    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

        THE AMERICAN ENERGY INITIATIVE, PART 9: H.R. 909, A ROADMAP FOR
                            AMERICA'S ENERGY FUTURE

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

                                    HEARING

                                   BEFORE THE

                        SUBCOMMITTEE ON ENERGY AND POWER

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  JUNE 3, 2011

                                   __________

                               Serial No. 112-57

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

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                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman

    JOE BARTON, Texas                    HENRY A. WAXMAN, California
      Chairman Emeritus                    Ranking Member
    CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
    ED WHITFIELD, Kentucky                 Chairman Emeritus
    JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
    JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
    MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
    GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
    LEE TERRY, Nebraska                  ANNA G. ESHOO, California
    MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
    SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
      Vice Chair                         DIANA DeGETTE, Colorado
    JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
    TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
    MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
    MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
    BRIAN P. BILBRAY, California         JAY INSLEE, Washington
    CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
    PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
    STEVE SCALISE, Louisiana             ANTHONY D. WEINER, New York
    ROBERT E. LATTA, Ohio                JIM MATHESON, Utah
    CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
    GREGG HARPER, Mississippi            JOHN BARROW, Georgia
    LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
    BILL CASSIDY, Louisiana              DONNA M. CHRISTENSEN, Virgin
    BRETT GUTHRIE, Kentucky              Islands
    PETE OLSON, Texas
    DAVID B. McKINLEY, West Virginia
    CORY GARDNER, Colorado
    MIKE POMPEO, Kansas
    ADAM KINZINGER, Illinois
    H. MORGAN GRIFFITH, Virginia

                                     7_____

                        Subcommittee on Energy and Power

                             ED WHITFIELD, Kentucky
                                     Chairman
    JOHN SULLIVAN, Oklahoma              BOBBY L. RUSH, Illinois
      Vice Chairman                        Ranking Member
    JOHN SHIMKUS, Illinois               JAY INSLEE, Washington
    GREG WALDEN, Oregon                  JIM MATHESON, Utah
    LEE TERRY, Nebraska                  JOHN D. DINGELL, Michigan
    MICHAEL C. BURGESS, Texas            EDWARD J. MARKEY, Massachusetts
    BRIAN P. BILBRAY, California         ELIOT L. ENGEL, New York
    STEVE SCALISE, Louisiana             GENE GREEN, Texas
    CATHY McMORRIS RODGERS, Washington   LOIS CAPPS, California
    PETE OLSON, Texas                    MICHAEL F. DOYLE, Pennsylvania
    DAVID B. McKINLEY, West Virginia     CHARLES A. GONZALEZ, Texas
    CORY GARDNER, Colorado               HENRY A. WAXMAN, California (ex
    MIKE POMPEO, Kansas                      officio)
    H. MORGAN GRIFFITH, Virginia
    JOE BARTON, Texas
    FRED UPTON, Michigan (ex officio)

                                      (ii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Ed Whitfield, a Representative in Congress from the
      Commonwealth of Kentucky, opening statement....................     1
        Prepared statement...........................................     3
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................     5
    Hon. Fred Upton, a Representative in Congress from the State of
      Michigan, prepared statement...................................   139
    Hon. Joe Barton, a Representative in Congress from the State of
      Texas, prepared statement......................................   140
    Hon. Michael C. Burgess, a Representative in Congress from the
      State of Texas, prepared statement.............................   141

                                   Witnesses

    Hon. Devin Nunes, a Representative in Congress from the State of
      California.....................................................     6
        Prepared statement...........................................     9
    David Sandalow, Assistant Secretary for Policy and International
      Affairs, Department of Energy..................................    17
        Prepared statement...........................................    20
    Thomas Hicks, Deputy Assistant Secretary of the Navy (Energy)....    33
        Prepared statement...........................................    35
        Answers to submitted questions...............................   228
    Neil Auerbach, Managing Partner, Hudson Clean Energy.............    54
        Prepared statement...........................................    57
    Jack Spencer, Research Fellow, Nuclear Energy, The Heritage
      Foundation.....................................................    71
        Prepared statement...........................................    73
    James T. Bartis, Senior Policy Researcher, Rand Corporation......   109
        Prepared statement...........................................   112

                               Submitted Material

    H.R. 909, A Bill to expand domestic fossil fuel production,
      develop more nuclear power, and expand renewable electricity,
      and for other purposes.........................................   144

        THE AMERICAN ENERGY INITIATIVE, PART 9: H.R. 909, A ROADMAP FOR
                            AMERICA'S ENERGY FUTURE

                                  ----------

                              FRIDAY, JUNE 3, 2011

                      House of Representatives,
                      Subcommittee on Energy and Power,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 9:05 a.m., in
    room 2322 of the Rayburn House Office Building, Hon. Ed
    Whitfield (chairman of the subcommittee) presiding.
        Present: Representatives Whitfield, Walden, Terry, Bilbray,
    Scalise, McMorris Rodgers, Olson, McKinley, Gardner, Pompeo,
    Inslee, Green, Gonzalez, and Waxman (ex officio).
        Staff present: Charlotte Baker, Press Secretary; Patrick
    Currier, Counsel, Energy and Power; Garrett Golding,
    Professional Staff Member, Energy and Power; Cory Hicks, Policy
    Coordinator, Energy and Power; Ben Lieberman, Counsel, Energy
    and Power; Dave McCarthy, Chief Counsel, Environment/Economy;
    Carly McWilliams, Legislative Clerk; Mary Neumayr, Counsel,
    Oversight/Energy; Tiffany Benjamin, Democratic Investigative
    Counsel; Jackie Cohen, Democratic Counsel; Greg Dotson,
    Democratic Energy and Environment Staff Director; and Caitlin
    Haberman, Democratic Policy Analyst; Alexandra Teitz,
    Democratic Senior Counsel, Environment and Energy.

      OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
               CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

        Mr. Whitfield. Call the hearing to order this morning, and
    today is the ninth day in our American Energy Initiative
    hearing, and today we are going to be discussing a more
    comprehensive plan to explore ways to produce the necessary
    energy for the American people.
        As you know, when we talk about energy, we talk about
    electricity as one part of it and transportation and fuel for
    transportation as the other part of it. We also know that we
    have a vast amount of natural resources within the borders of
    the United States of America, and many of us believe that we
    have not been able to fully explore and produce from those
    natural resources. And there are many impediments out there to
    it. We also understand that natural resources here in America
    alone will not meet all of our demands for the future.
        We also recognize that not only must we use fossil fuels,
    but we have to use renewables, and we need to explore
    opportunities and more green ways to produce energy for the
    American people, but we also need to be realistic that by 2035,
    the amount of electricity, for example, needed in America is
    going to increase by about 50 percent, and we have to be
    realistic on recognizing the cost of green energy, how much can
    it realistically provide, and what will the cost of electricity
    be for the American people because we find ourselves in a
    global marketplace in which we are competing with other
    countries around the world, and our electricity prices and
    transportation prices have to be competitive if we are going to
    be sure that businesses expand in the U.S., locate in the U.S.,
    and we create jobs in the U.S.
        So I look forward to today's hearing. We have three panels
    today. On the first panel we have Devin Nunes, a member of
    Congress from California, who has done extensive work on the
    energy needs of America and has actually developed legislation
    to address some of those problems and issues. So I look
    forward--we look forward to his testimony, and at this time I
    would like to recognize the gentleman from California for his
    opening statement. Mr. Waxman.
        [The prepared statement of Mr. Whitfield follows:]

        [GRAPHIC] [TIFF OMITTED] T2153.001

        [GRAPHIC] [TIFF OMITTED] T2153.002

    OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Waxman. Thank you very much, and Mr. Chairman, today we
    are holding a hearing on a bill that is titled, ``Roadmap for
    America's Energy Future.'' Our Nation faces major energy
    challenges and we need to have a serious conversation about the
    American energy future. But I am sad to say the legislation we
    are examining today proposes no innovative solutions to our
    Nation's energy needs. It doubles down on oil, and it doubles
    down on old, ineffective policies.
        We have seen this roadmap before. This is a recycled
    version of a plan developed by the secretive Bush-Cheney Energy
    Task Force and pushed through Congress by Republicans while
    they were in office. The Bush administration and Congressional
    Republicans spent 8 years following this roadmap. They pushed
    oil and gas drilling, onshore and offshore. They expedited
    permits and weakened environmental protections. They opposed
    efforts to increase fuel economy. They called for nuclear fuel
    reprocessing. They tried to greenwash proposals for drilling in
    the Arctic National Wildlife Refuge by implying congressional
    appropriators could use royalty revenues to support renewable
    energy. They pushed the dirtiest alternative and unconventional
    fuels, coal-to-liquids, oil shale, and tar sands.
        And where did they get this--and where did this roadmap
    lead us? Energy prices soared, and carbon pollution increased.
    And we have become even more dependent on foreign oil. In the
    last year of the Bush administration the Energy Information
    Administration projected that our dependence on oil and oil
    imports would continue to rise year after year.
        Today, we are sending nearly $1 billion per day overseas
    for foreign oil. We use 25 percent of the world's oil, but we
    only have 2 percent of the world's oil reserves. We've worked
    to increase our domestic crude oil production by nearly 300,000
    barrels per day. And yet gas prices remain high.
        Increasing oil production is not going to solve our energy
    needs. Even if we doubled our oil production, oil prices would
    still be set by world markets and leave us vulnerable to price
    shocks.
        H.R. 909's roadmap doesn't lead to the future. It leads to
    the past. The technology to turn coal into liquid fuel has been
    around since World War II. Its problem is as it has always
    been: huge amounts of carbon pollution that will drive
    uncontrolled climate change.
        American entrepreneurs and inventors are using technology
    to unlock real energy solutions: energy sources that are clean,
    safe, and affordable, and grow our economy. In testimony
    provided to the committee for today's hearing, we will hear
    that the wind and solar industries will create over 200,000 new
    jobs. But H.R. 909 would abandon our clean energy future to
    China. For many reasons it is unlikely to help renewable
    energy, because of flaws in its reverse auction mechanism.
        The bill does nothing on efficiency, which is the cheapest
    and most reliable new source of supply. It promotes the form of
    nuclear energy that risks putting nuclear bomb grade material
    into the hands of terrorists. It does nothing to develop carbon
    capture and storage, the technology that coal needs to remain a
    competitor in a carbon-constrained world.
        In 2001, Vice President Cheney said, ``Conservation may be
    a side of personal virtue, but it is not a sufficient basis for
    a sound, comprehensive energy policy.'' Ten years later the
    Republican budget defunds the federal investment in energy
    conservation and innovation. The rest of the world has been
    racing ahead over the last decade. It is too bad the
    Republicans' energy policies have not.
        We have seen this roadmap before, and we know where it
    leads us.
        Thank you, Mr. Chairman.
        Mr. Whitfield. Thank you. At this time I would like to
    recognize Congressman Devin Nunes for his opening statement
    regarding his legislation, and Congressman, we are delighted
    you have come before the subcommittee, and we look forward to
    your testimony, and thank you for being here.

      STATEMENT OF HON. DEVIN NUNES, A REPRESENTATIVE IN CONGRESS
                      FROM THE STATE OF CALIFORNIA

        Mr. Nunes. I do appreciate that, Mr. Chairman and Ranking
    Member, for allowing me to testify here today. It is an honor
    to be before the Energy and Commerce Committee. In fact, I have
    never been before the Energy and Commerce Committee before, so
    it really is an honor and a privilege for me to be here today.
        Our Nation has been blessed with great abundance of natural
    resources. Consider these astounding facts. ANWR potentially
    contains 10 billion barrels of oil, the Outer Continental Shelf
    is estimated to hold 85 billion barrels of oil and 420 trillion
    cubic feet of natural gas, and over two trillion barrels of oil
    are held in oil shale deposits, more than are contained in all
    of the countries in the Middle East combined. Additionally, our
    Nation has nearly 250 billion tons of recoverable coal
    reserves, which is the estimated equivalent of 800 billion
    barrels of oil and constitutes more than three times Saudi
    Arabia's proven oil reserves.
        Unbelievably, our government has chosen not to utilize
    these resources fully, despite the repeated promises to achieve
    energy independence by both Democrats and Republican
    administrations and Congresses alike. But continued inaction is
    unacceptable with stubbornly high unemployment, lackluster
    economic growth, widespread unrest in the Middle East, and the
    prospect of escalating gas prices punishing American families.
    Nothing done by our government in the past 4 decades has
    actually helped to achieve the goal of energy independence, or
    for that matter, kept energy prices affordable for American
    families and businesses. The reverse is true. We are more
    dependent on foreign oil today than ever before and far more
    economically vulnerable than at any point in our Nation's
    history.
        If we summon the political will to enact this legislation
    before the committee, H.R. 909, would reverse this course,
    immediately lower energy prices, and finally deliver on the
    unfulfilled promises of recent decades.
        The energy roadmap is not a radical alternative to current
    energy policy. That is, while we can all agree that we need a
    comprehensive approach, this approach must be market-based and
    gradual if we are to achieve true energy independence. I
    predict that any other approach will ultimately be rejected by
    the American people.
        The energy roadmap would lift restrictions on development
    and extraction of resources in ANWR and OCS. This could create
    up to two million jobs and maybe just the construction of these
    jobs would create another 100,000 construction jobs.
        The roadmap recognizes that dependence on any one fuel
    source is dangerous and short-sighted. It also recognizes that
    the American people have made it clear that they do see the
    merit in federal resources to develop and transition to
    alternative energy sources and to reduce carbon emissions when
    economically and technologically feasible.
        The status quo does not provide adequate support to the
    development of alternative energy. It is not necessarily a
    question of resources as much as it is a question of the
    appropriate structure to deliver support for the development of
    renewable energy. For example, while many renewable energy
    companies support the current production tax credit, they are
    frustrated with its lack of predictability and that it can get
    caught up in the legislative process and lapse.
        Accordingly, H.R. 909 would provide the financial resources
    and structure necessary to transition our economy to renewable
    and advanced energy alternatives. It would do this by
    depositing the new federal lease and royalty revenues,
    estimated to be over $500 billion in the next 30 years, into a
    trust fund. These dollars would then be made available to
    renewable energy producers through a reverse auction. This
    market-based mechanism would ensure that the cheapest and most
    efficient technology thrives while simultaneously opening the
    alternative energy market to greater innovation and
    competition.
        Importantly, the roadmap would not end the credit. Rather,
    it would give an alternative to energy entrepreneurs to choose
    to receive the credit or to forego it to receive support
    through the reverse auction. Moreover, the support provided
    under the energy roadmap for the development of renewable
    energy would not be subject to the federal budget or the
    legislative process. Put simply, it provides the best mechanism
    to develop, produce, and transition to alternative energy.
        Another component of the roadmap would establish or would
    mandate that 200 reactors be--permits be granted by 2040. This
    bill would provide new, streamlined regulations and a system to
    manage the waste that will drive private sector investments in
    these facilities, which today are stalled as a result of red
    tape, lawsuits, and parochial concerns. Nuclear power in my
    estimation is essential to achieving an abundant and affordable
    supply of electricity to fuel our Nation's economy.
        H.R. 909 would enhance our national security by removing
    barriers to expand our Nation's secure coal supplies to fill
    the tanks of the American military vehicles and jets. In fact,
    the bill's near-team goal is to produce at least 300,000
    barrels of CTL, coal to liquid. Such supply would equal the
    amount of fuel consumed daily by the U.S. military for domestic
    operations.
        The American people are looking to us for leadership. They
    know intuitively that we are running out of time, and they are
    worried about the future of our country and for their--and our
    country's future for their children. They have given us the
    opportunity to offer solutions to this and other big problems.
    My fellow colleagues, it is time for us to act, and I really do
    appreciate, Mr. Chairman, Ranking Member, for having the
    opportunity to testify here today.
        [The prepared statement of Mr. Nunes follows:]

        [GRAPHIC] [TIFF OMITTED] T2153.003

        [GRAPHIC] [TIFF OMITTED] T2153.004

        [GRAPHIC] [TIFF OMITTED] T2153.005

        [GRAPHIC] [TIFF OMITTED] T2153.006

        Mr. Whitfield. Well, thank you, Mr. Nunes, for that
    testimony, and I will recognize myself for a period of
    questions and then will recognize Mr. Waxman for the same
    purpose.
        In your testimony you talked a little bit about a reverse
    auction for a fund to encourage more development of renewable
    fuels. Would you elaborate a little bit on the way this reverse
    auction would work?
        Mr. Nunes. Absolutely, Mr. Chairman. I believe that despite
    the ranking member's testimony at the beginning, I think this
    is something that is new, is innovative, and it would change
    the way that alternative energy is deployed. Basically to put
    it simply you take the royalty revenues, which some people
    estimate to be $500 billion over 30 years, it could be higher,
    it could be lower, but a significant amount of money. And what
    you do is essentially that money is there, and it acts as a
    reverse auction. So the lowest bidder wins.
        So if I could maybe give you an example. Say that someone,
    one person has windmills that they want to put up in
    California, and someone has a windmill farm that they want to
    put up in Nevada. And if one company says that they need $100
    to get their project off the ground, in California let us say
    it is $100, but in Nevada that company for the same size
    project only needs $90, they would submit those bids, and it is
    per megawatt, and the Nevada company would win.
        So you would--basically it gets to the cheapest way to
    deploy renewable energy, and this has been I think met with--in
    the Silicone Valley and the entrepreneurial community in
    California, this has been well received throughout the
    companies that want to see changes to the way these
    technologies are deployed.
        Mr. Whitfield. Now, is there an example of where this type
    of reverse auction has been implemented in other places and has
    been proven that it works very well?
        Mr. Nunes. Yes. Matter of fact, good question, Mr.
    Chairman. I was quite embarrassed to learn that when I
    developed this legislation I thought that I had developed
    something new. In fact, this is being used in Brazil, and to my
    knowledge, although I have not talked--I do coach the Brazilian
    Caucus, which is even more of an embarrassment that I didn't
    know that this was there, but from my understanding it is
    working very well.
        Mr. Whitfield. And they use it for the same purpose, for
    the development of renewables?
        Mr. Nunes. Yes, and I think it would be, it would probably
    for this committee, it would be worth your time maybe to look
    into that if you have another hearing.
        Mr. Whitfield. We have heard a lot recently, particularly
    from our friends on the other side of the aisle, about removing
    production tax credits and other things from the oil industry,
    and without getting into a discussion about that proposal per
    se, I would like to just broaden it, and do you think it would
    be reasonable or would it be helpful if we are going to have a
    debate about removing tax credits from the oil industry,
    should--in your view, should we have a debate about just
    removing incentives from all energy production?
        Mr. Nunes. In fact, Mr. Chairman, we have been--Chairman
    Camp of the Ways and Means Committee, we have been conducting a
    series of hearings of tax reform, and we have had many
    different companies from both foreign nationals and small
    businesses basically all say the same thing, that they would
    like to see the tax rate reduced and would basically forego all
    of these types of little production tax credits and different
    tax credits that are out there.
        And so I think President Obama-, you were at the meeting
    the other day, he indicated that this is something that he
    would like to do also, so I think simplifying of the tax code,
    getting rid of all these credits would be something worthwhile,
    and that is what the Ways and Means Committee is working on.
        Mr. Whitfield. You are working on that right now?
        Mr. Nunes. Yes.
        Mr. Whitfield. Now, in your proposal you talk about
    licensing 200 new nuclear plants in a relatively short time. I
    forgot if you said 2040, or whenever it was, but recognizing
    that we have this significant issue of how do we dispose of
    this waste because the administration has basically stopped
    Yucca Mountain after the expenditure of $15 billion and after
    judgments against the Federal Government of $15 billion and
    after taxpayers and energy users have paid the fee for this,
    how do you propose that we would get rid of this waste?
        Mr. Nunes. Well, one of the--what I tried to achieve in
    drafting this legislation was that tried to create a scenario
    where the Congress forces an administration to act one way or
    the other on Yucca Mountain and reprocessing and a whole host
    of issues, because as you know, it seems like every President,
    no matter if it is Republican or Democrat is--they are all for
    nuclear power yet nothing ever happens, and I think that our
    country, I think the most significant innovation in the last
    100 years from my perspective is the development of nuclear
    power.
        And I think we have been set back in this country over the
    last 4 decades because we really have not invested in new
    nuclear technology, and we are in real danger of falling behind
    China, who, you know, some folks estimate that they are on
    their way to build over 200 nuclear reactors. We don't really
    know, but I think they are building several dozen right now
    that are being built or in the process of it.
        So to not--so what this bill does is it basically forces
    the administration to say, yes or no, and it develops a
    timeframe so that we would either know that Yucca Mountain will
    be used or it will not be used, but we need to get to the
    bottom of that and get it, well, either stop it or start it.
        Mr. Whitfield. Well, thank you, Mr. Nunes.
        At this time I will recognize Mr. Waxman for his 5-minute
    question period.
        Mr. Waxman. Thank you very much for your testimony, and I
    think I might have been a little too harsh in my opening
    statement. I do want to consider your idea because I have long
    believed that we need to have market mechanisms to try to drive
    the results that we want. I don't think we can decide the
    winners and losers. We ought to say what we want to achieve and
    help the entrepreneurs in this country, unleash them and let
    them go forward and profit when they accomplish the goals we
    want. That is what we try to do, not to everybody's
    satisfaction in the cap-and-trade bill because we said if you
    can figure out new technology and ways to reduce the carbon
    emissions, it will be to your economic benefit. You will be
    able to have a clear profit for it.
        You seem to be doing that in a very different way, but
    nevertheless, you are trying to accomplish something that I
    find attractive, and I want to understand this more from you
    and from other witnesses later on.
        Mr. Nunes. Absolutely.
        Mr. Waxman. As I understand it, in order to be eligible for
    the reverse auction a renewable energy project must have a
    power purchase agreement in place, and the price in that
    contract is essentially the bid in this reverse auction. It
    would seem that because the prices will already be set in the
    contract, generators will not be able to change their bids as
    the auction proceeds, and the price-driving mechanism of a
    traditional reverse auction will not be available.
        I assume the intent of the provision to drive down the
    price of renewable energy. Isn't that what you are trying to
    do?
        Mr. Nunes. That is correct.
        Mr. Waxman. And do you anticipate generators breaking or
    renegotiating power purchase agreements in order to lower their
    bids?
        Mr. Nunes. Well, one of the things, Mr. Chairman, that--and
    I do appreciate your comments as it relates to the reverse
    auction, this is--it was a very difficult provision to draft,
    and we have spent several years doing it. You may remember that
    there in EPAC, whatever year that was, '05, there was something
    similar for renewable fuels that was put in.
        However, and the President actually has I think $150
    million in his budget for that proposal, but the way that the
    law was drafted and then how the regulations were written
    basically there has never been any money put into it, and there
    doesn't seem to be any interest from the renewable fuel
    community to utilize it.
        So what we attempted to do here was to keep it as clear and
    basic as possible so that you would have a clean way to run
    this auction. So, I mean, this is actually probably an
    expertise of yours on this committee, but we actually modeled
    it after the--originally when--before I knew that other people
    had tried this, we modeled it after the spectrum sales, the way
    that you auction off spectrum sales. So that was kind of our
    goal and then asking, when the regs would come out to basically
    have kind of three different levels so that you could have one
    level for technological development and research, you would
    have kind of a mid-sized level so that maybe small businesses
    and folks could utilize the program, and then you would have
    another pot at the highest level for the big energy companies
    to go out and build, you know, big wind farms or big solar
    farms.
        That is the attempt of the legislation. I would, you know,
    I think one of the options here is in this bill some of the oil
    provisions have moved through the House already, and I think
    there is an opportunity for this committee to maybe take this
    reverse auction and move it by itself, spend some time, you
    know, to make sure that it would work, you know, in a
    bipartisan way and maybe, you know, get this bill marked up and
    get it out to the floor, just the reverse auction provision. I
    would be very supportive of something like that.
        Mr. Waxman. Do you have a concern that if the choice
    between a reverse auction and a production tax credit, that the
    production tax credit is more certain, and the groups, the
    businesses involved will decide to forgo the reverse auction
    and stick with the tax credit?
        Mr. Nunes. I think that there is a--the uncertainty now in
    the production tax credit business is leading to a more
    complicated deployment of renewable energy, renewable power. I
    think there is some people that can use these credits, some
    people can't, and I think--and because I think what is 2012,
    they lapse anyway, and if you just look down the road, I mean,
    when you have Republicans and Democrats agreeing that we need
    to get out of this tax credit business to some degree, I just
    don't think it is--I think this program, having a trust fund in
    place where you take royalty revenue from oil and gas, is a way
    that would give some real certainty.
        Mr. Waxman. My time has expired, but let me thank you for
    your hard work on this legislation. You are a highly respected
    member of our California delegation and in the House, and I
    want to look at this more carefully because I do think we need
    a bipartisan approach, and I like the idea of something that
    will drive the markets rather than dictate the markets.
        Mr. Nunes. Well, Mr. Chair or Mr. Ranking Member, I would
    be willing to come and sit down with you and walk you through
    this or your staff.
        Mr. Waxman. I don't walk through things when I am sitting
    down, but I would be glad to----
        Mr. Whitfield. Well, in keeping with the procedures of our
    committee, Congressman Nunes, the chairman and ranking member
    are the only ones that would be asking you questions today, but
    our staff has looked at your legislation, and you have some
    really innovative approaches like the reverse auction, and we
    are going to continue to look at that and at some point work
    with other committees and try to move something to address some
    of the problems that you are trying to address in your
    legislation.
        So thank you for your time and for your involvement in this
    important issue.
        Mr. Nunes. I really appreciate it.
        Mr. Whitfield. Appreciate that.
        Mr. Nunes. Thanks for the opportunity, Mr. Chairman.
        Mr. Whitfield. At this time I would like to call up the
    second panel of witnesses. On the second panel we have Mr.
    David Sandalow, who is the Assistant Secretary for Policy and
    International Affairs at the U.S. Department of Energy, and we
    also have Mr. Thomas Hicks, who is the Deputy Assistant
    Secretary of the Navy, and we would like to welcome both of you
    to this hearing. We appreciate your taking time to be with us
    and offering us your expertise and knowledge, and with that,
    Mr. Sandalow, I would like to recognize you for 5 minutes for
    your opening statement.

     STATEMENTS OF DAVID SANDALOW, ASSISTANT SECRETARY FOR POLICY
      AND INTERNATIONAL AFFAIRS, DEPARTMENT OF ENERGY; AND THOMAS
         HICKS, DEPUTY ASSISTANT SECRETARY OF THE NAVY (ENERGY)

                      STATEMENT OF DAVID SANDALOW

        Mr. Sandalow. Thank you to members of the subcommittee.
    Thank you for the opportunity to be here today to discuss H.R.
    909, the Roadmap for America's Energy Future.
        The administration agrees with many of the goals of this
    bill. For example, the administration believes that
    facilitating the efficient responsible development of our oil
    and gas resources is a necessary component of energy security.
    We are working to expand cleaner sources of energy, including
    renewables like wind, solar, and geothermal, nuclear power, as
    well as clean coal and natural gas on public lands.
        However, the administration has serious concerns with many
    provisions in this legislation. For example, a number of the
    changes in Title I would make amendments to Interior's Offshore
    Energy Program, undercutting safety and environmental reforms
    adopted in the wake of the Deepwater Horizon oil spill, and it
    would open the coastal plain of the Arctic National Wildlife
    Refuge to oil and gas drilling. Department of the Interior and
    other involved agencies may have additional views on this
    legislation.
        H.R. 909 touches on programs implemented by a number of
    administration's agencies, and I will not comment in detail
    about programs outside of the Department of Energy's purview.
    In the remainder of my time I would like to discuss the
    administration's energy agenda and address several specific
    provisions from H.R. 909.
        In the State of the Union address President Obama laid out
    a plan for the United States to win the future by out-
    innovating, out-educating, and out-building the rest of the
    world while at the same time addressing the deficit. Many
    countries are moving aggressively to develop and deploy the
    clean energy technologies that the world will demand in the
    coming years and decades. As the President said, this is our
    generation's Sputnik moment.
        We must rev up the great American innovation machine to win
    the clean energy race and secure our future prosperity. To that
    end, President Obama has called for increased investments in
    clean energy research, development, and deployment.
        In addition, he has proposed generating 80 percent of
    America's electricity from clean energy sources by 2035. A
    clean energy standard will provide a clear, long-term signal to
    industry to bring capital off the sidelines and into the clean
    energy sector. It will grow the domestic market for clean
    sources of energy, creating jobs, driving innovation, and
    enhancing national security.
        And by drawing on a wide range of energy sources, including
    renewables, nuclear, clean coal, and natural gas, it will give
    utilities the flexibility they need to meet our clean energy
    goals while protecting consumers in every region of the
    country.
        The Department of Energy's goal is to strengthen the
    Nation's economy, enhance our security, and protect the
    environment by investing in key priority, including supporting
    groundbreaking basic research, leading in the development and
    deployment of clean and efficient energy technologies to reduce
    our dependence on oil, and strengthening national security by
    reducing nuclear dangers, maintaining a safe and secure and
    effective nuclear deterrent and cleaning up our cold war
    legacy.
        As the President said in his State of the Union address,
    investing in clean energy will strengthen our security, protect
    our planet, and create thousands of new jobs here at home. We
    are doing this through programs to make, for example, homes and
    buildings more energy efficient with a new Better Buildings
    Initiative. We are also developing new sources of wind, solar,
    and geothermal supporting the modernization of the electric
    grid and carbon capture and sequestration technologies. We are
    supporting reducing our dependence on oil by developing the
    next generation of biofuels and promoting electric vehicle
    research and deployment supporting the President's goal of
    putting one million electric vehicles on the road by 2015.
        Mr. Chairman, I drove to work today in a plug-in hybrid
    vehicle. At night I plug that car into an outlet in my garage.
    I often get 80 miles per gallon as I drive through the streets
    of Washington, DC, and I am pleased to say that today I drove
    to this hearing from the Department of Energy garage in one of
    the new plug-in electric vehicles in the Department of Energy's
    fleet. So I think building on the investment that we are making
    in this country in electric vehicles we can bring down our
    dependence on oil. That is going to require further investment
    in lithium ion batteries, and Mr. Chairman, someday I hope that
    one of my grandchildren will look at one of my children who are
    now teenagers and say, what, you mean you couldn't plug in cars
    back when you were young.
        At the Department of Energy we are also focused on moving
    clean energy technologies from the lab to the marketplace. Over
    the past 2 years our loan programs have supported more than $30
    billion in loans, loan guarantees, and conditional commitments.
    I want to emphasize, too, that nuclear energy has an important
    role to play in our energy portfolio. To jumpstart the domestic
    nuclear industry the President's budget requests up to $36
    billion in loan guarantee authority. It also invests in the R&D
    for advanced nuclear technologies, including small modular
    reactors. H.R. 909 takes a different approach to expanding
    nuclear power production.
        H.R. 909 creates a reverse auction mechanism to fund
    renewable energy projects just discussed in the last panel. We
    share Representative Nunes's view that reverse auctions are a
    useful took for promoting renewable energy. From our experience
    with reverse auctions it is important to protect the taxpayers
    by requiring adequate assurance from bidders that they will
    perform. We look forward to working with the committee on a
    provision that accomplishes our shared goal of promoting
    American renewable energy and protecting taxpayers.
        To spur innovation, the administration has prioritized
    investments in basic and applied research. These are discussed
    in more detail in my statement, which I have submitted for the
    record.
        Mr. Chairman, in conclusion I want to thank the committee
    for inviting me to testify on issues associated with H.R. 909
    that relate to the DOE's mission. I appreciate the opportunity
    to discuss the President's roadmap for a clean and secure
    energy future.
        [The prepared statement of Mr. Sandalow follows:]

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        Mr. Whitfield. Thank you, Mr. Sandalow.
        At this time, Mr. Hicks, you are recognized for a 5-minute
    opening statement.

                       STATEMENT OF THOMAS HICKS

        Mr. Hicks. Thank you, Chairman Whitfield and distinguished
    members, members of the subcommittee, thank you for the
    opportunity to appear before you today at this hearing on H.R.
    909. While neither the administration nor the Department of
    Defense has a formal position on this legislation, I am here to
    share with you the perspective of the Department of the Navy.
        As the Deputy Assistant Secretary of Navy on Energy, I have
    been actively involved in assessing the policy, economic,
    technological, and environmental costs and benefits associated
    with the use of fossil fuels and alternative fuels. I and many
    members of my staff and colleagues have personally met with
    dozens of industry representatives of U.S.-based organizations
    from a wide range of interests including alternative fuel
    companies, large oil companies, venture capital, private
    equity, and industry associations. We have also met with
    government experts from DOE, the Department of Defense,
    Department--U.S. Department of Agriculture, NASA, EPA, and
    others. So the perspective provided here today is drawn on
    these discussions and on contemporary studies and analysis on
    the topic of alternative fuels.
        Changing the way the United States uses, produces, and
    acquires energy is one of the central policy challenges that
    confront the Nation. It is something that Secretary Mabus cares
    deeply about, and it is something that the Navy and Marine
    Corps, under his leadership, has been aggressively working
    towards for the last 2 years.
        As a military and as a country, we rely far too much on
    fossil fuels, far too much on foreign sources of oil. This
    dependency degrades our national security and negatively
    impacts our economy. Our dependency on fossil fuels makes us
    more susceptible to price shocks, supply shocks, natural and
    man-made disasters, and, as we have recently seen, political
    unrest in countries halfway around the world.
        The challenges we face today are not just about what types
    of fuels we use or where and how those fuels are produced.
    Clearly we must be more efficient in the fuels that we use. The
    best barrel of oil is the barrel of oil we do not use. The
    challenge we face in the Navy today is the 280 ships we have
    today, the 3,700 aircraft are largely the ones we are going to
    have tomorrow and into the future, so focusing on new sources
    of fuel, drop-in replacement fuel is critical.
        For ships being more efficient means we can increase the
    days between refueling, improving both its security and combat
    capability. Better fuel economy for our aircraft means we can
    extend the range of our strike missions, enabling us to base
    them farther away from combat areas. Being more efficient and
    more independent and more diverse in our sources of fuel
    improves our combat capability both strategically and
    tactically.
        The Department of the Navy's interest in this topic of
    alternative fuels is fundamentally about improving our national
    security and our long-term energy security. The more we replace
    for in sources of oil with more diverse, domestically-produced
    alternative fuels the better we are as a military and the
    better we are as a Nation. How one successfully accomplishes
    that objective is where the debate lies, and it is a topic that
    the Department of the Navy has a perspective.
        It has recently suggested before this committee that the
    best near-term approach to meet the Department of Defense fuel
    needs is essentially a coal-derived or a mixture of coal-
    derived and biomass Fischer-Tropsch fuels. Fischer-Tropsch is a
    thermo-chemical conversion process invented and developed in
    pre-World War II Germany to convert resources such as coal,
    natural gas, and biomass to fuel oil. In this country given the
    enormous quantities of biomass required and its relative
    limited availability at the scales required to run a Fischer-
    Tropsch or an FT plant, biomass as a long-term feedstock that
    is typically not considered. More often than not, coal is
    viewed as the primary, if not exclusive, feedstock, and as a
    result, in addition to requiring large, new sources of coal, it
    requires enormous quantities of water, $5 to $10 billion in
    capital per plant to provide a fuel result that is more than
    twice as carbon intensive as petroleum.
        From the Navy's perspective, there simply are too many
    questions to suggest that this is the best near-term solution.
    In our ongoing dialogue with industry, venture capital, and the
    equity communities, one thing is clear. America's advanced
    biofuel industry knows no geopolitical boundaries, and unlike
    the proposed near-term solution, the feedstocks and refineries
    needed to produce advanced biofuels to power the fleet or our
    aircraft can literally be produced in every State, all 50
    States.
        The U.S.-based companies comprising this industry that are
    currently producing or will soon be producing fuels across the
    spectrum from the tens of thousands of gallons to the tens of
    millions of gallons. These are companies new and old, some are
    small businesses, and some are now publicly traded. These
    companies represent the type of innovation and spirit needed to
    meet the energy demands of the future. In conclusion, a robust
    advanced drop-in biofuels market is an essential element of our
    national energy security. Energy security for the Nation
    requires unrestricted, uninterrupted access to affordable
    energy sources to power our economy and our military.
    Traditional fossil-fuel based petroleum derived from crude oil
    has an increasingly challenging market and supply constraints.
    Chief among these is limited, unevenly distributed, and
    concentrated global sources of supply. Advanced biofuels that
    use domestic, renewable feedstock provide a secure alternative
    that reduces the risks associated with petroleum dependence.
        Just in closing, I would like to personally thank the
    committee for addressing the important topic of alternative
    fuels and for providing the Department of the Navy the
    opportunity to offer its perspective. Thank you.
        [The prepared statement of Mr. Hicks follows:]

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        Mr. Whitfield. Thanks, Mr. Hicks. We appreciate your
    testimony as well.
        I will recognize myself for 5 minutes of questions.
        Mr. Sandalow, you are Assistant Secretary for Policy and
    International Affairs at DOE, and you know as well as any of us
    that we are utilizing about 20 million barrels of oil a day
    here in the U.S. for all of our needs, most of it
    transportation. And since 19--my first memory was 1976, on this
    subject when Jimmy Carter was President, and the big push was
    made, we have got to be less dependent on foreign oil.
        Now, this administration in my personal view is overselling
    the electric cars and some of these renewable energy
    mechanisms, not that we don't need them but I don't
    realistically think that they are going to be able to meet all
    of our increased energy demands any time soon.
        But you have probably studied this even more than I have
    since you are head of policy. What is your realistic appraisal
    on our ability to significantly reduce the amount of oil that
    we are buying from the Middle East and other countries, and
    what kind of timeframe from your analysis do you think is
    realistic?
        Mr. Sandalow. I think the ability of this country to meet
    any great challenge is extraordinary, Mr. Chairman, and I
    believe that if we set our minds to it that we can reduce our
    dependence on oil, reduce our dependence on imported oil, and
    we can do it by following a number of different pathways. I do
    believe that electric vehicles have tremendous potential, and
    by the way, not just to reduce our dependence on oil but also
    to create jobs in this country.
        Mr. Whitfield. Let me just make one comment on electric
    cars. The other day I saw a 1917 issue of the New York Times,
    and the front page was, electric cars are the cars of the
    future. That was 1917, and so I just point that out, that I
    would like for you to go on with your explanation and talk
    about some timelines as well.
        Mr. Sandalow. Yes. Thank you, Mr. Chairman. Fortunately,
    today we have new battery technologies like lithium ion
    batteries that weren't in existence in 1917, that are
    transformational that I think are really going to make a
    difference in this sector.
        But I fundamentally agree with the point you made about it
    is not just electric vehicles. I mean, we also need to pursue a
    number of other technical pathways. Biofuels have already been
    discussed, and biofuels have tremendous potential to reduce our
    dependence on imported oil and by also creating jobs here in
    the United States. And we need to do that with new advanced
    biofuels, we need to build the infrastructure to make that
    work, and we need to pursue natural gas as a transportation
    fuel. We have tremendous resources of natural gas here in this
    country expanding dramatically.
        We need to improve efficiency. That will matter
    tremendously in terms of it, and then finally we need to expand
    production of domestic oil as well, and we need to do it in an
    environmentally responsible way. That can make a big
    difference.
        So if we pursue all of these pathways, Mr. Chairman, I am
    absolutely confident that we can get off of imported oil in a
    significant way.
        Mr. Whitfield. Thank you. Many of us had a lot of
    frustrations up here about some of the money, the way it was
    spent on the Stimulus Package and others, and specifically I
    want to ask you about this one. The first company that DOE
    chose to give a federal loan guarantee was Solyndra, which is a
    solar manufacturer. It received $535 million in 2009. Since
    then the information we have is that the company has imploded.
    Its initial public offering failed, auditors have raised
    questions about whether the company will survive, and it has
    closed one of its facilities and laid off 180 workers.
        Could you tell me what your information is on this company?
        Mr. Sandalow. Yes. I don't have specific information on
    that project to relate here today, Mr. Chairman. I would be
    happy to follow up for the record on that, but I would say more
    broadly this loan guarantee program has created tens of
    thousands of jobs and helped put America in a competitive
    footing in some of these renewable energy technologies.
        Mr. Whitfield. Well, I mean, some of them may have created
    tens of thousands, but that one--they have already laid off
    180, and I might also say that First Wind Holdings had sort of
    the same experience. So, I mean, I think all of us are
    encouraging people to develop alternative fuels, but to be
    spending this kind of money on failed projects is just
    irresponsible in my view.
        And then I want to ask this question also. We hear a lot
    about wind power, and everyone I talk to does not think wind
    power is a realistic, major producer of energy anytime soon,
    and I want to know have you all conducted any studies with any
    groups on the amount of land that is necessary to produce any
    meaningful amount of electricity from wind? I mean, I am
    genuinely concerned about the amount of land that it takes to
    produce any meaningful amount of energy from wind.
        Mr. Sandalow. Mr. Chairman, I would say the wind power is
    already producing significant amounts of energy and growing in
    this country. It has been one of the major sources of new
    energy in this country for the past couple of years.
        In--there was a study done actually in the prior
    administration which pointed to the potential for wind power in
    this country at the range of 20 percent and more in the decades
    ahead.
        Mr. Whitfield. To be without incentives. Right now there is
    a $24 per kilowatt hour incentive for wind power.
        Mr. Sandalow. But the cost is coming down like it is with
    all these new technologies, and you know, I would say on the
    topic of land, that certainly land is required for some of
    these big turbines, but there is increasing interest right now
    in offshore wind all the way around, you know, around the
    world. So I think this is another area where with American
    innovation, American ingenuity, and research we can create the
    technology of the future that will allow us to have cheap,
    clean, secure energy.
        Mr. Whitfield. Thank you. My time has expired.
        Mr. Gonzalez, you are recognized for 5 minutes.
        Mr. Gonzalez. Thank you very much, Mr. Chairman.
        Let me go straight to Mr. Hicks, because you said a couple
    of things that were rather interesting. Regarding DOD and the
    role that it can play obviously as we go in search for
    alternatives, on page--I am trying to see what page this is
    actually. I think it is page 3 of your testimony, ``the
    camelina grown in Florida and Montana, the algae grown in New
    Mexico, Hawaii, or in Pennsylvania, for example, can be turned
    into fuels blended in existing infrastructure in the Gulf or on
    the East or West Coast to power the Fleet.''
        So you are saying that that may be a realistic alternative
    in your opinion?
        Mr. Hicks. It certainly is a realistic and growing
    alternative for us, literally and figuratively. I mean, it is
    one that we are seeing--today we are aware of a facility in
    the--in Texas, for example, that is capable of alternative
    fuels, bio-based alternative fuels, 90 million gallons per
    year, and claiming at competitive prices with petroleum.
        So we are seeing that. You know, what we are looking at is
    fuels that don't need new infrastructure, and that is both for
    the commercial sector but also for us. We need ready, dropped-
    in fuels, fuels that don't require changes to our platforms and
    our engines, that don't require changes to our infrastructure
    to store and use the fuel, and that is exactly what we are
    getting by looking at these advanced biofuels.
        And to be clear, we are looking at these in 50/50 blends,
    so these are blended with petroleum, and that is a common point
    for the commercial industry as well, going to a 50/50 blend.
        Mr. Gonzalez. In the production of these alternatives, but
    they still require some incentives, some encouragement in the
    way of tax credits and such that we have attempted to do in the
    past. Is that something that still would be in the mix?
        Mr. Hicks. Certainly that would help. That said, there are
    companies and there are about a handful of those that are
    publicly traded now and are moving forward with their plans
    without necessarily those subsidies in hand. But certainly that
    type of support would accelerate the maturation of that market
    and enable that--those technologies in this country to be
    something that can be exported outside of this country, and I
    think to the betterment of those commercial industries.
        Mr. Gonzalez. Let me ask you about the Department of
    Defense specific as far as contracting for alternatives. Are
    you allowed to enter contracts that are long-term, because
    obviously that would have some benefits, there would be some
    predictability in the producers of biofuels alternatives and so
    on.
        What is the situation when it comes to DOD contracting long
    term?
        Mr. Hicks. Sure. So for contracting long term for fuels and
    to be very clear, the Navy and all the services purchase our
    fuels through Defense Logistics Agencies, Energy, which is part
    of the Department of Defense. Their limit is a 5-year agreement
    to purchase fuels.
        Mr. Gonzalez. And I don't know the answer, that is why I
    would ask you. Is 5 years something that works to the benefit
    of both the Department of Defense as well as the producers of
    the alternatives that were seeking greater use?
        Mr. Hicks. Well, certainly as we have talked to the
    producers, 5 years for an emerging industry is not something
    that they feel is sufficient, and I know through legislative
    proposals the Defense Logistics Agency Energy has put forward
    requesting as much as 20 years, and what we have heard
    consistently from industry is 10, 15 years are needed, but I
    think where the Department of Defense is today is requested
    through DLA Energy upwards of 20 years.
        Mr. Gonzalez. And full disclosure, Mr. Griffith and I have
    a bill to that effect. That is the reason I am asking. It is
    kind of self-serving but----
        Mr. Hicks. We thank you for your support, and I think it
    would be a help as well as the ability to address some of the
    scoring issues that go with those purchases as well.
        Mr. Gonzalez. I only have 40 seconds left, and Mr.
    Sandalow, I have a question for you, and that is I know the
    chairman had some doubts about electric vehicles, but I do see
    that is an increasing role, but have you all been able to or is
    there another agency or department that would be more
    appropriate to factor in the increased demands on the
    production of electricity if, in fact, we increased the number
    of electric vehicles? Some could be hybrid, and some would be
    like the Leaf, which is fully electric. Nevertheless, you still
    got to plug them in.
        Mr. Sandalow. Thank you for the question, Congressman. That
    is something the Department of Energy has looked at very
    closely, and the good news there is that we have a lot of
    excess capacity in our power generating sector at night, and
    when cars plug in at night, they are going to be able to
    refuel.
        Another piece of good news is that these electric vehicles
    are very efficient. They are much more efficient in terms of
    their use of energy than in a standard internal combustion
    engine. So the technical productions that have been done say
    that even with tens of millions of these cars on the road we
    would not be putting major stresses on our electric generating.
        Mr. Gonzalez. Thank you very much. My time is up.
        Thank you, Mr. Chairman.
        Mr. Whitfield. Yes, sir, and Mr. Terry, you are recognized
    for 5 minutes.
        Mr. Terry. Thank you. Mr. Hicks, I appreciate your
    testimony here today and presence. In your opening you made
    statements and suggestions about making the Navy vehicles more
    energy efficient, and of course, you also then mentioned that
    the major users of fuel are ships and planes.
        How do you make them more fuel efficient? How do you get
    better air miles per gallon for your planes and ocean miles for
    your ships? And following up you can just make them more
    efficient, why haven't you?
        Mr. Hicks. Well, we are making them more efficient, and the
    way you do that, and I will speak both for our surface vessels
    as well as our aircraft, in many ways you can look at the
    codings on those, and so for our service vessels, for example,
    we are putting on whole codings, propeller codings to make the
    ships effectively silkier in the water, better able to float
    through the water.
        We are also putting on stern flaps onto many of our ships,
    and where we can, where it is economically justified in the
    lifespan of those platforms, as they go through their dry
    docking procedures, we are putting those measures on place--on
    board.
        With our aircraft it is largely, again, looking more at
    some of the codings we have on our aircraft, and again, we are
    doing that, but there is another opportunity that we are
    working on, we have had some success with our surface vessels,
    and that is an incentivized energy conservation program. We
    call it INCON, and it is a way for the skipper of the ship as
    they go forward and plot out their course if they can do that
    in a more efficient way, some of the savings that comes from
    that could be used for other supplies on the ship, and the rest
    of that savings coming back to the Navy for other purchases
    such as fuel order training.
        So there is a culture aspect to this as well that we are
    looking at, and we are also looking at the so-called hotel
    loads on these--on the ships, so not only as they are under
    way, what do we really need to power and when and then
    certainly as they plug into the shore and literally plug in and
    get much of their power from the shore, how can we reduce the
    energy on there to limit it to what is really required to
    maintain the combat readiness of that craft.
        So we are doing these, and we are exploring many other
    opportunities as well, but, you know, the ships and the
    aircraft we have today are the ones we are going to have for
    the future. So being more efficient is critical to that but
    also finding alternative sources of fuel is----
        Mr. Terry. Let us go into that quickly, and you had
    mentioned coal to liquid, and in fact, a few years ago that was
    a major push by the Department of Defense for national security
    and defense security in having a domestic source that is
    reliable and secure.
        Where are--where is the Defense Department overall, Navy,
    on production of aviation fuel or diesel fuel from coal? Has
    that been shut down?
        Mr. Hicks. Well, the Navy--I can't speak for all the
    Defense Department, but the Navy never really had a coal to
    liquid certification program. The Air Force has had that
    program. They are also testing hydro-renewable fuels, jet
    fuels, as we are. Our path has been more with the hydro-
    renewable jet fuels. We will have tested and certified every
    service vessel and every aircraft frame by 2012, to use 50/50
    blends of alternative fuel, hydro----
        Mr. Terry. Is the Navy's position that they would like to
    have a coal-to-liquids program? You had mentioned that in your
    statement.
        Mr. Hicks. I don't believe I mentioned it, sir, and if I
    did, I misspoke, but I think we are very comfortable with the
    program that we are on, and we feel that that is the best near-
    term solution for the Department of Navy is one that is focused
    on alternative biofuels. The challenges with coal to liquids,
    as has been mentioned before, it is a technology that has been
    around since pre World War II Germany. The challenges there are
    the capital expenditures required, $5 to $10 billion, the
    amount of water and the sources of water that you need for
    that, the amount of waste that is generated from those plants,
    and then certainly there is the carbon picture there that--
    which is typically those plants without carbon capture and
    storage----
        Mr. Terry. And my last----
        Mr. Hicks [continuing]. Hasn't been done in this country.
        Mr. Terry [continuing]. Question, I hate to interrupt but--
    --
        Mr. Hicks. Sure.
        Mr. Terry [continuing]. I have been told that the Navy has
    used aviation fuel blend with the aviation fuel from algae. Can
    you tell me how that has worked?
        Mr. Hicks. It has worked flawlessly. I have actually had
    the privilege to sit down with the pilot of the F-18 that used
    the 50/50 blends of biofuels. Part of what we, you know, one of
    the things that we require is that the ready drop-in fuels, the
    blends that we have is transparent to the end users and does
    not sacrifice any part of our mission, and that is what we are
    finding today.
        So F-18 hornet a year ago in April flew at mach 1.2 and has
    since gone through its entire envelope with not a--any sort of
    issue at all with the fuel, and we are finding out that same
    case in the rivering command boat that we have got, a Seahawk
    helicopter, and the other platforms that we see. Algae is one
    of the biofuels or feedstocks that we have used to date. It is
    not the only one. We have also used camelina, and there are
    many other types that would be, that could be grown in, again,
    all 50 States in the country, and we are seeing that.
        Mr. Terry. Thank you.
        Mr. Whitfield. Thank you. Mr. Waxman, you are recognized
    for 5 minutes.
        Mr. Waxman. Thank you very much, Mr. Chairman. Mr. Sandalow
    and Mr. Hicks, I would like to thank you for appearing before
    us.
        Mr. Hicks, our Armed Services set an interesting nexus in
    our energy policy. They are both the biggest single user of
    energy and also reliant on the civilian energy infrastructure.
    Because of these two factors they can be a significant catalyst
    for helping the Nation transition to a clean energy future by
    advancing new technology and leading the way for the
    development of new commercial transportation fuels.
        In 2007, we enacted the Energy Independence and Security
    Act. Section 526 of that act contained a provision to ensure
    that long-term government contracts are not used to prop up
    dirty, unsustainable fuels.
        Mr. Hicks, from the Navy's perspective what signal has
    Section 526 sent to industry and the Armed Services, and can
    you explain what the result has been?
        Mr. Hicks. I can explain that from the Department of Navy's
    perspective, again, not speaking for Department of Defense or
    the administration, but what we have seen is in working with,
    again, industry from the refiners and the companies themselves
    to the equity communities that support them is that they are
    responding to that, and they are holding themselves to that
    higher standard, not only on greenhouse gas emissions as 526
    requires, so we see that as an effective policy tool, but also
    on things such as food, security, water use, land use, indirect
    and direct, and they are holding themselves to that higher bar
    because, well, I will leave it to them to describe why, but
    that is what we are seeing as a trend.
        Mr. Waxman. Well, you mentioned the algae-driven jet fuel
    the Navy purchased from Solazyme. I had the opportunity to
    visit their operations in Northern California. It is the
    world's first 100 percent algae-based jet fuel, and you have
    mentioned that there are other things along those same lines,
    but this just seems to be the right result from the market
    signal that has been sent by Section 526. Is that right?
        Mr. Hicks. Yes, it does, and I think as you mentioned
    Solazyme is a great example as a company that literally started
    in a garage as I understand it and has as of a week ago just
    went public and was over subscribed by 10 or 12 fold. So--and
    hundreds of jobs coming along with that, but bottom line
    providing fuel for us in the areas where we have used it for
    the testing and certification, you know, blended with
    traditional fuels and, again, transparent to the users.
        It has been an effective tool. The market is responding to
    this and is ramping up to support it, and I would also say that
    private equity in our conversation, multiple, multiple
    conversations with them is lining up as well, and they are
    starting to see these companies with some very solid business
    plans and business models and supporting them as well.
        Mr. Waxman. The bill that is before us for discussion would
    repeal Section 526. From the Navy's perspective, from your
    perspective, would repealing Section 526 send the right
    direction of the industry and the Armed Services?
        Mr. Hicks. I think, again, we are comfortable with 526. It
    is an effective policy tool. It is having an affect on the
    market that I think is one that is the right direction in the
    sense that it is providing not only clean fuels but fuels that
    ultimately will be competitive, and I think that is what we are
    looking for.
        Mr. Waxman. It in effect means the Armed Services and the
    Congress are consistent in the message that we must pursue new,
    more sustainable fuels. I think that is an important policy
    that we want to continue.
        Mr. Sandalow, the bill before us purports to be a roadmap
    to our energy future, but it omits key policies that many
    recognize are critically important. For example, it does not
    even mention energy efficiency. It also fails to mention
    technologies that show so much promise and are just now
    beginning to be commercialized like electric vehicles.
        Instead it seems to be a proposal to return to the energy
    policies of the Bush administration with a focus on drilling in
    the Arctic Refuge and the Outer Continental Shelf.
        Can, Mr. Sandalow, can you discuss whether this legislation
    identifies the right areas for us to focus on as a roadmap to
    our energy future?
        Mr. Sandalow. Well, thank you, Mr. Ranking Member. Let me
    emphasize in response to the point you made about energy
    efficiency. I talked to a power plant executive recently who
    told me that the cheapest power plant for him is the one that
    he doesn't have to build, and he underscored the tremendous
    potential in this country to improve our economic performance
    by saving energy, by stopping the wasting of energy. So any
    comprehensive energy plan for our country needs to include
    energy efficiency, what some people call the first fuel.
        It also needs to emphasize innovating, and you know, we are
    an extraordinary Nation with--throughout our history we have
    innovated and succeeded by doing so. The energy race in the
    next century is going to be absolutely central, and I think
    government and business working together can help position the
    United States in this global competitive marketplace.
        Mr. Waxman. If this committee were to craft an energy
    policy to meet our Nation's needs now and in the future, would
    the Department be willing to work with us and support those
    efforts?
        Mr. Sandalow. Yes, Mr. Ranking Member, very closely.
        Mr. Waxman. Thank you. Thank you, Mr. Chairman.
        Mr. Whitfield. Mr. McKinley, you are recognized for 5
    minutes.
        Mr. McKinley. Thank you, Mr. Chairman.
        Since I have come to Congress now, what, 140 days now, I
    have come to really understand more the frustration of the
    process here, and I have really come to the characterization
    coming from West Virginia that is a coal State, I really can
    sense a strong disdain in this administration for using coal,
    and it manifests itself time and time again, even at the White
    House here today, how he, the President mischaracterized fly
    ash as being poisonous and running in our streams and killing
    our marine life. Just patently false.
        I see in Wellsville that there was a coal liquefaction
    facility plan for there to create diesel fuel, excuse me,
    airplane fuel for our military. That has been held up by
    permitting. There was a facility constructed in Marshall
    County, West Virginia, in the '60s with a coal liquefaction
    facility there.
        I would ask you, I guess, Mr. Sandalow, that might be--no
    one has records of that that we can find. Is that something
    that you could get back that that plant was operating for
    numbers of years to prove the viability of that technology and
    conclusions?
        As I recall from the '60s that there was something that as
    long as petroleum was over $40 a barrel, that is age ago, that
    is before inflation obviously, that it was commercially viable
    that we could take coal and liquefy it.
        Could you possibly try to find that, some of those older
    findings so we could refresh that? It is just an ongoing
    characterization I have of this administration that they have--
    they are avoiding--you all seem to be avoiding accountability.
    I am an engineer. I want to solve a problem, not take on more
    problems. Once I identify and we have got issues out here, and
    we never seem to finish them.
        We have talked--we know about liquefaction, we know about
    some of these things, but now let us take on another project so
    that we never conclude that project. Clean coal technology.
    Everyone was thumping their chests over the years. We were
    going to have clean coal technology, we are going to put more
    money into research, and then when the President submits his
    budget, he slashes the money in the National Energy Technology
    Lab. It is just so blatantly evident that you all don't want to
    use coal.
        So now my question would be if we can, I guess we just have
    to wait you out. Two years we will find out. Can we not use the
    spent fuel rods? Then you all have, I mean, participated--the
    Yucca Mountain Project is on hold. Correct? Can we put fuel
    rods in Yucca Mountain today? The answer is no?
        Mr. Sandalow. Congressman, if I could, first I want to be
    sure to respond to the question you asked about the specific
    plant you mentioned, and I would be happy to--I am not familiar
    with that particular plant, but I would be happy to look into
    that for you.
        Mr. McKinley. Thank you.
        Mr. Sandalow. Follow up on that. Second, I want to state
    clearly that coal is a vital energy source for this Nation,
    that it is one that is essential for our future, and it is one
    that this administration is committed to as an important source
    of energy for our country. And that is one reason that we have
    invested so much in our coal future, in funding for clean coal
    research, and funding for deployment of carbon capture
    technologies, and a variety of other programs that would make
    the difference for this country, and you know, I have had the
    privilege of visiting the National Energy Technology Lab in
    your State, Congressman. It is--I think it is a real jewel of
    the Department of Energy lab system, doing important work in
    this area.
        So I hope it is something we can work on.
        Mr. McKinley. The Department, the EPA has become a rogue
    agency for--they are pulling permits for mines, they are
    shutting them down, they were operating for 4 years, Melville
    Mine down in Logan County. They pulled the permit for Dan Mine
    in northern West Virginia over a water permit.
        These are operating mines. I want to get back now to the--I
    think it is clear where the administration is. They don't want
    to be held accountable, they want to continue doing research
    rather than finish the job on what they are, and one of those
    elements is coal.
        But I want to go back to nuclear. Is there any way that we
    can take those spent fuel rods instead of storing them, are
    they--is there any way that we could use them for the military
    in fueling our ships that once they have been completed, their
    lifecycle is finished for creating energy?
        Mr. Hicks. We can take that one back for the record, sir. I
    am not able to speak to that today.
        Mr. McKinley. Do you have any----
        Mr. Sandalow. I know this, I mean, this committee has had
    extensive conversations about Yucca just this week,
    Congressman, I know, and my colleague, Pete Lyons, was up here
    testifying on exactly this topic, and I know he is answering
    extensive questions for the record from your committee on
    exactly this topic.
        Mr. McKinley. But right now for the--we cannot store any
    fuel rods at Yucca Mountain. Is that correct?
        Mr. Sandalow. Right. I mean, Yucca Mountain, of course,
    Congressman, is, you know, right now not in a position, and it
    is----
        Mr. McKinley. Fifteen billion dollars spent----
        Mr. Sandalow [continuing]. The blue ribbon----
        Mr. McKinley [continuing]. And we can't put anything in it
    yet.
        Sorry. I have run over my time.
        Mr. Whitfield. The gentleman from Texas, Mr. Green, is
    recognized for 5 minutes.
        Mr. Green. Thank you, Mr. Chairman. I have a number of
    questions.
        My first one is for Mr. Hicks. Section 526 of the Energy
    Independence and Security Act of 2007 sought to limit the DOD's
    ability to enter into contracts for fuels derived from coal-to-
    liquid fuels or ``non-conventional'' oil sources, such as
    Canadian oil sands. Advocates of Section 526 claim it was
    supposed to impact the purchase of fuels that were made
    available to the general fuel supply, but environmental groups
    are suing DOD for purchasing fuels derived from oil sands.
        Is it practically possible for the DOD to determine which
    fuels are derived from Canadian oil sands or which are not in
    the general--Nation's general fuel distribution system?
        Mr. Hicks. Congressman, I appreciate that question. I think
    the best way for me to answer that is really take that one for
    the record. That is really a better question I think for
    Defense Logistics Agency Energy, who is the one who that is
    purchasing the fuel on behalf of the services to answer. Yes. I
    would prefer that, to take that for the record, sir.
        Mr. Green. Well, I have refineries that produce--bring in
    crude oil from a lot of different places, and the result is
    aviation fuel, and you can't tell if the aviation fuel meets
    the criteria whether it comes from the Gulf of Mexico, Saudi
    Arabia, or even Canadian oil sands. So----
        Mr. Hicks. Yes, Congressman. I know that is a challenge and
    how they can find that accounting, and we can do, can kind of
    track where the dropped fuel and barrel of oil came from, but
    it is one that is probably better suited for DLA Energy to
    respond.
        Mr. Green. Thank you.
        Mr. Sandalow, Wednesday the last question from my
    colleague, the Environment Subcommittee had a hearing on Yucca
    Mountain. In that hearing we discussed the need to develop at
    least one interim storage facility to ease the burden of the
    storage dilemma.
        The President has said that he supports investments in
    alternative forms of energy, and Secretary Chu testified before
    this committee that we are unable to meet the President's goal
    if we do not continue to invest in nuclear energy. This, of
    course, means that we will have to have an increase in nuclear
    waste, and we need to safely store it. So we will need to
    resolve the situation sooner or later.
        In June of 2009 the DOE withdrew its proposed Global
    Nuclear Energy Partnership Technology Demonstration Program.
    This program would explore different ways to recycle spent fuel
    much as the French system. If the administration does not
    support long-term storage at Yucca Mountain or recycling fuel
    rods but remains insistent on we must rely on energy sources
    such as nuclear, then just what do we intend to do with this
    nuclear waste? Is there an alternative? Because I know the
    French have been, you know, recycling those rods for at least
    20 years.
        Mr. Sandalow. Yes. Thank you for the question, Congressman.
    It is very important and along the same lines as Congressman
    McKinley.
        This is a topic that is being addressed by Blue Ribbon
    Commission appointed by the Secretary of Energy, composed of
    some of our Nation's leading experts on this topic, and their
    report is expected this summer. So I would defer any further
    question, you know, and answer on that, I mean, answer on that
    to Blue Ribbon Commission.
        Mr. Green. Mr. Chairman, we might need to have the Blue
    Ribbon Commission come up some time because I wasn't in
    Congress in the '80s when the decision on Yucca Mountain was
    made, but obviously, hopefully, they had a Blue Ribbon
    Commission in the 1980s to make that decision.
        Let me ask a question also. H.R. 909 has set up a reverse
    auction to incentivize renewable energy development. I have
    some concerns on how the details are laid out in the
    legislation. Mr. Sandalow, you testified about the Department's
    experience with reverse auction for cellulosic biofuels which
    has yet to achieve its objectives. The cellulosic biofuels
    industry, which was expected to take off, has stalled, and last
    summer's call for bids in the reverse auction went unanswered.
        Clearly reverse auctions must be carefully crafted in order
    to achieve the dual goals of saving money and incentivizing
    production. Several aspects of reverse auction in this
    legislation may be problematic. Reverse auctions have potential
    as incentive for renewable energy development, but it is clear
    from DOE's experience that the details matter, and if our
    committee develops legislation on the matter, we will be
    mindful to do so very carefully.
        For example, in order to be eligible to participate in
    reverse auction, facilities have to have power purchase
    agreements in place. My question, Mr. Sandalow, is what stage
    of development will a renewable energy project developer enter
    into a power purchase agreement?
        Mr. Sandalow. Well, I think the way that that relates to
    the reverse auction is something that will need to be worked
    out in the course of discussions about this legislation,
    Congressman. I agree completely with the point you are making
    that reverse auctions have tremendous potential. They are an
    important market-based mechanism, but the details do matter in
    terms of how we work that out.
        Mr. Green. Is there any portion of the renewable energy
    sector in your estimation that has progressed to that stage?
        Mr. Sandalow. I am sorry, Congressman. When you say that
    stage?
        Mr. Green. To the stage of even talking about a power
    purchase agreement.
        Mr. Sandalow. Yes, absolutely, Congressman, there are.
        Mr. Green. And as soon as they reach that stage, will they
    have done so without the benefit of federal loan guarantees
    included in--including DOE loan guarantees and loan guarantees
    administered by USDA for biofuels?
        Mr. Sandalow. That is a good question which I will take for
    the record, Congressman.
        Mr. Green. OK. I don't expect you to answer about USDA, but
    if you could--if they have done it without the Department of
    Energy loan guarantees.
        Mr. Chairman, I know I am out of time. I will submit the
    rest of the questions.
        Mr. Whitfield. OK. Mr. Olson, you are recognized for 5
    minutes.
        Mr. Olson. Thank you, Mr. Chairman. I seem to be the guy
    who always comes up when votes are being called, so I will try
    to be brief. But thank the witnesses for coming today, thank
    you for your expertise.
        My first question is for you, Mr. Sandalow. As you know
    now, the U.S. is the largest producer of natural gas in the
    world, and there is great potential there to improve our energy
    security, our national security. Hydraulic fracturing
    advancements in horizontal drilling techniques have been the
    key to developing these resources. President Obama in the State
    of the Union and energy speeches this year has said natural gas
    is a big part of our energy future.
        EPA is studying the fracturing process over concerns about
    contamination of drinking water, but Administrator Jackson
    admitted on the Hill over on the Senate side last week that
    there are no known cases of contamination as results of
    hydraulic fracturing.
        Last year in a reference to hydraulic fracturing Secretary
    Chu was quoted as saying, this is a quote, ``We are going to
    have some regulation going on then.'' Let me read that again.
    ``We are going to have some regulation going on then.'' So
    basically DOE is looking to have DOA doing some regulation, and
    has your agency been actively pursuing any regulations over the
    practice of hydraulic fracturing?
        Mr. Sandalow. Congressman, thank you for your question. A
    couple of points in response to it. First, I would emphasize
    that all the--that the technical progress that we have made in
    shale gas in the past couple of years is extraordinary and
    impressive and that much of it started with funding from the
    U.S. Department of Energy. It is a great example of the
    important role of the Federal Government in spurring
    technological innovation.
        At this--in your question about the environmental impacts,
    the Secretary of Energy has asked his advisory board to take a
    look at this issue, and in fact, just this week that advisory
    board has been meeting, looking at technologies that will allow
    us to develop our shale gas resources using hydraulic
    fracturing and doing so in a way that minimizes environmental
    impact. And that has been the main focus of our activity at the
    Department of Energy on this topic.
        Mr. Olson. OK, but there is no known contamination of
    drinking water from a DOE perspective. Correct?
        Mr. Sandalow. I don't have specific information on that,
    Congressman. That would mainly fall into the purview of the
    Department of the Environmental Protection Agency.
        Mr. Olson. I couldn't agree with you more. The government
    has a great record of investing resources but once we get
    beyond that, that is about it, and it is my concern that we
    don't have the competing things, EPA, these things to keep
    these resources going, because, again, our natural gas reserves
    are--right now, clean source of energy, so our generation is
    probably in transportation, the next, you know, replace
    gasoline with something we need to do right here in our
    country, American jobs and decrease our dependence on foreign
    sources of oil.
        Mr. Hicks, I appreciate your comments today about the
    Department of Defense, the Department of the Navy's dependence
    on fossil fuel. If I understand your comments to Mr. Terry, DOD
    and the progress you are making isn't because you are changing
    fuels per se. It is because you are doing all sorts of things
    outside, streamlining the aircrafts, moving in the propellers,
    those type of things, the screens on the surface vessel subs.
    And obviously wind and solar aren't going to be used in those--
    our carriers, our subs, or our airplanes. I mean, some fossils
    are going to be a big part of our future and very specific
    fossil fuels; mosinavia and JP, JP-5, JP-8. JP-8 was on--
    because it was specifically designed to have a lower flash
    point so the fires we had in history like the USS Forrestal
    during the Vietnam War.
        And that is a very special fuel, and most of that, a lot of
    that is, built is not the right word, but is processed in the
    district Congressman Green represents at the shale facility in
    Deer Park, Texas, and you know, it is, again, if it was made
    more difficult to obtain these fossil fuels, would that have a
    weakened affect on the military of today?
        Mr. Hicks. Certainly that would have an effect, and I think
    it speaks to our overall energy strategy, which is both one of
    efficiency and one of finding domestic alternative sources so
    we can be more independent in our field choices, and, again,
    the waypoint that we are going toward is a 50/50 blend of the
    JP-5 that you mentioned in hydro-renewable jet fuel, and
    likewise, F-76 Marine diesel and a combination of HRD hydro-
    renewable diesel fuel for our service vessels.
        Mr. Olson. Thank you for those comments, and I am about
    running out of time, but I know you share these sentiments,
    but, you know, our job, our main job of our military is to kill
    our enemies, and our job here in Congress and your job is to
    give them all the equipment, the proper equipment, the proper
    fuel they need to do that and not to be some sort of test bed
    for some future generated source of energy. Other people can do
    that. We need you to have your fuel and fossil fuels for as
    long as you need it to have the best equipment out there that
    is second to none.
        I yield back the balance of my time. Thank you.
        Mr. Whitfield. Mr. Inslee, you are recognized for 5
    minutes.
        Mr. Inslee. I thank you, thanks, Mr. Sandalow, for being
    here. Glad you are on duty, and I want to ask you both about
    biofuels potential. I am going to be a little parochial talking
    about this for a moment because we really have an aggressive
    effort to develop a biofuels industrial base in the Pacific
    Northwest. There is a very active consortium with Boeing and a
    host of civilian aviation firms, and we appreciate Secretary
    Mabus's leadership on this. He was hugely excited on our Earth
    Day last year in the rose garden when he announced that we had
    had our Green Hornet first time break the sound barrier using
    biofuels. That was pretty exciting.
        Mr. Sandalow. Yes.
        Mr. Inslee. So I guess the question is what can we do to
    facilitate a bioreactor actually going in out in the Northwest,
    how can we help that effort, and what is the status of those
    considerations?
        Mr. Sandalow. I am going to start by thanking you,
    Congressman, for your long-time leadership on these issues. I
    have learned a lot from reading what Mr. Inslee has written
    and----
        Mr. Inslee. Good. There was somebody out there. I wasn't
    sure.
        Mr. Sandalow. This is an extremely important area of our
    country, one with tremendous potential. I am going to have to
    take back the specific question about the opportunities in the
    State of Washington and come back to you on that, but there is
    no question that overall this country can create jobs and
    reduce our dependence on oil with investment in new biofuels
    technologies. We just heard what I think is an amazing American
    story about taking a fighter jet to mach 1.2, you said, I
    believe, and using American-made, you know, biofuels from a
    technology nobody would I think believe was possible 10 or 20
    years ago.
        That is exactly the type of thing that we can do, and the
    future, I think, many--I have heard experts say that the next
    stage in this industry is scaling up commercial-sized bio-
    refineries that will get significant volumes of biofuels that
    have been tested at bench scale up and into the marketplace,
    and I think it is very important that we look at ways to do
    that in the years ahead.
        It is important that we continue the research in the new
    types of feedstocks that are really going to make a difference
    in the years and decades ahead.
        Mr. Hicks. And if I could add, and I would be remiss if I
    didn't mention that the Green Hornet actually has now gone to
    1.7, mach 1.7. Commander Weaver, Pie, as he is known, I think
    would want it to be known that he has taken it to its full
    limit with no challenges at all to the fuel whatsoever.
        Certainly as we know a couple of companies in the State of
    Washington, they are doing great work, AltAir Fuels is one, and
    I believe Imperium is another, and we are watching those
    companies as they mature.
        In terms of your question I think just, you know, continued
    support toward alternative fuels is something that we can do as
    a country to help us and enable us to be more energy
    independent. As David mentioned, you know, R&D plays a critical
    role in this both in the near term and the long term. I think
    for our efforts being able to test and certify the platforms we
    have and be able to accomplish those missions at 100 percent of
    their abilities with no challenges at all with those fuels is
    something that we would also just, you know, request continued
    support for.
        Mr. Inslee. Well, just to be a little parochial, there is
    an amazing consortium out in our neck of the woods, and we have
    multiple companies, Targeted Growth is doing genetically-
    modified base, a company with some leadership in Washington
    State, Sapphire Energy, is doing algae-based. There are now
    commercial scale or pre-commercial scale ponds in New Mexico,
    and I know you will be looking for--from growing to
    distribution to testing to commercialization. I think we are
    developing that kind of environment out in the Northwest, and
    if there is any way we can help accommodate your efforts, that
    would be great.
        I want to ask you about coal to liquids. I am a person who
    has supported the effort to develop cleaner coal to reduce CO2,
    and we supported here in the bill we passed in the House last
    year, the year before last, a billion-plus dollars a year to
    help develop a way to use coal in a way that does not
    significantly disrupt the climate.
        But the coal to liquids that I am familiar with that are
    addressed in this bill it appears to me would actually go
    backwards from a CO2 pollution context and lifecycle of the
    product. If that is correct, then why would we want to go
    backwards to a product that actually is going in the opposite
    direction than we all know we need to go?
        Mr. Hicks. I would just say those are some of the questions
    that we have from the Navy's perspective, which are--I think
    there are some large questions around that technology and may
    explain why some of those in that industry are pulling back or
    dialing back some of their efforts there.
        But the questions of the enormous capital expenditures
    needed, $5 to $10 billion, enormous water needed, as well as,
    you know, just some of the waste product that would come out of
    that are all areas that need to be addressed, in addition to,
    and this is what is great with Department of Energy is dealing
    with and doing the research and development on carbon capture
    and storage technology, which can be used, you know, with the
    coal plants that we do have, the plants that have been
    providing affordable power for, you know, a century now and
    will into the next and using that technology focused on those
    plants I think is something that could be an advantage.
        But for coal-to-liquid facilities and to suggest that that
    is the near-term solution with all these other question marks I
    think is something that needs further inquiry.
        Mr. Inslee. Thank you.
        Mr. Whitfield. Thank you. We have one vote on the House
    Floor, and so we are just going to take a little time off here.
    I think Ms. McMorris Rodgers will be coming back, and when she
    comes back, I think she will have questions for the two of you,
    but whether she does or does not come back, we will be back
    within about 10 minutes.
        So we will be in recess until then.
        [Recess.]
        Mr. Terry. [Presiding] Hopefully I will have some of my
    colleagues continue to join me, but we are finished with the
    second panel. So Mr. Sandalow and Mr. Hicks, really appreciate
    your testimony. It was interesting, and I thought you gave good
    detail on your answers, which is much appreciated by this
    committee.
        So at this time you are dismissed.
        At this time we will call up the next panel. While we are
    setting up name plates and getting the chairs organized, our
    third panel is Neil Auerbach from the Hudson Clean Energy,
    James Bartis, Senior Policy Researcher, RAND Corporation, and
    Jack Spencer, Research Fellow, Nuclear Energy, from The
    Heritage Foundation.
        Mr. Auerbach, we are going to start with you. Give us just
    a few more seconds to get settled in, get your water, turn your
    mike on, and Mr. Auerbach, if you would begin.

      STATEMENTS OF NEIL AUERBACH, MANAGING PARTNER, HUDSON CLEAN
      ENERGY; JACK SPENCER, RESEARCH FELLOW, NUCLEAR ENERGY, THE
        HERITAGE FOUNDATION; AND JAMES T. BARTIS, SENIOR POLICY
                      RESEARCHER, RAND CORPORATION

                       STATEMENT OF NEIL AUERBACH

        Mr. Auerbach. Thank you very much, members of the
    committee, for the opportunity to testify for you today. It is
    an honor and privilege.
        My name is Neil Auerbach, and I am the Founder and Managing
    Partner of Hudson Clean Energy Partners. Hudson Clean Energy
    Partners is a global private equity firm that focuses
    exclusively on investing in the clean energy sector. With over
    $1 billion in assets under management, Hudson is a leading
    global investor in sectors that include wind, solar and
    hydroelectric energy, and biofuels, biomass, smart grid,
    electric vehicles, energy efficiency, and storage. Given our
    position on the front lines of these fast-growing industries,
    we have seen firsthand the impact of government policies on
    private sector capital flows, both at home and abroad.
        New capital flowing into our sector is coming in at such a
    quick pace that we are already drawing nearly equal to capital
    flowing into new fossil-fuel-fired power plants around the
    world, and in fact, in 2010, the amount of capital in renewable
    energy power generation was about 85 percent of global capital
    flowing into fossil-fuel powered generation. So this is
    becoming and is now a very big business.
        The increasing scale of our industry is causing dramatic
    changes and strategic thinking of industry players and
    policymakers around the world. Other forces at work in the
    energy industry are also causing a reassessment of strategic
    thinking, most notably the rapid advances made in extracting
    shale gas cheaply.
        While these and other forces at work are putting pressure
    on lowering the cost of power, upward pressure on the price of
    oil is occurring, leading to higher prices at the gasoline pump
    for motorists here in the U.S. and around the world.
        As the Chinese economy continues to grow, demand for
    petroleum will continue to increase. Today China is by far the
    world's largest market for automobiles, yet on a per capita
    basis the market penetration for automobiles is roughly about
    1/20 of what it is in the United States. Imagine what will
    occur when they draw equal to the United States.
        While my written testimony addresses the reverse auction
    mechanism in Title III of H.R. 909, I just want to articulate
    first, although my specialty and frankly a majority of my
    network and my career is now devoted to clean energy, I am
    broadly in support of an all-of-the-above strategy and that
    strategy informing this legislation, and so I support the basic
    concept of using dedicated oil and gas royalties as a funding
    source to create a trust fund out of which payments will be
    made to renewable energy generators.
        It is important to understand why I believe so passionately
    in the future of clean energy and why I believe it is actually
    in the present. There are three basic reasons why clean energy
    is increasingly attractive to consumers and to policymakers
    around the world. It is good for energy security, including
    American energy security, it is good for economic growth, and
    it is also good for the environment, and I believe that by
    looking at all three factors one concludes that more clean
    energy, in particular, renewable energy, is better than less
    for America's energy future.
        I want to focus before getting into renewable--to reverse
    auctions directly on the chart which is to my right, and if you
    want, I can--if the camera can focus on it. Just as an
    illustration to make it as clear as I can with a chart, that
    looks fairly complex I will try to simplify it, at just how
    dramatic the changes are that I refer to in the--in what is
    happening today in clean energy.
        Over the past 80 years there have been obviously
    significant price movements in the electricity sector in the
    United States of coal-fired, gas-fired, nuclear-fired, wind-
    powered, and solar-powered electricity. And what this chart
    shows is how prices have come down as each of these power
    sources has scaled over the past roughly 100 years. The fastest
    declining cost for power is coming from solar, and that is the
    orange dotted line all the way on the right. Next fastest is
    wind, and then we have got natural gas and coal and then
    nuclear, which to date has actually been increasing in cost.
        Now, again, I am not against any of the power sources but
    ultimately I believe that the reverse auction mechanism that I
    will address in more detail now speaks to the need to allow
    market forces to drive down the cost of all sources of energy
    in our economy, and the most--and so what we have seen here is
    enormous progress.
        Last week the research director for GE gave his
    pronouncement that he thought that solar electricity would be
    cheaper than coal, electricity in 3 to 5 years. My personal
    assessment from investing hundreds of millions, if not
    billions, of dollars in the solar industry over the past 10
    years is that it may be 5 years away, maybe a little bit more,
    but it is coming very fast.
        Just to give you a further example, the solar industry has
    grown from 2005 to 2011, 15 times. The changes that are
    occurring in that industry alone are enormous, and they are
    going to bring cheaper power to Americans everywhere if we
    scale up the industry wisely in the United States.
        The reverse auction mechanism, first of all, very simply,
    there is a lot of confusion about what a reverse auction is,
    and I think Congressman Nunes addressed it clearly. A regular
    auction is clearly where one seller is trying to induce
    multiple buyers to bid, to raise the price. In a reverse
    auction the buyer is trying to do the opposite, and so there is
    a lot of window dressing or detail associated with how one
    constructs a reverse auction, but reverse auctions work, and
    they have been demonstrated to work, and I will get into the
    Brazil example in a few minutes.
        The bill effectively proposes replacing the current tax
    credit system over time that has existed for about 18 years for
    supporting renewable energy with a reverse auction. I want to
    point out here that the reverse auction mechanism in essence
    works. There are some issues that need to be addressed, and I
    will just mention two of them, and then we can get into the
    rest of it in questions.
        I believe that we need to remove the reverse auction from
    annual appropriations. Billions, hundreds of billions of
    dollars of capital can be mobilized in support of renewable
    energy in the United States, but capital will not flow if the
    reverse auction mechanism is subject to annual appropriation,
    and I think that the PPA issue that has been raised by several
    members that is noted in my testimony also needs to be
    addressed. In my written testimony we focus on a recommendation
    to actually expand the use of the reverse auction to include
    all three revenue streams.
        [The prepared statement of Mr. Auerbach follows:]

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        Mr. Terry. Thank you. I appreciate that, Mr. Auerbach.
        Mr. Spencer of The Heritage Foundation.

                       STATEMENT OF JACK SPENCER

        Mr. Spencer. Mr. Chairman, members of the subcommittee, my
    name is Jack Spencer. I am the Research Fellow for Nuclear
    Energy Policy at The Heritage Foundation. The views I express
    in this testimony are my own and should not be construed as
    representing any official position of The Heritage Foundation.
        Thank you for inviting me to testify before you today
    regarding the Roadmap for America's Energy Future. I would like
    to focus on the nuclear power provisions of that bill.
        Nuclear is among America's least expensive electricity
    sources. It emits nothing into the atmosphere, has a great
    safety record in the United States, including no injuries.
    Despite these facts, no plants have been ordered for over 3
    decades. In many instances there will be none, there will be no
    additional construction without taxpayer backing.
        So this has been the basic approach of most policymakers.
    In fact, looking at many of the proposals currently under
    consideration, one might conclude that Washington thinks that
    it can subsidize nuclear energy into commercial viability.
        I would suggest, however, that a lack of taxpayer support
    is not the problem. The problem is an incoherent nuclear waste
    management policy and an antiquated regulatory system. The
    energy roadmap begins to address both of these areas.
        Ultimately, America's failed approach to nuclear waste
    management presents a substantial risk to the future of nuclear
    power. Constructing a nuclear materials repository is essential
    to fixing this problem. Current law states that the repository
    shall be built at Yucca Mountain. The energy roadmap breaks the
    impasse over Yucca Mountain by establishing a 90-day timeline
    for the Nuclear Regulatory Commission to determine based on
    technical and scientific data whether or not to issue a permit
    for repository construction. If Yucca is not suitable, the
    proposal sets forth a process to find an alternative site.
        But the roadmap goes a step further. It directs the
    Department of Energy to report back to Congress on the
    feasibility of both establishing an organization outside of the
    Department to manage Yucca and of removing the fee that
    ratepayers pay to the Federal Government for waste management
    services. Removing the fee would allow for a market-based
    system to emerge. It is this provision of the--that sets the
    roadmap apart from recent, from its recent predecessors.
        Instead of attempting to fix the flawed system, this
    legislation allows for a fundamental reform of how nuclear
    waste is managed. In a market-based system instead of paying a
    preset fee to the Federal Government to manage used fuel or in
    this case not managed used fuel, nuclear power operators would
    pay a fee for service. This could include simply paying a fee
    for geologic storage or a more complex suite of processing
    services.
        The key is to establish a pricing mechanism for placing
    nuclear waste storage in a geologic repository. Nuclear power
    operators could then decide, given the price of used fuel in
    Yucca, how to manage their waste. As the price to access Yucca
    goes up, so will the incentive for nuclear operators to do
    something else with their used fuel.
        This should give rise to an industry that competes to
    provide used management, used-fuel management services. One
    could imagine a marketplace where everything from interim
    storage to full fuel reprocessing was available. The basic
    regulation would be that all the waste must be disposed of by
    the time the plant is decommissioned, and of course, that
    everything is done within the guidelines set by the NRC to
    protect public health and safety.
        This idea is gaining ground. For example, Tim Echols, a
    Georgia State Public Services Commissioner, recently published
    an op-ed in the Atlanta Business Chronicle supporting the
    approach. More recently, experts from the Center for Strategic
    and International Studies, the Federation of American
    Scientists, the University of Illinois Champaign-Urbana, and
    The Heritage Foundation, I would be the representative there,
    authored a report entitled, ``U.S. Spent Nuclear Fuel: A
    Market-Based Solution.'' Even nations like Finland and Sweden
    are finding great success in waste management programs where
    waste producers are responsible for waste management.
        The energy roadmap also would reform how new reactors are
    permitted by creating a second permitting track that would
    allow for a permit to be issued in approximately 2 years. The
    expedited process would entail more efficient processes for
    both environmental and technical review.
        The bill also begins to build regulatory support for new
    reactor technologies. Without this regulation, new technologies
    are effectively banned from the marketplace. Customers do not
    want reactors that the NRC will not regulate, and the NRC does
    not want to put its resources toward a reactor technology that
    has no customers. The result is that new technologies are at a
    severe disadvantage.
        To begin changing this, the roadmap directs the NRC to
    develop a set of guidelines for technology-neutral nuclear
    plants. Allowing our reactor designers to meet a general set of
    plant guidelines would represent a significant step forward in
    building a more diverse and competitive nuclear industry.
        And the final point that I would like to bring to the
    committee, the subcommittee's attention is that the proposal
    would give the NRC a 90-day deadline to report to Congress what
    personnel and resources are required to establish a
    predictable, regulatory program for small modular reactors.
    Like other elements of the bill, this provision moves away from
    the subsidy-first mentality that consolidates market power in
    Washington to a market-based division that allows the actual
    commercial value of a technology to determine its ultimate
    success.
        That concludes my testimony. I look forward to your
    questions.
        [The prepared statement of Mr. Spencer follows:]

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        Mr. Whitfield. Mr. Bartis, you are recognized for 5 minutes
    for your opening statement.

                      STATEMENT OF JAMES T. BARTIS

        Mr. Bartis. Mr. Chairman and distinguished members, thank
    you for inviting me to further elaborate on the testimony that
    I gave to this subcommittee on May 5 of this year. I will be
    focusing my remarks today on the policy implications of
    sections of H.R. 909 that deal with oil shale and coal
    liquefaction, as is RAND's policy. My testimony neither
    endorses nor opposes specific legislation.
        The United States has enormous oil shale, has an enormous
    oil shale resource base, enough to support the production of
    millions of barrels per day for centuries. But getting a useful
    fuel from this resource is technically complex, requiring
    temperatures that are much higher than those used in processing
    Canadian oil sands.
        Moreover, nearly all of the high-value oil shale resources
    geographically concentrated on federally managed lands lie in a
    very small area, roughly 30 by 35 miles in Colorado's Piceance
    Basin and within a small portion of the Uinta Basin within
    Utah. That oil shale belongs to all of us. The public value is
    potentially tens of trillions of dollars.
        But reaping that public benefit, not to mention the energy
    security benefits of domestic alternative fuels production,
    requires the development of a commercial oil shale industry
    capable of producing a few million barrels per day. That level
    of production should be the long-term strategic goal for oil
    shale. At this stage I don't know if that goal can be achieved.
    We are talking about a tremendous amount of industrial
    activity, especially when we consider supporting infrastructure
    within a very small reason. Extensive measures will be required
    to prevent serious adverse ecological and social economic
    impacts and to protect the quality of the Colorado River.
        My analysis of the oil shale provisions of H.R. 909 is that
    they do not move our Nation towards that long-term strategic
    goal of large and sustainable commercial production. My
    specific concerns are detailed in my written testimony.
        There are a few areas where Congress may need to provide
    direction so that the Nation can realize the full opportunity
    that oil shale offers. The critical step is obtaining early
    production experience. Until we understand the performance of
    the process options, it is not productive to engage in
    establishing a detailed, regulatory structure for a large,
    multi-million barrel-per-day commercial industry.
        I suggest the following for consideration by the committee.
    First, require that the Departments of Energy and the Interior
    and the Environmental Protection Agency cooperatively develop
    and publish a federal plan for promoting the construction and
    operation of a limited number of pioneer commercial plants.
    That plan should be designed to attract America's top high-
    technology firms.
        Second, require that the Department of the Interior
    develop, publish, and implement a 15-year schedule for multiple
    offerings of small R&D leases.
        And third, require the preparation of plans for conducting
    critical environmental and ecological research and an
    assessment of the carbon management options in the vicinity of
    the federally managed oil shale lands.
        Turning to coal, here we have another enormous resource
    that we could be utilizing to meet our liquid fuel needs.
    Technical approaches are available to produce liquid fuels from
    coal or a combination of coal and biomass with life cycle
    greenhouse gas emissions that are comparable or significantly
    below those associated with conventional petroleum.
        Moreover, over the long-term, liquid fuels derived from a
    combination of coal and biomass could provide a new market for
    coal that could counter the adverse local and regional economic
    impacts of reduced demand for coal in power generation due to
    measures to reduce greenhouse gas emissions.
        I am concerned with the slow progress towards gaining
    commercial experience in coal-derived liquids production in the
    United States. However, I do not believe that government
    ownership of alternative fuels production facilities is a
    credible solution. If the Congress is interested in using the
    purchasing power of the Defense Department to promote early
    commercial experience, I suggest providing the Department with
    the authority to make long-term agreements to guarantee a
    minimum sale price to the benefit of the alternative fuel
    producer in the event that oil prices are low. In return for
    this benefit the Department would negotiate a maximum purchase
    price that would be lower than world oil prices in the event
    that world oil prices pass a specified threshold.
        I would also like to make a few comments regarding 526 of
    the Energy Independence and Security Act of 2007. The primary
    policy issue raised by repeal of this section is whether it is
    in the national interest to allow government agencies to
    promote the production of alternative fuels to have life-cycled
    greenhouse gas emissions that are significantly higher than
    their petroleum counterparts. For example, repeal of this
    section would open the door to a government procurement of
    coal-derived liquids produced without any management of
    greenhouse gas emissions.
        As enacted, Section 526 places severe constraints on the
    government's ability to purchase fuels. This is because
    commercially-available fuels might contain certain amounts of
    alternative fuels that fall under the prohibitions of that
    section, as was mentioned by the Congressman from Texas.
    Congress attempted to correct this problem in 2010, when it
    enacted Public Law 111314, but the language of Section 3010 of
    that law is very unclear. Congress should consider clarifying
    the meaning of that section.
        If the intent of Congress is to promote the early
    production of alternative fuels with greenhouse gas emissions
    that are comparable or very close and well within the
    uncertainty of our petroleum imports, then Section 526 can be
    appropriately amended. For example, an amendment could allow
    government purchases of alternative fuels derived from coal if
    90 percent of greenhouse gases produced during the production
    process were captured and sequestered. Such a provision would
    greatly simplify the ability of a coal-to-liquids plant to
    qualify for government purchase contracts.
        My written testimony contains a section-by-section review
    of the oil shale and coal-to-liquid provisions which I hope you
    will find useful.
        Thank you very much, sir.
        [The prepared statement of Mr. Bartis follows:]

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        Mr. Whitfield. Well, thank you all for your opening
    statements, and at this time I am going to call on Mr. Terry
    for 5 minutes of questions.
        Mr. Terry. I appreciate that, Mr. Chairman.
        Mr. Auerbach, fulfilling my promise, but it is one of the
    more intriguing aspects of the bill is reverse auctions and
    clean energy. So in the context of Brazil, you said you were
    going to tell us about Brazil, but put it in the context of
    what also you think would positively and negatively work in the
    United States to encourage more clean energy.
        Mr. Auerbach. Sure. Certainty provides greater investment
    in clean energy infrastructure, and the current system we have
    of tax credits that expire every couple of years has introduced
    uncertainty and has stymied deployment. The reverse auction
    mechanism in Brazil, which came actually I think it was last
    year, the year before that was called ``the PROINFA feed-in
    tariff,'' at an average price for wind of about $136 a
    kilowatt. I am sorry. A megawatt hour.
        In the reverse auction process auctioning off 2.1 gigawatts
    of wind energy in a number of different contracts, the average
    price bid was $74.40 in U.S. dollar terms. That came in below
    hydropower, which averages in Brazil about $80 a megawatt hour.
    That is remarkable. Some have criticized the auction for
    allowing too many speculative bids, but if you look at the list
    of winners, you see some of the largest utility companies,
    companies that have very substantial balance sheets and are
    capable of transacting. So I do believe that the auction there
    has worked.
        And so the biggest difference between the Brazilian auction
    and what is in this current program is that you sell the power
    to the reverse auction agency rather than just one attribute,
    and so in our proposal one way of solving the chicken and egg
    problem associated with meeting a power purchase agreement to
    establish credibility before participating in the reverse
    auction to get the benefit payment that substitutes for tax
    credits is to be able to sell all the revenue streams through
    the reverse auction agency that would be administering the
    purchase and sale of electricity.
        So a renewable energy generator would have a price certain
    for all of its attributes. The three income streams are to sell
    the power itself, the sale of renewable energy credits, which
    are a substantial portion of the revenue stream of a renewable
    energy generator, and the benefit payment that comes from the
    trust fund. And that would take some work to get that
    innovation into the law and obviously we would need bipartisan
    agreement, but I think it would actually streamline and
    dramatically increase the clean energy generation in the United
    States.
        Mr. Terry. Does Brazil have a credit as well?
        Mr. Auerbach. I don't think so, but I would tell you I
    would like to do more homework. I have researched, but we don't
    have facilities in Brazil today. So I may be missing a beat,
    but I have studied it, and I don't believe so. I think it is
    just one price.
        Mr. Terry. So but in your testimony you mentioned multiple
    revenue streams, one of which is the tax credit.
        Mr. Auerbach. Right.
        Mr. Terry. The philosophy I think that we are working under
    is reverse auctions instead of credits.
        Mr. Auerbach. Correct, and so what I mean, let me just make
    this as simple as I can because there is a lot of complexity
    here. If--I actually have companies that have several hundred
    billion dollars invested in clean energy generation in the
    United States in development. What we want to do is to know how
    much money we are going to make for the sale of the electrons,
    and the way you get paid is through the power purchase
    agreement, through the tax credits today, and through renewable
    energy credits.
        And so that, the total of that revenue divided by the
    capital costs and minus your funding costs is how much money we
    made, and so if the clean energy generator knows how much money
    they are going to make and they can have that price certain,
    then you are going to have more clean energy generation because
    the market is determining it.
        The reverse auction mechanism is substituting a tax credit
    for a benefit payment, which I believe is more efficient on its
    own. So if the reverse auction only covered substitute tax
    credit payments, we need to solve the chicken and egg problem.
    There are other ways of solving it. Our recommendation is to
    just--is to have a more organized sale of renewable power
    through the reverse auction agency, which I believe can be used
    for a broader purpose, including the diversion of royalty
    payments into the trust fund and any allocations to renewable
    energy generators.
        Mr. Whitfield. Mr. McKinley, I will recognize you for 5
    minutes for questions.
        Mr. McKinley. Thank you, Mr. Chairman.
        I am just curious to get a sense of where we are in this
    with the--if the bill was presented, would you support it?
        Mr. Auerbach. I would support it with modifications. If we
    got the modifications that we asked for, I would support it. As
    written it needs further work in order to have its intended
    effect.
        Mr. McKinley. Thank you. Mr. Spencer?
        Mr. Spencer. I am not in a position to support or not
    support legislation. I can say that I think that a lot of the
    ideas and policies put forth certainly from a nuclear
    standpoint really give us a new way to address some really
    fundamental flaws in how we do nuclear energy and gives us a
    future there.
        Mr. McKinley. Mr. Bartis.
        Mr. Bartis. I would rather not comment on that. I haven't
    studied this.
        Mr. McKinley. I am just--I was curious because I think at
    least he is showing some imagination here and something that
    reflects a little bit on the use of coal, and as I said to the
    earlier panel, my--I have come pretty clearly to understand
    there is quite an aversion in Washington and especially under
    this administration to use coal.
        Mr. Bartis. Well, there has been a long history of Congress
    and the administration specifying how to do things as opposed
    to what the goals are, and as we pointed out with coal
    liquefaction, if we can do it with a small amount of biomass
    and coal, gets you fantastic environmental benefits, and it
    gets you very reasonable costs. And yet the way we have
    structured some of our legislation, that option is not allowed
    because as soon as it is coal involved, it doesn't meet the
    renewable.
        And so I think there is, you know, the goal of the Congress
    should always be focused on, you know, what are you trying to
    achieve. Are you trying to achieve energy security, are you
    trying to achieve lower greenhouse gas emissions? Use those as
    your goals, not specifying technologies.
        Mr. McKinley. Do any of you know from the coal industry
    whether the coal industry is subsidized? I hear that all the
    time here. Panels, members of the other side of the aisle talk
    about the subsidy on the coal industry. Do any of you have any
    record at all of the subsidies on coal?
        None? Again, I am just curious because it seems like we
    just keep chasing things down the stream. I won't use that
    clique, but, again, we just don't seem to solve anything. We
    are about--we get close to solving something. There was the--
    what was it, the Fischer-Tropsch process, it was--why aren't we
    just back in the '30s, why aren't we just perfecting it instead
    of taking on something new?
        And maybe it is--maybe I am being naive about the whole
    process. I am thinking as an engineer that we would complete
    something instead of starting something new. It just seems like
    this administration and the whole process that we don't have
    the energy policy, we don't have any plan to have an energy
    policy, everyone talks about it, but there is none. And we
    are--we don't want to be held accountable. We seem to be so
    much more filled here in Washington with symbolism that we want
    to move symbolically to starting a new fuel process and new
    energy when we have things that we could work.
        I can imagine if this would have been back in the
    automobile industry if we had quit making the first automobile
    and went with something else, but they kept perfecting it until
    it became the automobile, the vehicle that we use. Same thing
    with airplanes when they started in the process. Why don't we
    finish it? Why don't we just--what--is it the economics? Mr.
    Bartis?
        Mr. Bartis. No. Our discussions with organizations that are
    interested in promoting and building plants is that there is a
    residual concern regarding where the world oil prices are
    heading, and we all, because they are high today, we think they
    are going to stay high, and if you have got a large investment
    to bet on that, you are going to be a little bit more cautious.
        So there is downward potential that could last. It may not
    be very long, but it could be downward potential, and that
    would cause something like a coal-to-liquids plant to be a
    disaster. And that is why we are talking about--in our analysis
    we looked at incentives that the government could provide that
    would be applicable to the first few plants. We don't like
    subsidizing production. We do think that there is a government
    role in promoting early commercial experience, and coal-to-
    liquids is one of those, coal and biomass to liquids. That it
    is environmentally clean is one of those applications.
        Mr. McKinley. Thank you. Mr. Spencer, do you have something
    you want to chime in?
        Mr. Spencer. Yes, Congressman. I am here to talk primarily
    about nuclear energy, but you have given me an opportunity that
    I find hard to pass up. Given that when I am not working on
    nuclear energy I work on energy subsidies broadly, and I think
    the bigger issue here is what is the role of government, and
    you talked about these projects that have started and stopped.
    I would simply suggest that with all due respect to all of the
    great men and women who have--who work in this building and the
    one on the other side and all of the great men and women and
    scientists who work down at the Forsaw Building at the
    Department of Energy, that ultimately it is the marketplace
    that is the best arbiter of which of these technologies go
    forward and which ones don't.
        And if coal to liquids is the way to go, then people will
    invest in that and will do that. If energy prices are going to
    stay high, then that creates a panoply of opportunity for
    biofuels, ethanol, whatever the case may be, but we continue to
    use Washington and centralized control in Washington to distort
    the marketplace, so we never get any of these projects
    finished, rather than allowing and trusting the marketplace.
    And ultimately it is the marketplace that has given us all of
    the goods and services that we enjoy today.
        Mr. McKinley. Thank you very much. I think I have gone over
    my time.
        Mr. Whitfield. The gentleman from Kansas, Mr. Pompeo, is
    recognized for 5 minutes.
        Mr. Pompeo. Thank you, Mr. Chairman.
        Mr. Auerbach, you talked about the increase in capital
    flows into renewable----
        Mr. Auerbach. Yes.
        Mr. Pompeo [continuing]. Energy. What drove that increase?
    You said--I forgot the time period. The last couple of years?
        Mr. Auerbach. Yes. In the solar industry--the last 6 years,
    I am talking about--it was policies, government policies around
    the world. Most of that actually was happening in Europe with
    feed-in tariffs, the most notable of them is in Germany, which
    despite its relatively poor solar insulation conditions is the
    world's largest market for solar energy. And it also resulted
    from improvements in technology, and several companies, many
    companies have participated in that progress in the United
    States, in Europe, and in China.
        So the cost of installed solar has dropped roughly about 75
    percent over the last 5 years. When prices drop and they are
    going to continue to drop, it stimulates demand, and these
    feed-in tariffs which started out very, very high have been
    coming down extremely quickly. I am not a personal proponent of
    feed-in tariffs as the way to go because it is another example
    where the government is setting the price rather than the
    market, which is why I like Congressman Nunes's reverse auction
    approach.
        But the combination of market stimulus, the price signal,
    and technology progress has resulted in a transformation of the
    solar industry unlike anything I have seen in the energy
    industry over the course of my involvement, and this would be
    for well over a decade.
        Mr. Pompeo. I appreciate that, and I, too, I think the
    reverse auction is a step forward from the way we have done
    business. I can't imagine putting hundreds of millions of
    dollars at risk depending on us to renew a tax credit every
    couple of years.
        Mr. Auerbach. It makes me nervous.
        Mr. Pompeo. Yes. I can only imagine the increase in the
    cost of capital that results from that.
        Mr. Auerbach. The cost of capital has gone up much higher
    in the United States than anywhere else in the world because of
    it.
        Mr. Pompeo. So with all of these improvements that you
    described why not just say, hey, just go away? Why not just
    tell us, go away, leave us alone, don't need a reverse auction,
    we don't need a thing. Remove the regulatory barriers that are
    in the way of all of these things whether that is wind or solar
    or natural gas and coal, and we will raise the money, and we
    will get it done, and we will make money doing it. And make
    really happy consumers because they will have affordable energy
    here in America.
        Mr. Auerbach. OK. That is a great question, and there are
    many who have suggested that. Let me--in answering that
    question, and I am sure my other panelists here will have views
    on it, I will also touch on Mr. McKinley's point. If you look
    at the history of federal expenditures in this country, there
    has been an analysis actually done for the Nuclear Energy
    Institute a couple of years ago. The vast majority of federal
    expenditures have gone actually to fossil fuels, something like
    73 percent, including to the coal industry.
        Now, I didn't do the study myself, so I can refer you to
    it, and so you can look at the source material I quoted in my
    testimony. And so the renewable power industry is catching up
    and is catching up as the chart shows at a pace that gives us
    enormous confidence in the future. If you simply stop the music
    and then force everyone to find their seats, it may be that the
    wrong folks will not find a seat, you know, in the room that
    otherwise would be the winners in a few years from now.
        So what we need is smarter policies that allow market
    mechanisms to work more efficiently. Stopping the music right
    now and pulling all subsidies or all expenditures of all sorts
    I think would increase the cost in the short term rather than
    reduce the costs.
        So I think we need to do this in a more gradual way.
        Mr. Pompeo. I don't understand that. I don't understand how
    if the government got out of the way it would increase costs.
    You would still--because it would still find the low-cost
    alternative, and utilities would power their plants with the
    low-cost alternative, and more people would go figure out how
    to make those curves come down even faster.
        Mr. Auerbach. Well, what the reverse auction does is it
    actually allows the market, if the market doesn't need it, the
    market will not be asking for it, and it will disappear on its
    own, so it allows actually for a gradual move to full market
    freedom to set prices.
        So I think the reverse auction mechanism is the safer way
    to get the same goal that I share.
        Mr. Pompeo. Yes. Very good. I yield back the balance of my
    time, Mr. Chairman.
        Mr. Whitfield. Thank you. At this time I would recognize
    the gentleman from Louisiana, Mr. Scalise, for 5 minutes.
        Mr. Scalise. Thank you, Mr. Chairman.
        I would start with Mr. Auerbach. On the reverse auction, I
    know one thing that you talk about a lot of us get frustrated
    with is when you see some trying to pick winners and losers
    where government is trying to pick who is going to win and who
    is going to lose.
        In a reverse auction can you maybe walk through some things
    in that type of process that would prevent the Federal
    Government from picking winners and losers?
        Mr. Auerbach. OK. Yes. What the bill currently provides is
    a division of regions and actually a division of technologies.
    There, what we are trying to do on the region side is to allow
    various resources in the country to be developed on their own.
    See, if you actually have one national auction, a reverse
    auction, you might have South Dakota taking all of the wind
    resource, but because of the lack of transmission, you may
    never be able to evacuate that power to California or New York
    or Chicago where you need it.
        And so a regional approach allows the realities of the
    marketplace to work well, so I think it is a well-designed
    piece of the legislation. What we also do is allow for--what
    the legislation does it allow for technology limits, 60
    percent, I think, to one technology, 90 percent for two, and
    what that is doing there is saying that although wind today is
    the cheapest form of renewable power generation, ultimately
    because of these cost curves you want to induce more
    competition and to see oil prices continue to come down.
        So the allocation of the auction among technologies I think
    helps to push the price down of all renewable power.
        Mr. Scalise. Thanks. One of the things we have been hearing
    when you talk about impediments to expanding renewable energy,
    it seems like some of the same things we are hearing about
    impediments to developing some of our own natural resources in
    America in traditional energy are seeming to apply to renewable
    energy, and that is overreach by the Environmental Protection
    Agency.
        Can you describe, especially as it relates to the long
    process it takes for site selection, things like that, can you
    describe what types of overreach you have seen?
        Mr. Auerbach. Yes. Anecdotally, although I--we have a lot
    of development sites in California, it is well known, for
    example, that it takes 2 to 3 years to actually develop a wind
    farm in Texas, and it takes 5 to 8 years to develop a wind farm
    in California. I don't think it is the EPA that stands in the
    way. It is a lot of State environmental red tape that delays
    the pace of development in California in particular. But
    California has actually--recently has been showing more
    progress.
        And so environmental red tape is actually a problem for the
    renewable power industry, and so more accelerated permitting
    would allow, both on federal lands and also on private lands,
    would allow for faster deployment of renewables and cheaper
    deployment of renewables.
        Mr. Scalise. Thanks. Mr. Bartis, talking about more
    opportunities for permitting for natural resources, I know one
    of the frustrations that we have in the Gulf Coast area is the
    inability to get clear guidelines from the Department of
    Interior, BOEM, to move forward but also with the inability to
    get more areas opened up. When you talk to other States, it
    seems like there are a number of other States interested in
    getting into the game and helping produce American energy, and
    you know, it surely would be my goal to see us eliminate our
    dependence on Middle Eastern oil.
        Clearly, we have the capacity to do that with so many
    reserves that are completely shut off by federal policy, but if
    you can talk maybe about some incentives that could be provided
    that you know of that would encourage States to participate
    where maybe they are not right now.
        Mr. Bartis. That is a tough question. There is a lot--from
    what we know there is a lot of offshore oil that other States
    have, and the challenge is to move forward successfully. We
    know we have a tremendous amount of oil shale as addressed
    today, literally three times the reserves of Saudi Arabia, that
    look very attractive. We need to make some progress there. The
    only way to get progress is to get some more experience, and
    that means we have got to allow people, to give industry enough
    incentive, a big enough reward so that if they go in there and
    figure out how to do this, and thereby monetize this huge
    resource that we have as a Nation and to our benefit, you know,
    they will move.
        Mr. Scalise. What is your take on increased revenue sharing
    to States who want to participate?
        Mr. Bartis. The revenue sharing, I mean, I can't comment on
    the revenue, I mean, the revenue sharing. I don't want to
    comment on that. I think there is already revenue sharing as
    you are aware, and I don't--we have not looked at whether----
        Mr. Scalise. Well, we don't--I know in Louisiana we don't
    have any revenue sharing right now. It is not until 2017,
    that----
        Mr. Bartis. Right.
        Mr. Scalise. But it seems like there are a number of other
    States that have----
        Mr. Bartis. It depends. Yes. Yes.
        Mr. Scalise. If revenue sharing was involved where they can
    provide a stream of revenue to their State, there would be a
    big stream of revenue to the Federal Government as well, it
    seems like kind of a win-win to encourage more----
        Mr. Bartis. Yes. I--we haven't looked at that, and I
    shouldn't be commenting on things that we have----
        Mr. Scalise. I don't know if anybody else wants to comment
    on that.
        All right. I yield back. Thanks.
        Mr. Whitfield. The gentleman from California, Mr. Bilbray,
    is recognized for 5 minutes.
        Mr. Bilbray. Thank you. Mr. Chairman, I apologize. I was
    downstairs at my other committee looking at government
    regulations that are obstructing economic growth, so I think we
    are sort of in a lot of ways looking at the same problems from
    different angles.
        First of all, being a history major, I want to go back and
    remind all of us that the oil industry was the environmental
    option to the oil, I mean, from the previous oil was the
    whaling industry that provided the energy to light our lights.
    And the fact that the gasoline was just a waste product from
    the manufacturing of the--and so the whole concept of driving a
    car that was driven by gasoline was really just because we had
    all this, you know, dangerous stuff around as a bi-product, a
    waste product, and develop that.
        So I think it kind of tells us how innovative Americans can
    be and the human mind can be confronted with an opportunity and
    a problem, and now it is this huge, precious resource rather
    than trash from, you know, leftovers, and how do we move
    forward with it.
        The other assumption I want to point out is would everybody
    here agree with the concept that we need a Manhattan Project
    for our energy independence? We keep hearing that. You know, my
    biggest frustration about it is somebody has been in a
    regulatory agency one way or the other since 1976. Manhattan
    Project wouldn't be legal today. Would not be legal to do it
    today and every time I just ask anybody, anybody brings that
    up, we need to confront that.
        My question is when we look at these obstructions that the
    government, one way or the other, is standing in the way of,
    while we are talking about why aren't we doing innovative
    things, the fact is we require people to stay in a box, and we
    complain about them staying in a box.
        You mentioned California. In fact, you may want to talk
    about this. We talk about how wind generation is so efficient,
    but do we talk about the fact that it needs transmission lines
    that are usually three times farther than traditional power and
    the obstructionism and let me give you the sun link. You know
    that one. It is twice to three times as long as it would have
    been if the Federal Government would have allowed the
    transmission lines to go over federal jurisdiction. No Indian
    reservation, no national park, but the freeways go through. Do
    you want to comment on the fact that it is oK to put a freeway
    through federal property but not a transmission line to get to
    solar power?
        Mr. Auerbach. Sure. I can't pass up that opportunity,
    Congressman.
        I am concerned obviously. I am in the clean energy
    business. I am concerned with the environment, but ultimately
    everything is cost benefit, and the amount of time and energy
    and money that renewable energy development teams have to
    expend on figuring out how to get transmission to load centers
    from the wind resource basically it prevents a lot of renewable
    energy from being built that could be both environmentally
    beneficial and also cost effective.
        Mr. Bilbray. Give me an example. California implemented AB
    32, talked about saving the planet, thought it was so important
    to be able to save the planet, but all those regulations and
    all those mandates but did not exempt it from CGWA, the
    California Environmental. Didn't think it was important enough
    to exempt it from CGWA because, oh, they couldn't retreat on
    that.
        At the same time my colleague from California will remind
    you they did exempt the football stadium in the City of
    Industry from CGWA but not the implementation of AB 32.
        Can we agree that we should get away from the term,
    renewable, and go to clean technology or sustainable
    technology? I mean, words matter, and one of the things that
    frustrates me is to hear almost as if renewable is a catchy
    catchword but really doesn't reflect the reality.
        Can we talk about the changing of those terminologies?
        Mr. Auerbach. Could I just----
        Mr. Bilbray. Go ahead.
        Mr. Auerbach [continuing]. Address that quickly? Well,
    first of all, the name of my firm is Hudson Clean Energy
    Partners. I had the choice to name it renewable, and so I
    wanted a broader platform, and so I agree with the term clean.
        I would like, however, to just note that renewable energy,
    the resources themselves are also natural resources that are
    part of our national treasure. So the sun that is shining in
    Southern California and the wind that is blowing across the
    Plain States are natural resources for this country that are
    worth trillions of dollars.
        Mr. Bilbray. OK, but here is the point. To get into that,
    when somebody talks about electric fleets, when we talk about
    developing efficient wind generation, we are talking about
    permanent magnet DC motors and generators. OK? At that time we
    talk about that, but we don't talk about the fact that if we
    are going to go to electric system, if we are going to have
    wind power, we are going to have efficient electricity, we have
    got to have rare earth, 70 pounds for every Prius, and you know
    what your wind generates, but we are not talking about that the
    Federal Government will not allow private industry to go onto
    public lands and mine the rare earth that is essential to do
    all the things that everybody else--and we sit through these
    committees and hear colleagues talk about all these great
    plans, but they are not willing to allow the process to be
    legal to reach those goals. Things like rare earth, which is 98
    percent coming from China.
        Mr. Auerbach. It is only 98 percent or 95 percent of the
    production, not of the resource itself. The United States has
    plenty of resources. I agree with what the Congressman is
    saying. If we are going to develop more clean energy and use
    technologies that are now commercially available and coming
    down rapidly in cost like electric cars, we need to have a
    resource strategy, and it has to be domesticated more than it
    is today.
        Mr. Bilbray. Mr. Chairman, I appreciate that, and just to
    point out that the Prius are actually, the Toyota is actually
    designing now an AC motor, which is a lot less efficient than
    the permanent magnet DC motor, just because of the threat of
    not being able to get the rare earth material, and we get into
    it.
        And I apologize. I didn't get a chance to get in nuclear
    power. I think that we need to be looking at nuclear power and
    moving it like we did on interstate freeways where the Federal
    Government has engaged, and DOD should be looking at sighting
    facilities so that we can get the private sector doing what we
    do with freeways, not sighting, not permitting, but building
    them after we go through the hoops, the regulatory hoops, and
    if we are not brave enough to go through those regulatory
    hoops, we should forget about the concept of being able to tap
    into this clean and cost-effective energy.
        Yield back, Mr. Chairman.
        Mr. Whitfield. Mr. Bilbray, I think we are going to adopt a
    policy of giving you 10 minutes for your questions.
        Mr. Bilbray. I apologize.
        Mr. Whitfield. Mr. Auerbach, I noticed in your testimony
    you made the comment that a focused effort should be made on
    making the U.S. a more welcome home for clean energy
    manufacturing, and I was just wondering what specifically would
    you be referring to?
        Mr. Auerbach. Well, yes, thank you. If we would provide
    longevity to the system incentivizing deployment, manufacturing
    will come to roost in the United States. The problem with the
    current system and my personal problem is having to approve
    manufacturing facilities and generation facilities is that we
    have to look at the clock, and when the clock runs out every
    couple of years on the system for providing centers at the
    federal level, which are still today a necessary component but
    are--and through reverse auctions will become a decreasing part
    of the calculus, it makes it hard to stimulate capital
    deployment that needs a multi-year payback.
        And so if we can have a reverse auction mechanism, that
    longevity--and was taken out of an annual appropriations--then
    capital committers around the world would look to how to
    streamline the value chain to put in place in the United States
    those parts of the value trade that are going to actually help
    lower the cost of clean energy in the United States.
        Mr. Whitfield. So you are primarily talking about
    incentives and more certainty on those types of programs?
        Mr. Auerbach. The best thing that we can do to get more
    capital flowing because the private sector, we are now in our
    portfolio companies building two manufacturing facilities in
    the United States, and there are many other manufacturers that
    would actually reopen plants for value trade components that
    have actually been shuttered today----
        Mr. Whitfield. Uh-huh.
        Mr. Auerbach [continuing]. And build new ones if they knew
    that this industry had a home for a multi-year period that was
    more market based.
        Mr. Whitfield. And what would be the impact if--Mr. Nunes
    talked about the Ways and Means was looking at eliminating all
    tax credits and incentives, and Mr. Pompeo made some reference
    to that. If that actually happened, how would that affect your
    company?
        Mr. Auerbach. As I indicated to Mr. Pompeo in--because he
    asked me that in a question, my preference as a policy matter
    is to see this being done carefully. Billions and billions of
    dollars of capital are already at work, and hundreds of
    billions of dollars are also looking to be deployed, and so I
    think Congress needs to move very, very carefully, and so by
    making any radical move, by, for example, terminating tax
    credits that have a statutory life and terminating them early,
    I think that it would have a deleterious affect on capital. It
    would cause the stock prices of public companies to fall, it
    would strand capital investment, it would cause loss of jobs in
    the United States.
        If we do so in a thoughtful, gradual way, as I think is the
    crux of the reverse auction mechanism in H.R. 909, I think that
    we will have the opposite affect of actually encouraging more
    capital to come into the United States to find it a more secure
    home.
        Mr. Whitfield. Do you invest in--does your venture capital
    firm invest in nuclear energy?
        Mr. Auerbach. We don't. We are not prohibited from doing
    so, but for reasons that are--have been made pretty clear to
    capital committers it is not a very easy place to commit
    capital at least for 10-year time periods.
        Mr. Whitfield. Mr. Spencer, you in your testimony talked
    about Mr. Nunes's legislation providing a second permitting
    mechanism for nuclear energy. Would you explain just briefly
    what that is, how that would work----
        Mr. Spencer. Sure.
        Mr. Whitfield [continuing]. And why it is better?
        Mr. Spencer. Yes. The current process allegedly takes 4
    years. It has never happened yet, and each time we get close it
    seems to not happen again, but what the roadmap does it sets up
    a 2-year timeframe that if the applicant meets certain
    conditions--they are building on or adjacent to an existing
    site, if you are, if you have a reactor that is fully
    certified, and there are a number of others--then you get to
    enter into this separate track that gives a more efficient or
    consolidated review of the environmental and technical aspects
    of the application.
        It is a tight time scale, but it is one that I think, a lot
    of experts think is doable if we establish that path, and that
    would give certainty, would allow us to get through more
    applications, and quite frankly, I think provide competition
    within the regulatory environment to demonstrate that you need
    to start getting these things done. Otherwise we are going to
    do it a different way.
        Mr. Whitfield. Now, are you optimistic about these smaller-
    type nuclear plants that sometimes people refer to as modular
    or whatever?
        Mr. Spencer. I think--I am optimistic that the technology
    can be applied commercially in the future extraordinarily,
    economically, and efficiently in all that. I am less optimistic
    that the policies that have been proposed will get us there.
    What we see is the administration and proponents of small
    modular reactors, what they want is a Department of Energy
    program where the DOE essentially chooses the one or two
    technologies that go forward to be licensed.
        I think that is the wrong approach, frankly. You have a lot
    of entrepreneurs out there spinning off technology, spinning
    off commercial enterprises. What if they are not one of the two
    that are chosen? I would suggest that it is--the market is the
    better arbiter of that.
        Instead of going through the Department of Energy I would
    suggest we get the Nuclear Regulatory Commission really geared
    up to be able to support this sort of activity so that if
    people want to go down that road, then, you know, we have the
    Regulatory support to do that.
        Mr. Whitfield. Yes, and Mr. Bartis, you mentioned Fischer-
    Tropsch. Other than South Africa, where is the Fischer-Tropsch
    technology being used today?
        Mr. Bartis. It is--the Fischer-Tropsch technology is used
    in--most recently it has been built up in Qatar in the Persian
    Gulf. They are going to have about 170,000 barrels per day of
    production online this year. The technology is very up to date,
    but that is an application to natural gas. In our country the
    only place that might make sense is in Alaska because that gas
    in Alaska, no one is going to pipe back to this, to the
    Continental--or the lower 48 anymore because of all the shale
    gas. So we have got stranded gas up there.
        Applying it to coal is not a big deal, and we have got one
    for building, scheduled to build a plant and pretty far along
    in Wyoming. They are not going to be using Fischer-Tropsch.
    They are going to be using a variant of Fischer-Tropsch
    called--that the Mobil Oil Company invented, and--but it is
    very much the same.
        But that is the only--and they are going to be producing
    gasoline. They are not going to be producing fuels that would
    be of interest to the military.
        Mr. Whitfield. Thank you. Mr. Gardner, you are recognized
    for 5 minutes.
        Mr. Gardner. Thank you, Mr. Chairman. I just got back from
    the hearing downstairs, so I will defer at this point.
        Mr. Whitfield. Well, I guess that concludes today's
    hearing. I want to thank the three of you for coming in and
    giving us your views and opinions which we certainly will take
    into consideration as we move forward, and we look forward to
    working with you in the future. Thank you very much.
        The record will remain open for 10 days for any additional
    material or testimony that anyone would like to offer, and with
    that this concludes today's hearing.
        [Whereupon, at 11:39 a.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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