coal burning facilities you have right now would be a huge improvement over the status quo. if you're going to be in india or south africa or china where you're going to have a huge amount of coal consumption you would at least want to steer them in that direction rather than not having them go that way. there may be other technologies that the d.o.e. clean coal program can look at whether ways to capture emissions that come out of the flue stack or wraz ways to change the boiler. renewables are not going to give them base load, it is not going to be cost-effective in a lot of places. we are much better off continuing to invest in ways to minimize the impact of coal combustion than we are just trying to wish it away. >> thank you. there is a quick question i think we can do that. you qualify? please. >> thank you. david nelson with ge.

my question is what's needed politically to get european countries to exploit their shale resources? if you were to encourage it how would you encourage it? >> the first thing i would find a way to reward the owners and all those that get affected by the shale production. but honestly this is not all. in spain, for instance we have a big debate. it's not old. but one thing i would do. the second thing, i think that for many years in europe there was this idea of don't touch, don't tell in terms of electricity generation, generation in general. so people don't know really. we went for renewables. this is fine. don't miss understand me, this is fine. but people don't know what it costs in the end because i mean i'm not able to read the receipt

of the electricity every month. i don't know what i'm paying for the renewables. people should know. i should know how. it's not a fatality that we are bound to be dependent on an importer. we need to develop our own resources and of course efficiency. and on efficiency european union is very good. >> thank you. and on that very spirited note, let's thank the panel and look forward to secretary monjoining us very shortly.thsecretary joining us very shortly.esecretary joining us very shortly. secretary joining us very shortly. here are some of our featured programs on the c-span

networks. cass sunstein on the pitfalls of group decision making. sunday afternoon at 1:00, part of book tv's college series, we talk with recently published professors at johns hopkins university on the influence of hip-hop. on american history tv on c-span3 saturday at 8:00 p.m. eastern on "lectures in history," andrews university professor brian derr uses abraham lincoln's life to talk about times before and during the civil war. sunday afternoon at 4:30, a discussion on birth control advocate margaret sanger. her legacy and the impact race, social class and politics had on the birth control movement. find our complete television schedule at c-span.org. let us know what you think about the programs you are watching. call 202-626-3400. e-mail us at comments comments @c-span.org or send us

a tweet @cspan #comments. like us on facebook, follow us on twitter. here are a few of the comments we've recently received on the 114th congress. >> my comment is nothing is going to change in washington, d.c. at previous caller said it's too much corruption. some of these senators been there too long. it's time for them to go. give the younger ones a chance. new ideas. this country's on the wrong path. we not going to get anywhere as long as these senators stay in that same position. john mccain and them they been down there. the lindsey graham. it's the same old same! it's time for changes. people are working too hard in this country. have to work two and three jobs to take care of their family, and still not getting anywhere.

something has to give. >> i'm looking at the overall conversations that you guys have been having for the last 34 months. the congress, the government, is so huge what can they do when they go in there today? i tell you, they could be like the leaders that they should have been the leaders that i was raised around, the men that looked over at the communities that they lived in and said, these are our children, these are our young men and these are our daughters. what can we do in a realistic way to make this a better place to live. i know, i would adjure anyone that's going to carry power that's going to yield the idea of wisdom in front of the faces of us who are having to work and pay for it. guys, you know, we're living a pretty good life here. let's take what you got the opportunity to do and do something right and quit playing games with what you think you're going to value in life that you're going to have to give away one day.

>> my question to the 114th congress that is going to do nothing for the american people. i can't understand. how is it that congressmen become good people until they get elected. when they go to washington, the lies, the propaganda and it just seems disturbing to me that it seems like everything president obama does is wrong, and it's sad to me because i'm a pastor. i heard these people come on. your colleague just came on and said that he was a christian. well jesus said that if you do this to the least of them, you have also done it to me. >> continue to let us know what you think about the programs you are watching. call us at 202-626-3400. e-mail us at comments comments @c-span.org. or send us a tweet

tweet @c-span#comments. like us on facebook follow us on twitter. at the national press club, postmaster general patrick donahoe discussed the future of the postal service and how they are adjusting to lower mail volume. mr. donahoe has led the agency since 2011 and is leaving the job on february 1st. this is an hour. it is nice to be back here at the national press club and i'm glad to see everybody made it. neither rain nor snow nor gloom nor dark of night. that's very good, but this is not a good day to be a letter carrier. it's cold and especially going up and down steps. keep them in your thoughts today as they are out there making sure the mail gets delivered. i'd like to hank herb perrone and the newsmakers committee for making a little room for the

schedule for the lame duck. but 40 years my uncle bob rousted me out of bed one summer morning. i was probably a sophomore in college. and he wanted to make sure that i went down to the pittsburgh general post office in time to take the postal example. if if i wouldn't have done that 40 years ago, i wouldn't be standing here today. ended up working the afternoon shift and was going to university of pittsburgh during the day. i was going to graduate in four years and did that. so it wasn't easy because we had a lot of demands of the time back then. but i do consider it very lucky in terms of great start to a career. now if i could talk to a younger version of myself back then, at a time, there's no way i would have guesses i would have been at the postal service almost 40 years later much less having the honor to lead a

630,000-person organization of the service of the postmaster general. i truly was fortunate at every stage of my career. i found interesting challenges, opportunities, very good mentors, and that's a testament to a very very special organization, really great people who are dedicated to serve the american public every day, including days like today in the snow. however, when you have 40 years of perspective and you're still working to get out of a tight fiscal crisis you wonder about that young person who might join the postal service today. what's the organization going to look like in 10 to 20 years from now? how will we serve our customers in the future? will that person have the same opportunities today in the organization that i had almost 40 years ago? these are questions that need to be addressed and the best approach is to take a broad, long-term view of the organization and develop strategies that best serve both

our customers and our employees going into the future. account postal service operate profitably far into the future? absolutely. can it continue to adapt quickly to changes in the marketplace? we've already proved that. we can do that. can it continue to meet its full potential as an engine of growth for the american industry and american business? absolutely. can it do these things within the current business model? not likely. now if you followed my tenure as postmaster general over the last four years you'll know i spent a decent amount of time trying to push for legislation that would give the postal service greater operational flexibility. this means having greater control over the way we manage our workforce including health care benefits, it means fully managing our infrastructure, it means having greater pricing and product flexibility, and it means being able to solve problems and pursue

opportunities without irrational mandates and legislative requirements. retiree health benefits are my favorite example of an absurd mandate. unlike practically any organization, the postal service is required to pre-fund retiree health benefits that we promise to employees. we promise them we should fund them. but unfortunately, the congress has made the postal service prepay a 40-year obligation in ten years. which would have been very easy to pay it if the internet had never been invented. to compound the issue, we've massively overpaid for retiree health insurance. that's because our employees are in plans that do not leverage medicare. the postal service employees pay for those medicare benefits. so we pay for them and can't use them. under our current mandate we are supposed to pay a total of $96 billion into the tresh are you department account for health benefits.

we have already paid roughly $48 billion prior to 2011. we've defaulted on roughly $22 billion in the past three years. the sad part of this is that it could have been fixed immediately with legislation. if we integrate medicare into our retiree health care plans, we would be fully funded after one final $3 billion payment. we're done. we'd be fully funded. we're practically fully funded into one retirement fund and fully funded into another. so we'd be in better financial shape than any organization in the united states. and rather than overspend on health care we could be spending these funds on a new vehicle fleet package sortation equipment, letter sortation equipment. we could pay down our debt and we could significantly slow postagepost age age rate increases. what's holding it up? might be obvious -- shortsidedness. may sound a little harsh but it

would be too easy for me to just stand up and say it is congressional gridlock. to no avail we've tried to get postal legislation passed for the last four years. as much as we've tried to elevate conversations about the future of the organization we never get beyond the narrow interests that are intended to preserve the status quo. the post at service has put together a smart comprehensive businessman and made recommendations about legislative changes to get us back on sound financial footing. we didn't get much support from our unions or the mailing industry because it threatens the status quo. mailing industry views the future of the postal service mainly through the lens of pricing so they don't want the postal service to have greater product and pricing flexibility. i've always found this kind of odd, because the ongoing lack of reform creates more pressure to raise prices which is exactly what happened last year. our labor unions view the future of the organization mostly through a lens of preserving jobs and again fits as they

currently exist. technology is driving dramatic changes in the delivery service. just look at amazon. right now they're offering one-hour delivery in new york city. the postal service needs the flexibility to be part of those changes, and more importantly, shape those changes. the postal service is delivering packages seven days a week in most parts of the country. we don't need to be delivering mail on saturday. doesn't make financial sense given over 30% drop in our volume. and the public supports the change going to five-day delivery. my hope is that a new congress will find ways to build consensus and it has to start with a real willingness on the part of all stakeholders to take a longer term view of the organization. the narrow interests cannot continue to get in the way of the broader national interest. just this past year the american postal workers union mounted a protest campaign disrupting our

partnership with staples, which was a very good business partner for the postal service. the postal service partnered with staples to provide customers with more convenient access to a wide range rf products and services and roughly 82 staples stores. it was successful in terms of driving revenue for both partners. unfortunately, the apwu's approach is to keep all transactions at the post office. that is not convenient for customers especially in today's world and it is not a smart strategy from a retail perspective for our business nor any other business. we much prefer to be able to sell our products and services with a multitude of retail partners and be in popular locations to make it easier and more convenient for people to do business with us. it is an example of narrow short-sided views winning over the longer, broader long-term strategy. and unfortunately for now, it is a little tougher to find retail partners. attitudes have to change and i hope they will.

i've been accused of being optimistic to a fault, and perhaps i am. but i believe this new congress will take a fresh look at the long-term future of the postal service and pass the legislation that we need. as someone who's leaving this job in a few weeks, i'll offer some unsolicited advice on the way out. first of all, acknowledge the reality that the mailing and shipping marketplace is changing rapidly. first class mail is going to decline more than 35% in the past ten years. and that would be worth $17 billion in annual revenue. annual. not full-out. annually. $17 billion of revenue that's gone, and it is not coming back. e-commerce is driving big demand for delivery services and that's what's driving our package growth. location based technology is enabling tremendous new ways of adding value to delivery, and integrating mail and digital technologies is creating powerful strong business

opportunities for centers of mail. these are facts about our business that need to be part of the future business model discussion. will the postal service always continue to fulfill its core business message? yes. but, congress needs to look at the postal service as a business that is going to be a lot different in coming years and it should be viewed as a positive desirable outcome. second, congress needs to take a broader long-term view of the organization. america needs a strong postal service. it needs a postal service with a business model that's profitable over the long term so that it can continually invest in the future. we oiwe our customers and the nation a postal service that will continue to drive the economy, help business grow and provide continually improved products and services. the discussion about the future of the organization would benefit greatly working towards a 10 or 15-year time horizon. if you truly embrace the longer term view, many of the narrow

special interests that would have a completely different context and be much less important. third, the postal service needs the authority and flexibility to manage the organization more like a business. this means streamline governance, this means fewer constraints on products and pricing, workforce, flexibility and freedom from very irrational mandates that we're under today. we'll always have strong oversight and the checks and balances are in place, but we need to have an attitude across this entire industry that encourages flexibility in a way that we manage the organization and adapt to the marketplace. fourth, i would encourage congress to view the postal service as a test bed or a laboratory of change that may be applied to the rest of federal government. we look at our workforce and what we're going to need in 20 to 30 years from now, what we're doing today has to evolve. most people are looking for a single employer over the course

of their careers. in today's world does it make sense to offer the promise of a pension to a 22-year-old who's just entering the workforce? how reliable is that promise? does somebody want to wait until they're 70 or 75 years old to get that retirement? the postal service's financial issues are similar to those facing the federal government. at some point costs have to come down and the promises of benefits have to be paid. just look today at the unfunded liability for our military veterans, federal, state and local retirement systems. we've proposed transitioning from a defined benefit program to a defined contribution program for postal employees. a t.h.r.i.f.t. savings plan or i.r.a. would give employees much more mobility and flexibility, and it may be much more responsible and a much more honest arrangement when all is said and done. i would like to see the congress encourage much more experimentation at the federal level. the postal service has the kind of management that would appreciate are being at the front end of change and would

make good use of those opportunities. health care reform is another important area for experimentation. i don't think anyone would argue that the federal government isn't massively overpaying for all employee and retiree health care. let the postal service develop a much more cost-effective approach. we've developed some promising proposals and we should have the flexibility to pursue them. over the past four years, i've had the privilege of leading a great management team and a tremendous organization through some challenging times. i'm very pleased to say that our last fiscal year was the best in the past six years. we earned a controllable -- that's without the accounting for the prefunding -- but a controllable profit of $1.4 billion. and considering that we recorded a $27.27 $2.4 billion loss in 2012, that profit represents a big success for the organization. we've accumulated also $6

million in cash which gives us some flexibility to make some long overdue investments. it was pretty gloomy in 2008 and 2009 as we came out of the recession, and we were facing declines in every part of our business. we had to revamp and improve our core offerings, significantly upgraded our product development and marketing strategies which helped us to spur strong growth and our package business in particular. if you take a look that we offer date-specific delivery, free tracking of priority mail, that's a great value to customers from both the sender and receiver perspective and it continues to attract more customers to the postal service. however, we couldn't have offered those features if we hadn't taken a long-term approach to upgrading our technology and tracking systems. we've worked hard to put strong data and technology platforms in place to driver future innovation. one of the reasons we've solidified our mail ref u over

the past few years especially standard mail, is because of the rich reporting data that we provide now to our commercial customers. we've already worked hard to develop a culture of risk taking and experimentation. we're delivering groceries in the san francisco area. we're doing same-day deliveries in new york. we're delivering on sundays in many markets across the country and we're taking on some small-scale warehousing services. and all of these have revealed nice results. the door director is a digital tool to bring small businesses into the mail. it was an experiment four years ago that's now bordering on a billion dollar business annually for us. we've also invested in our product investment and marketing strategies. we've e altalized sales operations. our sales marketing officer and her team has done a wonderful job getting close to our customers and competing for their business. we have got a lot of momentum as an organization as a result. we've been just as aggressive on the cost side of the equation.

since 2006 we've reduced the annual cost base by $16 billion. that's a year. annual cost base. $16 billion. we did that by consolidating 305 mail processing facilities our post plan optimized window hours at 13,000 post offices. we eliminated 23,000 delivery routes. even as the number of deliveries increased by a million new deliveries a year. and we reduced the size of the workforce by 212,000 people relying on an orderly process of attrition without resulting in layoffs. i think from many perspectives, you have to say it was a result of developing a strong long-term strategy ignoring the nay sayers and following through. if we hadn't pressed so hard and moved as quickly as we did, especially on the cost side of the equation, i have no doubt that we would have run off the fiscal cliff by flou. had we done nothing congress would likely be bailing us out to the tunes of billions of

dollars annually. if there is one message i have today, it's this -- we made a lot of tough decisions that were based on the long-term view of what's right for this organization. we used every bit of flexibility we had as we should have. that should be seen as a strong argument for allowing this organization the additional flexibility it needs to deal with some of our bigger structural issues. if given that flexibility, i have flo doubtno doubt the postal service will continue to aggressive adapt in a changing world, changing marketplace and do so profitably. that would be the best way to meet the expectations of our american public. let me conclude by recognizing the performance of our employees during this holiday season. we saw a package deliveries increase by over 18%. and our on-time performance was the best ever. our employees were delivering in some tough weather conditions, like today, and on sundays, and they did a great job. and that's a testament to an

incredible organizational effort and employees who are highly dedicated to the public that they serve. with all the technology changes and disruptions, the postal service still remains a critical part of the american economy and american society. it has been my pleasure to serve this organization and the american people for almost 4four years. my successor, megan bren flan, is bren brennan, is going to do a great job leading the organization in coming years. makes it a lot easier to pass the baton knowing that the organization will be in such good hands. thank you again for the invitation today, the opportunity to speak with you, i've enjoyed getting to know many of you over the past few years. and with that, i'd be happy to answer any of your questions. thank you very much. >> thank you. do we have a microphone in the audience to pass around?

>> you mentioned four years of work trying to get a postal bill passed and obviously that didn't happen. realizing that you won't be the one to carry the ball forward, how do you see the prospects for legislation with the new congress? there's obviously a new chairman of committees in both chambers and postal reform is not something that they've been listing so far as a top priority but it will be a priority for the organization. what's the strategy and what do you see as prospects for a bill in this congress? >> thank you. well, first of all, i think that the work that senators tom coburn and tom carper did was very good. it sets a good base. it was a very good long-term look at the organization, covered many different fronts. and again irritated some people. let's slim it down, let's do the minimum going forward. that's not theight idea going forward. so i think that having the basis set going forward is critical.

i think that we've got some good support in both the house and the senate. the new chairman of the committee on the house side used to be the subcommittee chairman of the postal service so he's familiar. i think he and elijah cummings both understand we need to make some changes. i'm looking forward to action from the house. same on the senate side. tom carper will be the ranking member. senator johnson was on the committee, spent a lot of time on the chit, kramommittee, came to all the hearings, was very interested in the issues we face. i think it is very important to have a strong postal service going forward. it may not be the first thing that comes up but i think the house and senate are both looking for some wins and i think from a postal service perspective, there is a pretty good chance that there will be a good bill coming out of the here. my hope is it addresses long term as much as short term issues. >> let's open it up to the

audience. >> from the "washington post." you mentioned -- you suggested that congress view the postal service as a test laboratory for the federal service generally. then you talked about does it make sense to have the promise of government pension to a 22-year-old. i wonder generally what kinds of changes or what kinds of things would you like to see the postal service do that would apply to the entire federal service and specifically as it relates to pensions. are you suggesting that the government do away with pensions or offer pensions to postal folks? >> i think the issue that i've had with pensions over the years is that i think when a person like me came into the system and things were a lot different in terms of a person spending many years in one place, it made a lot more sense. when you see employees today and we see it with our management

trainees, our management interns. we go out and recruit kids off a college campus. many of them come in and spend three or four years and they're off to another job. i often think to myself, in the case there, and in the case especially when you look forward to and lot of change potentially in the postal service in 20 years from now i think it is fair to employees to give them a lot more control over what their retirement actually looks like. so when they come in we should be working with the unions to come up with some very interesting proposals around whether it's an i.r.a. or some type of a defined contribution 401(k). give people the flexibility to manage those things in a way that gives them more control. if you're a postal person coming in today at 25 years old, 20 years from now you may not want to be in the postal service. the way we're set up from a federal perspective, they're locked into a pension that they'll get when they're potentially 70 years old.

i don't think that's very fair. i think that we should step back, take a good look. i'm not saying rout the system or take benefits away. i think it is critical. as we see in the u.s. today, that we have good pension systems and good retirement systems for people so they're not having to work until they're 70 or 75 years old. part of the changes also would be rules of withdrawal and making it a little bit harder for a person to move the money into something that would make good sense for them. but i think that the postal service and federal government should be at the cutting edge of some of those things rather than far behind where everybody else is. >> what about the issue of health care? >> we overpay for health care in an extraordinary manner. i mean we've got the fbhb. which was a great program in 1962. federal government and the postal service would be the largest purchaser of health care

out there in the health care market today. in the postal service we would have over a million people in the plan. we should be able to go out and, whether it's an individual plan like a blue cross, or a mix of a number of plans based on some regional offerings, should be able to get a really good plan that provides a lot of flexibility, that provides a forward look on health care, not just some of the things we have today, and get it at a reasonable price. i mean i talked to other people -- matter of fact, there's companies represented in this room who told me what they've done from a health care perspective on a much smaller basis. we should have the same opportunity not only in the postal service but the federal government. federal government has not funded one cent of retiree health benefits. that's probably a trillion dollars worth of liability sit something out there and it is irresponsible not to address it. >> you touched on this a little

bit in your speech but could you say what your sense is of how much smaller both in terms of it infrastructure and staffing does the postal service need to be going forward as mail volumes continue to decrease? >> what's happened over the last ten years from a postal service standpoint is we've been able to pretty quickly adjust to changes in volume. it's interesting because i think people define mail as mail and packages and packages. within those markets there's a gigantic range in terms of what people pay and how much revenue comes in to the postal service. i think the key thing to keep in mind is that over the course of the last ten years, we've lost 60% of single-piece mail, blue mailbox mail.

49 cents. that 49-cent mail is the most profitable mail we have. that's also the volume that's gone away the quickest. so as you look forward you think to yourself, we'll probably lose another at least half of what you have there. so you go from $20 billion down to $10 billion. at some point it will setting out with greeting cards and some bill payment. when that happens, you go from $5 billion in revenue a year that you'll lose. we've been growing the package businesses 50% up in the last five years. it is great. it is a very competitive space. it is a very competitive space. u.p.s. and fedex are excellent competitors, excellent companies. but you've got companies out there today like laser ship and ontrack who are also excellent companies who are able to undercut everybody from a price perspective and have some of the same technology everybody else has. knowing that you can't say we'll just grow our way out with packages but that's truly a dog

fight. so understanding that, and looking ahead right now we've got about 490,000 career employees. another 140,000 non-career employees. we need from a flexibility and an aabilityffordability standpoint a balance going forward. we've got negotiations coming up in february with the union. how can you come up with an affordable career employee so that you can provide a good, well paying, secure middle class american job for people in this country. if that means 400,000 people by 2020, that's where we might be. it will all be dictated by the amount of revenue that comes in to our system, and that's the thing. so it's a tough question. it involves a lot of discussion with unions. it involves a lot of work with the mailing community. because we certainly feel with asking for a lot more flexibility with pricing, you don't want to do that in a way

that puts the about is inbusiness in harm's way by irrationally pricing mailings. so there is a balance there. >> direct marketing news. let's talk about non-competitive price, market dominant products. you know that i write for the folks that would argue you're talking about them as one of those narrow special interests, that they indeed are not that narrow, that they are floating the boat with what they pay. i'm just -- i no he that if i speak to them they'll say, well, okay there needs to be flexibility in pricing but it is very expensive to market by direct mail versus internet. >> correct. >> marketers have that option. they'll say, raise the price less volume. so i know in speaking to you and folks in the postal service in the past, you said, hey, if we get control of pricing we'll be fairly reasonable with it. how can that work going forward with what you say? >> i think that, again,

market -- the market will decide what you can actually charge. that's the position that we need to be in. i think when you're in that situation, the unions also understand that the market decides what a person actually is paid. it is a balance, the fact that we're self-supporting, no tax money, you've got to be able to have reasonable volumes, whether it's mail and packages, and reasonable price excellent service and visibility levels and at the same time be able to meet payroll and offer jobs that people want to come in and work for on a daily basis. so that's the equation. fact that we're locked up on pricing on one side -- i have argued this to the unions. i said any kind of price gap is a wage gap. you can't argue that one way or the other. you've got to have that kind of flexibility. every other organization has that. i think that from a postal service perspective, we've had a great group of governors. little short now. we need some of these positions

filled. but they've always displayed a great responsibility and understanding where the mailers are coming from, as well as the postal service, as well as the american public in this whole equation. >> if i could just follow up. >> sure. >> in new jersey right now, there is a legislator that introduced a do-not-mail legislation, like do-not-call. people talk about junk mail they don't want. if you were given full pricing -- i know i'm asking you to crystal ball this -- how would you see that working in concert with the fact that marketing by mail is so expensive. if it gets more expensive, more people go to the alternate methods of internet. >> i would tell you it should be performance based pricing. that's where we should go. in today's world you can measure everything. you know that a lot of the people that are investing in mail today are also investing in digital. you can measure hits in digital. you can measure with the intelligent mail bar code not only the day that a person gets a catalog, you can get within an

hour when a person gets a catalog. you can actually see from one address who bought something and respond to that mail piece. i would say that what we should be doing especially in that world which is pretty competitive really when you think about it. it is not really market dom flant in indominant. we should be looking at a pricing scheme that's performance dominant. >> can you speak a little bit about the mail processing consolidations that you are resuming this year and the early retirementar retirement, buyouts and the like that will come with it. you talked moments ago about short sidedness between congress and unions and this is something they've both been very outspoken and against. >> let's frame that up first of all. it is important to understand what we're talking about because in our world, people love to put things out there that may cloud the issue a little bit.

as i mentioned to ron before we have a substantial -- we've experienced substantial loss in certain portions of our mail, especially single piece first-class. that drives everything from a processing facility standpoint. it used to be half of our first-class mail. just to put it in perspective, in the last ten years, when i mention that $17 billion number? $14.5 billion of it has come from single-piece first-class. so as we've looked to try to consolidate the networks what we've done is taken a look across the entire market. the mailers have already made these changes. the mailers have made these changes. when i was a kid starting in pittsburgh in 1975, every night bell telephone would bring mail in. anybody remember bell telephone? how about mello nochltn bank. they would bring mail in. or duquesne light. they're still our light business. every night. every facility across the

country would have that. people would bring process it and deliver it overnight. at&t dropped the mail in three spots today. verizon drops mail in two. many of the large companies that are dealing with credit card billing drop mail in one spot nationally. so they've already consolidated operations. so we have this plant network that's still useful from a standpoint of destination volume putting mail in order for a carrier to deliver. but the whole front end the afternoon shift that i started on, is not there anymore. there is no afternoon shift. so what we've wanted to do is to take the remaining facilities db you heard we've already consol tated 305. remark pli the service is still great. tracking is still great. the value is still there. that's how you end up with a profit, by the way, versus a loss two years ago. we'll consolidate the last 82 out so we'll be in a situation where we will operate these facilities on about an 18 to 20-hour day versus about a 12-hour day now. there is money to be made on

that from the standpoint just not having as many facilities, not having as many managers and supervisors, custodial work light, heat and electric. but the other thing that it allows us to do is make good decisions going into the future around equipment investment. we have i think about 6,700 letter sorting pieces of equipment out there. you don't need that many when you consolidate. so there's a number of these changes. bottom line is this. with the exception of the holiday and your birthday, okay you think about your own mailbox. when is the last time you got a piece of mail that had a stamp on it? you know? this whole change represents at most and will affect at most 4% of the mail. we think it is closer to about 2.5%. so you can't hold an entire system hostage and continue to run up debt and continue to avoid making investments over 2% to 4% of the mail, and that mail

is the mail that unfortunately for us is going away at the fastest pace. now from a responsibility standpoint we've never laid anybody off. i have worked very hard. i told you i'm from pittsburgh. most people don't remember, 1980s in pittsburgh we lost 100,000 jobs in that city. gone. the steel industry went away and a whole bunch of other joshsbs in a whole bunch of towns. most people don't even remember or didn't even remember hearing about it back in the '80s when it happened. that stuck with me for all these years and i've always felt very compelled to make sure any changes we make, the minimal negative impact on employees. people do come, to joe's point, to work at an organization for many years. if they do that we try to make sure the employment is taken care of going forward. >> i wanted to know what you and the postal service has done to

comment -- >> from an assault perspective in the postal service there's a number of situations that we have. any time that anybody ever has an assault, whether it's been a customer, or anything internally, there are many venues to report that. the ig, union grievance process, we have a postal inspection service. any time anything happens we deal with it immediately. nothing is taken lightly. we follow up and we take whatever actions we need to a, prevent it, and, b, address it if it happens. [ [ inaudible question ] >> we have the best system in the united states responding. we respond immediately if anything comes up, whether it is a known assault or even something as harsh words. we take all those things very seriously and address them immediately. >> in broader violent crime it has increased in recent years, particularly robberies

nationwide. anything you would recommend for your successor here about robbery. >> part of what we're look being at with consolidation is making sure our letter carriers get to start earlier in the morning. in neighborhoods -- it's unfortunate, some neighborhoods in the evening especially delivering packages today, our letter carriers are a little bit more exposed to somebody with bad intentions. so as we consolidate, the other thing that happens is the mail is available much earlier for letter carriers in the morning so we should be able to start them rather than 8:00, 8:30 in the morning 6:30, 7:00 in the morning, you get them off the street before dark. >> so you talk about what the postal service isn't. with the decline in first-class mail. you've talked about the dog fight for package delivery. postal service may win this, may not. so what do you see though in the long term, you know ten years out, five years out, i don't know? what is the mail going to look

like and what will role will the postal service have in delivering whatever it is the new concept of the mail is? >> well i think the key thing to keep in mind is the fact that we are everywhere every day. we have 215,000 routes every day that visit americans. even on sunday now. we probably send out somewhere over 4,000, 5,000 delivery routes. not full. maybe two or three-hour routes for sunday package delivery. even with changes that we've had to make in our post offices, we still have about 32000 physical locations in every town in america. and we've had with the post plan we've shrunken the hours but we've kept the presence there and that was done on purpose. i think that what you'll see going into the future -- this is why we expanded into sunday delivery. this is why we expanded into groceries. this is why we expanded into same-day delivery.

why we've expanded into warehousing. do you know that today in a couple spots you can actually order something and it comes right out of our post office delivered to your house the same day or in one day? i think that with the changing american demographics, much more of a need for convenience that we shouldn't limit the postal service to the idea that it is just mail or packages. there are going to be digital products out there. there was an interesting article in the paper last night at ces. somebody has now developed a way to sign on to the internet just looking at it with your face. right? facial recognition. you can sign on without even a thumbprint like apple does now. there's a need to make sure that that face is who it is and the postal service can play an interesting role there. so there's plenty of interesting opportunities going out in the future we think from a standpoint of delivering many differ things. grocery business could be a multi-billion dollar business from our perspective.

we've seen -- to me i would never have thought about ordering groceries and getting them delivered to my house. but as you see what people actually do, it is amazing that the growth opportunities you've got out there. we're working with a couple partners now. we think there is big opportunities. so taking advantage 215,000 routes visiting houses every day, 30000-plus post offices. we think there is a very bright future out there. it is just you can't limit yourself to what you're doing now. you got to keep it wide. you got to keep it flexibility. that's why we're asking for flexibility of product and pricing going into the future. >> you can talk about expanding. you said you were criticized for precisely doing that. the office of inspector general has recommended pilot projects for non-bank financial services. ralph nader has excoriated you

for -- the regulatory chair person put out recommendations and how many of those have you followed up on. on the other side, selling off post offices. the living new deal project has called this a bank heist with no hop on the beat. [ inaudible ] how do you respond to that? >> sure. i think, again the key thing for any successful business is to work within their core. we don't know anything about banking. i mean we would be perfectly interested in talking to somebody that comes in that would want to use a facility to accept a deposit. but to set a banking system up and lend money to the unbanks, we don't know anything about that. >> you don't know anything about groceries either. >> we know a lot about delivery.

we are the best delivery company in this world. that's what we know. we know more about delivery than anybody and we know how to get things to a person's house. wherever they live, we know how to get groceries delivered fresh and cold. that's where our core is in delivery. from a facility perspective, we don't need them. we have buildings in many of these places. as people have moved away to pay bills online and that's smart. it's free. it's convenient. without $14.5 billion a year coming in to the coffers in terms of bill payment in the mail versus bill payment online you have to make some tough decisions. if you knew a lot about me you would know that i am fanatical about our old buildings. i've spent a lot of money in this postal service over the years to maintain and update and keep a lot of old facilities. when you have one building across the street from the other, you have to make tough decisions. in many cases what we've been able to do is take those

buildings and sell them off to people who have been able to re-employ them or re-use them in the public manner. the berkeley post office would have been a great sale. they were to put a hardware store and a coffee shop and a couple other things. maintaining an old post office when we have something right up the street makes no sense. and that's what you have to do going forward. that's the whole idea of short-sightedness versus the long approach. and we certainly, again, you know take our role and responsibility very critically. but our role is delivery our role is retail. again from a retail perspective we've invited many people to come in and we're starting to work with them on using our retail and delivery as ways to expand the business going into the future. to step in to noncore areas, especially whenever you've got, in this competitive world today money is one thing. but gray matter, and the ability to concentrate on doing more than three or four things really good in any company you're

hard-pressed and that's why we've taken that approach. >> you basically rejected the resignations of the inspector general and the -- >> let me define the inspector general's recommendation. it was a three-page paper said $98 billion is made in the area of same-day loans the postal service would be able to get 10% of it which would be worth $8.9 billion. there's no other research. that's it. read it. >> you talked about some of the detractors to postal reform and their short-sightedness and narrow interests, and it would be -- they need to take more involve involved [ inaudible ] necessary but how do you, i mean like you said you've been trying to do this for four years, and the [ inaudible ] how do you shift that. >> it's a hard thing, eric. i've seen firsthand when you don't shift.

in the city of pittsburgh the steel mills went down the drain because both management and unions could not shift. the auto industry. my mom and dad worked for generous motors, great place. they didn't act and look what happened. and at some point in time people have to step back and assess, geez we better start thinking about the future. and we better think about you know, not, you know what's going to happen in our quarterly reports or what's going to happen in terms of employment in my union, or union dues or the next year, and think about what the future looks like. if you step back and you say to yourself, the growth opportunities in this organization are in delivery of packages and other goods whether that's groceries, or hard goods that we keep on file for somebody or something like that, that's the way you got to be thinking about it. mail in terms of linking up with the internet, or catalogs that get people out of the internet

that's where the growth is. a person putting a piece of mail in a blue mailbox, that's not the growth. if i took a survey of people in here, i'll bet a lot of people in here don't pay any bills in the mail. i hate to say that. but that's what's happened. and so knowing long-term where you're going to end up when you look out and you say to yourself, geez, you know in ten years if we only have 7 billion or 8 billion pieces of first class mail and we have 22 today we better make some changes. that's the way people have to start looking at this. not what's going to happen next month or if you'd only not delay. delay the closing for another three months while we study -- forget it. there's no reason to study. everybody knows it's going to happen anyway. so start looked out in the future and make the plans that way. >> i'm sure you've made that argument to these people before. >> yep. >> do you see any sign of their willing to -- >> i think that we -- i think that what you saw with the bill was probably the best attempt to take a look at the future. i mean the one thing they did in

there is they addressed the health care, they addressed the federal employee system that we're paying. they even put a threshold on single piece -- on mail delivery. under 140 billion pieces we go to five-day delivery. that represented 33% volume loss. that's a lot of mail to lose. before you actually make that change. and so i think that you saw at least an effort on their part to try to start defining the future. and it's critical. >> i'm a member of the newsmaker committee and i just first very short. somebody owed me some money before christmas, and they sent it to me on the monday before christmas. i didn't think i'd see it until 2015. it came on tuesday. >> oh, good. there you go. >> thrilled. >> thank you. >> but, however what i understand from the federal register, what i've heard from the apwu, what i've heard from

others, is that these changes in service standards that are kicking in this week that some day would have had to put that check in the mail to me before 8:00 in the morning in order for me to get it under these changes, at the very least. and that you played down the effect of these changes, and how many -- how much mail has a stamp on it. but won't this have a serious effect on like seniors who are getting prescription drugs in the mail or churches putting their bulletins in the mail or people like me that are waiting for checks? isn't this a real shot to productivity and really pretty serious issue for millions of americans who've come to expect things at certain times, certainly within their own systems? >> sure. it won't affect medicine at all. that's all just rhetoric. no medicine. the medicine is all commercial. what it will affect is the small portion of what's considered overnight, single piece volume that comes out of a mailbox then

goes from one spot to another. so washington, d.c. for an example, the chances of we'll still deliver 20% of the mail overnight minimally. it will probably be higher. our minimum estimate is 20%. today we deliver about 30% overnight. the majority of the overnight volume that's affected one way or the other is bill payment. there's very little mail that goes into the system today, unfortunately for us, that goes from one address to another. you know, the fact that you're, you know, with the exception of your birthday and the holidays and the fact that somebody owed you money, there are very few people that actually use the mail for those purposes. and it's unfortunate but that's what's happened. and so, things like church bulletins, commercial mail. not affected. medicine, commercial mail, not affected. your bills, your statements coming from banks, none of that is affected. what is affected is the small volume, the shrinking volume that's in a blue mailbox where somebody's either sending a money in the mail or maybe an

invoice from -- in generally across two different processing facilities. if it's within one, it will get delivered very probably on an the idea of 8:00 a.m. 8:00 a.m. is not the cutoff time for collection of mail. collection of mail will not change. 8:00 a.m. is the cutoff time for an extended reach for overnight service. i'll give you an example. we'll consolidate erie, pennsylvania, into pittsburgh. if you're a mailer in erie and you want to get mail delivered back to erie overnight and you're commercial you have to have it in raw by 8:00 a.m., or if you sort it to a five digit zip code if you get it in by noon you'll get that delivery. so you get your mail in by noon you, in fact have an expanded delivery window because you don't only get your erie mail delivered overnight you can go as far as state college and johnstown and the whole city of pittsburgh. so there are some improvements in this from a commercial mailer standpoint. the rhetoric, don't do anything, keep the status quo, that's what you hear. [ inaudible ] -- for hundreds of

thousands of people. how has that reach affected the way -- cybersecurity and what [ inaudible ] >> i think that the cyber breach for us and i think that many companies are seeing this you know, it's unfortunately for all of us becoming like a normal practice. we, you know, there's the latest cyber breach that is happening that's called ransom hack. where somebody actually captures your computer and sends you a ransom note. that's happening. out there right now for bitcoins. pay the bitcoins and we'll free your computer. these are just ongoing things that you consistently see. what happened to us was this. i think that we followed very closely both industry and

federal recommendations around the way we protected our systems. and that was to a large extent, you build a wall and you have a moat and you don't let anybody in. and unfortunate thing is as people get into systems, and you've seen this across the country, once they get in sometimes if they're undetected it becomes problematic. so we have now employed a substantial change in not only maintaining the wall and building the wall stronger, much more scanning internally. there's a lot of new products on the market right now that are not even for sale yet that we're using. we're using them coming from companies like microsoft institutions carnegie mellon who are the best cyber people in the people. the other thing we're doing is employing an over-the-sorter review of non -- like a third party to take a good look at how we're doing thoings make sure that everything that we're doing is better than any industry standard.

but the unfortunate thing is, it is -- it's an unfortunate fact of life that we all face with the cyber intrusions. we just have to be almost as vigilant versus hoping that you're never going to be hacked. >> if i may follow on that-some of the foremost experts when it comes to cyber crime we've interviewed them how to protect ourselves as consumers. did they take it personally? were they particularly annoyed with this? what was the response within, this is our turf? >> to a large extent -- >> and we'll leave this discussion to go live to a workshop on lobbying strategies featuring faculty and professional lobbyists who will talk about fund-raising, advertising and public relations, as well as litigation strategies. this is hosted by american university's public affairs and advocacy institute. >> -- of lobbying and one of the most important elements of lobbying is lobbying the

executive branch lobbying rule making. to put this in context congress passed fewer than 300 bills this last congress. and some of them weren't very important. where as our next speaker neil kiirwin who is president of the university and was provost and dean of the school of public affairs and was appointed to the faculty in 1975, he'll tell you in more detail just how important it is to have a strategy of lobbying after a bill is passed. bills are vague. frequently, they're general. spes 'tisty is put on through the rule-making process. and we have one of the best people in america to do this he has the best book in my opinion although there are not very many books on this topic. entitled rule making how government agencies write law and make policies. the founder of the center for the study of rule making, and

certainly you know about rule making because this president is shifting to rule making, economic orders and other actions when he has divided party government. i want to welcome neil kirwin. neil, this is the 22nd year of the institute. you've been at every one and we appreciate that very much. we appreciate your support. he's going to be speaking on lobbying and the regulatory process. thank you, neil. >> thank you, gentlemen. thank you, jim for that introduction. i wanted to especially thank him for the plug for the book. i've spoken to the class 22 times. the book is now going into his fifth edition. the classes apparently had no effect whatsoever on the sales. >> wait a minute. aren't you having a movie made of it? >> yeah. sure. yeah. yeah, we're casting it now. all right. what jim did by way of introduction is absolutely right. this is a field of study that,

except for students of political science, who are reasonably advanced in their work, and frankly the practitioner community in washington, this is an arcane science. but as pat well knows, as jim well knows most of the heavy lifting when it comes to public policy formation and implementation occurs in this setting. this is not meant as any dismissal of congress. but as you've heard during the course of this week and certainly well before, congresses in the past several cycles have found it increasingly difficult to reach consensus on significant pieces of legislation. there are some notable exceptions that i'll mention in a moment. but the irony is on those major pieces of legislation, along with them were enormous grants of authority. along with all the controversy that goes along with it. to agencies of the federal government.

now, when i wrote the book in 1994, initially, i made a statement in it that created a considerable amount of division in my field. including people who studied at congress like professor thurber, for example, who thought at the time that the entire universe revolved around capitol hill. and i think in large part in a city like this that's understandable. but what i said at the outset based on research that led me to write the book was that rulemaking has been now for almost a century the most important source of law in america. and i don't think any longer that is being seriously disputed. because the evidence i believe is overwhelming both empirically, and in terms of the patterns of practice we see in the advocacy communities here in washington. organized political interests, now you're working fast track and trade promotion? >> yeah.

>> okay. you probably picked one piece of legislation where rulemaking's impact is going to be limited, at least initially since so much focus is on the dynamic between the congress and the president, and granting the president this extraordinary authority. you know the controversies that are surrounding it. but if the president loses if he doesn't get fast track capability in this my guess is that he will turn to the processes that we're talking about today in one way or another. his famous statement, most often associated with the immigration reform act, or lack thereof but a comment that he's made in past, he said i have a phone and i have a pen. and this is what he's talking about when he talks about a phone and a pen. not entirely, but largely. organized political interests discovered this area long before

the political science community did. the first survey of work that we did for the book asked lobbying organizations, publicly oriented, privately oriented, nonprofit and the like, how much time and treasure they spent trying to affect the hill, versus trying to affect administrative agencys the results were stunning. even then, which is now more than 20 years ago, these respondents said they were spending as much or more time attempting to influence agencies of government as they were capitol hill. and that has only increased as the congress' ability to produce legislation has declined. now why are they most important in volume? jim mentioned 300 pieces of legislation, which i find a surprising number. >> less than. >> less than, okay. now he didn't say how much less than. but i imagine it's somewhere between 290 and -- all right. and you know, as your

instructors know some of those pieces of legislation are probably a little less than earth shattering right? you know, wishing pat griffin happy birthday. you know national pumpkin week. you know because it's really critical to acknowledge that. but of course, some of them are immensely, immensely important and impactful. rules are much the same. take 300 pieces of legislation and consider this. that in an average year, democrat or republican administration agencies of the federal government alone will produce somewhere between 6,000 and 7,000 proposed and final rules. for the multiples are enormous. and when you take a major piece of legislation like the affordable care act, or dodd-frank, you're talking about literally setting in motion hundreds of substantial rulemaking efforts. now volume alone really isn't

the best measure of impact. but you take my job now i'm the chief executive officer of a university that is now the seventh or eighth largest employer in the district of columbia. we operate with a $600 million budget. we operate a set of hotels that we call residence halls. a set of restaurants we call dining facilities. we have air issues water quality issues, we have workplace safety issues. we purchase equipment. we deal with dozens and dozens of administrative agencies at both the federal, state and local -- at the federal, state and the local level. now, if i were to ask my general counsel as a ceo of any major company might how the law

pertains to something important we do let's say it's the protection of animals in biology, or psychology labs. or the exposure of my colleagues in an aspect of our physical plan, the hazardous substances or materials. mary kennard who is our general counsel and was general counsel at other universities before she came here can give me two things to read. she can give me the united states code that applies to that area. and the code is the compilation of all the statutes written by congress. and we can find it in the appropriate statutes those things that apply to, let's say, the composition of rugs in classrooms. trust me you won't find much. the other thing she can give me to read is the code of federal regulations. and that code of federal

regulations is very different from the united states code. it's written by agencies of the federal government. written by people who are not elected. written by people who are deeply expert in how much of what kind of substance you're worried about in this rug is safe for a human being to be exposed to. and that code of federal regulations is developed in a process i'm going to talk about in a moment. and 99 times out of 100, maybe 100 times out of 100 mary is going to give me the code of federal regulations to read, and not the u.s. code. because the code of federal regulations contains the most specific statements of our rights and obligations under the law we're likely to get until we have an enforcement action imposed on us, or we take one against somebody else. so this is the law that largely defines the quality of life in

this country. and in countries well beyond our borders. because of our interactions around the world. the reason why your statute that you're working on is a bit different is because as i understand trade promotion and fast track congress delegates to the president the opportunity to write effectively a piece of legislation. but after he's done with that, and it gets an up or down vote in the congress the hard work that we're talking about here this morning has to be done. it could be in the trade rep's office. it could be in state. it might even be in some of the domestic agencies that affect labor conditions, environmental quality, and the like. you know, from your reading already on trade promotion some of the opposition to it is a concern that we're going to compromise some of our workplace safety and environmental standards. but all of those standards every one of them. and by the way every breath you take in this room has been determined in part by a

regulation written in this case by the environmental protection agency. so that's why we're here this morning. then finally, the way i would have you understand this is never, ever underestimate the importance of a statute. statute has huge framing authority. everything an agency does by way of rulemaking has to be authorized in some way or form by an existing statute or one that's being written. but all the statute is capable of doing for reasons i'll get to in a minute, is setting boundaries, parameters. within which agencies provide the details that you and i all need to live our lives. all right. these are just some examples recently that you're all aware of, of where rulemaking is really driving the bus.

affordable care act. dodd-frank, i mean it's ironic there was a piece in yesterday's "washington post" about the failure of a republican congress to roll back the volcker rule. well the volcker rule has a lot to do with how banks structure their portfolios of investments and the like. an aggressive rule was written by the department of treasury. and other banking related regulators. the republican congress was hoping to roll that back as we -- as the congress rolled back certain elements of derivatives regulation in the earlier congress. they failed yesterday but they're going to take another bite at it. harp has to do with the ability of homeowners who find themselves underwater with mortgages to effectively renegotiate their relationship with the lender. the immigration reform is where that great state, and i got a

phone and i got a pen came from. a president finding himself frustrated by the inability of congress to enact immigration reform, and promising to do something on his own. climate change, at least as the debate is currently engaged in this country has been driven by rulemaking by the environmental protection agency. under a statute that was last amended 24 years ago. and then finally every so off the often you'll see in the popular press a report on rulemaking. they are few and far between. but talking about the political sensitivity at the end of this last off year election cycle to ensure that the president's agencies don't issue regulations in a way that compromised the ability of democrats to get elected. so if you read between the lines in an awful lot of contemporary american public policy is an implicit admission that this is

where the action has moved to. and the formal research on the topic i think established that a long time ago. now you're going to hear every one of these criticisms. if you go into this line of work, there is no way you will avoid working with rulemaking. and when you do you will hear these complaints about the process. almost all of which have some merit. it's an unconstitutional preemption of substantive rights in a democratic process. everybody here has at some point read the american constitution, right? good idea if you haven't you might want to catch up on it at some point. all right? the first thing the founders say about how we govern ourselves article 1, section 1 of the constitution says very simply the legislative power will be invested in a congress of the united states.

it doesn't say a congress of the united states and the pension benefit guarantee corporation. or the federal aviation administration. or the environmental protection agency. but in point of fact most law now is written in places the founders would have found probably appalling. so the critics who say the founders say it was made by elected representatives are absolutely right. but what the founders couldn't possibly have contemplated is the society as large and an economy as complex as this one that requires constant readjustment of existing public policy. even if you're not writing any new law. what a clean water act means in 2014 is fundamentally different than what it meant in 1972. and if a congress can't assemble

itself to rewrite the statute, an agency will do the job of catching up. all right? poorly informed subject to strategic use of information constrained in data collection and analysis. in a minute i'm going to show you how difficult it is to write a reg. agencies now operate in an environment that is highly constrained in terms of their ability to collect and use the information they need to have to write law. the most important element of this statement is you. because increasingly, you and the organizations you represent public private, nonprofit are the most important sources of information agencies have to work with. because they have found themselves over the past 30 years increasingly unable to keep pace with information as it's generated in the private sector.

budgetary problems, staff issues, all the things that you read about in other parts of your public administration literature have impacted rulemaking profoundly. they have increased the importance of your ability to convey information to agencies. and i mean that sincerely, not just because you want to influence it to win but because the american public depend on the highest quality information to ensure the rules that are written are accurate and effective. very slow, obsolete by the time it's enforced. the federal aviation administration can put out an air worthiness directive in 24 hours. and you and i should be very pleased about that. all right? but the last time we measured how long it took the environmental protection agency to produce a major regulation, and a major regulation under the law is defined as any regulation that has an impact on the economy of $100 million or more in compliance costs each year,

how long do you suppose it takes epa to write a reg like that? anyone want to hazard an estimate? hmm? >> ten years? >> ten years, good lead but you're a little bit high. if it was ten years even i would give up on it. all right? >> seven? >> well it's actually half of his number about four and a half years. and the reasons why it takes that long we'll be talking about throughout the course of this. but it is a slow process. and you have to worry, particularly as we saw in the financial crisis and aftermath of 2008, when you're dealing with industries where the half-life of effective information is weeks or days, the ability of an agency to keep pace with that and regulate those transactions is seemingly questionable. there's no easy answer to it

it's just simply a fact that we all need to be aware of. and then finally it's an inequitable process. like much of our public policy system. this is a process that favors well-resourced, well-organized interests that have easy access to their membership, easy access to the highest quality technical, scientific and frankly political information that they can get their hands on, and that have developed over time, bridges to agencies, that they can cross every time they need it. and many of the same principles that we've read about, talked about, in class about working with members of congress and their staff apply to agency interaction as well. some are different. and i think there are some notable differences in this that we'll talk about in a second. why it thrives and why it survives.

congress is a limited institution. it has only so much time. their processes as you have already studied and in a process for example to get a trade promotion piece done is exotic, all right? but you know obviously once it passes then things can move very, very quickly. you know we've had a similar in the past five to ten years, of some of the arkana of congressa procedure. the ability to block. the ability to put what some people feel are inappropriate riders on existing pieces of legislation. in any event even if congress were the essence of efficiency, the demands of the american people for public policy are limitless. if i took a poll of the ten things that you'd like to see

change altered, created in the public policy process just in this room you would create an agenda for congress that would keep them busy for decades. so at some point there has to be you know an agenda control. there has to be a limit on how many things they can address. the processes, we mention it. but the other piece here is that there are a lot of political issues that congress simply does not want to deal with. they would prefer not to be on the record voting for certain kinds of things. and frankly that -- that charge has been leveled at things like trade promotion legislation, as well. you can write a piece of legislation that gives the president broad authority to establish trade relations between us and another country. and the congress doesn't necessarily have to take responsibility for some of the details that might hurt one or another interest here in the states. that is absolutely the way many

political scientists view the delegation of authority to agencies to write regulations. it's called responsibility transfer. and there's a flip side to it, as well. i fly a lot in this job. i travel a great deal. i'm on airplanes more than i want to be. every element of that airplane and the flight i take and you take, is regulated by the federal aviation administration. the aircraft, its exterior, its interior, its avionics, the air spaces that we fly over and in and land in, the pilots, the flight attendants, the airports, are all regulated tightly by the faa. now, the faa is populated by largely engineers.

some transportation specialists, some public policy specialists. but when i get on an airplane and i think to myself, who wrote the regs that are going to -- that are going to essentially define this flight, i have some consolation knowing that it's the faa, and not a subcommittee of the congress. and that's no great disrespect to congress. that's not what it really was created to do. but the implication of what congress does, the fact there's respectively no limit on what the congress can do in most areas of american life, also bring to the fore the fact that the details at some point have to be written. you have to -- you know at some point you have to decide what the appropriate design from an airplane engine is. what the proper number of hours are for a pilot to fly. what kind of materials can be

used inside an airplane to prevent unnecessary deaths from fire. those decisions are delegated to agencies of government. presidents like this one learn pretty quickly that executive actions are a lot more fun than work ing working. divided government in particular elevates that perception. it doesn't always happen in the first term. it almost always happens, if there is a second. and certainly very early into a presidency when a presidency realizes he's dealing with a recalcitrant congress. and his alternative is to turn to a set of agencies run by men and women he selected, who have direct accountability to him, that he'll turn to devices like rulemaking to get an agenda moving that can't otherwise get moved.

rulemaking, you ought to review, you ought to consider this, as just the next step in your work after you're finished with the bill. as a matter of fact you ought to be thinking about this phase of the process at the earliest stages of your work. because if you do your work with the hill right you can make your work with the agencies that follow somewhat easier. and somewhat more predictable. and again, if you're fortunate enough to work with a well-resourced organization, you're going to find yourself advantaged. because you're going to find agencies in large part that if you work with them properly with a degree of respect and integrity they're going to come to depend on you for information that they, in turn, can rely on. these are the things right now as you're working in the field,

moving into working in the field all of these things are conditions that currently affect the use of rulemaking. partisanship re-election's been with us forever. the impact of sequester, and sequester-like budget constraints have profoundly affected the ability of agencies to collect and use information. those of us who have been around town a long time, pat and jim included know that when agencies are faced with a call to reduce budgets rightly or wrongly, they tend to go to low-hanging fruit. and like it or not, low-hanging fruit includes training of personnel, extramural research, and the inducement for early retirement of senior people who are very expensive in favor of

hiring younger folks who aren't. every one of those things in their own way reduces the ability of an agency to keep pace with highly -- highly vocal constituencies, demanding some type of action. uncertainty, that's just simply a fact of life that we all deal with in terms of public policy deliberations. and if you look at this administration and beyond there is a massive pentup demand out there for action in a wide variety of areas. and right now, if it's going to get done, unless there is a very dramatic and somewhat unexpected change in the environment between congress and the presidency, much of that's going to get done in these processes we're talking about this morning.

here are the four or five, six, institutions that influence how rules get written. and i want to make a point at the end of this particular item that you need to be very much aware of in your work. congress starts the process by enacting legislation. the legislation with some notable exceptions will always have two critical characteristics that create fertile ground for your work with agencies to write grants. number one the legislation will always be incomplete. it will never answer all the questions nick needs to run his business. simply incapable. there's no way that the legislative process can or wants to produce policy at that level of detail.

and then the second is that language can be vague. oftentimes vague language is a marker. if you were an anthropologist or archaeologist and you were digging around 300 years from now and you saw language like "in the public interest," what you were really looking at is the inability of congress to agree on the kind of direction it needs to get to an agency. the kind of evidence that the congress was under intense pressure from multiple contending constituencyiesconstituencies, to produce something. but their reaction was not to alienate everyone. but to turn the hard decisions over to a third party. all right? and so congress -- you must work with congress in order to set

these broad parameters. the president plays in rules that he decides to play in. and let me tell you how. then later i'll show you some data on it. ronald reagan created in 1980 the most significant power over domestic public policy that any american president has created, perhaps, in the history of the united states. he mandated that all proposed and final rules passed through the white house before the published in something called a federal register. now the irony here is that ronald reagan was not known, and probably still isn't, as a guy that had a big, hard, strong grip on the details of government. he was not seen as a guy who really respected that. he was, you know, he was known for two things you know. one was to get the government off america's back.

and end the evil empire. well russia is russia today. you know, it's better than the soviet union was. fine. if not, that's yours to judge. but he didn't get the government off america's back. matter of fact, the reagan administration and republican administrations since have been plenty active when it comes to rule-making. because as i'll mention in a moment, rulemaking is not a partisan tool inherently, democrat or inherently republican. it is a tool that can be used by any president with an agenda. ronald reagan had an agenda. every president since has had an agenda. but by this one executive order and executive orders that have been refined -- that executive order has been refined by subsequent executive orders since, every president has issued one related to rulemaking, or more than one, president reagan created for every american president that followed the ability to

influence american domestic public policy in ways that no presidents had had prior to that. by requiring that rules pass through the white house, he created the ability to put a presidential stamp on each one of those. now that becomes very impractical. no president's going to touch 7,000 regulations, and do anything else with his life. so what president clinton did to refine reagan's executive order was to set up a process where agencies negotiate with the white house, each year to determine what rules are going to pass through the white house for the year. and that's what we had today. there's still a sizable number. the office they passed through was something called the office of information and regulatory affairs, oira. remember that. you are now part of a very select group of americans that know the place exists.

all right? but it is arguably one of the most important offices in the federal government. so the president decides obviously his staff decides, which rules at epa are the most important, which ones at osha, which one at the trade rep which one at the pension benefit guarantee corporation. all right? and by implication, what he's saying is that i'm reserving the right to change those if you don't like what i read. and i'm going to show you some data in a minute that indicate that is not an empty threat. every place that imposes, every thing that imposes a requirement on an agency where rulemaking occurs is an opportunity for you to influence that for an interest you're representing. that's how you have to see it. and this is a big one. if you know, you're fortunate enough to have one of your rules

selected by the president, and if you're able to get a hearing at the white house. the court system i'm not going to spend a great deal of time on. challenges to rules in court are very common. they are typically not the kind of work you're going to do unless you don't go on to law school. they're argued in federal courts. federal courts are populated by federal judges. federal judges have lifetime appointments. removing a federal judge is a lot more difficult than, let's say, an impacted wisdom tooth. it takes an impeachment proceeding just like who would be to impeach the president of the united states. the last time we successfully removed a federal judge from office he'd been in jail for four years. i wouldn't call it an effective constraint, right? so let's not go there. let's go right down to press and media. except for the highly specialized old newsletter and now blog communities rulemaking

is -- there is no function of government as important treated less often or less well. on rare occasions you see some of the national newspapers with a story here and there but it's really unusual. the critical nexus is between agencies and interest groups. it's grown more and more important over time. it's influenced by all of these other characters in ways i'll talk about in a moment. agencies are the place where the rules get written. interest groups are the people that bring vital information to that process. so your job as a public advocate, as a lobbyist is to ensure your group or organization has the substance and the strategy to get the information you have to the right people at the right time. sound familiar?

but it's crucial. anybody who walks off the hill with a -- or out of the white house oval office with a signed piece of legislation, and says oh, boy that's great, you know, we're all finished, we won, and you throw a cocktail party, and you get on to the next day, you're going to get exactly what you deserve. because everybody who thinks they lost is already at the agency that's been delegated responsibility for the statute seeing what they can do to undo it. your job is to hold on to everything you've won, and to minimize everything you think you've lost. and we've got hundreds of examples of both. the statement by john mccain when mccain thought he had secured election reform and then saw what the federal election commission had done

with the piece of legislation he wrote with feingold he said i don't recognize this. i thought this was something that was going to change the way we do business, all it's done is make matters worse. so, let's talk quickly. the fundamentals of rulemaking are established in something called the administrative procedure act. it's almost 70 years old. it was written in 1946. immediately after the second world war, that's significant but we don't have time to go into why. all right? the administrative procedure act establishes three fundamental principles, and if you understand these three principles, and read all the rest of the stuff that's written about rulemaking process and legal requirements attached to it, every one of those things that follows the administrative procedure act is based in one of these three principles.

principle number one. is that agencies are required to provide information to the public in advance of writing a regulation. that information today is written in something called the federal register. how many people have seen the federal register? okay. i mean you know, if you're reading the federal register, you've already established yourself as eight or nine standard deviations out from a normal american citizen, all right? but if you've read it you know that almost in every day you'll find an example of a proposed or final rule. now the information today that has to be contained in advance of a rule making is something called a notice of proposed rulemaking. nprm. and in it, you will find the

problem that the agency is attempting to deal with, or the issue. the congressional authority that gives the agency the right to go after it, and what the agency is proposing to do about it. in other words you'll get a draft of the regulations. there's a variation on this. something called an advanced notice of proposed rulemaking. and this is a device that agencies use basically to test the waters with people like you. it's not a formal proposal at that point. it's an idea. the agency's basically saying to the public we're thinking about writing a reg about rugs in classrooms. we think we have the authority to do it under this statute. we think this is the problem that has to be solved. what do you think. and what the agency can do then

is to gauge both the public reaction to whether or not they had legal authority, and whatever the public already knows about the problem. so, you know one of the many associations that represent universities might weigh in and say there's nothing wrong with carpets, you know, in university classrooms. so knock it off. you don't need any more. all right. or they might say yeah it's a really serious problem because there are very dangerous chemicals in those carpets and students sitting in a classroom for any more than, let's say 25 minutes, could have serious health issues. that's not the case, by the way. hang around at least until i'm done then you can leave, all right? but fundamentally, that notice of proposed rulemaking is the official notification to the public that we're thinking about writing a rule. now here's what you need to know about that. if this is the first you've

learned for your interest about a rule that affects your work the bus has already left the station, and by the way, you're likely under that bus somewhere. that means other people have almost always been in touch some way with the agency. not in anything nefarious. because everybody has the right and opportunity to participate in discussions with agencies. but the fact is, you need to know this is happening the moment the staff of the agency is considering it. and there are a variety -- we could talk in the q&a about how you might go about learning those things. but simply put, that's very late in the process. by that time, the agency has already made a major commitment to whatever it's intending to do. the second piece of information that has developed around this requirement is that agencies are required to consider certain kinds of information when they

write a rule. not just telling you about it, but what kind of scientific and technical information is required for them to write the reg. and once again you go back to the home statute maybe it's the occupational safety and health act, and it will tell the agency usually in general terms, these are the kind of data you should assemble to write the rule. principle number two. is that once you're informed the agency must give you the opportunity to participate in the process. and the minimum requirement is they allow you to write to them with written comments on the proposal. now that takes on great significance. because after the notice of proposed rulemaking is written, and the agency receives their comments from you and others, they then have to write a final

rule, and that also appears in the federal register. and the major difference between a final rule and the proposed rule that presided it is that the final rule contains a summary of all the comments that the agency received, and what the agency did about those comments. and one easy way to challenge an agency in court is to demonstrate they ignored a comment that received a significant comment that you submitted. and you can actually trace from proposed rule to final the changes that were made in the rule based on public participation. and those that might have been made because the agency decided some other way. and then principle number three. this, too, is important although you hope you don't have to resort to this, it will happen on occasion.

agencies are accountable the three institutions when they write the reg once it's written. they are responsible to the congress. they have to submit the final rule to the government accountability office and the government accountability office does a review to determine legal sufficiency. this rule is consistent with the statute that it's based on. now the accountability of the congress goes way beyond that. because if a congress doesn't like the rules you've written let's say for example, how the new chair of the house environment committee or senate environment committee feels about climate change rules, they can haul you up to the hill they can order a general accounting office study, or general -- governmentability office study. they can do all the things that

congress normally does to conduct oversight. but there is this technical piece that an agency has to meet going to gao. accountability number two is to the president, and of course that's through the process i just described a moment ago of passing proposed and final rules through the white house. and then finally the mega tonnage, the stuff that really only the well-resourced organizations can do and that's suing an agency in federal court. and the standards to sue an agency, i'll cover very briefly if we have the time. now, since this act was passed in 1946 congress has routinely returned not so much to what the agencies can write rules about but how they go about writing them. and they've enacted a series of statutes to ensure that agencies pay particular attention to certain kinds of things. every one of these things here is a door open to you if you

choose to go through it. one of them is the paperwork reduction act. in my view and i've said this before, this is the closest thing to surrealism in legislation that you're likely to get. all right. i won't go through the entire process, but in effect agencies have to estimate in advance how much burden they're imposing on you and me when they write regulations. so it's going to take somebody at american university 35 minutes to fill out this form. now i'm not going to go into the details about how they determine how many minutes it takes to do various things. but the simple fact is you have the opportunity to challenge estimates of paperwork burden. i mean it's not a great way to spend your life, but it's an opportunity. the second is the national

environmental policy act. and that impacts rules that have a significant impact on the environment. if you can determine and make a case that a regulation, let's say being written by the department of commerce, is likely to have a significant impact on the environment you may be successful in requiring the congress department to develop something called an environmental impact statement. and an environmental impact statement looks, in terms of process, very much like a mini rulemaking. because you have the opportunity to participate in not only the research that's being done on the impact statement, but you can comment on its quality after it's finished. regulatory flexibility act, and this amendment to it provides special access to rulemaking for small and medium-sized businesses. you may represent people like that.

the federal advisory committee act establishes standards for agencies that want to bring together groups of experts in the development of a rule. and then finally the data quality act which is a constraint on agencies to ensure that they're using the best quality information available scientifically when they write a reg. once again it's an opportunity for you to participate in the process and to challenge the agency. now all that means and many other procedural requirements that are out there, that we don't have time to discuss this morning, means that agencies have found conventional rulemaking increasing difficult to conduct. because of all the requirements they have to meet. so what you have to be on the guard for is agencies using what i call one of the mutant aspects of rulemaking.

and these take a lot of different forms. dear colleague letters. letters of interpretation. policy from agencies to the public that say this is how we are interpreting existing law and policy. oftentimes these statements go right up to the edge to say you are required to meet these standards. but they're sending strong messages to the public that this is how we're going to evaluate your behavior. these tip kri are not subjected to all the process i mentioned earlier demanded by the administrative procedural act. and they are now very very common. ironically, for every danger there is in them writing something in one of these things that hurt you is the possible

advantage of them writing something in one of these that hurt helps you. so the issue is once again the ability to interact effectively, legally with agencies to get to them the best possible information. lettalk tactics and what we've observed in terms of the research. advocacy starts in the congress. you have to -- you have to be cognizant of the fact that this legislation is being turned over to an agency. we talked about these various elements before, but from here on down you can have some influence on where a piece of legislation goes for implementation through rule making. in some cases it's very obvious. if you get legislation on climate change it's going to go to the air office in the field.

but there could be ancillary activity that goes somewhere else. so you may have an opportunity to participate in terms of the routing. deadlines and hammers. all right. a deadline is -- a deadline is not a technical requirement. it's a political statement. anybody here from cleveland? nobody from cleveland. anyone who was from cleveland at some point? you've all heard of cleveland. yeah, you've all heard of cleveland. anybody heard of the cuyahoga river? good. in 1971 -- well 1972 we had passage of the clean air act. sometimes before the passage of the clean air act, the cuyahoga river ignited. the river ignited.

right. okay. jim and pat and i, we're not chemists. right? my son is an engineer but, you know, i'm a political scientist so i can often be intimidated by big science. but it strikes me when a river ignites. right? you probably have an underlying issue with pollution and the river, right? the congress agreed and of course this was a year or two after the famous santa barbara oil spill as well. but fundamentally what occurred is they wrote the clean water act, which is a landmark piece of legislation. and by the way if you're interested in political history, the period of late mid-60s to mid-70s is a period of immense congressional productivity in terms of legislation that has had immense effect on the quality of life in the country. and the clean water act is one of them. but one of the things that congress did in the clean water act is to say that america's

rivers will be swimmable and fishable and drinkable in two years. now, you have a river that's on fire fire, and two year later you're expecting it -- or expecting one of you to go and4púj drink it. strikes me a an ambitious expectation. especially when i just told you it takes four years for the agency to write a rule. deadlines really provide the opportunity for congress to say we are really serious about this. but in addition to, that when a deadline to write regulations is missed, the congress can actually impose a standard that will be in place until the reg is written, and that can be a very burdensome standard both for the agency and for other groups. deadline for outside interests

to say you're going to move fast essentially tactically the group saying i got the information for you to move fast and if you don't use it you're going to move slow all right. and if you don't move quickly, with or without a hammer we all of a sudden have really significant leverage. with we can go to the hill and have them deal with you directly because you're dilatory or frankly we can sue you for missing a deadline. and we've seen lots of examples of successful lawsuits under deadlines leave ss leading to a requirement that the agency who messed a deadline negotiating with the party bringing a suit. so all of a sudden you're in a very advantageous situation. the other thing we're seeing lots of examples of, i'm sure pat and jim have seen this a lot, congress is almost -- finds itself in a reversed situation with agencies.

instead of agencies reabouting to congress we now see congress reacting to agencies. and they're doing it in a variety of ways trying to catch up trying to maintain some degree of control over the bills they think they wrote. and rules are established through authorizing legislation. but appropriations bills can be used in effect to accelerate or decelerate rule making by removing funding on the one hand for a rule or increasing funding to move the thing along quicker, you know, for research or for staffing. and then, as we saw by the way, you know, in the bill that kept the government going for another eight months or so we saw writers attach to that, you know, fundamental budget bill what was designed to affect

derivatives risk. so congress is in it, they're in wit both feet, they're in it at the front end, they're in it in the middle, and they're in it in the back. there is something, and let me get to this one on the next slide -- yeah. >> a guest speaker said derivatives were defined three different ways in dodd/frank on purpose to give the agency more power to actually select the definition that they wanted because they could have more power not on the hill at that point but with the agency defining it. >> yeah. well, i mean, if but but if you're saying that the agency has the power, you're really saying that the groups that influence the congress to write those three different definitions were expecting some advantage from one or more of those definitions. >> right. >> right? yeah. so there's also something you should be aware of although it's

used rarely, is congressional review act. the congressional review act you've heard part of. that's the element that set the gao up as kind of the reviewer of record. but congress can actually veto to a rule or regulation if it chooses to. but it basically takes a fresh act of congress steined edsigned by the president. it's only been used once, only successfully once. now, go fwhort the agencies. this is where the core work is done. in my view, and i've been studying this now for more than 20 years, high quality information is the currency. you've heard in this institute, you know, you can use bad quality information in public deliberations once, but you're not going to get to use it twice. well that's very much the case with agencies. they have a memory just as long,

in some cases longer than the congress. these are decision where is there is a great deal at stake -- health welfare, life and death. so scientific and technical information, depending on the field of study, is crucial. if you don't have it you're not going to be effective. you can write in and say, hey, i don't like this. but it's not going to get you very far. agencies not only need to know why you don't like it, you know what they valued more often than not, you don't like it, what's better? and what's the scientific or technical information for or in support of your position? you know if there's formaldehyde in your shirlts or blouses, and by the way there probably is, trace elements of it, you ought to know the best

science out there on how much formaldehyde it takes to hurt you. and that's -- you know, that research is done in the public sector, but it's also done in the private. nobody's got a monopoly on integrity. nobody's got a monopoly on high quality work. but in your business where you're transmitting crucial information to agencies you have a special obligation to understand that science and understand what constitutes good quality information or not, because you will be communicating. increasingly in this process the impact of the rule on selected populations is going to be something very important, because in most cases agencies can't ignore it. they can't ignore it either because they're required to study it under law or regulation or because practically they want to know what's coming in over the transom after they