[Senate Hearing 107-125]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 107-125

                   GRILES, OTIS, ROBERSON, BROWNELL, 
                          AND WOOD NOMINATIONS

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                                   on

THE NOMINATIONS OF J. STEVEN GRILES, NOMINEE TO BE DEPUTY SECRETARY OF 
THE INTERIOR; LEE SARAH LIBERMAN OTIS, NOMINEE TO BE GENERAL COUNSEL OF 
THE DEPARTMENT OF ENERGY; JESSE HILL ROBERSON, NOMINEE TO BE ASSISTANT 
  SECRETARY FOR ENVIRONMENTAL MANAGEMENT OF THE DEPARTMENT OF ENERGY; 
   NORA MEAD BROWNELL, NOMINEE TO BE A MEMBER OF THE FEDERAL ENERGY 
  REGULATORY COMMISSION; AND PATRICK HENRY WOOD III, NOMINEE TO BE A 
           MEMBER OF THE FEDERAL ENERGY REGULATORY COMMISSION

                               __________

                              MAY 16, 2001


                       Printed for the use of the
               Committee on Energy and Natural Resources


                   U.S. GOVERNMENT PRINTING OFFICE
75-052                     WASHINGTON : 2001


_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402
               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  FRANK H. MURKOWSKI, Alaska, Chairman
PETE V. DOMENICI, New Mexico         JEFF BINGAMAN, New Mexico
DON NICKLES, Oklahoma                DANIEL K. AKAKA, Hawaii
LARRY E. CRAIG, Idaho                BYRON L. DORGAN, North Dakota
BEN NIGHTHORSE CAMPBELL, Colorado    BOB GRAHAM, Florida
CRAIG THOMAS, Wyoming                RON WYDEN, Oregon
RICHARD C. SHELBY, Alabama           TIM JOHNSON, South Dakota
CONRAD BURNS, Montana                MARY L. LANDRIEU, Louisiana
JON KYL, Arizona                     EVAN BAYH, Indiana
CHUCK HAGEL, Nebraska                DIANNE FEINSTEIN, California
GORDON SMITH, Oregon                 CHARLES E. SCHUMER, New York
                                     MARIA CANTWELL, Washington

                    Brian P. Malnak, Staff Director
                      David G. Dye, Chief Counsel
                 James P. Beirne, Deputy Chief Counsel
               Robert M. Simon, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Allard, Hon. Wayne, U.S. Senator from Colorado...................     7
Allen, Hon. George, U.S. Senator from Virginia...................     4
Boucher, Hon. Rick, U.S. Representative from Virginia............     9
Brownell, Nora Mead, Nominee to be a Member of the Federal Energy 
  Regulatory Commission..........................................    12
Burns, Hon. Conrad, U.S. Senator from Montana....................    26
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado........     1
Griles, J. Steven, Nominee to be Deputy Secretary of the Interior    18
Murkowski, Hon. Frank H., U.S. Senator from Alaska...............     1
Otis, Lee Sarah Liberman, Nominee to be General Counsel of the 
  Department of Energy...........................................    16
Roberson, Jesse Hill, Nominee to be Assistant Secretary for 
  Environmental Management of the Department of Energy...........    17
Warner, Hon. John, U.S. Senator from Virginia....................     2
Wood, Patrick Henry III, Nominee to be a Member of the Federal 
  Energy Regulatory Commission...................................    14

                                APPENDIX

Responses to additional questions................................    49

 
                   GRILES, OTIS, ROBERSON, BROWNELL, 
                          AND WOOD NOMINATIONS

                              ----------                              


                        WEDNESDAY, MAY 16, 2001

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:52 a.m. in room 
SD-366, Dirksen Senate Office Building, Hon. Frank H. 
Murkowski, chairman, presiding.

         OPENING STATEMENT OF HON. FRANK H. MURKOWSKI, 
                    U.S. SENATOR FROM ALASKA

    The Chairman. We are going into the second part of the 
hearing. We have five presidential nominees before us. First is 
Patrick Henry Wood, who has been nominated to be a member of 
the Federal Energy Regulatory Commission. Since I gather that 
no one is going to be introducing--well, I notice that nobody 
is introducing Patrick Wood III, so I will defer the order to 
accommodate the Senators who are going to introduce some of the 
nominees. We seem to have some confusion associated with this, 
but nevertheless we have Senators here and they are a voice to 
be heard from.
    So I would ask Senator Wayne Allard to introduce Jesse Hill 
Roberson. Jesse has been nominated to be Assistant Secretary 
for Environmental Management, Department of Energy. Senator 
Allard, please proceed.
    [A prepared statement from Senator Campbell follows:]

   Prepared Statement of Hon. Ben Nighthorse Campbell, U.S. Senator 
                             From Colorado

    Thank you Mr. Chairman. I am honored and pleased to be here at this 
hearing to consider the nominations of all these folks nominated to 
serve in the administration. They are all overwhelmingly qualified and 
the right people for their respective agencies.
    Before I focus on the nomination of Steve Griles, I want to briefly 
comment on the FERC nominees, especially since the ongoing problems in 
California are not going away. Both of you are going into a job that 
needs to be executed efficiently and completely. The FERC has a big 
role that is crucial to the West and I believe that you both will do a 
fine job. I support both of your nominations.
    Now, moving on to the Griles nomination, I believe that Steve 
Griles will complement the team in place and that he is the right 
person for this job. Steve's experience will help accelerate and 
improve work at the Department of the Interior and across the nation as 
well. He already has worked eight years at Interior where he made the 
hard decisions about managing our lands. He demonstrated then that he 
could resolve conflicts and get the job done.
    Steve Griles has been a powerful voice for promoting and enhancing 
our land management policies. He has an institutional knowledge as well 
as extensive experience in lands issues. Also, Steve understands the 
Western ethic of land use and conservation which was questioned and 
ignored by the previous administration. Steve is an outstanding 
professional who will do great things as Deputy Secretary of the 
Interior.
    His demonstrated abilities will enable him to excel in his new 
capacity, if confirmed as we all know he will be, as Deputy Secretary 
of the Interior. I strongly support and applaud Steve Griles' 
nomination and soon to be confirmation as our next Deputy Secretary of 
the Interior.
    Thank you Mr. Chairman.

    Senator Allard. Mr. Chairman, I would be willing to yield 
to my colleague from Virginia, Senator Warner. He has got a 
commitment there as chairman of Armed Services that he has to 
be at, and I can join that meeting a little bit later. But I 
think if it suits the committee, I would be happy to----
    The Chairman. I would be happy to accommodate Senator 
Warner.

          STATEMENT OF HON. JOHN WARNER, U.S. SENATOR 
                         FROM VIRGINIA

    Senator Warner. I thank my colleague.
    The Chairman. Senator Warner, you have been a victim of the 
alphabet. That is all there is to it.
    Senator Warner. Not to worry about a thing.
    The Chairman. Allard and Allen and Warner, and that is how 
they rolled it in.
    Senator Warner. Fine. Let me just point out my only regret 
is I did not stay on this committee. If I had I would have been 
in that chair right now where you are.
    [Laughter.]
    The Chairman. Well, I wonder if I would be given the same 
treatment. I am sure I would.
    So Senator Warner is here to introduce Lee Sarah Liberman 
Otis.
    Senator Warner. No, I am here to introduce Steven Griles 
and Mrs. Otis.
    The Chairman. Lee Sarah Liberman Otis.
    Senator Warner. Right.
    The Chairman. And J. Steven Griles. Please proceed, Mr. 
Senator.
    Senator Warner. What I will do is ask unanimous consent 
that my statement may be placed into the record.
    The Chairman. Without objection.
    Senator Warner. I point out I know both of these 
individuals. I commend the President and indeed the Secretary 
for submitting to the Senate two eminently qualified 
individuals. When I came to the Senate 23 years ago, one of my 
earliest recommendations to the then President was Steven 
Griles to take a position in the Department of the Interior, 
and I have known this man these many years and I have 
unqualified recommendation for this committee and the Senate as 
a whole.
    Now, Mr. Chairman, I find in today's Washington Post a very 
constructive article on page A21 entitled ``Symbol of a Shift 
at Interior.'' As I read through it, it is my judgment that 
this article simply indicates the shift towards an individual 
who has had great experience and success in the private sector. 
In my humble judgment, I say to the chair and the members of 
this committee, if the United States is going to work itself 
out of this energy crisis it will, yes, have a framework of 
leadership from the Executive Branch, but it will be the 
private sector in the end that will work to get us out.
    I think our nominee is prepared to answer each and every 
question as it relates to that article and others that will be 
propounded by this committee.
    With that, I depart and leave it to my distinguished 
colleague George Allen. Good luck. You are on your own.
    [The prepared statement of Senator Warner follows:]
   Prepared Statement of Hon. John Warner, U.S. Senator From Virginia
    Mr. Chairman, Ranking Member Bingaman, and members of the 
Committee, it is my distinct honor this morning to join my colleague 
from Virginia, Senator George Allen, in introducing J. Steven Griles, 
nominated to be Deputy Secretary of the Interior and Lee Liberman Otis, 
for your consideration as General Counsel for the Department of Energy.

                           LEE LIBERMAN OTIS

    With your permission Mr. Chairman, I will begin with Mrs. Otis. I 
had the pleasure of meeting with Mrs. Otis in my office on Monday to 
discuss her nomination and the challenges she will face at the 
Department of Energy. I am pleased to report she is a Virginian with a 
distinguished record of public service and impeccable credentials.
    I understand Mrs. Otis has several family members here including 
her husband Bill, and her stepmother Nadine. I welcome her entire 
family here today to the Committee.
    Because Mrs. Otis has a long history of accomplishments, I will 
merely relay the highlights to you. She clerked for Supreme Court 
Justice Antonin Scalia. She served as Associate White House Counsel for 
the first President Bush. And she has served in this body as Chief 
Counsel to the Immigration Subcommittee of the Senate Judiciary 
Committee and as Counsel to Senator Abraham.
    It is fortunate Mrs. Otis' background is so impressive, because she 
will need to draw upon her vast experience when grappling with the 
enormous challenges facing the Department of Energy. When Mrs. Otis and 
I met on Monday, I relayed to her my fear that this nation may once 
again be facing an energy crisis.
    I don't need to explain this to the members of this distinguished 
committee, as you are all energy experts, but I wanted you to know Mrs. 
Otis aware of the magnitude of the problem and is enthusiastic about 
the challenge. I am confident these issues will be examined in great 
detail during this hearing.
    Mr. Chairman, thank you for the opportunity to introduce Lee 
Liberman Otis. I enthusiastically recommend her and urge her speedy 
confirmation.
    Now, Mr. Chairman, with your permission, I will turn to Steve 
Griles.

                            J. STEVEN GRILES

    I have known Steve Griles since 1979 when I began my service in the 
Senate. I can say with confidence that Steve is a man of unquestioned 
integrity and impeccable character.
    Steve has a large and wonderful family, many of whom are with him 
today. I welcome to the Committee his mother Elsie, daughters Kimberly 
and Maegan, sons Timothy and Matthew and brothers Joe and Dwayne.
    Steve is an outstanding Virginian who brings to the position a 
wealth of experience in both State and Federal government and the 
private sector.
    In 1981, with my strong support, Steve came to Washington where he 
served in various positions at the Department of the Interior.
    In 1985, I had the pleasure of introducing Steve to this Committee 
as President Reagan's nominee for Assistant Secretary of Lands and 
Minerals Management.
    After four successful years in that position, Steve returned to the 
private sector as Senior Vice President for a Virginia based natural 
resource company.
    In the last 6 years Steve has built his own energy and 
environmental consulting firm where he has concentrated on renewable 
energy projects and other forms of energy production.
    Mr. Chairman, I strongly recommend to the Committee the nomination 
of Steve Griles, a man of unquestioned integrity, superb judgment and 
exceptional knowledge.
    I know he will do a good job for the American people, and I urge 
the Committee to recommend his confirmation.
    Thank you Mr. Chairman.

    The Chairman. Thank you very much, Senator Warner.
    We will hear from Steven Griles, who is the nominee for the 
Department, the Secretary of the Interior, as the Deputy 
Secretary, in a few minutes, as well as Lee Sarah Otis as 
General Counsel for the Department of Energy. We will now move 
to accommodate either Senator relative to the next nominee. 
Gentlemen.

         STATEMENT OF HON. GEORGE ALLEN, U.S. SENATOR 
                         FROM VIRGINIA

    Senator Allen. I would ask Wayne or the chairman. I 
understand you have several panels. Ms. Otis is on the first 
panel, Mr. Griles is on the second panel. If you would permit 
me----
    The Chairman. There is just one panel, I might add. We are 
probably going to add a chair or two, but we think we can do 
it. But go ahead, whichever.
    Senator Allen. Well, I have to be over in the Commerce 
Committee to introduce another fine Virginian.
    The Chairman. Well then, I would suggest, Senator Allen, 
you proceed.
    Senator Allen. Do you suggest, Mr. Chairman, that I 
introduce both Mr. Griles and Ms. Otis at this moment?
    The Chairman. I would suggest that might be appropriate.
    Senator Allen. Okay. Well, first I want to thank Senator 
Allard and thank the chairman, Senator Bingaman, and all the 
members of the committee.
    First let me talk about Ms. Otis. It is a privilege to 
introduce her. She is here with her husband, Bill, her sister 
and her nieces.
    The Chairman. Would you be recognized, please. Stand up.
    Senator Allen. They are back there somewhere.
    The Chairman. Stand up.
    Oh, you have got a whole family.
    Senator Allen. A whole passel of Otises and Libermans with 
us.
    The Chairman. Good.
    [Applause.]
    Senator Allen. I am pleased to join with Virginia's senior 
Senator, John Warner, in introducing both these individuals. 
Now, the role of Ms. Otis is particularly important in Energy 
these days as General Counsel. She will certainly work very 
hard and capably to formulate and implement a much-needed 
national energy policy, and I think she will balance the 
Nation's needs for more energy production with also 
conservation of our resources, and, most importantly, also look 
to innovations in technology to help meet our needs.
    As you see, Ms. Otis received her bachelor's degree in 
English from Yale, her French baccalaureate from Elysee 
Francais, before earning her law degree from the University of 
Chicago. She has an extensive record in clerking for judges, 
outstanding judges, and professorships at George Mason and 
Georgetown Law Schools.
    You all probably most recently know that Ms. Otis worked as 
Chief Counsel to the Senate Judiciary Committee, Subcommittee 
on Immigration, and thanks to her efforts H-1B visa waivers for 
non-immigrant visas were raised, and that is very important to 
technology companies, not just in Virginia but across the 
country.
    During my term as Governor, I was very fortunate to have 
her serve on our Virginia Advisory Council on Self-
Determination and Federalism. I know she will bring steady 
principles, great diligence and determination and drive to her 
work at the Department of Energy. She will continue now to 
contribute to the people of America, especially now that we are 
at this vitally important crossroads and challenging time for 
the Department of Energy.
    So I am very pleased to present and introduce her and give 
her my wholehearted endorsement.
    Now, so far as Steve Griles is concerned, Steve Griles is a 
long-time good friend. The first time I talked to him was on a 
train years ago. I was in the House of Delegates and got to 
know Steve Griles, and he was telling me about his term and 
service previously in the Department of the Interior.
    This is a man who loves the West, and I look at this 
committee and the furthest east anyone is from is Nebraska and 
South Dakota. He is a man who loves the resources of the West, 
the beautiful monuments.
    Senator Dorgan. Senator Allen, California.
    Senator Feinstein. California, do not forget California.
    Senator Allen. What did I say? I said the furthest east on 
this committee was Nebraska.
    Senator Craig. We consider California----
    Senator Allen. What did you say, furthest west? I meant 
furthest east. If I said furthest west, I am sorry. Thank you. 
I meant furthest east.
    Senator Craig. George, California is just unique to itself.
    [Laughter.]
    Senator Allen. No, I made a mistake and thank you for 
correcting me. I was dropped in California, so I should know. I 
was almost born in Sioux City.
    But at any rate, now, Steve is I think, Steve Griles is one 
of the very best choices out of outstanding choices that 
President Bush has made. I have known him. He is always a 
person who worked well, not just at the Federal level, but the 
State level, with the Virginia Department of Conservation. He 
has a great reputation. His professional reputation is one of a 
problem solver, and it can be illustrated by the letters of 
support which I would like to have put into the record from 
people with the Chesapeake Bay Local Assistance Board, the 
Outdoors Foundation, the Virginia Land Trust, and board 
members, a former board member of the Nature Conservancy, as 
well as on the board of trustees for the Chesapeake Bay 
Foundation.
    I would like those letters to be put into the record.
    The Chairman. Put into the record as noted.
    [The material referred to follows:]

                         Tidewater Consulting Incorporated,
                                      Tallahassee, FL, May 9, 2001.
Senator Frank Murkowski,
Dirksen Building, Washington, DC.
    Dear Chairman Murkowski: I write in support of the nomination of J. 
Steven Griles for the position of Deputy Secretary of the U.S. 
Department of the Interior. By way of introduction I am a former member 
of the board of Audubon of Florida, and was most recently Environmental 
Policy Coordinator for Governor Jeb Bush, and served as his 
``Everglades Czar.'' I speak, however, for myself.
    When asked to evaluate his suitability for this post, I 
investigated his background and spoke with his personally. I was 
particularly pleased at his prior work in and commitment to the 
Everglades. I believe that he has a background that will bring balance 
and an orientation that will serve the administration, the citizens and 
the environment well. His work, in and out of government, will bring 
balance in his duties.
    We have worked very hard to build bridges between the business and 
environmental communities here in Florida. Our success was highlighted 
in the signing by Governor Bush of Florida's Everglades set in 2000. 
Sugar barons, environmentalists, compelling agencies bends and partisan 
politicians all who put aside former differences for common good 
flanked him. You need more of this in D.C. I believe Mr. Griles will 
help bring this attitude change.
            Yours truly,
                                             J. Allison DeFoor, II.
                                 ______
                                 
Senator Frank Murkowski,
Chairman, Senate Energy and Natural Resources Committee, Dirksen 
        Building, Washington DC.

    Dear Chairman Murkowski: We are writing to express our support of 
the nomination of J. Steven Griles for the position of Deputy Secretary 
of the United States Department of the Interior. Like Steve, we are 
Virginians who are deeply concerned about conservation. We have devoted 
a significant portion of our lives to ensuring that our children will 
enjoy the environmental treasures that we were fortunate enough to 
inherit. The signatories of this letter represent over 100 years of 
dedication to issues ranging from the restoration of the Chesapeake Bay 
to the preservation of Virginia's agrarian heritage and protection of 
much needed open and untamed spaces.
    Today, Virginia benefits from the numerous contributions Mr. Griles 
made both while serving in the Commonwealth's Department of 
Conservation and in the private sector. During his tenure in state 
government, Virginia expanded and added numerous state parks, including 
the Chappokes Plantation State Park, the Sky Meadows State Park, the 
False State Park, the Grayson Highlands State Park, and the Leesylvania 
State Park.
    While with the Commonwealth, Mr. Griles worked with conservation 
groups to change regulations to protect the environment from ``bad 
actors'' in the coal industry. He made significant efforts to initiate 
reclamation of abandoned mine sites and to eliminate environmental 
loopholes that led to scarring of the landscape and polluted runoff. 
Ultimately, Mr. Griles' leadership resulted in the strengthening of 
Virginia's environmental laws to protect streams and rivers from mining 
activities through the enactment of Virginia's Surfacing Mining and 
Reclamation Act.
    At the United States Department of the Interior, these state 
accomplishments were mirrored through the reformation of the Coal 
Surface Mining and Reclamation Act, the expansion of federally 
designated wilderness areas by 16 million acres, protection of the Rio 
Grande River, and acquisition of the West Water Canyon on the Colorado 
River, among other significant environmental gains. Mr. Griles 
exhibited a high level of corporate responsibility for the environment 
while at United Company in southwest Virginia.
    There are those who have chosen to use intolerant rhetoric and 
apply negative labels to Mr. Griles in an effort to taint public 
perception. There are some who will never acknowledge that a person's 
career can accommodate both public and private sector service. However, 
like most Americans, we prefer to take a more deliberative approach 
when considering an issue of such importance. It is after such 
deliberation that we are pleased to support the nomination of J. Steven 
Griles for this post.
            Sincerely,
                    James C. Wheat, III, Former Member of Board of 
                            Trustees, the Nature Conservancy, (Va. 
                            Chapter, Member of Board of Trustees, the 
                            Chesapeake Bay Foundation; Paul Ziluca, 
                            Chairman, Virginia Outdoors Foundation; 
                            Linda Porter, Past President, Virginia Land 
                            Trust, Board of Directors, Virginia Land 
                            Trust; T. Gaylon Layfield, III, Vice Chair-
                            Board of Trustees, the Chesapeake Bay 
                            Foundation; Louis Clifford Schroeder, Sr., 
                            Chair-Chesapeake Bay Local Assistance 
                            Board, Commission for the Future of 
                            Virginia's Environment, Chesapeake Bay 
                            Partnership Council, Vice-Chair, Va. Oyster 
                            Reef Foundation.

    Senator Allen. He is one who I always looked at as an 
adviser on conservation and mining issues when I was running 
for Congress, when I was running for Governor, and also in the 
U.S. Senate. This is a man with a great deal of credibility, a 
great deal of experience that he will bring as Deputy 
Secretary.
    Most importantly, Mr. Chairman and members of the 
committee, he will love his job. If someone loves their job, 
that is infectious, that is contagious. I know he has a great 
personality and I strongly and proudly recommend Steve Griles, 
a fellow Virginian. He will bring vitality, experience, 
knowledge, and integrity to this very important leadership 
position.
    So thank you very much.
    The Chairman. Thank you, Senator Allen. I appreciate that 
statement.
    Senator Allen. Later Rich Boucher will also be speaking on 
behalf of Mr. Griles. I know that as well.
    The Chairman. Are there any questions for the Senators 
before we call on Senator Allard?
    [No response.]
    The Chairman. If not, you are excused. There is a mailman 
going to get you on the way out. But outside of that--that does 
not require an answer here. It might require your glasses to 
read it.
    But in any event, Senator Allard, would you care to proceed 
since you are the last one that is on the list? It says the 
first shall be last, and that pertains to you. Please proceed.

         STATEMENT OF HON. WAYNE ALLARD, U.S. SENATOR 
                         FROM COLORADO

    Senator Allard. Mr. Chairman, thank you very much, and 
Senator Bingaman, members of the committee. Thank you for 
having me here today to introduce and recommend a person who I 
believe is an exceptional and deserving nominee to be the next 
Assistant Secretary for Environmental Management at the 
Department of Energy, Ms. Jesse Roberson. Ms. Jesse Roberson is 
sitting here on my right.
    Jesse has 17 years of private and public sector experience 
in the nuclear field, with an emphasis on environmental cleanup 
and restoration, low level waste management, nuclear reactor 
operations, and project management and safeguards and security. 
Currently, Ms. Roberson is the board member of the Defense 
Nuclear Safety Facilities Board, referred to as the DNSFB. The 
DNSFB is the oversight body which ensures the nuclear health 
and safety activities at all of DOE's nuclear weapons complex. 
She has been a board member since January 2000.
    Prior to being a board member, Ms. Roberson was with the 
Department of Energy. In her 10 years at the Department, she 
was at the Rocky Flats environmental technology site in Golden, 
Colorado, and the Savannah River site in Aiken, South Carolina. 
It was during her time at Rocky Flats that I met and befriended 
Ms. Roberson. In 1996, she became the manager of the Department 
of Energy's Rocky Flats field office. She was ultimately 
responsible for the integration and performance of all 
environmental cleanup activities at Rocky Flats.
    Before becoming the site manager, Rocky Flats was scheduled 
for a 2015 cleanup and closure date, but once she stepped in as 
manager she, along with Kaiser Hill, put into place a more 
robust and vigorous plan to close the site at the end of 2006. 
I can say unequivocally that without her leadership this 
ambitious plan would never have been a reality.
    While I believe Ms. Roberson's credentials and experience 
alone speak for her qualifications to become the next Assistant 
Secretary for Environmental Management at the Department of 
Energy, she has also received numerous awards and honors and in 
1998 she was recognized as one of the top 25 newsmakers in the 
construction industry with the 1997 Newsmaker Award by 
Engineering News Record.
    Now, in 1997 Fort Valley State University awarded her the 
platinum achievement award for outstanding leadership in the 
field of education. Plus, the Girl Scouts Mile High Council 
awarded Jesse the woman of distinction award. In 1996 Ms. 
Roberson was honored with the black engineer of the year award 
for professional achievement in government and the NAACP 
scientific achievement award by the Conicue County Branch.
    Mr. Chairman, I would like to insert into the record an 
April 3, 2001, Denver Post editorial entitled ``Roberson a Top 
Flight Pick.'' *
---------------------------------------------------------------------------
    * Retained in committee files.
---------------------------------------------------------------------------
    The Chairman. Without objection.
    Senator Allard. If you will indulge me, I would like to 
quote one line from the editorial: ``The Department's 
environmental management job in fact is one of the toughest 
positions on the Federal Government. There likely is not a 
better person around to tackle the task, however, than Jesse 
Roberson.''
    That statement sums up my feelings regarding Ms. Roberson. 
I have worked with her for many years and have seen her make 
many tough and sometimes not always popular decisions. However, 
she stood her ground, took care of business, and got the job 
done. This editorial shows that Jesse worked with the State and 
local communities to accomplish this task. She kept everyone 
involved informed, and as a matter of fact Governor Bill Owens 
strongly supports Jesse's nomination as well.
    Due to her efforts of cooperation at Rocky Flats, today our 
local communities are the biggest supporters of the closure 
activities at Rocky Flats. Not all closure sites, I might add, 
can claim this.
    Mr. Chairman, given Jesse's extensive experience and 
qualifications, I strongly recommend her swift approval for the 
position of Assistant Secretary for Environmental Management at 
the Department of Energy. I am very proud to call Jesse a 
friend and hope to soon call her Madam Assistant Secretary.
    Again, thank you for allowing me to be here today and to 
speak on behalf of Jesse.
    The Chairman. Thank you very much, Senator Allard.
    We welcome you, Jesse Hill Roberson, as the nominee to be 
Assistant Secretary for Environmental Management of the 
Department of Energy. Thank you very much. Actually, we will 
hear from our friend from across the park, Representative Rick 
Boucher from Virginia's Ninth District, who will be introducing 
Mr. Griles. Mr. Griles is going to be well introduced, having 
been introduced by George Allen and Senator Warner as well.
    Please proceed. Nice to have you over on our side of the 
fence. Please.

                STATEMENT OF HON. RICK BOUCHER, 
               U.S. REPRESENTATIVE FROM VIRGINIA

    Mr. Boucher. Thank you very much, Mr. Chairman. I am 
honored to be here this morning for the purpose of introducing 
to the committee Steven Griles, whom the President has 
nominated to be the Deputy Secretary of the Interior. I can say 
that Steve and I have known each other and we have worked 
together since we were both in our late twenties. At that time 
I was beginning my public service as a member of the Virginia 
State Senate and Steve at that time was an Assistant Director 
of the Virginia Department of Conservation and Natural 
Resources and was performing admirably in that work.
    Our work together began when I noticed an absence in the 
State of Virginia of any State laws regulating the 
environmental effects of oil and gas project development. The 
oil and gas industry in those days was just beginning its 
operations in Virginia and some environmental controls were 
necessary. As a member of the State Senate, I proposed the 
first comprehensive State program to provide those 
environmental controls, and in the effort we really needed help 
from the Virginia Department of Conservation and natural 
resources. Steve Griles provided that critical assistance and 
was a champion of our effort, and with the work that he and I 
did together we were able to pass a landmark law which still 
regulates oil and gas development in the State of Virginia.
    In later years when Steve was called upon to serve in the 
U.S. Department of the Interior, we stayed in contact. I was 
elected to the U.S. House of Representatives in 1982 and we 
have been in very close association since that time. Steve has 
provided helpful advice on a variety of matters as I have 
undertaken my work in the Congress.
    The advice that he has offered over the years has always 
been based on a deep knowledge of the subject matter and a 
balancing of various competing policy considerations. He has 
always been objective, he has always been thoughtful, he has 
always been well-balanced in the positions that he has taken.
    The congressional district that I represent contains all of 
Virginia's coal production and my constituents highly value 
conservation and the environment. The advice and suggestions 
that I have been privileged to receive from Steve Griles over 
the years have been invaluable to my ability to work through a 
wide range of difficult policy choices that frequently confront 
members of Congress who report mining regions across the United 
States. That advice has been helpful. Those suggestions have 
been material to some of the successes I have been able to 
achieve, and I thank Steve very much from what he has done in 
that area.
    I am pleased to count Steve Griles among my friends. I 
respect his judgment, I respect his integrity, I respect his 
commitment to public service and the balance that he brings to 
his work, and I strongly recommend his confirmation by the 
Senate as Deputy Secretary of the Department of the Interior.
    Mr. Chairman, I am pleased to note today that Steve has a 
large and a wonderful family, and many members of that family 
are here in the room. I would like to welcome to the committee 
Steve's mother Elsie, his daughters Kimberly and Meagan, his 
sons Timothy and Matthew, and his brothers Joe and Dwayne.
    Thank you, Mr. Chairman, for permitting me to make these 
comments on behalf of Steve Griles. I wonder if they could be 
recognized, his family. Please stand up. There they are.
    [Applause.]
    The Chairman. Have you concluded, Representative Boucher?
    Mr. Boucher. Yes.
    The Chairman. I want to thank you very much for that very 
warm statement. I might add I neglected to note that you are of 
the Democratic persuasion, which we appreciate because 
obviously those on my left are of the same persuasion. But I 
did want to make that known because I overlooked it in your 
introduction.
    Is that the extent of your remarks?
    Mr. Boucher. Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    I believe that we are ready for the panel. Let me call you 
up in the order that I have you: Patrick Henry Wood III, and we 
have appropriate signs that at least we can read, if we do not 
put any water cups in front of it. Mr. Wood has drawn the seat 
on my far right.
    Norma Mead Brownell. Please come on up. Then Lee Sarah 
Liberman Otis, Jesse Hill Robertson--Roberson, excuse me; I am 
sorry--who has been up before; Mr. J. Steven Griles, and I 
guess that is it.
    I would suggest that we offer the two FERC nominees an 
opportunity to present their statements, followed by the two 
DOE nominees, followed by Steve Griles, if that is in 
agreement, unless you have other demands on your time.
    Maybe we would start with Nora Brownell. Ms. Brownell has 
been nominated to be a member of the Federal Energy Regulatory 
Commission, commonly known and regarded as ``FERC.'' I asked 
her why she was anxious for this opportunity to serve and she 
looked rather startled because I followed it by asking, I 
wonder why anybody would want to accept that responsibility.
    But she will proceed to tell us why. But we are very 
pleased to have you here and please proceed, Ms. Brownell.
    Ms. Brownell. Thank you, Mr. Chairman, Senators. I 
recognize that our time this morning is constrained, so I will 
ask that my statement be entered into the record and I will 
make only a few brief comments.
    The Chairman. Without objection.
    Do any of you have family that were not introduced that are 
here?
    Ms. Brownell. We do.
    The Chairman. Patrick Wood, please introduce your family.
    Mr. Wood. Mr. Chairman, my wife Kathleen, my parents and 
sister and uncle are here from Texas.
    The Chairman. Would you please stand up and be recognized.
    [Applause.]
    The Chairman. Ms. Brownell.
    Ms. Brownell. Mr. Chairman, my children, my brothers, and 
the first friends are here, and I am appreciative of their 
support.
    The Chairman. Please stand up and be recognized.
    [Applause.]
    The Chairman. Ms. Otis.
    Ms. Otis. Thank you, Mr. Chairman. I think the Virginia 
Senators were kind enough to recognize my family, so I will not 
inflict all of their names on you. But I would like to ask them 
to stand.
    The Chairman. Ms. Roberson.
    Ms. Roberson. Thank you, Mr. Chairman. I would like to 
introduce my daughter Jessica.
    [Applause.]
    The Chairman. Jessica, how are you.
    Mr. Griles, I believe we have introduced your folks.
    Mr. Griles. Yes, sir.
    The Chairman. It is going to be necessary that I swear you 
in, so if you would care to stand. The rules of the committee 
which apply to all nominees require they be sworn in in 
connection with their testimony. Please raise your right hands.
    Do you solemnly swear that the testimony you are about to 
give to the Senate Committee on Energy and Natural Resources 
shall be the truth, the whole truth, and nothing but the truth.
    Mr. Wood. I do.
    Ms. Brownell. I do.
    Ms. Otis. I do.
    Ms. Roberson. I do.
    Mr. Griles. I do.
    The Chairman. I am going to ask each of you a couple of 
questions and you can respond right down the line. Before you 
begin your statement, I will ask you three questions addressed 
to each nominee before the committee. Will you be able to 
appear before this committee and other congressional committees 
to represent departmental positions and respond to issues of 
concern to the Congress?
    Mr. Griles.
    Mr. Griles. Yes, sir.
    The Chairman. Ms. Roberson.
     Ms. Roberson. Yes, sir.
    The Chairman. Ms. Otis
    Ms. Otis. I will.
    The Chairman. Ms. Brownell.
    Ms. Brownell. Yes.
    The Chairman. Mr. Wood.
    Mr. Wood. Yes, sir.
    The Chairman. Are you aware of any personal holdings, 
investments, or interests that could constitute a conflict or 
create the appearance of such a conflict should you be 
confirmed and assume the office to which you have been 
nominated by the President?
    Mr. Griles. No.
    Ms. Roberson. No, sir.
    Ms. Otis. My holdings have been reviewed by the Ethics 
Office in Energy and the Office of Government Ethics and we 
have worked out an ethics agreement that should cover it.
    Ms. Brownell. My investments, personal holdings, and other 
interests have been reviewed by both myself and the appropriate 
ethics counselors with the Federal Government. I have taken the 
appropriate action to avoid any conflict of interest. There are 
no conflicts of interest or appearances thereof to my 
knowledge.
    The Chairman. Mr. Wood.
    Mr. Wood. My investments, personal holdings, and other 
interests have also been reviewed by myself and by the 
appropriate ethics counselors within the Federal Government. 
I've taken appropriate action to avoid any conflicts of 
interest and there are no conflicts of interest or appearances 
thereof to my knowledge.
    The Chairman. Let me ask the last question. Are you 
involved or do you have any assets held in blind trusts? Mr. 
Griles?
    Mr. Griles. No, Mr. Chairman.
    The Chairman. Ms. Roberson.
    Ms. Roberson. No.
    The Chairman. Ms. Otis.
    Ms. Otis. No, sir.
    The Chairman. Ms. Brownell.
    Ms. Brownell. No, sir.
    The Chairman. Mr. Wood.
    Mr. Wood. No, sir.
    The Chairman. Please proceed. We would appreciate--we will 
take your statements, enter them into the record as if read. 
You may proceed as you see fit.

TESTIMONY OF NORA MEAD BROWNELL, NOMINEE TO BE A MEMBER OF THE 
              FEDERAL ENERGY REGULATORY COMMISSION

    Ms. Brownell. Thank you. I'll keep my comments brief. I'm 
honored to come before you this morning. We are at a time in 
history which is almost unparalleled. At a time of enormous 
growth, we are faced with uncertainty and stress in our energy 
markets. Our neighbors in the West are suffering as we grapple 
with developing energy policy that ensures reliability, 
efficiency, and accessibility.
    We need both short-term and long-term solutions. This is 
about the continued economic development of our country, about 
the wellbeing of its citizens and the stewardship of our 
resources. I believe we can and we must move forward with 
thoughtful, innovative--thoughtfulness, innovation, and 
urgency. If confirmed, I commit to do just that.
    [The prepared statement of Ms. Brownell follows:]

Prepared Statement of Nora Mead Brownell, Nominee To Be a Member of the 
                  Federal Energy Regulatory Commission

    Chairman Murkowski, Senator Bingaman, and distinguished members of 
this Committee, I am deeply honored to appear before you today. I would 
like to thank Senators Specter and Santorum for their work on my behalf 
and their leadership on behalf of the citizens of Pennsylvania. I am 
also very honored by the President's confidence in me and thank him for 
nominating me to the Federal Energy Regulatory Commission.
    As my biography indicates, I am member of the Pennsylvania Utility 
Commission and president of NARUC, the National Association of 
Regulatory Utility Commissioners. Prior to joining the Commission, I 
was Executive Vice President of Meridian Bank. I managed our corporate 
affairs department, which included community and economic development. 
While in that position, I observed first hand the value of successful 
economic development for communities and the citizens who live there.
    In the interest of full disclosure, I am a believer in free 
markets. Free markets bring innovation and efficiency that monopolies 
never have and never will. In Pennsylvania, while we transition 
ourselves to a fully functioning electric market, we are beginning to 
see these benefits manifest themselves in new generation and investment 
in new technology. However, markets do not happen overnight. They 
require monitoring to ensure that they have a chance to develop and 
grow.
    In the Pennsylvania market, we view electric competition as an 
economic development issue, pure and simple. We have resisted the 
inclination to argue over jurisdiction. We have avoided framing issues 
in contexts such as environmentalists versus industry or incumbents 
versus marketers. As we approached our transition to competitive retail 
markets in Pennsylvania, we wanted a policy that would bring certainty 
and reliability and attract the investment we need to maximize benefits 
for all Pennsylvanians.
    I also point to some benefits that are not immediately measured in 
price. Free markets bring innovation and efficiency that monopolies 
never have and never will. Pennsylvania's model was created with 
several principles in mind:

   First, everyone must benefit;
   Second, markets are fragile and must be nurtured over time;
   Third, demand and capacity must be kept in balance;
   Fourth, the independent service operator must be truly 
        independent;
   And, finally, market transparency is essential.

    Guided by these principles, competition is steadily moving ahead in 
the Keystone State. Let me share some statistics.

   More than 750,000 customers are purchasing their energy from 
        a competitive supplier.
   Over 20,000 megawatts of new generation is expected to come 
        on line in the next four years.

    New fossil generation will not and should not solve all of our 
energy problems. The advent of electric choice in Pennsylvania has 
taught us that customers want the opportunity to purchase 
environmentally friendly power. In fact, more than 10% of the shopping 
customers have chosen a green energy provider.
    The marketplace has responded to this consumer demand by investing 
in wind generation. By the end of 2001, Pennsylvania will feature 5 
wind farms with a generating capacity of 84 MW, or enough to power 
31,000 homes. In Pennsylvania, through our restructuring process, we 
were able to facilitate the development of sustainable energy by 
infusing over $70 million in new money to support sustainable energy. 
Our goal is to leverage those dollars with other investments to make 
Pennsylvania a center for energy technology.
    Lessons learned from other states have also taught us that 
customers will accept a demand side response program when they are 
reimbursed for energy they do not use. Both environmentally friendly 
energy and demand side response programs are good for the environment 
and good for the marketplace. If confirmed, I will continue to support 
the development of sustainable energy in addition to programs that 
promote new technologies.
    During my association with NARUC, I have had the opportunity to 
work with my colleagues across the country as we have attempted to deal 
with the issues in today's markets. I have the utmost respect for my 
colleagues in other states as, time after time, they have worked 
through regional differences and looked beyond purely parochial 
interests to arrive at consensus positions on very controversial and 
complex issues. This ability to move toward solid, well-grounded 
resolutions is desperately needed today. I hope to continue to work 
with NARUC and its members as well as other stakeholders. Should I be 
confirmed, I will work with my colleagues toward solutions which 
reflect unique regional situations.
    While serving on the Pennsylvania Commission, I have had the 
opportunity to implement and direct similar processes of consensus 
advancement. However, this effort was not initiated within a system 
that was known for consensus building efforts. In order to move to a 
market-based system, the Pennsylvania Commission revamped the way it 
used to do business. Simply put, markets will not wait for a nine-month 
rate case. Nor will markets pause while litigants pursue years of trial 
and appellate litigation.
    Recognizing this, Pennsylvania demanded and received parties' good 
will in pursuing consensus and settlements wherever and whenever 
possible. We pursued swift and relatively inexpensive informal issue 
resolution. This is contrasted to formalized litigation which had been 
both time and resource intense. The Commission also examined the 
settlements proposed to ensure that the public interest was actually 
advanced. We succeeded in moving into the transition phase in a timely 
manner and with well thought out initiatives. We succeeded without 
lengthy appellate litigation. And we succeeded by re-engineering the 
manner in which we expected parties to bring issues to us and the way 
our agency conducted issue resolution.
    As I worked through the complex issues surrounding electric and gas 
restructuring in Pennsylvania, my approach was one of inclusion. By 
that I mean that I listened to and worked with a wide array of 
interests and constituencies. The goal was always the same: to provide 
the best service for Pennsylvania's consumers. But in order to get 
there, I believed that I must take into account the interests of as 
many stakeholders as possible.
    There is no question that we are faced with very real problems. As 
a FERC commissioner one of my primary goals would be to reach out to 
the various stakeholders to seek input on how to solve regional and 
national problems. I still believe that today. Having worked through 
the highly complex details of restructuring in Pennsylvania's electric 
industry and the extraordinary technical nuances of telecommunications, 
I can tell you that one simply cannot be guided by a focus group of 
one. The more complex the issues are, the steeper the learning curve is 
and the greater the need for innovative thinking.
    If confirmed, I look forward to working with Chairman Hebert, 
Commissioners Massey and Breathitt and my fellow nominee, Pat Wood, to 
address these extraordinary problems. Thank you for the opportunity to 
appear before you today. I am prepared to answer any questions you may 
have.

    The Chairman. That is the extent of your statement? We 
appreciate your brevity. Thank you.
    Mr. Wood, can you match that?
    [Laughter.]
    The Chairman. If you do, you might get our vote.

TESTIMONY OF PATRICK HENRY WOOD III, NOMINEE TO BE A MEMBER OF 
            THE FEDERAL ENERGY REGULATORY COMMISSION

    Mr. Wood. Mr. Chairman, if confirmed for this position I 
will look forward to serving this Nation with the same 
collegiality, vigor, and purpose that I have served the people 
of Texas in my current position.
    [The prepared statement of Mr. Wood follows:]

Prepared Statement of Patrick Henry Wood III, Nominee To Be a Member of 
                the Federal Energy Regulatory Commission

    Chairman Murkowski, Senator Bingaman, and members of the Committee, 
I am honored to be here today as a nominee for the Federal Energy 
Regulatory Commission (FERC). I would like to express my appreciation 
to President Bush for his trust in me. It has been a privilege to serve 
him and the people of Texas for the past six years at the Public 
Utility Commission of Texas. And, if confirmed for this position, I 
look forward to serving the nation with the same collegiality, vigor 
and purpose I have brought to utility regulation in my native state.
    I bring some relevant experience with me. As the Chairman of the 
Texas PUC, I have worked to implement the Federal Telecommunications 
Act of 1996, which has opened up our local telephone monopolies. With 
two superb colleagues, I have also presided over Texas' transition from 
a fully regulated electric power market to a competitive wholesale and 
retail marketplace.
    Texas is unique in that electric providers serving some 86 percent 
of Texans are in the Electric Reliability Council of Texas (ERCOT), and 
thus under the retail and wholesale jurisdiction of the Texas PUC. In 
other parts of Texas, as in all other parts of the nation, wholesale 
electric jurisdiction is under the FERC. In ERCOT, this situation has 
allowed the Texas PUC to move forward to address the identical market 
opening issues that the FERC is addressing.
    The absence of jurisdictional ambiguity has allowed Texas to move 
assertively in setting up its wholesale electric market. Our ability to 
formulate a market vision and then implement detailed rules on market 
structure was unfettered. Early on, Governor Bush asked my fellow 
commissioners and me to set out clear and predictable incentives so 
that companies would be confident about investing in Texas. Our 
policies on streamlined generation siting, regional transmission 
planning, expedited transmission licensing, transmission cost 
responsibility and retail cost recovery have stimulated an 
extraordinary investment in new, clean power plants and record 
investment in new transmission projects. Our market-based approaches 
toward distributed generation, renewable energy, demand-side bidding 
and conservation have garnered significant attention.
    Texas is on the verge of opening its retail markets to competition. 
One potential blemish is the insufficient number of retailers who have 
announced plans to serve customers in the non-ERCOT regions of Texas. 
It discourages me that the basic wholesale market infrastructure is not 
in place outside ERCOT to allow Texas customers there to benefit from 
retail electric competition. Congress mandated wholesale electric 
competition in 1992. It is within FERC's power to establish robust 
regional wholesale electric markets, and I am committed to getting them 
in place across the nation this year.
    Workable wholesale markets require a number of key ingredients: 
adequate generation (including a reserve margin), adequate 
transmission, the ability for at least some customers to respond to 
prices, a timely and accurate settlement system, standardized rules/
protocols and a vigilant market cop walking the beat.
    Earlier in my career, I was legal advisor to FERC Commissioner 
Jerry Langdon. In 1992, the FERC promulgated Order No. 636, which 
completed the transition to a competitive natural gas market. I have 
been proud to have been a part of that effort. Recently, as constraints 
in the gas delivery system are starting to abound, some have questioned 
whether competitive natural gas markets are still working well. I 
applaud the aggressive approach the FERC has taken in recent months to 
overcome this infrastructure lag. I recognize that staying on top of 
the supply, delivery and demand situation in the broad energy 
marketplace is a continuing obligation of the FERC.
    Hydroelectricity is a key part of the electric power picture in 
some regions of the country. Of the three substantive areas of FERC 
responsibility, this is the one in which I have the least direct 
professional experience. Nonetheless, with the substantial numbers of 
transmission line certificates I have worked with in recent years at 
the Texas PUC, I am intimately familiar with the process of working 
with expert agencies in a timely manner to address environmental 
concerns in the licensing process.
    There is simply no substitute for investment in pipelines, in 
transmission lines, in power supplies (both big and small) and in 
demand-side resources. The energy industry is the heart of our economy 
and should not be immune from the benefits that new technology and 
market forces have unleashed in the telecommunications industry. In the 
short seventeen years since major parts of the phone industry were 
opened up to competition, the explosion of entrepreneurial innovation 
has transformed our entire culture. Can the loosened electron be any 
less?
    The demands of the nation require that states and the FERC work 
aggressively to get ahead of the investment curve, leaving 
jurisdictional arguments aside. There is plenty of work for everyone to 
do. A broad net must be cast, including environmental regulators, 
siting authorities, and state legislators.
    Traditional regulation requires regulators to serve as substitutes 
for a market. Speaking from direct experience in that world for the 
last decade, it is inefficient, wasteful, subject to erratic changes 
and rife with bad incentives. But, if we are to supplant a century of 
traditional regulation, it ought to be with a better system. Wholesale 
energy markets are in their infancy, and it is important to get them 
firmly established on a strong foundation. I have a record of doing 
just that, but more importantly, that record is one based on broad 
industry-wide collaboration.
    A regulator's job isn't to know the answers; it's to get the people 
that do know them a place at the table and to have the good sense to 
learn from them. My job for the past six years has been to serve as a 
catalyst for people from all sides of my state's electric power 
industry to work together, address the full range of issues and work 
through the many necessary details to implement a market. Throughout 
this transition, my chief role has been to keep everyone's eye on the 
ball: a competitive market that delivers benefits to all customers. If 
that is not the result, then we go back to the table.
    Today the nation faces extraordinary challenges on the energy 
front. Every industry participant has to understand that our mutual 
benefit from solving these problems together far exceeds any individual 
benefits if we fail to comprehensively address them. And working 
together to implement a comprehensive solution is what we shall do.
    Chairman Hebert and Commissioners Breathitt and Massey have faced 
daunting issues over the past year. If confirmed, I look forward to 
joining their team with my close friend Nora Brownell, as we work with 
Congress and the Administration to address our nation's energy 
concerns.
    I appreciate this opportunity to testify before you today and will 
be happy to answer any questions you may have.

    The Chairman. The balance of your statement will be entered 
into the record.
    Mr. Wood. Thank you, sir.
    The Chairman. Well, it is rather refreshing to hear the 
statements of the two FERC nominees, and we hope you'll be able 
to make decisions that concise, succinct, and lasting.
    Ms. Otis, would you care to go next?

  TESTIMONY OF LEE SARAH LIBERMAN OTIS, NOMINEE TO BE GENERAL 
              COUNSEL OF THE DEPARTMENT OF ENERGY

    Ms. Otis. Thank you, Mr. Chairman. It's a great honor to be 
here as President Bush's nominee as General Counsel of the 
Department of Energy. Having just come from the Senate, I'm 
well aware of the importance of mutual respect and cooperation 
between the Executive Branch and the authorizing committees and 
I very much want to work with this committee on the very 
important matters that will be coming before it concerning the 
energy challenges facing this country.
    Thank you very much for convening this hearing.
    [The prepared statement of Ms. Otis follows:]

 Prepared Statement of Lee Sarah Liberman Otis, Nominee To Be General 
                  Counsel of the Department of Energy

    Mr. Chairman and members of the committee:
    It is a great honor to be here before you today as President Bush's 
nominee for General Counsel of the Department of Energy. I would like 
to thank Secretary Abraham for his confidence in recommending me for 
this position. And I very much appreciate the Chairman''s convening of 
this hearing.
    The Administration and this Committee have already spent a good 
deal of attention and effort on the various urgent energy-related 
challenges facing our nation. As a nominee awaiting action by this 
body, I have not been involved in these discussions to date. Over the 
coming months, however, I am sure the Administration and this Committee 
will continue to discuss how to move forward together on these matters. 
My recent experience as chief counsel to an authorizing Subcommittee 
here in the Senate, as well as my past experience providing legal 
advice in the executive branch, will help me in providing legal 
assistance in connection with these discussions. I look forward to 
working with all of you on these important questions.
    Indeed, in that connection, I do want to note one point. Having 
just spent a very rewarding four years as chief counsel of an 
authorizing Subcommittee here in the Senate, I am keenly aware of the 
importance of cooperation and mutual respect between the executive 
branch and authorizing Committees. I worked hard to foster that kind of 
cooperation in my prior position. I intend to do the same at the Energy 
Department should I be fortunate enough to be confirmed.
    Recent general counsels have also spent significant attention and 
effort in assisting the Department in its efforts to clean up its 
legacy sites. This is plainly a monumental task, involving 113 sites in 
30 states covering over two million acres. The Secretary has made clear 
that while he is pleased with the progress that has been made since the 
program was established, he believes that a time horizon of 70 years 
for completion of this work--which is what Department officials have 
informed him is what current projections call for--means that this is 
just taking too long. He wants to see the Department move significantly 
faster in completing the cleanup of remaining sites. If she is 
confirmed, the task of determining how to do this will principally fall 
to my colleague on this panel, Ms. Roberson, working with other senior 
officials at the Department. But I do want to assure her and all of you 
that if I am confirmed, I pledge to work not only reactively but 
proactively with her and other interested parties, including Members of 
this Committee and State and local officials, in this challenging 
endeavor.
    Finally, as this Committee no doubt knows, the Office of General 
Counsel is known both within and without DOE for its high standards of 
professionalism. If I am confirmed, I shall endeavor to perpetuate 
those standards and to work with the hard working and talented lawyers 
there to produce nothing short of the highest quality legal product.
    With that, I would be pleased to respond to your questions.

    The Chairman. Thank you very much, Ms. Otis.
    Ms. Roberson.

   TESTIMONY OF JESSE HILL ROBERSON, NOMINEE TO BE ASSISTANT 
  SECRETARY FOR ENVIRONMENTAL MANAGEMENT OF THE DEPARTMENT OF 
                             ENERGY

    Ms. Roberson. Thank you, Mr. Chairman and Senator Bingaman 
and other members of the committee. It is a privilege to appear 
before you today as the President's nominee----
    The Chairman. Why do you not pull that mike a little closer 
so we can hear you.
    Ms. Roberson. Thank you.
    The Chairman. Thank you.
    Ms. Roberson. As the President's nominee for Assistant 
Secretary for Environmental Management at the Department of 
Energy. I thank the President and Secretary Abraham for their 
support and look forward to serving under Secretary Abraham in 
this critical position.
    I also thank you, Mr. Chairman, and your staff for moving 
rapidly on my nomination. I pledge to work closely with this 
committee and all of the Congress in meeting the many 
challenges our Nation faces in managing the capability of our 
nuclear complex.
    I am committed to safety, to our workers, to the public, 
and to the environment. After all, safety is the net goal of 
all of our efforts in the cleanup program. Getting the cleanup 
done more quickly and more efficiently is a key way to advance 
safety. It is incumbent upon us to manage the often hazardous 
work of DOE so that we maintain an increased safety margin as 
we do it. I know this can happen and must be done.
    Finally, I commit to informing and consulting with the 
Congress, the States, and individual citizens of our policies 
and decisions. Nothing that I do will be a surprise to you or 
other DOE stakeholders. Openness, accessibility, and 
accountability are core values to me personally, and they are 
certainly critical to the success of our efforts.
    Perhaps I can summarize my thoughts by saying I intend to 
learn, to communicate, to encourage, and to act, and finally, 
devote my fullest energies to the task every day that I serve 
in this position.
    Thank you, Mr. Chairman.
    [The prepared statement of Ms. Roberson follows:]
  Prepared Statement of Jesse Hill Roberson, Nominee To Be Assistant 
   Secretary for Environmental Management of the Department of Energy
    Good morning, Mr. Chairman, Senator Bingaman and other Members of 
the Committee.
    It is a privilege to appear before you today as the President's 
Nominee to be the Assistant Secretary for Environmental Management at 
the U.S. Department of Energy. I thank the President and Secretary 
Abraham for their support, and look forward to serving under Secretary 
Abraham in this critical position. I also thank you, Mr. Chairman, and 
your staff, for moving rapidly on my nomination. I pledge to work 
closely with this Committee and all of Congress in meeting the many 
challenges our nation faces in managing the cleanup of DOE's nuclear 
complex.
    I come before you today with a comprehensive understanding and deep 
respect for the magnitude of the task I am undertaking. I am a child of 
the formal south, born and raised in Alabama, and educated in 
Tennessee. My formal training is as a nuclear engineer, educated at the 
University of Tennessee. Over the last 20 years I have worked in many 
facets of the nuclear business: as a project engineer for Georgia 
Power, as a contractor and subsequently a federal manager at the 
Savannah River Site in South Carolina. Finally, I served as head of 
environmental cleanup and then Manager at Rocky Flats in Colorado. 
Currently I am a Member of the Defense Nuclear Facilities Safety Board, 
overseeing and advising the Department of Energy nationally on nuclear 
safety. I have been a production manager, a reactor operator, an 
environmental cleanup manager and an independent safety advisor. I have 
worked in the field and in Washington. I consider myself well versed in 
the complexities and challenges presented by this program. Closing and 
managing the environmental legacy of the cold war nuclear production is 
an awesome national responsibility.
    I am not daunted by the task, however. Rather, I am eager and 
anxious to get on with the challenge. I share Secretary Abraham's 
impatience with 70-year schedules and mind-boggling budget outlooks. 
The challenge of this program is great, but it does not mean taking 
three generations to see results. I do not want to leave this for my 
daughter's children to figure out. We can and we must do better.
    Mr. Chairman, I plan to acquire deep understanding of the technical 
strengths and weaknesses of the existing environmental program. I need 
to know successes, failures, where the program has inspired public 
confidence, and where it has disappointed public expectations. But make 
no mistake, cleaning up this complex will mean tough decisions. To be 
effective, the Assistant Secretary needs to step up to the plate and 
take on the hard questions. Neither the Department, the Congress, nor 
the nation will be served by anything less.
    I recognize fully that hard decisions like these will not please 
everyone. Nonetheless, decisions must be made and carried out. I will 
challenge the employees in my charge from top managers, to the hands-on 
employees in the field to satisfy our commitments.
    I am committed to safety--to our workers, to the public, and to the 
environment. Safety is the goal of all of our efforts and it must 
inform our work at every step. Getting the cleanup done more quickly 
and more efficiently is a key way to advance safety. It is incumbent on 
us to manage the often-hazardous work of DOE so that we maintain and 
increase safety as we do it. I know this can, and must be done.
    Finally, I commit to informing and consulting with the Congress, 
the States and individual citizens of my policies and decisions. 
Nothing I do will be a surprise to you or to other DOE stakeholders. 
Openness, accessibility and accountability are core values to me 
personally. They are critical to the success of our effort, especially 
when the time comes to make the tough decisions.
    Perhaps I can summarize my thoughts today by saying that I intend 
to learn, communicate, encourage and act, and finally devote my fullest 
energies to the task every day that I serve in this position.
    Mr. Chairman and other Members of the Committee, I will be pleased 
to answer any questions you may have.

    The Chairman. Thank you very much, Ms. Roberson.
    Please, Mr. Griles, please proceed.

 TESTIMONY OF J. STEVEN GRILES, NOMINEE TO BE DEPUTY SECRETARY 
                        OF THE INTERIOR

    Mr. Griles. Mr. Chairman, Senator Bingaman, members of the 
committee: It's really an honor to have this opportunity to 
appear before you today as Deputy Secretary of the Interior 
nominee. I wanted to--I'm going to summarize this statement 
with a couple of points that I'm going to pull from it.
    Secretary Norton when she was confirmed and has now adopted 
at the Department of the Interior a protocol that's known as 
the Four C's: consultation, cooperation, and communication, all 
in the service to the shared national idea of conservation. My 
role as the Secretary has defined it will be to ensure that the 
Secretary's mandate is to be applied to all aspects of the 
Department's activities.
    Mr. Chairman, if I could for a moment, I just want to add a 
personal perspective. As a native Virginian from Southside, my 
dad taught me how to fish and hunt. When he used to walk 
through the fields and streams and all, he taught me a lot 
about how to handle a gun safely and how to hook and cast a 
line. He taught me about how to look at the ripples of the 
water when fish are feeding. He taught me how to track the 
quarry of an animal and he taught me, more important, the 
judgment to know when to shoot, what was right, and which prey 
was fair game.
    I spend a lot of time each summer with my kids hiking the 
Appalachian Trail. We ski the West. We enjoy our national 
parks. We have been to a lot of them. My family has been 
introduced to you today.
    My point in all of saying this is we've rafted the Colorado 
River, fished the Snake River, and I've been to the beautiful 
State of Alaska and spent time there. We have an obligation to 
protect and preserve this national wealth of America, but not 
without that obligation--more importantly and more sacred than 
those of us who have the privilege that I have, to have 18 
years of serving in government prior to this, and with this new 
opportunity to serve in this new government that is before us 
today, we have a responsibility to provide for economic 
security for our Nation.
    Those two goals of conservation, economic security, are not 
incompatible. If I am not--if I am confirmed, I pledge a 
commitment to do exactly that, to bridge those two obligations, 
to protect the land and our resources and to provide for 
rational careful management of those resources for our citizens 
now and in the future.
    I look forward to your questions, Senators.
    [The prepared statement of Mr. Griles follows:]

Prepared Statement of J. Steven Griles, Nominee To Be Deputy Secretary 
                            of the Interior

    Mr. Chairman, Senator Bingaman and Members of the Committee, it is 
a privilege and an honor to appear before you today as the President's 
nominee for Deputy Secretary of the Interior. President Bush and 
Secretary Norton have paid me the highest compliment by recommending me 
for this position. As a son of Virginia, having been raised in 
Southside, my parents taught me the value of conserving our natural 
resources--and protecting them for our children. More than 30 years 
ago, in my first job with the Virginia Department of Conservation, 
these common sense values helped me with each decision I made.
    The Virginia Department of Conservation was responsible for the 
oversight of numerous state programs including management of the 
Commonwealth's parks, forests and mining activities. During my tenure 
some of the Department's many accomplishments were creating five new 
state parks, creating Virginia's litter control and prevention program, 
and leading the effort for Virginia to secure state administration of 
the Federal Coal Surface Mining and Reclamation Act.
    I ended my service with the Commonwealth of Virginia to join the 
Department of the Interior in 1981. I originally served as the Deputy 
Director of the Office of Surface Mining, Reclamation and Enforcement. 
I held several other positions within the Department before being 
confirmed by this Committee and the full Senate for the position of 
Assistant Secretary of Land and Minerals Management in 1985. Two of the 
more significant achievements during this time period at Inferior were 
directly related to my close working relationship with members of 
Congress. Let me briefly explain.
    As this Committee is well aware, energy and mineral laws and 
regulations are complex. Occasionally the laws enacted to address these 
complexities result in the unintentional creation of loopholes--paths 
for ``bad actors'' to circumvent the spirit and intent of the law. In 
other cases, there is the opportunity for outright fraud. I took these 
challenges and worked as a common sense problem solver. I was 
privileged to work in a bi-partisan manner with the late Congressman Mo 
Udall to eliminate the abuse of the Coal Surface Mining and Reclamation 
Act known as the ``two-acre exemption.'' I also had the honor of 
working closely with Senator Dale Bumpers to secure the passage of 
amendments to the Mineral Leasing Act that eliminated fraud in onshore 
oil and gas leasing. As in Virginia, I also worked to protect our most 
treasured unspoiled landscapes and recommended the increase of 
federally designated wilderness areas by more than 6 million acres.
    At the time I left the Department of the Interior in 1989, I had 
spent my entire professional career in public service. I looked forward 
to taking my extensive experience from government and use it to foster 
better partnerships between public and private groups to work in 
concert to solve many of our Nation's most serious and challenging 
problems. While in the private sector, I have had the opportunity to 
work with all forms of energy production. For example, I have worked 
closely with one of the largest renewable energy companies in America--
specializing in geothermal, solar and wind energy. I have worked to 
secure additional electrical generation capacity in California, and I 
have extensive experience working with coal bed methane development in 
the West. In that effort, I was successful in securing additional funds 
to hire more Bureau of Land Management personnel to review and inspect 
coal bed methane development, not only to issue permits but also to 
ensure environmental protection.
    My combined public and private sector experience has afforded me 
the opportunity to gain different, and very valuable, perspectives to 
the issues that the Department of the Interior now faces. I realize the 
decisions relating to our nation's parks, wildlife, minerals and lands 
are complex. In addition, I am keenly aware of the Department's special 
obligation to American Indians, Alaska natives and the citizens of our 
territories. There are no easy solutions to the problems confronting 
the Department's leadership--but I look forward to tackling problems 
and finding solutions through collaboration and partnerships.
    Over the years, I have had the good fortune of working with this 
Committee on many critical issues. I've learned a great deal about how 
government works with the private sector. I've learned the importance 
of community input. But just as importantly, I have learned the value 
of listening to all interested parties before making decisions. This is 
crucial to ensuring the public's interests are. served. The decision 
making process must include a visible and participatory process where 
all parties have a seat at the table.
    The issues and challenges facing the Department of the Interior are 
many and varied. The Department has the mandate to balance many 
interests and needs, and to be exceptional stewards of our precious 
lands for the sake of our children and for future generations of 
Americans.
    Under Secretary Norton, the Department of the Interior has adopted 
a protocol known as the FOUR Cs: Consultation, Cooperation, and 
Communication, all in the service to the shared national idea of 
Conservation. My role as Deputy Secretary will be to ensure that the 
Secretary's mandate is applied to all aspects of the Department's 
activities.
    If confirmed, I pledge to work in a forthright, bi-partisan and 
cooperative manner with this Committee, and with all members of the 
House and Senate. I pledge to listen to your interests and hear your 
concerns. It's my commitment to you that I will represent President 
Bush, the Department of the Interior and the American public to make 
sure that when we leave office, our water will be cleaner, our 
environment will be safer, and our public lands will be in better 
condition than when we found them.
    Thank you again for the opportunity to appear before you, and if 
there are any questions, I would be pleased to try to answer them.

    The Chairman. Thank you very much, Mr. Griles. We're going 
to proceed with questions to the nominees and we'll proceed in 
the order that members have come to the committee, and we'll 
limit. We have a timer on over here for about 7 minutes. Is 
that agreeable with you, Senator Bingaman?
    Senator Bingaman. Yes.
    The Chairman. I'd like to ask the two FERC nominees a 
question relative to our interest in assisting California. And 
I know Senator Feinstein, who's on our committee, is vitally 
interested in some relief, and I pledged to work with her to 
find a tangible way to provide that relief. But I want to make 
sure that that relief is realistic and is forthcoming in the 
addition of new power generating facilities that will actually 
be built and financed.
    I think we have a little difference of opinion on the 
concept of wholesale rate caps and what it will or will not do 
without the assurance that those caps are at a level, if indeed 
there's any effort to seek relief through wholesale rate caps, 
that they're at a level that we've seen exist, say, in Texas 
or, for that matter, Pennsylvania, which are in the area of 
1,000 or thereabouts.
    My concern is that we have the commitment from the 
financial community who are going to finance these power 
generating units that they actually will be completed. It's one 
thing to receive a permit; it's another thing to have 
unconditional financing commitments. It's my understanding that 
at least some that we've made some inquiries on have suggested 
that the financing is conditional upon the assurance that 
there's a reasonable rate of return.
    My concern is if we explore wholesale price caps and these 
caps are so tight that they don't provide in the minds of the 
investor some degree of certainty on the reasonable rate of 
return we might find ourselves in a condition where we do have 
wholesale caps, but we don't have the relief that we need in 
the building of the new facilities.
    Now, at a hearing yesterday that we conducted we heard that 
the State of California and the California local gas 
distribution companies, specifically PGE and Sempra, have 
opposed the construction of a new natural gas pipeline to 
California. Now, FERC is in charge of authorizing these 
pipelines. This one specific was the Kern River. We also are 
concerned about California having adequate supplies of natural 
gas.
    So my question to you is what are your views independently 
on this dilemma of how we can protect California from 
unreasonable price gouging, which has occurred and which FERC 
is investigating with diligence, I think, which was noticeably 
missing under the makeup of FERC prior to the new 
administration. I don't mean to be partisan on that, but I 
think it's a reasonable observation that, even with the limited 
makeup of FERC with two Democrats and one Republican, they are 
moving expeditiously to try and bring these matters to a halt, 
and they're initiating investigations and so forth.
    So my question is broad in one sense, but more definitive 
in another, of what your views are on how to address this 
legitimate dilemma in California?
    Ms. Brownell. Senator Murkowski, you've identified a series 
of very complicated issues that don't lend themselves to a 
simple answer, which I know that you and your colleagues have 
been really focused on in the last number of months. We need to 
do everything we can to expedite the development of 
infrastructure in California and indeed throughout the country. 
We need to move forward expeditiously at FERC and we need to 
send the assurances to the financial community that there will 
be an adequate rate of return.
    Rate caps are one of many things that need to be 
considered, but need to be considered, as you've indicated, in 
an extremely cautious way. We don't want to do anything to 
upset the balance in the investment community, whose capital is 
critically needed to move forward with infrastructure, 
powerplants, and a number of other additions. So that I think 
that I would be very cognizant, as we have been in 
Pennsylvania, of achieving a balance of certainty in the 
market, a clear set of rules, expedited treatment, at the same 
time sending messages to the investment community that there 
will be expectations of fair rates of return and there will be 
expectations of judicious treatment of applications.
    We have financed and under construction in Pennsylvania 
about 15,000 megawatts of new generation that should come on 
line over the next couple of years. So we've seen that, sending 
the right economic signals, markets can and do work.
    The Chairman. Mr. Wood.
    Mr. Wood. Mr. Chairman, I would only add to that a critical 
component that is also under FERC's jurisdiction of electricity 
is the supply of natural gas. I do applaud the action that FERC 
has taken in recent months to really accelerate the delivery of 
gas through the interstate grid to California and to other 
States. I also recognize that there's also a role for the State 
to play, and California in particular regulates its own 
pipelines inside the State's borders in some cases. So it's 
important that we on the FERC and the State commissioner 
colleagues in California and Pennsylvania and other States work 
together to make sure that the full delivery system is 
dependable.
    I think that's one issue that has shown up more lately, is 
that there are some constraints and some aspects of the gas 
transmission system that are under strict scrutiny right now 
and need to continue to be looked at closely. I know there are 
some pending matters at the commission looking at these issues 
specifically, that we look forward to, if confirmed, getting to 
the bottom of.
    The Chairman. One of the opportunities that we had when 
FERC Chairman Hebert was with us was in his example of cost of 
service accounting or cost of service as a method of 
determining, if you will, how to price, and they brought in 
boxes of detailed information, indicating the complications it 
would be for FERC to do this. It's certainly a suggested way. 
The practical aspects of that obviously are the responsibility 
of FERC.
    Some suggested, well, that's their job anyway, regardless 
of how many boxes you bring in here. Would you conclude by 
commenting on your evaluation of the practicality of that 
methodology being looked at?
    Mr. Wood. Certainly. Cost of service ratemaking is 
something that regulators can do and have done for probably a 
century. Doing that on a monopoly industry is a different 
process than doing it on somebody that's open to the market. So 
taking a market participant and then putting a cost of service 
regulation on them, yes, it's doable. I think, quite honestly, 
in the amount of time it would take to establish a fair rate we 
might well have enough powerplants to kind of negate the whole 
point in the first place.
    But I should admit, yes, it is doable. But it is, I think 
as was probably demonstrated here by Chairman Hebert, it is no 
small task from a regulatory perspective.
    The Chairman. Well, you may respond to this. My time is up. 
But it has been suggested, and I don't think we know, how 
gigantic a task it would be, but I think I've got a feeling for 
it because there are different costs associated with your 
ability to produce power depending on what your source of 
energy is, the cost of that, all kinds of factors.
    So am I not correct in suggesting that it's different in 
many, many of the mixes that come in in the generation of 
energy? Can you tell us a little bit why it's impractical and 
what you would suggest as a more practical methodology?
    Ms. Brownell. As Commissioner Wood indicated, it could be 
done, but the reality is in transforming markets and in moving 
forward it's important that we develop new tools to respond to 
market development issues. Cost of service would not, as 
Commissioner Wood indicated, respond to the crisis in 
California possibly in a timely enough manner to really bring 
that short-term relief that we're looking at.
    Certainly I think the commission in its recent orders has 
been extremely forward-looking and innovative in using a number 
of tools, including closer market scrutiny, to respond to the 
issues that they're confronting. No regulation can, of course, 
replace the supply or develop the supply that we need in the 
very short-term future. What we can do, however, is make sure 
that we're sending the signals that get that supply to the 
market as quickly as possible.
    So cost of service has worked, but the reality is in these 
kinds of changing times and evolving times we need to develop a 
number of new tools to respond to those.
    The Chairman. My time is up.
    Senator Bingaman.
    Senator Bingaman. Well, thank you all very much for being 
here.
    Let me just follow up on this issue that we've been talking 
about. There's a 1975 case out of the Court of Appeals here in 
the District of Columbia, where the court makes an interesting 
statement. They say of the commission's--this is talking about 
the Federal Power Commission, which is the predecessor to FERC. 
It says: ``Of the commission's primary task there is no doubt. 
That is, to guard the consumer from exploitation by 
noncompetitive electric power companies.''
    Would you agree with that statement, that that is the 
primary task of FERC?
    Ms. Brownell. Yes.
    Mr. Wood. I would.
    Senator Bingaman. I guess that would lead to sort of a 
philosophical type question: Do you see competitive markets as 
a tool that can, using the court's phrase, ``guard the consumer 
from exploitation,'' or do you see those competitive markets as 
an end in themselves, regardless of what effect they have on 
the consumer?
    Mr. Wood. Senator Bingaman, regulators have regulated in 
the past, including now, because monopolies existed. Whether 
they were natural monopolies or legislated monopolies, they 
were monopolies, and to protect the consumer regulation was put 
in place, folks like Nora and I were drafted to do the job in 
our States.
    I think there was a general consensus on many of the 
economically regulated industries in the late seventies here in 
Congress and in the early eighties that substituting market 
forces where possible would allow regulation to back out of the 
way. So the surrogate for regulation would be a workably 
competitive market. At that point and not before would be the 
step where the regulator could step back. So competition first, 
then ultimately deregulation where it's feasible.
    So I think, yes, sir, markets are not the end; they are a 
means by which the customer continues to be protected against 
undue exercise of market power.
    Senator Bingaman. Thank you.
    Ms. Brownell. Senator, I would agree. I would also point 
out what we have discovered in our States as we've moved to 
competitive markets, and that is that these are transitions 
which happen slowly, and there are certainly oversight 
responsibilities to the consumer to ensure that in this 
transition they are not being taken advantage of and their 
needs are being met.
    We have played a very active role and I think commissions 
everywhere will not abandon the consumer. Indeed, their first 
responsibility will be consumer oversight, consumer education, 
and consumer empowerment.
    Senator Bingaman. So let me just conclude with one other 
question. When the Federal Power Act declared that unjust and 
unreasonable wholesale rates are unlawful and directs FERC to 
monitor that and where they determine that there are unjust and 
unreasonable wholesale rates FERC is directed to go ahead and 
set just and reasonable rates. Do either of you have a problem 
with that responsibility which you would be taking on?
    Mr. Wood. No, sir.
    Ms. Brownell. No, sir.
    Senator Bingaman. Thank you very much.
    Let me ask Mr. Griles a few questions if I could. You have 
had a very successful practice representing oil and gas and 
coal companies and various others before the Congress and 
regulatory agencies in recent years, and certainly that is in 
the finest tradition of advocacy in this town. But what I'm 
concerned about is trying to determine what assurance you can 
give us that the public interest and the interests of the 
public in seeing its resources protected and its laws and its 
regulations strictly enforced. What assurance can you give us 
that that interest will now be your primary and only concern 
and that you can avoid a conflict as a result of the prior 
representation that you've been engaged in, which as I say has 
been quite honorable in the private sector, but certainly would 
be a problem if it continued now that you're taking on these 
public duties?
    Mr. Griles. Well, Senator, thank you. I have had the honor 
to work with you personally on some legislative efforts and we 
have been successful in doing that, and thank you for your help 
in those areas.
    Senator, I spent 18 years prior to my leaving government in 
public service. It is an honorable profession. It is one which 
we enter into with a sacred trust that we have to honor and we 
have the raise the public trust above all other issues. In that 
regard, I have recused myself on all the recusal forms and 
identified all prior clients and I have worked with the 
Government Ethics Office to make sure that there is no 
misunderstanding or mistake about what I will and will not do.
    I will not be involved in any activities or any clients, 
any of the issues, that I have been associated with in terms of 
my prior private practice. But I think, Senator, you know, it's 
an honor to be in public service. Each of the Senators sitting 
here and all your staff are in public service. I'm entering 
back into that profession because it is an honorable 
profession, and I will do my utmost and assure you not only to 
prevent the appearance of any improprieties or conflicts in 
terms of my prior associations and will do my best to uphold 
that honor for which we all are serving, sir.
    Senator Bingaman. Well, thank you.
    Let me ask about some actions that occurred toward the end 
of your tenure as Assistant Secretary of the Interior for Lands 
and Mineral Management. The Minerals Management Service at that 
time adopted a final rule that allowed coal companies to deduct 
black lung taxes, abandoned mine fees, and State and local 
severance taxes from the value of the coal that they paid 
royalty on to the government. As I understand it, that final 
rule was adopted and then when Secretary Lujan came into office 
10 months later he reversed that.
    I don't know if you can give us insight as to what role you 
had in that rule, what your view is on the decision to reverse 
it or to adopt it initially. I think it was signed by your 
deputy, James Cason.
    Mr. Griles. Senator, it's been more than 12 years ago and 
the facts are not--in terms of the exact nature of which rule 
you're speaking of. The issue of the deductibility of State 
severance taxes and the black lung taxes and all was something 
that Secretary Hodel himself was directly involved in and he 
made that decision based on presentations that were made and 
information that was provided to him. It was a call of the 
Secretary of the Interior at that time, Don Hodel.
    The implementation of that occurred. I was not involved in 
the implementation or the signing of that rule. In fact, I 
recused myself, Senator, in the fall of 1988 from any of those 
kinds of activities as I was seeking outside employment. That 
regulation was signed by, as you say, Mr. Cason in the acting 
capacity in concert with the Secretary of the Interior, for 
which I was not involved in.
    Senator Bingaman. My time is up, Mr. Chairman. Thank you.
    The Chairman. Thank you, Senator Bingaman.
    In the order, Senator Burns on my far right.

         STATEMENT OF HON. CONRAD BURNS, U.S. SENATOR 
                          FROM MONTANA

    Senator Burns. Well, I just want to congratulate the folks 
here before us today for public service. I think we discussed 
in our private meeting some of the concerns I had, and most of 
it is the relicensing of some of our dams and power generation 
and hydro. We've been very slow in doing that. The process has 
been very slow and painstaking, and I think there'll be further 
discussions on maybe it might take some actions of Congress in 
order to facilitate relicensing and to accelerate that 
licensing if we possibly could.
    As you know, around 15,000 megawatts of hydroelectric 
capacity in California alone will be up for relicensing in the 
next 15 years. Now, that constitutes 4 to 8 percent of their 
production, and right now they're not in any mood of losing any 
of their capacity to generate electricity in California. So 
that concerns a lot of us with the relicensing.
    So I thank the chairman and I have no questions for the 
folks at FERC or with anybody else. We've pretty much talked 
over those situations as we met in our office, and we 
appreciate you coming by and answering and responding to those. 
I thank the chairman.
    [The prepared statement of Senator Burns follows:]
   Prepared Statement of Hon. Conrad Burns, U.S. Senator From Montana
    Thank you, Mr. Chairman, for the opportunity to address the 
Committee this afternoon. I welcome the nominees to this hearing and 
thank them for giving us the opportunity to engage in this discussion 
today. As we fill these positions people who will set the course for 
the future, I am glad to say we have very capable people. After 
learning more about each of them I am confident that their combined 
knowledge and experience will serve the American people well.
    There is no doubt that today we will hear a lot of different 
opinions today on the role of the Departments of the Interior, Energy, 
and the Federal Electric Regulatory Commission.
    These are subjects very close to my heart, because my home state of 
Montana contains so much public land managed under the Department of 
the Interior. Additionally, the challenges of balancing the interests 
of people, wildlife, and different types of land use are becoming 
harder all the time. Montanans are affected very deeply by decisions 
regarding federal land, because they are the ones trying to make a 
living on that land, or live next to it, or use it for recreation.
    Montana also has a vital stake in the development of a sound 
domestic energy policy. Since we are a net producer of energy, and have 
access to large reserves of energy resources, the decisions about how 
these resources can be used could make or break our economy. Right now 
it's a struggle to keep many of our industries afloat, and with the 
added pressure of region-wide electricity shortages and what looks to 
be an upcoming drought, things are looking to get even tighter as we 
move through the year. I am interested to see how the FERC nominees 
will propose to address these challenges in Montana and elsewhere.
    I know from experience that it is very possible for the Department 
of the Interior to be a one-way street and hand down regulations 
unilaterally. I know that with our new Secretary Norton in place, this 
will not be the case. She needs a Deputy Secretary who can help to 
manage the Interior as an fair and balanced agency. Tough decisions 
will need to be made, and we need someone who is confident in making 
them. I support Steve Griles because he brings outstanding credentials 
to the job. Having served in a number of high level positions within 
the Department of the Interior, and in the private sector, his 
knowledge regarding public lands policy will serve him well. He will 
look for answers to the hard questions, and I am confident he will do a 
great job.
    There are a few specific issues I would like to mention to note how 
important they are in Montana, and also for many other states. When we 
look at public lands, energy development and access to public land are 
vital to Montanans. These issues will be coming up again and again over 
the next few years, and I look forward to working with my colleagues in 
the Senate and with the all our nominees today to craft sound policy 
with respect to maintaining a reliable supply of domestic energy and 
making sure our public lands are available to the public.
    When you look across this country, you see high prices for 
petroleum, for natural gas, and electricity. This means high fuel 
prices, and pressure on families who are trying to heat their homes, 
and manufacturing companies that have to shut their doors because they 
simply cannot afford to keep the power running. There is no way we can 
form a comprehensive energy policy for this country without looking at 
the whole picture. This means that the nominees we have in front of us 
today will need to work together to ensure that all the sides of this 
issue are addressed. This will include everything from access to energy 
resources on public land, siting new energy production, transmission 
and pipelines, and streamlined licensing procedures.
    These examples that I have mentioned are complicated problems, that 
will require well thought out answers, and I am confident the nominees 
we are listening to today have what it takes. Thank you, Mr. Chairman.

    The Chairman. Senator Thomas, and then followed by Senator 
Johnson, who I guess--Senator Feinstein would be after that.
    Senator Thomas. Thank you, sir.
    Mr. Griles, this newspaper thing says ``represents the 
movement of pro-industry and anti-regulation conservatives.'' 
How do you respond to that?
    Mr. Griles. I'm not sure how you respond to the Washington 
Post, Senator, and I don't know that today is my day to try. 
Senator, I've had a long history of public service. I have my 
own personal views about how government should work. It should 
work for all people. It should protect our resources and it 
should provide for economic opportunity.
    And I think, Senator, as we look at all the issues the 
Department of the Interior is faced with, as I said in my 
opening statement, we have to have cooperation and 
communication and we have to have compliance with all the rules 
and regulations, and we have to do that under the ethic that is 
called conservation. That's my objective. That's what the 
Secretary has announced and that's what I'll try to achieve 
with her as we move forward.
    Senator Thomas. When you talk about the mission of the 
Department of the Interior, I presume you talk about 
conservation, you talk about preservation of the environment, 
but also multiple use of those lands and resources; is that a 
fair statement?
    Mr. Griles. Yes, Senator. We have--the crown jewels of 
America are under our protection. Those national parks must be 
protected and we will protect them. We also have the unique 
opportunity of managing multiple use lands that have been 
designated as multiple use by the Bureau of Land Management, 
and they need to be managed in a multiple use fashion.
    Within the Bureau of Land Management, we also have 
wilderness areas. We have beautiful areas that have been 
designated as monuments under the Bureau of Land Management. We 
have all lands for all people, and that's how we must manage 
them, to protect those that ought to be protected to the 
highest degree, and those which can be used in a multiple use 
purpose, we should allow that use with some conservation 
principles being applied.
    Senator Thomas. How important to you is the concept of 
access, so that people who are the owners of these lands, the 
owners of the park and so on, the first responsibility is to 
protect the resource, but isn't there a second responsibility, 
to allow people to have access, for instance on managed and 
cleaned-up snow machines, for example?
    Mr. Griles. Obviously, access to our beautiful parks, which 
I have, as indicated, had the opportunity to experience, is 
very, very important. We are in some instances loving our parks 
to death, and we need to make sure that the health or the 
future of those parks, that they're preserved.
    Some of the issues that you're alluding to are in 
litigation, specifically on the snowmobile question, and I 
think it would probably be best if I didn't speak direct to 
that issue. But we need to assure that our parks are protected, 
but they're enjoyed by all Americans.
    Senator Thomas. With respect to FERC, I understand FERC is 
a regulatory agency, but do you feel like there's any value--
you talk about, you know, what needs to be done and the fact 
that you need transmission and a grid. Do you feel like there's 
any role for FERC to have suggestions as to how we fill the 
needs for energy needs? Or do you just--is your job just to 
regulate ideas that other people have?
    Ms. Brownell. Senator, that's a good question. Certainly in 
Pennsylvania as commissioners we see it as our responsibility 
to be resources to our legislatures, to our executive branch, 
to the people that we serve. So that we play an active role in 
talking through issues, in trying to design new solutions to 
new problems. We see ourselves as problem solvers and 
resources, and I think within the bounds, of course, by which 
we're guided, we would certainly--I would certainly see it, my 
role, to be working with you and others to come up with 
solutions.
    We're in a new world, in a new market, with a lot of 
challenges, so we all better be as creative as we can.
    Mr. Wood. I think the only thing that I would add to that, 
Senator Thomas, is yes, there is a clearinghouse role. 
Certainly with the Department of Energy and the commission, 
there is probably some overlap there and I think probably some 
ability to synchronize a little bit better where appropriate 
the role of the commission and of the Department. But in doing 
some kind of future planning about not only where the grid is, 
but where are powerplants being located, where are sources of 
fuel, do we have the infrastructure to get those fuels to the 
appropriate markets, generally participants in the market will 
respond in an appropriate way as to where those ought to be. 
But I think we also need to kind of have a fallback provision 
that if they don't, is there some kind of nudge where we direct 
investment to a certain area so that infrastructure problems 
don't kind of meet a train crash?
    So yes, I think there's probably not a dominant role, but 
certainly a supportive role, a very active, vigilant role, that 
the regulatory commission would and should play in monitoring 
the health of the energy markets.
    Senator Thomas. It's a great change, as you well know 
better than I, in the electric industry, for example, where it 
used to be if I was a distributor and a generator I would build 
a transmission line to serve my needs. Now we're talking about 
merchant generators and we're talking about moving on a 
national grid. So there needs to be some input.
    One of the interesting things for all of you is, and I'm 
glad the Vice President is doing it, when we talk about energy 
it's not just the Energy Committee any more. It's also 
Interior, it's also the regulatory people, it's also EPA, all 
of whom have very important roles to play in where we go. Just 
the miles of transmission, for example, are not the issue. It 
also has to do with the voltage. It makes a lot of difference 
on how much you can carry.
    So I hope that you regulate, of course, which is your task, 
but also are willing to give some advice and counsel as to how 
we set up energy policy and a distribution system that'll work 
for us.
    Thank you.
    Senator Bingaman [presiding]. I believe Senator Feinstein 
is next.
    Senator Feinstein. Thanks very much, Mr. Chairman.
    There are probably no two appointments that I will have an 
opportunity to ask questions of in this entire administration 
that are more important to the State of California than the two 
FERC commissioners, because you can make the difference between 
life and death. It sounds overly dramatic, but it isn't.
    California effectively stands at a precipice. So your 
answers to these questions are very important to me. Let me 
begin. California's peak demand last week--my yellow light 
already went on and I didn't have a chance to ask the question 
yet.
    Senator Bingaman. I agree. I think we'll ignore that. It's 
back to green, as you can see.
    Senator Craig. Jeff, I'm controlling the dial.
    Senator Bingaman. I see.
    [Laughter.]
    Senator Feinstein. Oh, that's what it is.
    California's peak demand last week reached 32,000 
megawatts. Its normal summer peak is 45,000 to 47,000 
megawatts. Yet last week we had rolling blackouts and we had 
electricity selling at $1900 a megawatt hour. How do you 
explain that and how could FERC address it?
    Mr. Wood. I'm not sure I know how to explain that, Senator 
Feinstein. I think if confirmed I'll have the opportunity to 
address that and explain it. I also read with interest the 
reports of the megawatt hour price for a non-emergency market 
sale as well. I think that, of course, you know, it is 
difficult with these pending matters that I definitely would 
like a chance to vote on without having to recuse myself before 
the commission.
    The commission, as you know, initiated the proceeding last 
summer when the San Diego complaint was filed and that began a 
series of related complaints that I think I don't need to 
belabor the committee with--I think you know as well as I do--
it's led to an order in the recent past 3 weeks that the 
commission has passed that said, here's how we're going to get 
back to just and reasonable rates. I'm not sure under the terms 
of that order if that sale that you refer to is captured or 
not. I think we will have the opportunity very soon to look 
into the fact as to whether it is or not and do something about 
it.
    But Senator Bingaman's question was really the core and 
it's one I believe that you and I had the opportunity to visit 
about, Senator Feinstein. unjust and unreasonable rates. The 
commission found in fact that under certain circumstances, in 
their December order, there were unjust and unreasonable rates 
being charged in California. They began a plan to do something 
about getting them to just and reasonable levels, and again 
that's a work kind of under construction as we speak and it's 
one I look forward to getting all the facts from the whole 
arena.
    Certainly I could react to a news story, but I don't know 
that that would be what you would want in a prudent regulator. 
I think it's important for us to get to the bottom of the full 
story there and find out why in fact a $1900 per megawatt hour 
sale fits under the ``just and reasonable'' rubric.
    So I wish I could give you a detailed answer based on facts 
and knowledge. I don't have the full amount of both, but I do 
look forward, if confirmed, to getting to the bottom of that 
and a number of the other issues that are very important to you 
and your home State.
    Senator Feinstein. Mrs. Brownell.
    Ms. Brownell. Senator, I would add in addition to the 
things that Pat outlined, it's clear that there is something 
very broken. In addition to what is obviously a serious supply 
problem, there are other factors at work that are not fully 
understood by us because we're not in possession of all the 
facts. We need to be aggressive and we need to act with a sense 
of urgency to bring transparency to the transactions that are 
going on throughout the West, to take whatever steps are 
necessary to respond to things that we find that may in fact 
not be appropriate.
    And we appreciate the risk at which your constituents find 
themselves and commit to moving as quickly as we possibly can 
if we're confirmed. We need to end the uncertainty and tragedy 
that's occurring for all of the constituents of California and 
indeed throughout the West.
    Senator Feinstein. Thank you.
    Yesterday natural gas was selling for $11.52 in southern 
California and $3.31 in the San Juan Basin. I understand that 
before FERC issued Order 637 in February 2000 the 
transportation cost to move gas from San Juan to southern 
California could not exceed 70 cents. At one point last 
December the differential was more than $40. What accounts for 
that in your view?
    Ms. Brownell. Senator Feinstein, you've hit I think upon an 
ingredient in the dysfunctionality that we do not fully 
understand. In fact, both Pat and I have asked a lot of 
questions and have been unable to get answers that are 
satisfactory to us. Clearly, there is information at the FERC 
that may shed some light on that. But I can't explain that. It 
really doesn't make sense, and without being in full possession 
of the facts I can assure you that that is one aspect that will 
not go ignored.
    There are many factors moving in a market and we can't 
afford to ignore any one of them. We need to have a full 
understanding of exactly what's going on with each contributing 
segment of the market.
    Mr. Wood. I think the only thing I would add, Senator, I 
mentioned that in response to Chairman Murkowski's question. I 
think there is a big piece of the puzzle, not just at the lack 
of generation facilities, which is indeed a very big concern--
and I was pleased actually the day we visited to go through the 
data of the different plants that are out there and coming on 
line--but the fuel that runs those plants and how that actually 
gets to California and how it goes from the price it comes out 
in Texas or San Juan, for example, to an end point in 
California.
    There are some constraints on the system. I've been made 
aware of those. But the interplay between a regulated rate of a 
regulated pipeline, whether that's a FERC-regulated line or a 
California PUC-regulated line, and you add to that a market 
price of a gas commodity, the math doesn't add up. I think, as 
she has said, we're looking--we've been asking really 
excessively--not excessively, but a lot--of different players 
in the market: Where's the money going? Which pocket is it in? 
Who's got it? And I'm not sure I've got the right answer to the 
question, but I think that is the salient question that I would 
look to get an answer at pretty quick when we get over there, 
if confirmed.
    Senator Feinstein. Just so everybody knows, the FERC order 
essentially took off the transportation cap on the 
transportation of natural gas, and that's when the prices 
exploded.
    My next question is, how would you address the issue of 
bundled transactions in the grey market? Would you support 
greater transparency of these transactions?
    Mr. Wood. Again, that's the core. This Order 636--637, as I 
understand it, would apply to just a limited range of 
transactions in the very short-term market. But there are still 
these other ones, as you labeled them, the grey market, where 
you get just a delivered price, this is what you're paying to 
get gas at your burner tip. It includes whatever the gas costs 
me to buy it, whatever the gas costs me to transport it, and 
whatever else I want to add on here to give you a final price.
    The unbundling of that price certainly gives the market 
participants some knowledge about what each component of their 
product is costing them, and I think there's probably a fair 
argument to be made for transparency. Where in a totally 
competitive market, like the price of a car, you don't get the 
price of the door and the seat and the steering wheel, but you 
do get a final delivered price, this has a monopoly price stuck 
in the middle, whether that's FERC-regulated or CALPUC-
regulated. That's a regulated rate, and I think there's a good 
argument to be made that the customer deserves to see what that 
rate actually is, and if there is some markup there then it's 
at least shown to him or her what that markup would be.
    Ms. Brownell. I would only add, Senator Feinstein, that 
markets don't work without transparency. All of the 
participants need to have the confidence that they're getting 
the right information in real time, so they can respond with 
buying decisions and risk decisions. So I would encourage any 
effort to bring transparency to markets because that's the only 
way they work.
    Senator Feinstein. Thank you very much.
    Thanks, Mr. Chairman.
    The Chairman. You bet, Senator.
    Senator Cantwell is next.
    Senator Cantwell. Thank you, Mr. Chairman. To the various 
panelists, thank you for being here. I'm going to submit 
questions to Ms. Roberson and Ms. Otis in regard to Hanford 
clean-up issues and direct my questions to the FERC nominees.
    Like Senator Feinstein, our State has grave concerns about 
the actions or lack thereof that FERC is taking, and if I could 
ask you specifically about your beliefs about the prices 
currently being charged in Washington State: do you think that 
they are reasonable or not.
    Mr. Wood. Not have full knowledge, Senator Cantwell, of 
exactly what the charges are, certainly it would be difficult 
for me to say that they're----
    Senator Cantwell. They're 11 times what they were a year 
ago.
    Mr. Wood. And I know that the hydro power is really a lot 
lower than it was, and I'm not sure where in fact the megawatts 
are coming from at all. So it would be useful for me to know 
which powerplants are actually being called upon to deliver 
that kind of power. I think that is really what the FERC has 
initiated that West-wide inquiry about a few weeks ago, so it 
gives us the opportunity to, if there are unjust and 
unreasonable rates being charged, not just in California but 
across the West, including Washington, Oregon, Idaho, that 
we've got really the hook to go back in and look at those rates 
if they are in fact unjust and unreasonable, which I think is 
what your question implies, that we have the ability to restore 
those to a just and reasonable level.
    But I think it would really depend on----
    Senator Cantwell. About 75 percent is normally coming from 
hydro and then, obviously, the problem arises if you're buying 
in the spot market. I mean, we can get into the question about 
what FERC thinks should be done about the level of reserves, 
but the fact is consumers are now being held ransom because 
we've had one of the worst droughts in 30 years, and utilities 
are increasingly going out on the market. And I want to get to 
Ms. Brownell in a second about her dysfunctionality, because I 
want to know whether you think the market is dysfunctional or 
not.
    But we really have a situation where we have had a unique 
environmental situation with a drought, the worst in 30 years, 
and are being forced to go out and buy power on the spot 
market, which has got us looking at 11 times the wholesale 
prices from 1 year ago.
    Mr. Wood. Again, not knowing anything else other than 11 
times, yes, that sounds high. But compared to hydroelectricity, 
which is very relatively low-cost power, again I'd have to 
know.
    Senator Cantwell. Well, if ratepayers are seeing a proposed 
200 percent rate increase, it's pretty hard--even if rates are 
at a starting point that may be lower than other places. And 40 
to 50,000 jobs are being estimated as the economic loss in the 
State. That's significant.
    I don't know, Ms. Brownell, if you want to address that?
    Ms. Brownell. Well, I would simply add that our job is to 
determine whether rates are just and reasonable, and we are 
committed to getting all of the facts to make that 
determination. And if in fact the facts lead us to the 
conclusion that those rates are not just and reasonable, 
there's going to be prompt and serious response to that.
    If you want me to respond now, too, to your question of 
dysfunctionality, markets require a number of things to 
actually work and markets----
    Senator Cantwell. I'm sorry, were you referring to the 
market when you used that term?
    Ms. Brownell. Yes. The critical thing that markets require 
is that supply and demand be in balance. So just from that 
regard alone, there's a dysfunctional market.
    I think the second point, however, I would make is that in 
a period of transition you really don't have markets. They 
don't happen overnight, and there are a number of issues that 
need to be dealt with in order to respond to and create a 
sufficient wholesale market in which people can have confidence 
and a sufficient retail market where people have choice.
    So that there are a lot of issues that I think recent 
orders of FERC have begun to address that will bring all the 
pieces of the puzzle, as we say, together. One of the problems 
with some kinds of responses is that the pieces in the end, if 
you do them without looking at them as a whole, in the end 
don't fit together, and I think we've seen some of the impact 
of that.
    So that's what I meant by a dysfunctional market.
    Senator Cantwell. Do you think that the section 206 
investigation that was ordered West-wide is broad enough to 
answer those questions about why we have a dysfunctional 
market, because it's limited in what it's investigating.
    Ms. Brownell. I think that alone might not get all the 
answers that you need, but there is a series of actions that 
the FERC has taken, I think, that will bring us more answers 
and more clarity. If it doesn't or if, when and if we are 
confirmed, we get there and we determine that in fact more 
information is needed, certainly I think I would be the first 
to ask for that. And I know my colleagues join me in that.
    Senator Cantwell. Well, I would love to hear Mr. Wood's 
comment on that?
    Mr. Wood. I think that the scope of the inquiry appears to 
be pretty broad. I think what you might be referring to is that 
the remedies that are proposed, I think they're limited to just 
certain periods of time, might not be broad enough if the FERC 
found in fact something was--I was just reading the comments of 
parties the other day that responded to this inquiry and I 
think the concern from some of the parties said, well, if you 
find something that is not functional, to use Nora's term, have 
you actually put the parties on their 60-day notice that you're 
going to go do something about it?
    I'm not sure that that part is as broad as perhaps may be 
necessary.
    Senator Cantwell. I'm most specifically referring to the 
real time trades of 24 hours or less.
    Mr. Wood. Because that's what the comments referred to as 
well, stage one, two, and three emergencies, which might well 
be 24-7 this summer or into the fall. That may not cover the 
full period of time. If in fact there's more power on the grid 
than 7 percent extra, then that would not be covered by the 
scope of the remedy phase in the order.
    So that would need--that would require that the order then 
be re-issued to broaden it to the full term if necessary.
    Senator Cantwell. Well, I appreciate your comments and 
interest in an expeditious pursuit of these issues. There are 
some communities that have already witnessed a 40 percent 
increase in rates and BPA is proposing somewhere between a 100 
and 200 percent rate increase to take place in October. So a 
very expeditious action by new FERC members would be very 
helpful to the State of Washington and to the economy, and I 
appreciate, Ms. Brownell, your comments about the electricity 
markets.
    I know my time is almost up, but I appreciated, Mr. Wood, 
your comments about the relicensing process for hydro. You do 
qualify your statements as not having a lot of experience with 
it, but indicating that you do want those environmental and 
licensing process issues addressed in a timely manner. Perhaps 
we could submit a question to you on furthering that, because 
the process of taking many, many years to relicense these 
projects is costing us. We need more efficient policy, and it 
is a very difficult issue to balance. But I appreciate FERC's 
attention to that issue as well and will submit a question on 
that. Thank you.
    Thank you, Mr. Chairman.
    The Chairman [presiding]. Thank you very much, Senator 
Cantwell.
    I have checked the order again in response to a challenge. 
I am told that Senator Craig is next, followed by Senator 
Dorgan, and, for reasons that are unknown to me, Senator Wyden 
appears to have been the last one to have shown up.
    Senator Wyden. Mr. Chairman, I am certainly not filing any 
challenges to my friends, but I think I was the first one to 
show up. I am definitely going to respect the chair's ruling.
    Senator Craig. This is a tough question, Mr. Chairman.
    The Chairman. Well, I do not know. We have two clerks here 
that supposedly are pretty good at counting their fingers. But 
I apologize if you were here first and you should go ahead.
    Senator Wyden. No, absolutely not. For purposes of today, 
because I have two friends here, I am definitely going after 
Senator Craig and Senator Dorgan.
    Senator Dorgan. Mr. Chairman, I might have greeted both of 
them as they arrived.
    [Laughter.]
    Senator Dorgan. But maybe not.
    The Chairman. I won't say we have bigger fish to fry, but--
I would suggest you promptly move, Senator Craig. What we're 
going to try and do is, we have a vote that is probably coming 
up in about 20 minutes, so maybe we can handle everybody. Is 
that fair enough?
    Senator Craig.
    Senator Craig. Gentlemen, thank you. I'll be quick. Let me 
congratulate all of you for having been nominated. Obviously, 
by that action the President believes in you and trusts that 
you will execute your responsibilities in the necessary and 
appropriate ways.
    Both of our FERC nominees I've had the opportunity to visit 
with at length on a variety of issues. I asked the FERC about a 
month ago to come to the West and they did, and they held a 
hearing in Boise, Idaho, and 11 States testified. 11 States' 
power authorities, commissioners, some governors; almost all of 
them agreed that the market in the West was broken and in many 
ways dramatically dysfunctional, based primarily on what 
California had done and was doing or failing to do, but also 
other contributing factors: transmission, adequacy of 
transmission, certainly the high profile of a drought in the 
West and the less capable hydro system this season than last.
    Now, of all of that, your responsibility rests with only 
about 50 percent of it, because 50 percent of it in general are 
the publics and about 50 percent are the privates, and of 
course your relationship to the wholesale market is clear by 
law, and what you can do there I think is understandable. Do 
you believe that under the just and reasonable clause in our 
deregulating of wholesale rates you have the adequate authority 
to move in the wholesale markets to bring some stability? 
Either of you can respond to that, or both.
    Mr. Wood. Senator Craig, I think certainly with the 
limitations that you put out there, that are facts, that there 
are a significant number of non-jurisdictional entities that 
are part of the wholesale market out West. California, the 
Northwest, really across the country, there are significant 
holes in the Swiss cheese. It is a challenge to make the just 
and reasonable mandate for the whole market work as easily as 
probably it could.
    I think the commission in its order in April attempted to 
reach to the people that, while they're not jurisdictional to 
FERC, they use FERC jurisdictional transmission. That was a 
technique that the FERC also used to reach a broad market to 
regulate the gas markets 10 years ago. So clear authority is 
always welcome. I mean, I've asked for that at the State level 
for 6 years now and we've gotten it. It does make things move 
quicker when you don't have to spend 10 years in the courts 
trying to wrangle it out.
    But whatever the will of the Congress is, we'll make it 
work, and I think the current law has been around a long time 
and has been tested quite a bit.
    Ms. Brownell. Senator, I would merely add that in 
Pennsylvania we found where we don't have jurisdiction--and we 
have fairly broad jurisdiction--we've been able to forge 
relationships with entities and work to resolve problems. We, 
for example, do not regulate coops, but we have a very strong 
relationship with them, often work with them to solve problems 
with other entities.
    So it would appear, of course, there are limitations, but I 
think we can overcome those limitations by reaching out to 
others to work with them. I think we all agree that a solution 
is the responsibility of many and we need to reach those many. 
I applaud the commission from their visit to Boise and we would 
hope to be doing more of that.
    Senator Craig. Thank you both.
    We've talked about hydro. My colleague from Montana 
mentioned it. I think you all sense the importance of it in the 
process that you have some control over in the relicensing, but 
not all. There may well be an effort here to help shape that to 
some degree, while still allowing all the stakeholders to play, 
as they should.
    I know that the administration plans to be expressing to 
some degree an importance of that, and largely because the 
licensing process has at least historically diminished the 
generating capability of the hydros, and oftentimes has driven 
their costs up. And in the West, with 15,000 megawatts at play, 
a 10 or 12 percent reduction in that production system, 
generating system, over the next 15 years by a licensing 
process would in itself be damaging. It would simply have to be 
replaced by much more expensive energy resource. Do you not 
agree?
    Ms. Brownell. Absolutely. The importance of hydropower has 
never been clearer than it is today, and nothing should take 3, 
4 years and that expense, particularly when we need every 
megawatt. So we agree that the process needs to be expedited 
and we will do whatever we can to be part of that.
    Mr. Wood. Senator Craig, just to add, I understand that the 
FERC office that deals with this has a more recently policy of 
trying to squeeze more megawatts out of these relicenses than 
possible. So getting that is important, but also maintaining 
the ability to do operational--the beauty of hydro is it's 
there when you need it. So it can really--if you've got a runup 
of heat in Boise or in Sioux Falls or anywhere, you can follow 
that electric demand with very finely precise, tuned 
hydroelectricity generated power, and that's unique, and that 
needs to be certainly a top priority for maintaining hydro.
    Senator Craig. Thank you both.
    Jesse, we've not forgotten you, nor Lee. You two will play 
a very valuable role in my State, as DOE has a large presence 
there, with a national laboratory. It also has a large 
responsibility to the State and the citizens of the State of 
Idaho, Ms. Roberson, as it relates to environmental management.
    It is my belief at this time that the President's suggested 
budget misses the mark by about a billion dollars as it relates 
to commitments and milestones within the agreements established 
by the Department of Energy with its laboratories across the 
country. The Secretary is doing a bottom-up, top-down review of 
this to try to understand why environmental management is so 
expensive.
    What is your understanding as it relates to the objectives 
of the approached review? And it appears that it's going to be 
your responsibility to help carry that out once confirmed and 
in place.
    Ms. Roberson. Yes, Senator Craig, it would be my 
responsibility to conduct that review on behalf of the 
Secretary. Some of the elements that I understand the review is 
intended to look at involve application of DOE orders and 
requirements, and identifying opportunities that simplify that 
application. It will look at the sequencing of work. It will 
look at opportunities, try to identify opportunities for better 
integration across the complex, specifically in the waste 
management area.
    Those are some of the elements that the review would take 
into consideration. Obviously, the goal of the review is to 
find opportunities to accelerate cleanup and meet our 
commitments, and that would certainly be my goal.
    Thank you.
    Senator Craig. So are milestones legally binding 
commitments by the Department? And if they are and they fail to 
meet them, wherein lies the problem?
    Ms. Otis. Yes, Senator. I have not--I should say, I have 
not reviewed all the agreements that the Department has entered 
into, so I am hesitant to comment on exactly what the legal 
status is of each of them. I think that the one in your State 
is somewhat unique in that it is a consent decree, but they are 
legally binding in the following sense: that they represent the 
things that, if the Department does them, the State will 
refrain from taking enforcement actions against the Department, 
and therefore they're certainly very important in obtaining 
compliance.
    Senator Craig. Thank you both.
    Steve, I'm out of time. It isn't that I've forgotten you. 
It's just that you need to remain relaxed and comfortable. 
Thank you.
    The Chairman. What I would suggest is that, we've got--the 
first bell has rung, but that's 15 minutes, and maybe between 
the two of you you can split that time. My intention, unless 
anybody wants a second round, is that this would conclude the 
hearing. Is that fair enough?
    Senator Dorgan. Fair enough.
    The Chairman. Fair enough. Well, we have Senator Smith. 
Senator Smith can conclude the hearing.
    Please proceed, Senator Dorgan.
    Senator Dorgan. Mr. Chairman, thank you very much.
    Mr. Griles, because I don't have a substantial acquaintance 
with your background, let me ask. I know that Senator Bingaman 
asked you a series of questions for responses. Let me ask that 
you do respond, at least in writing, with respect to the story 
that appeared today. I know you indicated this in the 
Washington Post, but I think it's important. The story raises 
at least four or five, I think, significant issues.
    It raises issues with three people who worked with you at 
the time. Just as one member of this committee, I think it's 
important for you to give us a written response to it so that 
we understand your perspective on what is alleged in the 
article. If you would do that, I would be appreciative.
    Mr. Griles. Senator, I welcome the opportunity to do that 
and will definitely do that. When we are in the positions we've 
been in, policy disputes arise. There are differences of 
opinion and I have had those. I would like to give you 
something in writing on those and I will do that, sir.
    Senator Dorgan. I appreciate that. One final point. The 
story indicated you helped coordinate the State of Virginia's 
lawsuit against the new Federal mining law. Now you are being 
asked to enforce the same law which you opposed. And you also 
indicated, times change, things change. Give me your 
perspective about the law that you will now be required to 
enforce.
    Mr. Griles. Senator, that issue is one that arose in 1978, 
1979, when I was a career State employee employed by the 
Commonwealth of Virginia. My effort, at the request of the 
Department of Conservation, was to pull together a program that 
responded to the Surface Mining and Control Act. I'm not a 
lawyer. I didn't argue the case, I wasn't part of the case. I 
was a State employee, a career State employee, providing 
information to the elected officials of the Commonwealth, the 
Governor and the attorney general.
    Senator Dorgan. But is that answer suggesting that your 
heart really wasn't in the challenge, or were you a part of the 
challenge because you felt, as did the State of Virginia, that 
the new Federal mining law should be overturned?
    Mr. Griles. I never felt that the Surface Mining Act should 
be overturned. The challenge that the Commonwealth initiated 
was over several specific provisions of the statute. Those 
statutory provisions have been found constitutional.
    In 1981, I entered into service to the Federal Government. 
My primary role in 1981 through 1983 was to enforce that very 
statute, and we rewrote some of those regs, but we also I think 
put in place the mechanisms and the organization today that 
have resulted in this program working much better than it did 
20 years ago, Senator.
    Senator Dorgan. Mr. Griles, if you will just put in writing 
the response I would appreciate it. I think all of us will be 
advantaged by that.
    Let me ask--thank you very much. Let me ask the two 
nominees for FERC a question. I have been critical of FERC, 
some would probably say unfairly critical. I have said that 
they are doing a wonderful imitation of potted plants while we 
have this massive energy problem developing, especially on the 
West Coast, but particularly in California.
    I hope we can put some people down in this regulatory body 
that really want to follow the trail and be involved in cases 
where the market system doesn't work. Let me ask the two 
nominees whether you think FERC has been a vigilant market cop 
because, I think, Mr. Wood, you have used the term the FERC 
needs to be a vigilant market cop walking the beat. Sometimes 
markets are perverted, sometimes they don't work. In those 
cases you need a referee.
    Do you think in your judgment, has FERC been a vigilant 
market cop the last couple of years with respect to the energy 
situation in California?
    Mr. Wood. I think it's difficult to judge somebody without 
walking in their shoes. If I'm confirmed, I'll be glad to 
answer that one a year from now after we have to walk it. But I 
will say, in my role as the regulator in Texas we have parallel 
jurisdiction to FERC. It's a unique anomaly of the electric 
grid. In setting up a market for the first time in an industry 
that's been regulated for 100 years, there are a lot of 
opportunities for error and for oversight.
    Senator Dorgan. How about manipulation?
    Mr. Wood. I'm talking about on the part of the regulator. 
Certainly--that's what we've got to oversee. Having sufficient 
authority to remedy that I think is important. I think the 
Federal law has given that to the FERC. So that's an important 
thing, do you have the power to do something about it once you 
catch it, yes.
    Senator Dorgan. The question I'm raising, are they using 
that power, in your judgment?
    Mr. Wood. I think they have started to use it. Certainly 
the December order--the October--I think from October forward 
the FERC has put the Western markets on notice that they can go 
back and do just about anything they need to to right what may 
be wrong. So I think we saw the runup shortly before that. I 
think it was a relatively prompt response. I know there's 
been--I acknowledge there's been some difference of opinion as 
to whether some of the response has been appropriate, and I 
think that's always fair on any decision.
    But they did move relatively fast. The San Diego news hit 
the California newspapers about the time a complaint got going 
at FERC. So perhaps something could have been done in advance 
of that, but I really don't want to judge somebody on that 
issue because I do think that they were moving relatively 
swiftly and have been so since last summer.
    I think the broad question is could something have been 
done prior to then, and I think I'd like to look into that once 
I get there, if confirmed. But there is never too much you can 
do in a transitioning market. I think there's no A-plus grade 
you can get in this job.
    Senator Dorgan. But one can try to avoid failure, right?
    Mr. Wood. Certainly.
    Senator Dorgan. Ms. Brownell.
    Ms. Brownell. Senator, I would merely add that earlier I 
spoke of a sense of urgency and I feel a sense of urgency, as I 
believe my colleagues do. One of the clear lessons immediately 
apparent in the Pennsylvania market when we opened it is that 
markets don't wait for the classic responses that we've 
designed in regulation. So what we need to do is, as I spoke of 
earlier, bring new solutions, bring expedited solutions, and, 
frankly, bring mediated solutions so that we don't have to 
waste time in endless litigation while the constituents suffer 
from uncertainty, blackouts, and high prices.
    Senator Dorgan. Just one final question. Would you agree 
that when you have no price transparency and you have very 
large traders and companies selling from unregulated markets 
into regulated markets with really no opportunity to understand 
what the pricing practices are, that you're really blindfolded 
in your ability to evaluate what your responsibilities are 
there?
    Ms. Brownell. Senator Dorgan, as I said earlier, 
transparency is what makes markets work. So I will be committed 
to getting that transparency and working with my colleagues and 
with you and the legislature to ensure that that happens.
    Senator Dorgan. Would you agree that FERC has been rather 
timid in doing that in the last couple of years, especially 
with respect to California?
    Ms. Brownell. Senator, I would be reluctant to be a Monday 
morning quarterback. As Pat said, when you're in a transition 
market you're learning new things every day. The reality is 
it's quite clear to all of us that the transparency issue is 
one that has to be dealt with expeditiously.
    Senator Dorgan. My time is up. I think that these are 
important issues. I will support your nominations. I reserve 
the right to receive Mr. Griles' response. I don't make a 
judgment about it one way or the other, but I appreciate your 
willingness to do that.
    I will support your nominations, but I hope you are tigers 
when you get down there. I mean, the whole purpose of this 
agency is to be helpful and protective of the consumers and 
make sure markets work, and these markets are broken. They 
simply are not working.
    Thank you very much.
    The Chairman. Senator Wyden. I'm sure Exxon will be happy 
to hear there's a tiger in the tank.
    Senator Wyden. Mr. Griles, as you know, there's enormous 
environmental opposition to your appointment, and in response 
to that opposition what you've essentially said is you've 
changed. You've changed your outlook. I've heard that when we 
talked and on other occasions. I'd like you to describe 
specifically how you've changed and how you would bring that 
changed outlook to the extremely important position that you 
would have if confirmed.
    Mr. Griles. Senator Wyden, first I want to thank you for 
having a chance for me to spend some time with you yesterday or 
the day before and discuss viewpoints on how we move forward.
    Change is a matter of perspective as well as age, and as 
one looks at issues. My viewpoint on all of these issues are 
that with communication, cooperation, and consultation we can 
change the debate. You and I talked about specific examples in 
the West where we have an opportunity----
    Senator Wyden. But you said you had changed. I want to hear 
how you've changed, because certainly these examples from the 
past don't reflect to me that the environmental view will get 
equal treatment with the industry view. You, to your credit, 
said: I hear that argument; I've changed. I'd like you to tell 
me how you've changed and how that would be implemented in the 
day to day work that you do at the Department.
    Mr. Griles. Senator, I believe that in terms of myself what 
I am indicating to you is the change that is necessary is 
consultation and communication, that I believe I understand how 
to do that. I have had a valuable experience of learning, of 18 
years of public service, 12 years of private sector, and in 
that time I have learned that through listening and bringing 
people together better solutions can occur.
    I will promise you that's my objective in the future. I 
will make that the commitment that I bring to this job. Is that 
a change? I hope that if that's what we need to do, and I think 
that's the only way we can make public policy work, Senator.
    Senator Wyden. I'm not ready to support your candidacy 
unless--and I'm going to take a third crack at this question--
if you're telling me: Senator, I didn't consult with the 
environmental side like I should have in the past and I'm going 
to change and do a better job of working with those people so 
that we have a more balanced approach in the future. That 
strikes me as a change and gives me a rationale to vote for 
your candidacy.
    But if you just tell me the world has changed and, by gosh, 
if I get on down there I'm going to try to change, too, that 
doesn't cut it. Are you telling me that you're changing in 
terms that you didn't consult with the environmental side 
enough in the past and you want to do more of that in the 
future?
    Mr. Griles. Senator, I have indicated to you in my private 
conversation that over the last 3 weeks I have consulted with 
and met with a huge number of environmental groups, and my 
objective is to make sure--and I committed to them, as I 
committed to you--that my door would be open. Have I changed my 
viewpoint on that? I don't think I ever had a viewpoint that I 
didn't consult, but it's clear from the viewpoint that's been 
expressed by some that I didn't consult enough, and I have 
changed my viewpoint. I will consult as much with you as with 
them in order to assure that their message and their needs are 
understood and are communicated to the Secretary.
    Senator Wyden. Any other changes that you would bring to 
the Department from your past? As I told you, I'm looking to 
have you give me a rationale to support your candidacy. I'm not 
there yet and you're going to have to give me some evidence 
that you would look at these issues in a different way.
    As you know, Senator Craig and I wrote a precedent-setting 
bill with respect to forestry, probably the most important 
forestry law for the Forest Service in the last 30 years, 
because we took some fresh approaches. When you talk about 
changes, you've indicated to me on the consultation question 
that you would be willing to look at that differently. Are 
there any others so as to give me some reasons to support your 
candidacy?
    Mr. Griles. Well, Senator, as I said to you on the 
consultation question specifically, as well as looking at how 
one views these issues, we have to set up not a--we have to set 
up a process of consultation that is in fact true. We have to 
allow the local people of the West, particularly on a lot of 
the issues that concern you and Senator Craig and others, an 
opportunity to be involved in that consultative process.
    It can't be just--it has to be real. It has to be listened 
to. The Bureau of Land Management is a good example, where I 
think with the need for energy we need to set up a process in 
the West on these very critical areas which are going to be 
coming under review, as energy development. We've got to have 
the local environmental groups, we've got to have all the 
efforts put together, so that the consultative process is real 
and it's not transparent.
    Senator Wyden. What you're telling me, though, is that 
other than consultation you're going to do business the way you 
did it in the past with respect to your basic approach. I want 
you to know that's not going to be good enough. We'll have more 
time between now and the committee vote and the floor vote. My 
door is open to you. But if the only change is that you're 
willing to talk to environmental folks, that's not going to be 
enough for me. My door is open to you.
    One question for you, if I might, Ms. Roberson. As 
colleagues have said, there's going to be a big cut in the 
cleanup budget and a number of us are very troubled with it. 
We've got a $10 million cut at the plutonium finishing plant. 
That means four metric tons of unstable plutonium that's stored 
there.
    Now, at the Defense Nuclear Safety Board you criticized the 
Department for the slow progress in fixing a pretty significant 
nuclear safety problem. I guess my question is were you wrong 
to criticize the Department or is the Department wrong now to 
propose funding cuts that would address the problem?
    Ms. Roberson. Senator Wyden, I would say that as a part of 
the Defense Nuclear Safety Board I don't believe we were wrong. 
The Board looks at the conduct of the work and I think provided 
insight into opportunities resulting from better planning and 
sequencing of the work to get that done. I believe that the 
Board was correct, and if confirmed I would work to make sure 
that we satisfy the concerns raised by the Board.
    Senator Wyden. I don't have any specific questions now for 
the FERC appointees. I want it understood, as we talked about 
in the office, that I believe that with energy being traded as 
a commodity it's time to lift this veil of secrecy around this 
country's energy markets. You've got Enron and a variety of 
these marketers, Enron, Reliant, a variety of them buying and 
selling energy constantly, and yet a lot of folks are in the 
dark with respect to transmission, outages, and the like.
    Both of you indicated to me that you would be generally 
supportive of the legislation I'm going to introduce that would 
open up these markets, lift the veil of secrecy, and make it 
possible for folks to get information. So I think I'm going to 
quit while I'm ahead with you two at FERC and just repeat the 
fact that I heard you say that in the office and I'm 
appreciative of it.
    Mr. Griles, I think you know the challenge for you in the 
days ahead. I want it clear I am not prepared to support your 
appointment as of now, but I will leave it open, particularly 
on the question if you can give me further concrete examples of 
how you would change the way you do business other than in the 
consultation arena, which I would be to first to say is a 
welcome approach.
    My colleague is here and I think he's going to wrap it up.
    Senator Smith [presiding]. Thank you, Senator Wyden.
    May I extend my welcome to each of you and my 
congratulations for your nominations. I look forward to 
supporting it. Mr. Griles, I visited with you yesterday and I 
talked briefly about the plight of the Klamath farmers, and I 
have been deeply frustrated with how to help them, because the 
crisis that has literally turned off their water is not just 
nature, it's literally the operation of Federal law under the 
Endangered Species Act.
    I believe when we get this tax issue behind us the 
President is going to send up a supplemental appropriation, an 
emergency appropriation, that I hope that the first item on it 
will be real dollars to help some real folks in need in the 
Klamath Basin.
    Can you assure me that that will be the case?
    Mr. Griles. Senator, I assure you that if confirmed in this 
position that request will be included in some discussions at 
Interior.
    Senator Smith. If ever there was a case of equity to help 
some people in California and in Oregon, it's this one. It's 
the most amazing story. But in any event, there's a lot of 
human suffering as a result of the two biological opinions, one 
from Commerce, one from Interior, one to save the short-nosed 
sucker and the other to save the coho salmon, that leave birds 
and farmers out of the equation. I'm not sure that that was 
what was ever intended.
    But in any event, I hope that you'll be mindful of the 
Klamath situation and liberal only in the sense that you'll 
help them.
    I want to welcome our nominees to FERC. You're coming in at 
the best of times and the worst of times. I'll bet not one in a 
thousand Americans could tell you what ``FERC'' means, but I 
would predict to you that the end of summer nearly every 
American will know what the FERC means. I think we're in for an 
interesting experience, and a lot of people are going to look 
to you for answers.
    I think before I arrived others questioned you and I 
understand you both acknowledged that in the Northwest the spot 
market in the middle of April 2000, the spot market for a 
kilowatt was $16, and that you acknowledged today that it is 
$287. I wonder if you think that that's just and reasonable, in 
that farmers, small businesses, seniors, families on fixed 
incomes, should they regard a 1700 percent increase, should 
they regard that as just and reasonable?
    Ms. Brownell. Senator, the experience that your 
constituents--farmers, small businesses--are having with the 
volatility in these energy markets is painful. It's clear, I 
think, as we indicated earlier, that the market is 
dysfunctional. We talked about various ways in which we need to 
get the information as soon as possible to make the 
determination of what is just and reasonable and what is not.
    Certainly the FERC has made a good start at that. I think 
we've concluded with the input from you and your colleagues 
that we need more information to look at broader issues and we 
will do that.
    It is not just and reasonable to cause people economic 
harm.
    Senator Smith. Are you open to expanding your current 206 
investigation to cover all the Western United States? It's 
already been done for California and I believe it includes some 
kind of a price cap, a circuit breaker mechanism not unlike 
that of Pennsylvania and Texas. Is that a fair evaluation?
    Mr. Wood. I would say that probably it's a little bit less 
of a circuit breaker and a little bit more of a real-time, day 
before tuning of what would be the acceptable price for the 
next day. So it is a bit more customized for the market.
    The question you asked right before that, Senator Smith, 
was broadening the 206 inquiry. FERC in late April did broaden 
it. Ms. Cantwell asked me a question a moment ago about the 
nature of how broad it would be. I think one of the open 
questions there is, if some of the problems that have been seen 
in California are kind of structural things that we see out 
West, that those really are in fact unjust and unreasonable, 
has FERC put the parties on notice that it can go after those 
transactions and examine those and perhaps order some refunds?
    I think that what was proposed as a remedy there might be 
narrower than the full universe of transactions. Certainly I 
would be open to considering whatever breadth is necessary to 
provide that market stability and to establish some long-term 
signals about what kind of investment's needed and where it's 
needed, as well as some short-term appropriate pricing that is 
consistent with the Federal law.
    Senator Smith. I just have a belief that your active 
engagement of this issue on a broader basis in the Western 
United States will send a signal also to generators that, don't 
gouge here, be careful, because this will generate emotions 
that may not translate into good policy. So my fear, for those 
who want deregulation, is that they're pricing themselves back 
into re-regulation. So this is a perilous time for everyone in 
the energy business because, frankly, turning on a light switch 
and filling your tank up with gasoline--that doesn't have 
anything to do with you, but energy companies it does--these 
are not, these are not luxuries to the American people. They 
count on them, and they count on them to be affordable.
    I think those who would gouge do so at the peril of their 
own interests long term. So I think you can perform a great 
public service just by being aggressive in this.
    That brings me to my next question, which is the rehearing 
on the December 15 order. That may have been asked by an 
earlier colleague. I was tied up in the Foreign Relations 
Committee, but wanted to be here to ask these questions. Are 
you going to attend that rehearing on the whole issue of the 
December 15 order?
    Mr. Wood. Unless it's voted before we take office, yes, 
sir, we would sit for the rehearing of that. And it's actually 
I think just a paper--I don't know that there's actually a 
formal hearing for it. But we would be able to vote on the 
different petitions that people have raised to maybe change 
that order or to reaffirm that order. That would be something 
that should still be open and it is open today. If it's not 
voted on between now and the time we, if confirmed, join the 
commission, then yes, we would.
    Senator Smith. I think that's important if people are going 
to have the opportunity to benefit by any finding you might 
have of unjust and unreasonable. So I would encourage strongly 
the FERC to participate in that and to broaden it to include 
States beyond California.
    Do you--both of you, do you support electricity reliability 
legislation? I have introduced some to enhance reliability of 
the high voltage transmission grid. Are you familiar with that 
and do you support such a thing?
    Mr. Wood. Is this from the last session, Senator Smith?
    Senator Smith. Yes, it is. Senator Gorton introduced it in 
the last session, and I.
    Mr. Wood. Certainly the concept of empowering either the 
commission or whoever Congress wants to be empowered to enforce 
reliability standards is a good thing. One of the experiences 
that I've had in our own market in Texas is that if you have 
the reliability standards being done at a different location or 
a different group of people than the market opening is done, 
then you might get some conflict and it really is probably 
counterproductive.
    So yes, sir, certainly the concept of giving some 
responsible outside entity the ability to enforce reliability 
standards, to encourage them to be adhered to by all the market 
participants, is important. I just would suggest, sir, that 
maybe combining that function with where the commission's going 
with these regional transmission organizations, you would put 
reliability, market operations, long-term planning, which I 
think is a big issue here today, not just for transmission but 
for generation--siting that in one entity or one type of 
entity, like the FERC is moving toward with the regional 
transmission groups, is probably a good way to go.
    I think certainly you've identified a key problem here. 
It's one thing to have standards. It's another one to make them 
really stick. Yes, sir, anything that can be done to make those 
stick is going to be very important in a competitive market.
    Senator Smith. You're from Texas and, Ms. Brownell, you're 
from Pennsylvania. These are two States that are held up as 
models of how to deregulate. But I think it would be important 
to have on the record that as part of your deregulation you 
actually do have a price cap mechanism, a circuit breaker it's 
called.
    Ms. Brownell. We do.
    Senator Smith. Can you describe how that works and how that 
might be applicable to FERC in this very crucial time?
    Mr. Wood. I'll start, because we actually borrowed ours 
from FERC had approved for the Pennsylvania market. My 
colleague in the Texas commission, Commissioner Walsh, had been 
concerned that in the opening years of a market there could be 
some, whether it's a computer glitch as we had seen in the New 
England power pool, where power went up to $6,000 a megawatt 
just because of a way that the computers registered people--and 
I don't know all the details. But it was really kind of almost 
a gaming opportunity that was exploited.
    Senator Smith. Is some of that gaming going on now?
    Mr. Wood. In New England or just everywhere?
    Senator Smith. In the West.
    Mr. Wood. We'll find out.
    Senator Smith. I think it is. I think you understand the 
issue. I hope you'll pursue it aggressively, because I think 
some real gaming's going on.
    Mr. Wood. What we tried to do on the thousand dollar per 
megawatt hour cap was for a 2-year period set a cap that would 
basically be a circuit breaker if something really was awry. 
We've got prices in our market, $40, $50, $80 at the peak, so 
$1,000 is quite well above what would be permitting good 
incentives for people to build new powerplants and the like.
    Senator Smith. Could it be lower than $1,000 without 
discouraging investment?
    Mr. Wood. Well, we actually calculated this. Based on the 
price of gas--we wanted to make sure that peakers, which are 
these units that run maybe three days a year, that those guys--
they have to recover their costs over those three days. So we 
wanted to make sure that it was set at a level such that those 
peakers found Texas a good place to invest.
    So we looked at the price of gas, we looked at what their 
fixed costs were, and actually calculated. It was about $900 
something, or it was either $1,100 and we rounded down or $900 
and we rounded up. But we did say $1,000, but it was actually 
based on a calculation of keeping the kind of powerplants that 
we need to fill all of the space in Texas, keeping those on 
line.
    Senator Smith. Is there any reason why the FERC could not 
provide such a mechanism for the whole country?
    Mr. Wood. I think it has moved forward to do that where 
it's been suggested.
    Senator Smith. Not only is that common-sense policy as we 
transition from a regulated to a deregulated environment, 
doesn't that just make a whole lot of sense in order to protect 
the concept?
    Mr. Wood. Again, it is a different price cap, I think, than 
the price cap that has been talked about in D.C.
    Senator Smith. I grant that it is a different one, but I'm 
raising it simply to say that those who would just 
ideologically reflexively say no price cap are denying the fact 
that they already exist. They're there in States that have 
deregulated, and I'm just simply saying, if for no other reason 
than political protection, an aggressive FERC ought to 
establish one and defend the folks on fixed incomes, the small 
business, the seniors, so many folks who are, frankly, very 
subject to being gouged by those who would game this market.
    I don't know where the ideology comes in. It seems to me we 
have price caps. We just have to make sure that they are 
enforced and work.
    Yes, Ms. Brownell; can you talk about Pennsylvania?
    Ms. Brownell. Yes, Senator Smith. I can just add a little 
bit because Pat described the model. The reality is the 
existence of that price cap, which was agreed upon by the 
market participants actually, I think has served to send a 
signal to the market that we are looking and that there are 
controls and framework in place.
    It's interesting that in the last year or so, 2 years, 
we've only seen prices reach that price cap in a period of heat 
wave and it's only happened once and only happened for a couple 
of hours. So clearly it has worked in Pennsylvania. We also 
have the benefit, of course, of excess capacity, so that the 
supply and demand balance also helps in the market.
    Senator Smith. Absolutely.
    Well, I just, I hope--if I agree to vote for you, will you 
promise to take the Texas and Pennsylvania models to the FERC? 
That's really important to me because I would like to be able 
to go home and say the FERC's going to work, they're showing 
up, they're putting in place mechanisms to make sure you folks 
don't get gouged. Can you make that commitment?
    Mr. Wood. My history is why I'm here. I mean, Governor Bush 
appointed me to the Texas commission to--my mandate was: Pat, 
get to a market. So that's what we've done, and that's what I 
think we need to do here, not because a market is the end 
point, but because market is a replacement for the C-plus grade 
that we get for regulation for the last 80 years.
    So there's a lot to take. I think, quite frankly, we based 
so much of what we did on their good State's effort that 
there's a lot of similarity here. But yes, sir, that's who I am 
and that's my professional background, is what we have done in 
our State's market. I recognize, lest everybody start cringing, 
not everything in Texas is exportable to the national model, 
but there's a lot that is, and I look forward to making sure 
that we optimize the best practices of the whole country, what 
is the best model for our country.
    Senator Smith. Am I mistaken? It's my understanding that it 
was then-Governor Bush who signed this deregulation bill in 
Texas; is that right or am I wrong?
    Mr. Wood. Absolutely.
    Senator Smith. He signed it, with a circuit breaker price 
cap model?
    Mr. Wood. We added that at the administrative agency. The 
statute was not that detailed, so we've added that.
    Ms. Brownell. Senator, you absolutely have our commitment. 
We believe that markets can and should work and they should 
work for the benefit of all consumers. They should bring new 
products and innovation to market. And we are going to do and 
have done in our own States whatever it takes to make that 
happen, including I think the issue of transparency, which you 
and some of your colleagues have brought up.
    We need to have--we need to have credibility in those 
markets for people to feel comfortable.
    Senator Smith. Well, thank you. I look forward to 
supporting you, all of you, on the floor of the Senate, and I 
wish you the very best. You're here at an auspicious time and 
at a time when you can do a whole lot of good for our country, 
and I think for our President as well. I think he may not like 
the model Senator Feinstein and I are working on, and I grant 
that.
    I don't want to discourage new investment. I know markets 
can work. I know that personally. But I also know that energy, 
unlike green peas, is a necessity. I wish green peas were a 
necessity. They're a luxury. But I really think it's important 
that we not lose sight of the fact that people need it and they 
can't go without it and there is an expectation that the 
Government will do something to intervene to make sure that 
those most vulnerable amongst us are not victimized by a few 
who can game the system to enormous profit, to the enormous 
harm of folks on fixed incomes.
    I have been asked to announce at the conclusion of this 
hearing that all additional questions for the record should be 
submitted to the Chief Counsel's office by 5 p.m. this 
afternoon. I thank you all and wish you all well, and we are 
adjourned.
    [Whereupon, at 11:56 a.m., the hearing was adjourned.]
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

                                                      May 17, 2001.
Hon. Frank Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: Enclosed you will find my responses to your 
written questions following my confirmation hearing before the Senate 
Energy and Natural Resources Committee on May 16th.
    If I can be of further assistance, please let me know.
            Sincerely,
                                          J. Steven Griles,
                                        Deputy Secretary-Designate.
[Enclosures]
               Responses to Questions From Senator Wyden
    Question 1. Mr. Griles, I asked you at your confirmation hearing to 
provide me with actual examples of how you and your approach to natural 
resource management have changed since your tenure with the Reagan 
Administration from one of exclusion to one of inclusion. I also asked 
how you intend to work at the Department of the Interior within the 
context of those changes. I need to know how you plan to create an 
open, transparent, inclusive work environment so that allegations, such 
as those raised by the May 16, 2001 Washington Post article about you, 
could have no standing under the Bush Administration. Please provide 
those examples of change and your plan for implementing them in 
writing.
    Answer. As I have gotten older, and perhaps wiser, I have learned 
that the process used to reach a public policy decision is critical to 
ensuring that the underlying decision is both correct and sustainable. 
By engaging local communities, interested stakeholders, and state 
entities in a real and substantial dialogue early in the decision 
making process, an individual can maximize the likelihood that the 
final product will be a sound, broadly supported, public policy 
decision. Thus, I intend to reach out to a wide variety of groups to 
ensure that interested parties are brought into the decision making 
process as early as possible.
    Specifically, and as I indicated in my meeting with you, I believe 
this type of decision making will be needed as policy is developed in 
the area of oil and gas development. For example, in the over thrust 
belt where controversy exists associated with wildlife values and other 
special considerations, we will set up a process where all affected 
groups will be involved in developing a consensus on how to resolve the 
issues and move forward.
    Question 2. Mr. Griles, if there was ever an area that needed 
collaborative problem solving, it's natural resources. Senator Craig 
and I proved, by the county payments legislation, that the impossible 
can be achieved if you get everyone talking together--the industry, the 
environmental community, the local folks and the government--and work 
out a compromise. Senator Craig and I passed the first major natural 
resources legislation in 20 years, unanimously in both the House and 
the Senate.
    How would [you] use this sort of collaboration at the Department of 
the Interior and what sort of priorities would you address using it?
    Answer. Collaborative problem solving is the model I intend to use 
in developing natural resources policy. Moreover, as the Secretary 
explained to Departmental staff in her first address to them, the 
Department must dedicate itself to collaboration, consultation and 
communication, all to achieve our conservation goals--the so called 
``4C's''. I will dedicate myself to fulfilling the Secretary's 
directive. As I stated during the confirmation hearing, I have always 
supported including all affected parties in the decision making 
process. If confirmed, I will use this model for developing management 
plans for lands managed by the Department.
    Question 3. The previous administration, in response to a GAO 
Report regarding the fees collected for uses of federal lands, 
responded by proposing to dramatically increase the right-of-way fees 
for fiber optic telecommunications. Even more troubling than the size 
of these fee increases, which could have slowed or in some cases halted 
the expansion of high-speed telecommunications services to some parts 
of our country, was the close-door process utilized by the Bureau of 
Land Management and other agency counterparts to develop these new 
regulations and fees.
    In the meantime, I understand that the BLM has proceeded this year 
with what it is calling ``market data collection'', by approaching 
private sector fiber optic cable builders and network owners, and 
asking them to share their prices, data, and rights-of-way rental 
agreements. This also is proceeding outside any normal rulemaking 
process. Nobody knows what that data will be used for.
    Are you committed to the development, in cooperation with Congress 
and impacted stakeholders, to a fair, open, regulatory process which 
recognizes not only the value of federal lands, but the need to promote 
the development of a robust national telecommunications infrastructure? 
Will you commit now to seeing that at a minimum, that regulatory 
process proceeds on the basis of valuing fiber optic rights-of-way over 
federal lands based on the impact on the land, rather than extracting 
taxes for the commerce traveling through that cable?
    Answer. My general view is that regulatory processes should be 
fair, open and developed in cooperation with the Congress and impacted 
stakeholders. As you may be aware, in my agreement letter to the 
Department of the Interior, I agreed to recuse myself for a period of 
one year from my appointment from any particular matter involving 
specific parties in which any of my clients is or represents a party. 
Some of my former clients were in the fiber optics industry. In light 
of my recusal, I will seek the guidance of the Department's ethics 
office before participating in regulatory matters directly affecting 
the fiber optics industry. I remain committed to ensuring that 
consultation with all affected parties and stakeholders is meaningful 
and that those interests are considered in any regulatory process 
developed on my watch.
              Response to Question From Senator Feinstein
    Question. What is the administration position on oil and gas 
drilling offshore the California coast?
    Answer. The Administration supports the current moratoria on 
leasing offshore the California coast. The Administration will continue 
with the current process to evaluate plans for exploration and/or 
development of the few existing leases off California. I understand 
that an extensive environmental review of these plans is underway and 
will provide a full opportunity for comment by State and local 
governments and the public.

                Response to Question From Senator Craig

                            GEOLOGIC MAPPING

    Question. The budget request for FY 2002 cuts the funding for the 
geologic mapping program within the U.S. Geological Survey. The State 
Map part of this program produced 311 new geologic maps in 2000 and has 
committed to producing 1,300 maps in 2001.
    What are your views on the importance of geologic mapping? Would 
you reconsider the proposed funding cuts to this program?
    Answer. Geologic mapping is the essential scientific foundation on 
which land-use and resource-use decisions are based. Geologic maps are 
fundamental for understanding where our future energy, mineral, and 
groundwater resources will come from. Modern digital geologic maps, and 
many derivative maps that can be made from them, are the best way to 
display and understand the information decision-makers need to address 
complex natural resource, environmental, and hazard issues, as well as 
public health, land management, and emergency response issues facing 
industry, governments, and communities across the Nation.
    I understand that the USGS considers the National Cooperative 
Geologic Program to be a model for Federal, State, and university 
partnerships. While budgetary limitations require the Administration to 
make difficult choices about funding levels for all Federal activities, 
I recognize that this is a viable and important program and I look 
forward to working with you to see that such partnerships are 
maintained to the degree possible within available resources.

               Responses to Questions From Senator Akaka

                           OFFSHORE DRILLING

    Question. Your experience during the Reagan Administration as 
Assistant Secretary, Lands and Minerals Management in the Department of 
the Interior, was a valuable introduction to mining and leasing policy 
on federal lands. Your biographical material states that under your 
tenure you leased more federal offshore oil and gas acreage during 
1984-1989 than in any prior period of federal leasing activities.
    Can you please share your current thoughts on offshore drilling and 
any plans to pursue offshore drilling in particular areas such as 
California or the Gulf of Mexico? Do you plan to keep up your earlier 
pace of leasing offshore areas?
    Answer. I agree with the Administration's support for the current 
moratoria on leasing lands offshore California and Florida. Major oil 
and gas resources are available in the non-moratorium zones in the Gulf 
of Mexico and the nation is heavily dependent on the natural gas and 
oil from leases there. I support continued leasing in that area.

                           PARKS AND REFUGES

    Question. As Deputy Secretary of the Interior, you will see a much 
broader range of public lands issues than you did under your previous 
position in lands and minerals management. As Deputy Secretary, you 
will oversee and provide stewardship over our national parks and 
wildlife refuges, wild and scenic rivers, national historic trails, and 
other well-loved areas that the public enjoys. With your background in 
economics, I am sure that you understand that certain areas have value 
far beyond what is called a market valuation. You will be responsible 
for upholding and maintaining the aesthetic and non-market values for 
millions of acres of national parks, wilderness areas, and cultural 
resources.
    Do you feel that your policy experience in the Department of the 
Interior with mineral and gas leases, coal valuation rules, coal 
royalties and opening federal lands to mining and drilling has prepared 
you well for managing the public side of lands management? What 
initiatives do you propose to support the development of non-market 
values of public lands in our national parks, refuges, and wilderness 
areas?
    Answer. Yes. I believe my policy experience at Interior has 
prepared me well for the public side of lands management. In my 
previous capacity at Interior, I oversaw the multiple use management of 
over a quarter billion acres of public land. The management of our 
national parks, refuges, and wilderness areas will be undertaken 
primarily by the Assistant Secretary for Fish, Wildlife and Parks. 
Having said that, I strongly support protecting the resources in our 
national parks and designated wilderness areas and conserving the 
wildlife and wildlife habitat on our National Refuge System. To 
accomplish these goals, we need to expand our partnerships for natural 
resource stewardship to include individuals and organizations outside 
the Park Service and Wildlife Refuge System to assist in the protection 
of these resources. Informing and teaching the public about the non-
market values of public lands is an important function of the 
Department.
    I support the President's initiative to eliminate the backlog of 
maintenance needs in the National Park System and to invest in research 
at our National Parks through the Natural Resource Challenge. These 
investments are critically needed to safeguard public facilities and to 
protect the environment, ensuring that visitors have an experience that 
helps them understand the values we are working to protect.
    I support the President's initiative to fully fund the Land and 
Water Conservation Fund and to increase the flexibility of states to 
use the money for habitat conservation through landowner incentives and 
technical assistance. That flexibility in the President's plan will 
enable us to work with engaged and informed local landowners to 
increase the total acreage of protected species habitat to a level 
which has never been reached before. This is an excellent approach to 
enhancing habitat protection and I look forward to working with 
Congress to find other ways we can create productive partnerships with 
States, local governments and private landowners.
    Question. As Deputy Secretary for the Department of the Interior, 
you will have wide-ranging responsibilities for native peoples through 
the Bureau of Indian Affairs and other legislative mandates. As you 
know, I have long supported the rights of indigenous peoples on an 
international level as well as domestically. I'd like to discuss the 
issues involving Hawaii's indigenous peoples.
    Public Law 103-150, commonly referred to as the ``Apology 
Resolution'' was signed into law in 1993. In summary, the resolution 
apologizes to Native Hawaiians on behalf of the people of the United 
States for the overthrow of the Kingdom of Hawaii on January 17, 1893, 
and calls for the reconciliation between the United States and Native 
Hawaiians. In 1999, representatives from the Department of the Interior 
and the Department of Justice began public consultations with Native 
Hawaiians as the first step in this process of reconciliation. On 
October 23, 2000, the Departments released a report about the public 
consultations with recommendations for additional steps in the 
reconciliation process.
    The reconciliation process is an incremental process of dialogue 
between the United States and Native Hawaiians to resolve a number of 
longstanding issues resulting from the overthrow of the Kingdom of 
Hawaii. The Department of the Interior has had the lead in this process 
as the agency that deals with indigenous peoples within the United 
States jurisdiction. What assurances can you provide regarding the 
continuation of this important process between Native Hawaiians and the 
United States?
    Answer. Although the matter of reconciliation between the United 
States and Native Hawaiians is a new one for me, I believe this 
important subject deserves careful attention by the Department of the 
Interior. Once confirmed I intend to review carefully the October 23, 
2000 report of the Department of Justice and the Department of the 
Interior with the appropriate Departmental staff. I look forward to 
having further discussions with you on this subject.
    Question. One of the recommendations from the report released on 
October 23, 2000, is the establishment of an office within the 
Department of the Interior to focus on issues involving the indigenous 
peoples of Hawaii, Native Hawaiians. The office would continue to 
facilitate the reconciliation process and would assist Native Hawaiians 
in addressing the political and legal relationship between Native 
Hawaiians and the United States. What are your thoughts regarding the 
implementation of this recommendation?
    Answer. As I stated in my previous response, although the issue of 
reconciliation is a new one for me, I believe it deserves careful 
attention by the Department of the Interior. Upon confirmation I will 
review the October 23, 2000, report, and will pay special attention to 
the recommendation that an office to focus on Native Hawaiians be 
established.

            Responses to Questions From Senator Gordon Smith

    Question 1. The previous administration, in response to a GAO 
Report regarding the fees collected for uses of federal lands, 
responded by dramatically increasing the right-of-way fees for fiber 
optic telecommunications. Even more troubling than the size of these 
fee increases, which could have slowed or in some cases halted the 
expansion of high-speed telecommunications services to some parts of 
our country, was the closed-door process utilized by the Bureau of Land 
Management and other agency counterparts to develop these new 
regulations and fees.
    In the meantime, I understand that the BLM has proceeded this year 
with what it is calling ``market data collection'', by approaching 
private sector fiber optic cable builders and network owners, and 
asking them to share their prices, data, and rights-of-way rental 
agreements. This also is proceeding outside any normal rule making 
process. Nobody knows what that data will be used for.
    Are you committed to the development, in cooperation with Congress 
and impacted stakeholders, of a fair, open, regulatory process which 
recognizes not only the value of federal lands, but the need to promote 
the development of a robust national telecommunications infrastructure? 
Will you commit now to seeing that at a minimum, that regulatory 
process proceeds on the basis of valuing fiber optic rights-of-way over 
federal lands based on the impact on the land, rather than extracting 
taxes for the commerce traveling through that cable?
    Answer. My general view is that regulatory processes should be 
fair, open and developed in cooperation with the Congress and impacted 
stakeholders. As you may be aware, in my agreement letter to the 
Department of the Interior I agreed to recuse myself for a period of 
one year from my appointment from any particular matter involving 
specific parties in which any of my clients is or represents a party. 
Some of my former clients were in the fiber optics industry. In light 
of my recusal, I will seek the guidance of the Department's ethics 
office before participating in regulatory matters directly affecting 
the fiber optics industry. I remain committed to ensuring that 
consultation with all affected parties and stakeholders is meaningful 
and that those interests are considered in any regulatory process 
developed on my watch.
    Question 2. What is the status of the independent peer review of 
the Hardy flow studies on the Klamath River? Please provide me with the 
names of the current reviewers selected by Dr. Hardy and their 
credentials.
    Answer. I have been informed by the Bureau of Indian Affairs that 
the Phase II flow study effort has not yet been completed. Therefore, a 
peer review has not yet been initiated. I have been informed that the 
names of the current reviewers selected by the Department are:
    Dr. Arle Harby, of Trondheim, Norway. He is a member of the Eco-
hydraulics Committee for the International Association of Hydraulic 
Research and co-leader of the Crof 626 program of the European Union to 
define the state of the art in instream flow and eco-hydraulics 
modeling.
    Dr. Klaus Jorde, of the Institute of Hydraulic Engineering, 
University of Stuttgart, Norway. He is a member of the Eco-hydraulics 
Committee for the International Association of Hydraulic Research and 
co-leader of the Crof 626 program of the European Union to define the 
state of the art in instream flow and eco-hydraulics modeling.
    Dr. Michel LaClerc, of the Institut National de laf Recherche 
Scientifique (National Institute of Scientific Research), University of 
Quebec. He serves as the secretary of the Eco-hydraulics Committee for 
the International Association of Hydraulic Research and co-leader of 
the Crof 626 program of the European Union to define the state of the 
art in instream flow and eco-hydraulics modeling.
    Dr. Mike Acreman, of the Center of Ecology and Hydrology in 
Wallingford, England. He is the head of the research group at Center of 
Ecology and Hydrology for Instream Flows.
    The Department has also sought the recommendation of an independent 
peer reviewer from the Klamath Water Users Association.
    Question 3. I have repeatedly asked the Department for copies of 
the actual contracts with Dr. Hardy to conduct the flow studies on the 
Klamath River. Please provide me with those contracts now.
    Answer. Following the March 21 oversight hearing regarding Klamath 
issues, I understand that the Secretary's Indian Water Rights Office 
provided your staff and the staff of Representative Greg Walden, in a 
letter dated March 29, 2001, the documents within the Department 
related to the retention of Dr. Hardy for Klamath flow study efforts. A 
copy of that letter is attached. Those documents included complete sets 
of the scopes of work for both Phase I and Phase II and the interagency 
agreements between the Bureau of Indian Affairs and the Department of 
Justice. As the interagency agreements show, the Department of Justice 
actually contracted with Dr. Hardy. Therefore, the Department of the 
Interior does not have the record contracts. I have been informed that 
it is the understanding of the Indian Water Rights Office that the 
contracts incorporate the scope of work already provided by the 
Department.

              Responses to Questions From Senator Bingaman

                         COAL ROYALTY REDUCTION

    Question. In 1988, while you were an Assistant Secretary for Land 
and Minerals Management, the Bureau of Land Management proposed a rule 
that would have reduced the royalty rate on underground coal from 8 to 
5 percent. What role did you play in proposing and promoting the 
proposed rule?
    Answer. The proposed rule was developed by the BLM in response to 
concerns that had been raised to the Bureau and the Department about 
the economic viability of underground coal mines during a period of low 
market prices. When the issue was initially raised, I was briefed by 
BLM staff and I asked for an economic analysis of the effect of 
considering the royalty reduction. The draft report I received did not 
provide, in my opinion, the appropriate level of analytical evaluation. 
After a more thorough evaluation was prepared--consistent with the 
normal rulemaking process--the rule was drafted by the Bureau and it 
included the more complete economic analysis which supported the 
proposed course of action. As Assistant Secretary, I was required to 
approve the rule for publication. However, prior to that decision, I 
had recused myself from involvement in this action since I was 
considering employment opportunities outside the government. 
Ultimately, the Deputy Assistant Secretary approved publication of the 
proposed rule for public comment.

                 REDEFINITION OF VALID EXISTING RIGHTS

    Question. In December 1988, after you had recused yourself from 
matters affecting the coal industry, the Department proposed a rule 
that would have redefined ``valid existing rights'' so as to permit 
coal companies to mine sensitive areas otherwise protected by the 
Surface Mining Act. What role did you play in proposing and promoting 
this proposal?
    Answer. After my recusal in September 1988, I did not participate 
in the rulemaking process for proposed revisions to the definition of 
``valid existing rights.'' Any decisions that were made after that date 
and leading up to the rule's publication on December 27, 1988 were made 
by higher-level Department officials. Prior to my recusal, as Assistant 
Secretary for Land and Minerals Management, I had been involved in the 
rulemaking process, but the proposed rule itself was actually signed on 
May 6, 1988, four months before my recusal, by James E. Cason, the 
Acting Assistant Secretary. The delay between Cason's approval and 
publication in the Federal Register resulted from the OMB clearance 
process.

                         REGULATORY PHILOSOPHY

    Question. The coal valuation, coal royalty, and valid existing 
rights proposals provide three concrete examples of the policies that 
you promoted or at least supported while you were at the Interior 
Department before.
    What assurance can you give the Committee that, if confirmed, you 
would not pursue initiatives like these in the future?
    Answer. If confirmed as Deputy Secretary, I will function as chief 
operating officer of the Department. Initiatives such as those you list 
will be the primary responsibilities of the Bureau Directors and 
Assistant Secretaries rather than of the Deputy Secretary. With regard 
to the specific examples listed, the proposals were the result of 
either responses to the need to define standards contained in 
regulations or statutes, or in response to requests for the public to 
address these issues. As to the Office of Surface Mining's rule 
defining ``valid existing rights,'' it is my understanding that OSM 
subsequently promulgated a final rule which was challenged in National 
Mining Association v. Norton, No. 01-283 (D.D.C) and that case is 
currently awaiting a decision in United States federal district court. 
At this point, it is appropriate to await the Court's ruling and 
guidance on this issue.
    Question. In what ways, if any, has your thinking about the 
environment and mining policy changed since 1988?
    Answer. Since 1988, I believe the mining and environmental programs 
have matured. For example, passage of the 1990 Clean Air Act affected 
the market for various types of coal with a shift to western low sulfur 
coals. What I think is needed in these areas of environment and mining 
policy is regulatory certainty. With regulatory certainty, market 
mechanisms will assure that stringent environmental goals are met in 
the most cost effective manner. This encourages industry to be 
innovative and develop new technologies. I recognize that these issues 
have become more complicated. Now more than ever we must take advantage 
of the opportunity to develop consensus and move forward through a 
collaborative process that includes Congress, state and local 
governments, tribes, and all other interested public and private 
parties.

                      THE OFFICE OF SURFACE MINING

    Question. (A) While you were Deputy Director of the Surface Mining 
Office from 1981 to 1983, the Office experienced a major upheaval. 
Several hundred employees were fired, resigned, retired, or were 
transferred; citations against mine operators fell; and most of the 
federal surface mining regulations were rewritten. Critics contend that 
you and OSM director James Harris carried out a systematic campaign to 
weaken the enforcement of the Surface Mining Act.
    How do you explain what happened in the Office of Surface Mining 
while you were its Deputy Director?
    Answer. When I joined the Office of Surface Mining early in 1981, 
the states, in accordance with the requirements of SMCRA, were moving 
toward primacy. The result was that OSM's mission was evolving from one 
of federal control, to oversight and assistance for the states. This 
change, which was initiated by the Carter Administration, resulted in 
the need for fewer OSM inspectors and other employees.
    Congress approved this reduction as part of OSM's fiscal year 1981 
and 1982 budgets. I wanted to ensure that the cuts were not made at the 
expense of the environment. At the beginning of the reorganization, OSM 
had approximately 875 full-time permanent employees on board. At the 
conclusion of the reorganization in 1982, OSM had approximately 650 
permanent full-time employees. We reduced the number of federal 
inspectors, but we increased the funding for state regulatory grants to 
cover the new SMCRA-authorized state inspections.
    With regard to revising the regulations, we did undertake an 
intensive review and rewrite of the 1979 regulations. We believed that 
the design standards in the 1979 rules were far too rigid and 
complicated to be understood and enforced. Additionally, in a 1981 
report, the National Academy of Sciences emphatically stressed the need 
for changes in the regulations and presented a convincing argument for 
making the entire set of regulations more flexible in application to 
specific mining operations. Thus, we revised the rules to establish 
performance standards that were a great deal easier to implement and 
measure than design standards.
    I am reminded that while I was at the Department of the Interior, 
both at OSM and as the Assistant Secretary who oversaw OSM, 
appropriations for abandoned mine land reclamation increased by more 
than 350 percent. We inherited an appropriation of $82 million in 
fiscal year 1981, which increased to $115 million in fiscal year 1982, 
$213 million in fiscal year 1983, $271 million in fiscal year 1984 and 
$296 million in fiscal year 1985. That $296 million is the highest 
level of funding the program has ever achieved. As this record shows, 
we recognized early and throughout our Administration the importance of 
the AML program in reclaiming lands and waters damaged by past coal 
mining and the need to increase support for it.
    Question. Did you ever fire, reassign, or pressure any OSM employee 
to resign because you perceived the employees to be enforcing the 
Surface Mining Act too strictly?
    Answer. No. However, one of the primary purposes of OSM's 
reorganization in 1982 was to link centralized decision-making in 
Washington with consistent implementation of decisions throughout the 
country. Thus, we created 13 Field Offices throughout the nation. As 
these new offices were established, some employees chose not to 
relocate and resigned their positions. Also, as with any reduction and 
reorganization, some staff were adversely affected. We were, however, 
compassionate in determining position reassignments, relocations and 
separations.
    Question. (B) Your critics have also alleged that, as Assistant 
Secretary for Land and Minerals Management, you orchestrated the 
removal of Office of Surface Mining employees who enforced the law 
against coal companies too aggressively, and replaced them with people 
more sympathetic with the industry.
    Is there any truth to these allegations?
    Answer. No.
    Question. Did you, at any time after you began discussing a job 
with one of the largest coal mining companies east of the Mississippi 
River, have any role in the appointment of the Office of Surface Mining 
official who would be responsible for strip-mining enforcement in that 
region?
    Answer. No.

              OIL AND GAS LEASING OFF THE CALIFORNIA COAST

    Question. In April 1988, the Fish and Wildlife Service made 
comments critical of a proposal to lease over a million acres off the 
coast of northern California for oil and gas development. The Fish and 
Wildlife Service raised serious concerns about the high risk of a spill 
if the lease sale took place, and about the serious harm to the 
environment that would result from such a spill.
    In response, you sent a note to Bill Horn, the Assistant Secretary 
for Fish, Wildlife and Parks that was sharply critical of the Fish and 
Wildlife Service's assessment. You told Mr. Horn that the Fish and 
Wildlife Service's concerns ``could prove very damaging'' to the 
proposed lease sale if they became known.
    What does this incident tell the Committee about your willingness 
to consider the environmental consequences of the Department of the 
Interior's actions and the balance you would strike between competing 
energy and environmental goals?
    Answer. I want to assure the Committee that I am very willing to 
consider the environmental consequences of energy development. With 
regard to the specific incident that you referred to in your question, 
I thought at the time and still believe it is important that the two 
Departmental bureaus (MMS and FWS) work together before any public 
statements are made so that we may benefit from their collective 
expertise.
    Question. Do you support the continuation of existing Outer 
Continental Shelf leasing bans?
    Answer. I agree with the Administration position that supports the 
current moratoria on leasing on Federal offshore lands.

                                                      May 17, 2001.
Hon. Byron Dorgan,
U.S. Senate, Washington, DC.
    Dear Senator Dorgan: I am writing in response to your request at my 
confirmation hearing that I respond to the issues raised in the 
Washington Post article that appeared on Wednesday, May 16. I hope this 
letter will sufficiently address your questions.
    Let me first comment on the reference in the Washington Post 
article that I twice suppressed Departmental studies during my service 
in the Department as Assistant Secretary for Land and Minerals 
Management. I assume the two studies in question are the proposed coal 
royalty reduction and an offshore oil and gas leasing and drilling 
report for Northern California.
    The draft coal royalty reduction analysis and proposed rule was 
developed by the Bureau of Land Management (BLM) in response to 
concerns that had been raised to the Bureau and the Department about 
the economic viability of underground coal mines during a period of low 
market prices. When the issue was initially raised, I was briefed by 
BLM staff and I directed an economic analysis to be prepared on the 
effect of considering the royalty reduction. The draft report I 
received did not provide, in my opinion, the appropriate level of 
analytical evaluation. After a more thorough evaluation was prepared--
consistent with the normal rulemaking process--the rule was drafted by 
the Bureau and it included the more complete economic analysis which 
supported the proposed course of action. As Assistant Secretary, I was 
required to approve the rule for publication. However, prior to that 
decision, I had recused myself from involvement in this action since I 
was considering employment opportunities outside the government. 
Ultimately, the Deputy Assistant Secretary approved publication of the 
proposed rule for public comment.
    With regard to the offshore drilling study, it is my recollection 
that the April 1988, Fish and Wildlife Service (FWS) comments were 
prepared in the FWS Regional office and were communicated to the 
Regional office of the Minerals Management Service (MMS). The MMS 
prepared a memorandum that I forwarded to my counterpart, the Assistant 
Secretary for Fish and Wildlife and Parks. A meeting then occurred 
between the professional scientists at MMS and FWS and myself and the 
Assistant Secretary for Fish and Wildlife and Parks. The result of the 
meeting was a unified Department position on the minimal risks 
associated with offshore exploration and development.
    In response to questions about my involvement, as the State of 
Virginia's senior mine regulator, with the lawsuit that had been filed 
on the Federal Surface Mining Control and Reclamation Act (SMCRA)--as I 
stated during my confirmation hearing, I was a career public servant 
for the Commonwealth of Virginia when the SMCRA was passed in 1977. I 
was not a lawyer. My sole duty in that dispute was to assist the 
Attorney General of Virginia in representing the State in its 
constitutional challenge on several specific provisions of the Act. As 
I indicated in my statement during the confirmation hearing, I consider 
one of my greatest accomplishments to be ``leading the effort of 
Virginia to secure state administration of the Federal Surface Mining 
Control and Reclamation Act.''
    With respect to questions related to my service in the Office of 
Surface Mining Reclamation and Enforcement (OSM), when I joined the OSM 
early in 1981, the states in accordance with the requirements of SMCRA, 
were moving toward primacy. The result was that OSM's mission was 
evolving from one of federal control, to one of oversight and 
assistance for the states. This change, which was initiated by the 
Carter Administration, resulted in the need for fewer OSM inspectors 
and other employees.
    Congress approved this reduction as part of OSM's fiscal year 1981 
and 1982 budgets. I wanted to ensure that the cuts were not made at the 
expense of environmental protection. At the beginning of the 
reorganization, OSM had approximately 875 full-time permanent employees 
on board. At the conclusion of the reorganization in 1982, OSM had 
approximately 650 permanent full-time employees. We reduced the number 
of federal inspectors, but we increased the funding for state 
regulatory grants to cover the new SMCRA-authorized state inspections.
    With regard to revising the regulations, we did undertake an 
intensive review and rewrite of the 1979 regulations. We believed that 
the design standards in the 1979 rules were far too rigid and 
complicated to be understood and enforced. These rules took a 
``cookbook'' approach to mining and reclamation practices that did not 
recognize the unique topographical and climatic differences among the 
coal-producing states--differences such as the vast plains of North 
Dakota and the mountainous terrain of West Virginia.
    Additionally, in a 1981 report, the National Academy of Sciences 
emphatically stressed the need for changes in the regulations and 
presented a convincing argument for making the entire set of 
regulations more flexible in application to specific mining operations. 
Thus, we revised the rules to establish performance standards that were 
a great deal easier to implement and measure than the design standards.
    I am reminded that while I was at the Department of the Interior, 
both at OSM and as the Assistant Secretary who oversaw OSM, 
appropriations for abandoned mine land (AML) reclamation increased by 
more than 350 percent. We inherited an appropriation of $82 million in 
fiscal year 1981, which increased to $115 million in fiscal year 1982, 
$213 million in fiscal year 1983, $271 million in fiscal year 1984 and 
$296 million in fiscal year 1985. As this record shows, we recognized 
early and throughout our Administration the importance of the AML 
program in reclaiming lands and waters damaged by past coal mining and 
the need to increase support for it.
    As a matter of my management philosophy, I believe that regulators 
should have the flexibility to look at innovative solutions to 
challenging problems. There are many instances where flexible resource 
management tools can result in greater conservation benefits. For 
example, by leveraging limited federal resources with the efforts that 
private landowners contribute, more wildlife habitat may be protected, 
without taking land off the local tax rolls or adding to the federal 
estate.
    In closing, my thirty-year career in public and private service was 
incompletely summarized in this Washington Post story. It failed to 
mention my bipartisan work with the late Congressman Mo Udall to end 
the abuse of the ``two-acre exemption'' or my close work with Senator 
Dale Bumpers to eliminate fraud in onshore oil and gas leasing. It is 
that commitment to bipartisanship that I pledge to continue if 
confirmed by the United States Senate.
            Sincerely,
                                                  J. Steven Griles.
                                 ______
                                 
                                                      May 21, 2001.
Hon. Frank Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: Enclosed are my responses to questions for the 
record of the Senate Energy and Natural Resources Committee's May 16, 
2001 hearing to consider my nomination to be a member of the Federal 
Energy Regulatory Commission.
    If you have further questions or need additional information, 
please let me know.
            Sincerely,
                                                Nora Mead Brownell.
[Enclosure]
             Responses to Questions From Senator Murkowski
    Question 1. Everyone seems to agree that the licensing process for 
hydropower projects is broken--it takes too long, it's too expensive, 
and it's fraught with uncertainty. What are your views about ways to 
improve the process for relicensing the nation's non-federal hydro 
projects?
    Answer. From everything that I have read to date, it seems clear 
that the hydroelectric licensing process is in need of significant 
improvement which will bring operational discipline to the process. If 
confirmed, I look forward to working with this Committee, my fellow 
Commissioners, and other interested groups to advance that goal. I will 
continue to familiarize myself with the FERC licensing process; the 
analysis of streamlining options recently completed by FERC staff; 
legislative proposals by Members of this Committee, including Senators 
Craig and Bingaman; as well as the viewpoints of other hydro licensing 
stakeholders.
    Coordination with senior policy makers at agencies involved in the 
process is crucial. Such coordination should strive to establish 
priorities and deadlines, eliminate redundancies and enhance data 
exchange in order to tighten up the process. Although it may be 
necessary to seek legislation, administrative reforms should be a 
starting point and may go far in addressing a substantial part of the 
delay. If confirmed, I look forward to conducting my own analysis and 
working with Congress to design the most appropriate response to ensure 
expeditious treatment and a realistic balance among all interested 
parties. Our goal is a more timely and less costly licensing process 
that addresses our continuing power needs while also protecting and 
fostering our nation's environmental resources.
    Question 2. As you know, over 15,000 MW of hydroelectric capacity 
in California and the Pacific Northwest face relicensing over the next 
15 years. This is a significant amount of power that can make a big 
difference in whether the western states will have sufficient 
electricity to meet demands. What can we do to minimize the loss of any 
of this capacity during the relicensing process?
    Answer. I am very much aware that hydropower is a very critical 
piece of the Western supply picture. Within the territory served by the 
California Independent System Operator, hydropower accounts for 
approximately 25% of the resource capacity. In the Northwest, that 
figure grows to approximately 66% of the available resource capacity. I 
understand that to date there has been no net loss of hydroelectric 
capacity as a result of the recent rounds of relicensing. I will 
certainly make every effort to continue in that fashion. In addition, I 
believe that we should encourage license applicants to consider 
applying to increase their projects' generating capacity within 
appropriate environmental constraints in order to take full advantage 
of the available flows.
    Question 3. In a report submitted to Congress last week, FERC staff 
concluded that: ``Many specific factors contribute to delays [in the 
hydro licensing process], but the underlying source of most delays is a 
statutory scheme that disperses decision-making among federal and state 
agencies acting independently of the Commission's proceedings.'' Do you 
agree with this statement and that legislative improvements are needed 
to fix the hydro relicensing process?
    Answer. Although I have not had the opportunity to examine the FERC 
staff report in any detail, it does suggest that the current 
legislative framework of dispersed decision-making is a significant 
factor in licensing delay. The report also strongly suggests that the 
Congressional mandate that the Commission give equal consideration to 
power and to the environment is clearly affected by the mandatory 
conditioning authority of various resource agencies, which do not have 
the same equal-consideration mandate. My preliminary view is that 
legislation may clarify priorities and accountability. However, before 
suggesting that legislation is essential or the form such legislation 
should take, I want to develop a clear understanding of the issues and 
the allocation of authority among agencies. A more coordinated and 
cooperative effort by all concerned may address a significant portion 
of the delay problem. If confirmed, I look forward to working with all 
involved elements to reach the appropriate resolution to this issue.

            Responses to Questions From Senator Gordon Smith

    Question 1. In a report recently submitted to Congress, FERC staff 
stated, ``Many specific factors contribute to delays [in the licensing 
process], but the underlying source of most delays is a statutory 
scheme that disperses decision-making among federal and state agencies 
acting independently of the Commission's proceedings.'' Do you agree 
with this statement?
    Answer. While I have not yet had the opportunity to review the 
staff report in detail, I do know that the current dispersed decision 
process is one of the critical factors mentioned. Even without specific 
knowledge about the delays related to the dispersal of decision-making, 
common sense suggests that a dispersed scheme will be slower and less 
efficient than a unified one. Dispersal of decision making can cause 
policy confusion, redundancy, overlap and inefficiency. We need to 
determine the most expeditious process which includes, but is not 
limited to: a clear understanding of policy priorities for all involved 
in decision making, time deadlines, and data sharing so everyone who is 
working on the same case shares the same base of knowledge.
    Question 2. The recommendations laid out in the FERC report 
underscore the need to legislate improvements to the hydro licensing 
process. Do you agree that some sort of legislation is needed if we are 
to get to the root of the problem and fix the licensing process?
    Answer. Before reaching any position on this, I want to have an 
opportunity to hear the views of the state and federal resource 
agencies who under existing law share authority over the licensing 
process. It may be possible that better coordination and cooperation 
among the involved agencies can address a significant part of the 
delay, as I have outlined above. However, I certainly will work to 
address legislative changes if that is called for. If confirmed, I look 
forward to working with Congress and others to develop the most 
appropriate response to this problem.
    Question 3. Several regional transmission organizations are 
developing in the Western United States. Do you support the manner in 
which these entities, including RTO West, are developing?
    Answer. Order 2000 provided for a voluntary process for regional 
transmission organizations (RTO) formation with input from interested 
stakeholders. While voluntary, the eventual outcome must meet the 
standards set forth in Order 2000. I am aware that both RTO West and 
Desert Star (a proposed RTO organization in the Southwestern United 
States) have engaged in extensive stakeholder discussions regarding the 
formation of such organizations. As long as that process shows prompt 
and meaningful progress in the formation of RTOs that will successfully 
meet the needs of their regions and meet the standards set forth in 
Order 2000, it should be continued. To me, meaningful progress would 
include transparency and open and equal access to RTO processes as well 
as to the transmission infrastructure. There should be a role for the 
RTO to engage in long term planning. In addition, I would expect 
parties to be disciplined in their start-up costs. I would urge parties 
to examine successful ISO ventures such as PJM Interconnection, L.L.C., 
New York ISO and ISO New England. Adoption of best practices already in 
place can only shorten the formation time frames as well as hold start-
up costs to reasonable levels.

              Responses to Questions From Senator Cantwell

    Question 1. Consider the situation in Washington State. As you are 
probably aware, we've already experienced retail rate increases in the 
high double-digits, suffered plant closures and job loss as a result of 
skyrocketing electricity costs, and are facing the prospect of a BPA 
rate increase this fall that threatens to further undermine the 
economic health of the entire region. Based on this anecdotal 
information--and the fact prices at the Mid-Columbia trading hub has 
increased 11-fold over the prices paid last year at this time--do you 
believe prices in the Pacific Northwest are just and reasonable?
    Answer. Clearly, there are very grave problems in the Northwest as 
well as in California. If confirmed, I will approach these problems 
with a great sense of urgency. I believe prices in the Pacific 
Northwest may not be just and reasonable under current market rules and 
under certain conditions. Therefore, I agree with the Commission's 
recent decision to institute an investigation into the rates, terms and 
conditions of certain wholesale sales within the Western Systems 
Coordinating Council.
    Question 2. As you are no doubt aware, many have questioned the 
effectiveness of FERC's price mitigation plan for California--that it 
is riddled with loopholes and far too narrow to provide any significant 
relief. I absolutely agree with that analysis. But even more pressing 
from my perspective is the fact FERC has done nothing to help the 
Northwest--even though our prices have actually been higher than 
California's by some measures. Specifically, while the average daily 
peak price at the Mid-Columbia hub increased by $140/MWh between June 
1999 and June 2000, the associated increase in California was $113/MWh 
during peak. Daily peak average prices in our region have ranged from 
$155/MWh to $460/MWh from Feb. 2001 through April 2001, and dropped 
below $200/MWh on only 6 days throughout the course of those three 
months. Given this information, do you believe FERC has fulfilled its 
statutory mandate to uphold just and reasonable rates--especially in 
the Northwest? If these circumstances don't trigger required action by 
FERC, what would?
    Answer. The section 206 investigation recently instituted by FERC 
is certainly an appropriate step in ensuring that rates in the Pacific 
Northwest and other parts of the West are just and reasonable. As I 
stated at the hearing last week, I do not have access to all of the 
information available to the Commission as it deliberated on that 
matter. Accordingly, I would hesitate to judge whether I would have 
acted differently at that time. With regard to possible future action, 
I cannot prejudge at this time what action the Commission may take as a 
result of the investigation, since I would certainly wish to 
participate in that decision, if confirmed. However, I can certainly 
state that I am deeply concerned about the circumstances in the West. 
There are very substantial problems which require swift attention.
    Question 3. It is true FERC in its April 26 order initiated a 
Section 206 investigation throughout the West and proposed that it may 
move forward with a California-type mitigation plan that would include 
the Northwest. I am concerned, however, because our problem with 
wholesale prices is in no way limited to the types of transactions 
covered by the investigation-real-time trades of 24 hours or less, 
during periods when reserves dip below 7 percent. As you are likely 
aware, most of our sales in the Northwest are done under bilateral 
contracts. Further, because of our reliance on hydro resources, it's 
not clear how or when that 7 percent reserve level would apply within 
Northwest control areas. Do you believe this investigation is broad 
enough to reflect what is actually happening in NW markets? If 
confirmed, would you support broadening it? Could you also comment on 
whether and how it would be possible to adapt FERC's price mitigation 
plan for California to Northwest markets--especially given the fact we 
do not have a centralized, auction-like market?
    Answer. First, I cannot prejudge what the Commission will do as the 
result of its Section 206 investigation. The Commission will be 
receiving comments and conducting its own analysis. Until that 
investigation has been completed, there is no way to know what the 
Commission will do. However, you do raise important issues which will 
have to be carefully considered. It is possible that the scope of the 
investigation may have to be reviewed but without additional 
information, I cannot arrive at a position on that issue at this time. 
In addition, the scope of any mitigation plan the Commission may 
develop and which transactions it should include will have to be 
carefully considered. I am aware that the Northwest relies on bilateral 
contracts. Accordingly, applying a California-type mitigation plan to 
the Northwest will present some challenges. I can state that if I find 
that the scope of the investigation is insufficient, or the existing 
steps are unresponsive to the unique market conditions in the 
Northwest, I will act accordingly.
    Question 4. In the Pacific Northwest, BPA and investor-owned 
utilities have worked with regional stakeholders to develop a proposal 
for a regional transmission organization called RTO West. Movement to 
an RTO would be a significant change for my constituents. Before this 
proposal moves forward too quickly, we must be certain there has been 
considerable input and participation from all regional interests, and 
that the RTO's costs and benefits are sufficient to merit such a 
change. Do you agree that when striving to meet national policy 
objectives--as FERC has outlined in Order 2000--that individual regions 
should be encouraged to find solutions that meet their unique needs and 
fit their characteristics, and that regional processes and solutions 
should be respected and acknowledged?
    Answer. My experiences in Pennsylvania with the PJM 
Interconnection, L.L.C. in its role as an independent system operator 
clearly indicate that voluntary processes among stakeholders are 
critical to the successful transformation of the market. I am also 
aware that Order 2000 acknowledged that RTOs may take different forms 
that reflect the unique needs of the region. As long as seams issues 
are successfully managed, I do not believe that we must impose a ``one 
size fits all'' approach to the formation of RTOs. Consensus solutions 
achieved through regional processes involving input from affected 
stakeholders should be given all due consideration, subject to 
Commission review to ensure the overall conformity of any proposal with 
the requirements of Order 2000. A careful cost analysis, disciplined 
budget planning and an independent board are important ingredients in 
RTO formation. Regardless of the precise form adopted for a particular 
RTO, open and transparent markets must serve the wholesale market with 
free flowing information on a real time basis. With regard to cost, the 
current charge for PJM, L.L.C. is approximately .37 cents per MWh. This 
cost is relatively small considering the engineering and economic 
market functions that ISO provides.
    Question 5. Again, on the topic of RTO West, there is significant 
concern within the region about FERC's push for a single, West Coast-
wide RTO. While the NW is still working hard to find answers that work 
within the region, this emphasis on a West-wide RTO seems premature at 
best. What is your position on the establishment of a West-wide RTO?
    Answer. At this point, I do not feel that I have sufficient 
information to have reached a position on that issue. However, I do 
know that historical trading patterns in the West indicate that there 
is a regional relationship between and among the transmission systems 
and the generating resources located in that area. A West-wide RTO may 
well be a desirable end-state for the region since the West is a 
natural marketplace. However, such a result will not be accomplished 
immediately. If there is a move toward such an entity, existing 
organizations that support the current operating, planning and 
reliability needs of the Western Interconnection as well as proposed 
organizations just now moving forward will have to be considered. I 
would also note that recognition of regional characteristics is 
important to provide for smooth transaction flows.
    Question 6. The RTO West proposal is for the creation of a not-for-
profit, independent system operator. Do you support the creation of 
this type of structure (a non-profit organization)?
    Answer. I have not reviewed the RTO West proposal in detail at this 
point. However, I believe that as proposed, RTO West will be a non-
profit system operator while one of its anticipated transmission owner 
members will be a for-profit transmission company. This company will be 
formed through the purchase of the transmission facilities of several 
of the public utility companies currently operating in the Northwest. 
The Commission approved this hybrid structure after a finding that both 
organizations satisfied the independence standards of Order 2000. I am 
aware that Order 2000 provided some flexibility for entities to choose 
an appropriate organizational structure, whether non-profit, for-
profit, or a combination of the two, that best serves the parties' 
attempt to fashion an RTO that provides the greatest benefit to the 
region. But whatever the structure, the entity must bring transparency, 
equal and non-discriminatory access, certainty, and efficiency. RTOs 
must be value added.
    Question 7. Can you describe your views on the RTO's role in 
transmission planning and expansion authority? Do you support RTO's 
that have strong planning and expansion authorities?
    Answer. Without referring to any specific RTO filing now pending 
before the Commission, I do believe that an RTO needs to have a 
substantial role in planning on a regional basis. A truly independent 
RTO can provide for a neutral planning process that ensures that 
necessary expansion and transmission planning will occur in locations 
and at a pace that will promote reliability for the grid as well as 
financial stability and the participation of all stakeholders. Long 
range planning on a regional basis is also necessary to attract capital 
to transmission and regional business development. In addition, 
planning is essential to provide for growth of regional energy markets. 
From an engineering standpoint alone, an RTO would be a logical entity 
to provide those essential planning and coordination roles. From a 
market perspective, an RTO is uniquely placed to oversee 
interconnection timing and data flows. This is also one very real 
reason why an RTO's independence is so crucial. Accountability is an 
issue that must be addressed to ensure that any planning process takes 
into account basic principles of nondiscriminatory open access as well 
as local and environmental concerns. Obviously, I believe that a well 
functioning RTO must have a role in transmission planning and 
expansion.
    Question 8. Are you aware that Congress has specifically defined 
the Commission's authority to review Bonneville Power Administration's 
power and transmission rates under the Northwest Power Act, and that 
the Commission's authority to regulate Bonneville's transmission rates 
under the Federal Power Act is limited?
    Answer. Yes. Clearly the Commission must act within its 
jurisdiction as defined by Congress. I am also aware that Congress 
requires FERC to ensure that the rates, terms and conditions of all 
jurisdictional services under the Federal Power Act are just and 
reasonable. In its April 26 Order, the Commission concluded that it 
could not fulfill this FPA requirement without conditioning non-public 
utilities' voluntary participation in the California ISO's markets or 
use of the ISO's open access transmission tariff on their agreement to 
abide by price mitigation. If I am confirmed, I would need to 
participate in the decision on rehearing of this conclusion, so I 
cannot state at this time whether I agree with the Commission's 
decision on this point.
    Question 9. Utility executives and risk managers have serious 
concerns about potential widespread, uninsurable liability stemming 
from system outages. This concern has increased due to the intensified 
use of the electric transmission grid resulting from the 1992 Energy 
Policy Act, the aggregation of transmission systems under RTOs, and the 
possibility of mandatory national reliability standards. Would you 
support some kind of wholesale tariff liability limitation for 
transmission system owners similar to what exists in many states for 
retail transactions?
    Answer. Tort liability is generally governed by applicable state 
law. To date, the Commission has declined to impose a federal standard 
of liability for transmission service that would preempt applicable 
state law. See New York State Electric & Gas Corp. v. FERC, Docket No. 
00-1228 (D.C. Cir. May 15, 2001) (affirming Commission policy). 
However, I have an open mind on whether the formation of an RTO 
warrants reevaluation of the Commission's decision not to preempt state 
law.
    Question 10. The Commission recently attempted to extend its 
jurisdiction to include non-public utility entities in the California 
wholesale power market dockets. Even in the face of an emergency, 
wouldn't you agree that Congress, not FERC, defines the scope of FERC's 
jurisdiction? There are those states, such as Texas, that have been 
very successful in avoiding FERC jurisdiction. Aren't you troubled by 
Federal expansions of authority, at the expense of local control, over 
energy matters?
    Answer. As I stated above, the Commission has no authority to 
exceed its jurisdiction as defined by Congress. However, FERC also has 
a statutory duty to ensure that the rates, terms and conditions of all 
jurisdictional services under the Federal Power Act are just and 
reasonable. In its April 26 Order, the Commission concluded that it 
could not fulfill this FPA requirement without conditioning non-public 
utilities' voluntary participation in the California ISO's markets or 
use of the ISO's open access transmission tariff on their agreement to 
abide by price mitigation. If I am confirmed, I would need to 
participate in the decision on rehearing of this conclusion, so I 
cannot state at this time whether I agree with the Commission's 
decision on this point.
    Question 11. I understand that over 15,000 MW of existing, non-
federal hydroelectric capacity in the Pacific Northwest and California 
must go through the FERC relicensing process in the next 15 years. 
These are energy resources that are very important to my state and 
region. All stakeholders seem to agree that the relicensing process is 
lengthy, complex, disjointed, expensive for all involved, and in need 
of improvement. Delays often result in resources being spent on process 
rather than on-the-ground environmental improvements. Clearly, this 
process requires refinement in terms of cutting time and expense, but 
at the same time, we must be extremely careful to give environmental 
issues due consideration. I believe this process must be refocused on 
outcomes--and outcomes based on sound science. Do you believe 
legislation is needed to address these problems? How would you approach 
reform and the delicate balancing act that FERC must perform as part of 
its statutory mandate?
    Answer. My preliminary view is that legislation may be necessary to 
address this issue. At this point, the Commission is mandated by the 
Electric Consumers Protection Act of 1986 to give equal consideration 
to power and to the environment. However, the federal and state 
agencies holding mandatory conditioning authority over licenses have no 
such equal-consideration mandate. Whether it is accomplished 
legislatively or through administrative cooperation, a more coordinated 
approach is definitely necessary.
    Regulatory agencies can find themselves having to balance the 
understandable desire for ever more scientific testing with the need to 
make timely decisions on matters affecting other aspects of the public 
interest. What is important is to continue gathering information about 
project impacts after a license has issued, and to make the appropriate 
adjustments based on that information. I believe this is what the 
Commission's licenses now provide for.
                                 ______
                                 
                                      Department of Energy,
                                      Washington, DC, May 21, 2001.
Hon. Frank Murkowski,
Chairman, Energy and Natural Resources Committee, Dirksen Senate Office 
        Building, Washington, DC.
    Dear Mr. Chairman: I want to thank you and Senator Bingaman for the 
opportunity to appear before the Committee on Energy and Natural 
Resources as General Counsel nominee at the U.S. Department of Energy.
    Enclosed for the record are the answers to the post hearing 
questions submitted to me in writing by members of the committee.
    Please let me know if I can be of any further assistance.
            Sincerely,
                                                 Lee Liberman Otis.
[Enclosures]
             Responses to Questions From Senator Murkowski

    Question 1. If confirmed as the Department's General Counsel, will 
you make it a priority to comply the terms and spirit of the Economy 
Act to ensure that federal sites are only used for services, such as 
disposal of low-level radioactive wastes, that cannot be performed as 
conveniently and cost-effectively as qualified commercial enterprises 
in the private sector?
    Answer. If confirmed, I will direct attention to assuring that all 
the terms of the Economy Act are complied with when that authority is 
used by the Department. In addition, I would agree that the business 
principle of using convenient and cost-effective commercial vendors is 
a sound one to apply in all of the Department's activities.
    Question 2. If confirmed, will you rigorously enforce the 
Competition in Contracting Act to ensure that the Department uses full 
and open competition in the award of its contracts?
    Answer. If confirmed, I will emphasize the need for the Department 
to comply with the Competition in Contracting Act, including its 
limitations on the circumstances in which an agency may depart from 
full and open competition in awarding contracts.

              Responses to Questions From Senator Cantwell

    Question 1. As I've previously expressed to this committee, the 
Hanford Nuclear Reservation and the clean-up of its 54 million gallons 
of dangerous high-level radioactive waste is of tremendous importance 
to me and the State of Washington. As you know, the states with DOE 
nuclear sites have issued regulatory orders setting forth DOE's legal 
obligations. In Washington, the Tri-Party Agreement between the State, 
EPA and DOE is a legally enforceable pact that obligates DOE to clean-
up Hanford on an agreed-upon schedule. If confirmed, do you commit to 
fulfilling DOE's legal obligations under the Tri-Party Agreement? What 
would you do differently than prior Administrations to ensure that DOE 
lives up to these obligations?
    Answer. If confirmed, I am committed to doing everything in my 
power to see to it that DOE complies with all its regulatory 
obligations, including those set out in the Tri-Party Agreement. I 
completely understand why the cleanup of Hanford is of tremendous 
importance to you and the State of Washington. I believe it is also of 
tremendous importance to the Department of Energy and to Secretary 
Abraham. I understand that there is considerable frustration about 
missed deadlines both at Hanford and at other cleanup sites. Indeed the 
Secretary has indicated that he would like to see cleanup expedited at 
all DOE's legacy sites and has directed a top-to-bottom review to see 
how this can be done.
    If confirmed, the Assistant Secretary-designate for the 
Environmental Management program will, in accordance with the 
Secretary's directive, develop a current assessment of the status of 
cleanup at Hanford and options for completing it as promptly as 
possible. Doing so will undoubtedly require more cooperation and trust 
than the Department and the State have been able to achieve to date. 
The principal reason I believe this may be possible to achieve is that 
the individuals the President has nominated as Assistant Secretary for 
the Environmental Management program and Under Secretary have a record 
of having succeeded in a similar endeavor in the past at Rocky Flats. 
If confirmed, I view my role as lending them whatever assistance I can.
    Question 2. Do you understand that the citizens of Washington State 
are expecting DOE to meet its binding commitment to construct a waste 
treatment facility that will glassify the tank waste by 2007? Can you 
reconcile DOE's promise to meet this deadline with the failure of this 
Administration to request sufficient funding to do so?
    Answer. I do understand that the Tri-Party Agreement calls for 
construction of a waste treatment plant that will begin operations by 
2007. I understand there is disagreement over whether or not that 
target can be met if the project is funded at the level proposed in the 
President's budget. I believe that the Secretary told the Committee a 
few days ago, at its hearing on the President's budget on May 8, that 
he is not prepared to say that the budget will result in any compliance 
obligations, including this one, not being met. The Secretary also 
acknowledged that the Congress obviously plays an important role in the 
budget process, which is ongoing.
    Question 3. Did you know that, over the past 12 years, DOE has 
repeatedly requested extensions of the schedule for treating the tank 
waste at Hanford? Do you understand that Washington citizens are 
increasingly skeptical of DOE's commitment to meet its legal 
obligations to treat this waste? What would you do to build confidence 
in our citizens that DOE will address this growing threat to human 
health and the environment?
    Answer. I completely agree with you about the importance of getting 
the Hanford tank waste addressed so as to avoid very significant 
potential future health and safety problems. I have not personally 
reviewed what has happened in the past, but I am aware that there is 
considerable frustration about missed deadlines, accompanied by lack of 
trust on the part of the regulators and the community. If confirmed, 
one of the first things I will do is to work with the Assistant 
Secretary for the Environmental Management program and the Under 
Secretary to get their assessment of where this project stands and how 
they think it most prudent and realistic to proceed. I would hope we 
would then be able to discuss that assessment with the regulators, the 
community and you in a way that would earn everyone's confidence. The 
Assistant Secretary-designate and the Under Secretary-designate have a 
record of having done this at Rocky Flats, where I believe there was a 
similar history that had to be overcome. It seems to me that this 
background and record make them ideally suited to the key task you 
correctly identify of restoring trust, so as to allow everyone to move 
forward constructively. If confirmed, I would want to lend them my 
assistance in this important endeavor.
    Question 4. The Attorney General of the State of Washington has 
indicated that the lack of progress in the design and construction of a 
tank waste treatment facility--combined with the failure of DOE to seek 
sufficient funding to meet its legal obligations--may leave the state 
no choice but to seek a judicial remedy. What, if any, alternatives to 
litigation can you suggest for the state to ensure that DOE lives up to 
its commitments?
    Answer. My hope is that if we promptly engage in the process I 
describe in my previous answers, the result will be both a more 
effective working relationship between DOE and its regulators and an 
agreed-upon, realistic assessment of how this project will proceed. 
That in turn should facilitate resolving issues without the need for 
litigation and its attendant costs.
                                 ______
                                 
                                      Department of Energy,
                                      Washington, DC, May 21, 2001.
Hon. Frank Murkowski,
Chairman, Energy and Natural Resources Committee, Dirksen Senate Office 
        Building, Washington, DC.
    Dear Mr. Chairman: I want to thank you and Senator Bingaman for the 
opportunity to appear before the Committee on Energy and Natural 
Resources as the Assistant Secretary for Environmental Management 
nominee at the U.S. Department of Energy.
    Enclosed for the record are the answers to the post hearing 
questions submitted to me in writing by members of the committee.
    Please let me know if I can be of any further assistance.
            Sincerely,
                                              Jessie Hill Roberson.
[Enclosures]

             Responses to Questions From Senator Murkowski

    Question 1. I understand that the production site managers at the 
Y-12 Plant at Oak Ridge and the Savannah River Site are concerned about 
the negative impact on their operations due to cuts in the 
Environmental Management budget. Specifically, the concern is that the 
on-site waste, which falls under the EM budget, may not be removed 
under a constrained budget and will cause further disruption to the 
operations of the defense facilities.
    If confirmed, what would you do to ensure that processing and 
removal of waste from the production sites are funded so that 
operations of these facilities are not adversely impacted?
    Answer. Y-12 at Oak Ridge and Savannah River Site present unique 
challenges to DOE since these facilities contain activities managed by 
EM and by NNSA. It is critical that EM and NNSA coordinate closely and 
integrate their activities to ensure effective management of these 
facilities and projects. I am committed to managing EM wastes at these 
facilities in a manner that does not negatively impact NNSA or other 
activities but also contributes to the success of the cleanup program.
    Question. Please explain how you plan to apply the closure site 
model pioneered by you at Rocky Flats to large sites such as Hanford, 
specifically the tank cleanup effort managed by the newly-created 
Office of River Protection.
    Answer. I believe that the strategies that were successful at RF 
are instructive for other sites, but should not be regarded as a cookie 
cutter or a one size fits all approach. There are several initiatives 
that were effective at Rocky Flats that may be helpful in other places, 
but each site is different and each site will require a unique mix of 
approaches.
    At Rocky Flats, we successfully worked with regulators and the 
community to develop risk based priorities. The regulators and the 
community agreed that the nuclear stabilization activities needed to be 
conducted first, even if it meant postponing lower risk environmental 
work. We realized that we could not let some disagreement over about 
10% of the work holdup progress on the 90% of the work on which we 
agreed.
    At Rocky Flats we determined that minor, administrative milestones 
stretching many years ahead were not helpful. Instead, we instituted a 
system of fewer, major milestones. We kept long term goals present as 
common agency and community objectives, but we stuck to short range 
targets as our milestones.
    In exchange for this greater regulatory flexibility, DOE gave the 
regulators and the community a far greater role in our process for 
establishing a baseline of activities and prioritizing that baseline. 
Stakeholder and regulator involvement in our work and budget process is 
built into the regulatory agreement. The agreement acknowledges that 
certain factors may be beyond our control, but it makes the regulators 
and the community our partners on those factors that are within our 
control.
    In general, we learned that we needed to earn the trust of the 
community and of the regulators, and that the onus is on DOE to behave 
in a manner that elicits trust. We found at RF that baby steps on trust 
lead to baby steps on flexibility, which leads to performance. This in 
turn earns more trust, and allows the cycle to continue.
    Question 2. As the Department proceeds with its ``top-to-bottom'' 
review of the Environmental Management program, a key issue is 
obviously getting more cleanup done for less money. One sure-fired way 
to reduce costs is to encourage competition with the private sector.
    In this context, would you agree that the Department should 
consider using licensed commercial sites which offer a competitive 
price for the disposal of low-level waste?
    Answer. I do agree that there is enormous potential in utilizing 
licensed commercial facilities for low-level waste disposal, when it is 
cost effective for the taxpayers. At Rocky Flats, we made extensive use 
of such facilities when I was manager.
    Question 3. It appears that the Department is planning on building 
new on-site disposal cells at sites like Oak Ridge, Paducah, Portsmouth 
for disposal of its low-level radioactive waste.
    Before DOE commits substantial resources to construct these new 
disposal sites, shouldn't the Department fully evaluate using existing 
commercial disposal sites?
    Answer. I support using whatever method of disposal is most cost 
effective for the Department and for the taxpayer. It is my 
understanding that this is already DOE policy. As ASEM, I will continue 
to seek the best available options at all of our sites for waste 
disposal, and I will seek better opportunities for efficiencies through 
greater complex wide integration.

              Responses to Questions From Senator Cantwell

    Question 1. Your experience at Rocky Flats is instructive for what 
needs to happen at Hanford, and many residents in Washington State and 
I are looking forward to working with you. As you know, at Hanford--
like Rocky Flats--we are trying to accelerate cleanup with incentive-
based contracts that move us toward a completion point. Using Rocky 
Flats' model, investing more up front in Hanford's tank waste treatment 
program should significantly reduce long-term costs and accelerate the 
schedule considerably. I think this is everyone's goal. What are your 
plans to apply the closure site model that you helped make a success at 
Rocky Flats to Hanford's tank cleanup program, managed by the Office of 
River Protection?
    Answer. I believe that the strategies that were successful at RF 
are instructive for other sites, but should not be regarded as a cookie 
cutter or a one size fits all approach. There are several initiatives 
that were effective at Rocky Flats that may be helpful in other places, 
but each site is different and each site will require a unique mix of 
approaches.
    At Rocky Flats, we successfully worked with regulators and the 
community to develop risk-based priorities. The regulators and the 
community agreed that the nuclear stabilization activities needed to be 
conducted first, even if it meant postponing lower risk environmental 
work. We realized that we could not let some disagreement over about 
10% of the work hold up progress on the 90% of the work on which we 
agreed.
    At Rocky Flats we determined that minor, administrative milestones 
stretching many years ahead were not helpful. Instead, we instituted a 
system of fewer, major milestones. We kept long term goals present as 
common agency and community objectives, but we stuck to short range 
targets as our milestones.
    In exchange for this greater regulatory flexibility, DOE gave the 
regulators and the community a far greater role in our process for 
establishing a baseline of activities and prioritizing that baseline. 
Stakeholder and regulator involvement in our work and budget process is 
built into the regulatory agreement. The agreement acknowledges that 
certain factors may be beyond our control, but it makes the regulators 
and the community our partners on those factors that are within our 
control.
    In general, we learned that we needed to earn the trust of the 
community and of the regulators, and that the onus is on DOE to behave 
in a manner that elicits trust. We found at RF that baby steps on trust 
lead to baby steps on flexibility, which leads to performance. This in 
turn earns more trust, and allows the cycle to continue.
    Question 2. As we've discussed, the funding cuts are of great 
concern to us in Washington State. Again, given your experience at 
Rocky Flats, do you believe it would make more sense to keep funding 
for Hanford's Waste Treatment Project level at $690 million over the 
next few years, rather than counting on a funding spike next year to 
$880 million, to comply with progress deadlines? Do you think a 
measured, level funding base would be more consistent with the goal of 
the ``top-to-bottom'' review Secretary Abraham alluded to last week--
making clean-up more efficient?
    Answer. It is my intent to use the EM program review as an 
opportunity to find efficiencies and opportunities to get our work done 
more quickly and more effectively. I will look at management 
strategies, opportunities for complex wide integration, unnecessary DOE 
requirements and other aspects of our program. The budget process is 
still ongoing. The President has proposed a budget. Congress is now 
considering and may choose to modify this budget.
    At any funding level, it is critical for the Department to make 
progress on the Hanford Waste Treatment project in FY 2002. I plan to 
look closely at this project if I am confirmed. I will review closely 
the necessary funding profile for this project, as well as any 
management strategies that may be needed to expedite this project. I 
also intend to work closely with members of Congress, the regulators 
and the community as we proceed.
    Question 3. Clean-up of the corridor along the Columbia River is 
another important priority at Hanford, in addition to construction of 
the waste treatment plant. This remediation effort is proceeding 
extremely well, and with a 2012 completion date, it fits the closure 
site concept pioneered by you at Rocky Flats. I would appreciate it if 
you would explain your plans to keep the momentum going on the Hanford 
River Corridor cleanup project--especially when the program has not 
been funded at levels supported by the local site manager.
    Answer. I recognize the importance of cleaning up the corridor 
along the Columbia River, and recognize its importance to the 
community. I also recognize that this project has the potential to 
reduce the ``mortgage'' or fixed-costs associated with Hanford, and 
therefore does follow the Rocky Flats model. At any funding level, it 
is critical for the Department to make progress on this project in FY 
2002. I will review closely the necessary funding profile for this 
project, as well as any management strategies that may be needed to 
expedite this project. I also intend to work closely with Members of 
Congress, the regulators and the community as we proceed.
                                 ______
                                 
                        Public Utility Commission of Texas,
                                          Austin, TX, May 21, 2001.
Hon. Frank Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: Enclosed are my responses to questions for the 
record of the Senate Energy and Natural Resources Committee's May 16, 
2001 hearing to consider my nomination to be a member of the Federal 
Energy Regulatory Commission.
    If you have further questions or need additional information, 
please let me know.
            Best regards,
                                             Pat Wood, III,
                                                          Chairman.
[Enclosure]

             Responses to Questions From Senator Murkowski

    Question 1. Everyone seems to agree that the licensing process for 
hydropower projects is broken--it takes too long, it's too expensive, 
and it's fraught with uncertainty. What are your views about ways to 
improve the process for relicensing the nation's non-federal hydro 
projects?
    Answer. If confirmed, I would plan, within the first 30 days of 
taking office, to ask my fellow commissioners to convene an open 
hearing to receive a comprehensive status report from the FERC staff 
and staff from the affected federal and state resource agencies on each 
pending hydro re-licensing project, and other hydroelectric projects 
meriting an update. My service on the Texas Commission has shown that 
direct Commissioner interest and oversight tends to accelerate 
procedural handling of licensing applications. In light of the 
President's instruction to federal agencies last week to expedite 
applications such as these, I hope the FERC will receive significant 
support from sister agencies in this endeavor. While I don't expect 
this will solve all issues relating to licensing project timetables, it 
will more clearly delineate the issues. Should there be issues 
requiring legislative remedy, I will recommend the FERC bring them to 
the Congressional oversight committees expeditiously.
    Question 2. As you know, over 15,000 MW of hydroelectric capacity 
in California and the Pacific Northwest face relicensing over the next 
15 years. This is a significant amount of power that can make a big 
difference in whether the western states will have sufficient 
electricity to meet demands. What can we do to minimize the loss of any 
of this capacity during the relicensing process?
    Answer. Hydropower is critical to keeping the lights on in the 
West. I understand that to date there has been no net loss of 
hydroelectric capacity as a result of the recent rounds of relicensing. 
I will seek to maintain this record and encourage license applicants to 
increase their projects' generating capacity within appropriate 
environmental constraints to take full advantage of the available 
flows.
    Question 3. In a report submitted to Congress last week, FERC staff 
concluded that: ``Many specific factors contribute to delays [in the 
hydro licensing process], but the underlying source of most delays is a 
statutory scheme that disperses decision-making among federal and state 
agencies acting independently of the Commission's proceedings.'' Do you 
agree with this statement and that legislative improvements are needed 
to fix the hydro relicensing process?
    Answer. Although I have not examined the FERC staff report in 
detail, it strongly suggests that the current framework of dispersed 
decision-making is a significant contributor to licensing delay. The 
report also strongly suggests that the statutory mandate that the FERC 
give equal consideration to power and to the environment is clearly 
affected by the mandatory conditioning authority of resource agencies, 
which do not have the same equal-consideration mandate. To the extent 
this staff conclusion is borne out by the comprehensive status review, 
I propose in my response to Question 1, I envision that the FERC would 
formally develop and recommend specific legislative remedies.

            Responses to Questions From Senator Gordon Smith

    Question 1. In a report recently submitted to Congress, FERC staff 
stated, ``Many specific factors contribute to delays [in the licensing 
process], but the underlying source of most delays is a statutory 
scheme that disperses decision-making among federal and state agencies 
acting independently of the Commission's proceedings.'' Do you agree 
with this statement?
    Answer. I do not yet have enough information to evaluate this. 
Before concluding that the current system is unworkable, I would like 
the opportunity to learn more. If confirmed, I would ask my fellow 
commissioners to convene an open hearing within 30 days to enable us to 
get a comprehensive status report from the FERC staff and staff from 
the affected federal and state resource agencies on each pending hydro 
re-licensing project, and other hydroelectric projects meriting a 
status update. My service on the Texas Commission has shown that direct 
Commissioner interest and oversight tends to accelerate procedural 
handling of licensing applications. In light of the President's 
instruction to federal agencies last week to expedite applications such 
as these, I would hope that the FERC would receive significant support 
from sister agencies in this endeavor. While I don't expect this will 
solve all issues relating to licensing project timetables, it will 
focus our attention on those issues that cannot be resolved 
administratively. I will recommend the FERC bring those issues that 
require statutory change to the Congressional oversight committees 
expeditiously.
    Question 2. The recommendations laid out in the FERC report 
underscore the need to legislate improvements to the hydro licensing 
process. Do you agree that some sort of legislation is needed if we are 
to get to the root of the problem and fix the licensing process?
    Answer. The FERC staff report indicates that the current 
legislative framework of dispersed decision-making is a significant 
contributor to licensing delay. It suggests that the statutory mandate 
that the Commission give equal consideration to power and to the 
environment is clearly impacted by the mandatory conditioning authority 
of resource agencies which do not have the same equal-consideration 
mandate. To the extent this staff conclusion is borne out by the 
comprehensive status review I propose in my response to Question 1, I 
expect that the Commission would formally recommend legislative 
remedies. I commit to moving expeditiously on this process, after 
having the opportunity to hear the views of the state and federal 
resource agencies that under existing law share authority over the 
licensing process.
    Question 3. Several regional transmission organizations are 
developing in the Western United States. Do you support the manner in 
which these entities, including RTO West, are developing?
    Answer. Yes. In 1996, as Chairman of the Texas Commission, I was a 
catalyst for one of the first RTOs in the nation, the Electric 
Reliability Council of Texas Independent System Operator (ERCOT ISO). 
The ERCOT ISO oversees one of the country's three electrical 
interconnections, and because of its intrastate nature, it is the only 
one which is non-FERC jurisdictional. The combination of reliability, 
market facilitation, transmission planning and resource adequacy duties 
in one independent body is critical to the health of our nation's 
electric industry. The FERC process has been somewhat slow to move 
forward, but it is moving in the right direction. Relying on a regional 
collaborative approach and resisting a ``one size fits all'' solution 
is appropriate, and bears the highest likelihood of long-term success. 
Moving forward on establishing these entities across the country would 
be a primary goal for me in this position. To date, both RTO West and 
Desert Star (a proposed RTO organization in the Southwest) have engaged 
in extensive stakeholder discussions regarding the formation of such 
organizations.

              Responses to Questions From Senator Cantwell

    Question 1. Consider the situation in Washington state. As you are 
probably aware, we've already experienced retail rate increases in the 
high double-digits, suffered plant closures and job loss as a result of 
skyrocketing electricity costs, and are facing the prospect of a BPA 
rate increase this fall that threatens to further undermine the 
economic health of the entire region. Based on this anecdotal 
information--and the fact prices at the Mid-Columbia trading hub has 
increased 11-fold over the prices paid last year at this time--do you 
believe prices in the Pacific Northwest are just and reasonable?
    Answer. Even considering the shortfall of several thousand 
megawatts of hydroelectricity, I believe prices in the Pacific 
Northwest may not be just and reasonable under current market rules and 
under certain conditions. Therefore, I agree with the FERC's recent 
decision to institute an investigation into the rates, terms and 
conditions of certain wholesale sales within the Western power markets.
    Question 2. As you are no doubt aware, many have questioned the 
effectiveness of FERC's price mitigation plan for California--that it 
is riddled with loopholes and far too narrow to provide any significant 
relief. I absolutely agree with that analysis. But even more pressing 
from my perspective is the fact FERC has done nothing to help the 
Northwest--even though our prices have actually been higher than 
California's by some measures. Specifically, while the average daily 
peak price at the Mid-Columbia hub increased by $140/MWh between June 
1999 and June 2000, the associated increase in California was $113/MWh 
during peak. Daily peak average prices in our region have ranged from 
$155/MWh to $460/MWh from Feb. 2001 through April 2001, and dropped 
below $200/MWh on only 6 days throughout the course of those three 
months. Given this information, do you believe FERC has fulfilled its 
statutory mandate to uphold just and reasonable rates--especially in 
the Northwest? If these circumstances don't trigger required action by 
FERC, what would?
    Answer. I believe the section 206 investigation recently instituted 
by the FERC is an appropriate step in ensuring that rates in the 
Pacific Northwest and other parts of the West are just and reasonable. 
However, I cannot prejudge at this time the actions the Commission may 
take as a result of this investigation, since I would expect to 
participate in the FERC's decision, if I am confirmed.
    Question 3. It is true FERC in its April 26 order initiated a 
Section 206 investigation throughout the West and proposed that it may 
move forward with a California-type mitigation plan that would include 
the Northwest. I am concerned, however, because our problem with 
wholesale prices is in no way limited to the types of transactions 
covered by the investigation-real-time trades of 24 hours or less, 
during periods when reserves dip below 7 percent. As you are likely 
aware, most of our sales in the Northwest are done under bilateral 
contracts. Further, because of our reliance on hydro resources, it's 
not clear how or when that 7 percent reserve level would apply within 
Northwest control areas. Do you believe this investigation is broad 
enough to reflect what is actually happening in NW markets? If 
confirmed, would you support broadening it? Could you also comment on 
whether and how it would be possible to adapt FERC's price mitigation 
plan for California to Northwest markets--especially given the fact we 
do not have a centralized, auction-like market?
    Answer. Until I have reviewed the confidential transaction data, 
the public comments and the investigator reports, I cannot state what 
my conclusions are. I would like to participate in this and related 
proceedings, if confirmed. In response to a question from you at our 
hearing last week, I stated that it may be appropriate to broaden the 
investigation to include all transactions, rather than just those 
referenced in the FERC's April 26th order. The scope of any mitigation 
plan ultimately adopted by the Commission may be less than the full 
universe of transactions, but due to legal notice issues, it is better 
to announce a broad inquiry and narrow it down, rather than vice versa. 
Clearly applying a California-type mitigation plan to the Northwest 
will present some challenges because the Northwest relies on bilateral 
contracts rather than a centralized auction.
    Question 4. In the Pacific Northwest, BPA and investor-owned 
utilities have worked with regional stakeholders to develop a proposal 
for a regional transmission organization called RTO West. Movement to 
an RTO would be a significant change for my constituents. Before this 
proposal moves forward too quickly, we must be certain there has been 
considerable input and participation from all regional interests, and 
that the RTO's costs and benefits are sufficient to merit such a 
change. Do you agree that when striving to meet national policy 
objectives--as FERC has outlined in Order 2000--that individual regions 
should be encouraged to find solutions that meet their unique needs and 
fit their characteristics, and that regional processes and solutions 
should be respected and acknowledged?
    Answer. Yes. Order No. 2000 acknowledged that RTOs may take 
different forms that reflect the unique needs of the region. I agree 
that it would be counter-productive to impose a ``one size fits all'' 
approach to the formation of RTOs. Further, I believe that consensus 
solutions achieved through regional processes involving input from 
affected stakeholders should be given appropriate deference, subject to 
Commission review to ensure the overall conformity of any proposal with 
the requirements of Order No. 2000. This is consistent with the 
approach we at the Texas Commission used in setting up the Electric 
Reliability Council of Texas Independent System Operator (ERCOT ISO), a 
non-FERC jurisdictional entity in 1996. With regard to costs, we have 
been able to more than offset the costs of the RTO by removal of 
redundant costs from numerous utility rate bases. I would expect the 
FERC to be able to do the same with all other RTOs.
    Question 5. Again, on the topic of RTO West, there is significant 
concern within the region about FERC's push for a single, West Coast-
wide RTO. While the NW is still working hard to find answers that work 
within the region, this emphasis on a West-wide RTO seems premature at 
best. What is your position on the establishment of a West-wide RTO?
    Answer. A West-wide RTO is a desirable end-state for the region 
since the West is a natural marketplace. I believe that electric retail 
customers are better served by an efficiently run, broadly scoped, 
independent transmission entity. To the extent such an entity evolves 
from the existing organizations that support the current operating, 
planning and reliability needs of the Western Interconnection, it 
should be beneficial.
    Question 6. The RTO West proposal is for the creation of a not-for-
profit, independent system operator. Do you support the creation of 
this type of structure (a non-profit organization)?
    Answer. Yes. The ERCOT ISO, with which I have been intimately 
involved since its creation, is a not-for-profit entity that controls 
the interconnected transmission facilities owned by some 30+ entities. 
As I understand the RTO West proposal, RTO West will be a non-profit 
system operator while one of its members will be a for-profit 
transmission company. This company will be formed through the purchase 
of the transmission facilities of several companies in the Northwest. I 
support the flexibility granted in Order No. 2000 for entities to 
choose an appropriate organizational structure, whether non-profit, 
for-profit, or a combination of the two, that allows an RTO to become 
operational. The important factor is that it be workable and effective, 
I believe it is possible to move forward more swiftly with the ISO 
model, since it does not require current transmission owners to divest 
themselves of ownership of their facilities immediately. An ISO can 
evolve to a larger stand-alone single transmission entity over time.
    Question 7. Can you describe your views on the RTO's role in 
transmission planning and expansion authority? Do you support RTO's 
that have strong planning and expansion authorities?
    Answer. An RTO should have four key objectives: network 
reliability, market facilitation, transmission planning and resource 
adequacy. Prior to the establishment of the ERCOT ISO, grid planning in 
Texas was a utility-specific affair. In that era, robust 
interconnectivity between various utility control areas was not a 
primary goal. When the ERCOT ISO was created, a substantial mindset 
change was called for. Since that time, regional planning has led to a 
significant reorientation of transmission construction. As a regulator, 
one of the most important aspects of RTO transmission planning is that 
new transmission projects are ultimately recommended by an independent 
expert body, which reviews the plans on the basis of sound engineering 
and regional stability, not just the interests of a single utility. 
Once the ERCOT ISO approves an annual transmission plan, the Texas 
Commission then directs specific transmission providers to construct 
the needed critical facilities. In the past 18 months, my colleagues 
and I have approved over $1.5 billion in new transmission construction 
in Texas, much of that resulting from the regional planning process at 
our RTO. Few observers dispute the need for more transmission across 
the nation; I believe that regional transmission organizations are the 
appropriate forum to facilitate the right kind of grid planning and 
investment.
    Question 8. Are you aware that Congress has specifically defined 
the Commission's authority to review Bonneville Power Administration's 
power and transmission rates under the Northwest Power Act, and that 
the Commission's authority to regulate Bonneville's transmission rates 
under the Federal Power Act is limited?
    Answer. Yes. The FERC has only that authority granted it by 
Congress. At the same time, however, Congress requires the FERC to 
ensure that the rates, terms and conditions of all jurisdictional 
services under the Federal Power Act are just and reasonable. In its 
April 26 Order, the Commission concluded that it could not fulfill this 
FPA requirement without conditioning non-public utilities' voluntary 
participation in the California ISO's markets or use of the ISO's open 
access transmission tariff on their agreement to abide by price 
mitigation. I understand this issue is pending rehearing before the 
FERC.
    Question 9. Utility executives and risk managers have serious 
concerns about potential widespread, uninsurable liability stemming 
from system outages. This concern has increased due to the intensified 
use of the electric transmission grid resulting from the 1992 Energy 
Policy Act, the aggregation of transmission systems under RTOs, and the 
possibility of mandatory national reliability standards. Would you 
support some kind of wholesale tariff liability limitation for 
transmission system owners similar to what exists in many states for 
retail transactions?
    Answer. Generally, applicable state law governs liability for 
torts. I understand that, to date, the FERC has declined to impose a 
federal standard of liability for transmission service that would 
preempt applicable state law. However, I have an open mind on whether 
the formation of an RTO warrants reevaluation of the FERC's decision 
not to impose a standard of liability. The Texas Commission has 
approved tailored limitations on liability for transmission utility, 
distribution utility and ISO actions that are beyond their control and 
which would not have been reasonably anticipated and prevented through 
use of reasonable measures. We also have restricted transmission 
utility, distribution utility and ISO liability for damages related to 
outages/interruptions of service due to reliability or repair 
situations. This limitation of liability does not reach to gross 
negligence or intentional misconduct.
    Question 10. The Commission recently attempted to extend its 
jurisdiction to include non-public utility entities in the California 
wholesale power market dockets. Even in the face of an emergency, 
wouldn't you agree that Congress, not FERC, defines the scope of FERCs 
jurisdiction? There are those states, such as Texas, that have been 
very successful in avoiding FERC jurisdiction. Aren't you troubled by 
Federal expansions of authority, at the expense of local control, over 
energy matters?
    Answer. Congress has defined the scope of FERC's jurisdiction. In 
its April 26 order, the FERC indicated that it believes the current law 
permits non-public utility entities to fall under its jurisdiction 
under certain conditions. I understand this issue is still pending 
review before the FERC.
    The ERCOT part of Texas is wholly within one state, connected only 
by three direct current (DC) ties to the interstate and international 
markets and thus, its intrastate activities are not under FERC 
jurisdiction, except for imports and exports over those DC ties. The 
Texas Commission has jurisdiction over the transmission facilities of 
for-profit and publicly owned utilities, because both own parts of the 
overall interconnected network. The remainder of Texas, including my 
hometown, is under FERC jurisdiction, and the Texas Commission has 
repeatedly asked the FERC to be aggressive in asserting its proper 
authority under federal law to regulate interstate wholesale markets. 
It is simply not practical for a single state to fairly regulate that 
which is, by the laws of physics, spread over several states.
    Question 11. I understand that over 15,000 MW of existing, non-
federal hydroelectric capacity in the Pacific Northwest and California 
must go through the FERC relicensing process in the next 15 years. 
These are energy resources that are very important to my state and 
region. All stakeholders seem to agree that the relicensing process is 
lengthy, complex, disjointed, expensive for all involved, and in need 
of improvement. Delays often result in resources being spent on process 
rather than on-the-ground environmental improvements. Clearly, this 
process requires refinement in terms of cutting time and expense, but 
at the same time, we must be extremely careful to give environmental 
issues due consideration. I believe this process must be refocused on 
outcomes--and outcomes based on sound science. Do you believe 
legislation is needed to address these problems? How would you approach 
reform and the delicate balancing act that FERC must perform as part of 
its statutory mandate?
    Answer. I do not yet have enough information to evaluate this. 
Before concluding that the current system is unworkable, I would like 
the opportunity to learn more. If confirmed, I would ask my fellow 
commissioners to convene an open hearing within 30 days to enable us to 
get a comprehensive status report from the FERC staff and staff from 
the affected federal and state resource agencies on each pending hydro 
re-licensing project, and other major hydroelectric projects. My 
service on the Texas Commission has shown that direct Commissioner 
interest and oversight tends to accelerate procedural handling of 
licensing applications. In light of the President's instruction to 
federal agencies last week to expedite applications such as these, I 
would hope that the FERC would receive significant support from sister 
agencies in this endeavor. While I don't expect this will solve all 
issues relating to licensing project timetables, it will focus our 
attention on those issues that cannot be resolved administratively. I 
will recommend the FERC bring those issues that require statutory 
change to the Congressional oversight committees expeditiously.

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