mr. smith, i would like to start with you. reading through both your written testimony and the comments that you've provided here this morning, you have outlined steps that doe has taken, that really get us to a point where there is -- there is less time between the approvals. i appreciate what you have done with re-alignment. your testimony states that this legislation is "not necessary." now, this is not saying that you don't support the legislation. i certainly understand that you have, again, under your leadership, and with secretary moniz, you've issued several final authorizations. again, i appreciate the comments

and direction that you are taking. but i think we here in congress need to be thinking long-term. secretary moniz has made very clear that he wants to work through this process, but i worry that perhaps a future secretary of energy might not be as favorable to lng exports connelling out of this secretary around the administration. so i question that i would ask you very directly is whether or not you think s-33, as it is written, is workable and achievable. >> thank you, madam chair, for the question. first of all, we understand the intents and interest of this legislation and in fact, as i listened to many of the comments that have been made here in opening statements, we share many of these drives, many of these core values of transparency, make being prudent

public interest determinations. so i think we have a lot in common in terms of what we want to accomplish and we understand the intent of the legislation. in fact, the changes that the department of has made to our internal process has been along those exact same lines, make sure we are making good, solid public interest decisions that withstand scrutiny. so we think we are currently moving in that direction and we're using the current statute in a way that protects the public interest. that said, your direct question about the workability of the legislation that's being proposed certainly if this legislation is passed, as currently written, the department will be able to accomplish the mission. we will, as always, accomplish the letter and spirit of the law. we believe there is a solution we will be able to comply with. >> well, i appreciate that. what you're telling me is you can do it, you have been doing it, 45 days is workable. >> yes, senator. if this is the legislation that is passed, we can comply with

the law. >> i understand. let me ask you a question regarding lng and alaska. as you no he, the facility there as has been exporting lng since 1969. some forget that alaska has been engaged in the export business for a long, long period of time. granted, these have been small amounts but it has been a process without interruption, the longest export contract that we've had in the country. so i think it has laid the groundwork most certainly for things to come. of course we also have the bigger project, the alaska lng project that i believe merits a conditional authorization from doe on the basis of what the department itself has described as these unique features of an alaska project but you have an

800-mile pipe. is it doe's understanding this legislation would no no way affect lng alaska eligibility to x port to non-lng countries and the project will receive an extended deadline. >> thanks for the question. i have actually visited the facility in alaska. spent time on the north slope. so we have a keen understanding of opportunities and some of the challenges with all of those projects. it is my understanding that we've already stated that we have held the right to do a conditional authorization for

projects coming out of alaska. it is my view this bill would not change that, we still have the ability to issue a conditional authorization for both of these projects. the north slope project has additional complexities that might require additional authorization. in addition as we read the law as currently written, it doesn't appear to make any distinction between the lower 48 and alaska in terms of the time limit that two impose on the department. >> thank you. i appreciate you going out there and spending some time. >> thank you, madam chair. i want to be clear, i like natural gas juxtaposed to what we are discuss something on the floor. which is a dirtier source of

fuel. dempbtly like exports. but i like something even better than those two bsh -- i like cheap domestic sores of energy. i think part of this discussion is how we ensure that we're going to make sure that the u.s. economy takes best advantage of this. so i have a bunch of different questions. maybe i can cue it all up. mr. durbin, talk a little bit about the democratic natural gas markets. the potential for the transition of the maritime energying to natural gas as a fuel source, again to dpli with environmental issues aurl up and down the coast. how do we get that right. mr. cicero, what price point -- again, those were very exaggerated rates. but the aluminum industry an several other mineral industries just had no choice. the price fluctuation came. guess what? those factories shut down forever.

these long-term contracts get locked in on export at say a rate for a long time because ofthe nature of those contracts. then the domestic market is based on that international market not locked in to long-term contracts. what price point do you start worrying about the impact to you industry? my guess is it is a lot narrowing than people might imagine. then the doors shut and factory is not open again. it is not like you turn the lights back on again. this is what we saw in the northwest. aluminum plants shut down forever and ever. okay? so this is very important to midwest industry issues. third point is mr. smith, i just don't know what happens when you get this list, you say, okay, here we are and we're not done. denied. so is that denied now like you're back at the bottom of a 100 permit list? or denied and like maybe in two years i'll think about you again? my question is i think the denial part of this legislation

is a good idea in concept but i think what it might actually mean on projects that really shouldn't be denied is an interesting question. i wonder if you have -- as quickly as people can answer that, that would be appreciated. >> to start with the markets on natural gas going forward. we think there may be some additional opportunities as an industry but nonetheless first is power generation. no question we'll continue to see natural gas grow in the power generation market. second is the industry and manufacturing. petrochemicals will be a huge part of that. over the road -- rail, road, but that's not a huge demand draw. then exports of course. >> on the price. >> my energy intensive consumers

consume about 75% of all the natural gas of the entire manufacturing sector. their operating costs range from about 20% energy to as much as 80% of the cost of making anything from plastics, chemicals, fertilizer, cements, steel, glass. there's two parts to that answer to that question. there is no specific price point. but first on the table is the fact that natural gas is subsidized and regulated in so many countries across the world that is kept at a low price. for example, china may buy last year they bought lng at $16 but they were providing that gas to mr. non-residential consumers -- manufacturers at $1.78.

we are looking long-term, not short-term. the fact is there are uncertainties in the domestic market in terms of what price point can producers produce gas. okay? they can impact investments. no one forecasts that the price drop of crude oil. that was a surprise. that's impacting investment, oil and gas going forward. that will impact the supply. no one forecast it. what we do know is from 2000 to 2008 the price of natural gas increased by over 200% in the united states. that was over a 20% increase per year.

over that time frame we lost 44,000 manufacturing facilities. now those plants shut down were not entirely because of energy. but i have those types of companies and they were a major part of the plant shutdowns. >> thank you. maybe mr. smith can get us a longer answer -- i mean a more -- that's a pretty big question. i mean our time is over. but we can either get a short answer and a longer written answer. however, madam chair, you want to proceed. >> i can give a quick answer. i think it is important to emphasize that when we look at each applicant we are looking at each on a case by case basis. each order is a long, detailed document that we've endeavored to write in good, clear, common sense english that has to address all points made by the intervenors in each case. we get varied comments. some strongly pro, some strongly against. and depending on the comments we get, we have to address those and make our public sbes determination based on a variety of factors. what we do subsequently to that would depend on the individual case. so there's not a rubber stamp.

there's not a particular answer that comes out of a spread sheet. it would depend on the case. >> thank you. >> thank you. i'm now going to turn to senator barrasso, going a little bit out of order with the early bird rule. next in order to those who have, based on when they have to return to the committee. no, i understand that, i said we would go to the sponsors of the bill for their questions, and then go to those who are next in line, which would be senator davanau after that. >> thank you, madam chairman. mr. smith, you correctly state as to add regulatory insurance to the applicants for the lngx exports, and as you said the

department does share the goal of transparency and certainty of process. the -- one of the areas that we disagree a bit is the department you said is committed to act expeditiously, but i don't think we've gotten those results, because the d.o.e. has given final approval of final applications. there are 33 export applications pending at d.o.e. a dozen have been pending for more than two years. an additional 13 have been pending for more than a year. so could you explain a little bit this discrepancy that we're seeing here? >> thank you, senator. first of all, yeah, as we understand the intent of the legislation, there's some agreement. in terms of how far the process currently operates, the way the department's operating is there are two important things that a particular exporter needs in order to build a plant. they need to have to show they can build the plant in a way that it's safe.

and with the department of energy to export the molecules, and those two together create a project. our process now says that we look at a particular -- an applicant after it's completed that first process to show they can actually build the plant safely. in that aspect, we've moved very quickly. essentially as soon as these projects have come out of the queue, or out of the foot process, we've moved very quickly. with one of the applicants, we acted the next day, within 22 hours. so i think we've demonstrated that our intent certainly is to move quickly. but we also have to act in a way that's judicious, and write these orders in a way that withstands the scrutiny they're sure to receive. there's a variety of views that we have to balance. >> so is it fair to say the department of energy would be able to comply with the deadline that's set in the bill? >> that's my view, yes. >> thank you very much. mr. carney, it's my understanding 21 countries import more than 40% of their natural gas from russia.

in your testimony, you say that the united states is in an excellent position to improve liquidity on the global lng market, to european countries to access lng, and accelerated process, licensing would put downward pressure on gas prices in central and eastern europe well before even a single molecule of american gas might even reach europe. so could you further explain how u.s. lng exports help european nations if lng is not actually shipped to europe? >> thank you, senator, that's an excellent question. it actually already has. because the mere fact that the united states no longer imports in large quantities lng outside the u.s. actually put a downward pressure on european prices already. one of the reasons gas has to be negotiated, long-term natural gas supply contracts in europe and in central and eastern europe as well, is that these countries built up terminals, and they have access to the energy market.

and supplies from qatar, from nigeria, from other places that were supposed to go to the united states ended up in up. so this has already happened in the past couple of years. looking forward, if there are additional quantities on the international gas markets, that will put a further downward pressure on these prices, especially if central and eastern europe manages to complete its market integration into the eu. there is the single unified energy market. >> mr. eisenberg, you stated that the overwhelming number of economists have looked at this issue, including the department of energy itself, have all repeatedly concluded that lng exports and domestic manufacturing sector can co-exist.

can you expand on your comments there? >> that's a really excellent point. i've read most of the studies at this point. i'm not an economist, i know a lot of smart ones and i've read most of them. the list is pretty long. they've basically all come out to the same place. they all come to the same spot. if i could read you something from the updated -- nara actually updated the study for the d.o.e. a couple of years ago. the last page of the executive summary has the title, u.s. manufacturing renaissance is unlikely to be harmed by lng exports. they say our analysis suggests there's no support for the concern that lng exports, even in the unlimited export case, will affect the renaissance in the united states.

we're also seeing this in real life on the ground. everybody's winning here. >> thank you, madam chairman. >> thank you, madam chairman. mr. durbin, i want to start -- you've heard the claim that u.s. liquid natural gas exports could result in the kind of inflated lng prices that australia has experienced. can you talk a little bit about -- and explain to the panel where the australia example is not directly analogous to the u.s. markets, particularly in light of the dramatic differences in market size? >> sure. i appreciate the question, senator. i would say it would be like comparing apples and oranges. i'm not even sure they're both fruits. if you look at the size of the economy, you know, in gdp, we're more than ten times greater. our production of natural gas is more than 11 times greater. the infrastructure that we have in the u.s. for being able to produce natural gas, there is no comparison, which allows us to

be able to produce the gas at a much lower cost. and i think the real important point here is that right now, what australia is experiencing, is because they are exporting literally 50% -- more than 50% of what they're producing, they're exporting. even in the most -- in the eia projections. we'll be exporting between 9% and 10% of our production in 2040. i think there really is no comparison to make there. and no threat that the united states would end up experiencing the same type of thing. >> my understanding is our market is roughly about 40 times the size of australia? and we're talking about much lower levels of overall exports, correct? >> that's correct. >> mr. smith, i want to turn to you real quick. if it were enacted, this legislation is passed and signed, would you expect our bill to change the number of applications for exports to non-fta countries that would eventually be approved or disapproved by the d.o.e.?

>> thank you for the question, senator. i honestly think it would be impossible for me to determine based on the language if this is going to impact the number of final applicants. the applicants on the condition of the time, et cetera. so i would demure from making any prediction or forecast, because these are case-by-case evaluations that we make. >> all right. as you know, our bill also requires d.o.e. to publish the list of countries that receive shipments of liquid natural gas from the united states. do you have a view as to whether or not that would be important information for the public to have access to? >> we think that more transparency is good. so we've endeavored to create a process that's open, that is transparent, and that makes all

this information available to potential intervenors. so we think that is important. >> great. i'll have one last question for you, and then i'll yield back the remainder of my time. one of my interests is making sure that we continue to grow jobs while sort of reordering our energy infrastructure to recognize the challenges that we have with carbon pollution and climate change. natural gas has a sort of unique place within those changes. we have limited capacity right now to do electrical storage, for example, but natural gas allows us to seam together different sources of energy in more realtime. much more effectively than old-fashioned coal generation, just because of how fast you can ramp up and down the turbines. do you want to talk about -- a little bit about your thoughts about how relatively low natural gas prices that we have experienced with current

policies will affect the ability to deploy those other sources of clean renewable energies? for example, solar and wind power? >> thank you, senator. i'll focus on the natural gas portion, the technology program that i oversee. one general comment that i'll make is that these are long-term important and decadal challenges. so we don't manage our technology programs based on the short-term fluctuations of the futures curve. we think these are important existential challenges, that it will drive the clean energy economy of the future. all of these solutions from wind to solar to natural gas and hence geothermal, nuclear, they remain core and important parts of the department of energy's technology program. that said, we have seen big fluctuations in natural gas prices, that have come from a variety of sources. that is something that we have to take into account. we look at the importance of

price when we look at public interest determination. they impact the price on consumers, on manufacturers, and a lot 6 the issues that you heard here on the panel. that is something we're focused on. we think it is very important. but over time, as you look at our research and development program, in the area that i manage, which deals with throughout the department of energy, we want to make sure we're pushing those technologies here in the united states. >> thank you again. >> thank you, madam chair. i thank the witnesses for being here today. i'm very pleased to be here, and also to be a co-sponsor of senator barrasso's bill. many people think of the shelf as occurring in the western states, like wyoming. but that is not the case as we know. the eastern united states and my home state of west virginia have been blessed with shale gas

reserves. and we're just discovering really how massive they are. if i could illustrate the point for a few minutes. let me share a few facts from the december 2014 department of energy report on oil and gas reserves in the united states. in 2013, west virginia surpassed oklahoma to become the third largest shale gas reserve state. west virginia also had the second largest discoveries of natural gas reserves behind only pennsylvania and in fact, a full 70% of the 2013 increase in proven gas reserves is because of west virginia and pennsylvania in the marcellus shale play. we have more than enough gas to power a renaissance back home in west virginia and to export liquefied natural gas, supplying lng to our friends and allies increases their dependence on hostile regimes, as we heard from the testimony, and a result will increase our own national security. not to mention a huge economic

boon to certain areas of the country and certainly my state of west virginia. i would like to start with a question for mr. smith, very briefly. as you know, the lng facility in maryland has received a finding of no significant impact on november the 5th of 2015. that was nearly three months ago. can you give this committee an idea of when the d.o.e. expects to supply final approval of the lng application? >> thank you for the question, senator. so, under our current process, we move on these applications in the public determination, once they've completed the first process. that includes all of the final notice for rehearing in that process. we watch these as they go through the process. it's our expectation that would be concluding probably in the february time frame. and so depending on ferc, finishing that process, that would allow us to move forward with our final determination.

>> thank you. as we all know, the estimates of what the actual reserves are is sort of a moving target. it started slower and seems to be expanding greatly. i like the way mr. eisenberg framed it that everybody's winning. but i'm curious to know from you, mr. eisenberg, and mr. durbin, as these estimates of the vast resource change, how do your projections on the economic impact that will have in job creation and manufacturing resurgence, how does that change in your estimates, and how closely are you monitoring that as we look at what the vast reserves actually provide? >> so, we -- our policy, and frankly, the will of the manufacturers that i speak for is to have a stable, secure, and consistent supply of natural gas. and so -- because we use it not only for electricity, but also as a feed stock for the many things that we do. >> right. >> that's a lot of what i do for a living. that's basically -- you know, we need to keep an eye on the policies that are coming out of

washington, and make sure that the manufacturers can still continue to do what they do. and so obviously, yeah, the supply matters significantly. you know, we are now staring at a situation where eia every single year tells us we have more and more and more. >> right. >> we're very, very optimistic, and continue to be optimistic. >> mr. durbin? >> yes, in my written testimony, i show a chart that eia puts in there, showing the difference in the projections on reserves from 2009 through today. and i mentioned that. the point is, it's dynamic. and every year, it's increasing. but i think what's really important about this, even this morning, eia put out a new paper, a new report, or i should say a statement talking about the vast increases in ethane crackers, all driven by the natural gas liquids produced with the greater reserves. >> we're seeing that in west

virginia, certainly. i should mention that the brazilian chemical manufacturing company is looking to cite a major cracker in west virginia, which would have a major residual economic benefit to that region, and hopefully a resurgence of our chemical industry, which has shrunk over the last several years because of the uses of the natural gas as a feed stock. you know, i understand, mr. smith, just quickly, when you're looking at these -- well, i think my time's up. and we're under -- as a good former house member, i know i should quit when the red thing comes on. i'll learn to talk through it eventually, i'm sure. [ laughter ] >> we like that part, senator. you are more than welcome in this committee. thank you. >> thank you, madam chair. you know, this is a big deal

here. we have this great new resource for us in america that's giving us an edge that we haven't had in a long time in other areas. and how we make this decision is really, really important. i appreciate very much the different states' perspectives. but this is a big deal. and i want to first say thank you to the d.o.e., not only taking seriously the need to move forward, but understanding that you need to update your study on economic impact for america. and the fact that you are doing that. and i don't know why we wouldn't wait for that to happen if we want to make sure we're doing this the right way. but i want to thank the secretary, and thank you for doing that. you know, we know jobs are created when we build export facilities, right? but we also know, according to the charles webber associates,

that we -- using natural gas to increase american manufacturing output is twice as valuable to the overall economy. just jobs in general. and creates eight times more jobs than exporting. so i don't know why we are not very concerned about what you're saying here. you're the end user, right? you're the guys that buy this. you're here, and you're buying it from industrial consumers. but we also have a whole lot of consumers that are concerned about heating oil, and costs and so on. so the consumers, as you said, are taking all of the risks on this. i would like you to expand a little bit more on this from the standpoint of leveraging this great resource. and i get it from an oil and gas standpoint you want to sell to the highest -- user, the highest price. i get that. but from the american standpoint, i mean, what i'm hearing, mr. cicio, when you're saying china buys it for $16

last year and subsidizes it, so their folks pay $1.78, now they're paying $1.78 and you're paying $16. so how is that good for americans' jobs? i'm desperately concerned about manufacturing jobs and getting that eight times leverage here for america. and i want american first policy. if you could speak to that. and also on australia, to me it's not the size of the country, it's how the government handled the issue. which is exactly what this bill does. this is australia-like in terms of the bill. and i am very concerned. i appreciate differences, but i have to say, to me, in history, folks are going to look back at this and decide, now, what were we doing here in terms of americans, and american jobs. >> well, thank you for that question. when we come to this issue, we

are not thinking short-term about -- and particularly looking at the nymex, and seeing $3 prices out for the next several years. that is not the point. we're looking out long-term. and there's references to how much gas we have. okay? now, we look at ten years out. and when we look at the eia technically recoverable resources, you know, we have a 58-year supply. we don't have a 100-year supply. in terms of jobs, you are correct. we can take that gas and create eight times more permanent jobs than if you export that gas. we recently looked at the permanent jobs created by the export terminals. any job is a good job, okay? make no mistake. but construction jobs are short-term. these terminals, the seven terminals, first up, create 1,890 permanent jobs.

and when that gas goes offshore, it's gone, okay? all we're doing here is, let's emphasize that we need to be looking long term, and each approval puts new demand on the marketplace that -- every study says the same thing, it will increase the price of gas and it will increase the price of electricity. we cannot forget that there's two parts. we're going to understand that, as i said earlier, manufacturing is subsidized in these countries that we are competing with. the real world. and so we have to be -- it's not just the price that we're paying here in the united states that matters to manufacturers who compete around the world. so we need to come to this with great care. now, for those of you who feel that we never have to worry about a supply of natural gas, then you should be all for putting in place the full

implementation of the natural gas act that has these cautions, the ongoing review of these terminals, the applications, monitoring, and the d.o.e. having a requirement to revisit that, and be sure that it's not impacting the economy. if you feel we have so much gas, then you know then that trigger will never happen. so you should be supportive and not afraid of fully implementing the natural gas act. >> senator portman? >> thank you, madam chair. thank you for having this hearing today. and thank you to the witnesses for giving us great testimony. i represent ohio, which is a state that didn't used to be viewed as a great natural gas producer. now we are, thanks to marcellus shale find, and utica.

most significantly utica right now. i appreciate the fact that national association of manufacturers is supporting this bill, the chamber of commerce supports this bill. i support this bill. i'm a co-sponsor now because i've looked at the alternatives and i think this is the best balance. it's in the legislation, a balanced approach. that's why so many manufacturers are supporting it. also, i would tell you, ohio does a lot of manufacturing for facilities, including lng export facilities. i noticed in your testimony this morning, you talked about chart industries, who testified in the ways and means committee, ohio based manufacturer involved in the lng supply chain. so it's going to help in the manufacturing as well.

but i do think it's important that we have a balance in the legislation. i'm really interested in the legislation because of a broader interest that i have. i think this regulatory regime we have in this country is putting us behind in so many ways. back in the good old days, you could get a green light to produce something, make something, move forward with a project in the united states of america pretty quickly. now we're ranked 41st in the world in the dealing with construction permit category by the world bank. we're getting worse. other countries are getting better. germany, something like number eight. south korea is something like number 12. and capital is flowing to different places around the world and not coming here because of the time it takes to permit something. yesterday i introduced legislation with senator mccaskill that's bipartisan, that's a balanced approach to how do you get at some of this

permitting. senator king is a co-sponsor of that legislation. he's got an incredible background in this, having been a governor, but also in the private sector dealing with permitting. what i like about this legislation is it doesn't take away d.o.e.'s approval authority, but it says you have to do it in 45 days. i appreciate what mr. smith said about the fact that this legislation can be implemented by d.o.e. that that's enough time, given the run-up to that, to be able to understand whether this is an appropriate project or not. the legislation we introduced will be more broad. this is specifically with regard to lng exports. but i think it's part of a bigger effort we need to undertake in this congress. consistent with the 2006 and 2012 transportation bills, this mirrors that in terms of the permitting and how the litigation reforms work and so on. mr. eisenberg, let me ask you a question. can you speak some more on the importance of the requirement in the bill that d.o.e. does approve or deny these pending permits within the 45 days of a completed nepa review? mr. smith, do you think you could live with that? i assume you agree with a deadline like this, gives the d.o.e. ample time to review the application. but also, is giving investors some certainty that this project is actually going to be completed, is that correct? >> that's absolutely correct. thank you.

we poll our members regularly. i want to be clear who we represent. we represent 14,000 members. that is small manufacturers, medium sized manufacturers and large energy intensive manufacturers who are also represented by mr. cicio's group. we are for regulatory certainty for free trade. it's the number one priority of our membership right now, as we polled them quarterly. it came up the most. it was the most frequently cited answer. there are two types of regulatory certainty, making sure that the regulations put in place that are new are reasonable. there's also regulatory certainty on the back end. when you apply for a permit, you can get it. the legislation you recently introduced, the legislation of rapid act in the house, these mirror all sorts of other legislation and while they're in place at the federal level, that would impose a deadline. or shot clock, or something like this. that can say, please uphold the law. but do it in a quick, expeditious fashion.

that is the closest thing to what our policy wants on this, which is just a quick up or down decision on an export license. >> mr. smith, i think there's some misunderstanding, and again, i really appreciate the leadership senator barrasso has brought to this. the export application is not the only federal permit. what other federal permits are you aware of, and is that in addition to any local and state permits that might also be required? mr. eisenberg, or mr. durbin? >> sure. like i said, you have to run the gauntlet to get these things. it takes about two years before you even prefile to scope out the site and all of these kind of things. then you have to go through nepa. which on average i believe takes three and a half years by recent studies by the government. it can take longer, it can take less. but you have all of that time that you basically have every single agency check the box and make sure everything's compliant with the environmental laws, economic interests, part of the

nepa process. you do examine the economic impact. and then you get a final decision. >> by the way, are there deadlines associated with those permits? >> on nepa, absolutely not. there actually is none. and you can actually -- it falls under the six-year statute of limitations. that's part of why we're -- why the senate is debating it right now. >> with regard to state and federal permits? mr. durbin or mr. smith? others want to chime in? >> absolutely. maryland dominion is a perfect example. in addition to everything they're doing at the federal level, many state permits they have to get as well. >> my time's expired. i appreciate your testimony today, gentlemen. >> thank you. and we turn to senator hurano. >> thank you, madam chair. senator heinrich had asked mr.

smith a question regarding if we create administrative or regulatory certainty in the time frame for approval, wouldn't we expect more applications. and mr. smith didn't want to opine. but i'd like to ask the other panelists whether you think -- very brief answers, please -- whether you think there would be more applications if we create certainty? as it still does? >> i don't believe the number of applications is going to be affected by the timeline. it will be affected by companies who believe they're going to be able to get the financing, be able to line up customers. again, these are very long-term, very expensive propositions. i think those that are moving forward, knowing that there is some certainty at the end, after a very long extensive and, but a predictable process -- during the ferc process, d.o.e. is one of the cooperating agencies.

so they're part of that effort as well. >> it sounds as if the ferc process is a much longer process than what d.o.e. has to do once approved. >> it is a longer process. but d.o.e. is part of that process. and to d.o.e.'s credit, during this entire time, not on a case by case basis, but they've been engaged in the studies that have been raised several times here, when you look at the broader natural interests, the economic impact. and those are ongoing. that's why our feeling is, having gotten through the ferc process, they've got the foundational items they need at that point, in a timely and specific way, and can make a determination. >> okay. so i think the rest of you will -- you agree that it's a ferc process that's really sort of the big question mark. so you wouldn't expect additional -- or increased applications as a result of this bill.

and yet i don't want to open a can of worms, but are you okay with the ferc process? >> again, i'll speak for anga. we believe the end for the companies that we've worked with, as i said, it is a long, it is an expensive, it is a comprehensive process. but it's a predictable process. it's one they're familiar with. so there have not been complaints about the ferc process. >> let's move on. i have a note of caution about exporting natural gas, because it has to do with our ability to predict what is going to happen. about ten years ago, we thought we would be importing natural gas. so it gives me pause. and also, a state like hawaii, where we're looking to import liquid natural gas, i would love for the industry to help us figure out how we can do that, and meet domestic needs in a cost reasonable way.

but that's not for this hearing. i understand that the extraction of gas does create a by-product of methane, and that there are methane leaks, and methane is an extremely potent greenhouse gas that contributes to climate change. i would like to ask this of mr. durbin. assuming there will be more construction activity, are there efforts by gas producers to reduce methane gas emissions during the production process? >> thank you, senator. i'm glad you asked the question. the answer is an emphatic yes. let me tell you what's already happened. if you look at epa's own data, nothing from the industry on methane emissions from natural gas producers, go from 2006, which was kind of a peak, to the emissions we saw in 2012, the reduction of methane just from natural gas producers was 39.5%.

now, the dates are important here. 2006 was before the shale gas revolution. so in those six years, we've added thousands of wells. we've increased production by over 25% during that time. yet, methane emissions from natural gas production have been reduced by 39.5%. and that's going to continue. because it is in our interest to capture the methane. methane is natural gas. that's what we're wanting to sell. it's also the continued improvement in efficiencies and technology in the industry that has us today as the most productive gas well in the country, in pennsylvania. ten years ago, the most productive well in the well produced only five. the numbers are just for relative scale. we are producing a heck of a lot more gas at the same time methane emissions are plummeting in our industry. >> i take it you would not be in favor of epa regulating methane

emissions from this activity? >> it is regulated by epa through -- we say the current regulations, you know, we're having all these productions under current regulations. i would argue epa does not need another new regulation. >> thank you. i think my time is up. >> thank you. and we are now going to turn to senator gardner. i will be excusing myself from the committee right now. we're going to start votes here very shortly. and senator cantwell will be here for a short period. we want to make sure we get through all members and have an opportunity before the panel. it's going to be a little bit choppy from here on out. i apologize that i won't be able to hear your further comments. but please know how much i appreciate what you have provided the committee today. this is a very important issue. i think we would recognize that. and again, i appreciate the level of cooperation that we have had.

and i think a place where we have a compromise bill that i think will be helpful to the country. with that, i will turn to senator gardner. and he will be followed by senator franken. >> thank you, madam chair. and thank you for the hearing today. i thank the witnesses for your time. when itches in the house of representatives, introduced hr-6, the domestic prosperity and global freedom act was passed with overwhelming bipartisan support. one thing that made that bill so successful was many of the statements made today by the witnesses, including conversations that we had with people like dr. orbon from hungary, and others who recognized the national security implications of a strong and vigorous opportunity for the united states to share in our energy security with our partners around the globe. and so today, talking about senate bill 33, a straightforward piece of legislation granting approval for lng exports already languishing, depending how you look at the department of energy, and it's not too often we share in these kind of opportunities where you have a

bipartisan bill that will create jobs, create energy security, add to our national security all at the same time. something that i wish we could do more of. and i do believe this has the opportunity to create a number of american jobs across this country, including in colorado, my home state. one of the nation's leading producers of both oil and natural gas. and renewable energy as well. mr. smith, a question for you to start with. dr. paula gant with the department of energy testified last congress, 113th congress that the department of energy is keenly interested and invested in the energy security of our allies, and trading partners. do you think american lng exports add to the energy security of our allies? >> thanks for the question, senator. we look at a variety of factors, including international aspects.

i wouldn't say currently that the fact that we are importing less lng than we had expected is already impacting global markets. the fact that u.s. producers of potentially out negotiating contracts in advance of any terminal being built has an impact on global markets. we think all of those things are positive. those are things we explicitly care about, and note in our applications. >> so reading between the lines, it is clear that you believe the department of energy believes that exporting lng does increase the -- adds to the energy security of our allies? >> it has an impact, yes. >> mr. coriani, you believe in the same position, correct? >> absolutely. and that actually goes back also to senator barrasso's question, as far as the future is concerned. we have this benefit of diverting energy supplies that were supposed to come to the united states. also looking into the future, because asian gas prices are higher, most of the supplies will go to asia.

i'm not really sure about that. if you look at the contracts, a bulk of those are with european natural gas suppliers. they will provide gas to spain, to the uk. european natural gas suppliers. they supply gas to spain and the u.k. asian gas prices since last february came down by 78%. so the gap is not that big. and if there is another cut-off from russia through ukraine, then that could send up gas prices. so to sum up, yes. >> mr. smith again in response to the chairman you said the 45-day time frame was workable, is that correct? >> that is our view. we could comply with the law. >> do you have the same view about representative johnson's bill that moved through the

house yesterday? i think it is a 30-day time frame. >> i haven't compared the time frame but i know the 45-day time frame is something we could comply with. >> mr. durbin, testimony last congress and in colorado and the western slope the peon basin, would you agree that the u.s. is demand restrained and not supply constrained. >> absolutely. >> does that drive down investment in new production. >> absolutely. >> and is that something se 33 could make in new development. >> yes. to make sure we have a new robust outlet it will provide consistency and the incentive

and the motivation for the industry to continue production not only in the gas for exports and for the natural gas liquids and everything else that will drive the manufacturing here in the united states. >> and i want to keep in line when the red light comes on and i want to compress how important this legislation is when it comes to national security and i know last congress there was security on states like hydraulic fracturing knowing that exporting l and g is only available because of hydraulic frackuring because they understand the abundant supply of energy that we can share with our allies and i hope that continues to be an important part of this debate. >> thank you. >> senator franken. >> i'll pick up from senator

gardner. we're able to do this because of hydraulic fracking and i want everyone here to understand who developed that technology. and who is responsible for that. and it is the the taxpayers of the united states. mr. durbin talked about how in 2009 projections of the supply of natural gas going out were so low that the prices were going to be very very high. and mentions that now they are much lower in the projections and we're hearing senators talk about the discoveries of -- you know, of reserves of natural gas in their state, as if this is just a discovery that happened

out of nowhere. this is because of the taxpayers doing investments in research into three dimensional micro seismic imaging done in labs. and please listen to this, because i say this over and over again in this committee. this whole renaissance in natural gas is due to research done by the department of energy paid for by the united states taxpayers. and projects done with the oil and gas industry. in horizontal drilling. but understand that this didn't come out of nowhere. and let's have some historical

context here. so who paid for this? who is responsible for this unbelievable renaissance? the american taxpayer. and that includes the minnesota taxpayer. now, do you know how much natural gas we produce in minnesota, just as an estimate mr. durbin? >> i'm not aware of the natural gas production in minnesota, so i don't know? >> zero. this does us no good whatsoever. this does minnesota no good whatsoever. the eia just says this will increase the price of natural gas. this is going to increase the price of electricity to every minnesotan.

of heat to minnesotan. the cost of operations to every minnesota manufacturer. this does my state no good whatsoever. now, i would appreciate it if those from the other states who will benefit -- the benefits of this, the jobs the gdp growth and the jobs will be very concentrated bisector and region. mr. durbin, you represent the natural gas producers. i would venture to say that your sector will benefit from it the most? >> we certainly are benefiting from it senator. but i would say the entire nation is benefiting from it, senator. you didn't have the evolution, you didn't have the production and the prices where they are and so you won't have the prices

where they are. >> so you don't have the taxpayers of minnesota. >> and when you have the dee's and the roll -- >> i only have a little bit of time, sir. the point is there is no benefit for the people of minnesota in sending this abroad. this is what will happen. this will benefit -- the steel workers are against this. in min tack, in minnesota where they mine ore and make tannen hite it will drive up the cost of natural gas. this will hurt minnesota. this is why the united steel workers are against it. manufacturing creates eight times as much jobs. if you export a natural resource, the people who produce

that natural resource benefit, but it doesn't do anything like the kind of -- create the kind of jobs that we in minnesota have created because of this technology that we taxpayers in minnesota help to promote. so i just want this re -- perspective. and i know my time is up and i've been here a little longer than senator capito. so when senators talk about this natural renaissance, to understand where this came from. and aside from this subject on natural gas, when we are talking about renewable energy and talking about all energy let's understand the role that basic rsh and applied -- basic

research and applied research in our nation to make sure we are energy research come from. >> thank you. returning to senator cappen. let me remind you that the prices have fallen and the obama administration has released a study showing that gas prices will remain low with l&g prices and even if the department of energy approves four times the amount of l&g exports that are already approved so four studies have approved the studies. mr. cassidy. >> to speak about pervasive of fracking i have a article right here, the benefit of this was

george mitchell taking the doe research and benefiting goes to research. and i have two questions relating to that. this is about jobs. i can tell you there are families struggling because they don't have jobs. we know there is a downturn in the oil patch because of falling oil prices. i'm interested in we can increase the jobs in natural gas production because of an exportation. hainesville shale is in north louisiana and that has decreased play because it is dry gas and not what the people want to make petro chemical prodicts mr. durbin or mr. smith do you have an idea how many jobs would be created if we could unshutter the wells like in hainesville and ship the markets to places

that want dry gas? >> i don't have specifics to that. there have been studyies, one done with shell house cooper we could create a million jobs in the manufacturing sector across the country. there is no question that providing for the exports you have a much more certain demand outlet for this product and we're fortunate here in the u.s. the gas prices are decoupled. >> so if we increasing that then we'll decrease the demand for pipes and stuff like this. >> absolutely. >> mr. smith this is a great hearing but i have a perception, it may be false, there is a certain kind of lang widness about the approval of these permits. i'm happily married which means

i speak of my perceptions, not of what i know. so that said, when i look at the ferc and doe processes, ferc says i understand under d doe, they want to look at the increase of life cycle if export increases the life cycle of gas and ferc cannot consider it. the fact that d.o.e. would consider what ferc said is impofrable -- i'm sorry for the bells -- that they are in viting litigations by those who wish to retard this process. so why would d.o.e. consider something which ferc considers impofritiable. >> i would not characterize

something as lang wid as impossible. we [ inaudible ]. >> as i would say to my wife, i apologize. >> duly noted. thank you. for the ferc process consider the fact we are looking at two different considerations and two very different decisions. the job of ferc is to determine if the plant itself can be built safely and the footprint is consistent with our values of safety and sustainability. can the applicant build that terminal on that footprint. >> and do you look at if there is an increase of methane or gases. >> that is what d.o.e. looks at.

we have to look at all of the public determination for that molecule and that includes all of the things surrounding. >> but that particular information is going to be full of assumptions. you have to predict in 2022 what will be assumptions and how much through pipes and what not. and since it is a variable with more variables which makes me wonder why it is in there. >> you are outlining what is happening. and spending billions of to build plants will have an impact on the environment job creation and things we care about for a long period of time and in its

very nature it does involve a lot of diverse views. i heard from mr. cicio and mr. durbin's members and they have diverse views. >> but we don't know which of those is correct. >> so if we have a variable in which we cannot possibly know with any kind of the r-square, the correlation will be huge and you are picking a number which is subject to political considerations, do we want to approve this or not, that would be the fear and we can improve -- approve one which has a big number of methane release or no this is the glide path we think it will come to another number. >> our job is to make a good determination and i would point everybody to, when we issue a order, it is not a sticky we put on the wall that is yes or no, we issue a complex doct that has to take into consideration all

of the documents from all of the members, mr. cicio and mr. durbin's members and all of the diverse issues here in this hearing and our goal is to write an order that is clear, consistent with the letter of the law and with stand the scrutiny it is sure to receive and our goal at the end of the day is if we should approve that a particular applicant can look at that order and that applicant can spend the billions of dollars to build the terminal because we've had a process consistent with the spirit of the law and it does make assumptions but in a way that is consistent with the law. >> we're out of time. i yield back. >> senator king. >> i want to say i'm good with regulatory reform.

i like bills that lay out regulatory clear guidelines and time. and i'm also good with natural gas. so good with it in fact i don't want to blow an advantage this country has. i have been to factories, gentlemen, and looked in the eyes of people who have lost their jobs to asia, to other parts of the world, to mexico and they looked at me and said how did you let them ship my jobs away. we have no advantage on wages, we have no advantage on labor protections or environmental protection. we have today an advantage on energy costs. i cannot understand this discussion that will inevitably lead to higher energy costs. mr. eisenberg, i can't understand an organization called the natural organization

of manufacturers supporting this bill, because the larger bill is what concerns me. right now if we export to china, add in the cost of transportation and the cost of lickive case and we are giving them a 30% cut in their energy costs. i just don't get it. now, mr. durbin you testified that you thought and projected out ten years, 20 years i think you said 2040, 9% is all we would talk about. would you accept a friendly amendment to this bill that the limit of the public interest would be reversed if the export was more than 9% of domestic production? i believe you when you say it, but you subscribe to president reagan's admonition trust but verify. i trust the industry when they

say we just want to do a little bit. it won't affect the industry that much and only just that much. let's put it in writing. 10%, i'll go with. 9% is what you said so maybe that is where we ought to start the negotiation. so i just think this -- this moment will be looked back at at a time when americans will say what were you thinking when i have what we call america's second chance at manufacturing but we're going to give it away. mr. durbin. there is a question in there somewhere i'm sure. >> and i'm happy to answer it. we're posing a question as either/or. we can only have the abundance of gas for manufacturing or we can export it. we have both. we can do both. the issues that manufacturers in new england need to be concerned about is pipeline constraints.

>> that is a separate issue. >> you are a strong supporter of that. >> our natural gas prices were the highest in the world last winter. the world. that is a pipeline problem. >> and if you look at the estimates, the industry -- the government estimates, how demand will increase going out to 2040, we are outstripping consumption and demand all along. >> all i'm saying is put it in writing. accept a cap on the export so that we don't end up with australia -- we've now -- we're producing 75 bcf a day in the q is 78 bcf a day and that is more than half and that is the problem and that is what you said would never happen and that is to australia. and if there is no definition of public interest i'm saying let's define it.

>> i would say the limit is being provided by the global markets. we are not exporting 10% 15% -- >> why not if they are going to pay 12 or 15 over there? >> if we are going to export that much it is because gas prices here are so low and we have enough to provide it to those markets that they are willing to pay. you can see the global market dynamics right now will influence the number of facilities will be built. that has always been the case. >> mr. cicio what do you think? >> look at australia, the scale is different. i agree with what is said different. but the government did not provide the necessary safety nets. the resources that they have in australia were contracted out under long-term contract to ship l&g off shore to government at high prices. >> and once you do that you are locked in. >> and the reserves were not

available for the australian consumer any more and that is why prices went up. and the australian consumer now is being asked to pay an equivalent net-back price to that l&g price they would sell to japan or south korea or china. so again think long-term here. if there is a lots of resources everybody should support putting the full necessary of the cap back. >> it would seem to me to cap the domestic coverage and you could say it wouldn't be catastrophic like in australia. there is one thing congress can't repeal that is price and demand. we can't deny the price will go up. that is the whole point. but the question is how far will

it go up. and i realize you have to have a price sufficient to call forth production and open the wells and those things. i don't know exactly where that number is. but if we take an action here in this congress to open the door and end up with an australia operation. shame on us. thank you, mr. chair. >> thank you, mr. king. i'm going to put in an article from the boston globe by j. fitzgerald outlining the concern in natural gas due to inadequate gas pipeline getting it to where it needs to go. >> aiks. i'm fully in line with that. >> thank you mr. chairman. in the 70s i was going to school and in the early 80s going to college studying chemical engineering and hearing we will

run out of oil and what that might mean to the world and here we sit where there was a scarcity on oil and natural gas to an abundance and the bakken formation and we are seeing oil and natural gas production, i can tell you, we would like to produce more natural gas in moent. our natural gas production has declined for lack of demand. and this intersection of the demand and the transmission and the pipeline issues that the senator of maine was aware of last winter, as we move to an abundance of production and increasing the supply chain, ultimately the person that wins is the american consumer, as we see with the drop of oil. we'll go from the average price

for the average american household as a result of what has happened here in america and the shale play. the geopolitical play is interest. and i saw the struck of russia on natural gas. i remember serving in the house on the last term getting letters from europeans looking to america for this instead of relightning on the putin regime. i was a manufacturing guy for years. i had a day job in the private sector for 20 years before i came up here. i looked at operations in china. managed operations in asia-pacific. this means that this is great for global competitiveness to

bring manufacturing jobs black to america and i don't think we can underestimate the national security implementations. this is a great hearing for me. and i was struck mr. eisenberg i am here at 45,000 feet why are we here today? because we are looking at the permitting process. how do we create this permitting. i believe you said regulatory permitting is the issue? >> it is what our citers would like to see fixed right now. >> looking at the permitting. so looking at my engineering background, and we are looking at regulatory uncertainty the number one issue for

manufacturers here in this country? >> that is correct. and i would take it one step higher. we're talking about free trade. this is the intersection of two policies. energy and trade policy. and to senator king's last point, the reason the nam came out against this we are not for or against so that we could find markets to export to we believe you are either for free trade or you are not. and for a cap, that would stand in the way of exports anything whether it is a honda civic or a razor blade and that is where free cap wins. >> and i believe we'll have limits on trade but this is about creating certainty in an

uncertain environment. and mr. eisenberg could you expand on the resources spent on the exporting process including nipa and how important it is for american security and the american taxpayer. >> no manufacturer would take on this without knowing it will cost you quite a bit in terms of the up front cost to do the environmental studies and all of the research an the background but also the cost of delay. at the end of the day, time is money and the longer it takes, the longer -- the more you are spending to not do this. so obviously as you said permitting certainty is what we are looking for. making sure the rules are there and to comply with them we get an up or down answer and we know going in there is an end of the road to this problem. >> and mr. chairman i too was caught in the house, you don't run red lights so my time is up.

>> i appreciate that mr. danes, i am certain that the daines bill is up for vote and i'm certain you don't want to miss that. so this hearing is adjourned. and former governor of massachusetts and republican presidential candidate mitt romney has decided he will not run again in 2016. he made the announcement during a conference call to supporters today. the associated press saying he surprised donors that he was eyeing another run for election but after losing to barack

obama, told those who asked that he would not run for re-election. here is his announcement this morning. >> good morning, everybody. this is mitt. let me let you know how many people are on the call. there are a large number of leaders on our finance effort and state political leadership from several primary states and here from new york city and on the phone are people that are helping me think how to build through a new team and supporters from the past that have been volunteering their time during this deliberation stage. welcome and thank you. your loyalty and friendship and your desire to see the country through new confidence and leadership does, in fact, warm the heart. ar putting in considerable thought for making the run for president, i decided it is best

to give other leaders the opportunity to be the next nominee. i'm convinced with the help of the people on this call we could win the nomination. our finance calls make it realized we would have enough money to be more competitive and we are enthusiastic about a new race and reaction about republican voters is surprising and heartening. i know early poll numbers move up and down during the campaign but we would have no doubt started in a strong competition. one poll shows me leading two to one and in all of the four early states. so i'm convinced we could win the nomination but i realize it would have been a difficult test and a hard fight. i also believe with the message of making the world safer, providing opportunity for every american regardless of the

neighborhood they live in and working to break the grip of poverty, i would have the best chance of beating the eventual nominee but that is before the other contenders have the opportunity to take their missage to the voters. i believe another contender, one not as well known as i am today and one who has not yet taken their message across the country and just getting started might be better able to defeat the democratic nominee. and i expect and hope that to be the case. i feel that it is critical that america elect a conservative leader to become our next president. you know that i wanted to be that president. but i do not want to make it more difficult for someone else to emerge who may have a better chance at becoming that president. you can't imagine how hard it is

for ann and me to step aside, knowing your support and those across the country. but we believe it is the best for the party and the nation. i've been asked and will certainly be asked again if there are any circumstances whatsoever that might develop that could change my mind. that seems unlikely. accordingly, i'm not orging a pac or taking donations or not hiring a campaign team. i stay all of you on this call to stay engaged on this call on helping to organize a candidate. please feel free to sign up for a campaign that would best become a nominee. i believe backing up our white house is essential for a nominee and i'll do whatever i can to make that happen. so to all of my supporters, friends and family, who worked

tirelessly and loyally to support my campaigns in the past ann and i will thankful. we are overwhelmed and humbled by your loyalty to us, by generosity and spirit. god bless you all and god bless our great country. bye-bye. >> here are some of the featured programs for this weekend on the cspan networks. on book tv saturday night at 10:00 on afterwards, white house correspondents april ryan on her more than 25 years in journalism journalism. and on sunday, our three hour conversation with walter issacson. and on american history tv on cspan3 on saturday at 6:00 p.m.

eastern on the civil war, boston college hist or professor on how the cowboy became symbolic of a newly unified america and on sunday at 6:00, we'll tour the house that was the headquarters of the american red cross and learn about the wife of the founder, clara barton. found our complete schedule at cspan.org. call us at 202-626-3400. e-mail us at comments at ter. cspan.org cspan.org. or join us at facebook and fol us on twitter. and turning now to budget cuts, the military continued to warn ffec congress about the the impact of sequestration on national security. chiefs of the army navy, air th force and marines testified ervice before the senate arms committee

and code pink protesters were on attendance. >> the committee will come to order. and we have the individuals here to choose to disrupt the hearing committ and so i will ask our -- all arin spectators here to observe the of hearing today to observe the roceed courtesy of allowing us to hear from the witnesses and for the you hearing to proceed.to and of course if you decide to disrupt the hearing, as you remo usually do we'll have to pause until you are removed. i don't see what the point is th but i would ask your courtesy to the witnesses and to the committee and to your fellow citizensst who are very interested in hearing what our zipg wished pe

panelists have to say that have we served our country with honor and distinction and i hope you will respect that. so we'll move forward. the senate armed services ony o committee meets to observe the sequestration on u.s. national i a security. i'mef grateful for our witnesses earing for appearing today and for their decades of many years to m our country in uniform. and i appreciate their sincere and earnest attempts over many years to warn the country of t what is happening this their r services. the brave men and women o they represent and the national security if we do not roll back sequestration and return to a strategy-based budget. we look forward to their candid testimony on this subject today. such warnings from our senior t tod military and nationalay security leaders have become

frustratingly familiar to many of us, despite an accumulating delay of complex threats to our national interest, anumber of uste which arose after our current 2012 strategy was developed and adjusted in the 2014 qdr we are on track to cut $1 trillion from the american defense budget by the year 2021. 20 and while the ryan-murray budgete of 2013 provided welcome relief from the mindless suks, that relief was partial, temporary and did little to provide the fiscal certainty that our y comm military needs to plan for the o future andf make longer term decisions for our national again defense and yet. here we go gep.eques in we in congress don't act, sequestration will return in full in fiscal year in 2016 setting our military on a far why more dangerous course. w why should we do this to

ourselves now?ar just consider what has happened in the world in the past year. russia launched the first cross border invasion of another nt in country on the european continent in seven decades. a terrorist army with tens of thousands of fighters, isis has taken over the size of territoryk of indiana in the middle east. we are about to have 3000 troops back in iraq and we are fighting isis in iraq and syria. yemen is on the verge of is collapse and al qaeda continues lapse to use the country's ungoverned ies spaces to plan attacks against the we the stwest. china has increased its ential aggression against our alleys and where geopolitical tensions are high. >> [ inaudible ]. r >> and of course just last mos

month, north koreat carried off erri the most brazen cyber attack on onen -- on u.s. territory. if we continue with these cuts co we'll harm our military's ability to keep us safe. our army and marine corp will be to too small. our air force will have too few aircraft and many of those will be too old. our navy will have too few ships. our soldiers and marines will sh not get the training and will equipment they need and it will become increasingly difficult for them to respond to a number in of conte sinkencies to respond e st around thei world.r's we have heard from our commanders before yet those say ally l never fear the sky didn't fall under sequestration. what a tragic way of deliberating government policy.of seq the impacts of sequestration y will not always be immediate or

obvious but the sky doesn't fall for military readiness to be r eroded or for things to atrophy pabili orti maintaining military b superiority to be delayed, cut or canceled. this is the results of sequestration's quiet and every cumulativeb disruptions that are every bit dangerous for our dee national security.ng o i will say candidly that it is frustrating that a hearing of this kind is necessary. it is frustrating because of what dr. around carter,.president obama nominee for sect of defense said two years ago and i quote. what is tragic is that sequestration is not a result of an economic emergency or no recession, not because discretionary spending cuts are bec the answer to our nation's final challenge. do thech math. it is not in reaction to a change to a more peaceful world. it is not due to a break-through in military technology or a new

strategic insight. it is not because passive revenue growth and entitlement haus spending have been grown or exhaustive, it is political gridlock. ge and i would like to echo when general madis explained yesterday, no fall in the field se can wreak such havoc on the security that mindless sequestration is achieving. america's natural defense can no longer be held hostage to american domestic disputes separate from the reality of the a threats we face.can no three years after the passage of the budget control act, it is time to put an end to this defensive policy and do away to with budget-driven strategy and rush to a -- return to a do strategy driven budget.driven mr. reid. ou >> thank you for calling this mr. ch very importantai hearing and for

im your timely and insightly and remarks and i thank these men vice for their service and to the soldiers and service and airmen. and we continue to two intersecting policy problems andadmi our debate on how to follow h them.s because of sequester we have a problem. every senior civilian in the department of defense have told us, if defense budgets continue to be capped at sequestration bu levelsdg we will not meet the face national defense strategy. a we face new and continuing if threats around the world from ukraine, syria and beyond. if we don't address the problem of sequestration we will not be able to address our national

interests. through the years, after rang testimony, our witnesses have ro described the budget control ony ou liner caps and sequestration on ontrol military readiness and the ness. welfare of our service members and their families and i'm sure we'll hear a similar message today. compromise and difficult choices require to provide sequestration relief for the department of defense and other critical national priorities including public safety infrastructure, health and education. mr. chairman i know you are d committed to working with our ic budget committee to find a way to work through these challenges and i'm eager to help in this effort, int the mean time i'm willing to hear from the testimony of our witnesses. >> since a forum is present. i ask for military nominations.

they have been before the group at this time. >> i move. s. >> so second. for all of the ayes. and we'll begin with you thank chairman giordano. ra >> thank you fornk allowing us theen opportunity to talk about this ng us opportunity topic today. as i sit here before you today as sequestration looms in 2016, i'm truly concerned about our we future and how we are investing in our nation's defense. b i believe this is the most ervice uncertain i've seen the veloci environment in my nearly 40 years of service. thef unstability increases around the world. the islam and the order of iraq ng and syria have escalated

conflict in the region.ry order within yemen is expanding and the country is quickly approaching a civil war. in north and west africa anarchyno extremism and terrorism continues to threaten the conti interest of the united states asf t well as our allies and partners. in europe russians intervention r in the ukraine challenges the resolve of the european union and the north atlanta treaty organization.s t across the pacific china's onal military raises concerns with our allies and regional interest while the cycle north korean provocation continues to an increase. the rate of humanitarian and nty th disaster relief missions such as the recent ebola heightens of uncertainty we face around the world along with constant evolving threats to the home land. despite all of this we continue to reduce our military capabilities.

i would like to remind everyone ye over the last three years we have significantlyca reduced the capabilities of the united states army. and this is before sequestration will begin again in 2016. in the last three years the army's active component and strength has been reduced by 80,000. the reserve component by 30,000.ia we have 13 less combat component teams and relieved brigades and removed from the inventory and ed slashed modernization by 25% andn eliminated our infantry fighting vehicle modernization program we and eliminated our scout helicopter program. we have significantly delayed upgrades for our systems in aging platforms. readiness has been degraded to the lowest level in 20 years. our fiscal 15 under sequestration, only s 15% of our combat teams are

de training.fe our combat brigades were canceled and over half a billion dollars of maintenance has been denvered. and even after additional support from the bba today we ent of only have 15% of our brigades to be ready to the extent we would expect them to be if asked to fight. and we are forced to involuntarily separate soldiers, some while serving in combat zones. this is a sample of what we've tion e done before sequestration kicks in, again in 2016. when it returns, we'll be forced r to reduce another 70,000 out of na the active component and 30,000 out of the national guard and 10,000 out of the army reserves. we'll cut 10,000 brigade teams and reduce modernization levels

over the next five years because we can't draw down in strength any quicker to generate the required savings. the impacts will be much more overa severe requiring us to end, restructure or delay every program with a modernization decrease of over 40%.lting home station training will be under funded resulting in decrease training levels and we'll be forced to drop over support 5,000 seats from initial fr military training, 85,000 seats from specialized training and over 1,000 seats in our pilot training programs. our soldier and family readiness will be weakened and our g p readiness facility upgrades will be effected, impacting our on tra long-term readiness strategies.ess therefore, sustainable readiness is out of reach with our individual and unit readiness deteriorating between 2016 and 2020.ani additionally over all the duce o

mechanism of sequestration has and will continue to reduce our ability to efficiently manage the dollars we in fact do have. the system itself has proved to it be very inefficient and increases costs across the . board, whether it be in t acquisition orhi training. so how does all of this translate strategically.ld it will hurt our allies and partners around the world, and ally eliminate on any scale to conduct simultaneously for operations, deterring in one region and competing in another. and sequestration even puts into question our ability to conduct even one long prolonged multi-phased combined armed campaign against a determined enemy. we would significant degrade our ability to shape the security environment in multiple regions re simultaneously. it puts into question our mul ability to deter mult develop

adversaries simultaneously. it limited flexibilityredi and ccurac requiresy, us to hope we are able to predict a future with great accuracy, something we've never ou been able to do.r soldie our soldiers have done everything that we've asked of them and more over the past 14 year and they continue to do it today. today our soldiers are supporting five named operations on six continents with nearly 140,000 soldiers committed, deployed at stations at over 140 countries. they remain professional and dedicated to the mission, to the. arm your and to the nation.ntinen until depl with the very foundation being nal an built on trust.and but at what point, do we the nat institution andio our nation loseprofes our soldiers' trust?what.d the trust we'll provide them ther right resources the training wil and equipmentl to properly prepare them and lead them into d harm's way. trust we'll properly take care of our soldiers and our families

and civilians who so selflessly sacrifice so much. in the end it is up to us not to. lose that trust.e fait today they have faithh in us, g trust in us to give them the tools necessary to do their job.bu but we must never forget our soldiers will bear the burden ofheir liv our decisions with their lives. i love this army i've been a part of for over 38 years and i want to make sure it is the o greatest land force the world est has ever known. ever to do that it is our shared o opportunity to provide our soldiers and army with the necessary resoorss for success. it is our decisions, those we make today and in the near ov futurei that will impact our source soldiers and army and the joint s force and our nation's security j posturoie for the next ten years ears. we don't want to return to the to days of a hollow army.army thank you for allowing me to testify today and i look forward to your questions. >> thank you, general.

admiral griner. >> thank you chairman and distinguished members, thank you for allowing me to testify about the impact of sequestration on ques the navy thus far and the impact comm of a potential return to that intration 2016. nav mr. chairman presence remains the mandate of our navy. we must operate forward where itwe mus matters and we need to be ready when it matters. i've provided a chart to show you where it matters around the world to us and where it matters to our combatant commanders. it recent events testify to the value of forward presence. and when tasked in august the ce. george bush group moved to the ea arabian gulf was ready in iraq and syria. navy and marines strike forces

generated 20 to 30 combats for days and for 50 days representedy the only strike option to project power against isil.the the troops arrived in the black sea to reassure our allies after russia invaded the crimea.en the george washington strike n group provided disaster relief to the typhoon highon about a year ago.covery and then there was support the it airasia craft recovery. we have been where it matters, when it matters, with deploys.our but our response force is om t one-third of what it should be at and what it needs to be. sequestration resulted in $9

billion shortfall in 2014 below our budget. this degraded fleet readiness ll and r created consequences from which we are still recovering. the first round of sequestration forced reductions in float and shore operations it generated nerate ship and aircraft maintenance backlogs and compelled us to extend unit deployments. since 2013 our carrier strike strike group and amphibious ready groups and destroyers have been on zee employments lasting 8-10 months or longer. and this comes as a result of the sailors and the families andma it willnc reduce the service livesps of our ships. the navy's fleet readiness will likely not recover from the ship and maintenance backlog until 2018. five years after the first roundship of sequestration. this is just a small glimpse of the the readiness price caused by sequestration. although thess funding levels

provided to us under the bipartisan budget act of 2013, they were $13 billion above sequestration and those budgets were $16 billion below the of resources described in our of submission as necessary to budge sustain the navy.low the so now to deal with these sust shortfalls we slowed -- that sl means we just pushed out modern modernization that we t scheduled to be done during this defense year plan and reduced aircraft t and delayed upgrades to all but en the most critical shore infrastructure and the end result has been higher risk, particularly in two of the missions that are articulated inhe our defense strategic guidance, defe that is our defense strategy and i provided a copkopcop -- a copy of that and the impact of nop sequestration. the missions are those requiringat us to deter and defeat aggression and to project power

despite an aerial access challenge. now sequestration in 2016 would a necessity a revisit and revisionwe of our defense strategy. we've been saying this for years. that would be a budget-based strategy for sure. we would further delay critical delay war fighting capabilities further reduce readiness of contingency response forces only at one-third level and su forego our stretch procurement of ships and submarines and further downsize our smeens. the sequestration of 2020 would not execute the two missions i refer from. we go from high risk to not ion executing those missions and be ferr in high risk of those missions h so that is seven out of ten.of t and more detail is in a handout ha in front of you and in a writtenest to statement that i request be f

submitted to the record. l and we with quantitify. as the general said, what is less easy to quantify is the sequestration's impact on people. people under write our security. we call them our asymmetric advantage. they are the difference in the navy between us and even the most technological navy. we enjoy meeting our recruiting of goals and until recently the retentiony. i is phenomenal. the but however sequestration in vy. we h 2013, it really left a bitter our taste with the sailors with our civilians and families. in the threat of looming ci sequestration along with a estrat recovering economy is a troubling combination to me. we are already seeing disconcerting trends in our retention, particularly strike fighter pilots our officers, fighte

sealsr and our cyber technology an and radar and nucleus fields.mind this reminds me of the r challenges i had as a junior officer after the vietnam war s and in command of a submarine as they downsized. the world was more stable than it is today. and we can't create that same ce. circumstance. w sequestration will setil us right on that same course i just described and frankly i've been id, i in before and as the general ain. said i don't think we need to go there again. now ship building and related industrial base suffer. the companies that make the key suffer vows and circuit cards and the things that make us the great y sea power we are might be forced to close their businesses and itgrea takes a long time to build a o

ship and longer to recover from ver the losses of the skilled materi workers or the materialsal that e some of the companies provide. the critical infrastructure in this vital section of our nation's economy is key to sea mr. so mr. chairman, i understand ders the pressing need for our nation to get the fiscal house in order. i do.al it is imperative we do so i say, in a thoughtful and deliberate manner to ensure we maintain the trust of our people. we have to retain that trust.deli and to sustain the appropriate war fighting capability for your cap navy, the forward presence and its readiness. unless naval forces are properlyadiness. sized, modernized at the right rnized pace with regard to the adversaries we might have, ready to deploy without adequate to training and equipment, and aining capable to respond in th ae capabl numbers and at the speed sp required by the combatant commanders, they won't be able to answer the call. i look forward to working with this committee, with the congress, to find the solutions ommitt that will ensure that our navy s that retains the ability to organize, to train and to equip our great

sailors and marines and soldiers and airmen and coast guard men in defense of this nation. thank you. >> thank you, general welsh. >> thank you, mr. chairman, ranking member reed and members of the committee always an honor to be here. a special honor to hit before hairm you today withan three men i consider to be friends mentors ecial and heroes. my pride in the air force and the airmen that give it life hasn't changed since the last li time a peered edfei appeared before you. n when we deployed operation desert storm -- >> repeat that again. repeat that. >> ai we'rerha now the smallest air force we have ever been, chairman. when we deployed to operation desert storm in 1990 the air force had 188 fighter squadrons. 19 today, we have 54 and we're headed to 49 in the next couple 5 of years. in 1990 there were 511,000 00 active duty airmen alone. today, we have 200,000 fewer than that. and as those numbers came down the operational tempo went up.s

your air force is fully engaged. all the excess capacity is gone.he and now more than ever we need a ne capable, fully ready force. we simply don't have a bench to . go to. s and we can't continue to cut for force structures as we have beenf doing to pay costs of readiness and modernization. we will risk being too small to risk succeed in the task we have already been given. bca level funding will force us to do exactly that. we will have to consider divestiture of things like the kc 10 fleet the u 2 fleet, and portions of our airborne control and command fleet. we would have to reduce our mq 9f and 1 fleet. that would be significant. in the isr missionary lone, 50% of of the high altitude isr litary missions being flown today would no longer be available.he commanders would lose 30% of their ability to collect intelligence and targeting data against moving vehicles on the

battlefield. andco we would lose a medium altitude isr force the size of ize one doing great work in iraq and syria today. the air force would be even smaller and less able to do the ai things routinely expected to do. i would like to say that smallerexpe air force would be more ready than it has ever been but that's not the case. 24 years of combat operations have taken a toll. in fy 14 and 15, we used the short-term funding relief for the balanced budget act to t target individual and unit have readiness. and the readiness of our combat relief squadrons improved over the past year. today, justtarg under 50% of those units are fully combat ready.f under 50%. sequestration would reverse that trend instantly. just like an fy 13 squadrons would be grounded readiness rates would plummet red and green flag training exercises would have to be canceled, weapons schools classes limited and air crew members frustration in their family's frustration pl will rise umagain, just as the n major airlines begin a hiring d

push, expected to target 20,000 pilots over the next ten years.ajor we have a broader readiness issue and the infrastructure ten that produces combat capability er over time things like training rages, test ranges simulation infrastructure, nuclear infrastructure, have all been aining intentionally underfunded over r the last few years to focus infr spending on individual andas unit readiness.ess. that bill is now due. b bca caps will make it impossible to pay. the casualty will be air force readiness and capability well into the future. a i would also like to tell you ld your smaller air force is younger and fresher than it has ever been, but that wouldn't be rue true either.our s our smaller aircraft fleet is also older than it has ever been. if world war ii's venerable b 17 bomber had flown in first gulf war, it would have been younger than the b 52 the kc 135 and u war 2 are today.rable we currently have 12 fleets of 13 airplanes that5 qualify for oday's antique licens.e plates in the state of virginia.qualify

we must modernize our air force.te we want to work with you to do m it within our top line.ork it certainly won't be easy and easy it will require accepting ration prudent operational risk and a some missionaries for a time. but the option of not real modernizing isn't an option at air all. air forcesis that fall behind technology fail. and joint forces that don't have the breadth of the air space andin cybercapabilities that compromise modern air power will lose. speaking of winning and losing, at the bca funding levels, the air force will not longer be able to meet the operational requirements of the defense strategic guidance.un we cannot defeat an adversary deny a second adversary and defend the homeland.e i don't think that's good for america. no matter what angle you look at it from. d't thi we do need your help to be ready for today's fight and still able to win in 2025 and beyond. i believe our airmen deserve it. te i think our joint team needs it. and i certainly believe that our nation still expects that of us.

i would like to offer my personal thanks to the members of this committee for your ank dedicated support of airmen and com their families and i look rt of forward to your questions. >>es thank you, general dunford. >> chairman mccain, ranking member reed and distinguished members of the committee, thank you for the opportunity to t appear before you today.thpr i'm here to represent the marines and testify on the impact of sequestration. i would like to begin by thanking the committee for your beg steadfast support over the past 13 years, duty or leadership we fielded best trabined and equipped marine corps we have ever sent to war. i know we have high expectations for marines as our nation's pp naval expeditionary force and an readiness. you expect the marines to at operate forward,ions engage with e an partners, deter potential rs adversaries and respond tod crises. when we fight, you expect us to win. you expect a lot of your marines and you should.an this morning as you hold this wi hearing, then. marines are doing ot what you expect them to be uld. doing. over 31,000 forward deployed them and engaged. i've captured what the 31,000 capt are doing in my statement.th

i ask that be accepted in the the record for the interest of time. our role as a nation's expeditionary force and f readiness helps us equip the th marine corps.rine c itor prioritizes the allocation of resource that we receive from d congress. before ihap address what would leve happen at a budget control act level of funding with sequestration, let me quickly outline where we are today.d we have experienced budget cuts fi and fiscalsc uncertainty over past few years, we prioritize the readiness of our forward deployed forces. but in order to maintain a readiness of our forward deployed forces we have assumed risk in modernization i infrastructure sustainment and have quality of life programs. as a result, approximately half -of-li of our nondeployed units those ed who provide the bench to respond to the unexpected, are suffering personnel, equipment and training short falls. in a major conflict, those short a falls will result in a delayed response, and/or additional casualties. we'rel ca investing in modernization

at a low level. we know that we must maintain at at le least 10 toas 12% of our resourcesrces on on modernization to field a ready force for tomorrow. to pay today's bills we're investing 7% to 8%.ently over time, that will result in maintaining older or obsolete equip equipment atme higher cost and more operational risk. and we are funding our os infrastructure sustainment belowional the dod standard across the future years defense program at the projected levels we won't bel properly maintaining or enlisted barracks, training ranges and other key facilities. when we can meet the requirements of the defense strategic guidance today there is no margin. even without sequestration, we will need several years to uidanc recover from over a decade of rg war in the last three years of s flat budgets and fiscal uncertainty. in that context bca funding levels with sequester rules will preclude the marine corps from meeting the requirements of the ru defense strategic guidance.eet sequester will exacerbate the challenges we have today.ester wi it will also result in a marine

corps with fewer active duty th battalions and squadrons than squ would be required for aad single m major contingency.er perhaps as concerning, it will arine result in fewesr marines and sailers being forward deployed in an position to immediately respond to crises involving our diplomatic posts, american citizens or interests overseas. while many of the challenges a associated with the tely r sequestration could be involvin quantified, there ishurmwith en human dimension. ou r soldiers, sailors, airmen rmen, and marines and their family shou should not haveld to face doubts ether about whether they would be deployed without proper training and equipment. the foundation of our all volunteer force is trust. sequestration will erode the of trust that our young men and is women in uniform, civil servantsen and families have in their se leadership. and theilie cost of losing that trust isin incalculable. given the numerous and complex security challenges we face today, i believe the dod fundingth at the budget control act level i with sequestration will result d th

in the need to develop a new the strategy. wed simply will not be able to will execute the strategy with the implications of that cut.ications thank you, once again, for the opportunity to appear before youbefore this morning. a i look forward tond your questions. >> i thank you. al i thank you all for a very compelling statements and i hope that all of our colleagues and in fact all of the american people could hear the statement and see the statements that you made today.cted m our most respected members of our society. a i would also have an additional u c request, that is that if you could provide for the record all of you a list of some of the f s decisions you would have to make if sequestration continues to bee enacted and there is no amelioration of the situation