nderstand the rise of china in that we to some degree accommodate the rise of china. where we can to attempt to shape the rise of china. i've said on many occasions that a china that would a china with a military that would come forward as a net provider of security rather than a net user of security would be beneficial to not only the region but would be beneficial to us as well. and i think that's an achievable goal. i think that has to be looked at, at how we deal with china globally in a global institution from their role in the united nations to how they're behaving and conducting themselves in other regions of the world, and how we interact with them there. i think it also will require us to have a pinpoint focus on how we see their influence in this region that we have been talking about today, which is primarily east, southeast asia, northeast asia. and to understand we have to try

to understand what their side of the equation is. and to be honest with you, some of the things they have done aren't really clear today. so you know we always get in a debate about whether we should continue mill to mill if we're unhappy with the things they're doing. i'm a proponent of continuing to take some risks there because there is benefit in us continuing to have dialogue, to try to establish those types of frameworks that allow us to communicate with each other in crisis. we've had some good work with the prc lately of building some confidence building measures that allow us to understand how to operate with each other in these constrained waterways so we don't have a bunch of lieutenants and captains and commanders of ships out there making bad decisions that might escalate us to something we didn't -- escalate us into the trap. so we need to i think continue engaging them. we need to be forthright about

how we feel about these things and what the u.s. position is on behavior when it doesn't match what our allies and our partners and our value systems support. >> clearly, in recent years the thrust of the chinese has been economic, but in even more recent years it's been military, as you have testified today. a tremendous growth and subsurface, everything else. what do you make of these actions which can only be characterized as aggressive building islands off the shore and increased patrols in the south china sea? what do you read into that in terms of china's military or expansionist intentions? >> yes, sir, i think the chinese communicate to us pretty clearly what they're doing. they see themselves as a renewing power. they have the assets to build a military. they're building particularly in the navy and the air force.

because they understand the importance of protection of the global areas and you'll start to see them operate globally in different places which they didn't operate years ago. they told us over and over again that they believe that the 9 dash line in the south china seea is their territorial waters. as i understand they refuse to participate in international legal venues you know, the filipinos have a case at the u.n. law convention tribuneal challenging the line, and as far as i know, the chinese have refused to participate in that. what they're doing, through what they articulate as peaceful means, they're building these land reclamations, they're establishing their position in the south china sea which opens their options down the road as the situation continues to unfold. >> i'm out of time.

one-word answer. do you believe it would be beneficial to the united states to aseed to the law of the sea treaty? >> yes. >> thank you. thank you, mr. chair. >> thank you, mr. chairman. and gentlemen, thanks for your testimony and your service. colonelal locklear thank you for hosting me a couple weeks ago. appreciate the time. please send my regards to your staff. three hours on a saturday is well above and beyond the call of duty for anybody, so let them know how much i appreciate that. i've been critical of many aspects of the president's national security strategy in part because i think we lacked credibility when we say something that we're going to do as a country, we need to do it. i think in certain areas of the world, we haven't done that. i think it undermines our national security when we do that. one area of the president's strategy that i have been supportive, both militarily and economically, is the chairman

stated about tpp is the rebounds to the asia pacific, and you know, i believe we need to make sure that this rebalance and optimization of our military forces in the region is credible. we're saying that we're going to rebalance. we need to actually do it. do you agree with that? >> yes, sir, i do. and i think that the rebalance goes far beyond just military, though. >> right. >> i think we also have to get our economic house in order as well. otherwise, all the military rebalancing we do will not have the effect we want it to have. >> i agree with that. i appreciate the map of the aor map. i wanted to talk briefly you know, alaska is no longer in your aor, but as we discussed the troops and which are significant, both in terms of army dcts and a very robust air force presence, those troops are still op-con to you in the case

of contingencies, aren't they? >> that's correct, sir. >> how critical do you see these troops in the region in terms of not only shaping but also contingency forces with regards to your plan? >> well senator, the forces in alaska, you know, if you take a look at the globe they're as far west as maybe even farther west in some cases than hawaii is. so the response time that those forces would have in the significant contingency in northeast asia or southeast asia is quite good. and important. that's why the other forces, i think, have been op-kon co-con to me for a long time. there's a variety of forces up there that are important to us. the fighter squadrons that are there, the bcts that are there including the ranges. the range complexes we have in alaska are very important because that's where we get our high end training for sort of

our hardest types of environments that our aviators may have to fly in. >> general how about you in terms of just the korean contingency issue? >> i agree with admiral locklear. we rely on those forces as a part of our quick response which we'll need in crisis. we also train with them regularly, and we also send forces to train them, too. >> you think if we remove onory two bcts from alaska that would show that we're committed to a rebalance or undermine the rebalance commitment? again, this goes to credibility. >> well, i think that from a perspective of what the other outcomes were of that, from a regional perspective, there could be questions about the loss of troops. >> and the credibility of our rebalance strategy? >> you would have to look at it holistically. i prefer not to take it from just one perspective, but you have to understand the remainder

of the changes taking place if they were to happen. >> admiral locklear, you think that would undermine our rebalance credibility, two bcts in the region leaving the region? >> i would answer in general terms. i think any significant force structure moves out of my aor in the middle of a rebalance would have to be understood and have to be explained because it would be counter intuitive to move significant forces in another direction. >> i agree with that, and i think it's a really important issue to look at the rebalance as a successful rebalance that's credible. can i turn to -- i want to commend you for what you stated and senator wicker on the struteatstru strategic lift issue. i think that was certainly something i saw in my recent trip that was a concern. we're moving forces to different parts of the region, but the strategic lift seems to be lacking. both air force and our capacity

but to get there we need to have a successful laydown. are you confident that the realignment of forces from okinawa to guam and other places is going to be on schedule in terms of cost and timelines that the department has laid out? i know that's something this committee as you know has been very focused on. >> yes, sir, well in the last three years i had a lot of time to take a look at this and to work through it. in my overall assessment is that we're on plan at this point in time. >> thank you. thank you, mr. chairman. >> admiral, in march, the gao published a report on operational contract support and i'm nerdy enough about operational contracts that i pay close attention to this stuff, as you know we wasted billions of dollars in iraq and afghanistan because we had not embraced training on contracting in the core capacity of our

command engaged in the contingency, and in that report, it indicated that your command is the furthest behind in incorporating operational contract support in its joint training exercises and operation plans. now, i know that gao noted that you have taken some recent positive steps to address this but i would like you to lay out if you would briefly the steps you're taking to include operational contract support in your command's joint training exercises. >> well, thank you. not to make excuses, but i think the reason we're falling behind is because we haven't had the demand signal that was put on the commanders in the middle east in the last several wars, and we haven't had that type of a massive rapid build-up to support a war effort anywhere. that said, we did recognize it after that report as a

deficiency, and we're looking hard at where are those contract decisions made, how is the commander have visibility to the contracting decisions during the execution of a crisis or an execution of a campaign, because you know, when a crisis occurs, stuff just starts coming. and that's good, that's what makes us so strong but when it starts coming, at some point in time, you have to decide what's enough and what's not enough and who's going to be the steward of it down the road. we're trying to understand the command and control of those contracts and how much the leadership knows and what they need to know and when. >> well i think it's so critical that we never lose sight of this contracting oversight and planning and training as a core capacity because we're never going to go back to the day my father peeled potatoes in world war ii. we're not going to have our trained war fighters peeling potatoes ever again and all we have to do is look at the long ugly saga of all the long cap

contracts to realize what happens when contracting is not considered a huge priority. so i appreciate your attention to that. on another note, i know that you are the primary jammer provider in the navy for dod. could you speak about the role of airborne electronic attacks and how critical they are and how critical is the acts of our only electronic warfare capability that is provided by the growler? >> i've been a huge supporter of growler for my entire navy career. the transition of the prowler squadrons which were so significant in many of our conflicts and provide us what i thought was an asymmetric advantage in our air space because of their capabilities. i was glad to see those capabilities, jammer types of capabilities transition to

basically a fourth generation plus aircraft that can operate effectively in denied air spaces. so in any campaign that i would envision, that would be of a higher end warfare electronic warfare attack provides me battle space that i may have to go fight for. and those growlers and to some degree the other higher end capabilities that we have are critical to allowing us to have that access. >> i finally, i want to touch on the stresses that we're feeling on remote piloted aircraft as you know whiteman is the home to the 20th reconnaissance squadron and those pilots and those operators and intelligence personnel along with the airmen who are operating the predator and the reaper are very important. we're putting incredibly high demands on these folks. they're not getting normal rest. they are not getting time for

training. we can't even rotate some of them into a training capacity because the demand is so high. could you briefly talk about what steps can be taken to alleviate what i think is a critical problem. i mean thesis guye guys are -- they're working around the clouk and getting very little break. i don't know we would do this to a traditional war fighter but we're doing it to these rpas. >> well the advent of these systems and in the past couple decades and the obvious benefit that they brought to the battle space have put pressure, i think, on the air force to be able to produce the types of people and to be able to man them, but unfortunately, the demand goes up and up and up. one of the asymmetric strengths of the united states is our ability to sense and understand what's going on. we have the best isren the world, but it's overtaxed for

the demands we have globally and that's where it's showing in the faces and working hours of these young people. we need to rationalize, number one, what are the platforms we're going to invest in the future and build a structure of man training equipment underneath it that's sustainable. >> i particularly worry because i think we have a tendency to think of these as machines and don't realize the human component of this, and the stresses they have. i mean, these guys are manning these things for 10, 12 hours and then going home to their families for supper and homework, and then getting up pretty quickly and going back at it. it's a unique kind of role and certainly nontraditional as we look at the history of our military, and i just want you to share with your colleagues that talking to some of these folks, you know it's clear to me that we need to be thinking about their wellbeing and whether or not we're overutilizing them and what kind of strezs stresses we're going to see in that personnel.

thank you. thank you, mr. chairman. >> thank you mr. chair. thank you, admiral locklear and general, for being here today and for your men and women that serve as well. i appreciate it very much. as you know the dod is planning to transfer operational controller op-con of south korea forces to the south korean government in the event of another event on the peninsula, and this op-con transfer has been discussed for many many years. it was originally supposed to take place in 2007. it's been delayed many, many times in the past number of years. and it does appear to be currently indefinitely postponed. so can you describe some of those challenges that we're being faced with those and those that the south koreans are facing in their efforts to create conditions which would allow us to successfully do the op-con transfer?

>> yes, ma'am. thank you. as you know this past october that secretary of defense agreed upon a conditional approach to op-con transition, in the past, it had been focused on a date with capabilities. so in short, i agreed with the change that we made to focus on capabilities and conditions as opposed to shooting for a date. three general conditions, the first is that south korea develop a command control capacity to be able to lead a combined and multinational force in a high intensity conflict. the second is that they have the capabilities to respond to the growing nuclear and missile threat in north korea and the third general condition is that this transition take time and take place at a time that is conducive to a transition. now, there's specific

capabilities i mentioned that are listed in detail as a part of this, a part of the agreement. i'll cover generally the main areas. the first was c-4, command and control computers. in terms of their capability there, which i mentioned earlier. ballistic missile defense, generally enin their capability there. the munitions they have to have on hand for us to conduct a high intensity conflict and finally the intelligence surveillance and reconnaissance assets necessary in an environment that is very challenging for isr and particularly with the assets and the asymmetric assets that north korea is developing. in a nutshoal, those are the things that are the challenges that we have as an alliance and republic of korea's focused on enhancing. >> thank you. admiral, do you have any

thoughts? >> no, i think the dynamic that's most changing in the dialogue of that op-con transfer is the behavior of kim jong-un so that has to be brought in the calculation as well. >> thank you. and general, i do agree absolutely the capabilities versus calendar. we have to look at the capabilities. so realistically, do you think moving forward with op-con transfer that in the foreseeable future and if it is, what are the benefits to us then of doing the op-con transfer? >> well, i think it is foreseeable. i don't think it's in the short term. and i think it's of benefit in terms of our presence in the alliance that we have with republic of korea is very important for regional security. it plays into global security as well because they have been a

very good partner of ours for a number of years and they're developing the capability and they have actually employed forces around the world and they have deployed in support of us as well. in some of the conflicts we've been involved in. so i think in the long term the alliance in its development in this regard is good for both countries. >> very good. i do know the south koreans were engaged at the air force base when my trucks were rolling through that area and we're appreciate their support in that area. i want to thank you gentlemen for being here today as well as the service of your men and women. thank you, mr. chair. >> thank you mr. chairman, and to the witnesses for your testimony today. mr. chair, i appreciate the way you're doing these hearings. i now see the method in the madness to have the strategic hearing a couple days ago.

we had a wonderful hearing with strategic experts on this topic before we get to ask you questions actually makes this discussion work very well and i appreciate the chair setting it up that way. as our military lead in take com, describe why the support for the treaty is why you support. you gave the one word answer and i'm asking the why question. >> well i won't speak about it from the military side or from the sea side. >> it's additional elements as well. >> i won't comment on because it's not my area to do but first of all, it's widely accepted after a lot of years of deliberation by many, many countries, most countries in my aor, it provides a framework that we -- that most countries look at it believe is useful for us determining who particularly

in these sea spaces and these things that aren't quite clear, provides a proper framework for how to go about dealing with the disputes. it's a rule of law a rule of process, that's a good thing. by not being -- to be honest with you, on the military side, we have been directed by numerous presidents to comply with the law of the sea at least as it reflects the way we interact with other countries and our partners. that said, when we're not sigatory, it reduces our overall credibility when we bring it up as a choice on how to solve a dispute of any kind. >> second question to the trap, you indicated that the u.s. should do what we can reasonably that is within our interest to accommodate the rise of china within the network of global institutions. and i think you laid out a pretty good rational aile that the

more they're engaged in the global institutions, that can have a pro-stability effect. one current matter that is pending before congress is reforms to the imf. that would enable china to have more of a role more voting power, but also more of a financial obligation in terms of the work of the imf. i don't want you to comment on you know imf reform if that's not your lane and you don't have an opinion, but that is the kind of thing, wouldn't you agree we ought to be taking a look at if we're going to try to accommodate china's growing influence. having them more engaged and play more of a leadership role in global institutions, like the imf, is one way to accomplish that integration that can be ultimately a pro-stability move would you not agree? >> yes, i absolutely agree. i mean, if china is inevitable

rise to be a world power in the many different venues, they inevitably have to participate and be part of those institutions, and they have to take some responsibility for these things. >> kind of the common sense you know, the law firms that get founded by strong partners they often run aground when the next generation of young, excited partners want leadership roles and law firms that don't make room for the young leaders as they come up find they split away and end up being arch competitors. if they find a way to accommodate them in, it holds them together. it seems like a basic analogy we see a lot in human situations. well, i would hope on both law, we would take it seriously here because while they have nonmilitary dimensions, ido think they bear directly on some of the military questions. one thing i would like to commend you, i like the fact

that you in your written testimony and some of the wednesdays talk aboutindo asia pacific. you know india has had an interesting history militarily with the united states and more generally the congress kind of have a long nonaligned position that made them slant a little toward russia in terms of purchasing material, but now they're significantly engaged with the u.s. and u.s. companies. they do more military exercises with the united states than they do with any other nation. i think there is an opportunity under prime minister i know the chair has spent time with him and others have, too, to deepen that relationship, just as i conclude, could you share your thoughts on the u.s.-india military partnership at this moment? >> yes, sir. part of the rebalance was to develop a strategy for a longer term security relationship with india. we're doing that. we have, i think a tremendous opportunity here as the leadership changes in india, and

the world changes for them to be a growing partner with the united states, not necessarily an aligned partner, but a growing partner. i believe that some of the defense trade initiatives we have with them will help bring us together in a more productive way for many years to come. >> thank you very much. thank you, mr. chairman. >> thank you very much. and thank both of you for your work. general, i do believe that the work in south korea is important, and we've been able to draw down our numbers and i know the south korean military is more effected in many ways than they have been but i think it is an important relationship. they've been good allies, as have the japanese and others in the pacific. and that long term umbrella relationship, partnership that we've had remains important.

i think to the world and to the united states interests. so i appreciate the work that you're doing. i appreciate the importance of the pacific. just undeniable, it seems to me. our strategic subcommittee has dealt a good bit with nuclear weapons. our relationship with russia the drawdown, the treaty under the treaty of nuclear weapons systems, admiral locklear, but we don't talk enough about china's position. they built a nuclear weapon capability capability, and i assume they have the ability to surge that at any point they choose to. they have the finances and the technology and the capability of doing that. is that correct? >> yes, sir. we have observed them pursuing a deliberate modernization of

their nuclear forces, both those that are land based and ones that are subsurface based. they now have, i believe, three operational submarines in the pacific, ballistic missile submarines. that could grow to four or five in the future. we know they're pursuing missiles missiles that would extend their capability for a second-strike nuclear attack, is what they've explained, how they explain it. but it is growing and i think it will be a continued consideration for us as war planners. >> we in congress and policymakers in washington need to understand the reality of a nuclear armed submarine. how many missiles would those submarines chinese submarines be able to handle and launch, and how many warheads could they

launch? >> to give you an accurate answer, let me respond to that for the record if you don't mind, but multiple. >> would it compete with our capabilities? if you're able to say. if not, that's all right. >> i wouldn't say sir. >> all right. one of the strategies that china has used has been to create a zone outside the nation to make it difficult for our ships to inhabit, and put them at risk. does that continue, is that part of the df-21 missile plan? and do they have other plans that are designed to make it more difficult for our ships to be within hundreds of miles of the shore? >> across the board, the chinese

have improved their, greatly improved their ability to build missiles of all time cruise missiles, ballistic missile defense, so they have, i think, a quite credible technology. the missile you're talking about is a missile they're fielding and testing and producing that could potentially, if employed properly and work right it would put u.s. forces at sea at risk, at greater and greater distances. but it's one of those things that we are dealing with and trying to answer. >> i think you're correct and i think the navy's thinking clearly about that. and a wise way. what about the capabilityies we have? army has some potential land based missiles that could create also a zone around our interests, our country, our territory territories, that could protect

us. any thought given as i believe secretary hagel mentioned of using some of those capabilities from a land to provide a better safe zone around our bases and territories? >> i wouldn't know senator, exactly what secretary hagel was talking about at that time, but i would be glad to get specifics and to answer him. >> well, thank you both for your service, and i believe we have a fabulously capable military well led by talented leaders, and we thank you for that. >> senator donnelly. >> thank you mr. chairman and thank you both for your service. admiral locklear, what would youapologize i haven't been here the entire time when you look, the two biggest challenges you look at in your command command?

>> well, the biggest challenge is making sure we can respond effectively to what i think is the most dangerous situation, north korean peninsula. i have a huge responsibility for helping north com with the defensive homeland, the defense of hawaii, guam, and then follow forces and things that flow in to support the general on what could be a short line problem in korea. so north korea. so that's kind of number one problem. the second, i think, is just insuring that the rebalance does what it needs to, to insure that u.s. is properly positioned in the asia pacific for the rest of this century, and under that fall a lot of things. insuring that the alliances are as strong as they can be, building new partnerships and in some cases, insuring that the rise of china doesn't turn into a trap.

>> general, as you look at kim jong-un, when you look at the decision making process that he uses, and i don't know if the appropriate word is random, but would you say is there like a chain of command or a general structured way decisions are made or is it pretty much you're not usually certain how things are going to go with him? >> yes, sir, thank you. we don't know a lot about the decision making process inside of that regime. if you look at just the three years he's been the leader he's changed his senior leadership more than his father and his grandfather put together. and so from one perspective, the use of keratin stick the use of brutality in many cases in order to insure absolute loyalty to him i think undercuts and leaves concern with me that one, he's got a group around him that will be frank with him, that won't

only tell him what he wants to hear. so i think that's a dynamic within that decision making process that gives me concern. >> and as you look at the way the decision making is going on right now, it appears there is somewhat of a move toward russia, toward creating an additional strengthening of bonds between them. do you think that provides any more stability for them or it makes them more dangerous? >> well, i think you can see not only the out pm reach to russia but others in the last year. there's an attempt by them to get around sanctions, which are having an effect, and to develop others that would provide trade and funds to them, which, you know their economy, they're very tight particularly given the percentage of it he puts into his military. i think that's his attempt there. we don't see a lot of return on those efforts at this point. >> admiral, when the north koreans start to saber rattle

and start to make a lot of noise, ofttimes your command brings a presence into the area there, and helps to change the discussion. do you have fears or concerns about any plans they might have to come after your fleet in particular? >> well, certainly we're talking in the context of the north koreans, you can't rule out any unpredictable type of activity. so we know that they also pursue a pretty significant missile program, whether how good it is sometimes we're not sure, but that's not just a ballistic missile capability but a cruise missile capability that would have to be considered when forces were put in the area and they also have a submarine force that's, if it's operational, could be quite unpredictable,

mini subs and things like that, but they're generally locally contained, not far reaching so at this point in time i'm not really concerned about our ability to project power should we have to support a contingency in north korea. >> general, what is the one thing in your command you're most concerned about? >> sir, i'm most concerned about a provocation which north korea commits two or three every year, and one of those provocations escalating into conflict. >> thank you. thank you, mr. chairman. >> admiral locklear, general, thank you both for your time and for your service and more importantly, for the service of all the men and women in uniform you represent in your command. admiral locklear do you believe china is increasing aggression in the south china sea reflects their calculation that the u.s. lacks the willpower and capability to challenge them in

the south china sea? well, you would have to ask the chinese if that's the way they feel about it. my guess is that they, as they always do, i believe, they listen careful to how the u.s. feels about things globally was as well as in that region, and where they have a clear understanding of u.s. position a tendency to understand it and respect it. >> do you think the balance of power is shifting to the point where they believe that they now have a military advantage over us in their regional waters inside the first island chain? >> i don't think they think they have a military advantage over us because they always recognize we're a global power and that they're not a global power. i think that they believe that their ability to build and produce military they have has provided additional decision smas for space for them in their local region. >> one point you mentioned is

the importance of clarity, deterance works best when the lines we draw are clear and strongly enforced. i have read press reports during the president's visit to washington, the united states might make an explicit pledge to protect the islands which are currently under administrative control of japan, but china also claims them. do you think that would be a wise step to take for the purposes of stability in the east asian theater? >> well, my understanding is we have pretty much made it clear our position in the east china sea as it relates to those islands. we still maintain we don't take a side on territorial disputes. in the long run the issue of the sovereignty of the island is for them to figure out. what we have said and it's been said at numerous levels, is that the islands do fall within the administrative control of japan

and in the fuchmutual defense treaty with japan, and i think that alone has provided a level of stability to the issues in the east china sea northeast asia. >> the press reports -- i appreciate and understand and agree with the points you have made. the press reports suggest we would be reducing that to writer, and that could provide more clarity in words. could you clarify your military to military relations with thailand add the time. >> well, we maintain military to military contact with thailand. we do it at a lower level. post coupe, post coup. we were on a positive glide slope, i think prior to the coup, the opportunities we were pursuing were quite good for the region. thailand is our oldest ally.

in the end, if we want to keep thailand, we love the thai people, they're close to the american people, and we have similar value systems so it's important for that. but post coup we have truncated a number of military to military activities. reduced them in scope and we're managing those through an interagency process where we go through and decide, is this one we want to continue or not? but we hope that the leadership current leadership in thailand will move actively and aggressively to restore, you know, rule of law and tonsitutiontons constitutional processes and civilian control and government. >> general, korea is in many ways a unique area of operations in the world calling for some unique capabilities. i want to speak briefly about cluster munitions. our stated policy is we will no longer use such munitions greater than 1% unexploded rate.

can you describe the effect this policy will have on current operations and planning and the challenges it will face achieving that rate? >> yes, sir. the cluster muniegzs are an important part of the munition inventory i have because of the effect they create for me. there are plans right now work being done for replacement munition that would meet the requirement of less than 1% dud rate, but that's a requirement we must meet before 2019. we would use other munitions, but the munitions we have available just simply don't provide the effect of those that i have today in my inventory. >> gentlemen thank you both for your service and to the service you all represent and your families and theirs. >> thank you mr. chairman. admiral locklear general, thank you both for being here this morning. admiral locklear, in your testimony, you point out the

significance of china's military modernization efforts and earlier this week, we heard from admiral roughhead from some other experts on east asia about china's modernization and how swiftly that has happened. what do we need to do to respond to what's happening in china? and can you also talk about how if we go back to level of funding that's required by sequest rashz, what that does to our efforts to make sure that we are technologically ahead of where the chinese are? >> well, i think first of all, we need to continue to encourage the chinese to be more transparent, and to be more forward leaning in how they respond to their neighbors how

they respond in the international community, to be a responsible leader in the region. if they're going to have a military, and they're going to yauz it for security, they should be part of the global security environment participating with others and not being at odds with them. that's a choice they have to make. we also have to make a choice to accept them into that environment, so that's something we have to always consider. and there may be some risks as we do it because as they rise as a power, it will be a collaborative on one hand and competitive on another. though that kind of relationship resorts in friction, and it will always be friction and that frixz, some of it may end up happening in the south china sea or the east china sea. so managing that friction and understanding how to manage it so it doesn't escalate is very very important for all of us, particularly between the united states and china so we're working that part of it. >> so, before you answer the sequester question, how important is the effort to

rebalance rebalance, i use that term in parenthesis, to asia that has been set out in doing those kinds of things with respect to china? >> the rebalance is not about china. china is just one of many issues around why the u.s. should be in asia pacific, why we should have a security posture there, but they are a big concern in that. so the rebalance, and on the military side, insuring that we have the right assets to be able to manage the situation, to be able to understand the environment, and to be able to respond effectively are extremely critical. the readiness of the assets, the readiness of the men and women that man them are critical. sequestration, what happens is that in general, you have less force structure, less ready, that's less technologically capable. so we get under pressure like

we're under now one of the first things to do is technological advances because we have to keep what we got because nobody wants to change. the things we need to stay relative not only in that part of the world but globally in the technological arena in war fighting gets pushed off the table and to the right and into timelines that make us start to lose our technological advantages in war fighting. >> one of the things we heard from former admiral roughhead earlier this week was the importance of continuing the carrier launch uav and that that program would become even more important as we look at what we need to do in the asia pacific. do you share that view? and how do you see that -- that effecting what we need to do in that part of the world? >> well, i think in general

whether it's launched off a carrier or launched anywhere else, in my particular area the unmanned vehicles both air and surface and subsurface are a significant part of the future because any time you can take a man out of the loop, you operate in denied environments much easier, a lot of benefits to it. so to the degree that the uav would be from a carrier a carrier for me is just a very flexible air field that can operate widely through the theater. i would see huge benefits in being able to operate long range isr, long range strike if necessary from those platforms. >> and general, is this something that would be beneficial to you in the korean theater? >> yes, ma'am, absolutely. >> thank you. thank you, mr. chairman. >> thank you, both of you, for what you're doing for the

country. i wanted to ask about a follow up admiral locklear, on your written testimony where you said iran has built their robust nuclear structure and with materials that have passed through the u.s., pay-con, aor, can you help us understand how they're getting these materials and also could you describe for us what you understand is the cooperation between iran and north korea in particular on their missile programs? >> well, i think it's pretty well known that there's been a movement of proliferation of activity from north korea into iran, in this case of the types of technologies that iran was looking for. i think that's been known through the interagency for some time. >> do you think that's how they're advancing their program? with advice from north korea? >> i would say -- i wouldn't discount that as a possibility.

>> so in addition to that, you've also noted that north korea continues to procure for its nuclear ballistic missiles program, and from the region and a network of individuals and enemies in the region, and as you know, that violates u.n. security council resolution 1718. in terms of the ability of member states to directly or indirectly supply to north korea these kinds of materials, and obviously, there are many u.n. resolutions that apply to iran as well. but so as i look at that testimony, what more can we do to isolate north korea in terms of those that are supplying the country of things we don't want them to have and are against u.n. resolution? and who do we need to be tougher on in the region in that regard?

>> well, i think that primarily in terms of proliferation security, we have a proliferation security initiative that's global in nature multinational. that's also an important key because we have to bring in, we have to deal with other nations to help provide intelligence and also forces that may help us in interdiction et cetera. and continuing our training in that regard, which we do. in terms of the nations that i think we have to be concerned about, i would prefer to answer that actually for the record in a classified document as opposed to here in the open forum if i could. >> of course thank you general. i appreciate that. i also wanted to follow up admiral locklear, i note in your written testimony you mentioned taiwan i believe once in passing. in light of china's major

military buildup what is your assessment of the current balance of military capabilities in the taiwan straight between the pla and taiwan and where and where does taiwan have an advantage and where does the pla's advantage? so what concerns are you hearing from the taiwan e is se and what platforms, weapons, assistance and training has taiwan requested from the united states that we haven't yet provided? >> well we have a robust interaction from the pay kom headquarters with taiwan. intact, we have i don't know going right now over there their major annual exercise where we participate with them we send advisors overseers and we go and, in fact, we sent general thurman who used to be scaparrotti's predecessor who would be over there at my request advising them and assisting them and so that's important. i think that in

general over time the capabilities of the pla, of the prc, will vastly eclipse what the taiwan ease could produce on their own. it's just a matter of magnitude of force size if the prc stays on the course that it's on now. my task is to support the taiwan relations act and to provide my advice to the -- up to the osd and then up to the president for him to decide on what kind of things we provide. i know that they have requested our assistance in -- in submarine programs and we're contemplating that at this point in time but have not committed them one way or the other. they are collateral interested in us helping them in cybersecurity areas that allow them to assume asymmetric capabilities that will improve their defense and improve their confidence that they can make decisions on their

own and not be coerced. >> thank you. >> colonel graham. >> thank you captain. admiral, would you describe china's behavior toward their neighbors as provocative? >> i would call it aggressive and i guess provocative would be in the eyes of the beholder, but from my view it's aggressive. >> from the eyes of the japanese would you say it's provocative? >> i think they would say yes. >> north korea, general, would you say the regime on a good day is unstable? >> no, sir. i'd say -- i'd say that kj yu is in control. we see no indications of instability at this time. >> so you think we don't have to

worry much about north korea? >> no, sir. >> okay. when i say unstable i mean unpredictable, provocative. >> unpredictable provocative, danger, why he. >> that's what i meant. >> willing to -- i think willing to be provocative as well. >> so in your backyard you've got dangerous provocative unstable with nukes in north korea, right? >> yes, sir, within short distance from the capital. >> the leader of north korea seems to be like nuts. i don't -- i don't know how y'all should describe the guy but he seems nutty to me. so under sequestration at the end of the day how will your ability to defend the korean peninsula and our interest in that region be affected from an army point of view? >> well, from -- from a holistic

point of view sequestration would, as admiral locklear just said, end up with a smaller force, a less ready force -- >> if the army goes down to 420,000, let's say that's the number they one day hit if we don't fix southwest operation. >> yes, sir. >> how does your theater of operations fair in terms of threats and -- >> sir, in high intensity conflict that you will have on the korean peninsula i would be concerned of having a force that had enough depth collateral for sustained operation. >> so it would be seen as weakening our position in asia, right? >> yes, sir. >> as mirl, under sequestration the navy would have approximately how many ships if it was fully implemented? >> well i would have to refer that back to the navy.after the exact numbers. >> how many do you have is this. >> i have about 150 ships in my

or that are assigned all the way from san diego to the theater, probably about 50 or so are west of the date line at any given time. so what would be impacted by the eyes of the navy is their ability to rotate forces forward to augment the ones that are west of the date line all the time which is the problem we're having now with sustaining our numbers because the readiness bathtub we're in even with the size we have today, so sequestration would just drive that further into the ground. >> it would have hard to pivot to asia under sequestration? >> yes, sir. >> all right. so the likelihood of an armed conflict between south korea and north korea how would you evaluate that on a one to ten scale, one being very unlikely, ten being highly likely, say in the neck ten years? general? >> well, sir, i think that i caveat by saying i think the

kgau knows if he were to conduct a conventional attack on south korea it would be the end. so i don't think that's his purpose. i think it's to maintain his regime. but i think over a ten-year period it's above a five. it's a six probably. >> and the more we reduce our forces, the less deterrent, it may go up to a seven? >> sir, i think with less deterrents it becomes more likely that we would have a conflict. >> okay. admiral, from your point of view, if we reduce our forces in your theater of operations does sequestration level do you think that encourages china to be more provocative? >> i think any signal that we send that we're less interested in the asia pacific on the security side than we currently are would be an invitation for a hang in the region and that

china would be interested in pursuing. >> do our allies in the region, are they beginning to hedge their bets? what's their view toward our footprint and where we're headed? >> yeah, i don't think they're necessarily unsatisfied with our military footprint. i think what they're concerned about most is the growing divide between what they see as the economic center of gravity, which is precede dantly asia and more and more around china and their security center of gravity which is around us. so that creates a conundrum for them as they have to deal with strategic decision-making. they want us a security grantor because they believe -- they see us as a ben volunteer lent power and like how we operate in but they see us as a diminished economic power in the region that they have to deal with that. >> admiral and general i would

appreciate it if for the record you would give a written estimate to this committee as to the effects of sequestration on your ability to carry out your responsibilities, and please make it as detailed as you wish. we're going to have this fight again on sequestration ongoing and members of this committee are dedicated to the proposition that we have to repeal sequestration, and your testimony as to the effects of sequestration can affect that government -- that argument probably more effectively than anything that members on this side of the desk could accomplish. so i would very much appreciate it if you would give us as detailed as possible, short-term and long-term effects of sequestration on your ability to carry out your

responsibilities. admiral, is this your last appearance before this committee? >> yes, sir, it is. >> well i want to take the opportunity on behalf of all of us and this this committee and the united states senate thanking you for your outstanding service. i think you can be very proud of the many contributions that you've made to this nation's security and you're one of the reasons why the leaders in uniform are so highly respected and regarded by the people of this nation. so i thank you, admiral. this hearing is adjourned.

a look at two agency budget requests, first fee ma's budget then a hearing on the department of transportation's 2016 budget. and later border patrol officials discuss threats and security along the u.s./canadian border. next fema administrator craig fugate renting his agency's 2016 budget proposal to a senate appropriations budget committee. it is for disaster radio preparedness and resiliency. from capitol hill. this is about an hour and a half.

i call this hearing to order for the dhs appropriations subcommittee. today will be -- i'd like to welcome administrator fugate, administrator of fee ma. i appreciate very much you being here, also senator shaheen appreciate you being here as well. we're here to discuss the fiscal 2016 budget for your agency. before we get into the substance of your budget i'd like to take a moment and thank you for sending roy wright to fargo several weeks ago. it was very helpful and actually will pertain -- or his visit there pertains to one of the subjects that i will bring us later

today, which is talking about how we coordinate flood mapping and flood insurance with communities efforts to build permanent flood protection. he did a very fine job, he was very helpful and i think that's something that can be helpful around the country. the focus for today's hearing is -- at least my focus will be on three areas, effective stewardship of the disaster relief fund fema's efforts to buy town risk before a disaster occurs and measuring preparedness levels of the nation after years of investment. dis ter relief fund or drf is fema's biggest tool in aiding disaster victims, rebuilding our communities and ensuring resiliency in disasters. congress took a major step to stabilize the dlr. as a result fema must focus on

ensuring the funds are managed and distributed in an effective and efficient manner to respond to, recover from and mitigate against disasters. congress took steps in 2013 to help reduce the overall cost of disasters. in the sandy recovery improvement act section 428 of that act provided for alternative procedures in certain projects to grant -- to allow grantees to receive full project funding up front on agreed to estimates. that option should reduce administrative costs, start recovery projects faster and likely reduce some of the challenges currently being established with dee obligations of funds after projects are closed. unfortunately there seems to be some reluctance on the part of grantees who em bra is that program. i want to better understand what that reluctance is because i think this is an innovative idea to help projects move forward more

ex pishsly. i mentioned dee obligations. because i know that this is a real concern to the states. where projects expenditures are questioned in an audit fema appropriately has the ability or authority to dee obligate funds, however, that authority has been exercised years in some cases after project approvals and often well after project completion in response to audits by the inspector general. we need to find a balance between any waste, fraud, or abuse findings and decisions made under the pressure of responding to a disaster. so again i applaud you for fema's efforts to work with grantees through the new procurement disaster assistance teams. hope these teams will avoid grantees to avoid some of the common mistakes while managing the response to the

disaster. but clearly there is a real concern on the part of states about the possibility of dee obligating funds i understand that having served as a governor ten years i know that senator shaheen understands it very well based on her tenure as a governor. with he do have to find ways to mitigate that concern, better address the challenge that it poses between states being able to go ahead and undertake these programs in a timely way with confidence that they're following the rules, but at the same time making sure we don't have waste fraud and abuse. we have to do both and it is a challenge. also you and i have discussed and agreed administrator in the past that fema's hazard and pre mitigation disaster programs as well as risk map are critical to buying down damage that would otherwise be seen in future

disasters, especially flooding. the key is that disaster mitigation focuses on the actual hazard and that the funding is effective in preventing or mitigating that type of disaster, whether it be flood fire or other natural disaster. the example that i've used in our discussions and that i've worked on with i think probably you and certainly members of your agency is where we have flooding and roads get washed out and fema provides funding to help replace those roads, and you can replace the road exactly like it was am in a sense, but if that is at a level where it continues to wash out and be flooded, that doesn't make much sense because we just repeat the problem, we keep stepping in the same hole. so the ability to make sure that you replace the road in a way where you mitigate against some of those problems is cost effective for everybody concerned. you pay for it once

instead of three, four, or five times and the locality is better served because they have a usable road. so i think this is an important area that we'll explore in addition in this hearing and i know you have some thoughts on that. with respect to preparedness effort, the administration has submitted its proposal to consolidate grants into the national preparedness grant program or the mpgp. while the authorizing committees should consider this proposal i view that fema could be doing more to assess the return on the investment that the government has made in our nation's preparedness, what is the level of preparedness across the nation, how are training and exercise efforts integrated with these grants how can we better measure the effectiveness of grant programs in raising the preparedness level. so we want

to talk about where with err in terms of preparedness as a nation, what your opinion is in that respect and what we're doing to continue to improve it. fiscal year 2016 request also includes funds to start 19 modernization for your grant systems. so the question here is will that modernization effort improve the ability of states to report preparedness levels. i think we talk about some cost savings, always a good thing, but also we want to talk about the effectiveness of the program. so i look forward to hearing from you on these and other priorities that you have for this year and with that i will turn to ranking member senator shaheen for any opening comments that she may have. >> thank you, mr. chairman. welcome administrator fugate and your staff members who are here, we appreciate your coming this afternoon. as chairman hoeven says as a former governor i also recognize how critical fee ma's

activities are when states have emergencies and even more personally having been in a tornado at one point in my past i've very personally benefited from the efforts that feem had a has made to help people who are victims of disasters. so i appreciate that your work is critical and understand that currently all 50 states, including new hampshire and some tribal areas have an active disaster with fema and understand that the costs to rebuild are growing. in the 1990s fema was appropriate created an average of $3 billion a year for disaster costs and yet one decade later average costs have trild to over $9.5 billion a year. disaster types are also more varied and complex. in the last five years along with the anticipated floods tornadoes, wildfires,

hurricanes, the nation has had an earthquake on the east coast a super storm sandy in the northeast, landslides in the west, a bombing at the boston marathon, active shooters in public places and unprecedented snow in the northeast. and further impacts from a cyberattack are constantly materializing. so it has been a very busy time at fema. now, because these events have become more common and more intense, this makes our mitigation efforts increasingly critical. we can't continue just to make investments and rebuilding after an event occurs we must pay equal attention to preventing damage from occurring in the first place and these efforts are not only critically important to vulnerable communities, but also to the federal budget. i was pleased to see the administration's request for a significant increase in mitigation efforts to better prepare for and reduce the

impacts of flooding and other types of natural disasters. for every dollar we invest in these activities we save up to $4 in rebuildings costs and that is, in fact, a smart investment. each state, territory major urban area and several tribes have ongoing preparedness projects with the agency as well. these activities have an immediate and real impact on citizens, on businesses and on our first responders. administrator fugate i look forward to working with you to ensure fema's support role is delivered in a user friendly way both from your headquarters and regional offices. so, again thank you for being here today and i look forward to your testimony. thank you mr. chairman. >> thank you, senator she hand. i'd also offer an opportunity for senator baldwin, any opening statement you might have. >> thank you, mr. chairman and ranking member. i don't want to give an extensive opening

statement, but i will, like you mr. chairman preview the focus of my questions following your testimony will be the issue of rail safety and the prospect for a derailment or explosion as we see a lot of train traffic through our state and particularly from the chairman's region of the world. i thank you for being here and look forward to asking you questions following your testimony. >> with that administrator fugate, we turn to you for your opening statement. >> well, senators, mr. chairman thank you. the first thing i wanted to talk about is i wanted to thank you and your staffs for something that isn't always seen as something that's glamorous, but it's a key part of the constitutional separation of powers and that is the budgeting process. the fact that the administration comes forward

with recommendations but ultimately congress must determine where we apply our taxpayers' dollars is a deliberative process that we participate this. it's not easy, our staff spent a lot of time over it, we're not going to agree on everything but it is the difference between having continuing resolutions an uncertainty and knowing what the intent of congress was with a budget that makes a difference in our ability to execute the mission. it isn't always going to be the highest priorities that some people think we should be working on, but i understand the hard work you put in the staff put in to get to those numbers, to get to the budgets to ensure that we have the resources to do our jobs. if you have determined against all the priorities of government. so first of all, i understand our role here is to present our budget, but i also understand it's the role of you to make those decisions to figure out how we're going to fund all of government and we're part of that discussion. so we just appreciate that. the second thing i want to talk about is and i want to save more time for your questions because i think there's a lot of things we want to talk about, but when i got to

fema it was a real challenge for me to be able to talk to you and tell you about what we were doing. i could more easily tell you how much money we had spent, but i couldn't tell you what that had actually accomplished. even within the programs i found that we were oftentimes doing things because we had been doing them without really understanding, well, is there another way to look at this. and i told the staff when i got here, and i had come from the state of florida i said the majority of your budget this is the last one that's going to go up. we knew what was happening across the country, knew that the economy was in trouble and the years of budgets incrementally going up each year and you were able to basically achieve your mission because you were going to get a little bit more each year was over. it didn't mean that you didn't have needs, but you did have to look at your budget differently because if you were going to find or free up money for the things you thought you needed to do they were going to come from the things that you had been doing that either you were going to do differently or find different ways to accomplish that. to a certain degree we

were doing that well before sequestration came in. even with that we had focused on the mission and not used that as an excuse, but rather look at how do we get more efficiencies in savings. but we also needed to colace around a lot of different moving pieces in fema and tell people this is what we have to be focused on. first thing, you have to build for the catastrophic disaster. if you don't your risk is we will have the next katrina because systems do not scale up. if you're not building for the big event and you don't understand that's why you're putting your teams together building your programs if you only build to what you're capable of doing that larger disaster will be a failure. that doesn't mean you have to ask for more money but you have to look at your systems designed around the catastrophic disaster response. second thing is you have to build your programs around the people you serve and as senator hoeven points out when that's not the

case we see the mismatch between trying to serve our communities and how they need the programs to work for them versus what may be easy for us to administer. so oftentimes we found we had defaulted to those that are easy to administer we weren't really focused as much on the people we're serving and that mismatch oftentimes has played out in survivors, communities, not getting the full support they should have gotten in a disaster. you have to go to where disasters are. i tell people just because it works at 500 c street doesn't mean it's going to work out in a train derailment in the middle of nowhere with poor communications. you have to build the systems that go to where the survivor and dis ter is, no the what works in washington, d.c. you have to buy down your future risk. we have to do a better job of understanding that we can no longer subsidize risk and come back to the first dollar every time there's a disaster if local governments and states are not to go their part to reduce future risk. we just can't keep dealing with every disaster and

building it back as senator hoeven says the way it was only to rebuild it time and time again. we have to do that differently. so we have to look at risk reduction. and then the last thing, we oftentimes at feem had a and as your committee staff will tell you have not been good stewards of the basic functions of our programs, whether it's it personnel, a lot of the things that may not be things people want to talk about in disaster, but if you don't have the foundational systems of your management working right you're not going to build that catastrophic disaster response team t it goes from how you hire people to how you mr. your systems, how you set up your architecture for it. so we look at these five areas and draw all of our programs through that lens of are we as a nation building the cape ability to respond to catastrophic disasters, not just what fema does but through all those grant dollars that have funded local and state capabilities. are we building the capability to respond as a nation to catastrophic disasters. so that, mr. chairman available to respond to your questions.

>> thank you administrator, for being here today. we'll begin the questions, we'll start with rounds of five minutes. and i want to go right to the concern that is come up in regard to sur lane sandy and claims for homeowners who have not received the proper resolution on their claims. that they have had issues with the insurance company and it appears particularly with engineering companies that have worked on adjusting their claims and as it turns out these claims were not adjusted properly and it appears that homeowners were short changed on the recovery that they're entitled to. my understanding is there is out of 144 claims, 144,000 excuse me claims that were made, that there's on the order of 2,200

cases where the engineering report may have been fraudulent improper where the insurance company didn't provide the proper reimbursement to the homeowner. this is obviously a very serious concern and that we need to make sure we understand exactly what happened and hold those responsible accountable and correct it. i also had am aware that mr. roth, the dhs inspector general is conducting a full investigation and we look forward to his report, but i'd like you to respond as to exactly what are the actions that you're taking and what is the current status of this matter? >> well, the actual cases you mention, i believe, those are the cases that are actually being litigated. we're concerned that there may be people who did not choose to litigate that may also have had questionable engineering reports. so very

simply we're approaching this from if they are owed more money we pay. if it's fraud, we refer that to the ig of justice. if we're finding litigation costs are going to exceed what the claims were we're willing to settle. so those are the cases that are in litigation we're working towards settlement there are additional hearings taking place as we move towards that, but we are prepared to reopen the other cases where there may have been engineering firms or concerns of allegation that involved these firms as to how accurate the findings were in determining what the damages were. so we're in the process to begin in this next month opening up claims process to the people that had policies, sir. if they got the full amount of the $250,000 they've gotten what their insurance will pay, but those that did not receive that that still had concerns we're going to open up a process to begin looking at those with the same scrutiny we have been looking at those that have been

in litigation. this goes back to being survivor centric. i think we found that through our right your wrongs and through our own program that we mutt more emphasis on ensuring the solvency of the nfip funds without making sure we were putting as much emphasis on servicing those claims. there should have been no reason why if it was eligible they weren't paid. we were looking at what was the cyst am mic root cause. we think it comes back to there was more emphasis on not making overpayments because the insurance companies would have to get that money back and reimburse fema and that seemed to drive more of this than making sure there was equal weight given to paying full yie what the policy should have paid. so as we get through that we'll provide more swrup dates. we're currently focused right now on resolving the current litigation, going back to the people that filed claims and then going back to those

systemic issues as both the ig is looking at it as well as attorney generals in both the states of new jersey and in new york to look at fundamental issues as well as any impropriety that was taking place. we will address the impropriety on the front end, but we're also looking at the structural issues that got us there and going we want to build this program back. there is equal weight to ensuring giving full payment on claims without the overbearing penalty of having to pay money back driving decision-making. >> so my understanding is there are 144,000 cases or claims that included engineering services. so you're saying that for those 144,000 cases you've set up a process whereby they can in essence apply for any -- to address any shortfall that they may have suffered and get the reimbursement that they're

entitled to? >> yes, sir. we brought in people from across fema and detailed them into the flood insurance program to set this up, we will be announcing it coming live this next month. we're going to traj and start with those that were involved with firms that we saw concerns with and then we will be opening it up to anybody else. again, if there was any concerns or questions about their claims process, we're not going to predetermine that until they call us and we start working that and see what we find. >> you will start that process when? >> our goal is to start it next month. >> okay. and you've already taken steps to address the administrator who was overseeing the program i understand and that's correct. and are there being fob further chajs in personnel or are you awaiting the inspector general's report at this point? >> right now we've -- we've had some staff changes i brought in an experienced senior executive service to take over and lead the program. we have detail people into the program to provide the initial surge help and we will be evaluating that

with the assistance of the ig and others what additional steps may be needed if we find things that suggest there was any impropriety among our staff. >> okay. thank you. >> administrator fugate, senator hoeven has asked a number of my questions around this issue but one of the things that i found as troubling almost as troubling as the allegations of fraud by a number of the insurance companies, were conversations that i had with my colleagues about raising concerns that they had heard from their constituents in new york and new jersey about what was happening to them. they had raised it with the program and that they had not gotten any attention to that until after the segment on 60 minutes really highlighted what had happened there. so i wonder if you could speak to that and to the effort

to make sure that when complaints are brought before the agency that they are taken seriously, that there is some heck nichlmechanism whereby those are examined and responded to in a substantive way. >> yes senator, and the personnel moves were being made prior to the 60 minutes. i had to free up certain staff to make them available to be transferred in and that took more time, but we originally this came to my attention as something that was out there, but it was like we saw one or two cases, and i referred to the staff and i said, look guys what's going on, we need to address this and focus on again if we owe more money why aren't we paying them? we found ourselves in a situation because we use right your wrongs to service policies we were working through a right your wrong. we weren't able to directly engage. as the process

kept continuing i became more and more as frustrated as anybody on why we cannot get to resolving these cases. it if we owe money we pay. if there is allegations of fraud, then there's a mechanism to handle that. if we're having a dispute but litigation costs are going to be greater than what the settlement would be why aren't we moving to settle? i wasn't getting the response i wanted. so prior to 60 minutes we were already making changes but we had to free people up to make the moves, we had to reassign people, we had to start the process of changing out the leadership. and that was probably, you know, it started that really right after the thanksgiving holidays was we had made the decision we were going to make the changes but we had to move the personnel and start that process of getting them slotted, getting them in place, getting them up to speed so we can start dealing with this. >> well, i appreciate that. i'm glad to hear that you were already taking action. one of the things that was pointed out on the 60 minutes segment was

the -- there was a class action attorney who actually brought a number of these cases to the agency and that it took -- at least it was presented as taking that level of attention before it rose to the point of somebody taking action on that. so i'm glad to hear that you were addressing it and it seems to me that this is the kind of thing that we all ought to be on the lookout for every day as we're trying to make government work as effectively and efficiently as possible. so i look forward to hearing more about the reforms that you put in place so that this -- this kind of abuse doesn't happen again in the future. i want to go back now to -- to one of the challenges that you pointed out in your statement, opening statement about putting together a budget

for fema that works given all of the unknowns that you're dealing with, and as you point out, you have disasters that you can't anticipate in advance that the number of the severity, the type and so is you have to plan for that. so i wonder if you could spend a few minutes just talking a little bit about how you do that planning process, what's involved and how you allocate resources in it thinking about what might be coming up. >> well, there's two parts to this. the first is we do deliberate planning with communities based upon various scenarios, quite honestly you're not going to have catastrophic disasters unless you have large vulnerable populations and a large risk so it tends to geographical define where that is it doesn't mean we don't prepare across the country. we do that, it identifies what the capabilities are. this helps goes back and drives some of the initiatives in our threat hazard reduction of areas we need to

focus on to build capability, but another piece is budget. within the disaster relief fund one of the things that happened when you fully funded the drf is we've been able to maintain a healthy balance. when we had the colorado floods several years ago we weren't in the situation we were in 2011 with irene where we were out of money and congress was having to very quickly do a supplemental. by maintaining a balance of a billion dollars in the fund at the end of the year we were prepared for those no notice earthquakes or other ooents that were large scale that gives us the funding to do the initial response an ensures that congress has a time to do a deliberative process in determining the supplemental. so maybe training that balance gives us that initial push for a response to a catastrophic disaster. we did this in sandy as well. if you remember although there was a lot of work getting to supplemental it was not about fema having to shut down or not do our jobs because we didn't have immediate

funding. by maintaining that balance in the drf and allowing for that balance to stay there it protects the ability to congress to do deliberative findings when supplementless are requested versus having to respond to what in many cases is preliminary date at that. >> i certainly agree with that i think that makes much for sense and support that effort in having had communities in new hampshire who were affected by hurricane irene and still some of them are still affected by that, appreciate its much more important to have the funding there so you can continue the relief efforts throughout that process. the one thing i would say, and i understand the point that you're making about planning for major disasters for areas where they're going to hit significant populations. the one thing that i hear from people in new hampshire is that even though it may be a small community or maybe even, you ne one farm one neighborhood,

people will tl are affected just as dramatically by disasters as large communities like new york or some of the communities in new jersey. so that's why the efforts of fema make such a difference and they're so important. >> i agree 100%. senator again, we look at where the largest disasters can be to make sure we have enough capacity as a nation. that ensures that when you do have that disaster in your home state and we may have tornadoes in the south and then there's an earthquake on the west coast we're not pulling resources out of your state when you still need them. so this goes into our planning and actually drives some of our assumptions that we don't have one disaster at a time. >> right. thank you. thank you, mr. chairman. >> senator baldwin. >> thank you, mr. chairman. as i mentioned, i plan to focus my questions on oil train safety and disaster preparedness in that regard. it's an issue i've

been heavily involved in as my state has become one of the most heavily traveled routes to bring oil from the ball can to refineries on the east coast as well as the gulf. as well also as the ranking member of the authorizing subcommittee with jurisdiction over fema i've been very involved and a very enthusiastic supporter of the response act which would establish a subcommittee at fema to bring together experts and establish best practices to responding to oil train derailments and i look forward to two,ing with the chairman and ranking member of this subcommittee to ensure that fema grant programs are adequately funded to provide training and equipment for first responders to respond to oil train accidents. mr. fugate, in your testimony you identified building capacity or capability for a catastrophic dis officers as a strategic priority. in

wisconsin certainly my constituents who live on these rail corridors or along these rail corridors and state emergency management personnel have identified the increasing frequency of oil train -- trains passing through their communities as a catastrophic disaster waiting to happen. the growing number of oil train explosions in north america suggests that it is not a matter of if but when a train -- additional train accidents will occur and certainly we worry a lot about one in wisconsin. i want to ensure that fema is doing all that's within its power to build its capacity to respond to such an incident were it to happen. i'd like to hear from you first off, sort of where and how the growing threat of oil trains -- oil train accidents fits into your

strategic priorities and what fema plans to do in response to this significantly increasing volume of oil train traffic. >> well, senator, as we're not the regulatory agency over the event prevention i want to focus on consequences because that's what we really find that when we talk about specific hazards are we building capacity and capabilities to respond to the likely impacts from the most immediate firefighting operation, which we've been work through our center for domestic preparedness and national fire academy to update training but also what happens if that occurs in a populated area you have search and rescue operations, warning systems, our integrated public warning system what most people think ever as the emergency broadcast and wireless emergency alerts working with states to make sure they have those systems ready to go so they can warn and evaluate populations, that we have teams that can support the teams if they need additional personnel

to do search and rescue, communications equipment to support those responses but also looking at our grant program because that's really where most of the resources are going to be utilized in this. although the intent of the homeland security grants are to build capability for terrorism, it's also understood that the same type of capabilities you have to build for a bomb explosion would be similar to the type of capabilities you would have to respond to a train derailment. so, again, we don't preclude it we make sure that as we identify new threats that we look at our grant language to see if there's things in there that may be unintentionally not clear could be used from that. we don't have to subtract to attention that we have to prepare for those type of events such as terrorism but it also means that other hazards that have capabilities that were building we want to address that from the standpoint of life safety, immediate response, communications, evacuation and sheltering. that's pretty much something you're going to need to do in a lot of different

events. it's this idea that our grant dollars that have built a lot of capability are looking at where do we need to put more emphasis, right now our first work with dot is looking at training capabilities, new issues and we want to make sure that senior executives on the fire service have the latest but also looking in the grant programs and again as we see these threats emerging going because this is dual use, we do have the capability, we always going to the consequences. what are the things we need to do if that happens. from a lot of their emergency management preparedness grapts which again i support this administration's administration. those emergency preparedness grants, those are some of the dallas they can be use to go develop those community plans. there are other programs that are not part of fema that have supported this before under the super fund reauthorizing act the epa administers. so there's a lot of different pieces out there that we can apply to this, but from our standpoint we're

looking it at the consequences most heedly our training been looking at our grant programs and looking at gaps that this is exposing across the nation. >> if i could just follow up briefly on the training aspect of that. you talked about training and reaching out to senior executives but i am certainly hearing from rank and file emergency management personnel who feel that they are underprepared were an event like this to happen. specifically they feel they lack the resources to send first responders to require training or provide them the specialized foam that would be needed for example, to put out a burning crude oil fire. and they don't feel like they're getting adequate information from the railroads themselves to respond quickly to an incident should one occur while a train is passing through their jurisdiction. i'm curious to know how much fema has engaged

with the railroads themselves and do you believe that more action would be necessary from the railroads and oil producers in order to properly protect the citizens who live along these rail lines? >> we're not directly working with the railroads, we're working with our federal partners that actually do -- that have that regulatory oversight which is u.s. department of transportation. but, again we continue to work in the interagency on this. that's part of the reason why a lot of our training is being designed to be train the trainer and independent study type as we are sitting down going, what are the training needs, what can we already have that we can utilize and then what can we adapt. so we are still in the process of developing and further examining what additional training needs are out there. we are also working back through the department of transportation with the industry itself over types of training venues that they have that we can also tie into all of our other training and make more available the

visibility of what industry has out there for training, in addition to a lot of state fire academies, our national fire academy, our center for domestic preparedness and making sure that we have consistent training, we're looking at field delivery training, train the trainer. part of this is dealing with the most immediate -- what's the best information how do you deal with this and are we getting that ready to go and then looking at what are all the delivery systems that may be needed to get that out to the local level. >> one of the things i mentioned in my opening statement was making sure that as you work with flood mapping and remapping and flood insurance that you're coordinating with the planning and the efforts by local communities to build permanent flood protection. can you tell me what you're doing, you're making sure that those two things work together in tandem because it's vitally important this terms of the cost of flood insurance for people that live in those communities. >> yes, senator, again all the

way back to when you were governor we often had this challenge that our regulations would not recognize future projects in calculating risk as we were updating maps. so what we would oftentimes tell a community is that's fine, when you get it built come back and we'll change the maps, about you then we would have the issue of having to change rate several times, we knew this was funding authorizing coming on. i think you saw from roy wright that we're taking a more pragmatic approach. if we know the commitment is there and projects are coming on in a timely manner it does it make a lot of sense in the interim to change rates several times and not recognize that. so as we're going through this what we do want to make sure is that the community has the commitment, they have the funding, they have the weather all and they are actually moving forward with that. i think from roy's perspective that is much more pragmatic to work with that community, not issue a map until we know that's online, but, again, we also want to make sure that munts are going to be moving forward

because we don't want to delay that if there's risk out that there that people aren't aware of. if we know there's permanent work, corrective actions, things that are taking place that's going to fall outside of the updated map cycle and if we delay it for a year we would have the best data and recognize that, i think roy is working to be more pragmatic about that so we're not unfairly penalizing communities but we're not waiting to identify risk for indeterminate periods of time. >> and the ability to do that in phases is very important. in other words, if that can be koord maded, your process, with building that permanent protection, which is very often done in phases i think it makes a big difference for people. >> second -- or the next question i would have for you goes to administrative cost as you know gao did a study an liesed your admin costs over 650 major dis officers between 2004 and 2013 and their ratio was

about 13% in terms of admin costs relative to your disaster recovery fund and then they compared that to the states that had about a 3% ratio i think it was. so can you tell me, you know, why your admin cost is at the 13%, the state is at 3% and first you doing to try to make sure that it's as cost effective as possible? >> well, those admin costs include a lot of the capabilities to respond to disasters that are rolled into that, it also means that the state is usually benefited from the jfo that we are leasing and a lot of overhead cost that we build in our buckets the state does not have to deal with that. but you point out something that i've oftentimes challenged my staff is how much does it cost me to administer one grant dollar in a disaster and it's a range because it depends upon how many people you've got, what's the complexity and i'm like that's not a good answer. i'm trying to look at this at

the same point you are, why do i have to establish all of these different tools if i don't need them in every disaster? so one of the things we've done is why are we establishing a physical presence if it's just going to be public work out of hotel rooms right the projects, i don't need a facility, security the it hookup. so we're to go virtual jfo's or joint field offices with the state and many of them appreciate it because it means they can stay in their workplace and get the work done without having to relocate to another location. so we are looking at what is it costing us are there different ways of doing t we're more inclined of doing virtual field offices instead of setting up a physical presence. we are looking to drive down that cost but we also do things that are reporting requirements the states don't have the over jiet that we have, if you look at the post katrina reform we have a lot of oversight to ensure that we are delivering programs and eliminating fraudulent waste. as we go through that we're tryingo how do we do a better job of accomplishing the oversight without what the systems we

built that sometimes are very cumbersome they're not that efficient, but they were the initial response to how do you provide that oversight. we're looking at both maintaining fiscal accountability and delivering the programs but looking at the mechanisms there's got to be a more effective less expensive way, as a state person i was oftentimes floored by the number of people that fema would bring in for external affairs, i would have two people, they would have 200. we had a joint field office in florida that had over 5,000 people in it and i can assure you half of that wasn't the state of florida. so i'm also sensitive to how much of a work force do we need to bring in to support a state, how much is -- they've always done it that way and that's why we really pushed back on the number of people deploying, setting up physical locations and really focusing on the outcome of executing the disaster, not just going in and throwing in systems that had always been in place at a level that wasn't sustainable or necessarily required in all dis

officers. >> do you have any type of statistic that show, you know what you've been able to save and or do you have any benchmarks as to what you feel you should achieve? >> we are benchmarking, the challenge i keep running into when i try to do disasters is there's such a range but i can come back and show you and show staff what it costs us to run a virtual joint field office versus what it would have been to set up a facility. we have to go in and lease a facility for so many months and have everything associated with that and we may only need it for a month to do what we need to do. so i can give you -- it's better if i show you some of those type of dis officers and show you what it would have cost if we didn't do this versus what we had traditionally spent. i think as we build better analytics we're trying to get to this number of how much is actually part of the disaster response versus overhead to maintain the capability response and then looking at that on a case biy case bases, are we showing avis. some disasters like sandy are

going to have a higher admin cost, it's in an expensive area to put people up in hotel rooms other disasters would be less expensive and others we're looking at are we driving the trends down and are we seeing overall that we're containing overtime, cost are we not, you know, doing things just because poo em have always done it that way to drive down the cost of each dollar we administer. i think i can give you some of the things we're working towards give you some case studies of disasters have we have done those reduction its versus what we would have spent before. >> you will show us some metrics on outcomes? >> yes, sir. >> okay. thank you. >> well, thank you. i agree, i look forward to seeing those. i want to go back to your conversation can with senator baldwin because you talked about the importance of grant programs to preparedness and working with local first responders and local agencies and i certainly agree with that as governor after september 11th i can tell you very directly what a difference the department of homeland

security grants have made in new hampshire to our preparedness. that's why i was concerned when i saw in the budget that you were proposing an 18% cut to preparedness grants a 28% cut to training and 1.5% cut to fire tighter grants. the recent fema preparedness report found eight areas where communities are still in need of improvement and i know that one of -- one of the proposals is to consolidate many of these grant programs and while i appreciate that there are places that there can be efficiencies, i can tell you that those grants as i said, have made a huge difference in new hampshire and we leverage a little bit of money and make it go a long way and the firefighter grants, the other preparedness grants have really been critical. so can you

explain why the proposed reductions? and i know that -- or at least my understanding is that the authorizing committee is probably not going to take up the consolidation issue and so that's probably not going to be an option in this budget and as i said i probably wouldn't support it if it were. so i wonder if you could talk a little bit about that. >> well, two pieces, it's very straightforward. obviously i would like to provide the maximum amount of funding that we could provide in the grants programs, but as the administration as you have to make hard choices we have to fit within our budgets we have to submit based upon overall priorities of the administration and this is a continuation of the president's request. so although congress has been able to find more money and have funded these grants at higher levels, we have been pretty consistent in what we've asked for. stars the consolidation of the grants, this actually went back to -- and both of you as

governor my experience in florida since the ability to leverage dollars across the state, some states do a better job than others, but it really came back to as governors you have the emergency powers your institution establishes the emergency authorize, its consolidation of grants was really upon the governor and state and the position to help direct where resources were across the state you know your states better. i will give you more flexibility across those grants to make those decisions we also understand a lot of stakeholders don't have the same trust there, there's concerns about not all states may be as equitable in disturbing funds. as i've said, the reason we're doing this is recognizing the role states have, governors and what state constitutions ep empower the emergency authorities and the creation of the political subdivisions are unique to each state. by consolidating these grants at the level of the governor it gives governors more flexibility to determine those priorities. that being said i've also said i will faithfully execute the budget that congress provides us

with the direction you give us and that will be not up for debate. one of the national preparedness goal that is out for review says that fire management and suppression was added as a core capability, which makes total sense to me. and the request for grants for fire departments was a reduction and so can you talk about what a reduction in fire departments would have on the distribution of funds to rural communities and volunteer departments and how we can on the one hand talk about a goal of fire management and suppression and talk about grants to fire departments and

folks who need to make sure we're prepared for those fires. >> i think the structural firefighters goes back to the original framework while in fire fighting. and on a national level fires had been the one failure response most often but i had come out of the fire service so i have to be bias here as a structural firefighter. we do a lot of firefighting but in disaster we do the bulk of the search and rescue and emergency capabilities at the local level we felt it was important they be recognized as the framework of the emergency support function that exclusively on wildfires. as far as the grants, the reduction will mean fewer smoke detectors and fewer breathing apparatus but it's a reality that when we have to force into

a budget, everything and all priorities, these are numbers we were able to get and represent to you what we think is the administration we can fund. it doesn't mean there's not more demand or need, this is based upon all of the parties the administration has to look at funding everything from health and human services and ebola response and a lot of things i find myself dealing with, this is where we came out and we're able to make the recommendation. we also understand this is where we start the discussion. >> i'm glad to hear you acknowledge that it will have an impact if we don't have that additional funding. i want to go back to the discussion about how you put together your -- several things that you include as new shouldn't say they are new initiatives but to upgrade the

management structure, focus on i.t., on business management grant management and i cyber security, can you talk about why it's important to do those now and have those initiative rose to the top of what you were looking at in order to be more efficient? >> we had started this before being -- part of homeland security we found ourselves with grant modernization being wrapped in the initiative that did not later occur. we have systems that are ancient. we pay so many in supporting and maintaining old systems that we think we can do a better job by modernizing the systems and reduce costs. in many cases we think we can have substantial reductions by upgrading to newer systems and pay legacy costs. this becomes a cyber security

concern as well. when you have systems running on old, old systems, including the fact that microsoft is no longer supporting server 2003, but your systems are built on that, if you're not upgrading them, you increase cyber vulnerabilities xgt we've looked at our vulnerabilities on that end not a poster child at all for that. we've been documenting our systems and eliminating redundant systems no longer needed but we have reached a point where if we do not start upgrading these systems, not only will they become more expensive to maintain but not achieve the purpose of being able to be transparent and share information with stake holders and quite honestly spend more time responding to your request by creating a spread she'll in excel to take the data to cannot produce to make your decisions. >> do you have estimates on how much -- how much you're going to save or how much the spending will balance out in the long

term because of the efficiencies you'll be able to achieve? >> yes, senator, we've taken -- we're back and what we said is we're going to take small incremental steps and build on common operating systems and use government owned systems and move forward in the grant consolidation and modernization. we can show you from our time line if we appropriate funds for this what our milestones are and projected savings and what it's costing you right now to maintain the current systems and how we'll see those costs go away as new systems come on and replace them. >> that's great, if that's something you have not shared with the committee, will you do that please? >> yes. >> we would very much like to see that. thank you. >> as a result of sandy, you received both authority to provide upfront funding for public assistance projects so that entities could get funding

up front and to give them -- both to expedite the process and give them more flexibility to get it done. and then also, given authority to examine ways in which you could reduce disaster costs nationally. both of those seem like really good ideas and like you to respond in both areas. why aren't more of the -- why isn't more of the funding where it can be provided from, why isn't it being utilized more frequently? and then second, talk about your strategy as far as implement being the national strategy? >> yes, senator, as with anything new there was a lot of concern that by doing a cost estimate what would happen if they discover something later on that wasn't anticipated they would miss out. they would be stuck with a bill. our first success actually came out of a case that was still

pending from irene in the state of vermont and once they understood the flexibility to solve problems we have not been able to resolve, they moved forward with it and had the first success project. we've seen additionally a lot of resistance because of unknowns. as that success spreads, people are starting to understand this is giving them flexibility and ability to move forward with certainty on these projects and we are increasingly seeing more projects come in that will go this route. the amount that we've already approved and dollars going out are in the billions. i am still working with the mayor of new orleans to finalize the projects till outstanding from katrina ten years later. i do not foresee that with sandy. where we are with the complex hospital using this charity we were five years and went to arbitration before we got an

answer. we're already moving forward on funding in the construction and rebuilding and prepare of hospitals. so i think this is still the concern that what if they find things later. >> that's why we want to put the effort in on the front end. >> we don't need to rush that, i want to make sure it's a good solid number, once we have that nb and we can agree to it, do i really need to be there every time you change an order or you need to do something different to get a review? and i have do dole out money each quarter and do the inspections? that's where the administer costs goes up. if we have a good product and good agreement and have fiscal tools in place and accounted for what was eligible and make that determination, then we should be able to move forward. i think as applicants become more familiar with that and see the benefits of it, we're going to see increasingly in particularly in large complex

projects communities turning to this to speed up the process. >> what the is flexibility mechanism, the concerns are covered if they take the money up front and find out there is additional cost, what is the flexibility? >> part of that is, what we have done in many cases, we'll write a small grant to bring in an engineering firm and you've been through state bid process where you bid out a building and the person bidding on it made a mistake, they own the mistake. we basically take this up to where you got somebody ready to bid on that project, that's the number we want so we've done everything, they've done the studies and done engineering sean done the due diligence. at that point you should be ready to issue the contract. if the person didn't do due diligence that's going to be their responsibility. we've tried to make this as seamless as we can with the best understanding of what it is when all of the eligibility is. if it takes us a year to get to that or something complex like a

hospital, we'll take a year. once we get to that number, we want to be able to pay you, allow you to move forward and i allow you to do things we have historically not, from the standpoint of other federal dollars making decisions about increasing size with your own dollars, we were so con strained -- we can only do what was damaged. and if you need to do things that were going to prove that, we may not be able to fund it but shouldn't be an i am pediment to you, or utilizing community dollars to enhance something. our process was always so restrictive that that was very difficult. >> this is much better. we build the mitigation on the front end. as you point out, a lot of times we'll build back based upon the past data, we have been back to