back to justice breyer's first question? it was about how these categories work and how the categories enable the epa to mitigate certain dramatic or onerous costs of certain segments of the industry. but that is not an unknown provision of any kind. and indeed, it seems to me that the provision very much cuts against your ultimate. epa, in some ways, can't even figure out the cost until itthe aggregate cost obviously depend on how epa categorizes and sub categorizes. you won't have the epa make the cost calculation before it really can given the structure of the statute. mr. brownell: the cost does dr. into a variety of determinations as made part of the regulatory process. when eta issued its findings in

20 justice sotomayor: host: they said it was not final. there is no final determination or listing and we are going to take comment on that as part of the rulemaking to examine the admission standards. the agency addresses related to -- in light of this study address whether such regulation under the section is appropriate and necessary for power plants. it may be necessary to regulate something like mercury.

that may not be the appropriate regulatory regime if their view of the statute is not to focus on whether such regulation is appropriate, whether listing of power plants is under subsection c is appropriate just like every other source. justice scalia: can i ask whether that listing are subject to the categorization device that justice breyer was asking about? could the agency say we're going to divide these categories since 80% of plants don't have waterfalls nearby, we're going to exempt them from these minimum standards? mr. brownell: no, your honor not at a listing stage. justice kagan: the minimums depend on the categories and the subcategories.

you can categorize in such a way that the minimums will be up here, or you can categorize in such a way that the minimums will be down there. mr. brownell: and it during the rulemaking, arguments made about that sub categorization and epa ultimately sent cut revised the power industry with respect to want limited set of sources. otherwise, epa's position is once listed, it triggers an obligation to issue emissions standards under the -- justice kagan: it triggers an obligation as to some standard but again the minimum standard can vary dramatically depending on how the categories and subcategories are set up. so it you are having the epa consider cost you for the epa can know what costs are.

mr. brownell: epa doesn't know what the costs are during the rulemaking process in which it undertakes notice and comment with respect to both the n1a determination and emissions standards. the clean air act lists subsection n as one of the provisions that requires notice and comment will making under the special clean air act procedures. this is why the agency explained that there is no final n1a until the end of the process, until notice and comment and we've taken and determine what the costs are. justice sotomayor: confirming

what justice breyer said, the point that you had an opportunity and apparently took advantage of it, to tell epa that it should sub categorized this source. and it decided to sub categorized just one piece of it. so what you are really saying to us is it is not the listing, it is the way they set up their emissions standards that i disagree with. because they could have decided that there were subcategories that didn't require a standard at all. i am presuming that they could have said anybody by water doesn't have to do more because they're already told percent -- they are already part of the 12%. we are going to do cost by everybody else that is not my daughter. mr. brownell: conceptually, i imagine they could have sub categorized away the entire industry, but that is not what they did in this rulemaking. justice sotomayor: no, they didn't do it. but you are asking us -- this is a challenge to a regulation that is only piecemeal. because you are arguing that

they should have considered costs, but they obviously did before they issued the standards. you can't look at the standards and the admission to the case and the listing in a case like this in isolation. mr. brownell: justice sotomayor, if i could try to answer the question once again. the subsection n1a question is whether after considering the results of the study -- and i note that the study also looks at alternative control strategies for any emissions that may want regulation -- the agency determines such regulation is appropriate and necessary. the focus of the determination is not on listing what may flow from that, what regulation and that the agency decides to apply .

justice alito: did epa say we are not going to take cost and to account at the listing stage because we will take costs into account through this subcategories in possibility that is being discussed? mr. brownell: no, your honor. as i recall of the record of the proceeding, this discussion of its has come up in the briefing afterwards. justice brewer: why didn't they write -- these questions are difficult because they are so hypothetical. it isn't true that 50% of the industry will use up all of the domestic product, etc. but they wrote this thing in a way that sounds as if even if they had been true, that wouldn't have been taking into account. but with the sg is telling us is don't worry. maybe they should have written knowing what we know and what is undisputed so far, what we don't the cost problem is enough for us to warrant a cost-benefit your analysis or other

consideration. now, they didn't write that. that is why i am looking to see -- it is really the sg, but i mean, is there really a different way that they could eliminate this horrible scenario if it existed, which it didn't. you understand what i am driving at? trying to get your best answer on that. mr. brownell: i want to emphasize this is not an argument whether or not to regulate mercury, it is whether or not the regulatory regime that has been defined here under section 7412, which the government says is the listing that applies to all other source categories, and the minimum control technology standards that apply to all other source categories is the right way to do it.

regardless of how you sub categorized, it will have a tremendous impacts as a result of acid gas relation and for a polluted that present no public health risk. chief roberts: we can't uphold an agency rule on a grounder that they didn't adopt below, correct? so your understanding correct that this is not a basis for decision that they adopted below? mr. brownell: my understanding of the basis for the decision below is that costs are irrelevant-- whether or not whether to regulate the source have a gory under the typical subsection 7412 regime that applies to other sources. justice kagan: but that is exactly right, mr. brownell. the agency at that point in time

was only answering the very first question, the very threshold issue. at that point, the agency said cost were irrelevant. but cost become irrelevant later in the analysis and in a variety of ways. through the 12 and a half percent, through the 12% through the categorization of sub categorization, through the determination whether to raise standards even higher. so costs costs later, but as to this particular thing, the agency said yes here we don't consider costs. we could, but we don't want to because there is all this potential for cost to come in afterwards. mr. brownell: and your honor it's costs cost costs under the statutory criteria that congress provided for setting control technology standards and then having to find their standards at the end of the process. the agency finalizes its determination in light of the

costs and impacts and other factors entered in the -- justice kennedy: do you think whenever the term "appropriate" is used in the clean air act that it demands a cost-benefit analysis? mr. brownell: your honor, when you say in any context, that is so broad that i don't think i can say whether it require cost-benefit in any context. but in a specific context where focus is on whether such regulation is appropriate and necessary, that regulation has certain character a and consequences that we talked about this morning, including the fact that it imposes on a pollutant that poses no public health risk $5 billion a year. , justice ginsberg: before your time is up, can you clarify for me why i did stage this is something that we should be concerned about, because there is this regulatory impact assessment -- that has said that the benefits vastly exceed the costs, and that impact analysis

has gone through the or process and or concluded that epa appropriately cuckolded costs. -- appropriately calculated the cost. mr. brownell: the co-benefits, all of those benefits are coping of its. only $4 million to $6 million are associated with hazardous air pollutants. those benefits that are in the regulatory impact analysis were not considered as part of the regulatory determination for good reason, because i are -- they are important questions regarding their legal importance and relevance under the proper standard. what i mean is that pm 2.5 is the pollutant, fine particles that is associated with these co-benefits. that is extensively regulated under the national ambient air quality standard. in fact, those are quality standards were only recently

revised to be tightened, and in the context of that proceeding the agency found that the low levels of exposure for these co-benefits did not produce effects or risks that were of regulatory significance because they were too uncertain. there were serious questions about legal relevance and importance. justice roberts: thank you counsel. general verrilli: may it please the court, epa's interpretation of 7412 should be affirmed for three basic reasons. it is the most natural and certainly a permissible reading of the statutory text which drugs epa to focus on health concerns and doesn't mention costs. it harmonizes the provision with section 7412's structure and design, because it applies the same regulatory logic to power plants that congress directed epa to apply to regulate hazardous air pollution from every other type of source.

as a matter of common sense and sound government practice, it was certainly appropriate for epa to list powerpoint regulation based solely on health and environmental hazards, because that reflects the approach congress not only chose in 7412, but in all of the major regulatory programs under the clean air act. justice roberts: you concede don't you, that epa could have interpreted the statutory language to allow them to consider costs? general verrilli: i think epa rated as the best interpretation of the statute was that it didn't provide for the consideration of cost at the listing stage -- justice roberts: but under chevron, if you are adopted a regulation of that said appropriate and necessary allows us to consider costs, do you think that would be appropriate? general verrilli: i think the phrase appropriate and necessary doesn't preclude the epa from considering cost. under chevron what the epa has

to do is explain the justification for the reading of the statute. justice roberts: but since you are dealing with the term, i think this says capacious as appropriate, and since you could have issued a regulation allowing the consideration of costs as appropriate, you're saying is that the agency deliberately tied its hands and said we are not going to consider something. general verrilli: what the agency did was decided it was weather appropriate to approach the question of whether to regular power plants, in the same manner that commerce found it was not only appropriate, mandated to answer the question. justice roberts: i understand the question that they could have done that, what it is unusual for an agency to say when they do some thing, that that is the only thing we could do agencies usually like to get as much discretion as they can. it strikes me as unusual. maybe they could go ahead and

not consider costs. to say that they were prohibited from considering cost under the phrase " appropriate" strikes me as unusual. general verrilli: it says we not consider costs of the listing stage -- justice kennedy: could this agency reasonably have considered cost? general verrilli: i don't think the statutory text for bids than from considering costs. the epa determined that powerplants are no differently situated than any other source of hazardous air pollutants regulated under section 7412.

and if i may, for every other source of hazardous air pollutants, what congress mandated as appropriate wasn't that you do not consider costs when you decide whether to regular. you only consider health and environmental effects, and then you do consider costs under section 7412d when you set emissions standards. justice alito: how is that consistent with this statutory scheme? if your argument is that epa only reason for doing this is that it wants to treat powerplants same as other

sources, we know that is what congress didn't want or it would have -- it would not have enacted the separate provision for powerplants. general verrilli: i agree, justice alito, that congress proposed different treatment for powerplants, but that doesn't answer the question. that's just asks question. what petitioners are arguing is what congress prescribed and mandated was a cost-benefit analysis that does not apply to any other source of hazardous pollutant, but that is not what the text of the statute says. what it says is that for every other source, regulation would proceed immediately, but for powerplants, there was uncertainty about whether powerplants in hazardous pollutants at a level that would cause a problem, and whether there were alternative control strategies available. what congress told epa to do was studied those three things. those go to health considerations. once epa made a judgment about

that, it was to decide whether to list powerplants or regulation, whether it was appropriate to list them for revelation -- four regulation. justice alito: this is what i understand about your position. -- don't understand about your position. congress's decision to treat powerplants differently reflects the fact that congress wanted at least to hold open the possibility that powerplants not be listed even if their emissions exceeded the levels that will result in listing for other sources. i don't see why they would treat them any differently. if i can just continue. perhaps you may disagree, but that's just necessary inference from this statutory scheme. if that is the case, what factors might congress have thought it justify allowing powerplants to emit more than would be permitted if they were other sources? petitioners save par plans have to bear a lot of costs and others don't. their admissions might exceed the otherwise permissible limit because they have participated in the cap and trade program, so

they have contributed to the reduction in emissions in that way, in a way that would be full cited in their own emissions. that is an explanation. i don't know what your explanation is. general verrilli: i know you're asking me to accept the premise, but i cannot because both the text of n1a and the legislative history tell you what considerations congas left open. the argument that your honor just post is not in the legislative history, and it is not in the text. congress really hot that, then what they would have said to epa is to push the pause button, take three years and study. they would have expertly told epa to study cost, and they did not do that. justice alito: if they all were concerned about health, why wouldn't they impose powerplants the same standard that is imposed on area sources? justice alito: i think they came very close to that.

until the epa to make its judgment after considering results of the ready. -- the study. they told them to study anything that went to health hazards. the reason they used appropriate and necessary language is because congress, when it was legislating, and instead there might well be uncertainty at the end of this analysis that congress directed the epa to undertake. there might be uncertainty about the effects of acid rain. justice sotomayor: i think that is what the legislature said. donald verrilli: the way that

acid rain regulations unfolded they were at the same time as 7412. but they unfolded over a 10 year period. epa had to make a long-term projection. when i think with congress with saying, you may need to exercise judgment here. and epa did exercise judgment. justice breyer: there are two parts to this. the argument very much depends on -- don't worry because there is a way to take into event account cost. it is a lot of money, $9 billion. if you divided it, you have $30 per person.

that is a lot of money for people. for some people. it begins to look a little irrational to say i'm not taking into account at all. they will take into account when they set standards. at that point, i read the thing about 12%. they can refer me back to the categorization of two things earlier. and then i have aside from that, there is what you do. you look at the top 12 generators and that is the minimum standard. so they might want to say, that's not right. i mean, it's right, it says it, but if you go to the bottom 50 generators, you will see it will not cost $120. it will cost $1000 per family. we had the epa saying, we won't even look at that. at that point, i think they would say, why?

why would you even look at it? the answer seems to be in the source. maybe the epa could say, don't worry if there is such an argument. which there isn't. we have the power under the statute to take into account. you know where the argument came from? discussion and thought in my chambers. maybe it came out of the reefs to -- briefs, too. can the epa take that into account, or do they have to find your -- blind will he say -- blindly say that, the top 12 counts for everybody no matter what the cost? that is the argument.

donald verrilli: i'm going to make three points in response. the first goes to the empirical situation. the first is this. 9 billion is a big number. this is an industry with 300 and 60 billion -- two and a half percent annual revenues. what congress and epa concluded -- justice sotomayor: this isn't about profit though. donald verrilli: right, but 2% could go off-line as a result of it being economics. but it is not 50% or 70. now let me talk about the way epa under this regime does take cost into account. the situation that your honor

described in hypotheticals is a quite unusual one. in a normal case, the 12% rule it's that kind of april. and in the normal case, it is not going to have that effect. it means that this percentage of the industry has been able to meet this without an operator in an economic matter and congress is trying to force the rest of the industry to catch up. as we know from multiple experiences, as your honor identified, with respect to catalytic converters and motor vehicles and with respect to acid rain, it turned out that the cost would be vastly lower on industry then epa anticipated. the third point is your honor's point about subcategories. section 7412 c one, the provision that governs the listing of categories, it mentions the availability of subcategories. the last sentence says -- the

appendix to our brief. justice kennedy: thank you. donald verrilli: it says nothing in the preceding sentence limits the administrators authority to establish subcategories under this section is appropriate. that is how it would work because you identified the category. then you generate the standard based on who was in the category. justice scalia: i thought the standards are automatic. there's certain minimums. once they find on the basis of the study that these should be listed, i thought there was an automatic requirement imposed on -- which is the reason they are complaining. donald verrilli: the requirement depends on how you categorize. if there were a situation in which, one segment of the industry was so vastly different from another segment, in terms

of technology, then epa would have the authority to break those into two separate subcategories and then you don't calculate the best performing 12%, the standard. until you know it is the best performing 12% of the people. justice breyer: the language does that. the language does that is the first sentence of three. the maximum degree that is deemed achievable. that is achieved in practice by the best controlled similar source as determined by the administrator. that is what allows him to break into categories. am i right? donald verrilli: that's correct. justice breyer: -- where can you point me in the record where this was made by the agency?

it is a very important principle of administrative law that we will only uphold the rule based on arguments that were considered by the agency. it is not something i recall. donald verrilli: you are exactly right in stating in principle, our argument in this case is that this question here is under and one a, -- n1a, says that epa shall regulate under this section if he determine that such regulation is appropriate and necessary. therefore when ep makes a judgment to regulate under this, it is appropriate and necessary.

justice scalia: well you're just seeing the argument is right. the agency must have arrested its decision. donald verrilli: i think that the agency in the order of being challenged here did use the approach. but beyond that it would be one thing if this were a case in which you had a situation that epa faced a situation where 50% or 75% were going to raise -- face vastly economic consequences. justice sotomayor: can i simplify your answer? [laughter] basically you have consistently in your brief, and the other respondents, basically said at the listing stage, we don't consider cost. we consider it later. everybody gave a few examples.

whether this was given or not is irrelevant. a few here was, do you have to do it at listing? it is only some of my colleagues who are concerned that when you issue standards, you never consider the cost. donald verrilli: that's exactly right. the question here is whether epa has to conduct a cost benefit analysis when it goes to listing. the logic of the statute doesn't operate -- justice kennedy: but at that point the game is over. donald verrilli: i don't think it is for several reasons. first, the standard under section 7412 d, for setting emissions standards, that does take off into account in the sense that a segment of the industry can operate economically. justice scalia: i don't -- i did not understand. i thought there were automatic requirements imposed once the

plants or listed. donald verrilli: once epa lists and defines a category, the automatic requirement is that applied is that everyone in the category has to match the performance of the best 12%. justice scalia: where did the categories come from -- i don't like that your friend on the other side was not permitted to mount an argument in opposition to this categorization theory that justice breyer's chambers devised. usually we have arguments on both sides. this is an argument i never heard of. i'm not sure it is right. i didn't know the agency to say we are just listing but we are going to categorize the listing. they didn't say that. donald verrilli: i understand your point about the focus or not focus of subcategories.

but the point that we are just listing, we see that over and over again. and in fact, the petitioners concede, this is at page five and six of the uart reply brief. it is just about listing. that is the way the statute works. chief roberts: you have responded to the fairly dramatic disparity your friends on the other side say, 6 million benefits, 9.6 million cost. you respond with a different calculation. the argument is raised that it is not quite proper because you are using your agp regulation to get at the criteria pollutants that he otherwise would have to go to and much more difficult process.

in other words, you can't regulate the criteria pollutants through the hap program, so were going to regulate and that is how we get the additional regulation. so it is an end run around the restrictions that would otherwise make -- give you less control. donald verrilli: there are several points i need to make clear. the first is that that is not an argument that any party has we -- reasons. one amicus reef raised it. justice roberts: well my chambers found it. [laughter] donald verrilli: here is the problem with the argument. once epa concludes that a source admits hazardous pollutants, that they inmate mercury at levels that are unsafe, i don't think petitioners dispute that. by the unambiguous terms of section 7412 d, epa is under an obligation to regulate all hazardous pollutants that a source admits. that is in a case called national line -- chief justice roberts: i understand. i'm just questioning the legitimacy of it. you found one that you want to

do is list, but you ought to consider only the benefits of regulating that. not be bootstrapped benefits. donald verrilli: the next point i would make is that it is not an end run or bootstrap. this is regulating the surrogates, it is a well recognized methodology that goes back decades. that epa has used for decades and the d.c. circuit has upheld for decades. that is an appropriate way to deal with getting on metals and other pollutants that would be hard to get at directly.

the very argument that your partner is positing here as an end run is one that was made in the same national line case to the d.c. circuit 15 years ago and the d.c. circuit rejected. the epa is doing -- they said that the section required them to do with respect to regulating every hazardous pollutant, and what the circuit that for decades, is permitted to do and it isn't an end run at all. chief justice roberts: the issue that raises a red flag is that such a tiny proportion of an event from the program and such a disproportionate amount of benefit that would normally be addressed under the criteria. it's not just that you are regulating one if it's a good thing, it also has benefits with respect other pollutants. but if your basis -- what is the

benefit from the co-pollutants? donald verrilli: many billions. roberts: what for million? so you say we get to regulate this. but we get to regulate it there is $4 million impact. but when we do that, it -- in a way that gives us $35 billion. i understand the idea that, it is a good thing if your regularization -- regulation on benefits in other ways. donald verrilli: i don't think that. i understand the petition is put the case that way. i don't think that is a fair way to put it. when epa did was quantify one of the public health benefits. it did not quantify many of the other health it. if you look in the joint appendix, this is 910 to 940. epa has listed other benefits that come from regulating mercury and hazardous substances that it did not try to quantify.

quantifying those kinds of benefits can be very difficult and challenging. that is one of the key reasons congress adopted 7412 but other programs, they were not taking costs into consideration at the listing stage but only at the regulatory state. justice sotomayor: could you tell me about the natural gas iago --? donald verrilli: it did not reach public health levels that would make them comparable to the coal. sotomayor: they were part of the listing but not regulated.

donald verrilli: yes your honor. justice alito: your argument is that under the last sentence of 7412 c one, the epa can create subcategories based in whole or part, on costs. is that right? donald verrilli: i think it is more subtle. it is not just that provision. numerous provisions. that allow for sub categorization. if there is such a vast difference in the technologies that the group of entities is using, there would be that vast difference in cost, there might be a basis to treat them as a different subcategory. justice scalia: why didn't the epa say that? i thought they said we are not going to take into account costs with regard to listing. they could have said, we're going to take into account costs as to whether subcategories should be listed and others should not be.

that is not what they said. they said we will not take into account costs with regard to listing. we list all of these utilities. donald verrilli: here is what they said. what they said was we think it is appropriate with respect to power plants, not to consider costs at listing and to consider costs at emissions standards settings. the reason we think it is appropriate is because that is the standard and regulatory logic that congress deems appropriate and also mandatory for every other source category.

one would have to conclude that what congress said was mandatory and therefore necessarily appropriate for every other category, was inappropriate and -- scalia: i did not understand it to say we can exempt some people from these standards because we categorize them differently. donald verrilli: that is fair -- they are argument, but the point of the logic of the epa's position is you make the listing decision and then you regulate under section 7412. these are provisions in section 7412 that gives epa the authority. justice alito: are there regulations that set out the interior for creating these subcategories? without them we don't know. donald verrilli: i do think -- it is going to be based on differences in technology and operation from which you might be able to infer costs. but that is hypothetical because this is not a case in which epa needed to confront the question

except with respect to natural gas fired power plants. because it did not have a kind of problem that justice breyer's hypothetical raised. you didn't had that can of problem. you did not need to face this issue in these cases. if i could just make this point, it is quite critical. given that 70 4/12 regulatory logic provides for listing based on health, and mission standard-setting based on costs, including consideration of costs. and paste on -- given that is exactly the same logic under one program and the motor vehicle program, the same under the new source performance standards program, that it -- if congress intended to mandate that the epa cut so deeply against the grain and such a radically different approach with this one category, you would expect to see very clear legislative language to

that effect. you would expect to see a direction to epa and 7412 to study costs before making a judgment. justice scalia: a question about costs. there are other costs besides economic costs. is it the agency's position that no cost can be taken into account? it may find that a particular material has an effect on health, but it may find that eliminating it will have other effects that are even more deleterious to health. could that be taken into account? donald verrilli: if i may answer, i think that will be taken into account in the oira regulatory, but not for the listing. chief justice roberts: thank you, general.

mr. smith: mr. chief justice and may please the court. we agree with the government that the epa was not required to engage in a cost benefit analysis before making the initial listing to regulate hazardous pollutants emitted by power plants applying the appropriate and necessary standard. i want to knowledge, clearly congress did think that they needed to be treated differently. but they gave them a three-year pause in which the epa was instructed to take account of the health effects of that particular pollutants emitted by our plans. he did this under an appropriate and necessary standard. if i can address the issue of what that means. i refer to page 226 of the national mining association

appendix. what the epa said consistently throughout this record is we look at two things. there was a claim made in the legislative history that these chemical not simply not harmful enough to require any further regulation, that there affects are negligible, and they looked at that under the appropriateness rubric. they said these are harmful, particularly mercury. they also looked at the question of whether or not there were technologies available to regulate them. the necessary rubric was used to look at the post clean air act post acid rain health effects that would persist. they said these are harmful chemicals, and under necessary they will continue to be harmful after the acid rain program has kicked in. that is how the epa saw the two different words. it is a perfectly logical way for them to proceed. justice scalia: who would've guessed? that seems such an artificial division of necessary and approve.

i didn't quite understand it. mr. smith: everybody concedes the necessary means that there will still be health problems after the program kicks in. the appropriate was intended to meet the claim made by the industry that these chemicals already are sufficiently carved -- sufficiently harm free and we don't need to regulate them. scalia: why isn't that part of the first one -- mr. smith that's the way the government : read them. they keeping his is the issues they were directed to study, the issues that were supposed to control the listing decision that come out of the power plants. if i can clarify one thing that happened at the listing stage. natural gas fire plans were not turned into a category.

natural gas fire plans, seeing we are exempting them from regulation under this section because they simply don't inmate more -- emit more than trace amounts. natural gas plants get taken out at the listing stage. we then have coal-fired and oil fired plants that they applied the subsection d standards. standards which were designed by congress to limit the emission regulations to read -- reasonable amounts, designed because the floors are in fact limited to what has already been achieved high plans in the same category. there was some question raised about whether or not this categorization was something the epa recognized incudes to affect -- it could use to affect the emissions standards and make

them reasonable. they did create a category of coal burning plants that burn lignite because it turns out none of those plants could meet the standards that would otherwise have applied with the other coal-fired plants categories. and they looked at the whole process. they started out with two coal-fired categories. they started out with one oil fired category. in the final rule, there are four separate categories. of oil fired plants, depending on what they burn. this whole process to produce emissions standards that makes sense was built into subsection the -- justice kagan: could you clarify the categorization happens after the listing?

mr. smith: host: yes, your honor. what they listed was all coal fired plants and all oil fired plants, but no natural gas plants. then they go to the question of what admissions standards could occur. they have a process of seeing what are the categories going to be. we have to get information at that point. what did the top 12% of the category are emissions. justice scalia: aren't these above the minimums that automatically applied? the categorization that allows you to reduce some people, and not reduce others, that applies to requirements about the minimums, no? mr. smith: the minimums i do things that are set by mathematical

calculations from the categories. justice scalia: yes. mr. smith: the only thing that is done using not express consideration of cost, but indirectly basing the regulations and what the top 12% are doing, is the minimums. the minimums i been altered depending on what categories you establish. that is the way they do for all the sources regulated. justice kagan: just to clarify. you categories one way, the minimums are down here, you categorize another, the minimums are up there. it can make a huge difference in terms of minimums. mr. smith right. : there is a notice and comment process. they put out proposed categories. they tell them -- they get

comments and make different categories. justice alito: how can we tell the degree to which costs without knowing the criteria for creating subcategories? mr. smith: it is in the statute. justice alito: no, the 12% came into play after you created the category. mr. smith: right. justice alito: how do i know they create the subcategories? mr. smith: you can see it in a notice of proposed rulemaking. what happens is people comment and say, we are so different from that category. we have special problems. justice kagan: it is a rulemaking after the rulemaking that applies to the listing, is that right? m.r. smith: it is totally after that. if the second phase. justice breyer: you confirm it was not made up in my chambers. [laughter] mr. smith: they did a wonderful [laughter] justice breyer: the congress -- the brief said unambiguously required epa to consider costs

at the second stage of the process. that is what it said. a few pages later, they have the statutes. i read the statutes. reading that leads me to think it works along the lines you just said. if he did at the most expensive set of generators in the world you would ask epa to create a separate category in which case the top 12% would no longer be in your category and you wouldn't have to do it. when asking is, if you think it is the system, that is what i read in the statute. is there a treatise? an explanation that the epa has put out so it is clear it was not made up and it is clear the system is following that?

mr. smith: the only thing i can supply you with is the notice proposed rulemaking in the final rule. the process is laid out in detail. justice sotomayor: i think justice -- chief justice roberts: is there something in the administrative record where the epa. that, when somebody says you are not considering cost, we are going to the supreme court? and then epa says, no we will consider cost. is there a reference to the administrative record where their something like that? mr. smith: well they certainly said, in the notice of proposed rulemaking, that we interpret the listing decision as being something that is based solely on health and not cost. justice roberts: i want to know there's anything there that says don't worry because we are considering cost through categorization. mr. smith: that was so implicit in the whole system. this has been in operation since

1990. chief justice roberts: implicit usually doesn't work. mr. smith: they gave everybody the opportunity to attack the categories that they proposed. justice kennedy: i thought the position was that he didn't need to consider cost that the first step and that would include your initial category. mr. smith: the categories are the second step. justice kennedy: but you didn't take that second step. mr. smith: yes they did, they categorized oil fired plants in four categories. justice kennedy: you say that was done based on cost? how much did that save. justice scalia: did we know how much of the 9.6 alien dollar cost would be reduced? mr. smith: i don't have that

calculus, but something like 90% of that which is most of the $9.6 billion, has already been spent. and industry has not experienced the kinds of the peoples that are being described. the rule takes effect in the middle of april so the idea that the result was somehow ludicrous or outlandishly expensive, is belied by the fact that the industry is bringing itself into full compliance. justice scalia: instead of going to jail? it might be ludicrous but i had to be done. mr. smith: the other thing i would say is the $4.6 million benefit is the proper comparator is wrong on so many levels. that was one single health benefit related -- justice kennedy: is the $9 billion a year recurring annually or are you saying most

of this is capital investment one time? mr. smith: most of it is amateurish station of the capital expenditures that have already been made. 40% will be operating costs, 60% of annual costs. the industry has been able to do this, and the situation is we are ready to have national standards. the states will continue to have mercury flowing across state lines. we have this national competitive electricity market were some companies have marginal cost and some don't . that is a problem that needs to be solved. justice sotomayor: finish your thought, the 4 million -- 4 billion that they are referring to is only mercury. the agency did not quantify other costs for other? mr. smith: it did not quantify many if not most of the others.

it causes cardiovascular problems. it is an extremely poisonous neurotoxin. that is a particular reduction. some of it is not mercury metals . it is the acid gases which turn into particles because they become aerosolized, go into your lungs as tiny droplets. all of those are being taken care of in the controls of the particulate. it is true that in controlling those, you use the same technology and you end up controlling a lot of other kinds of particulate. primarily sulfur dioxide which

causes premature deaths. so when they did the calculation they said we put these particulate controls and to control them. it happens to save a lot of lives. justice alito: was this the basis for the decision? i thought the epa position was, does it matter how much the benefit or costs exceed the benefits. we will just not take cost into account at the listing stage. mr. smith that is correct. : they did not consider the cost benefit analysis at the listing stage. the statute, it's conceding you don't do the cost benefit analysis of front. -- upfront. the statue came out of the time of regulatory paralysis of 20 years. the epa was not regulating effectively. congress came in and said we are going to force regulation. of these chemicals being spewed into the environment. it gave one benefit to the power

plant industry. a set, you have three years. there wasn't health effects that are serious. but it did not give them the benefit of having a cost benefit analysis done up front. or create all of the discretion and the world on the part of the epa. chief justice roberts: thank you, mr. smith. mr. lindstrom, you have four minutes. mr. lindstrom: thank you. any sub categorization is going to happen has already occurred. we are talking about the role that has been promulgated and despite any sub categorization there's still $9.6 billion in costs. they are being imposed on a annual basis. justice sotomayor: it wasn't the question presented. is the question presented not that you have to take into account at listing, but somehow that ratio makes any emissions standards wrong. even if for some people, it's

really not backbreaking to do it? lindstrom: the question is cost have to be considered. justice sotomayor: that is at the emissions standards. lindstrom: what happens under 7412c is you have a floor standard and and above the floor standard. you are taking out the categorization. justice sotomayor: do not establish the floor until they categorize. lindstrom: the steps armor. -- are merged. that is the language of the statute, it says it is such regulation appropriate or necessary. it is looking at what is actually going to happen. that is why it is both at the

same time. they published the emissions standards, they are looking at the cost to have because they did not know what the cost would be. justice scalia: they made the categorization decision without cost? lindstrom: we did not consider cost. that is correct. i would like to return to one of the principles which is this falls on what the agency did. we have made determinations that the costs are not relevant and ignored an important part of the regulatory problem. justice sotomayor: the proposed categories everybody had the opportunity to say it is the wrong category. and argue why it is the wrong category. and some people submitted complaints about cost relative to technology and plants,

correct? lindstrom: yes, your honor. justice sotomayor: so it is not true that the proposed them but everybody gets a chance to tell them that the technology is different than the others this kind of plant is different than the others and the cost is greater than anticipated. lindstrom: to say we are past that phase, it has already been done. justice sotomayor: it is past because the final rule has been issued. i am talking about during the rulemaking process. the rulemaking process does below the agency to consider the cost of technology. lindstrom: may have adopted the opposite is that cost do not matter. breyer: they look, we've have special ways of producing

so please do not put us in the same category that we put other people in for purposes of the 12%. and the agency said right, separate. did that happen? lindstrom: yes. breyer: i do not know how we can do that without considering cost. lindstrom: i do not know how to did it but there's and throughout the they are not considering costs. thank you your honor. >> the case is submitted. >> president obama and cuban president raul castro held an informal meeting this afternoon in a small room in the convention center where the summit of the americas is being held. it is the first meeting and happy century. president obama said "this is obviously an historic meeting. we are in a position to move towards the future."

the says the majority of americans and cubans have responded positively to the policy change. after they spoke fish all caps. the human presidents -- they shook hands. the cuban president spoke through an interpreter and said that they can have differences in respect to the ideas of others. they need to be patient. president said that among the immediate tasks, opening embassies in washington and havana. >> the house and senate return on monday. we talked with a capitol hill reporter about what is ahead this month. bob spence: with congress it to return, reporter laura ballard lopez -- baron lopez geared to

give us an overview of the next two weeks. this coming week they planned to mark up the chairman and spell on the nuclear framework agreement and laura baron lopez you write about it in your article "gop stood fast -- steadfast on passing iran bill." what kind of support does it have? laura barron-lopez: thank you for having me. what senator corker's bill does is give congress a chance to weigh in on the iran nuclear deal, the framework that the administration announced last week. and so it either, they will vote on it, but for the framework or vote against it, and do nothing on it. it puts a halt on whatever final buildout for 60 days. there is a good amount of support within the republicans

but there do need democrats to come over in order to get a vetoproof majority. bob spence: also next week, the budget resolution which passed the house and senate heads to conference committee. you tweeted yesterday that the house budget share and senate budget share met to chat -- budget chair and senate budget chair met to chat. what do they need to work out? laura barron-lopez: they need to work out the difference in defense spending. people aim to boost military spending but they have different amounts in the budget -- both aim to boost military spending what they have different amounts in the budget. also obamacare. bob spence: turning to the senate, the anti-human trafficking bill was at an impasse to abortion language.

what is the status of that and how does that impact moving ahead with the loretta lynch nomination for attorney general? laura barron-lopez: it impacts loretta lynch a lot because senate majority leader mcconnell has said they are not going to be moving forward on the nomination unless the human trafficking bill is pushed forward. like you said, in order to have the vote, the new to figure out the abortion language on the bill. bob spence: you wrote regarding the house that the first 100 days has been a learning process for the republicans. tell us why that is and what we can expect the wise -- bilwiselwise over the next few weeks. laura barron-lopez: as you know the senate is not controlled by a republican majority and it has

been a rocky start in the house and senate. in the senate they spent a month and a half on keystone knowing it was going to review note was speaking to senator john boehner and they made a commitment during the election that they were going to vote so it was a matter of honor. in the house it was the dhs battle followed closely by a budget debate where the house gop leadership had to put different budget plans on the floor to make sure that one past. -- passed. they had to work with their deficit and defense talks ahead of time. i spoke to congressman mulvaney who is pretty upset with leadership he is a republican from south carolina and he was saying he wants more conservative amendments to be heard, their voices to be heard so it will be interesting to see

how that plays out in the months ahead. when they get back this next week house majority leader kevin mccarthy is going to be focusing on tax bills. there is also the possibility that they will vote on the reauthorization of the patriot act. bob spence: laura barron-lopez: of the housing can post. you can catch her on -- huffington post. laura barron-lopez:, thanks for a much for being with us today. laura barron-lopez: thank you. >> the annual white house correspondents dinner is april 23 and we will have the program live on c-span. leading up to what we will show you presidential speeches from past dinners. tonight, president clinton president george w. bush, and president barack obama's remarks in 2011.

it begins tonight at 9:30 eastern on c-span. >> virginia governor terry mcauliffe outlined his state's early childhood programs yesterday at an event hosted by the center for american progress in washington dc. governor mcauliffe said that it is a cost-saving measure of that ensures virginia will have the workforce of the future. this is about 30 minutes. >> good morning everyone, i am thrilled to have governor mcauliffe here today. neera: we will discuss the values of states and communities taking action on early childhood action. really happy to have him at the center for american progress. he has been a leader on this

issue as on so many issues. early indications are that it is a bright spot in the national policy landscape. it brings together diverse leaders at the city and state and federal level. at the state level and local level, we have bipartisan leaders who have been really focusing on these issues. i believe that is because really there has been incredible data points on the return on investment we get from early learning. early childhood programs not only even the playing field for children as they begin kindergarten, they also build a workforce that can drive future economic growth and ensure american businesses remain globally competitive. that is one reason president obama has called for more investment in early education. in december he brought together stakeholders including state and local policymakers, mayors superintendents, corporate community leaders, and advocates to discuss the importance of

early education and to harness funds for early education. the next steps are to help communities implement proposals. state and local leaders are rushing to answer the call. states like pennsylvania georgia, virginia, and cities like boston, indianapolis, and columbus have increased funding and expanded access. we are thrilled to have leaders from those communities today. but i am particularly honored to introduce governor mcauliffe who has really focused on investments in early education. it is really from that perspective of human capital. we know that virginia is growing, growing very strongly. it has its lowest unemployment rate in 15 years. at 4.7%. congratulations, governor mcauliffe. congratulations. [applause] neera tanden: i think it is

really the leaders focusing on the long-term, ensuring that those businesses will have human capital needs met not now but well into the future. that is where early investment makes sense. if you are investing a lot in k-12 it makes sense to invest in the early years as well because we know that is the even start that kids need. we are honored to have governor mcauliffe here. he understands that prioritizing early childhood programs is essential to the virginia economy in the 21st century. and he has been instrumental in securing extension grants from the u.s. department of education. which will allow the commonwealth to serve an additional 1600 students in high-quality preschool classes in the first year. so we thought that it would be critical to have his voice year here -- here are because he

understands this not just as a governor but as a community leader that recognizes it as an important issue into the future. governor mcauliffe? [applause] governor terry mcauliffe: good morning everybody, it is an honor to be here at c.a.p. and i thank the center for american progress for inviting me. the deputy secretary of education is here with me as well and we thank you for the opportunity. this is an important topic in the commonwealth of virginia and i would make the argument in the entire country. early childhood investment, early childhood education, i make the argument, will determine the kind of workforce you will have for many years to come and if you are going to be competitive in a global economy, you better start early. it is an investment. when i became governor i inherited a $2.4 billion budget deficit that i had to work through so to convince folks to say, take money and invest here and tried to -- try to close the

budget deficit at the same time is challenging. we were able to do it. because we have consistently made the point that this is an investment avenues is an -- and it is is an investment that will return over and over. i want to thank the center, this is such an important issue for virginia. and i would make the argument for the entire country as a whole. we have made tremendous progress in the commonwealth and we have a lot of work to do going forward. when i ran for governor in virginia, one of my campaign promises was an investment in pre-k early childhood development. i found it very important, it was one of the main things i ran on when i talked about workforce diversification and the economy. i knew that i would face headwinds. the leaders of the general assembly basically, there are only 32 of the 100 democrats. i knew i had a challenge.

the head of the delegates told me that pre-k was a total waste of money and something they were not interested in. i knew i had a challenge ahead of me. for me, what i had to do was encapsulate early childhood development. into growing and diverse of fighting the economy. virginia is very unique. -- diversifying the economy. virginia is very unique. we are the number one recipient of department of defense dollars. number one in the country. we have the largest naval base in the world. we have so many military assets, the pentagon, the cia, quantico. so when defenses funding it is great but when they are cutting back it has a dramatic impact on the economy. sequestration is a big marker for virginia and it could have a crippling effect on the economy. what i have tried to do was work with the general assembly to say that we have to grow the economy and be less reliant and build a diversified 20th century economy. human genome sequencing, cyber security, all of the jobs of the

future. you cannot do that without the best educated workforce. the issue becomes when do you start education? this is something that became important working forward to building new economy and bring them jobs. we have been very successful in virginia, very low unemployment, 351 economic development projects. we have brought in $6.44 billion of direct investment into virginia. not that anybody is counting but that is double any governor in virginia history. not that i am counting but it is important. because of the successful job creation and economic development i was able to forge a bipartisan relationship with the general assembly which realize that he is creating jobs so let's work with him which has helped us to move the ball and we have made tremendous progress. i don't about the economy, it is not just education.

when i became governor we have legislation as it relates to women's issues. we have ended all about. we were going to shut down women's health clinics and that is gone. i have tried to make virginia open and welcoming to everybody i was the first candidate to come out for gay marriage. i did an executive order to allow gay couples to adopt. i am the first southern governor to perform a gay marriage in the world and the sky did not fall in. [laughter] governor terry mcauliffe: my point is, open and welcoming. if you want to come to virginia and set up a business than we want to. investing in your education. historically, in virginia, on education. i recognize that we have a lot of things to do in virginia. 52% of our three and four euros were not in school. think of that. -- four year olds were not in

school. think of that. with incomes below $20,000, 60% of the children were not in school. as i said in my state of the commonwealth address in january if we are going to lead in a global economy we cannot wait until students reach kindergarten to begin preparing them for economic success. research tells us that 90% of a child's brain development goes on between birth and five years old. the point i am trying to make, but not pick winners and losers at birth. -- let's not pick winners and losers at birth. your future should not be dependent on your parent's financial condition. if you do not do everything possible to maximize learning in early years i clearly realize these children will not reach their full potential. and as a business person i can tell you that you invest early guess what?

it saves you money on the backend. this is a cost-saving measure. it gives me the tools to be successful. 73% of our four-year-olds in virginia today or not enrolled in publicly financed preschool programs which amounts to 76,000 children. more than a third of our young children live in economically depressed communities. they desperately need a generation of educated, highly skilled workers. we have parts of the commonwealth. we have seen the loss of oil textile, furniture, and tobacco. these have been ravaged by jobs going overseas, changes in economic conditions. we need to bring business back into these communities and you cannot do it unless you have a highly educated workforce and that workforce i would argue startup rechecked. -- starts at pre-k.

i make the business case every day to expand the pre-k initiatives. first and foremost i believe this is the partnership that we have established with the business community. i would make the argument to every elected official here, why we have been successful in virginia is the virginia chamber of commerce and most community leaders have come out wholeheartedly to support the initiative. our virginia chamber of commerce , it is fair to say, probably about the most liberal organization ever put together. it has wholeheartedly supported my efforts on this and they came out with a blueprint virginia and said that the number one goal from the chamber of commerce's early childhood -- his early childhood preschool. do have the business community it had -- to have the business community, this has made opportunities to work with the

legislature. the top corporate leaders recognize in virginia that we will need 2 million workers in the future to support our state's economic growth. we are doing great in virginia, we have new businesses coming in, i have announced 351 economic development projects. we have brought projects in from all over the globe. i was one of the most traveled governors, i went to china and korea and europe. the largest investment by a chinese company ever into the united states, we just want that in virginia, $2 billion investment -- won that in virginia, to billion-dollar investment. we opened a new plant at appomattox. wonder 50 years ago, generals lee m grant ended the civil war -- 150 years ago, generals lee and grant ended the civil war.

we brought a company back, and old, shuttered furniture facility. we reopened that facility and turned it into a manufacturing facility. and that manufacturing facility is now making pollution control devices. we are taking the pollution control devices, taking them to our report, the deepest on the east coast, and we are shipping them back to china and selling them back to china. you want to talk about a new economy, but is a new virginia economy -- that is a new virginia economy. i was able to convince the ceos in china that we will have a workforce 10 or 15 or 20 years from today. they will not invest unless they are convinced you will have a workforce for 20 or 30 years and it starts with early childhood education. everybody is beginning to get on the bus and figure out what you need to compete in a global

economy. every governor faces the same challenges that i have today. growing and diverse defying the economy. i think we have gotten to the point were preschool, early childhood education is not a partisan issue at all. it is bipartisan and everybody needs to work together. as we move forward or do want to thank the department of education. as neera mentioned, junior was one of 18 states to receive regret that provided us with $17.5 million in the first year and they will continue. this was a grant that was hard to get, it was competitive and i am proud of the education team at work to get this together. the secretary of education, who happens to be married to the senator, so it is all in the family in virginia. as a result of this grant, we will serve 13,900 low income

five-year-olds in a high quality setting in our virginia high school initiative. we have identified 11 school district for participation with a concentration on poverty, the number of schools that are title one schools in the region, the number of unused slots available to the existing state pre-k program. you give money out, there has to be a match at the local level and if the community does not use it i sponsored legislation to prohibit using it in other areas. if you have funding slots and the other community wants them you want to be able to use them. common sense but it was not the easiest battle. finally, the percentage of students not meeting literary benchmarks. we have developed an innovative model that builds on the program to go forward and the program currently serves today more than

18,004-year-olds who are at risk or have faced failure and do not get into the head start program. the key ingredient of the program, most importantly high quality. more than anything else, it is the quality of that teacher in the pre-k. to get that young mind in their and get them excited early on about learning. i joke with my education folks when we have the meetings, every child that comes in, i want a creole book that says stem -- crayola book that says stem because we have to get them excited, all of the avenues we need the brands to be opened up on. we have state-of-the-art measures developed by people at the university of virginia. we want a child of the and staff ratio of 9 to 1 and we

concentrate on parental involvement. we can do whatever we want in the school but wants to go home -- once thweyey go home if the parents are not engaged it diminishes what we are doing. getting the parents involved is so important. we have support -- expected it to increase services. i can tell you or a stories i've heard from futures in certain parts of the commonwealth in virginia when some of the children come to school. the close that they have, -- c lothes that they have, said, sad stories. pre-k, we are changing the whole way we look at it, a 360 degree approach. i have started what we call a children's cabinet. i just passed legislation for

pregnant women in virginia who for the first time have access to dental care. it is important that women have access to dental care. it is important during the birthing process and we continue it for six months after. we have to have strong community partners. we are spending $68 million now in state funds for the program. and this grant enables us, we got just the other day to do more to address the communities that are struggling. if the local community cannot make the match, the money will help. we have communities that want to go to some step forward and we are to be assisting and the federal grant, i cannot thank them enough to give that to us. we will see the results very shortly and it is important that we work together on this but as i said we have put this in concert not just with the education department but with

our secretary of commerce who was involved in putting the whole program together. i tie it all into workforce development. when they are working together in the community talking about education we are also talking about job growth. dorothy and i have five children and we want our five children to stay in virginia. they will not stay unless we have the jobs for the 21st century because it is a global economy and these children will go anywhere. to get them to stay and build the economy is starts with education and early childhood development. i also want to thank robert, a world-renowned researcher who was probably one of the best researchers in helping to put these programs together. we have a great public and private partnership with together and i am excited about the future that we have in the commonwealth of virginia and i will say to elected officials that the key to all of

nothing better than success when you are bringing in jobs, and making that argument, people understand that. you have a great ability, i think, to move forward. i would just say, finally, as i speak about the 360 approach, my wife dorothy, wife of 26 years. what a statement. imagine if you are married to me for 26 years. she is a saint. her whole initiatives going -- we have 3000 children who go to school hungry. let's be crystal clear. you can't learn or expect a child to go to school who is hungry. they will not focus on learning. our goals is to end hunger for all 300,000 children that go to school hungry. we have made tremendous progress. i also want to thank the department of agriculture. we just got a tremendous grant

for several of our school district to feed children three meals per day for 355 days per year. we are one of five states who got this award. it ties to health, nutrition and early childhood learning. i wanted to come here and say thank you. we are stepping up front on childhood education. we are taking a 360 degree approach to doing what we need to do. the numbers we have, you just look at the statistics, those who have some type of pre-k education, when they going to kindergarten, as you know, 90% of those children -- actually 97% -- are excelling. only 3% are not. for those that did not have a pre-k education, the number of those not excelling goes up to about 30 percent. from 3% to 30%.

those metrics speak for themselves. it's an honor to be here with you. i thank you for inviting me here today and i look forward to taking some questions. [applause] neera: we would love to get questions from the audience. when you answer questions, tell us who you are. thanks so much. thank you again for being here. i think you help does understand something that has been a little bit of a mr. to me. so many of the benefits of decay have been -- i mean, the benefits of what you are making will happen really when you're no longer governor. in a way, it is one of these issues where you are not going to see the direct benefits, or capture all the benefits of the decisions you are making now. the argument is that you can

attract business. are there other ways -- basically, why do you spent all this time is the jobs created because of human capital will help some future governor? gov. mcauliffe: it will help a future governor, by would make the argument that it helps me -- we have shared all investment records in my first four months. i have to tell you, i travel all over the globe, i love to bring new businesses. that is why ran for governor. at the and of the day, all governors consider in the office and say they want to invest in this or put money here -- none of that matters if you don't have economic activity to invest in the parties that you have. i would make the argument, as i job around, one of the things that constantly -- i'm pretty good at sales and i really enjoy

it, i have fun doing this, as you can tell -- education is the key. honestly, i can't stress it to anyone else they're trying to bring business to their state. if the project we brought to china, a $2 million investment if they did not think that 10 years or 20 years, that they would have that workforce, they would not come to virginia. my main argument that i talk about, with great universities all of that, i talk about three k. we are starting our education system early. in all fairness, would you go to asia, they are doing it. let me be clear here, we are competing. they go to slow longer and more days than we do here in the united states of america. they are keenly attuned to what we are doing on education. for all governors and elected officials, you better get in the game on this or you won't get the business. they are smart. they are determining where they will invest their capital.

i can make the argument that pre-k -- starting education early is one of the best drivers we have. can just talk about it. we have to show that i put money in and got back much more. neera: there was a study that showed exactly how much china, india are ramping up their 0-22 investments. they are in a major path, like you said, most kids are in pre-k, early learning. gov. mcauliffe: studies show it. i just cited a study. 97%. these are metrics that we have. some of the people on the other side have argued -- one study out shows that after four years, they forget everything they learned in pre-k. you go talk to multiple pre-k teachers. they will say it is night and day for kindergarten teachers, they know who have had pre-k.

neera: what of the great things about pre-k is it is bipartisan. you see governors like yourself, but also the vulcan governors leading on these issues. we have had a little bit of a challenge on the federal level to create that same level of bipartisanship. is there anything that we can learn from your efforts to generate bipartisan support? gov. mcauliffe: as you mentioned -- i see we have c-span here -- i hope the department of education, some members of congress are watching. we need reauthorization of the elementary and secondary education reauthorize. like transportation funding and everything else, it is very important. i will be honest with you, as governor, it is very hard for us to plan. we cannot make long-term decisions unless we have some certainty.

that's why sequestration -- we have to get our act together. we can afford the cuts to the military that we have today. the office of transportation how are we going to fund transportation? i have 300 50 projects that will stop immediately and virginia if they don't do the authorization for funding. they have to understand, we are competing on a global basis every day. i'm competing against 200 nations every time i get out of bed, every day. if they continue to show uncertainty and an and ability to make decisions, it affects us on the state level and clearly affects every governor and every state. i'm glad you raise that question. let's get this reauthorization done. the numbers speak for themselves. this is important for all 50 states. this is important for america to allow us to compete on a global basis. neera: i told the agree. lessons from the audience. >> dylan. virginia has excellent

universities. are there ways to engage those universities more in this effort? gov. mcauliffe: great question. we have. university of virginia is our key strategic learner. they are a part of the children's cabinet. the children's cabinet -- i actually asked my lieutenant governor who is a pediatric doctor -- university presidents are all part of that children's cabinet that we have. all of our pre-k, all of our education, i make sure we have community leaders, education leaders, but uva provides of a lot of the research data that i provided here today. you are right. we have great higher ed institutions. they want to be involved. we can do a better job when i talk about -- the key elements teachers are pre-k we could do a better job getting those institutions to train the teachers and get a pipeline of

teachers as they are graduating. i will beginning several commencement addresses this year. one of my things will be, i need you, now that you have an education, i need your help now to plant the seeds. neera: i know we are tight on time because the governor has to go see children in virginia. i want to thank you for your remarks. we will bring up our panel. i really want to thank you for being here, and more importantly for everything you're are doing for kids in virginia. thank you very much. [applause]

ms. martin: i am carmel martin. executive vice president here at the center for american progress. it's my pleasure to introduce a panel to build on the conversation from the governor. we have representatives from the federal, state, and local level to continue to talk about the challenges and opportunities related to early childhood education. i will briefly introduce the catalyst to you and then we will move forward -- panelists to you and then we will move forward with the conversation. first, in the middle, we have john king, senior adviser of the office of the deputy secretary at the department of education. he has served at the state level in york. during his tenure as

commissioner, new york was national leader in many facets of education, including increasing educational opportunity for students and heidi's communities. john has been a high proponent of increasing levels of education, and cofounder of roxbury preparatory schools. he has been closing the achievement gap and encouraging students to graduate from college. to john's right, we have mayor andy berke who joins us from tennessee. mayor berke secured a grant from the department of health and human services. the largest grant awarded to chattanooga, allowing young children to start in education for to others.

he started in the state senate where he was vice-chairman for the democratic caucus. he was also a leader on "first to the top," at the u.s. department of education, and transformed the state system of education. last but not least, we have virginia's deputy secretary of education, jennie oholleran. jennie previously served at the george washington university where she worked with government and community leaders to promote gwu's campus and aspirin. i think i panelist for joining us today. i will dive right in. i will start us off -- start john, with you.

if you could talk a little bit more. we are lucky enough to have two recipients of the department of education grant funding. maybe you can give us -- and we will talk to each panelist about the plans they have to use the funding, but you could give us a broad national landscape of the grantees that you will be working with and then we can move to more specifics for chattanooga and virginia. mr. king: sure. thank you for the opportunity to be a part of the conversation. president obama has had a priority of expanding education. we have tried over the last six years to not only expand access to quality. preschool grants are one aspect of that strategy.

we are investing $150 million in 18 states to expand -- we have 300 60,000 more students being served because of the preschool development grants. we had quite as many applicants. a secretary talked about getting calls from governors, some republican, some democratic, expressing their disappointment that they did not get access to those resources. we see the pre-k developments as a down payment to what will be universal access to pre-k. the president proposed adding an additional $500 million to the grant. we hope to grow the number of states that are participating. what you see states doing with these dollars is not only opening new seats but improving teacher quality, connecting preschool with support for

families including health care and community-based organizations helping parents better support their children. we really are -- we hope galvanizing and effort. what you have seen over the last few months, like the state of the state address, you see governors all over the country like governor mcauliffe prioritizing investments in early learning. ms. martin: can you tell is a little bit about the impact of having additional funds in the area of early childhood education? mayor berke: we really got that largest grant in the state of tennessee. i want to say to john how great he looks today. 1000 of our students are ready for school, we know that. as mayor of a city that does not have the school system like many mayors have, we have a county system, we look at the areas where we can make an impact.

for me, it is the 0-5. if you look at the statistics at kids to enter kindergarten and are ready to learn, many do not catch up. many who make progress from year-to-year, they reversed back during the summer, and it is hard to catch back up. for us, we focus on the 0-5 space and the summer space. if you think of those thousand kids who are not ready for school -- i will also say, as governor mcauliffe says, you can hear it in the teachers. to say, i was at one of the schools that is lowest performing in our county. the principal told me that many of her kids come to kindergarten with 400 words in the vocabulary. typical american student comes with 4000.

for her, she spends a lot of the first years with kindergarten teachers trying to figure out how we close that gap of 400 words and 4000. ms. martin: jenny, can you tell us a little bit more? it was great to hear from the mayor about plans for virginia can you go in more deeply? ms. oholleran: we are very excited about the opportunity to participate. you can hear the governor's excitement and it goes down from there. we are thrilled. three things we are looking forward to doing with our grant is first and foremost serving more kids in higher quality settings. you heard the governor say, over the course of the term of the grant, we will serve 3000 kids in higher quality settings. the second is research and evaluation. we will use the data that we collect from the grant to better inform our system.

we will be able to track the kids and see how our investments have paid off over the course of time. third, that will inform our third important goal which is looking at state policy and how can we take the lessons that we have learned from this grant and make policy decisions at the state level to invest more and more effectively. ms. martin: it seems like in all three contexts -- state, federal, local -- with respect to tattered education is ensuring that across sectors ensuring -- would you like to speak to your efforts of integrating better education for an overarching goal of readiness? ms. oholleran: for us in

virginia, it is very important for us that we create this network and work with our private providers. we see early childhood education as a public-private initiative and the state and local initiative. virginia is unique in that we have a one term governor. we have for years to accomplish a whole lot. we need to be sure that we have partners in the private and public sector who are on board with this early childhood initiative so that we can sustain it beyond our time. one of the things i did not mention that we will be doing with our grant is working to increase quality and some of our nonpublic partners to create classrooms in nonprofit settings or private settings. for us, the network is really critical in increasing quality across sectors. mayor berke: one of the biggest powers i have as married is the power to convene people. we try to gather in all kinds of

areas, not just education, but all of our service revisions. more and more, our goal is to get people in the same room and make sure we are sharing ideas and best practices. we are certainly doing that in education area, especially the baby university, which i'm happy to talk about later. for me, it is leading by example and being sure that we are doing what we need to do. chattanooga had a high-quality head start program. we also knew that we need to look at that and see whether it was of the highest quality we could provide. sometimes high-quality means not just instruction, but also that you obey regulations. like most things that come from federal government, there are a lot of regulations that come with headstart. we actually went over the head of -- the head went over to pay attention to what is going on in

the headstart program. when what he found is unfortunately, because of being involved with young kids, these kids had to wash their hands all the time. you have to watch before you paint, after you paint, before you snack, after you snack. they were leaving the classrooms all the time -- teachers were with the kids. he came to me and said, for $80,000, we can blessing and every classroom and at probably about 1.5 hours of instruction time. you would not have done that from the evaluations. we do all the things that we have to do, but these commonsense ways of saying, how do we add instruction time to teachers -- who are doing a great job in the classroom, but figure out how do we comply with what the federal government wants, bad education time is important. mr. king: one of the things i

think the administration has tried to do is invested qualities of education. you have 20 states working around quality improvement. part of that is doing programs and doing feedback on instructional programs, the quality of the socioemotional environment. part of that i investing in data system so we have information about who is being served and who isn't. that can inform what are k-12 system provides to families. also, this work of teacher development, and making sure that teachers have good training, literacy development are able to teach students how to share well, express themselves.

those kinds of supports are also investment. ms. martin: do you want to tell us more about baby university? a very exciting initiative for the very youngest of our nation's children. mayor berke: as governor mcauliffe said, i think it is hard to think of childhood development without thinking of strengthening families. we know that childhood education has to be good, but that families are in power to make the best decisions possible. as we strengthen families and give them better support and what they do, that provides immediate dividends today in our workforce and in our communities. what we decided to do is bring social service providers together, partner with them on what we are calling "baby university." that is about giving parents the best information that we can. the great example that comes to mind is -- we were try to figure out what to do in this area, and we had a roundtable discussion

with expectant mothers. this one woman who was probably about eight months pregnant told me that she had a four-year-old son. the four-year-old son was hard to control, disobeyed her a lot, and now she had another child on the way. she also told me that she had been physically abused by her father as she was growing up. she really didn't know how to discipline her son without doing to him what her father had done to her. she wanted to know, what do i do? we want to provide people with that kind of education so they can make good decisions and strengthen our families from day one of birth. ms. martin: we have these beautiful posters here on, "invest in us," which is an initiative from the obama administration. can you tell us a little bit in that? i think it goes to jennie's

point on public-private partnerships. mr. king: the idea is to bring together elected officials philanthropic organizations, and others. the partnership between obama administration, the first five years fund. what we have been able to do is galvanized a large number of philanthropic contributions. over the summer, we were able to raise over $300 million in a variety of areas -- from the buffet organization expanding education in omaha to an organization investing in no signs research, the joy foundation in teacher development initiatives and how we better support our educators, and they are also working to organize communities so that

they can think creatively of investing their resources in early learning. ms. martin: one of the things the governor mention is the need to ensure that as you expand early education programs, they have in place high-quality teachers -- in the expansion phase, that can be difficult you need to catch up -- where are things you are thinking about in that space? it sounds like you're partnering with some folks. how can we talk about in a transition phase? ms. oholleran: the first part of the answer is that we will scale up. we will not serve all of the extra kids in the first year. our of the reason why is because we need to know that high quality teacher workforce. the second part of the answer is as you said, partnering with the private sector as well as our institutions of higher

education. we are so blessed to have so many wonderful researchers in virginia helping us with this initiative and so many others. we will be looking to the university of virginia to help us lead the way on this initiative. i think -- the other piece of it is the governor will be making some editions this coming spring to inform the success in early childhood education. teacher quality will be a piece of as well. ms. martin: the governor also mentioned the desire to move forward the education act, which has strong support. one of the big priorities is that we move forward with that legislation. we think about how we can improve the federal programs that impact k-12 education, but

also that commerce recognizes, what the government, mayors, the nexus between childhood education and elementary and secondary education. we are hopeful congress will include in the reauthorization a larger federal commitment to some of the programs we have been talking about, exist in appropriations land, but not in authoring land, which might not interest people out in the real world, but it makes a difference in washington. i wonder if any of you would like to speak to that to the importance of additional federal action in the context of elementary and secondary education act of further support early childhood programs. mr. king: you mentioned the secondary education act, which i'll now discuss. it was adopted in 1965.

secretary duncan spoke about that yesterday. to think about the elementary and secondary education act of the civil rights law, the voting rights act of 1965, elementary secondary education act is part of the effort to expand quality of opportunity. one of the most important ways we can expand opportunity today is by investing in early learning. we put out -- early this week that said 40% of students are enrolled in the major public early learning programs, like preschool to limited grants programs or head start. we got a lot of students who need the opportunity to get high-quality early learning so that they arrived at kindergarten ready, so students get to school with social skills they need to learn effectively in the school environment.

we have an opportunity in the reauthorization discussion to express the real national commitment to early learning that school does not begin -- learning does not begin in kindergarten. preschool has to be what we think about. we're hopeful. senator alexander and senator murray are discussing this. senator murray has been a longtime champion of early learning. we hope to see some movement on this issue. ms. martin: you had mentioned that there was not a -- between the county running the school system and the city level. do you feel -- how big of an obstacle is that given that we really do need to make sure that the programs are aligned with what is happening in the school system and they need to be reinforcing each other? mayor berke: as we look in the