren are eight and 10 years old, so i'm excited to be part of the

president's plan to reduce the risks of climate change. thank you, mr. chairman. >> thank you, mr. secretary. madam administrator mccarthy, you're recognized for five minutes for your opening statement. >> thank you, chairman whitfield, congressman waxman, members of the committee. i should be on. shall i get closer? all set now? thank you. in june the president reaffirmed his commitment to reducing carbon pollution when he directed many federal agencies including the eepa to take meaningful steps to mitigate and future damage caused by carbon dioxide emissions and prepare for climate changes that have been set in motion. climate change is one of the greatest challenging of our time. more than 97% of climate scientists are convinced that human-caused climate change is occurring. if our changing climate goes unchecked it will have devastating impacts in the united states and on our planet. responding to climate change is an urgent public health, safety,

national security and environmental imperative. that presents an economic challenge as well as an economic opportunity. both economy and environment must provide for current and future generations. we can and must embrace cutting carbon pollution as a spark for innovation, for job growth. clean energy and economic growth. the nation's success over the past 40 years makes clear that environmental protection and economic growth do go hand in hand. the president's climate action plan directs federal agencies to address climate change using our existing authorities. the plan has three key pillars. cutting carbon pollution in america, preparing for impacts of a changing climate and leading international efforts to combat climate change. epa play as critical role in the plan's first pillar. which is cutting carbon pollution. over the past four years, epa has begun to address this task. in 2010 epa and the national

highway transportation safety administration, along with the auto industry and other stakeholders, we worked together to set green house gas and fuel economy standards for model years 2012 to 2025, light duty vehicles. over the life of those vehicles, the standards will save an estimated $1.7 trillion for consumers. it will cut america's oil consumption by 12 billion barrels and reduce green house gas emissions by 6 billion metric tons. epa and nhtsa standards for model year 2014 and 2018, heavy-duty trucks and buses present a similar success story. under the president's plan we'll be developing a second phase of heavy-duty vehicle standards for post-2018 model years. bidding on that success the president asked epa to work with states, utilities and other key stakeholders to develop plans to reduce carbon pollution from both future and as well as existing power plants.

epa will soon propose carbon pollution standards for future power plants. reflecting new information and extensive public comment that we received on our 2012 proposal. existing plans already engaged in outreach for states with broad group of stakeholders to hip form the development of proposed standards which we expect to issue in june of 2014. using these standards, states will have the primary role in developing and implementing plans to address carbon pollution from existing plants, allowing us to capitalize on state leadership and innovation while counting for regional diversity and -- comprehensive strategy to address methane emissions. epa will work with other agencies to reduce methane emissions through incentive-based programs. the president's plan also calls for a broad array of actions to

strengthen america's resilience to climate impacts. epa will incorporate research on impacts into implementation of existing programs and we'll develop information and tools to help decision-makers including states, localities and tribes to better understand and address the current effects and future effects that we know are coming in a changing climate. epa's working closely with our federal agency counterparts on building national resilience including developing the national drought resilience partnership, insuring security of our freshwater supplies, and protecting our water utilities. the president's plan recognizes that we must couple action at home with leadership abroad. working closely with the state department, epa will continue to engage our international partners in efforts to reduce carbon pollution through activities including,

public/private partnership efforts, to address methane emissions and other short lived climate pollutants. in conclusion the president's plan provides a roadmap for federal action, to meet the challenges of a changing climate. to promote clean -- drive economic growth. thank you, again, and i look forward to answering your questions. >> thank you, madam mccarthy and, before i begin my questions, i would like to ask unanimous consent to introduce a few relevant documents into the record. i would like to enter one, the president's climate action plan. two, the invitation letter sent to the federal ages is requesting witnesses today. majority committee staff hearing memorandum, and in addition i would like to enter the special supplement to the bulletin of the american meteorological society released this month and

entitled, "explaining extreme events of 2012 from a climate perspective." excerpts from the energy information administration's annual energy outlook, 2013 including a chart reflecting world energy related carbon dioxide emissions, 1990 to 2040 and a table reflecting world carbon dioxide emissions by region and country from 1990 through 2040. finally an article entitled, making energy access meaningful published this summer in the national academy of science's publication, issues in science and technology. without objection the documents will be entered into the record. and at this time i recognize myself for five minutes of questions. recently during the august break i spent time at some universities in the state of kentucky and in talking --

graduation. and i started thinking about that and i went back and i looked at the last 62 years of the unemployment rate in america and in the last four years, 2009 through 2012, the unemployment rate has been higher in america than at anytime in the last 62 years except for three of those years. now, in his speech to george town university the president specifically said that as we transition, try to make this transition which we know can not be done overnight, and the president frequently talks about an all of the above policy but america is the only country in the world where you can not build a new coal powered plant because emission standards can not be met because the technology is not available.

and we know that regulations on existing plants are going to be coming out in 2014, in june. but in that speech the president said that, in talking about his action plan, that we must provide special programs for people who lose their jobs. and as i quote it, there have been significant closures of electricity production plants using coal and over 151 coal mines have been closed. so i would ask either one of you what are the special plans in the president's action plan to help address these people who are losing their jobs because of these policies. .

>> now looking at the chart the chart for the climate action plan, i noticed that there is one of charge under the office of energy and climate change policy referred to as the green cabinet. how does the green cabinet differentiate from the presidential cabinet?

>> the green cabinet denotes that there are occasional meetings of principles from the agency's who have special responsibility in the climate action plan. so we can get together and discuss coordination of programs and make sure they are not duplications. so it is a subgroup of the cabinet who again meets periodically together with the of key white house presidential assistant to discuss the general set of issues. >> and who is the person responsible for the coordination of all of the task force's relating to climate change and the government? >> i consider myself having ultimate responsibility. >> designated -- >> the action officer if you like is my chief of staff who is keeping track of all of our

responsibilities. >> ms. mccarthy who is your designated person? >> again i have ultimate responsibility to the we have two primary components. we have a mitigation strategy which we are mitigating of our office on the radiation primarily that would be janet who is the acting assistant administrator of the adaptation side which is looking at climate resilience and prepare a mess we have our option of policy that is directed by the associated administrator. >> now i notice the gao in the budget there is $22 billion allocated for climate change action plans for 2013. how much of that money will be allocated to the epa? >> i'm sorry, could you repeat the question? >> there's 22 billion plan to be spent in fiscal year 2013. how much of the money was allocated to the epa?

>> i can't answer that question but i would be happy to follow-up. >> do you know from the secretary of energy position how much -- >> i think the problem first of all is how one counts. for example, if we count the energy efficiency programs which of course have the objective of saving money it would be a good part of the solution for climate change. so if we talk about all of the programs that are hopeful for climate change then we are talking about $5 billion mostly in our r&d budget, which i say most of that is for efficiency, nuclear power, cleantech, fusion. the one exception one might say is the substantial resources we give it to the carbon capture and sequestration specifically to make whole competitive in a low carbon world.

>> my time is expired. five minutes for a question. >> in your testimony you describe the dangers that we face from climate change. is it too late to protect the planet from the effective climate change? >> first of all it is clear that we cannot avoid the implications that we are seeing today. in my view of this decade is the critical one that we need to move out smartly and smartly. >> how much time do we have? >> it will be a long-term commitment, but we have to act in this decade because as i said, the problem is a cumulative and you can check it off with our children and grandchildren. >> my concern as we are facing this urgent threat but all that congress is doing is getting in the way. this congress is being called the do nothing congress, but on climate we are doing worse than nothing. we are affirmatively obstructing

progress. the administrator mccarthy you've been accused of meeting the war on coal but in 2009 the president supported the market based legislation to make major carbon solution reduction while investing $60 billion to develop clean coal technologies like carbon captured and sequestration. is that right? >> that is my understanding. >> as the chairman said, this is the only country in the world where the new coal plants cannot be built in the regulations to prevent these have you? >> we have not, no. >> at that time our bill was criticized for being too generous to the industry but virtually all of the republicans on this committee and the coal industry oppose the legislation despite its massive investment in that industry. we wanted the innovative

approaches so that it could still be used and republicans opposed it. last year i tried a different approach. i wrote an op-ed calling for an ignition that would put a price on carbon and i even said that i would support using the revenues raised to reduce other taxes. but republicans in the house also opposed this approach. republicans outside some of them supported it. in fact, house republicans opposed every idea that has been raised for addressing climate change. administrator mccarthy, you promul

to match its budget by over 80%, isn't that right? >> that's correct, sir. >> in this committee offered the

republican members against the u.s. efforts to do anything about. because our nation had a competitive disadvantage and they say we need a global approach. but then the house appropriations committee votes to defund the u.s. framework convention on climate change, which is the international body charged with negotiating in the international climate treaty. last congress the house republicans voted to defund our efforts and the government's lead not only on the international efforts, but to defund the government's lead climate negotiators. add that up and what you have? republicans voted against the climate change legislation. they voted against climate legislation. they voted against climate research and development and they voted against international climate efforts. it's an appalling record and it's one of my questions to them

what's your plan? it's easy to criticize other people's solutions if all you do is criticize your either a climate dni here because you don't think that anything needs to be done or the science doesn't warrant that happening or they are ignoring the warning of the scientists. the secretary told us that we have a very narrow window to act and we should be starting to act now. that's why we need to stop ignoring the scientists and start listening to them, mr. chairman. so, i -- tell us what your plan is. don't just criticize. because we are facing a serious problem not for the future, but right now with extreme events. >> the time has expired. this time recognize the gentleman from michigan for five minutes. >> thank you mr. chairman. you know, i think it's important as we conduct oversight of the agency action on the climate change and energy that we also

reflect on the statutory frameworks of the agency's implementing such a policy. and as an example of the point that i would like to make as we reflect back on the energy coordination it was developed from the back at the time of the energy constraints back and 1970's. i think that you would agree that we are currently in a new era of north american energy abundance. and where i believe and i think the staff will show that as well we can actually be energy independent as for north america by using all of our resources that are available and i would like to comment on that as a part of the record. >> certainly mr. chairman co-president and i are very supportive of all of the above energy strategy within a world where we are working to reduce the co2 emissions. >> i know that on page ten of the president's climate action

plan on the natural gas board is as it refers to natural gas as a bridge fuel. is it the policy to consider natural gas as a bridge fuel? >> our policy is to do what we can to support clean, safe production of natural gas and i might add also of the unconventional oil. >> so as we look at what you may be giving as an agency to approve or to consider the export applications, is bridge fuel part of the discussion or the debate? >> that hasn't been part of the discussion to date. i mean, our approach to the export is by law to approve them unless we were lit and application has not in the public interest. the public-interest determination has many facets.

we have just given as you know another to applications of conditional approvals recently. i should emphasize the final approval will require the environmental review through ferc. >> as we try to become north american energy independent the new discoveries and the field that we have been able to find of natural gas are an exciting and positive change. we look at the advent of the manufacturing of the vehicles and passenger vehicles perhaps using natural gas. we look at some of the large fleets by some of the businesses within the be ups or at&t and others, being able to convert those mcnichols to natural gas. we look at a major manufacturer in my district which is looking at natural gas trucks for the

fleet. we even look at locomotives and railroads and looking at perhaps a very positive transition from diesel to natural gas, and then the work of caterpillar and general electric, producing those and then seeing if in fact it will have a very positive impact on our economy. and to the real change. ms. mccarthy, does the epa considered natural gas abundant? as a bridge fuel? >> epa views natural gas abundance as a positive for aerts quality as an opportunity for us domestically to be safe and secure in our energy supplies. our responsibility is to ensure that is done as safe and responsibly as we can working with the industry. >> one of the concerns i hear particularly as i talk to the railroad folks in that they are looking at this potential change

conversion to natural gas is that they are concerned if they look at purchasing navies in fact they work that the regulations may change, thus impacting the payback period as it relates. is the epa considering new regulations to do that? >> any regulations at the epa but consider going to be thoughtfully proposed and commented on. right now i think it's safe to say that the epa is investing very heavily in opportunities to understand the sector to gather the data to work with the industry in a collaborative way. we see this as a very positive collaboration moving forward. we see this as a significant opportunity to reduce the air pollutants and to move forward in a safe and effective domestic

supplies. so i'm very encouraged about the relationship with building the gas industry the rules were already put out. i see no reason for concern that the situation is going to change and people won't be able to rely on this as a clean fuel moving forward. >> i know my time is expired. >> may i make a footnote of the information of what to say to the chairman upton. i would add to your list marine applications and also in fracking reducing the diesel for the air quality. >> this time i recognize the gentleman from california for five minutes. >> thank you mr. chairman. i would like to explore two things in my five minutes. first the confidence that you have with climate change taking place. it's a significant threat caused

by a large degree by the human activities and secondly actions taken to combat climate change to harm or benefit the economy. first, secretary, would you address the first question how confident are you the climate changes taking place as a significant threat caused by a large degree by human activity. in those statements and i personally do as i said in a previous hearing before this committee, i think my confidence in the statements doesn't rely just on the results of some very complicated computer models but a very simple a arithmetic's in terms of what has been known for a long time about the strength of co2, the greenhouse effect, and the amount that we are committing is of a scale that in decades we would reach areas such as doubling of the

preindustrial missions which have always been viewed as being highly risky. >> thank you. admin illustrator i would like to address my second question to you. in this form, how have the high your standards such as those as fuel efficiency helped drive innovation and create jobs? >> we have been working with the auto industry in particular the past few years to understand what they need to have certainty moving forward on the quality standards and on fuel efficiency in a greenhouse gas standards. we have worked together and as a result of our rules, we have been able to support the industry in a robust sort of a re-emergence of that industry both domestically and internationally. we are proud of the work we have done together. we are delivering fuel efficient vehicles to the consumers in the way they want them. we are saving them money and reducing greenhouse gases and we believe that we are part of the auto industry's effort to gain a

competitive advantage to a great advantage for jobs and the economy in this country. >> so you believe they have become more competitive in the standards by creating more jobs? >> we know that certainty is important moving forward. we have provided this industry in a path forward to 2025. that gives them an opportunity to do research to develop new technologies and have a solid footing moving forward. >> if i may just add, sir, on the auto side i think it is even a bigger story going back to when the auto industry and the country looked like it was on its last legs. the whole combination of issues from support from gm and chrysler assuming they have proper restructuring in the future to loan guarantees for ford and nissan. nissan felt the plant for that guarantee and preparing the future free electric vehicle

markets and the great success stories. we can talk about fiscar which is a different issue today but it's taken us to an incredibly vibrant industry that's growing faster than the chinese auto industry. >> are there any other technologies with energy efficiency or work towards the renewable energy that has created the jobs that he would like to point to? >> certainly we can go through lots and lots of stories. the jobs in california is a way of even their business plan. in terms of the solar business -- and i will go back to the loan guarantee program. when there was no debt financing available, those loans supported the first six utility skill projects in this country that have subsequently been tan with

the pure private financing. that is true of all away from the manufacturing supply chain to the installation and operation. >> do you see the grand modernization plans role in helping reduce climate change and also in creating jobs? >> the duraid modernization is a very high priority. it has multiple benefits. one would be the integration of renewables into the system. a second is that it can provide with intelligence embedded in the credit that can provide new consumer services and higher efficiency, lower bills. and finally, it will be needed as the example i gave in new jersey to provide resilience against the extreme weather events that we are seeing more and more of. >> all i yield back mr. chairman >> i want to welcome hour to

witnesses and give you a badge of courage for showing up. we invited 13 agencies and i don't know if you all drew straws and got the longest wall or whatever but you are here and we are glad you are here. we didn't hear from the department of agriculture defense, the interior state department, transportation export import bank, the national oceanic atmospheric administration office of science and technology policy, our u.s. agency for international development. for some reason they couldn't make it but you are and you've been here before and we are glad that you are both here. each of you and the other 11 agencies got a letter dated august 6th, 2013 asking you to attend and to answer them on the questions. when mr. waxman was speaking in

his q&a he said the obama administration spent about $60 billion on climate change and the number i had was 70 billion but we will go with mr. waxman's 60 billion. this is an effort to let the obama administration put their best foot forward. so we asked nine questions and i asked the staff if your agencies that answered these questions and i am told that they had not. so i'm going to read them into the record and give each of you briefly a chance to see if you can get us these answers. the first question that we asked your agency was to describe the climate change research and technology programs that you are actively engaged in and putting programs or activities undertaken with other federal agencies. we didn't get an answer to them. we asked you to describe the climate change of the mitigation or sustainability related activities engaged in.

including activities undertaken with other federal agencies and didn't get an answer to that. we asked you to identify the climate change in the interagency task forces advisory committee working groups and initiatives in which the agency is currently participating in or has participated in since january of 2005 and didn't get an answer to that. we asked you to identify all climate change or queen energy related funding grants or financial assistance programs, which your agency is currently participating or has participated and and the amount of climate change or queen energy related funding grants and financial assistance distributed by your agencies since january of 2005, didn't get an answer to that. we asked you to identify the climate change may regulations to reduce greenhouse gas emissions, issued proposed by your agency since january of

2005 or under development. didn't get an answer to that. we asked you to identify the climate change related international negotiations agreements, partnerships, working groups or initiatives in which they currently have per dissipated since january of 2005 and didn't get an answer to that. provide the approximate amount of annual agency funding attributed to climate change activities for the fiscal year 2005 through 2012. it didn't get an answer to that we describe the actions that your agency has undertaken to respond to the executive order by the president 13514 including the approximate cost of personnel and other resources dedicated by your agencies to implement that executive order. it didn't get an answer to that mr. chairman. last but not least provide a list to the agency or the program office within your agency that is currently engaged in a climate change related activities and to provide an estimate of the approximate

number of your agency employees and contractors engaged part-time or full-time in the climate change related activities. guess what? didn't get an answer to that. mr. waxman has been asking this committee and subcommittee to hold hearings on president obama's climate change efforts all year long. we asked nine questions and we didn't get one straight answer. are you trying to hide something, are you embarrassed by it, or you just don't care to respond to the congress? >> i will answer first. thank you. looker i am very happy to come and discuss any and all of those questions. i will address a few of them now if you would like. certainly from the department of energy for example the question of regulation standards. sufficiency standards is what we

do in this regard in regards to the programs. the question is ambiguous but if we take all of the programs that help address climate change. that account would come to fifer 24 million because as i say this multiple objectives and fuel diversity, nuclear energy fossil energy etc.. >> the time has expired. we do appreciate you making the effort to answer but i do hope that you'll want to deal with your stuff in trying to respond to us because as it was indicated we ask these questions a time ago and we would appreciate your responding to that. >> before i yield back the point i'm trying to make is we are trying to have a good-faith

effort to have a real dialogue. but in order to have the dialogue we have to have the facts and we are being stonewalled which means the american people are being stonewalled. these are not complicated questions and they are not trick questions. if the obama administration has a great climate change action plan every one of these questions should be able to be answered in detail and in glowing terms. so i would hope that you representatives and the obama administration first of all both of you are good people, you are smart, you have integrity, you've worked with the committee. get us the facts and then we will have a debate over what those facts mean. >> will you yield to me -- >> i would be happy -- >> you quoted me saying the $60 billion has been spent but my statement was that we proposed the billion dollars to go to be spent under our legislation. secondly, it is on president we

have the to cabinet level officials that have the primary burden of dealing with the climate change issue to come before a subcommittee. i hardly call that stonewalling. >> actually, they said 70 billion over the last four years. >> we are talking about different he said 60 billion. i wasn't saying 60 instead of 70. my statement about 60 billion is what we propose to spend in the cap-and-trade bill. >> i would like to recognize the gentleman from michigan, the distinguished gentleman for five minutes. >> mr. chairman thank you for your courtesy. administrator mccarthy welcome back to the committee and congratulations on your new position as the epa administrator. we wish you good luck as you take on this new position. also mr. secretary we welcome you to the committee. gentlemen and ladies, these questions will be yes or no and

i will request that you give additional information as a response after the response has been made. so for both of our witnesses, does the epa or the department of energy see a future for coal as a viable energy source in light of the impending greenhouse gas regulations? >> please answer yes or no and submit additional information for the record. >> i agree, i guess. >> administrator mccarthy i a understand there will be a different proposal for modified sources coming units that have been updated and also for existing sources that have not been modified. can you tell me if the epa is reaching out to all of the stake holders concerned about both confluence of the greenhouse gas rule please answer yes or no.

>> to the best ability we can come in yes we are. >> would you please also said net more information for the record? now is the epa thinking about a compliance school for the existing and modified source carbon standards please answer yes or no. >> we are thinking about that in a number of different flexible strategies. >> what you said that such records for the record as you deem appropriate? >> yes, sir. >> fenty date about climate change is not just about air. but it's also about water. i am sure that both you and the secretary understand this. administrator you may know the great lengths contain 20% of the world's fresh water. our water levels are up slightly

this year after years of inadequate ice cover on the lakes and too little precipitation of rain and snow. the lake levels affect model the shipping and boating and recreation but also make it easier for the algae blooms to form endangered fish habitats and drinking water sources as well as industrial and cooling water intakes. do you believe that the president's climate action plan provides the direction to deal with the problems in the great lakes? please answer yes or no. will the epa under your leadership continue to work with other federal and state agencies to address climate related problems on the great lakes yes or no? >> yes. >> dealing with water quality you believe the epa has adequate verification of its jurisdiction

under the clean air act, under the clean water act to ensure the protection of water sources? please answer yes or no. >> not as yet but we are certainly working on that. i want you to give some additional response on that because that is a matter of deep concern to you and to me too. now madam administrator as these problems become more frequent do you believe the epa will need a further clarification of its clean water act jurisdiction please answer yes or no. >> yes i do. islamic and i believe that you are finding, madam administrator, the actions taken by the current risk to foreclose you from giving us additional work in terms of rules and regulations clarifying the supreme court decision or extremely unhealthy. am i connect? yes or no?

>> we find them very difficult. >> now i am sure that you have seen a recent map published in the national geographic showing what would happen if all of the world's i swear to melt. while somewhat a drastic scenario, it shows almost all of florida and new jersey submerged. it wasn't the map however that intrigued me most. the map showed little or no effect on the great lakes. do you believe that epa along with other federal agencies have the tools necessary to protect what affect climate change might have on the great lakes basin and the region in which the excess? please answer yes or no. would you submit additional information for the record as you deem it appropriate? >> i would like to have the submission from you

mr. secretary about what it is you are going to do about potential shortages and whether we have shortages coming on the electric power because of the actions that are going to have to be taken with regard to from global warming and matters of that kind and how that is going to affect our future in terms of the reliability and availability of the electric power. thank you mr. chairman if he would submit that for the record. >> i would note that we have a report vulnerabilities of the infrastructure that can answer many of your questions and i might add one fact there are projections that in an unconstrained world of gas emissions we could see about a 2-foot tropical level of the great lakes which would of course be very disruptive.

the industry is going to make a large number of retirement plans because -- >> the gentleman's time is expired pity estimate this time the gentleman from texas for five minutes. >> mr. chairman, thank you very much. the argument about whether or not climate change is taking place, i know one thing by the argument that mr. barton had with the gentleman from california, something that is taking place taxing the hard working people of the country is taking place and mr. chairman, thank you for your opening statement. it wasn't an estimate on your part from the congressional research service it's usually pretty accurate the climate change founding for science, technology, international assistance for approximately 70 million for the period of 2008 to 2012. you got a better answer.

to counter the 12 or 15 of those people but didn't give you any answer at all. by no answer you got a better answer than i received from mrs. mccarthy about a year ago in the science committee for the committee there. and i may have asked you a question you didn't like and your answer was i'm not in the job of creating jobs. i'm not in the business of creating jobs. that's out of the record itself. and i left that for you if you want to apologize to the millions of people that were unemployed and many of them hungry. i've never seen that apology to this day. actually, mr. chairman, i would like to ask unanimous consent to separate my questions in writing. i have more than five minutes or less to make. but it's taking place 20 billion

per year and we can figure that out if we want to. i yield back my time and think the witnesses. >> the gentleman yields back the time and in recognizing the gentleman from new york for five minutes. >> thank you mr. chair. >> if we are going to reduce our carbon pollution we need to deploy more clean energy and a boost energy efficiency. yesterday the department released its report showing that wind and solar power l. eda lighting and vehicles are growing rapidly in this country as a result of the well-designed federal incentives and investments in research and development. that being said, the report finds as a result of these measures and by quote the historic shift to a queen and more domestic and secure energy future isn't a faraway goal. we are living at and it is gaining force. i would like to ask unanimous consent to enter this report in

the record. >> without objection. the report contained a striking graph about the cost of the appointment of wind energy in the united states with capacity skyrocketing in our country and i believe the committee has that graf. okay we are posting it on the screen. thank you. secretary moniz, what has been the key to wind power success? as you see we have the graph on the display screen. >> i think the story is as i alluded to earlier it's actually the same story that we saw decades ago with unconventional u.n. natural gas -- unconventional natural gas. we had public-private partnerships and the time limited well crafted incentive that has these things taking off and we see the same thing now with the wind as we can see the deployment is very striking and of course the costs in good

areas are quite competitive with other sources. the report has similar graphs and the same kind of message with photovoltaics and solar energy isn't fully appreciated how competitive solar is already in the right conditions which is typical for this stage of other technology penetrating the market so is the response for solar s strong as the wind? >> stronger. it's gone from 50,000 to 20 million deploy it in the country in a very short time and the cost has gone from 50 to $15 the lifetime savings from one l. levy is over $100.

>> what can we do to ensure that today's r&d is utilized in the emerging technologies so that we can achieve the same levels of success? >> first of all we need to as i said earlier this is a sustained -- we need a sustained commitment to maintain the research development demonstration and deployment push that's actually required. and these will be market competitive technologies. again, sooner rather than later. the other thing is of course we'd like to capture the full value of these developments and that involves other things we are doing such as for example the advanced manufacturing partnership to help establish the cutting edge manufacturing capacity and training in this country. >> energy efficiency is a key part of the process for the climate action plan and energy efficiency is one of the

cheapest and most cost-effective ways to produce while saving consumers money. it's a big part of the department of energy's responsibilities under the president's plan. mr. secretary the president's plan calls for new energy efficiency standards for the equipment. are they a good way to reduce the carbon pollution? >> these standards are applied to reducing all of our emissions, carbon emissions as less conventional pollutants by reducing the energy needs quite substantially. but i really want to emphasize all of our rules have a cost-benefit test and they also save money for consumers. the upfront marginal increases are overwhelmed by the energy savings that the consumer level. some believe taking actions to address climate change and cost

consumers money and is that accurate on both the energy efficiency standards? >> no we believe they create jobs for one thing by saving money in the economy that can be devoted to other purposes. and in addition, it gives us products that we can sell globally. >> i see that my time is up. >> the gentleman's time is expired. i recognize the gentleman from illinois mr. shimkus for five minutes. >> welcome. glad to have both of you year-to-date. secretary moniz come any serious plan for reducing greenhouse gas emissions substantially must have a strong nuclear component. do you agree? >> nuclear power is critical and obviously reduce having a greenhouse gas plan. >> supporting the nuclear power. >> do you consider a nuclear program to be a critical part of this administration's plan? >> yes it is all of the above and nuclear is there.

>> so filing of the last licensing case before the nrc and the only person i voted against licensing and that was the then chairman who was appointed by this president. >> said the concern is the conflict in signals. you've got the presidential appointed chairman of the nrc casting the only no vote for licensing the power plant in this country. so that leads to the other question. under this administration how many nuclear reactors have closed down? >> i believe there are five. >> we've got one in new jersey, wisconsin, california, florida. >> without a vote to license by the chairman of the nrc appointed by the president. so, i will give you that point and you have to give me the point on jobs that a lot of jobs have been lost by the shutdown

of these nuclear facilities. under the president's climate action plan, the epa is expected to propose a rule later this week setting greenhouse gas standards for new power plants that would require ccs technologies for any coal plant will in the u.s.. this is effectively as many of us fear and the administrator knows where i stand on this a ban on the new coal-fired power plants. do you believe as the secretary of energy that it's the sensible for the epa to impose regulations that essentially ban the building of the new coal-fired power plants in this country? >> i'm not going to comment on the ongoing -- >> but from the presumption from the energy position of the base load demand requirements in this country and low-cost power obviously removing the coal-fired power plants from the fleet will raise cost. some of our job at the department of energy is to --

>> hopefully produce the production of low-cost energy for consumers and manufacturers and the like. >> for coal in the low carbon world and i might add that there's lots of activity already -- >> we are going to keep falling on that course of questions. is the doe aware of any commercial scale power plant using coal to transport and permanently store carbon dioxide? >> well as you know there's been a number of demonstrations -- >> that's not the question. is there one today -- >> 75% complete in mississippi but if i may add, it's not a power plant. but i think we shouldn't ignore -- >> that is another good point. >> both years we had the great plains 20 million tons have been used for eor -- >> the point is you know ccs takes billions of dollars. there's no commercially available technology to do it.

it's not being conducted right now -- i'm going to turn to the administrator who is a friend. but for these rules to be promulgated it is a signal we aren't going to build the coal-fired power plants unless there is at least a demonstrated ability to have the technology and the concern is the costs are going to be great. administrator mccarthy, has the epa ever established a new source performance standard for an emissions source on the basis of technology that hasn't been commercially proven by operation at a commercial scale? >> we have in the past for example our use of scrubbers was seen as an innovative -- >> but it was commercially available at that time. that is the whole difference between the clean air debate and the greenhouse gas debate. in the clean air debate, technology was available. in the greenhouse gas debate

it's not available. that is really the number one concern that we have. do you agree with that? >> the rule has yet to be issued. but i will say this is an issue that was heavily discussed and that is the reason we are we proposing and we will have a full debate about this when there will goes out. but i would indicate to you that this rule is not about existing facilities. it is about the future of the plants that are being constructed. there are four plants that are now being constructed that are planning on and are designing and at levels that would be anything that we had proposed an hour earlier -- >> and i hope you're right and hope it's successful but it will be costly. i'm going to end on this, mr. chairman. i think you have litigation issues that are unknown.

the state of illinois is planning for this as you know, secretary, you are doing your research there. there's other issues being able to get this down in the deep sequestration. >> will you provide a list of the four plants you just referred to? >> certainly. >> i recognize the gentleman from texas mr. green for five minutes to beat >> thank you mr. chairman. like my colleagues i would like to welcome the secretary mccarthy and moniz. i have enjoyed it so far. german mccarthy i've been concerned in the past that the epa hasn't taken the concern about reliability seriously when there have been utility rules. can you commit to give in deference to the doe on the greater reliability been drafting the will for existing power plants? is that part of the consideration with the epa? >> we have worked hand-in-hand developing this proposal and we will in the evaluation of

comments in moving any rule forward. >> i see the secretary shaking his head, too. i'm glad you are all working together because we want as clean air as we want we still want to be able to turn on the lights and particularly in texas have our air-conditioning in the summer. i support the research and the efforts to address a greenhouse gas emissions that the administration is undertaking when it comes to regulated carbon for the industrial service i do see that congress should move past the grid lock and develop a regulatory plan instead of the epa. congress ought to do the job and i particularly ask the supreme court they say the epa has the current authority. but until congress starts to legislate again we can't sit here and just complain about the epa for doing with the supreme court said it has the authority. climate change is real and something that congress should act on. psychiatry moniz, where are we with the ccs technology.

the plant in mississippi may be abandoning the that isn't guaranteed. when do you expect ccs to become economically feasible? >> i think the carvin kafta -- we set about carvin character and sequestration. certainly carvin capture what they're for the combustion plants or the gasification plants it is both demonstrated technology. we continue to invest in the new technology that will further reduce the cost. but those are the use technologies in various places in certainly in the petrochemical industry and in the former case the great plains case and in the second place and sequestration side the storage side as i said earlier there is one plant and one field where the enhanced oil recovery has already stored 20 million tons and largely in texas actually we

are using 60 megatons a year for producing 300,000 barrels of oil. so this is a growing concern. so the components are all there. >> i think some of our concern is that we don't want the requirements to get past with the technology which you can capitalize to be able to deal with it and so their needs to be the coordination there. of that technology is there and there are examples of it. but is the plan of the mississippi do you agree on the timeline of when it would actually be up and running? >> i believe they are operating in 2014 or 2015. it's quite close and it's a gasification plant and again, the co2 will go to enhance the oil recovery in the local fields. >> there's been a success in the midland area and in the basin for, you know, enhanced oil recovery and we even have a pipeline from mississippi to the

gulf coast so there are examples. >> on average, it's been in texas about a half a ton stored per barrel of oil produced. >> i appreciate that. it is a beneficial use. we could use it for the enhanced recovery. you testified that in developing the regulations for existing power plants you engaged in the outreach for the stake holders with expertise to form the development of proposed standards, regulation guidelines which expect to issue in june of 2014. you also said for us to be successful the have to promote economic growth. some people say that any policy addresses climate change is only going to do harm to our economy. to what degree will you tell them in developing these regulations? is there a formal process scheduled that they participate in? >> the epa has already engaged in a number of utility and energy related forums talking

about this issue and we will engage with of the utility at every step of the way. it is my concerted believe and i think you will see this as we talked to the states that they are taking numerous actions already that are reducing greenhouse gases. there are so many states that already have a renewable fuel standards and energy efficiency standards. they are working with the mayors to make the city more efficient and there are ways we can recognize and understand how best we can shape the plan to the states need to develop a would be beneficial to them on an economic perspective and beneficial to the u.s. and the world to reduce the threat of climate change. >> and these plants -- these power companies are part of that process? >> very much so. >> the time is expired. i recognize the gentleman from louisiana for five minutes. >> thank you mr. chairman. appreciate you holding this hearing and administrator

mccarthy and secretaries moniz i appreciate you being here talking about climate change policies, and of course a lot of this comes in the context of economic policy how these policies have an impact on families, how they have an impact on the economy. we hear all the time from small businesses i meet with and i know talking to my colleagues it's the same thing. some of the biggest impediments they have to creating jobs right now our policies coming out of washington and frankly the administrator of the policies coming out of the epa seemed to be up the top of that list. a lot of threats coming out of the epa and i know that you are new to the current job you have, but you have been at the epa in different roles throughout these years and i don't know if you'll recognize those impacts we talked about before in our committee hearings. but when you look at the climate policies that you are proposing, i want to read a comment from you recently and get your take

on that. i think the administrators of this recently. essentially the president said that it is time to act. he said he wasn't going to wait for congress that he had not mastered the authorities and that it was time to start utilizing those more effectively in a more concerted way. so administrator mccarthy when you talk about the president's behalf to act regardless of what congress does it causes a big concern not only to the members of congress but to the people across the country who believe in a space process where republicans and democrats work together and congress as divided and the president through his secretaries including you are the ones who are supposed to administer the policies that congress passed. and so when you are echoing the president who says you know what i don't care of congress didn't do it it's time to act any way i hope you understand the chilling effect it sends across the country and i would like to get your interpretation what you think the president means and the authority you have to act

even if congress chooses not to go down the path you want to. >> let me rephrase the issue in a way that yoakley is a bit more positive. >> it's not positive when i hear those comments. >> i think the president has reached dhaka and indicated that congressional action would be something that he would want to engage in and that he would welcome. i think what he's also told us to do is look at the laws that the congress has already enacted through their own public space process. and what have they told the agencies that their responsibility is and their authority is? we are not doing anything at the epa or in the climate plan that goes outside of the boundaries of what the congress has said it is our mission and authority. >> i hope to keep that in mind as to develop policies because we are concerned about some of the things you are doing in terms of them going against

wishes of congress and there's been the cap-and-trade bill that got defeated when there was a super majority in the senate so clearly the congress spoke but that isn't something we wanted to be the just a few weeks ago in the house we voted, the vote was 237 trinkle 176 to reject the carbon tax. the actual vote on the floor to reject the carbon tax and it passed overwhelmingly with democrats voting for republicans and in fact barbara boxer was quoted as saying we don't have the votes for the carbon tax. i would hope he would take all of that into consideraten you are looking at climate change policies not only did we say we don't want it but we voted to reject the carbon tax so you need to take that into consideration that's not an authority that you have and the congress has now said that is something you don't have an authority and we reject that. i want to also bring up when you look at the impact of these kind of policies how they are working in other countries. again it has an impact on our economy when some of these rules are proposed but some of these

other countries across the globe have already tried to go down this road in terms of climate change policy that you're looking at. there was a revolt in australia in their government a complete of people because of their carbon tax and in fact there is a movement with this new government to appeal the carbon tax. read from the telegraph just a few weeks ago brussels years the european industrial massacre struck by the cost. the business report warns against carvin target's. financial times the european utilities want e.u. over security risks. special online germani's energy policy our electricity becomes a luxury good. it goes on and on putting it in the u.k. express' 3,000 pounds a year bills on the way as energy prices rise again. the telegraph romantic germany risks economic decline as the agreement dreams spoilt. i hope you understand the countries that have tried this is failing miserably the revolts

in the countries of the congress has acted and send a message to you. i would hope he would respect those messages that have been sent not just in congress but look where they've gone down the road in other countries and the your seeing dramatic declines and dramatic increases that hurt real families. these are the concerns we have as you are looking at climate policy in your agency had recognize the will of the people in the country. >> the time is expired and this time recognize the gentle lady from california. >> weld ms. capps yield for 30 seconds? there is no reason you should be mindful of proposals that are not all. you have to be mindful of what until all is and what you have to do is force the law so there is an argument you should pay attention to what republicans were able to pass through the house isn't the law. thank you. >> thank you also from me administrator mccarthy and

secretary moniz for a hearing today and for your testimony. given the immediate threat posed by climate change and encourage we are finally having a formal discussion on this pressing issue with congress in action the president's climate action plan is a welcome step forward and we need to be dated this because we need to cut the carbon pollution and help prepare for the impact of climate change. ..

administrator mccarthmccarth y can you discuss what the task force will be working on and to what extent it will be examining this budgetary impact? for example we be issued findings comparing the long-term cost of inaction to those building a more resilient infrastructure? >> thank you for the question. as you recognize the president's climate action plan focused just as heavily on the adaptation question as it did on the mitigation issues in the international component i think he did that recognizing the extreme concern that communities are facing now and the public health impacts associated with not recognizing the climate is changing and preparing for that in making our communities more resilient in a changing climate. he established a task force to look at these issues. we are going to be working with every state and community. there is support already issued

by the department of the interior. to look at resiliency projects $100 million as a result of the climate action plan moving this forward. we all have each agency develop climate action planes. we are participating on national forms as well as developing our own task forces to begin to work with communities more effectively to integrate what we know about the changing climate into the work that we do. there's a great deal of work on going -- it's been nurtured over the past few years but it certainly has been given a boost in the action plan and will move this forward. >> could i just -- >> okay but i have a question. d.o.e. currently focuses heavily on more mature technologies like solar and wind. while i support these efforts i want to make sure we are not neglecting other policies like renewable technologies. for example there are several companies including my district

which are citing new technologies to relay upon its energy from ocean waves tides and currents. in fact eagle mare was awarded a 500,000-dollar d.o.e. grant to help develop its wave energy technology. this only scratches the surface however of public and private investments that are needed. secretary i was going to ask you and you can respond anyway you want to what does the present climate action plan due to expand development of hyperkinetic technologies? >> thank you. a note to your earlier question that in addition to the task force -- that task force there is also spend a specific sandy task force led by hud. the work i described later -- earlier will be translatable to other parts of the continent. under fema we have a responsibility for d.o.e. and energy infrastructure and other agencies for other parts of our national infrastructure.

on the question to me, it's very important that we not forget what are sometimes called the forgotten renewables and that includes -- >> absolutely. >> that includes wades, tides, small hydroadvanced geothermal and we are looking to increase our emphasis on those as we go forward. >> thank you. if i could follow up i would love to have a written response on some of the project -- the ways that you want to do that but i can take back to some promising industries of my local district that would love some support like the one that was given in terms of energy technology. >> the gentlelady's time has expired. at this time i would like to recognize the gentleman from pennsylvania mr. pitts at this time. >> thank you very much. you have recently taken over leadership that d.o.e. and you

understand the role of establishing an and core dating energy policy. can you tell us whether d.o.e. is going to have an active role going forward in ensuring that the climate policies pursued by other federal agencies do not negatively affect the affordability and availability of energy? >> thank you for the question. the principle way in which we will be doing that over these next say three years is the so-called quadrennial energy review process that will be convened out of the executive office of the president with the department of energy establishing the secretariat and the analytic underpinnings and that will involve the entire administration. that will be our principle role there and i can also assure you as i have in previous testimony here that we view our job in tech knowledge he development as meaning to innovate and keep lowering the cost of energy for our consumers and our inner --

industry. >> you will review regulatory initiatives epa that have the potential to negatively affect the affordability and reliability of energy? >> perhaps ms. mccarthy can answer but we have the processes. what we will do in this context is help provide the threads, some of the analytics to bring together the agencies to discuss energy policy broadly environment security economy. >> administrator mccarthy i want to understand, with all the climate change related programs that your agency pursues such as research technologies development grants, education and outreach does your agency determine at the outset what those programs are supposed to accomplish and then go back and evaluate whether they actually did accomplish what they set out to do? >> we keep quite close tracking and i would add many of the

programs that we run our programs that congress has specifically directed us to run at specific funding levels. >> does epa make information about what these programs have achieved available to the public? >> very much so. >> can you identify where that information is available? >> i can certainly provide that to you. >> epa has been implementing climate policies for a number of years. have you evaluated what that accomplishes in terms of meaningfully addressing climate risk and could you share that with the committee? >> we certainly take a look at work that we do to understand what kind of greenhouse gas reductions might have been reduced but as we all know climate risk -- reducing climate risk is a global effort and the u.s. is participating in that as rigorously as we can. >> ms. mccarthy does epa coordinate with other agencies

whether it evaluates the impact of its regulatory action relating to the power sector? >> very much so. in every regulatory process all agencies participate in the interagency review. part of that is to look at the cost and benefit and i'll says that epa produces and to comment on both of those. >> for example if you consulted with the department of health about the impact of energy poverty or higher energy prices on health or the ability to respond to extreme weather events? >> what we have done is to ensure that we do a complete analysis to the extent that it's available to us and appropriate on what the economic consequences are of our rulemaking and we take great pains to make sure that we do not threaten reliability nor do we put out rules that will significantly increase costs to consumers. >> one other question. the present climate action plan says on page 10 that quote

curbing emissions of methane is critical to our overall effort to address climate change and quote and it refers to interagency methane strategy group that is identifying technologies best practices for reducing methane emissions. i should also note epa's web site in the case that we can cut methane significantly by reducing influence on landfilling an increasing modern waste energy facilities like the one in my district in lancaster county. will you recommend to the interagency methane group or request that you recommend the importance of focusing on ways to increase the united states use of a waste, energy for managing nonrecyclable waste? >> we will raise that issue but i think if you see the tone and tenor of the president's remarks in the climate action plan it is

an effort to understand where methane is being generated how effectively to work with the industry on strategies that will reduce that methane and recapture it because it becomes a significant financial opportunity. those are the kinds of things we certainly want to capitalize on. >> if i may add, the 8 billion-dollar loan guarantee program that we will be issuing will include msw technologtechnolog ies as a possibility. >> thank you mr. chairman. at this time i recognize the gentleman from pennsylvania for five minutes. >> thank you mr. chairman. administrator mccarthy welcome. secretary mondesi or recent visit to pittsburgh was appreciated and what we see by all of us in attendance and we hope to have you back here soon. while your visit is very timely today because many of us are equally awaiting the first rule regulating carbon pollution from power plants, the single biggest

emitter of carbon in the united states. though i think the legislation to address climate change through a cap-and-trade system would have been an easier more direct approach to limiting our nation's global warming impact we tried that here on this committee and unfortunately we were unable to get it passed. having said that i want to point out that where i live in southwestern pennsylvania we are witnessing coal plant retirement nearly every month which is impacting the economy and many of our constituents and potentially the reliability of the electorate grid. whether that is because of low natural gas prices environmental regulations or old age the fact is we are taking a lot of old power plants off-line and making it very difficult to build new ones. the central tenet of the present climate change plan is of course the new source performance standards for power plants and it's been widely reported that the standard for nuke coal-fired power plants will require some

type of ccs technology to comply. i am aware of and have supported the creation of several demonstrademonstra tion projects for ccs across the country but i am not aware that there is anyone that would be considered the best system of emission reductions as defined by the clean air act. can you tell me how ccs is going to achieve that requirement that it be adequately demonstrated considering cost energy requirements and environmental impacts? >> congressman first of all it is good to be here. thank you for the welcome. the first thing i would say is that a relative to the retirements that you are discussing we have been very strongly engaged with our energy colleagues to ensure that his retirements are happening that we work with our energy office and our agency and others to make sure that those issues are managed effectively. we do not see that there is any

gap in ourann st ensuring that e those regulatory standards effectivelyhoutreathing reliabilireliabili ty. in terms of the rule that is coming out i do not want to speak exactly to what the rule is going to say. it would be inappropriate for me to do that but i will say on the basis of the information that we see out in the market today and what is being constructed and what is being contemplated that ccs technology is feasible and it is available today. now that is not to give a signal about what's going on in the rule. that needs to be put into a broader as well as a more specific context and we will meet our regulatory obligation to look at what's possible and what we should be doing for new future power plants. frank lee the challenge is that we need to provide certainty for how you construct a coal facility in the future that will allow investment in that

technology and allow the technologies that you are investing in to grow and become more and more competitive and lower those costs. >> let me ask you a follow-up to that because i'm aware the plant in mississippi that has been cited. that plant is utilizing the innovative tech week that pipes the carbon dioxide emissions to depleted oilfields and uses co2 to force oil to the surface. in pennsylvania that is a little less realistic. for us unless we want to build the pipe line to texas for co2 which i don't think it's practical how is epa taking into account the regional differences that there are from different places in our country as we look at these technologies? this seems to be working but it's not something that could work in my neck of the woods. are you going to recognize -- create the guidelines that recognize the diverse fuel mix in the country and specifically

those regions like southwestern pennsylvania that are still heavily dependent on rasul beals? >> i think we all recognize that the use of of co2 that is captured in enhanced oil recovery becomes a very cost beneficial in the use of ccs but we also see part of that as a result there are significant pipelines being constructed to take it damage of those cost considerations. there is also an opportunity to sequester which is i think demonstration projects and investments that the secretary can speak to but there's also products being produced at the end of these design systems that actually can be sold. there is saved for writing things we see developing that make it very promising for cole to have a certain future as the president intends in and all-of-the-above strategy. >> thank you very much.

>> the rule is expected out on friday i believe the 20th. we will be having a hearing on the proposed rule. thank you. on saturday afternoon. will you be here on saturday? at this time i recognize the gentleman from nebraska for five minutes. >> what an unexpected surprise to go this early. i appreciate that. i'm going to start off by asking unanimous consent to put the letter of our attorney general from nebraska -- his letter to gina mccarthy in a white paper that was done with other a.g.'s into the record. >> without objection. >> the date of the letter of

september 11, 2013. it's particularly ms. mccarthy important to note that our attorney general is involved in this because a it's an impact to our state but we are a public power states so he is the lawyer in essence for public power states or a public power generators. they have the concert and for the rules that are being promulgated. i know they aren't finalized yet but nonetheless in regard to coal as a new fuel we have old coal-fired plants that probably aren't going to -- they are going to be able to adhere to the new rules of the issue is can we build new plants with coal since we are only a couple hundred miles from the powder river basin and this is by far the prominent feedstock

for our generators. he has a question and i have the same question and that is, does the epa believe that it has the legal authority to eliminate coal as a fuel for new electrical generation? >> we have the authority and responsibility to establish the efforts in the case of new facilities and guidelines where the individual states look at their own energy mix and come back to the epa with plans on how to comply. i do think we believe that we are moving in a legally sound direction but it would also caution that one of the reasons we are proposing -- congressman is there a lot of comments on our original proposal. the short comments on the technology. there were legal concerns so i would ask that we have this conversation in a more concrete way when the news source rule

comes out and to not also project will they are doing in the news source as being either appropriate or legally correct for existing facilities because neither is the case. >> i appreciate the answer. it would be easier for we have the final rule. >> we are planning to re-proposed a rule so we will have certainly plenty of time. >> we certainly have concerns regarding our ability to use the cheapest and most readily available feed source for electrical generation. >> i might just interject. we were truthfully so shocked by the original rules that we are anticipating the new rules so sorry. >> to follow up on that no, with the proposed the newly to be proposed rule after the comments

, is there still room for new coal and electrical generation? >> i think that the rule will provide certainty for the future of new coal moving forward and i think in terms of existing facilities we believe that coal will represent and represents now and will continue to represent a significant portion of the energy supply moving forward for decades to come. >> all right. there have been several questions regarding nuclear power as well and can we even meet with the new greenhouse gas standards will be without nuclear power as part of the portfolio? >> i don't think the news source standard isn't designed to influence the existing portfolio. it is designed to ensure that

future power plants that are being constructed take advantage of technologies that will ensure that they are as clean as they can be and have a path certain and a future that will be constrained. >> it's important i think to have nuclear power which has basically zero greenhouse gas emissions to be part of our portfolio. >> the president certainly shares your concern that we made room for all fuels and our -- all power generation types. >> i appreciate that. >> if i may add. i would note that we went through in my view a lot of years with words and not actions and we are now seeing actions and not words. 8 billion-dollar loan guarantees for new or your programs and small modular or so i would say we are walking the talk. >> the gentleman's time has expired.

the gentlelady from california ms. matsui for five minutes. >> thank you mr. chairman and i thank our distinguished witnesses for joining us today. i applaud it and stretch them for taking on climate change and i strongly support the goals of the president's climate action plan to cut carbon pollution and better prepare our country for the impacts of climate change. human caused climate change is real. it's happening now and it will continue to produce devastating effects unless we take immediate action. failure to act in an urgent manner is short-sighted and detrimental to our environmental and economic interests. some say that addressing climate change will cost too much money but they neglect to scond said at the cost of inaction as well as the tremendous economic and if it's of positioning of our country is the global leader in clean energy. clean energy industries are currently employing hundreds of

thousands of americans and the potential growth of this that are is enormous. my home district of sacramento lose 14,000 clean energy jobs. throughout the united states there are 119,000 solar jobs and 80,000 wins jobs. thousands more are employed in energy efficiency in other areas. this is a sector that can create millions of jobs and lead to faster economic growth but we do have competition. according to the pew charitable trust last year china invested $65 billion in clean energy compared to only $36 billion in the united states. the u.s. ranked tenth in clean energy investments per dollar of gdp a hind china all of europe canada australia south africa and japan. secretary moniz these countries recognize the economic potential of clean energy. what are they doing to capitalize on it?

>> a meaning other countries. >> yes. >> clearly i think people are seeing frankly trillion dollar markets developing that are developing now for clean energy. to address climate and to address air pollution just to advance technology and certainly a country like china as you know is providing significant incentives or domestic manufacturing. >> the united states has always been a leader in clean energy technology and clearly we are facing these competitive challenges from abroad. the present climate action plan is a critical step to ensure not just that we address the dangers of climate change but also that the united states can compete and lead in a clean energy economy in the future. chairman moniz how will the president's climate action plans for energy innovation for the united states and create new energy jobs here at home?

do you believe the united states can again lead the clean energy revolution? >> i certainly think we can and we must lead that revolution. i will mention two ways in which we are moving forward. one is for example through continuing loan programs to bring as i said earlier many technologies forward. i mentioned solar. there has been a huge success and california has been part of the. but also the loan program for advanced fossils so again -- and for nuclear across-the-board for these to elegies. another different kind of of initiative i alluded to earlier are things like advanced manufacturing initiative where we want to capture things like 3-d printing which can apply to new energy technologies as well

as a host of other technologies so those are some of the things we are moving forward. >> thank you. my republican colleagues are quick to order that -- will hurt the economy but climate change poses an enormous economic risk and a failure to address it can be a disaster for the global economy. cbo released a report concluding that delaying action to reduce carbon pollution would increase the expected damage from climate change by increasing the risk of costly potentially catastropcatastrop hic outcomes. the clean air act provides a good example on how we can make steady progress in cleaning up the air while growing the economy. since the enactment in 1970 the clean air act has reduced clean air pollutants a two-thirds of the economy is tripled in size. administrator mccarthy what does it tell us about our ability to cut pollution while

building our economy? .. thank you, mr. chairman. i think we can agree that the

co2 levels are undeniably increases. some scientists and climatetologist included their energy models reflect that co2 levels coincide with temperature increases. now, we've got -- we are supposed to have some charts up here. these are the models that have been suggested by many of the scientists and climatologies. however, these -- as you well know, the molgtdzs are key components of developing climate change policy, bu unfortunately, as we're finding out, this was the projection but here is the reality of temperature changes over the last 40 years. now, actually we can say over 40 years there's been almost no easein temperature. very slight. in fact, over the co2 levels caused with increase arctic --

the increase greenhouse co2 level emissions, the arctic ice is actually increased by 60%. as shown by the aerial view. also, that the an arctic is also expanding. more importantly, this report coming out of the united nations, the ippc report coming up, that most experts believe by 2083, in 70 years, the benefits of climate change will still outweigh the harm. that leaves to the question today. what should be done about it? we hear the testimony from the administration that all climate change is manmade and america needs to reduce the co2, emissions. lets put it in perspective. hypothetically, let's assume all coal-fire generation in america were curtailed. all coal-fire generation were curtailed. according to the united nations and the ipcc, this would reduce

the co2 levels of the globe by merely two tenths of 1%. ridding all coal-fire generating power in the united states. the administration also needs to remind people, mr. chairman in the opening remarks that manmade -- manmade problem -- if we could, only represent 4% of all the emissions of the globe. natural issues represent 96%. so as a result this administration, by virtue of the stream of job-killing regulations is putting our nation at risk. all in the idea of clinging to the notion that cutting two tenth of 1% is going to save the world's environment. let me remind -- the rest of the world is not listening.

the president's energy policy is not being followed. china, india, russia, and europe are expanding their use of coal. the administration is embarking now on a global initiative. exports uncertainty, according to the president he's not going allow low interest loans to be made to developing nations around the world. struggling nations to come out of fof -- poverty will continue to suffer. lives will be lost, children will be sick. one of the biggest moral responsibilities the united states should be to help emerging nations come out of poverty. the most funded and resource of power is coal. for a nation that changed from poverty, emerged from poverty, it must have access to energy. energy for refrigeration, cooking, and commerce. just to give you an example, in the sub sahara of africa, the total amount of power they can

generate in africa is a 61 watt lightbulb per person for three hours a day. 60 watt light light, for three hours a day. why should they be denied to access to affordable energy so they can come out of poverty? please take the message back to the president. this president must not prevent people around the globe from obtaining affordable, dependable energy. and threatening american jobs over two tenths of 1% of green -- excuse me of the co2 emissions is not an acceptable energy policy. crushing america's economy to reduce co2 levels by two tenths of 1% is an abuse of this presidential authority. if i could, in that time, i'm curious, both of you, the issue now is worth 400 part per

million. what level do you want it to be? is it what many people are promoting? 300 parts per million? you can respond, but his time is expired. >> let's respond, mr. mckinley. he had a lot of issues. if i may focus on sake of response. first of all, as i've said before in the committee, the issues in terms the risk of climate change are not based just upon model. as i said it's pretty simple math. number two, i don't believer -- believe someone said, quote, all climate change is manmade. the statement is that the forcing from co2 are clearly of the scale that have long been expected to produce the kinds of change that we are seeing, and will see. third, i think we should address -- as many things but let me focus on the hiatus-so called, in the

increase of warming temperatures. first of all,let not forget, this decade is the warmest decade in modern and recorded history. so it's not exactly like it's been cooling off. but secondly, the issues of decadal change in the rate of increase are fully expected. el nino and el mean that are part of this. those models didn't include other issues such as deepwater warming and et. cetera. i'll give you an example, there's an article right now in "nature" where by looking at the observed surface water temperatures in the pacific, putting them in east central pacific, putting them in it come completely with this hiatus, it's only a hiatus in the constant global warming. i believe we have to say it's a misreading of the record. the statement stands that co2

missions and other greenhouse emissions are a driver at the level of multiple degree centigrade in the century. we are up .9 so far. that's very qecial. i remind you that we wouldn't be here if it weren't for the greenhouse effect of water vapor, which has provided 60 degrees fahrenheit of surface warn -- warming. we are tuning that by a few degrees centigrade at great parol. >> -- peril. >> i would like to ask the unanimous consent we put in the record a study by dr. ben min. neither volcano, sun, or any combination of the natural factors can plausibly explain the atmospheric temperature changes we have actually observed from space since 1979.

>> without objection. i would like to put in the record your photo of how ice has expanded by almost a million miles in the arctic circle. >> reserving the right to object. >> recognize. >> i think it illustrates why we need a committee where we bring in the scientist. i thought the statements the gentleman from west virginia were incredibly inaccurate. including mr. moniz an m.i.t. professor for 40 years. the department of physics, head of the linear accelerate and undersecretary and physics from stanford university. we need scientists to come here and talk about science. >> mr. waxman, are you objecting to this? >> i want to make that point. i will not object. >> okay. i won't object to yours either.

at this time, i would like to recognize dr. christianson from virgin islands for five minutes. >> thank you, mr. chairman. i'm glad we are having the hearing. of course, i support president obama's sensible plan to address climate change by reducing carbon pollution and helping communities to prepare for the impact of climate change. and i really -- reading your testimony and hearing your testimony, i applaud the open approach to setting the standards that has been engaging all -- and will engage all the stakeholders and their concern in the process. despite this we continue to hear a lot of criticism of the president's plan from our republican colleagues. like our ranking member, waxman i would ask what is their plan? the president has said he's willing to work with anyone who wants a proposal alternative. and i'm glad that if congress won't act, he will. and i'm also glad that both of you, included in your testimony that the economy also benefits

from the prior responses has benefited from pyre responses to climate change. my district and the u.s. virgin islands and the other territory are on the forefront. like our panelists on the safe climate caucus informed me yesterday, already experiencing the impact of that change. in the virgin islands we endured a serious coral leeching event that significantly impacted our fishery, by extension our tourism product and economic stability. if we were continue to do nothing we could expect increase ocean acidification, sea level rise will impact our coastal infrastructure, and more intense tomorrows. as much of the country is experiencing. so it's absolutely an abundantly clear that climate change is real, and that we have to act. and it's important though as was discussed in with congresswoman

that our country lead on the vital issue. but as we respond, we also have to make sure that we transition to cleaner energy sources in a way that is workable, especially for communities with a greatest economic challenges. in the virgin islands and the other territories, we realize -- rely high on key seal generate. at 35 cents per kilowatt today the electricity prices are highest in our country. we have a strong incentive to scale up affordable, renewable energy efficiency. it's going take time. administrator mccarthy, i think you have answered my first question. i think you made it clear that the rule you proposed on friday will apply only to new power plants. >> that's correct. >> and next you would start to work on a rule to reduce carbon pollution from existing power plants? >> yes. >> it's going to be particularly important for my constituents we find cost-effective solutions that work for our specific

circumstances, and i think the same is true for the territories and hawaii -- at astate of hawaii given the high prices we're already paying and the challenges related to being an island, and where we're located. i also have read in your testimony that you plan to work with the states and territories to ensure that you understand our specific circumstances as we do these things. so under the provisions of the clean air act, do states and territories have -- will they have the flexibility to achieve carbon pollution goals in ways that work for them? do you anticipate that flexibility will be there? >> that is correct. >> okay. and secretary moniz, as we look to the future of our energy supply system, do you see promising technology-based solution that will allow places like the virgin islands and the other territories to meet our electricity needs with clean as well as affordable power?

-- what do you see is the most promising area? >> yes, i do. and i also recognize that in fact, islands often have a biggest challenge in that combination of risk and high energy prices. that is where, first of all, renewable -- not being dependent upon particularly oil import is important. that's where a renewable can be very important. and also, i think there is an advantage -- at least one advantage in the islands setting, and that is transportation based upon electricity and/or natural gas can be more attractive because the range, the driving range issue is not as important. i think there's a real future for green islands, and we would be delighted to work with you on that. >> where are we with ocean tech thermal convention? it seemed like it would be a good source.

>> we continue to do research on that. that's a case if you saw the curve that was shown earlier with cost dropping and deployment. we are still on the early stage of the curve. there's a ways to go in term of cost reduction, but the research is going on. there are some pilot projects in various part of the world. >> thank you. my time is up, thank you, mr. chairman. >> the gentlelady's time is expired. i recognize the gentleman from kansas. >> thank you, mr. chairman. miss mccarthy want to ask a question. one of the objective is identify green house gas regulation that exist and how they impact the climate change; right? and you agree that we want to make sure behave a successful climate policy as a result of those sets of rules and regulation you promulgate; fair baseline statement? >> in the context of a larger international effort, yes. >> you bet. and on your website, you have 26 indicators used for tracking

climate change. they identify various impact of climate change, so you would believe that the purpose of these rules is impact the 26 indicators; right? so you put a good green greenhouse gas rule in place you get a good outcome on all or some of the 26 indicators many. >>ic the better way to think about it, if i might, it's part of an overall strategy that is that positioning the u.s. to leadership in an international discussion. because of the climate change requires a global effort, so this is one piece and it's one step. i think it's a significant one to show the commitment of the united states. >> makes per sphect sense. do you think it would be take the -- and link them to the 26 indicators you have on the website? >> it's unlikely that any specific one step is going to be seen as having a visible impact on any of those impacts. a visible change in any of those impacts.

what i'm suggesting is that climate change has to be a broader array of actions that the u.s. anthd international community take that make significant effort toward reducing greenhouse gases and mid -- mitigating the impact. >> these are your indicators. >> they are indicators of climate change. they are not ictly applicable to any one action. >> how about the cumulative impact of your action? certainly you're acting in a way these are the indicators of climate change. certainly can't be the testimony today is that your cumulative impact of your current set of regulations and those you're proposing isn't going to have any impact at all on any of those indicators? >> i think that the.-- president was very clear what we're attempting to put together is a comprehensive climate plan across the administration that has positions the u.s. for leadership on the issue, and that will put some leverage to international discussions and actions. >> so you're putting regulations

in place for the purpose of leadership but not to impact the indicators that you, the epa, are said the indicators of climate change? >> we're working within the authority that congress gave us to do what we can, but all i'm pointing out is that much more needs to be done, and it needs to be looked at in that larger. >> 2010, that's in your opening statement you said we have gotten rid of greenhouse gas about 6 billion metric tons. one your indicators is hit-related death. how many heat-related death have been eliminated as a result of the 2010 rules? >> you can't make the direct connections. neither can i. >> right. there's literal any no connection to the activity you're undertaking and -- >> i did not say that. >> you said you couldn't make the connection. tell me what i'm misunderstanding. can you draw connection between the rules you're providing, the regulates you're promulgating and indicators -- >> i think that what you're asking is, can epa inof itself

solve the problem of climate change. no, we cannot not. the authority you gave us -- carbon collusion is one of the regulated pollutants. we're going move forward with what we can do is that is reasonable and appropriate. >> i'm not asking the question you supposed. >> sorry. >> i didn't if you had the capacity to solve greenhouse gases. if anything you're doing doing any good as measured by the indicators you have provided. is your testimony -- you have no capacity to identify whether the actions epa has undertaken has any impact on the indicators? there's literally -- this is about science. >>. >> yes. >> cause and effect. is there any cause l relationship between the relations you promulgated and the 26 indicators of climate change you have on your website? >> the indicators on the website are broad, global indicators. >> they are not broad. >> impacted associated with

climate change. they are performance as impact related to any particular act. >> i like the indicators they are quantifiable. >> heat-reletted change, change in ocean, snow covered. those are great quantifiable things. >> they impact the public health impact. >> exactly. you're telling me you can't link up your action at epa to any benefit associated with the quantifiable indicators that the epa its has proposed of indicative climate change. >> i think what we're able to do is show -- i hope we will show this in the package that we put out for comment is what kind of reductions are going to be associated with our rules, what we believe they will have in term of an economic and public health benefit. but, again, is large strategy. >> awesome. my time is up. >> the gentleman's time is expired. i recognize the gentlelady from -- i'm sorry did you have a comment? >> a quick comment briefly. there's an academic literature

that associates extremely hot days with mortality. i would be happy to provide that paper. >> okay. that would be great. >> i would like to recognize the gentle lay i i did from florida for five minutes. >> thank you, mr. chairman. thank you for calling this hearing on the obama administration's climate action plan, and administrator mccarthy thank you for your leadership and willingness to assume the challenges as epa administrator. it's good to see you today. secretary moniz, same goes for you. thank you for being here. now my republican colleagues' arguments today relating to carbon pollution and the changing climate are reminiscent of their arguments and the arguments of special interests in the past. when it comes to updating they predict and they always do we're going have a rise in unemployment.

the unemployment rate is going to skyrocket. they predict the economy will go in to a tail spin if america tackles pollution and climate problem. it's an argument they raise every time america acts to set better standards for air, water, for children's health. all you have to do is think back to the 1970s. i'm old enough to remember what the mornings were like before the clean air act and how smoggy it was. you could smell it when you come out of your house and taste it. then the country had the wherewithal to adopt the clean air act. over decades our air has improved. same can be said in the 1990s when it comes down to -- it can be said how america tackled the problem of flora carbon that depleting the ozone air. the same can be said when it comes to cancer-causing chemicals and plastic. plastic industry did not

collapse, did it? there's probably more plastic around today than ever before. i would say to my republican colleagues, have confidence in america's ability to innovate in the face of significant challenges. challenges like climate change. coming from a vulnerable state like florida, i think what we see clearly ahead of us, there's a greater cause to inaction. look what citizens will face in rising insurance premiums when it comes to extreme events. we're debating flurns flood insurance right now. it's tied more and more to the changing climate and the sea level rise in the future. think about what local governments and communities are going have to do to invest in infrastructure. in the state of florida, we're investing a great deal to protect the clean water supply and the drinking water supply from the rising bays, bays and

oceans that are going to intrude on the drinking water supply, the salt water intrusion. communities are having to invest now to protect infrastructure. just the plain old pipes under the ground that we need to operate as a normal community all up-and-down the coast. so i would see in the face of more drought, more floods, longer fire seasons, more intense fires, faster sea level rise. it's important we take action. the cost ahead of us will be huge. if the congress continues to ignore it. i'm glad that the administration is taking leadership here. secretary moniz, and administrator. let's talk about cost and benefit. when you propose a major liewl, you are legally required to analyze the cost and benefit of the resume -- rule; isn't that correct? >> yes. >> hasn't been required for --

if you didn't look at both the costs and the benefits, the information wouldn't help you assess the merit of a rule if you only look at cost. no rule would be worth it. in fact, mr. secretary, doe recently issued a rule to require microwave ovens to be more energy efficient. as part of that d. o. e. by reducing the use of electricity, the rule will reduce air pollution including carbon pollution. that's one of the benefits of the rules. isn't that right? did it include a estimate of cost avoided by the rule? >> yes, it did. indeed the need do that is comes from a court ruling in 2007.

>> and how did you get to the number? was it developed lo an interagency process? was it based on peer review science? >> yes, the process formally started in 2009. it's based upon three highly peer review models. there's been transparency on the models that the 2009/2010 every rulemaking that opens up for comments going forward. the recent change in the numbers was strictly updating the peer review models using them with the same inputs used previously. >> i recognize the gentleman from ohio for five minutes. >> thank you very much, mr. chairman. thank you very much for having a hear today. i want to thank the secretary and the administrator for being with us today. i appreciate i comments today. mr. secretary, if i can start with a question to you.

as the chairman had earlier stated in his opening remarks, when the president came to office, congress took under consideration what was essentially his climate plan. congress considered whether we would embark on a complicated intense regulatory program massive -- rising our energy cost. the u.s. must take the lead, we were told. mr. secretary, do you think it's economically wise for the u.s. to implement policy that result in more expensive energy cost for american house holgtdz and manufacturing? this question is really important for a district like mine. i have 60,000 manufacturing jobs, and i spend all of my time on the road going through large and small plants across my district. what was happening here in washington effects these plans. and affects jobs back home. do you think it's economically wise for the u.s. to implement

policies that can result in more expensive energy for these manufacturing facilities? and for american house hold? >> well, first of all, in no small part due to the shale gas, we're actually seeing lower costs in many, many industries. -- and growth -- >> if i can interrupt for a minute. in ohio, 78% of the energy is coal based. >> yeah. across the country, certainly, we are seeing more manufacturing, lower energy prices. in fact, in ohio there's an issue developing shale gas now. secondly, in term of the u.s. moving forward, i would say that number one, american leadership is indispensable. if we are going to have international action. secondedly, it's very much, i

believe self-serving interest of developing new technologies that will in fact give us a strong position in a future multitrillion-dollar market. >> okay. if you continue on with that. if i continue on to the question to you. again, in the climate action plan and again in the climate action plan and your testimony we're talking about the three pillar there that you mentioned and the third point being that the united states needs to leave that international effort. especially when we talk about climate issues. what does the administration mean by the u.s. taking that leadership role? does it mean we're supposed to be the first nation that decarbonizes our energy supply on a large scale and expect the rest of the world to follow? what is that leadership? >> i would say it means that, first of all, we do lead in clean energy. i believe we lead, for sure, in clean energy innovation. we have to help deploy it.

we are working, for example, department of state in terms of if you like the policy level has made tremendous progress in the g20 context and the china in term of hfcs. and at department of energy, we are working through a variety of mechanisms, for example, we lead what is called the -- which is advancing dialogues in other countries, for example, in many countries now we have active dialogues going on where our companies are working with companies in those countries. i'll mention countries aye -- i've been in, brazil. discussion monday with turkey, et. cetera. they are interested in our technologies for industrial energy efficiency. this is a market for our companies to go throughout, both services and technology. that is what we mean by meaning.

>> also, i see from your testimony in page 8, you talk about the -- your finalizing the rule covering this standby power microwave oven. go on with land fixture, commercial refrigerators, and commercial walk in coolers and freezers. and i guess the question is, are there any other appliance rules you see are being planned in the future? >> yes, indeed. i would be happy to supply a list of those. the next one we've said the next proposal rulemaking we hope to advance in november on electricity motors. >> if you have any other appliances you see coming up in the future, if you could supply that to the committee. >> certainly. having provide a list. i might add, in addition to the rulemaking, we are -- when it's appropriate, for example, right now with set top boxes, we are pursuing voluntary

discussions, because frankly when the industry and consumers come together and agree on a rule we think is good, that will actually get the rule implemented faster. we work both on the rulemaking and on convening voluntary approaches to -- >> thank you, mr. chairman. my time is expired. i yield back. >> thank you, recognize the gentleman from texas mr. olson for five minutes. >> thank you, mr. chairman for holding today's hearing. like you and chairman and colleagues on my side of the aisle. i'm disappointed that some of the administration experts working to justify and put new carbon rules out decided not educate the public by testifying here this morning. the two out of 13 ratio does not bode well with most open - transparent administration ever. i'm sure we'll find wrowt the

people are. they will do the jobs have to leave here. but, we do have a few and the proud. secretary moniz, administrator mccarthy, welcome. my question will focus on refineries, u.s. energy renaissance, and issues in texas. first of all, refineries. miss mccarthy, much of today's discussion has been about the president's carbon plan, has been about the power sector. but i also worry about epa's next steps for the refineries. less than one month ago, your epa announced that houston area will now attract to obtain ground-level ozone standards by 2018. your epa said, this is a quote, these reductions are even more

impressive given houston rank as one of the fastest growing metropolitan areas in the country, end quote. rather than recognizing success, epa is already working on more strict ozone in so-called tier three rules. and we keep hearing rumors of new rules for greenhouse gases and the refining space. all of this can mean billions of dollars, billions in compliance costs. these costs will hit families hard and be passed on to average workers across the country in places like sugarland, katy, texas. briefly, i say briefly, i'm short on time. can you tell me when to expect the carbon rules for refinery? >> i don't have a time frame. >> no time frame, okay. will you commit to study

cumulative cost of the rules and consider the impact of carbon regulation on refineries? >> i will certainly commit to following whatever protocols are required do, sir. >> in following my colleague, answering yes or no yeses. yes or no. can you guarantee that your rules will not raise gasoline prices? yes or no. >> i don't know what you're referring to. i would never make guarantee to anything. >> okay. all right. this is about the u.s. energy renaissance. as you know, ms. mccarthy. carbon emissions have fallen in recent years despite the new regulations. there are many factors, but a significant reason is -- [inaudible] use of american natural gas. i begin the rule, yes or no, do you agree that hydraulic

frackering -- yes or no? >> i believe -- yes or no. it's a complicated question. take it very short, i believe that certainly the new technology has advanced our ability to capture natural gas. domestically, that has been a wonderful thing for the equality as well as domestically, and i think that answers your question. >> i'll take that. yes or no, would carbon emissions -- [inaudible] regulate existence? yes our no. no fracking, higher emissions. >> i can't make that direct question, sir. you are asking me complicated questions for yes or no. >> i don't think it's difficult. i think the answer is yes. >> one final question for you secretary moniz as well. my home state, as you know, is

in desperate need of reliable power. at the time when we're looking at blackouts in 2014-2015 without more power generation. the epa is considering carbon rules that could essentially capture -- [inaudible] now i'm not opposed to ccs. as we discussed earlier in the testimony came here a couple of months ago, my district is actually home to one of the only ccs modification in the country. through wa paris plant in texas. another yes or no question. secretary moniz, and ms. mccarthy. do you believe the ccs technology is currently economic for most coal plants not just the parish plant in texas? which is it? we have oil and gas right there. right on the property. they can get the carbon there quickly. >> i said, earlier the

combination of ccs is with eor is attractive. if i have one thing, mr. chairman. the issue come up many times about the two of us being here. i want to say that, first of all, there's been no trouble occupying three -- but two -- but secondly, i am -- i know my colleagues our colleagues across the administration would be delighted to have a conversation about all of these issues. >> thank you very much. gentleman's time is expired. ly say to you, you are right, it took up a lot of time today. we are going to get back in touch with those other agencies and even meet with them individually. we are going follow up with them. this time i would like to recognize the gentleman from illinois, for five minutes. >> thank you, mr. chairman. i thank you for being here and your service to your country. and the last few hours, you have given us, mr. secretary moniz,

i've heard you speak in favor of the president's climate action plan. to that extend, i understand the concern surrounding the reduction of greenhouse gas emissions being expressed. that being said, statement from energy experts said electrical prices are projected to increase over 40% since 2001 which is well above the rate of inflation. it will continue to rise due to the requirements of epa. in addition to this over 60% of our nation's clean power generation comes from nuclear power. which it virtually emissions free. i'm concerned with the effort of your agency in regards to the future of the nuclear energy sector. i believe that any serious plan to reduce greenhouse gas emissions swrowltd a strong nuclear component, yet the number of nuclear plants announced the retirement this year has grown to almost epidemic proportions. and more expected in the near future. let me ask you, first off, what your goals. keep it as brief as possible. what are the goal for the growth

of the nuclear energy sector overall? >> firstful all, the closures, obviously have a bunch of factors. in one case there was equipment issue in california. in vermont it's principally -- >> a lot of -- >> they're older. and i say -- but we have for years already been -- we the department of energy supporting things like life extension technologies, et. cetera. so that's one direction. another is the still working on the provision of lone guarantee for the plants. it's really important to get some of these new plants build. >> has the d. o. e. closed any of the loan guarantee? >> no. but on nuclear -- >> why not? >> it's an ongoing negotiation -- >> it's been awhile i know. i mean, can -- i hear the discussion about it. i -- >> i taken a direct interest in

it. >> from our perspective i hear the democrat use it loan guarantee as promise for we support it. these are all conditional. they're not finalized, and when you have a number of plants closing, because of the age of the plants, and we're very slow to replace that capacity. let me ask you this, do you believe the greenhouse gas target set by the administration can be met without the use of nuclear power? >> the 17% goal for 20 is that you're referring to which we're almost halfway there. clearly if there are a lot of nuclear power plant closure in that time. that will make it more difficult. >> i know it's we're asking you to guesstimate. how many more nuclear plants do you think could be put out of commission before the targets become unattainable? that i do not know. i can tell you that we are -- i'm hoping to have discussions with the industry try to understand better where it is going. nuclear power plants that exist

still do have pretty low marginal cost. which make them attractive. as we know, the lower natural gas prices have lowered the clearing price in many the part of the country. >> absolutely. i want to make the point we were talking about earlier, there are loan guarantee in existence right now. they are conditional. i'll just say to finish up. i won't take all my time. hold your applause, please. if the administration was serious about addressing climate change, i think it would harness the clean energy from nuclear power as we've been talk about. at a minimum it would follow the law. it would reinstitute the yucca mountain program. and provide a solid basis to measure new plant licenses. thank you for your time. i yield back. >> we're following the law. >> the gentleman yields back. at this time, you all may have noticed she is over here. we're ignored her.

she's a member of the energy committee but not a member of subcommittee member. we finish all the subcommittee member before we go to her. and she said that he's noted you sitting over there patiently. i would like to recognize you for five minutes if you would like that ask your questions now. >> i thank you both, especially mr. griffith for that courtesy. i believe that the threat to -- at least human life on our planet is the greatest challenge that human kind has faced. and i feel so strongly that this congress, this congress, is in a moment of such great opportunity where we could take leadership on behalf of united states, on behalf of the countries around the world that we can benefit

economically. this is a moment of great opportunity that i fear as a member of the energy and commerce committee that we are squandering i look at some of the young people, this is their century, and i feel an obligation that we to do something about this. i would like to see if either of you have a comment about this issue of coal, and the ruling that this promulgated ruling about to come out. some of the charges that basically an insignificant effect on climate change, and that it actually would jeopardize the economic opportunities of people in poor countries, and further, impoverish them. that's a pretty heavy charge. i wonder if you, madam administrator, could give us

some answer. >> i would be happy to. what i would say is that the reason why the power plant sector is one of the first places to go to regulate carbon pollution because it is by far the largest industry sector in term of the generation of greenhouse gases. the second reason is that there are opportunities to reduce greenhouse gases, and that will position us in the energy future. i think it's ever reason why we should want to tee up ideas and option for how to do that effectively. taking advantage of modern technologies that we can take advantage of, and escalade their introduction both in the u.s. as well as internationally. that is what is going make significant differences. not just what we're doing here, but its impact in moving cleaner energies forward. the issue of the international discussion, i think that you will see that the language in

the president's climate action plan is very detailed on this issue. it in no way steps back from both the intent of the united states and our obligations to work with the developing countries to ensure they mature and provide energy for their citizens. in the language in here is not inconsistent with that goal. it will not minimize our effort toward the goal. what it does say; however, is that we need to be careful about how we're investing. we don't want developing countries to make mistakes that we might have made, and not positioning themselves for the best technologies available in a carbon constrainted world. >> i would add the climate action plan, as far as the things like the x m bank has an exclusion for the least developed countries. >> i see. let me just say that how much i

appreciate your being here. the fact of having the epa administrator and the secretary of energy at a single hearing -- i'm sure we will have. i hope you will have an opportunity to hear others, but, you know, that's not an everyday occurrence. i want to thank you for that. i also want to associate myself with mr. waxman's plea that has been made more than once that we have scientists come in and talk to us. we can, you know, the kind of forum why where the science could be challenged, could be questioned. if there's differing opinions but i wonder in the seconds i have, is there really a significant difference of opinion about the science of climate change? >> well, again, i would argue that the at the level of broad

impacts, in my view, there is none. i think, again, very simple argument why it's expected. i also observe that the pattern of effect was predicted decades ago. it's not somehow being made up. clearly there are specific -- when you start drilling down specific issues, it's complicated science. so earlier we had a discussion about the last several years have seen a slow down of warming. this -- as i pointed out, it's not out of the expectations on decades l scales but that's a case where the scientists are still having some argument over the specific driver. recent papers -- as one example, have linked essentially the el mean -- that's something that remains to be worked out. it doesn't the overwhelming support for

what is going on in term of global warming. >> gentlelady's time is expired. this time i recognize the gentleman from virginia, mr. griffith for five minutes. >> thank you, mr. chairman. i appreciate the comments about the view as we move forward so we don't impoverish the other mainings and our nations we use modern technology as we move forward. the problem that i think we have, and i would say that the countering plan is we ought to make sure that the technologies are available first before we put regulations in place that then calls us to lose an entire segment of our population's job, energy production, et. cetera. that's been my concern along. coming from a coal-producing region. i can tell you that the policies already, not counting the ones coming out later this week or the ones coming out in the next few months are devastating the economy of my district. it was -- it's quite moving when you see these people --

these are hard working men and women who are trying to do jobs. it's not just the coal miners, it's thes that -- jobs that rely upon the coal mine. every time i turn around there's another manufacturing company that relied on the coal industry that is going out of business and needed affordable electricity that is going out of business. about every other week i'm losing a coal mine. it's people making about $75,000 a year that aren't making it now. probably the biggest blow any of my community has received. in fairness, the two first factor they listed was the double-edged sis or -- sis or so of obamacare. they listed the fact that the economy is poor in the area. as a coal-producing part of my descringt. we just lost a hospital in my district. some of my constituents have to drive an hour, hour and a half to get to cardiac care in the hospital. this is not a good thing. when we look at that cost-benefit analysis, we don't

always look at the fact if people don't have the ability to afford the electricity in their homes, then have to cut back on things. they have to cut back on important things. if you can't heat your home effectively i in the winter time. in the mountains of virginia, sometime it is can get cold it can affect your health. if you have a problem with your heart, instead of going to the local hospital because of policy enaked in -- enacted in washington. you have to drive an hour, hour and a half. it has an impact on the health. there's no way around. we need look at these things. i think we have to get the signs and the breakthrough age the technological breakthrough out there first before we shut down coal-power plant. the technology is not out there for everything that needs to be done in order to make them 100%. i don't think when you look at poverty. i noticed the gentleman earlier referenced a german article how

electricity became a luxury good. i don't think that the people of united states of america consider electricity to be a luxury good. i don't think we want to be a point where they have a minister, ms. mccarthy, german environment administrator giving out tips u how you don't preheat your oven. and if you lower the contract and the brightness on the television you can bring down the electrical bill. the germans put themselves in a position where people can't afford it. i don't want it for my country. it's hitting my district hard right now. i hope you would take to consideration. in along with those, i know the president jot lined the goal of 17% reduction in 2005 greenhouse gas levels by 2020, and mentioned also in a climate speech in june at georgetown university, i heard mr. secretary say earlier we're about half way there. i guess my question is, is that from programs from the epa, or is that from plant shutdowns?

how much have the programs that the epa has enacted brought down the greenhouse gas in the last five years? can you give me a quantify how much -- >> let me just -- >> let me just put the goal in a little bit of perspective. i think that goal clearly was stated in the climate action plan, but in no way does the climate action plan say that those actions are going to add up to that 17%. it is a start, and looking at the most economically viable opportunity -- >> go you know the 17% -- i apologize my time is running out. did the 17% come from a number picked out of the air? was there a scientific basis for it? can you give me the basis? >> i believe it was an international goal that was stated there is certainly some an lettic. it was -- it we mains a goal we would like to achieve. >> do we know, i understand we try reduce the gene house gases. do we know how much each program

will give us. if you can get that to me later. my time is just about up. ms. mccarthy, whibl you are here to testify. i told people in my district, i think you care about the flight of folks. i would ask you commit whether it's my district if we set up a trip. would you see what is happening in the district of the people and where the jobs are just disappearing and there's lots of towns with empty store front? it looks like a ghost town. >> i'll follow up directly. >> with that, i yield back. >> if i can say, half of the reduction so far have been from the shale gas revolution purely market-driven. another part has been the -- especially in the transportation sector the efficiency standards holding demand down. >> which are based on regulations; is that correct. >> correct. >> i like to recognize the gentleman from new york.

>> thank you, mr. chairman. let me say i'm applauding our committee for having a hearing on climate change. i want to say it's obvious to me and everyone else, the science is undenial. it's time for us to be act. congress has been ducking the issue. even going so far to deny the basic science behind climate change. i have seen the devastating effect right in my area when hurricane sandy hit new york, new jersey, connecticut. my descringt suffered a huge devastation. rising sea, stronger storms only increase if we are willing to do nothing. i'm happy the president has acted and decided to act. though some may dpn the exist of climate change, the science is clear. if people object to the specifics or the president's plan, then they should propose their own plan for curving carbon pollution and the climate change. the committee should actively pursue the matter -- this matter. we also know from experience that government can regulate pollution without hurting the

economy. in fact, many of the ideas that help reduce gar bonn emission will -- and other new technologies. it will help mitigate climate change. secretary moniz, let me ask you. you mentioned in your testimony, the devastation that sandy brought upon new york, new jersey, and connecticut. one of the major issues arising from that was the loss of power and the length of time it took to return. can you speak to what the department of new jersey is -- energy is doing with regard to electricity reliability. how to works with the president's climate change plans? >> yes. thank you. the -- one of the particular -- i'll mention two areas. one, is in the context of the general work on kind of electric grid of the 21st century. we're folding in heavily resilience issues as well as the kind of renewable and other drivers of that technology, and i mentioned earlier that one

specific project we just had in new jersey looking at a microgrid to support a major transportation order, which, by the way, provides an important evacuation route for new yorkers. the second thing, which is important. we're working closely with the eei and the aei. what we learned in sandy, a little bit the hard way. how the electric infrastructure and the transportation fuels infrastructures are interdependent. we are working on that, and being positioned for any future event. >> so implementation of the plans is ongoing. question can expect that soon? >> yes, it is. we hope to have a little -- a product that we will put out at the end of the month, for example. >> thank you. i have been a long supporter of

alternative fuel for transportation. besides electric vehicle you mentioned. what are other alternative fuels the department of energy working on? >>. >> we certainly support and particularly for heavy vehicles, looking at the issue of natural gas as a transportation fuel. we, of course, have an extensive program on advanced bio fuels. and these are, again, a case where cost aren't coming down quite dramatically. not quite there yet. coming down dramatically. of course, electricityification, again, cost have dropped dramatically. not yet for the long-range vehicle for the mass market, but the penetration is happening much faster than it did at the stage for hybrid vehicles looking very interesting. and more to the future, the hydrogen economy and fuel cells

that remains kind of in more -- a little bit earlier in the development. but i would say alternative liquid fuels and electricity are looking actually quite interesting. >> thank you. i know, you both have been here a long time. i'm going to -- submit a couple of questions for you and spare you from having to answer it. i thank you for your work. >> thank you. >> and gentleman from new york, you completed your questions, i would like to -- yield me the time. >> yes, sir. >> i want to make a comment on the hearing, which i think has been an excellent hearing. we are at the critical cross roads in this country in our energy policy. if we decide to do nothing, which i sense is what the republicans want is to do nothing. it's going to lead to more carbon pollution, more droughts and floods and other extreme weather events. more billion-dollar disasters, and relief bills to pay for them by the taxpayers. if we take that path, history

will not treat us kindly. we'll be the generation that ignored the warnings of scientists that left future generations a violate and inhospitable climate. on the other hand is another -- we have a shrinking window for action, but we still have our window act, secretary moniz told us that this is the critical, crucial time this decade. if we act now, if we invest in solar, wind, and other clean energy sources, if we unleash american inagree knewty. we can stop carbon pollution, protect our atmosphere, and create millions new, clean energy jobs. i want to thank the witnesses who have been very, very helpful and terrific in being here all this time. i hope we'll put a sign -- [inaudible] to help achieve these goals. they are very important ones for the future of our country and the rest of the world. thank you, mr. chairman. thank you.

>> thank you, mr. waxman. i would also say how much we appreciate the two of you being here today. we do think it's a major accomplishment that our co2 emissions are lower in twenty years. as we move forward, i think we want a balanced approach. weapon want to protect the environment. but we want to make sure we have a strong, viable economy, and we don't want to be left in a noncompetitive position in world marketplace. so -- i hope that you all will look forward to being with us in the future as we look forward being with you again. we spent three or four marvelous hours together. [laughter] >> exactly. >> today's hearing i would remind visitors and members they have ten business days to submit questions for the record, and i ask that the witnesses all agree to sprond promptly to the questions we submitted to you all. thank you, again, we look forward to working with you as we move forward. >> thank you for holding the hearing.

we appreciate it very much. it. >> thank you. that concludes today's hearing. [inaudible conversations] [inaudible conversations] ..

both natural gas and coal fired can minimize the carbon emissions by taking advantage of available modern technology. these technologies offer them a pathway for word today and in the long term. so let me get to the details of the proposal just a bit. the proposed standards are the first uniform national limit on the carbon pollution from the new power plants. they do not apply to existing power plants. now it might be well if i repeated that one more time so that everybody gets it.

these proposed standards are the first uniform national limits on carbon pollution from new plants and do not apply to existing power plants. today's proposal does that separate national limits for the new natural gas power plants and for the new coal power plants. new natural gas plants need a limit of 1,000 pounds of co2 per megawatt while smaller natural gas plants would need to meet a limit of 11 million pounds of co2 per megawatt. the new plants would need to meet a limit of 1100 pounds of co2 per megawatt. the coal plants could choose to also have additional flexibility if they want to average their emissions over multiple years by meeting a somewhat tighter limits. islamic that was some of the even from the national press club.

you can watch it in its entirety at c-span video library c-span.org. at the capitol earlier the house voted to extend to every funding beyond this of timber for the deadline taking the first steps to avoid a government shutdown. the bill would defund the federal health care law. it passed the vote of 230 to 189. it stands to the senate where it stands little chance of passage. the white house promised to veto the measure. the senate is back on monday expected to take up the legislation as early as tuesday. [inaudible conversations]

[applause] >> good morning and thank you everyone for joining us following this important vote. today the house has acted. the house has acted to keep the government open to control spending and to protect people from an unworkable wall that is making it hard on them. my colleagues have all voted in favor of this law because it is going to help moms and dads and families and young people and seniors all across the country and that is who this is all about. when i was, in all guest like so many of my colleagues i heard the stories from individuals and families who are concerned, who are panicked over the implementation and the impact that it's having on their lives. so that's why the house has

acted. and today, we urge the senate to take action. we urge our colleagues in the senate and our allies on the outside and the american people to push the senate to have an important debate on the floor of the senate because if we are going to take action on behalf of the american people we need the senate to have this debate on the floor of the senate. [applause] the president lead with a big promise to the american people. if you like the health care you can have you can keep it. today the headline reads the 20,000 americans work at home depot will no longer be the case. they are provide even a part time. obamacare does not allow that. that's why today when we acted it wasn't just a group of

republicans but it was a bipartisan vote. let me state that again because i want to make sure that you write that correctly. [laughter] it was a bipartisan vote because we are americans. [applause] it is a privilege to sit in this office and i will tell you this as the founders crafted this country they crafted to bodies to work. the house has now done their work and we call upon the senate to do theirs as well. [applause] the house has been fighting to stop obamacare since 2009 and we have said over and over again this is going to increase the cost for the working middle class families of the country and we are now seeing it. we have said from the beginning that this will harm our economy

and we are seeing our economy term from a full-time job economy into a part-time job economy. now it's up to senate democrats to show some responsibility and follow that lead. [applause] many senate republicans have promised to leave no stone unturned fighting this bill and all of us here support that effort. [applause] we are calling on senate democrats to do the same thing. i want to know where senator pryor stands and protecting the middle class from the consequences of this bill. earlier this summer a nonpartisan group in arkansas that provides care for seniors announced they were cutting hours for hundreds of staff members to 20 hours, 28 hours a

week. how about kay hagan in north carolina? does shia stand the consequences obamacare is having in her state? in a grocery store the president said it's not feasible or sustainable to extend coverage for all of the 1100 employees that he has. he too may have to cut hours for much of his work force. what about mary landrieu of louisiana? obamacare is also hurting her hard-working taxpayers in that state. in july the owner of dots diner told the senator in a committee meeting that he may have to lay off as many as 16 workers and these are working middle class americans just trying to make ends meet. finally what about mark begich of alaska. americans in the country could be hit with a great shock to the

edge on alaska premiums could rise between 30 to 80%. what is the senator going to do about this? will he vote to keep obamacare in place? we are in the fight and we want the senate to join us. [applause] while we have a victory today for the american people and also a victory for common sense senator baucus said it right several months ago when he said that the sluve -- this law is a train wreck and if we pass this law, health care costs will go down. now we find out health care costs are going up for most

americans. the president said do you like the health insurance policy that you have? you can keep it. we found out that's not quite accurate either pick in the coming months, millions of americans are going to find out that isn't quite true. listen, this is hurting our constituents. it's hurting the american people. in a time when the economy is barely making a long, wages are increasing, new jobs aren't available, and what are we doing? we are putting more cost and more inconvenience on the american people. it's time for us to say no. it's time to stop this before it causes any more damage to american families and american businesses. we have business is all for the country who are not hiring because of the impact of this law. you have of their businesses reducing the hours for their employees because of this law. the american people don't want

the government shut down, and they don't want obamacare. [applause] the house has listened to the american people. now it's time for the senate to listen to them as well. [applause] [inaudible conversations]

[inaudible conversations] over in the senate majority leader harry reid reacted to the vote in a statement. he said are outrageous, irresponsible and futile.

the senate is expected to take up the legislation next week and some reaction from viewers today on twitter. joshua says glad the bill passed. stop playing party politics and start acting as americans representing americans, many have said that our report would be their advocate enforcement of the fortress and the seas or closing down our prisons. no conclusion like that could be further from the truth. we recognize that perfection and protection is not possible and that fine and good men and women will still come forward to serve

their country and risk their lives on the front line of danger. we should continue to do all that we can to protect them as they go about such challenging tasks. that is the sole purpose of our report. it is produced with a deep sense that we had to get it right. politics, elections, personal controversy and all of their external factors aside. mom

now the u.s. postal service and postmaster general and ceo patrick donahoe. he said yesterday he supports a bipartisan senate bill that would reform the system and emphasized without significant changes the postal service will be financially unsustainable. he testified along with other postal service officials and interest groups before the senate homeland security intergovernmental affairs committee. the chairman is senator tom carper and he along with ranking member senator tom coburn article authors of the postal reform act 2013.

>> inaudible the committee will come to order. actually there is order already. and i hope some optimism. it is a beautiful day out there, and i hope that the future turns out to be just as this day has

been so far. thank you for joining us and to dr. coburn and me and some more colleagues will be coming along shortly to be a i want to think the staff for the work you've done in helping us prepare for this hearing and all of you for the work that you've done in preparing for this day. we meet today to examine the financial challenges facing the united states postal service and consider proposals that have been put forth to address those challenges. since i first joined the committee 12 years ago as a freshman senator one of my goals has been to not just help the postal service get by but to help it to be strong once again and remain viable for the long term. back in 2006i worked with senator collins, senator lieberman, house colleagues and the bush administration. a lot of our stakeholders to

give the postal service some of the tools, not all of the tools that it would need to deal with the challenges posed by the increasing use of electronic forms of communication. we had no idea at the time that the worst recession since the great depression was just around the corner and that it along with the growing use of e-mail electronic bill pay and other communication innovations which so dramatically borough's the mail volume. as i mentioned before the committee hearing we find ourselves closer than we've ever been to losing the vital service the post and service offers along with the 8 million or so jobs that depend on its continued vitality. as we sit here today in the fall of 2013, the postal service has maxed out its credit line with treasury, u.s. treasury, and is rapidly running out of cash. despite the improving economy and some positive signals particularly from package delivery and advertising, the job in the immediate future of

the postal service is not bright. absent legislative intervention, the postal service will likely limp along for a few months unable to invest in the future and its employees and customers on certain of what the future holds. it can only limp along this way for so long. this situation is unacceptable. it is also avoidable. and it calls for urgent action from congress and from the administration. unfortunately, despite the repeated requests from postal management for assistance, we failed to act. after months of effort to find common ground, dr. coburn and i finally succeeded in introducing bipartisan comprehensive legislation on august 1st that has a potential to said the postal service on the path towards self-sufficiency and relevance in the 21st century. i want to say here publicly how grateful i am to him and to the folks on the staff for working

with john colburn and others on the staff and others that are really represented in this room. a lot of hard work, a lot of give-and-take. but i think in the and it's going to be worth all that effort. but our bill attempts to permanently address the postal service longstanding health and pension issues and life-size its processing delivery network while providing it with the tools to generate new revenue and digital. some of you heard me say this before and i will say it again. the postal service is unique in this country. nobody else goes to every mailbox or every door. business and residential in this country are five or six days a week. there is a great potential to earn additional revenue from this network. we have to figure out collectively how to access that and how to realize that potential. my goal with this bill and i believe dr. coburn's bill as well is to enact a set of reforms that are fair to the three groups of people. one, our postal customers, number two our postal employees,

and taxpayers. the for their goal was to fix this problem at least in the foreseeable future and not to kick the can down the road. the hearing will focus on the provisions of the bill that relate to the postal rates, potential changes in bill sluve ball service provided by the postal service and the innovations the postal management must put in place for the postal service to survive and thrive in the coming years. it's important to note at this point that despite this relatively positive financial news we have seen in the recent months some tough decisions are still needed in order to get the postal service all the trouble. whether it happens today or next month or next year, it is likely postal customers will need to sacrifice at least some of the convenience that they enjoy today. our bill would give the postal service the authority it needs to address its operations to

reflect the changing demand for the products and services it offers and the changing needs of its customers. postal service to the needs to be granted the authority in congress to make decisions similar to those of our auto companies made in recent years and right citing their industry and enable them to succeed despite the challenges they face and the 21st century marketplace in this country. but the solution to the problem as we gather here to discuss today can't be just about cutting. we are not going to cut away out of this dilemma. it also has to be about intervention innovation and finding a way for the postal service to be almost as important to my generation or reserved the country during the vietnam war and to my parents' generation during world war ii. the postal service has been attempting to do just that and has aggressively offered its package offering and made them more user friendly and valuable to customers. it's also partnered with

companies like fedex, ups coming ups, like amazon.com for the last five finals for the last 10 miles to their customers. for example in my state and as on the outcome sends out trucks every night in the hours of the morning when they are in middletown about 20 miles from where i live and they send them to postal services all of them atlantic and northeast to deliver overnight items that people what the previous day. nice piece of business actually. the bill that dr. colburn and i put forward would help the management of its efforts. also expand the range of products and services postal service can offer by eliminating what was in retrospect a short-sighted restriction placed on postal innovation in 2006. our provision along with others such as our language allowing the postal service to compete with ups and fedex and shipping of br wine and spirits is intended to give postal management tools they need to make use of its wonderful one-of-a-kind processing

distribution and retail network. at the end of the day with the congress must do is provide certainty to the postal employees and customers to ensure that taxpayers along with all of the fiscal challenges we face as a country are not also saddled with showing up the postal service. i don't want to be back here in a few years discussing how we can dig ourselves out of yet another postal crisis. i suspect i speak for everyone in this room. i don't believe that any of us want to do that and if we are smart enough and creative enough and bold enough, we won't have to. turning this over to dr. colburn for whatever comments he wants to make let me just add a p.s.. we had a huge deficit and now about $700 billion.

dr. colburn has worked a lot on these issues and i have too. but there are three ways to get the country on the right track and one of those is we need to overhaul our entitlement programs in a way that saves money and save these programs and doesn't -- the rate fell the least of which a number society. the second thing we need to do is raise revenues and hopefully get by doing more on the tax exclusion sidey eliminating the tax breaks some of them productive just raising rates. in the third thing we need to do is what we are talking about here. we need to an almost everything we do i ask this question how do we get a better result? postal service can't continue to be a burden on the treasury and we know you don't want to. we had a meeting yesterday and one of the discussions was how can we have the most help to get the economy moving even stronger? some people had different ideas.

i think for my money for our money the best way to do it is to demonstrate in large part to the business community who are not hiring people sitting on a wild cash that we can govern and we can be fiscally responsible and provide with respect to the tax code and the seven or $8 million in the postal service a lot of customers need certainty if you are going to be in business and provide the service that we need to meet their needs so there's a lot riding on this and not just the people that work for the postal service. we value their efforts with the people who need your service in order to survive and thrive. dr. coburn? >> let me say to you, senator carper, we work hard to try to get a draft bill out. i am committed with you to try to move this process forward. i would think your staff as well. i think we've got a great working relationship. i would think the input from

what we've gotten from the outside groups as we attempted to do this and my assessment is that since nobody likes it, we are probably right where we need to be. since everybody hates it and that is usually a good middle ground but it is a draft. it is a starting point. the reason we're having these hearings today is to hear an informal ways rather than in the office what is positive, what is negative, what sarva negatives from everybody's view point? when we finish the postal bill in congress, everybody is going to have to get something. we are not going to solve this problem. i would note that we had the professor from cornell, 75% of the rest of the world has privatized the postal service and his other recommendation is you can't shrink the grow model which had to have products and you have to have pricing capabilities and the pricing has to be based on what your net

revenue can come by hitting the sweet spot for your customer and for the postal service. this is a draft because we intend to make further changes based on input. the reason we dropped the bill before the august recess was to make sure that both the customers and postal service and the workers that work in the postal service know that we are committed to getting a deal done. and we've demonstrated an hour compromises that we are willing to do that. and we are willing to listen. i'm going to work with three priorities in mind. first the postal service should look at the cutting costs. they've got to. and i would congratulate the postmaster general on what he has gone this far. but he has a way to go. the second is we should look at more revenues, not just through

price increases, with ingenuity, new ideas and markets in ways that do not unfairly allow postal service to compete against the private sector. ferre and last we should look to the taxpayers for a last resort. as senator carper can tell you, i actually believe we ought to let the board of governors have a lot of power in running this business so they can react to market so they can make the kind of changes they need to be competitive. i will note that yesterday fedex raised its prices and the stock went up $5 on the basis that they saw an economy that was frightening in terms of their package service that's well for the postal service and the employees that work for the postal service. it also creates some slack and gives them some working room. those are positive developments. what the postal service and postal employees have done with

packages needs to be applauded and we need to ensure that they have the capability to their management structure to be nimble and quick and reflective so they can compete in that market. the question before the panel today is quite simply how did we do with the draft? and we have heard the blow back. we recognize it and we want to take that and and then we want to work some more. so there is no bill until the bill was signed by the president. but it's going to have to be balanced and everybody is going to have to make a sacrifice if we are going to solve this problem. the postal service deserves a great deal of credit for staving off the liquidity problems. but that's going to end within a year. so we have a short period of time to try to create an organization that can compete as

long lasting and represents the service that americans deserved and recognizes the dedication of the employees that work for the postal service. the chairman and i are committed to getting this done. that's why we are here today and again i think you and all of you that are granted testify for the input. >> we've been joined by a couple colleagues and i want to thank senator johnson who is a statesman going to church. he is faithful in coming to these hearings and i am grateful for that. i also want to welcome sadr chester -- senator chester and i value that contribution and look forward to both of your strong participation as we go forward. briefly welcome our witnesses. no strangers to this panel when we do become strangers to this committee. our first witness is patrick donahoe. people say how does he pronounces lastname and i said

it's like who as an "the who" iain "who are you." mr. donahoe is the postmaster general. mr. donahoe spent his entire career of the postal service beginning as a clerk. his hometown of pittsburgh he spent many years in top leadership positions before being appointed postmaster general in 2010. our next witness is roof, the chair person. how do you like to be referred to? >> [inaudible] thank you, senator. we had a long discussion about this and determined that it should remain chairman. so the term of art for the position. >> okay. i will go with that. ms. goldway served on the commission for 15 years dating back to her appointment by the

former president clinton in 1998. she led the commission as the chairman since 2009. final witness for the panel david williams inspector general for the postal service and in addition to his current position which is appointed in 2003 mr. williams served as the inspector general with federal agencies including the nuclear regulatory commission and the appointment of the treasury. we think of our witnesses for being here but ask you keep your testimony seven minutes and if you go beyond that i will rain you and i know some of you have a lot to say and everyone make sure you have a chance. with that i will say senator heitkmap, welcome. we look forward to welcoming you to delaware. there you go. all right. mr. donahoe. >> please proceed. your statements will be made a part of the record.

>> good morning mr. chairman, dr. coburn, members of the committee. thank you mr. chairman for calling this hearing. the postal service is a tremendous organization. it is a proud and dedicated work force that delivers mailing packages to every business and president in america. it does so affordably and reliably. the postal service plays an incredibly important role in the american economy ended the american community. and yet, it is in the midst of a financial disaster. the postal service recorded roughly $20 billion in that loss and be faulted on $11.1 billion retired health benefit payments to the u.s. treasury to get we will default on another $5.6 billion payment due on september 40 of the of this year and our cash liquidity remains dangerously low. the postal service as it exists today is financial the unsustainable. it is burdened by an outdated and flexible business model.

without the significant structural changes that will continue to report large financial losses we must get on the path to financial stability quickly, and we need your help to do so. earlier this year the postal service published a comprehensive business plan designed to restructure the organization and to return it to profitability. it fully implemented our plan will generate $20 billion of savings by 2017, including the repayment of our debt. the postal service is pursuing elements of the plan very aggressively and we are receiving great results. especially in the area related to consolidation of mail processing facilities and the delivery routes automating our freedom of work and generating new revenue in our business. unfortunately the strategies that we are allowed to pursue cannot get us to the 20 billion-dollar market by 2017. to fully implement the plan we require the enactment of legislation that reforms our business model.

i want to make the point that legislation we are seeking isn't merely about closing the large budget gap. we want to be an organization that can readily add up to the changing demand for our customers. the marketplace for mailing and shipping service is changing and the postal service requires the legal framework that enables us to act with speed and flexibility. why are we to the universal service obligations. this legislation could determine whether we could continue to do that in the future. can we be more nimble and efficient and invest in the future of the milling industry and we need the flexibility to do so under this law. the postal service was given the additional flexibility by the congress to better compete in a package delivery business. we need the most of that flexibility. we have created a marketing

campaign and now our package is growing very rapidly. we need this kind of flexibility across all of our businesses. we believe there are tremendous opportunities to leverage that technology to make male. we also believe that there are great opportunities for the postal service to provide digital offering some future. if we are able to operate with greater pricing flexibility is a double wall, and if we can do so from a strong financial position i'm confident that we can develop and market products and services that drive growth in the american economy and benefit americans mailing industry. mr. chairman we are highly focused on the health of america's ailing industry. as a communication channel that competes against digital, print, broadcast and other media channels. industrywide innovation is very important and the postal service should have the flexibility to support and seek that

innovation. we also need to keep the mail affordable so that remains competitive and continues to deliver value for american businesses. unfortunately because of our financial condition is so precarious and the legislative process is so on certain we have reached a point that we have to consider to raise prices above the rate of inflation. i believe it's important that we discussed because the prospects for the legislation have a direct bearing on the pricing decisions that may impact the health of the business customers. let me conclude to the following thoughts. the postal service is quickly moving down a path that leads to becoming a massive long-term burden to the american tax payer. the legislation that you are considering is a great starting point to get us off the path of the disaster and on to the path of continued financial stability. we agree with the overall approach taken by the senate bill 1486 that provides important pricing of product

flexibility. however in order to meet the goal of generating the savings of $20 billion by 2017 the legislation must result our long-term health costs. i believe this is achievable and i am greatly encouraged by the recent discussions that we've had on this topic i would like to think the committee for taking the postal reform legislation this year and i look forward to supporting your work and hope to help in any way that i can. this concludes my remarks. thank you. >> thank you very much. the chairman of goldway, please proceed. >> thank you, chairman carper, ranking member coburn and senators johnson heitkmap and tester for the opportunity to use to fight today. i am pleased to represent the postal regulatory commission and to share its views on the

important topic of postal reform. we appreciate your leadership in shaping the debate on what must be done to assist the postal service and assure its sustainable future. the committee has convened the hearing to explore how the postal service can be renewed and reformed to thrive in this changing environment and examine the solutions that forged the senate bill 1486. certainly there is broad agreement that legislative changes are needed to place the postal service on a more sound financial footing. the accountability and enhancement act contained numerous reforms that were a positive force for change towards modernizing the postal service. efforts to renew and reform the postal service needed not and should not replace the many positive provisions included in the paea. am i written testimony emphasizes the importance of transparency and accountability

in the efficient provision of postal services and addresses the conditions experiences and views on a variety of issues addressed in 1886. for the example, it significantly increased the transparency and accountability of the postal service by mandating accurate and periodic adds subject to commission review and public comment. however in my statement i will focus on the rate making an area where the commission has broad responsibility. a major focus of the paea was rate making to and the reliance on unpredictable increases and concerns the postal service was passing along the cost of less than optimal operations through the cost of service rate making the paea achieved these goals by introducing a ridge above ray price scaap regime for those

postal service products over which it enjoys a statutory monopoly or possesses market power. the postal service adjustment for these market dominant products are now at a predictable interpol and reading increases for each class are kept at the rate of inflation. this approach has had many positive impact in many areas. most importantly, it has protected the ratepayers from the large unpredictable increases the were permissible under the old wall. the ability to accurately budget for the rate increases has reduced disruption to the mailer operations and permitted them to plan their mailing programs with regular reliability they also have to implement costs saving strategies to achieve increases in inefficiency since the price cap became effective, the commission has the impact on

service on any proposed changes intended to use the cost of the milling process team transportation and delivery degrading the real liability is not an acceptable way to reduce cost. it requires the postal service to enhance the service measurements and the commission to review service performance reports as a part of its annual compliance determination. it does however provide an exception to the price gap in the emergency rate provision. it requires the postal service justify this price increase based on extraordinary or exceptional circumstances to run independent and impartial regulatory body. this has guarded customers from unwarranted exigent price increases. this protection is particularly important in a government mandated monopoly environment.

they sought to eliminate the lengthy and expensive rate mitigation that had occurred under the prior law. implanted begole by providing them with increased flexibility to set prices within the amount of inflation based price gap regime and the required the commission to design and implement a modern system of the rate regulation. the commission developed a simplified process that replaced the ten month adversarial proceeding required under the prior lot, the new expedited process has significantly decreased the litigation related expenses for both the postal service and the mailers and organizations that formerly participated in the cases. since the passage of the paea, the commission has reviewed the adjustment proposals to ensure compliance with all promptly and efficiently. excluding the one exigent rate case the requests have been completed on an average in just

37 days. the commission completed its exigent rate request in 86 days. and i think it is noteworthy that no mailer has filed a complaint related to the rate adjustment that was reviewed and approved by the commission. the commission stands ready and willing to continue to assist the committee, converse, the postal service and stakeholders to ensure the postal service can meet its challenges now and well into the future. when postal reform is enacted, the commission will swiftly and responsibly implement the new law to ensure the postal service remains an effective part of the overall american communication network. thank you again for providing me the opportunity to testify today. and i would be pleased to respond to any questions that the committee members may have. >> madam chairman come thank you so much for your testimony and for your willingness to respond to those questions. we will have a number of them

david, welcome back. good to see you. thanks for the good work that you do. members of the committee, i appreciate the opportunity to testify today. since 2007 the postal service was hit with volume losses to the economic downturn and internet diversion. a decline in the volume appears to be slowing down. the financial crisis of syria is leveling off. the postal service has taken dramatic successful actions to optimize its network to the reduced demand. the focus however is on the revenue side and my office has conducted two related studies. the first study found the postal service the devotee to generate needed revenue under this consumer price index prez scaap. it's largely dependent on the unlikely increases in volume. this is true that any labor intensive enterprise subject to price control. the postal service obligation to

be delivered for and number of issuers that will remain labor-intensive. mail volume was expanding significantly when the cap was deployed. also at that time the monopoly even with the universal service requirement with a lucrative assets these conditions suggest the need for the price control since monopolies can be impervious to efficient market forces. in 2007 the male growth abruptly had fewer pieces going to a delivery point each remaining piece of mail had to raise more revenue to pay for the cost of delivery. sufficient revenue above the inflation was unavailable under the price gap. recent volume losses combined with the price gap in peril of the postal service ability to provide universal service. weigel remaining self funded. the gap was intended to protect and that the monopoly customers. but the monopoly lost much of

its values and the powerful competition preached each type of meal today advertising for some communication business transactions parcel. customers have alternatives and the diminishing monopoly combined with a universal service requirement is growing liability. they're taking into consideration volume fluctuation and revenue generated for delivery. how they are to price increases above the cpi to and we found that for moderate predictable price increases, postal products generally have low price elasticity. that means the small increases would provide a badly needed revenue. as the prices are increased, some volume will leave. but these as needed revenue loss would be more than offset by the revenue from the price increase. the study examined 20 years of data through 2012 and looked for any changes in the price

sensitivity in quoting from the internet and from the recession. we are not saying that all postal customers have a high tolerance for the price increases. some customers remain price sensitive whether as a whole the demand of the product as low price elasticity. current fears of a possible collapse are likely far greater risk than a small price increase. price increase for this efficient market forces should be used for possible casting them aside in favor of artificial controls has been problematic and it is problematic for the postal service today. there doesn't running the companies. if the postal service loses customers with excessive prices it would suffer the same punishing consequences as any other business. a new innovative technologies preventing opportunities to improve the corpuscle operations and customer service. thus needed generated throughout the network can be mined for

operational efficiency. gps can optimize the fleet and track packages. mobile imaging can provide customers with visual delivery confirmation. sensors and the technology can digitally link the postal equipment and vehicles providing real-time disability in all aspects of the network. joining the postal service to the internet. this remarkable book highly and perfect digital age citizens and businesses face fundamental problems. we offer privacy and secure the and confidentiality, the fragmentation of messaging they couldn't connect the dots between the written correspondence and e-mail complaints several years ago. the difficulty of navigating the government services and the rest of bodying online from on known individuals. even broadband and banking access and expensive the commerce middlemen and a habit of the entrepreneurs and small businesses.

the postal service can help address these problems. secure electronic messaging can preserve privacy security and confidentiality. storage and integration service can give people the tools to organize communications in a multichannel world. the postal service can offer a seamless government services and by supporting the daschle platform with network of post office and delivery carriers. the creation, storage consolidation of business identity would protect against the risk of transacting with unknown people and businesses. post offices can become centers of continuous democracy acting as hubs with citizen input. the sale of single use cash cards and cash redemption of digital currency can provide alternatives for the on bank enabling the participation and commerce and virtual post office boxes can offer citizens from u.s. goods, delivery of the

packages anywhere and anytime and support businesses with backend operations such as microwhere housing. the postal service already has a physical network underlining that the merchant why your digital infrastructure. by further enabling that, the postal service can ensure the commerce this supported by powerful fulfillment services for physical goods. the committee's attention to revenue and innovation is tremendously important. and refunding which the committee will take up next week is also a substantial factor in the plight of the postal service finances. part of the need for the increase in the absence of investment capital for innovation are directly tied to the financial strains from the refunding. thank you. >> you had a mouth full, didn't you? that was good stuff. i'm going to ask the postmaster general to react to some of what mr. williams has just shared with us in terms of additional

things we can do that the postal service to reduce our cost and gives a whole laundry list of things the postal service can do to help us on the revenue side. so just think about reacting to those ideas to be a i think a lot about what my colleagues -- i think about the problems of the service for a number of years i go back to another legacy in industry and that is the auto industry. wasn't that many years ago we were under attack and we had seen the market share dropped from about 85% 30 or 40 years ago to about 45%. the question is what are we going to do about it? just let everybody else in the will take the business away from us and send the auto industry down the tubes or not? and they chose not. a couple things that happened and are relevant for us today the right size to the enterprise they said we have more

manufacturing plants then we need. we have more plants and employees than the need. they didn't abrogate the impact but they also decided how can they use the they have to generate additional revenues and they are generating products people want and are willing to pay for so there are lessons to be used and we have those opportunities and what we are trying to do the everything that they do. we are a provider of health care for several hundred thousands of people and we have a subsidiary indian provider of health care for the packages and mail and

health care costs are substantial and the auto industry what they have done. and for the retirees and we can do it in a more cost-effective way. they have done it and it's actually worked. with the postal service and the unions and other employee groups and i would encourage you to continue to do that. as we try to find ways to bring down cost that is critically important. i like to see that there lies opportunity has challenged from the internet for the first class business that challenge is going to be there for a long time. but with that challenge comes opportunity. i got an envelope from you from

the postal service. we talk about the priority mail expressed and how the postal service will deliver one day or two days or three days of service to pay for a certain level this kind of thing has a huge upside and in the age where a lot of people still want to deliver stuff on saturday this kind of thing could help us. so i would apply for this kind of innovation i want you to take a couple minutes to respond to some of what has been given to us particularly the laundry list on the cusp the laundry list on the revenue side. go ahead, please. >> thank you mr. chairman pity i appreciate on the mailing we have the 11 scams is the average we provide a lot of visibility on the factor priority mail was a heck of a deal. let me respond to david williams

who've been excellent partners on a number of subjects over the past few years. we've asked them to take a look at that opportunity. he and his team have come back with a lot of good suggestions and i think the key thing for us to keep in mind looking forward, and we have looked forward in our business plan and even beyond in the tenure look ahead to revenue in the postal service looked to be relatively stable by $65 billion, $56 billion that has given a volume decrease of about 5% annually and first class and that includes the single piece and commercial. fairly stable volumes and our standard mail with some package volume increase. we've been experiencing substantial package increase and we think that we will see the near-term future. now given that, the other thing that we have to consider is the

fact even though we to give substantial cost of 300,000 plus people the last ten years, 200,000 in the last five years and substantially reduce the cost and the cost lines by $16 million we are still facing substantial profits going forward to the key issue if we get to the point we are debt free every year with a cost base of 61, $62 billion that we have we will be facing inflationary costs. if 2% about a billion and a half dollars a year so we have to figure out what we can do going forward. now, we think that you can't cut your way out of the problem but i agreed. i think the postal service has taken some very good action in the last few years. not just in the area of packages but in the area of male. just this week we are spending our time on a deal that was in minneapolis yesterday on the customer council day and we are spending a lot of time with our

customers out there talking to them about how you actually start to merge the technology of the internet service relevant, so it's actionable killing you get something in the mail and it would be great that you could order boxes with one click off of the smartphone and get that delivered. that is where we need to do it for the male perspective. we agree we need flexibility. our board is responsible for the long term health and welfare of the postal service and the industry. they need the authority to be able to set the prices and the freedom to do it quickly. so we need to talk about flexibility and the market and new opportunities out there. areas of digital and we will talk about that in a little bit. we are in full agreement and we need the flexibility in your wall gives us a good starting point. >> as i staff has given you some numbers how many plants as the

service have been 2008? the number is 614. how many today? 323. 1999 there were about 800,000 employees and today i think that we are just under 500,000. and, but we have not eliminated a lot of post offices that a lot rural post offices and it's something that senator has done and others as well. and rather than closing three or 4,000 post offices can come up with a way to provide to keep post offices open or using others in other ways in the communities with letter carriers but a variety of ways to continue to provide service to the communities that don't have access to the internet for years and i applaud the way that you have tried to right size the enterprise. we are getting closer to a sweet spot to bid dr. coburn? >> thank you for your testimony.

.. it's pretty low. the not-for-profit organizations would be another i would turn to -- and the careful? assuring they -- >> so, but under this bill that

we have, which gives pricing authority to the post office. can you imagine a scenario where they would not consideret total revenue buy it associated with revenue increases and look for that sweet spot. would anybody not look that the and try make that determination? >> no, i think that is exactly where the governor and the senior management come in. i think it would go the way you outlined. >> that's exactly what most other businesses do. and since -- as you said, the monopoly power is a hindrance now rather than an advantage. can you think of any reason why we should not have in a bill the ability for pricing power based on markets, competitive markets and their competition, and the service and quality of what they offer? >> we believe that the --

as i said the markets phosphorses are adequate and very appropriate to this situation. we're vail to you and available to others to search out any small areas, but broadly those are the -- >> thank you. >> yes, sir. >> there's been some criticism of the study. can you lay out the methodology. you stand behind the study, do you not? >> we do. we think it's been supported by many other earlier studies. there have been some occurrences that we try to isolate and look at to make sure those had not changed, but this norm of inelasticity. we looked at the twenty year

period, that just ended in 2012. we tried to isolate the period before -- what we look at the whole thing. we try to isolate the period before the internet, early adoption -- there was also a flat period in the adoption. we looked at the recession. during that period, also, there were two large price increases in 2000, and 2001. we try to isolate those as intervening variable and throw it against the regression. it wouldn't budge. it appears that we definitely can stand behind this study. >> the people that the post office compete with, how do you think they determine their prices? how do you think fedex made a determination to raise their rates yesterday? do you think they did a study and look what the market could bear based on the quality of service they were offering?

>> yes, sir. >> at the calculation. >> i'm certain they did as well as their competitors. fedex and u. p. s. annually have their increases have been about twice the rate of inflation as ours were held inside the inflation. the postal service competitive side, then they have their feet wet now they have been involved in increases. they have increased above inflation, and the areas have grown. the british just got rid of their price cap for virtually everything. we're a pretty good deal. worldwide we don't charge as much as the other world posts. >> we are also losing billions of dollars a year. >> that's is -- >> it is true, i think, this week the british postal service becomes privatized. we -- you talk a lot about predictability for rates so

mailers are not caught off guard. in doing so with the rate cap, wouldn't the postal service current financial crisis predictable? >> yes. [inaudible] under the current price cap, yes, prices predictable. >> no, the crisis we face. was it not predictable? >> well, i guess it was not predictable, no. >> i would like that enter my record from the statements in the hearing from 2007, which i would give to the clerk in a moment. it it was predictable. i predicted it. when we pasted the last postal bill, i said we would be back here. we're not setting a competitive market force, independent organization that can respond and compete what they have to compete with, and that markets ought to determine rates where they can, and we don't allow the

monopoly -- because it's no longer a force. it's an asset in term what the post office can do in term of an asset they can deliver better anywhere else anywhere in the country. they go the last mile. so that's an asset, but the risk of the monopoly power of the post office is gone. so we now have in front of us an organization that's price controlled and labor controlled. i tell you, we're never going solve those problems the problem of the post office if those two things stay there. so what we have to have is fair treatment for the employees in the post office and flexibility for the post office to maximize its return on the service that it has to sell. my question, again, is talk about predictability for rates and the mailers, but that

predictable lead to a predictable consequence, that's billions and billions and billions of dollars in losses, you know. i would enter to the record the number of postal employees since 1926, and the attrition that has happened because of this, and yet, the cost reduction still isn't good enough because we have no pricing power that is market-based. we have no pricing power that is market-based. so i would ask that this be entered to the record as well as my statement from 2007, which four months after the last postal bill was passed. >> without objection. >> i want to talk to you about a touchy subject with your employees, and it's called

arbitration. in our bill, it is presently the law that an arbitrator cannot consider the financial health of the post office in arbitrating a labor dispute with the post office; is that correct? >> that is correct. >> do you know any business in the world that can be successful in negotiating their labor contracts when they, in fact, can't consider their financial health when they negotiate their labor contracts? >> no. in a situation where you have binding arbitration, you have got to consider, not only the current financial, but you have to look ahead. that's what we're asking for with this legislation. the ability not only to look ahead from an arbitrator perspective to make some changes in the bill around employee retirement costs and everything else. we know the revenues will be fixed at about 65 to e6d billion. we have to control the costs. >> all right. i'm out of time. we'll come back.

>> thank you, dr. coburn. i go to senator mccain senator pryor. next was senator johnson next in line when he returns. senator tester you are next, senator mccain. >> thank you, mr. chairman, and ranking member coburn. i want to thank the panel for being here today. i agree, you guys need better -- there's no if, and, or but about that. if the goal to privatize the postal service. we thought to have a bill to do that and move forward. i think it would be a mistake, nonetheless, we thought have the debate and change the constitution to do it and move forward. my concern reinvolves rural america. the postmaster general knows that. we have talked many times. i believe some of the best customers the postal service have live in rural america. they depend on it.

as of july, 2002, they changed the deliver i are reductions were made in the alternative mean in transportation, as a result in those states overnight delivery is almost impossible. in fact, i would say -- i got that flier too that the chairman got, it was a good flier. but i would request whether you can have overnight delivery on a weekday as much less a saturday or sunday. i don't think it's possible right now. the reason is because the standards are changed, many of the processing facilities are gone in the rural areas. because of volume, i mean, you made the call. and as i understand that. i think it was a mistake that the call had to be made one way or the other. then the postal service continues to tell me that the reduction of hauling mail by plane is not impacted by the delivery stands. to get to the question, whether

were there any studies conducted before the july 1 reduction in the alternative method of transportation services? >> yes, senator. we go through what is called an area-mail processes study. we take a look at everything. all the effect and the cost savings that come out of that any service interchange we had to propose. >> did the studies indicate that those reduction on services would not impact rural america? >> the studies that we have put together show that where we have to make service standard changes in other words get it out. we have maintained it and overnight service in large portion of rural america. >> what you're saying is the study indicated -- i don't want to put words in your mouth. the study indicated there would be minimal impacts by this, is it fire say? >> it depends a how much of a change you're going make. >> with the changes --

i'm sorry, with the changes you actually did make. because the changes have been made. they are real-life changes now. >> right. >> the study indicate if you made the changes, you did it quote, proactively, it would have impact open service? >> yes. as we have made changes in service across the country, we start with the premise about 40% of all the mail that we delivered would be was overnight. the goal was to maintain as much of that as possible with the first round of changes. we have been able to maintain approximately 30 35%. there were some places we had downgrade from one day to two day. 5% the total volume. we have been able to maintain rural overnight service in rural areas. >> okay. i get back to rural america and montana, rural america every weekend. i go back travel the state in august. we got a chance to do some pretty extensive traveling, and i can tell you that almost with

every stop, i didn't hear about delays of one day. i heard mail delivery takes three or four days, five days. now, i can tell you my wife and i mailed a mortgage check on monday. and i said it's not going to get there. it's not going to get to where it needs to go by wednesday or thursday. it's going to be a week. we're probably going get dung for that. it's not the only slow service we. that's where my challenge are. if we get fined for that, then bring on ups and fedex. i can't do. it you see what i'm saying? that's the challenges. my question is that look there isn't anybody that live out there. there's a million people in montana. how many people live in pittsburgh? 2 million. if you're looking at the business model based upon where you're going make your money, you're probably not going to make a lot of money in montana. the question is the postal

service was set up to serve people, i think, in -- is that taken no the equation when we're closing mail processing centers? we're not using planes to use mail in rural america. those kinds of things taken in to account? >> absolutely. >> and so what is the answer when the postal standard has changed from overnight one to three days to three to five? that's deemed acceptable? >> no. we have not changed any service standards three to five, except in areas where we see in alaska -- >> i got you on that. >> right. >> the reality it has changed. i'm not going to put words in heidi's mouth. i'm sure we can verify north dakota. those five states, i think five, were the ones where standards were changed in. it's closer to five than three. >> we measure our mail whether it's standard mail, first class, periodical, everything that is measured is continued to stay at or improve on service level as well as priority mail i would be

more than happy to sit down with you and share all the data. we take our universal service responsibility very seriously. heard me talk about doing that. and we are faced with a financial crisis -- >> i got you. >> trying to figure out how. -- >> i got you. all i'm trying to get to if i'm swimming upstream here and the goal here to maximize profitability at the expense of rural america, just tell me. >> no, it's not. it's universal service. it's to keep mail service affordable, not become a burden in the american public, be able to provide reliable, responsible service, and eventually through the this legislation get the cloud of financial turmoil away from us. >> okay. i would just tell you, i don't doubt your study say what they say they say. i don't doubt that a bit. i can tell you in reality, because i live there over half my time. i live on that farm twelve miles west of big sandy. i can tell you in reality it ain't working that way.

not in that place. i don't ask for any special treatment. i don't want special treatment. i want to be treated my neighbors. if i'm being treated that way so are my neighbors. i bring that up, just take a peek and see what you think. >> absolutely. >> as this legislation moves forward, we haveth debate -- one more question and i'll kick it over. is there further consolidation of mail processing centers or post offices while we're doing the debate on the committee or on the floor? >> no. the bill, as it's written, puts a two-year freeze on mail processing facilities. we have some scheduled for 2014. we would not advance any of those things to try to get under the wire for a post office perspective. when i visited montana last year, people told us keep our office open, keep our local identity. if you have to change time we understand it. give us access to mail. we have done that. >> that's fair. what you're saying there

wouldn't be any post offices closed as we're debating the bill. >> no. we have done what we have needed to. any further changes provide service standard change. we won't do that. >> thank you for your patience, mr. chairman. >> you bet. thank you for the questions. >> thank you, mr. chairman. no big surprise here. we're going to follow on to senator tester's testimony. and i just have a basic question, and i don't mean to be sarcastic about it. i need an answer from you, mr. donahue. do you believe that the highly rural areas of america deserve the same level of service as suburban and urbannuationsurban areas in the country. >> i do even the offshore areas like puerto rico, hawaii, and alaska do. we measure and stay on the mission to provide universal service. i believe that fully.

>> and i believe you believe that answer, but there is always a constant discussion that we have about what your studies show and the reality of what our constituents experience dealing with the post office, and i want to follow up on what senator tester's discussion was about, you know, it having an expectations that if you put your mortgage check in to the mailbox and picked up, that you will in fact will be able to pay the mortgage on time. if it's due three days from then. i don't think anyone in rural america, anymore believes it's true or trust it is. it has created a sense that the constitutional obligation that was recognized the importance of the postal service, the importance of this offering this opportunity to every place in the country is not being met. and so, you know, i don't want

to belabor that point. i want to tell you that you can do all of the studyings in -- studies in the world. that's not experience the people having in rural america. the other question i want to get to, it goes to the future of the post office, and the future of the postal service. you heard mr. williams relay lot of opportunities, and i've been on the committee now for a very few months. certainly don't have the extent of the experience that the ranking member and that the chairman have on this debate, but yet i constantly hear good ideas. what seems like good ideas that ought to be explored about how we can make the post office more relevant, and certainly rural post office more relevant. i'm curious, in the last 12 months since i've the discussion, what steps have you taken as the postmaster general to identify and recognize and begin to implement some of those good ideas? give me three examples.

>> well, let's start with priority mail. >> priority mail has been around far long time. i've used it a lot. i'm talking about innovation. not priority mail. i'm talking about different kinds of things, whether it's digital, you heard mr. williams give you a lit any of ideas. i want to know in that space what -- >> could i interrupt? >> what they've done. they rebranded express mail and the way -- mr. chairman, i get that. i'm a faithful user of the mail service. i've used priority mail. it's easy. the package i agree with. but obviously those moves have not made the post office more lucrative or have not solved the problems that we have today. so i want to know about other innovations. >> they have made the post office more relevant.

revenue off packages alone has grown about a billion and a half dollars in three years. that goes a long way. in term of digital. we established a good digital group. we are working in a good contractor in the area. as a matter of fact, have just been awarded a contract the first contract ever to be the intermediary within the federal government on what is called the f6 program. we are very active in the digital area around starting to work on products that would help to set a platform for awe authentication of who you are, just like mr. williams mentioned. the work is being done right now in term of get on the internet. secure digital messaging. a lot of work to be done there. we think there are big applications in the health care world, the financial world, and for personal services. we also are exploring the concept of digital -- with our contractor. >> and when you did those

projects, and you look at them, what is the revenue benefit of those? >> five-year projection is $758 million. >> for which project? >> the digital set of projects. we have worked with incue tell and done work with the marketing group. we have a business plan established for a look ahead five years and the financial gains we think question have in five years are about $758 million. a lot of work has been done. i will tell you, i haven't spent a lot of time publicly talking about all those type of things. the bottom line is we have to got to address the cost factors in this organization. you can grow a business like digital a billion dollars. you can grow to introduce a product two years called -- part of our standard mail. we have grown it $800 million off a base of zero in two years.

inflations in our organization pushes costs by 1.2 to $1.4 billion a year. we have to got after the cost as well as innovation of growing new products. >> would you agree that some of what you would need do in terms of looking at cost containment, and business plans and business models without incorporating or merging the sense of what the new lines of revenue could be. you could be making decisions on the cost side that would greatly reduce or eliminate your opportunity to be relevant in new product line. would you agree that's true? >> no. i think there is big opportunities right now. as we work with mailers, i spent yesterday in the state of minnesota in minneapolis. we talked specifically with 300 customers about the growth of mail, and -- >> i only have a few more seconds here, but i want to point out if you close every rural post office in north

dakota, you won't have an opportunity for new revenue. >> close any post offices. as a matter of fact, in your state we are expanding some post offices and a few others because a oil boom. we are responding to that. there's no interest in closing post offices. so you never heard me say that. we made changes in the post plan that helps us from a bottom-line perspective but gives customers what they're asking for. access to the post office and rural town identity. >> thank you for the questionses and for your compassion for these issues. senator mccaskill, you are ready. >> this is one occupation where you -- half the time we pretended we are ready when we're not. i'll go ahead and ask question. i'm ready. i want to talk a little bit about the expensive part of our

infrastructure, and really what is a reality -- i obviously have come out strong for seven-day delivery. i believe it is a competitive advantage we have. if we give up the competitive advantage it's a mistake to give up the competitive advantage. because this is now a competition. we're competing. one of the things that is i need clarification on is what we're charging our competitors. the growth in the ups in the united states postal service is in going to be in packages. it's pretty obvious, i know in my life i spend a lot more time clicking than i do driving in terms of shopping. so if we're competing for package delivery, the growth area -- answer this question for me, mr. donahue. in fact, ups paying less to go

down the last mile than i am? aren't they using us for their last mile of delivery in the rural area? aren't they using our infrastructure? >> yes, ups, for fedex and use them for last mile. it's called parcel select. >> do they get it cheaper than i get it? >> there's no real access for do you have on that product unless you would actually wring it to the post office. if you are -- >> if i'm sending a package to a friend of mine in rural missouri. >> right. >> is my cost less expensive or more expensive than what you're charging your competitor. >> different products. you would use priority mail at the flat-rate box. you pay somewhere over $5 depending on the size of the box. it takes advantage of the whole networking. what happens with opts, fedex, and other customers they bring in mail in, sort it to the zip

code, drop it, our carriers deliver it. it's a small portion of the work. you don't charge somebody the entire amount. >> i guess what i'm worried about is that we are not seeing them as a competitor. we see them as a dmer. they are surferring off the most part of the internet of the architecture. they are using the part that is costing us so much money. and i don't feel like the agreements you have entered in to with them treat them as a competitor, but rather treat them the same way you treat every other customer. is that an unfair characteristickization? >> no. we have -- the you can enter to contracts and may make money for the postal service. the package business is a very competitive industry. the ups versus fedex versus other companies like laser ship

who nobody talks about. laser ship is competing with people making $10 an hour. it's very competitive. price, affordability, dependability is critical to win in the package game. >> they're using you because it's cheaper. >> we increased the market share in the package business by 2 points and secured a substantial number of customers coming in for the last mail delivery that bypass some of the other competitors. >> i think you understand the point i'm making. >> sure. if. >> if you spend, if it's a telecom company. our whole sector of telecom -- the people who work to the infrastructure. they are getting a huge payoff for the infrastructure from their competitors. huge payoff. especially in rural areas. we have done all kinds of things to assist with that. i really want to know when at specifics are of the agreement. i want to know what your competitors are paying. >> i would be more than happy. >> the irony it's the most competitive part of the business. it's where the most growth is,

but i don't sense that you are exacting a competitive advantage based on the fact we have made the investment united states postal service has made the investment in the delivery system they must use. why don't we have them do it themselves? >> we would be more than happy -- >> you know who would be cheaper? >> we know we are cheaper. that's why they use it. >> guess how much cheaper we would be. a lot cheaper. >> we're pretty cheap now. we're the best value for anybody mailing a package. >> i would like to get the specific agreement we have with our competitors on the package delivery. i want to make sure we're taking advantage of what we have as opposed to stuck in a mode that

if you done an economic model what you could -- what they would have to charge to send their packages versus what we charge? >> no. we haven't done that. i'm sure they have done that. they make the decision using us based on what their prices are. >> we're the ones that have it. we have the architecture. why haven't we modeled it out? >> think about it this way. if our letter carriers and rural carriers are driving down the road every day five days a week for mail in the future, six to seven days a week for package. it's in our best interest to have as many packages on that route as possible. they have to do it at the most reasonable price. we have smart people in the organization that put the prices together. we're not giving anything away. we have to take full advantage of the networking and throwed

up. that's why we're here. we have lost 27% of the mail volume. versus what we charge. that's the way we carry more packages. we get more of their business. >> one of the competitors right now uses a model that determines whether we get the package or not based on the denty of the route they have on any given day. that's how technical and advanced the tjt is. some days we get it, days we don't. pace based on how many packages are in a certain city block. it it's not just on a whim giving us mail or -- one day or not. it's very specific and technical. our people, i think, have done an excellent job pricing and

growing this business. we have picked up two points in the package business, and what is a very competitive environment. you should be doing the modeling as to what it looks like if you no longer allow them to use our carrier and whether or not we can get a competitive advantage. >> we are not perfect. believe me, the technology is there to make it more specific on a daily basis. we'll sit down with you. >> that would be great. thank you, mr. chairman. >> sure. >> a comment. by statute you can't sell the product below your cost. >> no. there's no subsidize -- >> no. >> that is achieved that is transfer to other mailers. because we're doing this. this is gravy for them. by law they cannot give ups or fedex a price below their cost.

>> i understand that. that's a market determined price. so there's no sub. as a matter of fact, package business is subsidizing the rest of it now. and so -- >> we might -- >> i think we can discuss it. i think we agree, i probably wasn't as articulate as i should have been trying to make the point. i'm not asking them to chargeless. that's the issue. i want them to charge more. they are using something we have and would gain a competitive advantage by charging more. >> i actually think they have done a good job in term of pricing their product to get as much volume as they can. the higher the price the lower the volume. giving them the ability to make a decision based on the market they're in to get as much as they can. there may be in this area some real inelasticity as far as the

lower end on the price. it. >> that is why into the look at it. >> that's what the bill is about. give them the flex tobility get the most revenue. >> i agree with that. i do agree with that. >> thank you. >> i think that was a good exchange. >> chairman, you have not been getting enough question. we're going to -- [laughter] ask you at least one. we argued we could change the postal service change prices without losing a volume. dr. corbin says that the monopoly isn't what it was. my question was to what extend do you believe the postal service still has monopoly power over certain mail products? what does it say about decisions that we thought make about retaining our changing the system for postal rate regulation? i'm going ask after you respond i'm going to ask the postmaster general to get involved and come

back to mr. williams as well, please. >> i think it's a very important issue that you have raised. >> think about it. it wasn't the postal regulatory commission. >> right. we set -- >> it had a different role than the last six or seven years. >> and i think this is matter can be discussed and debated by many people. what our staff has indicated is that there is still a strong monopoly when it comes to letter mail and those products that the postal service has a market dominant position in. you're a non-profit organization, and you want to communicate with a paper product, your option is only one nap is to go through the postal service. you don't have another option. so studies that determine what

the price elasticity and inelasticity in the future will be when we have been operating in a monopoly system for the last hundred years, are not necessarily reliable. it seems to us that the postal service can't have it both ways. it can't say that this is a competitive market, and if you let us have a competition without any regulation. we'll keep the volume up. there's no concern about it. there's constant command. you can't present both arguments. it seems to me, if you want to eliminate the monopoly, and allow prices to fluctuate and get the sweet spot, as we have done with the competitive

products of the postal service has done where they raised prices over 5% a year, and you do that. if you ask first class mailers, if you ask people who send greeting cards, ask you non-profit mailers whether they can manage with a 5% increase you get responses that say they simply can't do it. in fact you'll lose so much volume you won't get the revenue that the postal service thinks it's going to get from that mail. and we believe in the commission that the price cap regime has created the stability and transparency and accountability that has given mailers some assurance in a time of real transition, and has given -- which is important to their brand and future.

>> i welcome thoughts on mr. donahue. what is the role of -- [inaudible] it's not what it used to be. maybe it's not what it is today. what should be? i appreciate what you said. >> hi, you know where we stand. we have put a white paper on our role on govern mans in general. the key for us in a governor's perspective is this; if you are putting the responsibility on the governors and management of the postal service to run the organization, we should also have the authority to make choices and changes and prices, service, and products do it with absolute speed. this world has gone faster and faster every day we look around you think about the change that happened just in the telephone and computer industry, and we're in the same exact environment. our feeling has been we have a very reasonable and responsible board of governors. they will not make decisions that put the organization out of business. they won't make the decisions that hurt the industry.

we think that we should be in a situation as spelled out in your bill that has a lot of flexibility around a cap potentially no cap at some point time, and the ability to have after the fact review with the commission. we have no argument the commission should be there to take a look and decisions that we make, like a public rate commission does today. we would support that 100%. >> can i just -- >> miami chairman then . >> because the postal service is a federally owned enterprise, it includes provision that there can be no refunds. postal service is exempt from giving refunds. if they establish rates that are determined to be in some way unlawful, given the various requirements in the law propossessed. how does a complaint mechanism solve the problem?

after-the-fact complaint mechanism? it's a question. you may be satisfied with it. it is a question we hear from stakeholders. >> that can be easily added to the bill. i appreciate the element. i go to mr. williams before my time runs out. we recognize senator mccain i have one more minute. >> i think increasing the in a fast unforgiving environment we need tremendous aguilty. there are sudden threats and perishable opportunities. the postal service needs to be to be move in an agile manner to operate and navigate inside the environment or they will disappear. if they can't do it, they should disappear. there are a lot of alternatives messaging of all sorts today. in advertising, there's been television, radio, newspaper, and now an aggressive internet market. personal communications texts

and tweets and all posts have fabulous features to them. bill payment companies are aggress uv -- aggressively moving to cut back off costs by driving people to the internet. in parcel, actually we are the one breaking the monopoly. the postal service got to parcel in order to break some of the mischief occurring between the parcel companies and the railroads. so i believe that efficient market forces should always be used when it's possible, and nibble -- and i believe in this environment. it's the ingredient that is needed to move the postal service forward. >> thank you. senator mccain, welcome. thank you. >> thank you, mr. chairman. i want to thank you, and senator coburn for this product, which i think is a very important one and issue we have been wrestling with for a long time,

obviously. the fact that you and senator coburn have come together to craft the language with comprise which senator coburn well-known for. senator coburn is a model, as you know. we are in the senate -- [laughter] i want to thank both of you for putting together this legislation on very urgently-needed remedy to a very serious situation in a broad variety of ways. i thank you both for working this out. i look forward to supporting it in any way that i have possibly can. you made an interesting comment, five years ago, the whole means of communication, five ten years ago in america was vastly different than it is today. which i think you could argue five or ten years from now it

may be, again, very different from what it is today. you made the argument, i think it's vailed, we have to have an enormous amount of aguilty in order to keep up with these incredibly ever-changing methods of communication. is that an argument, in your mind, to privatetize postal service? >> the united states, so far, picked a different route. it has been -- >> chosen a different route; right? >> they have in a halting manner. they are sort of going forward as quickly as they can. they pause when they need to. in the united states, they have joined with the private sector in public/private partnerships, and callation, which definitely, as senator mccaskills comment were absolutely fascinating.

i'm not sure what the road is ahead. privatization are -- >> you're not sure the road ahead. do you have confidence in the legislation that it can accommodate to the road ahead? >> i do. i think it's a good piece of legislation. if i was worried about anything, i'm not worried sick, it would be we don't quite have it balanced yet. we are still trying to match demand with supply. we're still -- we still have a ways to go. the bill seems to want to pause that with regard with the closure of additional postal services. that's the part i look at with some worry. i also see some value in it. it might be good to pause. we are losing money, we're accumulating debt. all of our money for innovation is gone. we need to arrive as fast as we can at the balance and return to normalcy. >> thank you.

you have earned praise of senator coburn for all the work you have done in helping craft this legislation with him and senator. i assure you haas that's hard to come by. you should appreciate it. i want to thank you. i want to thank the panel for the work they have done. but given the fact that 80% of the postal service costs are associated with labor, how important stt language in the bill that require the financial health of the postal service to be a consideration during ash brags of labor contracts? >> i think it's very important. i think the key for the postal service -- very important and controversial. >> it's controversial. there's a lot of things that are in a probusinessed bill. we put papers thiewtd are controversial but needed. when you look ahead in the postal service, the idea is long-term comprehensive

legislation. it can't be halfway. so if we're going address these issues, we better address long-term costs like retirement costs, like some of the issues we face today from a work force environment. i think the key thing to keep in mind on from a labor perspective is this, if we deliver mail every door five days a week and deliver packages seven days a week. we'll have to have people to do that. labor costs will always be large. the key thing is not so much the percentage of labor costs, it's shrinking the total cost of the organization. that's with we need to do. we made good progress with the unions over the last couple years with substantially higher rates of non-career employees which help the bottom line. good people come in and get jobs. they are more affordable. we need continue that work to make the retirement system more affordable. next week we're going to talk about health care. there need to be dramatic changes in the health care proposal for the postal employees, which should apply to

all federal employees to make it more affordable. that'sthat's the way we need to go. we need to be courageous and bold and name happen. >> well, you made reference to this issue five-day mail delivery. in your testimony, you said the american public overwhelmly supports -- this legislation has moratorium on that. you think it's a matter of comprise, or think it's a good idea or bad idea? >> i think it's a matter of comprise. i would love to be in a situation -- excuse me, next mead we move to the five-day schedule. perfect time. mail volume is down low. it's a good time to make the transition. it saves us $2 billion a year. american public, every survey we have done in fully support. i think the lowest percentage is 70%. we have some information saying 80% plus think it's a good idea versus closing post offices and

raising prices. >> for the record again, you believe that the bill gives you the flexibility you need to achieve the billions in cost reduction necessary to sustain the postal service for the long-term? >> it gives us the flexibility and the speed we need. one thing that is missing is the requirement to use medicare as a primary for health care for retiree. we are going talk about week. i will make a pitch it's got to be mandated. it not we don't have the financial numbers we need. the business plan lay it is out. if we need to follow what we need to do from a business plan perspective. we'll get the organization back for financially. >> you agree with that? >> i certainly respect an admire and support the efforts that the postmaster general has made with regard to cost cutting. i think the level of efficiency

and savings are quite remarkingability, but i do not -- my commission does not endorse all of the aspect of this particular law. >> so would you submit for the record the areas that you do have concerns with? >> well, i think our testimony. >> i know your testimony. it's helpful to have it in writing your exact concerns. would you do that? >> i will be happy to do that. >> thank you, senator mccain, for your support. >> hey, man. in arkansas they say heyman. that's what i say to him every time i see him. senator pryor. you are recognized. >> thank you, mr. chairman. i want to thank you for your work on this. let me start with you, if i may, on the postal service advisory opinion -- >> yes. >> process.

i know, there's been some questions about how long it takes and why it takes so long. let me ask you from your standpoint the value of providing a non-binding advisory opinion. what is the value in a nonbinding opinion? >> well, i think we had many examples brought out today. the postmaster general talk about the fact they decided to maintain the post offices in rural america. they did that after coming to us with a proposal to close 3600 rural post offices. and the discussion we were able to provide in the open forum of the advisory process and the recommendations we gave them suggested they provide an alternative adjusting hours. that's what they've done. so i think that the point of the advisory opinions is to give the postal service a better opportunity to get ab honest

review of the proposals to change rather than barrel ahead with the initial proposals are. the same could be said for the six to five-day delivery. when we reviewed that, and highlighted many of the problems that rural america would face with eliminating the sixth day, and talked about packaging, particularly prescription drugs, and as a result the postal service adjust what it proposes to do with going to five-day delivery pattern. there are problem with the advisory opinion process. it can be less than -- timely. there's a lot opportunity to stream line the process. the commission has introduced rules to reduce the will will to the will pretentious nature. we believe that the transparency and accountability of the postal service is maintained when you

have the advisory opinion process. included in the public policy of the government. >> from your standpoint, excuse me. is there value in these advisory nonbinding advisory opinion? >> yes. we take the advisory opinions very seriously. we also listen to our customers to chairman's point with the post offices. we spend some time in the field in a number of different places. people told us if you can keep the post office open, if you can make it more affordable from changing the hours. we're okay with that. please, keep it open. and we balance that with what we got back to from the commission. >>. >> let me ask you to followup on one of senator mccain's questions. me made a statement. i want to know if it's accurate. he said that 80% of postal coasts are -- costs are associated with labor? >> 78%.

>> 78% are related to labor? >> yep. >> is that anything in addition to just the hourly or the wages and the salaries and the benefits, et. cetera. is that what that is? >> no. it is salaries, benefits, as well as the amount of money we put away for retirement and health care. now on top of that is the retire health care prefunding, that represents about 5%. it if we resolve that, our percentage of employment costs in terms of total would be about 73%. >> remind the committee, again, about your number of employees. i know, you have been shrinking your work force. as i say, you know, ten years ago, five years ago versus today, how much have you slunk the work force? >> the high point of employment in late '99, '00, we had 4,000 career employees. today we have 490,000 career employees and 120,000

noncareer. there's about 308,000 reduction in total career employment. >> what is that about a 35 to 40% reduction? >> it's almost 40%, yes, sir. >> and also, while i'm thinking about a followup, let me ask about some cost savings. i know over the years, we on this committee and in other contexts in the senate, we talk about the possibility of you guys going natural gas-vehicles. do you have an initiative on that in. >> yes. we are working with the star right association as we speak. they put together a very good group of about five large truck company owners. they're working with our people to explore ways we can move in to using natural gas, especially for the long haul. what we have to figure out how to name a win-win. we would like to be able to compensate these companies for making these investments at the

same time share some of the savings. in fact, we have reached out to the department of energy. we think it would be a good project for some investment and -- because there is definitely opportunities to get some pay back on this. it. >> do you think you'll save money by doing? >> we think we will save money. we think it's a good thing for the environment. >> and let me ask if i can. you mention in your testimony that a, quote, sizable portion of the u.s. population still depends on the mail to help manage their lives and communicate with businesses, government, and social institutions. would you tell us more about that sizable portion of people. and cienld of what you mean. and how they're affected billion soft m changes. >> -- -- there are many people especiallifully rural areas, but in fact throughout the country

who are not connected to the internet at all. while we talk about the dramatic changes that are taking place, as much as a third of a country is either not connected or not connected at a strength of broadband that would enable them to have the kind of interactive fructs and communications we talk about. our government is committed to providing universal education to everyone. we need have a postal service that does that. further more, as long as we don't have a national identification system, as we lie on where you live to identify you, the postal service is the address master for the country. they really need to be maintained for people to vote

for their children to be enrolled in school, for all range of emergency services. it's a vital networking. when we talk about balancing the needs of the public businesses we have to keep that in mind. it's difficult it's not an easy situation. when we know as other senators have pointed out, it's more expensive to serve in the rural communities. but it's something that is to be planned and has to be watched over. we believe that some sort of regulatory oversight that a assures that protection is necessary in whatever legislation is developed to give the postal service the additional financial support that it needs. >> thank you. thank you for the opportunity. >> thank you, senator black. >> senator coburn, anything else you want to say before the panel leaves? s? [inaudible conversations] >> thank you very much. excellent testimony. very thoughtful testimony.

those are very important issues. you brain lot to the field as not anything on the playing field. we have a lot of good ideas throughout. i bet it's a hopeful conversation. and looking forward to the next panel of witnesses. i want to say, with all of the -- don't say -- with folks look at the service they get from the federal government, some cases are pretty happy, some cases not as happy. we can do everything better always. the postal service can be do everything better as well. we need to keep in mind of all the services government-related service -- there is not entirely a government operation, we know. folks in the country have a high regard for the postal service. i think the last seven or so years still the number one compared to the rest of the services that we provide. that's pretty good. we can do better. i want to make sure we do

better. especiallily people go to a post office around the country for service they get friendly service. they get prompt and friendly service. for me that's important. i know, it is for the chairman. keep in mind. the other thing i want to say. any folks in the country that work for the postal service or retired. i want to say we appreciate your service and what you do for all of us. we want to make sure that you and your -- will be around far long time to provide the service. >> thank you, mr. chairman. [inaudible conversations] >> with that, i would like our second panel of withins to come forward, please. [inaudible conversations]