[Senate Hearing 111-99]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 111-99
 
               NORRIS, GARCIA, AND PIZARCHIK NOMINATIONS

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


                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                                   TO

   CONSIDER THE NOMINATIONS OF JOHN R. NORRIS, TO BE A MEMBER OF THE 
   FEDERAL ENERGY REGULATORY COMMISSION, JOSE ANTONIO GARCIA, TO BE 
   DIRECTOR OF THE OFFICE OF MINORITY ECONOMIC IMPACT, DEPARTMENT OF 
   ENERGY, AND JOSEPH G. PIZARCHIK, TO BE DIRECTOR OF THE OFFICE OF 
 SURFACE MINING RECLAMATION AND ENFORCEMENT, DEPARTMENT OF THE INTERIOR

                               __________

                             AUGUST 6, 2009


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



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20402-0001



               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

BYRON L. DORGAN, North Dakota        LISA MURKOWSKI, Alaska
RON WYDEN, Oregon                    RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota            JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana          SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey          JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas         ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
EVAN BAYH, Indiana                   JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan            BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               McKie Campbell, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Garcia, Jose Antonio, Nominee to be Director of the Office of 
  Minority Economic Impact, Department of Energy.................    10
Grassley, Hon. Chuck, U.S. Senator From Iowa.....................     2
Harkin, Hon. Tom, U.S. Senator From Iowa.........................     3
Martinez, Hon. Mel, U.S. Senator From Florida....................     5
Nelson, Hon. Bill, U.S. Senator From Florida.....................     4
Norris, John R., Nominee to be a Member of the Federal Energy 
  Regulatory Commission..........................................     7
Pizarchik, Joseph G., Nominee to be Director of the Office of 
  Surface Mining Reclamation and Enforcement, Department of the 
  Interior.......................................................    11

                                APPENDIX

Responses to additional questions................................    25

    [Due to the enormous amount of materials submitted for the record, 
additional correspondence and copies of electronic messages have been 
retained in committee files.]


               NORRIS, GARCIA, AND PIZARCHIK NOMINATIONS

                              ----------                              


                        THURSDAY, AUGUST 6, 2009

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:05 a.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Jeff 
Bingaman, chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. Why do we not get started here with the 
hearing?
    The committee meets this morning to consider three 
nominations: John R. Norris, to be a member of the Federal 
Energy Regulatory Commission; Jose Antonio Garcia, to be the 
Director of the Office of Minority Economic Impact at the 
Department of Energy; and Joseph G. Pizarchik to be the 
Director of the Office of Surface Mining Reclamation and 
Enforcement at the Department of the Interior.
    Mr. Norris is currently the Chief of Staff for Secretary of 
Agriculture Tom Vilsack. He has previously served as Chairman 
of the Iowa Utilities Board. He has extensive experience with 
electric utility regulation. He has been nominated to the seat 
that was left vacant by the resignation of Joseph Kelliher for 
the 3 years remaining on that term.
    Like Mr. Norris, Mr. Garcia is also a former State public 
utility commissioner. He served as Chairman of the Florida 
Public Service Commission. Mr. Garcia was nominated to head the 
Office of Minority Economic Impact, which has the duty to see 
that minorities have the opportunity to participate fully in 
the Department's programs. He will bring to the job his 
experience both as the Executive Director of the Cuban American 
National Foundation and as President of his own small business, 
Archon Consulting.
    Mr. Pizarchik has served as the Director of the 
Pennsylvania Bureau of Mining and Reclamation since 2002 and 
was legal counsel to Pennsylvania's Mining Program for 11 years 
before that. He will bring to the Office of Surface Mining over 
17 years of experience with regulating coal mining and 
abandoned mine land cleanup in Pennsylvania.
    President Obama has nominated three experienced and highly 
qualified individuals to these important offices, and I am 
pleased to welcome all three to the committee this morning.
    Senator Murkowski was not able to be here, but she asked if 
we would include in the record a statement of hers, which we 
obviously will include at this point.
    [The prepared statement of Senator Murkowski follows:]
   Prepared Statement of Hon Lisa Murkowski, U.S. Senator From Alaska
    I would like to thank Chairman Bingaman for holding this hearing 
today, and our nominees for their willingness to serve.
    While all of these positions are important, I look forward to an 
interesting discussion with Mr. Norris, our FERC nominee.
    FERC would have the responsibility for implementing some of the 
most controversial pieces of the energy bill reported by this Committee 
earlier this year, and Mr. Norris' views on these issues will be of 
great interest.
    I also anticipate an interesting discussion with Mr. Garcia.
    According to the to the University of Alaska's Institute for Social 
and Economic Research, rural Alaska Natives were paying 47% of their 
median family income for home energy use last fall, more than 13 times 
the national average of just over 3%. And energy prices that find fuel 
still selling for an average of nearly $6 a gallon in rural Alaska, has 
driven up the price of food where a loaf of bread is still selling for 
$6 in Barrow, a gallon of milk $10 and a dozen eggs are costing $4.60.
    I look forward to working with Mr. Garcia regarding the role that 
DOE can play with regard to improving the affordability and reliability 
of energy for native Alaskans as this nomination process continues.

    The Chairman. Let me go ahead and recognize my colleagues 
who are here to introduce these nominees. Senator Grassley and 
Senator Harkin are both here to introduce Mr. Norris, and 
Senator Martinez is here to introduce Mr. Garcia. So let me 
just start on the left and we will go right across the line. 
Senator Grassley, go right ahead.

        STATEMENT OF HON. CHUCK GRASSLEY, U.S. SENATOR 
                           FROM IOWA

    Senator Grassley. Thank you, Mr. Chairman. I appreciate 
very much this opportunity to introduce an outstanding Iowan to 
the committee to serve the people of this country. I am here to 
introduce John Norris, and of course, I am here with my 
colleague, Tom Harkin. I am pleased to support his nomination 
for the commissioner to the Federal Energy Regulatory 
Commission.
    As members of this committee know well, the commission is 
an independent agency with critical responsibilities regulating 
energy markets. The commission has the important mission of 
promoting our Nation's energy infrastructure, maintaining 
competitive markets, and preventing manipulation in energy 
markets. It is important that these commissioners on FERC have 
a thorough understanding of Federal policies relating to 
interstate transmission of electricity, natural gas, and oil. 
Our country runs on energy and having a robust, reliable energy 
delivery system is essential.
    So that brings me to the nominee, John Norris. He does, in 
fact, have the necessary experience and understanding of our 
energy markets to serve well, should he be confirmed.
    Just his background. He has a B.A. from Simpson College, 
Indianola, Iowa from 1981. He graduated with distinction from 
the University of Iowa Law School in 1995. In March 2005, John 
was appointed by then Iowa Governor Tom Vilsack to the 3-member 
Iowa Utility Board and was Chairman of that board from 2005 
until 2009. He was Co-Chair of the 2009 National Electricity 
Delivery Forum. He also served as a member of the National 
Association of Utility Commissioners, serving on the 
Electricity Committee and as a member of the Demand Response 
Collaborative. John was also the President of the Organization 
of Midwest Independent System Operator States and chaired this 
organization--the Demand Response Working Group part of it. 
Prior to his service on the Iowa Utility Board, John was Chief 
of Staff to Governor Vilsack, as well as Chief of Staff to Iowa 
Congressman Leonard Boswell. He is currently Chief of Staff to 
Secretary of Agriculture, Governor Tom Vilsack.
    I believe John is very well qualified to serve as a member 
of the Federal Energy Regulatory Commission. So I am here 
because I strongly support his nomination.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much for your statement, 
Senator Grassley. I appreciate it.
    Senator Harkin, go right ahead.

      STATEMENT OF HON. TOM HARKIN, U.S. SENATOR FROM IOWA

    Senator Harkin. Mr. Chairman, it is an honor to join with 
my colleague, Senator Grassley, in introducing John Norris, 
President Obama's nominee to serve as a commissioner on the 
Federal Energy Regulatory Commission.
    There is no question that Mr. Norris is superbly qualified 
for this critical regulatory position. I do not know that I 
need to go through again all of the different positions that 
Senator Grassley just went through, just to point out again 
that he served as the Chief of Staff to Congressman Leonard 
Boswell, also Chief of Staff to the Governor of Iowa, Governor 
Vilsack, and then as was mentioned, he chaired the Iowa 
Electric Restructuring Task Force in Iowa and then went on 
later to chair the Iowa Utilities Board from 2005 until earlier 
this year and then came to Washington to be the Chief of Staff 
for Secretary Vilsack, as you mentioned in your opening also, 
Mr. Chairman.
    So he has a distinguished background. He has worked on a 
lot of things in Iowa.
    I might also say that he has held very many top positions 
in a lot of Presidential campaigns. I should also mention that 
in 1992 he was the director in Iowa of my campaign for 
President, though I urge members of this committee not to hold 
that minor lapse in judgment against him.
    [Laughter.]
    Senator Harkin. As was stated earlier, he has a degree at 
Simpson College, which is in my home county, Warren County. I 
knew him then well.
    Let me just put it this way. I have known John since he was 
a high school kid, a farm kid in Montgomery County, Red Oak, 
Iowa. I have followed his career. He has always been involved 
in my efforts and political efforts in Iowa, working for good 
causes. In the 1980s, John was one of those individuals that 
worked very hard to help family farmers in my State who were 
facing foreclosures. It was one of the toughest eras in family 
farm agriculture in our country, second only to the Great 
Depression. In the 1980s, we had farmers all over Iowa 
committing suicide, losing farms, families being broken up. 
John worked very diligently during those years on behalf of 
those family farmers to help them stay afloat, to help them 
stay on the farm and to keep their families together. He was 
just one of the driving forces behind that whole rural effort 
of helping people that just had nowhere else to turn. So I have 
always admired him for what he did during the 1980s for our 
family farmers.
    He is a tough guy. He was a former Golden Gloves boxer, I 
might put it that way. That is why I never got in an argument 
with him.
    He has a profound understanding of energy issues and their 
impacts on ordinary Americans. We are looking ahead, Mr. 
Chairman, to major shifts in our electricity systems in the 
years ahead. We all know that. It will be valuable to have a 
commissioner with John's knowledge, his background, his 
expertise to help ensure that we have a fair and equitable 
treatment of all parties, including consumers, utilities, 
generators, and transmission developers.
    So I just have the highest praise and affection and respect 
for John Norris.
    Let me just also note that John's wife, Jackie Norris, is 
here today, a longtime school teacher in Iowa, and now serves 
as a senior advisor to the Corporation for National Community 
Service. So they are both hardened public servants and work to 
make sure that our country and our system works for the benefit 
of all. I just have the highest regard for both of them.
    Mr. Chairman, I just would close on this. John Norris is a 
public servant of exceptional honesty, intelligence, 
competence, and experience. I urge this committee to send his 
nomination to the full Senate posthaste with a positive 
recommendation.
    The Chairman. Thank you for your statement. I appreciate it 
very much. Let me just indicate if you gentlemen wish to be 
excused, I know you have busy schedules.
    Senator Nelson has arrived and Senator Martinez is here. 
Senator Martinez, you were first to arrive. If you would like 
to go ahead and make your statements----
    Senator Martinez. I would like to defer to my senior 
colleague and let him go first.
    The Chairman. Senator Nelson, we are glad to hear from you 
as to your views on the nomination of Mr. Garcia.

          STATEMENT OF HON. BILL NELSON, U.S. SENATOR 
                          FROM FLORIDA

    Senator Nelson. Thank you, Mr. Chairman. Mel and I will 
basically share the same information with you that Joe Garcia 
has had an exemplary record. He was the Chairman of our Public 
Service Commission. It is an appointed position, appointed by 
the Governor. It is one of the most sought-after appointed 
positions in State government and it has an enormous 
responsibility and portfolio in overseeing and basically 
regulating all of the electric utilities and other utilities in 
the State of Florida. Then his fellow commissioners elected him 
Chairman of the Public Service Commission.
    He is born and raised in Miami Beach. Did you go to Beach 
High?
    Mr. Garcia. No.
    Senator Nelson. There are a lot of famous people that have 
come out of Beach High.
    But he has been very prominent in the Hispanic community, 
particularly the Cuban American community, and has done a lot 
of charity work. I could go on and on and give you so many 
details, but I am going to defer to my colleague and any 
additional information that you need. Obviously, Senator 
Martinez and I being here--we want to commend him to you for 
your favorable consideration.
    The Chairman. Thank you very much.
    Senator Martinez.

         STATEMENT OF HON. MEL MARTINEZ, U.S. SENATOR 
                          FROM FLORIDA

    Senator Martinez. Mr. Chairman, thank you. It is great to 
be with you this morning to introduce Joe Garcia, a fellow 
Floridian, a fellow Cuban American.
    I will focus on two aspects of his career where we have 
intersected. While Joe was still a law student, he worked in a 
nonprofit refugee resettlement program that reunited more than 
10,000 families that had emigrated out of Cuba and had, in 
desperate conditions, gone all over Latin America. This program 
was run at no cost to the American taxpayer. It was really 
purely done as a private effort by Cuban American families in 
the south Florida area. This project was an enormous 
undertaking and a great humanitarian undertaking, and Joe led 
that effort with great distinction. I was proud to work with 
him in that.
    Then as he served in the Florida Public Service Commission, 
as Senator Nelson noted, I was at that time also serving in the 
Orlando Utilities Commission which is a municipal utility in 
Orlando. So Joe and I had an opportunity to intersect a great 
deal, work together on pro-consumer issues, as well as good 
ideas on how to best regulate our State utility scheme in a 
State that, frankly, was so fast-growing at the time that these 
issues were not without a great deal of challenge.
    I will admit that in recent years he has been involved in 
some projects where we have not worked nearly as closely, but 
we have always maintained a very cordial relationship.
    I commend Joe for his appointment. I know he will do a 
great job for the Department and also to look after a lot of 
the issues that will relate to the economic impact on minority 
families. So I commend him to your committee and thank him for 
his willingness to serve.
    I wish his beautiful family was here with him. They are out 
of the country, but that is another great credit to him.
    Thank you.
    The Chairman. Thank you very much for your statement. Both 
of you, obviously, are excused. Thank you for being here and 
taking time out of your busy schedules.
    Let me call the three nominees up to the witness table. 
Before you sit down, just go ahead and stand there and let me 
go through a little procedure we always do with nominees.
    The rules of our committee that apply to all nominees 
require that they be sworn in connection with their statements. 
So if you would each raise your right hand. Do you solemnly 
swear that the testimony you are about to give to the Senate 
Committee on Energy and Natural Resources will be the truth, 
the whole truth, and nothing but the truth?
    Mr. Norris. I do.
    Mr. Garcia. I do.
    Mr. Pizarchik. I do.
    The Chairman. Please be seated.
    Before you begin your statements, let me ask three 
questions that we in this committee address to each nominee 
that comes before the committee. No. 1, will you be available 
to appear before this committee and other congressional 
committees to represent departmental positions and respond to 
issues of concern to the Congress? If each of you could answer 
that, please.
    Mr. Norris.
    Mr. Norris. I will.
    The Chairman. Mr. Garcia.
    Mr. Garcia. I will.
    The Chairman. Mr. Pizarchik.
    Mr. Pizarchik. I will.
    The Chairman. The second question, are you aware of any 
personal holdings, investments, or interests that could 
constitute a conflict of interest 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. Norris.
    Mr. Norris. Yes, Mr. Chairman. My investments, personal 
holdings, and other interests have been reviewed by myself and 
the appropriate ethic counselors within the Federal Government. 
I have taken appropriate action to avoid any conflicts of 
interest. There are no conflicts of interest or appearances 
thereof to my knowledge.
    The Chairman. Thank you very much.
    Mr. Garcia.
    Mr. Garcia. Senator, all my personal assets have been 
reviewed by both myself and by appropriate ethics counselors in 
the Federal Government. I have taken appropriate action to 
avoid any conflicts of interest.
    The Chairman. Mr. Pizarchik.
    Mr. Pizarchik. Senator, my investments, personal holdings 
and other interests have been reviewed both by myself and the 
appropriate ethics counselors within the Federal Government. I 
have taken appropriate action to avoid any conflicts of 
interest. There are no conflicts of interest or appearances 
thereof to my knowledge.
    The Chairman. All right. The third question that we always 
ask is, are you involved or do you have any assets held in a 
blind trust?
    Mr. Norris.
    Mr. Norris. No.
    The Chairman. Mr. Garcia.
    Mr. Garcia. No.
    The Chairman. Mr. Pizarchik.
    Mr. Pizarchik. No, I do not.
    The Chairman. All right. At this point, we always invite 
nominees, if they do have family members present, to introduce 
them, if they would like to. Mr. Norris, did you want to 
introduce anybody?
    Mr. Norris. Yes. I have with me today my wife, Jackie 
Norris, and my three wonderful sons, Sam, Cole, and Hunter 
Norris.
    The Chairman. We are glad to have them here.
    Mr. Norris. Our nanny who is the reason we look so composed 
today, Diana Sturbek, right back here, and my good friend, 
Jeannie Murray, in the room as well. So thank you.
    The Chairman. We are glad to have them all present. Thank 
you for having them here.
    Mr. Garcia.
    Mr. Garcia. Senator, my family was in Europe, but I had the 
good fortune of having one of my best friends, almost a brother 
to me, visiting the city, and so I encumbered him with coming 
with his family. So I have a surrogate family here which is 
Roland Sanchez Medina, his daughters, Alesandra and Mariana.
    The Chairman. We are glad that they could come.
    Mr. Pizarchik.
    Mr. Pizarchik. Senator, with me today is my wife, Teresa, 
and I also have with me my sister Koreen and her husband David 
and my sister Mary, as well as my brother Tony and friend 
Marian and her daughter Jane.
    The Chairman. That is a good representation. Thank you very 
much for introducing them and I thank all of you for coming 
today.
    At this point, why do we not go ahead with your statements, 
any opening statements you would like to make? We will include 
your full statement in the record, but if you could just 
summarize the main points, that would be terrific. Mr. Norris, 
why do we not start with you?

  STATEMENT OF JOHN R. NORRIS, NOMINEE TO BE A MEMBER OF THE 
              FEDERAL ENERGY REGULATORY COMMISSION

    Mr. Norris. Thank you, Chairman Bingaman. It is an honor to 
be here today as a nominee for the Federal Energy Regulatory 
Commission. I would like to express my appreciation to 
President Obama for nominating me to this position and to thank 
the committee for considering my nomination.
    I also want to acknowledge and express my appreciation for 
my two home State Senators, Senator Grassley and Senator 
Harkin, for their support for me and for their great service to 
Iowa and this Nation.
    I also want to thank Secretary of Agriculture Tom Vilsack 
for his confidence in me that played a considerable role in my 
being here today. When I was serving as his Chief of Staff in 
Iowa, he early on appointed me to chair or take over chair of 
the Iowa Restructuring Task Force, Iowa Electric Restructuring 
Task Force. I did that for a year and a half, refocused the 
effort of that Restructuring Task Force to identify what were 
Iowa's real needs for the future and how we could address 
those. The result of that was landmark legislation for advanced 
ratemaking principles that developed a great deal of new 
renewable energy for Iowa and baseload and intermediate 
generation. As a result of that, Iowa is now a world leader--
national leader--excuse me--in wind generation and has had a 
reliable supply of electricity at stable prices for the past 10 
years.
    The past 4 years, prior to my service now as Chief of Staff 
at USDA, I was Chair of the Iowa Utilities Board. I think that 
experience on a regulatory commission is a valuable experience 
that I would bring to the Federal Energy Regulatory Commission.
    During my time on the Iowa Utilities Board, I also was 
active in the National Association of Regulatory Utility 
Commissioners on the Electricity Committee and the Energy 
Resources and Environment Committee.
    I was also very active with the Organization of MISO 
States, serving as a board member, Secretary, and then 
President of that organization. So I dealt extensively with the 
work of regional transmission organizations and the issues that 
they face.
    I have also been involved with the National Regulatory 
Research Institute to deal with emerging regulatory issues 
throughout the Nation.
    I would be honored to join in the important work FERC is 
doing on improving the reliability and security of the 
electricity grid, incorporating renewable energy into the 
system, the grid, for the benefit of customers and the 
environment, and promote the development of smart grid policies 
that will improve the efficiency of our system and provide 
consumers with better choices. If confirmed by the Senate, I 
will make these issues a personal priority and I look forward 
to working with the members of this committee as it prepares to 
move legislation addressing them.
    I know you are also aware of the serious challenges created 
by the uncertainty facing the industries regulated by the FERC. 
Investments in such capital-intensive industries as electric 
generation and transmission, hydroelectric power, natural gas 
infrastructure, and more are jeopardized by an uncertain 
future. There is a need to address such concerns as the 
reliability of our Nation's energy supply, containment of costs 
for consumers, upgrading of our electric transmission grid, and 
development of renewable energy and energy efficiency 
technologies. If confirmed, I look forward to working with 
members of this committee and Members of Congress in general to 
address our Nation's energy needs and resolve some of the 
uncertainties facing that sector of our economy.
    So I believe my experience both as Chairman of the 
Utilities Board, the Iowa Restructuring Task Force, activities 
with NARUC and involvement with the Organization of MISO States 
will all be an asset to my ability to serve this Nation at the 
Federal Energy Regulatory Commission.
    I also recognize the FERC's role as an independent 
regulatory agency in carrying out its statutory 
responsibilities Congress has given to it. It is essential that 
FERC continue to provide its expertise and assistance to the 
Congress in the development of Federal energy legislation. If 
confirmed by the Senate, I pledge to work closely with this 
committee toward that end.
    I appreciate the opportunity to testify here today and am 
happy to answer any questions you may have.
    [The prepared statement of Mr. Norris follows:]
  Prepared Statement of John R. Norris, Nominee to be a Member of the 
                  Federal Energy Regulatory Commission
    Chairman Bingaman, Senator Murkowski, and distinguished 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 Obama for nominating me to this position and 
to thank the committee for considering my nomination.
    I also want to thank Secretary of Agriculture Tom Vilsack for his 
confidence in me that in large part is responsible for my being here 
today. While serving as then-Iowa Governor Vilsack's Chief of Staff in 
1999, I was asked to take over as Chairman of Iowa's Electric 
Restructuring Task Force. I spent the next year and a half working with 
the Task Force to focus first on Iowa's energy needs for the future and 
then on how we could best meet those needs. The result of that process 
was the passage of landmark advanced ratemaking principles legislation 
that led to the construction of significant new electric generation 
capacity for Iowa, including baseload, intermediate and renewable 
generation. Iowa is now a national leader in wind generation as a 
result of the work of the Task Force and has had a reliable supply of 
electricity and stable electric prices for the past decade.
    Beginning in March of 2005 until this past February 2009, I served 
as Chairman of the Iowa Utilities Board. I believe my service on a 
state regulatory commission is a valuable experience that I would bring 
with me to the Federal Energy Regulatory Commission. While serving on 
the Iowa Utilities Board I was a member of the National Association of 
Regulatory Utility Commissioners (NARUC) and worked on that 
organization's Energy Resources and the Environment Committee and 
Electricity Committee. I also was the Co-Chair of the Department of 
Energy/NARUC 2009 National Electricity Delivery Forum.
    From 2005 through 2009 I was also deeply involved in the issues 
facing Regional Transmission Organizations. During that time I served 
as a Board Member and was elected to Secretary and then President of 
the Organization of Midwest Independent Transmission System Operator 
(MISO) States, and was Chairman of the MISO Demand Response Working 
Group. I also had the privilege of serving on the FERC/NARUC Demand 
Response Collaborative.
    I have also benefitted greatly from my years of service as a Board 
Member of the National Regulatory Research Institute and my 
participation with the Institute of Public Utilities Regulatory 
Research and Education at Michigan State University.
    I would be honored to join in the important work the FERC is doing 
on improving the reliability and security of the electric grid, 
incorporating renewable energy into the grid for the benefit of 
consumers and the environment, and promoting development of smart grid 
policies that will improve the efficiency of our system and provide 
consumers with better choices. If confirmed by the Senate, I will make 
these issues a personal priority and look forward to working with the 
members of this Committee as it prepares to move legislation addressing 
them.
    I know you are also aware of the serious challenges created by the 
uncertainty facing the industries regulated by the FERC. Investments in 
such capital-intensive industries as electric generation and 
transmission, hydroelectric power, natural gas infrastructure and more 
are jeopardized by an uncertain future. There is a need to address such 
concerns as the reliability of our nation's energy supply, containment 
of costs to protect consumers, upgrading of our electric transmission 
grid and development of renewable energy and energy efficient 
technologies. If confirmed I look forward to working with members of 
this Committee and the members of Congress in general to address our 
nation's energy needs and resolve some of the uncertainties facing this 
sector of our economy.
    I believe my experience as Chairman of the Iowa Utilities Board and 
my work as a member of NARUC and the Organization of MISO States will 
be assets at the FERC. I also recognize the FERC's role as an 
independent regulatory agency in carrying out the statutory 
responsibilities Congress has given to it. It is essential that the 
FERC continue to provide its expertise and assistance to Congress in 
the development of Federal energy legislation. If confirmed by the 
Senate, I pledge to work closely with this Committee to that end. I 
have enjoyed my years of public service, and should I be confirmed it 
would be a privilege and an honor to continue that public service at 
the Federal Energy Regulatory Commission.
    I appreciate the opportunity to testify before you today and am 
happy to answer any questions you may have.

    The Chairman. Thank you very much.
    Mr. Garcia, go right ahead.

STATEMENT OF JOSE ANTONIO GARCIA, NOMINEE TO BE DIRECTOR OF THE 
    OFFICE OF MINORITY ECONOMIC IMPACT, DEPARTMENT OF ENERGY

    Mr. Garcia. Thank you and good morning, Mr. Chairman. It is 
a pleasure to be here with you today and as well to thank my 
two State Senators, Senator Nelson and Senator Martinez, for 
their presence.
    It is a privilege to appear before you as President Obama's 
Director of the Office of Economic Impact of the Department of 
Energy. It is an honor to be asked by the President to serve 
particularly at this transformational time in our Nation's 
history, a time when we need to call upon all Americans and all 
communities to help our economy not only recover, but prosper. 
The American innovative spirit, coupled with the opportunity to 
succeed through hard work, is the very essence of the American 
dream that brought my parents to this country from communist 
Cuba years ago. This same spirit will help small businesses and 
disadvantaged communities create the jobs of tomorrow.
    If confirmed by the Senate, I look forward to working with 
Secretary Chu to carry out the statutory duties of the Office 
of Minority Impact and collaborate with his team to advance 
energy priorities that the President has outlined for our 
Nation.
    President Obama has challenged the Department of Energy 
with the importanttask of implementing significant programs 
under the American Recovery and Reinvestment Act of 2009. I 
will make it a priority to ensure that small and disadvantaged 
businesses, including those owned by women, minorities, and 
veterans, as well as minority educational institutions, are 
included in these important programs.
    My experience as a public servant and consumer advocate in 
the utility industry have formed my belief that hard work is 
paramount to personal success, and I will apply the same level 
of commitment to service and advocacy toward small businesses 
and disadvantaged communities. I will dedicate myself to be the 
Department's voice in support of those with innovative ideas 
and those willing to work to ensure they can all participate in 
the advanced energy opportunities our Nation offers.
    In conclusion, I would like to reiterate my sincere 
gratitude to President Obama and Secretary Chu for nominating 
me for this position, and I want to assure the committee that I 
will work with the Secretary of Energy, with this committee, 
and with Congress to carry out the duties as Director of the 
Office of Economic Impact.
    Thank you and I am, of course, available for questions.
    [The prepared statement of Mr. Garcia follows:]
 Prepared Statement of Jose Antonio Garcia, Nominee to be Director of 
      the Office of Minority Economic Impact, Department of Energy
    Good morning, Mr. Chairman, Ranking Member Murkowski, and members 
of the Committee.
    My name is Joe Garcia. It is a privilege to appear before you today 
as President Obama's nominee for the position of Director of the Office 
of Minority Economic Impact at the Department of Energy.
    It is an honor to be asked by President Obama to serve, 
particularly at this transformational time in our country's history--a 
time when we need to call on all Americans, and all communities, to 
help our economy not only recover, but prosper. The American innovative 
spirit, coupled with the opportunity to succeed through hard work, is 
the very essence of the American dream that brought my parents to 
America from communist Cuba years ago. This same spirit will help small 
businesses and disadvantaged communities create the jobs of tomorrow.
    If confirmed by the Senate, I look forward to working with 
Secretary Chu to carry out the statutory duties of the Office of 
Minority Economic Impact and to collaborate with his team to advance 
the energy priorities that the President has outlined for our nation.
    The Office of Minority Economic Impact was created to advise the 
Secretary of Energy on the impact of the Department's policies, 
regulations, legislation, and related activities on minority 
communities, businesses and educational institutions. This Office has 
the important responsibility of ensuring that minorities participate 
fully and actively in the programs of the Department of Energy.
    I commit to you today that, if I am confirmed, I will work 
aggressively to carry out these responsibilities. By doing so, I 
believe I will advance the Department's goals across its many missions, 
because success will require fully tapping the talents of all of our 
people. That is why I am committed to the idea of making the Department 
of Energy as the model agency for addressing issues of diversity and 
for providing support and assistance to small and disadvantaged 
businesses and minority educational institutions. I believe that the 
United States cannot afford to continue to underutilize small and 
disadvantaged businesses, or continue the under-representation of 
minorities in the technical and scientific workforce and industries.
    President Obama has charged the Department of Energy with the 
important task of implementing significant programs under the American 
Recovery and Reinvestment Act of 2009. I will make it a priority to 
ensure that small and disadvantaged businesses, including those owned 
by women, minorities, and veterans, as well as minority educational 
institutions are included in these important programs.
    Small businesses must play a critical role in creating new energy 
technologies. Their ability to innovate remains unsurpassed, yet they 
need the support of the Administration to remain in the global 
forefront of effective energy development strategies. According to the 
U.S. Small Business Administration, small businesses represent 99 
percent of all employers in the country. If I am confirmed for this 
position, I will ensure that DOE becomes a leader in utilizing small 
businesses to create the competitive jobs of tomorrow.
    My experiences as a public servant and consumer advocate in the 
utility industry have formed my belief that hard work is paramount to 
personal success. I will apply this same level of commitment to service 
and advocacy towards small businesses and disadvantaged communities. I 
will dedicate myself to be the Department's voice in support of those 
with innovative ideas and those willing to work hard to ensure that 
they all can participate in advanced energy opportunities.
    In conclusion, I would like to reiterate my sincere gratitude to 
President Obama for nominating me to this position. I want to assure 
this Committee that I will work with the Secretary of Energy, with this 
Committee and the Congress to carry out the duties as Director of the 
Office of Minority Economic Impact at the Department of Energy.
    Thank you, and I will be happy to answer any questions from the 
Committee.

    The Chairman. Thank you very much for your statement.
    Mr. Pizarchik, go right ahead.

STATEMENT OF JOSEPH G. PIZARCHIK, NOMINEE TO BE DIRECTOR OF THE 
     OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT, 
                   DEPARTMENT OF THE INTERIOR

    Mr. Pizarchik. Thank you, Chairman Bingaman, Senators. I am 
honored to appear before you as President Obama's nominee to 
head the Office of Surface Mining Reclamation and Enforcement 
in the Department of the Interior. I thank President Obama and 
Secretary Salazar for their confidence in me and I thank you 
for considering my nomination.
    The majority of my career has been in public service to 
Pennsylvania. My experience there has given me exposure to the 
many facets of the mining industry that make up the 
responsibilities of OSMRE.
    For the past 17 years, I have been engaged in 
Pennsylvania's mining program, first as legal counsel and then 
as Director of the Bureau of Mining and Reclamation where I 
oversaw the development and implementation of a policy to 
protect streams from underground coal mining subsidence without 
shutting down mining. I also oversaw the resolution of a post-
mining discharge liability matter that was blocking progress on 
the Flight 93 National Memorial. Pennsylvania's mining program 
encompasses a broad array of issues and my tenure as Director 
required knowledge of a broad range of laws and interaction 
with various agencies.
    I understand and appreciate the interests and duties of the 
States and Federal Government and the roles of citizens, 
environmentalists, and industry in protecting the environment 
and our people while helping to meet America's energy needs. 
Each plays a critical role. I have the experience, temperament, 
and skills to work with stakeholders. I understand the value of 
an objective, honest approach to resolving matters whether they 
are complex, simple, controversial, or mundane. I am 
comfortable working with people of divergent backgrounds.
    As a member of the executive branch, I see my duty as 
executing the law.
    On a more personal note, I grew up on a small farm in 
southwestern Pennsylvania with my parents and six brothers and 
sisters. Survival was a collaborative effort. The entire family 
had to pitch in. We all had our responsibilities. When I was 
10, my brothers and I assumed full operation of the farm. We 
handled the crops, livestock, equipment, and buildings. My 
brother Tony, who is here with me today, now owns and runs that 
family farm. Through that experience, I learned the value of 
hard work, cooperative decisionmaking, work distribution, and 
completing a job the right way the first time. Those values and 
work ethic instilled in me as a kid are still with me today.
    Coal was a part of our daily lives. That is how we heated 
our home. I also knew many people who worked in the mines. I 
saw firsthand the value placed on a job in the mines, tempered 
by the effects of poor safety regulations and the environmental 
havoc wreaked by unfettered mining. I have also witnessed the 
benefits of improved safety and improved environmental laws 
over the years.
    Like four of my siblings, I worked my way through college. 
I earned my bachelors degree from Penn State and my law degree 
from the University of Arkansas at Little Rock.
    It would be an honor and a privilege to serve America, its 
citizens, and the environment and President Obama as the 
Director of the Office of Surface Mining Reclamation and 
Enforcement.
    Thank you, Mr. Chairman, for the opportunity to testify. I 
am ready to answer questions.
    [The prepared statement of Mr. Pizarchik follows:]
 Prepared Statement of Joseph G. Pizarchik, Nominee to be Director of 
the Office of Surface Mining Reclamation and Enforcement, Department of 
                              the Interior
    Thank you, Chairman Bingaman and Senators. I am honored to appear 
before you as President Obama's nominee to head the Office of Surface 
Mining Reclamation and Enforcement at the Department of the Interior. I 
thank President Obama and Secretary Salazar for their confidence in me 
and I thank you for considering my nomination.
    I appreciate the opportunity to present my background and 
qualifications. The majority of my career has been in public service 
for the Commonwealth of Pennsylvania. My experience there has given me 
exposure to the many facets of the mining industry that make-up the 
responsibilities of OSMRE.
    For the past 17 years I have been engaged in Pennsylvania's mining 
program, first as legal counsel and then as the Director of the Bureau 
of Mining and Reclamation, where I have worked on a variety of 
projects. Under the guidance of Kathleen McGinty, then Secretary of the 
Pennsylvania Department of Environmental Protection, we developed and 
implemented a policy, based on sound scientific and legal principles, 
to protect streams from underground coal mining subsidence without 
shutting down mining. I was also assigned the responsibility and did 
resolve a postmining discharge liability matter that was blocking 
progress on the Flight 93 National Memorial. While working closely with 
the Pennsylvania State Police and the Pennsylvania Office of Homeland 
Security, I led the state effort to secure explosive storage magazines. 
These security measures, the only ones of their kind in the country, 
greatly reduced the risk to the nation's capital and other major East 
Coast cities. The number of break-ins and thefts of explosives in 
Pennsylvania dropped from one of the highest in the country to zero. 
Notwithstanding dire industry predictions, zero is also the number of 
explosive industry firms that left Pennsylvania or went out of business 
because of the security requirements.
    Pennsylvania's mining program encompasses more than coal permits. 
It also includes water quality and stream encroachment permits, 
Environmental Good Samaritan projects, remining and reclamation of 
abandoned mines, industrial mineral mining, blasting and explosives 
regulation, mine subsidence insurance, and bonding. The breadth of 
Pennsylvania's program requires knowledge of a broad range of laws and 
interaction with various agencies.
    I understand and appreciate the interests and duties of the states 
and federal government and the roles of citizens, environmentalists, 
and industry in protecting the environment and our citizens while 
helping to meet America's energy needs. They each play a critical role 
in effective development, implementation, and enforcement of our mining 
program and regulations. I have the experience, temperament, and skills 
to work with stakeholders for pragmatic and creative solutions.
    I have represented Pennsylvania as both the client and attorney in 
litigation, legislative, regulatory, and programmatic matters. Through 
these experiences I understand the value of an objective, honest 
approach to resolving matters, whether they are complex, simple, 
controversial, or uninteresting. I am comfortable working together with 
people of divergent backgrounds and interests, whether an average 
citizen or high government official.
    As a member of the Executive Branch, I see my duty as executing the 
laws enacted by the legislators and, at times, as interpreted by the 
courts. The laws are to be implemented for the benefit of America and 
not used to the detriment of an individual or interest.
    If confirmed, I will be leaving a corps of state government 
employees dedicated to implementing the laws to protect Pennsylvania's 
environment and people while meeting the country's mining needs, but I 
will be joining a group of similarly dedicated federal employees and 
officials in OSMRE, EPA, and elsewhere in the Obama administration. 
Together we will work with the states, citizens, and industry to build 
on past successes, correct past missteps, and craft new solutions as we 
strive to meet America's environmental and energy needs.
    On a more personal note, I grew up on a small farm in southwestern 
Pennsylvania with my parents and six brothers and sisters. My dad, a 
World War II veteran, worked in the steel mill in addition to farming. 
Survival was a collaborative effort; the entire family pitched in. We 
all had our responsibilities, which started at a very young age. Like 
my siblings before and after me, by the time I started school I had 
already moved from feeding the dogs to feeding and caring for the 
chickens. Life on the farm involved recycling before there was an Earth 
Day. We practiced conservation measures that arose out of the Dust Bowl 
era and cared for the environment upon which we were so dependent.
    When I was 10, my brothers and I assumed full operation of the 
farm. We planted and harvested all of the crops, cared for the 
livestock, and repaired and maintained the equipment and buildings. My 
brother owns and runs that farm today. Through that experience I 
learned the value of hard work, cooperative decision making, work 
distribution, and completing a job the right way the first time. The 
values and work ethic instilled in me as a kid are still with me.
    Coal was a part of our daily lives; that's how we heated our home. 
I also knew many people who worked in the mines so I saw first-hand the 
value placed on a job in the mines tempered by the effects of poor 
safety regulations and the environmental havoc wreaked by unfettered 
mining. Through friends and family I witnessed the benefits of improved 
safety and environmental standards.
    Like four of my siblings, I worked my way through college using a 
combination of summer jobs, work study, education grants, and Social 
Security, as my dad died while I was in high school. I have worked as a 
laborer for masons, in general construction, in a plant that fabricated 
steel buildings, in flood cleanup, and as a security guard. After 
getting my BA from the Pennsylvania State University I attended law 
school and received my law degree from the University of Arkansas at 
Little Rock.
    It would be an honor and privilege to serve America, its citizens 
and environment, and President Obama as Director of the Office of 
Surface Mining Reclamation and Enforcement.
    Thank you, Mr. Chairman, for the opportunity to testify. I am ready 
to answer questions.

    The Chairman. Thank you for your statement as well.
    Let me start and ask each of you a question or two, and 
then I am sure Senator Menendez will have some questions as 
well.
    Mr. Norris, you referred to the substantial amount of wind 
generation that has been created in Iowa during the time that 
you chaired the Public Utility Commission. What role do you see 
for the Federal Energy Regulatory Commission in promoting the 
development of renewable generation of electricity and also in 
developing the additional infrastructure needed to get that 
generation to market?
    Mr. Norris. One of the most pressing needs we need to 
address for the utilization of renewable energy is upgrading 
the electric transmission grid both for local distributed 
generation and for the transportation of renewable generation 
across the country. So I think one of the most critical roles 
that the FERC can do is to assist in the efficient and 
economical development of the transmission grid so we can get 
renewable energies from generation to the load centers.
    The Chairman. Very good.
    Mr. Garcia, let me ask you what steps--maybe this is 
premature, but do you have in mind particular steps that you 
would take if confirmed to reach out to these minority 
institutions and businesses to ensure that they compete fairly 
for grants and contracts that the Department is involved with?
    Mr. Garcia. I think it is a two-step process, Senator. 
Thank you for the question. But it is a two-step process. One 
is the Department of Energy's contracts that we put out tend to 
be highly technical and highly skilled, and for a long time, 
they were controlled by a relatively small group or very 
technical group. Clearly, minorities and disadvantaged 
businesses had not been given an opportunity. So part of that 
is to get the work force to the level that they can do some of 
this work and, more importantly, to offer more opportunities.
    In fact, next week the Department has a conference in Long 
Beach, California where we have 200 exhibitors. Most of those 
are labs and large contractors with the Department of Energy. 
We have over 1,100 participants already signed up. The idea is 
to get those procurement officers and create mentoring programs 
with existing contractors and with new contractors, smaller 
contractors, so they can participate in the opportunity that a 
new energy field offers all of us.
    The Chairman. All right. Thank you.
    Mr. Pizarchik, there has been a great deal of concern 
expressed about Pennsylvania's policy on placing utility coal 
ash in coal mines and the possible impacts of that on water 
quality. Can you briefly describe what Pennsylvania's policy on 
mine placement of coal ash is and how Pennsylvania's policy 
comports with the recommendations of the National Academy of 
Sciences?
    Mr. Pizarchik. Yes, Senator, I can do that. In 
Pennsylvania, we have what has been referred to by some as one 
of the best programs for ash placement in coal mines in the 
country. It was originally developed in the mid to late 1980s.
    Under the process, not all ash is suitable for use at a 
mine site to assist in reclamation. The ash has to, first, be 
tested in accordance with EPA standards and tests to make sure 
that it will not leach out any hazardous metals or 
contaminants. Then it needs to be certified for a particular 
use. Once it has been tested and certified, then the applicant, 
the mining site, has to apply through the normal permitting 
process with public involvement to get approval to use the ash 
at that particular site. The ash and the site have to be 
adequately analyzed and characterized to make sure there will 
not be any problems. There are monitoring wells that are put in 
place to monitor the groundwater to make sure that the ash does 
not, in fact, leach any contamination out into the site.
    A few years ago, we started reexamining our program to see 
if there were areas needed for improvement. We had a lot of 
public scrutiny from various citizen groups and concerned 
members of the public. The National Academy of Sciences had 
conducted its study, and as a result of that review and the 
recommendations of the National Academy of Sciences, in April 
of this year, Pennsylvania updated its coal ash beneficial use 
program in mine sites to include the recommendations of the 
National Academy of Sciences.
    We are now monitoring 40 parameters instead of just 27 from 
a few years ago. We have also required all of the sites where 
coal ash is being beneficially used to upgrade their monitoring 
systems, and we have increased the monitoring from annually to 
quarterly on the sites. Certification of the ash at the 
powerplants has to be tested at least twice a year, instead of 
once a year. We have also increased the requirements for how 
long you have to monitor the ash after the placement ends. That 
period is now 10 years.
    So in addition to implementing the National Academy 
standards, we also made a number of changes that were 
recommended by various citizen groups and environmental groups, 
but we did not stop with just the policies which we used to 
implement that. Recently we have also in Pennsylvania--the 
State has published proposed rulemakings that incorporate the 
national recommendations, as well as the other improvements to 
take a good program and make it even better. With the science 
that we have, we have not had any evidence of pollution of 
groundwater caused by the use of coal ash at these mine sites.
    The Chairman. Thank you.
    Let me go ahead and defer to Senator Menendez for his 
questions.
    Senator Menendez. Thank you, Mr. Chairman.
    Congratulations to all of you on your nominations.
    Mr. Norris, we have an energy bill that, as currently 
drafted, would allow FERC to approve lines anywhere and for 
almost any reason, as it relates to transmissions. It concerns 
me because, one, it could lead to more dirty coal power being 
piped into our State, a concern that 10 Governors of the 
Northeastern States have also voiced. We understand the need 
for greater transmission. The question is for what purposes.
    So since FERC has such a significant impact in its 
decisionmaking here, especially if we were to give it this very 
wide authority, give me your thoughts on what the Federal 
Government's role should be in siting transmission lines.
    Mr. Norris. I would bring, first of all, my experience as a 
State utility commissioner to the table and respectful of the 
rights of States and traditional rights of States in siting 
infrastructure and give great deference to States on this.
    There is a need to upgrade our transmission grid and that 
is not an easy process. As we look at how we get renewables 
built in this country, there has to be the capacity to get that 
renewable energy to the load centers. So there is going to have 
to be an upgrade in our electric transmission grid.
    I think, depending on what Congress--the power of the 
Congress decides to give to FERC, we have to use it very 
sparingly and judiciously where we would be respectful of the 
State process and the State input in this process.
    With regards to does that enable carbon emission generation 
sources to be on that same grid, as you well know, you cannot 
control the electrons once they are on the grid. But I think 
what we are looking at is the development of renewable energy 
in this country, and the increased capacity of our transmission 
grid should be utilized to enable renewable generation to get 
on the grid as a priority.
    If I understand the current legislation that gives FERC the 
siting authority or backstop authority for 345 kv and above and 
the 400 dc line and then the feeder lines for renewable energy, 
I think that is a key element that helps ensure that we can 
work to make sure that the renewable energies have the access 
to any upgrades in transmission.
    Senator Menendez. I appreciate your answer. Let me just say 
right now, as mapped out, the entire State of New Jersey would 
be subject to transmission lines going through. The entire 
State. I am sure that if I were taking the entire State of Iowa 
and throwing transmission lines through it, you all might not 
look at it so well.
    So my concern and my interests, because if FERC is given 
this power as envisioned under the legislation, it would be in 
my view almost unlimited power. So what commissioners at FERC 
decide to do with that unlimited power will be very important. 
So my hope--I heard about your deference to States, but that 
deference can be as simple as listening and then disregarding.
    So it is my hope that we are going to see a view that there 
is a role here that we understand we have a need for 
transmission, but we want to see more of that transmission be 
for renewable energies and we want to watch the consequences of 
how we site those lines to States like my own. It is not that 
we have a swath that is open to it. We have an entire State 
that is open to it. Whether that goes right through the 
Highlands of New Jersey, which is one of the few open space 
areas that we have in a State that is the most densely 
populated per square mile in the Nation, or whether that goes 
through major residential areas, the consequences of that are 
very significant.
    I also want to ask two other questions, if I may, about net 
metering and interconnection standards. My legislation, the 
Grid Access Act, tries to help us create some national net 
metering and interconnection standards. It basically would then 
allow any individual or business to put a renewable energy 
project on their State without local authorities using 
arbitrary rules to prevent it.
    What are your views on that in general, and should 
utilities really be able to shield themselves from competition 
by putting up arbitrary market barriers?
    Mr. Norris. No. I think as we look at changing the energy 
system of our country and empower renewables, we have to enable 
people to be a part of that process. So access through net 
metering or other means through interconnection agreements to 
enable local generation, local distributed generation to be a 
part of the solution I think is important.
    Senator Menendez. I have another question, but I will 
submit that one for the record.
    Mr. Garcia, I am glad to see your nomination. I know you 
personally. I think you will do an excellent job in this field. 
Your experience speaks wonders. So I do not want you to think 
that a lack of a question to you is meaning that I am slighting 
you. The chairman basically asked what I hoped to get a sense 
of where you were headed.
    I do hope that one of the Department's efforts in 
attracting more Latinos, African Americans, women, and others 
into the field is incredibly important. If we are going to be 
competitive globally, we are going to have that human capital 
at the end of the day be there. There are Department 
initiatives to try to get more of our young people engaged in 
this respect and also moving in the college areas. So I hope 
that in addition to the whole question of getting access to the 
opportunities that the Department of Energy provides, there 
will also be opportunities for the educational pursuit that 
will lay the foundation of the human capital and intellect in 
the country that we will need to achieve. So we look forward to 
working with you on that.
    Finally, if I may, Mr. Pizarchik, I have seen that Kathleen 
McGinty, your former colleague and a pretty nationally 
respected environmental leader, has heartily endorsed your 
nomination.
    But I have to be honest with you. I have received so many 
e-mails from people concerned about your nomination. I heard 
you respond to the chairman before, but I would like to give 
you the opportunity to respond to critics who say that in your 
work in Pennsylvania, you, one, ignored evidence that certain 
ways of disposing of the coal ash degrade water supplies, and 
they also say you are not open-minded about their concerns.
    So I would like to hear your response to that and, at the 
same, time how you are going to be in the midst, if you are 
confirmed, about how we protect people from the disastrous 
effects of mountaintop removal. I would like to know how you 
intend to, if confirmed, implement the plan and what ideas do 
you have on how to tighten mountaintop removal regulations.
    Mr. Pizarchik. Senator, that was a pretty long list there. 
If I do not get to them all, please bring me back to those.
    Regarding the first question on the coal ash and how we 
used it in Pennsylvania and been open on that, we have engaged 
with stakeholders and people who have an interest in the safe 
management of coal waste, coal ash materials in the sites. I 
have had a number of meetings with those folks over the past 
year plus. We have received good input from the citizens and 
the activists, many of whom are not even from Pennsylvania but 
who bring value to the table as well.
    Through the changes that we have made in our program, many 
of those are based on input that we received from the citizens. 
A number of those improvements were designed to develop higher 
quality data so that we can have a better data field with which 
to assure the public that the use of coal ash at these mine 
sites in Pennsylvania is not polluting the groundwater and has 
not polluted the groundwater.
    In regards to a series of analyses that they have performed 
and published, there was a very large document that they put 
together and submitted to us. We have expended considerable 
resources going back and double checking every allegation to 
find out whether or not there is any merit to that. On each of 
those cases where we have looked, we have not found there to be 
pollution resulting from the use of the ash at those mine 
sites.
    As far as being open-minded, I listened to everybody who 
comes in. I make myself available to the citizen groups, to the 
environmentalists, and to the regulated community to hear their 
perspectives. Where the requests have a valid basis in the law 
and in the sciences, we will act upon them. But as a member of 
the executive branch, I carry out the laws as they have been 
enacted, and I do not go off and do things for one particular 
interest group or another. That would be contrary to the law 
which I am charged with executing.
    Senator Menendez. So you are open-minded. Within that 
context you have just described, you are willing to continue to 
follow the opportunities for people to have input.
    Mr. Pizarchik. Absolutely.
    Senator Menendez. If their input is both within the law and 
in fact, you are willing to consider that in terms of how you 
decide.
    Mr. Pizarchik. Yes. My track record, I think, in 
Pennsylvania documents that. A number of years ago, we had a 
rulemaking package regarding coal mining and underground 
longwall mining, mine subsidence on that. There were a variety 
of issues on that where there was a difference of opinion as to 
how effectively Pennsylvania's law met the minimum requirements 
of the Federal law.
    Through the course of working out the differences that 
existed, I led the work group for Pennsylvania that met with 
the citizens who were interested in this area, as well as the 
regulated community. It was a bit of a controversial atmosphere 
in that those two groups refused to be in the same room 
together with each other. So we literally had to have meetings 
in the morning with one group and in the afternoons with the 
other group. But it was worthwhile. We got good input from the 
public. We made a lot of changes to implement the concerns.
    By meeting with those folks, I find that it helps me as a 
government official to better understand the concerns of the 
public and what the basis of those concerns are. If you have an 
understanding of the basis of a person's concerns, you can 
better assess whether you can accommodate those concerns within 
the bounds of the law or whether there may be other means that 
you need to do to address those concerns.
    Senator Menendez [presiding]. My time is way past gone. So 
I will wait for either the next round or ask you to respond to 
my second question for the record.
    The chair has had to step out and he has asked me to 
preside. With that, Senator Barrasso is next.
    Senator Barrasso. Thank you very much, Mr. Chairman.
    I want to thank you both, Mr. Norris and Mr. Pizarchik, for 
taking the time to come and visit with me in the office and 
discuss a number of these issues.
    Mr. Pizarchik, we talked quite a bit about coal when you 
had the chance to visit, and while coal mining in the East is 
different than coal mining in the West, I think you bring 
strong credentials and an important State perspective to the 
job for which you have been nominated. We know that coal is an 
abundant, affordable, reliable, and secure source of American 
energy. Wyoming supplies 40 percent of our Nation's coal. Coal 
mining creates good paying jobs for hard-working folks in my 
State and your State of Pennsylvania. It provides revenues for 
the State and for local government. If confirmed, I would like 
to invite you out to visit one of Wyoming's coal mines and see 
the wonderful and excellent job they do with reclamation.
    We talked about coal leasing and the coal bid bonuses. We 
talked about abandoned mine land money. We talked about the 
self-bonding rules. I would like to spend my time on the 
abandoned mine land funding.
    Washington owes Wyoming hundreds of millions of accumulated 
abandoned mine land funds. Washington also owes significant 
amounts of money to many other States. After more than a decade 
of politically finding a solution, a bipartisan compromise was 
reached that satisfied the States, satisfied Washington a few 
years ago. The law ensures that Wyoming and other certified 
States and Indian tribes would receive the money that they were 
promised without strings attached. It also provided States with 
their share of future fees collected from coal mining.
    President Obama, as well as Secretary Salazar, when they 
were Senators, both voted for this bill signed into law. 
Unfortunately, the administration now with President Obama and 
Secretary Salazar proposed a budget earlier this year that 
called for ending the payments to the certified States, the 
same payments that the President and Secretary voted for while 
they were members of the Senate because they knew the impact on 
their home States.
    Are you familiar with this abandoned mine land funding 
issue?
    Mr. Pizarchik. Thank you, Senator. Thank you for your 
compliments, and I will take you up, if confirmed, on visiting 
your State. I would be happy to do that.
    Regarding the abandoned mine land funding, I am not 
familiar with the intimate details of it. I know of the issue 
generally. I know that a few years ago when the States were 
trying to get reauthorization, that there was a lot of effort 
put in by many States, including Wyoming, for a successful 
resolution of that. But at this time, I am not familiar with 
the details of the proposal or the basis for the proposal. So 
it would not be appropriate for me to speculate.
    Senator Barrasso. As a State official, formerly a State 
official now to come into this new position, do you think that 
States are entitled to their share of revenues from development 
within their borders?
    Mr. Pizarchik. Senator, with the familiarity that I do have 
with the law, I believe Congress has specified how that money 
is to be handled on that, and I would defer to implementation 
of the law, should I be confirmed.
    Senator Barrasso. When you were working for the people of 
Pennsylvania, you felt, if there was an obligation to the 
people of Pennsylvania, they would have a right to get that 
money.
    Mr. Pizarchik. Again, Senator----
    [Laughter.]
    Mr. Pizarchik [continuing]. If confirmed, I will execute 
the law. I understand Wyoming's position on that. I understand 
the other States' position. But at this point, it is not 
appropriate for me to speculate.
    Senator Barrasso. You talk about executing the law, and I 
am going to read a little bit from the law because the bill 
that is signed into law required that the States be paid back 
money owed in seven equal installments. I will read it. Quote: 
``The Secretary shall make payments to States or Indian tribes 
for the amount due for the aggregate unappropriated amounts 
allocated to the State or Indian tribe,'' and then it says 
under these subparagraphs. ``Payments under subparagraph (a) 
shall be made in seven equal annual installments beginning with 
fiscal year 2008.'' Seven equal annual installments beginning 
fiscal year 2008.
    The Interior Solicitor interpreted that stating that what 
Congress meant was that the funds must be paid back in the form 
of a grant and not in seven equal installments. When you talk 
about the law, what is the interpretation of ``seven equal 
installments''? I mean, the trick question is do you agree or 
disagree with the Solicitor's opinion. I do not want to put you 
in that position.
    But I think Congress tries to write laws and we try to be 
very clear, and then the administration, whichever 
administration it is, comes up with different interpretations. 
So I would like to hold you to your statement of I will follow 
the law and hopefully not try to reinterpret the law as written 
by the Members of the House and the Senate.
    So thank you very much.
    Thank you, Mr. Chairman. My time has expired.
    Mr. Pizarchik. Thank you, Senator.
    Senator Menendez. Thank you, Senator.
    Senator Cantwell.
    Senator Cantwell. Thank you, Mr. Chairman.
    Mr. Norris, congratulations on your nomination. It is good 
to see--I think your family was here. It is good to have them 
with us in Washington, DC.
    There is a tremendous amount on FERC's plate, obviously, in 
the deregulation of energy markets, being a policeman on the 
beat and new technologies and obviously our aging 
infrastructure. Certainly we have had a chance to talk and I am 
impressed with your background.
    But I wanted to talk to you about there are some who want 
to give FERC a very new and very different and very large 
responsibility to police a new multi-trillion dollar carbon 
market. I personally have yet to hear a compelling case from 
anyone--I should say anyone that does not work on Wall Street--
why we should set up this giant trading system. But suppose 
that we did. This is, obviously, a challenge in having 
predictable and stable carbon prices.
    Do you think FERC is up to the task of regulating a new 
trillion dollar carbon market? How many new employees would 
that take, and what would the structure need to be for FERC to 
do a good job of that?
    Mr. Norris. Thank you, Senator, for the question and for 
your kind remarks.
    Is FERC up to the task? I think FERC has a great deal of 
talented, professional citizens who work there. I think this 
will be a challenging task for whatever agency is delegated 
this responsibility from Congress, should it delegate that 
responsibility. Having worked for a State independent 
regulatory agency, I often found myself frustrated because we 
would do things and have expertise there that could be very 
useful to policymakers, but because of the independent 
regulatory agency aspect of us, we are not involved in some of 
those decisions.
    Let me get back to the point here. The point is I think 
FERC is capable. I think there are a number of agencies that 
are capable of doing that. It will take significant resources 
of smart, intelligent, committed people to get it done. I have 
no reason to think the employees of FERC and the people we 
would have to add there could not do that job, but I do not 
know as I would advocate it is a better place than someplace 
else. I think we will have to leave that decision to you.
    Senator Cantwell. How many people do you think it would 
really take to police carbon markets?
    Mr. Norris. I have not studied it at all. I have heard, I 
think, 1,100 or 1,400 additional employees just in general 
conversation, but I have no background to be able to tell you 
if that is accurate or what it will take. But if it is going to 
take that much at FERC, it would probably take that much 
wherever you decide to put it.
    Senator Cantwell. If I could switch to another subject 
about natural gas refunds. Last fall, five of the FERC 
commissioners were all on record supporting legislation to 
change the process for issuing refunds to consumers for unjust 
and unreasonable natural gas rates. This change basically would 
allow the effective date for the overcharge to be the date of 
the filing of the case as opposed to current law which only 
allows the refunds to start at the date the case is completed. 
What happens is, obviously, people change their practice once 
they are ruled against, and then obviously, all of that 
overcharge is not returned to the consumer.
    So in January, Chairman Kelliher sent a letter to the 
Energy Committee recommending that we consider the change here, 
and under the current law, it is estimated that natural gas 
pipelines overcharged consumers by something like $3.7 billion. 
This is just for a 5-year period from 2003 to 2007. So we are 
talking about significant problems here.
    So we have, obviously, had legislation on this. So I just 
wanted to find out whether you support changing that effective 
date for the natural gas pipeline to the date the cases are 
filed.
    Mr. Norris. I mean, I think the authority in the Federal 
Power Act to go retroactive with regard to electric rates has 
been effective. I think it has worked effectively and worked 
well. There is certainly a deterrent effect, as you said in 
your remarks. Whether that is necessary in the natural gas 
market or not, I do not know other than to say we have to have 
adequate tools to protect consumers and use those responsibly. 
So I do not know if I would advocate one way or another in 
terms of the change in the law, but I think if given that 
authority, FERC would use it effectively to make consumers are 
treated fairly, and it could be a deterrent effect.
    Senator Cantwell. But you think it has been working well in 
other areas that currently FERC has the authority on.
    Mr. Norris. FERC, I believe, has authority under the 
Federal Power Act with regard to retroactivity.
    Senator Cantwell. Electricity and----
    Mr. Norris. Electricity, yes.
    Senator Cantwell. You think it works well there.
    Mr. Norris. To my knowledge, it has worked well there, yes.
    Senator Cantwell. I thank the chairman.
    Senator Menendez. Thank you, Senator Cantwell.
    Since I see no other members here, two last questions.
    Mr. Norris, you and I talked about regional transmission 
organizations, RTOs. My own view is they often do not 
adequately protect consumers. Now, I am aware that FERC has 
found parties to have engaged market manipulation at times, and 
while the commission has imposed penalties, I am not aware that 
FERC has ordered refunds in any of those cases. This suggests 
to me that consumers failed to receive some of the much-needed 
relief when there were clearly unjust and unreasonable rates as 
determined by the commission itself.
    So do you believe as a general rule that consumer refunds 
should accompany any commission finding of market manipulation?
    Mr. Norris. I think you would have to review the facts of 
the case. I think it can be used at appropriate times to deter 
inappropriate behavior.
    Senator Menendez. Sometimes penalties are just simply a 
cost of doing business unless the penalties are large enough in 
which the excess profits, because of market manipulation, were 
eliminated by virtue of the penalty. Then the penalty is fine. 
It does not do much for the consumer but maybe it acts as a 
deterrent.
    My personal view is that if the commission gets to the 
point that they find that, in fact, parties have been engaged 
in market manipulation, that penalties that basically leave 
them short of the consequences of saying, well, I will get that 
penalty and I will go back to it again because I will make a 
lot more than whatever the penalty is does not really act, one, 
as a deterrent and, two, does not do very much for consumers.
    Mr. Norris. I mean, FERC's authority now for a million-
dollar-a-day civil penalty I think has been regarded as an 
effective deterrent, and whether more authority is needed for 
penalties, I will obviously leave it to this body to----
    Senator Menendez. I do not know whether it is a question of 
more authority. It is whether what the commission does with its 
authority. I am just urging you to consider that when there is 
a determination of market manipulation, that in fact the 
commission use its authority both in its penalty authority, as 
well as in its rebate authority to consumers as a very strong 
deterrent not to have market manipulation. So I hope you will 
consider that. I hope you will consider that.
    Mr. Norris. Absolutely.
    Senator Menendez. That is about as easy as it gets.
    [Laughter.]
    Mr. Norris. You are asking us to do our job, and I consider 
that part of the job, yes.
    Senator Menendez. Mr. Pizarchik, last question to you. I 
had asked you the question. I just want to remind you what it 
is. Both the EPA, the Department of the Interior, and the Army 
Corps of Engineers came to an agreement on how to protect 
people from the disastrous effects of mountaintop removal. It 
stated that these three agencies, one of which you will 
represent most particularly, if you are approved, will 
implement a plan that will minimize the environmental impacts 
of mountaintop removal mining in the short run and tighten 
regulations in the long run.
    How would you work to implement that plan, and what ideas 
do you have as it relates to tightening mountaintop removal 
regulations?
    Mr. Pizarchik. Senator, if confirmed, I will get involved 
in that project and learn more about the different perspectives 
held by the Environmental Protection Agency, the Army Corps of 
Engineers, as well as the other stakeholders of interest, the 
citizens, environmentalists in those areas, or the State 
agencies that regulate the actual mining activities that occur, 
as well as the agency. Getting involved and getting a better 
handle on the details of that, how that is actually being 
implemented, I think, and getting an understanding of the facts 
would be the first basis to determine what has transpired in 
the past, has that activity been done in accordance with the 
law as enacted by Congress and the regulations adopted by the 
State and Federal agencies, and then looking at those facts and 
deciding what would be the appropriate action to take at that 
time. It is my understanding those agencies are currently 
working on that with the MOU that they have announced. I have 
not been privy to those details or what is going on. So my 
first step would be getting involved to learn more about the 
facts and details of that.
    Senator Menendez. I appreciate your answer, but there is 
one common goal that the three agencies came to in their 
memorandum of understanding, and that is, that they will 
institute a plan that minimizes the environmental impacts in 
the short run and tightens the regulations in the long run. So 
I hope that, if confirmed, you are going to pursue that with 
the vigor of what the agreement intended.
    Mr. Pizarchik. Senator, without knowing the nuances and the 
details of that, but if confirmed, I will be working for the 
President and I will be carrying out the course charted by the 
administration on that.
    Senator Menendez. All right. With that, I see no other 
members present, but members will have until 5 o'clock tomorrow 
to submit additional questions for the record. If they are 
submitted, we urge the nominees to answer them as expeditiously 
as possible.
    With that, the committee stands adjourned.
    [Whereupon, at 11:05 a.m., the hearing was adjourned.]
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

  Responses of Jose Antonio Garcia to Questions From Senator Murkowski
                             indian energy
    Question 1. In the Energy Policy Act of 2005, Congress approved an 
Indian Energy title with some grant aid to develop energy projects on 
Indian lands, tribal reservation lands in the Lower 48 and on Native 
corporation lands in Alaska, plus provided $2 billion in loan guarantee 
money to help Indian energy projects proceed. While the office of 
Indian/tribal energy has made a few grants in the past two years, the 
Department's response to make this program work has been truly 
underwhelming for those of us from Western states.
    a. What is your view of what should be done with the Indian Energy 
program?
    b. Do we need to rewrite the law by adopting new amendments during 
Senate consideration of a pending energy bill?
    c. Is the problem purely that we have not appropriated enough 
funds, even though the administration sought very little funding for 
implementation in its FY 2010 budget?
    d. What can we do and what would you propose that we do to help 
Indian energy project assistance proceed?
    Answer. As I understand it, the Office of Minority Economic Impact 
is not directly responsible for the Indian Energy program, but I do 
believe that this office should play a key role in championing 
diversity and assuring that program offices across the Department 
routinely reach out to native-owned small businesses to assure their 
participation in energy and technology development opportunities. This 
is particularly important now as we work to build a 21st century 
economy powered by innovative and sustainable clean energy. If 
confirmed, I look forward to working with my colleagues in the 
Department to make energy projects for rural and native communities a 
greater priority, in the lower 48 states as well as in Alaska and 
Hawaii.
    Just this past week, Secretary Chu announced up to $13.6 million in 
multi-year funding for new clean energy projects on tribal lands, 
including over $3 million in Alaska. As I understand the overall DOE 
budget at this point, I believe there is sufficient authority and 
funding to make the Indian Energy Program work. If confirmed, I will 
certainly work with others in the Department to encourage effective 
implementation of the Department's American Indian and Alaska Native 
Tribal Government Policy.
                    renewable energy on native lands
    Question 2. In Alaska we have a host of excellent potential 
renewable energy projects on Native-owned lands. The Fire Island wind 
farm owned by Cook Inlet Regional Corp., the Lake Chakachamna lake-tap 
hydroelectric project being pursued by TDX Power, a subsidy of the St. 
Paul Native village corporation, small hydro development at Thayer 
Creek near Angoon being pursued by the Kootzoowoo Native village 
corporation of Angoon, to name just three. While there is no program 
yet approved to provide actual grant aid nationwide for renewable 
energy project construction, there is such aid for Alaska. In Sect. 803 
of the Energy Independence and Security Act of 2007, such aid was 
authorized, but it has not been funded and the Administration did not 
support such funding as part of the stimulus bill earlier this winter. 
What is your view about whether Congress should make grant assistance 
available for construction of Native energy projects both in Alaska and 
nationwide?
    Answer. If Congress appropriates funds for Section 803, I would 
look forward to working with the leadership of the Department to invest 
those funds responsibly.
                                 ______
                                 
   Response of Joseph G. Pizarchik to Question From Senator Bingaman
    Question 1. The Committee has received a number of complaints from 
environmental groups and citizens about policies you may have promoted 
or actions you may have taken as Director of Pennsylvania's Bureau of 
Mining and Reclamation. Specifically, these complaints allege that 
you----

   Promoted the use of surface coal mines for disposal of coal 
        ash and resisted adopting safeguards recommended by the 
        National Academy of Sciences;
   Weakened Pennsylvania's stream buffer rule, allowing the 
        filling of stream valleys with mine spoils;
   Failed to require sufficient bonding for coal mines and 
        resisted correcting bonding deficiencies;
   Promoted long-wall mining; and
   Resisted public participation and transparent decision-
        making.

    Please respond to these assertions.
    Answer. Thank you, Mr. Chairman, for giving me the opportunity to 
address these assertions. Before I address each of these points below, 
let me first say that none of them is true. It is important to provide 
you with some detail in my response.
    Coal Ash.--I have not promoted the use of surface coal mines for 
disposal of coal ash; in fact, I have consistently taken the position 
that Pennsylvania mines are not dumps to be used for the disposal of 
waste. However, the beneficial use of certified coal ash, i.e., only 
that coal ash that meets certain chemical and physical requirements, 
for mine reclamation was authorized in 1986 amendments to the 
Pennsylvania Solid Waste Management Act, and Pennsylvania's program for 
the use of coal ash was developed, and has been in use, since the mid-
to late 1980's. That program does fall under my jurisdiction as 
Director of the Bureau of Mining and Reclamation, and I am responsible 
for its implementation.
    Under Pennsylvania State law and regulations, the use of coal ash 
for reclamation activities is stringently regulated. Applications made 
for such beneficial uses must include a detailed operational plan, with 
identification of the ash source; a certification from the ash 
generator; amount of ash to be used; purposes of the ash utilization; 
operational details of how the ash is to be handled and incorporated 
into the site; a demonstration that the ash is chemically and 
physically suitable for the proposed use; documentation of the 
hydrogeology of the use area; and a monitoring program, including 
background data collection, designed to show any influence of ash use 
on surface and groundwater quality. In addition, public notice and 
participation are an integral part of the review process for all 
beneficial uses of coal ash on mine sites.
    During my tenure, we carried out a self-examination of the program, 
and that examination, along with consideration of citizen concerns and 
scientific analyses, led us to change the State's policies governing 
use of coal ash at mine sites. These changes include more stringent and 
increased ground water sampling; improved sampling techniques; more 
stringent ash testing and monitoring requirements; and the addition of 
controls for temporary storage of ash. The coal ash approved by the 
PADEP mining program for the use at coal mines has occurred on a site-
specific basis to facilitate reclamation such as the elimination of 
dangerous highwalls or abandoned pits, to facilitate revegetation of 
sites lacking suitable soil, or to improve water quality previously 
degraded by historic unregulated mining.
    Stream Buffer Zone.--I have not weakened Pennsylvania's 
longstanding stream buffer zone rule but have diligently implemented 
the law, which does not allow the filling of stream valleys.
    The State's stream buffer zone regulation has remained unchanged 
for over 20 years. Under the regulation, coal-mine operators in 
Pennsylvania cannot put mine spoil into streams. Filling streams with 
spoil would violate State law as well as adversely affect streams' 
aquatic communities. In 1994, the Pennsylvania General Assembly amended 
the Coal Refuse Disposal Control Act, replacing the absolute 
prohibition on disposing of coal refuse within 100 feet of any stream 
with a variance procedure that allows for certain streams to be put 
into a pipe or underdrain and then covered with coal refuse, provided 
the operator mitigated adverse impacts by restoring or improving other 
streams, but those amendments pre-date my tenure as Director of the 
Bureau of Mining and Reclamation.
    Bonding.--I have not failed to require sufficient bonding for coal 
mines, nor have I resisted correcting bonding deficiencies, but have 
spent significant time improving the financial guarantee system.
    In fact, beginning with my service as program counsel in 1992, I 
participated in the drafting of amendments to Pennsylvania's Surface 
Mining Conservation and Reclamation Act and regulations to address 
shortfalls in Pennsylvania's now-defunct alternate bonding system for 
surface coal mines. When Pennsylvania terminated this alternate bonding 
system, I helped draft the appropriation legislation that authorized 
conversion assistance financial guarantees that prevented defaults by 
mine operators due to changes in the State's bonding requirements after 
permits had been issued. I developed the legal basis and helped draft 
the documents for Pennsylvania's trust fund program, the first program 
in the country that provided a means for the State to perpetually treat 
post-mining discharges in the event an operator defaulted on its 
obligation.
    I have proactively sought such funding as well. In 2003, I notified 
30 mine operators holding 59 permits that they must post additional 
funds to guarantee the State could treat their discharges in 
perpetuity. From the time the State began tracking it in 2007, the 
total amount of bond posted has grown from about $122 million to 
approximately $264 million. Additionally, during my tenure the bond 
rate guidelines for calculating surface mine reclamation bonds have 
been adjusted annually to reflect the State's actual costs for 
completing reclamation; bond rates for underground mines were adjusted 
for the first time in over 20 years. I led the effort in Pennsylvania 
to develop a legally enforceable funding stream to pay for treatment of 
discharges on sites forfeited under the defunct alternate bonding 
system, mentioned above. Through my efforts, a consensus solution was 
developed and implemented with input from the regulated community, the 
Mining and Reclamation Advisory Board, the public, and members of the 
General Assembly.
    Longwall Mining.--I have not promoted longwall mining but have 
advocated for landowner protections and the use of science-based 
decision-making.
    In fact, as program counsel and Director, I worked on two 
rulemakings designed to implement landowner protections from the 1994 
amendments to the State statute and advocated for an interpretation of 
the provisions that required operators to repair or compensate for 
damage to all dwellings in place at the time of mining. This 
interpretation provided more inclusive coverage and enabled the State 
to demonstrate that its subsidence program was as effective as federal 
counterpart regulations. I also led the team that developed the surface 
water protection policy, which is based on science. Whole areas of the 
State are off limits to mining because of excessive risk to streams 
posed by longwall mining-induced subsidence. At the same time, sound 
science was used to identify the areas where responsible longwall 
mining would not threaten stream integrity. As Director, I have 
steadfastly supported decisions to deny longwall mining plans that 
would have resulted in permanent flow loss in overlying streams.
    Public Participation and Transparency.--Finally, I have not 
resisted public participation and transparent decision-making but have 
been an advocate for increased public participation during my tenure as 
Director.
    During my tenure as Director, the Pennsylvania Bureau of Mining and 
Reclamation has routinely used email distribution lists--in fact it has 
three separate lists--to notify interested persons and organizations of 
draft policies, regulations, and program changes. BMR routinely answers 
public information requests without requiring the submittal of a formal 
Right to Know Request, which is the State's version of the Freedom of 
Information Act. Since 2002, we have answered over 1,100 such requests 
while formal requests have been, I believe, less than a dozen.
    I have also provided opportunities for public participation in the 
drafting of policies and regulations that are over and above those 
required by State policy or law. For example, currently the State is 
conducting voluntary meetings with coal ash stakeholders, including the 
Environmental Integrity Project, Earth Justice, Mountain Watershed 
Association, Sierra Club and others to obtain their input on 
establishing regulatory trigger mechanisms for when to institute site 
assessments and when to initiate corrective action in the event coal 
ash used at a mine site begins to leach pollutants that could affect 
ground water. These meetings are not required by law; I elected to hold 
them in order to obtain more information and a better understanding of 
stakeholder views on these two points. I have also held similar 
meetings with other interested groups that have resulted in input and 
information considered in developing other regulations and standards.
  Responses of Joseph G. Pizarchik to Questions From Senator Murkowski
        state role in interagency action plan on surface mining
    Question 2. The Interior Department recently signed an MOU with EPA 
and the Corps of Engineers to develop an interagency action plan on 
surface coal mining. Among the ``short term actions'' identified, OSM 
has been tasked with determining how it may alter agency oversight of 
state permitting, enforcement, and regulatory activities.
    How do you envision these directives aligning with the exclusive 
jurisdiction vested in the states under the Surface Mining Control and 
Reclamation Act for the regulation of coal mining operations?
    Do you believe that there should be an official role for the states 
in the process of developing any recommendations or reaching any 
decisions in the context of this interagency action plan?
    Answer. The Surface Mining Control and Reclamation Act, which 
incorporated the concept of state primacy, envisions OSM and the states 
working together cooperatively. I believe that it is critical to the 
success of the interagency action plan for state regulatory authorities 
to participate in developing any recommendations.
                  opportunity to respond to criticism
    Question 3. The Mountain Watershed Association has said, in 
opposing your nomination, that ``we need a consensus builder and 
someone who thinks outside of the box to help solve this nation's 
energy challenges, not someone who totes the company line regardless of 
the impacts.'' Do you care to respond to their criticisms?
    Answer. I do not agree with this assessment of my approach. I have 
worked with stakeholders to reach solutions on a variety of matters 
during my tenure. For example, I initiated a process of face-to-face 
meetings that, to my knowledge, had not been used in Pennsylvania to 
resolve program differences between the State, the federal government, 
citizens, and the regulated community. These meetings and the candid 
discussions that ensued led to a better understanding by all of the 
other stakeholders' positions and views. In these instances, my 
initiation of such a process led to successful resolution of the 
issues--without resort to litigation. If confirmed, I hope to utilize 
such innovative means and foster cooperation among stakeholders as 
Director of the Office of Surface Mining Reclamation and Enforcement.
             cooperative federalism approach taken by smcra
    Question 4. Coming from a State program, you have clearly developed 
an understanding of the meaning and importance of State primacy, which 
allows States to have exclusive regulatory jurisdiction within their 
respective borders.
    If you are confirmed as OSM Director, will you pledge to respect 
the longstanding principle of state primacy established in SMCRA?
    What specific role do you see the states playing under the Act and 
how do you envision federal oversight in light of this role?
    Answer. I recognize and fully support the importance of state 
primacy. The states have the primary responsibility for implementing 
SMCRA's requirements, and OSM must ensure that the states' 
implementation is appropriate. As I noted at my confirmation hearing, 
this can and should be done cooperatively. If confirmed, I will seek to 
ensure that it is.
             opportunity for public comment on rulemakings
    Question 5. The Administrative Procedure Act establishes a process 
for federal agencies to follow regarding changes to their rules and 
allowing for public notice and comment on those decisions. When taking 
major policy actions, will you commit to do so in a transparent and 
open manner that allows public participation through the Administrative 
Procedures Act process?
    Answer. During my tenure as Director of the Pennsylvania Bureau of 
Mining and Reclamation, I have been a strong proponent of increasing 
public participation in the processes under my management jurisdiction. 
If confirmed, I commit to ensuring that OSM's rulemaking process fully 
complies with the public participation provisions of the Administrative 
Procedure Act.
                         1872 mining law reform
    Question 6. This Committee has jurisdiction over the 1872 Mining 
Law, and may consider changes to that statute in the coming months. 
While not directly related, you have some valuable experience in the 
areas we'll be considering--you were one of the authors of 
Pennsylvania's Environmental Good Samaritan Act and you were actively 
involved in the administration of that State's abandoned mine clean up 
program. While there is not necessarily an explicit role for OSM, but 
understanding the experience you bring to the table, will you commit to 
working constructively with us on developing effective reforms to the 
1872 Mining Law?
    Answer. Yes. I am aware that Secretary Salazar has indicated that 
reform of the 1872 Mining Law is a priority. I stand prepared, if 
confirmed, to work constructively and in any capacity needed to bring 
this law into the 21st century.
    Responses of Joseph G. Pizarchik to Questions From Senator Wyden
    Question 7. Coal ash disposal in coal mines is a controversial 
issue in Pennsylvania and elsewhere. In 2005, the National Research 
Council (NRC) completed a study concluding while disposal in coal mines 
might serve as a possible disposal alternative to a vexing 
environmental problem, it could pose significant environmental risks if 
not properly carried out. During your tenure, how many mines have been 
permitted to receive coal ash in Pennsylvania to date, on what dates, 
and for what volumes of waste? What changes were made in your program 
and regulations following release of the NRC report to conform to its 
recommendations?
    Answer. As the chart below indicates, since my tenure as Director 
began in 2002, 21 permits were issued or amended for coal ash use at 
mines. An additional eight reclamation contracts were issued that 
utilized coal ash. The reclamation contracts are short-term projects 
(usually one year) that typically use small volumes of coal ash to 
manufacture soil or to stabilize the surface. For comparison, 
approximately 170 mine sites and reclamation contracts have been issued 
under this program for coal ash use approval since 1988. An average of 
about 50 sites are utilized every year with the others remaining 
inactive or completed.
    Volumes of ash placed at each site vary due to methods of 
compaction and differing uses, but can range from a few hundred tons 
for soil amendments to several million tons used to fill abandoned 
pits. Individual site volume is generally tracked on a site-specific 
basis through District Mining Offices and is not readily available in 
our central office. However, the volume of coal ash used collectively 
for mine sites in Pennsylvania was tracked beginning in 2007, when an 
aggregate of 11.4 million tons were used, and 2008, when 11.0 million 
tons were used.

  Mine permits issued or amended for coal ash beneficial use since 2002
------------------------------------------------------------------------

------------------------------------------------------------------------
02020201                       Robindale        Renton       2002
                                Energy Svc
                                Inc.
------------------------------------------------------------------------
03050105                       Amerikohl        George       2006
                                Mining Inc.
------------------------------------------------------------------------
11020202                       Ebensburg Power  Nanty Glo    2002
                                Co.              West
------------------------------------------------------------------------
11070202                       Ebensburg Power  Nanty Glo    2007
                                Co.              East
------------------------------------------------------------------------
13070101                       Keystone         No 2 Strip   2007
                                Anthracite
                                Marketing
                                Corp.
------------------------------------------------------------------------
16070103                       RFI Energy       RFI 548      2007
                                                 North
------------------------------------------------------------------------
17010102                       Compass Coal     Camp Run     2002
                                Co.              Mine
------------------------------------------------------------------------
17030112                       U. S. Operating  North Camp   2003
                                Service          Run Mine
------------------------------------------------------------------------
17990103                       River Hill Coal  Kasubick     2003
                                Co.
------------------------------------------------------------------------
24020102                       P & N Coal Co    Benezette    2003
                                Inc.
------------------------------------------------------------------------
24030103                       Amfire Mining    KPB 127      2003
                                Co LLC           Buhler
                                                 West
------------------------------------------------------------------------
43020103                       Ben Hal Mining   Schumann     2003
                                Co.
------------------------------------------------------------------------
61970102                       Rusnak Coal Co.  Hawk Run     2003
                                                 Mine
------------------------------------------------------------------------
10030101                       Quality          Hindman      2003
                                Aggregates
------------------------------------------------------------------------
11940201                       Amfire Mining,   St. Michael  2003
                                LLC              Pile
------------------------------------------------------------------------
11070201                       Fuel Recovery    Lilly        2007
                                Inc.             Refuse
                                                 Pile
------------------------------------------------------------------------
11070203                       Ridge Energy,    Marstaller   2007
                                Inc.             Pile
------------------------------------------------------------------------
32040202                       Robindale        Charles      2004
                                Energy Svc.,     Refuse
                                Inc.             Pile
------------------------------------------------------------------------
49050101                       Farragut         Farragut     2005
                                Anthracite       Mine
------------------------------------------------------------------------
56070201                       Robindale        Penn         2007
                                Energy, Inc.     Pocahontas
------------------------------------------------------------------------
16090101                       RFI Energy       548 NORTH 2  2009
                                                 MINE
------------------------------------------------------------------------
                                Reclamation Contracts--not
                                         mine sites
------------------------------------------------------------------------
10-06-02(GFCC)                 Quality          Marett       2006
                                Aggregates       Project
                                Inc.
------------------------------------------------------------------------
32-03-02                       Robindale        Blacklick    2003
                                Energy Svc       GFCC
                                Inc.
------------------------------------------------------------------------
32-04-01                       Robindale        Heilwood     2004
                                Energy           Site
                                Services, Inc.
------------------------------------------------------------------------
32-06-01 (NCC)                 Gator Coal, LP                2006
------------------------------------------------------------------------
32-07-05                       Robindale        Ballas       2007
                                Energy Svc       Refuse
                                Inc.             Site
------------------------------------------------------------------------
65-05-04(GFCC)                 Bedrock Mines                 2005
                                LP
------------------------------------------------------------------------
65-06-02 GFCC)                 Robindale        Whitney      2006
                                Energy, Inc
------------------------------------------------------------------------
11-07-01                       Robindale        Beaverdale   2007
                                Energy           Site
                                Services, Inc.
------------------------------------------------------------------------

      
    Following release of the NRC report and after consideration of 
citizen concerns, we implemented the following changes to the program 
for use of ash at mines:

   Background groundwater sampling was doubled from six to at 
        least twelve monthly samples covering the complete hydrologic 
        cycle.
   Groundwater sampling methods have been expanded from 27 to 
        40 different testing parameters.
   Groundwater sampling of all 40 parameters now occurs every 
        quarter instead of once per year.
   Water samples collected are tested for total and dissolved 
        metals instead of just total metals.
   Sampling techniques have been improved, including purging of 
        monitoring wells to improve quality of the data.
   Monitoring must include three or more downgradient points 
        and at least one upgradient to obtain the necessary data.
   Monitoring will occur for at least 10 years after ash 
        placement stops.
   Testing of ash for use approval now requires leaching 
        parameters for 32 substances, up from 20, and is a centralized, 
        standardized process to ensure consistency.
   Ash testing at the generation facility doubled to at least 
        four times per year.
   Acceptable leaching limits were lowered for arsenic, lead, 
        selenium and boron.
   Controls for temporary storage will be required.
   Added assessment procedures for when monitoring indicates a 
        potential problem.
   Added corrective action procedures should the assessment 
        find a problem caused by the ash.
   Amount of ash used at a mine is to be reported by generator 
        and mine operator.
   A 50% increase in the amount of ash to be used on a mine 
        requires new public notice.
   Ash generated from fuels other than coal or waste coal are 
        required to obtain a waste general permit approval and mine 
        suitability determination.

    Question 8. An extensive 3-year study by the Clean Air Taskforce of 
15 mines where the Pennsylvania Department of Environmental Protection 
(PADEP) permitted the disposal of coal ash, entitled Impacts on Water 
Quality from Placement of Coal Combustion Waste in Pennsylvania Coal 
Mines was completed in 2007 and concluded that PADEP's data indicated 
that ash is contaminating nearby water supplies in two-thirds (10) of 
the mines studied with arsenic, lead, cadmium, selenium, nickel, zinc, 
sulfate, chloride, manganese, boron and other contaminants exceeding 
drinking water standards, health advisories, or water quality standards 
often by orders of magnitude. In your testimony before the Committee, 
you indicated that your agency had reviewed the claims made in the 
report and found them to be without basis and that no additional 
pollution was attributable to ash disposal. Please confirm whether this 
is, in fact, your view and please provide the technical analysis that 
supports your position.
    Answer. I did indicate that the PADEP review of the allegations did 
not find pollution that resulted from the coal ash placed at the sites. 
The PADEP response to the allegations of pollution from the placement 
of coal ash and the PADEP response to Environmental Integrity Project 
allegations are available at: http://www.dep.state.pa.us/dep/deputate/
minres/bmr/programs/beneficial.htm, and include the following titles:

   PDEP Response to Clean Air Task Force Report (2007);
   PADEP Response to EIP Allegations of Lead Pollution Related 
        to BD Mining (2009)
   PADEP Response to EIP Allegations to Trace Metal Pollution 
        Related to McDermott and Ernest (2009)

    For your convenience, I am also including these documents as 
attachment A* to these responses.
---------------------------------------------------------------------------
    * Documents have been retained in committee files.
---------------------------------------------------------------------------
    The agency has also produced a publication entitled ``Coal Ash 
Beneficial Use in Mine Reclamation and Mine Drainage Remediation in 
Pennsylvania (2004)'' that can also be accessed on the website. This 
publication is intended as a peer-reviewed document on the beneficial 
use of coal ash in mine reclamation and mine drainage remediation in 
Pennsylvania.
    Question 9. It is my understanding that permits issued under the 
Pennsylvania program for the beneficial use of coal ash in mines have 
been found deficient by an Administrative Law Judge in your own 
department and by judges of the Interior Board of Land Appeals (IBLA). 
In Citizen Advocates United to Safeguard the Environment Inc., v. 
PADEP, EHB Docket No. 2006-005-L (Consolidated with 2005-329-L) (Issued 
Nov. 2, 2007), a state administrative law judge found that a monitoring 
system approved by the Department for a mine reclamation site permitted 
to take 10 million cubic yards of residual wastes, primarily a river 
dredge-coal ash mixture, was not capable of detecting offsite 
groundwater contamination from the waste despite offsite drinking water 
wells found in all directions around the site. In Robert Gadinski, 177 
I.B.L.A. 373 (2009), the IBLA sided with a citizen and groundwater 
scientist and against PADEP finding that the public wells used in 
Tremont, PA are potentially threatened by the failure to characterize 
and sufficiently monitor groundwater flows from a nearby ash minefill. 
Do you agree that such deficiencies in a mine ash placement permit, as 
identified in these decisions, which can lead to the contamination of 
offsite water supplies, are a fundamental violation of SMCRA? If not, 
why not? Does SMCRA require the issuance of permits for surface mining 
that demonstrate clearly, through effective characterization, 
monitoring and safeguards, that such damage will be avoided? What 
corrective actions has the Department taken, or in the IBLA case, does 
it intend to take, as a result of these decisions?
    Answer. Before I answer your specific questions, let me offer some 
clarification regarding the two decisions that you mention.
    First, Citizen Advocates United to Safeguard the Environment Inc., 
v. PADEP did not involve the use of coal ash at a permitted coal mine, 
but was an appeal from a Determination of Applicability of a Residual 
Waste Beneficial Use General Permit issued by the PADEP's Waste 
Program. Further, the site itself is a Brownfield Remediation site 
involving an old landfill, abandoned surface mining areas, and old 
deep-mining impacts. As Director of the Bureau of Mining and 
Reclamation and its programs, I have no authority for permits issued by 
Pennsylvania's Waste Program or over actions taken by the Brownfields 
Remediation Program or the Bureau of Abandoned Mine Reclamation. SMCRA 
was not applicable to this site because it was a Brownfield site being 
remediated under a consent order and agreement pursuant to the Land 
Recycling and Environmental Remediation Standards Act, 35 P.S. sec. 
6026.101 et seq.
    My understanding is that the EHB upheld the General Permit but 
considered the groundwater monitoring plan insufficient primarily 
because of the complexity of the site, with its underground mine pools, 
draining of pools to a mine tunnel, and other complicating hydrologic 
features. The expert testimony raised some questions about whether 
additional monitoring wells and characterization of the site was 
needed, and the EHB remanded to PADEP for the purpose of improving the 
groundwater monitoring plan.
    Second, the appeal in Robert Gadinski was from an OSM informal 
review and approval of a PADEP response to a Ten Day Notice that there 
was no violation because no contamination of the public water supply 
well had occurred. The IBLA decision involved the OSM standard of 
review, and the question was whether the record (i.e., the data 
provided by the State to OSM) was sufficient for OSM to reach its 
conclusion. The IBLA determined that it was not, and that OSM should 
have ordered a federal inspection pursuant to 30 CFR 842.11(b).
    The IBLA made no finding regarding contamination of water supply 
wells at the site. While the IBLA raised the issue of whether the 
hydrologic balance of the site had been impacted by ash placement 
activities, it made no finding to this effect. Regardless, the State 
was not informed of this appeal to the IBLA by OSM, and PADEP did not 
have any opportunity to explain its investigation or supplement the 
record before the IBLA.
    With regard to your specific questions, I agree that failure to 
properly characterize a specific coal ash as suitable for use at a 
permitted mine site and failure to properly characterize a mine site 
before the regulatory authority authorizes the placement of mine ash 
could have the potential to lead to contamination of offsite water 
supplies. Contamination of offsite water supplies is not authorized by 
SMCRA. Further, when permitting surface coal mines, PADEP will not 
issue a surface coal mining permit if there is evidence that the 
proposed mining will adversely affect a public water supply.
    As a result of the Gadinski decision, the State has met with the 
OSM's Harrisburg Field Office regarding an investigation as to whether 
the hydrologic balance of the site has been impacted and has proposed 
that a thorough joint investigation be performed. I expect that 
investigation to begin once approvals from OSM are received. I have 
also arranged with OSM that the State bureau will be informed of any 
similar federal administrative appeals so that PADEP can intervene and 
present its investigation and expert findings. This cooperative 
approach should significantly reduce the time needed to resolve citizen 
complaints and should provide IBLA the information necessary to render 
a decision.
    Question 10. It is my understanding that according to Pennsylvania 
Department of Environmental Protection (PADEP), one of the primary 
justifications for approval of the dumping of millions of tons of coal 
combustion waste in mines is to neutralize or cure acid mine drainage. 
How many mines in Pennsylvania have been successfully remediated or 
cleaned up by this process? Can you please provide the committee with a 
list of these mines? Do you require long-term monitoring at these sites 
to ensure that the alkalinity of the coal ashes is not exhausted 
resulting in the release of metals and other ash constituents to water 
at these sites.
    Answer. As I noted in response to a previous question, the State's 
mining program does not allow permitted mines to be used as dumps for 
coal combustion wastes or other wastes. Only coal ash that qualifies 
for use certification can be placed at a permitted coal mine in 
furtherance of the reclamation of the mine. I understand that there 
have been 33 mines where coal ash has been approved for use as alkaline 
addition, and I am providing a list of those mines below. 
Unfortunately, the results of the use of ash at these sites are not 
maintained in PADEP central office files, and I have requested that our 
district offices identify sites successfully addressed. Specific 
examples that I am aware of where the removal of waste coal and 
reclamation with coal ash has improved water quality include the 
Leechburg site and the Revloc site, both listed below. As of April 18, 
2009, PADEP requires monitoring to continue for 10 years after the last 
year of ash placement.
      

                                                                 Alkaline Addition sites

               Permit                                   Company                                      Site                           Municipality

02020201                              Robindale Energy Svc Inc.                    Renton                                   Plum Borough
11020202                              Ebensburg Power Co.                          Nanty Glo West                           Nanty Glo Borough
11070202                              Ebensburg Power Co.                          Nanty Glo East                           Nanty Glo Borough
11900201                              Maple Coal Company, Inc.                     Colver                                   Barr
11970201                              Maple Coal Company, Inc.                     Rail Yard Site                           Barr
32950201                              Cambria Reclamation Corp.                    Ernest                                   White
32950202                              Cambria Reclamation, Inc.                    Lucerne                                  Center
56743701                              Robindale Energy Services, Inc.              Custom Coals Laurel                      Shade
24020102                              P & N Coal Co Inc.                           Benezette                                BENEZETTE
24030103                              Amfire Mining Co LLC                         KPB 127 Buhler West                      HORTON
43020103                              Ben Hal Mining Co.                           Schumann                                 SANDY LAKE TWP
61970102                              Rusnak Coal Co.                              Hawk Run Mine                            IRWIN
10-06-02                              Quality Aggregates Inc.                      Marett Project                           ALLEGHENY
17990107                              River Hill Coal Co.                          Mid-Penn #1                              Bigler
11833026                              Greenley Energy Holdings of PA               Mine 42                                  Scalp Level Borough
11880201                              Ebensburg Power Co.                          Revloc                                   Cambria
11890201                              Greenley Energy Holdings of PA               Mine 42 A                                Scalp Level Borough
11930102                              EP Bender Coal Company                       54 Job                                   Dean
11960202                              Ebensburg Power Co.                          Revloc 2                                 Cambria
11980103                              Laurel Land Development                      McFadden No 2 Mine                       Blacklick
16910104                              TDK COAL SALES INC                           SANDY HOLLOW MINE                        MADISON
17950111                              SKY HAVEN COAL INC                           BLOOM 1 MINE                             Bigler
17950115                              LARSON ENT INC                               SWAMP POODLE MINE                        Morris /Cooper
17970101                              Sky Haven Coal Inc.                          E. M. Brown #1                           Lawrence
17980114                              LARSON ENT INC                               GRAHAM 2 MINE                            Graham
32940105                              Kent Coal Mining Company                     Lucerne #2                               Center
32980108                              Amerikohl Mining, Inc.                       JACKSONVILLE SURF MINE                   Young
65050102                              Bedrock Mines                                Marco                                    Washington
32-00-04                              Amerikohl Mining, Inc.                       Ernest Refuse Area 4                     Rayne
32-98-01                              Amerikohl Mining, Inc.                       JACKSONVILLE HILL SITE                   Young
33-00-02                              ACV POWER CORP                               Soldier Project                          WINSLOW
CO&A                                                                               Leechburg site
11950102                              Laurel Land Development                      McDermott                                Jackson



    Question 11. How many of the mines where coal ash disposal has 
occurred have long-term monitoring (defined in federal waste 
regulations as 30-year post-closure monitoring) to ensure that 
hazardous chemicals do not escape the disposal areas and enter water 
supplies?
    Answer. To clarify, coal ash disposal does not occur at permitted 
coal mines in Pennsylvania but is carried out instead in landfills. 
Permits for this type of disposal are issued by PADEP's Waste Program, 
not the Bureau of Mining and Reclamation, in accordance with the Solid 
Waste Management Act, the Clean Streams Law, and the regulations 
promulgated pursuant to those statutes.
    As I noted in response to a previous question, permitting the use 
of certified ash--ash that has been certified to meet certain chemical 
and physical requirements--for placement as part of the reclamation of 
mines began in the mid-to late 1980s. All sites that are currently 
using ash for reclamation purposes will be required to be monitored for 
at least 10 years after placement of ash concludes.
    Question 12. Are there specific corrective action standards in the 
permits for these sites that require cleanup of contamination from ash 
if it exceeds certain levels? Please provide a list of those permits.
    Answer. The permits contain monitoring requirements for the coal 
ash and for the groundwater and surface water sampling points and 
reporting requirements for updated maps and volumes each year. The 
permits do not contain corrective action standards, but as noted in my 
response to a previous question, the ash must be certified to meet 
certain quality standards, including a dry weight analysis and leachate 
values, before it can be used for reclamation purposes. The current 
frequency for testing these samples is 4 times per year, and a pattern 
of exceedance of these quality standards will eliminate the source from 
use in a reclamation project. A one-time exceedance triggers increased 
sampling and an investigation as to the cause of the result.
    For water monitoring, samples are submitted quarterly. The data is 
assessed to see if any degradation trends are occurring. An anomalous 
sample result is investigated first by the operator (through a 
resample) and then, if necessary, by the agency.
    Currently, typical compliance actions related to coal ash use are 
related to missed, late or incomplete sampling rounds or reporting. 
There are instances in which ash sources ceased to be used due to 
exceeding parameters; placed ash material was required to be amended 
due to a low pH caused by a generator malfunction; and on various 
occasions, operators on site were cited for failure to follow operation 
procedures (such as requirements for compaction, dust suppression, 
temporary stockpiles, etc.). The Department has not taken corrective 
action for remediation of groundwater because no polluting events have 
been attributable to coal ash beneficial use.
    Question 13. How many of these mines have bonds or other financial 
assurance specifically directed to ensure that hazardous chemicals in 
the ash, should they escape into water supplies, can be remediated by 
the mine owner or the utility dumping the waste and not the taxpayer?
    Answer. Permitted coal mines are not used as dumps for chemically 
hazardous ash. Ash used for reclamation purposes must be tested and 
certified for the specified use before it can be used at a mine. The 
mine operator must demonstrate, and the State must find, that there is 
no presumptive evidence of potential pollution from the ash before the 
permit will be amended to allow the use of coal ash for reclamation 
activities. Permit amendments are subject to public notice, comment, 
and appeal. Because there is no evidence of pollution resulting from 
coal ash used for these reclamation purposes, no bond is required to be 
posted to pay for corrective action. Should site monitoring determine 
that coal ash is causing pollution, PADEP has authority to require the 
mine operator to post the bond necessary to complete corrective action 
and has used that authority when coal mining has caused water 
pollution. If the operator does not post the additional bond, the State 
will proceed to forfeiture, ultimately resulting in the permittee and 
all owners and controllers being banned from domestic coal mining.
    Question 14. How many of the surface mines in Pennsylvania where 
coal ash disposal has occurred have liners to ensure that toxic 
chemicals in the ash do not migrate from the disposal site?
    Answer. To my knowledge, three coal refuse disposal/ash placement 
sites are lined with either clay or synthetic lining. These sites are:

   EME Homer City, generation site;
   Rosebud Mining Co., Lady Jane Preparation Plant; and
   TJS Mining, CRD #2

    Question 15. How many of these coal ash disposal sites are required 
to dispose of the toxic industrial waste above the seasonal high 
groundwater table so that groundwater doesn't come into contact with 
the toxic materials and is not thereby contaminated by heavy metals 
that can leach out of the waste?
    Answer. Again, coal ash that has been approved by the PADEP mining 
program for use in a reclamation project is tested and certified for 
the specified use before it can be used at a mine; permitted coal mines 
are not used as dumps for chemically hazardous waste. Nevertheless, it 
is my understanding that in every coal mine site where coal ash use has 
been approved, it is placed above the local groundwater table. No other 
ash placement occurs within the saturated zone (or groundwater table). 
All collected/perched water is required to be removed from a pit prior 
to ash placement at a mine site. All best management practices employed 
minimize the contact of ash with runoff water.
    Question 16. As discussed in detail in the NRC report, substantive 
improvements are needed in the leach tests used to characterize coal 
combustion wastes placed in mines. You indicated that you have 
incorporated the recommendations of the NRC report into your mine ash 
placement program. Can you tell us what improvements are being made to 
the test(s) that you will require for coal ashes placed in mines under 
your program?
    Answer. In this instance, for the reasons discussed below, we are 
continuing to use the best currently available, EPA-approved test. I 
apologize, as I could have been more precise in my testimony.
    Unfortunately, no test yet exists to characterize coal ash as if it 
were placed in a mine before it is actually placed in a mine, so it 
would be impossible to implement such a test. The PADEP uses the 
Synthetic Precipitation Leaching Procedure, or SPLP, which is deemed 
more representative of the leaching conditions of rock/soil material 
than the Toxicity Characteristic Leachate Procedure, which is used for 
solid waste at landfills. While there are some concerns about the 
validity of the SPLP testing under real-world conditions, this test 
remains in widespread use.
    The continued use of the SPLP test has proven to be effective in 
Pennsylvania in predicting whether harmful substances will leach out of 
the certified ash once it is placed in the coal mine environment. We 
have been successfully using this test on permitted coal mine sites for 
approximately 20 years.
    PADEP staff has extensive experience in leach testing and has 
examined protocols in various laboratory settings. While the NRC 
recommends alternate methods that require a higher degree of skill by 
the collector and the laboratory, which leads to higher costs, these 
new types of batch, column, and multipoint leach tests have not been 
used extensively enough to evaluate their effectiveness. The NRC report 
concedes that more research is needed in the area of predicting 
characteristics through leach testing. Both the Pennsylvania Waste and 
Mining programs attempt to keep abreast of all new research results 
related to this topic and are willing to examine new tests for 
feasibility and to make necessary changes to the procedures if 
warranted.
    The new leaching tests that have been proposed for use by some 
environmental groups are still under development; methods have not been 
standardized and labs are not equipped to conduct these tests. When 
these issues are overcome, it is expected that new and better leach 
tests will be adopted by various environmental agencies as a new 
standard. In addition, local industry representatives for coal-burning 
energy plants have expressed interest in conducting additional research 
and monitoring of coal ash placement areas to help answer some 
questions regarding long-term chemical and physical stability of the 
ash material.
    Question 17. As noted in the NRC report, coal ash disposal 
practices are not clearly covered at the Federal level by either the 
Surface Mining Control and Reclamation Act (SMCRA) nor the Resource 
Conservation and Recovery Act (RCRA) and their respective regulatory 
regimes. As a state regulator who has permitted this practice and as 
someone being nominated to be in charge of implementing SMCRA, what is 
your view on what actions should be taken at the federal level to adopt 
national standards for both the disposal of coal combustion wastes and 
their use in mine reclamation?
    Answer. Based on my experience, it is clear that not all coal ash 
is the same nor is all coal ash suitable for use at mine sites, either 
coal or other types of mines. It is also clear that not all mines are 
suitable for the placement of coal ash. The chemical and physical 
properties of ash can vary significantly due to the source of the coal, 
the combustion technology used, the pollution controls, and the types 
of other fuels used. If confirmed, I look forward to working with 
others in the Administration and in Congress toward developing policies 
on how to best manage coal ash use and disposal based on sound science 
and crafted to protect the public and the environment.
    Question 18. Following the 2008 TVA ash disaster, the U.S. 
Environmental Protection Agency announced in March of this year that it 
intended to issue regulations governing coal ash disposal. Given your 
extensive experience with the disposal and regulation coal ash what is 
your view on whether coal ash disposal should be regulated by U.S. EPA 
under the Solid Waste Disposal Act or RCRA and if it should be 
regulated, to what extent? If confirmed as the Director, what role do 
you intend to play in EPA's rulemaking effort? What role should EPA and 
the standards that it promulgates play in the regulation of coal ash in 
surface mines?
    Answer. As I noted in my response to the previous question, my 
experience as a state regulator has led me to conclude that not all 
coal ash is created equal. Consequently, the regulation and management 
of coal ash should be based on the chemical and physical properties of 
the ash and the character of the site where it would be placed. If 
confirmed as Director, it is my intention to actively engage with 
others in the Administration and to work cooperatively in the 
development of a practical and protective regulatory framework for the 
management of coal combustion residues in order to protect the 
environment and the public.
    Question 19. In a letter to the Committee the Sierra Club and Earth 
Justice contend that in 2001, as primary regulatory counsel, you 
supervised the drafting of state regulations that weakened the state's 
stream buffer zone rule allowing the filling of stream valleys in 
Pennsylvania. What role did you play in drafting the Pennsylvania 
regulations on stream buffer zones? On April 27, 2009, Interior 
Secretary Salazar announced that the Interior Department would move to 
rescind the 1983 Federal stream buffer rule allowing valley fill and 
mountaintop removal. Do you believe that the existing Federal stream 
buffer zone rule should be revised and if so, in what way?
    Answer. The Pennsylvania mining program has two stream buffer zone 
rules. The rule that applies to coal mining has not been changed in 
over twenty years, and requires the applicant that seeks a variance to 
demonstrate ``beyond a reasonable doubt'' that there will be no 
``adverse hydrologic impacts, water quality impacts or other 
environmental resource impacts . . . .'' 25 Pa. Code 86.102(12). For 
example, at my direction, violation of this rule as a basis for permit 
denial was added to the permit denial letter where an applicant 
proposed using spoil to bury one and a half mile of streams.
    The other SBZ rule applies solely to coal refuse disposal, and 
appears in the Coal Refuse Disposal Control Act (CRDCA), 52 P.S. 
section 30.56a(5), and in the coal refuse disposal regulations, 25 Pa. 
Code 90.49. As program counsel, I assisted the Department in drafting 
changes to the regulations that were necessary to ensure that those 
regulations were consistent with requirements contained in amendments 
to the State statute that were enacted in 1994 to authorize variances 
with required prevention or mitigation of adverse impacts. As counsel, 
my role was also to ensure that the revised regulations were not 
inconsistent with and were as effective as federal SMCRA and that the 
revised regulations did not violate the federal Clean Water Act and 
would not contribute to violation of applicable state and federal water 
quality standards. I approved the revised regulations for form and 
legality.
    Those revised regulations were approved by OSM and the 
Environmental Protection Agency, with input from the U.S. Fish and 
Wildlife Service and the Army Corps of Engineers.
    With regard to the stream buffer zone rule, I believe that 
Secretary Salazar announced in April that he was asking the district 
court to vacate and remand the Bush Administration's last minute change 
to the 1983 stream buffer zone regulations. During the public comment 
period on that Bush Administration proposal to change the 1983 
regulation, my program provided comments indicating that Pennsylvania 
did not support the proposal.
    Question 20. In letters to the Committee from the Sierra Club/Earth 
Justice and PennFuture, the groups contends that the Pennsylvania coal 
program under your leadership had significant deficiencies in its 
bonding program. They contend that you did not take action to correct 
these deficiencies until the program was found insufficient by a 
Federal Appeals Court (Pennsylvania Federation of Sportsmen's Clubs, 
Inc. V. Kempthorne, 497 F.3d 377 (3d Cir. 2007). However, despite 
recent changes, the result, they contend, is a program that is still 
not in conformance with SMRCA requirements for financial guarantees to 
reclaim land and prevent water pollution from coal mining. Do you 
believe that the Pennsylvania bonding program fully complies with the 
letter and intent of SMCRA, and if so, on what basis?
    Answer. I believe the Pennsylvania bonding program fully complies 
with the letter and intent of SMCRA. Program amendments submitted to 
OSM on August 1, 2008, provide a detailed explanation of how the 
State's bonding is consistent with and as effective as federal law. 
This information can be accessed at the following link: http://
www.dep.state.pa.us/dep/deputate/minres/bmr/bonding/
Response_to_Part732_Notices/Submittal/Notices_folder01.htm
    The program amendment describes the changes PADEP made to its 
bonding program and explains how the changes meet the federal 
standards. PADEP terminated the alternate bonding system to halt the 
accumulation of more reclamation costs. All mine operators must post 
bonds equal to the full cost of the amount it would take the State to 
complete reclamation. PADEP demonstrated that it has sufficient money 
to complete the land reclamation on the forfeited sites, to build mine 
drainage treatment systems on sites forfeited under the defunct 
alternate bonding system, and that it has a legally enforceable 
mechanism in place to generate the funds necessary to perpetually treat 
these discharges. The program amendment addresses the Part 732 Notices 
and the required demonstration and or program amendment codified in 30 
CFR section 938.16(h).
    An update of the status of efforts on implementing these changes is 
also available at: http://www.dep.state.pa.us/dep/deputate/minres/bmr/
bonding/Primacy_ABS_Bond_Forfeiture_Update_January_2009/
Primacy_ABS_Bond_Jan_2009.htm.
    During my tenure as program counsel and as Director, I have worked 
extensively on correcting identified deficiencies. Beginning in 1992 I 
participated in drafting amendments to the State's version of SMCRA and 
regulations to address shortfalls in the State's now-defunct alternate 
bonding system for surface coal mines. When Pennsylvania terminated 
this alternate bonding system, I helped draft the appropriation 
legislation that authorized conversion assistance financial guarantees 
that prevented defaults by mine operators due to changes in the State's 
bonding requirements after permits had been issued. I developed the 
legal basis and helped draft the documents for Pennsylvania's trust 
fund program, the first program in the country that provided a means 
for the State to perpetually treat post-mining discharges in the event 
an operator defaulted on its obligation.
    I have proactively sought such funding as well. In 2003, I notified 
30 mine operators holding 59 permits that they were required to post 
additional funds to guarantee the State could treat their discharges in 
perpetuity. From the time the State began tracking the amount of bond 
posted in 2007, the total amount has grown from about $122 million to 
approximately $264 million. Additionally, during my tenure, the bond 
rate guidelines for calculating surface mine reclamation bonds have 
been adjusted annually to reflect the State's actual costs for 
completing reclamation; bond rates for underground mines were adjusted 
for the first time in over 20 years. I led the effort in Pennsylvania 
to develop a legally enforceable funding stream to pay for treatment of 
discharges on sites forfeited under the defunct alternate bonding 
system mentioned above. Through my efforts, a consensus solution was 
developed and implemented with input from the regulated community, the 
Mining and Reclamation Advisory Board, the public, and members of the 
General Assembly.
    Question 21. In your testimony before the Committee, you testified 
that you carried out a policy of transparency and openness. In a letter 
to the Committee from a number of Pennsylvania citizens (Citizens 
letter), the claim is made that you were resistant to citizen input by 
limiting public testimony in permitting proceedings and holding 
hearings only during agency work day hours. In addition, the Sierra 
Club/ Earth Justice and PennFuture letters contend that you joined with 
the Bush Administration in attempting to prevent citizens from 
obtaining information under the Freedom of Information Act (FOIA) by 
claiming in an amicus curiae filing before the Third Circuit that 
correspondence between PADEP and the Office of Surface Mining was 
eligible for protection from public disclosure as ``intra-agency 
memorandums or letters.''
    Did you take or recommend such actions?
    How will you, if confirmed as Director of OSM, specifically address 
these issues and promote meaningful participation of citizens in 
permitting proceedings and rulemakings, promote transparency in 
decision-making by providing full access to agency documents, and 
ensure access to public meetings for members of the working public?
    Answer. During my tenure as Director, the State mining program 
operated with serious fiscal limitations due to reduced state and 
federal funding. My program was under a Department-wide policy that 
prohibited the payment of overtime, which was required for State 
employees who would attend evening public hearings. A decision was made 
at the Department level that foregoing evening public hearings was one 
option that could save funds and have the least adverse impact on our 
programs. During briefings with Congress, I and my counterparts in 
other states that were experiencing similar funding shortfalls apprised 
staff of how limited funding was adversely affecting our ability to 
effectively implement SMCRA. Congress ultimately appropriated 
additional funds in the 2008-2009 fiscal year, but State revenue is 
still suffering. PADEP is holding, when requested, evening public 
hearings with management staff, which does not require payment of 
overtime.
    I did not recommend that the State file the amicus curiae brief 
with the Third Circuit regarding the Freedom of Information Act 
litigation. Moreover, I did not participate in the development or 
implementation of litigation strategy regarding the freedom of 
information request. As I noted in response to a previous question, if 
confirmed as Director I will dutifully implement the relevant federal 
laws and the Administration's policies regarding these matters.
    Question 22. The Citizens letter also claims that you have ``shown 
little regard for SMCRA's purpose to minimize harm'' in developing 
Pennsylvania's regulations regarding long-wall mining. Specifically, 
the letter claims that you were insensitive to the impact on landowners 
from subsidence due to long-wall mining. The letter asserts that you 
defended the impacts based upon the prior sale of mineral rights 
regardless of the fact that the technology now being employed, long-
wall mining, and its potentially destructive consequences did not exist 
at the time of the transfer of such rights. What is your position on 
land owner rights where long-wall mining is occurring? And what is your 
interpretation of the minimization of harm obligations under SMCRA?
    Answer. I understand the impacts of longwall mining can be very 
traumatic and stressful to landowners. However, it is my understanding 
that Pennsylvania's statutes and property law limited what PADEP could 
do through a rulemaking. It is true that longwall mining did not exist 
when the mineral and surface support rights were severed from the 
surface, but it is also true that high extraction mining did occur then 
and did damage surface structures. I have taken steps that are 
sensitive to landowners. For example, as Bureau Director, I issued a 
memorandum clarifying that, where enforceable building codes are in 
effect, repairs must meet applicable standards regardless of whether or 
not the damaged structure was constructed according to code. It also 
specified that, when compensation is offered as settlement, the amount 
must be sufficient to repair or replace the damaged structure in 
accordance with the applicable building code.
    As program counsel and director, I worked on two rulemakings 
designed to implement landowner protections from the 1994 amendments to 
the State statute and advocated for an interpretation of the provisions 
that required operators to repair or compensate for damage to all 
dwellings in place at the time of mining. This interpretation provided 
more inclusive coverage and enabled the State to demonstrate that its 
subsidence program was as effective as federal counterpart regulations.
    Section 516(b)(1) of the Act provides that the operator of an 
underground coal mine (but not longwall mining) prevent subsidence 
causing material damage to the extent technologically and economically 
feasible. Section 516(b)(11) provides operators of all underground 
mines must, to ``the extent possible using the best technology 
currently available, minimize disturbances and adverse impacts of the 
operation on fish, wildlife, and related environmental values.'' I 
fully support all of these federal statutes and the implementing 
regulations.
    Response of Joseph G. Pizarchik to Question From Senator Shaheen
    Question 23. I have heard from a number of concerned environmental 
groups about the environmental impacts associated with surface mining, 
particularly as it pertains to mountaintop mining and surfacing mining 
involving valley fills.
    Several studies have shown that mountaintop removal is having a 
significant impact on watersheds in the Appalachian regions where it is 
being conducted. Selenium, mercury, lead, and other heavy metals and 
chemicals are released during the surface mining process into the 
watersheds of central Appalachia and are harmful to ecosystems and 
water quality. The studies also illustrate that there are severe 
ecologic and hydrologic impacts from mountaintop removal operations.
    As Director of the Office of Surface Mining Reclamation and 
Enforcement, to what degree will science and science-based reporting 
affect policy decision-making within OSMRE?
    Answer. If confirmed as Director, I will ensure that the Office of 
Surface Mining Reclamation and Enforcement uses sound science-based 
information to administer the requirements of the Surface Mining 
Control and Reclamation Act of 1977 and to implement the applicable 
policies of the President and the Administration. The better 
understanding we have of the environmental impacts of mining and the 
processes that cause such impacts, the better we will be able to target 
our policies to achieve our policy goals.
  Responses of Joseph G. Pizarchik to Questions From Senator Barrasso
    Question 24. The Mineral Leasing Act provides for the deferred 
payment of bonus bids for coal leases in equal installments. Under 
current regulations, federal coal lessees pay the bonus in five equal 
installments. The current system makes sense because cost is so 
significant--in Wyoming bonus bids for a federal coal lease can cost 
hundreds of millions of dollars.
    The Interior Appropriations bill passed by the House requires full 
payment up front. Requiring payment of the bonus bid in one up front 
payment would undermine domestic coal production, disadvantage smaller 
companies that lack the financial resources, and likely reduce 
government revenues from coal leasing in the long run.

   Given your experience with coal mining in Pennsylvania, do 
        you think requiring total payment of bonus bids up front--which 
        could be tens to hundreds of millions of dollars--could 
        discourage investment?
   Do you believe smaller companies would be at a disadvantage?

    Answer. Because the coal in Pennsylvania is virtually all privately 
owned, my experience in the State does not involve federal coal leases 
or bonus bids for coal. Additionally, the Bureau of Land Management in 
the Department, not the OSM, implements the Mineral Leasing Act 
provisions under which these payments are made. Therefore, if 
confirmed, I do not expect to have any involvement in determining the 
payment structure for federal coal leases.
    Question 25. In March 2006, the Wyoming Secretary of State 
submitted an amendment to its Coal Regulatory Program (referred to as 
Wyoming Rule Package 1-U) proposing changes to the rules concerning 
self-bonding requirements. The rule included important additions and 
revisions designed to address Wyoming-specific circumstances taking 
into account the substantially larger size of the surface coal mines in 
the state.
    It is my understanding the Solicitor's office approved the final 
rule in March 2009. OSM management then returned the rule to the 
Western Region for additional changes. The State of Wyoming has worked 
with OSM on this rule for over three years.

   Is it a normal part of the process to send it back to the 
        Western region after the Solicitor's office approves a final 
        rule?

    Answer. I have been informed that the Solicitor's Office provides 
advice, counsel, and legal representation to OSM, including reviewing 
draft regulations to ensure legal sufficiency. The Solicitor's Office 
staff does not approve or disapprove program amendments but reviews 
proposed decisions, the legal basis for those decisions, and advises 
its clients of any relevant findings before publication.

   Why was it sent back to the region for further changes?

    Answer. I understand that once review in the Washington Office was 
completed, the document was returned to the Western Region for final 
preparation, after which it will ultimately be submitted to the OSM 
Director for a decision.

   What steps remain in the approval process?

    Answer: I am informed that the remaining steps are a decision by 
the OSM Director, and publication in the Federal Register.

   Do you commit to finalizing the Wyoming Rule Package 1-U in 
        a timely fashion?

    Answer. Yes. If confirmed, I will commit to ensuring that a final 
decision is made in a timely fashion.
   Responses of Joseph G. Pizarchik to Questions From Senator Sanders
    Question 26. Several environmental groups, including The 
Environmental Integrity Project, Earthjustice, and the Sierra Club have 
raised concerns regarding your nomination. Particularly they have 
raised concerns about a lack of transparency and citizen input 
opportunities during your time working as a state official in 
Pennsylvania. How do you respond, and are you willing to commit that in 
your role as Director of the Office of Surface Mining Reclamation and 
Enforcement you will be a strong supporter of federal laws requiring 
transparency and public accountability in decision-making, such as the 
National Environmental Policy Act and the Freedom of Information Act?
    Answer. As I noted in response to an earlier question, I have not 
resisted public participation and transparent decision-making but have 
been an advocate for increased public participation during my tenure as 
Director. If confirmed as Director of the Office of Surface Mining 
Reclamation and Enforcement, I will comply with the federal laws 
requiring transparency and public participation and be a strong 
supporter of transparency in government decisionmaking.
    During my tenure as Director, the Pennsylvania Bureau of Mining and 
Reclamation has routinely used email distribution lists--in fact it has 
three separate lists--to notify interested persons and organizations of 
draft policies, regulations, and program changes. BMR routinely answers 
public information requests without requiring the submittal of a formal 
Right to Know Request, which is the State's version of the Freedom of 
Information Act. Since 2002, we have answered over 1,100 such requests 
while formal requests have been, I believe, less than a dozen.
    I have also provided opportunities for public participation in the 
drafting of policies and regulations that are over and above those 
required by State policy or law. For example, currently the State is 
conducting voluntary meetings with coal ash stakeholders, including the 
Environmental Integrity Project, Earthjustice, Mountain Watershed 
Association, Sierra Club and others to obtain their input on 
establishing regulatory trigger mechanisms for when to institute site 
assessments and when to initiate corrective action in the event coal 
ash used at a mine site begins to leach pollutants that could affect 
ground water. These meetings are not required by law; I elected to hold 
them in order to obtain more information and a better understanding of 
stakeholder views on these two points. I have also held similar 
meetings with other interested groups that has resulted in input and 
information considered in developing other regulations and standards.
    Question 27. What are your views on mountaintop mining and its 
impacts on surrounding communities and water quality?
    Answer. The Pennsylvania Department of Environmental Protection, in 
which my State Bureau of Mining and Reclamation resides, does not 
authorize mountain top removal mining in Pennsylvania. If confirmed, I 
will become more familiar with how the practice has been conducted and 
its impacts. I am also aware that Secretary Salazar and others within 
the Administration have recently taken steps to ensure that the federal 
agencies involved in these activities are coordinating efforts and 
making real progress toward reducing the environmental impacts of 
mountaintop coal mining. Should I be confirmed, I will work to ensure 
that these goals are met.
    Question 28. Do you believe that water quality can be negatively 
impacted by the practice of using coal mines as storage sites for coal 
combustion wastes?
    Answer. Water quality can be negatively impacted. However, it 
depends on several factors, because not all coal combustion residues 
possess the same chemical and physical properties and not all mines are 
suitable for the use of coal combustion residues. Depending on the 
properties of the coal combustion residues and the characteristics of a 
particular coal mine, some coal combustion residues could be safely 
stored at some mines, but not all residues could be safely stored at 
all mines.
  Responses of Joseph G. Pizarchik to Questions From Senator Menendez
    Question 29. The Administration has expressed an intention to 
tighten regulations on mountaintop removal mining. Specifically, what 
aspects of the practice do you think need further regulation? Would you 
be supportive of banning the practice or do you think the practice can 
continue without public health or environmental harms?
    Answer. As a state regulator in the Commonwealth of Pennsylvania, I 
have no direct experience with mountaintop removal because those types 
of mines do not occur in my home state. However, if confirmed, I will 
become informed on the practice and current issues surrounding this 
type of surface mining. As I said in my confirmation hearing, it is my 
intent to work with the Environmental Protection Agency, U.S. Army 
Corps of Engineers, and the Administration to carry out the Surface 
Mining Control and Reclamation Act (SMCRA), Clean Water Act, and 
related environmental statutes effectively. Should I be confirmed, I 
will carefully and thoroughly research the issues with the other 
federal agencies and stakeholders. Only after such a review, can I 
judge if additional or revised SMCRA regulations are necessary.
    Question 30. According to the Office of Surface Mining Reclamation 
and Enforcement website the Surface Mining Control and Reclamation Act 
``ensures that coal mining operations are conducted in an 
environmentally responsible manner and that the land is adequately 
reclaimed during and following the mining process.'' Can land be 
``adequately reclaimed'' following a mountaintop removal operation?
    Answer. As I noted in the response to the previous question, I have 
no experience judging mountaintop removal reclamation because it does 
not occur in Pennsylvania. I do understand that Congress authorized 
steep slope and mountain-top removal mining in SMCRA under certain 
conditions. However, there are many performance standards and 
reclamation requirements that apply under SMCRA. If confirmed, I will 
work to address the concerns raised about ensuring adequate reclamation 
following a mountaintop removal operation.
    I am also aware that Secretary Salazar and others within the 
Administration have recently taken steps to ensure that the federal 
agencies involved in these activities are coordinating efforts and 
making real progress toward reducing the environmental impacts of 
mountaintop coal mining. Should I be confirmed, I will also work to 
make sure that these goals are met.
    Question 31. The Department of the Interior recently rejected the 
Bush Administration interpretation of the Stream Buffer Zone Rule (SBZ) 
and said the department would return to the original intent--to prevent 
mining within a 100-foot buffer zone along intermittent and perennial 
streams. How will you enforce this interpretation? Are there any 
current mining operations that will have to cease or change their 
practices to be in compliance?
    Answer. As a result of the recent decision by the District Court 
for the District of Columbia on August 12th, it is my understanding 
that the Department is working with the Office of the Solicitor to 
chart a path forward. If confirmed, I will be guided and informed by 
the statutes, regulations, and best science to make decisions about 
interpretations of the Stream Buffer Zone rule.
    Question 32. Coal ash disposal is a highly controversial topic. 
Approximately how many mines have been permitted to receive coal ash in 
Pennsylvania to date? Are these mines required to set aside funds to 
remediate damages if toxins should leach onto water supplies? How are 
these mines being monitored to ensure that hazardous chemicals do not 
escape? Are these mines required to have liners to ensure that toxic 
chemicals in the ash do not migrate from the disposal site? How will 
you apply your work on coal ash disposal in Pennsylvania to your work 
in the federal government?
    Answer. Approximately 170 mine sites and reclamation contracts have 
been issued under Pennsylvania's program to date. An average of about 
50 sites are utilized every year with the others remaining inactive or 
completed. Because not all coal ash is the same, coal ash must be 
tested to determine whether it has the chemical and physical properties 
that make it environmentally acceptable to use at a mine for the 
specific reclamation purpose. If it is found acceptable, it is 
certified for use. The individual mine site is also evaluated to 
determine whether the certified ash can be safely used at the mine. 
Pennsylvania law requires that the mine operator, either in the permit 
application or in the permit amendment application, demonstrate that 
there is no presumptive evidence of potential pollution of the waters 
of the Commonwealth and PADEP must make such a written finding before 
coal ash can be allowed to be used on the mine. Because there is no 
evidence of pollution resulting from coal ash used for these 
reclamation purposes, no bond is required to be posted to pay for 
corrective action. Should site monitoring determine that coal ash is 
causing pollution, PADEP has authority to require the mine operator to 
post the bond necessary to complete corrective action and has used that 
authority when coal mining has caused water pollution. If the operator 
does not post the additional bond, the State will proceed to 
forfeiture, ultimately resulting in the permittee and all owners and 
controllers being banned from domestic coal mining.
    In addition, as part of the permit approval process the mine 
operator is required to establish a groundwater monitoring plan that 
will be in place for at least 10 years after placement of the ash 
concludes. The mine operator is required to collect water samples and 
have them tested for certain parameters. In April 2009, the groundwater 
monitoring was increased from annually to quarterly. The number of 
parameters tested was increased to 40 (previously, testing covered 27 
different parameters). PADEP also periodically collects and tests 
groundwater samples. The certified ash the PADEP mining program has 
approved for the specific reclamation use on a mine has been placed 
above the sites' groundwater table, and liners have not been required. 
If confirmed as the Director of the Office of Surface Mining 
Reclamation and Enforcement, I will use my experience with coal ash in 
Pennsylvania to be actively engaged within the Administration in the 
development of a scientifically sound, practical, and protective 
approach for the management of coal combustion residues in order to 
protect the environment and the public.
                                 ______
                                 
    Responses of John R. Norris to Questions From Senator Murkowski
                          future energy needs
    Question 1. What are your views on the future role of baseload 
coal-fired and nuclear power generation? Do you agree with Chairman 
Wellinghoff's statements that the nation's future power needs can be 
fully met by renewable energy sources and efficiency improvements?
    Answer. The nation currently depends on our existing coal and 
nuclear generation facilities to ensure a reliable supply of 
electricity. At the moment, about 70 percent of the electricity 
generated in the U.S. comes from these sources and it is likely that 
the country will continue to rely heavily on coal and nuclear energy 
resources for many years to come. Decisions to build new coal and 
nuclear generation facilities will be made as result of market forces. 
The markets are likely to be influenced by the amount of new renewable 
generation available, the availability of capital and most importantly 
legislation Congress may enact to address carbon dioxide emissions, 
transmission infrastructure improvements, demand response and a host of 
other issues. That being said, I cannot predict how much new 
conventional nuclear and coal fired generation may be built. In any 
event, my understanding of Chairman Wellinghoff's view (as stated, for 
example, at an August 6, 2009, hearing of the Senate Committee on 
Environment and Public Works) is not that our power needs can be fully 
met by renewable energy sources and efficiency improvements but that, 
depending on factors such as the structure and function of our energy 
markets and whether climate change legislation is adopted by Congress, 
it may be possible to use resources such as renewable energy (including 
solar, wind, geothermal, hydrokinetics and biomass), energy efficiency, 
demand response and natural gas to transition to a low-carbon energy 
future.
                         transmission (general)
    Question 2. In your opinion, what are the current obstacles to 
financing and siting new transmission?
    Answer. First, the question of whether there is going to be a 
federal renewable energy standard (RES) and/or a national carbon policy 
needs to be decided since these policies will significantly impact 
renewable energy demand and any economic decisions concerning energy 
supply choices. Assuming there are both a RES and a carbon policy, 
there are several obstacles to financing and siting new transmission. 
One of the primary issues is ``who pays'' or cost allocation. Without 
giving FERC the ability to properly allocate costs, new national 
policies like a RES or carbon reduction will not be properly 
implemented. Besides cost allocation, some of the obstacles to siting 
new transmission infrastructure include: the lack of a regional and 
national coordinated planning process; delays in federal land right-of-
way approvals; and delays in state utility commission approvals. Under 
the Commission's current backstop siting authority, the single largest 
obstacle to the siting of new transmission is the 4th Circuit Court of 
Appeals decision that limits the Commission's authority to instances 
where a state has not made a siting decision within one year. An 
individual State's decision to deny a project within its boundaries, 
can prevent the construction of new transmission even when these 
projects may be in the national public interest.
    Question 3. Absent legislative changes, how can FERC and the states 
work most effectively to expedite planning and siting of multi-state 
transmission projects and provide regulatory certainty on cost 
recovery? What actions can FERC take under its existing statutory 
authority in these areas?
    Answer. With regard to transmission planning, in Order No. 890 the 
Commission required jurisdictional utilities to engage in regional 
planning to ensure adequate and reliable transmission service within 
regional markets.\1\ States have generally been very supportive of this 
requirement for regional transmission planning. Order No. 890 requires 
all transmission providers to develop an open and coordinated 
transmission planning process that involves ongoing coordination and 
input from stakeholders, including state and local retail regulatory 
entities. This process provides an ongoing opportunity for states to 
work with utilities in planning as well as with the FERC in addressing 
transmission related issues since they often choose also to participate 
in Commission proceedings related to planning and cost allocation for 
transmission in interstate commerce.
---------------------------------------------------------------------------
    \1\ Preventing Undue Discrimination and Preference in Transmission 
Service, Order No. 890, 72 FR 12,266 (Mar. 15, 2007).
---------------------------------------------------------------------------
    Order 890-A further required transmission providers to address 
issues involving comparable treatment of resources in the planning 
process, cost allocation and regional coordination. To evaluate the 
effectiveness of the implementation of the regional transmission 
planning process and address issues, the Commission has scheduled a 
second series of regional technical conferences to begin in September 
of this year. These conferences will involve all stakeholders, 
including state and local retail regulators in addressing regional 
transmission planning, coordination, and cost allocation issues. The 
Commission seeks, through stakeholder feedback at these conferences, to 
determine if further refinements to the planning process are necessary.
    With regard to transmission siting please see my response to your 
question #6.
    Question 4. Chairman Wellinghoff has stated that one of his 
priorities is to integrate renewable, efficiency and demand response 
into the interstate grid--do you share that goal? If so, what 
specifically would that entail in the way of new policies and programs 
from FERC?
    Answer. Yes, I support the Chairman's goal of integrating 
renewable, efficiency and demand response into the interstate 
electricity grid. In that regard, the Commission is undertaking several 
initiatives that would help achieve the Chairman's goal. These include:

   Renewables.--FERC staff is conducting a technical study to 
        determine the appropriate metrics for use in assessing the 
        reliability impact of integrating large amounts of variable 
        renewable power generation into power grids.
   Efficiency.--To support participation of energy efficiency 
        resources in wholesale electricity markets, the Commission has 
        accepted proposals by ISO-New England and PJM to allow energy 
        efficiency resources to receive capacity payments in exchange 
        for taking on capacity obligations in their respective capacity 
        markets.
   FERC recently issued a Smart Grid Policy Statement to 
        prioritize and accelerate the development and adoption of 
        interoperability standards and protocols necessary to ensure 
        smart-grid functionality and interoperability in interstate 
        transmission and in wholesale electricity markets. Such 
        standards are important for unlocking the potential efficiency 
        benefits of the Smart Grid.
   Demand Response.--FERC recently completed a rulemaking 
        ordering the removal of specific barriers to the participation 
        of demand response in the organized wholesale markets (Order 
        No. 719, October 2008). In addition, it directed each RTO and 
        ISO to submit, and each has now submitted, a report identifying 
        and explaining how it will remove any remaining barriers to 
        demand response in cooperation with its stakeholders. Also, the 
        Commission is developing a National Action Plan on demand 
        response, as required by the 2007 Energy Independence and 
        Security Act. This plan will facilitate the development of 
        demand response as a resource and business area through 
        increased communication of its benefits to consumers and 
        stakeholders.

    Going forward, I support Chairman Wellinghoff's recent 
Congressional testimony on reforming national transmission policy, in 
which he called on Congress to enact legislation that will:

   Enable transmission developers to invoke federal authority 
        to site transmission facilities where necessary to interconnect 
        renewable power to the electric transmission grid, after states 
        have had an opportunity to address the proposal first;
   Clarify FERC's authority to ensure that state and regional 
        planning is consistent with national energy goals; and
   Clarify FERC's authority to allocate the costs of 
        transmission infrastructure necessary to accommodate the 
        Nation's renewable energy potential to all load-serving 
        entities within an interconnection, when it is appropriate to 
        do so.
                          transmission siting
    Question 5. Do you believe that transmission should be an asset for 
all generation resources? What is your view of efforts to mandate that 
new transmission be limited to renewable or low-carbon emitting 
resources?
    Answer. I believe that improvements to the interstate electric 
transmission grid can be an asset for all generation resources. New 
transmission facilities clearly are necessary in order to deliver 
renewable and low-carbon emitting resources to the market. At the same 
time, increasing the flexibility and the reliability of the grid, as 
well as reducing congestion, can result in the more efficient use of 
generation from other resources, with resultant benefits to consumers 
and the environment.
    Question 6. Although the provisions are different, S. 1462, the 
American Clean Energy Leadership Act of 2009 reported by this Committee 
and H.R. 2454, the American Clean Energy and Security Act of 2009 
passed by the House of Representatives, would give FERC additional 
authority over transmission siting, including the ability to consider 
applications where a state denies a siting permit.

    a. Do you support providing additional siting authority to FERC?

     Answer. Yes. I believe that there is a national interest in the 
siting of interstate electric transmission facilities that warrants a 
federal role, although I also believe that federal authority should be 
exercised, to the maximum extent possible, with due regard for the 
concerns of the states.

    b. S. 1462 provides FERC with backstop siting authority for those 
projects that are identified in the planning process as High Priority 
National Transmission Projects if a state fails to act within one year 
on the application or if the state rejects that application. Do you 
support this Committee's approach to transmission siting?

    Answer. Yes. While, as a former state regulator, I am confident 
that the states will render appropriate decisions on proposed 
interstate electric transmission facilities in the vast majority of 
cases, the strong national interest in an efficient interstate electric 
transmission grid justifies providing FERC backup authority.

    c. H.R. 2454, as passed by the House, leaves the National Interest 
Electric Transmission Corridor process from the Energy Policy Act of 
2005 largely intact for the Eastern Interconnection. The process for 
federal siting in the Western Interconnection is, like the Senate 
language, tied into the new planning process. Do you believe federal 
siting authority in the area of transmission should be uniform in the 
Eastern and Western Interconnection?

    Answer. As a general matter, a uniform approach to federal 
transmission siting would appear easiest to administer and most likely 
to provide consistent, predictable regulation. That said, I believe 
that there is more than one possible approach to transmission siting 
and that FERC will be able to fulfill whatever role Congress chooses to 
give it.
                      transmission cost-allocation
    Question 7. What, in your opinion, should be the standard or 
principle that governs who should be assessed costs for new 
transmission lines?
    Answer. I do not think a ``cookie-cutter'' approach works when it 
comes to allocating transmission costs. Rather, I believe the 
Commission needs to have the flexibility to apply a cost allocation 
methodology that addresses the circumstances of the case. As a general 
matter, I think that the beneficiaries of a transmission project should 
bear the costs of that project. However, I also think that at times it 
is appropriate to broadly construe who are the beneficiaries of a 
project, e.g., those who benefit from a project that helps meet a 
renewable portfolio standard. I also think it is important when 
allocating costs to balance the state, regional and, if applicable, 
national goals for developing renewable energy and reducing carbon 
emissions, as well as to weigh the reliability and economic benefits 
created by the transmission upgrade.
    Question 8. One issue this Committee really grappled with during 
consideration of S. 1462 was the issue of cost-allocation for new 
transmission projects. The House found this issue to be so complex that 
it did not even address it in H.R. 2454. As initially drafted, the 
transmission legislation allowed for the broad allocation of 
transmission costs--what some deemed the ``socialization'' of costs--to 
make projects more economical. During markup, the Committee adopted an 
amendment offered by Senator Corker, by a vote of 13-9,

    a. Please offer your perspectives on the issue of ``socializing'' 
the costs of building new backbone interstate transmission.
    b. Under this socialization concept, is it true that entities could 
be charged for the costs of building new transmission, even though they 
do not actually use that transmission to move power or receive power?
    c. What would be the basis for such charges? What benefit would an 
entity receive from a new transmission line if it does not use that 
line for transmission service?

    Answer. As a general matter, I believe that the decision on whether 
to allocate transmission costs broadly should be made on a case-by-case 
basis, depending on the circumstances of each case. As noted in my 
response to Question 7 above, I do not think a ``cookie-cutter'' 
approach works when it comes to transmission cost allocation. I also 
believe that a broad allocation of transmission costs would be 
supported by the establishment of national renewable energy or carbon 
policies affecting the need for new transmission lines. While it is 
possible under a broad allocation of costs that entities that will not 
actually use a particular new transmission line could be charged for a 
portion of the costs of building that transmission, I do not believe 
such a result is typical nor is it an outcome I desire. However, I 
believe it is appropriate in certain instances to broadly construe who 
are the beneficiaries of a project, which may extend to include 
entities beyond those who directly use a line. This approach may be 
appropriate in instances where a transmission upgrade includes general 
reliability or economic benefits (e.g., upgrades to relieve a 
transmission constraint on one part of a system can produce reliability 
or economic benefits on other parts of the system), or where there is 
shared responsibility for any national goals or mandates.
                       transmission (incentives)
    Question 9. FERC's authority to provide incentive based rate 
treatment to promote construction of new or upgraded transmission 
facilities to address reliability and accommodate the integration of 
renewable resources can assist transmission investment.

    a. In your opinion, has the Commission given appropriate incentives 
to promote investments in transmission?

    Answer. In general, I believe that the Commission's policy of 
evaluating whether incentives are necessary to encourage new 
transmission investment on a case-by-case basis has enabled the 
Commission to grant incentives in appropriate cases to promote 
investment in needed transmission.

    b. What types of projects do you see as meriting incentive-based 
rate treatment?

    Answer. As a general matter, I find reasonable the Commission's 
current case-by case approach of determining which projects merit 
incentives. First and foremost, the Commission considers whether a 
project ensures reliability or reduces congestion, consistent with 
Section 1241 of the Energy Policy Act of 2005.\2\ In addition, the 
Commission requires an applicant to demonstrate that the total package 
of incentives is tailored to address the demonstrable risks or 
challenges faced by the applicant in undertaking the project. Finally, 
the applicant has to demonstrate under section 205 of the Federal Power 
Act\3\ that the rates it will charge to consumers are just and 
reasonable and that costs were prudently incurred. I believe that 
additional incentives may be appropriate in some cases where the 
project advances important national policy.
---------------------------------------------------------------------------
    \2\ Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594, 
315 and 1283 (2005) (codified at Federal Power Act Sec.  219, 16 U.S.C. 
Sec.  824s (2006)).
    \3\ 16 U.S.C. Sec.  824d (2006).

    c. Are there additional criteria that you think more fairly 
---------------------------------------------------------------------------
determines the merits of a project seeking incentives?

    Answer. I believe the criteria the Commission uses in its current 
analysis is appropriate for determining whether incentives are 
warranted for a transmission project in most cases. However, if 
confirmed, I am open to considering additional criteria for determining 
whether a project merits incentives, particularly when the criteria 
advance national policy goals, such as providing access for renewable 
resources to the interstate grid.
                        transmission (planning)
    Question 10. Chairman Wellinghoff has announced that FERC will be 
conducting several regional technical conferences on transmission 
planning:

    a.Is it your impression that the regional planning process under 
Order 890 is not working well? If so, where is it coming up short of 
expectations?
    b. Are these technical conferences going to explore the possibility 
of creating an interconnection-wide planning process? Do you support 
such an exploration?

    Answer. Commission staff is holding a series of three technical 
conferences on regional transmission planning in Phoenix, Philadelphia 
and Atlanta in September. ``As stated in an August 3, 2009 Commission 
notice, The focus of the 2009 regional technical conferences will be: 
(1) to determine the progress and benefits realized by each 
transmission provider's transmission planning process, obtain customer 
and other stakeholder input, and discuss any areas that may need 
improvement; (2) to examine whether existing transmission planning 
processes adequately consider needs and solutions on a regional or 
interconnection-wide basis to ensure adequate and reliable supplies at 
just and reasonable rates; and (3) to explore whether existing 
processes are sufficient to meet emerging challenges to the 
transmission system, such as the development of inter-regional 
transmission facilities, the integration of large amounts of location-
constrained generation, and the interconnection of distributed energy 
resources.''
    While, as a general matter, I believe that the current planning 
processes are working well, I have an open mind as to where and how 
there may be room for improvement in these processes. I believe that 
the upcoming conferences and the subsequent written comments that will 
be filed with the Commission will help inform my thinking on this 
matter should I be confirmed. Finally, I believe that the Commission, 
the states and market participants benefit from exploring all options, 
including the possibility of creating an interconnection-wide planning 
process.
                  congestion on interconnection queue
    Question 11. The focus on interconnecting renewable resources to 
the transmission grid has created significant back logs in some 
interconnection queues, creating additional congestion and reliability 
concerns. There is concern that FERC's current interconnection policies 
do not adequately address these issues and projects that are not viable 
or not developing as rapidly as others are clogging the queues. How 
should FERC update its current interconnection policies to ensure that 
viable projects addressing the needs of all generating resources, 
including renewable resources, are not stuck in the interconnection 
queues?
    Answer. In Order No. 890, the Commission encouraged transmission 
providers to file queue reform proposals when they encounter queue 
problems. Additionally, the Commission held a technical conference on 
queue reform issues and issued a subsequent order on March 20, 2008, 
giving further guidance on its flexibility to entertain queue reform 
proposals. In the past two years, the Commission has approved major 
queue reform proposals filed by the California ISO (to address 
interconnection queue problems), the Bonneville Power Administration 
(to address transmission queue problems), Northwestern Corporation (to 
address transmission and interconnection queue problems), the Southwest 
Power Pool (to address interconnection queue problems) and the Midwest 
ISO (to address interconnection queue problems). It is my understanding 
that most if not all of these queue reform filings were made to address 
large numbers of requests from renewables that are trying to obtain 
service. Similarly, the Commission has demonstrated flexibility to 
address narrower queue issues by granting waivers of tariff 
requirements. For example, in August 2009 the Commission granted a 
tariff waiver to El Paso Electric Company to allow it to interconnect a 
solar power generator that will assist it in meeting a State of New 
Mexico RPS requirement. Given these actions, I believe that the 
Commission has taken positive steps to assist industry efforts to 
address the queue backlog, but nevertheless, should continue to work 
with the RTOs/ISOs, other planning entities and stakeholders to 
identify additional reform proposals to move critical projects through 
the queue.
                     renewable electricity standard
    Question 12. In a report last year, the California Public Utility 
Commission noted that ``flexible resources such as fossil peaker 
plants, dispatchable demand response, and energy storage will likely be 
needed to provide grid support services for intermittent renewable 
resources.'' According to the CAISO's analysis of a 20% RPS, ``as wind 
generation further increases, the amount of variability will increase 
non-linearly. . .an increase of the RPS to 33% could more than double 
the integration problems and costs.'' As a FERC Commissioner, how would 
you avoid these integration problems and associated costs if Congress 
enacts a federal RES mandate?
    Answer. The amount and type of ``grid support services'' needed to 
accommodate the variability of renewable resources are influenced by 
the Commission approved Reliability Standard. The ``users, owners and 
operators'' of the interconnected electric energy transmission network 
must plan for and provide sufficient ``grid support services'' to at 
least achieve the requirements of those Reliability Standards. As such, 
I would assure the costs are consistent with achieving reliable 
operation by assuring that those Reliability Standards are technically 
sound and necessary for reliability and by assuring that all resources 
and entities are doing their part in supplying the services and not 
requiring or using more services than are appropriate to assure system 
reliability.
                       renewable energy standard
    Question 13. S. 1462, the American Clean Energy Leadership Act of 
2009 reported by this Committee and H.R. 2454, the American Clean 
Energy and Security Act of 2009 passed by the House both contain new 
federal Renewable Electricity Standards. However, S. 1462 tasks the 
Department of Energy with running the new program, while H.R. 2454 
gives this responsibility to FERC. As a FERC candidate, I assume you 
believe FERC is the appropriate agency to manage the RES, correct? If 
so, why do you think FERC is the most effective agency to play this 
role?
    Answer. Yes, I believe that FERC is the appropriate agency to 
manage a federal renewable electricity standard program. Because of 
FERC's experience regulating complicated wholesale energy markets and 
the electric industry, the agency has an unusual combination of skills, 
knowledge, access to data, and expertise that make it well suited to 
effectively manage a transparent national market for the sale or trade 
of renewable energy credits and energy efficiency credits. Furthermore, 
FERC has experience in administering civil penalty provisions to 
enforce the proper functioning of these markets.
                             cybersecurity
    Question 14. S. 1462, as reported by this Committee, provides DOE 
with the authority to deal with cybersecurity threats and FERC with the 
authority to deal with cybersecurity vulnerabilities. Do you support 
this shared responsibility?
    Answer. I take the task of dealing with cyber security threats and 
vulnerabilities very seriously and, if confirmed, will do all I am able 
to make sure FERC meets the nation's needs in whatever cyber security 
responsibilities Congress delegates to the FERC.
    My understanding is that the FERC Chairman supports legislation 
giving FERC authority to require actions to address existing, known 
cyber security threats to the reliability of the bulk power system and 
also authority to require actions to address future cyber or other 
threats to the reliability of the bulk power system if the President or 
his designee determines that a national security threat exists. FERC 
representatives also have pointed out that such authority, if limited 
to the bulk power system, would leave a gap in Federal authority to 
protect facilities that do not come within the definition of bulk power 
system as that term is defined in the Federal Power Act.
    S. 1462 would give the FERC authority to order actions to protect 
critical electric infrastructure against cyber vulnerabilities. 
Critical electric infrastructure is defined to include systems and 
assets used for generation, transmission or distribution of electric 
energy affecting interstate commerce that, as determined by FERC or the 
Secretary of DOE, are so vital that their incapacity or destruction 
would have a debilitating impact on national security, national 
economic security, or national public health or safety. S. 1462 also 
would give the Secretary of Energy authority to require immediate 
actions as needed to protect critical electric infrastructure against 
cyber security threats. If confirmed as a FERC Commissioner and if S. 
1462 is enacted, I would do all I could to see that the FERC implements 
its authority effectively to protect against cyber vulnerabilities.
    Question 15. How can FERC work most effectively with NERC on cyber 
security protection? What guidance or direction should FERC provide to 
NERC on these matters? What input would you seek from industry on these 
issues?
    Answer. The primary means that FERC works with NERC is through the 
FPA Section 215 process. Throughout this process, FERC can direct NERC 
to either create or modify a cybersecurity standard that becomes 
mandatory and enforceable to all users, owners, and operators of the 
bulk power system. However, FERC cannot author or modify these 
standards, but must rely on an industry self-regulatory organization--
the Electric Reliability Organization--to develop and propose standards 
for its approval. (The North American Electric Reliability Corporation, 
or NERC has been certified by FERC as the ERO.) These standards are 
developed through a consensus-based process whereby all users, owners, 
and operators are afforded the opportunity to provide input and then to 
subsequently vote on the draft standard before it is submitted to FERC 
for approval. In this manner, FERC works directly with NERC to provide 
both guidance and directives to create or modify the standards in order 
to make them more effective. When issuing a directive for a new or 
modified cybersecurity standard, FERC can and has employed the 
rulemaking procedure first issuing a preliminary assessment, then a 
notice of proposed rulemaking and lastly a final rule. During the 
process, FERC solicits, considers, and answers the comments of industry 
before issuing a final rule.
    The FPA Section 215 process however, is not adequate to protect 
against cyber or physical security vulnerabilities and threats that 
endanger national security. Because the standards development process 
is open, inclusive, and controlled by stakeholder ballot it is also 
non-confidential, slow, and not necessarily responsive to FERC's 
directives. These factors make it inadequate for use when protecting 
national security.
                               smart grid
    Question 16. Pursuant to the Energy Independence and Security Act 
of 2007 (EISA), FERC is directed to promulgate rules for the smart grid 
once ``consensus'' has been reached by the collaborative on protocols 
being conducted by the Commerce Department's National Institute on 
Standards and Technology:

    a. How do you define ``consensus''? Does it require all involved 
stakeholders to agree to the protocols in question?

    Answer. The standard definition of ``consensus'' is a general 
accord or agreement. To me, this does not imply unanimity. Thus, I do 
not think that all stakeholders involved in NIST's process must be in 
agreement before FERC promulgates rules on smart grid interoperability 
standards. That said, I recognize that the question of consensus around 
smart grid standards is difficult. If confirmed, I will weigh the many 
perspectives involved when determining when or if particular standards 
should be adopted.

    b. Would FERC follow the usual notice and comment process to 
promulgate rules under this provision?

    Answer. I assume that FERC would rely on all the customary 
rulemaking processes when adopting smart grid standards including 
notice and comment procedures, as required by the Administrative 
Procedure Act.

    c. What would be the effect of any such rules? Do you anticipate 
that FERC would require utilities to adopt any standards or measures 
reflected in such rules?

    Answer. According to FERC's Smart Grid Policy Statement issued in 
July, EISA does not give FERC authority to make any smart grid 
standards mandatory or to enforce any standards that are adopted. The 
Policy Statement also notes that EISA does not authorize FERC to direct 
states to implement any particular policies or programs, although 
states could on their own initiative implement and enforce any 
pertinent interoperability standards. If the FERC were to make smart 
grid standards mandatory, it would have to rely on authority that 
already exists in the Federal Power Act. I expect that FERC would weigh 
the importance of particular interoperability standards and the nature 
and scope of its jurisdictional powers when determining whether to 
require utilities to adopt any.

    d. Would any such standards or measures be treated, after 
promulgation, as reliability standards under section 215 of the Federal 
Power Act? For example, would the first level of enforcement of any 
such standards or measures be conducted by NERC, subject to FERC 
oversight? Or would FERC be the first line of oversight and 
enforcement?

    Answer. My understanding is that only those standards filed by NERC 
and approved by FERC under Federal Power Act section 215 would be 
treated as Commission-approved reliability standards and enforced 
pursuant to that provision. As is currently the case, NERC may enforce 
reliability standards, subject to FERC oversight, and the Commission 
may also order compliance with reliability standards and impose 
penalties on its own motion or in response to a complaint. I have not 
yet had the chance to familiarize myself with this area enough to 
suggest options for enforcement of standards that have not been 
approved under section 215.

    e. How would you approach the regulatory effort in Smart Grid areas 
where there are no NIST endorsed standards?

    Answer. In terms of standards development, if confirmed, I might 
pursue informal discussions with NIST about the need for additional 
standards and the status of the development of such standards. In terms 
of rate regulation, the approach taken by the FERC in its Smart Grid 
Policy Statement appears reasonable. There, the Commission determined 
to accept rate filings submitted by public utilities to recover the 
costs of their smart grid deployments during the period of smart grid 
standards development if (among other things) the utilities are able to 
demonstrate that they have made appropriate protections to guard 
against security vulnerabilities and stranded investments. If 
confirmed, I would support this method of guiding utility activity in 
the absence of technical certainty.

    f. Before consensus is reached and a rulemaking is issued, how can 
FERC most effectively coordinate with the states clearly define what is 
under the authority of the states and FERC?

    Answer. As a former state commissioner and member of NARUC, I 
believe that the NARUC/FERC Smart Grid Collaborative is an effective 
body for purposes of discussing and coordinating the boundaries between 
federal and state authority in this area. If confirmed, I would support 
additional collaboration through this body.
    Question 17. On July 16, 2009, FERC released a policy statement 
outlining how the Commission intends to facilitate smart grid 
technologies. In particular, FERC found that ``EISA grants the 
Commission the authority to adopt smart grid standards--such as meter 
communications protocols or standards--that affect all facilities, 
including those that relate to distribution facilities and devices 
deployed at the distribution level.''

    a. Do you agree that standards for smart grid systems are in the 
national interest?

    Answer. Yes, I do believe that the continued development of 
standards for smart grid devices and systems will help to further the 
deployment of technologies that promote the nation's energy 
independence, offer opportunities to reduce the demand for electricity, 
and ensure a reliable and secure electricity infrastructure, among 
other goals.

    b. Do you believe that FERC has the jurisdictional authority to set 
appropriate national smart grid standards at the distribution level? 
What about facilities owned or operated by municipalities and electric 
cooperatives?

    Answer. EISA section 1305(d) provides that FERC shall adopt certain 
interoperability standards and protocols, namely those that ``may be 
necessary to insure smart-grid functionality and interoperability in 
interstate transmission of electric power, and regional and wholesale 
electricity markets.'' I believe this language indicates that FERC is 
authorized to adopt standards that apply throughout the electricity 
system. If this were not the case, then it is difficult to understand 
how interoperability could be assured, as two-way communications will 
cross between the transmission and distribution systems. The specifics 
of who owns or operates particular equipment do not influence the 
necessity for various devices and systems to be able to communicate. In 
order for interoperability standards to be effective, they will need to 
apply to any equipment involved in inter-system communication, as 
appropriate for each application.
    Question 18. Some in the industry would like to accelerate the 
Smart Grid rulemaking process. However, in comments before NARUC this 
past February you stated that Smart Grid should be carried out 
``incrementally'' and that there will have to be ``some type of rate 
impact cushion'' to protect consumers. Please explain.
    Answer. My comments during the NARUC winter meeting were not 
directed toward the interoperability standards development and 
rulemaking process. Rather, these particular comments were directed 
toward the actual deployment of smart grid technologies. Even assuming 
that interoperability standards can be developed more rapidly, the 
question remains as to how rapidly to deploy new smart grid equipment 
that adheres to those standards, including how quickly to replace 
existing equipment and what the cost impact of various replacement 
rates might be on consumers. While it may sometimes be necessary to 
replace current, non-compliant equipment that still has years of 
remaining life with new smart grid equipment in order to achieve 
certain smart grid capabilities, we should not assume that this will 
true for every smart grid application. The costs and benefits of such 
replacement should be considered in each case.
    I believe that the FERC recognized this in its smart grid policy 
statement. It stressed the need for an appropriate migration plan to 
minimize the stranded costs of legacy systems as they are replaced with 
smart grid systems. In other words, the actual deployment of smart grid 
equipment must be carried out in a thoughtful manner that balances the 
costs and benefits to consumers. Accelerating the standards development 
process will certainly help with that effort, but it does not eliminate 
the need for a thoughtful approach to actual smart grid deployment 
decisions.
                               hydropower
    Question 19. Do you consider hydropower to be a renewable resource? 
Please state your views on the hydropower resource and its contribution 
and value to the nation's energy mix.
    Answer. Yes, I believe hydropower is a renewable resource, although 
I believe that limiting its use in meeting a federal renewable energy 
requirement is a decision for the Congress to make. In fact, it is the 
largest renewable resource in the U.S., providing about 8 percent of 
the nation's electricity. Analysts say that capacity can double in 30 
years, rivaling the growth predicted for the nuclear power industry and 
at a fraction of the cost. The Federal Energy Regulatory Commission is 
reviewing more than 30,000 megawatts worth of new projects, equal to a 
third of all existing hydropower capacity and big enough to power the 
New York metropolitan area.
    Question 20. The hydropower industry is undergoing a 
transformation. Recent reports, as well as permit and license 
applications at the Commission, demonstrate that thousands of megawatts 
of this clean, emission-free power can be tapped from a variety of 
sources such as capacity additions and efficiency improvements; pumped 
storage; small hydro; powering existing non-powered dams; and ocean, 
tidal and instream hydrokinetics As the agency responsible for 
permitting and licensing hydropower projects, what can FERC do to 
promote and enact policies supporting hydropower's development 
potential?
    Answer. The FERC has been proactive in assisting in the development 
of all types of hydropower projects to assure the environmentally 
acceptable growth of this renewable resource. FERC has been especially 
active in the hydrokinetic area. Since the Commission's first technical 
conference to discuss hydrokinetic challenges in 2006, staff has 
responded by: (1) discouraging the ``hoarding'' of permits that would 
prevent timely project development; and (2) developing and implementing 
an expedited licensing process for hydrokinetic pilot projects.
    Because the complexity of the regulatory environment for 
hydrokinetic projects, as well as the lack of information regarding 
their environmental effects, were identified as challenges to their 
orderly development, the Commission has worked to reach out to other 
agencies to better define relationships. In 2008, Memoranda of 
Understanding (MOU) to better coordinate siting in state waters were 
signed with both Oregon and Washington. In 2009, the Commission and the 
Department of Interior signed an MOU clarifying the jurisdictional 
responsibilities of each agency and committing to work together to 
streamline the authorization process for projects on the Outer 
Continental Shelf and both staffs have produced a guidance document 
with details on how the agencies will implement the MOU. Commission 
staff has met repeatedly with representatives from the Army Corps of 
Engineers, the U.S. Coast Guard, the U.S. Navy, the U.S. Committee on 
the Marine Transportation System, EPA, and the National Oceanographic 
and Atmospheric Administration, concerning programmatic concerns as 
well as project-specific procedures. The Commission has also 
participated in the international effort to identify environmental 
effects and solutions. FERC and MMS staffs are co-chairing, on behalf 
of the Department of Energy, an International Energy Agency-Ocean 
Energy Systems annex that is working to develop a database of 
environmental information.
    In addition to its extensive work on hydrokinetic policy, the 
Commission has continued to support the development of small and 
incremental hydro. The FERC website contains guidance on small hydro 
development and provides a hotline for applicants. The Commission has 
also published an informative brochure targeting developers of small 
hydro projects.
    Finally, if confirmed, I would continue to promote the Commission 
staff's open-door policy with regard to maintaining a dialogue with the 
hydro industry and other stakeholders. Staff periodically provides 
outreach events in states and for specific projects, meets with 
potential developers, continually updates the public website, and 
recently published a citizens' guide to hydropower licensing. The 
Commission should continue to proactively communicate with the public 
and work to address challenges in new hydropower development. 1.
    Question 21. As we seek to increase renewable power generation, one 
question that has been raised is the ability to integrate variable 
sources of power on the grid. What are your thoughts on these 
integration issues and the role both conventional hydropower and pumped 
storage have to play in addressing them?
    Answer. Conventional hydropower and pumped storage power have 
characteristics that can accommodate the variable characteristics 
associated with renewable resources. They are more flexible than most 
conventional generation in their ability to start quickly, have good 
governor response and can increase their output quickly to accommodate 
rapid increases or decreases in the differences between demand and 
resources for any reason.
    Question 22. This year, FERC signed an MOU with the Minerals 
Management Service setting forth an agreement on a process of lease 
sales, permitting, and licensing of hydrokinetic projects on the Outer 
Continental Shelf. Do you believe any additional follow-up by the 
agencies is necessary in order to ensure that this process works 
smoothly and provides energy developers the certainty needed to move 
forward on these projects? Can FERC do anything more under its 
authority to aid this developing industry?
    Answer. I have not had the opportunity to familiarize myself with 
this matter in great detail. However, if confirmed, I will be open to 
considering proposals to aid the development of the new hydrokinetic 
industry. Also, it is my understanding that the staffs of the MMS and 
FERC have developed a guidance document explaining to the public how 
the two agencies' processes for regulating hydropower projects on the 
Outer Continental shelf will interrelate, and that this document is 
available on the Commission's website.
    Question 23. In Alaska we have nearly 250 sites that hold good 
potential for conventional hydroelectric development. But there appears 
to be growing interest in companies and municipalities to file for 
preliminary licenses that allow holders three years to investigate the 
feasibility of projects. Do you have any feeling whether that period 
should be expanded to perhaps 5 years to give holders more time to 
advance to the second, construction phase for hydro projects. Do you 
have an opinion on whether three years is too long, too short, or about 
right for preliminary licenses? I ask that because of a current filing 
issue before the commission involving a license for a part of the 
potential Thomas Bay hydro project near Petersburg, Alaska.
    Answer. The Federal Power Act (FPA) limits the maximum term of a 
preliminary permit to three years. I understand that many developers of 
conventional and hydrokinetic projects are not able to perfect a 
license application prior to the expiration date of their 3-year 
preliminary permit. This introduces uncertainty for these developers as 
to whether they will be successful in maintaining priority of 
application for a license by obtaining a subsequent preliminary permit 
while they complete their license application. This can have a negative 
effect on the ability to finance the project. The FPA also requires the 
Commission to give preference to municipal entities when granting 
preliminary permits. This fact adds additional uncertainty as to 
whether a private developer will be successful in obtaining a 
subsequent preliminary permit. Under the Commission's Integrated 
Licensing Process (the current default licensing process), it could 
take more than the three years afforded by a preliminary permit to 
perfect an application for license, especially if two years of studies 
are necessary. For that reason, a longer permit term may be warranted.
                            demand response
    Question 24. How would you define the term ``wholesale demand 
response''? Isn't all demand response really retail in nature, since it 
involves reductions in consumption by end users of electricity? If you 
do believe demand response is essentially retail in nature, do you 
think FERC ought to coordinate its demand response policy with those of 
the states?
    Answer. I agree that ultimately most demand response is retail in 
nature. However, it is also the case that a utility that is a wholesale 
buyer of power can reduce its own demand for the energy purchased from 
others. It can do this in at least two ways. One, it can call on its 
own retail customers to reduce their demand, which we would call retail 
demand response. Second, if it has electric generation of its own, it 
can use more of its own generation when this costs less than buying 
from others in the wholesale market. The second way involves no demand 
response by a retail customer. Either way, the utility's action reduces 
its demand for energy in the wholesale market, which is what I call a 
wholesale demand response. The term also is often used for demand 
response offered by both wholesale and retail customers into organized 
ancillary services markets and capacity markets.
    Wholesale demand response can also refer to other actions. If the 
utility is in an RTO or ISO, it may bid that wholesale demand response 
into the RTO's or ISO's organized market and be compensated according 
to the wholesale market rates approved by the FERC. Alternatively, a 
third-party curtailment service provider may aggregate the demand 
responses of that utility's retail customers and bid this demand 
response into the FERC-regulated market. Wholesale demand response may 
also refer to participation by either retail or wholesale power buyers 
in various demand response programs offered by RTOs and ISOs and 
approved by the FERC, including the emergency and economic load 
response programs.
    Regardless of whether all demand response is considered retail in 
nature, I believe that it is important for the Commission to coordinate 
its demand response policies with the states. Because many demand 
response programs can be affected by both state and federal 
jurisdictions, I support the NARUC-FERC Demand Response Collaborative 
established by the FERC and the National Association of Regulatory 
Utility Commissioners as a forum to discuss common demand response 
issues.
    Question 25. When you were the Chairman of the Iowa Utilities Board 
(IUB), the IUB issued some orders granting waivers for a requirement 
that utilities inform electricity customers on the importance of peak 
usage reduction. According to the IUB, ``additional language might 
increase confusion and send a mixed message to customers.''

    a. As a FERC Commissioner, how would you avoid confusing customers 
and educate the public on the benefits of peak demand reduction?

    Answer. During the time I was Chairman, the Iowa Utilities Board 
(IUB) granted to MidAmerican Energy Company (MidAmerican) temporary 
waivers of 199 IAC 20.11, which provides that each electric utility is 
to inform its customers of the significance of reduction in the 
consumption of electricity during hours of peak demand. The IUB found 
that language in the peak alert notice regarding delaying the need to 
build generating facilities or buy additional power could be confusing 
to customers in light of the publicity that surrounded MidAmerican's 
generation investments, which included coal, gas, and wind facilities. 
In each of its orders on the subject, the IUB encouraged MidAmerican to 
continue to educate customers about the benefits of energy efficiency 
programs that conserve energy throughout the year, not just at times of 
peak usage. With each waiver filing made by MidAmerican the company 
included examples of communications to customers regarding various 
energy efficiency programs, including the importance of energy 
efficiency efforts throughout the year. MidAmerican had and continues 
to have an extensive program of energy efficiency measures offered to 
customers that were approved by the IUB in MidAmerican's energy 
efficiency plan, with ongoing monitoring and evaluation efforts by the 
IUB that included periodic reports detailing the success of each 
measure.
    FERC is currently engaged in the development of the National Action 
Plan on Demand Response. According to the statute directing this Plan, 
an important component of the Plan is the identification of 
requirements for implementation of a national communications program 
that includes broad-based customer education and support. I believe a 
principal goal of the communications program should be to educate the 
public about the benefits of peak demand reduction.

    b. How would you avoid sending mixed messages when rolling out new 
technologies and rate designs while also encouraging conservation and 
efficiency?

    Answer. I believe that to meet the future energy needs of the 
American consumer and the U.S. economy while coping with climate change 
at a reasonable cost, we need to use all available cost-effective 
resources, including conservation and energy efficiency together with 
various new technologies and rate designs. If confirmed as a FERC 
commissioner, I would make it clear that these programs are not at odds 
but are complementary and highly necessary for our energy future.

    c. How can FERC encourage consumer behavioral changes and 
technology adoption that could decrease peak demand?

    Answer. In several ways, the FERC has and can in the future 
encourage consumer behavioral changes and technology adoption that 
could decrease peak demand. FERC has been engaged for several years in 
efforts to remove barriers to demand response in the markets it 
regulates. One way to encourage customer behavioral changes and 
technology adoption is to send accurate price signals. In its recent 
Order No. 719, FERC took a number of steps to ensure that the wholesale 
prices accurately reflect the value of energy during periods of 
operating reserve shortages. FERC has also called for comparability 
between generation and demand resources in the reliability standards it 
has approved. Also, at the direction of Congress, it produces a 
comprehensive informational report each year on demand response and 
advanced metering. Recently, also at the direction of Congress, the 
FERC issued a National Assessment of Demand Response Potential and is 
now in the process of producing a National Action Plan on Demand 
Response. The Plan is required by law to identify actions to achieve 
demand response goals by (1) identifying requirements for technical 
assistance to States to allow them to maximize the amount of demand 
response resources that can be developed and deployed; (2) identifying 
requirements for implementation of a national communications program 
that includes broad-based customer education and support; and (3) 
identifying analytical tools, information, model regulatory provisions, 
model contracts, and other support materials for use by customers, 
States, utilities and demand response providers.
                             climate change
    Question 26. The House-passed climate legislation would give FERC 
the oversight responsibility for trading in greenhouse gas emission 
allowances. Do you support this provision?

    a. If so, why do you think FERC is the appropriate and most 
effective agency to play this role?
    b. Will FERC require a significant increase in personnel and 
spending authority to oversee and regulate the allowance trading 
markets?

    Answer. FERC has the benefit of many years of experience and 
expertise in regulating complex markets and if given this 
responsibility would carry it out effectively. Whichever agency is 
delegated this authority will need significant personnel and spending 
authority to oversee and regulate the allowance-trading market.
    Question 27. In comments before NARUC this past February you stated 
that there is a ``tremendous disconnect between the ability to achieve 
carbon reduction and the means to do it.'' You further cautioned that 
we ``shouldn't put an emphasis on carbon reduction at the expense of 
the customer's bill.'' Please elaborate.
    Answer. I believe there is a lot of misunderstanding about the 
current technology, our capacity to fully integrate renewable energy 
onto the grid, our ability to sequester carbon, our ability to store 
energy and more. These and other technological possibilities offer 
great hope to achieving long term carbon reduction but they will take 
varying degrees of time and investment to achieve full utilization. I 
believe there is still a disconnect for a lot of people in 
understanding what is possible now and what will be possible in the 
near and long term future. I am optimistic in America's ability to meet 
the challenge of reducing our carbon output to sustainable levels. We 
also have to be vigilant at minimizing the costs to consumers while at 
the same time setting high but achievable goals, adequately funding 
research and development of new carbon reduction technologies, and 
maximizing efficiencies through such efforts as good transmission 
planning, energy conservation, demand response, energy efficiency and 
more.
                          market manipulation
    Question 28. S. 1462, as reported by this Committee, provides 
``cease and desist'' authority to FERC to invalidate a transaction if 
it determines that an entity is manipulating, has manipulated, or is 
attempting to manipulate the wholesale electric energy markets. In some 
cases, the Commission can take such action without providing prior 
notice and an opportunity for hearing. There is concern that providing 
FERC with such broad, unrestrained authority could deny due process and 
chill competitive electricity markets. Do you believe FERC needs such 
new authority or is the current authority sufficient to deal with 
energy market manipulation?
    Answer. Whatever authority Congress delegates to FERC to enforce a 
fair wholesale electric Energy market should be exercised with great 
respect for due process and recognition of the impact it may have on 
the competitive electricity market. I believe the cease and desist 
authority being contemplated is a valuable tool to assist the 
Commission in ensuring that markets are well-functioning and free of 
market manipulation. FERC's current authority to prohibit market 
manipulation does not currently enable FERC to prevent a suspected 
manipulator from dissipating assets during the pendency of an 
investigation. FERC's inability to do that may ultimately result in the 
manipulator escaping with its gains.
                           organized markets
    Question 29. What is the appropriate path forward with respect to 
organized and bilateral markets? Can and should they co-exist or should 
all utilities ultimately be in organized markets?
    Answer. I believe that organized and bilateral markets can and 
should co-exist. As long as FERC continues to work to improve 
competition in both organized and bilateral markets, through such 
efforts as open-access transmission tariff reform, market-based rate 
reform, and its Competition Final Rule (Order No. 719), there is no 
reason why FERC should attempt to impose a single market structure on 
all regions. Both organized and bilateral market structures are capable 
of supporting competitive markets.
    Question 30. Do you think that FERC's oversight of electricity 
markets is sufficient to ensure that the wholesale electric rates meet 
the ``just and reasonable standard'' of the Federal Power Act? If so, 
what is the basis for this conclusion? If not, how could FERC do a 
better job?
    Answer. Yes, I believe that FERC's oversight of electricity markets 
is sufficient to ensure just and reasonable wholesale electric rates. 
In addition to recently strengthening competition in the electric power 
markets through its Competition Final Rule issued in 2008 (Order No. 
719) and its 2007 order to prevent undue discrimination and preference 
in transmission service (Order No. 890), FERC now more closely monitors 
these markets for anomalous market behavior.
    Question 31. Do you think that, based on currently available data, 
the wholesale electricity markets operated by Regional Transmission 
Organizations (RTOs) are achieving net benefits for consumers? If so, 
what is the basis for this conclusion? If not, are there actions, other 
than those identified in Order 719, which FERC can take to better 
protect consumers in the RTO markets?
    Answer. I have not had the opportunity to work directly with all 
the RTOs, therefore I am currently unable to speak authoritatively 
about the benefits of each. However, I have had the opportunity to work 
with the Midwest ISO. Having served on the Board of Directors of the 
Organization of Midwest ISO States from 2005 through January of 2009, I 
am familiar with the benefits achieved through the Midwest ISO 
operations. I would like to limit my comments to their benefits, but I 
assume that other RTOs can demonstrate similar benefits (however they 
may be limited by other factors such as the scale of the organization).
    For example performance measures for Midwest ISO would indicate the 
following:

          1. Improved reliability through reductions in both the 
        average size of outages and the average duration of outages. 
        The systems developed by the Midwest ISO exceed the North 
        American Electric Company (NERC) standards.
          2. Increased economic efficiency in the commitment of 
        generation units and dispatch of energy by combining 23 
        individual regions into one single region.
          3. Improved dispatch of support services such as regulation, 
        operating reserves and supplemental reserves. The formation of 
        the Midwest ISO along with the implementation of an Ancillary 
        Services Market allowed the Midwest ISO to improve the dispatch 
        of these services.
          4. Investment in generation has been deferred because the 
        scale and geographic diversity of the Midwest ISO has enabled 
        the reserve margin to be about 2.7% less than what it would 
        have been without the Midwest ISO.
          5. More efficient regional transmission planning has been 
        implemented.

    Question 32. Last September, the Government Accountability Office 
released a study finding, among other things, that FERC ``has not 
conducted an empirical analysis to measure whether RTOs have achieved 
these expected benefits or how RTOs or restructuring efforts more 
generally have affected consumer electricity prices, costs of 
production, or infrastructure investment. . .'' FERC has since reported 
that it is working on developing standardized performance measures for 
RTOs. What do you see as the most critical measures of success for 
these markets?
    Answer. While the standardized measures are under development, in 
my opinion, the most critical measures of success for these markets are 
as follows: (1) customer benefits, in particular reduced customer 
costs; (2) reliability, specifically long-term reliability as measured 
by increasing capacity available for peak load conditions and short-
term reliability as measured by no violations of NERC or regional 
reliability standards and success in implementing tools such as 
security constrained economic dispatch, security constrained unit 
commitment, state estimators and rapid response protocols for system 
emergencies; (3) improved system efficiency and diversity as measured 
by increased transmission flows, efficient dispatch, increased plant 
availability, and increased transmission capacity additions, 
interconnections and MW of renewable and demand resources added; and 
(4) increased competition as measured by new resources and new 
facilities being added to RTO markets. If confirmed, I look forward to 
reviewing what is developed by the FERC staff and working with my 
colleagues to develop effective measures.
    Question 33. Do you think the indicators provided by the RTO market 
monitors in their annual reports are adequate measures of the 
competitiveness of the wholesale electricity markets? If not, what 
improvements could be made to these reports?
    Answer. Yes, I think that the indicators used by the RTO market 
monitors are adequate for evaluating RTO/ISO market competitiveness. 
The RTO market monitors provide extensive data and analysis on the 
competitiveness of wholesale electric markets in their annual reports, 
by looking at, for example, ease of entry for new resources, price 
trends, transmission additions, and the liquidity of the market, among 
many other indicators.
    Question 34. Do you think that there is an adequate level of 
transparency in the pricing and other relevant data from the 
electricity markets, especially those operated by RTOs?
    Answer. FERC has made efforts to increase the transparency of 
electricity markets including RTO markets. Currently, prices for all 
power sales within the Commission's jurisdiction are reported quarterly 
to the Commission and available to the public, and all RTOs post 
location-specific prices for the public on an hourly basis. FERC has 
also recently improved transparency in regional markets through reforms 
to its Open Access Transmission Tariff. FERC is also in the process of 
implementing Order No. 719 to increase transparency with respect to 
demand response and long-term power contracting. Whether these efforts 
are providing an adequate level of transparency, if confirmed, is a 
topic I will consider closely as I become more familiar with the 
numerous data resources available.
    Question 35. What is your assessment of the success of pricing 
incentives in the RTO markets, such as locational pricing 
differentials, to spur infrastructure development and address 
transmission congestion?
    Answer. The organized energy markets in most RTOs rely on 
Locational Marginal Pricing (or LMP), which is a system that allows 
prices to vary at different locations and at different times to reflect 
the market conditions and costs of meeting demand in those areas. The 
LMP system sends price signals to market participants regarding where 
generation resources are most needed, where reductions in demand are 
most valuable, and where transmission constraints are the most severe. 
The transmission planning processes employed by the RTOs considers the 
congestion price signals in developing transmission expansion plans. Of 
course, the ability to pursue upgrades identified in those transmission 
expansion plans would require a number of regulatory approvals in the 
states that they traverse. So, while the price signals sent by the 
RTOs' markets are an important factor in encouraging efficient 
transmission expansions where they are needed, they alone are not 
sufficient to develop infrastructure; other factors also are important.
                            ferc authorities
    Question 36. S. 1462, the American Clean Energy Leadership Act of 
2009 reported by this Committee and H.R. 2454, the American Clean 
Energy and Security Act of 2009 passed by the House of Representatives, 
provide FERC with extensive new authority in areas such as renewables, 
energy efficiency, demand-side management, retail consumer interests 
and climate change. If confirmed, how do you intend to reach out to the 
states to help promote regulatory certainty?
    Answer. As a former President of the Organization of MISO States 
and previously active member of NARUC, I understand the value of 
federal coordination with states to promote regulatory certainty. The 
recent Smart Grid Collaborative, a joint effort between NARUC and FERC 
to develop the criteria for establishing preconditions under which 
Smart Grid projects would be funded through the American Recovery and 
Reinvestment Act of 2009, is an excellent model of a collaborative 
effort between the federal government and the states that will help to 
provide regulatory certainty. If confirmed, I will get involved in or 
encourage additional collaborative efforts, communications, and 
outreach projects with states for any new areas of FERC authority.
                     ocean marine renewable energy
    Question 37. Another hydro power issue is how to proceed to 
encourage the development of marine hydrokinetic power. FERC and the 
Minerals Management Service signed an MOU this spring to work out 
permitting issues between your two agencies for ocean wave, tidal and 
current projects. Alaska, of course, has dozens of great sites for such 
projects. If you are aware of the terms of the agreement, what is your 
opinion about it? Will it work in your view to permit enough permitting 
and siting certainty to allow projects to be financed and proceed in a 
timely manner? If not, what would you as a commission like to see done 
to further marine renewable energy in the future?
    Answer. I am not familiar with the details of the document, but am 
generally aware that it reflects an agreement between Chairman 
Wellinghoff and Secretary of the Interior Salazar that the Commission 
and the Minerals Management Service can without conflict exercise their 
respective responsibilities with respect to the development of 
appropriate hydrokinetic projects on the Outer Continental Shelf. I 
support this outcome. If confirmed, I will become more familiar with 
this issue.
                      alaska gas pipeline project
    Question 38. The biggest potential energy project on the horizon in 
the country is construction of an Alaska natural gas pipeline project. 
FERC back in 2005 issued an order to permit in-state use of the gas, 
offtake points, and to deal with pipeline expansion issues. At this 
time I don't see the need for additional FERC rulings on those issues. 
But for this project to proceed, FERC will have to devote considerable 
staff and effort to rapidly processing any application for a line 
certificate, perhaps after next year's open season periods end. Do you 
commit as a commissioner to do everything possible to complete timely 
review of a certificate request for any project that successfully 
finishes an open season process? Do you have any ideas on any changes 
Congress should be making either in the loan guarantee program or in a 
regulatory way to further the chances for this project?
    Answer. I commit to doing whatever I can to ensure the completion 
of timely review of any application for an Alaska natural gas 
transportation project that is filed with the Commission. It is my 
understanding that in the Alaska Natural Gas Pipeline Act of 2004, 
Congress mandated that FERC issue a final environmental impact 
statement (EIS) no later than 18 months after receipt of a complete 
application for an Alaska natural gas pipeline project, and that FERC 
issue a final order no later than 60 days after issuance of the EIS. I 
am confident that FERC and its staff will make every effort to meet 
these deadlines.
                                  lng
    Question 39. On January 15th of this year FERC issued a final 
environmental impact statement for an application to build a liquefied 
natural gas facility in Sparrows Point, Maryland. This decision came 
nearly 2 years after the application was filed with FERC. The State of 
Maryland has appealed this decision and requested a rehearing of the 
decision. What is your position on matters of upholding or overturning 
prior FERC decisions such as this one?
    Answer. If confirmed as a Commissioner, my obligation would be to 
decide all matters based on the record before the Commission, 
applicable legal standards, and appropriate policy considerations. I 
would vote to affirm or overturn decisions made prior to my joining the 
Commission based on an objective consideration of these matters.
    Question 40. Since the passage of the Energy Policy Act of 2005, 
only one LNG application has been granted a final environmental impact 
statement under the rules promulgated as a result of this law. The 
EPACT 2005 process was designed to front load the design and review of 
facility plans. This committee and the Congress also recognized the 
need to expedite review of those applications. Since that exhaustive 
process has taken over 2 years to date and is currently pending 
rehearing, what is your view on a reasonable duration of time before a 
rehearing should be completed?
    Answer. Because the time needed for the Commission to act on 
rehearing in a given case will depend on the extent and the complexity 
of the matters raised on rehearing, and because I do not yet have 
extensive experience with the Commission's review process, I cannot 
suggest a generally applicable deadline for the Commission to act on 
requests for rehearing. However, I do believe that the Commission 
should act as quickly as possible, and it is my understanding that the 
Commission's policy is to do that.
      Responses of John R. Norris to Questions From Senator Wyden
    Question 1. The energy bill recently reported out of the Senate 
Committee on Energy and Natural Resources expands FERC's authority with 
regard to the nation's electric grid. Given your experience in leading 
the utilities in the State of Iowa to modernize the electric 
infrastructure and to build additional sources of renewable energy, 
what do you believe FERC's role should be in fostering the 
modernization of the electric grid by the power utilities?
    Answer. FERC should take a leadership role to foster modernization 
of the electric grid in the following ways: (1) create better federal/
state/industry coordination to implement new energy efficient 
technologies, (2) accommodate the transmission needs of all generation 
types, including renewables, (3) encourage additional demand-side 
management programs, and (4) continue to emphasize planning to enable 
expansion of the interstate transmission system.
    Question 2. What will you do as FERC Commissioner to encourage the 
use of innovative solutions for electric grid improvements and 
modernization? Specifically how will you promote the use of storage 
technologies to integrate intermittent sources of renewable energy, 
such as wind and solar, into the grid; alleviate the need for 
additional generation through peak shaving; and minimize the need for 
additional transmission capacity?
    Answer. As you mention, there are many potential benefits of bulk 
energy storage, from supporting the integration of intermittent 
renewable generation to enabling a more efficient use of existing 
generation and transmission facilities. It is important to recognize, 
moreover, that there is a wide array of storage technologies that 
perform different functions and, as a result, may be able to provide 
existing services in a better way. For example, there is growing 
evidence through pilot projects that fly-wheel energy storage devices 
and utility-scale batteries may be better suited than traditional 
generation to provide certain ancillary services like frequency 
regulation. However, most current regulatory practices and structures 
were designed during a time when these new storage technologies were 
simply not available. As a FERC Commissioner I will strive to identify 
and seek to address barriers that unduly hamper the development of new 
storage capacity, in all of its useful forms. Specifically, I will 
support reforms that enable all resources, whether supply-side or 
demand-side, to participate on a comparable basis in the energy markets 
regulated by the Commission.
    Question 3. As energy storage systems are added into the electric 
grid infrastructures, some issues have arisen as to whether the costs 
of these storage systems can be included in transmission rates or 
whether they should be treated as generation assets. Do you believe 
that the costs of storage systems should be allowed as part of the 
electric grid infrastructure? If so, under what circumstances or 
conditions should they be allowed?
    Answer. Given the variety of storage systems, such as short-term 
flywheel systems and long-term pumped storage systems and their 
different possible uses, I believe that storage systems need to be 
evaluated on a case-by-case basis when determining whether they should 
be included in transmission rates or be treated as generation assets. 
If confirmed, I will pay close attention to the complicated issue of 
how costs are allocated for storage systems used to sell electricity in 
energy markets.
    Question 4. FERC recently issued a report assessing the potential 
for demand-response to reduce peak demand (A National Assessment of 
Demand Response Potential, FERC Staff Report, June, 2009). The only new 
technologies that were considered in the report were advanced metering 
and direct load control. Based on this report, FERC must now create a 
National Action Plan.
    Answer. The FERC staff report, National Assessment of Demand 
Response Potential (Assessment), analyzed quantitatively the potential 
for realizing the nation's demand response potential using advanced 
metering and direct load control. It did recognize, in Chapter IV, that 
technologies other than advanced metering and direct load control may 
have significant potential to reduce demand. These technologies include 
emerging smart grid technologies, distributed energy resources, 
targeted energy efficiency programs, and technology-enabled demand 
response programs with the capability of providing ancillary services 
in wholesale markets (and increasing electric system flexibility to 
help accommodate variable resources such as wind generation.) However, 
the demand response achievable with these other technologies was not 
assessed quantitatively because there was not sufficient experience 
with these resources to estimate their potential reliably. However, the 
Commission has considered and should continue to consider opportunities 
to allow these other technologies to prove themselves.
    Question 5. Since the scope of this report was somewhat limited, 
thus limiting its range of solutions, what will you do as a 
Commissioner to ensure that the National Action Plan, which will set 
the course of action for the next 5 to 10 years, has a more forward-
looking scope?
    Answer. If confirmed as a FERC Commissioner, I will pursue 
opportunities to allow a broad range of demand response technologies to 
prove themselves. Nothing in section 529 of the Energy Independence and 
Security Act of 2007 (EISA) requires the Commission to limit the scope 
of its National Action Plan on Demand Response to the technologies 
identified in the National Assessment. Further, in forming the Action 
Plan, the Commission should--and I understand has already begun to--
solicit and accept input from a broad range of industry stakeholders, 
including proponents of all demand response technologies. If confirmed, 
I would support that approach.
    Question 6. What will you do to ensure that the Demand Response 
National Action Plan makes recommendations that new technologies be 
considered for their potential in alleviating peak demand as well as 
providing increased reliability, specifically what will you do as a 
FERC Commissioner to include renewable sources of energy and storage 
systems in solutions that reduce the peak demand for electricity?
    Answer. If confirmed as a Commissioner, I will ensure that the 
recommendations of the Demand Response National Action Plan consider 
new technologies--such as smart grid applications, electric storage 
technologies, and energy efficiency programs--based on their potential 
to reduce peak demand in a cost-effective manner. Reliability is 
paramount, however, as the costs to the nation of a major blackout are 
huge and long-lasting, so that every technology should be required to 
be fully tested, cybersecure, and maintain its performance throughout a 
reasonable performance life in a reliable manner. If confirmed, I will 
endeavor to provide consumers with the opportunity to select from a 
full range of resources that best meet their overall goals and energy 
needs by ensuring that all resources, including renewable sources of 
energy and storage systems, are able to be considered if they are 
reliable.
    Question 7. Although statutorily authorized to establish an Office 
of Public Participation (16 USC Sec.  825q-1), FERC has never 
established such an office. This office would coordinate assistance to 
the public for people who wish to intervene or participate in matters 
before the Commission. Because the office would also provide 
compensation for fees of attorneys and expert witnesses, it would serve 
to let other voices be heard. Do you agree that FERC should establish 
the Office of Public Participation?
    Answer. Participation by the public and stakeholders is a critical 
part of the FERC decision-making process, and is consistent with FERC's 
responsibility under the Federal Power Act to protect the public 
interest. If confirmed, I will look into ways, including the possible 
establishment of the Office of Public Participation, to ensure that the 
public has sufficient and appropriate participation in FERC processes.
    Question 8. If confirmed, what steps will you take to help ensure 
that the office is created and properly staffed?
    Answer. If confirmed, I will carefully evaluate whether the Office 
of Public Participation should be established and, if so, how that 
office should be structured and staffed to provide effective assistance 
to interests that may be underrepresented before the Commission. 
Specifically, if the Office of Public Participation is established, I 
will examine whether the office staff should include attorneys, 
technical and financial analysts, and/or engineers.
    Question 9. What additional statutory authority, if any, do you 
believe the Commission would require to ensure that all of FERC's 
jurisdictional responsibilities for electricity, natural gas, and oil 
pipelines were covered by the Office of Public Participation?
    Answer. Participation by the public and stakeholders is a key part 
of the FERC decision making process. If confirmed, I will look into 
whether FERC has the necessary authorities to ensure sufficient and 
appropriate participation by the public in the FERC process.
    Question 10. FERC insists, as a matter of policy, that even when 
multiple natural gas projects are being proposed to serve the same 
market it need not determine which of the projects are actually needed 
to serve the market, or which would best serve that market. In Oregon, 
three separate LNG terminals and two pipelines from the Rocky Mountains 
have all been proposed and are currently being permitted. The quantity 
of gas proposed to be delivered by these projects dwarfs the actual 
amount of gas that can (1) be used in the Northwest, and (2) can even 
be transported in the existing interstate pipelines to which they will 
connect. Why shouldn't FERC look at which projects are truly needed, 
and which will, in fact, best serve that market?
    Answer. The projects in Oregon that you refer to are currently 
pending before FERC, so it would not be appropriate for me to comment 
on those specific projects. To date, the Commission has taken the 
position that its role is to determine whether a proposal is 
environmentally acceptable, safe and secure, and to approve only those 
projects which are found to be in the public interest. Ultimately, the 
market and the customers of that project will decide whether the 
projects are commercially viable enough to move forward. While I agree 
generally with the notion that markets largely will decide which of 
several projects might ultimately be built, I also believe that the 
Commission could take steps to better understand the cumulative effects 
of multiple projects and factor that understanding into its decision 
process.
    Question 11. In response to questions for the record during the 
Committee's 2005 hearing on LNG permitting, the former Director of the 
Office of Energy Projects testified that ``The Commission is supportive 
of competition within the energy industry and of the idea that the 
market drives infrastructure development. Past experience, particularly 
since the restructuring on the gas industry following Order No. 636, 
has demonstrated that market forces can serve the same end as a 
competitive or ``Ashbacker'' hearing. Where the Commission approves 
multiple projects to serve a similar market, only an economically 
viable project will actually be built, i.e., only where customer 
commitments ensure new service will fulfill a genuine need.'' This 
continues to be the Commission's policy. How is this policy consistent 
with the obligation of the Commission to make an affirmative finding of 
public convenience and necessity under the Natural Gas Act? Do you 
agree with this policy that competitive or ``Ashbacker'' hearings need 
never be conducted where multiple projects are proposed for a given 
market? Are there circumstances where you believe that it is ever 
appropriate for the Commission to conduct competitive or ``Ashbacker'' 
hearings where multiple projects are being proposed to serve a single 
market? If so, when?
    Answer. I do believe that the market can be an effective arbiter in 
selecting between competing energy infrastructure projects. Consumers 
are in the best position to decide whether, and under what conditions, 
they will support a given project. I do not think that it is 
necessarily inconsistent with the Commission's obligation to make a 
finding that a proposed project is consistent with the public 
convenience and necessity if, after ensuring that proposed projects 
meet exacting safety and environmental standards, the Commission allows 
demand to determine whether one or more competing projects has the 
public support, and thus the financial wherewithal, to be built. That 
said, I do not understand it to be the Commission's policy that an 
Ashbacker hearing is never appropriate, nor do I believe that to be the 
case. Rather, I think that Ashbacker hearings are one of the regulatory 
tools that the Commission may elect to use. I cannot identify the 
specific circumstances in which I would deem an Ashbacker hearing to be 
the best method for dealing with competing energy infrastructure 
projects, but I will have an open mind on the matter.
     Responses of John R. Norris to Questions From Senator Barrasso
    The Energy and Natural Resources Committee approved legislation 
that expands FERC's eminent domain authority. It allows FERC to 
override State rejections of proposed transmission lines.
    Question 1. Do you believe FERC should have the authority to 
override a State rejection of a transmission proposal?
    Answer. Siting of interstate transmission lines is often a very 
contentious process at the state level. There are a variety of reasons 
for a state's rejection of a transmission proposal including, but not 
limited to, local opposition and parochial interests. In the Energy 
Policy Act of 2005 Congress determined that it is in the national 
interest to site, build, and maintain a robust interstate electric 
transmission system to ensure a secure and reliable supply of 
electricity and integrate renewable energy. FERC has the necessary 
expertise to review and make national public interest determinations 
for electric transmission projects, since the Commission has extensive 
experience successfully siting linear infrastructure projects under the 
Natural Gas Act.
    In the case of transmission siting, interstate benefits must be 
carefully considered when siting decisions are made. These include 
consideration of whether the line is needed to relieve congestion, 
improve system reliability, access renewable generation, or meet 
growing energy demand. Some states will not (or cannot) take into 
account these regional or national benefits when making a siting 
decision. Accordingly, it is quite probable that a single state could 
prevent construction of a needed interstate transmission project by 
simply denying approval within its state borders.
    Authority to override a state's rejection of a transmission 
proposal does not guarantee that a particular proposal would be 
approved by FERC. The Commission could also deny the same project. 
Under FERC's siting authority and permit review process, consideration 
of an application before the Commission requires a careful evaluation 
of all stakeholders' interests and concerns, including the record 
supporting a state's public interest determination.
    Question 2. Do you believe Washington is better qualified to make 
transmission siting decisions than State and local officials?
    Answer. States are best qualified to make certain transmission 
siting decisions particularly for intrastate proposals, and it should 
be the Commission's preference that states retain primacy in siting 
such transmission projects. However, it has proven to be a more 
daunting challenge for states to make siting decisions on interstate 
transmission facilities due to opposition or lack of statutory 
authority to consider regional or national benefits when making public 
interest determinations. In those instances, FERC's expertise and 
experience in making national public interest determinations could 
better facilitate the siting of needed interstate transmission 
projects.
     Responses of John R. Norris to Questions From Senator Shaheen
    I was pleased to read in your testimony about your commitment to 
containing costs in order to protect consumers. I wholeheartedly agree 
with this goal. As we discussed in our meeting earlier this week, a key 
issue before the FERC regards the approval of favorable return on 
equity incentives when constructing new transmission lines.
    While I agree that improvements to our nation's transmission system 
are necessary to ensure reliability, connect renewable energy and make 
smart grid improvements; I am troubled by what some see as a prolific 
use of rate incentives by the FERC for new transmission projects.
    In EPAct 2005, Congress authorized the FERC to establish higher 
incentive-based rate treatments for new transmission. FERC finalized 
its rule to provide for these incentive rates to encourage improvements 
and investments in new transmission in July, 2006.
    FERC has long had the authority to regulate the rates, terms, and 
conditions of wholesale electricity transmission. Typically, FERC has 
approved an average rate of return of 11% on equity for utilities' 
investments in transmission and generation. However, under FERC's 
incentive rate making rules, utilities have been able to receive return 
on equity rates approaching 14 percent. These incentives are borne 
directly by ratepayers.
    Question 1. How risky do you think it is to build new transmission 
lines?
    Answer. The risks associated with building a new transmission line 
vary depending on the specifics of a project and in some cases the 
risks can be substantial. This is the reason for the Commission's 
current approach of reviewing requests for incentives on a case-by-case 
basis.
    Generally speaking, I think incentive rates implies the need for a 
greater return to reflect a higher than average investment risk. I 
believe it would be my responsibility as a member of the Commission to 
see that any incentive rate award is justified by a showing of a higher 
than average risk associated with a specific transmission project.
    Question 2. From an investment standpoint, do you think 
transmission facilities are good investments?
    Answer. As a general matter, I believe that transmission projects 
can be good investments. However, a decision whether or not to 
undertake investment in a particular project depends on many factors, 
and is highly dependent upon the specific facts and circumstances of 
each individual transmission project.
    Question 3. In your view, is there a lack of investment capital for 
new transmission?
    Answer. I believe that there is a continued need for investment in 
new transmission. Historically, investment in transmission facilities 
in real dollar terms has declined significantly in the past few 
decades. This decline in transmission investment in real dollars has 
occurred while the electric load using the Nation's grid has increased. 
Further, the aging infrastructure has to be updated to provide reliable 
and affordable service, to accommodate increased consumer demand, and 
accommodate large amounts of renewable generation.
    Given the current investment climate, utilities may cancel or defer 
spending on transmission projects because they need to access very 
large amounts of capital at a higher cost, in addition to facing 
tougher competition in the debt and equity markets for limited capital 
over the next several years.
    Question 4. Would you agree that once siting, permitting and 
regulatory approval have been completed, the risks for most 
transmission projects is relatively low?
    Answer. Even though siting, permitting and regulatory approvals may 
reduce the risk faced by transmission projects, there are several other 
types of risks and challenges that a transmission project faces that 
will continue to exist.
    Question 5. Do you think the return on equity incentives should be 
tied to the risks of getting the transmission facility approved?
    Answer. As discussed in my previous responses, the risk of 
regulatory approval should be one, but not the only, factor considered 
when determining a request for return on equity incentives. The 
Commission's case-by-case approach enables it to determine the 
appropriate return on equity commensurate with the risks and challenges 
of a particular project. If confirmed, I am committed to weighing all 
relevant factors when examining the risks associated with a 
transmission project.
    Question 6. In your view, what are the risks that would justify 
additional incentives for owners of new transmission facilities?
    Answer. In my view projects that advance national policy goals, 
such as providing access for renewable resources to the interstate 
grid, and face higher than normal risks and challenges may warrant 
additional incentives for transmission facilities. I believe the 
Commission's existing case-by-case approach enables it to review the 
specific facts and circumstances of an individual project in order to 
determine whether additional incentives are warranted.
    Please also see my answer to question 3 above.
    Question 7. Section 1241 of EPAct 2005 authorized FERC to establish 
incentive-based rates for new transmission facilities ``for the purpose 
of benefiting consumers by ensuring reliability and reducing the cost 
of delivered power by reducing transmission congestion.'' Would you 
agree that unless a transmission project ensures reliability or reduces 
congestion, there is no basis for a rate incentive?
    Answer. In addition to Section 1241 of the Energy Policy Act of 
2005, which you cite, the Commission has broad authority under section 
205 of the Federal Power Act to encourage investment in transmission 
through the application of incentive pricing for projects that may 
provide benefits to consumers other than ensuring reliability and 
reducing the cost of delivered power by reducing transmission 
congestion. For example, an entity is not precluded from seeking 
incentives from the Commission for transmission facilities to 
interconnect large amounts of renewable power to the transmission grid. 
If confirmed, I will ensure that any actions are well grounded in 
authorities granted to FERC by Congress.
    Question 8. In one recent case, the FERC approved a return on 
equity of 14.3 percent for a proposed transmission project (Allegheny 
and AEP's PATH project). In her partial dissent, Commissioner Kelly 
noted that FERC made the determination about the 14.3 percent return on 
equity without holding an evidentiary hearing, which has been 
traditionally been FERC's practice. Commissioner Kelly stated by 
skipping the evidentiary hearing and making a determination on the 
return on equity directly in the order, it ``reinforces the notion that 
the Commission has adopted an ad hoc approach to granting transmission 
incentives in general.''
    Would you agree that evidentiary hearings, where parties have the 
opportunity for cross-examination, rebuttal, and oral argument, are 
essential elements when making return of equity decisions?
    Answer. Evidentiary hearings are one of the ways the Commission can 
choose to decide the return of equity for an applicant. The issue of 
whether a case needs to be set for evidentiary hearing depends on the 
adequacy of the record before the Commission and whether the Commission 
has sufficient facts to decide the case. If the Commission has a 
sufficient record upon which to make a reasoned decision, there may not 
be need to obtain additional information or hold a hearing. If 
confirmed, I would support an evidentiary hearing in any case where I 
felt such a hearing is necessary to receive needed information in order 
to reach a reasonable and well informed decision.

          A compounding factor for me is the escalating costs of 
        transmission projects. One such project is the Middletown to 
        Norwalk, Connecticut transmission project. In 2004, the project 
        was estimated to cost $690 million. That figure now stands in 
        excess of $1.3 billion. In New England, we share in 
        transmission upgrades regardless of where the project is built, 
        so these cost escalations have a direct impact on New Hampshire 
        rate payers.
          For this project, FERC granted a 50 basis point incentive for 
        the underground portion of the project for using advanced 
        technologies. However, at this point the project was well into 
        the construction phase and there was little doubt the project 
        would not be built without the additional incentives. 
        Additionally, Connecticut law requires that underground 
        transmission lines must be used to the maximum extent possible 
        and the Connecticut Siting Council (``CSC'') ordered in April 
        of 2005 that the only acceptable method for construction of 
        this project was to install 24 miles of underground XLPE cable. 
        Therefore, no incentive was needed to encourage the use of this 
        advanced technology, it was the only way the project would be 
        allowed to be built.
          It should also be noted that this project was already granted 
        a 50 basis point return on equity (ROE) incentive that is give 
        to projects build by Transmission Owners who have joined 
        Regional Transmission Organizations such as ISO-NE and 100 
        basis points awarded to all new transmission projects in New 
        England. These incentives were granted to the entire final cost 
        of the project.
          The total ROE on the project is difficult to calculate (as 
        the 50 basis points adder for the use of advanced technology 
        was only applied to the underground portion of the project), 
        however a good estimate would be 12.5% to 12.7%.
          Not only are the ROE incentives questionable, but they are 
        compounded, in my view, by the higher costs of the project--
        which effectively doubled.

    Question 9. Do you believe return on equity incentives should be 
applied in cases where state law required advanced technologies to be 
used or the technologies are not truly advanced?
    Answer. In Order No. 679, the Commission explained that to the 
extent that applicants seek additional incentives for advanced 
technologies, the Commission will consider the propriety of such 
incentives on a case-by-case basis.\1\ If confirmed, I will examine 
each-case to determine whether an applicant has justified its request 
for additional incentives for using advanced technologies.
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    \1\ Promoting Transmission Investment through Pricing Reform, Order 
No. 679, FERC Stats. & Regs.  31,222, at P 289-292, order on reh'g, 
Order No. 679-A, FERC Stats. & Regs.  31,236 (2006), order on reh'g, 
119 FERC  61,062 (2007).
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    Question 10. Do you think it is appropriate for return on equity 
incentives to apply to estimated costs of a project and not be applied 
for cost over runs?
    Answer. As a general matter, I support the Commission's established 
policy for ensuring that only prudently incurred costs are recovered 
under section 205 of the Federal Power Act.
    However, the specific issue you raise is pending before the 
Commission on rehearing and to avoid prejudging the issue, I cannot 
discuss it further at this time.
    Question 11. Do you agree that a case-by-case analysis is critical 
for determining whether ROE incentives are, in fact, truly necessary?
    Answer. I find reasonable the Commission's current approach of 
determining the level of the return on equity on a case-by-case basis 
when an application for an incentive-based return on equity is filed 
with the Commission.\2\ This approach enables the Commission to 
authorize a unique return on equity appropriate to the specific facts 
and circumstances of each case.\3\
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    \2\ Order No. 679 at P 93.
    \3\ Order No. 679-A at 65.
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    Moreover, the Commission requires an applicant to demonstrate that 
the total package of incentives is tailored to address the demonstrable 
risks or challenges faced by the applicant in undertaking the project. 
Therefore, if some of the incentives in the package reduce the risks of 
the project, that fact should be taken into account by the Commission 
in any request for an enhanced return on equity.\4\
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    \4\ Id. at P 27.

                                    

      
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