one side of the argument felt we didn'tfatalities. there are different points of view on how to get there. one side of the argument felt we didn't go far enough and o t other side feels as though we've gone too far. both sides took us to court and the court for the first time in 15 years of litigation, the court actually deemed that the agency -- i think in the court's own language says "we think the agency has reacted reasonably if incrementally to promote driver health and safety." so we have a rule that has withstood that challenge so it's important that we continue the analysis, that we view -- let's get through several years of this operation, let's begin the data collection now. and the analysis now. so we can continue reporting. >> and just short answer. do you have a time frame when you'll be able to confirm that? >> no, but i'd like to follow up with you with a clearer timeline. >> great, thank you. thank you for answering the question. i appreciate it. thank you, mr. chairman. >> thank you, senator ayotte? >> administratorer if roe, it's

my understanding that your agency is planning to move forward on an issue of increasing the minimum insurance requirements if for trucking industry. is that true? >> we have. >> yes. >> will you commit to ensuring you comply with the motor carrier act of 1908 that says that is tech tear shall also include an estimate of the impact of the regulations upon the safety of motor vehicle transportation, the economic impact on the motor carrier industry including but not limited to small and minority motor carriers and independent owner-operators and the ability of the insurance industry to provide the designated coverage. >> yes, you have my commitment and the agency's commitment. >> very good. will you make that information public in your analysis? >> yes, we will. as we do and we'll hope that comments -- if we aren't going far enough, we hope comments

will get to that. >> thank you. i i want to follow up on the hours of service rules issue. one question -- i have a couple of questions. as i understand, you've talked about the rigorous response to senator fischer's questions, the rigorous analysis in issuing that rule and the federal motor vehicle carrier, fmcas, released the results of its map 21 on the real world study of the impacts of the hours of service and that was something recently released, correct? >> that's correct. >> so i assume when you're talking about rigorous analysis that's what you're referring to in terms of part of your analysis? >> it is an example of the rigor that we use. it is, in fact, in relation to two lab studies and a congressional requirement. the broader nationalistic going forward right now. >> i want to ask you a few questions about the study. >> sure. >> the study pointed out that

drivers under operating under the old rule had greater lane deviations, as i understand it. what was the difference in centimeters between two groups of drivers? >> so let's back up so i can put in context. the study in question was a study actually mandated by congress. >> right. for good reason because many of just heard deep concerns about the hours of service rule and how it is impacting the economic -- economically jobs and so congress obviously asked you to do a study as a result of it. >> fair enough. so it was very carefully scripted. the language was very scripted and constrained us from doing the find of broader naturalistic analysis we're going to be doing going forward. >> i'm sorry. i want to make sure i get a couple 60 these answers. so you feel that that study -- let me get to the heart of it then. you felt that study was

constrained? because the study itself, as i understand it, only included an average of less than 12 days worth of data with 106 drivers. is that true? >> it's true that it contained close to a half million miles and it included for each driver 12 days of driving. >> with 106 drivers, correct? >> that's correct. >> you they's a large enough sample. >> the study requirements were very closely tied by statute to the way we conducted the lab study. >> but do you think that's a large enough sample to draw conclusions? >> interestingly enough, it's the largest driving study that has ever been done so it's statistically a very relevant study, yes. >> did the study show that drivers operating under the new rule were more likely to operate during daytime hours than nighttime hours? >> it reflected that drivers who are most impacted by the rule changes, specificedly 1:00 a.m. to 5:00 a.m. sleep requirement

if they use it had restart are most impacted. so the nighttime scheduled driver is the most impacted driver. >> so my question is simple to you. under this this rule we are going to have more drivers driving during daytime hours. isn't that true? >> that will be part of what we continue to analyze going forward. we have not seen that. it is an incremental impact and in the mix of all the commercial traffic that starts early mornings across our country. we think that impact is far outweighed by the improved driver safety. >> well, you would agree with me that there's a higher crash impact during the day, isn't that correct? >> yes, a much higher concentration of traffic during the day. >> so one of the things i'm hearing from my constituents is that because of the new hours of service rule they actually going to have to put more trucks on the road during the daytime hours, which are the highest crash times. because obviously there's more traffic during the day that you

could interact with. and so have you come up with data as to how many more trucks are going to have to be on the road because of the new hours of service rule during daytime hours that, again, in some ways i think could undermine what you're hoping to accomplish with this rule? >> the analysis in developing the rule did identify a marginal impact but, again, outweighed by the improvements of a better rested driver. >> but do you know how many more trucks are going to have to be on the road during daytime hours and do we have analysis of those numbers so that we can understand, a, the impacts on congestion, b, the impacts on potentially i suppose the environment as well, c, the impacts on more crashes potential because we've got more drivers and congestion during the daytime hours? do we know the answers to those questions? >> those are all core elements

of the data collection effort. the rule has been in place now, everybody's been operating on it for 11 months so, again, we are gearing up for doing improved and additional analysis with new data. >> see, here's the problem that we face. you're gathering this data and yet what i'm hearing already from companies that have to operate under these rules -- both large and small that have a significant impact on our economy -- is that they are going to have to drive more during the day, they're having to put more trucks on the road. so by the time we have this data, instead of having done the analysis in advance, we can have a situation where we are not having the impact we want to have on safety, number one, which we all want, to make sure people are safe and secure. and secondly we see the negative impacts on the economy which i'm shocked at how many businesses are coming up to me telling me about the impact of this rule.

and it's not just long-haul businesses. i was with a short-haul beer distributor this weekend. the problem is they require the long haul to get their product to them and then they drive short-haul distances. so i think there are many impacts to this rule and, you know, my concern is that we've gone forward with it without the type of analysis of how many more trucks we'll have on the road as a result of this. >> well, again, we did significant analysis in the rule-making process, solicited as much data and information as we could possibly solicit. what has clearly transpired is that the trucking industry is hitting profitability levels that they've never seen before. i mean, this is among the strongest period that the trucking industry has ever experienced when you look at their returns. they are healthy. it has not been an easy change for all companies. the vast majority, 85% of the industry out there, is operating -- based on the

analysis we have done -- there are those that have had to make adjustments and many have made those adjustments. there are some for whom it has been and harder and i recognize that. and i started last december saying please, let's sit down, let's walk through the logbooks, let's look at the experiences you are having. let's get the facts. i was out in minnesota, i was down in arkansas. we just had a meeting in virginia recently. again, we are very -- i am committed and the agency is committed to gathering the kind of data to recognizing where the impacts so r so that we can build the right analysis going for forward. >> i appreciate that. my sometime up. in new hampshire we have the largest food wholesaler in the country, cns wholesale grocers and they're seeing an impact because of having to get food there on time and also during seasonal issues. and also weather issues which are significant across the country and in new england. so i would ask also that you

take their concerns into consideration as well. thank you. >> absolutely. >> thank you, senator rubio? >> thank you, mr. chairman. thank you for being here today. administrator someday bow thanks for being here as well. i want to talk about all aboard florida. as currently proposed, the current benefits of that project would impose costs and impacts to all local governments atloong corridor and there's this feeling along the corridor in some of the areas that don't have that con seine tlags there are no public benefits provided to them but all the costs that come along with this project and we're hearing about that from our constituents. in particular i wanted to ask you a couple questions and see where fra is. in the midst of conducting an

environmental impact statement, i've heard from constituents and officials who support this project and i've heard from many in the treasure coast, just north of west palm beach, expressing concerns about the impacts that could have on their communities. the issues they're concerned about are safety at the gate crossings and noise pollution. and i've passed these comments along the ifra as we've gotten them and i hope the agency has reviewed them. can you share with us whether you are taking these concerns into seriously. >> i encourage you, as well as all citizens, to stay engaged in the eis process to make sure they get their concerns, their voices heard and get on the record in that process. because that process is, in fact, what is used to make sure that these concerns get addressed as the project moves

forward. so, you know, yes, we're hearing the concerns. we're making sure everything gets forwarded to the record. rest assure there had will be a pro bust process with public hearings and for those people that have reached out to us we'll make sure that they're aware of those public hearings. we'll make sure they're fully publicize sod all of these concerns get on the record and we ensure there are measures to address these concerns as part of that record. >> let me ask specifically about safety. there's already been an eis conducted on the west palm beach to miami segment and an issue -- and you issued a finding of no significant impact. in that finding the fra lists over 120 locations for proposed crossing upgrades. is the fra proposing they be upgraded or are those recommended by all aboard florida. do you know? >> we intend to hold all aboard florida to the highest standard of safety.

we have guidance that is out there for the great crossing protection approaches and systems that we expect in any of our -- in this case it's not a high-speed rail project, it's a regional express project. but there's standards for that and we expect that high bar to be met. >> so it's safe to say the fra will be monitoring these crosses to ensuring they're upgrated and that public safety is protected? you're not just deferring to all aboard florida? >> no, we plan to hold them accountable on that. >> and then on the funding side of it, as you may be aware, all aboard florida has applied for an improvement financing loan. does fra look at the financial stability and proposed business plan when deciding to award the loan or do you take local comments and concerns like the safety and environmental ones i've mentioned into account as well? >> when it comes to the loan it comes down to two simple questions -- are they eligible? and in this case is answer is yes. and, two, can we make a finding

of repayability. it's a mathematical -- >> it's a financial review. >> that's right. when it comes to the loan it's not about public policy. it's about is it eligible and can we make the documented finding of repayability. so it's a financial transaction. but the eis is the process the public needs to continue to use to make sure their voices are heard and that their concerns get addressed. >> i have one last question that has to do with sun rail, different project. >> okay, we'll go to orlando. >> it's a new commuter rail system for those who are not familiar with it. there was an incident in which a car stalled on the tracks and was struck by a sun rail train. luckily there was no one injured but the collision along with other close calls on the rail lines has prompted calls for additional safety measures on the system. in fact, yesterday the florida highway patrol announced it will be patrolling sun rail intersections to make sure drivers are following the law. so as the agency with safety jurisdiction over sun rail, is fra looking at these incidents

and what role does the fra shea from. >> are we looking at it? absolutely. it comes back to a couple of things. first off, the three fundamental premises under operation lifesaver. the three es -- education, enforcement and engineering. we need to make sure we're advancing all of this. but i take you back to what we're proposed in grow america. there's significant benefits there n there relative to safety, that continues to be our biggest challenge nationwide. while i talk about the dramatic drop in rail accidents, incidents, injuries, fatalities across the board, the one vexing challenge we have is on great crossing safety and through grow america there would be funding available for local communities to make great crossing enhan enhanceme enhancements. we also need to the extent possible to advance what i called sealed corridors, eliminating great crossings where possible with the strategic placement of overpasses and underpasses so we ensuring the efficient flow of

pedestrians, trains, vehicles, but the safest great crossing is one that doesn't exist. >> okay, just to close up, just back to the all aboard for a moment. as you work through the eis process and public hearings, those will be announced via -- through the local -- how can constituents best know where and when these hearings will take place and how they can best input? >> there will be significant public notice but we'll also make sure that your office is aware. so it won't just be the traditional public approach. we'll make sure your office is aware. >> and we'll work with the congressional delegation and senator nelson's office in making sure we get people to turn out and, in fact, are engaged in this process. so thank you. >> thank you. >> thanks, senator rubio. the record should note that senator nelson was here earlier and expressed to me his interest in these areas of inquiry and he had hoped to return. i'm not sure he'll be able to do so. i want to come back, mr. szabo,

to the penalty issue. because i think that the record here of minimal and minuscule penalties really is emblematic more than symbolic of a problem that really spans the entire area of scrutiny here and pertains to other agencies as well. and to come backing to the mcgrath and loudon incidents, wouldn't you agree me that the $5,000 penalty under those circumstances of neglect, the severity of the consequences, the seriousness of the safety violations is atrociously inadequate as a measure of what happened here? >> senator, i don't know the specifics on those two cases but i do know the process that we go through that we're required to go through as we assess fines and that we do, in fact, take a

look at the severity of the violation. you have to realize that the penalty is relative to the violation, not necessarily the outcome of that violation and so there's got to be a -- >> well, when you say "not necessarily," it can be and here there was -- in both instances they were -- >> but senator as i understand it, in the one case in 2009 before i was wiiwith fra, it wa relative to radio procedures that occurred after the fatality. so it had nothing to do with the fatality itself but it was a failure on the part of the engineer or the conductor to say the word "emergency" three times, which is required under our radio regulations. you have to say "emergency, emergency, emergency" before you start speaking and so the fine was for his failure to say that.

but the point i make is we have to make sure that we have a legally sustainable position. you know, we use the penalty schedule that's in place. >> well, what's your explanation of the loudon incident. you were agent the agency at that time. >> which specific -- i don't know these by -- >> that's the west haven death. a worker was struck on the west haven line after -- >> i will say this -- >> the controller failed to prevent a train from going on the same track where he was working. and the railroad failed to have in place basic technology that was state-of-the-art for railroads around the country. >> our regulations will address roadway worker prevention. in fact, that regulation -- final rules should be out this fall. we're targeting for september that will require the appropriate protections for all roadway workers and, in fact, would address that case. but coming back to the penalty itself --

>> so you will issue a regulation that might have saved his life? >> yes. we've already been in the works. that's been in our pipeline. >> why wasn't that issued earlier? >> it's part of a pipeline, senator. i can't just -- we have a process that we have to go through. my agency is the first step in that process, then it goes into clearance with the offices upstairs, the offices of the secretary, and then it goes over to omb. and so our regulatory approach is for us to continue to constantly come up with rules that feed into that pipeline, come through the pupline, there has to be the appropriate periods of public comment and review and so it's a never-ending process. we're constantly feeding them through. so this is one of the rules that we're required under the rail safety improvement act that's been in the hopper moving through the pipeline. >> how long has that regulation been in the pipeline, as you characterize it. >> i'm not sure when it started but i know this, senator, that

we complete some kind of regulatory document more than once a month. we complete about 15 a year that we put into and move through the process. so it's a never-ending flow. senator, not only did the rail safety improvement act require of us an unprecedented number of rule makings, regulations, studies and reports, but it also at that time promised us 200 additional employees, positions that were not filled or at least not immediately filled. they've been partially filled now. but we work everyday as effectively and efficiently as we can with the resources that we're given. >> well on the rail safety improvement act of 2008, the inspector general of the department of transportation found just last year, april, that nine of the 17 mandated rules had not been issued. i understand that two have been

issued since then. when are teasehe other six rule going to be issued? >> i know that i would have to actually take a look with the 6-r, but there could be a couple of them that i believe are waiting on the training standards. some of these have to be cued up. >> can you give us dates for when those rules will be issued? >> for the record i can provide them to you. i can give you an update right now where my pipeline is today. the final amendments on positive train control are due to be out there this month. training standards for railroad employees, the final rule, is out this month, our risk reduction for freight railroads, the notice of proposed rule is due to be out in august. our system safety program for commuter railroads, the final rule we're targeting for october. the roadway worker protection that i was talking about, that final rule, is scheduled to be done in september.

passenger equipment safety standards for high speed train sets, the notice of proposed rule is due to be out in november. our fatigue management plans, the notice of proposed rule is targeted to be out in november. >> well, i think you may have covered some of them -- some of the six because these outstanding rules involve risk reduction plans. >> that will be final, risk reduction will be final in october. >> emergency breathing apparatus. all of those six rules will be finalized in november? >> emergency breathing apparatus will not. we have a significant challenge there with the cost-benefit ratio. obviously any rule that i promulgate has to go through a rigorous cost-benefit ratio and we have to be age to prove that the benefits equal or outweighing the costs. and we've got a real challenge on finding a cost effective way

to advance emergency breathing apparatus. >> just so we're clear here. these are rules that were authorized and required by the law approved in 2008. >> that is correct. >> so here we are six years later and they still haven't been issued. what is the reason for that delay? >> we prioritize our rules and move them as efficiently and effectively as we can through the pipeline. so the highest priority for us, obviously, was positive train control. that was the single most important regulation that we could get out that would have the greatest benefit to the public on safety. and the complexity of that rule, the need to go back and make amendments to it, you know, dealing with suits that happen with rules, coming up with trying to get a cost benefit ratio that would work. you know, there's complexities here. and so we prioritize all of these rules, start feeding them

into the pipeline and advance all of them as quickly as we can. but the number of rules that were required of us was an unprecedented level, likely unmatched by any other period of time in the agency's history. >> the ntsb currently has 56 open recommendations to you. for some of them, the fra has given a quote/unquote unacceptable response. in fact, on 29 of the recommendations, meaning that the fra failing to move in the right direction to implement those recommendations. i also understand this is the highest number of open unacceptable recommendations for any entity within the united states department of transportation. some of these recommendations concern rules that, as you've mentioned earlier, could have

prevented the metro-north catastrophic incidents. for example, inward and outward facing recording and audio devices on -- >> senator, that would not have prevented that accident. in fact, now, don't general electric me wrong, we believe inward outward facing cameras have safety benefit. that's why back in 2013 we chose to make it a part of our rule-makiing program for 2014. certainly it will help in accident investigations, so there are safety benefits. but, sir, it would not have prevented speighton. in fact, the requirement wes put forward in our emergency order were, in fact, the very steps that were appropriate to those risks, the civil speed restrictions, enforcement, as i said, every rule that we want to

promulgate, every rule we want to move has to go through a cost/benefit ratio and we're not allowed to take the benefits twice. so, for example, the benefits of speighton dible are being captured in the positive train control rule. so when i go to advance a rule on inward/outward facing cameras i'm going to have a challenge relative to my cost benefit ratio on what it would have prevented so this is one of the challenges as agent agencies we face. >> >> well, i am not here to debate you. my point was not that it would have, not that there was any certainty that it would have prevented spiten dieville but that it could have inward and

outward facing cameras could have provided a di tesht to that conductor nodding off. in other words his knowing that he was on camera there are other rules that might have prevented it. rules that would have enhanced inspection practices that result it had failure to inspect and properly maintain the track causing the joints to fail and the joints to occur. you reserve there had might have been actions taken by

metro-north and actions that could have been required by fra rules that would have prevented these failures. >> we go back, senator, after every accident, no matter how large or how small to review what we can do differently. it's all a part of our drive for continuous safety improvement. our approach, we use our data to -- and it goes into a computer model to allocation our resources. the staffing allegation model. so we use our inspection data to ensuring that we're strategically deploying the limited resources that we have. as you've noted before, we only have the resources to inspect about 1% of the nation's rail trackage each year and so we have to follow our data. and it's follow that data, it's that approach that has been so effective in driving this 95% drop in accidents, injuries,

fatalities to record lows. >> let me just ask you a general question. wouldn't you agree with me that these rules have to be issued more quickly? >> i wish that that was feasible, senator. but, you know, all i can assure you that with the resources -- >> well, what do you need for it to happen? >> well, the important thing to note here is it's a matter of growing the entire pipeline. even if you give me more resources -- which, of course, i always love to have more resources -- all that allows know do is enter the rules into the pipeline more quickly. but there's still going to be a bottleneck having it flow through. it's a matter of resources at every step of the process. the point i was coming back to, though, sir, is that i believe that we can, in fact, continue to improve safety everyday, everyday. in '13 we had fewer accidents than in '12, in '12 we had fewer accidents than in '11. my goal is to ensure if '14 we

have fewer than we had in '13. and so i was talking about our databased approach to inspection. there's no question that when you take a look at metro-north and certainly if you talk to canada, there was no data in either case that would have triggered the fact that there was an extraordinary amount of risk there. and so while we should not throw away what has worked so effectively for us the past decade, there's no question we have to lay over on top of it additional steps. and so under grow america, i'm talking about a three-pronged approach. we continue our databased oversight and enforcement program, but we have to get to the second step which is the progressive risk reduction, risk analysis programs that, one, will be required in the system safety program. the final rule will be done -- what did i say, the target is

for october this year. over and above that, grow america gives us resources we need to make confidential close calls reporting a nationwide program. and we think that that's critically important. from what we've mean? the pyla projects where this has been implemented, most notely our most mature pilot project there was a 70% preduction in accidents in accidents and injuries. so we believe this has tremendous potential toll get us to the next level of safety. and in that regard, senator, i had told you, i had promised you that when the deep dive report was done we were going to use it as a learning tool for the entire industry and for my agency and i cull together all the commuter railroad ceos from across the country, metro-north hosted us. they all responded, brought

staff, there was 100 in that room. we went through that deep dive report. had a lessons learned discussion on it then had an open discussion on all of them. all right, faced with this new knowledge, what are you going to do? what are each one of you going to do to be more proactive and identify and mitigate these risks well in advance. a very robust discussion. based on that i'm meeting with the commuter rail ceos in about ten days. and bringing -- >> you'll make that meeting, we won't keep you that long. >> we might. but senator, i'll have to make that meeting. but we're going to have a full blown several-hour conversation object on close calls and the president of the union pacific railroad who's had my most successful pilot project at his own expense is flying to that meeting to engage with the ceos and share his experience and why he believes it has so much value in advancing safety.

so this is what we're doing with the industry to learn from that. the other piece i talked about that i have to learn. my agency has to learn. so i brought in all of my regional administrators from across the country in new york. all of them have commuter properties. all of them within their jurisdiction. so i wanted them to be a part of the conversation. then we all came back here to d.c. and spent a day together taking a look at and talking about those things that we need to do differently. we're doing good work. we know we must always do better work. we're at a record low number of passenger fatalities, but that doesn't bring back the lives of those four people that perished up on metro-north. i know i own that. our goal is to get to zero and stay there. wand what we're proposing in the grow america act, i'll have the tools to get us there. >> mr. szabo, i've given you the

floor to provide a full answer and i very much appreciate your doing so and i want to make clear to you that the critical questions that i've been raising are not directed at you personally or even solely at your agency. they're really directed at a broken system. for rule making. what you've referred to as a pipeline is more like an obstacle course rid within hurdles that are insurmountable for many of these essential rules that protect health and safety. and it's a broken system not only for your agency and your rules but for many other rules. so i hope we can use your agency as an example of how the system can be improved because we can debate whether specific rules,

cameras facing in and out, alerters, automatic train control as distinguished from positive train control, whether these basic safety measures could have prevented. no one can say they would have prevented. but the point here is they should have been issued long ago. the recommendations made by the ntsb should have been implemented long ago and that may be an issue of resources or complexity of decision issues for the feelings of the administrative system and the administrative procedure act. but one way the other system has to be reviewed and changed. >> well, thank you for indulging me, senator. because i do take this very, very personally. it's personal to me. as i said i come out of the ranks. i've had my share of close calls. i don't know any railroader that

hasn't. i've had five friends killed on duty. i've been to those funerals. i know those families. so when it comes to safety this is very personal for me. and, yes, i want to achieve perfection. we're not there yet but every year i've been here -- and, frankly, my last two predecessors every year made continued progress and my staff knows it's all about continuous safety improvement and senator i can't tell you how much i believe in this team of professionals that i have. these inspectors in my staff. these are incrediblebly dedicated people. they work so hard and this mission is personal for them also. so we're truly on the same page with what it the we want to achieve. >> let me ask you about the deep dive report.

are you satisfied with metro-north's response so far? >> at this point they have certainly said all of the right things and from what i've seen, i'm seeing the right things but it's going to take time to play out. my deep dive team continues to have a presence up there to monitor their compliance with what they have promised us. we continue to meet with senior leadership every 30 days. we also continue to meet with the labor folks up there. you know, just to hear what we hear from them at the ground lev level. but certainly when i talk with joe gillettety and tom prendergast. the appropriate level of commitment clearly seems to be their -- they understand, as i said we do, the job that we have to do to regain the confidence

of the riders up there i believe they're up to the task. >> so fair to say they're saying the right things but the jury's still out on whether they're doing the right things? >> they're saying the right things. we're seeing the right things in the initial steps but it's going to take time. there's a lot of work up there. particularly when it comes to changing safety, culture. that is a drawnout process. it doesn't happen overnight. and so it's going to take just continued, continued reinforcement but i clearly believe that they're heading in the right direction. >> on the 100-day plan that they have announced and promised to fulfill, in fact, by june 11 -- so we're coming close to it. have you been working with them on that 100-day plan? >> staff has been engaged. my regional administrator is up there on a regular basis. as i said, even parts of my deep dive team, which i brought in from across the country from

other regions, have been engaged with them. so, yes, we're -- they're cooperating with us, we're cooperating with them. and we're monitoring their progress. >> and do you have a view as to whether that plan will be, in fact, achieved? >> as i said, at least at this point they are clearly on track to achieve what they have set out to do and now it becomes our job to continue to monitor that progress. >> do you have any assessment as to why the metro-north bridge that went down recently failed to open or failed to close once it had opened as to what the reasons for were that mishap? >> we will get you a fuller explanation for the record but as i understand it, that bridge is well over a hundred years old. you know, it really speaks to the state of the infrastructure, particularly on the northeast

corridor. you know, and as one of the things that our proposal under grow america is explicitly put together to address, modernizing that infrastructure to make sure that it is more safe, more reliable and more efficient. this is a set on the northeast corridor is one of the prize assets that we have. it's one of the best passenger rail markets in the world. in the world. but because of decades and decades of disinvestment, it's never reaped its fullest potential. so that's the case in that bridge and the concerning thing is there are so many other bridges and tunnels on the corridor that are of a similar age. >> and, again, it's not just about the metro-north railroad or even the northeast corridor, senator koontz noted for me and, in fact, wanted me to ask you about a bridge on i-495 which

late yesterday encountered a similar problem. it's a bridge over the christian river, i believe in, delaware, which now has been shut down. it is closed indefinitely. it carries about 90,000 vehicles a day. and it will have a huge impact in creating congestion from florida to maine. especially in trucking. >> you know, is this a rail bridge or a highway sfwlij this is a highway bridge, okay. there are a couple of elements of grow america that really help with railroad bridges. i talked about, you know, the two pieces, the one for amtrak to be able to bring their railroad to a state of good repair, that's a critical part. the second piece is for other corridors to be upgraded through competitive grants.

and these are the kind of infrastructure improvements we're talking about. but the last one i want to touch on is a grant program for short-line railroads and i think this is critical, particularly as we talk about the movement of crude oil. the class one railroads for the most part con k take care of themselves. they have deep pockets. but these short lines are very capitally constrained in what is a very capital intense industry. and so there are brings out there, there's track structure out there that have not been upgraded to modern standards. and so in grow america we're advocating for competitive grants for short-line railroads to make critical safety upgrades to bridges, critical safety upgrades to track structure to be abe to safely haul heavier loads and critical upgrades to signaling systems for shortlines so we're looking to address this in our proposal.

>> i think one of the problems we can agree and maybe this is an issue pertains to all your agencies is the resources available for enforcement and, as you well know, senator schumer and i advocated successfully for an additional $185 million in the last fiscal year, fiscal year 2014, which was to hire 45 additional critically necessary safety inspectors for your agency. can you tell me what the status of the hiring is? >> we moved immediately. now, again you don't just snap your fingers and have 45 people on place, but we have moved immediately on the first 15. ten of them have, in fact, been hired. but senator, to be clear, it takes about a year. by the time you recruit, hire, go through the training that is necessary it takes about a year to be a qualified inspector, to be turned loose on your own.

but we've moved right away. when there's an opportunity for more resources, we're not going to wait. >> do you need more? >> senator, it's my job to ensuring the safety of this industry with the resources you choose to give me. >> well, we can only give you what you request. we can give you more but the best indication of whether you need more is whether you request it. >> it's my job to work with the resources i have that and to strategically deploy. that's why we use the staffing allegation model to make sure that we're as effectively deploying as we can. >> and i don't want to put you on the spot here but i'd like to ask you for the record to provide me with a -- an estimate as specific as possible of the additional resources you need for enforcement. and i'd like to make the same

request to all of your agencies. >> thank you, senator. >> not to be critical of what you've done in the past but simply to show what we need to do adequate enforcement of the rules and laws on the books. if they're on the books and they're not enforced they're dead letter. in fact, they're worse than dead letter because they encourage non-compliance, people who know that rules aren't going to be enforced aren't going to obey them. when the penalties aren't sufficient, there's no incentive to obey them. if they're part of the cost of doing business, the big companies that you regulate will thumb their nose at your agencies which is to say at public health and safety. so i'm going ask that for the record and let me just conclude with these questions, mr. szabo. my understanding is that the maximum penalty for the violations of orders and rules

such as pertained in the loudon -- robert loudon incident was $25,000 and that the -- in the case of egregious and aggravated cases the maximum is $105,000. is that correct? >> i believe that's correct. for the record i can confirm that for you. those are established via statute. but there's other elements that come into play as we're determining how much a particular violation -- what we'll be able to sustain with a fine. so it's not for every violation that's out there that we can instantly go and levy the maximum against them. >> can you give me examples of when the maximum of $25,000 or $105,000 have been imposed? >> we'll get you that for the

record. that way i can let you know what the history has been, those cases where that may have been done and the legal basis that was in place to support that. >> how quickly can you provide that for the record? >> i'll put staff to work on it, but, again, there's a clearance -- >> these are cases that have already been occurred, the penalty has been imposed. i'm asking for examples of it. >> i will put staff to work on it today, senator, but there's a clearance process on everything we provide. >> why was the loudon death on those tracks in west haven not an egregious and aggravated case. >> for the record, we'll get you, again, what we believe was the legal basis for our fine. but senator, again, i want to come back to something that i said earlier that the purpose of fines is to ensuring compliance. it's not necessarily to punish. and, you know, the hammer is but

one tool that we have in our tool box and we need to make sure that we have multiple approaches to drive continuous safety improvement. >> well, it may be only one tool but it is one of the preeminent tools and when you fail to use it you are leaving yourself essentially -- >> well, as i said, senator -- >> -- weak and worse. >> in the five years i've been here we have, in fact, set a record for the highest dollar amount of fines levied for any five year period. so with the tools i have we're doing what we can do. >> i'll just conclude on this point. that's only one of minuscule penalties, $5,000 and $10,000 over that period of ten years that's been documented. >> senator, certainly we'd be happy to work with you on some

technical assistance if you would like to take a look at legislation that addresses our penalty schedules. >> well, if i were in your shoes i would be advocating for more authority. >> we'll work let me ask you, talking about answers for the record. when you were last here, you promised some answers. we still haven't received them. >> they have been completed by me and my staff. staff has prepared them, and they're in the clearance process. i certainly had hoped they would have been delivered to you in advance of this, but you should have them very shortly. >> they're in the pipeline? >> that's right. >> when are we going to see them? >> i can't answer that other than to say i believe that it's very close, and i -- it wouldn't surprise me if it's this week, but i don't control that piece.

>> i would like to know who has to clear them? who should i contact? >> for the record i'll get you -- in fact, i believe in the q and a that you propose to us we've got in the process that is used for clearance. actually, it was relevant to at least one or two of the questions that you asked me. you'll have that information. >> i thank you all for being here today. i hope that we can continue this conversation. i have additional questions for the record. i don't want to detain all of you here. i understand my colleagues will as well. i thank you for spending time with us and being so forth right and helpful. the hearing is adjourned.

snoo hosted by the center for strategic and international studies. speakers include former australian prime minister kevin rudd, among others. it gets underway at 1:00 p.m. eastern here on c-span 3. a bit later it's a hearing on u.s. border security issues, including a look at the pay structure for officers. it's being held by the senate homeland security committee live at 3:30 p.m. eastern. joining us later today for a rare evening congressional hearing looking at veterans access to health care, that starts at 7:30 p.m. eastern live here on c-span 3.

president obama has scheduled an announcement for later today. he is expected to address student loan debt. we'll have that live for you at 1:45 p.m. eastern time on-line at c-span.org. >> now if, in fact, you wait until the thing shows up, that's the worst of a cheaper alternative, you've waited too long because when it shows up, it's not worse and less expensive. it's better and less expensive. in the case of our navigation example, we had companies like thomas roberts and garmen and imagine elan, and they knew that the smartphone was starting to take off. had he knew it was possible that somebody google, apple, somebody else, start-up could launch a navigation app, but they said we don't see any threat yet. hasn't shown up wret. we'll wait. we'll respond when it does show up. when it did respond, it took off. you had millions of people saying this is better and cheaper. this is worse and more expensive. which one am i going to hoos?

by then it was too late for them to respond. we say that, in fact, innovators, that is to say incumbent businesses of any kind need to start looking much earlier into the life cycle of new technologies and recognize that even before -- things like kickstarter that allow to you see how people are playing with new technologies, and we say that's the moment when you should get worried. >> how technology is changing the way companies do business. tonight on the communicators. 8:00 p.m. eastern on c-span 2. >> steven hadley recently spoke at an event at a center for strategic -- to talk about the treasury department's role in national security.

together their comments run just over an hour. >> you were working with warren christopher, and steve from all of the years at the white house, and, of course, national security advisor role when security rice was secretary of state. thank you all so much. we've had a great kickoff to this from jack lew. first, let's talk about since he raised the questions of sanctions, and it is so top of mind right now with russia and

with ukraine. steve, first to you, how effective have we been in mobilizing europe against russia? we've seen the effects, the economic effects with the move. how is that translated into affecting vladimir putin's behavior? >> well, you don't know. i mean, one of the great questions is what makes vladimir putin tick, and i think it's really hard to say. on these kinds of issues he runs that system, you know, out of his hip pocket. it's really what is in his mind. it's really what matters. the administration was able to put together international support for a sanctions regime. it has been limited. it has focused on individuals and institutions that have been associated with regime and associated with this effort. asset freezes, visa bans, those kinds of things. >> threatened more institutional sanctions that would go after

elements of the russian economy in the event that russia would have intervened to upset the upcoming election, were to move across the border with their own forces, rather than with money and personnel and weapons, which is what they're doing every day. i think it's been a useful element, but i think one of the problems is these sanctions are so visible and so public that they become the sort of, in some sense, the thing you reach for, and they are a useful tool, but they are only one of a series of tools, and they could be more useful in some context than in others. i think in ukraine.

>> it's visible. people see the term what is ae tactic into a strategy. the administration said to countries, help us with sanctions on iran. visibility and effectiveness and embed them in overall strategy using all elements of power in order to achieve our objectives. >> well, to that point, tom

donlon, you are the national security advisor, or the secretary of state, and you have an effective tool that are tried and tested. we should have. >> no. well, i think -- i agree with you. first of all, it's great to be here. it's the anniversary of the -- it's a group that the treasury department. this, by the way, will get back. i think this discussion underscores the -- i think this is an example of that.

you do need to include a number of things. put it through the imf. it's to indicate our support through our nato alliance for those countries. the president will be underscoring that in europe this week. also, imposing a cost here through sanctions. it's one element of a comprehensive strategy here to address russia's aggression and it's illegal activity in europe. in addition, i do think that there are a number of long-term things we need to look at, including focussing with europe on diversifying their energy

supply and having strategies for insuring that they're not as dependent on russia as they are today. i also think it's part of moving forward with our economic negotiations. getting the t-tip agreement done with europe. it's back to the sanctions. >> the estimates will be maybe $100 billion of outflow this is year. it may be higher than that. we may have $60 billion, and putin in the former finance minister said it may be as much as $150 billion. you've had lots of deterrent investments in russia, so i think it has had an affect. it's had affect on decision making, and it's been a deterrent of some of the worst kinds of conduct that putin might have engaged in.

last, with respect to putin. in my judgment, it's -- it would be inaccurate to describe this as a system making these decisions. it's hard to know which pressures get which results, but my own judgment is that, in fact, russia is actually more -- it's not a simple calculation because there are costs as well. i think russia is actually quite vulnerable to a targeted sanction regime. last thing i'll say. if putin can say -- >> you know, the foreign policy the president putin seems to be pursuing right now is a turn away from integration of russia into with the west politically in security, which is something

that the -- many administrations, the clinton administration has been pursuing. he turned away from that, right? it has a foreign policy now defined, i think steve you would agree, by negative opposition to the west. contradistinction to the west because russia has taken a unique stance to pull back in terms of political cooperation. that said, you can't pull back economically. you can stand defiantly politically, but the end of the day, the russian economy can't stand defiantly in the economic realm, and they really are vulnerable, i think, to this, and i think it's made a difference in terms of his decision. i think it's to balance his conduct versus causing the west to put the most aggressive sectoral sanctions. >> first, let me ask you, steve, is his option to make -- pardon the phrase -- a pivot to asia, can russia counter balance his losses in europe by what we've seen recently in negotiations in

china? >> we've got export for his oil and gas. my understanding, though, is that the expectation is that the oil and gas that will go to china is largely from the western part of russia, so he will continue to be dependent on having supply -- sorry. the eastern part of russia. he will continue to have -- need to have supply to europe and beyond the western part. you know, putin is interesting, and i think one of the ways to think about putin and we saw this when he went into georgia in 2005. he is very -- he has a long-term strategic view. he believes in russian greatness. i believe he has a historical role to restore russian greatness. not the soviet empire, but a russian empire, if you will, through this eur-asia union that is contra distinction to europe

and the west. he went into gornl george. we were concerned that today georgia, tomorrow the crimea, and the day after the baltic states. well, putin is two-thirds of the way there, and if he were to try against the baltic states, particularly latvia, what he is doing against ukraine, and call into question the article five guarantee of nato, that is really an effort to split nato. it's very interesting that he has been currying favor with the extremist parties of both the right and the left that did so well in the parliamentary election. those parties are all unified by one thing and one thing only. they don't like the e.u. some simtsz, if you are putinen,

you are playing an interesting hand. you can take advantage of these opportunities, disarray that has occurred in kiev, and how far he goes depends on how well he does and how much resistance he gets, but the stakes are very high. the stakes really are about the kind of europe we're going to have in the future. whether it's going to be a europe free and peace, with based on our values, or is it going to be a russian-centric europe with a kind of regime that putin is imposing in russia because it's interesting and i'll stop -- it's interesting that his activities in ukraine have been a greater crackdown internally on political civil rights. >> that hasn'ten gi the way. i think the kind of attention in the west -- the interim level of repression and activity of opponents inside russia is at a level we haven't seen. enter the propaganda efforts that we haven't seen. >> and against the media.

>> absolutely. >> we haven't seen since the crack of soviet union, and this is all a piece, i think. with respect to the china, putin was clearly trying to educate that he had alternatives through trying to negotiate the long-term gas deal in china. you know, in the relevant time frame here, remember that i think the total trade relationship, economic relationship between russia and china right now is about $80 billion, which is a small portion of trade relationship with the united states. particularly europe. it's -- and i think a lot of competition and suspicion historically. there's a lot of competition in central az wra. we'll have to see how this all ultimately develops. i do believe in the medium term there's a lot of pressure from ukraine and russia. >> you know, here treasury has these enormz tools.

the targeted sanctions that you refer to are to try to not make any of our allies bare the full brunt of the pressure. we know france's vulnerability on arms exports and the u.k. on finance, and germany obviously on energy. the attempt to try to spread the pain. the leaders have been remarkably supportive given how hard it was to bring them around, but as we see in the european elections and as we hear anecdotally, i was just in italy and was speaking to people in the media there, leading figures in italy from france, speaking to people from germany, the populations are not really where we are regarding putin. people were questioning me, where are you americans so upset about vladimir putin. now we see hollande inviting him to normandy.

the president of the wraits is going through europe this week. obviously the assumption -- sidebar conversation. how did you try to hold the coalition together when they are under such pressure from their business interests and their populations? >> well, one of the -- we were talking about this before. europe is in a bit of a crisis. i had, you know, los to one-third of the european parliament elections of off the people that are anti-e.u. i have -- the counsel they will have in foreign policy.

how much are european leaders willing to let them make decisions for europe plus the individual countries will back up and support. there is the e.u. project has always been an elite. the voices of the many. one of the problems is that the president doesn't really have a solid partner, and it has a solid partner that is internally focused and in crisis. i think it's good that he is going. i think it's very good that he is going to poland, and i think his speech there will be very important. he is going to have to show the vision of the future and to try to in some sense over the heads of the leaders, rekindle some

excitement in europe for the vision of a europe free in peace. something that we kind of stopped doing in 2008 when the expansion of nato stopped, the expansion of the e.u. stopped, and we kind of left countries like ukraine in the middle between the west on one side and russia on the other. that's a bad place to be. i hope the message he will send is it's time for us to get back into our vision of what a europe should be and not by default leave space for putin to pursue his. >> i couldn't agree more. i think it's important -- well, what's happened, of course, is in the recent parliamentary elections, you had a strong indication that sections of the european population believe europe is not providing for them. there is a lot of effort that's going to have to take place here in order to bring leadership more in line with the expectations of the people and actually deliver. i think the president's role

will be to underscore the stakes and to underscore the importance of solidarity and nato and the u.s.-europe relationship. to underscore the obligation that is we have to our partners here. by the way, i know there's some debate about the wisdom of nato expansion and there's been some commentary that somehow that the wraits pursued the nato expansion through the administration and into the bush administration was somehow responsible for the direction of russia had gone here. i don't think we want to make an argument that vladimir putin is -- and, number two, through those years the wraits repeatedly reached out to try to work on integration efforts with russia, and number three, i think as we sit here today and you look at the conduct of russia since 2008 and again now in 2014, we should be very happy with the engagement nato has made. if you sit in the baltic state or you sit in poland today, you are very happy that you are a member of nato, and it makes a

huge difference with respect to what putin can consider, what russia can consider that it might do, and what is off the table. i do think this is a very important strategic initiative, and it needs to be underscored and embraced in the course of the president's trip. >> it's been pursued by three administrations because there has been enlargement of nato under clinton, bush, and the obama administrations. this has been a bipartisan policy, and it's served our country well, and it's served europe well. >> the argument that somehow sh this has forced russia to take the direction it has domestically or in terms of foreign policy i don't think holds water. >> if you are a treasury, and you are negotiating and working with the allies on sanctions, how much is your leverage undercut by the snowden leaks and the post-snowden era and its affect, if not personally on angela merkel -- she can get over it -- but on the political

sentiment in europe against the united states? >> well, it's difficult, and i want to make a plug here for my colleague juan ziratta who has written a wonderful book that tells the story, and it's a great tale about how treasury got into this business, and really developed these new tools. one of the things that's very important is treasury as a source of intelligence and information about what the bad guys are doing and how they're moving their money around in addition to a way of trying to disrupt things. it has been -- the snowden leaks, the discussions of the involvement of u.s. social media in helping the government in areas of dealing with terrorism proliferation have given us two crisis. one is the crisis with government leaders.

how come we didn't know and concerns about spying on leaders and the like? my guess is that that piece of us well, will repair over time through dialogue and conversations. there are some reforms going about how we do some of these things in terms of bulk storage of data and the like that i think will help with the leaders. the problem i think is in some sense the european public's, and there's a breach of trust there. >> exactly. >> i think there has to be a broader conversation about this balance between what we need to do to defend our people against terrorism proliferation and how to do that in a way that safeguards civil liberties. i don't think we really have that conversation. i think europe today does not feel under threat from terrorism. it does not feel the way we do at the risk of proliferation and references. i think we need to have a whole adult debate. it's a tradeoff, and i think we

can have that debate in europe. >> what are the constraints under this government? the key i think -- secondly, in any event -- he has not done in their name, and be comfortable with it over time. we had a lot of work to do in terms of the debate. i agree. i think over time because of relationshi relationships. i think those will be repaired.

we can discuss it directly. our internet and hardware product. it's something we're going to have to work on. a real threat to the states and the internet. >> the intelligence relationship that we have. they are mutually beneficial, and i think we can work those. >> steve hadley -- >> it was very, very -- -- that

we had to appreciate with iran. i don't know -- >> you know, there's always a problem when you use sanctions and diplomatic pressure and other things to put pressure on a regime. it's pressure for what purpose, and the purpose in this case was trying to get the iranians either to unilaterally give up their program or to come into a negotiation then and negotiate constraints. >> do you have any doubt? should we stipulate late that there was no way that they were going to come to the table without the sanctions? that the sanctions work to that -- >> i think the sanctions were one of a series of tools in terms of diplomatic isolation, many terms of things directed at the program that we can't talk about. i think it's been a very successful coordinated policy of pressure. i think it did bring them to the

table. i think having come to the table we have an only fwags to test and see if we can get a negotiated solution that gives assurance that this is not going to be a path to a nuclear weapon. >> it says to me he has been following this, if iran does not now have a covert nuclear facility. it will be the first time in 20 years that it hasn't. there is a cheating issue, and one of the challenges of the agreement is not just what is the agreement, but what are the things that surround the agreement in terms of snapback sanctions and preauthorized actions that will give iran an

incentive not to cheat. there are harder issues of sanctions if there isn't an agreement. the question will be how does the negotiations break down. if iranians walk out in a huff and say you don't trust the americans, we're now going to go get a nuclear weapon. if it's a muddier outcome and the iranians basically go public and say we made a reasonable option -- offer to the americans and the americans didn't accept it and we can't accept it because it does not meet our threshold, that's going to be the question. can we then get the world at that point to agree that we need more sanctions to make iran more reasonable or do you have a vladimir putin that decides to put himself once again center stage and announce that he thinks the iran wrans have given far enough and the problem of

the breakdowns and talks is all on the americans' heads. at that point the international consensus that has made sanctions so effective breaks down. both sides say we've made a lot of progress. a lot of technical challenges remaining. we're going to extend beyond july. then netanyahu says this is a very dangerous window, because this is when iran might start. >> the interim agreement provides for that expressly. the interim agreement based on what you rrnt negotiating provides for a six-month rollover if both the parties agree. >> essentially you have frozen, and at the risk of medium risk

uranium, you've rolled it back. >> are you as confident -- how would you respond to steve's suggestion that iran has never not had a covert operation we couldn't detenkt? >> this is part of the ultimate deal. the size is there. the distance being able to achieve a nuclear weapon if they decided to break out, and quite critically, the importance and the intruciveness of the regime that you might have, sxlt ability to kind of -- i just disagree, by the way, with the premise of your question that somehow that the regime was breaking down and that's the reason that the united states and iran got to negotiate. i don't think that's true. i think what happened is that as steve indicated, if you do an assessment of each time that the iranian government has made a strategic reversal, a strategic

decision to go in a different direction it has only been under extreme pressure, and we can go through each of those instances in 1979. we determined after -- the united states determined after a bonefied effort to do outreach to the iranian government in 2009 and to offer negotiations at the highest level with the iranian government, and we got nowhere. they were unable or unwilling to respond with respect to that. our understanding with our allies and friends and partners around the world, including the russians and the chinese, was that, in fact, after the bonefied offer of negotiation, the iranians were not able to do this orren willing to do this, and that's what happened. we would join in a pressure campaign. it resulted in the election of rojani. especially iran on the prospect drew brees -- or on the proposition that he would undertake to relieve the economic pressure on iranian

society. didn't p see any breakdown on the regime. i saw, on the other hand here, rohani being elect odd the promise of getting economic relief for iran and knowing the only way to do that was to come to the table with the united states and the rest of the international, national community. that leads me to another point here. i think all the leverage is with the west right here right now because the sanctions, the bulk of the sanctions remain in plame place. i don't think the iranians have gotten any sort of real kind of maximus boost out of the interim agreement, and the united states and the west should come to those negotiations with that attitude that, in fact, that sanctions remain, that rohani will not be able to make good on his promise to the iranian people, and that we have quite a bit of leverage here in these negotiations. >> will that leverage persist, steve? we saw the french and the germans and others with interest

lined up in davos and trying to meet with rohani and how long can we maintain the coalition? >> it's a problem. you know, we've seen this movie before. there are differences. we have been to the table. we had a nuclear agreement. they suspended the program, the covert aspects of the program, and they engaged in negotiations with u-3, and we reached the paris agreement that suspended enrichment pending a negotiation of the ultimate resolution of the issue. then, quite frankly, we got bogged down in iraq. they had an election. majad is president. he campaigns on the platform that those people entered into

the -- they were traitors and ought to go to prison, and he rolls the whole thing back. there is getting a deal and then there's keeping a deal. i think the administration, i hope, has in some sense three task forces going. one is the task force that's trying to get the deal with iran. one is the task force thinking about what are the things outside the agreement we'll actually keep the iranians compliant with it. then, third, is a task force thinking about how to reassure the rest of the country is in the region are friends and allies that if there is an agreement with iran, we are not now sort of packing our trunk thinking our job is done and leaving the region free to an iran which will have even more money to back the kinds of things that's doing to support terror, to support assad in syria, to disrupt iraq, to disrupt afghanistan. this is a real challenge. you know, getting the agreement is only the first step of a very

challenging road. >> i agree with that. with respect to companies and others anxious to do -- they continue to force companies to choose between doing business in iran and doing business in the united states. we've seen the force that -- you know, one of the really i think important aspects of the sanctions approach that's been put together by the u.s. treasury department has been to take advantage of the centrality of the united states financial system and to work with governments obviously, but also with private entities who have to make these kinds of choices. that's the sakes. the sanctions put together by the administration and implementing congressional legislation really do force a company to decide, a bank to decide between doing business with iran and doing business with the wraits. it is exceedingly powerful, and i am not in the government today, but i think i have a pretty good guess that the treasury department would tell

you that while these are in place, they tend to enforce them. >> as we look at the ark of treasury's role in making foreign policy, sort of taking the 30,000 foot view, when you first became first deputy national security advisor, then national security advisor, was treasury always at the table in as big a role or how do you evolve under juan and stew and now david into becoming -- what is it now in terms of relative position? >> me view was that treasury should be at the table because what we did in foreign policy had implications on things treasury did, and because it was a clear head of someone who was not engaged in the day to day. it was not the treasury that was there because they had an arsenal to contribute to solving the problem. that's really the terrific story that juan tells and others have

told that it was a real case of people in the government being free to be innovative. it starts with the effort to target terrorist if anying and those countries that -- those companies and banks that were laurenedering terrorist funds. it's then expanded being fairly successful in using the war on terror. someone comes in and says why don't we use it for -- and that the first test is actually not iran. it's north korea in 2005 and bank row delasia where we got hands around kim jong il's personal funds. >> i was in pyongyang in 2006, and when they told me ipsos facto that i had to pay something like $70,000 in cash for the satellite time we had used or they wouldn't let me use

the country, and i discovered there was no way to make a transaction because of exactly what you had said. we had to go to another diplomatic resource, and -- >> we cut north korea out of the -- >> whatever you call it. >> and ultimately it led them to come in 2007 to negotiate a follow-up agreement which at the end of the day was never implemented. then it's let's try another iran. one thing that i think needs to be said is -- but the other one that stewart levy and hank paulson used so effectively is the indirect reputational risk. banks and financial institutions in europe and said, you know,

you don't really want to be dealing with these iranian banks and you don't want to really be dealing with the irgc because they're actually funding terrorist activity and proliferation activity, and it's going to become public, and your people and your depositors aren't going to like it. they're a wonderful tool because they have direct, indirect, and reputational effects, and this was a whole -- this was a new frontier. it made treasury a real player. as i said earlier, my risk -- my concern now is it's become so good and they've become so effective people think it's a silver bullet rather than just one element of a comprehensive strategy. >> i agree with that. a couple of things on the office. first of all, it really is a truly nonpartisan set of tools. bipart sfwlan set of tools. it may be one of the first personnel calls that i made during the transition in 2008. we can track down stewart levy

at an event. >> and talk to -- >> and to beg him to stay into the obama administration. luckily, he did. it did, i think, to steve's point, it resulted in continuity and building on the tools and the insights that have been developed in the bush administration that we built on going forward. it really is a bipartisan -- treasury is at the table. they have been at the table for addressing some of our most important security issues, national security issues, whether it be the terrorist threat or whether it be the north korea challenge or the monday prisoner live rags alchallenge and in iran. i think the point that steve pointed to, which is an important point, which goes to the point about the strength of being at the center of the world financial system here in term of our ability to do these things, and in many ways even our unilateral steps become multi-lateral steps because as steve was pointing out, if you stit down with the bank and you

say, all right, you have assets and transactions in the united states, they're subject to the treasury des iing nailingses, but you also have to think, and we're designating this bank in iran, for example, because of bad conduct, and we can underscore to you and show you the bad conduct. banks are on the private sect o, and they're want going take that risk. >> quite targeted and exceedingly -- >> have we lost any leverage post-2008 as many -- and our banking system -- did we lose

any leverage as china has risen relative to our strength? >> you know, i'm not a financial type. there are other people here you can ask for that. my sense is, look, we took a hit, but we have recovered. it is true that i think one of the things that's the consequence of the financial and economic challenge of 2008 is that almost for the first time it was developing nations rather than dwom developed nations that actually led us in some sense out of that financial and economic struggle. i don't think nick thinks there's a substitute for the dollar and the reserve currency. china has eye lot of things it

needs to do to make its currency truly convertible. >> at this point the united states financial system is still the beak oen in the international community. i think my sense is it's going to be that way for a good long while. >> i agree with that. we did that i it dwesh obviously took a hit reputationally at the power and prestige in the world after the financial crisis. >> it's where money has gone in

the world. obviously. with respect to the specific things we're talking about here, andrea, i haven't seen any ammunition with respect to our ability to leverage a financial system, work for the financial system in a cooperative way to affect our sakes regime at all. >> they can do things quickly and are identifiable and concrete. it's very important that they be part of overall strategies and that we remember that not every case is iran. the iranian case where we have been exceedingly effective, as i argued earlier, with respect to bringing iranians to the table sshgs a unique set of circumstances. it is horrible conduct. it is clear violation of international law. it's a policy goal many terms of preventing iran from firing up their weapons and wish the broad agreement around the world,

including, by the way, by the russians and the chinese. they were particularly vulnerable with respect to oil and the banking sector. it all puts tremendous resores both to work. the governments, multi-laterally. we're referring to here. we also had the important collateral circumstance that we did this sxrp able to do this in a time that saturdays were able to increase their oil production and where the united states had its energy future going a completely different direction. with respect to us now being on track to become the large oil producer in the world, and, indeed, the increased production of oil by the wraits during this critical period in conjunction with the increased production by

the saudis is one of the reasons that the costs were actually bearable here in terms of our cutting off and reduce big more than half the export of oil from crude oil from iran. absent those productions, we would have had real cost issues with respect to the impact of the sanctions that we were putting on. for negative impact on americans and on the west from our sanctions, and we were able to manage that because of our energy -- to change our energy futures and saudi actions. >> let me drill down on china for a moment. in terms of their increasing leverage and the cyber war and their -- they have no reluctance to use these tools and we are -- i would argue -- more vulnerable in that the snowden leaks occurred only days -- when we were told that the president was planning to make that big part of his first big meeting with

the president. how has china evolved in terms of its economic and cyber tools against what we can leverage? >> well, the -- again, i am dealing with what's in the newspapers. for get information to counter proliferation and to do with the threats against the countries. to use cyber tools to steal private corporate information for competitive economic advantage. we clearly do the first. we are not alone. there are a lot of other countries that are doing the same. some of whom are very outraged by the disclosure of snowden and probably know more about what we

do than what their own home countries are doing. but that is something countries do. what china is doing and what some people call the greatest theft of intellectual property in history is really something we don't do and most other countries, not all other countries, do not do. china is doing in spades. one of the things we have to do is to get the chinese to understand in their heart of hearts, because they will not admit it publicly, that there is a difference. secondly, the chinese will not stop this activity in my view unless there is a penalty. now, this effort indicting, you know, five pla people is an effort to try to impose a penalty. it has a lot of problems. one of the problems is that one of the unfortunate things about u.s.-china relations when we hit a political hiccup, one of the first things either one country or the other does is cut off

military to military ties. in fact, having military to military interaction is a very important thing, and, unfortunately, arresting the five pla threatens that. i think we knead and keith alexander is here, and you can ask him about this. i think we need to impose a penalty for cyber crime in cyberspace and to be able to have a way and there are difficult legal and policy issues here to take away capacity of cyber criminals to conduct cyber threats. until the day we can impose in some sense asymmetric penls for this kind of -- i think it's not going to stop. i think just, you know, diplomatic interactions are not going to get us there. i would hope there's a task force looking at what those costs would be because i think, you know, the -- i understand why they arrested the pla folks. i think that's not going to turn

out to be the best and most useful tool. >> sorry. >> indicted. >> my apologies. >> i gave. >> we had massive and have massive state enabled cyber theft from the united states. we have been engaged with the chinese on this, and i think -- i talk a little more broadly about it. i do think there has to be a policy, and i chicago the chinese did not perceive any costs to this up to the point that it was raised. they certainly would use the snowden revelation, as you pointed out, as a pushback with respect to the dialogue that we have had.

very important to give back. it's very important to reject the equivalent argument that the chinese might make between espionage, right, and a criminal cyber activity and cyber naval and economic theft. they're very different things. the conversation takes place, and the -- >> there's an overall quality between the united states and china, but this is going to be something that's going to be raised repeaedly and directly with the leadership of china by the most -- the highest levels in the united states, and it's going to affect the overall quality of the relationship. you can't have a circumstance -- this is the conversation i think we have to have. between the wraits and china and where you have this scale of outright theft, and that dialogue needs to take place and there needs to be a cost associated with it. it needs to affect the overall quality of the relationship, and there needs to be a very direct

set of conversations about what is allowable, what's on, and what's off in terms of russia. >> what lerchlg do we have? >> the economic relationship, and there are a lot of elements. >> they will -- we will know it. the argument is -- it discontinues more. i would rather not have the in the overall public trade.

>> it if they don't change their ways, more of that will happen. that's what i hope we're looking for. >> i have to ask you because jack lew started the talks by talking about 9/11 and the evolution of the treasury tools many response. there is a big debate today about whether releasing five very high level taliban prisoners is the right response to get back a prisoner of war. steve. >> look, it's very hard, and the right questions are being

raidsed. if we negotiate with terrorists. we don't, and for good reason. the problem is if you swap or pay to get your hostages back, you incentivize hostage taking. that's a problem. there were congressional statutes requiring consultation with congress. you know, again, the limit of the administration was the following. we've turned over a lot of prisoners in afghanistan to afghan authorities and regretted gretably they have released a lot of them over the objection of our military. people who are now released in afghanistan who. it's troubling. that is what happened in

afghanistan, and disposed of those prisoners. our troop levels are coming down, and i think that the administration probably was in a very difficult choice of, look, we have an opportunity to get this guy back. the president said i think regrettably that all of our combat troops who basically will be out by the he wanted of 2016. i think that's unfortunate to have that kind of arbitrary cutoff. i would much rather have it condition space. in any event, if that's the policy, the question is so if we're not going to get this guy back, when? i think that is the case, and they basically said, look, we lost, and these are five guys, bad guys. at least we have a chance. this may be the only way to get our guy back. it came before the

administration. you can have arguments about whether how it was handled, whether they should have notified congress and all the rest, but my guess is that -- it's a hard one. >> with respect to this, one, there's a big difference between being a p.o.w. and negotiating with terrorists. it's an entirely different context here. that's what this is. the gunneries were mediating this, and will take some steps to restrict the activities of these guys. they are difficult decisions, though. with respect to incentiveizing the taliban and others who we are at war with in afghanistan from taking prisoners, they

don't need a lot of the incentives, right? we've been there for over a decade, and they know the value, frankly, of being able to -- of being able to take american soldiers captive. i find that persuasive. >> the only prisoner of war in the conflict and there were constraints put on the activities of the guys who were going there. it's a different context. it's essentially getting back p.o.w. in a war zone context. >> i take tom's corrections interestingly, because i read the press coming out of the

sunday shows which said that we had the osama bin laden -- that was not my understanding. i haut that's interesting. it is a point if we did consult on that, i think it's important, and record be connected publicly. because that argument is being -- >> i'm willing to make that correction. i know something about this. >> yes, indeed. >> i'm willing to make that -- i'm willing to take the opportunity to make that correction, make that correction public. >> are you making a distinction between consultation on the months leading up to and or and no consultation during the week or days leading up to the actual raid? >> there was not -- there was not -- there was not a consultation with -- with the congress with respect to any of the -- just any of the specifics around the osama bin laden. we had tremendous operational --

operational security concerns. and if, in fact, there had been a leak, with respect to any of the -- anything with respect to the osama bin laden raid, we would have, number one, probably not had another shot at it for another ten years, and we would have put our troops at extreme risk. >> i want to, in the few minutes left, talk about places where you don't think sanctions work. we talked about iran, and you've talked about the unique set of circumstances with iran. and to a certain extent, with russia and ukraine that targeted sanctions, you think, have already affected russia's economy, and potentially this behavior. where doesn't it work? steve? syria? >> well, a couple things. and i'm -- others can correct me on the numbers, but one of the issues that came, surfaced in

connections with sanctions against russia on ukraine is people, you know, the united states generally has to lead on these things, and encourage the europeans to come around. but i think germany is, i think, russia's number two trading partner, if you take the eu together it's far and away the number one trading partner for russia. we're way down that list. so one of the problems in sanctions is, you know, they need to be multilateral many times because the folks with the money, with the economic and financial relations, may not be the united states of america. this is why it was so important to bring the europeans along, which actually started in the clinton administration, to bring the europeans along to see around the way we did, because we were sanctioned out, in many respects, at least initially on iran. now the administration's -- two administrations moved that

goalpost further. so one is the question, you got to look at who's got the leverage. and if you're really going to make these things work, then the folks with the leverage have to be at the table, and have to be willing to sanction. because otherwise, they're not going to be effective. secondly, you know, it is tools can are cumulative in their effect. and if you can have a military element in addition to your diplomatic and all the rest, if you can have the threat of a military element, it is going to make sanctions more effective. this is the argument that we made on iran. we cannot make -- bring the table with the sanctions we'll have to contemplate military force and nobody really likes that. it is true, nobody when russia went into georgia, when russia went into ukraine, no one suggested the u.s. would engage russia militarily. but the fact that we have reinforced our presence in nato countries, the fact that hopefully the nato countries will begin to pay more attention to defense, and to increase their own defense spending, this again is something that i think

gives added leverage so a sanctions context. finally, they're at the question for how many things are you willing to threaten sanctions. we've now been on terrorism, we've been on organized crime, and drug trafficking, we've been on proliferation, there's now discussions sort of using it as a tool for human rights. you know one of the things you have to really decide is, because you can overuse these things, what are the national interests and national values which are so important to us as a country that we're willing to use this tool? and what are issues on which, you know, the advocates for this particular perspective will watch you use the tool but in some sense we ought to say you know, we've got to save this for the things where -- that matter most to us, and where they can be most effective.

so i think that's -- it's got to be an issue of priority in terms of values and interests, and in considerations of effectiveness, because you know, these things will become a wasting asset at some point. >> i think that's all correct. one is that, with respect to where it hasn't worked, i think overuse is an important -- is very important concept to think hard about here. as i said earlier, not every case is going to be an iran case and you have to think very clearly about what your objectives are. and it can't just be a reflex to go through this because, again, it's something that the treasury can do in a week, and military action it seems to me the two or three context, andrea, where they're difficult, right, is where a country is unplugged from the world economy. like north korea. now as the bush administration successfully was able to find a seam there and a connection that was effective. but that's one of a few. so if a country is willing to

live like north korea, and tragedy, and where their citizens are completely unplugged from the world, and suffer, you know, that's a more difficult circumstance in terms of -- you know, you can make it more difficult for north korea and we have, frankly, to engage in proliferation efforts and we can make it more difficult for them to get the kinds of things that can advance their program. but you have a more limited effect when they're unplugged from the world economy. and the second is, i think, as steve said where you don't have multilateral support. you know, for example, there's not an economic relationship between the united states and iran, there hasn't been since, i don't know what the relationship was, but basically since 1979 or the early '80s there really hasn't been an economic relationship and it was absolutely essential that we have a multilateral setting there, and where you don't have an economic direct economic relationship of any consequence if you don't have multilateral support you're not going to have an effective sanctions.

>> i think our time with you is -- has expired. but i wanted to thank both of you for your collective wisdom, and judgment, and experience, and for sharing with us today. it's been a great privilege for you. >> thank you for being here. >> thank you so much. [ applause ] now, if in fact you wait until the thing shows up, that's the worst but cheaper alternative, you've waited too long. when it shows up, it's not worse and less expensive. it's better and less expensive. in the case of our navigation example, we had companies like tom tom and garmin and magellen and they knew the smart phone was starting to take off. they understood it was possible that a startup could launch a navigation app. they say we don't see a threat yet, so we'll wait.

we'll respond when it does show up. when id did it, it took off. this is better and chicer. this is wor and more expensive. which do i choose? business leaders of any kind need to look much earlier into the life cycles of new technologies and recognize that before there is a product, there will be a lot of experiments going on. many are very visible. they're in the market. things like kickstarter and other crowd funding platforms ayou to see how people are playing with new technologies. that's the moment when you should get worried. >> how technology is changing the way companies do business, tonight on "the communicators" at 8:00 p.m. eastern on c-span 2. >> c-span's new book sundays at 8:00 includes kenneth feinberg, who oversaw the 9/11 victim

compensation fund. >> from the perspective of the victims, i don't see any distinction. if you try to justify any program on the basis of the victims lost, i can't convincingly explain why 9/11 yes, '93 world trade center, no. i think the only way you justify this program as a special carveout is from the perspective of the nation. a recognition that 9/11 was along with the american civil war, pearl harbor, maybe the assassination of president kennedy and 9/11, the impact on the american people was such that this was really a response from america to demonstrate the solidarity and cohesiveness of the american people towards these victims. >> read more of our conversation

with kenneth feinberg and other featured interviews from q&a programs on c-span sundays at 8:00. now available for a father's day gift at your favorite book seller. live now to the center for strategic and international studies where coming up in a few moments a discussion on china/russia relations. kevin rudd and former u.s. ambassador to china stapleton roy and others will talk about the increasing tensions between the u.s. and china and russia. speakers will also talk about the warming relations between russia and china. russia signing a $400 billion deal to pipe natural gas across the border to china. we which part this to get under way in a few moments. live coverage here on c-span