[Senate Hearing 113-024]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 113-024
 
                 ENERGY EFFICIENCY AND HYDROPOWER BILLS

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



                                HEARING

                               before the

                              COMMITTEE ON

                      ENERGY AND NATURAL RESOURCES

                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                                   ON
                                     

           S. 306                               H.R. 267

           S. 545                               H.R. 678

           S. 761



                                     

                               __________

                             APRIL 23, 2013


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




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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                      RON WYDEN, Oregon, Chairman

TIM JOHNSON, South Dakota            LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana          JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont             MIKE LEE, Utah
DEBBIE STABENOW, Michigan            DEAN HELLER, Nevada
MARK UDALL, Colorado                 JEFF FLAKE, Arizona
AL FRANKEN, Minnesota                TIM SCOTT, South Carolina
JOE MANCHIN, III, West Virginia      LAMAR ALEXANDER, Tennessee
CHRISTOPHER A. COONS, Delaware       ROB PORTMAN, Ohio
BRIAN SCHATZ, Hawaii                 JOHN HOEVEN, North Dakota
MARTIN HEINRICH, New Mexico

                    Joshua Sheinkman, Staff Director
                      Sam E. Fowler, Chief Counsel
              Karen K. Billups, Republican Staff Director
           Patrick J. McCormick III, Republican Chief Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Hogan, Kathleen, Deputy Assistant Secretary for Energy 
  Efficiency, Office of Energy Efficiency and Renewable Energy, 
  Department of Energy...........................................    16
McMorris Rodgers, Hon. Cathy, U.S. Representative From Washington     4
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     2
Pimley, Lowell, Deputy Commissioner of Operations, Bureau of 
  Reclamation, Department of the Interior; Accompanied by Kerry 
  McCalman, Manager, Power Resources Office, Bureau of 
  Reclamation, Department of the Interior........................    11
Wright, Jeff C., Director, Office of Energy Projects, Federal 
  Energy Regulatory Commission...................................     6
Wyden, Hon. Ron, U.S. Senator From Oregon........................     1

                               APPENDIXES

                               Appendix I

Responses to additional questions................................    43

                              Appendix II

Additional material submitted for the record.....................    59


                         ENERGY EFFICIENCY AND 

                            HYDROPOWER BILLS

                              ----------                              


                        TUESDAY, APRIL 23, 2013

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

 OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR FROM OREGON

    The Chairman. The committee will come to order.
    The purpose of today's hearing is to receive testimony on 5 
bills pending before the committee. Four of the bills on the 
committee's agenda promote hydropower. If I had to cut my 
comments on these bills down to one phrase, that would be, as 
Senator Murkowski and I have talked about often, ``hydro is 
back.''
    The fact that 4 of the first 5 energy bills considered by 
the committee this year promote hydropower shows how important 
this resource can be to a clean energy future. S. 545, the 
Hydropower Improvement Act of 2013, has been introduced by the 
ranking committee member, Senator Murkowski. S. 545 includes a 
number of provisions that will make the Federal Energy 
Regulatory Commission licensing process more efficient and at 
the same time be extremely sensitive to environmental values. I 
am pleased to be a cosponsor of S. 545.
    In the last Congress, a hearing was held on similar 
legislation, S. 629, and that bill was reported by this 
committee. I believe S. 545 is a significant improvement from 
its predecessor and an important step forward toward increasing 
the contribution of renewable hydropower to the transition to a 
lower carbon economy.
    Also on the agenda is H.R. 267, the Hydropower Regulatory 
Efficiency Act of 2013 sponsored by Representatives Cathy 
McMorris Rodgers and Diana DeGette. H.R. 267 is very similar to 
S. 545 and was passed by the House unanimously by a vote of 422 
to nothing. When you just say those words, ``422 to nothing,'' 
you almost feel like a vote took place in an alternative galaxy 
because it is hard to imagine anything passing 422 to nothing.
    [Laughter.]
    The Chairman. The other hydropower bill on the agenda is S. 
306, the Small Conduit and Rural Jobs Act, introduced by 
Senator Barrasso, a member of our committee. S. 306 expands and 
simplifies the jurisdiction of the Bureau of Reclamation over 
hydropower on existing pipelines, canals, and other small 
conduits on Bureau facilities.
    Also before the committee is H.R. 678 and that is a bill 
sponsored by Representative Tipton. H.R. 678 is similar to S. 
306. It was passed by the House earlier this month by a vote of 
416 to 7 after a compromise was reached on language concerning 
the application of the National Environmental Policy Act.
    Finally, I am pleased to have before the committee S. 761, 
the Energy Savings and Industrial Competitiveness Act, 
introduced by our colleagues Senator Shaheen and Senator 
Portman. This bill is very similar to S. 1000 as reported by 
the committee in September 2011, with titles covering building 
efficiency, commercial building efficiency finance, industrial 
efficiency, and Federal agency energy efficiency.
    The Energy Information Administration reports that the 
building and industrial sectors of our economy currently 
account for 72 percent of this country's energy usage. So 
improving efficiency can play a major role in cutting costs for 
our businesses and our consumers, making the economy more 
competitive and reducing greenhouse gases and other emissions.
    So we are looking forward to hearing from our witnesses 
about these bills and how they will help contribute to a clean 
energy future.
    First, I want to recognize Senator Murkowski and tell her 
what a pleasure it has been working with her on these hydro 
issues especially. I think the two of us said some time ago 
that these used to be the forgotten renewables, and you and I 
are going to make sure that that is no longer the case. I just 
appreciate our working on those issues.
    [The prepared statement of Senator Wyden follows:]

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman. I am not big 
into slogans other than my bumper sticker that is ``energy is 
good.'' I think I am ready for another bumper sticker slogan 
and that is ``hydro is back.'' I like that one. So I am all 
over it and look forward to working with you on these 
initiatives that I think are so important to us.
    I have long been a hydropower proponent. I consider 
hydropower to be our hardest working renewable resource, one 
that often gets overlooked, as you have noted. But I do not 
think that there is any question that our largest source of 
renewable electricity is and must continue to be part of our 
energy solution. So how do we make that happen?
    I do think that what we are seeing today here in this 
committee is just a perfect example of how we do move 
hydropower through. We have got good, broad bipartisan and 
bicameral support for the two hydropower measures that we have 
before us today.
    The Hydropower Improvement Act, which is my legislation to 
advance conventional hydropower, has been cosponsored by you, 
Mr. Chairman, which I appreciate, but also Senators Risch, 
Senator Cantwell, Senator Udall, all members of the committee, 
as well as Senators Begich, Bennet, Crapo, and Murray.
    The companion bill, which Representative McMorris Rodgers 
will speak to this morning, has already passed, and as you 
note, Mr. Chairman, when you have a vote that is that 
overwhelming, 422 to nothing, that gets your attention. It 
certainly got our attention here on this side of the Congress, 
and how we figure out ways to move it I think is going to be 
important.
    This legislation is supported by the National Hydropower 
Association, American Rivers, a host of other organizations.
    The other measures that you have mentioned, Mr. Chairman, 
S. 306, sponsored by Senators Barrasso and Risch; H.R. 678 that 
is sponsored by Representative Tipton--you already spoke to 
that. But when we look to the support that we have from the 
stakeholders for these various measures, we have got the 
American Public Power Association, the Family Farm Alliance, 
the Oregon Water Resources Congress, the Colorado River Energy 
Distributors Association, I think all good measures of the 
broad support that we have there.
    As with hydropower, I continue to believe that efficiency 
is part of the all-of-the-above energy plan. We need to be 
doing more of it more often, and I credit the good work of 
Senator Shaheen and Senator Portman in this area. Again, I 
think when we are talking about efficiency, this is a bottom-
line issue, an area where it is really in our best interest to 
find agreement, particularly as we deal with these very 
difficult budgetary and fiscal constraints that we have. So the 
work that Senators Portman and Shaheen have done with the 
Energy Savings and Industrial Competitiveness Act is good. 
Again, when you look to the supporters of this legislation, 
some 200 different organizations, a wide range of efficiency 
advocates and manufacturers, I know that both Senators have 
been working very aggressively to garner that support, and I 
think that that will hold them in good stead as we move this 
legislation through.
    Mr. Chairman, I am not sure which, whether it will be the 
hydropower package or whether it will be the energy efficiency 
package, but my prediction--and I usually do not make 
predictions on legislation around this body, but that one of 
these two measures will be signed by the President, and I would 
like to be there with members of this committee as we recognize 
the advancements that we are making in good areas as it relates 
to efficiency and renewables with hydro. So I look forward to 
that day, but it starts here.
    The Chairman. Well said, Senator Murkowski, and I think you 
and I are operating on the principle we are going to get both 
of them signed.
    Senator Murkowski. Absolutely.
    The Chairman. Without turning this into a bouquet tossing 
contest, Senator Portman is here and I just want to commend him 
for the excellent work he has done. He and Senator Shaheen have 
really been in the vanguard of looking to tap the potential of 
energy efficiency, and we just look forward to working with you 
and bulking up the energy efficiency cause to the greatest 
extent we can and commend you for it.
    Today we have the Honorable Cathy McMorris Rodgers who 
comes from our part of the world, the Pacific Northwest. She is 
the Republican architect of the bipartisan team that produced 
these almost astounding votes in the House of Representatives 
for important issues. Congresswoman, we welcome you today. We 
will make your prepared remarks part of the record in their 
entirety, and why do you not just go ahead with your comments? 
Again, our commendations for the leadership.

 STATEMENT OF HON. CATHY MCMORRIS RODGERS, U.S. REPRESENTATIVE 
                        FROM WASHINGTON

    Mrs. McMorris Rodgers. Thank you very much, Mr. Chairman. I 
hope we can keep the momentum going in the Senate. I really 
appreciate your leadership and thank you, Senator Wyden, 
Senator Murkowski, for convening this hearing today to bring 
attention to the important role that hydropower has played, but 
also the potential that it has as a part of an energy package 
moving forward.
    I just wanted to make a brief statement.
    I am eager to advance an all-of-the-above energy strategy 
and, in doing so, have joined with my colleagues in a 
bipartisan fashion in the House to make sure that our Nation's 
largest, cleanest, most affordable, reliable, and renewable 
energy source is included, and that is hydropower, and the 
potential of hydropower is tremendous.
    In my home State, Washington State, which I share with 
Senator Cantwell, 75 percent of our electricity is coming from 
clean, renewable energy. But that is not just the Pacific 
Northwest, but the rest of the country can expand an energy 
source that will not only lower energy cost, but create 
thousands of jobs. We could double hydropower in this country 
without building a new dam, simply by investing in new 
technology. Only 3 percent of the dams actually produce 
electricity, and we can create up to 700,000 jobs over the next 
decade alone.
    In central and eastern Washington, which I represent, the 
Columbia and Snake River system through irrigation transformed 
a dry, barren desert with lots of sagebrush into one of the 
most productive agriculture regions in the world. The low cost 
of hydropower brought tech companies like Google and Yahoo to 
locate their data farms in central Washington and brought 
manufacturing facilities like BMW to Moses Lake. Also, because 
of advanced technology in new turbines and improved fish 
ladders, we are seeing record salmon returns in the Pacific 
Northwest.
    Around 7 percent of our Nation's electricity and 75 percent 
of our renewable energy comes from hydropower. Yet, the 
regulatory approval process for hydropower development, 
especially for smaller projects, can be unnecessarily slow, 
costly, and cumbersome. That is why I joined with my friend, 
Diana DeGette from Colorado, to introduce the Hydropower 
Regulatory Efficiency Act, which you noted passed with a big 
vote in the House earlier this year. Specifically, this bill is 
going to streamline the permitting process for small hydropower 
and conduit projects, reducing the burdens impeding development 
and getting this low-cost power to communities faster. We need 
to make the regulatory approval process for hydropower 
development easier and less costly, and that is what this 
legislation will do. I sometimes call it the 1040-EZ for 
hydropower permitting.
    By utilizing currently untapped resources, the United 
States could double the amount of hydropower produced in this 
country, and that I think is a tremendous asset that we have.
    So from my perspective, I will do everything I can to help 
unleash American ingenuity to increase hydropower production, 
lower energy costs, and expand domestic energy production in an 
affordable and cost-effective way.
    I look forward to working with all of you in the Senate to 
move this bill as quickly as possible to the floor and then to 
the President's desk. Thank you again.
    The Chairman. Congresswoman, thank you for an excellent 
statement, and as a tax reformer, I love your analogy to the 
1040-EZ of hydropower.
    Let us see if any colleagues have questions. I do not. I 
think you have said it all. Senator Murkowski, any colleagues 
like to make comments?
    Senator Murkowski. Do you think we can get 100 to nothing 
on this side? If so, can you help us make that happen?
    Mrs. McMorris Rodgers. With the Senators on this panel, I 
have every confidence.
    Senator Murkowski. OK. We will work with you on that. Thank 
you.
    The Chairman. Other Senators? Senator Cantwell.
    Senator Cantwell. Mr. Chairman, I would just say that I so 
appreciate the Congresswoman being here today to shed light on 
how important this is to the House of Representatives and how 
easy it is to get people's attention on this. Our former 
colleague, Senator Craig, and I had worked on some reforms on 
hydro relicensing which paid dividends in the end, and I think 
that is what we are trying to do, to create the simplicity to 
this process, get the questions answered but do so on the front 
end instead of the back end in a legal process. So I so 
appreciate your leadership on this issue in the House.
    The Chairman. Senator Cantwell, as usual, is too logical 
for Washington, DC. I thank you.
    Any other Senator who would like to make a comment? OK.
    Mrs. McMorris Rodgers. OK, thank you.
    The Chairman. Senator Portman.
    Senator Portman. Just really first to thank my former 
colleague from the House for her leadership on so many issues, 
including this one. We were just talking. We have not heard 
much from our constituents on this, although on the Ohio River, 
we have a number of locks and dams, as you know. In fact, we 
have hydropower, and I think AMP is currently looking at about 
6 additional hydropower facilities. I assume this would also 
help on existing hydropower in places like Ohio.
    Mrs. McMorris Rodgers. Yes.
    Senator Portman. Thank you. I appreciate you coming today.
    The Chairman. Congresswoman, thank you and we will excuse 
you at this time.
    Mrs. McMorris Rodgers. OK, thank you very much.
    The Chairman. Now we have a panel of administration 
witnesses: Mr. Jeff Wright, Director of the Office of Energy 
Projects, the Federal Energy Regulatory Commission; Mr. Lowell 
Pimley, Deputy Commissioner of Operations at the Bureau of 
Reclamation at the Department of the Interior, and he is 
accompanied by Mr. Kerry McCalman, Manager of Power Resources 
at the Bureau of Reclamation. Dr. Kathleen Hogan, Deputy 
Assistant Secretary for the Office of Energy Efficiency and 
Renewable Energy at the Department of Energy.
    So we welcome all of you, and let us begin with you, Mr. 
Wright. We will make your prepared statement a part of the 
record in its entirety, and if you could summarize your views 
today, that would be very helpful.

    STATEMENT OF JEFF C. WRIGHT, DIRECTOR, OFFICE OF ENERGY 
         PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION

    Mr. Wright. Chairman Wyden, Ranking Member Murkowski, and 
members of the committee, my name is Jeff Wright and I am the 
Director of the Office of Energy Projects at the Federal Energy 
Regulatory Commission. I appreciate the opportunity to appear 
before you to discuss S. 545, the Hydropower Improvement Act of 
2013, and H.R. 267, the Hydropower Regulatory Efficiency Act of 
2013.
    The commission regulates over 1,600 non-Federal hydropower 
projects at over 2,500 dams pursuant to part 1 of the Federal 
Power Act, or FPA. Together, these projects represent 54 
gigawatts of hydropower capacity, more than half of all the 
hydropower in the U.S. The FPA authorizes the commission to 
issue licenses and exemptions for projects within its 
jurisdiction. About 70 percent of the hydropower projects 
regulated by the commission have an installed capacity 
megawatts or less.
    I will turn now to the draft legislation.
    Section 5 of S. 545 and section 6 of H.R. 267 would require 
the commission to investigate the feasibility of implementing a 
2-year licensing process at existing non-power dams and for 
closed loop pump storage projects.
    I support the goal of an expedited licensing process. It is 
commission staff's goal to act on all license applications as 
quickly as possible, and the commission has established 
processes that allow for great flexibility and efficiency. I am 
not certain whether an additional licensing process is 
necessary. We have been able to issue some licenses in a matter 
of a few months where the project proponent had selected a site 
wisely, stakeholders have agreed on information needs, and 
State and Federal agencies performed their responsibilities 
quickly. Moreover, the commission operates under significant 
constraints imposed by the FPA and by other legislation 
affecting the licensing process, the Clean Water Act, Coastal 
Zone Management Act, Endangered Species Act, and the National 
Historic Preservation Act among them. Without the ability to 
waive sections of the FPA and other acts or to set enforceable 
schedules in licensing proceedings, it is not clear that the 
commission, under its existing authorities, can establish a 
shortened process.
    Section 6 of S. 545 and section 4 of H.R. 267 would 
establish various measures to promote conduit hydropower 
projects, which is consistent with commission policy and has 
been a major focus of commission staff's efforts in the last 
few years. These sections would amend section 30 of the FPA to 
establish a procedure whereby qualified conduit projects with 
an installed capacity of 5 megawatts or less would not be 
required to be licensed.
    I support this provision which would serve to increase the 
amount of electric generation derived from conduits. This would 
also allow the commission to grant conduit exemptions on 
Federal lands and would permit the commission to issue conduit 
exemptions for those projects with an installed capacity of up 
to 40 megawatts for both non-municipal as well as municipal 
applicants.
    Section 7 of S. 545 and section 3 of H.R. 267 would amend 
the Public Utility Regulatory Policies Act of 1978 to increase 
the maximum capacity of a project which could be granted a 
small hydropower exemption from 5,000 to 10,000 kilowatts. This 
would promote development of small hydropower by allowing more 
projects to qualify for this exemption, and I therefore support 
this provision.
    Section 8 of S. 545 and section 5 of H.R. 267 would amend 
the FPA to authorize the commission to extend the term of a 
preliminary permit issued under FPA section 5 once for up to 2 
years. Commission staff has heard that developers are concerned 
that the need for environmental studies can make it difficult 
to complete a license application within the current maximum 3-
year term of a permit, with the result that a developer which 
has invested substantial time and money studying a project may 
face the possibility of losing its project, based on 
competition from other entities, if it needs to seek a 
subsequent permit. I therefore support the proposed FPA 
amendment.
    Section 9 of S. 545 and section 7 of H.R. 267 will require 
the Department of Energy to study the flexibility and 
reliability that pump storage facilities can provide any 
opportunities and potential generation from conduits. While I 
cannot speak for the Department of Energy, I support such 
research.
    In conclusion, there is a great deal of potential for the 
development of additional hydropower projects throughout the 
country, including small projects and marine and hydrokinetic 
projects. Working within the authority given it by Congress, 
the commission continues to adapt its existing flexible 
procedures to facilitate the review and, where appropriate, the 
approval of such projects. Commission staff remains committed 
to exploring with all stakeholders every avenue for the 
responsible development of our Nation's hydropower potential. 
The legislation under consideration will assist in realizing 
that potential.
    That concludes my remarks. I would be pleased to answer any 
questions you may have.
    [The prepared statement of Mr. Wright follows:]

   Prepared Statement of Jeff C. Wright, Director, Office of Energy 
 Projects, Federal Energy Regulatory Commission, on S. 545 and H.R. 267
    Chairman Wyden, Ranking Member Murkowski, and Members of the 
Committee: My name is Jeff Wright and I am the Director of the Office 
of Energy Projects at the Federal Energy Regulatory Commission 
(Commission or FERC). I appreciate the opportunity to appear before you 
to discuss the following legislation: S. 545, ``Hydropower Improvement 
Act of 2013'' and H.R. 267, ``Hydropower Regulatory Efficiency Act of 
2013.'' As a member of the Commission's staff, the views I express in 
this testimony are my own, and not those of the Commission or of any 
individual Commissioner.
                             i. background
    The Commission regulates over 1,600 hydropower projects at over 
2,500 dams pursuant to Part I of the Federal Power Act (FPA). Together, 
these projects represent 54 gigawatts of hydropower capacity, more than 
half of all the hydropower in the United States. Hydropower is an 
essential part of the Nation's energy mix and offers the benefits of an 
emission-free, renewable, domestic energy source with public and 
private capacity together totaling about seven percent of U.S. 
electricity generation.
    Under the FPA, non-federal hydropower projects must be licensed by 
the Commission if they: (1) are located on a navigable waterway; (2) 
occupy federal lands; (3) use surplus water from a federal dam; or (4) 
are located on non-navigable waters over which Congress has 
jurisdiction under the Commerce Clause, involve post-1935 construction, 
and affect interstate or foreign commerce.
    The FPA authorizes the Commission to issue either licenses or 
exemptions for projects within its jurisdiction. Licenses are generally 
issued for terms of between 30 and 50 years, are renewable, and carry 
with them the right to exercise federal eminent domain to obtain 
property necessary for the construction, operation, and maintenance of 
a project. Exemptions are perpetual, and thus do not need to be 
renewed, but do not permit the use of eminent domain.
    Congress has established two types of exemptions. First, section 30 
of the FPA allows the Commission to issue exemptions for projects that 
use, for generation, the hydroelectric potential of manmade conduits 
that are operated for the distribution of water for agricultural, 
municipal, or industrial consumption, and not primarily for the 
generation of electricity. Conduit projects must be located on non-
federal lands, and have a maximum capacity of 15 megawatts (40 
megawatts if the exemptee is a state or local government entity). 
Second, in section 405(d) of the Public Utility Regulatory Policies 
Act, Congress authorized the Commission to grant exemptions for small 
hydroelectric power projects having an installed capacity of 5,000 
kilowatts or less. To qualify for this type of exemption, a project 
must be located at an existing dam that does not require construction 
or the enlargement of an impoundment, or must use the hydropower 
potential of a natural water feature, such as a waterfall. Both types 
of exemptions are subject to mandatory fish and wildlife conditions 
provided by federal and state resource agencies.
    The Commission has established three licensing processes, with the 
intent of allowing parties to select the process that is best suited to 
individual proceedings. The integrated licensing process (ILP) 
frontloads issue identification and environmental study to the period 
before an application is filed, and is thus well-suited to complex 
cases with substantial issues. The alternative licensing process (ALP) 
allows participants significant flexibility to tailor licensing 
procedures in a manner that may work well for unique cases. The 
traditional licensing process (TLP), in which environmental and other 
work can occur after the application is filed, appears to work best for 
less controversial matters. The TLP may be the process that is best-
suited for many simple cases involving exemptions or small, low impact 
licenses. Commission staff has also developed a pilot licensing process 
for marine and hydrokinetic projects in which, with the assistance of 
federal and state resource agencies, a project can be licensed in as 
little as six months.
    It is extremely important to note that project developers and other 
stakeholders, not the Commission, in most instances play the leading 
role in determining project success and whether the regulatory process 
will be short or long, simple or complex. The first key issue is site 
selection and proposed project operation. For example, the processing 
of applications tends to be expedited when applicants propose projects 
that: (1) are located at an existing dam where hydropower facilities do 
not currently exist, (2) would result in little change to water flow 
and use, (3) are unlikely to affect threatened and endangered species 
and are unlikely to need fish passage facilities, and (4) involve lands 
and facilities that are already owned by the applicant. To the extent 
that a proposed project, even one of small size, raises concerns about 
water use and other environmental issues, it may be difficult for the 
Commission to quickly process an application.
    Another, and related, factor is the extent to which project 
developers reach out to affected stakeholders. If a developer contacts 
concerned citizens, local, state, and federal agencies, Indian tribes, 
and environmental organizations, and works with them to develop 
consensus as to what information is needed to understand the impacts of 
a project and what environmental measures may be appropriate, and to 
develop support for the project, the application and review process is 
likely to be simpler and quicker. Where a project comes as a surprise 
to affected entities or where a developer does not respond to expressed 
concerns, the Commission's job becomes much more difficult.
    A final, and again related, matter is the development of the full 
record that the Commission needs to act on an application. A potential 
applicant needs to work with Commission staff and with federal and 
state resource agencies and other stakeholders to determine what 
information is needed to support an application, and to provide the 
Commission with a complete application. Where Commission staff or other 
stakeholders must ask an applicant to provide information that is 
missing from an application, the regulatory process slows down.
    The other entities with roles in the licensing and exemption 
process regarding small hydropower projects are also key to its 
success. The quickest, most efficient process can be achieved only 
where federal and state agencies, as well as other stakeholders, devote 
the resources early on to help project review move ahead, and where 
they display the flexibility to look at the merits of individual 
projects and the willingness to shorten the process in appropriate 
cases. Commission staff is dedicated to making the regulatory process 
as short and cost-effective as possible. We can only do that where 
applicants, resource agencies, and other stakeholders serve as willing 
partners in the process.
     ii. commission efforts regarding small and innovative projects
    The majority of the hydropower projects regulated by the Commission 
are small projects, with about 70 percent having an installed capacity 
of 5 megawatts (MW) or less. In recent years, the Commission has seen a 
greatly increased interest in small hydropower projects at existing 
dams, in innovative marine and hydrokinetic projects, and in pumped 
storage projects, particularly closed-loop pumped storage, which does 
not involve regular water withdrawals from rivers or other water 
sources. The Commission has responded by implementing a number of 
measures to facilitate efficient review of project proposals. In 2007, 
in order to provide personalized, responsive service to entities 
seeking to develop small hydropower projects, Commission staff 
established a dedicated phone line and email address for inquiries on 
small hydropower, developed a brochure to provide guidance to potential 
developers of small, low impact hydropower projects, and put these 
resources and a list of frequently-asked questions on the Commission's 
website.
    In light of the continued growing interest in such development, the 
Commission held a technical conference on December 2, 2009, at its 
Washington, D.C. headquarters to explore issues related to licensing, 
and exempting from licensing, small non-federal hydropower projects in 
the U.S. The technical conference generated discussion on 
recommendations that could improve the process for authorizing small 
hydropower projects. In addition to insights received from the 
panelists and attendees at the technical conference, written comments 
were solicited and over 40 comment letters were received from industry 
representatives; federal, state, and local agencies; private citizens; 
and non-governmental organizations. At the Commission's April 15, 2010 
meeting, staff reported on the conference and the comments received, 
and presented an action plan to assist and expedite the review of small 
hydropower proposals. The action plan adopted the following immediate 
changes: (1) adding new web-based resources to the Commission's website 
(www.ferc.gov) to make it easier for applicants to understand and 
complete the licensing process; (2) updating or creating Memoranda of 
Understanding (MOUs) with other agencies to improve coordination; (3) 
continuing to maintain our small hydropower contact list on our web 
site to answer applicant questions; and (4) educating potential small 
hydropower developers through a new education and outreach program. The 
Commission has, under its small hydro initiative, held numerous 
outreach meetings with small hydropower developers and interested 
stakeholders, and implemented web based tools, such as application 
templates and application checklists, which potential applicants can 
use to prepare their applications. The small hydro website further 
contains guidance and sample letters that applicants can use to obtain 
waivers from fish and wildlife agencies for part of the prefiling 
consultation process. The Commission staff has also relaxed some of the 
standards, under Section 4.39 of its regulations, for exhibits and 
drawings for exemption applications. For those applicants that have 
filed complete and adequate applications, and for which the Commission 
has determined that impacts are minimal, the Commission has reduced the 
public notice period from 60 days to 30 days and the reply period from 
45 days to 15 days. A number of conduit and small hydro exemptions have 
been approved in as short as two months and original licenses in as 
short as 6 months from the date that an application has been deemed 
complete.
    Since the April 15, 2010 Commission meeting, we have updated our 
MOU with the U.S. Army Corps of Engineers (March 2011) and entered into 
an MOU with the U.S. Coast Guard (March 2013); launched a small hydro 
program website (August 2010); participated in small hydro workshops 
across the U.S.; conducted webinars on our small hydro website 
(November 2010, December 2010, June 2011, and January 2012); and 
updated our small hydro brochure. Upcoming outreach efforts will 
include participating on a small hydro panel at the National Hydropower 
Association's annual conference in Washington, D.C., working with the 
state of Colorado on providing state guidance documents on our small 
hydro licensing process; and updating our small hydro licensing web 
site in response to user input. As a result of these efforts, 
consultation has improved, applications are more complete, and 
application processing times have been reduced. With this background, I 
will turn to the draft legislation.
    iii. hydropower improvement act of 2013 (s. 545) and hydropower 
              regulatory efficiency act of 2013 (h.r. 267)
    The Hydropower Improvement Act of 2013 and the Hydropower 
Regulatory Efficiency Act of 2013 have the commendable goal of 
increasing hydropower production in the United States. I strongly 
support this goal, and offer comments on specific sections of the draft 
legislation.
A. Section 5 of S. 545 and Section 6 of H.R. 267
    Section 5 of S. 545 and Section 6 of H.R. 267 would require the 
Commission to investigate the feasibility of implementing a two-year 
licensing process, in particular, with respect to hydropower 
development at existing, non-powered dams, and for closed-loop pumped 
storage projects.
    I support the goal of an expedited licensing process. Indeed, as I 
have discussed, it is Commission staff's goal to act on all license 
applications as quickly as possible, and the Commission has established 
processes that allow for great flexibility and efficiency. I am thus 
not certain whether an additional licensing process is necessary. 
During the last few years, we have been able to issue some licenses in 
a matter of a few months, where the project proponent had selected a 
site wisely, stakeholders had agreed on information needs, and state 
and federal agencies performed their responsibilities quickly. 
Moreover, the Commission operates under significant constraints imposed 
by the FPA, and by other legislation affecting the licensing process--
the Clean Water Act, Coastal Zone Management Act, Endangered Species 
Act, and National Historic Preservation Act among them. In the absence 
of the ability to waive sections of the FPA and other acts, or to set 
enforceable schedules in licensing proceedings, it is not clear that 
the Commission, under its existing authorities, can mandate a shortened 
process.
B. Section 6 of S. 545 and Section 4 of H.R. 267
    Section 6 of S. 545 and Section 4 of H.R. 267 would establish 
various measures to promote conduit hydropower projects. This goal is 
consistent with Commission policy and has been a major focus of 
Commission staff's effort in the last few years. These sections would 
amend section 30 of the FPA to establish a procedure whereby conduit 
projects with an installed capacity of 5 MW or less would not be 
required to be licensed, provided the applicant makes a showing that 
the project qualifies as a conduit project. These sections would also 
allow the Commission to grant conduit exemptions on federal lands and 
would permit the Commission to issue conduit exemptions for those 
projects with an installed capacity of up to 40 MW. This proposed upper 
limit would apply to non-municipal, as well as municipal applicants. I 
support these provisions, which should serve to increase the amount of 
electric generation derived from conduits.
C. Section 7 of S. 545 and Section 3 of H.R. 267
    Section 7 of S. 545 and Section 3 of H.R. 267 would amend Section 
405(d) of the Public Utility Regulatory Policies Act of 1978 to 
increase the installed capacity of a project to which the Commission 
could grant a small hydropower exemption from 5,000 to 10,000 
kilowatts. This change would promote the development of small 
hydropower at the nation's existing non-powered dams by allowing a 
larger pool of small, low-impact projects to qualify for small 
hydropower exemptions. Such exemptions are attractive to developers in 
that the exemptions are perpetual, and thus the developer need not 
expend the cost and effort to renew the authorization as is the case 
with licenses. I, therefore, support this provision.
D. Section 8 of S. 545 and Section 5 of H.R. 267
    Section 8 of S. 545 and Section 5 of H.R. 267 would amend the FPA 
to authorize the Commission to extend the term of a preliminary permit 
issued under FPA Section 5 once for up to two years. Preliminary 
permits grant the permittee a ``first-to-file'' preference with respect 
to license applications for projects being studied under a permit. 
Commission staff has heard anecdotally that developers are concerned 
that the need for environmental studies in some instances makes it 
difficult to complete a license application within the current maximum 
three-year term of a permit, with the result that a developer which has 
invested substantial time and money studying a project may face the 
possibility of losing its project based on competition from other 
entities--particular those with statutorily-granted municipal 
preference--if it needs to seek a subsequent permit. I therefore 
support the proposed FPA amendment, which could ameliorate this 
problem. It might be worth considering, as an alternative, authorizing 
the Commission to issue permits for terms of up to five years, which 
could avoid the need for developers to go through the process of 
seeking an extension.
E. Section 9 of S. 545 and Section 7 of H.R. 267
    Section 9 of S. 545 and Section 7 of H.R. 267 would require the 
Department of Energy to study the flexibility and reliability that 
pumped storage facilities can provide and the opportunities and 
potential generation from conduits. While I cannot speak for the 
Department of Energy, I support this research.
                             iv. conclusion
    There is a great deal of potential for the development of 
additional hydropower projects throughout the country, including small 
projects and marine and hydrokinetic projects. Working within the 
authority given it by Congress, the Commission continues to adapt its 
existing, flexible procedures to facilitate the review and, where 
appropriate, the approval of such projects. Commission staff remains 
committed to exploring with project developers, its sister federal 
agencies, Indian tribes, the states, local government, and other 
stakeholders every avenue for the responsible development of our 
nation's hydropower potential. The legislation under consideration 
will, as I have testified, assist in realizing that potential.
    This concludes my remarks. I would be pleased to answer any 
questions you may have.

    The Chairman. Mr. Wright, thank you.
    We have an important vote in the Finance Committee right 
now. We are fortunate to have Senator Franken to chair, and I 
should be back quite shortly. Senator Murkowski, I believe, 
will also be able to stay. So I apologize to my colleagues, and 
I will be right back and thanks to Senator Franken.
    Senator Franken [presiding]. I guess we will turn to Mr. 
Pimley.

STATEMENT OF LOWELL PIMLEY, DEPUTY COMMISSIONER OF OPERATIONS, 
BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR; ACCOMPANIED 
 BY KERRY MCCALMAN, MANAGER, POWER RESOURCES OFFICE, BUREAU OF 
            RECLAMATION, DEPARTMENT OF THE INTERIOR

    Mr. Pimley. Thank you. Chairman Wyden, Senator Franken, 
Ranking Member Murkowski, members of the committee, I am Lowell 
Pimley. I am the Deputy Commissioner for Operations for the 
Bureau of Reclamation. I am accompanied today by Kerry 
McCalman, Reclamation's senior advisor for hydropower who may 
help in responding to any technical questions the committee may 
have today.
    Thank you for the opportunity to testify on the two bills 
before the committee today. My written statement on S. 306 and 
H.R. 678 have been submitted for the record.
    The Department has testified on a prior version of S. 306 
and H.R. 678 and continues to support the goals of these bills 
which aim to increase generation of hydropower in existing 
canals and conduits. We believe these bills will provide 
greater certainty and administrative streamlining of these 
types of projects.
    Both S. 306 and H.R. 678 will clarify that Reclamation is 
responsible for authorizing conduit hydropower development on 
all Reclamation facilities through the Lease of Power 
Privilege, or LOPP, contracts. The Department supports this 
jurisdictional clarification in the interest of expediting the 
authorization process.
    Section 2 of S. 306 and H.R. 678 would also require that 
Reclamation offer preference in the award of LOPP's to 
irrigation districts or water user associations with which 
Reclamation has an exiting contract for operations and 
maintenance. We agree with this concept. In September 2012, we 
incorporated this approach into our revised Lease of Power 
Privilege directive and standard.
    Additionally section 2 of S. 306 would provide that NEPA 
``shall not apply to small conduit hydropower development, 
excluding siting of associated transmission on Federal lands.'' 
Reclamation's newly published Lease of Power Privilege 
procedures allow for categorical exclusion under NEPA to be 
applied to low-impact hydropower projects.
    The Department understands the importance of timely 
environmental review and believes development of low-impact 
hydropower can be efficiently analyzed using these existing 
review processes without unduly delaying project development.
    H.R. 678, as amended by the House of Representatives, 
directs Reclamation to apply its categorical exclusion process 
under NEPA to small conduit hydropower development, excluding 
siting of associated transmission facilities on Federal lands. 
If enacted, Reclamation would interpret the House-passed 
language as endorsing our current directive and standard to 
potentially apply categorical exclusions, provided no 
extraordinary circumstances exist, pursuant to NEPA. 
Reclamation cannot guarantee categorical exclusions will apply 
on every small hydropower project but will use the processes 
outlined in our directive and standard to determine whether a 
closer review under NEPA is warranted. That said, under our 
current procedures, Reclamation anticipates that the majority 
of hydropower development on Reclamation's facilities will 
qualify for categorical exclusion.
    Section 2 of S. 306 specifies that Reclamation's Power 
Resources Office will be the lead office of small conduit 
hydropower development. Given their project-specific knowledge, 
Reclamation's regional or area offices are actually better 
positioned to be the first point of contact for developers with 
our Power Resources Office being called in as needed. For that 
reason, the Department is pleased to support the House-amended 
language in H.R. 678 specifying that the Power Resources Office 
will be the lead office for small conduit hydropower policy and 
procedure-setting activities.
    Additionally, S. 306 and H.R. 678 would amend section 9(c) 
of the Reclamation Project Act of 1939. Several of the 
definitions in S. 306, as drafted, would affect other 
authorities in the 1939 act, and we recommend technical 
improvements which are detailed in my written testimony. The 
Department appreciates and supports the language in H.R. 678, 
as amended in the House, that reflects those technical 
recommendations.
    Finally, H.R. 678 provides that nothing in this subsection 
shall alter or affect any existing preliminary permit, license, 
or exemption issued by FERC under the Federal Power Act or any 
project for which an application has been filed with FERC. This 
language allows for existing and pending FERC licenses to 
remain within FERC's licensing process. The Department welcomes 
and supports this clarification.
    Reclamation will continue to review and assess potential 
new hydropower projects that provide a high economic return for 
the Nation, are energy efficient, and can be accomplished in 
accordance with protections for stakeholders and the 
environment. With recommendations detailed in my written 
testimony, the Department believes these bills will go a long 
way toward meeting the administration's goals of developing 
clean, reliable, cost-effective, and sustainable hydropower in 
the United States.
    In closing, I would like to offer my commitment to work 
with you and your staff to further develop the points in my 
testimony, and I would be happy to answer any questions at the 
appropriate time. Thank you.
    [The prepared statement of Mr. Pimley follows:]

Prepared Statement of Lowell Pimley, Deputy Commissioner of Operations, 
 Bureau of Reclamation, Department of the Interior, on S. 306 and H.R. 
                                  678
    Chairman Wyden, members of the Committee, I am Lowell Pimley, 
Deputy Commissioner of Operations at the Bureau of Reclamation 
(Reclamation). I am pleased to provide the views of the Department of 
the Interior (Department) on S. 306 and HR 678, the Bureau of 
Reclamation Small Conduit Hydropower Development and Rural Jobs Act. 
The Department supports the goals of S. 306 and HR 678, which aim to 
increase the generation of clean, renewable hydroelectric power in 
existing canals and conduits, and believes these bills will provide 
greater certainty and administrative streamlining of these types of 
projects. As noted in previous hearings, the Department has an 
aggressive sustainable hydropower agenda, which we continue to 
implement under existing authorities. My testimony today will summarize 
the areas where the Administration supports the objectives of S. 306 
and HR 678, as well as detail the areas in the bills where we believe 
improvements could be made, recognizing that the House of 
Representatives amended HR 678 to address many of the Department's 
concerns.
    Reclamation is the second largest producer of hydropower in the 
country. A 2010 Hydropower Memorandum of Understanding (2010 MOU)\1\ 
signed by the Secretaries of Energy and the Interior, and the Assistant 
Secretary of the Army (Civil Works) provides a strategy to facilitate 
the development of sustainable hydropower on federal facilities. Before 
I share the Department's views on S. 306 and HR 678, I want to 
highlight some of the activities underway at the Department to develop 
additional renewable hydropower capacity. In March 2011, Secretary 
Salazar and the U.S. Department of Energy Secretary Steven Chu 
announced nearly $17 million in funding over three years for research 
and development projects to advance hydropower technology. The funding 
included ten projects that will receive a total of $7.3 million to 
research, develop, and test low-head, small hydropower technologies 
that can be deployed at existing non-powered dams or constructed 
waterways. The funding will further the Obama Administration's goal of 
meeting 80 percent of our electricity needs from clean energy sources 
by 2035.
---------------------------------------------------------------------------
    \1\ http://www.usbr.gov/power/SignedHydropowerMOU.pdf, 2010
---------------------------------------------------------------------------
    In March 2011, the Department released the results of an internal 
study, the Hydropower Resource Assessment at Existing Reclamation 
Facilities, that estimated the Department could generate up to one 
million megawatt hours of electricity annually and create jobs by 
addressing hydropower capacity at 70 of its existing facilities. In 
March 2012, Reclamation completed the second phase of its investigation 
of hydropower development, Site Inventory and Hydropower Energy 
Assessment of Reclamation Owned Conduits, as referenced in the 2010 
MOU. While the first phase, completed in 2011, focused primarily on 
Reclamation dams, the second phase focused on constructed Reclamation 
waterways such as canals and conduits, and estimated the Department 
could generate over 365,000 megawatt hours of electricity annually by 
addressing hydropower capacity on 373 of its existing canals. In total, 
the two studies revealed that an additional 1.5 million megawatt-hours 
of renewable energy could be generated through hydropower at existing 
Reclamation sites.
    Reclamation worked diligently with our stakeholders and the 
hydropower industry to improve our Lease of Power Privilege (LOPP) 
processes, and this collaboration culminated in the release of an 
updated and improved LOPP directive and standard in September 2012. 
These new procedures better define roles, timelines and 
responsibilities that will allow us to better support and encourage 
sustainable hydropower development at Reclamation facilities.
    In summary, both S. 306 and HR 678 would do two things: 1) provide 
a blanket authorization for the installation of small hydropower units 
on all Reclamation-owned canals and conduits and 2) require that 
Reclamation offer preference to water user organizations for the 
development of canal/conduit hydropower under a LOPP. Additionally, S. 
306 would exempt small canal/conduit hydropower projects below 5 MW 
from the requirements of the National Environmental Policy Act (NEPA), 
while HR 678 directs Reclamation to apply its categorical exclusion 
process under NEPA to small conduit hydropower development. Finally, S. 
306 designates Reclamation's Power Resources Office (PRO) as the lead 
point of contact for requests to develop canal/conduit hydropower under 
a LOPP. Per the Department's recommendation, HR 678 was amended to 
direct Reclamation's PRO as the lead office for policy and procedure 
setting activities.
    Section 2 of S. 306 and HR 678 would clarify that Reclamation is 
responsible for authorizing conduit hydropower development on 
Reclamation-owned facilities through LOPP contracts. As background, 
Reclamation is authorized by existing law to issue LOPP contracts that 
utilize Reclamation-owned facilities for private hydropower development 
under Section 5 of the Townsites and Power Development Act of 1906, 43 
U.S.C. Sec.  522, and Section 9(c) of the Reclamation Project Act of 
1939, 43 U.S.C. Sec.  485h(c). Statutes that are specific to individual 
Reclamation projects may also apply. Similar to the LOPP process, the 
Federal Energy Regulatory Commission (FERC) may also issue licenses for 
hydropower development under the authority of the Federal Power Act, 16 
U.S.C. Sec.  791 et seq. To resolve potential confusion over whether a 
Reclamation LOPP contract or a FERC license should govern hydropower 
development at Reclamation facilities, Reclamation and FERC entered 
into agreements in 1981 and 1992 to address hydropower development. In 
particular, a 1992 memorandum of understanding between Reclamation and 
FERC (1992 MOU)\2\ established a process to resolve questions of 
jurisdiction over hydropower development at Reclamation facilities. 
Reclamation and FERC continue to work together to improve that process 
and make the process more efficient.
---------------------------------------------------------------------------
    \2\ The 1992 MOU is available in the Federal Register at: 58 Fed. 
Reg. 3269 (Jan. 8, 1993).
---------------------------------------------------------------------------
    Section 2 of S. 306 and HR 678 would specifically authorize 
Reclamation to develop or enter into LOPP contracts for the development 
of new hydropower on conduits or canals on Reclamation-owned projects. 
This language would streamline the issuance of LOPP contracts by 
simplifying the Reclamation-FERC jurisdictional consultation that was 
established in the 1992 MOU. This language also could provide 
Reclamation with an opportunity to discuss programmatically resolving 
jurisdiction over hydropower development on Reclamation conduits with 
FERC, thus creating the potential to eliminate case-by-case 
jurisdictional consultations for development on Reclamation conduits.
    Section 2 of S. 306 and HR 678 would also require that Reclamation 
offer preference in the award of LOPPs to ``irrigation districts or 
water users associations'' with which Reclamation has an existing 
contract for operations and maintenance (O&M) of that project or 
project feature. While Reclamation already provided preference to 
existing irrigation districts and water user associations pursuant to 
Section 9(c) of the Reclamation Projects Act of 1939 we agree that 
these irrigation districts and water users currently operating and 
maintaining Reclamation transferred works should get additional 
favorability. In September 2012 we incorporated this concept into our 
revised LOPP directive and standard. Reclamation would be happy to work 
with the sponsors of the bills and the Committees to resolve any 
concerns regarding preference.
    Section 2 of S. 306 would provide that NEPA ``shall not apply to 
small conduit hydropower development, excluding siting of associated 
transmission on Federal lands[.]'' The Department opposes a waiver of 
NEPA. Furthermore, this language is in contrast to the existing 
provision in Section 30 of the Federal Power Act (16 U.S.C. 823a) that 
allows FERC to approve an application to develop hydropower within 
conduits located on non-federal lands under certain conditions. 
Accordingly, as provided in FERC's regulations at 18 CFR Sec.  
380.4(a)(14), FERC is not required to prepare an environmental 
assessment or environmental impact statement for certain conduit 
hydropower projects that meet the statutory and regulatory criteria and 
do not have the potential for significant environmental impacts.
    The Department understands the intent of S. 306 to be that conduits 
and canals are existing, man-made structures where environmental 
impacts associated with construction have already occurred and/or been 
mitigated. However, the Department's view is that low-impact 
hydropower, particularly in conduits and canals, can be efficiently 
developed by utilizing existing environmental review provisions that 
will not unduly delay project development and ensure environmental 
health and safety. Environmental analysis for many LOPP contracts has, 
for example, been addressed through environmental assessments rather 
than environmental impact statements. Reclamation's newly published 
LOPP procedures also allow for an existing categorical exclusion under 
NEPA to be applied to low-impact hydropower projects where low impact 
is defined by their impact to project operations as opposed to the size 
of the project. Reclamation believes that low-impact hydropower 
developed in conduits or canals may be appropriately analyzed under the 
same categorical exclusion procedures that are documented in the 
Departmental Manual at 516 DM 14.5(C)(3) and (D)(4).
    HR 678, as amended by the House of Representatives, directs 
Reclamation to ``apply its categorical exclusion process under the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) to 
small conduit hydropower development under this subsection, excluding 
siting of associated transmission facilities on Federal lands.'' The 
Department recognizes the intent of HR 678 to encourage the use of the 
categorical exclusion procedures that are allowed for in its LOPP 
directives and standards and documented in the Departmental Manual. If 
enacted, Reclamation would interpret this language as endorsing its 
current directive and standard to potentially apply categorical 
exclusions, provided that no extraordinary circumstances exist, 
pursuant to 40 C.F.R. Sec. 1508.4. Under Section 2 of HR 678, 
Reclamation does not guarantee that categorical exclusions will apply 
on every small hydropower project. Reclamation believes it should 
preserve its discretion to determine whether a closer review under NEPA 
is appropriate.
    The Department believes that environmental protections should 
continue to apply in the context of new construction undertaken on 
federal lands, and will continue to apply NEPA through the use of 
categorical exclusions or environmental assessments. We understand the 
value and importance of expedient environmental review and believe 
development of hydropower within Reclamation's existing conduits and 
canals can be efficiently analyzed utilizing these existing review 
processes.
    I would also like to address concerns raised by language in Section 
2 of S. 306 specifying that ``the Power Resources Office of the Bureau 
of Reclamation shall be the lead office of small conduit hydropower 
activities conducted under this subsection.'' The Department 
understands the bill sponsor's desire to simplify points of contact for 
entities seeking to develop hydropower. However, in practice, project-
specific expertise concerning Reclamation facilities resides first at 
the field level where ownership responsibility for the specific 
infrastructure resides. It is preferable for developers to approach the 
appropriate Reclamation regional or area office with proposals to 
develop conduit hydropower, and contact the PRO as needed. There is a 
robust channel of communication between the PRO, other Denver Offices, 
and Reclamation regional and field offices that allows for successful 
implementation of a LOPP agreement. Reclamation organizes its workforce 
as appropriate to maximize the efficiency and expertise of personnel.
    For these reasons, the Department is pleased to support the House 
amended language in HR 678 specifying that ``the Power Resources Office 
of the Bureau of Reclamation shall be the lead office of small conduit 
hydropower policy and procedure-setting activities conducted under this 
subsection.''.
    S. 306 and HR 678 would amend 9(c) of the Reclamation Project Act 
of 1939, which in addition to providing LOPP authority, authorizes the 
Secretary to enter into contracts for municipal water supply and 
miscellaneous purposes. Several of the definitions in S. 306 as drafted 
would affect the other authorities in the 1939 Act. In particular, the 
proposed definition of ``transferred work'' is too narrow to refer to 
all works affected by subsection 9(c) of the 1939 Act, since that 
subsection authorizes contracts involving works other than conduits. 
Either the definition would need to be broadened to include all 
affected works, or the term defined narrowed from ``transferred work'' 
to ``transferred conduit.'' Also, the existing 1939 Act has a 
definitions section. Any definitions that are of general application 
should be included in the existing definitions section, rather than in 
subsection 9(c). Definitions that apply solely to conduit hydropower 
need to do so explicitly, to avoid misapplication or confusion. The 
Department would be happy to work with the Committee on S. 306 to make 
these technical changes to the language of the proposed definitions and 
their placement within the existing 1939 Act. The Department 
appreciates and supports the language in HR 678 that narrows the terms 
defined as recommended above.
    As referenced above, Reclamation has procedures in place through 
the LOPP process for the sites where Reclamation has the authority to 
develop hydropower. In September 2012 we released an updated LOPP 
Directive and Standard that improved our processes, especially for 
conduits and canals, and incorporated the concept of additional 
favorability for irrigation districts and water user associations with 
O&M responsibility on Reclamation projects.
    Finally, HR 678 provides that ``nothing in this subsection shall 
alter or affect any existing preliminary permit, license, or exemption 
issued by the Federal Energy Regulatory Commission under Part I of the 
Federal Power Act (16 U.S.C. 792, et seq.) or any project for which an 
application has been filed with the Federal Energy Regulatory 
Commission as of the date of the enactment of the Bureau of Reclamation 
Small Conduit Hydropower Development and Rural Jobs Act.'' This 
language allows for existing and pending FERC licenses to remain within 
FERC's jurisdiction, rather than be redirected into Reclamation's LOPP 
process.
    In conclusion, as stated at previous hydropower hearings before 
this committee, Reclamation will continue to review and assess 
potential new hydropower projects that provide a high economic return 
for the nation, are energy efficient, and can be accomplished in 
accordance with protections for fish and wildlife, the environment, or 
recreation. As the nation's second largest hydropower producer, 
Reclamation strongly believes in the past, present and bright future of 
this important electricity resource. With these recommended revisions, 
S. 306 and HR 678 will go a long way towards meeting the 
Administration's goals of developing clean, reliable, cost-effective, 
and sustainable hydropower in the United States.
    Thank you for the opportunity to discuss S. 306 and HR 678. This 
concludes my written statement, and I am pleased to answer questions at 
the appropriate time.

    Senator Franken. Thank you, Mr. Pimley. Mr. McCalman, thank 
you for being here to respond to questions that the panel has.
    But we will go to Dr. Hogan for her testimony.
    Dr. Hogan.

  STATEMENT OF KATHLEEN HOGAN, DEPUTY ASSISTANT SECRETARY FOR 
 ENERGY EFFICIENCY, OFFICE OF ENERGY EFFICIENCY AND RENEWABLE 
                  ENERGY, DEPARTMENT OF ENERGY

    Ms. Hogan. Thank you. Chairman Wyden, Senator Franken, 
Ranking Member Murkowski, and members of the committee, thank 
you for inviting me to testify today on behalf of the 
Department of Energy regarding energy efficiency.
    We all know energy efficiency is a large, untapped resource 
in the United States, which offers many benefits, billions in 
consumer savings, improved competitiveness, more domestic jobs, 
greater reliability of our energy systems, reduced reliance on 
foreign oil, and reduced air pollution. We are making 
significant progress on energy efficiency and realizing many of 
those benefits. DOE's energy efficiency portfolio is making 
important contributions, but there is more that we can do 
through high-impact, leveraged efforts to catalyze more of 
these benefits.
    This year's State of the Union Address included a goal to 
cut the energy wasted by our homes and businesses by half over 
the next 20 years and to double our energy productivity. It 
included a new partnership with the States on energy efficiency 
and grid modernization called Race to the Top, and the 
President's fiscal year 2014 budget requests additional funding 
for energy efficiency and clean energy programs, including Race 
to the Top.
    So we thank you for your leadership on S. 761, the Energy 
Savings and Industrial Competitiveness Act of 2013, and look 
forward to working with you on it on the additional things we 
can do with energy efficiency.
    While the administration is still reviewing the bill and 
does not have a specific position at this time, we clearly 
support the objectives of the bill. I would like to highlight 
some of the areas where we see greater opportunities for energy 
savings, particularly ones that relate to S. 761.
    We can just look at our homes and buildings where they 
consume 40 percent of U.S. energy at a cost of $400 billion a 
year and a cost that continues to grow in this country. Here, 
DOE-catalyzed innovation is yielding new lighting, heating and 
cooling, windows, building envelope, and other technologies, 
many offering 50 percent savings over current ones. We are 
showing how to design and construct whole new buildings that 
put all the pieces together with savings of 50 percent or more.
    Building codes help put low-cost energy saving measures in 
place during the construction and major renovations of these 
buildings and provide savings over the very long lives that our 
buildings have. DOE has a longstanding program assisting State 
and local governments with adoption and implementation of 
building codes for both residential and commercial buildings, 
and we know that there are many opportunities for greater 
savings here.
    We also know that lack of qualified professionals is a 
frequently cited issue by home and building owners wanting to 
upgrade their buildings. Here DOE is helping to improve the 
U.S. Energy efficiency work force by leading multi-stakeholder 
efforts to define quality work, establish accreditation 
requirements for training programs, and establish certification 
requirements for professionals. We are working with GSA on 
programs for the Federal work force for the people that are 
responsible for energy use in Federal buildings, and we are 
engaged in a pilot effort with NIST on building tune-up 
trainings. Again, there is much more work that we can do here.
    We also know that limited access to financing is a 
frequently cited issue, and improving access to financing is 
one of the objectives of the DOE's Better Buildings Challenge 
effort through which we have partnered with more than a dozen 
financial organizations that have put on the table $2 billion 
in financing for commercial building improvements, half of 
which have been executed. Clearly $2 billion is again just the 
beginning of what we need to do in terms of access to 
financing, and we continue to work with State and local 
governments here on best practices with regard to any number of 
finance mechanisms.
    Improving industrial energy efficiency and competitiveness 
is another priority across the energy-intensive, the less 
intensive, the large, small, and medium firms. Here DOE is 
advancing next generation materials and processes working with 
more than 100 organizations through their Better Plants 
commitments to improve their energy intensity by 25 percent or 
more, supporting industrial assessment centers across the 
country, and participating in the development of new 
international standards for energy management and its related 
protocols. Again, there is clearly a lot more work that we can 
do here.
    Our minimum energy conservation standards are providing 
tens of billions of dollars in energy savings across all of 
these sectors. Just this month, the Department issued a final 
standard for distribution transformers which will go into 
effect in 2016 providing billions in savings for commercial and 
industrial entities through this one area alone. So again, many 
more savings that we can achieve.
    We also continue our work across the Federal Government to 
help the Federal Government lead by example and achieve large 
energy savings, water savings, and to meet our renewable energy 
goals. Energy savings performance contracts have been a very 
important tool. The Federal Government remains on target to 
meet the President's goal to implement $2 billion in 
performance contracts by December 2013, and again, there is 
just a lot more opportunity for the Federal Government with 
performance-based contracts. We also know there is a lot of 
opportunity for us to continue to do work with data centers and 
the use of computers and power management.
    So in summary, I will just say that energy efficiency is 
the cornerstone of a more secure, resilient, and competitive 
energy economy, and we look forward to seeing what we can do 
working with you together.
    Thank you again for the opportunity to be here today, and I 
am happy to answer questions.
    [The prepared statement of Ms. Hogan follows:]

 Prepared Statement of Kathleen Hogan, Deputy Assistant Secretary for 
 Energy Efficiency, Office of Energy Efficiency and Renewable Energy, 
                          Department of Energy
    Chairman Wyden, Ranking Member Murkowski, and Members of the 
Committee: thank you for inviting me to testify today on behalf of the 
Department of Energy (DOE) regarding energy efficiency.
    The Energy Savings and Industrial Competitiveness Act of 2013 
outlines new provisions for building codes, financing building 
upgrades, industrial energy efficiency, and efficiency of Federal 
buildings among other areas. The legislation would increase DOE's role 
in providing technical assistance to building code bodies and would 
expand the type of support that DOE provides to States. It would also 
establish DOE-administered rebate programs for more energy efficient 
electric motors and transformers.
    The Administration is still reviewing the Energy Savings and 
Industrial Competitiveness Act of 2013 (S. 761) and does not have a 
position on the bill at this time. The Administration does, however, 
support the objectives of improving energy efficiency in the 
residential, commercial, and industrial sectors and in the Federal 
government. Energy efficiency is a large, low-cost, but underutilized 
U.S. energy resource. Increased energy efficiency offers savings on 
energy bills, opportunities for more jobs, improved industrial 
competitiveness, and lower air pollution. This year's State of the 
Union address included a goal to cut the energy wasted by our homes and 
businesses by half over the next 20 years.
    The President also called on us to build on the success of existing 
partnerships as well as to establish new partnerships, in particular 
with the States. This includes his call for a new Race to the Top for 
Energy Efficiency and Grid Modernization challenge. Modeled after the 
successful Administration approach to education reform to promote 
forward-leaning policies at the Statelevel, the President's budget 
includes $200 million in one-time funding for Race to the Top awards to 
support State governments that implement effective policies to cut 
energy waste and modernize the grid.
    As Deputy Assistant Secretary for Energy Efficiency in the Office 
of Energy Efficiency and Renewable Energy (EERE), I am responsible for 
overseeing DOE's portfolio of energy efficiency research, development, 
demonstration, and deployment activities. I am pleased to be here today 
and look forward to working with Congress, and this Committee in 
particular, and discussing how we can catalyze greater energy 
efficiency to help address our Nation's energy challenges. My statement 
today will provide an update on DOE's energy efficiency portfolio, the 
challenges we are working to address, and the progress we are making.
                     homes and commercial buildings
    Improving energy efficiency in our homes and buildings offers a 
tremendous opportunity to create well-paying jobs, save money for 
businesses and consumers, and make our air cleaner. In the U.S., homes 
and buildings consume 40 percent of the Nation's total energy with an 
annual energy bill of more than $400 billion.\1\ DOE estimates that 
these energy bills can be cost-effectively reduced by 20-50 percent, or 
more, through various energy efficiency approaches.\2\
---------------------------------------------------------------------------
    \1\ Buildings Energy Data Book, U.S. Department of Energy. March 
2012, http://buildingsdatabook.eren.doe.gov/TableView.aspx?table=1.2.3.
    \2\ See, for example, DOE/ASHRAE's Advanced Energy Design Guides 
for commercial buildings (http://www1.eere.energy.gov/buildings/
commercial/aedg.html) and DOE's Building America program (http://
www1.eere.energy.gov/buildings/residential/ba_index.html).
---------------------------------------------------------------------------
    DOE uses a portfolio approach to pursue the potential energy 
savings in buildings. Research and development (R&D) on next-generation 
building technologies will lead to advances in enduses representing the 
majority of building energy consumption, including efficient lighting 
that is cost-competitive in today's market, new technologies in heating 
and cooling, and windows that decrease energy demands and improve 
comfort. Some highlights from DOE's project portfolio include:

   DOE's R&D on solid-state lighting has the potential to 
        reduce lighting energy usage by one-fourth, saving businesses 
        and consumers $15 billion annually.\3\ Already, new technology 
        developed with DOE support has led to a solid state bulb with 
        lower lifecycle costs that lasts roughly 25 times longer than 
        traditional incandescent bulbs.
---------------------------------------------------------------------------
    \3\ BTP ET Program Information Sheet: Solid-State Lighting, August 
10, 2011.
---------------------------------------------------------------------------
   New heat pump water heaters offer households large savings 
        on water heating, more than 50 percent in many cases. As a 
        Nation, we spend $34 billion\4\ each year on energy for water 
        heating,\5\ and heat pump water heaters could free a large 
        percentage of that cost to meet other household expenses. The 
        first of these innovative water heaters that use a hybrid of 
        electric heating and heat pump technologies are being 
        commercially produced here in the United States.
---------------------------------------------------------------------------
    \4\ ``Annual Energy Review.'' EERE Buildings Data Book, 2011, 
http://buildingsdatabook.eren.doe.gov/TableView. aspx?table=2.3.5.
    \5\ ``Saving Energy.'' EERE Buildings Technology Program, 2012, 
http://www.eere.energy.gov/buildings/ saving_energy_ge.html.
---------------------------------------------------------------------------
   Efficient windows, pioneered with EERE funding, have played 
        a critical role in the market shift toward double-pane windows 
        with low-emittance coatings, which insulate three times better 
        than typical single-pane windows. More recently, EERE has 
        helped develop and commercialize technology to create better, 
        more efficient windows for cold climates that will allow in 
        more energy than they lose.

    DOE also invests in whole building R&D that demonstrates how new 
energy efficient technologies can function together to create an 
efficient system, achieve greater overall savings, and inspire the 
next-generation of buildings. For homes, this will translate into a new 
generation of housing stock that is durable, uses smarter energy 
management systems, and offers substantial energy savings. Our recently 
introduced Challenge Home program is a new and compelling way to 
recognize builders for their leadership in increasing home energy 
efficiency, improving indoor air quality, and making homes zero net-
energy ready. DOE Challenge Homes are verified by a qualified third 
party and are at least 40-50 percent more energy efficient than a 
typical new home.\6\
---------------------------------------------------------------------------
    \6\ A typical new home as built to recent model energy codes. For 
more information on DOE Challenge Home methodology, see http://
www1.eere.energy.gov/buildings/residential/pdfs/
ch_label_methodology_1012.pdf.
---------------------------------------------------------------------------
    In addition to creating energy efficiency opportunities in the new 
buildings market, DOE invests in activities that target the large 
savings potential that exists across the stock of existing homes, many 
built before modern codes. Here, the Department is working with 
organizations in communities across the country to demonstrate upgrade 
programs that offer savings of 20 percent or more for single family and 
multi-family residences. Within this market space, effective programs 
are the ones that include three elements: clear, compelling information 
for homeowners on potential energy savings; skilled workers; and access 
to financing. To help improve these programs, we are developing new 
rating tools to help consumers understand the efficiency of their 
buildings and the opportunities for improvement.
    In addition, in late September 2012, EERE reached the major 
milestone of weatherizing more than one million homes across the 
country since 2009, while supporting tens of thousands of jobs in local 
communities. These efforts save eligible families hundreds on their 
heating and cooling bills in the first year alone. Each year, these 
programs train thousands of workers in both the public and private 
sectors, boosting their ability to serve the home retrofit market and 
helping to grow the clean energy workforce. To ensure the consistency 
and quality of this growing U.S. workforce, the Department is leading 
efforts to define Standard Work Specifications for Energy Efficiency 
Upgrades in residential weatherization and building a foundation for 
the home energy industry through professional training and 
certification.
    We have similar efforts targeting energy efficiency opportunities 
for commercial buildings. Two particular efforts to highlight are the 
Energy Efficient Buildings Hub and the Better Buildings Challenge. To 
accelerate the development and deployment of energy-saving solutions 
for commercial buildings, DOE established the Energy Efficient 
Buildings Hub, a Regional Innovation Cluster headquartered at the Navy 
Yard in Philadelphia. A key feature of the Hub is the availability of a 
unique set of buildings as a test bed, including a 30,000-square-foot 
building that will be used to demonstrate advanced energy retrofits of 
commercial buildings. The tools developed, lessons learned and best 
practices from the Hub will ultimately help enable widescale deployment 
in similar climate zones and building types nationwide.
    The Better Buildings Challenge (BBC) is a signature partnership 
effort, with over 110 partners across the commercial, industrial, and 
public sectors. Together, these partners represent approximately 2 
billion square feet of commercial and industrial space, 300 
manufacturing plants, and $2 billion in private sector financing. As 
partners advance toward meeting their individual goals, the BBC 
website\7\ will highlight their commitment and progress, including 
information on showcase projects and hundreds of replicable 
implementation models. To date, more than $1 billion of the commitment 
from private sector financial firms has been extended to projects, and 
we are continuing to look for ways to expand access to private-sector 
financing, as this remains an important barrier cited by commercial 
building owners.
---------------------------------------------------------------------------
    \7\ The BBC website address is www.betterbuildings.energy.gov/
challenge.
---------------------------------------------------------------------------
    Further, DOE assists with the adoption and implementation of state 
and local building codes for both commercial and residential buildings. 
Building codes take advantage of the broader set of efficiency measures 
available during construction and major renovations. The Department 
emphasizes updating codes based on cost-effective savings opportunities 
and assisting state and local governments with ensuring code compliance 
so that savings are realized. To accomplish its objectives in this 
area, DOE has developed a suite of assistance tools it routinely 
provides to state and local authorities.
                         advanced manufacturing
    The U.S. manufacturing sector also offers important opportunities 
for cutting energy waste, while improving our industrial 
competitiveness and promoting economic growth. In the United States, 
manufacturing represents about 12 percent of the gross domestic product 
and nearly 12 million jobs.\8\ The Department's investments in advanced 
manufacturing are geared toward developing next-generation 
technologies, processes, and materials that offer substantial 
improvements in efficiency across a product lifecycle and at costs 
competitive with current technologies. We are also assisting industry 
with strategic energy management and combined heat and power (CHP). 
This portfolio will enhance the competitiveness of U.S. manufacturing 
now and for the longer term.
---------------------------------------------------------------------------
    \8\ Full-time and Part-time employees by industry, U.S. Department 
of Commerce, http://www.bea.gov/iTable/
iTable.cfm?reqid=5&step=4&isuri=1&402=43&403=1#reqid=5&step=4&isuri=1&40
2= 43&403=1
    Value added by industry as percentage of GDP, U.S. Department of 
Commerce, http://www.bea.gov/iTable/
iTable.cfm?reqid=5&step=4&isuri=1&402=5&403=1#reqid=5&step=4&isuri=1&402
=5 &403=1
---------------------------------------------------------------------------
    In the State of the Union address, President Obama called for a 
network of manufacturing innovation institutes that will help to 
support investment in U.S. manufacturers' competitiveness and 
accelerate innovation in manufacturing. The Department of Energy is a 
partner in the pilot institute, the National Additive Manufacturing 
Innovation Institute (NAMII), located in Youngstown, Ohio. NAMII is 
bridging the gap between basic research and product development for 
additive manufacturing, providing shared assets to help companies 
(particularly small manufacturers) access cutting-edge capabilities and 
equipment, and creating an environment to educate and train workers in 
advanced additive manufacturing skills. Additive manufacturing 
techniques create 3-D objects directly from computer models, depositing 
material only where required. These new techniques, while still 
evolving, are projected to exert a profound impact on manufacturing for 
high-value products. They can give industry new design flexibility, 
reduce energy use, and shorten time to market. To realize the full 
potential of additive manufacturing, the technology will need to be 
integrated into broad manufacturing solutions. In applications where 
additive manufacturing is competitive, DOE estimates that 50 percent or 
more energy savings could be realized.
    In January, the Department announced the selection of Ames 
Laboratory to establish an Energy Innovation Hub that will develop 
solutions to help address the domestic shortages of rare earth metals 
and other materials critical for U.S. energy security. The Critical 
Materials Institute (CMI) will bring together leading researchers from 
academia, Department of Energy National Laboratories, and the private 
sector. CMI will focus on technologies that will enable the U.S. to 
make better use of available materials as well as eliminate the need 
for materials that generally must be imported from overseas and are 
subject to supply disruptions. These critical materials, including many 
rare earth elements, or the development of feasible substitute 
technologies are essential for American competitiveness in the clean 
energy industry; many materials deemed critical by the Department are 
used in modern clean energy technologies such as wind turbines, solar 
panels, electric vehicles, and energy-efficient lighting.
    In addition to investments in advanced process and materials R&D, 
the Department has active technical assistance programs aimed at 
reducing manufacturing energy intensity by 25 percent over ten years by 
engaging a diverse set of industry partners in effective business 
models, continuous improvement in energy efficiency, modeling key 
processes, and supporting standards and certifications for third-party 
services. DOE technical assistance also supports the achievement of the 
national goal set by President Obama in an Executive Order last August 
of developing 40 gigawatts of new, cost-effective industrial CHP by 
2020. And, DOE provides tools to support improvements in a number of 
common systems in manufacturing facilities, including motor, steam, 
compressed air, and pumping systems.
                   appliance and equipment standards
    In addition, the Department implements minimum energy conservation 
standards for more than 60 categories of appliances and equipment. As a 
result of these standards, energy users across all sectors are 
estimated to have saved tens of billions of dollars on their utility 
bills in 2010. Since 2009, 17 new or updated standards have been 
issued, which will help increase annual savings even further over the 
coming years.
    Most recently DOE finalized a standard for three types of 
distribution transformers that take effect in 2016. The standard for 
low-voltage dry-type transformers, which are typically used by 
commercial and industrial users, represents 30 percent savings over the 
prior standard and provides estimated net benefits of up to $11.8 
billion on equipment sold through 2045\9\. The two other types of 
distribution transformers that were subject to this rulemaking, liquid-
immersed and medium-voltage dry-type transformers, are used primarily 
by electric utilities in outdoor settings as opposed to inside 
buildings. These two standards combined provide estimated net benefits 
of up to $5.7 billion on equipment sold through 2045.
---------------------------------------------------------------------------
    \9\ Net present value of net benefits, in 2011 dollars, estimated 
at a 3 percent discount rate.
---------------------------------------------------------------------------
                        federal lead-by-example
    Finally, DOE plays a critical role in providing technical 
assistance to Federal agencies to increase understanding and accelerate 
cost-effective adoption of energy-saving technologies and strategies. 
The U.S. Federal government is the Nation's single largest user of 
energy and has both a tremendous opportunity and an acknowledged 
responsibility to lead by example in saving energy. In December 2011, 
President Obama signed a Presidential Memorandum directing the Federal 
government to enter into a minimum of $2 billion in performance-based 
contracts over the next two years for energy retrofits on Federal 
buildings. Agencies have identified a pipeline of over $2 billion in 
energy efficiency projects for Federal buildings that will be contract 
awards by December 31, 2013. These projects will use energy savings to 
pay for project implementation costs, achieving substantial energy 
savings at no net cost to the American taxpayer. More than $500 million 
in projects have already been awarded, which will also help agencies 
meet the government's goals to reduce Federal building energy 
consumption per gross square foot by 30 percent from 2003 through 2015; 
increase renewable energy use to 7.5 percent annually; reduce water use 
intensity by 26 percent from 2007 through 2020; reduce vehicle 
petroleum use by 2 percent annually; and reduce greenhouse gas 
emissions by 28 percent from 2008 through 2020.
    Federal data center optimization and closures, the use of Energy 
Star and EPEAT-registered computers and power management also remain 
important opportunities for energy savings.
                               conclusion
    Through R&D, deployment, and collaborations at all levels of 
government and the private sector, the Department of Energy aims to 
capitalize on the opportunities that energy efficiency affords. The 
Department's efforts to lead in next-generation buildings and advanced 
manufacturing will result in a more secure, resilient, and competitive 
energy economy. While we are making progress, continued efforts are 
necessary to capture the full set of opportunities.
    Thank you again for the opportunity to speak to this important 
issue, and I would be happy to answer any questions.

    Senator Franken. Thank you, Dr. Hogan.
    I really would like to congratulate Senators Portman and 
Shaheen for their bipartisan effort in crafting this 
legislation. I certainly hope it is one that we will pass in 
the Senate.
    Since I am chairing here, I am going to pass it off and 
maybe I will ask questions when it appears that the chairman is 
coming back so I can get to Judiciary.
    Senator Murkowski?
    Senator Murkowski. Thank you.
    Several questions for each of you. First, thank you for 
being here today to provide testimony to the committee on the 
various measures that we have in front of us.
    Mr. Wright, let me begin with you. You mentioned the 2-year 
licensing process within both S. 545 and H.R. 267, and you have 
indicated that there are--I think the terminology you used--
``significant constraints? that are imposed by the Federal 
Power Act, but you also cite too to other Federal acts, whether 
it is endangered species, clean water, coastal zone management.
    Can you give me a little more background in understanding 
the FERC's inability here to set enforceable licensing 
schedules with these other agencies and whether or not there 
are any consequences then to these agencies if they miss the 
deadlines that might be subject to this FERC licensing process?
    Mr. Wright. Thank you, Senator.
    First of all, we do not have a regime where we set a 
schedule for other agencies which would be similar under the 
Natural Gas Act which does have that kind of authority.
    What we do have with the Federal Power Act are mandatory 
conditions that are allowed by--for instance, for Fish and 
Wildlife at the Federal and State level. In that example, we 
have to wait for those agencies to act before we can actually 
issue a license. For instance, I will go to the Clean Water 
Act. That authority is delegated down to the State. They give 
water quality certifications. We are dependent upon the State 
to act before we can actually issue a license, and in some 
respects and in some States, it is a multi-year process.
    We do our NEPA work. We continue with that, and in large 
part, we are done with our NEPA work within a 2-year period. 
Much of the waiting for the final issuance of a license is 
dependent upon the other permits from other permitting agencies 
to finish their work and allow us to prepare an order and 
prepare that license for issuance.
    Senator Murkowski. So we can go ahead and provide for this 
2-year licensing process, but what you are saying is you cannot 
necessarily direct or control what may happen within these 
other Federal agencies and the timelines that they have. So is 
this kind of a best effort type of an approach in your view, or 
is this something that folks can count on as they are looking 
to the licensing process, that it is a 2-year hurdle for them?
    Mr. Wright. I will say this. We will endeavor, if this bill 
passes, to come up with a 2-year licensing process, but we do 
not have a hammer, if you will, over the other agencies to 
dictate a schedule and make these licenses priorities of their 
work product.
    Senator Murkowski. This is what we are trying to do here. 
We are trying to put forward a path to give some level of 
certainty that there is a process that will not be open-ended. 
Of course, when we recognize some of the complicating factors 
that come up because of ESA, the Endangered Species Act, Clean 
Water Act, we do not want these other acts to be used to thwart 
the intent which is a more streamlined process. So that may be 
something that we need to provide a little focus to.
    Mr. Pimley, I wanted to ask you about the NEPA waiver and 
the categorical exclusion language. You have given some detail 
in both your written and your oral testimony here.
    Do you think it would be helpful if we were to provide for 
report language on this issue of categorical exclusion? Would 
that be helpful just in providing some clarity out there?
    Mr. Pimley. I think that we certainly would not oppose any 
language like that. We would interpret that as further 
clarification that we should follow the process as H.R. 678 has 
told us to follow the process we have in place in our directive 
and standard. So it certainly would reaffirm that process, yes.
    Senator Murkowski. Then finally, Dr. Hogan, for you. Under 
the Energy Savings and Industrial Competitiveness Act, there is 
a program in there called Supply Star, which is designed to 
identify and promote highly efficient supply chains. Are we 
going to run into a situation where Supply Star is confused 
with the Energy Star program, relatively similar in name, in 
purpose? Does this cause confusion? Is this an issue or not?
    Ms. Hogan. I think this is all workable. I think first 
Supply Star starts as a sort of business-to-business framework 
to help organizations that are--the materials that they need to 
bring in as part of their processes to help have a good 
framework for improving energy efficiency up and down the 
supply chain. So I think there is a lot of benefit to have in 
that sort of business-to-business world before we start talking 
about products and recognition and any potential confusion with 
Energy Star. Certainly we can work with the EPA to make sure 
that there is no confusion.
    Senator Murkowski. Thank you, Mr. Chairman.
    Senator Franken. I am not sure if we had an early bird. 
Senator Portman, we will go to you.
    Senator Portman. Thank you, Mr. Chairman. I appreciate your 
comments earlier and appreciate Senator Coons, who was here 
earlier, who has been involved in the design of this 
legislation.
    This is the same bill basically that we had before the 
committee last year. So in a sense, it is old business. We have 
made some changes. Frankly, in the fiscal climate we have, we 
have made it more fiscally prudent. We have dropped the 
language that expanded the DOE's loan guarantee program and 
replaced it with a State-based financing mechanism that I think 
will work better. A number of our colleagues had expressed 
concerns about the loan guarantee program. But this is very 
similar to the legislation that came through the committee last 
year, 18 to 3.
    I want to thank the Energy Department and Dr. Hogan, in 
particular, for their help on this. They have given us 
expertise and advice all the way through.
    Senator Coons is now here. Sorry. I did not see you.
    This has enabled us, I think, to come up with, again, some 
refinements to the legislation that make it even more 
effective.
    A couple questions I would have for Dr. Hogan briefly. One 
is with regard to the Advanced Manufacturing Office, or AMO as 
I affectionately call it. This is something that, as you know, 
we are focused on as a way to help the manufacturing sector, in 
particular, get some of the technology they need to be able to 
be more energy efficient, which is important for our 
competitiveness and the economy. There are other offices at DOE 
that focus more on the science side and focus more on some of 
the production even of technologies like solar energy. But we 
want to be sure that AMO has this special focus on 
manufacturing.
    So I guess I would just ask you if you could talk a little 
bit about the role of the Advanced Manufacturing Office, why is 
it important, why does the Federal Government play a role here, 
and if you could explain a little about what the office does 
now and maybe what you think it should do.
    Ms. Hogan. Great. So as you have noted, we have changed the 
name of our program that was focusing on the industrial sector 
from the Industrial Technologies Program to the Advanced 
Manufacturing Office. I think what you should hear in those 
words is our intense focus on manufacturing and our interest in 
being able to bring forth new solutions that make sense for all 
of industry but as we take sort of a more lifecycle approach 
looking at sort of where we use energy in our economy and look 
for the big steps that we can make to improve sort of energy 
intensity across our economy.
    So what we are looking for are opportunities where we can 
get 10, 20, 30, but really 50 percent savings in our processes, 
in our materials, and to work with all of the industries where 
we have those opportunities for such changes. So that includes 
energy-intensive industries, as well as sort of advanced 
manufacturing techniques that we think are critical to the 
competitiveness of our economy going forward.
    Senator Portman. Thank you very much.
    You noticed Senator Wyden, Chairman Wyden, earlier 
mentioned the fact that there are over 200 organizations and 
companies that have supported this legislation, and many of 
those 200 are industrial companies, manufacturers who are 
interested in the energy efficiency best practices and again 
the deployment of technology to help them that came out of 
this. So they are very excited about having this Advanced 
Manufacturing Office work closely with them as partners, and I 
think that is the goal of this legislation certainly to engage 
them as stakeholders directly so that they are getting what 
they need out of this to become more competitive and also to 
save energy. So it has both issues.
    Earlier you called the energy efficiency a cornerstone of 
national energy policies, and I think that is certainly 
correct. There are many of us on this committee who believe we 
ought to be producing more energy, including hydro, but also we 
ought to be using less and being more efficient. That is 
certainly consistent.
    You also said in your statement that the administration 
supports the objectives of the legislation but that you are 
still looking at the bill. We appreciate again your working 
with us to come up with an even better bill this year.
    You also noted several times in your testimony that there 
is a lot more opportunity to find energy savings through 
efficiency, and we certainly agree with that. That is one 
reason we have focused this legislation on some of those areas. 
You mentioned that buildings, for instance, is where we use 40 
percent of our energy. One of the focuses this year is on the 
building side including, as I noted earlier, kick-starting this 
private sector investment in building efficiency, but also more 
transparency in the national building codes. We have worked 
with the home builders and others on that transparency.
    We also are focused on training that next generation of 
workers, as you talked about, through these university-based 
building training and research assessment centers.
    Then manufacturing we talked about earlier, which I think 
we have got some really exciting opportunities there, including 
the Supply Star program that Senator Murkowski talked to you 
about.
    Then finally, the Federal Government where we have the 
largest user of energy in the world, as far as we can tell, and 
sometimes it is used efficiently, sometimes not. There is lots 
of, as you indicated, opportunity there, including getting 
these companies that perform service contracts in efficiency 
and are paid over time through the savings to be engaged 
directly in some of the objectives of the legislation, 
including installing natural gas vehicle charging 
infrastructures and electric vehicle infrastructures.
    So I think there is a lot of opportunity here, as you said, 
and we appreciate your support already and, again, appreciate 
the Senators, including Senator Coons and Senator Wyden and 
Senator Murkowski and others, who have contributed to the 
design of the legislation this year.
    Thank you, Mr. Chairman.
    The Chairman [presiding]. Thank you, Senator Portman.
    Senator Coons is next.
    Senator Coons. Thank you, Chairman Wyden, and thank you for 
the different sponsors who brought forward these hydropower 
bills today that I think are quite interesting and deserving of 
consideration.
    I want to thank Senator Portman and Senator Shaheen for 
their leadership on moving forward this vital energy efficiency 
bill. I strongly support this legislation and am determined to 
do whatever I can to contribute to its passage through this 
committee and its adoption through the whole Senate. It passed 
through this committee last Congress by a vote of 18 to 3. So, 
as Senator Murkowski mentioned, this is old business that we 
hopefully will move forward on swiftly.
    I think there is clear indication of strong bipartisan 
support for the common sense ideas in this bill. As Senator 
Portman mentioned, there are more than 200 off-the-Hill 
validators, sponsors from business, trade associations, 
advocacy groups. This bill contains no mandates. There are no 
compulsory requirements on a company or individual because of 
this legislation. It is something that I think has been 
misunderstood or miscast. If there are other additional 
concerns, my understanding is the sponsors are more than 
willing to work through any Member's office to explain them or 
address them.
    These are difficult economic times. First, we do need to 
reduce our deficit, and so I am grateful for the revisions that 
have been made. I think this bill offers a perfect opportunity 
for responsible bipartisan progress that finds savings wherever 
possible and works in public/private partnerships to achieve 
that.
    Since my work on the State Energy Efficiency Workforce in 
Delaware more than a dozen years ago, I have been convinced 
that energy efficiency is a powerful, vital way to achieve 
progress. There is no winning or losing, simply progress by 
improving energy efficiency.
    So I would like to mention two other things, if I might. In 
your comments, I was encouraged to hear positive reference to 
the Better Buildings initiative and performance-based 
contracts. So I want to work with the administration to make 
sure there is not a CBO scoring hurdle to the broad and 
responsive adoption of the ESCO technology.
    Also, you mentioned the importance of financing for energy 
efficiency. A bill which will be reintroduced this week, The 
MLP Parity Act, of which I am a cosponsor, includes a provide 
that extends the tax benefits of the MLP structure to 
commercial and institutional buildings based on the 179(b) tax 
credit, that definition.
    Let me get, if I could, to building codes. Last year, the 
American Council for an Energy Efficient Economy did a study of 
the Shaheen-Portman bill that suggested the benefits it would 
provide--more than 90 percent of them would come through 
improvements in building codes. As a former county official, I 
was responsible for the maintenance, update, and implementation 
of our building codes. Your office will play a key role in 
working with private code-setting organizations to define 
consensus-based standards that can be achieved for higher 
energy savings.
    Some have raised the concern that these building codes 
might then be some Federal mandate. Could you speak to that, 
and could you tell us more about what you are doing now in the 
building codes area and what more you could do with this 
legislation?
    Ms. Hogan. Great. Yes, I think there is some confusion out 
there in the building code space.
    The way this process works in this country is there are 
code bodies where various entities bring proposals and those 
get examined from any number of angles, including with a lot of 
examination from the code officials across the country, and 
then the updates, the sort of new proposals get voted on.
    So what does DOE do in that process? We bring to the table 
what we hope is very sound analysis on the costs and benefits 
of new measures that could make sense to deliver cost effective 
savings as we upgrade those codes. Of course, we get to vote on 
those as well, but really, with a sort of a minor voting role 
relative to all the votes that are taken. So what we are really 
trying to do is bring forth very good information on the costs 
and the benefits of these measures and stay up to date with 
technology as it develops.
    What we have been able to do with regard to, I guess, the 
2012 code update that States and local jurisdictions are 
looking at now is bring forth a lot of information around the 
savings that, for example, the average household could see as 
they would buy a home that would have those advanced measures 
in place. What we see is the average homeowner would have a net 
cash-flow improvement on the order of $200, $300, $400 a year. 
So truly these codes are making a difference in people's lives.
    But that is really what we see our role as, is bringing 
very good information to the table on what these measures, as 
you update the codes, can offer. Then it is up to the States 
and the local jurisdictions to look at those numbers, evaluate 
them, and adopt the code, consistent with their own legislation 
that they have on the books.
    The other part that I think that I think we all know is 
important is not just code adoption, but looking at how you 
ensure that the codes are being abided by on the ground. We 
have a variety of technical systems tools that we offer there 
as well.
    Senator Coons. Thank you, Dr. Hogan. Thank you again to 
Senators Portman and Shaheen for their leadership on this 
important legislation. I look forward to working with you and 
the leadership of the committee in moving this forward 
promptly.
    The Chairman. Very good.
    Senator Barrasso.
    Senator Barrasso. Thank you, Mr. Chairman. Thank you also 
for allowing my bill and its House counterpart to be considered 
in this hearing, this Barrasso-Risch-Tipton bill named the 
Bureau of Reclamation Small Conduit Hydropower Development and 
Rural Jobs Act. It authorizes the Bureau of Reclamation 
hydropower development on nearly 47,000 miles of Federal canals 
throughout the West. In Wyoming alone, 121 sites could be 
developed, according to the Bureau of Rec March 2012 report. 
Oregon has the second highest conduit hydropower capability 
with 68 identified sites.
    The bills proactively authorize hydropower development on 
existing facilities that have already gone through Federal 
environmental review.
    The bills also provide common sense administrative and 
regulatory streamlining to ensure that this development 
proceeds to the construction phase.
    Both the House and the Senate bills were originally 
introduced with a NEPA waiver. That was done because we are 
talking about manmade facilities on already disturbed ground 
that had to go through Federal permitting previously.
    I realize, however, that compromise on this provision is 
necessary to get this bill across the finish line. So working 
together with the House counterparts, we supported an amendment 
that recognizes the Bureau's existing NEPA categorical 
exclusion process and it strengthens it by directing it to 
apply to, quote, small conduit hydropower, close quote, which 
is something the existing process fails to do. This will help 
insulate the Bureau and investors from unnecessary lawsuits. It 
also matches how FERC currently treats similar conduits when it 
comes to NEPA. But by endorsing the categorical exclusion 
process, it also gives the Bureau the administrative 
flexibility to use what it calls extraordinary circumstances in 
case a project does deserve more scrutiny. This off ramp from a 
NEPA categorical exclusion is important as part of its 
flexibility.
    The amendment was adopted by a voice vote in the House and 
then the House passed this bill on a roll call vote by 416 to 
7. I am happy to report, Mr. Chairman, that all of the Oregon 
House Members voted for the bill.
    Mr. Chairman, the list of the bill's supporters grows every 
day. The National Hydropower Association, Family Farm Alliance, 
National Water Resources Association, American Public Power 
Association, and the Western Governors Association, the Oregon 
Water Resources Congress are just some of the supporters. I 
ask, Mr. Chairman, that the letters of support be added to the 
record.
    The Chairman. Without objection, so ordered.
    Senator Barrasso. Thank you, Mr. Chairman.
    I sincerely hope that we can move forward on this 
compromise, get these small hydro projects underway by getting 
this bill signed into law.
    With that being said, with all the good work that has been 
done to meet everyone's needs, I just want to seek a 
clarification with a statement, Mr. Pimley, in your written 
testimony. You stated, quote, Reclamation believes it should 
preserve its discretion to determine whether a closer review 
under NEPA is appropriate. It is my understanding that such a 
deviation from the categorical exclusion process for the 
installation of a small hydro conduit would occur if there 
were, quote, extraordinary circumstances.
    So can you describe maybe in a little more detail when the 
Bureau would exercise this discretion to do that closer review 
under NEPA with regard to small hydro conduits?
    Mr. Pimley. Yes. As you pointed out, our assessment of 
extraordinary circumstances is based on an evaluation of the 
checklist that we utilize for all of our minor construction 
categorical exclusions. That document is rooted in the 
department's manual, and it has been used since 2008 across the 
Department on all agencies to evaluate the relative impact of 
anything unusual that would not normally have been analyzed 
perhaps in the evaluation.
    The experience we have had has been very good. We wanted to 
use an existing process so that we were not reinventing or 
plowing new ground, and by doing so, we think we have got the 
procedure in place to have an efficient and very timely 
evaluation to get us past that part of the process, past the 
NEPA compliance portion.
    Senator Barrasso. Are there any other circumstances where 
the Bureau would exercise discretion to do a closer review 
under NEPA other than that case of extraordinary circumstances 
that you can think of?
    Mr. Pimley. In general, if there are some issues with local 
impacts or listed species and so forth, we would go through our 
normal NEPA assessment on most projects. But again, the idea 
was that we would use the minor construction process we already 
have in place to try to use a process that has worked very 
well, and that seems to capture, at least up until now, the 
breadth of what we have encountered on those minor construction 
projects.
    Senator Barrasso. So is it your opinion that if we adopt 
this language that passed the House, would that accelerate the 
permitting and installation of the small hydro conduits on 
Bureau of Rec canals?
    Mr. Pimley. I believe that the intent is to do just that. 
Our interpretation, as you mentioned in your opening statement, 
is we interpret this as basically endorsing our process we have 
now. Yes, we believe that process will accelerate the overall 
process from application through construction.
    Senator Barrasso. Thank you, Mr. Pimley.
    Thank you, Mr. Chairman.
    The Chairman. Senator Barrasso, thank you. I think you and 
Senator Risch have done good work on this issue. I was going to 
ask a question about the extraordinary circumstances issue as 
well, and I know we are going to work together on this and get 
this out quickly. I think you noted the almost astounding vote 
in the House. You practically cannot get that kind of a vote to 
order a soda around here.
    [Laughter.]
    The Chairman. So I really appreciate the good work you all 
have done.
    Let us see. Next is Senator Udall on our side.
    Senator Udall. Thank you, Mr. Chairman.
    Welcome. Your testimony today is very important.
    Mr. Chairman, I have got an initial statement for the 
record that I would like to ask unanimous consent----
    The Chairman. Without objection, it will be entered into 
the record.
    Senator Udall. It goes on at great length about how 
fantastic Colorado's approach is.
    The Chairman. Eloquent.
    Senator Udall. It is eloquent as well.
    [Laughter.]
    Senator Udall. It's about how targeted and broad-reaching 
Colorado's approach is, including the National Renewable Energy 
Lab's presence and so on.
    But I would like to turn, if I could, to a couple of 
questions.
    Mr. Wright, I will start with you. Your testimony 
referenced the State of Colorado and the FERC have a history 
when it comes to working together to streamline the development 
of small-scale hydro. In 2010, Colorado and the FERC signed a 
memorandum of understanding to develop a pilot program. In 
2011, on the heels of that, an irrigation pipeline in Meeker 
was the first project to successfully complete that new pilot 
process. That approval took just 2 months, while in the past, 
similar projects have taken upwards of 3 years to get approval, 
and that is a remarkable change of pace.
    Can you talk a little bit more about what you have learned 
from the pilot program and what role the program may play if 
the proposed legislation were to become law?
    Mr. Wright. Thank you, Senator.
    What we did learn from the MOU with Colorado--and this is 
spelled out in the MOU--was seeking sites that are 
accommodating for hydro development, and that is one of the 
points I made in my testimony, is finding proper sites, also 
running the traps, if you will, between the various permitting 
agencies. This makes the process go quicker and this is what we 
have seen in Colorado, and this is part and parcel of the MOU 
with Colorado in terms of finding those spots, those sweet 
spots, if you will, for development, making sure that the 
government agencies, other permitting agencies are on board, 
and that makes the process go that much quicker.
    Senator Udall. We look forward to continuing to move in 
that direction. We have many, many opportunities in Colorado.
    I want to talk about H.R. 678, if I might, which has been 
introduced and carried in the House. The chairman talked about 
the strong support for it. I am looking forward to working with 
the chairman and Senator Barrasso to move the bill from our 
committee to the President's desk.
    I know we want to maximize our Federal resources to develop 
clean, sustainable energy, as H.R. 678 will do, but we should 
not do that at the expense of the environment. Some of the 
bills have the potential to waive some of the requirements from 
NEPA, which has brought tremendous benefits to our country. I 
want to highlight one from Colorado.
    For years, the I-70 corridor, which runs from Denver to 
Glenwood Springs, experienced hours of congestion as travelers 
heading to the ski areas, including Senator Murkowski's sons 
who are going to college in our great State, hikers, other 
recreational destinations. We have had a lot of plans for 
improving the corridor's capacity, but some of them were 
unattractive and would have channeled the Colorado River and 
would have had some negative effects. So the majority of the 
stakeholders did not support this preferred alternative, and 
the Colorado Department of Transportation then used the NEPA 
process to initiate a collaborative decisionmaking process to 
identify a new reconstruction plan. Thanks to the input it 
received through the NEPA process, CDOT, our Colorado 
Department of Transportation, came up with a plan that was not 
only safer but it had fewer impacts on the environment and the 
river. That project has won now some 30 awards for innovative 
design and environmental sensitivity.
    I understand Representative Tipton's bill is consistent 
with the Bureau of Reclamation's categorical exclusion policy 
set by the administration last September. Mr. Pimley, could you 
expand on the reasoning used by the BOR to waive the NEPA 
requirements on small hydropower projects?
    Mr. Pimley. I mean, I would not say that we were waiving 
NEPA compliance. The process we would go through is based in a 
well established process for a minor construction, which is 
designed to recognize that largely you are operating within an 
existing footprint of a facility. So you go through a process 
to evaluate whether this is--in the conduit hydro process, you 
go through a process to evaluate whether or not you are, in 
effect, within the same footprint if you are using existing 
infrastructure, if you are not changing the diversion flow 
rates or timing or discharge locations, and if you are making 
sure you are not changing the intent of the facility. In other 
words, if it is irrigation primarily, it remains irrigation.
    So with those criteria and the ability, the flexibility to 
look for extraordinary circumstances which may arise, as is 
outlined in our DNS, that gives us the ability--if something 
does jump up that does indicate there are some impacts that we 
had not anticipated, we still have the ability to go to a more 
detailed NEPA evaluation, environmental assessment. That is 
what we have used up till now. I think we have got about a half 
dozen of these that we have done using the EA process.
    Senator Udall. So your overall sense is there is a balance 
here, and CE's, categorical exclusions, have a real role to 
play, but there is also a check and balance, as you foresee it, 
that could be applied to Congressman Tipton's bill.
    Mr. Pimley. Yes, absolutely.
    Senator Udall. Thank you, Mr. Chairman.
    [The prepared statement of Senator Udall follows:]

   Prepared Statement of Hon. Mark Udall, U.S. Senator From Colorado
    Thank you all for being here today and for your testimony. I'm 
pleased that my colleagues, Senators Shaheen and Portman, have 
reintroduced their energy efficiency bill--there is certainly more work 
to do on these technologies. In Colorado, we are appreciative of the 
great research on efficiency and future of energy development being 
done at the National Renewable Energy Lab in Golden. I have said it 
many times on this Committee, but I will repeat it again--Colorado is a 
model for its pursuit of true energy security--and energy efficiency 
advancements are a big part of that effort.
    That being said, I would like to focus my questions on the 
prospects of hydropower development, both for Colorado and for the 
nation. Water is a vital part of Colorado society from agriculture to 
recreation and from hydropower to the beautiful landscapes that water 
helps provide. It is important that we keep these multifaceted uses in 
mind as we discuss the future of hydropower today.
    Colorado has a long history of hydropower within the state. More 
than half of the hydropower sites in Colorado are rated as small-scale 
hydropower and these sites combined to provide a capacity of 64.6 MW. 
Like many of my colleagues' states here, Colorado has much untapped 
energy capacity in the form of small-scale hydropower.

    The Chairman. Thank you, Senator Udall.
    Senator Risch is next.
    Senator Risch. Thank you very much.
    Mr. Wright, you made reference in your testimony to the 
deadlines that you can put on other agencies when you are 
dealing with gas facilities. Two questions. No. 1, does that 
work? No. 2, is there reason that procedure cannot be followed 
with the small hydro facilities?
    Mr. Wright. I will say in the gas side, it works to an 
extent. The Energy Policy Act of 2005 allowed FERC to set 
schedules for processing natural gas infrastructure. The 
hammer, if you will, for that is if the other agencies did not 
meet the schedule, then the applicant could sue them in Federal 
court. It is not often you see an applicant who wants to sue a 
permitting agency.
    But what I would say a benefit that has been on the gas 
side is that it has established a bit more order, if you will. 
We do come out with a schedule of how we process gas projects 
and permits from other agencies--we ask them to be complete 
with their analysis and their permitting 90 days after we issue 
our environmental document. I would say we, on the whole, have 
had some success with that.
    Going back to hydro, we do not have that kind of regime, if 
you will, for scheduling, and I would think that would be very 
beneficial in terms of trying to reduce the time it takes for 
licensing of hydro projects, if we could establish some sort of 
priority, if you will, for the other agencies to realize that 
the hydro projects should be higher on their agendas than they 
seem to be at times.
    Senator Risch. So your characterization is, although not 
perfect, it is better under the regime for gas facilities. Is 
that right?
    Mr. Wright. Senator, I think that is a good 
characterization.
    Senator Risch. It would seem to me that that is probably 
something that should be looked at here inasmuch as one of the 
main criticisms we get of the Federal Government always is the 
lack of urgency. Urgency is the hallmark of the private sector, 
but not so much when it comes to the Federal Government. The 
fact that delays take place and private capital is sitting on 
the sideline waiting to deploy is always a problem. So I 
appreciate your thoughts in that regard.
    Without asking you to get too far into the weeds on this, 
do you think that is something that could work on the hydro 
projects after your experience in gas projects?
    Mr. Wright. I would think it would be a good beginning to 
try to establish some sort of order to the process, if you 
will, and instead of many agencies who wait for us to finish 
our environmental work on the hydro side and then they begin 
their operations, we have seen on the gas side agencies operate 
in parallel to us, if you will. While we are doing our NEPA 
analysis on the gas side, other agencies, permitting agencies, 
are doing their work at the same time.
    Senator Risch. It is shocking to hear the Federal 
Government is not doing duplicative work when instructed to do 
so by statute. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Risch. Again, 
commendations for your good work and I look forward to working 
closely with you on these issues.
    Mr. Wright, let me start with you on S. 545, Senator 
Murkowski's bill. I think it is a first-rate bill and am 
looking forward to doing everything I can to work with her to 
get this passed.
    Now, we are curious, Mr. Wright. How much do you expect the 
amount of megawatts in these types of projects to increase if 
the reforms in S. 545 are enacted?
    Mr. Wright. Senator, to put a number on that is probably 
speculative at best, but what I would say is anytime you amend 
statutes that in my statement will reduce barriers to entry 
into the hydro world, you could probably expect an increase in 
applications, an increase in generation and capacity overall. 
As I believe you quoted, we have got over 80,000 dams in this 
country. Only 3 percent of them are powered. I think a change 
especially in conduit and small generation requirements could 
only spur an increase in generation. I think as the U.S. 
realizes that hydro is kind of the low-hanging fruit, if you 
will, of renewables, hydro generation will experience a 
resurgence especially in small generation.
    The Chairman. I know you do not want to speculate. You do 
not want to even give us a ball park, for example, regarding 
the amount of megawatts. It is such a good news story. In the 
U.S. Senate, you like a good news story when you can get one.
    Mr. Wright. I will say that I have also heard the number 
that there is the potential for over 60,000 megawatts out there 
by 2025. So I think as we liberalize the requirements, so to 
speak, we could come close maybe to realizing--you know, 60,000 
is probably an upper limit. If we could get to 30,000 megawatts 
by 2025, just through some of these actions----
    The Chairman. Let us get closer to 60,000.
    Mr. Wright. OK. We will try.
    The Chairman. All right.
    A couple of questions on the mandatory conduit exemption, 
just so we can kind of have a clear record in terms of the 
history.
    The Federal Power Act has an exemption for small conduit 
projects, and S. 545 broadens the exemption, makes it more 
available, and that certainly makes sense to me as a basic 
proposition.
    Now, the current exemption is discretionary. It was 
proposed in 1978. The exemption would have been mandatory. The 
commission would have been required to grant the exemption if a 
proposed project met certain criteria. Senator Johnston, who 
chaired this committee managing the bill to which an exemption 
was offered on the floor, said he did not want to go that route 
of the mandatory exemption and offered the amendment if it were 
made discretionary. That is where the Senate came down.
    So with S. 545, there is a different route with respect to 
the smallest of the small conduit projects. It makes the 
exemption statutory. For these projects, it removes the 
smallest conduit projects from the commission's jurisdiction as 
a matter of law if they meet the criteria.
    What do you make of the argument--and there is such strong 
support for broadening the exemption--that the commission 
should be allowed to make the decision instead of it being made 
for them?
    Mr. Wright. I would notice that in S. 545, it establishes a 
noticing regime, if you will. If the conduit does qualify under 
the parameters, it would qualify for the 5 megawatt or less. 
But it also gives a balance in that it allows parties to 
contest a qualifying determination if they do desire to.
    I would also say that this change to the FPA does not trump 
any other Federal or State law. So in that sense, if another 
State or Federal agency wishes to question the development of 
the conduit, they may do so. We are not going to stand in their 
way.
    I would also say there is nothing prohibiting a developer 
to come in for a traditional license if they so desire, and we 
stand ready to dispose of that as quickly as possible.
    The Chairman. Very good.
    One other question about S. 545 on the fish and wildlife 
protections I think all of us care so much about. This 
preserves the fish and wildlife protections afforded by the 
current small hydro exemption for the small conduits over 5 
megawatts, but goes a different route for those of 5 megawatts 
or less. What is your take on that with respect to the waiver 
and the issues there?
    Mr. Wright. I am sorry. I really have to study that a 
little more in depth, but I would be glad to answer a question 
on that.
    The Chairman. Very good. Why do you not get back to us on 
the record on that point?
    Mr. Pimley, with respect to H.R. 678 categorical 
exclusions--and I kind of want to walk this through it so I can 
kind of have for the record and Senator Murkowski and I can 
talk about this. We are trying to move this as quickly as we 
can. Under departmental rule, only the CE's, the categorical 
exclusions, established by the agency rule are subject to this 
extraordinary circumstances review and categorical exclusions 
that are created by statute are not unless the governing 
statute requires it.
    So I can really understand this, does H.R. 678 bar the 
Bureau of Reclamation from reviewing small conduit projects for 
extraordinary circumstances? I was under the impression from 
the earlier kind of discussion that it did not, but just so you 
are clear on that.
    Mr. Pimley. Our interpretation of the amended language in 
the bill is that it basically endorses the process we have 
documented in our directive and standard which includes the 
ability to consider extraordinary circumstances. So the short 
answer would be, no, we do not believe it bars----
    The Chairman. Very good.
    One question for you, Dr. Hogan.
    I see my friends, Senator Franken and Senator Manchin, have 
arrived.
    On the energy efficiency front, the President challenged 
the country to double U.S. energy productivity, something I 
strongly support. Our economy clearly has shifted in recent 
years looking to try, in particular, to use less energy, and 
even more recently, companies are moving back to the United 
States to reinvest in our manufacturing sector so they can take 
advantage of cheaper natural gas.
    How are these changes in our economic landscape going to 
effect the ability of the country to meet the President's goal?
    Ms. Hogan. Yes. I think the President has put out some 
ambitious but achievable goals about cutting energy waste by 50 
percent and doubling energy productivity over the next 20 years 
or so. I think what that really means is we are working hard to 
get as much from every Btu that we use as possible, and that is 
really what we want to be focusing on here in a way that we 
continue to improve industrial competitiveness across the 
country. So I think the President is really putting us on the 
right path with these goals, and then, of course, as we sort of 
move forward and make progress toward them, we can continue to 
look at them and revise them as appropriate.
    The Chairman. I am over my time. I just want to ask one 
question about the Shaheen-Portman legislation that I strongly 
endorse.
    S. 761 is very similar to S. 1000, as reported by the 
committee in the last Congress. It has 4 titles: buildings, 
commercial building efficiency finance, manufacturing, and 
Federal Government efficiency.
    Could you describe the importance of these areas in 
achieving the President's goal of doubling national energy 
productivity by 2030? My view is that S. 761 would contribute 
significantly to achieving that goal that the President set, 
but just to have your views on the record would be helpful.
    I thank my colleagues for letting me get that extra 
question. I know Senator Franken, in particular, is trying to 
get back and forth to the Judiciary Committee. So if you could 
give us a brief answer, and maybe you could incorporate it for 
the record so we could go to--we have Senator Manchin and 
Senator Franken next. I want to let them ask their questions.
    Dr. Hogan.
    Ms. Hogan. Sure. Again, we have not looked into real detail 
into this bill, but generally we think that the areas covered 
by this bill make an important contribution to the President's 
goal. As we have talked about, the bill puts in place some 
really new ways for DOE to work hand in hand with the States 
and local governments on building codes. Building codes are a 
powerful way to deliver savings, consistent with the roles that 
the State and local governments play with building codes. We 
know that lack of a trained and skilled work force, as well as 
lack of access to financing, are also stumbling blocks to 
greater investment in energy efficiency where it makes sense, 
and there are some great provisions in that area as well.
    Industrial energy efficiency is a place for additional 
progress to be made both in the supply chain, as we have 
discussed, as well as enhancing, I think, some of the things 
the Department does in a way that it partners more broadly with 
the private and public sector.
    We also know that there is more progress we can make in the 
Federal sector too as we use the tools that are available to us 
or potentially expand what it is those tools can do.
    The Chairman. I need you to look into this bill in detail 
because I think it is a good bill. It is a bipartisan bill. 
There is great interest here in the Senate. Could you get back 
to me with your views on the details of this bill, say, within 
2 weeks?
    Ms. Hogan. Yes, we can.
    The Chairman. Very good.
    Next in order of appearance is Senator Manchin.
    Senator Manchin. We were betting on who was next.
    [Laughter.]
    Senator Franken. No one wanted to bet. The chairman did it 
right.
    Senator Manchin. Let me just ask whoever would answer this 
question. The reason I say this, in my little State of West 
Virginia, I think there are 3 dams that were built during or 
before World War II, that had the penstocks, had everything 
ready to go for the power this country needed to defend itself, 
as you know, during that period of time.
    About halfway through the war, they decided not to finish 
and put the power units on. The penstocks are still there. 
Everything is ready to go.
    How many dams were built in America during that time that 
have never been retrofitted that were ready to go? Does anybody 
know that? You all know you have them in your States. Everybody 
has one I am sure.
    Mr. Wright. Senator, I will say I do not know the answer to 
that question.
    Senator Manchin. We are talking about building this and 
doing this. I mean, most of them have the--everything is ready 
and we just did not need the power at that time and fossil was 
so much cheaper, oil, whatever at the time. They never put it 
in. But they are all prepared, ready to go. I have got two 
ready to happen in my State anytime you want to do it.
    That was just a question. If you could give me that answer, 
I would deeply appreciate it.
    Dr. Hogan, I would go to you because I noticed that it was 
said that with the energy efficiencies, that we could cost 
effectively reduce by 20 to 50 percent or more is what you have 
been saying. Correct? Now, you are saying with homes and 
buildings. You are factoring in power plants in that savings, 
correct, because of the waste we have from the power plants? 
You are saying that power plants are about 30 percent 
efficient?
    Ms. Hogan. Correct. Power plants are about 30 percent.
    But I think as we talk about reducing energy use in the 
home, it is really reflective of the energy bill in the home.
    Senator Manchin. But I am saying we think that we can do 
things much more efficiently with our homes and our buildings 
because of all the waste. But you readily admit that we have an 
awful lot of waste in our power plants.
    Ms. Hogan. Sure.
    Senator Manchin. A lot of our coal plants, natural gas 
plants. We have a lot of waste there.
    How come you are not putting any money to retrofit them? 
That is where your greatest savings are. That is where your 
greatest efficiencies would be because that is where your 
greatest loss is.
    Ms. Hogan. I think the Department of Energy has a broad 
portfolio of efforts, including looking at ways to improve the 
efficiency of our power plants. The other area I think that is 
ripe for a significant savings are things like combined heat 
and power where we also can greatly improve the conversion 
efficiency.
    Senator Manchin. Let me just say what you have here. About 
half of the budget of the Office of Fossil Energy and in DOE on 
the President's energy efficiency initiative, while reducing 
funding on programs like the advanced energy systems program at 
the National Energy Technology Lab. So it does not make sense, 
if you are trying to get the efficiencies you want and you are 
not trying to retrofit or make that happen at the largest 
plants that you have identified as the most inefficient.
    Ms. Hogan. No. I mean, we would be happy to have this 
broader conversation with you. I think when you look at what 
the role of the Department of Energy is, it is largely one of 
looking at what the research challenges are--there are indeed 
challenges--and then also helping people understand what their 
opportunities are. As we know, sort of what goes on with power 
plant retrofits is a very complicated----
    Senator Manchin. But I am saying NETL, the National Energy 
Technology Lab, has been very effective in working with fossil, 
both coal and natural gas, but you keep cutting their budget. 
The Department of Energy does not put any money in it.
    Ms. Hogan. If we look at the investment the Department has 
made in improvements in R&D for our fossil-based system in this 
country, we will see that it is very substantial. But I am 
happy to sort of continue the conversation.
    Senator Manchin. We would be happy to because we are not 
seeing what you are seeing, and we had the figures from your 
own agency to back that up. But I would love to sit down and 
talk with you.
    One more very quickly. This is for anyone. Do you have any 
estimate at all about how much energy can be saved through the 
energy efficiencies programs such as the Shaheen-Portman bill 
and if you have any idea about that as far as what you think 
that can actively do?
    Ms. Hogan. So I think I am the one that is here speaking to 
the energy efficiency issues.
    This is something we will be happy to go back and look 
into. We have sort of gone through that there is a long list of 
energy efficiency provisions in the bill that touch on a number 
of different areas, the building codes, industrial energy 
efficiency, enhancing the work force for commercial buildings, 
as well as additional opportunities with the supply chain. So 
we will be happy to look into that in more detail.
    Senator Manchin. Can you give me a ratio of what the 
savings would be per the cost? That is all. I am just looking 
if it makes sense--the type of savings that we have for the 
cost that we are investing. There has to be a cost ratio.
    Ms. Hogan. Yes, and I think everything that you look at in 
this bill is looking to address market barriers for things that 
really are cost-effective. So I think you can expect a pretty 
good cost-benefit ratio.
    Senator Manchin. The only thing I would ask real quick--and 
I am sorry, Mr. Chairman. I will finish right up. If you are 
going to categorize it--and I would categorize it if you have 
homes, if you have commercial buildings, and if you have 
manufacturing. I would include--manufacturing would be in our 
power plants--how much of the total loss is coming from each 
one or the inefficiencies, and with the investments you would 
make in each category, what type of return you can--to me that 
would make it much easier for me to understand it if you 
categorize it. So if you are going to spend $100 million here 
and only get a $10 million return and you are going to spend 
$100 million here and get a $400 million return, I would like 
to at least see the comparisons. Does that make sense?
    Ms. Hogan. Sure. We can look at it.
    Senator Manchin. For the sponsor of the bill, I think you 
know where I am going with this.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Nobody on this committee spends more time advocating for 
renewable energy than the Senator from Minnesota. So we welcome 
your questions.
    Senator Franken. I was happy to hear the Senator from West 
Virginia talk about renewable energy, about hydro and about 
energy efficiency at power plants, as well as in buildings and 
commercial buildings and homes.
    I started an initiative in Minnesota called Back to Work 
Minnesota because I see that this is an opportunity to create 
jobs.
    Again, I congratulate Senator Portman and Senator Shaheen 
on this important bill, S. 761, because it seems to me that the 
bang for the buck here is pretty obvious when you are talking 
about saving energy and at the same time you are creating jobs.
    In Minnesota, we manufacture energy efficient windows, 
energy efficient doors, HVAC systems that are incredibly energy 
efficient. You have the jobs that are created when people do 
the retrofit. People in our building trades have been hit over 
the last several years with the depression in their industry, 
and we need to put these people back to work. It also pays for 
itself. I want to talk to you a little bit about financing.
    But I really would like to ask you about what you see as 
the job creation possibilities that come out of this piece of 
legislation.
    Dr. Hogan.
    Ms. Hogan. So as you look at the legislation, I mean, you 
are building to more efficient levels, providing more access to 
financing in the commercial building space, looking at new 
opportunities for efficiency in the industrial sector, 
particularly as there is clear information about how to improve 
energy efficiency up the supply chain. I think there is a fair 
amount of information out there supporting what you are saying 
about the enhanced jobs that we get by working to improve the 
efficiency of our buildings and facilities. So when you look at 
the bill, you are seeing some very important provisions that 
will help us grow that energy efficiency marketplace and build 
those jobs.
    Senator Franken. I work closely with my constituents in 
Minnesota, and I often hear that a major impediment to doing 
retrofits is financing. I support the goals in the bill. I 
think it is very smart in the bill that we have provisions to 
address exactly that, overcoming financing obstacles.
    A 2009 study from McKinsey found that more than $1 trillion 
in wasted energy could be saved in this country if we spent on 
the scale of hundreds of billions of dollars. That is a great 
return on investment that can help our citizens save money and 
cut down on unnecessary greenhouse gases and, as you just said 
and as I said, create jobs. That is why I believe this bill can 
and probably should go further in providing financial 
incentives for building retrofits.
    How large is the opportunity for energy savings in 
buildings? It is 40 percent of our energy. What kind of 
financial incentives and also what kind of financing can we do? 
Because if you--and we have different financing approaches that 
we have used in Minnesota where the energy service company 
essentially puts all the money up front and they get paid back 
either through--the owner of the building pays the old energy 
bill and the excess money goes right back to the energy service 
company. There are all kinds of models. Can you speak about 
that a little bit?
    Ms. Hogan. Yes. Again, we do see that access to financing 
is frequently cited as a reason why building retrofits are not 
going forward. We do see that many, many, many buildings can be 
improved from an energy efficiency standpoint by 20 percent or 
more. Then you have to look at sort of the more particular 
issues that are out there in the commercial building 
marketplace. I think you are referring to some of the issues 
with the public sector. Some of them have a harder time getting 
access to dollars.
    Senator Franken. Actually in the public sector in many 
cases, it is easier because they know that in the public sector 
that building is going to be in the same hands for 30 or 40 
years. MUSH, right?
    Ms. Hogan. The MUSH market and using the energy savings 
performance contracts that you were referring to. Right.
    So the part of the industry that has figured out how to do 
that is doing it well, but there are still many more public 
entities that do not quite know how to use that type of 
contractual mechanism. So there is a lot more work to be done 
to expand the number of people that can do that well and to get 
the savings we can from the public sector, the MUSH market.
    When you go to the private----
    Senator Franken. Should we not, just for everyone listening 
and watching--it is municipal, university, schools, and 
hospitals. That is the MUSH market, everybody. You are welcome.
    Ms. Hogan. It has nothing to do with dogs. Right.
    Senator Franken. Unless it is a university that teaches 
people how to train dogs. I think that is the only overlap.
    Ms. Hogan. Right.
    Senator Franken. I am sorry I got this off track.
    [Laughter.]
    Senator Franken. Let us talk about pace laws. Can you 
explain to the folks what pace laws are and how they work? I 
think they are really a good way of doing this.
    Ms. Hogan. Right. So there is a lot of different financing 
mechanisms out there, and pace is one where you put--I mean, it 
is somewhat similar to what you are saying with the energy 
performance contract where you engage in a retrofit for the 
building. There is a cost. The cost gests assigned to the 
property assessment and you pay it back through your sort of 
property tax process.
    Senator Franken. Yes. In other words, instead of paying up 
front, you put it on your property as a property tax, and even 
if the property changes hands, it just stays with it. In this 
way, you can get financing from a county or from a city or from 
a State. The Edina, Minnesota was the first in Minnesota to do 
that, and we are having other cities do it. Actually, you can 
borrow money at a lower rate because the city is doing it or 
the county is doing it.
    Ms. Hogan. Right, and it addresses the issue that the 
building may change hands before the energy efficiency measure 
may pay itself back. So you are attaching the improvement to 
the building as opposed to the owner and addressing some of 
those key barriers.
    Senator Franken. Mr. Chairman, I am over my time, but can I 
ask one more?
    The Chairman. Absolutely.
    Senator Franken. I want to spend a couple minutes talking 
about a separate energy efficiency issue, the energy efficiency 
resource standard. Are you familiar with that at all? We have 
that in Minnesota and a number of other States, I think, have 
implemented these standards.
    In Minnesota, there is a requirement for utilities to get 
1.5 percent more efficient use of their electricity by their 
consumers every year. By dong this, it has incentivized exactly 
what we are talking about. It has incentivized retrofitting 
because the utilities are looking for customers to do exactly 
that, and it is developing more efficient technologies. Can you 
talk about the merits of a Federal energy efficiency resource 
standard?
    Ms. Hogan. I think I can talk generally about that. I mean, 
clearly we are interested in policies that, as you are pointing 
out, encourage energy savings where energy savings make sense. 
At the State level, the energy efficiency resource standard is 
proving to be a very effective tool. I think over half the 
States across the country have such a standard. It can be at 
varying levels, 1 percent, 1.5 percent, 2 percent in some 
States. As you are pointing out, it really engages the utility 
in delivering effective programs across all of their customer 
classes to get the savings where the savings are cost-effective 
and with a good payback. So it is a powerful tool.
    Senator Franken. It is a powerful tool that I think we 
could use and possibly legislate that nationwide, being careful 
not to punish the utilities in those States that have already 
been doing this for a number of years like they have in 
Minnesota.
    Thank you all for your testimony. Dr. Hogan, thank you 
specifically for answering my questions.
    Mr. Chairman, thank you.
    The Chairman. Thank you, Senator Franken.
    Senator Murkowski has indicated to me she does not have any 
further questions, and I think Senator Portman would like to 
make a statement. Then we will wrap up.
    Senator Portman. Just briefly again, thanks, Dr. Hogan, for 
being here. I thank Chairman Wyden and Senator Murkowski for 
allowing us to have this hearing today and to move quickly on 
the energy efficiency legislation. I thank Senator Franken. He 
has obviously got a wealth of experience in this.
    We talked earlier about the ESCO's at the Federal level 
that are allowed to perform these services for efficiency and 
then be paid over time with the savings, which is the Federal 
Government. We are expanding what those savings can be to 
include the electric and natural gas charging stations, for 
instance, which is infrastructure. So we do have some 
legislation here which will help to strengthen that at the 
Federal level.
    I really loved getting the question, Dr. Hogan, from my 
colleague from West Virginia, Senator Manchin, because that is 
really what this is all about. We are going to get you a lot of 
good data, but just a couple thoughts here.
    The authorization, based on the CBO numbers we have so 
far--and we will get the final numbers before the markup--is 
about $570 million. That will all be offset so there will be no 
cost. In other words, this is a deficit-neutral bill. Given the 
times we live in, we think that is necessary. We are committed 
to finding those offsets.
    However, in terms of the cost-benefit analysis, we have an 
analysis out there that shows that this legislation per what 
Senator Franken talked about and also Senator Coons in terms of 
jobs, 80,000 new jobs. We have a figure out there that there 
would be a savings of $4 billion per year by 2020 to consumers 
in terms of energy costs. So in terms of a cost-benefit 
analysis, that is pretty impressive.
    In terms of the emissions savings, there are a lot of 
people concerned about with CO2 in particular. It is 
equivalent to taking 5 million cars off the road, which is a 
pretty significant savings.
    In terms of the Federal Government, the costs there we 
talked about earlier, the Federal Government being the biggest 
energy user in the world. We think there is about a $24 billion 
bill a year for energy just in the Federal Government alone. So 
this is a direct help to taxpayers, obviously, because whatever 
savings--we will get you some numbers on these--goes directly 
into the taxpayers? pocket because this is money otherwise that 
would be spent at the Federal level.
    So we think this is an incredible bang for the buck, which 
is why I am excited about it and appreciate again the fact that 
we are moving quickly on this legislation this year. Having 
gotten out of committee with a good bipartisan vote last year, 
we are hoping to do that again and get it to the floor and, as 
Senator Murkowski said and the chairman said, hopefully get it 
through the House and then to the President for signature.
    Thank you, Mr. Chairman. Thank you, Dr. Hogan.
    The Chairman. Senator Portman, thank you very much. A 
couple of hours ago, Senator Murkowski and I began saying that 
hydro is back, and I think with the good work that you and 
Senator Shaheen are doing, we can amend that and say energy 
efficiency is coming back, too. So we commend you for your good 
work.
    With that, the committee is adjourned.
    [Whereupon, at 11:46 a.m., the hearing was adjourned.]
                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

      Responses of Kathleen Hogan to Questions From Senator Wyden
    Question 1. S. 761, is very similar to S. 1000 as reported by the 
Committee in the last Congress. It has four titles: buildings; 
commercial building efficiency financing, manufacturing, and Federal 
government efficiency.
    Please provide the Department's view on each section of the bill 
and an estimate of the savings that would result from each section.
    Answer. An analysis of S. 761 is as follows. The Administration is 
still reviewing the bill, and the following analysis does not provide 
or represent a complete position on the bill or any of its subtitles. 
This analysis and estimates therein are preliminary and do not 
necessarily reflect all inputs, effects, or impacts.
                           title i--buildings
Subtitle A--Building Energy Codes
    This subtitle would expand on DOE's authority to assist in the 
development of model building codes. The bill would add to the existing 
building code program certification requirements for States and Tribes 
to demonstrate improvements in the energy efficiency of their building 
codes and achievements in compliance.
    Importantly, the bill would authorize the establishment of stretch 
codes and targets for codes by DOE to advance energy efficiency in the 
absence of improvements in the model building codes.
    The bill would expand upon recent DOE steps to increase the 
transparency of its participation in the voluntary codes process. The 
bill language would codify many of those efforts and provide further 
enhancement of those efforts.
    The bill would authorize $200 million to carry out these tasks. DOE 
has yet to perform an analysis that details the annual consumer savings 
and costs realized upon implementation of these provisions.
Subtitle B--Worker Training and Capacity Building
    This subtitle would establish a grant program to develop and 
support building and training centers at institutions of higher 
education to identify opportunities for optimizing energy efficiency; 
to promote emerging concepts and technologies; to train building 
engineers, scientists, technicians and code officials in energy 
efficiency design and operation; and to promote research in alternative 
energy sources and distributed generation.
    While the bill would make clear that this authority would be 
coordinated with DOE industrial research and assessment center programs 
and other Federal programs in order to avoid duplication of effort, DOE 
understands this provision as complementing its on-going workforce 
training efforts and energy service development activities, including 
the current Industrial Assessment Centers program.
       title ii--private commercial building efficiency financing
    Title II would establish a grant program focused on State-level 
investment in programs to promote energy efficiency retrofits through 
the use of a variety of innovative financing mechanisms, including 
commercial Property Assessed Clean Energy (PACE) programs, credit 
enhancements, and revolving loan funds.
    The high initial costs of installing improved building energy 
efficiency measures can deter businesses from making such investments. 
The availability of private sector financing, however, can allow these 
projects to happen. We have seen that often businesses with access to 
financing to undertake efficiency upgrades could generate enough 
savings to pay finance costs associated with their energy efficiency 
investments. DOE supports State-level financing programs as a means to 
secure long term access to funding for energy efficiency retrofits. 
Currently, included with the many eligible activities under the 
Department's State Energy Program are State-level activities to improve 
access to financing for energy efficiency and renewable energy 
projects.
    The bill would authorize $250 million for a 5-year period, spanning 
from 2015 through 2020, to help States develop financing mechanisms 
that would spur increased energy efficiency investments that leverage 
private sector financing. Through the financing mechanisms described in 
the bill, this funding could be leveraged into a many-fold increase in 
available energy efficiency retrofit financing for commercial entities. 
Moreover, the grant program authorized under the bill focuses 
exclusively on the investment potential for energy efficiency that can 
be realized by such programs.
          title iii--industrial efficiency and competitiveness
Subtitle A--Manufacturing Energy Efficiency
    Manufacturing is the most diverse energy-use sector--in terms of 
energy services required, sources of energy used, and technologies 
needed and product output. This subtitle would provide further emphasis 
to DOE's efforts in interagency cross-program coordination to ensure 
the strengthening of the U.S. industrial sector through smarter and 
more efficient uses of energy. The Future of Industry Program, as 
outlined in the bill, would enhance the potential of the DOE program 
offices, the National Laboratories, and the industry sector to identify 
and deploy technologies and practices that will increase industrial 
efficiency and productivity, which in turn will improve the 
competitiveness of the U.S. industrial sector. Such authority would 
allow DOE to continue to partner with industry, small business, 
universities, and other stakeholders to identify and invest in emerging 
technologies with the potential to create high-quality domestic 
manufacturing jobs and enhance the global competitiveness of the United 
States.
Subtitle B--Supply Star
    This subtitle would establish a program to identify and promote 
practices, recognize companies, and recognize products that use highly 
efficient supply chains in a manner that conserves energy, water and 
other resources. This subtitle also authorizes the
    Department to award competitive grants and other incentives in 
support of such practices.
    Benefits from understanding and recognizing energy and resource 
efficiency across the supply chain include:

   Improved operational efficiencies,
   Decreased energy intensity,
   Energy data for fact-based decisions,
   Support for organizational and cultural change,
   Drivers for organizational integration,
   Reduced environmental impacts,
   Competitive advantages over firms that neglect resource 
        management,
   Visible demonstration of social responsibility, and
   Positioning for carbon accounting.
Subtitle C--Electric Motor Rebate Program
    This subtitle would establish a program to provide rebates for 
expenditures made by entities for the purchase and installation of new 
energy efficient electric motor controllers for constant speed motors. 
These motors are used in both commercial buildings (elevators, 
escalators, moving sidewalks) and manufacturing facilities (conveyor 
belts). For the rebate program for motor controllers, preliminary DOE 
estimates indicate that the $10 million cost to the government of the 
rebate program over two years and the $36 million capital investment 
costs for participating entities could save approximately $74 million 
(undiscounted, real dollars) in electricity bill payments by the end-
users over the lifetime of the motors with controllers purchased in the 
two years that the rebate is in place. The average lifetime of these 
motors is approximately 11 years and therefore these electricity bill 
savings accrue over a longer period of time than the rebate program.
Subtitle D--Transformer Rebate Program
    This subtitle would establish a program to provide rebates for 
expenditures made by owners of industrial or manufacturing facilities, 
commercial buildings and multifamily residential buildings for the 
purchase and installation of a new energy efficient transformer. The 
Department has recently finalized improved energy efficiency standards 
for this equipment, which are to take effect beginning in 2016. The 
availability of rebates could, in the interim, incentivize the 
installation of high-efficiency transformers both in advance of and to 
exceed the new standards. For products with long estimated lives, such 
as distribution transformers, installation of models with higher 
efficiency can result in significant long term energy and dollar 
savings following the additional initial capital cost.
    The rebate program could be beneficial for the purchase of more 
energy efficient transformers because of the nature of the market for 
the low-voltage, dry-type transformers that would be eligible for this 
rebate. In most cases, the low-voltage, dry-type transformers installed 
inside buildings and plants are purchased by electrical contractors or 
building managers who are not responsible for paying future energy 
bills. Thus, most of these purchases are made on the basis of lowest 
first cost, not efficiency, which creates a potential for energy 
savings that could be realized by purchasing more efficient 
transformers. This program could attract more efficient transformers 
into the market ahead of the new energy conservation standard for low-
voltage dry-type distribution transformers; however, it should be noted 
that NEMA Premium level will be a required efficiency level for the 
vast majority of the market (3-phase units) in 2016. For the two year 
rebate program, the government cost of $10 million and the purchaser 
costs of $20 million could save the end-users approximately $362 
million (undiscounted, real 2012 dollars) in electricity bill payments 
over the lifetime of the transformers purchased in the two years of the 
rebate program. It should be noted that the average lifetime of this 
equipment is approximately 30 years, so that these savings are 
generated over a long period of time relative to the length of the 
rebate program, and that the new energy efficiency standards for this 
equipment are to take effect beginning in three years.
               title iv--federal agency energy efficiency
    As frequently noted, the Federal government is nation's largest 
energy consumer. This means that there is tremendous opportunity and a 
clear responsibility to lead by example through improvements to energy 
management across our buildings, facilities, and fleets. The bill would 
further emphasize, and enhance, efforts to identify opportunities for 
improving energy efficiency in some of the most energy intensive 
sectors of the Federal government, including the increased need for 
information, communication, and data center resources.
    The bill would also expand the authority of the energy savings 
performance contract (ESPC) program to allow the conversion of Federal 
fleets to alternative fueled vehicles if substantial savings could be 
generated through such a conversion to pay for the investments needed. 
This application of ESPC authority is not within the present framework 
of Administration policy, which relates only to Federal buildings, and 
is beyond the scope of the Administration's current guidance and would 
require careful review.
    Question 2. Title I of S. 761 directs DOE to support the 
development of a voluntary national model building energy code, to 
encourage state adoption of the code, and to certify adoption.
    How would DOE encourage state adoption, and what would be the 
benefits in terms of efficiency and market standardization?
    Answer. The Administration is still reviewing S. 761, and the 
following preliminary analysis does not provide or represent a position 
on Title I of the bill. Moreover, at this time DOE has not determined 
how it would implement enhanced activities to encourage State adoption 
of more efficient building energy codes under the authorities provided 
in the bill.
    Title I of S. 761 would expand on DOE's authority to assist in the 
development of model building codes. The bill would add to the existing 
building code program certification requirements for States and Tribes 
to demonstrate improvements in the energy efficiency of their building 
codes and achievements in compliance.
    Importantly, the bill would authorize the establishment of stretch 
codes and targets for codes by DOE to advance energy efficiency in the 
absence of improvements in the model building codes.
    The bill would expand upon recent DOE steps to increase the 
transparency of its participation in the voluntary codes process. The 
bill language would codify many of those efforts and provide further 
enhancement of those efforts. The bill would authorize $200 million to 
carry out these tasks. DOE has yet to perform an analysis that details 
the annual consumer savings and costs realized upon implementation of 
these provisions.
    Question 3. Experience and skill in designing and installing energy 
efficiency measures varies widely around the country. Title I of S. 761 
would direct DOE to establish Building Training and Assessment Centers 
at existing educational institutions to promote training and improve 
the skills of building professionals in building energy retrofits.
    What lessons has DOE learned from establishing their Industrial 
Assessment Centers that would be applicable to these Building Centers?
    What does this training provision do to level the availability and 
quality of training programs between states, and what impact would this 
have on job creation?
    Answer. The Administration is still reviewing S. 761, and the 
following preliminary analysis does not provide or represent a position 
on Title I of the bill.
    Title I, Subtitle B of S. 761 would establish a grant program to 
develop and support building and training centers at institutions of 
higher education to identify opportunities for optimizing energy 
efficiency; to promote emerging concepts and technologies; to train 
building engineers, scientists, technicians and code officials in 
energy efficiency design and operation; and to promote research in 
alternative energy sources and distributed generation.
    While the bill would make clear that this authority would be 
coordinated with DOE industrial research and assessment center programs 
and other Federal programs in order to avoid duplication of effort, DOE 
understands this provision as complementing its on-going workforce 
training efforts and energy service development activities, including 
the current Industrial Assessment Centers (IACs) program. Currently, 
IAC teams are located at 24 universities across the country. Through 
periodic funding opportunity announcements, universities have been 
eligible to apply to host an IAC and receive DOE funding to provide 
assessments for industrial facilities.
    The IAC program enables promising engineering students around the 
country to conduct energy assessments in a broad range of manufacturing 
facilities, providing skills and experience that prepares the students 
to compete in today's economy while helping local companies and 
factories to reduce energy waste, save money, and become more 
economically competitive. We expect that the training provision in S. 
761 would build upon this foundation to achieve additional benefits 
related to job creation and access to quality training with a focus on 
cutting waste in the nation's buildings.
    Question 4. Title II of S. 761 would establish an initiative, under 
the existing State Energy Program, to encourage states to focus on the 
challenge of increasing investments in private commercial building 
efficiency.
    Would you briefly explain why this particular sector has been 
resistant to energy efficiency investments and improvements and how 
this provision would help to overcome this resistance?
    Answer. The Administration is still reviewing S. 761, and the 
following preliminary analysis does not provide or represent a position 
on Title II of the bill.
    Title II of S. 761 would establish a grant program focused on 
State-level investment in programs to promote energy efficiency 
retrofits through the use of a variety of innovative financing 
mechanisms, including commercial Property Assessed Clean Energy (PACE) 
programs, credit enhancements, and revolving loan funds.
    The high initial costs of installing improved building energy 
efficiency measures can deter businesses from making such investments. 
Also, commercial buildings may have split incentives in cases where the 
building owner would be the one to undertake improvements while the 
tenants would be the ones to pay the energy bill and receive the 
benefits. Additionally, some buildings change ownership frequently so 
the owner may not realize the full payback from an energy efficient 
upgrade. The availability of one or more private sector financing 
mechanisms, however, can allow these projects to happen. We have seen 
that often businesses with access to financing to undertake efficiency 
upgrades could generate more than enough savings to pay finance costs 
associated with their energy efficiency investments. DOE supports 
State-level financing programs as a means to secure long term access to 
funding for energy efficiency retrofits. Currently, included with the 
many eligible activities under the Department's State Energy Program 
are State-level activities to improve access to financing for energy 
efficiency and renewable energy projects.
    The bill would authorize $250 million for a 5-year period, spanning 
from 2015 through 2020, to help States develop financing mechanisms 
that would spur increased energy efficiency investments that leverage 
private sector financing. Through the financing mechanisms described in 
the bill, this funding could be leveraged into a many-fold increase in 
available energy efficiency retrofit financing for commercial entities. 
Moreover, the grant program authorized under the bill focuses 
exclusively on the investment potential for energy efficiency that can 
be realized by such programs.
    Question 5. DOE's Advanced Manufacturing Office (AMO) has 
increasingly focused on R&D for new, more efficient industrial 
processes. But, our installed industrial base uses about 30 percent of 
the nation's energy.
    What do you think is the appropriate balance between R&D on new 
processes and support for retrofits to increase the efficiency of 
existing manufacturers?
    How will you interpret Title III of the bill to realign the AMO's 
priorities?
    Answer. Through the Advanced Manufacturing Office (AMO), DOE works 
closely with a broad set of industry sector stakeholders. The Office 
approach has shifted emphasis to investments in foundational 
technologies--technologies that are anticipated to have a high impact 
in helping save energy and improve competitiveness and that will 
benefit multiple industries in the installed industrial base. When R&D 
investments are approached in this manner, the extensive supply chains 
associated with manufacturing multiply the government's initial 
investments from one industry to multiple applications in other 
industries and end-use products. Examples include improving processes 
for the manufacturing of steel and chemicals, as well as advancing 
additive manufacturing, development of new lightweight materials, and 
new high performance semiconductor materials.
    Many of these foundational technologies have cross-cutting 
potential and directly enable improved energy efficiency retrofits for 
existing manufacturers in the installed industrial base. The need for 
cost share typically requires that research be conducted by, or in 
partnership with companies that include the installed industrial base, 
and would benefit from the development of these foundational 
technologies. For example, in 2012 DOE invested over $18 million in 
four projects from the Innovative Manufacturing Initiative Funding 
Opportunity Announcement that directly benefits the steel industry.
    AMO pursues this mission through investments that research, 
develop, and demonstrate (RD&D) at convincing scale new energy-
efficient manufacturing processes and materials technologies to reduce 
the energy intensity and life-cycle energy consumption of manufactured 
products and promote a corporate culture of continuous improvement in 
energy efficiency among existing facilities and manufacturers. AMO-
supported technologies must have the potential to reduce the life-cycle 
energy consumption of impacted manufactured goods by 50% over ten 
years. AMO investments in RD&D projects and shared RD&D facilities are 
competitively selected and cost-shared with industry to maximize energy 
savings and economic benefits.
    AMO also supports industry's adoption of technology through the 
Industrial Technology Assistance program by developing strategic 
partnerships. DOE support to industry helps lower a range of 
institutional barriers to prepare innovative, energy-efficient 
technologies and energy management systems for commercial deployment. 
AMO's software tools assist existing facilities in identifying energy-
saving opportunities in systems commonly used across the sector such as 
steam, process heating, compressed air, pumps, fans, motors, data 
centers, and combined heat and power (CHP). The Better Buildings, 
Better Plants Program has 118 industry partners demonstrating their 
commitment to energy savings by signing a voluntary pledge to reduce 
energy intensity by 25% over ten years. Moreover, eleven manufacturers 
have signed on to the Better Buildings Challenge to not only make their 
buildings and facilities more energy efficient by 2020, but to 
transparently share the business approaches they use to achieve these 
savings.
    AMO's Industrial Assessment Centers (IACs) continue to be a 
workforce development initiative to train the next generation of energy 
engineers. Led by faculty directors, students receive hands-on 
experience conducting assessments for small-and medium-sized 
manufacturers (SMEs) in their region, while the SMEs gain access to 
critical resources and bottom line benefits. The Regional Clean Energy 
Application Centers (CEACs) promote and assist the implementation of 
CHP, waste heat to power, and district energy technologies and concepts 
across the U.S. by providing market studies, education and outreach, 
and technical assistance. The Superior Energy Performance program 
offers industrial and commercial facilities the opportunity to earn a 
certification by voluntarily demonstrating continual improvement in 
energy efficiency. The program provides a transparent system for 
verifying improvements in energy performance and management practices 
through the application of the internationally accepted ISO 50001 
energy management standard.
    Title III of S. 761 would provide further emphasis to DOE's efforts 
in interagency cross-program coordination to ensure the strengthening 
of the U.S. industrial sector through smarter and more efficient uses 
of energy. The Future of Industry Program, as outlined in the bill, 
would enhance the potential of the DOE program offices, the National 
Laboratories, and the industrial sector to identify and deploy 
technologies and practices that will increase industrial efficiency and 
productivity, which in turn will improve the competitiveness of the 
U.S. industrial sector. Such authority would allow DOE to continue to 
partner with industry, small business, universities, and other 
stakeholders to identify and invest in emerging technologies with the 
potential to create high-quality domestic manufacturing jobs and 
enhance the global competitiveness of the United States. The 
Administration is still reviewing S. 761, and this preliminary analysis 
does not provide or represent a position on Title II of the bill.
    Question 6. Title III of S. 761 would direct DOE to establish a 
rebate program to promote the replacement of inefficient electric 
motors and electric transformers.
    Why aren't the energy savings achieved by replacement of existing 
equipment with more efficient equipment enough of an incentive for 
businesses to make these replacements without government incentives?
    What's a rough estimate of the energy savings that would be 
achieved by replacing the nation's electric motors and transformers 
with more-efficient and cost-effective models, and what's a rough 
estimate of the savings that would result from these two rebate 
programs in S. 761?
    Answer. The Administration is still reviewing S. 761, and the 
following preliminary analysis does not provide or represent a position 
on Title III of the bill.
    Title III, Subtitle C of S. 761 would establish a program to 
provide rebates for expenditures made by entities for the purchase and 
installation of new energy efficient electric motor controllers for 
constant speed motors. These motors are used in both commercial 
buildings (elevators, escalators, moving sidewalks) and manufacturing 
facilities (conveyor belts). For the rebate program for motor 
controllers, preliminary DOE estimates indicate that the $10 million 
cost to the government of the rebate program over two years and the $36 
million capital investment costs for participating entities could save 
approximately $74 million (undiscounted, real dollars) in electricity 
bill payments by the end-users over the lifetime of the motors with 
controllers purchased in the two years that the rebate is in place. The 
average lifetime of these motors is approximately 11 years and 
therefore these electricity bill savings accrue over a longer period of 
time than the rebate program.
    Title III, Subtitle D would establish a program to provide rebates 
for expenditures made by owners of industrial or manufacturing 
facilities, commercial buildings, and multifamily residential buildings 
for the purchase and installation of a new energy efficient 
transformer. The Department has recently finalized improved energy 
efficiency standards for this equipment, which are to take effect 
beginning in 2016. The availability of rebates could, in the interim, 
incentivize the installation of high-efficiency transformers both in 
advance of and to exceed the new standards. For products with long 
estimated lives, such as distribution transformers, installation of 
models with higher efficiency can result in significant long term 
energy and dollar savings following the additional initial capital 
cost.
    The rebate program could be beneficial for the purchase of more 
energy efficient transformers because of the nature of the market for 
the low-voltage, dry-type transformers that would be eligible for this 
rebate. In most cases, the low-voltage, dry-type transformers installed 
inside buildings and plants are purchased by electrical contractors or 
building managers who are not responsible for paying future energy 
bills. Thus, most of these purchases are made on the basis of lowest 
first cost, not efficiency, which creates a potential for energy 
savings that could be realized by purchasing more efficient 
transformers. This program could attract more efficient transformers 
into the market ahead of the new energy conservation standard for low-
voltage dry-type distribution transformers; however, it should be noted 
that NEMA Premium level will be a required efficiency level for the 
vast majority of the market (3-phase units) in 2016.
    For the two year rebate program, the government cost of $10 million 
and the purchaser costs of $20 million (undiscounted, real 2012 
dollars) could save the end-users approximately $362 million in 
electricity bill payments over the lifetime of the transformers 
purchased in the two years of the rebate program. It should be noted 
that the average lifetime of this equipment is approximately 30 years, 
so that these savings are generated over a long period of time relative 
to the length of the rebate program, and that the new energy efficiency 
standards for this equipment are to take effect beginning in three 
years.
    Question 7. Title IV of S. 761 would require the Federal government 
to develop a plan to use advanced power savings techniques to reduce 
energy use by government computers, and it would require the Federal 
government to develop a goal for energy savings through the 
consolidation of data centers.
    How will these requirements be implemented in the context of 
existing government efficiency objectives and programs, and are they 
duplicative of any existing federal efficiency requirements?
    Answer. As frequently noted, the Federal government is nation's 
largest energy consumer. This means that there is tremendous 
opportunity and a clear responsibility to lead by example through 
improvements to energy management across our buildings, facilities, and 
fleets.
    Currently, Energy Star already provides significant guidance for 
power management of computers; in addition, the power management 
settings are incorporated into the Energy Star certification process. 
As mandated by Executive Order 13423, Federal agencies are required to 
activate Energy Star ``sleep'' features on computers and monitors; this 
E.O. also mandates that Federal agencies buy Electronic Product 
Environmental Assessment Tool (EPEAT) certified products. Executive 
Order 13514 requires Agencies to promote electronics stewardship by 
ensuring procurement preference for EPEAT-registered electronic 
products, enabling of computer power management, activation of duplex 
printing functions, and procurement of Energy Star-qualified and FEMP-
designated electronic equipment.
    With regard to the data center consolidation, in 2010, the Office 
of Management and Budget launched the Federal Data Center Consolidation 
Initiative (FDCCI), which seeks to promote the use of Green IT by 
reducing the overall energy and real estate footprint of government 
data centers; reduce the cost of data center hardware, software and 
operations; increase the overall IT security posture of the government; 
and shift IT investments to more efficient computing platforms and 
technologies, like cloud computing. The FDCCI was built on foundational 
efforts across the government, including those carried out under 
Section 103 of the Energy Policy Act of 2005.
    Title IV of S. 761 would not only codify development of guidance 
and goals relevant to the power savings techniques requirements listed 
in the Executive Orders and the activities of the FDCCI, it would also 
further emphasize and enhance efforts to identify opportunities for 
improving energy efficiency in some of the most energy intensive 
sectors of the Federal government, including the increased need for 
information, communication, and data center resources. To that extent, 
it would complement broader Federal efforts to use total cost of 
ownership metrics, such as those recently called for in another OMB 
initiative, known as PortfolioStat.\1\ Under, PortfolioStat, agencies 
are optimizing those data centers that are pivotal to delivering 
taxpayer services, while closing duplicative and inefficient data ones 
to better enable mission delivery. In this context, energy efficiency 
measures are one component of many efficiency measures that agencies 
are addressing as complete work under the FDCCI.
---------------------------------------------------------------------------
    \1\ http://www.whitehouse.gov/sites/default/files/omb/memoranda/
2013/m-13-09.pdf
---------------------------------------------------------------------------
    The Administration is still reviewing S. 761, and this preliminary 
analysis does not provide or represent a position on Title III of the 
bill.
    1Currently the FDCCI is managed by OMB and GSA, and the Energy Star 
Power Management program and the EPEAT program are managed by EPA. The 
Department's Federal Energy Management Program (FEMP) also provides 
services, tools, and expertise to Federal agencies to help them achieve 
their legislated and executive-ordered energy, greenhouse gas, and 
water goals. Additional energy savings guidance related to information 
and communications technologies would complement existing Federal 
efforts.
    Responses of Kathleen Hogan to Questions From Senator Murkowski
    Question 1. The Energy Savings and Industrial Competitiveness Act 
contains a section to ``reform and reorient'' DOE's industrial 
efficiency programs. There has been much talk in this Committee and in 
the full Senate about the duplication of federal authorities, some of 
it across agencies but also some within, and the need to consolidate or 
streamline some of the programs or authorizations within our 
jurisdiction. What are your thoughts on this type of approach? Are 
there other areas that you can point to where a re-organization may be 
helpful?
    Answer. The Administration is still reviewing S. 761, and the 
following preliminary analysis does not provide or represent a position 
on Title III of the bill. Title III of S. 761 would provide further 
emphasis to DOE's efforts in interagency cross-program coordination to 
ensure the strengthening of the U.S. industrial sector through smarter 
and more efficient uses of energy. The Future of Industry Program, as 
outlined in the bill, would enhance the potential of the DOE program 
offices, the National Laboratories, and the industrial sector to 
identify and deploy technologies and practices that will increase 
industrial efficiency and productivity, which in turn will improve the 
competitiveness of the U.S. industrial sector. Such authority would 
allow DOE to continue to partner with industry, small business, 
universities, and other stakeholders to identify and invest in emerging 
technologies with the potential to create high-quality domestic 
manufacturing jobs and enhance the global competitiveness of the United 
States.
    DOE has recently taken steps to ensure that the Department's 
investment in industrial-sector energy technologies yields the greatest 
benefit possible. In particular, the recently announced EERE's Clean 
Energy Manufacturing Initiative will help integrate manufacturing 
activities across DOE, focus them on American competitiveness goals, 
provide the Advanced Manufacturing Office and the other EERE technology 
offices with rigorous analysis on the best use of federal dollars, and 
establish an improved mechanism for engaging directly with industry 
partners on energy efficiency and clean energy challenges. EERE 
coordinates its activities with other Federal agencies through the 
Advanced Manufacturing National Program Office at the National 
Institute of Standards and Technology (NIST), in order to minimize 
overlap and foster increased collaboration in agency goals and 
activities. The Department is committed to increasing collaboration 
across its programs and with the National Laboratories, as well as with 
its academic, non-profit, and private sector partners, in order to 
eliminate duplication of activities, reduce fragmentation of efforts, 
and accelerate the achievement of its technology goals.
    Question 2. In your testimony you describe R&D that is underway on 
next-generation building technologies and the idea of these 
technologies functioning together with others to create energy-
efficient systems--integrating ``silos'' of efficiency (appliances, 
buildings) with the goal of achieving greater overall savings. Please 
elaborate.
    Answer. In addition to efforts focused on specific building 
components, DOE invests in whole building R&D that demonstrates how new 
energy efficient technologies can function together to create an 
efficient system, achieve greater overall savings, and inspire the 
next?generation of buildings. For homes, this will translate into a new 
generation of housing stock that is durable, uses smarter energy 
management systems, and offers substantial energy savings. DOE's 
research in these area focuses on several technologies, including 
sensors, controls, and whole building performance.
    Sensors are designed to help building owners and operators better 
manage their energy use through improved information sharing between 
systems and automation. Sensors measure predefined variables, such as 
the amount of natural light coming in through an office window, and 
then feed this data into a building's control system. The control can 
then respond by adjusting the various building systems. For example, 
sensors may note when a person leaves a room and let controls know to 
turn off the lights, or can ensure that faucets only release water if 
someone's hand is waved.
    Advanced building controls can play a significant role in improving 
building energy performance. Controls can be programmed to 
automatically respond to environmental variables, such as daylight, but 
can also respond to preprogrammed parameters aligned with other 
factors, like whether a particular day falls on a weekend or a holiday. 
Responses can include increasing a room's temperature when it is cold 
outside, or having the lights turn on automatically when it is too 
dark. The delivery of continuous, up-to-date information on building 
system and component performance will enable more cost-effective 
equipment servicing and optimized building operation. Building owners 
and operators can realize lower maintenance and operating costs, and 
building occupants could enjoy greater levels of comfort and 
personalized control.
    Whole building performance energy management systems are designed 
to integrate the diverse and numerous systems that a building operates 
to control the building environment. These systems include 
refrigeration, heating, ventilation, and air conditioning (HVAC), 
lighting, and a host of others. By having these systems communicate 
with each other, building owners and operators can achieve improved 
building performance and reduced energy use.
      Response of Kathleen Hogan to Question From Senator Landrieu
    Question 1. Energy efficiency is an issue that all sides can agree 
is important. One item that unfortunately is not addressed in this 
legislation concerns Section 433 of the Energy Independence and 
Security Act of 2007 which created a mandate to ban fossil fuel use in 
new federal buildings and renovation projects over $2.5 million by 
2030. This restriction would prohibit the use of clean and efficient 
domestic fuels like natural gas to be used in numerous federal 
buildings. When this legislation was passed we had no real idea about 
the supply of natural gas that we would be able to provide. Yet the 
most recent analysis by the Potential Gas Committee (PGC) showed a 
dramatic increase in the estimated recoverable natural gas reserves in 
the U.S. The assessment of 2,384 trillion cubic feet is the highest 
assessment in the 48 year history of the PGC. Given our increasing 
access to these vast reserves of cheap, clean energy, does it seem 
reasonable to revisit these restrictions placed on the federal 
government which already operates 370.2 million square feet of office 
space and instead provide the federal government with the option to use 
this fossil fuel which affordable, abundant and American?
    Answer. As you note, Section 433 of the Energy Independence and 
Security Act directed the Department to establish regulations to 
implement statutorily mandated Federal building standards that require 
incremental reductions in energy consumption from fossil fuels, as 
compared to 2003 levels, with a required 100 percent reduction 
beginning in fiscal year 2030. DOE has been working hard to find the 
right balance to help agencies meet these ambitious requirements with 
as much flexibility as possible. The law does provide the Secretary 
with the discretion to adjust the requirement downward for a specific 
building upon request by the head of an agency, when meeting the 
requirement would be technically impracticable in light of an agency's 
specific functional needs (such an adjustment does not apply to the 
General Services Administration).
    The Administration is committed to an all-of-the-above energy 
strategy. The Department of Energy has been working to advance this 
rule, as it is an important way for the Federal government to lead by 
example. At the same time, we have been listening to stakeholders who 
indicate a need for flexibility. We have responded to Congress that we 
would seek comment again, and are in the process of doing so currently. 
Providing clarity on stakeholders' questions about implementing Section 
433 of EISA is a top priority for the Department.
     Responses of Kathleen Hogan to Questions From Senator Franken
    Question 1. Please outline the merits of state and local energy and 
water disclosure policies, particularly as they apply to large 
commercial buildings. What can the Department of Energy do to help more 
states and localities implement these policies?
    Answer. Benchmarking and disclosure policies can facilitate market-
based competition and drive investment in energy efficiency. 
Informational resources for State and local governments are available 
through The State and Local Energy Efficiency Action Network (SEE 
Action).
    SEE Action is a state and local effort facilitated by DOE and EPA 
that helps States, utilities, and other local stakeholders take energy 
efficiency to scale. SEE Action's Working Group on Existing Commercial 
Buildings has developed fact sheets that are tailored to State and 
local stakeholders and regulators of rate-payer funded programs; as 
well as a document entitled, ``Benchmarking and Disclosure: State and 
Local Policy Design Guide and Sample Policy Language.'' All of these 
publications are available at http://www1.eere.energy.gov/seeaction/
existing_commercial.html.
    Question 2. Energy consumption in the U.S. could be reduced 
substantially through behavior changes alone. What steps can the 
Department take to prioritize consistent and effective research in this 
area? Please also provide your recommendations to Congress on how we 
can strengthen and improve behavioral research efforts at the 
Department of Energy.
    Answer. The Department understands the value of behavioral and 
social sciences and is increasing the use of these disciplines within 
its energy efficiency programs. Several programs within the Office of 
Energy Efficiency and Renewable Energy (EERE) are using behavior-based 
tools and information to shape program design, implementation, and 
evaluation.
    These programs span the nation's key energy use sectors and 
include: the State and Local Energy Efficiency Action Network (SEE 
Action), the Clean Cities initiative, the Better Buildings Neighborhood 
Program, and Home Performance with ENERGY STAR. In addition, EERE is 
developing a Home Energy Score, and creating a Commercial Building 
Asset Rating and Building Performance database. In each case, the 
Department is employing social science research--including public 
survey data and experimental behavioral research--when designing, 
evaluating, and communicating about its programs. We would be happy to 
continue the conversation as to how we can build upon and improve the 
Department's behavioral research efforts to achieve higher energy 
efficient outcomes.
    Question 3. Studies show that the energy efficiency of information 
and communication technologies could be greatly improved. Please 
indicate how best practices and lessons learned from energy efficiency 
improvements in the information and communications technology sector at 
federal agencies can be communicated, and transferred, to the private 
sector.
    Answer. The Department's Federal Energy Management Program (FEMP) 
assists Federal agencies in reducing data center energy consumption by 
encouraging them to adopt best practices, construct energy-efficient 
data centers, and educate energy managers and information technology 
professionals.
    FEMP's Data Center Initiative partners with the General Services 
Administration (GSA), the Energy Star Program, and private industry to 
make data centers more energy efficient. One of the most visible 
results transferrable to the private market from these partnerships is 
the training that is created to raise awareness of efficiency 
opportunities and support project implementation. These include in-
person seminars to IT and Facilities professionals, webinars on tool 
use (Data Center Profiler Suite), and online webinars.
    Question 4. Please provide the Department's estimate of the job 
creation potential of S. 761.
    Answer. The Department has not undertaken a comprehensive analysis 
of S. 761 and does not currently have an internal estimate of its job 
creation potential. We would be happy to discuss requests for a 
comprehensive analysis of impacts of S. 761.
     Responses of Kathleen Hogan to Questions From Senator Manchin
    Question 1. Homes and commercial buildings last a long time and I 
can't imagine we expect them to all get replaced or upgraded at once. 
This tells me that while some low-hanging fruit exists--where we can 
get significant energy savings from modest investments--our savings 
might taper off down a more modest amount after that.
    Does the DOE have an estimate of how much energy we can save 
through energy efficiency programs such as those that the Shaheen-
Portman bill would support or through the initiatives in the 
President's proposed initiatives? Specifically: how much in energy 
savings are we talking per year? And does the rate of those savings 
change over time because it takes a long time to replace buildings?
    Answer. Energy efficiency is a large, low?cost, but underutilized 
U.S. energy resource, and the opportunity for energy savings in the 
buildings sector is vast. We spend more than $400 billion each year to 
power our homes and commercial buildings, consuming more than 70% of 
all electricity used in the United States, about 40% of our nation's 
total energy bill, and contributing to almost 40% of the nation's 
carbon dioxide emissions.\2\ Much of this energy and money is wasted. 
If we cut the energy use of U.S. buildings by 20%, we could save 
approximately $80 billion annually on energy bills, reduce greenhouse 
gas emissions, and create jobs.\3\
---------------------------------------------------------------------------
    \2\ Buildings Energy Data Book, U.S. Department of Energy. March 
2012, http://buildingsdatabook.eren.doe.gov/TableView.aspx?table=1.2.3. 
3
    \3\ Cross-Agency Priority Goal: Energy Efficiency, FY2013 Quarter 1 
Update
---------------------------------------------------------------------------
    The U.S. built environment includes approximately 80 billion square 
feet of commercial space and about 116 million homes. While energy 
efficient new construction is important to lock in savings for the life 
of the building, strategies to improve the efficiency of existing 
buildings are essential to have an impact on U.S. building energy use. 
The Department's Building Technologies Office therefore invests in an 
array of innovative, cost-effective energy saving solutions that apply 
to both new and existing homes and buildings, and appliances that are 
used in every sector. These activities range from longer-term R&D on 
emerging technologies in building components and systems, to providing 
information, tools, and standards for increasing the use of efficient 
off-the-shelf technologies and for building code adoption and 
implementation in the short term. Having a diverse portfolio of 
activities allows the Department to help capture the ``low-hanging 
fruit'' of energy efficiency options available today as well as invest 
in advances that will save businesses and consumers money in the 
future.
    The Department has not undertaken a comprehensive analysis of S. 
761 and its potential impacts on energy use and savings. We would be 
happy to discuss requests for a comprehensive analysis of impacts of S. 
761.
    Question 2. Deputy Assistant Secretary, in your testimony you state 
that homes and buildings consume 40% of the Nation's total energy. It 
is my understanding that a large portion of this energy--about half of 
it--is lost in the generation of the electricity that is eventually to 
be used in those homes and buildings. This is reported as ``Electrical 
System Energy Losses'' by the Energy Information Administration (EIA). 
That is to say that you're counting the fact that our power plants are 
only 30 or 40 percent efficient in your calculations of our energy use.
    It would follow that if we improve the efficiency of our 
electricity generation and reduce losses in electricity transmission, 
we will directly address the energy use--not just in the homes and 
buildings, but everywhere electricity is used.
    My question to you is this: should we be spending $200 million 
dollars--about half the budget of the office of Fossil Energy in the 
DOE--on the President's ``Race to the Top'' energy efficiency 
initiative, while reducing funding on programs that would help us 
generate electricity more efficiently? For example, the Advanced Energy 
Systems program at the National Energy Technology Laboratory is a 
program which has a long track record of helping improve the efficiency 
of our coal and natural gas power plants which we know are going to be 
responsible for providing our nation with safe and secure electricity 
well into our future? Shouldn't we be spending money on both energy 
efficiency and getting more bang out of our buck with our resources?
    Answer. The Administration is committed to an all-of-the-above 
energy strategy that reduces our dependence on oil, saves businesses 
and consumers money, and positions the United States as the global 
leader in clean energy.
    As part of this strategy, DOE has requested $200 million in one-
time funding for Race to the Top awards, based on demonstrated 
performance, to State and tribal governments, local governments with 
public power utilities, and electric cooperatives that implement 
effective policies to cut waste and modernize the grid. The Department 
would offer informational resources and merit-based technical 
assistance grants to States and other eligible applicants that wish to 
qualify for awards for the greatest demonstrated improvements in energy 
efficiency and energy productivity. Race to the Top would lead to 
improvements in both energy efficiency and grid modernization.
    Race to the Top is just one part of the Department's FY 2014 budget 
request, which includes $28.4 billion in discretionary funds (including 
$11.7 billion for nuclear security). DOE's request supports an array of 
activities including conducting basic science research; advancing the 
safe and environmentally sound production of domestic fossil fuels; 
supporting clean and secure nuclear energy generation; developing the 
next generation of renewable energy technologies; modernizing and 
improving our electricity systems; and increasing energy efficiency of 
our homes, buildings, and vehicles.
                                 ______
                                 
      Responses of Jeff C. Wright to Questions From Senator Wyden
                           s. 545 & h.r. 267
    Question 1. Two Year Licensing Process: The Commission's default 
``integrated licensing process'' (ILP) is designed to take five-years. 
S. 545 and H.R. 267 both require the Commission to consider 
establishing a two-year licensing process for low impact projects at 
existing non-hydro dams and for ``closed loop'' pumped storage.

          a) Do you agree that in many instances the Commission is 
        capable of getting its part of the licensing process done in 
        two years or less for a low-impact project such as adding hydro 
        to an existing non-hydropower dam?

    Answer. While it is correct that the ILP, established through a 
public process with the collaboration of federal and state resource 
agencies, Indian tribes, licensees, and other stakeholders, provides 
for a five-year licensing process, the Commission's regulations allow 
applicants to request approval to use the traditional licensing process 
(TLP) or the alternative licensing process (ALP), which can take 
substantially less time. Also, the TLP is the default process for 
exemptions, both conduit and small hydroelectric power projects. Low 
impact projects at existing dams are typically good TLP candidates and 
many of the new projects that have been authorized in recent years used 
the TLP. In instances where developers select sites that do not raise 
significant environmental issues or other public concerns and where 
developers engage in outreach with federal and state agencies, Indian 
tribes, local communities, and other stakeholders to build a consensus 
that projects are desirable, the Commission already can, and does, 
issue licenses within as few as two months from when a complete 
application is filed.

          b) Is it accurate to state that other federal and state 
        agencies with authority over certain aspects of the licensing 
        process do not always act in a timely manner?

    Answer. Our experience with licensing new projects at existing dams 
is that agencies typically act in a timely or near-timely manner such 
that licensing is not significantly delayed. We attribute this to most 
of these projects being properly sited such that there are few or no 
endangered species, water quality, or fish passage issues. Our limited 
experience with closed loop pumped storage projects indicates that 
these projects are likely to be more challenging to license in a timely 
manner because they can affect environmental resources of particular 
concern to the public and agencies. Our experience has not been as 
positive with respect to project relicensing.

          c) Should the Commission adopt a two-year goal or some other 
        goal significantly shorter than five-years for low-impact 
        project licensing, recognizing that other involved agencies are 
        not legally bound by it and may not comply?

    Answer. Our goal has been and continues to be to process license 
applications in as timely a manner as possible, in some cases in less 
than two years, as noted above. Without the ability to set schedules 
that are binding on all stakeholders, including federal and state 
agencies, the Commission cannot guarantee any specific timeframes. 
Whether it would be valuable to set a goal without the power to achieve 
it is a matter to be considered.

          d) Is a non-binding two-year licensing goal for low impact 
        projects better than no goal at all?

    Answer. Please see response to 1(c) above.

          e) Absent a two-year licensing goal or some other goal that 
        is significantly shorter than five-years what options does a 
        hydro developer have whose low impact project is uneconomic due 
        to the costs and length of the ILP or the ``Traditional'' or 
        ``Alternative'' licensing processes? Is dealing with such a 
        situation best done on an ad hoc basis as it is currently? 
        Alternatively, would it be better for the Commission to have a 
        policy or process to address the licensing of low impact 
        projects that only are viable with a shorter and less costly 
        licensing process?

    Answer. Our experience through licensing new projects and 
discussions with developers indicates that it is the lack of financing 
or the inability to execute a power sales agreement, and not the 
licensing process, that makes a project uneconomic. Moreover, while 
Commission staff strongly supports the development of small hydropower, 
it is also the case that a developer must have the wherewithal to 
engage in the licensing process and to meet licensing requirement. That 
said, Commission staff works closely with developers and is constantly 
reviewing Commission processes in an effort to ensure that they are as 
efficient and cost-sensitive as possible.
    We have dedicated a significant amount of staff resources over the 
past several years to developing tools and web-based resources to guide 
developers in ways to expedite low-impact projects. The process has 
worked best and most quickly when developers approach Commission staff 
about specific, well-sited projects and staff work with them on the 
process that appears best suited to their specific project.
    Question 2. Please explain the apparent inconsistency between 
paragraphs 2-6 and paragraph 7 of the Commission's declaratory order in 
Power Site Reservation Fees Group, 142 FERC,61,196 (Mar. 21, 2013).

          (a) If a power site reservation is a valuable interest in 
        land, which the United States retains under section 24 ofthe 
        Federal Power Act, and if section 10(e)(1) requires any 
        licensee who uses the power site reservation to ``pay to the 
        United States reasonable annual charges ... recompensing'' the 
        United States for the use of the power site reservation, why 
        has the Commission decided it ``will no longer assess annual 
        charges'' for the use of power site reservations'' on ``former 
        federal lands included within the boundaries of hydropower 
        projects as to which'' a power site reservation exists?
          (b) Paragraph (7) of the Commission's order states that 
        ``licensees have given valuable consideration to obtain fee 
        ownership of federal lands, and have done so for the 
        development of hydropower, the very purpose for which the power 
        site reservation was created.'' But has the licensee given 
        valuable consideration for the right to use the federal power 
        site reservation itself, which section 24 requires ``shall be 
        expressly reserved in every patent issued for lands'' reserved 
        for power development? If the licensee has already ``given 
        valuable consideration to obtain'' the power site reservation, 
        as paragraph (7) suggests, was the power site reservation, in 
        fact, reserved to the United States? Conversely, ifthe power 
        site was reserved to the United States, did the United States, 
        in fact, receive ``valuable consideration'' for its sale to the 
        licensee?
          (c) If a power site reservation is a valuable interest in 
        land, and section 10(e)(1) of the Federal Power Act requires 
        the Commission to collect a ``reasonable annual charge'' for 
        the use of that valuable interest, from what source does the 
        Commission derive the ``equitable'' power it claims in 
        paragraph (7) to waive those charges?

    Answer. I was not asked to testify as to this matter, and the 
Commission's annual federal land use charges are not within my area of 
responsibility. The Commission, as an independent regulatory agency, 
speaks through its orders, and staff cannot add to what the Commission 
has stated in an order.
    Question 3. Another important aspect of the current small conduit 
exemption is that it only exempts them from FERC licensing 
requirements, not from Federal and state fish and wildlife protections. 
S. 545 preserves the fish and wildlife protections afforded by the 
current small hydro exemption for small conduits over 5 megawatts, but 
exempts those of 5 megawatts or less from those protections.
    Why is it necessary to waive those fish and wildlife protections 
for small conduit projects of 5 megawatts or less?
    Answer. In my opinion it is not necessary to waive fish and 
wildlife protections for small conduit projects, but my experience is 
that fish and wildlife issues rarely arise regarding such projects. 
Since October 2004, the Commission staff has issued 65 conduit 
exemptions. In none of these cases have fish and wildlife agencies 
filed any substantive conditions related to protection of fish and 
wildlife resources.
    Responses of Jeff C. Wright to Questions From Senator Murkowski
    Question 1. Both S. 545 and H.R. 267 establish a process for FERC 
to consider ``qualifying conduit hydropower facilities'' through an 
expedited public notice and comment period. Such qualifying projects 
must (1) use a non-federally owned conduit; (2) be 5 mw or less; and 
(3) not have a current FERC license or ``exemption.'' I view this as 
maintaining our federal nexus through the FERC review process but 
providing flexibility for the vast majority of conduit projects that 
are non-controversial. Do you agree? Also, please explain to the 
Committee how you envision this new provision working.
    Answer. Yes, I agree. The proposed legislation would maintain 
flexibility for qualifying conduit exemption projects less than 5 MW. 
After a developer files a notice of intent to construct a qualifying 
facility as determined by staff, the Commission would issue a public 
notice, and if no comments are received during the notice period 
alleging that the project doesn't qualify, the developer could then 
construct the project without Commission authorization. In the event 
that a commenter alleges that the project does not qualify, staff will 
review the comments and make a final determination regarding the 
project's qualifying status.
    Once FERC makes a determination that the proposed project meets the 
qualifying criteria and there is no public opposition, then that 
project is not required to get a license or an ``exemption'' from the 
Commission, correct? But, doesn't any applicable state or other federal 
law remain in force? Also, there's no requirement that a project 
developer must use this new process, correct?
    Under the proposed legislation, projects that do not require 
Commission authorization would still be required to obtain other 
pertinent approvals. Also, nothing would preclude the project developer 
from seeking a license or conduit exemption from the Commission.
    Question 2. S. 545 and H.R. 267 are premised on the need to develop 
additional hydropower resources. What is your view of the potential of 
undeveloped hydropower?
    Answer. The U.S. Department of Energy in its April 2012 ``An 
Assessment of Energy Potential at Non-Powered Dams in the United 
States'' reports that, where conditions are suitable, non-powered dams 
could be powered to create up to 12,000 megawatts of new electric 
generation capacity.
    Question 3. What are some steps Congress can take to improve the 
hydropower licensing/relicensing process?
    Answer. Congress could enact legislation that provides the 
Commission, as lead agency, the ability to establish an enforceable 
schedule for all stakeholders, including federal and state agencies 
with mandatory conditioning authority.
      Response of Jeff C. Wright to Question From Senator Manchin
    Question 1. Can you tell me how many dams are out there and not 
producing power?
    Answer. The U.S. Department of Energy in its April 2012 ``An 
Assessment of Energy Potential at Non-Powered Dams in the United 
States'' reports that there are more than 80,000 non-powered dams that 
provide a variety of other functions, including water supply and inland 
navigation.
    Especially when you look at dams that were originally supposed to 
produce power, dams built before or during World War II, that they for 
whatever reason decided to not generate power from?
    As a regulatory agency, we only have occasion to investigate the 
history of an existing, non-powered dam when a development application 
is filed to utilize it or its head potential for electricity 
generation. For example, on April 30, 2013 Tygart, LLC filed with the 
Commission an application for an original license for the proposed 30-
megawatt Tygart Hydroelectric Project No. 12613 to be located at the 
U.S. Army Corps of Engineer's existing Tygart Dam on the Tygart River 
in Taylor County, West Virginia.
    For those 80,000 non-powered dams that are federally owned, the 
particular federal owner (e.g., U.S. Army Corps of Engineers and U.S. 
Bureau of Reclamation) may have more information on the history of its 
dams, including the reasons it is non-powered.
                                 ______
                                 
        Response of Lowell Pimley to Question From Senator Wyden
                           s. 306 & h.r. 267
    Question 1. H.R. 678 establishes a statutory categorical exclusion 
for small conduit hydro projects. It says nothing about extraordinary 
circumstances. In a similar situation involving statutory categorical 
exclusions for oil and gas development, the Department has taken the 
position that it cannot review the action to determine whether there 
are extraordinary circumstances since the statute does not require it. 
Similarly, H.R. 678 does not expressly require review for extraordinary 
circumstances.
    If H.R. 678 does not bar the Bureau of Reclamation from reviewing 
small conduit projects for extraordinary circumstances, shouldn't the 
provision be amended to permit extraordinary circumstances review?
    Answer. HR 678, as amended by the House of Representatives, directs 
Reclamation to ``apply its categorical exclusion process under the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) to 
small conduit hydropower development under this subsection, excluding 
siting of associated transmission facilities on Federal lands.'' If 
enacted, Reclamation would interpret this language not as statutorily 
creating a categorical exclusion, but as endorsing its current 
directive and standard to potentially apply a categorical exclusion, 
provided that no extraordinary circumstances exist, pursuant to 40 
C.F.R. '1508.4. For that reason, Reclamation does not believe it will 
be barred from reviewing extraordinary circumstances for the 
development of small conduit hydropower projects. Reclamation would not 
be opposed to amendment language clarifying consistency with its 
current policies that ensure extraordinary circumstances are considered 
when applying categorical exclusions.
      Response of Lowell Pimley to Question From Senator Murkowski
    Question 1. What are the financial challenges in developing conduit 
hydropower at federal canals and pipelines? In particular, what are the 
capital costs, regulatory costs and other costs on a project covered by 
S. 306 or H.R. 678?
    Answer. The cost of hydropower development varies widely and is 
dependent on a number of factors. Costs related to licensing, equipment 
and civil works, transmission interconnection, and environmental and 
cultural resource mitigation all vary greatly by site. According to the 
National Hydropower Association small hydropower projects of 10 MW or 
less can range from approximately $1,500-$6,000 per kilowatt installed 
(http://www.hydro.org/why-hydro/affordableD, and the top 70 sites 
identified in the 2011 ``Hydropower Resource Assessment at Existing 
Reclamation Facilities'' report show an estimated potential cost of 
between $1,455-$7,745 per kW installed.
    It is difficult to identify general Capital Costs and Environmental 
Costs for conduit hydropower projects due to the wide range of possible 
conditions that may present themselves. The hydraulic conditions 
themselves will generally dictate the cost effectiveness of a given 
site. However, in some cases, other conditions could impact the cost 
effectiveness of conduit hydropower projects. For instance, some canal 
systems, because of their age, may be considered historic sites in and 
of themselves and require special historic property consideration and 
documentation. Others may be situated near endangered plant or animal 
species or wetlands which may be impacted by construction of penstocks, 
powerplants or powerlines. Interconnection studies and contracts are 
often required and can vary widely.
    Since Reclamation is not the entity developing the sites covered by 
S. 306 and H.R. 678, detailed project cost information has not been 
developed. That said, based on conversations with recent developers we 
can provide some examples of overall project costs. One of the more 
recent examples of the costs associated with these projects is a 900 kW 
installation on a Reclamation canal. The overall project cost 
approximately $2,000,000 (-$2,200/kW installed) according to the 
developer, and of that $2,000,000 approximately $50,000 was spent on 
the direct costs of executing the Lease. These activities included 
NEPA, and design and construction reviews.
    Another recent example is a 7.5 MW canal project with an overall 
cost, including powerplant, transmission, substation, contingencies 
etc., of approximately $20 million (-$2,900/kW installed). Non-Capital 
costs including planning, preliminary designs, pre-construction costs, 
construction management were $1 Million. The cost of executing the 
Lease, including NEPA, and design and construction reviews was 
$125,000, and mitigation as a result ofNEPA was $750,000. The cost of 
executing the Lease, including NEPA mitigation, accounts for 
approximately 4% of the overall cost of the project.
       Response of Lowell Pimley to Question From Senator Manchin
    Question 1. Can you tell me how many dams are out there and not 
producing power? Especially when you look at dams that were originally 
supposed to produce power, dams built before or during World War II, 
that they for whatever reason decided to not generate power from?
    Answer. Approximately 3% of the nation's 80,000 dams currently 
generate power. Some nonpowered dams are better configured for power 
generation in that power penstocks were installed with the anticipation 
that power would be added later. In many instances, other dam outlet 
works can be modified to supply water to a hydropower plant. In other 
cases a new water conveyance must be installed in the dam. Development 
of power at a dam is determined more by the amount of water available 
to operate the plant, proximity to transmission, and overall economic 
feasibility which factors in any water conveyance structures originally 
installed to support hydropower. Reclamation's Hydropower Resource 
Assessment, published in March 2011 identified 143 dams in the western 
17 states with hydropower potential totaling 180.5 MW of capacity and 
795,320 MWh of annual energy potential. Fifty-two of those dams showed 
a cost benefit ratio greater than 0.75 percent with a total capacity of 
147.5 MW and 674,261 MWh of annual energy potential. Development has 
been initiated on 13 of these dams.
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

           Statement of the American Public Power Association
    The American Public Power Association (APPA) appreciates the 
opportunity to submit this statement focusing on hydropower legislation 
to the Senate Energy and Natural Resources Committee's April 23, 2013, 
hearing on energy efficiency and hydropower bills. APPA is the national 
service organization representing the interests of over 2,000 
community-owned, non-for-profit electric utilities (collectively known 
as public power). These utilities include state public power agencies, 
municipal electric utilities, and special utility districts that 
provide electricity and other services to over 47 million Americans.
    Hydropower is the nation's largest source of clean, renewable 
electricity, accounting for 62% of domestic renewable generation and 8% 
of total electricity generation. Of public power's total generation 
portfolio more than 17% is hydropower according to the most recent 
Energy Information Administration data from 2011. It is a reliable 
source of base-load (i.e.; available most of the time) energy. Despite 
the beneficial use of hydropower, most dams were built, decades ago, 
for purposes other than power generation, such as for flood control, 
crop irrigation, or storage of municipal water supplies. Therefore, 
only 3% of the country's approximately 80,000 dams currently have 
facilities that generate electricity. Given this situation, there is 
substantial potential for adding renewable hydro-electric generation to 
non-power dams by installing electricity generation equipment at those 
sites. At the same time, there are a number of regulatory, financial 
and other barriers impeding the commercial development of this 
hydropower potential. The legislation being considered at this hearing 
seeks to address a few of these issues.
    APPA appreciates and supports Congress' interest in hydropower and 
the provisions in the various bills introduced in the 113th Congress 
that would expand hydropower usage, particularly in light of the many 
benefits this abundant resource provides as a source of low-cost, 
reliable and emissions-free power. Unfortunately, there are significant 
impediments to licensing and relicensing of hydropower projects, 
especially smaller units. APPA believes the licensing process for these 
small projects is overly burdensome and uneconomic. Further, APPA 
supports legislation that cuts the lengthy, duplicative and, at times, 
contradictory regulatory processes for hydropower projects. 
Streamlining the multi-agency inefficiencies associated with hydropower 
development on federal projects is also necessary.
    Therefore, APPA supports H.R. 678 and S. 306, the Bureau of 
Reclamation Small Conduit Hydropower Development and Rural Jobs Act 
introduced by Representative Scott Tipton (R-CO) and by Senator John 
Barrasso (R-WY), respectively, that address these issues. These bills 
would authorize power development at the Bureau of Reclamation's 
conduits. This new authorization in both bills will help clarify and 
streamline the multi-agency inefficiencies associated with hydropower 
development on these federal projects by cutting duplicative processes 
and reducing the regulatory burdens that many of our members have 
encountered. Further, the legislation protects existing agreements that 
water users have on conduit generation projects and provides additional 
safeguards to ensure such projects do not undermine water deliveries. 
This bill is a needed fix to a burdensome process. APPA also supports 
the language added to H.R. 678 during consideration on the House floor 
that would replace the NEPA waiver with the following language:

          The Bureau of Reclamation shall apply its categorical 
        exclusion process under the National Environmental Policy Act 
        (42 U.S.C. 4321 et seq.) to small conduit hydropower 
        development under this subsection, excluding siting of 
        associated transmission facilities on Federal lands.

    This new language is a good faith effort to bring regulatory 
certainty to help spur hydropower development while giving 
administrative flexibility to the Bureau of Reclamation. It also 
provides a needed fix to the differences in the Department of the 
Interior's and the Bureau of Reclamation's NEPA provisions and the 
Lease of Power Privilege (LOPP) program. Consequently, this language 
strengthens the bill.
    APPA also supports the other hydropower legislation by 
Representative Cathy McMorris Rodgers (R-WA), H.R. 267, the Hydropower 
Regulatory Efficiency Act, and the companion bill in the Senate by 
Senator Lisa Murkowski (R-AK), S. 545, the Hydropower Improvement Act 
of 2013. Both bills would promote hydropower development at conduits 
(i.e.; man-made water conveyances such as tunnels, canals, or pipelines 
that are operated for water distribution and not primarily for 
electricity generation) by excluding projects under 5 MW from federal 
licensing requirements if the project met certain criteria. It would 
also facilitate conduit project development by exempting projects 
between 5-40 MW from federal licensing requirements, upon approval by 
the Federal Energy Regulatory Commission (FERC), amongst other things.
    Together, these bills combine to create a worthwhile small 
hydropower development program. H.R. 267 and S. 545 give the Federal 
Energy Regulatory Commission the tools it needs to streamline its 
statutory program for small hydropower development while H.R. 678 and 
S. 306 provide a statutory framework missing from its existing 
authorities for the companion program at the Bureau of Reclamation. 
These bills accomplish this task while retaining the necessary 
environmental safeguards that will ensure careful implementation of 
this newly directed initiative.
                                 ______
                                 
                                       ConEdison Solutions,
                                                    April 29, 2013.
Hon. Ron Wyden,
Chairman, Committee on Energy & Natural Resources, 304 Dirksen Senate 
        Building, Washington, DC.
Hon. Lisa Murkowski,
Ranking Member, Committee on Energy & Natural Resources, 304 Dirksen 
        Senate Building, Washington, DC.
    Dear Chairman Wyden and Ranking Member Murkowski:

    On behalf of ConEdison Solutions, I am writing to express our 
support for S. 761, The Energy Savings and Industrial Competitiveness 
Act and to thank you for holding this hearing today.
    ConEdison Solutions is a leading energy services company with over 
200 employees in 9 states that provides competitive power supply, 
renewable energy, sustainability services, and cost-effective energy 
solutions for commercial, industrial, residential, and government 
customers. ConEdison Solutions offers programs and services designed to 
help customers achieve their energy objectives and is accredited as an 
Energy Services Provider (ESP) by the National Association of Energy 
Service Companies. (NAESCO).
    By addressing energy use in buildings, manufacturing and the 
federal government, S. 761 focuses on three major areas of energy use. 
This focus will enable the country to reap the greatest return on its 
investment in energy efficiency.
    Buildings currently consume 40% of all energy used in the United 
States. The Energy Savings and Industrial Competitiveness Act would:

   Support regular updates to the existing national model 
        building codes. Building codes help investors overcome the 
        market barriers that impede energy savings in this sector, and 
        reduce energy costs for businesses.
   Kick start private sector investment in building efficiency 
        upgrades and renovations by creating a Commercial Building 
        Energy Efficiency Financing Initiative.
   Train the next generation of workers in energy-efficient 
        commercial building design and operation through university-
        based Building Training and Research Assessment Centers.

    Energy efficiency is vital to America's manufacturing future. It 
helps lower costs for business big and small and the innovation that 
drives it through the development of new technologies creates 
manufacturing jobs. To help strengthen manufacturing and create more 
manufacturing jobs, S. 761:

   Directs the U.S. Department of Energy to work closely with 
        private sector partners to encourage research, development and 
        commercialization of innovative energy efficient technology and 
        processes for industrial applications.
   Helps manufacturers reduce energy use and become more 
        competitive by incentivizing the use of more energy efficient 
        electric motors and transformers.
   Establishes a DOE program--SupplySTAR--to help make 
        companies' supply chains more efficient.

    The United States government is the nation's largest energy 
consumer. It accounted for 1.5 percent of the country's total energy 
use in 2009 (the most recent year for which figures are available) and 
spent $24.5 billion the previous year on fuel and electricity for its 
roughly 500,000 buildings and 600,000 vehicles. To reduce the federal 
government's energy consumption, S. 761:

   Requires the federal government to adopt energy saving 
        techniques for computers, saving energy and taxpayer dollars.
   Allows federal agencies to use existing funds to update 
        plans for new federal buildings, using the most current 
        building efficiency standards.
   Clarifies that Energy Service Companies (ESCOs) and Utility 
        Energy Service Contracts (UESCs) can be used by federal 
        agencies to install electric and natural gas vehicle charging 
        infrastructure, making it easier for agencies to use these 
        types of vehicles.

    Swift passage of S. 761 is essential to improve energy efficiency, 
air quality and the economy. According to analysis completed by the 
American Council for an Energy-Efficient Economy the version of this 
legislation that was introduced in the 112thCongress could lead to 
159,000 new jobs, save consumers $20 billion in avoided energy costs, 
and reduce carbon dioxide emissions by 108 million metric tons by 2030.
    Again, thank you for holding this hearing and I ask that you move 
this legislation out of your committee quickly. We at ConEdison 
Solutions will continue to do our part to help our nation save energy 
and improve our industrial efficiency.
            Sincerely,
                                          Michael N. Perna,
                                                    Vice President.
                                 ______
                                 
                                                     April 9, 2013.

    The undersigned organizations, on behalf of our millions of members 
and supporters are writing to express our strong opposition to the 
provision in Section 2 of H.R. 678 that waives the National 
Environmental Policy Act (NEPA) with respect to small conduit 
hydropower projects at Bureau of Reclamation facilities.
    While we support the legislation's intent to encourage the 
responsible development of low impact, conduit hydropower projects, 
waiving NEPA reviews for Bureau of Reclamation projects is 
unacceptable. Since this bill was considered last year (H.R. 2842) the 
Bureau of Reclamation applied a categorical exclusion under NEPA as a 
part of its final Directives & Standards for Lease of Power Privilege 
process--thus making the proposed waiver completely unnecessary. The 
National Environmental Policy Act is not a roadblock to the successful 
approval of conduit hydropower projects at Bureau facilities. We 
believe that this backward step will not accelerate hydropower 
development. Rather, our experience has shown us that attempts to 
shortcut or sidestep environmental review typically result in delayed 
projects.
    Successfully advancing the development of new energy resources, 
like conduit hydropower, requires us to do better than we have done 
with other forms of energy and other Bureau of Reclamation projects. 
While we do not oppose the development of conduit hydropower, it must 
be done responsibly and under all of the appropriate reviews necessary 
to make sure that such development is consistent with the public 
interest; a guarantee that NEPA provides.
    Therefore we respectfully urge you to vote NO on H.R. 678 unless 
the language requiring a NEPA waiver is struck from the bill.
                                                    April 23, 2013.

    The undersigned organizations, on behalf of our millions of members 
and supporters are writing to express our strong opposition to the 
provision in S. 306 that waives the National Environmental Policy Act 
(NEPA) with respect to small conduit hydropower projects at Bureau of 
Reclamation facilities.
    While we support the legislation's intent to encourage the 
responsible development of low impact, conduit hydropower projects, 
waiving NEPA reviews for Bureau of Reclamation projects is 
unacceptable. Since this bill was considered last year, the Bureau of 
Reclamation applied a categorical exclusion (CE) under NEPA as a part 
of its final Directives & Standards for Lease of Power Privilege 
process--thus making the proposed waiver completely unnecessary. We 
would also like to note that, critically, application of CEs require a 
consideration of whether any extraordinary circumstances warrant 
further environmental review. The proposed waiver would eliminate such 
vital consideration. The National Environmental Policy Act is not a 
roadblock to the successful approval of conduit hydropower projects at 
Bureau facilities. We believe that this backward step will not 
accelerate hydropower development. Rather, our experience has shown us 
that attempts to shortcut or sidestep environmental review typically 
result in delayed projects.
    Successfully advancing the development of new energy resources, 
like conduit hydropower, requires us to do better than we have done 
with other forms of energy and other Bureau of Reclamation projects. 
While we do not oppose the development of conduit hydropower, it must 
be done responsibly and under all of the appropriate reviews necessary 
to make sure that such development is consistent with the public 
interest; a guarantee that NEPA provides.
    Therefore we respectfully urge you to vote NO on S. 306 unless the 
language requiring a NEPA waiver is struck from the bill.
            Sincerely,
                    American Rivers * Buffalo Field Campaign * Center 
                            for Biological Diversity Defenders of 
                            Wildlife * Earthjustice * Great Old Broads 
                            for Wilderness * Grand Canyon Trust * 
                            Klamath Forest Alliance * The Lands Council 
                            Natural Resources Defense Council * Sierra 
                            Club * The Wilderness Society.
                                 ______
                                 
  Statement of Robert S. Lynch, Robert S. Lynch & Associates, on H.R. 
                    267, H.R. 678, S. 306 and S. 545
    Chairman Wyden, Ranking Member Murkowski, Members of the Committee, 
thank you for having this early hearing on H.R. 267, H.R. 678, S. 306 
and S. 545. One of our clients is the Irrigation & Electrical 
Districts' Association of Arizona (IEDA), a voluntary association 
organized in 1962 to represent the interests of irrigation, electrical 
and other special districts, rural communities and other public 
entities in the acquisition and use of federal hydropower and water 
from Reclamation projects. The Association marked its 50th anniversary 
on December 14, 2012. Its 25 members and associate members manage water 
systems and supply electricity, much of both originating from or on the 
Colorado River. I am pleased to present this Statement supporting these 
four (4) bills, which will authorize and promote hydropower development 
at all water conduit facilities and streamline the processes for 
development of such hydropower generators not only throughout the 
Reclamation West but throughout the country. We supported and testified 
in favor of these bills' House predecessors in the last Congress and we 
supported and testified in favor of these House bills again this year. 
We are pleased to offer you our views on these four excellent bills for 
your consideration.
    Over the last century and more, Arizona has developed irrigated 
agriculture, both in central Arizona and along the Colorado River. We 
have developed systems of canals and laterals which now serve both 
irrigated agriculture and municipal and industrial water users. Much of 
these canal systems are Reclamation project systems built over the 
years as successive projects were authorized by Congress. A number of 
the distribution systems were built or have been acquired by the 
Districts receiving project water. The water that flows in these 
systems contains energy. Indeed, the water would not flow if it did 
not. That energy is largely unused as the water courses through these 
systems until it reaches its ultimate destination and stops moving. The 
energy is dissipated at that point. Lost.
    Recent improvements and innovations in the development of small 
hydropower generating turbines have made the idea of installing 
multiple small turbines in these systems a potentially attractive 
source of electric energy. This technical advance comes at a time when 
our electricity providers are scrambling to find alternatives to fossil 
fuel generation, developing conservation and demand side management 
programs and otherwise trying to make existing electric resources go 
farther. Indeed, the Department of Energy released just today an 
assessment extolling the virtues of increased hydropower production in 
the United States.
    Our members would very much like to be part of this effort and 
participate in a new widespread small hydropower installation program. 
With these bills, that program could be implemented throughout the West 
and indeed everywhere water is flowing in the various conduits that 
water providers are using.
    One key to making this happen is to reduce bureaucratic process, 
and its associated costs, to make small hydropower installation 
economically attractive in the same fashion as it has become 
technically attractive. Since the Bureau of Reclamation holds title to 
so many of these facilities in the West, we and others in the Western 
Reclamation states have been working with the Bureau of Reclamation to 
try to reduce costs and paperwork toward that end. Some of the hurdles 
we identified along the way needed to be addressed by Congress; hence, 
H.R. 678 and S. 306.
    At the same time, colleagues were negotiating concepts introduced 
to streamline processes of the Federal Energy Regulatory Commission 
(FERC), leading to passage of H.R. 267 and introduction of S. 545.
    These four bills provide simplified paths for the development of 
small hydropower facilities in existing conduit. H.R. 678 and S. 306 
additionally recognize the primacy of water delivery as a Reclamation 
mission. They recognize the position that Reclamation law has always 
historically given to irrigation districts and water users' 
associations as operators and water distributors. They also answer 
questions that Reclamation officials have been debating. They give 
those of us in the Reclamation West a clear incentive to begin working 
aggressively toward using flowing water in these conduits for electric 
generation instead of having to let that energy go to waste.
    At the same time, we have been working with Reclamation to develop 
environmental and permitting guidelines that would complement the 
direction Congress, we hope, will give the agency on this subject. 
However, Reclamation's reaction to this legislation has not been as 
helpful as we would have hoped for. Indeed, the Directives and 
Standards document that Reclamation produced last fall appears to us to 
complicate rather than simplify the process. We are attaching the 
comments that we made on the Interim Directives and Standards to give 
you an idea of the problems we have identified in them. These comments 
include a two-page timeline we tried to piece together because the 
Interim Directives and Standards addressed who does what rather than 
giving us a path and a timeline. That has not changed. Just as 
importantly, the final Directives and Standards still leave us with a 
plethora of questions.
    Now, Reclamation has established a website, perhaps in reaction to 
our and others' comments. Ostensibly, this website will make things 
easier for applicants. The website's 5-page summary is accompanied by 
73 pages of attachments and three pages of flow charts illustrating the 
various paths this process can follow. I have attached the flowcharts. 
As we lawyers say, ``Res ipsa loquitur'' (the thing speaks for itself).
    In sum, we strongly support H.R. 678 and S. 306. We also strongly 
support H.R. 267 and S. 545, which will give our distribution system 
owners a streamlined FERC process to follow for their conduits. We hope 
the Committee will mark and report these bills as soon as possible. The 
House amendments to H.R. 678 addressed any remaining real issues. There 
is an enormous amount of energy being wasted every day as water flows 
through these conduits to their ultimate destinations. We now have the 
technology to capture a great deal of that energy in small increments 
which collectively can provide an enormous resource for the West. This 
clean, renewable hydropower is waiting for us to use it. We need your 
help. H.R. 678, S. 306, H.R. 267 and S. 545 are a big step forward 
toward that end.
    Thank you for the opportunity to present this Statement to the 
Committee. We would be happy to answer any questions or provide any 
additional information that the Committee might desire as it 
deliberates over this important and very much needed legislation.
                               Attachment
  Irrigation & Electrical Districts Association of Arizona,
                                         Phoenix, AZ, June 4, 2012.
Mr. Michael Pulskamp,
Bureau of Reclamation, P.O. Box 25007, Denver Federal Center, Denver, 
        CO.
    Re: Comments on the Temporary Directive & Standard for Lease of 
Power Privilege requirements, Reclamation Memorandum dated April 4, 
2012

    Dear Mr. Pulskamp:

    The Irrigation & Electrical Districts' Association of Arizona is an 
Arizona non-profit association celebrating its 50th year of service to 
the State of Arizona. Our 25 Members and Associate Members take power 
and water from federal facilities on the Colorado River either directly 
or, in case of Hoover power, through the Arizona Power Authority, and 
in case of Colorado River water in central Arizona, the Central Arizona 
Water Conservation District, one of our Associate Members.
    A number of our members operate federal water facilities and others 
built or acquired water facilities from the federal government. One of 
our members has already gone through the painful process under Section 
30 of the Federal Power Act in dealing with the Federal Energy 
Regulatory Commission. Others would like to go through a sensible and 
streamlined process with the Bureau of Reclamation to install small 
hydropower units in existing water facilities whose water energy is 
currently being wasted. With this interest in mind, we offer the 
following comments on the April 4th Temporary Directive & Standard and 
appreciate the opportunity to do so.
                               timelines
    The Temporary Directive & Standard (D&S) is structured along lines 
of responsibility by various officials within the Bureau of 
Reclamation. As such, it is very difficult to get a sense of when 
things are supposed to happen and what timelines exist for seeing to it 
that they do. A number of the tasks assigned to various people are not 
identified as being associated with any particular timeline and the 
timelines that are stated in the D&S. For that reason, we have 
attempted to create a timeline that would show a potential applicant 
the path it would have to take between expressing a ``formal request'' 
to Reclamation and actually having an operating electrical device. Our 
timeline is attached. It contains a number of question marks that 
indicate that the timeframe and positioning of that particular task was 
not identified. In our view, it is this very sort of checklist that 
potential applicants need up front in order to understand what they are 
getting into, what the requirements are and when they occur. We think 
Reclamation should consider developing such a timeline and going one 
step further by identifying the as yet un-timelined tasks as either 
fitting within a timeline already identified or one you assign in order 
to properly gauge the sequence and timing of events.
                             other comments
    For ease of reference, we will now provide other comments to you in 
the order in which they relate to the Temporary D&S.
Applicability
    We do not understand the reference to Reclamation ``development 
authority''. Does that mean that there is a specific authorized feature 
of a project that Reclamation has not developed and is therefore off 
limits to an applicant? Currently Reclamation only has jurisdiction 
over its facilities that are part of a project authorization that 
includes power development. One could read this paragraph as saying 
that any proposed application where Reclamation has jurisdiction could 
be denied on the basis of Reclamation deciding to do itself. We doubt 
that was the intent but this divergent point of who does what needs 
clarifying. No one wants to go through a process or begin to go through 
a process only to find out that the agency has decided to do it itself.
Definitions
    We do not understand the meaning of the phrase ``conveyance of 
water over or through a dam, its abutments, or foundation via existing 
or proposed conveyance features.'' This is an addition to the 
definition of conduit that has been used in pending federal legislation 
and is very close to the definition used by the Federal Energy 
Regulatory Commission (FERC). Are there existing conveyance features 
that convey water over or through a dam, its abutments, or foundation? 
We are not familiar with such facilities but knowing what is already 
out there may make it easier for us to understand why this addition is 
important and necessary.
    We do not understand why gross revenue would be something that 
includes renewable energy certificates (RECs). If one of your water 
districts or water users associations or someone else is going to spend 
money, go through this process and essentially do all the work and pay 
Reclamation for its oversight, why would gross revenue be the parameter 
for deciding the fee and most especially why would it also include the 
REC. Reclamation has done absolutely nothing except allow a portion of 
one of its facilities to be utilized at someone else's total expense to 
generate electricity. The portion of the facility used will most likely 
be very small in comparison to the overall project of which the site is 
a part. In a shopping center lease, the triple net lease would be based 
on gross revenue of whatever store is occupying that particular space 
but not on its tax breaks. Moreover, for small projects, say 5 
megawatts or below, the paperwork to keep track of these calculations 
and collections would be more expensive than the revenue that would be 
created. We think the basis for charging needs to be rethought. All of 
the comments we have seen show that everyone wants the new facilities 
owner or benefactor to pay a fair share of project obligations. To the 
best of our knowledge, there has been no real public debate over how 
one would calculate that. Nor has there been any debate over what 
concepts should be used for the very smallest of facilities that should 
not have to go through the entire process. In short, a one-size-fits-
all rate structure will only inhibit the development of additional 
hydropower in Reclamation facilities in our view. We think this process 
needs work.
Formal Request
    This term first appears in subparagraph 5.A(3) on page 4. There is 
no discussion within the document about what constitutes a formal 
request, what paperwork is required for such a request and whether or 
not there is any information requirement that precedes it. Yet it is 
the precipitating event of the process, initiating everything that 
follows. We presume without knowing that receiving a formal request 
will initiate the process within Reclamation to decide whether or not 
Reclamation will turn the requester aside and develop the site in 
question. Certainly Reclamation would make that decision early and not 
let an applicant spend a lot of time and money before shutting them 
out. That Reclamation decision should have a timeline of its own in 
order to ensure an applicant that it will not get played.
Requests for Extension of Time
    This first appears in subparagraph 5.A(9) and appears to only apply 
to timeframes outlined in the Lease of Power Privilege (LOPP). 
Reclamation does intend to consider extension requests for an entity 
holding a Preliminary Lease. See Section 8. That reference should be 
included here.
Public Safety
    In paragraph 5.C, the responsibility of the Chief of the Dam Safety 
Office is outlined but that individual's role in the timeline is 
nowhere to be found. The subject matter is brought up in a number of 
places but not with regard to the role this individual plays in 
executing the timeline.
Notifications
    The appropriate Regional Power Manager or Area Office Manager is 
responsible for ensuring the publication of solicitations for 
applicants for a LOPP, apparently after being notified of the receipt 
of a ``formal request'' and a ``formal determination of jurisdiction 
(5.A(3)). The 3 following responsibilities are all intended to precede 
that event. The list appears to have been created backwards rather than 
forwards. Just as importan