    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

            QUADRENNIAL ENERGY REVIEW AND RELATED DISCUSSION DRAFTS

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

                                    HEARING

                                   BEFORE THE

                        SUBCOMMITTEE ON ENERGY AND POWER

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  JUNE 2, 2015

                                   __________

                               Serial No. 114-47

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Printed for the use of the Committee on Energy and Commerce
                            energycommerce.house.gov
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                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman
    JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
      Chairman Emeritus                    Ranking Member
    ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
    JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
    JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
    GREG WALDEN, Oregon                  GENE GREEN, Texas
    TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
    MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
    MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
      Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
    STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
    ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
    CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
    GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
    LEONARD LANCE, New Jersey            JERRY McNERNEY, California
    BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
    PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
    DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
    MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
    ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
    H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
    GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
    BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III,
    BILLY LONG, Missouri                     Massachusetts
    RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
    LARRY BUCSHON, Indiana
    BILL FLORES, Texas
    SUSAN W. BROOKS, Indiana
    MARKWAYNE MULLIN, Oklahoma
    RICHARD HUDSON, North Carolina
    CHRIS COLLINS, New York
    KEVIN CRAMER, North Dakota
                        Subcommittee on Energy and Power

                             ED WHITFIELD, Kentucky
                                     Chairman
    PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
      Vice Chairman                        Ranking Member
    JOHN SHIMKUS, Illinois               JERRY McNERNEY, California
    JOSEPH R. PITTS, Pennsylvania        PAUL TONKO, New York
    ROBERT E. LATTA, Ohio                ELIOT L. ENGEL, New York
    GREGG HARPER, Vice Chairman          GENE GREEN, Texas
    DAVID B. McKINLEY, West Virginia     LOIS CAPPS, California
    MIKE POMPEO, Kansas                  MICHAEL F. DOYLE, Pennsylvania
    ADAM KINZINGER, Illinois             KATHY CASTOR, Florida
    H. MORGAN GRIFFITH, Virginia         JOHN P. SARBANES, Maryland
    BILL JOHNSON, Ohio                   PETER WELCH, Vermont
    BILLY LONG, Missouri                 JOHN A. YARMUTH, Kentucky
    RENEE L. ELLMERS, North Carolina     DAVID LOEBSACK, Iowa
    BILL FLORES, Texas                   FRANK PALLONE, Jr., New Jersey (ex
    MARKWAYNE MULLIN, Oklahoma               officio)
    RICHARD HUDSON, North Carolina
    JOE BARTON, Texas
    FRED UPTON, Michigan (ex officio)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Ed Whitfield, a Representative in Congress from the
      Commonwealth of Kentucky, opening statement....................     1
        Prepared statement...........................................     2
    Hon. Bobby L. Rush, a Representative in Congress from the State
      of Illinois, opening statement.................................     3
    Hon. Fred Upton, a Representative in Congress from the State of
      Michigan, opening statement....................................     4
        Prepared statement...........................................     6
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................     7

                                   Witnesses

    Ernest Moniz, Secretary, Department of Energy....................     8
        Prepared statement...........................................    11
        Answers to submitted questions...............................   139
    Rudolf Dolzer, Advisory Board Member, Association of
      International Petroleum Negotiators, and Professor of
      International Law, University of Bonn..........................    59
        Prepared statement...........................................    61
    Jason Grumet, President, Bipartisan Policy Center................    66
        Prepared statement...........................................    68
    Scott Martin, Commissioner, Lancaster County, Pennsylvania.......    77
        Prepared statement...........................................    80
    Gerald Kepes, Vice President, Upstream Research and Consulting,
      IHS............................................................    88
        Prepared statement...........................................    90
        Answers to submitted questions...............................   162
    Alison Cassady, Director of Domestic Energy Policy, Center for
      American Progress..............................................    97
        Prepared statement...........................................    99
        Answers to submitted questions...............................   167
    Emily Hammond, Professor of Law, George Washington University Law
      School.........................................................   112
        Prepared statement...........................................   114

                               Submitted Material

    Statement of The Canadian Electricity Association................   127

            QUADRENNIAL ENERGY REVIEW AND RELATED DISCUSSION DRAFTS

                                  ----------

                             TUESDAY, JUNE 2, 2015

                      House of Representatives,
                      Subcommittee on Energy and Power,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:04 a.m., in
    room 2123 of the Rayburn House Office Building, Hon. Ed
    Whitfield (chairman of the subcommittee) presiding.
        Members present: Representatives Whitfield, Olson, Barton,
    Shimkus, Pitts, Latta, Harper, McKinley, Pompeo, Kinzinger,
    Griffith, Johnson, Long, Ellmers, Flores, Mullin, Upton (ex
    officio), Rush, McNerney, Engel, Green, Capps, Castor, Welch,
    Loebsack, and Pallone (ex officio).
        Also present: Representative Cramer.
        Staff present: Nick Abraham, Legislative Associate, Energy
    and Power; Gary Andres, Staff Director; Will Batson,
    Legislative Clerk; Sean Bonyun, Communications Director;
    Leighton Brown, Press Assistant; Allison Busbee, Policy
    Coordinator, Energy and Power; Karen Christian, General
    Counsel; Patrick Currier, Counsel, Energy and Power; Graham
    Dufault, Counsel, Commerce, Manufacturing, and Trade; Tom
    Hassenboehler, Chief Counsel, Energy and Power; Peter Spencer,
    Professional Staff Member, Oversight; Dan Schrieder, Press
    Secretary; Jeff Carroll, Democratic Staff Director; Caitlin
    Haberman, Democratic Professional Staff Member; Ashley Jones,
    Democratic Director, Outreach and Member Services; Rick
    Kessler, Democratic Senior Advisor and Staff Director, Energy
    and Environment; John Marshall, Democratic Policy Coordinator;
    and Tim Robinson, Democratic Chief Counsel.

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

        Mr. Whitfield. I would like to call the hearing to order
    this morning. The title today is the hearing on the Quadrennial
    Energy Review and Related Discussion Drafts, including Title
    III, Energy Diplomacy. We will have two panels of witnesses
    this morning. And, of course, on the first panel we have our
    Secretary of Energy, Mr. Moniz, who is no stranger to this
    committee or to Congress. So we appreciate him being with us
    very much, and look forward to his opening statement. And then
    we will have some questions relating to his testimony, as well
    as other issues.
        And at this time, I would like to recognize myself for 5
    minutes for an opening statement.
        Everyone is very much aware that this subcommittee and the
    Congress has been working on a bipartisan energy bill for
    several months now. Many people are even asking, not
    surprisingly, is there enough common ground between our efforts
    and the Obama Administration to enact meaningful energy
    legislation. And I do believe that this question was answered
    with a clear yes when the Department of Energy's first
    installment of its Quadrennial Energy Review was released last
    April. This detailed study focuses on the infrastructure
    implications of America's new energy boom, and many of its
    recommendations overlap with provisions of our draft energy
    bill.
        And so we are excited that Mr. Moniz is here today, so that
    we can explore the perspective of the Department of Energy as
    the country makes dramatic changes in its energy distribution,
    production, transmission system. We have a lot of
    infrastructure needs. We are focusing on the diplomatic
    diplomacy aspects of energy, which is becoming more and more
    important to our friends in the European Union, who find
    themselves reliant on natural gas coming from Russia. And so we
    have many opportunities in the United States to come forth with
    a good energy policy. And I think that most of the provisions
    that we are focused on in this energy bill, democrats and
    republicans agree that they need to be addressed, and one of
    the biggest is infrastructure needs, and trying to improve the
    permitting process, for an example.
        So I look forward to the testimony of all of our witnesses
    today. And we have a real opportunity here and we don't want to
    drop this ball, so we are getting close to the end of drafting
    this legislation, coming up with a final product, and we look
    forward to move it in a meaningful way.
        [The prepared statement of Mr. Whitfield follows:]

                    Prepared statement of Hon. Ed Whitfield

        This subcommittee has been working on our bipartisan energy
    bill for several months now, and many have asked whether
    there's enough common ground between our efforts and the Obama
    administration to enact meaningful energy legislation. I
    believe that this question was answered with a clear yes when
    the Department of Energy's first installment of its Quadrennial
    Energy Review (QER) was released last April. This detailed
    study focuses on the infrastructure implications of America's
    new energy boom, and many of its recommendations overlap with
    provisions in our draft energy bill. I welcome Secretary Moniz
    this morning to discuss the QER and look forward to his input
    which is always valued by this subcommittee.
        Since the 1970s, Congress has developed an energy policy
    based on assumptions of declining American energy output and
    increasing import dependence. But that came before the dramatic
    turnaround in oil and natural gas production over the past
    decade, and now we are beginning the task of adjusting our
    energy policy to reflect this new reality. Both the QER and our
    energy bill are largely based on the need to update
    Washington's outdated approach.
        First and foremost, America's energy boom is necessitating
    an infrastructure boom. We need more pipelines and storage
    facilities and all the other elements of the infrastructure for
    oil and natural gas. We also need more electric transmission
    lines and upgrades to the existing infrastructure to ensure
    that our electricity supply is sufficient, reliable, and secure
    against outside attacks.
        Unfortunately, energy infrastructure faces a host of
    permitting delays and other red tape. These impediments may
    have been tolerable in the past when relatively little new
    infrastructure was needed, but now they are holding back the
    full benefits of the energy boom. Both the QER and energy bill
    contain a number of measures addressing infrastructure
    permitting, and both are careful to do so while maintaining
    existing environmental and safety standards.
        The energy boom and the resulting need for infrastructure
    is a good kind of problem to have, because solving it creates
    jobs. However, DOE's existing job training programs don't fully
    reflect the consequences of our changing energy sector, and
    don't focus on the skills currently in demand. The QER contains
    recommendations for updating these programs that are similar to
    the workforce training title in our energy bill authored by Mr.
    Rush.
        The energy growth in the U.S. and across North America also
    necessitates a new approach towards energy geopolitics. The QER
    emphasizes the need for integration of energy infrastructure
    and increased cooperation with Canada and Mexico. We concur
    that a fully integrated North American energy system would
    benefit the U.S. as well as its neighbors. Our recently-
    released energy diplomacy discussion draft contains several
    provisions to advance this continent-wide approach and to
    ensure that energy policy decisions take energy security
    considerations into account.
        Beyond North America, we also see the U.S. playing a more
    prominent role in global energy markets. Doing so can help our
    allies and trading partners around the world, weaken the
    position of our energy-exporting adversaries, and add more jobs
    by expanding the market for American energy. The discussion
    draft contains several ideas to enhance America's energy
    standing in the world. This includes the first-ever provisions
    to coordinate with our allies on energy security issues as well
    as provisions to eliminate needless delays in the approval of
    LNG export facilities.
        I would also add that both the QER and the energy bill
    consider ways to update the Strategic Petroleum Reserve to more
    closely fit the energy security challenges of 2015 and beyond.
        Certainly there are also areas of disagreement, and I am
    sure Dr. Moniz will let us know about them. Nonetheless, I
    believe we can put our differences aside and agree on a range
    of energy reforms that will benefit the American people for
    decades to come.

        Mr. Whitfield. And at this time, I would like to recognize
    the gentleman from Illinois, Mr. Rush, for his opening
    statement.

     OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Rush. I want to thank you, Mr. Chairman, for holding
    this important hearing today on the QER, and--as well as on a
    variety of other energy issues covered in the discussion draft.
        Mr. Chairman, let me first begin by welcoming the Honorable
    and distinguished Secretary of Energy, Mr. Moniz, here to the
    subcommittee today. Welcome, Mr. Secretary. Mr. Secretary, let
    me commend you for the outstanding work you have been involved
    in on a myriad of different issues, all important to the
    American people. Mr. Chairman--Mr. Secretary, you might not
    accept this, you might not--you might think that this is a--not
    something that you see, but in my mind and in the mind of a
    number of my constituents, you are indeed a superstar
    Secretary. We are proud of your work on behalf of our Nation.
    Mr. Secretary, from your leadership in the historic nuclear
    talks with Iran, to establishing the much-needed Minorities and
    Energy Initiative at DOE, to overseeing the development of the
    comprehensive QER, are among your more important
    accomplishments. And I have no doubt that you will go down as
    one of the most significant and effective Energy Secretaries of
    modern time. You see, I am a fan, Mr. Secretary.
        Mr. Secretary, as you may be aware, I have a bill that I
    will soon be introducing that will amend the Department of
    Energy Organization Act to replace the current requirement for
    a biannual energy policy plan with a quadrennial energy review.
    It is my hope that this bill, like its Senate counterpart that
    was recently introduced by Secretary Coons of Delaware and
    Senator Alexander of Tennessee, will attract bipartisan
    support. In fact, Mr. Secretary, I have held off on introducing
    the bill as of yet so that my office can continue to hold talks
    with the majority side in order to find language that both
    sides can agree on. And, Mr. Chairman, I will continue to reach
    across the aisle for support on this nonpartisan issue of
    codifying a quadrennial energy review, and I hope that we can
    find common ground.
        Mr. Chairman, the QER addresses many areas that are also
    covered in the discussion draft of the Comprehensive Energy
    Bill we have all been working on. Issues such as increasing the
    resilience, reliability, and safety of the grid are discussed
    in both packages. Additionally, there are many similarities in
    both the QER and in the discussion draft regarding integrating
    North American energy markets, modernizing the grid, and
    enhancing employment and workforce training. However, Mr.
    Chairman, there is still much work to be done in bridging the
    gap in areas where there are some disagreements, such as in
    signing and permitting and addressing the environmental aspect
    of transportation--or transmission rather, storage, and
    distribution infrastructure. Specifically, in the discussion
    draft before us today, I have some concerns regarding the
    cross-border approval process described in Section 3104. In
    this section, the burden is shifted away from farming companies
    and onto agency officials to issue so-called certificates of
    crossing, unless the official finds the project, and I quote,
    ``is not in the public interests of the United States.''
        Another concern that I have, Mr. Chairman, is in Section
    3102, which sets up an interagency taskforce to evaluate North
    American energy flows. However, the task is noticeably missing
    representatives from either the Council of Environmental
    Quality, the Environmental Protection Agency, as well as the
    Departments of Interior or Transportation, among others who may
    weigh in on environmental issues.
        Mr. Chairman, as we move forward with the goal of putting
    forth a truly bipartisan energy bill, it is my hope that the
    majority side will work with us to find common ground on most
    of these issues, and put precedence in doing the right thing
    above doing it quickly.
        Mr. Chairman, I thank you, and I yield back the balance of
    my time.
        Mr. Whitfield. Thank you, Mr. Rush, for that opening
    statement.
        At this time, I would like to recognize the chairman of the
    full committee, Mr. Upton, for 5 minutes.

       OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Upton. Well, thank you, Mr. Chairman. I just want to
    say in response to Mr. Rush's comments, I look forward to
    working with him and Mr. Pallone, and all of our members on
    both sides of the aisle, to do this right. And appreciate those
    kind words.
        We are delighted to welcome back Secretary Moniz to the
    committee to discuss the first installment of the Quadrennial
    Energy Review that focused on energy transport and
    infrastructure; something we need to do. America's energy
    picture is rapidly changing, and our laws and regulations need
    to change with it. Longstanding concerns about declining
    domestic energy output have been erased by rapidly rising oil
    and natural gas production. 2013 alone, according to the QER,
    the U.S. added 1.2 million barrels per day of production, a
    record increase by one country in 1 year. Domestic production
    of natural gas and related liquids has experienced equally
    dramatic increases. 2014, the U.S. became the world's number 1
    energy-producing nation, and it is time we start acting like
    it.
        Unfortunately, the scarcity mindset is still embedded in
    our national energy policy. Rising energy production requires
    more energy infrastructure; what I have called the architecture
    of abundance. Both the energy legislation and the QER include a
    number of ideas for upgrading and expanding the Nation's energy
    infrastructure. And in light of the recent pipeline spill in
    California, I would add that both aim to ensure that this new
    infrastructure is built with state-of-the-art technologies that
    reduce the environmental and safety risks. But our energy
    abundance can be more than just an economic success story; it
    can be--it, indeed, can be a foreign policy success story as
    well. And that is why recently released discussion draft of our
    energy diplomacy title is so important.
        This--the discussion draft builds on the extensive work
    done by this subcommittee on LNG exports. At numerous hearings
    over the last couple of years, we heard from many of our allies
    around the globe who said they would rather get their natural
    gas from us than the likes of Russia or Iran. That message was
    underscored last month when I led a high-level delegation to
    several of our European allies, including Ukraine, and we came
    away with a profound new understanding of just how vital these
    partnerships can be. In established parts of the EU, leaders
    are coming together to promote a unified energy market because
    of its potential for security, affordability, and innovation.
    In Ukraine, where the commitment to freedom and democracy is
    hard-fought each and every day, their energy aspirations are
    fundamental to their dreams for a peaceful future.
        While our discussion draft encourages North American energy
    cooperation and cross-border infrastructure, opportunities for
    energy diplomacy extend well beyond our own continent. For
    example, there is broad recognition that U.S. LNG exports will
    benefit the U.S. economy, our consumers, and yes, our allies.
    While the same could be said for oil exports, a statutory ban
    has prevented us from pursuing these benefits for the last 4
    decades. And it is time that Congress considers revising the
    ban on crude oil exports.
        As with natural gas, America now has enough oil production
    to make increased exports feasible, especially the lighter
    grades of crude that the QER notes have experienced the most
    rapid supply increases. Economic and foreign policy experts
    across the political spectrum believe that expanding the
    markets for American oil would be a net jobs creator at home,
    while enhancing our geopolitical influence abroad. And at the
    same time, reports from the GAO, CBO, and Energy Information
    Administration all point to reductions in the price of gas as a
    result of increased oil exports. In other words, oil exports
    can be a win for the American people and a win for our allies.
        The energy sector has been the Nation's most significant
    job creator in recent years, but with the drop in oil prices,
    as many as 100,000 energy industry positions have been lost.
    The case for creating more jobs by expanding the market for
    American oil is a key reason why oil exports should be on this
    committee's agenda this year. And while we are not currently
    considering any such provisions in this pending legislation, I
    do look forward to working with my good friend, Mr. Barton, and
    others on both sides of the aisle to ensure that we get the
    policy right.
        I yield back the balance of my time.
        [The prepared statement of Mr. Upton follows:]

                     Prepared statement of Hon. Fred Upton

        We are delighted to welcome back Secretary Moniz to the
    committee to discuss the first installment of the Quadrennial
    Energy Review that focused on energy transport and
    infrastructure. America's energy picture is rapidly changing,
    and our laws and regulations need to change with it.
        Longstanding concerns about declining domestic energy
    output have been erased by rapidly rising oil and natural gas
    production. In 2013 alone, according to the QER, the U.S. added
    1.23 million barrels per day of production, a record increase
    by one country in one year. Domestic production of natural gas
    and related liquids has experienced equally dramatic increases.
    In 2014, the U.S. became the world's number one energy-
    producing Nation--and it's time we start acting like it.
        Unfortunately, the scarcity mindset is still embedded in
    our national energy policy. Rising energy production requires
    more energy infrastructure--what I have called the Architecture
    of Abundance. Both the energy legislation and the QER include a
    number of ideas for upgrading and expanding the nation's energy
    infrastructure. And in light of the recent pipeline spill in
    California, I would add that both aim to ensure that this new
    infrastructure is built with state-of-the-art technologies that
    reduce the environmental and safety risks. But our energy
    abundance can be more than just an economic success story; it
    can be a foreign policy success story as well. That is why the
    recently released discussion draft of our energy diplomacy
    title is so important.
        The discussion draft builds on the extensive work done by
    this subcommittee on LNG exports. At numerous hearings over the
    last two years, we heard from many of our allies around the
    globe who said they would much rather get their natural gas
    from us than the likes of Russia or Iran. That message was
    underscored last month when I led a high-level delegation to
    several of our European allies, including Ukraine, and we came
    away with a profound new understanding of just how vital these
    partnerships can be. In established parts of the EU, leaders
    are coming together to promote a unified energy market because
    of its potential for security, affordability, and innovation.
    In Ukraine, where the commitment to freedom and democracy is
    hard-fought each and every day, their energy aspirations are
    fundamental to their dreams for a peaceful future.
        While our discussion draft encourages North American energy
    cooperation and cross-border infrastructure, opportunities for
    energy diplomacy extend well beyond our own continent. For
    example, there is broad recognition that U.S. LNG exports will
    benefit the U.S. economy, our consumers, and our allies. While
    the same could be said for oil exports, a statutory ban has
    prevented us from pursuing these benefits for the last four
    decades. It's time that Congress considers revising the ban on
    crude oil exports.
        As with natural gas, America now has enough oil production
    to make increased exports feasible, especially the lighter
    grades of crude that the QER notes have experienced the most
    rapid supply increases.
        Economic and foreign policy experts across the political
    spectrum believe that expanding the markets for American oil
    would be a net jobs creator at home while enhancing our
    geopolitical influence abroad. At the same time, reports from
    the GAO, CBO, and Energy Information Administration all point
    to reductions in the price of gasoline as a result of increased
    oil exports. In other words, oil exports can be a win for the
    American people and a win for our allies.
        The energy sector has been the nation's most significant
    jobs creator in recent years, but with the drop in oil prices
    as many as 100,000 energy industry positions have been lost.
    The case for creating more jobs by expanding the market for
    American oil is a key reason why oil exports should be on this
    Committee's agenda this year. And while we are not currently
    considering any such provisions in this pending legislation, I
    look forward to working with Mr. Barton and my colleagues on
    both sides of the aisle to ensure that we get the policy right.
    Thank you.

        Mr. Whitfield. Gentleman yields back.
        At this time, recognize the gentleman from New Jersey, Mr.
    Pallone, for 5 minutes.

    OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
                IN CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Pallone. Thank you, Chairman Whitfield and Ranking
    Member Rush.
        Let me begin by welcoming Secretary Moniz back to the
    committee, and congratulating you on completing the first
    installment of the Quadrennial Energy Review. It is a truly
    comprehensive look at our Nation's energy infrastructure, and
    its recommendations will help us chart a path forward in the
    rapidly changing energy sector.
        This installment relates to the transportation, storage,
    and distribution of energy. These TS&D connections between
    suppliers and users can impact our energy reliability and
    security, and affect our ability to meet environmental and
    economic goals. TS&D infrastructure is vulnerable to a wide and
    expanding array of threats from natural disasters to physical
    and cyberattacks, so it is important we thoroughly understand
    these vulnerabilities and how to mitigate their impacts. At the
    same time, its modernization can help achieve meaningful
    greenhouse gas reductions and other environmental goals, while
    enhancing safety, security, and reliability. Ultimately, the
    OER represents the forward-thinking we need to ensure a
    smarter, more resilient, cost-effective, and environmentally
    sound energy system for the future. And I look forward to
    working with you, Mr. Secretary, to translate these important
    ideas into legislation and law.
        I wish I could be as upbeat in discussing the majority's
    Energy Diplomacy Discussion Draft. Rather than building on the
    strong relationships with our North American neighbors, the
    majority has chosen to resurrect controversial legislative
    proposals that have already drawn democratic concerns and
    presidential veto threats. For example, the bill would
    eliminate the current presidential permitting process for
    liquid and gas pipelines, and electric transmission lines that
    cross the U.S. border with Mexico and Canada, and it replaces
    the process with one that effectively rubberstamps permit
    applications and eliminates any meaningful environmental
    review.
        While it now would only take effect after President Obama
    leaves office, and specifically excludes the Keystone Pipeline,
    it still appears to allow TransCanada to avail itself of the
    new process by reapplying with a revised route. The provision
    also limits federal approval and environmental review to the
    small segment of the project that physically crosses the
    national border. It also creates a rebuttal presumption that
    these projects are in the public interest; shifting the burden
    of proof to project opponents. This all but guarantees permit
    approval, and virtually eliminates the opportunity for
    protective permit conditions.
        The draft bill also recycles LNG export language designed
    to address nonexistent delays at the Department of Energy. In
    fact, DOE recently testified, that ``Right now, there are zero
    applicants sitting in front of us for a decision. The last
    application that came out of FERC, we turned that around in 1
    day.'' Nonetheless, the bill would make changes to an otherwise
    successful process.
        And finally, another provision would create a taskforce,
    burdening federal energy regulatory actions with additional red
    tape, and undermining environmental considerations. In fact, it
    speaks volumes that the very agencies tasked with natural
    resource and environmental management, like EPA and DOI, are
    excluded from the taskforce.
        So I hope this committee can start to work towards
    consensus legislation instead of resurrecting problematic
    issues of the past.
        But thank you, Mr. Chairman. I yield back.
        Mr. Whitfield. Gentleman yields back.
        That concludes the opening statements for today. And, Mr.
    Secretary, once again, thank you for joining us. We do look
    forward to your insights on these important issues. And I would
    like to recognize you for 5 minutes for your opening statement.

    STATEMENT OF HON. ERNEST MONIZ, SECRETARY, DEPARTMENT OF ENERGY

        Secretary Moniz. Well, thank you, Chairman Upton and
    Whitfield, and Ranking Members Pallone and Rush.
        Mr. Whitfield. I am not sure the microphone is on, but----
        Secretary Moniz. The light is--yes. OK. Start again.
        OK. Well, again, Chairman Upton and Whitfield, and Ranking
    Members Pallone and Rush, distinguished members of this
    subcommittee, thank you for the opportunity to be with you
    again today. And I really appreciate the leadership that this
    committee has shown in working towards comprehensive and
    bipartisan energy legislation that includes many of the topics
    in the QER first installment. I look forward to working with
    you to move these ideas forward, and really appreciate in the
    opening remarks the statements about common ground and the
    opportunities we have to work together.
        As was already stated, the U.S. has reaped enormous
    benefits from our energy revolution the last several years
    which, I point out, includes, of course, hydrocarbon
    production, but also dramatically increased renewables
    deployment to energy productivity gains. This revolution,
    however, has produced changes that are challenging our energy
    infrastructure. And to be direct, we need to modernize and
    transform our energy infrastructures and our shared commodity
    infrastructures. This will require major new investments, and
    we have to get it right.
        We should acknowledge that, while the choices we make and
    the decisions we take today and in the near future are
    critical, we also have to acknowledge that the choices and
    decisions that we fail to take in a timely way are very
    important for generating our infrastructure for the 21st
    century.
        To help guide these investment choices, the QER provides
    recommendations based on a 15-month, multiagency process that
    included 14 public meetings across the country, and
    consultations with Canada and Mexico. The QER focuses on TS&D,
    including the network of pipelines, wires, storage, waterways,
    railroads, and other facilities that form the backbone of our
    energy system.
        I ask the chairman's permission to submit the summary
    version of the QER into the record.
        The full QER is available online, and you have my written
    testimony, so let me just take the opportunity to highlight
    five crucial tasks that we need to take.
        First, our infrastructure and investments can and must
    serve energy security in a broader sense than the oil-centric
    focus of the last several decades. An example is found in the
    definition of energy security that the U.S. and our G7 allies
    developed after the Russian aggression in Ukraine that includes
    seven critical elements in a modern view of energy
    infrastructure. Supply diversification, for sure, but also
    transparent markets, greenhouse gas emissions reductions,
    enhanced efficiency, clean energy, infrastructure
    modernization, and emergency response. This doesn't mean that
    global oil disruptions are not a concern. Indeed, in the
    context of the QER and its recommendations, modernizing the
    SPRO both from a physical distribution standpoint, as well as
    the authorities for its use, is a major area of focus. Through
    its analysis of resilience and infrastructure modernization,
    the QER goes beyond global oil supply disruptions as the single
    focus of energy security policy, leading, for example, to
    recommendations related to regional fuel disruptions, as we
    have seen across the country. More coordinated state planning
    is also essential. And most notably, we feel that state
    planning grants to help states update and expand their
    emergency preparedness and security strategies and exercises to
    enhance electricity reliability, to accommodate several
    changing factors, are all critical. Other ways to improve
    energy security include programs to make our energy
    infrastructures more resilient to a range of hazards and
    vulnerabilities. These are addressed in part through the QER's
    recommendation for a pre-disaster hardening grant program,
    options for transformer reserves, and a systematic program to
    replace aging unsafe natural gas distribution pipes.
        Second, QER and its recommendations underscore the
    indispensable role of states. These really are test beds. We
    need to advance studies such as a new framework for evaluating
    energy services to help things like rate structure development.
        Third, the QER analysis showcases the importance and
    complexity of how our energy revolution challenges our shared
    transport infrastructures. Frankly, when we started the QER, we
    did not anticipate that we would end up with this as a major
    area of focus. However, the dramatic oil production increases
    in unconventional locations, coupled with things like the RFS
    and pending exports of natural gas, have placed strains on
    those transport infrastructures; rail, barge, locks, port
    facilities, and the like. The QER includes recommendations
    focused on innovative funding mechanisms for these
    infrastructures and, for example, recommends a program for port
    connectors being stressed by new energy supplies.
        Fourth, the QER recommends coordinated efforts for skills
    training, and recruitment of works to build and staff our
    modernized energy infrastructure system, and support jobs for
    working families. A national job-driven skills training system
    with rigorous curricular and standards that includes a special
    emphasis on training for veterans, on minorities and energy, is
    critical to our energy future. I might note that yesterday, 85
    minority interns started working at DOE for the summer. I also
    created the Job Strategy Council to look at how we can capture
    the energy sector opportunities that we have for new jobs.
        And finally, fifth, we need to acknowledge the critical
    federal role in incentivizing our energy infrastructure
    investments. While the bulk of the QER recommendations fall
    under this committee's jurisdiction, the Congress has other
    committees with equities in energy infrastructure, especially
    in shared infrastructure and North American energy integration.
        I would just note in closing that the Administration's most
    recent budget request includes a down payment for funding some
    of the QER's key recommendations at about half a billion
    dollars, however, in the current budget environment where
    sequestration has placed artificial caps on spending, DOE's
    programs and the shared infrastructure programs for the Corps
    of Engineers and others, frankly, placed these critical
    programs in competition with very restricted budget
    allocations. And so, for example, the House Appropriations mark
    does not meet our needs for energy infrastructure.
        In closing, Department of Energy and all the agencies that
    developed this report and its recommendations see great
    potential for benefit, and we look forward to working with this
    committee again to find bipartisan ways of advancing our TS&D
    infrastructure.
        Thank you, and I would be pleased to answer questions.
        [The prepared statement of Secretary Moniz follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Well, thank you, Secretary Moniz.
        And at this time, I will recognize myself for 5 minutes of
    statements and questions.
        We all recognize that the Clean Energy Plan has been at the
    very center of President Obama's initiatives, and I think
    everyone recognizes that the tension between the Obama
    Administration and republicans in the House and Senate, as well
    as elsewhere, has been--many of us feel that the President is
    moving so quickly through regulations without adequate
    communication with the legislative body, and while we all
    recognize the need for an all-of-the-above policy emphasizing
    clean energy, we look at Europe and we see how some policies
    over there in which countries like Germany have made decisions
    to eliminate nuclear energy, has created low wholesale prices,
    extremely high retail prices, and as a result, Europe has some
    real economic problems. So what we want to be sure about in
    America is, we made this mad rush for change, that we do so in
    a way that we can protect the reliability, the affordability,
    so that America can continue to be competitive in the global
    marketplace.
        Mr. McKinley, who left, was just telling me that in West
    Virginia, they have lost 45 percent of their coal jobs. And so
    this economic impact affects all of us, and that is why we are
    trying to move this energy bill. That is why the Quadrennial
    Energy Review is so important to look at all aspects of
    everything because everyone knows that we are fortunate, we
    have an abundant energy supply, natural gas particularly, and
    oil as well, but we have infrastructure needs. And it is very
    difficult to get permits, it takes years, and so as we are
    shutting down coal plants through regulatory orders, we don't
    always have the capability to get the energy product to where
    it needs to go. And so that is what this is all about.
        So one of the things I just wanted to ask you, you were
    talking about the development of this first installment was a
    colossal undertaking with at least 22 agencies involved and
    more than a year of work. And if this is the first installment
    of the QER, will there be a new installment each year for the
    next 3 years, and then the process will begin all over again?
    Is that what your understanding is? Yes, there you go.
        Secretary Moniz. I apologize. So this first installment,
    frankly, did take us a few more months than we had hoped. We
    are now in the process of working across the government to
    settle on the next installment. We would like to get something
    into your hands early next year again, and then again at the
    end of 2016.
        Mr. Whitfield. Yes. Now----
        Secretary Moniz. And clearly, this will be now expanding
    into the supply and demand ends of the energy sector.
        Mr. Whitfield. Yes. My time is already running out here. I
    want to focus on one issue--maybe because I was in the railroad
    industry, but railroads provide a vital transportation network
    for all sorts of commodities in America, and historically
    railroads have generated lots of income from moving coal. And
    the coal shipments have dropped dramatically, even though our
    coal exports are up, despite problems with trying to open up
    coal export facilities in Washington State. But many people are
    genuinely concerned about the financial viability of the
    railroad industry with this extreme reduction in coal
    transportation. Was that discussed in the quadrennial review
    process from your personal knowledge? Was there any discussion
    about that at all?
        Secretary Moniz. Yes, Mr. Chairman. Of course, the
    Department of Transportation would have prime responsibility in
    that area, but there were discussions because we did see in
    some cases, especially in the upper Midwest, some coal
    shortages for a while, but it was not because the trains
    weren't operating, they were just carrying other commodities
    which, my understanding, may have had a higher margin for them.
        So one of the initiatives that we have taken, and the DOE
    EIA is working with the Surface Transportation Board at DOT,
    first of all, to try to get more data and understanding of how
    commodities, including energy commodities are moving on the
    railroads, because it is coal, it is obviously oil, and ethanol
    competing, in a certain sense, with a whole variety of other
    commodities.
        Mr. Whitfield. Yes.
        Secretary Moniz. But I think more data and data
    transparency will be very important----
        Mr. Whitfield. Yes.
        Secretary Moniz [continuing]. For federal and state
    planning.
        Mr. Whitfield. Yes. Because we do have to have a strong
    financial railroad sector just because of the impact it has on
    our entire economy.
        So my time has expired. At this time, I would like to
    recognize Mr. Rush for 5 minutes.
        Mr. Rush. Thank you, Mr. Chairman.
        Mr. Secretary, as I asserted in my opening statement, I
    believe that you will go down as one of the most consequential
    Energy Secretaries of our time. And again, I want to commend
    you on your fine work and the initiatives that you have
    established during your tenure. And as you know, Mr. Secretary,
    when one attempts to change the culture and the practices of
    institutions that have been doing things a certain way for a
    long time, then inevitably there will be resistance and
    apprehension when those entities are asked to change. And it is
    with this in mind, Mr. Secretary, that I ask you to follow up
    with me to gage where we are with some of the initiatives that
    you and I have discussed before in the past. Specifically, I
    would like to discuss with you the issue of inclusiveness and
    outreach at the publicly funded national labs including, but
    not limited to, Argonne and Fermi in my state. And my office
    will be in touch with you to schedule a meeting for some time
    in the very near future between you and I. It is my opinion,
    Mr. Secretary, that they are--Argonne and Fermi specifically,
    are faking and fumbling on the issues of inclusiveness and
    outreach. It seems to me that they are trying to run out the
    clock on you and I. They are not seriously taking our requests
    and our initiatives and our discussion to heart.
        Mr. Secretary, on another issue, I would like to get your
    thoughts and feedback on the QER legislation that was
    introduced in the Senate. And I--as I said before, I will be
    offering a companion bill in the House soon. As you know, Mr.
    Secretary, this bill will simply amend the DOE Organizational
    Act to replace the current requirement for biannual energy
    processing plan with a quadrennial energy review. And can you
    give the subcommittee some feedback on this bill? From your
    understanding, would DOE take the lead in addressing a QER, and
    is there a need for legislation such as what I previously
    discussed?
        Secretary Moniz. Thank you, Mr. Rush. Yes, by the way, on
    the consequential issue, I hope they are positive consequences.
    And I might also at this point say that I think our energy
    policy and Systems Analysis Office did a heroic job in
    marshaling this huge QER forward.
        On your first question, and culture, et cetera, I might add
    that there is a wonderful expression by Peter Drucker, the
    famous management consultant, that culture eats strategy for
    breakfast. We can change rules but it is harder to change
    culture. But I think we are certainly making advances,
    certainly on the issue of minorities and energy, and if you
    know otherwise, I would like to discuss it with you because I
    do see enthusiasm going forward. Argonne, for example, one of
    their initiatives is in terms of making sure that minority
    businesses are quite aware of the opportunities for
    procurement. We also have, and Dot Harris has been a leader in
    our place-based initiative. So a good example is working, in
    this case, in southwest Louisiana with the enormous
    construction going on driven by natural gas, for training
    minorities to get some of those jobs. In terms of research
    collaborations, another example would be our Jefferson Lab,
    working closely with Hampton University. I mentioned the
    interns already. So we are going to keep pushing on all these
    fronts, and I want to work with you on that, and if you find
    problems, let me know because I will be sure to----
        Mr. Rush. I certainly will----
        Secretary Moniz. OK.
        Mr. Rush [continuing]. Mr. Secretary.
        Secretary Moniz. Thank you. Secondly, on the QER and the
    possibility of legislation, let me say that I certainly share
    the driver of this, which is that I think--and by the way, the
    initial reaction to the QER, including in this hearing, I think
    is--suggests that institutionalizing this could really be very
    important for continuing a bipartisan Administration-Congress
    discussion, so I am happy to work with both chambers in terms
    of how that might go forward. I would say that Department of
    Energy, in this first installment, clearly did provide kind of
    the analytical horsepower for it, but I do want to note that
    the Executive Office of the President also played a crucial
    role in being able to convene 22 agencies to come together to
    work on it. So anyway, we would be happy to discuss that
    further.
        Mr. Rush. Thank you.
        Mr. Whitfield. Gentleman's time has expired.
        At this time, recognize the gentleman from Michigan, Mr.
    Upton, for 5 minutes.
        Mr. Upton. Thanks again, Mr. Chairman.
        Mr. Secretary, in my opening I reaffirmed the desire of
    this committee to work with you and the Administration to find
    areas of mutual agreement on some QER legislative
    recommendations, and we look forward to that, and receiving
    technical assistance on some of the other sections of the bill
    as well.
        One of the areas that I wanted to zero-in on is SPRO this
    morning. As I note in your response to the committee yesterday,
    the SPRO was established in 1975 and it is the largest
    government petroleum reserve in the world. It has been used
    successfully on multiple occasions to respond to different
    types of energy supply disruptions. But it is now 2015 and
    global and domestic oil markets have changed significantly, we
    would all recognize that, and SPRO needs to be modernized.
        So as you know, the committee recently voted a--to drawn
    down a limited amount of SPRO oil to pay for our 21st Century
    Cures package beginning in 2018. And as you conduct the ongoing
    study to recommend the new size and role of SPRO going forward,
    would you support an additional change that would allow the
    President to draw down and sell surplus SPRO crude oil in order
    to use the funds to pay for operations and maintenance in line
    with the DOE budget request and potential modernization plans?
    In other words, using what we call mandatory savings to provide
    for the modernization and need improvements that really have to
    take place in the next number of years. And I would imagine
    that would be a pretty small draw down.
        Secretary Moniz. Mr. Chairman, well, first of all, as you
    know, I have some considerable concern about using the SPRO for
    anything other than energy security and resilience issues, for
    which it is intended. Now, first of all, I have to say, the
    issue of what is or might be called surplus, I think, is really
    part of the study going on because we understand that there are
    certain IEA requirements, but that may or may not be the metric
    for us to use. That is the first thing. Secondly, we did
    identify, of course, in the QER, excuse me, needs right now for
    modernizing the SPRO for--well, there are issues of
    maintenance, there are issues of modernization, and the
    particular issues of addressing distribution systems for
    getting SPRO oil onto water, in particular, in an emergency. We
    estimated that as $1 \1/2\ to $2 billion. That is part of the
    discussion with Congress, how to address that. Clearly, what
    you propose would be a case in which, if one were to do that,
    it would be being used, I would argue, for the energy security
    intent of the petroleum reserve.
        Mr. Upton. So as you know, the QER recommends more
    flexibility and anticipatory authority to initiate a SPRO
    drawdown. Do you envision a greater role for SPRO to moderate
    global prices?
        Secretary Moniz. The motivation for recommending somewhat
    greater anticipatory authority is not motivated by a desire to
    use the SPRO to manipulate oil prices. The issue is that the
    current anticipatory authorities are highly restrictive. Up to
    30 million barrels, and only if that keeps you above 500
    million barrels. So there are issues there, and we feel that
    should a larger drawdown be required, or if the SPRO were at
    500 million barrels, one shouldn't have to wait to see the
    consequences on consumers of a spike in global oil prices
    before one can act. So I think that is the spirit, as opposed
    to manipulating oil prices.
        Mr. Upton. So I would note, as the QER discusses, the last
    time SPRO had a major release in reaction to Libya was back in
    2011. Seems like yesterday, but it was 2011. Since then, the
    supply situation has greatly changed for sure, as demonstrated
    in the test sale this last year. If there is an interruption
    somewhere in the world that doesn't impact the supply to U.S.
    refiners, would it make any sense at all to export SPRO crude?
        Secretary Moniz. Well, once again, I would say that that
    should be part of the studies really, that are going on, but I
    might say that it is hard to see how a major global disruption
    would avoid impacting our imports, because again, we still
    import 7 million barrels a day, only because with a major
    disruption, even if that, let's say, country is not directly
    importing to us right now, there would probably be a
    redistribution of the market that would impact our imports. But
    nevertheless, hypothetically, if that were the case, I think
    there would still be an issue of putting SPRO out would have
    the effect of backing our imports that would then equilibrate
    in the global market. So we could discuss that further.
        Mr. Upton. My time has expired. Thank you very much for
    your appearance again today.
        Secretary Moniz. Yes.
        Mr. Whitfield. At this time, recognize the gentleman from
    New Jersey, Mr. Pallone, for 5 minutes.
        Mr. Pallone. Thank you, Mr. Chairman.
        Secretary, climate change, as you know, is real and we are
    already feeling its effects across the country. The damaging
    impacts range from heatwaves and droughts, to reduced crop
    yields and increased wildfires. Every region in the country and
    every part of the globe is affected. I am concerned about
    impacts of extreme weather events and sea level rise that are
    already problems that we have with our energy infrastructure.
    So my question is, the QER outlines a number of findings in
    this area, how is your energy transmission, storage, and
    distribution, or ETS&D infrastructure, vulnerable to the
    impacts of climate change?
        Secretary Moniz. Thank you Chairman Pallone. First of all,
    as the data in the QER show, we have been seeing increasing
    impacts, probably impacting the economy, at the order of $25
    billion a year on average over the last decade. And with rising
    sea level, the effects of storms, major tropical storms, for
    example, are amplified. So we feel it is very important now to
    address the hardening of these infrastructures, not only
    coastal, but coastal is one major issue, and that is why we
    recommend a joint set of initiatives. One is to provide energy
    assurance grants for states to do planning, and to provide a
    basis for the states to then compete for what we recommend as a
    several billion dollar opportunity for these hardening kinds of
    activities. I will give one example. It happens to be in New
    Jersey. It was not part of the recommendations here, but in New
    Jersey, there was the case where we cost-shared with the state,
    a study on implementation of a very significant micro grid to
    protect electrified transportation corridors. The state then
    used that study to compete for Sandy recovery money, and in
    fact, got several hundred million dollars to implement that.
    That is the kind of thing. Do these studies get technical
    assistance, and then have the opportunity to move forward with
    cost sharing major resiliency projects.
        Mr. Pallone. Well, I appreciate your mentioning our New
    Jersey grant because, obviously, we did have a lot of
    vulnerabilities during Super Storm Sandy. We saw a breakdown of
    the infrastructure and services, both electricity and water
    supply.
        But in terms of this competitive grant program that is
    going to promote innovative solutions for infrastructure
    resilience, reliability, security, just give me a little more
    information about how that program would work. I know you
    mentioned the New Jersey program, but what other kinds of
    projects would be eligible for those grants?
        Secretary Moniz. Well, it could be, again, any kind of
    project that hardens infrastructure. The electric grid has
    clearly shown vulnerability to storms. So it could be things
    like I mentioned with micro grids. It could be the use of
    advanced technologies. I could mention some things like
    synchrophasors that would allow system operators to respond
    much more quickly to something that is happening, to protect
    spreading of a blackout, for example. It could be in terms of
    fuels requirements. One of the recommendations that we have in
    there is to expand analyses of what different kinds of regional
    product reserves might do. Now, this is a case where, again, in
    the northeast and New Jersey----
        Mr. Pallone. Right.
        Secretary Moniz [continuing]. We have already moved there,
    but there are issues in California, there are issues in the
    southeast, there could be issues in the upper Midwest. And so
    we recommend that. And there could be opportunities there for
    new resiliency projects.
        Mr. Pallone. All right. Thanks a lot. I do want to applaud
    you for your efforts to strengthen these vulnerable and
    critical energy infrastructures, especially in the face of
    global climate change. So thanks again.
        Thank you, Mr. Chairman.
        Secretary Moniz. If I----
        Mr. Whitfield. At this time----
        Secretary Moniz. If I may, I might just add that this is an
    example of the importance of the broader view of energy
    security, including resilience of our infrastructure.
        Mr. Pallone. Yes, exactly. Thank you.
        Mr. Whitfield. Thank you. At this time, I will recognize
    the gentleman from Texas, Mr. Barton, for 5 minutes.
        Mr. Barton. Well, thank you, Mr. Chairman. And, Mr.
    Secretary, welcome back.
        Mr. Rush and you seem to have a mutual admiration society
    going. Superstar Energy Secretary. I wouldn't go----
        Mr. Rush. Don't get jealous.
        Mr. Barton. Say what?
        Mr. Rush. Do not get jealous.
        Mr. Barton. Do not get jealous? Well, I wouldn't go quite
    so far as superstar, but my daughter has a saying that she
    learned in college, when something is really cool, it is money.
    And it is money. When you say it is money, it means that, man,
    that is hot and it is cool and it is right on the bean. Well, I
    would say Moniz is money. So not superstar but money.
        Now, you know what I am going to----
        Secretary Moniz. I asked for this.
        Mr. Barton. I am going to give you a chance to show just
    how money you are. What do you think I am going to ask you
    right now?
        Secretary Moniz. I don't know but I am covering my wallet.
        Mr. Barton. You heard the chairman's opening statement. He
    talked about oil exports and, as you well know, Mr. Secretary,
    back in the '70s we had the Arab OPEC Embargo, and this
    committee and the Congress passed a lot of legislation to deal
    with that, most of which has been repealed. We had price
    controls on the wellhead natural gas prices, we had price
    controls on crude oil, we had even retail price controls on
    gasoline. We limited what natural gas could be used for. That
    has all been repealed. The only thing that hasn't been repealed
    is the ban on crude oil exports.
        Now, the U.S. is number one in the world in oil production;
    over 10 million barrels a day. World use is somewhere around
    94, 95 million barrels a day. Would you agree that if we were
    to let our domestic oil potentially be exported, that it would,
    at a minimum, keep prices from going up on world markets, and
    it is a possibility that the world oil price might go down?
    Would you agree with that?
        Secretary Moniz. I think the key issue, Mr. Barton, is
    whether or not in a country like ours, that still imports 7
    million barrels a day, the question would be whether that did
    or did not stimulate any appreciable additional production. And
    that would be the issue in terms of global price. Internally,
    there would be an issue as to how rents are shared between,
    say, refiners and producers, but in terms of the economy-wide,
    the real issue was whether there is more production, and
    certainly in today's market, it is hard to imagine that
    happening. Now, in a future market----
        Mr. Barton. I am not a Harvard economics professor----
        Secretary Moniz. Nor am I.
        Mr. Barton [continuing]. But I did go to graduate school,
    and if we want to talk about sharing of rents, our refiners are
    taking those rents and putting them in their pockets today.
    They are not sharing those with the retail consumers. If we let
    the producers have the option of putting that oil on the world
    market, the consumer in the United States could potentially
    benefit from the world price going down, and I think you will
    agree with me that retail gasoline prices are basically set
    based on the world price for crude. You will agree with that.
        Secretary Moniz. Absolutely, yes.
        Mr. Barton. So----
        Secretary Moniz. EIA has confirmed that.
        Mr. Barton. So I have a list here of studies where they
    have looked at what would happen to the price in the United
    States at retail for gasoline, and the Brookings Institute,
    NERA, Resource for the Future, Council on Foreign Relations,
    Bipartisan Policy Center, Baker Institute, Center for Global
    Energy Policy at Columbia University, Energy Policy Research
    Institute, Aspen Institute, Progressive Policy Institute, IHS
    Energy, ICF International Heritage Foundation, American Council
    for Capital Formation, Congressional Budget Office, Energy
    Information Administration, General Accounting Office, Federal
    Reserve Bank, have all concluded that if we allowed our oil to
    be exported, there would be no increase in the domestic price
    of--for gasoline, and in most cases it might go down. Now,
    those aren't oil company hacks; those are bipartisan usually, I
    would say, objective institutes. You have to be aware of some
    of those studies.
        Secretary Moniz. Well, yes. And again, I think they are all
    in agreement with the fundamentals that, again, the issue is
    whether or not such a move would lead to an increase of
    production of any appreciable magnitude. If it doesn't, then
    there is essentially no impact on price.
        Mr. Barton. Yes. My time has expired----
        Secretary Moniz. Yes.
        Mr. Barton [continuing]. But if you will send one of your
    crack aids to the Republican Study Committee Taskforce on
    Energy Seminar this afternoon, you will hear 4 or 5 experts all
    say that if we allow our oil to be exported, U.S. production
    will stabilize and probably go up.
        Secretary Moniz. Again, that is the key issue. We----
        Mr. Barton. Yes.
        Secretary Moniz. I think we all agree on the facts.
        Mr. Barton. OK. Thank you, Mr. Secretary. Thank you, Mr.
    Chairman.
        Mr. Whitfield. At this time, the chair recognizes the
    gentleman from California, Mr. McNerney, for 5 minutes.
        Mr. McNerney. Thank you, Mr. Chairman.
        Mr. Secretary, I do appreciate the big effort that went
    into producing this QER document. Nice work. The document does
    recommend legislation actions. Would you elaborate on 1 or 2 of
    the most urgent actions that would be required?
        Secretary Moniz. Well, certainly, I think one of the very
    important ones, as I already mentioned, is this issue of
    providing funding, particularly for states, to compete for good
    projects that will provide resiliency of infrastructure. I
    think that is a very important one. Another one is we recommend
    a fund that again would allow for competition for accelerating
    the modernization of natural gas distribution infrastructure
    for both environmental and safety reasons. Clearly, the Federal
    Government should not and cannot pay for what may be a quarter
    trillion dollar bill, but what we recommend is acceleration in
    which the Federal Government could help absorb any great
    increase for low income families. Those are two examples of the
    number.
        Mr. McNerney. Very good. One of the things that is
    discussed is the potential for energy storage and grid
    modernization, grid resilience. Do you think that there is a
    short-term potential for that energy storage to be useful in
    grid resilience and in lowering the cost and improving access
    for renewables and so on?
        Secretary Moniz. Yes. Well, in fact, we all know California
    is in the lead, as if often the case----
        Mr. McNerney. Right.
        Secretary Moniz [continuing]. In terms of storage. And
    clearly, except for the places geographically where pumped
    storage is available, we still need to bring down the costs of
    storage, but they are coming down. They could be a game changer
    in terms of large-scale, variable renewables, but also
    distributed storage at the household or commercial enterprise
    level could be another game changer, particularly in terms of
    distributed generation enablement.
        Mr. McNerney. Are we pretty close to having the technology
    available?
        Secretary Moniz. Well, the technology is available. It is
    the cost. And we probably need another factor of two to three
    reduction in the cost to make it wide-spread available.
        Mr. McNerney. Well, thank you. Do you feel that the
    regional grid reliability would be put at risk by the Clean
    Power Plan?
        Secretary Moniz. Well, we don't see any evidence in our
    analyses yet that this could not be managed in a pretty normal
    way. For example, we did a specific analysis in terms of the
    natural gas transmission infrastructure because of the issues
    raised in terms of dramatically expanding gas use in the power
    sector, and that found that while one would probably have some
    regional issues to develop, it was not like we needed a massive
    program because we actually have been building out that
    infrastructure pretty substantially for the last 15 years, and
    frankly, there is overcapacity. So we don't see that as, you
    know, as a particularly difficult issue.
        Mr. McNerney. What would be the best way to deal with the
    regional question then that you just referred to of grid
    reliability?
        Secretary Moniz. I think it would be just in the normal
    process. As the supply distribution is understood in that
    region, the companies would go through the usual FERC process
    for, let's say, interstate gas transmission pipes.
        Mr. McNerney. Well, there seems to be a patchwork of
    transmissions citing initiatives across federal agencies. The
    QER highlights a need to improve coordination between all the
    stakeholders for transmission-permitting processes. Do you
    believe that the Rapid Response Transmission Team has been
    effective, and should its role be expanded?
        Secretary Moniz. I believe that it is--what I would say is
    I think it has really gained traction. It has been--in my view,
    I will be honest, I think it is a little bit slow getting
    going, but I think now the whole pre-application
    standardization has kind of come into play, and I think that we
    do need to, in fact, keep up the pace and, if anything,
    strengthen it, yes.
        Mr. McNerney. OK, thank you.
        Mr. Chairman, I yield back.
        Mr. Whitfield. Gentleman yields back.
        At this time, recognize the gentleman from Texas, Mr.
    Olson, for 5 minutes.
        Mr. Olson. I thank the chair. And welcome, Secretary Moniz.
        My first question is about the Federal Power Act. Under
    Section 202(c), DOE, you, can order a power plant to stay
    running during a grid crisis. In following your order, the
    plant might squeak past their clean air permits. Unfairly, that
    plant can be fined and sued by others for doing so. One
    regulator says go, another says stop. That plant has to decide
    whether they want to acquiesce in a power shortage, maybe a
    brownout or blackout, or cut a check, breaking the permit for
    just a few days, maybe a few hours. I have a bipartisan bill
    with Representative Doyle and Green to fix this in the energy
    package we are working on. This is not about a company riding
    roughshod over environmental laws; we are talking about days or
    hours in a crisis.
        The other week, FERC and NERC endorsed our bill. Your
    predecessor, Secretary Chu, told me in this committee that he
    is ``very supportive'' of the idea. The bill has passed this
    committee three times now, and the whole House twice, in the
    112th and 113th Congress.
        And so my question to you is, can I count on your support
    in the 114th Congress, will you be very supportive of the bill
    like your predecessor?
        Secretary Moniz. And, Mr. Olson, thank you. You have asked
    me this question before, and let me say that the answer is
    basically yes. I know our DOE staff has worked with both sides
    on this, and I think we are quite comfortable with it. Thank
    you.
        Mr. Olson. Great, thank you for that clarification. As you
    know, my home State of Texas has half our southern border, over
    1,200 miles with our neighbor to the south, Mexico, and we know
    how important that relationship with Mexico is for our trade.
    Your QER points out that we trade tens of billions of dollars
    in energy each year with Mexico.
        Secretary Moniz. Sixty-five.
        Mr. Olson. Sixty-five. I like that even better. In fact,
    some of Texas' only power line connections outside of ERCOT
    come from our neighbor to the south, Mexico. You might recall
    that those lines prevented rolling blackouts and brownouts with
    crises in the fall--I am in sorry, in the early winter of 2011
    and August of that same year. My question is, we know this oil
    plays--we know that oil and gas--shale plays don't stop at the
    southern border. The new Administration in Mexico is reforming
    its energy economy, and I think those opportunities will expand
    in the future. Your QER on our energy package will address the
    topic North American energy. I believe better coordination and
    trade will be critical in the years ahead. My question is, can
    you please tell me what you see as the next major opportunities
    for North American energy and where that relationship is
    headed?
        Secretary Moniz. In particular, I would say actually last
    week, I spent four, I want to emphasize, workdays in Mexico
    with Western Hemisphere and other energy ministers. The energy
    reform in Mexico, I think, offers tremendous opportunities for
    us. Clearly, in the hydrocarbon sector. We know that. Our
    companies are going to Mexico in the current auctions, and are
    prepared to offer lots of technical assistance to get engaged
    in the shale plays as well. However, in discussions with
    Minister Joaquin, the Energy Minister of Mexico, he has
    emphasized something that I agree with, and that is that the
    reform of the electricity sector may actually offer
    qualitatively new opportunities because the reform, I think,
    will bring our systems of regulation, et cetera, and standards
    much more into alignment, as we have with Canada, where we have
    a completely integrated electricity system.
        So we are looking forward to that. It is going to be a
    major focus. We have both a bilateral working group that I
    chair on the American side with the--it is a multiagency group,
    with the Minister of Environment in Mexico, Minister Guerra.
    And then I also am one of the three chairs of Canada, U.S.
    Mexico trilateral energy ministers, and we are already well
    along into a trilateral data cooperation. And just last week,
    we have a release that went out, I would be happy to get it to
    you----
        Mr. Olson. Yes, thank you.
        Secretary Moniz [continuing]. Where the three of us
    announced that we are now going to expand the cooperation----
        Mr. Olson. Right.
        Secretary Moniz [continuing]. With a full agenda laid out,
    which will include things like emissions and hydrocarbon
    production, and energy infrastructure issues. So it is a very,
    very active----
        Mr. Olson. Thank you, sir. I am out of time. I want to
    extend an invitation to come down and see the work at MIT in
    your current position, the Petra Nova Project in Thompsons,
    Texas, the only viable carbon capture and ancillary recovery
    project in the whole world. Come down and see it. You will love
    it.
        I yield back.
        Mr. Whitfield. At this time, recognize the gentleman from
    Texas, Mr. Green, for 5 minutes.
        Mr. Green. Thank you, Mr. Chairman. Mr. Secretary, you will
    get an overdose of Texas.
        I see my colleague, Joe Barton, is not here, but I don't
    know if our members heard that his mom passed away last week,
    and----
        Secretary Moniz. Sorry.
        Mr. Green [continuing]. I just wanted to express regret to
    Joe.
        Mr. Secretary, welcome back. According to the DOE Web site,
    for projects that cross the U.S. international border, DOE must
    comply with NEPA requirements to consider environmental
    consequences of a proposed project. Mr. Secretary, are you
    familiar with that requirement?
        Secretary Moniz. Yes, yes.
        Mr. Green. When making cross-border decisions, does DOE
    adhere to NEPA regulations and guidelines set forth by the
    Council on Environmental Quality?
        Secretary Moniz. Yes.
        Mr. Green. Does this include cumulative indirect impacts?
        Secretary Moniz. I am sorry, Mr. Green----
        Mr. Green. Does that----
        Secretary Moniz [continuing]. Can you modify the question?
        Mr. Green. When making these decisions, does DOE adhere to
    NEPA regulations and guidelines set forth by CEQ, and you said
    yes, but does that analysis include cumulative and indirect
    impacts? Does the NEPA process include that?
        Secretary Moniz. I guess I am not quite sure if that is
    actually part of the NEPA process or not.
        Clearly, there are, in general, when we make public
    interest determinations, cumulative impacts are part of that.
        Mr. Green. OK. CEQ requires an environmental impact for
    major federal actions significantly affecting the quality of
    human environment. It is reasonable to conclude that DOE would
    require an environmental impact for a cross-border project, an
    EIS?
        Secretary Moniz. Absolutely. We always require an EIS, yes.
        Mr. Green. Would DOE consider approval of a cross-border
    project a major federal action? I am getting down to the
    whole----
        Secretary Moniz. Yes. Yes, all right.
        Mr. Green. CEQ has determined that NEPA applies to
    significant federal actions and can't be avoided by segmenting
    a project. So that means that a project coming across from
    Texas to Mexico, not just a cross-border crossing but the
    project itself, would DOE decision-making on cross-border
    segments of a cross-border project require compliance with
    NEPA?
        Secretary Moniz. Certainly. We always require, yes, NEPA
    compliance.
        Mr. Green. The discussion draft in the bill would eliminate
    the presidential permit process and grant cross-border
    decision-making to DOE for electric transmission facilities. If
    this draft would become law, the DOE will be charged with
    promulgating a rule to implement the granted decision-making.
    Is it reasonable to conclude that any DOE issues, new
    regulations, these regulations, would include NEPA requirements
    about a cross-border project?
        Secretary Moniz. Well, if I might take a step back. I think
    there are two principles that we would always insist upon. One
    is proper environmental review----
        Mr. Green. Yes.
        Secretary Moniz [continuing]. And secondly would be a
    judgment that this is in the public interest. I think those are
    the two basic principles.
        Mr. Green. OK. There is language in Section 3104 of the
    bill that would limit the department's ability to fully comply
    with NEPA requirements. Do you believe that that language is
    needed?
        Secretary Moniz. Well, again, clearly, I think we need to
    make sure that the environmental requirements are met. So if
    the proposal would curtail that, then obviously I would not
    support it.
        Mr. Green. OK. Are you familiar with what is called the
    federal NEPA small handle issues?
        Secretary Moniz. No, I am not.
        Mr. Green. OK. If federal small handle issues relate to how
    much federal control should be exercised over a private
    project, specifically whether a full NEPA review is required,
    when the federal agencies control only a small segment in an
    otherwise private project. Courts have determined if an
    otherwise private project cannot proceed without federal
    permits, then federal agencies are required to satisfy NEPA
    requirements.
        Mr. Secretary, is it possible for a cross-border project to
    proceed without a presidential permit under current law now?
        Secretary Moniz. I really had better check that with my
    general counsel.
        Mr. Green. OK.
        Secretary Moniz. I would have thought not, but I am----
        Mr. Green. Well, my concern is that we have been trying to
    set a standard in this bill and previous legislation on cross-
    border electric transmission, natural gas pipelines, and of
    course, crude oil pipelines. And in this case, the Department
    of Energy would have the authority over electric transmission--
    --
        Secretary Moniz. Wires.
        Mr. Green [continuing]. And whether Department of Energy
    would use the NEPA process to approve those cross-border----
        Secretary Moniz. Yes. Well, again, my assumption is that,
    again, the two principles are there. The environmental impact,
    which is the NEPA process, certainly for the part in the United
    States, and the determination of public interest. Those are the
    two requirements and the two principles that I would uphold.
        Mr. Green. Well, I am out of time, but I know DOE, if we
    pass this bill with this particular section in it----
        Secretary Moniz. Yes.
        Mr. Green [continuing]. Would have that authority, and I
    just wanted to see what the regulatory process would be with
    DOE.
        And I yield back, Mr. Chairman.
        Secretary Moniz. OK, and I would be happy to discuss that.
        Mr. Whitfield. The gentleman's time has expired, but are
    you saying that under 3104, our legislation would not require a
    NEPA review?
        Mr. Green. It does require a NEPA review.
        Mr. Whitfield. OK, because I----
        Mr. Green. And that is what I was wondering, because there
    has been some confusion on our legislation that we have done
    separately that NEPA review is not required----
        Mr. Whitfield. Yes.
        Mr. Green [continuing]. And I want to make sure folks
    understand that it is in this bill----
        Mr. Whitfield. It is required.
        Mr. Green [continuing]. It was in the previous bill we
    passed out of the House last session----
        Mr. Whitfield. Right.
        Mr. Green [continuing]. And on cross-border issues, not
    just for DOE.
        Secretary Moniz. OK.
        Mr. Green. Thank you, Mr. Chairman for clarifying.
        Mr. Whitfield. Thank you.
        At this time, I will recognize the gentleman from Illinois,
    Mr. Shimkus, for 5 minutes.
        Mr. Shimkus. Thank you, Mr. Chairman. Mr. Secretary,
    welcome.
        Your department really was developed and instituted based
    upon our nuclear heritage, as you know, and also is focused on
    our nuclear future, and then you have to deal with a lot of
    legacy issues. That is not really part of the hearing, but the
    introduction is just to let you know I appreciate the support I
    receive from your professionals down at Savannah River, which I
    visited yesterday, and the contractors there, and they took
    good care of me----
        Secretary Moniz. Great.
        Mr. Shimkus [continuing]. And I just want to put that on
    the record.
        Now to the QER. The QER devotes an entire chapter to
    improving North American energy integration, but makes no
    mention of issues belying cross-border presidential permitting
    in general, or the Keystone XL Pipeline in particular. It is
    kind of some of the questions I think Mr. Green was alluding
    to. Do you agree that the, and I quote, ``ad hoc or siloed
    permitting process'', as the QER puts it, creates significant
    uncertainty?
        Secretary Moniz. Yes, it certainly can in many cases, yes.
        Mr. Shimkus. Has the inability to render a decision on
    Keystone Pipeline impacted other energy projects in Canada? Do
    you know of----
        Secretary Moniz. I am not aware of it, but--yes.
        Mr. Shimkus. Yes. And can you check back with us?
    Obviously, there might be, otherwise I wouldn't be asking this
    question.
        Secretary Moniz. Well, only in the sense that, obviously, I
    have seen discussions about other pipelines to take out things
    east or west, for example, but----
        Mr. Shimkus. Right. I think the public as a whole, I don't
    think they really--sometimes I put up the transmission system
    on a map just to identify how many cross-border pipelines and
    transmission lines we already have, both north and south, and--
    --
        Secretary Moniz. Yes, I think it is like 74 pipelines or
    something.
        Mr. Shimkus. Right. And obviously, just curious, we have
    problems with one, and the debate is will we have problems with
    the future or has this uncertainty kind of slowed down the
    process.
        And so part of the legislation which the chairman is
    pointing to talks about this cross-border energy infrastructure
    language, in the committee's energy diplomacy discussion draft,
    would attempt to address unnecessary delays in the permitting
    of cross-border pipelines and transmission lines. Have you
    looked at this, and is there room for improvement when we are
    talking about pipelines or wires?
        Secretary Moniz. Well, obviously, as was already stated,
    the pipelines, as you know, are not in our jurisdiction, the
    wires are, and I think it is going pretty straightforwardly. I
    might add that just the projects discussed over the last 5
    years for new transmission lines would total about 5 gigawatts
    of additional capacity coming into the northeast.
        Mr. Shimkus. Yes, and we had a hearing just a week ago, I
    think, on really the natural gas desert of the New England
    States, we had the Governor of Maine here, which would address,
    obviously, pipeline infrastructure and probably cross-border
    also with them. I think a lot of people would kind of shake
    their head understanding that we still heat with fuel oil in
    some major states in our union, where access to natural gas
    pipelines might help them transition----
        Secretary Moniz. Yes.
        Mr. Shimkus [continuing]. Especially with the abundance
    that we seem to be having now with our production.
        Secretary Moniz. If I may just----
        Mr. Shimkus. You may.
        Secretary Moniz. About a week and a half ago, we did
    approve for potential FTA re-export a natural gas project to
    Canada.
        Mr. Shimkus. The energy diplomacy discussion draft also
    talks about improving the process for permitting major energy
    projects. Do you agree that it would bring greater clarity and
    predictability to the process, and help in this energy
    diplomacy part?
        Secretary Moniz. Could you clarify? If we did what exactly?
        Mr. Shimkus. Well, the formulation of coordinated
    procedures and criteria balance energy security impacts with
    environmental consideration. So you have to--especially in
    energy diplomacy, Shimkus is ethnically Lithuanian, a lot of
    people here have heard that before. I have toured the LNG
    Terminal. This energy diplomacy for our friends around the
    world, whether it is Japan or whether it is the eastern
    European countries, is really critical to give them choices of
    energy. And so the question is cost benefit analysis, and how
    can you expedite it, and I think your quadrennial review
    addresses this a little bit.
        Secretary Moniz. Well, again, as I said earlier, the whole
    issue of energy security is we are looking at it in a broader
    sense than the traditional way. And by the way, maybe not here,
    but if you would like we would be happy to come to your office
    and discuss the work on Ukraine specifically, since that seems
    to be an interest potentially.
        Mr. Shimkus. That would be of great interest to many many
    members of the----
        Secretary Moniz. We would be happy to do that----
        Mr. Shimkus. Thank you.
        Secretary Moniz [continuing]. But anyway, we are trying to
    expedite these issues.
        Mr. Whitfield. At this time, the chair recognizes the
    gentlelady from Florida, Ms. Castor, for 5 minutes.
        Ms. Castor. Thank you, Mr. Chairman. Good morning, Mr.
    Secretary.
        I would like you to elaborate a little bit more on the
    transmission, storage, and distribution, beyond what you have
    already testified to, because America's energy infrastructure
    is aging, it is not well-matched with the new sources of
    supply, it is exposed to increasingly dangerous extreme weather
    events associated with climate change, such as sea level rise.
    In my neck of the woods, we are concerned about more intense
    electrical storms, and then drought and wildfires. And I know
    you are sensitive to the potential for cyber and physical
    attacks as well. And part of America's policy right now is to
    encourage these new clean energy supplies, and greater energy
    efficiency such as the availability of rooftop solar that holds
    great promise for powering households and businesses across the
    country, and our growing energy efficiency sector that will
    rely on smart meters, a smart grid distributed generation, but
    these run completely counter to the traditional electric
    utility model. Now, you have testified already today about,
    well, energy assurance grants for states. Maybe you need to go
    into greater detail on the micro grids. I have never heard of a
    synchrophasor. What else really must we be looking for to
    modernize America's grid and infrastructure going forward?
        Secretary Moniz. Well, in terms of the grid, including both
    the transmission and distribution systems, I think one major
    theme is that we need to really push forward on what we have
    just barely started, and that is real integration of
    information technology into the grid and all of the associated
    requirements to take the data to be analyzed, of course.
    Synchrophasors are a part of that. We can discuss that some
    other time.
        Ms. Castor. OK.
        Secretary Moniz. But sensors, control systems, coupling
    information technology into distributed decision-making so that
    the grid can respond quickly if there is something developing
    on the reliability side, for example. So that really is, I
    would say, the overarching theme, more and more information
    technology integration into that system. That does, of course,
    potentially exacerbate another thing you mentioned which is the
    cyber risk that we have to stay ahead of. And I would say
    there, I just might add that under the leadership of our deputy
    secretary, we head something called the Energy Sector
    Coordinating Council which has EEI and a number of CEOs that
    meet three times a year to discuss these kinds of risks to the
    infrastructure, to the grids especially. On the grid, there are
    some other issues besides those I mentioned, such as the role
    of potentially long-distance DC transmission where that is much
    more prevalent in other parts of the world right now, but
    again, IT, I would say, number 1 in terms of where we have to
    go.
        Ms. Castor. And back on your energy assurance grants, would
    they be open only to states, or would local communities and
    businesses be able to tap into those grants?
        Secretary Moniz. There is still really a lot of program
    design to do, and we would be happy to talk with the members
    about that. I think the way we have been envisioning it is
    principally through the states, but hoping that the states, to
    be competitive, would be working with localities and tribes in
    the appropriate states, for example. But that is all a detailed
    program design that----
        Ms. Castor. I would hope you would open it up to local
    collaboratives or regional collaboratives. Sometimes you have
    recalcitrant states--there is an unwritten state policy in
    Florida right now, you can't even say climate change, so that
    doesn't bode well for our ability to compete for those grants.
    And I have----
        Secretary Moniz. OK, we will take that under consideration.
        Ms. Castor. Great.
        Secretary Moniz. Yes, it has been raised before in terms of
    cities wanting to be able to have--be direct applicants.
        Ms. Castor. Absolutely. There has been some discussion
    today about exports of oil and gas. You have used a number
    today, how much right now is America importing in petroleum and
    gas?
        Secretary Moniz. I think we are still importing close to 7
    million barrels a day of crude oil----
        Ms. Castor. OK.
        Secretary Moniz [continuing]. Although we are net exporters
    of about 2 \1/2\ million barrels of oil products. So our net
    imports are maybe 4 \1/2\ million barrels.
        Ms. Castor. Doesn't the export heavy focus run counter to
    America's policy imperative to reduce carbon pollution?
        Secretary Moniz. Well, as I said, frankly, I think in our
    current situation where we are still major importers,
    relaxation of export is probably likely to more or less just
    swap around different oil qualities in different places, as
    opposed to lead to tremendously increased production or demand.
    That is my view.
        Ms. Castor. So you do not think that exporting additional
    carbon fuels would exacerbate the problem of carbon pollution--
    --
        Secretary Moniz. I think the----
        Ms. Castor [continuing]. Across----
        Secretary Moniz. I think the key is that even as we are
    producing more, and this debate is going on in terms of
    exports, I think the important thing is, and we satisfy this,
    is keep your eye on the ball for reducing oil dependence. And
    that means we are aggressive on efficient vehicles, we are
    aggressive in terms of developing low carbon fuel alternatives,
    like next generation biofuels, and we are aggressive in
    supporting the move towards electrification of vehicles with
    clean electricity supplying those vehicles. So----
        Mr. Whitfield. Gentlelady's time--no, go ahead.
        Secretary Moniz. No, I was just going to say, and if you
    look at it, we are, I think, succeeding. For example, in the
    last--I think it is 5--I forget, some number of years, maybe a
    decade, even as our population has increased, as our GDP has
    increased 13 percent, we have actually decreased petroleum fuel
    use.
        Mr. Whitfield. OK. Gentlelady's time has expired.
        At this time, recognize the gentleman from Pennsylvania,
    Mr. Pitts, for 5 minutes.
        Mr. Pitts. Thank you, Mr. Chairman. Thank you, Mr.
    Secretary, for coming today.
        Chairman Upton mentioned his interest in Ukraine and the
    meetings over there with the Ukrainian Parliament, the EU,
    getting resources over there. You said something that you are
    doing a lot with Ukraine. Would you care to elaborate please?
        Secretary Moniz. I would be pleased to. Starting in the
    middle of 2014, the G7 energy ministers together with the EU
    met to discuss energy security issues, and that included
    specifically the Russia-Ukraine situation. Out of that came a
    commitment to work with Ukraine for that winter. And so DOE led
    a team of several U.S. agencies, plus Canadian experts, that
    went to Ukraine several times and guided them to a winter
    contingency plan for energy. So that occurred. Including, by
    the way, a tabletop exercise at the level of the deputy prime
    minister. Then we are back there helping them again look
    forward to next winter, but other things as well. For example,
    we pointed out the dependence not only on natural gas, but on
    Russian nuclear fuel. And you may have seen now that has led to
    Westinghouse now has a contract to be a fuel supplier for the
    Russian reactors in Ukraine. This has caught the attention of
    some, breaking a monopoly again. So we are working in a number
    of ways to help Ukraine on the energy situation.
        Mr. Pitts. Thank you. The Department of Energy has made
    progress on a few LNG export applications, but the fact of the
    matter is that more than 30 applications still await final
    decision from DOE. And I realize that you decided to
    reconfigure the process to allow FERC to go first with its
    environmental review, but the process as a whole remains
    complicated, unpredictable, especially for U.S. allies who are
    unfamiliar with the bureaucratic process between DOE and FERC.
    My question is, when will DOE finalize its follow-on economic
    study of exports in the 12 to 20 billion cubic feet per day
    range?
        Secretary Moniz. I can't give you an exact date, but I
    expect it quite soon. So I don't think it is going to be an
    impediment because today, we are--8 \1/2\ I think BCF per day.
    Approved for non-FTA countries.
        Mr. Pitts. Would the transpacific partnership or the
    transatlantic trade and investment partnership clear the way
    for automatic LNG export approvals?
        Secretary Moniz. I think that will depend on the specifics
    of how it is negotiated, but it may very well provide FTA
    status to more countries, in which case the approval is, you
    know, more or less automatic. Although I would caution, because
    this statement is also often raised with regard to TTIP and
    Europe, that the reality is that the market prices probably
    have a bigger impact than whether you are labeled FTA or non-
    FTA.
        Mr. Pitts. Do you support the provisions within the
    discussion draft which would effectively give DOE 60 days to
    act on an application following the FERC environmental review?
        Secretary Moniz. Well, we have made our statements very
    clear on that, in particular, in a hearing in the Senate, that
    we, frankly, find it unnecessary. We have been acting quite
    quickly. It is workable. We have said it is workable. We can
    work with it, but we don't think it is necessary.
        Mr. Pitts. U.S. oil production has risen rapidly in the
    last several years, and imports are falling. In fact, only
    about \1/4\ of the petroleum consumed in the U.S. is imported
    from foreign countries, which is the lowest level in 30 years.
    When asked about lifting the ban on oil exports, you have made
    the point that the U.S. still imports oil, which is a fact, but
    given our role in the global market, would it make sense to
    both import and export oil?
        Secretary Moniz. Well, again, I imagine we are going to
    meet our needs, and so right now, if we export a barrel, we are
    going to import a barrel to replace it. So as I said earlier,
    the only real issue in terms of the exports is whether that
    would lead to any material increase of production as opposed to
    just, in effect, swapping oil. There could be some issues there
    in terms of oil quality. For example, the Mexicans have
    specifically petitioned for a swap in which we would send light
    oil to Mexico in return for heavier oil coming back. That is an
    example of a swap. But I have to say it is not as though we
    have not been able to absorb all of the oil production today in
    the United States. It has been--so anyway----
        Mr. Pitts. Thank you. My time has expired.
        Mr. Whitfield. Gentleman's time has expired.
        At this time, recognize the gentlelady from California,
    Mrs. Capps, for 5 minutes.
        Mrs. Capps. Thank you, Mr. Chairman, for holding this
    hearing. And I thank you, Mr. Secretary, for your testimony.
        The discussion of our Nation's energy infrastructure is
    very important, and as is the Administration's work on the
    Quadrennial Energy Review. I am particularly interested in the
    pipeline safety aspect of it. Over my years on this committee,
    I have referenced very many times the Santa Barbara oil spill
    of 1969. That oil spill had tremendous local and national
    ramifications, giving birth to our modern environmental
    movement, in many ways, and changing much of the way our Nation
    as a whole has viewed the environment and oil development.
    Sadly, the Santa Barbara community was recently hit with
    another terrible oil spill along the coast. On May 19, more
    than 100,000 gallons of crude oil spilled from the ruptured
    Plains All American Pipeline along the treasured Gaviota Coast
    just north of Santa Barbara. The oil quickly flowed under the
    highway, onto the beach, and into the ocean, where the oil
    slick spread south for miles along the coastline. While the
    exact causes of this spill are still being investigated, it is
    already clear that woefully inadequate federal pipeline safety
    standards have played a significant role. It turns out that the
    Plains All American Pipeline is the only federally regulated
    pipeline in Santa Barbara County. It is also the only
    transmission pipeline in the county that does not have an
    automatic shutoff valve built into its system, and this is not
    a coincidence. Every other comparable oil pipeline in Santa
    Barbara County has an automatic shutoff valve because the
    county has required it, but the federal Pipeline and Hazardous
    Material Safety Administration, or PHMSA as it is called, does
    not make this requirement of pipeline operators. While an
    automatic shutoff valve may not have prevented this spill, it
    certainly could have minimized it. Plains was actually allowed
    to squirrel away tens of millions of dollars into what they
    called a contingency fund for when their pipeline would
    inevitably fail, yet they weren't even required to spend a
    fraction of that amount on installing basic spill prevention
    technologies. This, to me, defies commonsense, and it cannot be
    allowed to continue. And this is just one example of lax safety
    standards. My constituents are understandably angry, and I
    share their anger. With all due respect for my seatmate, Mr.
    Green, who appropriately isn't here right now, oil and gas
    development at its core is dangerous and dirty business. The
    mere fact that Plains and other companies have oil spill
    contingency funds shows that there is no such thing as a safe
    pipeline. Spills do happen, and they will continue to happen as
    long as we depend on fossil fuel for our energy needs. We
    obviously cannot end this dependence overnight, but we clearly
    need to take bigger and bolder actions to achieve the clean
    energy future that we all know is needed.
        Secretary Moniz, I appreciate the President's and your
    strong commitment to pursuing renewable energy. The objectives
    of QER are important. We cannot build a clean energy future
    without modernizing our infrastructure and preparing for new
    challenges, but we must also do everything in our power to
    ensure that this infrastructure is as safe as possible.
    Congress has repeatedly directed PHMSA to strengthen its
    standards, and yet PHMSA has done very little. The QER
    specifically mentions a draft PHMSA rule in development that
    would help strengthen some of these standards, but PHMSA first
    began taking comment on this rule nearly 5 years ago, and
    nothing has been published so far. And in 2011, Congress
    enacted legislation explicitly directing PHMSA to issue a rule
    requiring automatic shutoff valves on new pipelines by January
    of last year. Still not even a proposal let alone a final rule.
    I find this really inexcusable. I know DOE does not have direct
    control over this agency, Transportation does, or rulemaking,
    but what is the point of replacing aging pipelines and building
    new ones if they are all built using ineffective and outdated
    safety standards? The pipeline that burst in my district was
    not even 30 years old, so age is clearly not the only factor
    here.
        So, Mr. Secretary, my question for you, and I would
    appreciate if you can get back to me because I have taken most
    of this time, but what is the Administration going to do now to
    ensure--there is a lot of attention focused on this topic, to
    ensure that a new pipeline infrastructure is as safe as
    possible?
        Secretary Moniz. Well, again, as you said, PHMSA obviously
    is in the Department of Transportation, and I would certainly
    be happy to talk with Secretary Fox and get back to you, but
    obviously, the QER focus is, we have to rebuild infrastructure
    in a way that is reliable and resilient, and I would say this
    is an example of resilience by having the kinds of safety
    systems in place that maybe cannot avoid but can dramatically
    limit the impacts. So this is just part of why we need this
    discussion, I think.
        Mrs. Capps. Thank you very much.
        Secretary Moniz. Thank you.
        Mr. Whitfield. At this time, recognize the gentleman from
    Ohio, Mr. Latta, for 5 minutes.
        Mr. Latta. Thank you, Mr. Chairman. And, Mr. Secretary,
    welcome back to the committee. It is always good to have you
    here.
        If I could just follow up what the gentleman from
    Pennsylvania, Mr. Pitts, was asking, and you mentioned about
    the swap--the light versus heavy with Mexico. Maybe some folks
    might not understand why you would have to have a swap. Why is
    that? That you would have to swap light for heavy crude. Is----
        Secretary Moniz. I just mentioned that that is what the
    Mexicans have petitioned for because, I think in the--
    currently, we do not have authorities for exporting oil
    directly to Mexico, my understanding is it isn't at DOE, of
    course, but my understanding is they asked for this kind of
    idea of a swap.
        Mr. Latta. Thank you.
        Secretary Moniz. Which is under consideration, I believe,
    at the Department of Commerce, I believe.
        Mr. Latta. OK, thanks very much. Another issue not only has
    this subcommittee taken up but also especially the Telecom
    Subcommittee, in regards to cyberattacks and physical attacks
    that could occur to our infrastructure in this country. And so
    it is not only a growing concern but a great concern that we
    all have as to what could happen. The committee's discussion
    draft on energy reliability and security provides the Secretary
    of Energy the authority to take emergency measures to protect
    the bulk power system from grid security emergencies. Are you
    generally supportive of the DOE having grid security emergency
    authority?
        Secretary Moniz. Well, I believe we have the authorities,
    but only under emergency conditions.
        Mr. Latta. Well, let me ask, what other grid security
    recommendations you would make to this committee that we should
    consider at this time?
        Secretary Moniz. Well, I don't know what is appropriate for
    statutory direction, but I think utilities, for example, on
    physical security. Many of them have taken significant steps
    since the California incident. They are not always advertised
    for obvious reasons, but they have been doing that. Similarly
    by the way, many of the utilities--but the reason we need to
    complete a study on the transformer issues, whether it is
    because of a physical attack or just wear and tear, a number of
    utilities have really moved in terms of their backup there, but
    it is not uniform. And, of course, we have very, very different
    utility structures, organizational structures, so it is very
    different for IOUs versus co-ops, et cetera. So I think that is
    an example where, maybe after a study, some statutory action
    could be called for in terms of how do we provide appropriate
    resilience to the low probability but very high consequence of
    not having access to big transformers.
        Mr. Latta. Let me ask this. How concerned are you about
    electromagnetic pulses against the grid system?
        Secretary Moniz. Well, that is another risk that we
    identified. There are studies on that. The National Academy has
    studied that. I would say it is, once again, an example of a
    probably low probability but significant consequence
    possibility.
        There has been----
        Mr. Latta. When you say low probability, how--what percent
    probability would you put that at?
        Secretary Moniz. Well, I am not going to give a number, but
    it is just--it is low.
        Mr. Latta. OK. Well, because----
        Secretary Moniz. But again, there has been hardening done
    by many to keep transformers, et cetera.
        Mr. Latta. OK, thank you. Could you explain the importance
    of information sharing and public-private partnerships as it
    relates to security the electric grid?
        Secretary Moniz. I am sorry, could you----
        Mr. Latta. Yes. Could you explain the importance of
    information sharing and public-private partnerships as it
    relates to securing the electric grid?
        Secretary Moniz. I think that is very important. Once
    again, the Energy Sector Coordinating Council that our deputy
    secretary heads is part of that public-private partnership. And
    by the way, I have to say groups like EEI have been just
    excellent partners in that. And in terms of information-
    sharing, just one particular example, there is a lot of
    information-sharing in terms of reliable operations, et cetera,
    but one area I would highlight that this council does is
    including through providing selective security clearances
    sharing cyber threat data with the private sector.
        Mr. Latta. OK. And finally, in the very short period of
    time I have, in analyzing recent power plant retirements, the
    QER mentions market factors, low cost of natural gas, and
    changing coal prices as the driving factors behind the
    retirements. Would you agree that environmental regulations
    like the Mercury Air Toxics Standard and the proposed Clean Air
    Power Plan also played a role in the retirement of some of our
    electric generator units?
        Secretary Moniz. Well, certainly, things like mercury
    restrictions obviously raise costs, and that is always the cost
    calculation. But again, I think by far the dominant issue over
    these last years has been gas prices of $2.50. And for
    certainly inefficient coal plants, even the variable cost is
    beat by natural gas combined cycle.
        Mr. Latta. Thank you. Mr. Chairman, my time has expired. I
    yield back.
        Mr. Whitfield. At this time, the chair recognizes the
    gentleman from Vermont, Mr. Welch.
        Mr. Welch. OK, thank you very much.
        I have one comment and four questions, so I will go
    lickety-split. And I think I will ask them all four so you can
    answer them.
        The comment, you have been getting praised for being a
    great Secretary of Energy, and sideline as a nuclear
    negotiator, but I don't think people know that you do the best
    imitation of Luis Tiant, his windup, delivery, and pitch. And I
    think all members should ask for a demonstration. But----
        Secretary Moniz. Including the look to God.
        Mr. Welch. The look to God. The whole thing.
        But the questions, one, this committee has been doing great
    work on energy efficiency. And energy efficiency in Vermont has
    been fully embraced, and it has led to our transmission
    company, VELCO, being able to avoid about $400 million in
    expenses associated with transmission lines. So I want your
    comment on what we can do as a committee and the Federal
    Government can do to help get the benefits of avoided cost.
        Second, we have been trying to get real-time information on
    electricity rates in New England, in significant part because
    our rates are very high, and your department has been helpful
    trying to get real-time information in all the states, and
    Canada and Mexico, but has been having real challenges in
    actually getting that information. And I am curious to know
    what you find is the reason why it is so tough to get that, and
    what the department and FERC can do to help reduce the
    electricity bills for New Englanders.
        Third, this is a smaller issue but quite important. We have
    some biomass stove manufacturers, and the standards evolve. One
    of those stove companies is Hearthstone, and they are having a
    real hard time getting basically an answer on what the
    standards are so that they can comply. So we need----
        Secretary Moniz. For efficiency?
        Mr. Welch [continuing]. Some help on that. Yes, that is
    right. So they have a great product, but if they don't get a
    real definition of what the standard is then it makes it tough
    for them to stay out there on the market, and he has been
    having an awful hard time with that. Small company, but
    important company, and real jobs to Vermonters.
        And then finally, net metering. That is tough because you
    have to have net metering if you really want to deploy energy
    efficiency. On the other hand, it obviously has an impact on
    the economic model. Vermont has gone in a different direction
    than most states, led by Green Mountain Power, our biggest
    utility, to embrace and promote expansion in net metering. What
    could we do at the Federal Government to help that process that
    is going to help deploy energy efficiency, but also deal with
    the economic realities of many----
        Secretary Moniz. Yes.
        Mr. Welch [continuing]. Of our big power producers? Thank
    you.
        Secretary Moniz. Great. Well, thank you, Mr. Welch. So the
    four questions--well, actually, the third question on the
    emission standards of biomass stoves I think is something that
    we will get back to you on because I just don't know the answer
    right now, but that is one we can take care of.
        On the energy efficiency in Vermont, well, again, we are--
    and as you know, I was in Vermont with the delegation, and
    Vermont has done a fabulous job in terms of efficiency, with
    novel, novel business models for supplying energy. But I would
    say there, the main thing, the recommendation in the QER of
    relevance to that, and to a certain extent to the net metering
    discussion as well, is that we need to develop, at at DOE we
    will start really delving into this much more, we need to
    devise a much better way of valuing all the services that can
    be provided in the electricity system. Efficiency, storage,
    diversity, capacity, power quality, there are all of these
    issues, and when we had the traditional business model and it
    was basically one way from a central plant to a house, well, it
    kind of all got lumped together. But now with much more
    diversity, with storage coming in in some cases, distributed
    generation, we know that energy efficiency, this involves
    another hot issue right now that is in the courts, is to what
    extent does end-use efficiency come back all the way to the
    wholesale market, which FERC is engaged in. So I think this
    issue of valuing all the services is really core, and that is
    something that we want to, over the next months, really work
    hard on, and that is something that needs dialog with the
    members. So that is, I think, an absolute critical
    recommendation.
        And on terms of electricity prices and real-time prices, I
    would just note that the EIA has, in fact, not so long ago,
    launched a new product which has much more real-time data being
    collected from the ISOs and the RTOs and combined together so
    that one can research it and one can understand how prices are
    moving.
        Mr. Whitfield. Gentleman's time has expired.
        At this time, recognize the gentleman from West Virginia,
    Mr. McKinley, for five.
        Mr. McKinley. Thank you, Mr. Chairman. And thank you again
    for coming before us.
        In the last week, during the break, I returned to West
    Virginia and was on overload of negative information coming at
    us in West Virginia. The first newspaper I got when I got back
    there was, dark day for miners. They just announced that 2,268
    coalmining jobs were lost. 2,268 families now are looking for
    jobs as a result of this mining--then soon thereafter we got
    another power plant closed down, the Kammer Power Plant. Even
    though FERC has said that--and they have testified before us--
    the concern that they have is that we are going to have rolling
    blackouts in the Midwest if we don't start replacing these
    power plants, but we are continuing to shut these power plants
    down. And then there was another one that went on to say, just
    in one community, one small community, they are going to lose
    $61 million in wages as a result of this.
        So I am dealing with all of this crisis. When you add the
    additional losses, these 2,268, now we are up to--and I believe
    the chairman mentioned it earlier today, that we have now lost
    in West Virginia 45 percent of our coalminers are unemployed
    since 2012. Just in 3 years. Three years 45 percent of our
    coalminers are looking for work.
        Now, last Friday I met with the Coal Association and I
    could see there, they said there is going to be further
    contraction as a result of what policies that are happening
    nationally. So they are very concerned about what is going on
    with it. This loss of the Kammer and other power plants, it
    challenges, you well know, the grid stability that we have,
    this dependability. It also goes beyond that, and that is what
    about property taxes, what about the local income tax that
    people are going to pay? You can take away the power plant but
    now you are affecting the schools, you are affecting how a
    community operates with this happening.
        So my first question of two questions would be to the coal
    industry to reverse this decline?
        Secretary Moniz. Well, Mr. McKinley, first of all, of
    course, we all feel, for whatever reason, when there are these
    major disruptions in communities, it is obviously something
    that we need to pay attention to. And the Administration does
    have some programs to look at some retraining, particularly in
    the overlap areas with natural gas production, the Power Plus
    Plan that has been put forward, but I recognize that these
    don't address 45 percent of a workforce. So they help in the
    right direction, but they certainly do not ``solve the
    problem.''
        Mr. McKinley. Well, but keep in mind too, Mr. Secretary,
    you know that coalminers average age is going to be in their
    50s. What are we going to retrain them--my second question,
    since I didn't--and, unfortunately, you don't have a quick
    answer either----
        Secretary Moniz. No.
        Mr. McKinley [continuing]. On this as to how to stop the--
    --
        Secretary Moniz. We----
        Mr. McKinley [continuing]. Hemorrhaging. But the second
    question, so if you are sitting in the kitchen with this 55-
    year-old that just lost his job, he has been working 30 years
    in a coalmine, what do you tell him?
        Secretary Moniz. Well, look, again, I am completely with
    you. This is a very, very difficult. I think in the end, it is
    about having to try to produce some other economic
    opportunities. Revitalization, some retraining, and----
        Secretary Moniz. But these are real--you understand, these
    are real people that have----
        Secretary Moniz. Yes, and I----
        Mr. McKinley [continuing]. Really lost their job----
        Secretary Moniz. I understand.
        SAnd the following is not on the right timescale for you,
    but I have said previously, I think in front of this committee
    as well, that we do have many programs, many different kinds of
    programs, that are addressing the issue of a future of coal,
    even in a low-carbon world, but that is not going to solve that
    gentleman's problem tomorrow. I completely agree with that.
        Mr. McKinley. So in the 2 what do we tell him?
        Secretary Moniz. I think the key----
        Mr. McKinley. He has a mortgage payment----
        Secretary Moniz. He has to be----
        Mr. McKinley [continuing]. He has a healthcare bill, what
    are we doing for him?
        Secretary Moniz. The key has to be economic development and
    providing other opportunities. And I might just mention, Mr.
    McKinley, that--and I am happy to say it here, that recently
    Senator Manchin has asked me to come to West Virginia, and I
    would be happy to join him and you and come to West Virginia
    and try to understand the situation and what we can do.
        Mr. McKinley. Thank you, Mr. Secretary.
        Secretary Moniz. Yes.
        Mr. Whitfield. At this time, recognize the gentleman from
    New York, Mr. Engel, for 5 minutes.
        Mr. Engel. Thank you very much, Mr. Chairman. Secretary
    Moniz, than you for your testimony today, and thank you for all
    your good work in so many things. We really appreciate it.
        I would like to join everyone in applauding your efforts--
    --
        Secretary Moniz. I am having a hard time hearing you.
        Mr. Engel. I will do this. This is better.
        Secretary Moniz. Thank you. Thank you, that is better.
        Mr. Engel. OK. Generally not so hard to hear New Yorkers
    talk. I will just try to talk a little louder and not slur my
    words.
        I want to applaud your efforts and the efforts of everybody
    involved in producing the first report of the QER Taskforce. I
    believe it really establishes a very sensible blueprint, making
    our electric grid more resilient, and to identify and improve
    vulnerabilities in our current energy transmission and
    distribution system.
        As you know, Super Storm Sandy swept through my district
    and the surrounding region in October 2012, knocking out power
    to over 8 million people, and causing several fuel supply and
    distribution problems. Some New Yorkers in my district waited
    more than 2 weeks for their lights to turn back on, and
    struggled the whole time to keep their families safe and warm.
    So as a result, I am particularly focused on the ability of our
    grid and our entire energy transmission and distribution system
    to withstand future shocks, and also to recover quickly from
    any outage that might occur.
        So could you please discuss how we are better prepared
    today than we were in 2012 for a storm like Sandy, and how the
    suggestions in the QER would build upon the improvements we
    have made? In particular, please touch on the establishment of
    the northeast reserve and the potential expansion of
    distributed generation through the REV Initiative in New York.
        Secretary Moniz. Thank you. Well, first on the regional
    gasoline reserve. As you know, that has been established with a
    million barrels, distributed in three locations from the New
    York Harbor area, up to Portland, Maine, and that complement to
    the heating oil reserve that was established some years back. I
    might point out that one of the recommendations, by the way--
    which I would put in front of the committee is that it would be
    very useful if the authorities for using those reserves could
    be harmonized because they are quite different, and this would
    not help in terms of a coordinated response in terms of an
    issue. So that is successfully put in place. It is paid for as
    well for 4 \1/2\ years of operation. And I might add, we are
    currently now about \1/3\ of the way through to using the
    remainder of the money to repurchase 4.2 million barrels of
    crude oil to go back into the reserve, because we took out 5
    million, so it will be 4.2 crude, 1 million gasoline, and 4 \1/
    2\ years of operations of the reserve.
        Secondly, with regard to the grid and resiliency, again, I
    would like to highlight what we consider to be one of the most
    important recommendations, actually, two recommendations, one
    is to support, in our fiscal year 2016 budget request, state
    assurance grants to allow planning for hardening
    infrastructure. And then, and this is a case we have to find
    out working with you, how to raise the revenue, how to raise
    the resources, but to establish several billion dollars for
    competitive resiliency projects. That could include things like
    micro grids, but designed for resiliency of the energy system.
        Mr. Engel. Thank you. Let me ask one more question. The QER
    report also recommends ways to further integrate the energy
    infrastructures of the U.S., Canada, and Mexico, and the idea
    is to enhance market opportunities, energy security, and
    sustainability. Some transmission lines already send hydropower
    from Quebec to the northeast United States, and the potential
    exists, obviously, for more capacity on more transmission lines
    in the region. Could you please talk about what role, if any,
    these transmission lines should play in our energy future?
        Secretary Moniz. Well, I think these are very important. Of
    course, one that was approved recently was the Champlain Hudson
    line that would take power to New York from--hydropower. And
    there are a variety of projects for 4 to 5 gigawatts of
    additional hydropower that could be available to the northeast
    and upper Midwest. This, obviously, would be clean energy to
    meet our needs.
        Mr. Engel. Thank you. Thank you, Mr. Secretary.
        Thank you, Mr. Chairman.
        Mr. Whitfield. Chair now recognizes the gentleman from
    Virginia, Mr. Griffith, for 5 minutes.
        Mr. Griffith. Thank you very much, Mr. Chairman. I do
    appreciate that.
        Let me reference the comments made by Mr. McKinley of West
    Virginia. We have had hundreds of layoffs in my district alone.
    Of course, in my neighboring State of West Virginia and
    Kentucky, there have been thousands, and it has been
    devastating.
        You referenced natural gas in relationship to the closing
    of some of the coal-fired power plants as one of the factors.
    Of course, it is one of the factors, but the regulations coming
    in also, yesterday we closed down the Glen Lyn facility in my
    district. It was paid for by the ratepayers. Wouldn't cost them
    any additional. It was only being used at this point for the
    peak periods. That is now gone. The Clinch River facility in my
    district had three EGUs, three electric generation power
    plants. They are converting two of the three over to natural
    gas, however, the third one is not going to be converted, and
    the \2/3\ that used to be there will produce about \1/2\ of the
    electricity.
        I am just concerned that in the peak periods of use, now
    that they are gone, how are they going to be replaced in
    southwest Virginia and in other parts of the AEP footprint?
        Secretary Moniz. Well, of course, I don't know well enough
    the exact geography and the distribution of power plants. If I
    talk more broadly, one of the issues, clearly, is the
    continuing build-out of the transmission system to move power
    around effectively. And I might say that I was a little bit
    surprised, frankly, with the data that came out in the QER that
    the spending on transmission in the country has actually
    reached $14, $15 billion per year with a continuous increase,
    basically, over the last 10 to 15 years. So we actually don't
    think that any significant increase in resources will be
    required. The issue will be to make sure that the lines are
    configured, of course, to make sure that energy gets to all the
    various places.
        Mr. Griffith. And I get that, and that brings up natural
    gas pipelines. And talking about all of this, and they are
    building them in my district, with great opposition from many
    people who don't like the pipeline concept. They are also
    building them in a district just north of mine. Pipelines are
    going everywhere. But I noticed in the QER you note the need
    for pipeline replacements for existing pipelines, and that you
    suggest a DOE-run grant program designed to allow states to
    receive funds to aid in improvements to pipeline
    infrastructure. I support improving our current system for
    existing pipelines, and I am interested in learning more about
    the details. What new authorities do you all think you need at
    DOE, or do you want at DOE in order to create this program, and
    will you be providing language to the committee so that we can
    see about putting that into the appropriate bill? How do you
    envision the DOE replacement program working? How would the
    funding get to the existing states? Would it be the existing
    funding or are you going to come up with new funding? Where is
    the money going to come from? What is the timeline, and how
    would the states apply, et cetera? I throw all those out at you
    at once. I will be glad to go back and review them but I don't
    want my time to run out.
        Secretary Moniz. I think we will have to get back to you
    with a lot of the detail, but let me make several points. First
    of all on the resources issue, we were very clear that we had
    about half a billion dollars proposed in the fiscal year 2016
    budget to address various QER recommendations, but there were
    another $15 billion of need identified, which we were very
    clear we have to have a discussion in terms of where can those
    resources come from. That is over many years, but still. So
    specifically, the funding for the acceleration of natural gas
    distribution infrastructure replacement is not in our budget.
    So that is one those cases. And we have in the past, of course,
    had many examples of raising resources in various ways for
    major infrastructure projects. I think that is the discussion
    we need to have with the Congress, are we prepared to find
    these mechanisms for a significant push on energy
    infrastructure.
        Mr. Griffith. And as we transition then and we use more
    natural gas, then it would seem that at some point that funding
    is going to have to come forward, which means it is going to be
    passed on to the ratepayer, and yet another expense added on to
    one of their energy bills.
        Secretary Moniz. Right, and what we are seeing today, by
    the way, at least for these years, I have a place in D.C., and
    on my bill there is a specific surcharge on there for
    replacement of the natural gas distribution pipe. What we are
    saying is we think this needs to be accelerated. I will be
    clear, I guess it is Washington Gas, I don't know, whoever it
    is, the surcharge is for a 40-year replacement program. That
    seems like an awfully long time. So what we are arguing is we
    need to shorten these--utilities are typically doing this many,
    many decades to keep the rate low. We are saying, geez, we need
    to accelerate this. And what we are proposing is funding that
    would go to help low-income households absorb the rate hit.
        Mr. Whitfield. Yes. Gentleman's time has expired.
        At this time, recognize the gentleman from Ohio, Mr.
    Johnson, for 5 minutes.
        Mr. Johnson. Thank you, Mr. Chairman. And thank you, Mr.
    Secretary, for being here with us again today.
        At the risk of piling on, I want to associate myself also
    with the concerns already mentioned regarding the coal
    industry. My district is a district and a state heavily
    dependent upon the coal industry, not only for reliable energy,
    affordable energy, but also the jobs that it represents.
        I was on a trip to Europe just a couple of weeks ago, and
    one of the statements that one of our European colleagues in
    the energy sector made was that, over the last 20 years or so,
    they have led America in shutting down much of their coal
    industry in an effort to reduce their carbon emissions, but
    some of those European countries, when we ask them what their
    energy profile looked like, they are returning to a higher
    percentage of a use of coal. And when I questioned them about
    that, I said why is that the case and how do you think you are
    going to be able to reach this 40 percent reduction by 2030,
    and this official said, look, we have learned, our ratepayers,
    our businesses and our residential customers, have said they
    are no longer willing to pay the exorbitant high prices for
    energy. The idea is you make coal so expensive by taxing the
    carbon emissions that renewables and other alternative forms of
    energy are more economically attractive. They are going back to
    coal. I don't know why America, Mr. Secretary, why we have to
    learn this lesson the hard way; that coal still provides the
    most reliable, affordable energy on the planet.
        And so let me get off of this subject because I have some
    others I want to talk to you about. You expressed a willingness
    to come to West Virginia with Senator Manchin and
    Representative McKinley. Can you swing through Ohio at the same
    time----
        Secretary Moniz. We can try to do that.
        Mr. Johnson [continuing]. That you are in the region, and I
    would love to take you to talk to some of our coalmining
    cooperators and some of the manufacturers who are being asked
    to idle their plants because there is not enough energy on the
    grid to meet the peak demand. And that is today. That doesn't
    even count for what is coming.
        Secretary Moniz. If I may make a suggestion that might be
    useful. We have a very, very excellent person named Dave Foster
    who is really the creator of our Job Strategy Council. Perhaps
    a meeting with those of you with kind of Appalachian
    connections in coal, just to brainstorm around what might be
    other ways of going. I would be happy to do that.
        Mr. Johnson. Can you help facilitate that?
        Secretary Moniz. Yes, I would----
        Mr. Johnson. Good.
        Secretary Moniz [continuing]. Be happy to do that.
        Mr. Johnson. Well, my office will be in touch and we will--
    --
        Secretary Moniz. Certainly, the two of you and Mr. McKinley
    would be among those.
        Mr. Johnson. All right. We would like to do that.
        Let me move quickly to these other questions. In March,
    William O'Keefe, the CEO of Marshall Institute, penned an
    editorial in the Washington Times where he notes that the
    Council of Economic Advisors' annual economic report for 2015
    details the beneficial effects that LNG exports would bring for
    domestic employment, geopolitical security in the energy
    industry and the environment. He also makes the point that
    unless we act soon, we are going to lose many of these
    benefits. He says, while the American policymakers
    procrastinate, other countries are stepping up to meet these
    needs. The United States has an incentive not to wait. Our
    window of opportunity is closing.
        So with that in mind, what are your thoughts not only on
    LNG exports, but are there any specific steps and policies we
    should be putting in place today to realize this opportunity
    before it is lost?
        Secretary Moniz. Well, I have to say first of all that we
    are not procrastinating. Now, we have approved--and by--this is
    separate from the conditional approval that we made last week
    for the Alaska project, because that is a separate gas source,
    but for the lower 48 we have approved roughly 8 \1/2\ billion
    cubic feet per day to non-Free Trade Agreement countries. We
    have no other applications to work on at the moment. And just
    to give a scale, I mean the largest LNG exporter in the world
    is Qatar, and they are at about 10 billion cubic feet per day.
    Now, the first cargos----
        Mr. Johnson. I hear you, Mr. Secretary. Then why does the
    rest of the world, why are they still urging America to get
    into the LNG export market on a global basis? Why does the rest
    of the world----
        Secretary Moniz. Well----
        Mr. Johnson [continuing]. And the oil and gas industry
    thing that we are not participating in the global export?
        Secretary Moniz. I think that, first of all, there is a lot
    of misunderstanding, to be honest, number one. Number two,
    clearly, they are sitting there with $12, $15 gas, and they see
    us at $2.50, and they think that looks pretty good. Now, of
    course, by the time it reaches them, when you add $6 or $7 for
    the supply chain, it is not going to be our prices, but it
    still beats their prices. So clearly, they have an interest.
    They want to see that. Well, the fact is that if you look at
    the economic studies that have been done, not by DOE, by
    others, in terms of what they expect to be our real export
    market, very few of them come in above, say, 10 BCF per day,
    given competition in various parts of the world. So all I know
    is that is for the private sector to sort out.
        We have studies that take us up to a potential 12 BCF per
    day. Earlier it was pointed out we have commissioned another
    study that would even look at 20 BCF per day, but in the
    meantime, we have approved 8 \1/2\. The projects are being
    built. The first cargos will get on the water probably the
    beginning of 2016, and then we are going to start exporting.
        Another issue is, and a lot of our European friends say,
    they want the gas, I might just point out as an aside, no value
    judgments, there are a lot of places in the world that don't
    want to develop their own indigenous resources but would like
    ours. OK, well, that is fine, but we do not direct where cargos
    go. We approve export licenses to non-FTA countries, and those
    are commercial contracts. Frankly, it is a constitutional issue
    in terms of our not doing that.
        Mr. Johnson. Mr. Chairman, my time has expired.
        Mr. Whitfield. Gentleman----
        Mr. Johnson. I would submit to our committee and to the
    Secretary, there is a big disconnect somewhere because the
    experts tell us that our price is going to rise when we get
    into the global export market. We haven't seen that. We have
    heard that the global market price is going to come down. We
    haven't seen that. So I don't know where the disconnect is, but
    there is a big disconnect somewhere.
        Mr. Whitfield. Yes. Thank you.
        At this time, I am going to recognize the gentleman from
    Missouri, Mr. Long, for 5 minutes.
        Mr. Long. Thank you, Mr. Chairman.
        And, Mr. Secretary, the discussion draft provides the
    Department of Energy with some new responsibilities beyond your
    current mission. For example, we direct the department to study
    the feasibility of establishing a federal strategic transformer
    reserve, and arm the Department of Energy with new authority to
    address certain grid security emergencies, which I think is
    foremost in everyone's mind as far as grid security. Do you
    believe the Department of Energy has the expertise and
    capability to meet these new duties?
        Secretary Moniz. Well, yes, sir. First of all, on the
    transformer reserve, we are moving forward to study that. We
    have one study already from WAPA, our western organization, but
    we are moving forward on that and will, depending on the study,
    engage then in the appropriate public-private partnership to
    make sure that we are secure.
        With regard to grid security emergencies, again, we already
    do a lot of this. We work under the FEMA umbrella. We are the
    lead agency for energy infrastructure. And so, for example, you
    may have read about the typhoon going through Guam a couple of
    weeks ago I think it was, well, we had a person in Guam as part
    of the FEMA response for energy infrastructure. So we are
    already doing this. Now, additional authorities could be
    helpful.
        Mr. Long. OK. In your testimony, you mention that one of
    the key energy objectives is enhancing energy reliability. What
    impact do you think that the proposed Clean Power Plan will
    have on energy reliability and transmission issues?
        Secretary Moniz. Well, again, first of all, we analyze
    these issues, but of course, we don't have a final rule yet to
    know how to analyze it. But what we have done to date and what
    we have done in terms of technical analysis around the proposal
    of last year, again, suggests that reliability will be quite
    manageable, but we have to wait to get the final rule before we
    can really do the----
        Mr. Long. So you don't think the proposed plan will have a
    big effect?
        Secretary Moniz. Well, as I mentioned earlier, one example
    of something that we did, there was an issue around the
    projected significant increase of natural gas for the power
    sector versus coal, and when we looked at the infrastructure
    issues of the gas delivery, we just did not find that there was
    likely to be any significant challenge. There would be some
    work to do, but not a significant challenge.
        Mr. Long. With Mr. Griffith from Virginia a while ago, you
    had a discussion about money to the states and things, and with
    this Quadrennial Energy Review recommend providing state
    financial assistance, which I think you all spoke about a few
    minutes ago, and grants and investment plans for electric
    reliability and efficiency. Can you discuss a little bit of
    some of the criteria, regardless of where the money is coming
    from, because we know there is a shortage of money, but can you
    discuss some of the criteria the Department of Energy will
    require for the states to receive this financial assistance?
        Secretary Moniz. Well----
        Mr. Long. Assuming, again, there would be money there.
        Secretary Moniz. Yes, well, the money issue is relevant,
    and I must say I was very, very disappointed in the
    appropriations mark, which did not provide any funding for
    either the reliability or the assurance grants, which I think
    is shortsighted, to be perfectly honest, because I think the
    states need to have this kind of planning capability. We would
    provide technical assistance. Now, in terms of program design,
    that remains to be done, but what we envision will be
    ultimately proposals around things like micro grids, for
    example, for reliability and resilience. We would see, again,
    the integration of IT and smart grids as providing those
    services. And as I said, we hope in the reliability and
    assurance arenas to then have funding for competitive cost-
    share grants.
        Mr. Long. Would the criteria be the same from state to
    state or would it change across the country?
        Secretary Moniz. I think the criteria--well, that still
    remains to be worked out completely, but the criteria, no,
    would be around enhanced reliability and resilience. That is
    the criteria.
        Mr. Long. I understand that but I am just--my question was
    whether it would be the same from state to state across the
    country or whether different----
        Secretary Moniz. I think----
        Mr. Long [continuing]. Different states would----
        Secretary Moniz. No, I think----
        Mr. Long [continuing]. Face different criteria.
        Secretary Moniz. I think the same criteria, but the way the
    projects would be structured would look very different
    depending upon the regional and state resources.
        Mr. Long. OK. I am past my time so if I had any time I
    would yield back. But thank you again for your testimony. Mr.
    Chairman----
        Mr. Whitfield. Yes, at this time, I am going to recognize
    the gentleman from Texas, Mr. Flores, but I also just want to
    make a comment that we really appreciate your taking the
    leadership with the Republican Study Group on the forum on oil
    exports, and have an opportunity to examine that more
    thoroughly today, so----
        Mr. Flores. Well, thank you.
        Mr. Whitfield [continuing]. You are recognized for 5
    minutes.
        Mr. Flores. Thank you, Mr. Chairman. I hope Secretary Moniz
    will send someone to the discussion this afternoon.
        Of course, I want to talk about exports like my friend, Mr.
    Barton, did. One of the things you talked about is that there--
    one of the good reasons for the ability to have oil exports is
    because you have a better matching of the qualities of grades
    that are needed by the refineries in different geographical
    areas around the world. And you didn't go quite far enough, I
    don't think, because one of the things that happens when you
    have that better matching is you have economic efficiency, and
    economic efficiency releases additional capital, and that
    additional capital, based on my experience is--with 30 years in
    the business, would go back into reinvestment, which stimulates
    the production. So next time you are answering that question,
    if you would go all the way through that economic cycle I think
    that it would be helpful.
        The next thing has to do with, I guess I would call it a
    safety valve question. As you know, there are multiple versions
    of--or proposals for oil exports out there, and some of them
    include giving the President the ability to suspend oil exports
    in the situation where we had some sort of an energy crisis, or
    if it is deemed in the national interest, or to be able to use
    the strategic petroleum reserve under those same circumstances.
    And so with those two safety valve features in place, doesn't
    that make it more compelling to allow oil exports?
        Secretary Moniz. Well, again, obviously, more flexibilities
    are always welcome, but I think the fundamentals of the oil
    export question are those that we discussed earlier, I think.
    And I agree with you, of course, in terms of your economic
    argument.
        Mr. Flores. OK. One of the things that was interesting
    about timing is, while your agency and others were working on
    the QER, the Administration was also involved in negotiations
    with Iran, and in early April your agency estimated that with a
    deal in place and the sanctions lifted, Iran might start
    selling us a stockpile of 30 million barrels or more later this
    year, and raise its output by $700,000--700,000 barrels a day
    by the end of 2016. This would come at a time when we would
    already have a global gut of crude oil.
        And so my first question is this. What analysis, if any,
    has DOE performed to better understand the implications of the
    entry of Iranian oil into the global markets on global supply
    and demand--global supply and prices, rather?
        Secretary Moniz. Well, I think, first of all, you have
    stated the basic conclusion: that one would see over some year
    to 2 years, certainly, several hundred thousand barrels per
    day, probably of increased production. That would go into the
    95 million barrel per day or so pool. There are so many
    uncertainties in that timescale; in particular, on the demand
    side. For example, a recovering European economy would put
    substantial then pressure on the supply side. Clearly, the
    nuclear negotiation is quite independent of that dynamic. That
    is about nuclear weapons issues that we think are important to
    block.
        Mr. Flores. Well, no, I do understand the independent
    nature of the two discussions, however----
        Secretary Moniz. Yes.
        Mr. Flores [continuing]. The impact is the same. So I mean
    the outcomes are the same.
        Secretary Moniz. Well, it is all supply and demand and, you
    know----
        Mr. Flores. Exactly.
        Secretary Moniz. Right.
        Mr. Flores. Exactly. And so I guess under these
    circumstances, doesn't it seem like the President would have an
    increasingly difficult time justifying lifting the sanctions on
    Iranian oil, and at the same time keeping the sanctions on
    domestic oil in place, where domestic oil can't be sold abroad?
        Secretary Moniz. Well, I think the big difference is that
    we import 700 million barrels a day of crude oil. We are not a
    net exporter. We are an importer.
        Mr. Flores. Right, but we are on track to be in a position
    to export, so it makes sense to lift the sanctions.
        Secretary Moniz. Well, that is quite a few years away. We
    are still--even if you add in oil products, we are still at 4
    \1/2\ million products a day.
        Mr. Flores. OK.
        Secretary Moniz. So----
        Mr. Flores. I have no additional questions. Thank you. I
    yield back.
        Mr. Whitfield. At this time, recognize the gentleman from
    Oklahoma, Mr. Mullin, for 5 minutes.
        Mr. Mullin. Thank you, Mr. Chairman. And, Secretary, thank
    you for being with us again today. I believe this is the second
    time you have been in front of this panel.
        Secretary Moniz. More than that.
        Mr. Mullin. Well, but this year, if I am not mistaken. At
    least this is the second time you and I have had an opportunity
    to visit. And the last time we spoke, we talked about the lack
    of infrastructure with the power plants as far as the coal-
    fired plants that are coming down. We have a report from
    Southwest Power Pool there is going to be 12,900 megawatts lost
    just in their area. And just a while ago while you were being
    questioned, I believe by Mr. Long, you said that you didn't see
    any significant challenges to meet those needs, but yet where
    is the power going to come from?
        Secretary Moniz. Well----
        Mr. Mullin. If we are going to lose 12,000 just in my
    region, then where is the extra power going to be made, or
    where it is going to be produced? The gas lines aren't there.
    We are seeing 4 years to take a permit, to just simply get a
    permit to install a gas line. Unless there are power plants
    that are being built that I am not aware of in my region, then
    I believe there is going to be a significant challenge to meet
    the power needs.
        Secretary Moniz. But first of all, let me emphasize that I
    did state that what we have seen to date, but we, of course,
    await a final rule. Secondly, of course, demand--now, I am
    talking nationally, not in any particular specific region----
        Mr. Mullin. Well, specifically speaking, the coal-fired
    plants are in a specific region.
        Secretary Moniz. No, no, sure. Well, every plant----
        Mr. Mullin. I understand that, but we have 12,900 megawatts
    being lost in one region, and you said that there was--you
    didn't see any significant challenges in meeting those needs.
    Where is that extra power going to come from?
        Secretary Moniz. Well, I mean, first of all, I made it very
    clear that I--the same when I discussed the natural gas
    transmission pipes, there will be local issues that have to be
    resolved in some places with new infrastructure, all I can do
    is look at the broad picture nationally and note that, first of
    all, electricity demand nationally is not going up, it is
    essentially flat. We are building a significant amount of
    natural gas and wind, in particular, capacity----
        Mr. Mullin. So it is OK because----
        Secretary Moniz [continuing]. Annually----
        Mr. Mullin [continuing]. The numbers aren't going up----
        Secretary Moniz. And Oklahoma, by the way----
        Mr. Mullin [continuing]. It is OK----
        Secretary Moniz [continuing]. Has plenty of wind.
        Mr. Mullin. Yes, but it is OK to bring the power down
    because we don't need it right now? I mean----
        Secretary Moniz. I----
        Mr. Mullin [continuing]. That is like saying----
        Secretary Moniz. I did not----
        Mr. Mullin [continuing]. Let's----
        Secretary Moniz. I did not say that. All I said was that we
    are building substantial capacity even as out demand is flat,
    and secondly----
        Mr. Mullin. Where is the building----
        Secretary Moniz [continuing]. We have substantial----
        Mr. Mullin [continuing]. We are losing power, you are
    saying we are building significant capacity. What are we
    building it in? Because power cannot replace--or wind cannot
    replace what we have here. You can have miles and miles and
    miles of windfarms, which we have in Oklahoma, which I,
    frankly, don't think is very pretty, I think it leaves a lot
    bigger footprint than we do in anything else, but that is
    another topic, but we are losing 12,900 megawatts in one area.
    I am going back to what you said----
        Secretary Moniz. Right.
        Mr. Mullin [continuing]. With the gentleman from Missouri--
    --
        Secretary Moniz. Yes.
        Mr. Mullin [continuing]. When you said you don't see
    significant challenges meeting those needs. So what I think I
    hear you saying, now, correct me if I am wrong, that it is OK
    that we lose it because our increase for electricity isn't--the
    need isn't there so it is OK that we lose it. Is that what I am
    understanding?
        Secretary Moniz. No, what I am saying is that, first of
    all, we have about 68,000 megawatts of wind, but what I am
    saying is that there will, obviously, all the local planning
    authorities will have to be planning, but at the macro level,
    we are not seeing the likelihood of enormous challenges. We are
    being cautious. We have to wait for the final rule to come into
    place.
        Mr. Mullin. But you guys are already moving forward with
    it. And, Mr. Secretary, you are over the Department of Energy,
    and you are saying that the local communities, local areas,
    need to get together. What is DOE's specific plan to meet this
    need? Is there not a need----
        Secretary Moniz. Well----
        Mr. Mullin [continuing]. It is just saying we are going to
    let them go down----
        Secretary Moniz. I mean----
        Mr. Mullin [continuing]. And let everybody else figure it
    out, it is not our problem?
        Secretary Moniz. Look, first of all, in our system, the
    private sector obviously builds the power plants, builds----
        Mr. Mullin. But you guys are the ones that pick winners and
    losers.
        Secretary Moniz. No.
        Mr. Mullin. Yes, it is, because----
        Secretary Moniz. The----
        Mr. Mullin [continuing]. You have said coal is going out,
    wind is the new thing.
        Secretary Moniz. Obviously, there is a responsibility of
    government, whether statutory or regulatory, to set certain
    rules of the road in terms of environmental protection, et
    cetera, et cetera. The private sector and typically state
    regulatory bodies then respond to that. So----
        Mr. Mullin. So if I am hearing correctly----
        Secretary Moniz [continuing]. That is the way it works.
        Mr. Mullin [continuing]. There is no plan. We are just
    going to drop the power and let everybody else figure it out.
        Secretary Moniz. There----
        Mr. Whitfield. Gentleman's time has expired.
        Secretary Moniz. They are no more----
        Mr. Mullin. I yield back. Thank you.
        Secretary Moniz [continuing]. Or no less plan than there
    always has been.
        Mr. Whitfield. Yes. Mr. Pompeo of Kansas is now recognized
    for 5 minutes.
        Mr. Pompeo. Great, thank you, Mr. Chairman. And thank you
    for your patience today. You have been with us a long time. We
    are getting toward the end and so a lot of the questions have
    been asked. And so maybe I will open the aperture just a little
    bit, starting with this. Do you believe that the American
    taxpayer has received good value for the tens of billions of
    federal dollars that have been spent on carbon capture
    technologies to date, yes or no?
        Secretary Moniz. Well, first of all, I don't think it is
    tens of billions of dollars, so it is quite a bit less than
    that.
        Mr. Pompeo. OK, whatever the number is, sir----
        Secretary Moniz. But the----
        Mr. Pompeo [continuing]. Do you think we have gotten good
    value for----
        Secretary Moniz. Yes.
        Mr. Pompeo [continuing]. That?
        Secretary Moniz. But I think the answer is that, yes, it
    will prove to have been very, very well spent.
        Mr. Pompeo. Great, thank you. I think they look more like
    slender than success, so we disagree. Yes or no, do you agree
    with French Foreign Minister who has said that the global
    climate change agreement that is being negotiated this year
    should be worded in a way that does not require congressional
    approval? Yes or no.
        Secretary Moniz. I am not aware of that statement.
        Mr. Pompeo. So----
        Secretary Moniz. The----
        Mr. Pompeo [continuing]. Do you think--I will ask it more--
    --
        Secretary Moniz. The----
        Mr. Pompeo [continuing]. Directly----
        Secretary Moniz. If I may say, the--currently, obviously,
    the Climate Action Plan that we are executing is based upon
    administrative authorities to get an economy-wide approach
    eventually, but it will require legislation.
        Mr. Pompeo. The government that you are a part of is
    negotiating an agreement this year, at the end of the year, it
    intends to enter into an agreement, they have made that very
    clear. Do you believe that the agreement that the United States
    enters into ought to be submitted for congressional approval?
        Secretary Moniz. I think we need to see what the nature of
    this agreement is. There are many agreements----
        Mr. Pompeo. So I can't get you to say----
        Secretary Moniz [continuing]. That are political
    agreements.
        Mr. Pompeo [continuing]. Yes, that you think that a climate
    agreement should be approved by Congress.
        Secretary Moniz. I think it very much depends upon what the
    nature of the agreement is.
        Mr. Pompeo. I will take that as a no. Today, we have had a
    lot of questions about crude exports. It seems to me that the
    only country that you are currently advocating to export crude
    oil is Iran. Is that right?
        Secretary Moniz. Excuse me?
        Mr. Pompeo. Well, you are sitting in a set of negotiations
    where we are going to free-up the Iranians to export their
    crude products, but you won't advocate for Americans to be able
    to export their crude products. Is that----
        Secretary Moniz. As I said earlier, the situations are
    completely different, and we are a large importer of oil.
        Mr. Pompeo. The situations are identical. It would benefit
    each country greatly to be able to access foreign markets and
    sell their products at market prices around the globe, and both
    consumers and exporters would benefit from those in both
    countries if they are opened up. Do you agree with that or
    disagree?
        Secretary Moniz. Obviously, for Iran----
        Mr. Pompeo. I mean it is a simple question----
        Secretary Moniz. Obviously----
        Mr. Pompeo [continuing]. Mr. Secretary.
        Secretary Moniz [continuing]. If Iran----
        Mr. Pompeo. It is not a trick question.
        Secretary Moniz [continuing]. Had sanctions lifted, it
    helps their economy.
        Mr. Pompeo. And if we lifted ours----
        Secretary Moniz. And it indeed helps us----
        Mr. Pompeo [continuing]. It would help ours too.
        Secretary Moniz [continuing]. On the nuclear weapons side.
    As I said earlier, the only issue on oil exports in the United
    States of large-scale relevance is whether or not there is a
    significant increase in production as a result, and I have
    said, in the current oil market, that may be a difficult case
    to make.
        Mr. Pompeo. Right. You don't believe in supply and demand
    when it comes to crude--which you think no more supply will be
    lodged. So we have been through that. In 18 months there will
    be a new President, although maybe not a new Secretary of
    Energy. One never knows. Your QER was prepared based on this
    President's vision of greenhouse gases, their impact around the
    world, and America's role in diminishing them. If the next
    President comes in and has a different view with respect to
    that, tell me what remains of the value of the QER work that
    you all did.
        Secretary Moniz. Essentially, all of it. The QER is really
    aimed clearly at facilitating more clean energy, but it is
    about energy security, resilience of our infrastructure, it is
    about North American energy, it has huge, huge implications for
    our energy infrastructure, independent of the climate issues.
        Mr. Pompeo. Yes, I just have a different view of what is in
    the QER. When I stare at it, I see the analysis and I
    appreciate that. I agree with your analysis of the requirements
    for increased infrastructure. We don't disagree there. But it
    seems to me most of what is in the QER was aimed at federal
    intervention in the marketplace. You have several references to
    classic market failure with respect to public goods and
    negative externalities. I think much of the conclusions in the
    QER about how that infrastructure will be ultimately built out,
    and who will decide which infrastructure will be built out, is
    heavily dependent on this President's vision for climate change
    and how the United States can impact that. And I just think it
    was a wonderful exercise, I am glad we did the work with
    respect to infrastructure, but I think the conclusions drawn on
    the QER will need to be revisited immediately by the next
    Administration.
        With that, I yield back, Mr. Chairman.
        Mr. Whitfield. Gentleman yields back.
        And that concludes our questions. We have one additional
    member though, Mr. Cramer of North Dakota, who is a member of
    the Energy and Commerce Committee, he is not in this particular
    subcommittee, but he has been so focused on these issues that
    he sat here for 2 \1/2\ hours with us, and we are going to give
    him the opportunity to ask 5 minutes of questions.
        Mr. Cramer. Yes, well, thank you, Mr. Chairman. And thanks
    to my colleagues for the indulgence.
        You know what, it doesn't only take one good North Dakotan
    to represent the entire state, so I spread myself fairly thin,
    Mr. Secretary. So I thank the members. And I also, Mr.
    Secretary, want to thank you not only for being here, but for
    at least agreeing to, if not joyfully, although I think you are
    a joyful person, to holding one of the listening sessions in
    North Dakota. I know it was a late request, and it was a late
    addition to the agenda for you and Secretary Fox and others,
    but I thoroughly enjoyed the time that you were out there.
        And I notice in the QER, there is a lot of reference to
    things that you learned last August in North Dakota, especially
    as it pertains to the transportation infrastructure, and some
    of the challenges particularly reflected are the challenges for
    the railroads that move multiple commodities, as you know. And
    you heard quite clearly, and I think, again, indicated in the
    report quite clearly, that there were challenges, but at the
    same time, one of the things I want to do, I think, is to bring
    the record up-to-date. Last August, we were following on two
    record winters and two bumper crops, we had two seasons in a
    row that strained the infrastructure for sure for agricultural
    commodities. I think one of the bigger challenges was the fact
    that not only was it a record crop or a bumper crop, but it was
    a late harvest, due to weather, it was also a late and a very
    wet harvest. And so there was a consolidation of all of those
    commodities. And the additional moisture creating other
    transportation problems like the movement of propane, for
    example, for grain drying. That perfect storm created
    incredible stress on the infrastructure, along with, of course,
    700,000 or so barrels per day of oil being moved by rail. So
    there was a lot of criticism last August. There is a fair bit
    of that reflected in the report, but just in the last 10
    months, the storm has sort of shifted, and I want to stress
    some of those points, but also encourage you and the team to
    continue to monitor it on a very regular basis, because some of
    the things that were identified have worked. The STB's weekly--
    the requirement for the weekly reports, for example, by the
    class 1 railroads has been very helpful in transparency,
    allowed better planning. A warmer winter with a more
    traditional harvest season, and, frankly, lower commodity
    prices have created more normalcy. And during which time, and I
    can be the railroad's worst nightmare, but I also want to
    acknowledge when they have done their part, and I have to say
    for BNSF, which is obviously, our largest railroad by far, they
    have invested mightily in personnel, locomotive, energy, cars,
    and certainly double-tracking much of the Bakken region and
    much of the Upper Midwest. And I want to be sure that the
    record is clear, but I also want to, again, encourage you to
    remain flexible and update the report regularly to acknowledge
    that this robust infrastructure does exist. And it is my hope
    and my expectation that that additional and more robust rail
    infrastructure actually enhances all commodities.
        I also think it is worth noting that because of the STB
    reports, we have noticed that they are pretty well caught. Not
    just pretty well caught up, but caught up to the point where
    there is extra capacity. And much like the electrical grid, it
    doesn't hurt to have a little extra capacity, but it also
    creates opportunity for growth.
        So, I would only probably ask that, for you to comment on
    my comments if you would like to, but again, express my
    appreciation for your attention to the issues.
        Secretary Moniz. Well, thank you. And we certainly
    appreciated, by the way, your participation in the QER field
    hearing in North Dakota, along with your Senate colleagues.
        First of all, I think you have put your finger on really
    what was the main driver of our discussion on this subject in
    the QER, and that was the need for more data. To be perfectly
    honest, the railroads have not always been the most transparent
    in terms of data availability. And I think that has certainly
    been improved, and certainly, the issues around coal, for
    example, have been certainly relieved. There are other issues,
    as we know, in terms of oil by rail that are being addressed,
    and I might say that with the Department of Transportation we
    have now launched the next phase of the study of relevance to
    crude properties and rail.
        Mr. Cramer. Yes.
        Secretary Moniz. It will take about 18 months before we are
    ready with that. But I think you are absolutely right. We have
    had some progress on the data front and EIA, by the way, is
    playing a role in there as well.
        Mr. Cramer. Yes, they are. Yes.
        Secretary Moniz. So it is great.
        Mr. Cramer. Well, thank you. And thank you again, Mr.
    Chairman.
        Mr. Whitfield. Well, thank you.
        And that concludes the first panel. Secretary Moniz, thank
    you very much for your testimony and answers to our questions,
    and we look forward to continuing to work with you on many
    pressing issues as we move forward. And thanks again for your
    leadership. And Mr. Rush will be notifying you of the formation
    of the fan club, and we will be getting together soon with
    that.
        Mr. Rush. Yes.
        Secretary Moniz. Well, thank you, Mr. Chairman. Thank you,
    gentlemen.
        Mr. Rush. Mr. Chairman, we will have our first meeting
    relatively soon.
        Secretary Moniz. OK.
        Mr. Whitfield. And there will be a huge crowd there, so.
        I would like to call up the second panel of witnesses at
    this time. And I want to thank them for their patience. I know
    many of them came from long distances.
        On our second panel today we have Mr. Rudolf Dolzer, who
    flew all the way to the U.S. from Bonn, Germany, to testify.
    And we appreciate him being here. We have Mr. Jason Grumet, who
    is the President of the Bipartisan Policy Center. And we have
    Mr. Gerald Kepes, who is Vice President, Upstream Research and
    Consulting. We have Ms. Alison Cassady, who is the Director of
    the Domestic Energy Policy for the Center for American
    Progress. We have Ms. Emily Hammond, who is Professor of Law at
    George Washington University Law School. And I am going to call
    on my colleague, Mr. Pitts of Pennsylvania, to introduce one of
    our witnesses as well.
        Mr. Pitts. Thank you, Mr. Chairman. I am very pleased to
    introduce Mr. Scott Martin, a County Commissioner from
    Lancaster County, Pennsylvania, formerly chairman of that
    commission, and also active in the statewide Association of
    County Commissioners. An outstanding commissioner who I am very
    pleased could travel down from Pennsylvania to be with us
    today.
        Thank you, Mr. Chairman.
        Mr. Whitfield. Thank you. And, Mr. Martin, thank you for
    being with us.
        Once again, I want to thank all of you. We really look
    forward to your testimony. And I am sorry that there was such a
    delay in your testifying. We had to reschedule a little bit.
    But, Mr. Dolzer, I think you came the longest distance--from
    Bonn, Germany, and I think you were in the German Parliament at
    the time, and you are a professor also at the University of
    Bonn, and so we genuinely appreciate your making this effort.
    And I am going to recognize you to start off with for 5
    minutes. And then after everyone has concluded, we will have
    some questions for some of you. So, Mr. Dolzer, you are
    recognized for 5 minutes.

    STATEMENTS OF RUDOLF DOLZER, ADVISORY BOARD MEMBER, ASSOCIATION
       OF INTERNATIONAL PETROLEUM NEGOTIATORS, AND PROFESSOR OF
    INTERNATIONAL LAW, UNIVERSITY OF BONN; JASON GRUMET, PRESIDENT,
    BIPARTISAN POLICY CENTER; SCOTT MARTIN, COMMISSIONER, LANCASTER
     COUNTY, PENNSYLVANIA; GERALD KEPES, VICE PRESIDENT, UPSTREAM
       RESEARCH AND CONSULTING, IHS; ALISON CASSADY, DIRECTOR OF
    DOMESTIC ENERGY POLICY, CENTER FOR AMERICAN PROGRESS; AND EMILY
      HAMMOND, PROFESSOR OF LAW, GEORGE WASHINGTON UNIVERSITY LAW
                                 SCHOOL

                       STATEMENT OF RUDOLF DOLZER

        Mr. Dolzer. Thank you, Chairman Whitfield, Ranking Member
    Rush, members of the committee. My name is Rudolf Dolzer, I am
    a German national who, all together, has lived about 8 years in
    the United States. In Germany, I became a law professor.
    Subsequently, I was director general of the Federal Office of
    the Chancellor and the Chancellor Kohl. This is where my gray
    hair come from. And then I was appointed three times to the
    German Parliament's Commission of Inquiry. We have that in
    Germany, you can be appointed to Parliament without the right
    to vote.
        In the U.S., I studied in Spokane, Washington, at Gonzaga
    University. Then I studied for a longer period at the Harvard
    Law School. I later taught at five U.S. universities; the last
    time in Dallas in Texas. In Houston, I am a member of the
    Advisory Board of the Association of Independent Petroleum
    Negotiators. A month ago, I published a larger study of
    international cooperation in global energy affairs.
        Mr. Chairman, the era of abundance, as you say, opens up
    new opportunities of leadership for the United States, and the
    world is looking at the United States. This reminds us also, at
    least me, that energy is not just about energy, it is about
    foreign affairs, it is about national security, it is about
    finances. But ultimately, energy has its own characteristics
    and dynamics and, this is my first major point, foreign
    affairs, national security, and also issues such as trade must
    be folded into the fabrics of energy politics and not the other
    way around. This is also my view as regards climate change.
        Energy politics, Mr. Chairman, and when I look at your
    draft on energy diplomacy, energy politics also calls for
    arrangements of its own when it comes to international
    cooperation. Title III of the present bill represents an
    innovative modern approach, also from an international point of
    view. This Title may even be strengthened by a transatlantic
    trade and investment partnership. Again, trade is not just one
    aspect of energy. Recent events, and this has been addressed
    this morning, in Russia and Ukraine, and Europe in general,
    have underlined that energy independence will require safe
    energy supplies, and will require political foresight and a
    robust long-term strategy. Together, we must understand the
    nature of that issue.
        This is not well known, Europe as a whole will, in the
    coming decade become more vulnerable as our resources dwindle,
    in particular in Norway. So this is Europe as a whole. The
    forums as proposed in your bill will serve to provide a common
    basis, but I propose that we go further and establish a more
    advanced concept which I call the Transatlantic Energy Agenda.
    We need to update and broaden existing arrangements with the
    new involvement, I think of parliaments and of the private
    sector. We have longstanding arrangements for cooperation in
    foreign affairs, in national security, in agriculture, for
    example. For energy, arrangements of this kinds are lacking at
    the moment, and I think that ought to change. We need more
    exchange, we need better exchange, we need to know what we are
    doing, and we need exchange about best practice.
        America's abundance also lends itself to strengthening of
    regional partnerships. In Europe, we have particular experience
    in this respect. Since 2009, the European Union has the
    competence to deal with the establishment of a single market,
    but the member states have retained their sovereign powers to
    determine the energy mix. The French made sure that no one
    touches their right to work with atomic power. This is a very
    complex jurisdictional situation which we have in Europe. We
    now have a set of rules promoting competition in Europe with
    liberalization with unbundling. We have less progress, and I
    think this is of interest here so far with regard to internal
    and cross-border connections to overcome isolated domestic
    markets.
        The key concept which has been worked out in the last 24
    months has been the idea of project of common interests, as it
    is called. The new rules call, and I think this is of interest
    here, for a much more rapid process of approving permits. So
    far, that time, don't be astonished, took about 10 years or
    more to have a permit for a trans-border arrangement. This is
    now going down to 3 \1/2\ years at a maximum, according to the
    new law. Also member states now must introduce one-step
    authorities instead of the multitude of institutional
    arrangements we have had so far.
        Now, the funds needed for a single energy market will be
    considerable, but I think the advantage will justify the cost.
    Costs in terms of secure supply, new infrastructure urgently
    needed, more options for the customers, better negotiating
    position on the international level. When you negotiate with
    Russia or the OPEC or Venezuela, I think the larger your
    market, the better it is. In North America, I think a new
    taskforce by the NAFTA countries, similar to the European
    Commission, might help to elaborate a unified energy strategy.
        Mr. Chairman, I conclude. In the past, energy issues have
    at times been a bone of contention between the United States
    and Europe; sometimes a bitter contention. I think your bill
    with Title III has the promise and the hallmarks of a new era
    of cooperation, with tangible benefits on both sides of the
    Atlantic.
        Thank you very much for your attention. I very much
    appreciate this opportunity to express my views before your
    important committee. Thank you very much.
        [The prepared statement of Mr. Dolzer follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Well, thank you, Dr. Dolzer.
        And our next witness, as I said, is Mr. Jason Grumet, who
    is the President of the Bipartisan Policy Center. And thank you
    very much for being with us. You are recognized for 5 minutes.

                       STATEMENT OF JASON GRUMET

        Mr. Grumet. Well, thank you very much, Chairman Whitfield,
    Mr. Rush, and the resilient members of the committee. On behalf
    of the Bipartisan Policy Center, it is a pleasure to join you
    in this important discussion on the economic and policy
    architecture governing our Nation's energy abundance.
        My testimony can be summarized into 3 main points. First, I
    want to applaud the committee for focusing on significant
    opportunities to strengthen North American energy integration
    and collaboration. North American energy security and self-
    sufficiency are, in fact, realistic goals that must be
    vigorously pursued, and not taken for granted.
        My second point, Mr. Chairman, is that increased North
    American cooperation is a critical component of a larger effort
    to promote economic growth through efficient markets, to
    enhance North America's role in global energy trade, and to
    project U.S. power and global interests.
        And my third point is that we must seize the opportunity to
    translate this strength of abundance into a long-term and
    sustainable energy strategy, and not allow this strength to
    result in unintended complacency.
        In short, Mr. Chairman, this committee and Congress has the
    disorienting challenge of managing success, which is a new
    problem for our Nation when it comes to energy policy, and I
    think it creates real opportunities that we need to discuss.
        So let me begin by saying a little bit about the energy
    integration and collaboration. I believe the provisions in this
    legislation that promote data quality and sharing, that
    coordinate planning and improve permitting and siting, are all
    essential to achieving the promise of North American energy
    security.
        The opportunities are particularly pronounced in the case
    of Mexico. While U.S. companies have much to gain in increased
    trade with Mexico, it is hard to overstate the importance of
    energy production to the Mexican economy, and the broader U.S.-
    Mexican relationship. Even after years of decline, energy
    production remains a key source of high-paying jobs, and is
    responsible for actually \1/3\ of the Mexican Government's
    overall activities. If modernization efforts succeed, energy
    production could be a significant driver of Mexican economic
    development and individual opportunity. And the implications
    here are quite broad. The Bipartisan Policy Center believes
    that we must reform our Nation's broken immigration system. And
    while this hearing is not the place to discuss the challenges
    and intricacies of protecting the southern border or enhancing
    our legal immigration, there is no question that improved
    economic opportunity in Mexico is an essential component of
    successful and lasting immigration reform.
        Let me turn now to the issue of siting. While our
    technology for producing energy has evolved dramatically over
    the last decades, our permitting policies date back to the
    1950s and 1960s, and are poorly matched to our rapidly evolving
    needs. We commend the committee's substantive efforts to make
    the cross-border permitting process more transparent and
    predictable. BPC also commends the committee's political
    judgment in crafting this provision to exempt the still-pending
    Keystone decision. It is time to have a broad-based bipartisan
    energy debate that is explicitly beyond Keystone, and it is
    encouraging to see the committee working diligently to avoid a
    focus on symbolic disagreements in favor of producing an agenda
    that can secure broad bipartisan support and become law.
        I would like to now move to the second point, which is a
    focus on the component that North America plays in the larger
    global picture. Our Nation has made, I think some very good
    progress of late supporting LNG exports, but as was discussed
    earlier, current restrictions on crude oil are undermining out
    commitment to efficient markets, they diminish our ability to
    promote free trade and fair trade, and they empower our
    adversaries who seek to use energy as a weapon. I cannot build
    upon Mr. Barton's string site of studies except to agree that
    there has been a spate of recent analyses that all conclude
    that adding a reliable supply of crude to the global market
    will continue to exert downward pressure and actually protect
    U.S. consumers.
        My final point is on the challenge of how we use this
    abundance to promote our long-term sustainability and security
    needs. There is a broad critique of the abundance agenda that
    must be grappled with if we are going to secure the broad-based
    support for an effective national energy policy. The concern is
    that stable, low-cost supplies of oil and gas are undermining
    investment in the diverse array of technologies our Nation and
    the world will require over the next century to meet global
    demand, to protect our security interests, and to confront the
    risks of climate change. This legitimate concern, however,
    leads to very different policy pathways. The Bipartisan Policy
    Center believes that additional action must be taken to
    confront climate change, but we reject the idea that we should
    pursue a low-carbon future by erecting and undermining barriers
    to the resurgence of oil and gas production. Perpetuating
    inefficient markets and creating transportation and
    infrastructure bottlenecks in the hope of somehow reducing
    global reliance on fossil fuels is not an effective climate
    change strategy, and if anything, it will result in increased
    emissions. Instead, as we vigorously pursue the benefits of
    abundance, we must be equally determined in conducting the
    research and creating the incentives to develop and
    commercialize the next generation of energy breakthroughs. From
    carbon capture and storage, to utility-scale solar, to next
    generation biofuels, advanced nuclear energy storage, and an
    array of energy-saving technologies, we must find ways to
    encourage greater investment, despite the current low price
    environment.
        America's hydrocarbon renaissance has given us the gift of
    time. The question before the committee and Congress is what do
    we do with this time.
        In closing, the Bipartisan Policy Center looks forward to
    continuing to work with the committee as you build an
    architecture for abundance that grows our economy, enhances our
    security, and confronts domestic and global environmental
    threats.
        Thank you.
        [The prepared statement of Mr. Grumet follows:]

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Thank you.
        And our next witness, who has already been introduced, but
    is Mr. Scott Martin, who is a County Commissioner, Lancaster
    County, Pennsylvania. Thanks for being with us, and you are
    recognized for 5 minutes.
        Mr. Martin. Thank you, Mr. Chairman. Just for the record,
    it is Lancaster, not Lancaster.
        Mr. Whitfield. What did I say?
        Mr. Martin. Lancaster, that is what--you said like Burt
    Lancaster.
        Mr. Whitfield. OK.
        Mr. Martin. That is in Lancaster County, so----
        Mr. Whitfield. Well, I am going to----
        Mr. Martin [continuing]. We will have Mr. Pitts work with
    you on that one.
        Mr. Whitfield. I am going to let you and Mr. Pitts work
    that out.
        Mr. Martin. All right, well, thank you, Mr. Chairman.
        Mr. Whitfield. But thanks for letting me know.

                       STATEMENT OF SCOTT MARTIN

        Mr. Martin. You are welcome. Thank you, Mr. Chairman, and
    members of the subcommittee. It is an honor to be here. Again,
    I serve on the Lancaster County Board of Commissioners.
        The United States must work to develop a coherent, logical,
    and clear national energy strategy. I applaud Chairman Upton
    for his architecture of abundance legislative framework that
    will hopefully stimulate a wide-ranging and bipartisan debate
    on the need for a long-term national energy agenda based upon
    economic development, commonsense regulations, a modern and
    safe energy infrastructure, greater efficiencies, increased
    exports, especially with LNG, to support our foreign policy
    goals, environmental sensitivity, minimal government
    involvement, and utilization of free market economic
    principles.
        There are certainly many positive developments and trends
    in energy, however, there are also numerous challenges and
    issues that urgently need to be addressed. The longer we wait
    to address and solve these issues will only make them more
    difficult, expensive, complicated, and controversial.
        One of the most pressing priorities is energy independence.
    Of course, energy independence can only be achieved through new
    and recoverable sources. The required infrastructure exists,
    the regulatory environment is not hostile, excuse me, capital
    is available to finance the expansion in both domestic and
    international markets are functioning properly. Thankfully, due
    to horizontal hydraulic fracturing, known as fracking, and the
    discovery of vast new oil and gas reserves, America is now the
    world's largest oil and natural gas producer. As they should,
    energy prices have been decreasing. The United States is
    increasingly able to export large amounts of LNG around the
    world, and especially to European countries. The volatile and
    tense situation in Ukraine demonstrates very clearly why we
    need to build the Keystone XL Pipeline, greatly accelerate the
    permitting of LNG export facilities, and work to expedite the
    building of pipelines and compressor stations.
        As noted above, a significant technological improvement has
    been the use of fracking and extracting natural gas from shale.
    The use of fracking in Pennsylvania, and the construction of
    necessary infrastructure, has had widespread and significant
    economic development impacts. Some of these include 96 percent
    of new energy hires were from the Appalachian area, 45,000 new
    building trade jobs in that same region, 243,000 new energy
    jobs in Pennsylvania, over $1 billion invested by the shale
    industry in road and infrastructure improvements, and including
    energy industry grants to community college and trade schools
    to train the workers needed by extraction companies in the
    Marcellus Shale region, with an average core wage of $68,000 a
    year.
        This increased shale gas production in Pennsylvania has
    also saved the average Pennsylvania family between $1,200 to
    $2,000 annually in energy savings costs. Businesses and other
    institutional energy users have also benefitting from the
    greatly increased availability of cheap natural gas. The
    Pennsylvania National Guard and Army Reserve components of Fort
    Indiantown Gap, the Garden Spot Public School District, and the
    Shady Maple Companies, all in our area, have experienced
    significant savings in their energy bills after switching to
    natural gas.
        Cheaper energy will further a developing industrial and
    manufacturing renaissance in America. In brief, lower energy
    costs create more disposable income, and hence, greater
    aggregate demand. Decreased transportation costs lead to lower
    prices, and American products are more globally competitive.
    The domestic oil and gas revolution can only be successful
    long-term if the necessary pipelines are quickly built and
    brought online. The Williams Company has proposed to build 180
    mile interstate pipeline, known as the Atlantic Sunrise
    Project, from northern Pennsylvania and connect it to their
    main U.S. gas pipeline that travels from Texas to the
    northeast. The actual connection point would be in southern
    Lancaster County. Thirty-seven miles of the proposed pipeline
    would go through my county, and we are talking about a $2.6
    billion economic impact throughout the construction of this
    project. Williams has been very cooperative and easy to work
    with as various concerns have come up. Over 100 route changes,
    which is more than \1/2\ of the original route, have been made
    based on stakeholder input. Williams is also committed to
    making the pipeline open access so that potential customers in
    Lancaster County could directly access the pipeline.
        As you can imagine, a project of this size does generate
    controversy and opposition. One early controversy was the
    proposed routing of the pipeline through a protected and
    environmentally sensitive area parallel to the Susquehanna
    River. The Board of Commissioners, working with several local
    organizations, went to Williams and expresses strong concerns
    regarding this route. Williams quickly found a new route and
    completely moved away from the sensitive areas, and did so with
    Native American sites and water source areas.
        Lancaster County has five significant pipelines running
    through our county. Many property owners are not even aware of
    the pipelines that cross their land. Based upon discussions
    with local farmers having existing pipelines on their property,
    Williams, including with their major U.S. pipeline, has been
    very responsive to their needs.
        Lancaster County is one of the leaders in agricultural
    production, not only in Pennsylvania but across the county, but
    we also preserve more farmland than any other county in the
    United States, with over 100,000 acres preserved. Needless to
    say, the county ordinances that govern our farmland
    preservation program have allowed pipelines since inception.
    Since November of 2014, there have been two elections where the
    proposed pipeline was in a de facto manner on the ballot, and
    the voters were very clear in rejecting efforts to stop the
    proposed pipeline, including an effort to have two townships
    adopt a community-based ordinance that would essentially
    declare that federal and state laws do not apply in these
    municipalities. I believe that many of these voters clearly
    recognize that this pipeline represents the concept of a
    greater good being served.
        In closing, I want to again emphasize how incredibly
    important the ongoing energy revolution is to the future of the
    United States, and indeed, the world. While renewables, greater
    efficiencies, clean coal, next-generation nuclear, and a secure
    and smart grid are vitally important, it is really the
    virtually unlimited supply of clean, recoverable natural gas
    from shale that will lead America into the future.
        Thank you.
        [The prepared statement of Mr. Martin follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Thank you, Mr. Martin.
        And our next witness is Mr. Gerald Kepes, who is Vice
    President of Upstream Research and Consulting. And, Mr. Kepes,
    thanks for being with us, and you are recognized for 5 minutes.

                       STATEMENT OF GERALD KEPES

        Mr. Kepes. Thank you, Mr. Chairman. Members, thank you for
    having me here.
        Mr. Whitfield. Did you turn your microphone on?
        Mr. Kepes. I will do that. How about that? Does that come
    across? OK. Apologize for that.
        Mr. Chairman, members, thank you very much. I am actually
    very pleased to be in front of you today because in my world,
    which is----
        Mr. Whitfield. Mr. Kepes, forgive me for interrupting.
    Would you mind taking Ms. Cassady's microphone and try that
    one?
        Mr. Kepes. Push that again. Thank you very much. Again, my
    apologies. I hope this doesn't eat into my 5 minutes here.
        Mr. Chairman, members, thank you. I am very pleased to be
    here today because the world that I usually am in is the
    business world, in the exploration and production business. I
    am a geologist. I have been in and around the oil and gas
    industry for 30 years, so you can decide whether that makes me
    objective or not on this business, but I think I am fairly
    knowledgeable. And I am also representing the work and analysis
    and experience of my colleagues at my company.
        What I really want to talk today about is competitiveness
    of the E&P sector, and more than the volumes that have been
    produced, the new supplies from shale, just as important for
    you to think about is the incredible competitiveness of the
    energy industry right here. And the reason is that competitive
    basically means cost and efficiency, and reaction to market
    conditions. So, for example, as we look at this low oil price
    period, which has many benefits for the economy, consumers, et
    cetera, at one point clearly, perhaps the Saudis and others
    thought that the U.S. oil industry was just a phenomenon of
    high oil prices. That is not the case. In other words, many
    thought that this industry, the shale oil and gas industry,
    could survive only with high oil and gas prices. That is not
    the case. So that is actually one of my first points today.
    This is not a high oil price phenomenon. But we have had low
    natural gas prices for about 6 years right now, and shale gas
    production has sustained and, in fact, grown. That is
    critically important. And why is that so important? Because
    when it comes to thinking about energy diplomacy and the idea
    that we can export the volumes that we have, because we will
    match or meet the internal requirements, it is not just about
    volumes. What we are really exporting is competitiveness. And I
    want to make that point, is that anything that you might
    consider in terms of these energy diplomacy objectives or
    goals, which are actually quite admirable, they will be
    sustainable and viable as long as this competitiveness exists
    because it is not just offering to send supplies somewhere, the
    marketplace is what is pulling them. Whether it is the Ukraine
    or parts of Europe or Mexico, as I will talk about next here,
    which is a great example, they wouldn't be doing this if these
    supplies exported from U.S. shores were not competitive and a
    lower-priced alternative to other factors. This is particularly
    important because if we define very simply what energy security
    is, which is really, we would argue, reliable supply at
    affordable prices.
        So let's take Mexico. Right now, there is a lot of interest
    in Mexico because of the opening of the E&P sector, that is
    exploration and production, because of the fact that we have
    had over 70 years of a monopoly of the state oil company,
    PEMEX, going to be reversed. But that is actually not the
    biggest issue going on. The bigger issue is the fact that
    Mexico is going to be importing a lot more natural gas from the
    United States. I am sure the committee knows that right now,
    they import about 2 billion cubic feet a day. That number could
    go up to 5 or 6 billion cubic feet a day within the next 10
    years. It is a bigger impact because, two things. One, all this
    will draw more much gas-fired power generation if the reforms
    work in the midstream and downstream in Mexico, and we hope
    that they will. That should result in lower energy prices for
    the entire economy. We don't know yet if it is 10 percent lower
    or if it is 30 percent lower, but the impact of that on the
    Mexican economy competitiveness, this is actually the big
    picture. It is not so much the oil side, what I am trying to
    say, it is the gas side and what we are about to do right
    there. That is a very important factor.
        Now, it is said, and it is quite true, that Mexico has
    substantial natural gas resources, but in this case, the
    decision that they made was, if they tried to develop their own
    natural gas resources right now, it is so expensive that it
    made far more sense to import less expensive U.S. natural gas.
    That is a choice for competition, it is a choice for
    competitiveness, and again, if you want to look at it from an
    energy policy program for the U.S., a tremendous success,
    because as this goes forward, that competitiveness, that lower
    price and efficiency is what is going to have a larger impact
    on the Mexican economy, and a huge contributor to what has
    already been troubled at times, but a very successful U.S.-
    Mexican relationship.
        So those are the arguments I want to put in front of you.
    That, one, shale production is not a high-priced phenomenon.
    Also intrinsic to the supply volumes that we have, which is
    important, is the competitiveness of that. One, that if it is
    going to be part of U.S. energy diplomacy initiatives, then
    that competitiveness needs to continue. That is going to
    undergird all of that in order for it to be successful. And
    finally, U.S. infrastructure processes and regulations,
    naturally, have to be equally competitive in order to allow
    this to be sustained.
        Thank you very much for giving me the time.
        [The prepared statement of Mr. Kepes follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Well, thank you, Mr. Kepes.
        And our next witness is Alison Cassady, who is the Director
    of Domestic Energy Policy for the Center for American Progress.
    And thank you very much for being with us, and you are
    recognized for 5 minutes.

                      STATEMENT OF ALISON CASSADY

        Ms. Cassady. Thank you, Chairman Whitfield, Ranking Member
    Rush, and members of the subcommittee, thank you for the
    opportunity to testify today. My name is Alison Cassady, and I
    am Director of Domestic Energy Policy for the Center for
    American Progress. CAP is a nonprofit organization dedicated to
    improving the lives of Americans through progressive ideas and
    action.
        Before I jump into my more specific comments on the energy
    diplomacy discussion draft, I would like to highlight a topic
    that is not a subject of today's hearing, but I think should
    be, and that is climate change which, to me, is the most urgent
    and challenging energy diplomacy issue of our time.
        Climate change has become a priority in international
    relations because the climate science is so clear. A failure to
    act on climate change risks severe, irreversible impacts on a
    global scale. As the committee considers the Nation's energy
    policy and its interaction with the rest of the world, CAP
    urges you to put climate change front and center of any policy
    that you develop. We can no longer afford to separate energy
    policy from climate policy.
        So with that introductory context in mind, I am going to
    jump into a few thoughts on Section 3104 of the discussion
    draft about cross-border energy projects.
        As you all know, under current law, entities wanting to
    construct or operate a cross-border pipeline or transmission
    line are required to obtain a presidential permit. This section
    of the bill eliminates that requirement, and instead requires
    the relevant federal agency to issue a certificate of crossing;
    that is, unless the agency finds that the cross-border segment
    of the project is not in the public interest of the United
    States.
        And I have a few concerns about this approach. First, the
    new process presumes that the project is in the public
    interest, placing the burden of proof on concerned stakeholders
    to demonstrate that it is not, instead of asking the applicant
    to make the affirmative case that it is. Second, under the new
    process, the applicant only needs to obtain federal approval
    for the portion of the project that physically crosses the U.S.
    border, even if the project itself spans hundreds of miles. And
    finally, the new process limits environmental review under NEPA
    to just the cross-border section of the project. To me, this
    makes little sense since we all know that these types of
    projects can have environmental impacts well beyond the border.
    For a truly transcontinental project, such as a pipeline that
    runs through numerous states down to the Gulf Coast, the
    current presidential permitting process is the only venue for
    the public and stakeholders to examine and understand the
    potential impacts of the whole project that is under
    consideration. Under the process established by this bill, the
    review would be fragmented, it would be state-by-state, and no
    one except the project applicant would ever examine the project
    as a whole.
        I also have a few concerns about Section 3106, which is the
    LNG export section. This section sets a 30-day deadline upon
    the completion of an environmental review for the DOE to issue
    a final decision on any application to export natural gas to a
    non-free trade county. The United States is well on track to
    becoming a new exporter of natural gas. To date, the DOE has
    issued final authorizations to 6 facilities to export up to 8.6
    billion cubic feet per day of LNG. That is more than 10 percent
    of daily U.S. natural gas consumption, and that is on top of
    what we already export to free trade countries like Mexico.
        The existing DOE permitting system appears to be working.
    It puzzles me, therefore, why we need a bill that would seek to
    fast-track new DOE permit approvals. To be clear, CAP does not
    oppose LNG exports in principle, but we have concerns about
    placing an artificial deadline on agency review of permit
    applications. Congress should not preclude DOE from taking the
    time it needs to make a considered and well-informed decision,
    particularly on the most difficult projects. The stakes are
    simply too high for natural gas consumers here in the United
    States. Last year, the Energy Information Administration
    concluded that increased LNG exports lead to increased natural
    gas prices. And these higher natural gas prices create economic
    winners and losers. Certainly, natural gas producers and
    employees of natural gas producers would be the clear winners,
    but, for example, manufacturers that use natural gas as a
    feedstock would face much higher energy costs.
        In short, the decision to export significant volumes of
    natural gas, even to our allies, is a complex one that should
    not be made lightly given the potential consumer impacts here
    in the United States. This decision is made even more
    complicated given the growing demand here at home for natural
    gas in both the electricity sector and the transportation
    sector. So if the United States overcommits to natural gas
    exports via long-term 20-year contracts, consumers here could
    pay the price, and that is why a deliberative process is so
    important.
        With that, I will end my testimony, and be happy to answer
    any questions.
        [The prepared statement of Ms. Cassady follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Thank you, Ms. Cassady.
        And our next witness is Ms. Emily Hammond, who is Professor
    of Law at George Washington University Law School. And thank
    you for joining us, and you are recognized for 5 minutes.

                       STATEMENT OF EMILY HAMMOND

        Ms. Hammond. Thank you, Chairman Whitfield, Ranking Member
    Rush, and the distinguished members of the subcommittee. I
    appreciate the opportunity to testify today.
        In my testimony, I would like to highlight several concerns
    that undermine the discussion draft's important goal of a
    unified energy policy. These concerns relate specifically to
    Sections 3102, 3104, and 3106. In short, those provisions fail
    to properly account for the reliability, fuel diversity, and
    environmental implications of energy policy, and they also fail
    to adequately permit the energy agencies to undertake their
    work in a participatory, deliberative, and well-reasoned
    manner.
        Let me start with the Interagency Taskforce. Despite that
    the lines between energy and the environment no longer truly
    exist--excuse me, the composition of the taskforce has
    significant gaps that will hinder rather than help the
    development of a comprehensive energy policy. Most critical is
    the absence of agencies with environmental expertise. But other
    key agencies like those whose missions relate to jobs, to the
    economy, and to transportation, are also omitted from the
    taskforce. As demonstrated by the QER, which we heard about
    this morning, all of these agencies can successfully work
    together toward unified energy policies, and administrative law
    will show that when agencies collaborate in this way, they are
    more successful, and that they tend to have broader stakeholder
    support, and they have reduced vulnerability to judicial
    challenges.
        For the same reasons, the criteria for the Interagency
    Taskforce as planned should include environmental issues, and
    especially climate change. Failing to do so will only deepen
    the current dysfunctions in our energy regulatory system and in
    the energy markets.
        Second, the authorization for cross-border infrastructure
    projects does not make clear how DOE would implement its
    authority differently from how it currently does under the
    presidential permit framework. Currently procedures do account
    for environmental issues, and those should be retained. I note
    as well that the provisions striking portions of the Federal
    Power Act, and in particular Section 202(f), threaten to
    undermine important backstop authority that the Federal Power
    Act retains for FERC that allow it to ensure grid reliability
    for intrastate projects that cross international boundaries. I
    urge the subcommittee to carefully reexamine the striking
    provisions of this section.
        Finally, the 30-day deadline for DOE action on LNG
    applications is of concern. Even if DOE is able to act quickly
    in some circumstances, it needs more flexibility, given the
    very complex issues at stake. Imposing a rigid deadline
    actually threatens more delay. First, deadline suits, which are
    contemplated by the discussion draft, tend to impose additional
    delays even if those suits are successful. And second, with
    stakes so high and such engaged stakeholders, judicial
    challenges are inevitable. All right, we can easily predict
    lawsuits no matter DOE's decision, and if DOE is rushed in
    making its determination, the record is less likely to be
    carefully developed, the agency's reasoning may not be clear,
    and once again, it is likely to be more vulnerable to judicial
    remand and imposition of even further delays.
        To summarize, the relationship between energy and the
    environment must be considered as the United States seeks a
    uniform energy policy. Careful attention to administrative
    procedure and its role in promoting good government must also
    accompany any new energy statutes. If we move forward with U.S.
    energy policy with these principles in mind, we can make
    substantial improvements for the future.
        Thank you again for the opportunity to testify today, and I
    look forward to your questions.
        [The prepared statement of Ms. Hammond follows:]

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Well, thank you, Ms. Hammond.
        And that concludes the opening statements. I just want to
    make an announcement that we are expecting some votes around
    1:30 or so. There are only six members here, so we each get 5
    minutes. That will be 30 minutes. I think that we can make it
    through and give you all an opportunity to respond if we go
    efficiently and quickly.
        So I am going to recognize myself for 5 minutes, make sure
    I get mine in, Bobby, and then we will go from there.
        Ms. Cassady and Ms. Hammond both made comments about
    climate change, and certainly, that is something we are very
    much concerned about, but I would like to remind everyone that
    within the Federal Government, just the U.S. Federal
    Government, there are 68 different initiatives on climate
    change. There has been a total of about $36, $37 billion spent
    by the U.S. Government alone each year just on climate change.
    So the differences that we are having with President Obama,
    truthfully, is that he views it as the most important issue
    facing mankind, and some of us have different views that a job,
    access to healthcare, clean water, affordable energy, economic
    growth are very important also. So I appreciate your comments--
    and now Mr. Pallone is coming in so that is another person, so
    I am going to have to hurry. OK. I wanted to make that comment.
        Now, Dr. Dolzer, in France, they have a large percentage of
    their electricity produced from nuclear. Germany made the
    decision, I guess, to stop all production of energy by nuclear.
    Is that still the policy in Germany?
        Mr. Dolzer. That is the policy. We decided 3 days after the
    Fukushima events in 2010 to phase-out. We had an earlier change
    in 2000, then we had another change in 2009, and Fukushima is
    still the key event in Germany. At the moment, my prediction
    is--the current situation is that \1/2\ of the nuclear plants
    have already been phased out after 2011, and the rest, eight of
    them are still in operation. They will be phased out by 2021.
        Mr. Whitfield. And, of course, you all have been--in
    Germany, they have been moving very quickly to renewable
    energy: wind, solar, whatever. So what has the result been? I
    mean has it affected your reliability? Has it affected the
    retail prices of electricity or not?
        Mr. Dolzer. It has affected the price of the consumer
    considerably. I think the price went up by about 30 percent for
    electricity for the private households.
        Perhaps one conclusion is, and I am not here taking any
    particular position, if you change policies to it in a
    pragmatic manner without too much momentary intervention, I
    think the change in Germany has forced us to react very
    quickly. It had some rather unintended consequences. At the
    moment, we are the main importer of U.S. coal. Now, of course,
    this is a little bit odd and awkward to have more coal----
        Mr. Whitfield. I was told that last year----
        Mr. Dolzer [continuing]. As a consequence----
        Mr. Whitfield [continuing]. Two-thirds of U.S. coal exports
    went to Europe.
        Mr. Dolzer. Correct. So we are supporting West Virginia. A
    consequence of our decision to phase-out nuclear was de facto
    to promote coal. For the moment, my prediction is this policy
    will not change. None of the major political parties, including
    the one to which I belong, intends to change. However, I think
    if I listen to--correct to what my wife tells me, opposition
    among the people is growing to this policy. The question is, is
    that affordable, what we are doing at the moment in the long-
    run. Germany has many issues, as most other states. We need
    more schools, we need better universities, we need more
    streets, and the question is can we focus our budget in the way
    we did on one issue alone, which is----
        Mr. Whitfield. Yes. When you--in your testimony, when you
    were talking about Europe being more vulnerable, is that what
    you were referring to?
        Mr. Dolzer. That is correct. The----
        Mr. Whitfield. The policy about the renewables and the push
    for----
        Mr. Dolzer. The policy about renewables, together with the
    policy of phasing out nuclear power means that we need more
    energy in the future as regards gas. We have a very special
    situation; we can get more gas from Russia, from Iran, from
    Algeria, or at the moment from Norway, but Norway is about to
    peak. In other words, our choices are not considerable. And
    here I would like to come back for a moment to U.S. policy. The
    U.S. has criticized us, of course, for being dependent too much
    on Russian gas. Correct. Almost 40 percent. At the same time
    now, of course, in an era of abundance, the Europeans would
    hope that the United States allows for more gas to be exported
    to Europe in a situation where we need stronger support with
    our alternatives. And I think even small additional imports
    from the United States would help on a symbolic manner. In
    other words, the position in Europe that you hear quite often
    is, on the one hand the U.S. criticizes that we are too
    dependent on Russia or Iraq or----
        Mr. Whitfield. Yes, OK.
        Mr. Dolzer [continuing]. Whoever, on the other hand, the
    U.S. does not allow and facilitate----
        Mr. Whitfield. Yes.
        Mr. Dolzer [continuing]. Exports to Europe. I think this is
    a position that may be reconsidered.
        Mr. Whitfield. OK. At this time, I am going to recognize
    Mr. Rush for 5 minutes.
        Mr. Rush. I want to thank you, Mr. Chairman. Mr. Chairman,
    I just want to take a moment to welcome back to the committee
    Ms. Cassady. She served for many, many years as an expert
    staffer under our former chairman, Henry Waxman, and she was on
    this side of the table, and now she is on that side of the
    table. But I just wanted to welcome her back. So good to see
    you again, and you are continuing your outstanding work. So
    thank you so very much.
        I want to ask you a question, and also Ms. Hammond. It is
    in response to some of the comments of the chairman. In your
    opinion, and both of your--if you will respond, are energy and
    environmental issues inherently related, and why is it so very,
    very important that any kind of comprehensive energy policy
    also integrate environmental concerns in that policy? And do
    either of you have any specific----
        Ms. Cassady. I would just add to that, the energy
    infrastructure decisions we make today will last decades. So we
    decide to build a pipeline today or build a new energy
    production facility, we are locking in decades of new emissions
    or not, and that is why it is very important to consider,
    whenever we are considering energy policy, we should consider
    climate policy as well, and think through how will this energy
    project affect our transition negatively or positively toward a
    zero carbon future.
        Mr. Rush. I yield back.
        Mr. Whitfield. Gentleman yields back.
        Because we now have called votes, I am going to reduce the
    amount of time to 3 minutes for everyone so that, hopefully, we
    can give everybody a chance.
        So, Mr. Olson, you are recognized for 3 minutes.
        Mr. Olson. Thank you, Chairman. I am with you.
        Welcome to our witnesses. I apologize you got behind an
    energy superstar, and now votes in a hearing coming in this
    hearing room about 2 o'clock, so I have one question for you,
    Mr. Grumet. It is about Mexico.
        As you mentioned in your testimony, Mexico is on the verge
    of a revolution for energy. Changes, changes, changes. I moved
    to Texas in 1972. I saw the stronghold OPEC had on America
    firsthand. 1979, I had just gotten my license. I was sent down
    to get in line for gasoline. Gasoline dependent upon, you have
    a long line, get gas depending upon the last digit of your
    license plate. If it was an even date, go on an even day, even
    number. Long lines. Gas prices doubled. They had a stronghold
    on us. Now, with all the street production in America, our
    neighbor to the north, Canada, and Mexico, I see a vision of
    OPEC going away, replaced by NAPEC. North American Petroleum
    Exporting Countries.
        My question is, sir, what is the one thing Congress can do
    to help make that reality, make NAPEC head of OPEC?
        Mr. Grumet. Thank you for that question, and I will note
    that usually you put the warm-up band before the rock star, so
    you might want to do that--all right, I am back. I think you
    make a very important point. We used to look at our headlines,
    and OPEC was having a meeting and there would be a chill
    through the land. Now, they can meet or not meet, it doesn't
    matter much to us if, in fact, we seize the opportunity of
    abundance. And I think our opportunities with Mexico are
    profound. We have to give a lot of credit to President Nieto
    for trying to reverse 60 years of an investment policy that
    basically discouraged first world technology. I think the
    opportunities to spend a lot of time working with Mexico on
    something that is pedestrian but incredibly important, and that
    is data quality. The ability to have North American energy
    security depends on having good data, shared analysis, shared
    understandings, and a transparency across our analytical
    platforms. That is a very boring but incredibly difficult and
    important thing to do. Our energy administration here is the
    gold standard, and I think we really should spend a lot of
    time, it is going to require some resources if we want Mexico
    to join us. If we had that shared data foundation and we have
    thoughtful laws that, as our colleagues have suggested, provide
    time for environmental deliberation, but then actually require
    a decision, I think we can have an integrated energy system
    that will raise both----
        Mr. Olson. So shared data, number one. We need to have that
    in Congress. That is the best we can do right now?
        Mr. Grumet. I think that is something you could actually
    get done right now, that would be very true.
        Mr. Olson. That is even better. I like that.
        Yield back, sir.
        Mr. Whitfield. Gentleman yields back.
        At this time, recognize the gentleman from New Jersey for 3
    minutes, Mr. Pallone.
        Mr. Pallone. Thank you, Mr. Chairman.
        I just wanted to follow up on a few statements made earlier
    today about Section 3104. This provision makes an end run
    around the National Environmental Policy Act, and would
    eliminate meaningful review of the environmental impacts of
    proposed cross-border energy projects. And this section
    dramatically narrows the scope of environmental review to only
    the cross-border segment of the energy project, the tiny
    portion that physically crosses a national boundary.
        So, Ms. Cassady, does limiting NEPA review to just a small
    sliver of a cross-border energy project make any sense to you,
    and what are some of the drawbacks of looking at just the
    cross-border segment of a pipeline or transmission line?
        Ms. Cassady. Thank you for the question. No, it doesn't
    make much sense to me simply because if you look at the more
    controversial pipeline and other projects that we have examined
    over the last few years, the controversy has never been around
    the impacts at the border. We all know, even the best-
    constructed, highest technology pipeline, an accident can
    happen. And those pipelines span hundreds of miles, they pass
    through sensitive ecosystems, over aquafers, over private and
    public lands. The purpose of an environmental review is to make
    sure that policymakers have all of the facts about the
    potential impacts of the project over the entire course of the
    project, not just the small part at the border, in order to
    better understand how to mitigate those potential impacts. So
    in order to understand the potential consequences of a project,
    we need to look at it in its entirety and not just at the
    border.
        Mr. Pallone. How about the legislation's presumption that
    cross-border projects are in the public interest, how would
    looking at just the cross-border segment impact an agency's
    ability to determine whether or not a project is in the public
    interest?
        Ms. Cassady. The presumption of approval stacks the deck
    against a stakeholder who has legitimate concerns about whether
    or not a project is in the public interest. It forces the
    concerned stakeholder to make the case that it is not in the
    public interest, rather than forcing the applicant to make the
    case that it is. And that is just a higher burden of proof. And
    the way the bill is written, since it is so focused on a very
    narrow part of the proposal and doesn't look at all of the
    potential impacts, it is going to be much harder for a
    concerned stakeholder to make the case that this tiny little
    part of the project is not in the public interest.
        Mr. Pallone. Well, thank you. I think these energy
    infrastructure projects are a lot more than just a border
    crossing: they are going to last for decades, and fundamentally
    NEPA requires us to look before we leap, and that is just basic
    common sense. So we should not be carelessly narrowing or
    creating loopholes in the law, and I think we need to
    understand the impact of these projects before they are
    constructed so that we can protect public health and safety and
    the environment, and I think ignoring the impacts is not going
    to make them disappear. So thank you again.
        Thank you, Mr. Chairman.
        Mr. Whitfield. At this time, recognize the gentleman from
    Pennsylvania, Mr. Pitts, for 3 minutes.
        Mr. Pitts. Thank you, Mr. Chairman.
        Mr. Martin, Lancaster County doesn't have any wells of
    Marcellus Shale being drilled in it. Probably the nearest well
    is 100 miles away. But how is Lancaster County benefitting from
    Marcellus Shale, the boom that you mentioned, even if there are
    no wells being drilled in the county?
        Mr. Martin. Well, first and foremost, what we have seen is,
    one, Pennsylvania putting forth an impact fee with monies that
    were distributed back not only to well counties, but also to
    counties who end up having pipelines. Those kinds of funds that
    are coming back are used to conserve open space, preserve ag
    preservation easements, and also really replace structurally
    deficient bridges. But we are also seeing the economic impact
    as well here. We have IT companies that do data mappings of
    pipelines and wells that have grown dramatically. Engineering
    firms. One of the larger engineering firms in the Marcellus
    Shale region, Virtue Engineering, more than doubled in size.
    Over a 2-year period, they bought an additional 75 vehicles.
        I used in my testimony examples of the Pennsylvania
    National Guard or Shady Maple. Shady Maple saving over 170--it
    is a smorgasbord, if anyone has ever been to one, I highly
    recommend it. $175,000 a year in energy costs, which then
    Garden Spot School District saw, which is in the same area, and
    said we are going to tape in, and they are going to realize
    those savings.
        Now, we would like to see more of it. Unfortunately, about
    \1/2\ of Pennsylvanians do not have access to that natural gas,
    but given the premise of the open access nature of pipelines,
    you will start to see more of these entities like the
    Pennsylvania National Guard at Fort Indiantown Gap, and others,
    who are able to tap in and be able to realize that savings. And
    where we expect to see most of it, and where we hear from a lot
    of our constituents, is especially in the area of
    manufacturing, especially those who are heavily reliant on
    energy to do that. We have companies that spend over $3 million
    a year in energy costs, but they are nowhere near the nearest
    pipeline. So I think we will see further opportunities coming
    forth.
        But I just want to add, Congressman, two of the great
    things I see is, you are now able to get an education in
    Pennsylvania in the petroleum and gas industry that you had to
    go to like Texas Tech to used to be able to get. They are
    investing in areas--I think $2 \1/2\ million dollar grant from
    the industry to Lackawanna Community College. Two-year program,
    cost for that 2 years about $22,000. And when they are coming
    out of that program, the starting rate is like $68,000. So
    those are the types of things that you are seeing. These are
    good middle-class jobs that not only use your head but also use
    your hands. And we are seeing that grow, and that is something
    we hopefully continue to see grow not only through Lancaster
    County, but throughout Pennsylvania.
        Mr. Pitts. Thank you very much, my time has expired.
        Mr. Whitfield. At this time, recognize the gentleman from
    Texas, Mr. Green, for 3 minutes.
        Mr. Green. Thank you, Mr. Chairman. I appreciate hearing
    from the county commissioner. My accent gives me away, but
    obviously, every school in Texas has energy courses, from our
    community colleges all the way up to not only Texas Tech and
    Lubbock, but UT and A&M and University of Houston, and
    everywhere else.
        Ms. Cassady, I want to welcome you back to the committee. I
    know you are familiar with the NEPA regulations promulgated by
    the Council on Environmental Quality, not only from your work
    on the committee, but with the center. Under NEPA, an agency is
    specifically prohibited from segmenting projects, known as
    piecemealing. The Code of Federal Regulations states proposals
    or parts of proposals which are related to each other closely
    enough to be, in effect, a single course of action are
    evaluated. The discussion draft requires the State Department
    to promulgate rules on cross-border pipelines, and you heard
    Secretary Moniz say that the agencies are required to do it.
        Ms. Cassady, wouldn't the federal agency in charge of the
    environmental review be charged with the NEPA review that
    satisfies these CEQ regulations, and looking at the whole
    project?
        Ms. Cassady. My understanding of the bill is that the NEPA
    review only applies to the cross-border segment of the pipeline
    project or the transmission line, and so the federal approval
    only applies to that portion as well. Therefore, NEPA would
    only apply to that portion. There would be state-by-state
    reviews if it was passing through a state. In terms of federal
    review, it just applies to the cross-border segment.
        Mr. Green. Well----
        Ms. Cassady. That is my understanding of the legislation.
        Mr. Green. Shouldn't the cross-border review--so much of
    our NEPA process is also done by other federal agencies and a
    party to it. For example, if you have a pipeline coming from
    Texas in Eagle Ford to Mexico, that cross-border pipeline,
    state law covers it on the property that is not federal, but it
    may be crossing federal lands, and so the NEPA process would
    come into play on that. But granted, the cross-border, which is
    international, and of course, as taxpayers we own our part of
    the border, then they would do it. But you don't think that the
    bill calls for them to look at the whole project? And it may
    not be one agency doing it, but there will be other agencies
    doing a NEPA process on what they are required to do in that
    pipeline, from whether it be at Eagle Ford, of course, into
    Mexico. That is what worries me because I know, and my
    colleague from New Jersey said that the NEPA process is not
    covered. I think it is, because if it is not the Department of
    Energy, for example, for electricity transmission, it would be
    another federal agency if they had the authority in there, or
    in some cases, state agencies. So the NEPA process would be
    included.
        And, Mr. Chairman, I know I am almost out of time, and we
    are almost out of time for----
        Mr. Whitfield. Well, Mr. Green, that is our view as well,
    and we would love for our staff to sit down with Ms. Cassady in
    more detail, but it is our understanding that this does not
    change the NEPA process.
        Mr. Green. Yes. Now, I have to admit, in my few seconds, I
    have a problem with the State Department. We have a company in
    Texas who was--a Canada pipeline that was dormant, they wanted
    to change the name because they bought it, and their goal was
    to not only bring crude oil from Canada, but it was also to
    attach into the United States from Bakken, and the State
    Department decided they needed to review what was on the U.S.
    property.
        Now, I want a federal agency looking at it, but the State
    Department shouldn't be deciding whether a pipeline out of
    Bakken is good or not because, granted, we are getting crude
    oil in trains into Houston, Texas, because our refiners do
    that. It is so much safer and easier to put a pipeline in there
    than it is bring those 100-car trains full of crude oil from
    Canada.
        Mr. Whitfield. Gentleman's time has expired.
        Recognize the gentlemen from Virginia, Mr. Griffith, for 3
    minutes.
        Mr. Griffith. Thank you very much. I appreciate it.
        All right, I will take anybody who can answer this, and I
    suspect it will be Mr. Grumet or Ms. Cassady, or Ms. Hammond.
        Are you all familiar with the regulations relating to
    production of electricity in Mexico by coal? And no is a fine
    answer. If you don't know, you don't know. Nobody knows.
    Because the reason I ask that question is it is part of our
    proposal here, and one that I am interested in, has electric
    transmission facilities, it is not just pipelines. And one of
    my concerns is that we are putting coalminers out of work in
    Appalachia. Like Lancaster, down our way it is not Appalachia,
    it is Appalachia, and we are putting coalminers out of work in
    Appalachia, but if we allow electric transmission lines to
    cross over from Mexico using not-as-good a coal, with not-as-
    good a process, in not-as-clean plants, what gain have we made
    environmentally? And I think this is a case where, while Ms.
    Cassady and I are not going to agree on much, we might actually
    agree on that, that that ought to be a concern.
        Mr. Grumet, do you have any thoughts on that at all?
        Mr. Grumet. I mean you make a very important point, and Dr.
    Dolzer's testimony referred to it as well, right. Electrons and
    molecules don't have a lot of concern about arbitrary political
    boundaries, and that is why we actually have to have a shared
    solution that brings the technology of the United States to
    bear on the issues in Mexico. We have to have shared
    agreements. And I am not going to try to get into a lengthy
    conversation about regional climate action in 60 seconds, but--
    --
        Mr. Griffith. Well----
        Mr. Grumet [continuing]. I think there is a real
    opportunity to actually lift the Mexican system so that it
    actually has parity with the U.S.
        Mr. Griffith. And I certainly don't mind lifting up the
    Mexican system, but I am reminded of the old NASA study that
    shows it takes 10 days for the air to get from the middle of
    the Gobi Desert to the eastern shore of Virginia, so if we are
    going to eliminate coal, waiting another 30 or 40 years on Asia
    just really means we are putting our people out of work and we
    are not really doing that much for the overall northern
    hemisphere----
        Mr. Grumet. All I will say is----
        Mr. Griffith [continuing]. Air.
        Mr. Grumet [continuing]. That we fundamentally have to find
    a way to burn coal in a way that meets our security interests
    and our environmental interests, and there is one way we can do
    that if we invest the resources to get it done. We are not
    doing that right now, so----
        Mr. Griffith. And I agree with you completely. We can do
    more and we should do more. I look forward to working with you
    on clean coal technologies.
        I yield back.
        Mr. Whitfield. And there are no other questions. So thank
    all of you once again for your patience, and we look forward to
    maintaining contact with you and continuing to work with you as
    we try to bring this legislation to the committee.
        I am also asking unanimous consent that a statement from
    the Canadian Electricity Association be submitted for the
    record. And without----
        Mr. Rush. No objection.
        Mr. Whitfield. Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Whitfield. Is this it? OK. And we are going to keep the
    record open for 10 days for any additional material that may
    need to be submitted.
        And once again, that will conclude today's hearing. Thank
    you all for your interest. And, Mr. Dolzer, thanks for coming
    all the way from Germany.
        [Whereupon, at 1:42 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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