us as governors. the battle is with employers around the globe. that is number one. number two, there are profound implications. we carry these computers in our pockets. the positive aspects of that increases productivity, more wealth and opportunity. i'm sure we all have employers in our states who are producing twice as much as they produced 10 years ago employing half as many people. this revolution has big twice as much as they produced implications for the nature of what is the role of people in producing things. i think particularly given the fact that there are more choices than ever before, we need to understand what it is that they care most about when they are making that decision about where to invest and hire. then we have to act on it. to me, the biggest take-away of all this is what everyone has talked about. it has to do with workforce and skills. the $28 billion overseas, i think it is not just about tax

policy. even if the tax policy was equal, they are going to have lots of great choices about where they can get a great workforce. we need to make sure every single day we are getting better because we know other countries are investing heavily in that. >> you make a great point. this issue is only going to get worse. right now, as we sit here, they are doing prostate cancer surgery robotically. they are doing health care equal, they are going to have checks of our bodies. we have sensors all over the machines talking to machines. that will mean fewer jobs. is everybody ready for that? obviously not. we don't have the skill sets. >> at the same time, these technologies will create new jobs, the kind of jobs we never thought about before. >> absolutely. >> the biggest economic choice place. you are facing?

>> the honest answer is the one we don't know. who would have envisioned a downturn the likes of the great recession a few years before it took place? i would say there are challenges that we currently know that we are ignoring. climate change. although we did talk about massachusetts' or boston's issue with snow, climate change is a gigantic challenge. my states on the eastern seaboard, maybe not in my lifetime, but i hope in the lifetime of my children -- i hope they get to the point where they will be as challenged by that as by >> the honest answer is the one seawater rising and the implications of greater disparity and whether i think that is a gigantic problem. transportation infrastructure presents a global disadvantage. i think we have to address that.

we go back to how we are going to fund it, how we address that. income disparity, and what we do or don't do about that. the story about the chef not i would say there are making as much as the wait staff. there is also a cultural educational, and racial disparity on who works on what side of the house. we have institutionalized to some extent those disparities and we have to worry about it. demographics. we are getting older. there are -- everybody has gotten older. it is not because you have a better skill set. on the demographic side. i think these are serious

issues. political infrastructures, the person who used political battles was the worst. the person who could unify. now the person that can win more often than not than ever before is the person that can best divide. that is a problem. >> governor? >> kentucky has been very fortunate in coming out of this recession in a strong way fairly quickly. our unemployment rate has gone from 10.7 to 5.7 in just a matter of 23 years, and it continues to fall. our economy is really picking up. none of us are where we want to be yet. >> to what do you attribute that success? >> every ceo i have talked to, they love incentives. they love infrastructure. they love the things that we give them.

but the thing that they want more than anything, their number one priority is a productive workforce just like everybody else. i think we ought to spend a moment talking about what the definition of a productive workforce is. obviously it is a trained workforce. we have problems like so many that we are partnering with business that we have programs like so many where we develop the skills needed for the jobs of the 21st century. a productive workforce, every smart ceo will tell you, is a healthy work force. they are not on the job all the time, they are not productive. we have made great strides in kentucky getting our workforce healthy. it has to be a drug-free workforce. all of us have that issue in our state. we have it. we are having to attack that problem. all of these things that we do in one way, you can see the relationship. it goes to developing that productive workforce that is

going to give you the job attractiveness to bring those folks into your state, because you have that workforce that will do the job they need. >> governor? >> our challenges are the opportunities. in arkansas we have great entrepreneurs. we have great producers. you think of the global marketplace, that is our challenge. making sure the global marketplace open to our industries. you look at walmart. they have expanded beyond the united states in the global marketplace. tysons food, in terms of making sure the global marketplace open to our poultry production, exports all over the world. rice production. we are a small state of great entrepreneurs that has to have a global marketplace to make sure we create the jobs. i think that is the opportunity we face. i have listened to the comments around the room, whether it is workforce education, job skills, infrastructure.

from a state perspective i would like to see the federal government give more flexibility in order for the states to address those problems. i think that we can do a better job. i think that we can manage it. i think it has been proven that while the federal government has done a great job of collecting revenues, they have not been very good at providing the solutions to the states, and we have done better. i would like to see that flexibility. >> does everyone agree with that statement? [laughter] this is going to be a topic you discuss with the president tomorrow. >> i hope to absolutely do that. i think there is a growing recognition in washington that there is a willingness to give more flexibility. i don't blame this simply on

the federal government. things have changed. we have been very dependent. we have enjoyed have the federal largess returned to the the federal government. state. times have changed for the federal budget. with the states being greater innovators. with mobile society that we have more competition. i think it is time to reconfigure that balance in federalism. that debate goes on. we can certainly push it and grab hold of the reins. >> let me push back a little bit on that. the last thing you said is actually a little bit at all its with what you first said. you want to strike the right balance. and i can go along with the argument that maybe it is time to reset that balance. let's not forget there is a balance there. we have a national economy everyone takes advantage of, whether you are pennsylvania or arkansas. the manufacturers, the distributors, they take advantage of not just a global economy but the fact that we have one of the biggest and richest domestic markets in the world. that takes federal regulation

and some federal cooperation. we can't lose sight of the idea that states can do everything. >> i agree totally. immigration, we need to have the federal government engaged in that. and trade policy, the global marketplace. the federal government needs to do trade policies. but whenever it comes to education, whenever it comes to our job creation, when it comes to our infrastructure, we have been dependent upon the federal highway dollars. let's reconfigure that. there are ways to do things differently. i don't think it is inconsistency. i think we are in agreement with that. we need to make sure that there is a clarity in the difference and responsibilities. >> governor? with that. we need to make sure

>> north dakota, our gdp growth over the last 10 years has been 10.4%, more than three times the national average. >> is that because of energy? >> about three or four points of that 10% has been attributable to the energy sector. the rest is other industries >> north dakota, our gdp growth agricultural, technology, heavy manufacturing. and you know, our greatest challenge is managing the rapid growth of our state. one of the fastest growing economies in the world. if it were not for north dakota, gary herbert would have achieved his goal of being the fastest growing economy in the country. we just keep chasing it and working hard to do the things that everybody has talked about. and the national media does call me and ask me why is north dakota so different from the rest of the nation over the last 10 years, and i think it

is not that complicated. we have low taxes. we have a reasonable regulatory climate. we have a terrific workforce. and we have a state government that we think is the most accessible government in the country. manufacturing. companies come to our state for that reason. you see deere rebuilding microsoft is expanding. there is economic activity that is a long ways away from the oil fields. so it is working well for us. but at that pace, 10.4%, we have to go to stay on top of that and keep everything going forward. the highways getting built buildings getting built, law enforcement expanding.

all the social services you have to bring to bear. all that has to keep up. that is without a doubt our biggest challenge. >> what has been the impact of the seller and the price of oil? >> so far we are almost surprised at how little we are noticing it. the bachman foundation in northwestern north dakota, it is one of the most productive in the world. we think our costs producing a barrel of oil is in some counties as low as $30 a barrel. the drilling pace has not dropped off that much. plus the fact that we had a shortage of workforce going in. so we are finding that if anybody has been laid off, they have had no problem whatsoever finding another job. >> governor?

>> my biggest challenge is probably the governor will not agree to a border realignment. we permit faster and lower taxes on our oil and gas than most in north dakota. in addition to that, i like to look at it more of post economic challenges as real opportunities. at the state government level, i think the opportunities, i need to maintain fiscal discipline. a reporter at j.p. morgan say we are the most fiscal state in the country. that allows us to do things to give folks looking forward that much more excitement. it allows us the ability to -- it may not be sexy, but reduce interest rates that we provide local governments on wastewater and sewer water, saving $40 million for ratepayers across the state. i think we need to continue to build on a business friendly environment.

like many others said, at the end of the day the private sector does this. we have the private sector to identify the opportunities and obstacles for growth. as a result, we have either repealed or streamlined 714 regulations that rather unnecessary, unwarranted, stand in the way of further economic development. we are asking them to say help build the business plan for the future. that is where we get into so many of these issues of we do have a skills gap. we had to do things like fund early childhood education because we know the difference that will make long-term. and the investments all throughout. if business is at the table saying, where can we grow and what are the opportunities to look long-term, because in government with political cycles it doesn't always look long-term. but partnering with them in looking forward, i think it is just going to create that many

more economic opportunities for the state. >> governor walker. >> the good news in alaska, we are closest to the market. i will not say we can see it from where we are but we are close. but the bad news is we can't get access to our resources. the permian basin has 475. we will drill 63 wells. we just can't get access to our resources. we have the highest cost of energy. >> the federal land. >> it is limiting our ability to get there. in wyoming, they have drilled 19,000 wells. we have drilled about 6000 wells. so we just can't get access to our resources. we have the highest cost of energy. electricity in some places over one dollar per kilowatt hour. diesel fuel is the equivalent of $30. we are paying two dollars down here. we have the coldest temperature

days. we don't have cold snaps. we have cold seasons. so it is very frustrating that we have trillions of dollars of value in the ground. and when we became a state, we were assured we would be returned to live off the resources. that was the mandate. we have held up our end of the deal. the administration has not. our biggest challenge is getting access to our resources for our economy and our own people so people can afford to live in the villages. some of the highest i've heard is 15 people live in one house -- that is ridiculous -- based on the energy. we reinject more energy into the ground than they consume in gas in california and washington combined. it is all about distribution. we have plenty of resources. we just have to be able to get to our resources. >> governor.

>> thank you. sitting here listening to the discussion, i feel lost. we are experiencing a very difficult time in our economy. not only that we have been associated with united states for the last 120 years, we haven't really developed any economy that would coast into some direction. here you are discussing which way to go as far as direction of our economy, and here we are struggling to find if we do have an economy or not. we lived under the mercy and survived under the mercy of the federal government. we don't really have a strong economy. but we do have a couple of galleries which rely solely on the availability of fish and the fishing industries. it is getting tough. it is getting very tight on its

policy. it is getting to be a national issue with the chinese and other foreign countries who are trying to take advantage of the fishing industry. we are the victim of such impact on our economy. what we have been discussing this morning, as insular territories and commonwealth we need to come together to find some ground within the relationship between the federal government and the territories of the commonwealth. we feel we have been left out many times, especially in our location, where it is 18,000 miles from washington. we are the furthest of american soil and we have been there since the beginning. we feel like many times we have been left out, and the only time we can feel the impact of the american dollar is when there and national disaster or

something happens to our territory. otherwise, we feel lonely down there. so we have been discussing the prospect of insular territories and commonwealth to come together and ask our organization to find a place for the insular territories and commonwealth in international associations. we also need to see that the federal government delivers more attention to us. i can say it without reservations. so seeing with the united states of america, we feel like we're headed nowhere. the closest people to us are the chinese who come around in our shores with change in pockets trying to set up some business with our local people. they have restricted us from fishing in our waters.

they have restricted us from other areas. we are victims of all this federal mandate and regulation. we cannot even protect our shorelines. you need to call the army corps to get a permit. we can't even deal with something unless the federal government knows that we do not have the resources to accommodate the lives of our people. we have been americanized by the americans. they convinced us america is the best nation in the world. we agreed. after so many years, we feel like we have been left out. for the first time, the assistant secretary of the interior visited our shores. for the first time, somebody visited and i tip my hat for paying attention and witnessing firsthand how the

american people down there live and survive in that part of the world. >> very important. >> i hope to take time to voice. >> thank you. >>thank you and good afternoon. first, the greatest challenge of the economy of the virgin islands is to convince my colleagues here in the national governors association that their winter meetings of the association should take place in the virgin islands. [laughter] [applause] 78 degrees. we are hopeful that the next 2 winters i don't have to get off of my sailboat to come into the snow. >> that should've been obvious. >> much of the conversation i was privy to today, we understand a lot.

in the virgin islands, we also have that challenge of aligning our workforce development, our education, our universities with the rapid changes in the economy for preparing our workforce for the new jobs. i think we are on the same model of going through schools graduating from high school, getting to a degree and getting out the world, and being competitive and productive. the changes in the economy happen so rapidly and the infusion of technology in much of what we are doing any economy and particularly in health care, we have to shift that model to prepare our people to be able to take this on. most know that the main source of the economy in the u.s. virgin islands is tourism. we have great opportunities and technology. we have to shift for that. that is going to require a great deal of investment in the infrastructure, to be a competitive location for

business globally, and be able to cycle back our workforce to leave and come to the u.s. mainland for education to have the opportunity to come back into the virgin islands and work and raise their families, and be productive. we find ourselves, we produce for many of your cities and states, many people work there. like the governor said, one of the biggest challenges to the territory, though, is federal bureaucracy . and a lot of rules and regulations made in washington and the other states or the federal offices are located. there is not an understanding how fragile the territory economies are. so when they make these rules and regulations, they are just destructive to our fragile economy, and we lose jobs by the hundreds or thousands because of them. we don't have reasonable rapid because of them. we don't have reasonable rapid response on the federal government to deal with these issues. we have to go through the congress and through a lot of

bureaucracy. and at the end of it, that segment in the trade is no longer relevant for us. we are going to be looking to the nga and are calling to assist us in getting that point across. we understand where we are at scale. the 2017 winter meeting, u.s. virgin islands. it is a lot warmer and more fun. thank you. >> you make great points. the attitude is not the way to go when you know your state best and better than anyone in washington. a final word from you. >> this is a great chance. i really appreciate it. puerto rico has great challenges. we have been dealing -- we have a huge deficit of 24%. in 18 months we reduced that to zero. it is now between zero and 2%. unemployment rate was 16.5%.

it is now 13.7%. it is too high but it is on the way down. the crime rate was the highest in our history, now the lowest in the last 22 years. zero. it is now between zero and 2%. so we are moving the economy on the positive line. we are breaking records. it is only 7% of our economy. our main part of the economic is manufacturing. we produce more medical devices per square mile. and as a matter of fact, for the first time since 2008, for the first time since 2006, the federal bureau of labor statistics states that our private sector is growing in the public sector is shrinking. without firing people.

16,000 only on attrition. that is why we are able to budget. but right now we are focused on a new tax structure. we are moving puerto rico to a value tax. we will be able to take 22% of the population and income tax to pay zero income tax. and that has been able to work in improving the economy in 160 countries already in the world. so we are moving in that direction and we will continue with that. >> thank you. it is extraordinary to me that the skills gap has been an across-the-board issue for all of you. and despite the fact that each state has its own mentality and its own strength, and opportunities in terms of resources, manufacturing.

you all agree on so much, and clearly the issues are around the federal government and its impact in terms of broad brush strokes in the face of your own very different economies. it feels like the opportunities do surround manufacturing, as well as some of those science and health care jobs. i want to thank all of you for -- governor herbert and all of you for having me today. i wish you success for the rest of your meeting. [applause] >> thank you for helping with this valuable discussion. i think we learned a lot from everyone at the table. very different economies. governors, this concludes our special session. please join us at a reception. i believe it is underway. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2014]

special session.

>> good afternoon, everybody. thank you for being here. we are pleased to have this opportunity. i am joined by governor dan malloy of connecticut, the chair of the committee not being able to make it, but we appreciate your filling in for him.

to my left is alex whitaker. alex, we appreciate all of your work. as a reminder, the briefing materials in front of you were sent out in advance of the meeting, and i am hopeful you all had a chance to get through them. severe drought, expanding domestic energy production, and aging water infrastructure have all introduced challenges for the states. they have demonstrated the relationship between energy and water resources. limits on financial resources and weather incidents strain water resources. developing state policies that address these challenges in collaboration with federal government can help -- the use of resources and better prepare states for energy and water challenges.

today's work session will examine how states are responding to energy and water challenges while identifying opportunities for greater collaboration between states and the federal government on these issues. this session will help show why a state perspective is vital for successful federal regulatory action. governor malloy and i hope that today's discussion will integrate state perspective into the federal conversation. states are not waiting for the government to develop solutions. states are moving forward with their own legislative and regulatory solutions. in wyoming, we have developed our own long-term energy and water strategies. the energy strategy is called leading the charge. it was issued in may 2013. we are two years into implementing it. the wyoming water strategy released in january provides for the developer, management,

conversation, retention, and restoration of our water resources. we are approaching these issues with the problem-solving mindset and increasing the coordination and efficiencies within and between agencies. for wyoming, this is a big issue. we are the number one energy supplier to the rest of the nation. we have vast energy resources -- coal, oil, gas, uranium, and wind, for example -- and we believe all should be used. supplier to the rest of the we believe it is not the government's role to pick winners and losers. businesses have to be able to make a profit, and when regulatory actions prevent it, it is a problem. in wyoming, we're focused on regulations that balance the needs of industries. we lead the nation. we lead the nation in baseline testing. we are large the largest

habitat bank in the united states and the largest planned wind energy project. we are leaders in the conversations of key species for example, sage grouse. we spend millions on wildlife and natural resources efforts every year. you can have both development and conservation. we do not accept it is an either/or proposition. in wyoming we are striking the right balance. states recognize that agencies have an important role to play in ensuring the safe and responsible use of energy and water resources. this role should be fulfilled in collaboration with the state. to that end, governor brown as chairman and i as vice-chairman sent a letter to epa and the u.s. army corps of engineers that requested greater clarity on the development of the waters of the u.s. rule and

encourage the agencies to continue consulting with the states as they go back and take a look at the proposed rule. the clean water act and the clean air act recognize that states have a statutory authority to manage water and air within their borders. those acts recognize that states should take the lead, and we do. states must have a strong voice in the development of any epa rule promulgated under these acts, particularly in early stages of development and before significant momentum precludes state participation or renders it non-meaningful. opportunities to gain federal perspectives are important and informative. and so, administrator, we appreciate you being here today, but the fact is that it does not take the place of the consultation process with the states. now i will pass it over to governor malloy. >> thank you, governor mead.

it is great be with you again. i am not new to this committee. in the four years previous to being here today, i chaired or was vice-chairman of the committee three times. i'm happy to be back and was more than happy to comply with governor brown's request. when i took office this january, connecticut faced a number of challenges demanding immediate attention. i focused on jumpstarting hard state's economic growth, helping the state. to do this i am determined to tackle the high cost of energy in connecticut. we cannot afford to wait for congress or anyone else to solve our high energy costs. how connecticut uses energies and the price of our energy needs to be addressed if we want to create jobs, lower costs, protect the air and water we breathe and drink. we need to preserve the environment for our children. today, connecticut is taking a leadership role in moving to

cleaner and more reliable energy. connecticut is making this move by using limited government funds to leverage and engage private capital. connecticut's energy platform has benefits for the future of our state as well as for our environment. we can do two things at the same time. we are implementing a strategy that will not only reduce carbon pollution, but bring down costs, clean up air by reducing levels of conventional pollutants, create jobs, and grow our economy. the key points of our plan are reducing demands through energy efficiency encouraging the deployment of more renewable and clean power sources through creative financing programs and the work of our first-in-the-nation green banks, bringing private investors to the table, freeing ourselves from reliance of scarce taxpayer or rates funds, these investors have responded enthusiastically because of the opportunities we offer and

because also they make good economic sense, promoting alternative vehicles and alternative fuels on our roads, because the gasoline-powered cars we all drive are a source of carbon emissions, reducing carbon pollution from power plants through involvement in the first-in-the-nation nine-state market-based initiative known as the regional greenhouse gas initiative. administrator credit was instrumental in launching this. rgi is succeeding in reducing emissions and finally backs millions of dollars for efficiency and renewable energy programs in connecticut and participating states. in connecticut we applaud the fact that the clean power i've proposed by epa offers other states the opportunity to replicate rgi and reduces their carbon emissions in an economically sound manner. this type of approach seeks a healthy state of federal

collaboration, and that will ensure our nation takes decisive action to address the reality of climate change. with that, i turn it back to you, governor mead. >> and we welcome administrator mccarthy. we appreciate you being here. she was appointed by president obama in 2009 as assistant administrator. administrator mccarthy has been a leading advocate for strategies to protect public health and the environment. during her tenure, she is worked up with the state and local levels on environmental issues and helped coordinating policies. she served as the commissioner of the connecticut department of environmental protection. i would also note as a side note, the administrator met with some of us governors at 7:00 this morning. we appreciate so much for taking your sunday and you have taken time to meet with us individually as we have

requested. you have made yourself available to us. we are pleased to have you here. i will turn it back to governor malloy for any other comments. >> thank you. it is an honor to introduce my friend gina mccarthy. i first got to know her not quite two decades ago when i was serving as mayor of stamford. she was involved in local issues in massachusetts. i first got to know her not it was not long before connecticut had a good sense to import her as a commissioner. she did an extraordinary job in connecticut gives, modernizing our agency and demonstrating that departmental protections and economic growth are not at cross purposes. she was such a positive presence in our state that i tried to lure her back when i became governor. she had already established herself as an extraordinary

assistant administrator at the epa. however, and it was certainly understandable, she was reluctant to leave the administration, and she has stayed here in washington, d.c., bringing real change and assistant administrator at the epa. international recognition to her efforts. there are a few people who can match her candor, openness if you get to know her, her humor, her capacity for hard work. as they say in boston, she is wicked smart, and her passion for leaving this planet in a better place than she found it in his only perhaps exceeded by her love of the red sox -- where i draw the line. >> thank you. thank you for trying to entice me. it was a very kind gesture on your part, and i know you are doing just fine with the folks you have, because you have a

great. thank you to all of the governors we have today, and more are joining all of the time. thank you for joining us or breakfast. again, it was a wonderful opportunity to establish a deeper relationship with one another, because i think we need that in times as difficult as. i do not know about you, but we worked really hard, as someone who has worked at date level for 25 years, i know you are facing just as difficult challenges. i know what you bring to the table, and i will always respect the time. i know i met separately with most of you, and i spent some time with the governor yesterday, but i also met with a governor on friday, so we are all caught up, i think. i am not sure what we will talk about that would be boring to all of you.

>> we will find something. >> i knew you would think of something, governor. it is my pleasure to be here and i am really excited to talk about some of the things going on that i know we all care about, and some of the ways we can continue to further our partnership. in order to address the challenges that you are facing to protect public health and the environment, which is pa's mission, it has to be a partnership with date -- which is epa's mission. you will find epa willing and able to be your partner and seeking to do that more and more and as much as he can because i really believe that the work that we are doing together in the area important for the future of the people we serve and to the current public health of the american emily

and i am excited to be forced upon you for sin and began working as i'm excited to be working with you. as we began working, i am excited. we have reduced air pollution by 70%. we have been successful in tackling just about half of our nation's polluted waterways, and at the same time technology drive, job growth and our economy has offered. it is a record we need to continue, and we need to do this more and more, because i believe the challenges we are facing are even more complicated than those we haven't facing for the past 30 to 40 years, so i went to start by talking a little bit about

the clean power plan. we have had some tremendous conversation. governor mead, you are right. we need to converse with the state at every opportunity in particular before we start, and we are working hard to make sure that happens, i do not think there is any better example of that than the clean power plants. i know you know the president considers this to be not just an environmental problem but also a public health talent and economic challenge and national security challenge, and it is of utmost importance that epa move forward on the actions we are working hard to make sure that happens, i do not think there is any better that the president has asked us to take to address the challenge of climate change, and we did that with the clean power plan, but before we even put 10 to paper, we had listening sessions across the country. they began 18 months before we even started drafting this world. that is because we knew this rule was going to be

important. it is a room that will reduce carbon pollution from our power sector, -- it is a rule that will reduce carbon pollution from our power sector, and the reason the conversations have continued so fruitfully and with such energy is not necessarily because we all agree that the key -- that the clean power plan should happen or that climate change is real. i think we are working together because we respect one another and we do see that climate is changing, and we have to take action, and the way in which we are working together has been successful because we have designed this rural -- rural -- rule to allow states to design their own pathway forward that is consistent with where they want to see their future in their stake and their economy, because i believe they will

always be better in designing the plan than the federal government ever could be, so we are continuing with collaborating with the states, recognizing that the glue that holds us all together is the flexibility that we have offered here, because this -- we have the flexibility to do this. we are going to maximize that advantage so we can keep our opportunities for commission reductions as high as we can get them reasonably, but we also want to make sure that we are keeping the costs of those reductions low, that we are not stressing individuals for additional costs associated with energy but are instead maintaining a reliable cost-effective energy supply system, and i think of we continue to work together, we will succeed. now, we have received 3.5 million comments on the proposal.

there is a some interest broadly in the u.s. across on that. many have been from the energy sector, and many of them have been states, and i want to thank you for the many detailed comments you have provided. you can rest assured that we are listening to the comments. i think you know that because we have already through the process and having dialogue, and we put out notices to share more broadly comments that we have seen that come in that thematically joined together that we want everyone to be considering as we move forward and we have heard that reliability cannot be threatened. frankly, nobody needed to tell us that, but i am glad that you did, because i know it, and we will not do it, and we realize time is precious here. we need to give the state time to put together a plan of this complexity and a way to do this which allows them the opportunity to take a look at

what they want their energy future to me. and concerns are concerns that we will continue to keep in mind as we actually continue the dialogue moving forward. i think you will still see us showing up at your door, talking to you folks, knocking on your window if we can't get in the front door, just so these discussions going, because it is important, and this rule will keep going with new sources and in the state model. we will be pulling this together in a package for final in midsummer, so there is a lot of work to be done, but it is not too late to think about how to get this done well. now, the second thing i would like to talk about is something we talked about this morning with many of you, and this is one issue, particularly in the west that we are all concerned

about. we are especially happy that we have pulled together the national drought resilience initiative, and we have some funding together, and you will see it projected in the president's fiscal 2016 fiscal need to have available to them, and we are trying to work together to develop them knowing what folks are concerned about and what their president's fiscal 2016 fiscal budget. we believe there are tools that state and local communities priorities are so that we can understand the changes that we are seeing and whether or not the projection is they may be longer and more severe drought seasons moving forward than what we had has before, but what we see is already enough to bring us to the table together and make us realize we need to address the issue of climate adaptation resiliency more effectively together, and we continue to put out tools to allow people to plan together, and hopefully we will be providing technical assistance

across the administration to continue the effort moving toward. governor mead, you mentioned water infrastructure, water and wastewater infrastructure. i think that is a challenge for all of us. see this all across the united states, not just in terms of our aging infrastructure, which is a huge venture to try to catch up with infrastructure that is old, but it is also to recognize that we are getting more intense storms, and we need to do that together, and it is not just a challenge for us, but for sectors across the u.s., including in agriculture. i know in iowa, the governor and i were talking to farmers, and i that some time with some of the young farmers this last agriculture. week, and we talked about the different technologies and ways you can keep the story on and -- keep the soil and storm water from running off, as well

as continuing to provide viable agriculture moving forward. these, i think him are things that we have to be unafraid to talk about together, and the good news is you will see us starting some water investment this year in our fiscal year 2016 budget as a way to try to be helpful to bring public-private partnerships together to think of new ways we can fund these, and the president has been good enough to increase from his presidential budget request in we can fund these, and the 2015 to 2016 of over half $1 billion, and we are shifting a little more resources into drinking water than our wastewater this year for the first time in a while, recognizing that we have new drinking water challenges that we have to get on top of and faced together, but we do have opportunities. we have opportunities for water use and recycling and for storm

water and rainwater capture. redesigning, making our communities even more beautiful than they were before, but using nature to address these issues more effectively. now, the clean water rule was mentioned. than they were before, but this led to address challenges we have been facing for the past few decades. working with the army corps to try to provide a lot more clarity on the jurisdiction of the clean water act. it is an enormously challenging task but one that is essential if we are going to allow science to tell us what rivers and streams and water bodies really need to be protected so that we can make sure that if there are pollutants put in those, or if they are being filled in any way, that we can make sure that the protections are therefore our drinking water supplies. that is what this rule is all

about, to provide clarity and certainty, and we have already received one million comments on that. apparently, only one in three who care about the other issue care about this. thank you. so we will be taking a look at those and make sure that when this is finalize that we have thoroughly considered the comments, it i think you know we have been out in your communities. we have been using our local advisory committee, and they have been great withholding hearings all across the country. we know it is an era of uncertainty, and i do not want to raise more uncertainty. i want to provide clarity for people with the comments they have sent to us. now, the last issue i want to bring up is the issue of oil and gas, because i recently went to an industry meeting of a number of international oil and gas leaders, and i spoke to them about this challenge,

because ba does understand and respect the sensitivity of the oil and gas industry, and we know how valuable it has been to the united states. the president is committed to and all of the above approach to our future, and the epa actions, when we look at how to reduce methane, and when we talk about the challenges we are seeing coming out of our research projects together, we have to do that also in partnership. we have to make sure that the index of the natural gas and the increase in oil that this partnership. we have to make sure that the index of the natural gas and the increase in oil that this country is enjoying that is providing us more domestic stability, that is providing us opportunities for a low carbon future is protected and that they continue to move forward, and that epa just works with the state to make sure it is done in a safe and responsible

manner. this is all about sharing information, working with these companies moving forward, and assuring that states are the primary protector of their water systems, and we also have opportunities for reductions in methane that will actually save money, that will reduce the need for flaring, and that will hopefully get us moving forward to a sure that we can continue to enjoy these resources moving forward. i think i should probably leave it there, but i will tell you that we have lots of eggs going on certainly beyond this, and i want an opportunity to be able to hear from you and to respond to those issues. again, i want to thank you for giving me the opportunity to be here to have what i believe have been very frank, honest, open dialogue, and i want to make sure that we continue

whether it is today or in the future. again, epa is only as successful as our engagement in this date in a cooperative way and i think what i do, i am honored to do it for this country, but frankly, mine is just a job where we are all on the same page together, and hopefully we are moving or were together to serve the people we serve. thanks. >> thank you for your opening comments. we appreciate the job you have to do. it is staggering to think about 3.5 million comments. that is staggering. a million comments is a lot. at least you know you are working in a job that everyone cares about and everyone has an opinion. as you and i have discussed before, wyoming is the number one exporter of btu's we do believe in the all of the above

approach. we are high in natural gas and oil, and we supply, for example, whole -- coal too many states, and it keeps us competitive with low-cost energy, and it provides roughly 39%, 40% in this country, when it comes to 111d, and you have people talking to you about numbers, and i have people talking to me about numbers, there is one thing that caught my attention. everything is carried out by 2030, the would remove millions of metric tons of carbon from the atmosphere, and that is the equivalent of about 13.5 days of what china puts in, so there is a cost associated with 111d and with the cost-benefit analysis, and we are not going

to get into climate change and people's belief about climate change, but if we are going to go forward on this, my question is are we getting the benefit for the cost, including the costs associated not just with the heating and cooling costs going up, but because energy is tied to the cost of everything we do, what is the cost-benefit analysis, so that is part one, and part two, i would just like to hear, because i have heard the administration say they believe in and all of the above approach, should they continue? >> i think it is important, and thanks for your question. let me see if i can't tackle it. first of all, this is about reductions in carbon pollution but it is done in a way that recognizes that epa is not choosing between different energy sources. any plan that we do should accommodate the continued use of all energy sources and leave it up to the state and the

market to determine in what quantity. when we took a look at what we expected of an impact from our rule, i think this is reflective of much of the work we are doing. we still see cole --coal as being significant, and we certainly see natural gas as a significant part. renewables, which we are seeing are ready, they have been significantly increasing over the last years since this administration came in, and we see that continuing. we also see energy efficiency being the least cost sort of pathway to reach evening -- two achieving reduction. it is really great to be able to provide customers an opportunity to save money while

you are also reducing our pollution, so the proposal does have a cost-benefit analysis and i do think one of the things that i would like to sort of challenge is the idea that these are actually going to be costs as opposed to investments in the future. i think a state that is willing you to use the flexibility, the are you optimum way that we have provided could find a way to you provide you provided could find a way to make this enormously beneficial from it is a bill economic development perspective and from a job growth perspective, because i do and i believe believe that people should be recognizing you that the climate is changing and that there are costs associated with that already and the best thing we can do is and begin to protect our communities by taking action and to do that, it is not about and a putting and of pipe controls, like it is for many of and controls, like it is for many of our pollution. in and i i will it is deciding what

the energy supply should look like in the future and what is that for your states, and because you are provided so much flexibility every day gets to dictate for themselves, and i do not think any state was asked more than what they can achieve in a very cost-effective way, also looking at regional programs come which even provide regional flexibility, and one of the questions you raise is one of the very good points that we sought comment on, and that is the idea that many states have built utilities and supply energy to other states, and the last thing in the world we want to do is to take all of the pollution from that facility to the host state without recognizing that other states benefit and should be looking for a cooperative relationship on how you move forward and make investment that can reduce the carbon from those sources, and we have a number of strategies to do that, and we even put out additional information on how that may be looked at, so we

know that this is an issue, and there are ways of handling that that we will make sure we put on the table. now, the last issue you raised is china. the president made it really clear when we put together the climate action plan, and each part of the administration look at where their place was and what they could do to help reduce carbon pollution that is fueling climate change, and the president was clear that we were moving forward with domestic action, that we were moving forward with climate resilience, but we were also moving for to show that when the u.s. take strong domestic action, we can get international action. the international joint agreement that the u.s. put out with china was a very significant step forward. the work that we are doing with india is a very significant step forward.

we know we have to take action but we know it also has to be an international solution that we are bringing to the table, so there is no intention of moving us forward in a way that would significantly increase energy costs as opposed to let's look at what you really want to invest in that is consistent with your own energy mix, your own natural resources, your own job that you want to grow, and how do we work together to make those all part of the same package instead of thinking one is a burden, and the other isn't, because i think you can look at this as being an open opportunity for investment in things you may want to invest in. >> thank you, administrator, and i also want to be respectful of your time. i know you have to be out by 4:00, so i would just ask one more question right now. suggested it may not be a cost to the state. if 111d goes through, do you suspect it will raise energy costs for all taxpayers across the country? what we have an analysis, and

when it shows is the average price increase over the course of the early stages of the rule would be about, i believe it is three dollars a month on average per household in terms of their energy bill, but it shows that over time, that will decrease, because a significant amount of the investment will be in how you decrease energy demand and how you bring more energy efficiency to the table, so that in 2030, it is actually going to be in a dollar per month savings on average for families. >> thank you. governor, i will turn it over to other governors. >> thank you, governor, and thank you, administrator. i just went to touch on one of the items that you happened to mention. the balance that the epa is trying to strike of those that

generate power for others and the environmental implications for the hosting date, as you know, we do not burn coal in connecticut, but we get pollution from coal-fired plants coming to us from illinois kentucky, western pennsylvania and it all kind of come by my neighborhood, and particularly my neighborhood, actually, in my county, where i get to enjoy what is being generated in those states at a profit for other people, and as a result, not only can we not burn coal, but my citizens during the summer months in joint anywhere from 20 to 65 days where our air is out of compliance with anders, so i

standards, so i understand the necessity of balancing those interest to just keep fairfield county and the rest of get in mind when you are trying to line the right balance. thank you. >> thanks, governor. let me just speak to that issue, if it is ok, just for a few minutes. i think you probably all know that it is no secret that i come from boston. maybe that is why i like the red sox so much better than the yankees, but i think the issue of transported pollution is one we have been working really hard on, and i think you will see that there has been remarkable success in lowering the amount of traditional air pollutants from upwind states to downwind states. clearly, there is more work that we need to do to make sure that everybody is working on this issue and taking care of their own pollution, but i think we have made tremendous success and one of the things we would

encourage in the carbon pollution plan that state developed is to look at the synergistic opportunities, to look at opportunities for developing a carbon pollution plan that is also consistent with what you need to do for other commitments that are either here or coming up, and one of the great things about moving forward with the standards, lowering the sulfur content of gasoline, and all of those rules is that it is actually providing a national opportunity to reduce these emissions so that the burden is not left up to the state to potentially go for more expensive reductions in their own state as opposed to providing a national framework for getting cost-effective reductions across the u.s., and so i think the dynamics are changing, but i do see the collaborating on these issues.

i know that the northeast is continuing to work together. i know that there are groups in the midwest that are talking. i know that the governors in the pacific northwest have been talking and out on the west coast. i am just hoping that we can get -- continue those discussions and take a look at how we treat this issue fairly and how we also turn this into a continuing economic opportunity. we don't have all of the answers today, but the united states is wonderful and has always been wonderful in when it has faced a problem, it has run or written has turned into opportunities for economic growth. >> administrator, let me open it up to the other governors. what thank you. i want to thank you. i want to thank you, administrator, for meeting with me and my secretary of agriculture on friday. we really appreciate the opportunity to visit with you.

as you know, renewable fuel standards is something very important to us in the midwest and the epa has been a great partner since that ball was passed in 2000, strengthened in 2000 and. we had some of our best farm years ever until the recommendation came out in 2013 to reduce the renewable fuel standard, and we have seen a perspective's decline in the value of corn since that time. 2014, we had reduction in farm income. usda is estimating we will see a 32% reduction in farm income in 2015. in my state, farmland values and i was governor in the 80's when they dropped precipitously, i was there when we closed 38 banks, and land values dropped 63%, and i do not want to go back to those days. that is why i am so strong on this issue, but we are concerned, and we have even seen

some layoffs with john deere and some of the other farming manufacturers. we are appreciative that you did not go farther with that proposed rule, but the uncertainty of not having a rule in place for 2018, and now we are nearly two months into 2015, it has meant that a lot of the renewable fuel makers, and we have 43 ethanol plants in iowa 12 biodiesel plants, and we are getting into the next generation of cellulosic ethanol, and yet because of the uncertainty people are very fearful about making huge investment in that area, and so, obviously, we would like to see as soon as possible and hopefully a restoration of the robust renewable fuel standard. i would point out that oil companies have always been against this, but the reason we have these is because they use

something that polluted the groundwater in this country, and i think the consumers on the east coast and west coast, the midwest you use ethanol that people had to face the pollution of the groundwater and they really turned against the oil companies, which is the reason they did not set and they continued to try to find a way to put up barriers and prevent it from really working. we think it has really been not only great for farm income and getting the jobs, but it has also helped us to reduce our dependency on foreign oil and reducing pollution, be it care of the groundwater. i want to encourage you to do whatever you can. we will do whatever we can to support the epa, as we always have, in restoring this robust renewable fuel standard.

>> thank you, governor. it was a conversation that we had the other day and you can bet that i would like nothing better to move the renewable fuel standards forward to provide the kind of certainty that will bring investments in in advance, because that really is the gold star for what we're looking for. we will do what we can to keep this moving as quickly as we can. i appreciate all the work you have done some universities and others to help the advanced science around this. and the commitment to renewable fuels it has been important as part of the overall strategy. we are just going to be very careful to follow the law and make sure that advanced fuels get the kind of certainty that they need moving forward.

it was a challenging year for all of us. >> thank you. >> thank you very thank you very much, administrator mccarthy for meeting with us. when i returned to north dakota people will ask me if i had a chance to meet with the president, they will ask me if i set down with the administrator of the epa. not only did i meet with her three times, and even on a sunday, so that says a lot about your accessibility. thank you very much. i do not write to you every month by governor mead, but that does not mean -- >> just as a point, we are just penpals, that's all. >> only 11 out of 12 months. [laughter] >> almost every month. it does not mean i have any less

interest in our relationship and the things we have to work on together. i just want to emphasize, as i did earlier today, that i really think that we need to form true partnerships with the epa. we have a lot of confidence in the environmental scientist and administrators in the state of north dakota. we think that they do an outstanding job and are true professionals who worked very hard at what they do. we think that we can do a good job, we want to do a great job. we appreciate that you can help us. and we hope that we can continue that spirit of partnership in everything that we are doing. i am not going to point out any individual complaints or anything like that today.

one thing that i will mention that i think is peculiar to north dakota, as really the heart of the prairie pothole region, i have to mention the proposed rule on defining the waters of the united states. the state of north dakota is covered with small wet areas. on every farm in north dakota there are spots about the size of this horseshoe right here that might be considered a wetland i usda. but 95% of the time they are bone dry. we have a road ditch along the edge of every square mile in north dakota. we have areas that will always flood for a couple of days in spring time, but after that they are farmed or used in a very normal way. i think that this notion that

somehow you as epa would need to be in charge of every little spot, that really is just not common sense. the people of north dakota especially the farmers, when they hear that this is what is being proposed, they really react to that. they really just sort of feel that it makes no sense what so ever. i hope that we can keep that dialogue going. you have been good enough to come to north dakota couple of times. i hope that you will come again. i will show you some road ditches. i will show you some from the map so that you are sure of what we are talking about. thanks, thanks again for being here. >> thank you. you know how to show a gal a

good time. [laughter] if i never hear the word ditch again, it will be such a happy day, it is an issue that we really need to resolve in this final role. you have been a great help thank you. >> other questions? >> i want to express my appreciation for your work, my state is just getting hammered by carbon pollution. we had our largest forest fire burn out half the town this year and they are sticking to three times the concurrency of these because of carbon pollution. what we have more frequently is no snow. i know it sounds like a non-problem here today, but half of the areas are shut down in the state of washington today. you cannot go skiing. the base of the food chain, the little critters in our western

waters are melting because of the acidity caused by carbon pollution. it comes out of our stacks and creates acidic conditions, melting the small critters of the base of the food chain. we are seeing this now firsthand and we are getting big costs in the industry. the cost of want to ask you about our the health costs. this was really brought to bear -- i was talking to some students along the river in south seattle, and industrial area. they found that the rates of asthma were incredibly intense along these highways and in the strip areas. a 14-year-old student call me that she was 11 until she found out that some kids did not have

asthma. her neighborhood, it was just chronic. i think that you said that this would be like three dollars per month in the beginning and then go down to an eight dollars savings over time as we become more efficient. how does the administration look at the health costs associated with this? when i talk to people they think that the health problems are as big as the climate issues. >> well, the cost benefits i was eking out were narrowly related to energy and cost impact. the benefits would be tremendous. one of the benefits would be to co-benefit of reducing traditional pollutants. the impact with climate change is real. it is not only a matter of seeing some of the pests and the disease carrying insect, seeing those impacting fresh populations.

it is also about more ozone. with those higher temperatures comes sunnier skies and heat. right now we are seeing one out of 10 kids having ads much in the united states. if you look at the puerto rican population, it is to out of 10 kids. we have a serious problem that will be exacerbated in a warming climate. we know that the costs associated with that are very large. it is a cost that every family now pays. not one that you can avoid. someone is paying it in terms of lost jobs, lost days at school more emergency visits with higher health care costs. just the cost of knowing that you are not able to take care of

your own child. it is a difficult situation and the more the learn about air pollution, the more that you don't like it. carbon pollution is one of those that we need to fight the most to make some really concerted efforts. that is why we are trying to do this. >> questions? >> just a few follow-ups. on the 111 d rule? outside the question of whether we agree with it or not, there is an opportunity for the states to develop a plan. we have a few agencies that weighed in on a few different plans that were very complex. added on top of those 3 million comments for the states to

develop a plan, particularly when you talk about regionalization and how it works with the credit, it is very complex and i wonder about the timeframe. >> it is complex. there are simple solutions, but depending on how you want to design your own unique situation, it can be complicated. i think it is important, what you are suggesting, having a lot of people at the table talking about this. the energy folks are just as engaged in the rulemaking as our environmental colleagues at the state level. the most important thing to keep in mind is that in the proposed rule we understood that this would be a challenge for the states. we actually put in a whole section that talked about implementation. it talked about the fact that if you are going to join a regional group, you need longer periods of time in order to develop a

plan and we provided for that. we also talked about how to make the process more adaptive so that if the states are doing projections for how successful they will be in an efficiency program and if it does not quite work out there is an opportunity to replace it with something else. there is a whole section in there where we are getting significant comment on how we can do as you suggest, which is to allow the states sufficient time to access any opportunities that they see here. we have tried very hard to do it in the rule itself as opposed to a secondary plan that we might do after the fact, talking about what needs to be on the table and when, providing opportunities for the additional states that need it. we have been getting a lot of comment on that and hopefully we will come up within a data strategy that allows states time to try new ideas and whether this works for them. >> one of the things, as you and

i have discussed before, we have in talking about the leading exporters of coal, trying to develop science and innovation using slipstream off the plan for chemicals, for the auto -- artificial food sweetener. we have been putting state money forward to find the solutions. i guess as we look at some of these rules, as you have heard there is a target on coal. i know that you disagree with that, but my question is that as the federal government looks at this on the whole if there is a problem that you want to address there is the environmental side of it but also innovation and technology. we have moved from the panel to

the lightbulb because of the regulations. we had innovation, technology, and an atmosphere where people wanted to invest money because they saw a future for it. your agency and others, looking at it from both sides, how do we find scientific solutions for some of this and turn it into something more useful rather than a liability? >> let me mention a couple of things. doe in the president's budget as you will see, has significant investment in carbon capture and sequestration. in understanding how we can provide the coal industry with the opportunity to move forward

with this technology in ways that allow you to take the carbon in and make it useful, if you sequester it, maybe you don't, there are actually facilities in the u.s. doing just that. that is at low concentrations with low amounts of slipstream. when we went and designed our rule for what we call 111 be that is the rule for new facilities, we did look at what they were projecting for investments in coal. there was no anticipation of significant investment moving forward. our interest was to try to put a moderate level of carbon capture as a goal for new facilities moving forward so that we could provide emphasis and supported doe to try to get interest in new coal facilities that could be retrofitted over time to be

part of a lower carbon strategy. because it simply was not there in the market when we were designing it. we have received comments about whether it is too much, but we believe it is not working alone. we are working in concert with doe to make sure that we are providing support and incentive for exactly what you are talking about, the technologies of the future. coal will be around, not just the future, but elsewhere. certainly for opportunities in other countries as well. for other countries in this fiscal year proposal, it also put together an incentive for the states that is a $4 billion fund for the states that want to move faster or further than a clean power plant might require.

right now that is a wide-open opportunity that we will be talking to the states about, it could be used for infrastructure or to support these efforts. we just need to figure out how to be continually reasonable for every state target so that there is an opportunity for more to be done, providing you the opportunity to access significant resources that advance the technologies moving forward. but there will be nothing better than to use a rule that provides a signal to the market between now and 2030 about the direction in which the country is heading towards a low carbon future. that is the signal that we want to send. >> thank you. i think that coal is the fastest-growing global energy source. it is not just a question for the united states, it is a question for around the globe. i know that you have about two minutes -- i'm sorry.

>> i just want to say that market competition with respect to the use of fuels in the united states is vitally important. as is the ability to use any fuel safely. particularly with respect to the residents of my state. universally, across the country, the right way to look at it is producing energy using any fuel generally is as safe as any other fuel, you should be able to do that and the portion -- the market will account for that. it has in fact already accounted for that and they've certainly provided you with the road not to do that i want to compliment you for the

-- they have provided you with a roadmap to do that and i want to compliment you for the hard work you are doing but also the team that has been and in some the cases you assembled to do that. >> do you have any closing comments, administrator? >> thank you for letting me come today and talk to you. for all of the work we're doing at epa, we will work hand in hand with the state moving forward. even if we disagree, we will certainly listen and take everyone's interest into consideration, doing the best job we can. we will be out there when this is done to make sure we can do it together.

>> you are accessible. wyoming is on the other side of the fence about these things but we appreciate you very much attending the national governors association and for making your staff and yourself available. thank you so much for being here. >> thank you, governor. [applause] >> before all of you governors get out of here, we have votes to do. it will only take a minute here you do don't want me in here by myself voting. it may not turn out the way you want. ok. the committee now has considered policy proposal located under tab g which you should have received in february 2013 when they were last approved. we have slight modifications natural

resources 1, 2, 3. your staff has looked at these. i think you have had a chance to look at them. quickly, we need to renew these. can i have a motion to move the policies en bloc? the motion has been made and seconded. further discussion? all those approved signify by saying aye. the ayes have it. that concludes business. thank you, governors, so much for attending today. i appreciate it. [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]

>> coming up, anthony blanck and discusses u.s. security priorities. on washington journal, our guest include walter jones and sheila jackson lee. >> janet eln delivers the semiannual monetary policy report to congress this morning. we will have her testimony starting at 10:00 a.m. eastern live on c-span 3. john kerry testifies today before the senate foreign relations committee. he will be questioned on the 2016 budget request and challenges abroad, including isis russia, and in ron. -- and iran.

>> the city's tour takes book tv and american history tv on the road, traveling to cities to learn about history and literary life. next week, we visit galveston, texas. >> with the opening of the suez canal, sailing ships were dealt a death blow. coal-fired ships had a shorter route to the far east, india, those markets. sailing ships needed to find a way to make their own living. instead of high-value cargo they started carrying lower value cargo, coal, oil cotton.

the ship found her niche carrying cargo that did not require getting to market at a fast pace. elissa sailed and arrived here in galveston about 100 yards from where we are standing now back in 1883, with a cargo full of bananas. she came a second time and it was important for galveston historical foundation to find a vessel that had a connection. >> watch our events saturday, march 7, at noon, eastern. >> next, anthony blinken discusses iran's nuclear program

and the failed cease-fire agreement between ukraine and russia. his remarks came during an event examining president obama's policy priorities. this is one hour and 20 minutes. >> before we start, i want to introduce general powell who has been giving me questions to ask. general powell, what question should we start with? >> if you don't know, i'm not going to tell you. you've got a great group here and i'm sure you're going to have an excellent discussion. and i think tony is uniquely qualified to deal with the issues of the day and to answer the questions that might arise. in earlier session walter and i spent an hour and a half talking about these issues. but doing it in a way that's going to be for teenagers, kids,

high school kids. which is where i spend most of my time with students now. because nothing i could do about my past, little i could do about the future, except watch it. but there's a lot i can do about the real future, which is our youngsters coming along in a nation that's going to be increasingly minority. we've got to prepare these minority kids for the leadership positions that will be waiting for them. that's kind of my passion and i thank walter for his support in this over the years. i thank the aspen institute for what they do on a daily basis. now ask a question, for god's sakes, don't just sit there. >> thank you very much, general. it's my pleasure to introduce the deputy secretary of state tony blinken who's been a great public servant and also a friend of the aspen institute. i know you're about to embark on a trip this coming week, so why don't you just open up by telling us what you're doing and what we should be doing about

it. >> walter, thank you very much. it's great to be here with all of you. i have to say, following secretary powell even briefly makes me empathize with two people in particular. alan and rossy. they were the act that followed the beatles on "the ed sullivan show." so with that said, actually thought i'd spend a few minutes, then we can get into the specifics of that with you walter on some things we'll be doing next week, including going to ukraine and visiting with our close european partners. just sort of stepping back for a second and putting some of where we are in a little bit of perspective, because there are constant narratives out there about u.s. leadership or not u.s. retreat from the world or not. and i think it's useful to create a little context for the discussions that we're about to have.

i would maintain that never has the united states and its government been more engaged in more places than at this char time. and if you look at what we've done in recent months and in recent years mobilizing, quite literally, international coalitions and countries to deal with isil, to deal with ebola, to deal with climate change, to deal with ukraine and afghanistan, you see that leadership in action. you saw it recently this summer when we brought the leaders of 50 african countries to washington for the first african leaders summit here in washington connecting them with the private sector, putting in place a new foundation for moving forward on growth, on collective security, and building institutions. you saw it in central america, the vice president brought together countries of the interamerican development bank to propose a new deal for central america where, if their leaders stand up and take responsibility for dealing with problems of governance, of corruption, of security, we and like-minded countries in the region will support them.

and you see it in asia. i just got back from japan south korea, and china. and you see it in an effort that's been ongoing for several years, that is the so-called rebalance, where we are in a very material and concrete way building institutions, strengthening our partnerships with existing allies, building new partnerships with new ones opening up even further to trade through tpp. and building a more cooperative relationship with china even as we deal directly with our differences. and you're seeing it in places like iran and cuba. think about this. the change that was made with cuba, the possibility of an agreement with iran at least on the nuclear program, opens the prospect in the space of about nine months, two of the most difficult elements in the psychology of american foreign

policy for the last decades will be in a new and different place. doesn't solve the problems. we'll still have, if we do get a nuclear agreement, acute problems with the way iran acts in the region and beyond. but quite significant. and the reason i say all this again, because there is this notion somehow that america is in retreat or is not leading. again, i think nothing could be further from the truth. maybe the best way to test the proposition is to think of what is probably a favorite movie among many people in this room at least one that you're subjected to just before christmas every year, "it's a wonderful life." we know what happened to bedford falls when george bailey was out of the picture. we know what would happen in each of these instances i just talked about if the united states was out of the picture. imagine where we would be for all of the deficiencies and challenges that remain, where would we be without the united states in the campaign against isil? where would we be when it comes to dealing with climate change? where would we be on ebola ukraine, et cetera? the fact of the matter is we are leading.

so the question really should be and the debate should center around, how are we leading? with what means, toward what ends? that is the proper subject for debate and one that i'm very happy to engage. >> now, you were going to say that you'reng next ng explain what that trip is about and what you' going to do. >> well, we have secretary horace is in europe now, he's working on iran, he's also working closely with our european partners on ukraine. it is a very challenging situation. let me put it in perspective. because i think there too it's important that we have specifics. there are a couple of big principles at stake in ukraine. because you can make the argument that what happens in ukraine doesn't go to our fundamental strategic interests. but i think when you look at the principles at stake there really is a lot here that we need to be mindful of and it explains why we've been so focused on this and why we've been leading the effort to put pressure on russia to reverse what is going on in ukraine.

first, the notion you can change the status quo by force in particular a big country can do that to a small one, is not a police department we want to allow to stand in the beginning of the 21st century. were that to happen, i think you'd see serious and very negative repercussions, not just in europe, but in other parts of the world. second, and this is something that doesn't get a lot of attention. when i served in the clinton separation, one of the great achievements early on was making sure that the successor countries to the soviet union that inherited nuclear weapons -- belarus, kazakhstan, ukraine -- actually gave up those nuclear weapons. and in the case of ukraine, the deal was this. they said, we'll give them up but we want our sovereignty and territorial integrity guaranteed. and three countries signed on to those guarantees. the united states, the united kingdom, and russia. imagine what this says now if we allow russia to, in effect ignore and tear up that

agreement, the so-called budapest memorandum many of you are familiar with. what does it say to a country like north korea that has nuclear weapons and we're trying to persuade to give them up? what does it say to a country like iran that doesn't yet have nuclear weapons, we're trying to get iran to forswear them, if the kind of assurances the countries with nuclear weapons want to give them up are in effect ignored? big things at stake here. >> i was just rereading "russia hand" where he talks about negotiating that. that budapest memorandum actually commits and obligates us to certain things. will you explain what those obligations are? >> we made a commitment to stand with two other countries ironically, for several propositions. and critical among them were the territorial integrity and the sovereignty of ukraine. and that has been grossly violated over the last year. so where are we? i think there are -- there's a good news piece of this and a bad news piece of this. the good news is this.

because of the pressure we were able to exert with president obama leading throughout this process in working with the europeans, getting them to exert the pressure with us, keeping the unity that was so necessary to making that pressure effective, we did create space for ukraine to have two successful elections and produce probably the most effective government that it's had since it's been independent. we created space for ukraine to sign the association agreement with the european union, which was part of the cause of the crisis in the first place. but what we haven't seen unfortunately, is the separatist land grab fueled by russia supplied by russia, organized in many cases by russia -- that has not stopped. there was a basis for stopping it in the mins agreements. the first ones concluded in september, now an implementation plan that was agreed by the countries in question just a couple of weeks ago with germany and france's leadership. there's a clear way out there.

if russia makes good on the commitments it made in these agreements there is what we call an off-ramp. if russia takes that off-ramp the pressure that's been exerted, the sanctions that have been exerted, those begin to be removed. you always have the crimea problem and that's significant and that's not going away any time soon and the pressure won't go away there. but for the east it could and it should. russia is playing a huge strategic cost for what president putin has gained it in in ukraine. we see the devastating impact on the economy, taking deeper and deeper root. we've seen capital flight of a rather extraordinary proportion. more than $150 billion over the last year. we've seen a virtual standstill in foreign direct investment. we've seen the ruble at an all-time low, despite the fact that they've spent over $100 billion in reserves to try and bail it out. we've seen the country get ratings of junk bond status from the major rating agencies. we've seen growth go from about 2.5% to zero, they're basically

in a recession. the drivers of the economy in the future have actually been singled out for the sanctions program, particularly the energy sector where the technology russia needs to actually take the next step in exploiting more difficult resources will be denied them. so this is not a good path. also, it's worth pointing out that to the extent the russians have gained crimea and may now have this foothold in the east they really have lost ukraine. the country is now more united and more focused and western-oriented than it's ever been in its history of independence. nato is more energized than it's been in recent years. there is now a greater seriousness of purpose about energy security in europe than we've seen in recent years. in other words, strategically president putin has precipitated virtually everything he sought to prevent. my concern is that he's been left with playing the nationalist card because there's

not much else left to play. the combination of the sanctions, obviously the fall in oil prices, mismanagement of the economy, all of those things don't give him a strong economic hand to play. so you play the nationalist card and it work in the short-term. you see that in his numbers. the problem with the nationalist card is you have to keep playing it. as soon as you stop playing it then people start to focus on all the things that are going wrong. that's why we try and continue to try to propose an off-ramp that allows him to move away from the direction that this is going. right now, the critical thing is to see the obligations and commitments made in mincing, both in september and the implementation plan that was reached a week or so ago. those commitments need to be implemented. there needs to be a cease-fire. the heavy weapons need to be pulled pack. ukraine has certain obligations too in terms of moving forward on decentralization legislation. critically, the international border has to be restored between russia and ukraine.

absent that border it's basically russia has a free hand to throw -- >> if that doesn't happen do we arm the ukrainians? >> this is something that has been on the table and remains on the table as a possible course of action. let me say a couple of things. first, we provided over the last nine months or so about $150 20 million worth of security assistance. it's not just the infamous meals ready to eat. by the way, meals ready to eat are kind of important. if your soldiers aren't eating they're probably not going to be able to do a good job. beyond that we've had counter radars that have been very important, night vision goggles, kevlar vests, et cetera cetera. we don't think that this conflict is going to be solved militarily. and the hard part about thinking about lethal assistance, even defensive, to the ukrainians, is that you do that and the russians are likely to match and it top it and double it and triple it.

so where does that lead? on the other hand, there's obviously a compelling case to be made for helping the ukrainians defend themselves against aggression. that's what we've been doing and that's why the question of additional defensive assistance remains very much on the table. >> let me move to iran. we're going to do that, then i'm going to open it up because everybody here i'm sure has questions. secretary kerry's been in geneva this weekend and he seems now to be getting closer and i think has even told people at the state department, perhaps in case there is an agreement, how we're going to sell it, what we're going to do with congress. can you give me the outlines what was you think that agreement could be? >> so where we are, first of all, is we've done a lot of hard work. and the secretary's done extraordinary work in trying to get the elements of an agreement in place. we're not there yet. whether we'll get there as we

sit here today, i can't tell you. we are making progress. serious discussions, hard discussions. and moving, but we're not yet there. but at the heart, any agreement has to do a couple of things. and this is what it should be judged on if we get there. the most critical thing is, as a practical matter, it has to cut off iran's pathways to fissile material for a nuclear weapon. so what does that mean? it means that they have potentially a pathway through their facilities that are uranium-based. tauns, which has most things on the surface. that as a practical matter needs to be cut off. they have a plutonium program at the iraq reactor. that too needs to be cut off. and then the fourth pathway, that is a covert program, needs to be dealt with, principally through transparency

inspections, access, so that we have confidence that they won't be able to pursue that. now, what we'd be looking at, and the measure that we've set is, we want to make sure that on all of these pathways, we have confidence that were iran to break out of them, that is to decide to renege on its commitments or cheat, that it would take at least a year for iran to produce enough fissile material for one nuclear weapon. >> did israel initially agree to that framework? >> there is a -- look, i think from the israeli perspective from everyone's perspective, if we could achieve zero enrichment in iran, that would be great. so i think if you ask the israelis i suspect they'd continue to say that would be their objective. the fact is iran has mastered the fuel cycle. we can't sanction that away, we can't bond that away, we can't argue that away. most of our partners i think have accepted that -- that proposition. the question is not whether or

not -- >> you say most of our partners, does that include israel? >> i'm talking about the ones who are negotiating with us, that is in this group in the p5+1. the question is whether you can design a program that is so constrained, so limited, so checked, so monitored, that you have confidence that they will not be able to produce fissile material for weapons should they choose to do so in less than a year. which gives you, should that take place, plenty of time to do something about it. keep in mind two other things. it's not just the is fissile material. you actually need a weapon. our experts believe while they were pursuing a weaponization program until about 2003, that was put on -- that was halt the. you also need a way to deliver the weapon. that goes to the missile program. then even if you got all of that, when it comes to fissile material, the idea that most countries would actually break out for one weapon's worth of material is pretty unlikely. so we've been very, very conservative about this.

and if we're able to achieve that, then i think we would be confident in moving forward. the other thing that's important is this. in any of these situations you always have to ask -- as compared to what? so if there's no agreement, what happens? well, a lot depends on why there's no agreement. if we're seen as seeing the -- that's going to make it very difficult to sustain the sanctions coalition that we've spent so much time building up. congress put in place very strong sanctions. has done a very good job on that. but the sanctions are much less effective if other countries don't join in implementing them and enforcing them. and this president has spent enormous time building and strengthening that coalition. if that starts to go away, the pressure's off and it moves in a bad direction. the other alternative is potential military action. and i think it's clear that, you know, one could certainly set back the program for some period of time.

and that if it comes to that someday. but you're also probably looking at setting it back, not stopping it. because again, the iranians have the knowledge. they'll build it back up. and it will probably be driven underground. so that's not an ideal solution. of course with military action there tend to be unintended consequences that are something -- >> how important is it in such a deal that the iranians come clean about what they were doing and the international agencies where they've not exactly come clean? >> the iaea has been, as many of you know, been engaged with the iranians to try to do just that, to get transparency on what has taken place. what they were trying to do in the past. and that is important. and i think -- >> so is that part of a deal you think? >> it's technically separate from the deal in the sense there's a separate dialogue going on with the iaea. but we would like to see satisfaction of that. i think -- >> i'm sorry, so you're linking those two now? >> it's important for the iaea

and iran to come to conclusions about the so-called possible military dimensions of the program. the most important thing though, when you think about this, going forward, that is putting in place the regime that we need and that our partners need to give us the greatest possible assurances that iran is making good on its commitments not deviating from them, not cheating on them. and that goes to what kind of inspection regime you have, what kind of transparency. and what has to result from any agreement is the strongest, most intrusive inspection and access program that any country has seen. because iran has forfeited the trust of the international community -- >> you think you'll be able to get an intrusive inspection? >> that will be a test of any agreement. i think what we've seen already in the interim agreement is much greater access than the international inspectors have had before.

and in places that they didn't have it before. what's interesting among other things about it is they've had access along different points of the production chain for fissile material. for example, the mines and mills. not just the places where the centrifuges are spinning. the more you have of that the greater the certainty you can have that iran is making good on its commitments. >> how do you respond to netanyahu's comment that it was "astonishing" that you were going forward without having resolved the coming clean irissue? >> again, that's an ongoing process. the iaea has been engaged in it. they've made some progress. also had a lot of frustration with iran not coming fully clean. that's something we want to see move forward over the coming months. and i think -- keep in mind, even if there is an agreement, the actual relief that would come to iran in terms of initially the suspension of sanctions and then ultimately the lifting, the repeal of sanctions. they will have to make good on their commitments up front. and i think one of the things we

would expect to see is some resolution of the issues with the iea. >> do you think it's problematic that netanyahu's coming to speak to congress? >> so let me say a couple of things about that. first, prime minister of israel is always welcome in the united states. to speak any place, any time. i think what's unfortunate here is the way this came about. and because of the way it came about, it turned it into a political issue. and the relationship with israel should not be a partisan or political issue. the fact of the matter is, over the course of the last six years, when it comes to israel's security, in my judgment, no administration has done more than this administration. and the relationships at every level, whether it's among the political leaders, the intelligence officials, the defense officials, i don't think

there's been more coordination dialogue exchanged than we've seen in the last years ever before. and where it really matters. the provision of what israel needs to defend itself and protect itself. this has been an exceptional period. let me give you one quick example. this is something i happened to see up close and personal. this past summer during the gaza crisis i was in my office at the i got a call from israel's ambassador. "i'd like to come see you on an urgent basis." came over about 8:30 at night. and he said, "we really need an urgent resupply and funding to buy more intercepters for iron dome," the missile defense system that has saved many, many lives. and he and the defense attache ran through the substance of why they needed it and why they needed it then and there. the very next morning, this was on a thursday night. friday morning, i was the oval

office with the president and i ran through what i heard from the israelis. and he said, "make it happen." and by tuesday, we had $250 million from congress to do that. so whatever the tensions whatever the disagreements on various issues, when it comes to the core of the relationship that is, our absolute commitment to israel's security, it's never been stronger. >> if you get a deal that you feel is good and the rest of the negotiating partners feel is good, to what extent do you think you need congress' approval and for what aspect do you or do you not need congress' approval? >> congress is an absolutely integral part of this entire process. from takeoff to flight to landing. the sanctions regime that congress legislated and then the international component that we