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gpo114.pdf

Mr. SHIMKUS.

And if I may, I would say in the statement you just said, of course, that 50 percent could be. I have no time, but I am happy to debate this as long as the chair would allow us to debate this.

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Ms. BALDWIN.

Not much longer, but go ahead.

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Mr. LYONS.

The IPCC report is based on a 90- to 95-percent confidence in the observations included in the report, and it includes scientists worldwide, including scientists from the United States. So as was discussed earlier, this is a matter of understanding risks and probabilities, but here there is a high probability in what they have observed. That is all I would offer for the record.

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Ms. BALDWIN.

Ms. Goodman?

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Ms. GOODMAN.

Thank you very much, Madam Chairman. Mr. Shimkus, I just wanted to clarify that I support continued and possibly increased reliance for our U.S. Navy. It has indeed been an essential source of power for our naval vessels. I would observer, however, that coal-to-liquids, unlike nuclear power, is not presently a carbon-free solution unless we make substantial investments in carbon-sequestration technology, which we have not yet materialized, but I hope it will in the future.

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Mr. SHIMKUS.

If I may, Madam Chairman, if we went—with to- day's prices, that would free up $192 billions of additional revenue to do all of these things and all of this scientific movement into this ''new Manhattan project'' because it is going to be costly, and we have got to find the money to do that.

gpo117.pdf

Mr. MCHENRY.

That might be a slight insult to Judy. She is much more attractive and a nicer lady. [laughter]

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Mr. MCHENRY.

Thank you, Mr. Chairman. Thank you for holding the hearing today. Obviously, Treasury and FinCEN are certainly vital in the United States to stop the money laundering and financing of terror. Law enforcement needs a quick dependable way to track the money involved in crimes, and financial institutions often serve as the first line of defense in preventing financial crimes and providing critical information to law enforcement. This is a complex and difficult task, obviously, but it is also imperative that we make certain it is done correctly. Since its inception, FinCEN has had to depend on the IRS for the bulk of its computing and data storage, a situation that made sense at first, but is now at best inefficient. Congress last year approved an amendment by Congressman Paulsen, who is here today on the subcommittee, to start the process of updating FinCEN's computers, but unfortunately, the Obama Administration has reduced its Fiscal Year 2011 budget requests for FinCEN by nearly 10 percent. FinCEN needs the proper resources to do its job, and that means it must have its own computer system and the clear responsibility to make sure it works correctly. It is unrealistic to imagine that every suspicious activity report will result in an investigation or a conviction, but FinCEN and law enforcement should have the hardware and software and other resources to search data reported by financial institutions quickly and thoroughly. Faulty data is unacceptable, whatever the reason. If online retailers can instantly see that an order being placed is missing essential data, certainly FinCEN and the IRS should have the capacity and capability to detect incomplete suspicious activity reports and see the missing data. I look forward to hearing from the witnesses, especially the IG and the GAO, and I look forward to seeing an ongoing discussion about FinCEN's necessary resources to do its job. I yield back. Chairman MOORE OF KANSAS. The Chair now recognizes Mr. Lynch from Massachusetts for up to 5 minutes.

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Mr. PAULSEN.

Thank you, Mr. Chairman. I also want to thank you for holding today's hearing. I appreciate it. Financial institutions often serve as the first line of defense in detecting financial crimes and providing critical information to law enforcement, and the information that is provided to government organizations by FinCEN is essential to catching criminals and defeating terrorism ultimately. The ability to follow the money trail provides our intelligence and law enforcement community with information that leads to a broader understanding of terrorist organizations and drug dealers. As my colleague, Representative McHenry, had mentioned just a little while ago, I offered an amendment during last year's appropriations process to help provide funding to FinCen for additional resources to more effectively combat financial crimes, and it was my hope that this funding would be used to help provide needed support and coordination with Federal, State, and local law enforcement. I look forward to hearing more about the modernization that FinCEN is currently undergoing and I look forward to the testimony today, and thank the witnesses for coming before us today, Chairman MOORE OF KANSAS. Thank you, sir. I am pleased to introduce our first panel of witnesses. First, we will hear from Mr. James Freis, Jr., Director of the Financial Crimes Enforcement Network, FinCEN, at the U.S. Department of the Treasury. Then, we will hear from the Honorable Eric Thorson, Inspector General for the Treasury Department. We are glad to have you testify before our subcommittee again, Inspector General Thorson. Without objection, your written statements will be made a part of the record. Director Freis, you are recognized for 5 minutes to provide a brief summary of your statement, sir. CRIMES ENFORCEMENT NETWORK (FinCEN)

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Mr. THORSON.

Yes. There are a number of things that raising that threshold would allow us to do. Specifically, with regard to FinCEN, I would have to refer to our audit plan, and we can certainly provide that for you. The idea and why we requested the increase in the threshold was to free up some of the audit resources. Certainly, aside from FinCEN, there are a lot of things within the Treasury Department that we have had to postpone that really are a major part of what our office is there for. I am giving you a little broader answer than you were probably looking for, but there are a number of things we would like to be able to do, and this would certainly help. Chairman MOORE OF KANSAS. Thank you, sir. Director Freis, thank you for your testimony and for your public service. In the Treasury IG's January report, they list the top 25 depository institutions, including IndyMac and NetBank, that had errors in over half of their SAR data in Fiscal Year 2006, and recommend that FinCEN should notify Federal regulators of these problems. Has your Bureau done so, and has FinCEN seen any improvements or more errors with depository institutions, especially in the past 2 years, as they have dealt with the financial crisis? Any comments, sir?

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Mr. FREIS.

Yes, Mr. Chairman. We have developed a process within FinCEN that is consistent with those recommendations, to work very closely with the supervisors of the financial institutions, so we do examine for problems in the filing of all our reports, not just SARs, and we follow up directly with the supervisor, and then the supervisor will monitor to see improvements. I am happy to say that we have seen a continual increase in the quality of the reports from the financial industry. Chairman MOORE OF KANSAS. Mr. Thorson, do you have any comments on that?

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Mr. THORSON.

First of all, we are very happy to see that and certainly accept FinCEN's explanations of the changes they have made. We obviously have not had a chance to look at that since then. I think all of us here have the same goal, and that is to do whatever we can do to increase the efficiency and effectiveness of FinCEN, as it helps all of us. Chairman MOORE OF KANSAS. Director Freis, on page one of your testimony, you note ''FinCEN's efforts to maintain the 'proper balance' between reporting requirements imposed upon the industry and the need to ensure information gets to law enforcement officials.'' Which do you believe FinCEN does better, improving SAR data quality and working with industry on reporting requirements or working with law enforcement to get the information to them?

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Mr. FREIS.

I do not think it is a choice between the two, Mr. Chairman. I think our mission is to get information to law enforcement and increasing the quality is making that information more accessible to law enforcement. Ultimately, a large part of what I have tried to do in our dialogue with the financial industry is show them how it is in their interest, and particularly in these economic times when we are fighting the people who are trying to rip off the bank or rip off the customers and customers who lose money are not good customers for your bank. We have a common interest with the financial industry. Chairman MOORE OF KANSAS. Thank you. Inspector General Thorson, from what you know, would you encourage FinCEN to do a better job working with industry on SAR data quality or working with law enforcement?

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Mr. THORSON.

I think really both of those things but certainly the quality when you talk, for instance, IndyMac, one of the banks that we looked at after it failed, had an 86 percent error rate. Everybody has the desire to certainly improve on those kinds of things, and I think what Director Freis has been saying is they are addressing it. You asked what would that threshold on MLRs improve on, that is one of the things that we would certainly be able to do, validate the actions taken on SARs as well as their IT modernization that he also mentioned. Chairman MOORE OF KANSAS. Thank you, sir. My time has expired. Mr. Paulsen, you are recognized for 5 minutes.

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Mr. PAULSEN.

Thank you, Mr. Chairman. I will ask just a couple of questions. First, I will go to you, Mr. Thorson, if I could. Probably the most interesting part of your testimony comes at the end where you address FinCEN's IT system. I would like to ask you three questions at once and you can tackle them altogether, I guess, more or less. Number one, if FinCEN could stand up its own computer system, would that system address a lot of the data quality and form updating issues you and the GAO address? Number two, Treasury in general, not just FinCEN, has had a lot of difficulty with newer computer systems. Would you summarize now and then maybe give us a larger written report later on how FinCEN can successfully manage a transition to its own system? Number three, what in your view is the cause for the morphing of the FinCEN OFAC tracking system? What are its prospects for success, and is there anything that Congress can or should do in that capacity?

gpo117.pdf

Mr. THORSON.

With the number of questions, I would like to provide you a very accurate answer, and I will do that in writing. One thing you mentioned was how do we implement this or how does FinCEN successfully implement that. I just would give you the answer I would give you on any major program, whether it is FinCEN or DOD. In this case, an IT program would start with a good solid plan of what it is you want to do, and what it is going to cost. In this case with Treasury, I would involve the Office of the CIO, and I would have strong independent oversight. That oversight is not there to second guess everything they do at all. It is there really to help them to make sure that they are looking at things that maybe they had not thought of. I hesitate to use the word ''partner'' because we are independent of everything. The truth is that is what our goal is, to help them accomplish their mission. A strong independent oversight would also be one of the factors I would put in there.

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Mr. PAULSEN.

Thank you. Mr. Freis, let me just follow up. As I mentioned earlier in my opening statement, FinCEN's mission and work to help safeguard the financial system and aid our law enforcement community is important. I support that certainly as we all do. As I mentioned in my opening statement, I am interested in FinCEN's ongoing modernization efforts. Will the modernization efforts that FinCEN is currently carrying out help resolve some of the issues that have been laid out in some of the reports that we have discussed that now have been brought up specifically? I am interested in how the modernization has helped you or helped you partner essentially with other agencies.

gpo117.pdf

Mr. FREIS.

Yes, indeed. The modernization is designed to address some of the issues that you mentioned and some of the issues that are in the GAO reports. Very consistent with what Mr. Thorson just said, the most important aspect in going to a big project, a big investment like this, is appropriate planning. We have been planning for a period of 31⁄2 years for this IT modernization. It has been an unprecedented level of collaboration with all of the stakeholders. By that, I mean bringing together our law enforcement customers because ultimately, once again, we are trying to get them the data they need to fight the criminals, and working with the regulatory authorities on whom we rely for ensuring compliance and appropriate reporting by the regulated industries, and also working with the industry. Any way that we can help simplify their efforts to get us lower costs more quickly is a benefit to everyone, both the industry and law enforcement and of course, the general public, that we are looking to protect. We also have established significant levels of oversight with this program. First, making sure that we bring together the stakeholders that need to be closely involved. Treasury CIO personally, and one of the two Deputy Commissioners at the IRS. As you know, we are transitioning the system in part from the IRS to FinCEN. Those are the three primary stakeholders. We work together in terms of the overall department priorities and working very closely with the Office of Management and Budget to make sure that they are helping us as we leverage across the different parts of the entire Administration.

gpo117.pdf

Mr. PAULSEN.

Thank you. My time is just wrapping up now. Mr. Thorson, if you have some follow-up in written form, I think that would be very helpful as well. Thank you, Mr. Chairman. Chairman MOORE OF KANSAS. Thank you. The Chair at this time recognizes Mr. Lynch for 5 minutes, sir.

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Mr. LYNCH.

Thank you again, Mr. Chairman. Director Freis, and this actually applies to Mr. Thorson as well, in this tight budget environment, it is not likely that we are going to see any increases for staffing. Director Freis, how many folks do you have handling your whole operation right now?

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Mr. FREIS.

We have 325 people as of today.

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Mr. LYNCH.

You are handling a global operation, trying to interface with governments all over the world. I have seen you do that. You have 300 domestic law enforcement agencies that you have to deal with. Now, we have just added some more responsibility with respect to these financial institutions that we want you to interface with. You are doing work with the top oversight panel. Realistically, I do not see this getting better. I do not see the funding for your people getting better. GAO, you are sort of in the same boat, where just doing this oversight in addition to what we are already requiring you to do on material loss at these banks. I just see this system stretching further towards the breaking point. How do you expect to handle all this responsibility with no additional people, no additional money, and at the same time ramping up this new technology? I am just trying to figure out how this works and how this gets better.

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Mr. FREIS.

We appreciate your support and we certainly appreciate the direction from the Congress in helping us to prioritize the funding that we have received for the IT modernization. It is a critical aspect. When I look back at our statutory mission, what Congress laid out for us, more than half of it talks about our IT management functions and the way the single investment at FinCEN can leverage across all aspects of the government.

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Mr. LYNCH.

Director, I appreciate that. I have more meter maids in my city than you have folks to handle your responsibility around the world. You have far greater responsibility, with all due respect to my meter maids, they do a wonderful job as well. It is just trying to match the resources to the job that needs to be done. Unless we change our budgetary priorities to give you the tools you need to do your job, I just see a failure coming. There will be a failure and then everybody will throw up their hands and say, sources that they needed to do their job, how did this failure happen? It will all be in retrospect looking back at some colossal intelligence failure that continues to go on. I, for one, support getting you more resources and increasing your staffing commensurate with the responsibilities that we have given you. We are not nearly there in terms of the importance of the job that you do. Like I said earlier in my statement, I am amazed that you do as much as you do with the little resources that you have. You have to be maxed out here in terms of all the responsibilities that you have. I think it is disingenuous sometimes for Congress to come down on you and say, why are you not doing this, why are you not doing that? You have to cooperate better. You have to communicate better. Just covering all the bases you have to cover is a job in itself. Is there any hope that at least with the technology upgrade—are there ways we can do this to multiply the effectiveness of the employees that you have using new technology? some of the SAR stuff, has suggested, for instance, if we could move to a bar coding type of method to track SARs and to make them more complete, some of that information will be embedded so we do not have the problems that we had with IndyBank. Is that something that you think might be helpful as a force multiplier so you are not running around doing the stuff manually or less efficiently than you might be doing?

gpo117.pdf

Mr. FREIS.

Certainly, the IT can be a force multiplier, but most of what we are doing in terms of the IT modernization, one of the core pillars of it, is moving away from paper and manual processing to leveraging that electronically. Right now, the people who are doing that manual processing are IRS employees. We, as the Treasury Department and the government will benefit from that, FinCEN will not benefit— Chairman MOORE OF KANSAS. The gentleman's time has expired.

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Mr. LYNCH.

Thank you, Mr. Chairman. Chairman MOORE OF KANSAS. I want to thank our witnesses for testifying here today, Mr. Freis and Mr. Thorson, Inspector General Thorson. Thank you both for testifying. If you have any additional comments to make, please make those in writing and submit them. I will excuse you at this time and call our second panel, if you would please be seated. Thank you, gentlemen. We will convene with the second panel of witnesses. I am pleased to introduce our second panel. First, we will hear from Mr. Richard J. Hillman, Managing Director, Financial Markets and Community Investment, with the Government Accountability Office. Then, we will hear from Ms. Eileen Larence, Director, Homeland Security and Justice Issues, also with GAO. Without objection, your written statements will be made a part of the record. Mr. Hillman, sir, you are recognized for 5 minutes. FINANCIAL MARKETS AND COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

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Ms. LARENCE.

Yes. We think that involving law enforcement in setting the criteria would help, but then also making sure FinCEN is transparent about that criteria. We do not argue that law enforcement should call all the shots because law enforcement itself recognizes that FinCEN brings particular expertise to the table because they have access to all of the data and because they have a broad perspective across the industry, regulators, and law enforcement itself. Law enforcement would just like to be more of a partner in that process. Chairman MOORE OF KANSAS. Thank you. Since you each focused on separate issues, it may be difficult for you both to give us a sense of which problem is more urgent, better communication with law enforcement or improving SAR data quality. How would each of you rank your respective issue on a scale of one to five, five meaning FinCEN is doing a great job, and one meaning they need to improve?

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Mr. HILLMAN.

Similar to the last panel, I believe that both of the actions that you are calling for are essential for FinCEN in achieving its mission. It must work with other regulators and other depository institutions in accomplishing its mission. It must serve law enforcement in meeting its terrorist financing and other financial crimes' work. I would put a high priority on both of those activities because if they were unsuccessful, then our country would be unsuccessful. Chairman MOORE OF KANSAS. Thank you, sir. Ms. Larence, do you have any comments?

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Ms. LARENCE.

Clearly, the law enforcement community found direct access to the data itself the most important service that FinCEN can provide, so I would argue that is where FinCEN would need to put its priorities. Chairman MOORE OF KANSAS. Thank you. Starting with you, Mr. Hillman, has FinCEN been responsive to GAO's recommendations? What additional steps should they take or focus on to improve their performance?

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Mr. HILLMAN.

One of the major areas we found in our report on the SAR activities was that their forms revision process was not a collaborative process. They had made changes to that form and many individuals within the law enforcement community, specifically SAR review teams in other High Intensity Financial Crime Areas (HIFCA) had limited ability to influence the changes that they wanted to make to those forms. Since that recommendation was made, FinCEN has really taken to heart the need to ratchet up their coordination and communication in the forms revision process. We have seen substantial efforts on the part of the organization in obtaining views from outside parties early in the process, much of what we had recommended in the past. What we have not seen, however, are some other important facets of collaboration, including identifying and reporting and evaluating progress associated with their initiatives. We are also concerned that we have not really seen a plan for the effective implementation of this modernization effort, and given past progress in the information technology area, a plan is very important. Chairman MOORE OF KANSAS. Thank you, sir. The Chair next recognizes Mr. Paulsen for 5 minutes, sir.

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Mr. PAULSEN.

Thank you, Mr. Chairman. Maybe I will start with level of budgetary funding provided to FinCEN? Do they have adequate resources to effectively carry out their mission?

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Mr. HILLMAN.

We really have not looked at the resources that edge the unenviable task that it has in achieving its multiple mission responsibilities, relying on the limited resources it does have and the other regulators at its disposal. Given that environment, that just puts a premium on ensuring effective collaboration and coordination across all of the financial regulators, law enforcement agencies, depository institutions, and others that are producing BSA data for that organization. That is what we have emphasized with FinCEN, improving its opportunities to collaborate and coordinate to get the biggest investment it can from the resources that it has.

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Mr. PAULSEN.

How important is it from your perspective for FinCEN to complete its SAR form revision process and how often do you think such a review or changes should take place in the future, given the changing nature of the financial system and of financial crimes?

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Mr. HILLMAN.

They are required by law—from the Paperwork Reduction Act—to review their forms process every 3 years. They generally look at those forms a little bit ahead of that schedule to ensure they can complete that review in a timely fashion. I believe they are doing a diligent job in looking at their forms revisions. What we have found, however, is that the revisions that they have made had not been fully coordinated with others to determine that those form changes were going to improve the efficiency of the process, and then once they had decided on the revisions that they wanted to make, they had not coordinated effectively with the IRS and they were even in fact unable to implement the revisions they were proposing. Today, FinCEN is still using forms that they developed in 2003 in their forms revision process, and are unable to use technology to enhance their efforts going forward.

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Mr. PAULSEN.

Ms. Larence, as you probably know, FinCEN issued a report on fraud in the mortgage market well before the bubble collapsed. It was virtually ignored by the law enforcement community. Should FinCEN be held responsible for reports and information that are simply not used by law enforcement? Do you have any suggestions on that front at all?

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Ms. LARENCE.

In talking with some of the FBI agents and liaisons, I think they felt like FinCEN brought a different perspective to that issue than the FBI could. The FBI has access to different information and takes a case perspective. They thought FinCEN could bring value but they would have liked to have maybe collaborated with FinCEN more. FinCEN itself in its internal review admitted that what they hear from law enforcement is the quality of their reports is very high, but sometimes the relevance is not as high. We argue if they would collaborate more with law enforcement to determine what kinds of information they need, what they are focusing on, they would stand a better chance to be more relevant.

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Mr. PAULSEN.

Regarding GAO's recommendation that FinCEN establish a process to inform law enforcement about the availability of completed analytical products, the December 2009 report indicated that FinCEN was not inclined to share certain products completed for one customer with other law enforcement agencies due to confidentiality rules. How should FinCEN handle this situation so that vital data and reports can be made available to all law enforcement agencies?

gpo117.pdf

Ms. LARENCE.

A couple of things. They do follow what they call the third party rule. That is, they would ask the originating agency if they could have permission to share, and how extensively could they share, those products. What we heard from law enforcement was they would just like to even know that the product existed, and that way they may be able to pursue channels to get that information. It looks from what FinCEN is telling us, we have not had a chance to audit that yet, but they have put a process in place, both to better inform and market their products as well as to communicate better with law enforcement on their responses to law enforcement's requests.

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Mr. PAULSEN.

Thank you, Mr. Chairman. Chairman MOORE OF KANSAS. Thank you, sir. The Chair recognizes Mr. Lynch for 5 minutes.

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Mr. LYNCH.

Thank you again, Mr. Chairman. Let me ask both of you. We are talking a lot about FinCEN's responsibility to interact and collaborate with law enforcement. That is just one-third of what their mission is. They also have a mission with 325 employees, they have 300 law enforcement agencies, then they have every single reporting financial services firm in the country, thousands, and then on top of that, they have 160 countries that currently have financial intelligence units—116, excuse me, and we are working on maybe another 40 right now to try to get financial intelligence units stood up, and FinCEN is working on those. They have 325 employees. I think it is mind boggling to expect anybody to be able to do that with that small a number of employees. I just do not see it happening. These folks are stretched thin. I know you did not look specifically at that, but do you have any—

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Mr. HILLMAN.

That actually was not the scope of our review in looking at SARs and SAR revisions, but it is clear FinCEN has a daunting responsibility with the resources that it has. It continues to put a premium on proper guidance and forms to the other regulators and depository institutions that supports its activities. In the recent past, we have seen a ratcheting up on the part of FinCEN in putting a good guidance out on their Web site for others on attending conferences. We learned that between 2006 and 2008, FinCEN representatives had attended over 300 different conferences and multi-agency groups to spread the word as to what types of activities they were hoping to see achieved. Law enforcement is doing the same thing and working with depository institutions and helping to ensure they get adequate and high-quality narratives in these SAR forms. We just need to continue to leverage the available resources to accomplish the goals and mission of FinCEN.

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Mr. LYNCH.

Right now, it seems like FinCEN is going out to these different agencies. They went out to California and they have been working closely with the FBI. Ironically, the FBI has put as many resources into analyzing the information provided by FinCEN than we have provided FinCEN to actually develop the data and provide the intelligence. It is sort of backwards. I just do not know how long we can continue to do that. I know FinCEN has a connection with all these different departments. We are providing extra resources to these other agencies, and yet we are level funding FinCEN that is providing all these agencies. I just see organizationally, it is a real problem. I do not know how to get past that without providing additional resources to FinCEN.

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Ms. LARENCE.

We tried very hard to be able to help answer that question, at least in terms of the work they are providing to law enforcement, through the Analysis and Liaison Division. FinCEN needs to be able to demonstrate this is what we are doing with the resources that we have right now in terms of supporting the law enforcement community. Here are the critical gaps or here are the missed opportunities that we have to be able to provide significant support. FinCEN needs to be able to demonstrate these gaps. We just had a hard time getting that kind of management information to be able to make that story.

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Mr. LYNCH.

Let me ask, in your reports and in your analysis in looking at this, is FinCEN bringing in—you would think that one way we might be able to close that gap is to sort of bring in the law enforcement people, do a number of seminars on the financial analysis products that they have. I know there is outreach. I am not so sure that is the best use of their time. Maybe bring all those folks into Washington and do a bunch of these conferences and do a training on the products and on the data and how to use FinCEN better. Of course, that is going to be a double-edged sword because they are going to get more and more SARs. They are going to get more and more business. It is sort of like the problem I had with some of my local hospitals. They are losing money on every patient. Then they do outreach and they get more patients coming into the hospital and they are losing even more money. It is sort of a downward spiral of a self-fulfilling prophecy. That is the problem that FinCEN has. I do not think they are doing it purposely. By not doing outreach, they are probably reserving some of their resources that they have. Any thoughts on that?

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Ms. LARENCE.

I think they have some existing channels that they can use more effectively. They have a bi-monthly roundtable with law enforcement. They have changed the agenda already where they are better publicizing the products and they are using the roundtable to solicit ideas from law enforcement about the kinds of issues and analyses that would be helpful. They have already taken some steps there. They have been increasing their attendance at conferences and doing outreach. They have been partnering with some of the IGs to get the word out. They are looking at using the available channels that they have. I think also with issuing these menus of products and services and resources and using their existing gateway and secure outreach portals that they have to law enforcement just to publicize them will help a lot.

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Mr. LYNCH.

Thank you. Thank you both. I yield back. Chairman MOORE OF KANSAS. Thank you. I understand that Ranking Member Judy Biggert is on her way. If Mr. Paulsen has any additional questions, he can go ahead at this time until she arrives.

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Mr. PAULSEN.

Thank you, Mr. Chairman. Just a couple of followup questions for Mr. Hillman, if I could. As you know, the suspicious activity report, the SAR report filings continue to increase. However, the quality of SAR filings continues to be an issue in depository institutions. Officials have commented they would like clear guidance on what law enforcement looks for, what they really want, what they find useful in these reports. Based on your work, what actions have FinCEN and law enforcement agencies taken to assist financial institutions in improving the quality of the SAR filings, and what should be done in the future on this front?

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Mr. HILLMAN.

This is one area that has been a continual concern on the part of depository institutions, concern that they do not know exactly how law enforcement is using this data, not knowing how exactly how to satisfy those needs. We have found, however, that FinCEN has done a number of things to improve communication and coordination with the depository institutions and to educate them about the importance of SAR filings. For example, they have a variety of written products reporting trends in SAR data, providing tips on SAR filings. They have also posted a variety of guidance on their Web site. One important piece of guidance outlined the 10 most important common filing errors in SARs and steps to avoid them. In 2008, they also produced a guideline from SAR filings on proceeds and foreign corruption. FinCEN representatives, as I previously mentioned, also are participating in a number of conferences for depository institutions to share information with them and law enforcement is doing the same, to best assist depository institutions in providing the right information on SAR narratives and to help depository institutions better understand the types of information that they need for their investigative activities. Going forward, FinCEN really needs to continue to educate filers on the important uses of SARs and the benefits to law enforcement.

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Mr. PAULSEN.

One more question. In the past, financial industry officials have expressed concerns about the extent to which law enforcement agencies use suspicious activity reports and whether the effort put into filing them is actually helping law enforcement investigations. Just again a quick follow-up, because I think you had a little bit of this in your answer, but what steps have FinCEN, law enforcement, and others taken to make better use of SARs in general? This is a common theme I think we hear.

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Mr. HILLMAN.

Absolutely. FinCEN, law enforcement, and financial institution regulators are each taking steps to ensure they are using quality information that is available from SARs. FinCEN, as we previously discussed, has produced various nonpublic analytical products and they have also pushed out bulk downloads of their SAR data to law enforcement organizations and others for them to combine that SAR information and other BSA information with other investigative information they have at their disposal to enrich their investigative activities. We have also seen some concerns being expressed by law enforcement agencies and others who use SAR forms, basically going to concerns with the formatting and the efficiency of the downloading process. A couple of important concerns have to do with the fact that SAR narratives produced on their systems come forth in all capital letters. There is no additional formatting for an individual, a SARs review team, for example, who may be looking at hundred of these SARs in an individual instance, from better understanding what was in that data. We also have had concerns expressed by financial regulators in that the downloads that are available in producing SARs analyses do not allow regulators to provide all the SARs that they need in that analysis at one point in time. There are concerns their analyses may not be fully complete. In addition, financial regulators have expressed concerns that the data input that is being provided by FinCEN, and to some extent by the IRS as well, is not producing accurate results. There are opportunities for FinCEN and the IRS to improve the uploading of information in their systems.

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Mr. PAULSEN.

Thank you, Mr. Chairman. Chairman MOORE OF KANSAS. Thank you, Mr. Paulsen, for your questions. Now I recognize for 5 minutes for questions the ranking member of the subcommittee, my colleague and friend from Illinois, Ranking Member Judy Biggert.

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Mrs. BIGGERT.

Thank you very much, Mr. Chairman. Thank you for giving me the opportunity to ask questions. I, unfortunately, have been in a markup all day. We still have eight amendments to go. I had quite a few amendments. It usually does not last this long. Chairman MOORE OF KANSAS. We are glad you are here.

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Mrs. BIGGERT.

My first question would be, what are the answers to addressing FinCEN's shortcomings and what does FinCEN need to do their job and to do it well? Is it new authority? Resources? Is it a set timeframe to update information systems? Briefly.

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Mr. HILLMAN.

I will take the issue on the information systems. I believe that is one of the significant challenges facing this organization at the time. They have had a dismal record in the past in establishing robust and successful information technology modernization initiatives, and they are undergoing one now as we speak. The advice that I would provide to FinCEN is that they take the time to thoroughly develop a plan for moving forward in their information technology initiative before implementing individual steps, and that they solicit the input of Treasury's Chief Information Officer in their deliberations on their modernization efforts. The Director, when he was here earlier this afternoon, discussed the fact that the CIO himself is on a panel with the Director and the Deputy Commissioner to oversee the modernization effort. FinCEN itself as an organization with so few resources, it really could leverage the technology expertise available in the Information Office to achieve its purposes more effectively.

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Ms. LARENCE.

In terms of the issues that we looked at, these are not new findings. FinCEN had several internal studies starting in 2005, 2006, and 2008. FinCEN knows what it needs to do. It just needs to do it. It needs to track it to make sure the changes are effective. It needs to hold itself accountable with law enforcement for these changes. I think setting timeframes and establishing an accountability system where it publicly reports out to law enforcement and to the Congress on what its commitments are and whether it is making those commitments.

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Mrs. BIGGERT.

Do you think Congress should set a timeline or a certain time when they should complete—outline the specific goals? I know the same situation is really in HUD, every year we ask them if they have their information system up and running and the technology, and it just keeps delaying and delaying. How can Congress get them moving and should there be a deadline set?

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Mr. HILLMAN.

I believe that it would be important for Congress to request a plan from FinCEN as to how it intends to successfully modernize its information technology, and then to request periodic progress reports on their activities. In that way, there would be some very important oversight from the Congress in ensuring that FinCEN is making true progress in achieving its ultimate goals.

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Ms. LARENCE.

We noticed in the most recent work on proposed regulatory changes that FinCEN collaborated very well with the law enforcement agencies within DHS, in part because Congress directed them to do that through statute. It is pretty clear that if Congress gave support and incentives such as setting recurring timeframes and holding FinCEN accountable to them, that does help.

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Mrs. BIGGERT.

I think in the first panel, Director Freis said we have been planning for 31⁄2 years and now they restarted the planning process. How much time do you think it would take them to complete the process of updating their technology?

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Mr. HILLMAN.

With their current technology efforts, the staff within FinCEN, when we were updating the status of our recommendations for this hearing, were reluctant to share with us any timeframes for completing any individual efforts, but suggested that the total modernization effort was likely not to be completed until 2014.

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Mrs. BIGGERT.

Does law enforcement find FinCEN more or less relevant now that agencies can access and analyze the Bank Secrecy Act data on their own?

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Ms. LARENCE.

What we found in our review is that kind of casespecific tactical support the agencies are now doing themselves, so they did not really need FinCEN to do that for them. They did recognize that FinCEN had valuable expertise, again, because FinCEN understood industry, regulators, and law enforcement. They do think FinCEN could have a more strategic and forward-looking approach to trying to anticipate issues, looking for patterns and trends in the data. Law enforcement does think FinCEN brings value to the table. They just want to collaborate better so they have an opportunity to help to define with FinCEN the kinds of analyses that will be most relevant and useful to support their investigations and their cases.

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Mrs. BIGGERT.

Do you think law enforcement really needs these complex analyses?

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Ms. LARENCE.

I think they find them very helpful, if they are timely and useful. What we heard is if FinCEN involved law enforcement in helping to again define what to pursue in those analyses and also get them involved on ongoing reviews, that would help the information to meet law enforcement's needs and be more relevant than it is today.

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Mrs. BIGGERT.

Do you see some of the agencies, law enforcement agencies, need FinCEN more to help them conduct their investigations and prosecutions than others?

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Ms. LARENCE.

We did note that they have now more than 300 potential law enforcement customers. These range from some of the five biggest players, such as the DEA, the FBI, and ICE, down to smaller State law enforcement agencies, and to some extent, even local law enforcement agencies. These agencies are going to need a variety of skills and support from FinCEN. I think FinCEN has a lot of potential customers out there.

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Mrs. BIGGERT.

Thank you. Thank you both for being here. Thank you, Mr. Chairman. I yield back. Chairman MOORE OF KANSAS. My thanks to the distinguished lady from Illinois. Again, I want to thank our witnesses for their testimony this afternoon. Today's hearing was helpful in improving our understanding of the challenges facing FinCEN and ways those challenges can be addressed. This is something we will continue to monitor closely. The Chair notes that some members may have additional questions for our witnesses which they may wish to submit in writing. Without objection, the hearing record will remain open for 30 days for members to submit written questions to these witnesses and to place their responses in the record. Again, I want to thank the witnesses for appearing today and for your testimony. The hearing is adjourned. Thank you all. [Whereupon, at 4:47 p.m., the hearing was adjourned.] (27) A P P E N D I X April 28, 2010 57747.001 57747.002 57747.003 57747.004 57747.005 57747.006 57747.007 57747.008 57747.009 57747.010 57747.011 57747.012 57747.013 57747.014 57747.015 57747.016 57747.017 57747.018 57747.019 57747.020 57747.021 57747.022 57747.023 57747.024 57747.025 57747.026 57747.027 57747.028 57747.029 57747.030 57747.031 57747.032 57747.033 57747.034 57747.035 57747.036 57747.037 57747.038 57747.039 57747.040 57747.041 57747.042 57747.043 57747.044 57747.045 57747.046 57747.047 57747.048 57747.049 57747.050 57747.051 57747.052 57747.053 57747.054 57747.055 57747.056 57747.057 57747.058 57747.059 57747.060 57747.061 57747.062 57747.063 57747.064 57747.065 57747.066 57747.067 57747.068 57747.069 57747.070 57747.071 57747.072 57747.073 57747.074 57747.075 57747.076 57747.077 57747.078 57747.079 57747.080 57747.081 57747.082 57747.083 57747.084 57747.085 57747.086 57747.087 57747.088 57747.089 57747.090 57747.091 57747.092 57747.093 57747.094 57747.095 57747.096 57747.097 57747.098 57747.099 57747.100 57747.101 57747.102 57747.103 57747.104 57747.105 57747.106 57747.107 57747.108 57747.109 57747.110 57747.111 57747.112 57747.113 57747.114 57747.115 57747.116 57747.117 57747.118 57747.119 57747.120 57747.121 57747.122 57747.123 57747.124 57747.125 57747.126 57747.127 57747.128 57747.129 57747.130 57747.131 57747.132 57747.133 57747.134 57747.135 57747.136 57747.137 57747.138 57747.139 57747.140 57747.141 57747.142 57747.143 57747.144 57747.145 57747.146 57747.147 57747.148 57747.149 57747.150 57747.151 57747.152 57747.153 57747.154 57747.155 57747.156 57747.157 57747.158 57747.159 57747.160 57747.161 57747.162 57747.163 57747.164 57747.165 57747.166 57747.167 57747.168 57747.169 57747.170 57747.171 57747.172 57747.173 57747.174 57747.175 57747.176 57747.177 57747.178 57747.179 57747.180 57747.181 57747.182 57747.183 57747.184 57747.185 57747.186 57747.187 57747.188 57747.189 57747.190 57747.191 57747.192 57747.193 57747.194 57747.195 57747.196 57747.197 57747.198 57747.199 57747.200 57747.201 57747.202 57747.203 57747.204 57747.205 57747.206 57747.207 57747.208 57747.209 57747.210 57747.211 57747.212 57747.213

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Mr. SENSENBRENNER.

Thank you very much, Mr. Chairman. Today's hearing will focus on the plight of those who are in the path of nature. From the coastlines of the Gulf of Mexico to erosion in Alaska to rising seas around the Maldives, these problems are real and threaten real people. And like many on this panel, I have concern for those people whose homes and livelihoods are being affected by this change in nature. But I am also concerned that today's hearing will do little to offer constructive and realistic solutions to these problems. Rising waters may well be an effect of global warming, but just how can we get these waters to recede? The answer many will offer today is regulation, regulation and more regulation. It is as if some people believe that government regulation and taxes will have the same gravitational pull on the oceans that the moon does. They don't. As we look for ways to address the global warming problem, we are looking for ways to produce energy and to power transportation without emitting CO2. It is my hope that researchers can soon develop the kinds of breakthrough technologies that will allow people all over the world to enjoy clean, cheap energy. New energy and transportation technologies have the potential to lower energy costs, improve the environment and end the world's reliance on unstable countries for energy fuels. That is the type of win-win solution that Republicans, like me, are seeking. It seems that many people believe that by enacting regulations, the work on global warming will be complete, and that the waters will miraculously ebb. They won't. As we already have seen, regulations have done little to lower the CO2 emissions in Europe, with one recent report showing so far all of Europe's extreme regulatory efforts have actually led to a 1 percent rise in emissions. Additionally, anecdotal evidence shows that aside from some outfits that sell carbon credits, the regulations aren't doing much to help Europe's economy either. It goes without saying that the European regulations are doing nothing to help keep water levels down. I do not wish to make light of the dangers faced by communities which are in the path of nature, but I do not think that regulatory measures that make energy much more expensive are the answer that will save places like the Maldives. My concern is that by enacting tough cap-and-trade regulations without having the needed developments in energy technology, we will see dramatic rises in energy prices that will threaten the jobs and the economy of not just the poor, but everyone. My fear is that in 100 years, people in this country will still continue to battle high energy prices, while people in the Maldives will continue to battle high water levels. That is what I call a lose-lose scenario, and Congress should seek to avoid it. And I yield back the balance of my time.

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The CHAIRMAN.

The gentleman's time has expired. The chair recognizes the gentleman from Oregon, Mr. Blumenauer.

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Mr. BLUMENAUER.

Thank you, Mr. Chairman. And I do appreciate what my friend from Wisconsin talked about. I do think we are interested in breakthrough technologies to the extent that they are available. But the irony is that we don't have to wait for breakthrough technologies. We know what to do in smartinez on DSKB9S0YB1PROD with HEARING terms of reducing energy consumption. We know what to do in terms of having global cooperation. Our friends in Europe already have half the CO2 emissions that we have, and the people in the Maldives, it is one-tenth of our emission levels, yet they are very likely to be paying the price first. I appreciate the opportunity to hear firsthand from folks who have the perceptive notion of helping us understand the pressures that are being faced. And it is not just the poor in remote areas. We have already seen what has happened to the poor in New Orleans with Katrina. I have here something which was just given to me today about— from New York: What if New York City were hit by a Category 3 hurricane? What if the most densely residential city in the country loses hundreds of thousands of homes in a few hours? The reconstruction, where people will live, these are very real problems for people at home and abroad. And I am looking forward to the discussion here today to have a better sense of urgency, which is lacking, I am afraid, with this administration and too many people in this Congress. Thank you, and I yield back.

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The CHAIRMAN.

Great. The gentleman's time has expired. The gentlelady from California, Ms. Solis, is recognized.

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Ms. SOLIS.

Thank you, Mr. Chairman. And I want to also welcome our witnesses this morning. I think it is highly important that we hear from underrepresented communities and communities of color because for many, many years the environmental movement hasn't always brought about the concerns of our communities. And therefore, I think that this is a first good step working towards that initiative to try to be as inclusive as we can, because global warming and the effects that it will have impact disproportionately low-income communities even in more harsher terms than we even know. And I can testify to that as having grown up in parts of Los Angeles County where in a district that I represent we have three Superfund sites. We have water that is contaminated through rocket fuel. We have high levels of smog that we are experiencing, and therefore are seeing higher incidence of asthma rates, higher rates of cancer, and also the mortality rates of many of our young people as well as our adults, our seniors are faced with. If we don't begin to address this issue of climate change and how it affects urban centers, but also rural communities, I think that we are really going to be leaving a lot of people out of this discussion. And I am very proud to serve as a member of this committee to be able to talk and hopefully amplify the voices that you witnesses here today bring to the table. You know, in a community like mine, Latinos don't often have the luxury of working in even communities where their environment is safe. And I mean safe in terms of health effects because of pollutants in the air, because maybe the proximity where they live is close to a freeway. In fact, many of the school districts that I represent are no more than one-half mile from a freeway where, you know, the exhaust from our cars and our diesel trucks are just continuing to spew these CO2 emissions. And it is having an effect because you see it in the costs that we are paying in health care smartinez on DSKB9S0YB1PROD with HEARING and in trauma centers, and you see it afflicting not just people of color, but people who are trying to make a living, middle-income individuals who are also having to face up to what is happening to them. In the State of California, we have been plagued with droughts, very hot summers. We have many of our local communities that are now self-imposing mandatory conservation efforts, and that is just one part of it. But when you tell a family, a working family, that they now have to pay $3.50 to get to work, and then know that they have no health insurance, and when they come home at night in that community that they are still faced with many more hardships just trying to put food on the table, something has to be done. So I would just say I am grateful that you are all here and look forward to your testimony. Thank you, Mr. Chairman.

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The CHAIRMAN.

The gentlelady's time has expired. The Chair recognizes the gentleman from Missouri, Mr. Cleaver.

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Mr. CLEAVER.

Thank you, Mr. Chairman. I really appreciate this hearing for some very personal reasons. I spent my teenage years growing up in Wichita Falls, Texas. I lived at 818 Gerald. I want to be very specific. And I didn't know that there was such a thing as living a great distance from what we called at the time the cesspool, which was the waste treatment plant, probably less than 300 yards from our back door. And then about 600 yards away was the city landfill. Anytime we had a strong wind blowing across north Texas, which happened quite a bit, the whole tone of our community changed. People would stay inside because of the odor. And we took for granted—you know, I don't think anybody can go back and figure out how many people have died as a result of pollutants in the air, but they would be considerable. And then just 3 months ago—almost 4 months ago, Jimmy Rainey ran from the living room of his home with only his underwear, trying to get his inhaler to work. He died on the front lawn of his home. And I spoke at his funeral. I began to look at all of the numbers of African Americans and Latinos in urban areas dying of asthma. And then I can't help but think about the funerals in my hometown at the time I grew up. And then I began to look at this issue, find out that according to the National Law Journal, communities of color take about 20 percent longer to qualify for either the Superfund or to have any kind of remediation in their communities of what is clearly environmental injustice. The movement began in the 1980s. I am not sure there was much participation even then by the minority communities, so this gives me an opportunity not only to talk about the issue, but hopefully figure out ways—no one benefits by having a hearing without learning something and then trying to fashion solutions. This is not an intellectual issue for me. It is real. I know human beings who have died. I have friends who have died. And asthma is running rampant in every urban community in this Nation, and everybody who has an ounce of concern ought to be angry. I appreciate you calling this hearing, Mr. Chairman.

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The CHAIRMAN.

I thank the gentleman from Missouri very much. smartinez on DSKB9S0YB1PROD with HEARING And we will now turn to our very distinguished panel. And our first witness, Martin Luther King, III. He is the Chairman and CEO of Realizing the Dream, Inc. Through the work of his new organization, he is working to restore and revitalize our communities and democracies around the world. tour where he is studying the causes of poverty in 50 selected communities. This summer he also helped organize the sons and daughters of many of the 20th century's world-renowned leaders in an unprecedented peace summit to launch the Gen II Global Peace Initiative. The mission of the new initiative is to use their collective strength to take action through nonviolent tangible steps to address instances of conflict and injustice worldwide. ready, please begin. THE DREAM

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The CHAIRMAN.

Thank you, Mr. King, very much. [The information follows:] smartinez on DSKB9S0YB1PROD with HEARING smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 26 here 58148A.003 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 27 here 58148A.004 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 28 here 58148A.005

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The CHAIRMAN.

Our second witness is Dr. Eileen Gauna, who is a law professor at the University of New Mexico with a focus on environmental law, environmental justice, administrative law, and energy and property. She is one of the country's foremost experts on environmental justice and has written about and worked extensively on the issue. She is also a member of the EPA's National Environmental Justice Advisory Council. begin. NEW MEXICO

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The CHAIRMAN.

Professor, if you could try to sum up.

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Ms. GAUNA.

I am finishing up. It is our ethical duty to do all we possibly can to roll back and avoid climate change. It is our ethical duty not to do so on the backs of heavily impacted and vulnerable communities. Thank you, Mr. Chairman. Sorry for running over.

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The CHAIRMAN.

Thank you, Professor, very much. [The information follows:] smartinez on DSKB9S0YB1PROD with HEARING smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 35 here 58148A.006 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 36 here 58148A.007 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 37 here 58148A.008 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 38 here 58148A.009

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The CHAIRMAN.

Our next witness is Mr. Mike Williams. Mr. Williams is a member of the Yupiaq Tribe from Akiak, Alaska and Iditarod race musher. Throughout his life he has strived to protect the livelihood and culture of Native villages across Alaska. Currently he is vice chairman of both the Akiak Native community and the Alaska Inter-Tribal Council, which represents 229 tribes in Alaska. He is also vice president of the National Congress of American Indians, Alaska Region, and Board member for National Tribal Environmental Council. We welcome you, sir. Whenever you are ready, please begin. INTER-TRIBAL COUNCIL

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The CHAIRMAN.

Thank you, Mr. Williams, very much. [The information follows:] smartinez on DSKB9S0YB1PROD with HEARING smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 44 here 58148A.010 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 45 here 58148A.011 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 46 here 58148A.012 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 47 here 58148A.013

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The CHAIRMAN.

And our final witness is Mr. Amjad Abdulla, who is Assistant Director General of the Ministry of Environment, Energy and Water for the Republic of Maldives. As Assistant Director General, he has brought to light many of the effects of global warming on his country and is actively working with the United Nations to find solutions for the Maldives and the world to the challenges presented by global warming. As we know on the committee, the effects 2 years ago of the tsunami on the Maldives was to basically have a profoundly negative impact on 80 percent of its economy as that water just washed over the entire country. So we thank you, Mr. Abdulla. Whenever you are ready, please begin. THE REPUBLIC OF MALDIVES

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Mr. BLUMENAUER [presiding].

Mr. Abdulla, could you summarize?

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Mr. ABDULLA.

Our political system needs to encourage greater incentives for investment in clean technologies and public regulations to support innovation. have looked for signs of progress, but too often we have seen a lack of leadership at the international level. We believe this trend is changing. In 2007, we see the signs of renewed dynamism and determination. Speaking in London in July this year, the President of the Maldives, Mr. Maumoon Abdul Gayoom, more than two decades of climate change advocacy, he said that there has been a great deal of expectations, but ultimately too many missed opportunities. In concluding his speech, he said. And I quote, ''Let us say enough of expectation and promises. It is time to deliver. Enough of hesitation. It is now time for bold leadership.'' We thank the committee for your invitation today, and we encourage you to strengthen your leadership and maintain your current momentum. Thank you. [The information follows:] smartinez on DSKB9S0YB1PROD with HEARING smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 55 here 58148A.014 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 56 here 58148A.015 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 57 here 58148A.016 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 58 here 58148A.017 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 59 here 58148A.018 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 60 here 58148A.019 smartinez on DSKB9S0YB1PROD with HEARING Insert offset folio 61 here 58148A.020

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Mr. BLUMENAUER [presiding].

Thank you, Mr. Abdulla. Our Chairman has stepped away. He had about two dozen guests here. He will be back in a moment and asked that we proceed. I would just note that we are going to be facing a vote pretty soon. So I would like to just move quickly. I would just ask one question, and then turn to my colleagues. facing the Native American community, Alaskan corporations. I am wondering if you are aware of any specific programs in place at this point that address the concerns of Native American populations as it relates to the consequences of climate change and adaptation that you referenced.

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Mr. WILLIAMS.

Right now we are at the crossroads, and many of the communities like Shishmaref is falling into the Bering Sea, and I think for some village of Newtok is currently planning to move into a higher ground, and that, I think, is one way of retreating from falling into the sea. And that is the only thing that is occurring. And what we have been trying to do is involving ourselves in trying to address the effects in the north, in the Arctic. And we have been involved in trying to have EPA enforce the regulations on the automobiles and also the power companies on the east coast, because all of these activities affect the people in the North. So we are most vulnerable and paying a heavy price for the activities in other areas of the world. So right now we need capital, we need more resources to plan for the future, because my community is going to be in the river and in the sea pretty quick if we don't address it soon.

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Mr. BLUMENAUER.

Thank you very much.

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Mrs. BLACKBURN.

Thank you, sir. I want to welcome all of our witnesses before us today. it has been instructive. you, if I may. The wind turbines that are being installed in Alaska, where is the money coming from for those? Do you know?

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Mr. WILLIAMS.

I think the money is coming from Congress, and those, you know, the energy costs, are tremendous in Alaska. In my community the price of gasoline is $7. But the wind programs in Kotzebue in Tooksok Bay have really reduced the 50-cents-perhour—per-kilowatt-hour problem that we are facing in the very poor communities, the poorest of the poor in the country.

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Mrs. BLACKBURN.

Let me ask you this also. So on the wind turbines you are depending on government grants for that. But let me ask you about transporting renewable energy to some of these rural and isolated areas. What solutions do you propose? Or do you all have any solutions that you are proposing for transporting renewable fuels into these rural areas?

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Mr. WILLIAMS.

I think shipping right now is the way to go, you know, because we don't have any roads in our areas. And there is no other way to get to those communities. So barges and shipping through waterways. smartinez on DSKB9S0YB1PROD with HEARING

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Mrs. BLACKBURN.

All right. I want to go to page 3 of your testimony. You talk there about NativeSUN Solar, which provides installation, maintenance, technical support for the photovoltaic systems. They have installed hundreds of systems on the Navajo and the Hopi Reservations. What is the cost per kilowatt hour for solar energy in Alaska? And what do residences—an average resident actually pay for electricity per kilowatt hour right now? Do you have that information?

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Mr. WILLIAMS.

Yes. I have—I don't have current data on the Navajo and Hopi per kilowatt hour, but in my community, per kilowatt hour to pay for our electricity ranges from 50 cents to 70 cents per kilowatt hour in our communities in Alaska.

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Mrs. BLACKBURN.

Okay. And then for the solar, can you get that number for me?

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Mr. WILLIAMS.

Right now in Alaska, I think the wind power is more viable. And the solar energy—in the wintertime when there is 24 hours of no solar, we don't see the sun up North for 24 hours for 6 months. It is pretty hard to get that to retrieve the solar energy.

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Mrs. BLACKBURN.

Now, on the wind power, let me just ask you one follow-on. Has the environmental community expressed any concern over the wind turbines and the harmful effects for birds? Have you had resistance there?

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Mr. WILLIAMS.

We have discussed that issue, but we have taken a look. And I come from the most populated migratory bird area in the world. And we have had those wind turbines going and have seen no effect on our migratory birds.

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Mrs. BLACKBURN.

Thank you.

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Mr. ABDULLA.

For the sea level, we have had a record of 15 years, and it shows about a millimeter of rise per year in sea level. And to this magnitude, even a small millimeter of the sea level, it speeds up the wind-generated waves, and it sort of leads to flooding more frequently.