[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:]
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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.]
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