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




 
       A LEGISLATIVE HEARING ON EIGHT ENERGY INFRASTRUCTURE BILLS

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

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 2, 2016

                               __________

                           Serial No. 114-111
                           
                           
                           
                           
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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, California7
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)

                                  (ii)
                                  
                                  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     2
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     3
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     4
    Prepared statement...........................................     5
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   147

                               Witnesses

Ann F. Miles, Director, Office of Energy Projects, Federal Energy 
  Regulatory Commission..........................................     7
    Prepared statement...........................................     9
    Answers to submitted questions...............................   175
Max J. Minzner, General Counsel, Federal Energy Regulatory 
  Commission.....................................................    19
    Prepared statement...........................................    21
Tim Powell, Director of Land, GIS and Permits, The Williams 
  Company, on behalf of the Interstate Natural Gas Association of 
  America........................................................    50
    Prepared statement...........................................    52
Edward Lloyd, Evan M. Frankel Clinical Professor of Environmental 
  Law, Columbia Law School, on behalf of the New Jersey 
  Conservation Foundation and the Stony Brook-Millstone Watershed 
  Association....................................................    59
    Prepared statement...........................................    61
    Additional information submitted for the record \1\
Bill Bottiggi, General Manager, Braintree Electric Light 
  Department, on Behalf of the Northeast Public Power Association    79
    Prepared statement...........................................    82
Bill Marsan, Executive Vice President and General Counsel, 
  American Transmission Company..................................    89
    Prepared statement...........................................    91
Tyson Slocum, Energy Program Director, Public Citizen, Inc.......   113
    Prepared statement...........................................   115
Jeffrey Leahey, Deputy Executive Director, National Hydropower 
  Association....................................................   122
    Prepared statement...........................................   124

                           Submitted Material

H.R. 3021, the AIR Survey Act of 2015, submitted by Mr. Whitfield   148
H.R. 2984, the Fair RATES Act, submitted by Mr. Whitfield........   151
Discussion Draft, H.R. ___, a Bill to Amend Section 203 of the 
  Federal Power Act, submitted by Mr. Whitfield..................   153
H.R. 2080, a Bill to Reinstate and Extend the Deadline for 
  Commencement of Construction of a Hydroelectric Project 
  Involving Clark Canyon Dam, submitted by Mr. Whitfield.........   154
H.R. 2081, a Bill to Extend the Deadline for Commencement of 
  Construction of a Hydroelectric Project Involving the Gibson 
  Dam, submitted by Mr. Whitfield................................   156

----------
\1\ Additional information submitted by Mr. Lloyd has been 
  retained in committee files and also is available at http://
  docs.house.gov/meetings/IF/IF03/20160202/104387/HHRG-114-IF03-
  Wstate-LloydE-20160202-SD088.pdf.
H.R. 3447, a Bill to Extend the Deadline for Commencement of 
  Construction of a Hydroelectric Project Involving the W. Kerr 
  Scott Dam, submitted by Mr. Whitfield..........................   158
Discussion Draft, H.R. ___, a Bill to Extend the Deadline for 
  Commencement of Construction of a Hydroelectric Project 
  Involving the Jennings Randolph Dam, submitted by Mr. Whitfield   160
Discussion Draft, H.R. ___, a Bill to Extend the Deadline for 
  Commencement of Construction of a Hydroelectric Project 
  Involving the Cannonsville Dam, submitted by Mr. Whitfield.....   162
Letter of January 29, 2016, from David C. Sinclair, President, 
  Advanced Hydro Solutions, LLC, to Mr. Whitfield and Mr. Rush, 
  submitted by Mr. Whitfield.....................................   164
Statement of Clark Canyon Hydro, LLC, by Alina Osorio, Director, 
  February 2, 2016, submitted by Mr. Whitfield...................   166
Statement of Hon. Ryan K. Zinke, a Representative in Congress 
  from the State of Montana, February 2, 2016, submitted by Mr. 
  Whitfield......................................................   168
Letter of February 3, 2016, from Jim Bradley, Vice President for 
  Government Relations and Policy, American Rivers, to Mr. 
  Whitfield and Mr. Rush, submitted by Mr. Whitfield.............   170


       A LEGISLATIVE HEARING ON EIGHT ENERGY INFRASTRUCTURE BILLS

                              ----------                              


                       TUESDAY, FEBRUARY 2, 2016

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:02 a.m., in 
room 2123 Rayburn House Office Building, Hon. Ed Whitfield 
(chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Barton, Olson, 
Shimkus, Latta, Harper, McKinley, Pompeo, Kinzinger, Griffith, 
Johnson, Long, Ellmers, Flores, Hudson, Upton (ex officio), 
Rush, McNerney, Tonko, Green, Capps, Doyle, Castor, Welch, and 
Pallone (ex officio).
    Also present: Representative Kennedy.
    Staff present: Gary Andres, Staff Director; Will Batson, 
Legislative Clerk; Allison Busbee, Policy Coordinator, Energy 
and Power; Rebecca Card, Assistant Press Secretary; Karen 
Christian, General Counsel; Patrick Currier, Senior Counsel, 
Energy and Power; Tom Hassenboehler, Chief Counsel, Energy and 
Power; A.T. Johnston, Senior Policy Advisor; Brandon Mooney, 
Professional Staff Member, Energy and Power; Dan Schneider, 
Press Secretary; Jeff Carroll, Democratic Staff Director; Rick 
Kessler, Democratic Senior Advisor and Staff Director, Energy 
and Environment; John Marshall, Democratic Policy Coordinator; 
Alexander Ratner, Democratic Policy Analyst; and Tuley Wright, 
Democratic Energy and Environment Policy Advisor.

  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.
    This is our second hearing in the Second Session of the 
114th Congress. I want to take this opportunity to wish 
everybody on the committee and those in attendance a very happy 
and productive 2016.
    This subcommittee has continuously examined legislation 
aimed at reducing red tape when it is standing in the way of 
economic development and development of energy infrastructure 
that would benefit this country. Projects that update and 
expand the Nation's energy infrastructure will create jobs and 
lead to greater supplies of affordable domestic energy for our 
homes and businesses. Affordable energy is very important 
because we are in a competitive world today. We are competing 
with other countries, and the price of electricity and energy 
goes a long way in determining where businesses locate and jobs 
are created. So, this is the unifying theme behind the eight 
bills that we are going to be discussing today.
    H.R. 3021 is the AIR Survey Act of 2015, which was 
introduced by Mr. Pompeo. It is an overdue measure to 
incorporate data collected through aerial surveys into the 
approval process for natural gas infrastructure.
    H.R. 2984, the Fair Rates Act, which was introduced by Mr. 
Kennedy, sets out a process to deal with those situations under 
the Federal Power Act in which FERC neither approves nor denies 
an electricity rate change such as when the Commission is 
deadlocked.
    A draft bill entitled ``A Bill to Amend Section 203 of the 
Federal Power Act'' would serve to address an oversight in the 
Energy Policy Act of 2005. That law amended Section 203 of the 
Federal Power Act which pertains to the sale, disposition, 
merger, purchase, and acquisition of certain utility assets and 
facilities.
    Along with these three bills making procedural changes, we 
also have before us five bills dealing with new hydroelectric 
projects on existing dams. Given the low cost and low emissions 
of hydropower, these projects ought to be among the least 
controversial issues of increasing the Nation's electricity 
supply.
    However, the FERC-issued licenses for these projects have 
expired, or soon will expire, largely because of regulatory 
delays or unforeseen circumstances that have prevented 
construction. These bills extend the life of the license by 6 
to 8 years, allowing these job-creating projects to move 
forward.
    The result of the passage of these eight bills will be more 
jobs, more energy for the American people at an affordable 
price, and I would urge all my colleagues to support them.
    So, that concludes my opening statement.
    [The prepared statement of Mr. Whitfield follows:]

                Prepared statement of Hon. Ed Whitfield

    This subcommittee has continuously examined legislation 
aimed at cutting red tape where it is standing in the way of 
energy infrastructure that would benefit all Americans. 
Projects that update and expand the Nation's energy 
infrastructure will create jobs and lead to greater supplies of 
affordable domestic energy for our homes and businesses. That 
is the unifying theme behind the eight bills we will discuss 
today.
    H.R. 3021, the ``AIR Survey Act of 2015,'' introduced by 
Mr. Pompeo, is an overdue measure to incorporate data collected 
through aerial surveys into the approval process for natural 
gas infrastructure. The bill would enable the Federal Energy 
Regulatory Commission (FERC) to accept such data in its 
application process under the Natural Gas Act, subject to any 
verification through ground survey data that FERC deems 
appropriate. Given the growing importance of natural gas in our 
economy, we will all benefit from a measure such as this that 
will help facilitate the construction of new natural gas 
pipelines.
    H.R. 2984, the ``Fair RATES Act,'' introduced by Mr. 
Kennedy, sets out a process to deal with those situations under 
the Federal Power Act in which FERC neither approves nor denies 
an electricity rate change, such as when the commission is 
deadlocked. These rate changes still take effect, but currently 
there are limited opportunities for the public to challenge 
them because FERC did not officially issue an order. This bill 
would create an administrative process for members of the 
public who wish to challenge such rate changes.
    A draft bill entitled ``A Bill to Amend Section 203 of the 
Federal Power Act'' would serve to address an oversight in the 
Energy Policy Act of 2005. That law amended section 203 of the 
Federal Power Act, which pertains to the sale, disposition, 
merger, purchase and acquisition of certain utility assets and 
facilities. It raised the minimum monetary thresholds for FERC 
jurisdiction from $50,000 to $10 million for three of these 
subcategories, but not for acquisitions. This bill would raise 
the minimum for acquisitions to $10 million as well, thus 
avoiding FERC process for relatively small transactions.
    Along with these three bills making procedural changes, we 
also have before us five bills dealing with new hydroelectric 
projects on existing dams. Given the low cost and low emissions 
of hydropower, these projects ought to be among the least 
controversial means of increasing the Nation's electricity 
supply. However, the FERC- issued licenses for these projects 
have expired, or soon will expire, largely because of 
regulatory delays or unforeseen circumstances that have 
prevented construction. These bills extend the life of the 
licenses by 6 to 8 years, allowing these job-creating projects 
to move forward.
    The result of the passage of these eight bills will be more 
jobs and more energy for the American people, and I urge all my 
colleagues to support them.

    [The proposed legislation appears at the conclusion of the 
hearing.]
    Mr. Whitfield. At this time I would like to introduce and 
recognize the gentleman from Chicago, Mr. Rush, and also wish 
you a happy new year, Mr. Rush. He is recognized for 5 minutes.


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

    Mr. Rush. Thank you, Mr. Chairman. I wish you a happy new 
year, and I wish all those who are in this committee room a 
happy new year also.
    I want to thank you, Mr. Chairman, for holding today's 
hearing on these eight energy infrastructure bills. Mr. 
Chairman, while I support the majority of these bills before us 
today, I do have some concerns that I would look forward to 
addressing as we move forward through the legislative process.
    In regards to the five bills extending the time period for 
expired hydropower licenses, I support each of these pieces of 
legislation. These bills would extend the construction time for 
hydropower projects across the country up to 8 years, and I 
commend my colleagues for sponsoring these important bills.
    Hydropower is a renewable source of energy that has 
received widespread, bipartisan support from those on this 
subcommittee. Allowing these projects to commence will help 
increase the Nation's portfolio of clean, home-grown energy 
resources.
    Mr. Chairman, I also support very strongly my colleague Mr. 
Kennedy's bill, the Fair Rates Act, which would provide the 
public with an opportunity to legally challenge rate changes 
approved by FERC essentially by new vote.
    Mr. Chairman, five times in the past 14 years rate changes 
have been approved by default due to the Commission being 
deadlocked during a vote. Even when these rate changes 
negatively impact consumers, the public currently has no legal 
recourse to challenge these cases, as a deadlocked vote is not 
legally viewed as in order. The Fair Rates Act would rectify 
this inequity by treating new rate changes, including those go 
into effect by default, as a FERC order that can be challenged 
administratively and, very important, by consumers.
    Protecting consumers and average Americans should be a 
primary objective of all the bills this committee considers. 
While I support most of these legislations that we are 
considering today, I am not sure that the remaining two bills 
meet that same high threshold.
    Mr. Chairman, I look forward to engaging today's witnesses 
on both H.R. 3021, the AIR Survey Act of 2016, and the bill 
that will amend Section 203 of the Federal Power Act. For both 
of these pieces of legislation, I want to make sure that there 
aren't any unintended consequences that we are overlooking 
before we move forward in making these important policy 
changes.
    My biggest concern is with H.R. 3021, which will require 
FERC to give the same equal weight to aerial survey data that 
it does ground survey data in the prefiling process and 
avoiding completion of an application for construction of our 
natural gas pipeline. Mr. Chairman, I look forward to hearing 
from our expert panelists on the practical impact of this 
change in policy for both landowners as well as the impact on 
the environment.
    So, once again, Mr. Chairman, I applaud you for holding 
this timely hearing today and I look forward to hearing from 
all of our expert witnesses.
    With that, I yield back the balance of my time.
    Mr. Whitfield. Thank you, Mr. Rush.
    At this time I would like to 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, Mr. Chairman and our ranking 
member, for this hearing today on a number of bills addressing 
programs and projects administered by FERC.
    I am particularly pleased that the subcommittee is 
considering H.R. 2984, Representative Kennedy's Fair Rates Act, 
which would greatly improve the process by which FERC votes are 
reconsidered. This small but significant change to the Federal 
Power Act would ensure that, if there is a deadlocked vote 
amongst Commissioners, there will still be recourse for 
eligible parties to seek a review of the rates that result from 
a de facto decision of the Commission.
    The need for this change became evident in the wake of a 
New England forward-capacity market auction in 2014. At that 
time, FERC had only four Commissioners and they split over the 
question of whether the auction results were just and 
reasonable. Since FERC didn't disapprove the auction results, 
wholesale electricity prices in New England increased 
dramatically. So, while rates went up, none of the affected 
parties could challenge the decision or resulting rate increase 
and, therefore, no rehearing or judicial review was possible.
    There is an old saying, Mr. Chairman, that if you choose 
not to decide, you still have made a choice. And we should not 
deprive stakeholders of any recourse when a nondecision by FERC 
has real consequences for consumers, producers, and others. 
Representative Kennedy's bill doesn't favor one side or 
another. It merely provides those who want to challenge the 
outcome of an action the same rights they would have if FERC 
made an affirmative decision. It is thoughtful and meaningful 
legislation that deserves to become law as soon as possible.
    Unfortunately, I can't say the same about the AIR Survey 
Act of 2015. It is a reckless and brazen effort to further 
strip landowners and resource agencies of their ability to 
participate meaningfully in the gas pipeline siting process. 
The bill directs FERC and agencies responsible for implementing 
Federal environmental laws not just to allow data collected by 
AIR to be used in gas pipeline certification activities, but it 
goes so far as to tell scientists and regulators to give it the 
same weight in the decision process as data collected on the 
ground. We should not categorically make a decision that photos 
taken thousand of feet in the air are as accurate in 
cataloguing endangered plants and animals as surveys on the 
ground, nor should we second-guess scientists and other trained 
professionals in State environmental offices or at the Army 
Corps as to how best to collect data related to their 
implementation of the Clean Water Act.
    Furthermore, this legislation is not needed. FERC already 
allows aerial data to be used in proceedings under Section 7 of 
the Natural Gas Act. The only reason to move the legislation is 
to shortcircuit meaningful environmental assessments and to get 
around the concerns of private landowners and in some cases 
local governments who have legitimately barred pipeline 
companies from surveying after those companies were caught 
acting illegally without proper authorization. It is a bad 
concept and a bad bill, and it should not move any further.
    Mr. Pompeo's other legislative proposal is, on the other 
hand, something worth exploring. The committee print before us 
would add a $10 million threshold to trigger FERC review of a 
merger or consolidation, since under current law no such 
threshold exists. I am particularly interested in hearing from 
Mr. Slocum regarding the concerns he raised with this 
legislation because this is not a change that we should 
undertake lightly. I look forward to working with my colleagues 
to see if there is a way forward on this issue.
    Finally, I just want to say that I know of no major 
objection with regard to any of the five hydroelectric 
construction license extension bills before us. They have all 
bipartisan support, and I hope we will move quickly on them.
    I appreciate the chair and the ranking member for holding 
this hearing, and the witnesses.
    [The prepared statement of Mr. Pallone follows:]

             Prepared statement of Hon. Frank Pallone, Jr.

    I want to thank Chairman Whitfield and Ranking Member Rush 
for holding today's legislative hearing on a number of bills 
addressing programs and projects administered by the Federal 
Energy Regulatory Commission (FERC).
    I am particularly pleased that the subcommittee is 
considering H.R. 2984, Rep. Kennedy's FAIR Rates Act, which 
would greatly improve the process by which FERC votes are 
reconsidered. This small, but significant change to the Federal 
Power Act would ensure that if there is a deadlocked vote among 
the Commissioners, there will still be recourse for eligible 
parties to seek a review of the rates that result from a de 
facto decision of the Commission. The need for this change 
became evident in the wake of a New England Forward Capacity 
Market Auction in 2014. At that time, FERC had only four 
Commissioners and they split over the question of whether the 
auction results were just and reasonable. Since FERC didn't 
disapprove the auction results, wholesale electricity prices in 
New England increased dramatically. So, while rates went up, 
none of the affected parties could challenge the decision or 
resulting rate increase, and, therefore, no rehearing or 
judicial review was possible.
    There's an old saying that ``if you choose not to decide, 
you still have made a choice.'' We should not deprive 
stakeholders of any recourse when a nondecision by FERC has 
very real consequences for consumers, producers and many 
others. Rep. Kennedy's bill doesn't favor one side or another, 
it merely provides those who want to challenge the outcome of 
inaction the same rights they would have if FERC made an 
affirmative decision. It is thoughtful and meaningful 
legislation that deserves to become law as soon as possible.
    Unfortunately, I cannot say the same thing about the Air 
Survey Act of 2015: it is a reckless and brazen effort to 
further strip landowners and resource agencies of their ability 
to participate meaningfully in the gas pipeline siting process. 
The bill directs FERC and agencies responsible for implementing 
Federal environmental laws not just to allow data collected by 
air to be used in gas pipeline certificating activities, but it 
goes so far as to tell scientists and regulators to give it the 
same weight in the decision process as data collected on the 
ground! We should not categorically make a decision that photos 
taken thousands of feet in the air are as accurate in 
cataloging endangered plants and animals as surveys on the 
ground. Nor should we second guess scientists and other trained 
professionals in State environmental offices or at the Army 
Corps as to how best to collect data related to their 
implementation of the Clean Water Act.
    Furthermore, this legislation is not needed. FERC already 
allows aerial data to be used in proceedings under section 7 of 
the Natural Gas Act. The only reason to move this legislation 
is to short circuit meaningful environmental assessments and to 
get around the concerns of private landowners and, in some 
cases, local governments who have legitimately barred pipeline 
companies from surveying after those companies were caught 
acting illegally, without proper authorization. It is a bad 
concept, a bad bill and it should not move any farther.
    Mr. Pompeo's other legislative proposal is, on the other 
hand, something worth exploring. The committee print before us 
would add a $10 million threshold to trigger FERC review of a 
merger or consolidation, since, under current law, no such 
threshold exists. I am particularly interested in hearing from 
Mr. Slocum regarding the concerns he raises with this 
legislation because this is not a change we should undertake 
lightly. I look forward to working with my colleagues to see if 
there is a way forward on this issue.
    Finally, I just want to say that I know of no major 
objection with regard to any of the 5 hydroelectric 
construction license extension bills before us. They all have 
bipartisan support, and I hope we will move on them quickly.
    I appreciate the chair and ranking member for holding this 
hearing, and I also thank the witnesses for participating 
today.

    Mr. Pallone. I would like to yield the remainder of my time 
to Mr. Kennedy.
    Mr. Kennedy. Thank you very much, Mr. Pallone. I am 
grateful.
    And I want to thank the chairman and the ranking member for 
holding this important hearing.
    My constituents face the highest energy rates in the 
continental United States. So, today's discussion about 
skyrocketing energy cost is, unfortunately, nothing new to my 
home State.
    But what happened to us 2 years ago after rates were filed 
with FERC should never happen, no matter how expensive or cheap 
your energy bill is. The Commission, which at that time was 
down to four Commissioners, deadlocked. The rates become 
effective by operation of law, precluding any avenue for 
administrative redress.
    As a result, any now protest of those rates were dismissed 
because, according to FERC and the Federal Power Act, there is 
no decision to rehear. That is unacceptable. But there is 
nothing my constituents could do to protest because of the flaw 
in the Federal Power Act.
    My bill, H.R. 2984, the Fair Rates Act, is a simple 
technical fix to ensure that scenario doesn't happen again. It 
ensures all administrative and judicial avenues for redress are 
available whenever new rates take effect, including in the 
advent of a deadlocked Commission.
    Today FERC once again is down only to four Commissioners, 
without a fifth so much as nominated, setting the stage for 
that event to play out again in the next weeks or in the month 
ahead.
    I appreciate FERC's thoughts on the legislation and their 
work with both me and my staff over the past several years.
    I look forward to hearing from the witnesses, and 
particularly Bill Bottiggi, who was willing to come down to 
Washington to share his expertise with us.
    I yield back. Thank you.
    Mr. Whitfield. The gentleman yields back, and that 
concludes our opening statements today.
    So, we have two panels of witnesses. On our first panel we 
have two witnesses. I would like to welcome them first, Ann 
Miles, who is the Director of the Office of Energy Projects at 
the Federal Energy Regulatory Commission, and the other witness 
is Max Minzner, who is General Counsel, Office of the General 
Counsel, Federal Energy Regulatory Commission.
    I thank both of you very much for taking time to be with us 
today to give your thoughts and ideas about these pieces of 
legislation.
    Ms. Miles, I will recognize you first for 5 minutes for 
your opening statement.

    STATEMENTS OF ANN F. MILES, DIRECTOR, OFFICE OF ENERGY 
  PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION, AND MAX J. 
 MINZNER, GENERAL COUNSEL, FEDERAL ENERGY REGULATORY COMMISSION

                   STATEMENT OF ANN F. MILES

    Ms. Miles. Thank you.
    Mr. Whitfield. And be sure to turn the microphone on.
    Ms. Miles. Good morning, Chairman Whitfield, Ranking Member 
Rush, and members of the subcommittee.
    My name is Ann Miles, and I am the Director of the Office 
of Energy Projects at the Federal Energy Regulatory Commission.
    The Commission is responsible for siting infrastructure, 
including non-Federal hydropower projects, interstate natural 
gas pipelines and storage facilities, and liquefied natural gas 
terminals.
    I appreciate the opportunity to appear before you to 
comment on the five hydropower bills to extend commencement of 
construction deadlines and on the Aerial Infrastructure Route 
Survey Act of 2015.
    As a member of the Commission's staff, the views I express 
in this testimony are my own and not those of the Chairman, 
other than as specifically noted, or of any individual 
Commissioner.
    I will first comment on the hydropower extension bills, 
H.R. 2080, H.R. 2081, H.R. 3447, the bill regarding Jennings 
Randolph Project No. 12715, and the bill regarding Cannonsville 
bill, Project No. 13287. Each of the bills seeks to extend the 
project's commencement of construction deadline to a total of 
no more than 10 years from the date the project license was 
issued. The last several Commission Chairmen, as well as the 
current Chairman, have taken the position of not opposing 
legislation that would extend the commencement of construction 
deadline no further than 10 years from the date the licensing 
decision was issued. Because each of these bills provides for 
commencement of construction deadlines that do not exceed 10 
years from the dates of the respective licenses being issued, I 
do not oppose these bills.
    I note that all bills, except for H.R. 2081, contain a 
reinstatement provision, should the period required for 
commencement of construction expire prior to enactment of the 
Act. Congress may want to consider including a reinstatement 
provision in H.R. 2081.
    Second, I will comment on the Aerial Infrastructure Route 
Survey Act, H.R. 3021. The bill would amend Section 7 of the 
Natural Gas Act to provide that data collected by aerial survey 
will be accepted in lieu of and given equal weight to ground 
survey data for the purpose of completing the Commission's 
natural gas project prefiling process and for completing 
applications associated with Federal authorizations related to 
such projects.
    The bill provides that an agency may require that aerial 
survey data be verified through the use of on-the-ground survey 
data before project construction. Aerial surveys can be a 
useful tool for developing project routes and making initial 
determinations of resources that may be affected by a proposed 
project.
    Currently, Commission staff accepts aerial survey data, 
especially where ground access is not available during the 
prefiling or application review process. However, most project 
applications include ground survey data for a significant 
portion of the right-of-way. I do have some concern that 
waiting to verify large amounts of aerial data until late in 
the project development process or after issuance of a 
certificate could in some cases pose difficulties.
    For example, if it was not discovered until the 
preconstruction stage that a project might affect historic 
properties or endangered species, matters that can be difficult 
to determine with certainty in the absence of on-the-ground 
surveys, a project proponent might be required at a late stage 
to amend its approved route or to conduct additional 
mitigation, which could cause delay and additional expense.
    This concludes my remarks, and I would be pleased to answer 
any questions you may have.
    [The prepared statement of Ms. Miles follows:]
    
    
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    Mr. Whitfield. Ms. Miles, thanks very much for your opening 
statement.
    Mr. Minzner, you are recognized for 5 minutes.

                    STATEMENT OF MAX MINZNER

    Mr. Minzner. Mr. Chairman, Ranking Member Rush, members of 
the subcommittee, thank you for inviting me to testify here 
today.
    My name is Max Minzner. I am the General Counsel at the 
Federal Energy Regulatory Commission. Like Ms. Miles, I am also 
a staff witness and my remarks today don't necessarily reflect 
the views of the Chairman or any specific Commissioner.
    I have been asked to testify today on two bills that would 
amend the Federal Power Act. One is a bill that would modify 
Section 203 of the Federal Power Act to set a minimum threshold 
value of $10 million on the merger or consolidation of 
facilities belonging to public utilities that would be required 
for FERC approval.
    And two, H.R. 2984, a bill that would amend Section 205 of 
the Federal Power Act, that would permit a party to seek 
rehearing and subsequent appellate review of any rate change 
filed under Section 205 that takes effect without Commission 
action.
    The first proposed bill would amend a provision of the 
Federal Power Act, Section 203, that requires public utilities 
to seek Commission approval before engaging a wide range of 
corporate transactions. In particular, this bill would change 
the Act so that utilities would only need prior FERC approval 
to merge or consolidate facilities, subject to the Commission's 
jurisdiction, if the facility's value was in excess of $10 
million. In other words, mergers or consolidations of 
facilities with a value less than that amount would not need 
FERC approval.
    This bill would align this provision of the FPA with the 
other subsections of Section 203(a)(1) which regulate other 
transactions by public utilities, each of which already 
contains a $10 million de minimis threshold. In my view, the 
proposal to add the same de minimis threshold to Section 
203(a)(1)(B) of the FPA could ease the administrative burden on 
Commission staff and the regulatory burden on industry without 
a significant negative effect on the Commission's regulatory 
responsibilities. Transactions below that threshold are 
unlikely to impose a significant negative impact on competition 
or the rates of utility customers.
    Second, H.R. 2984 would permit rehearing and appellate 
review of changes to rates made under Section 205 when those 
rates take effect without Commission action. To change rates or 
other tariff provisions under Section 205, a public utility 
typically makes a filing with FERC and the Commission will take 
action on the proposal during a 60-day statutory time period. 
In very rare cases, the Commission has not acted on that filing 
within the time period, and the filing takes effect when the 
period expires.
    In my view, rehearing and appellate review are not 
currently available when a filing submitted pursuant to Section 
205 of the FPA takes effect by operation of law. Appellate 
review is an important procedural avenue, though, for those who 
do not prevail before an administrative agency. Where review in 
the court of appeals may be challenging under this legislation 
because the appellate court will not be able to rely on the 
Commission's reasoning in the first instance, the possibility 
of a rehearing order or a remand from the court of appeals 
should reduce this difficulty and allow the court of appeals to 
effectively engage in review of the rate change.
    That concludes my prepared testimony. I look forward to 
your questions.
    [The prepared statement of Mr. Minzner follows:]
    
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    Mr. Whitfield. Mr. Minzner, thank you, and thank both of 
you for your testimony.
    At this time I recognize myself for 5 minutes of questions, 
and I yield my time to the gentleman from Kansas, Mr. Pompeo.
    Mr. Pompeo. Thank you very much, Mr. Chairman. Thank you 
for yielding to me as well.
    Ms. Miles, thank you for being here this morning. I wanted 
to ask you a couple of questions about H.R. 3021.
    Can you describe for me some of the benefits of having 
access to aerial route survey data for FERC?
    Ms. Miles. Well, aerial survey can be very useful in making 
general determinations or in some resource areas more specific 
determinations. So, certainly, for getting the route and 
initial determinations, yes, it can be useful.
    Mr. Pompeo. I appreciate that.
    Yes, I want to talk about a couple of concerns that you 
expressed and try to understand them, so that we might be able 
to make some changes to accommodate them, if we need to.
    In regard to endangered species, considering all the time 
and money spent to protect them, isn't it safe to assume that 
we know where those habitats are?
    Ms. Miles. Not necessarily on a specific project. The 
details would be required for us as well as other Federal 
agencies who have responsibility for dealing with the species, 
the Fish and Wildlife Service, especially for pipeline 
projects.
    Mr. Pompeo. But isn't it the case that the company that is 
intending to do this survey is going to do their best to 
identify that? That is, they don't want to have big amendments 
at the end, either. They have an enormous financial incentive 
to get this right.
    Ms. Miles. Very understandable. As we are seeing and as I 
said in our projects so far, most companies, where they can 
have project access early, are gathering that data. We all want 
to do as much as we can during prefiling.
    Mr. Pompeo. Yes. Yes. No, that makes perfect sense, and 
when you have ground access, that is great. But in those 
instances where I think this is most important is the places 
where ground access is not available; it has been denied. And 
so, the only other option would be being very disruptive to the 
landowner, either eminent domain or something of that nature. 
This is a way to mitigate the impact to those landowners and 
still get the information that we all need to make sure that 
that certificate is properly granted.
    It seems to me we have struck the right balance here. Do 
you agree with that?
    Ms. Miles. I think on a narrower course of that, it would 
be. I am not sure the bill is specific about the areas where 
there isn't access, there isn't on-the-ground access.
    Mr. Pompeo. That makes sense. And the same thing with 
respect to historic sites, those are listed. Right? Most often, 
we don't have to guess. I suppose there is a handful that are 
unknown, but that has to be the rarest of creatures.
    Ms. Miles. I am sorry, I missed what----
    Mr. Pompeo. With respect to historic sites, you expressed 
some concern that a narrow survey might not adequately identify 
an historic site. There is a registry of historic sites. I 
mean, that is not hard to figure out where they are.
    Ms. Miles. I think that many of those, though, will require 
on-the-ground work. Yes, there is a register of historic sites, 
but sometimes there are sites along the way that haven't been 
identified. We know there are archaeological or cultural sites, 
but they haven't been identified and they are not on the 
register yet. And so, it could take on-the-ground survey to get 
at that information.
    Mr. Pompeo. Yes, I just think about these companies that 
are trying to do this. They are going to try to get that right. 
They have the most vested interest in making sure that they do 
that right. And if they need a ground survey to do it, I am 
confident they will work through it. I just think it is 
important that they and FERC have access to this tool, so that 
we can be less disruptive to landowners as we are working our 
way through the process.
    Thanks for your testimony.
    Mr. Minzner, a question for you on the amendment to the 
draft, to Section 203. Tell me what the scale of the burden 
that this would relieve on FERC is. Can you give me man-hours? 
If we adjust these limits to the place that is proposed, tell 
me what benefits accrue to FERC in terms of reduced burden.
    Mr. Minzner. Congressman, thank you for that question.
    Mr. Whitfield. Mr. Minzner, be sure and pull your 
microphone closer. Interestingly enough, we have people 
watching this on the Internet, and they have complained that 
they didn't hear everything you said.
    Mr. Minzner. Thank you, Mr. Chairman.
    And thank you for your question, Congressman.
    I don't think I have an estimate of the number of man-hours 
that it would save the Commission. I do know that about 20 
percent of the Section 203 applications that FERC considered in 
fiscal year 2015 would fall below the statutory threshold, and 
therefore, would not have needed approval if this bill were in 
place last year.
    I can tell you that every filing that comes into the 
Commission under Section 203 otherwise looks at it closely and, 
if Commission action is required, a draft order is prepared for 
the Commission. And so, every filing is taken seriously and 
staff works on it intensively.
    Mr. Pompeo. Do you see any downside risk from creating 
parity between acquisitions and dispositions? Right, they are 
very similar? Do you see any burden or any downside to what we 
are proposing in just making parity as between those two types 
of transactions?
    Mr. Minzner. Well, the value of the bill, of course, as you 
said, would bring parity between this provision of Section 203 
and otherwise. It is, of course, a policy choice of how much 
oversight Congress wants these mergers to have at the 
Commission level. In my view, transactions that are below the 
de minimis threshold pose relatively limited risk to rates or 
competition.
    Mr. Pompeo. Great. Thank you very much.
    And thank you again for yielding, Mr. Chairman.
    Mr. Whitfield. At this time I recognize the gentleman from 
Illinois, Mr. Rush, for 5 minutes.
    Mr. Rush. Thank you, Mr. Chairman.
    Now, Ms. Miles, in your statement you note that, currently, 
``most project applications include ground surveys for a 
significant portion of the right-of-way.'' You also state that 
``waiting to verify large amounts of aerial data until late in 
the project development process, or after issuance of a 
certificate, could in some cases pose difficulties.''
    Are you concerned that policy change outlined in the AIR 
Survey Act of 2016 may impact, actually, the need to raise an 
additional cost for our pipeline projects rather than 
expediting these same projects? And can you explain your 
concerns?
    Ms. Miles. I think if it is carried out similarly to now, 
where the companies are doing the on-the-ground surveys where 
they have access, and in the majority of the cases companies do 
have access to a good bit of survey route and are able to do 
the on-the-ground surveys in the earlier stage of the 
certification process, as long as that continues, I think that 
is fine. As I said in my testimony, aerial survey data can be 
useful where there is not on-the-ground access, as long as 
there is the opportunity to verify that later in the process by 
actual on-the-ground surveys for the resource areas where it 
would be necessary. It is not necessary for all resource areas.
    Mr. Rush. Thank you.
    Mr. Minzner, in your statement you cited serial mergers as 
a possible concern with the merger in Section 203 of the 
Federal Power Act. You state that, ``The Commission would no 
longer have the authority to review and approve mergers valued 
at less than $10 million even in situations where the merger 
took place as one of a series of transactions that exceeded the 
limit in total.''
    However, you also state that you believe that FERC has 
other tools available to protect consumers and the public 
interest if circumstances such as what I describe would arise. 
Can you explain what are these other tools that the FERC has at 
its disposal that would help in the situation that I describe?
    Mr. Minzner. Yes, Congressman. Thank you.
    The Commission has a range of regulatory tools that it 
exercises in its oversight of public utilities regulated under 
the Federal Power Act. For instance, if a utility gains market 
power and is in a situation where it has authority to charge 
market-based rates, the Commission can modify or eliminate that 
authority to charge market-based rates.
    To the extent that a public utility is operated in one of 
the Commission-approved organized wholesale electric markets, 
there are a range of Commission-approved mitigation measures 
that are designed to limit or eliminate the exercise of market 
power. And, of course, the Commission retains its enforcement 
authority to regulate misconduct that is a violation of 
Commission rule or order or rises to a level of market 
manipulation.
    Those are three examples of mechanisms that the Commission 
would have to regulate the exercise of market power or other 
misconduct, even in the absence of the merger authority.
    Mr. Rush. Thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. The gentleman yields back.
    At this time I recognize the gentleman from Texas, Mr. 
Olson, for 5 minutes.
    Mr. Olson. I thank the chair.
    And welcome to our friends from FERC.
    I am going to talk about natural gas and pipelines. The 
questions will be mostly for Ms. Miles, but, Mr. Minzner, if 
the spirit so moves you, please answer if you feel comfortable.
    There has been big change in the last decade. Our electric 
grid relies heavily on natural gas. If the President's Clean 
Power Plan survives in court, that trend will continue and 
accelerate.
    Gas is critical as a baseload power. It is immune to 
weather, and it is critical for ramping up and down wind and 
solar on our grids. But gas can't keep the lights on without a 
robust pipeline system. And that is why this committee examines 
legislation designed to make the permitting process more 
reasonable.
    My first question is for you, Ms. Miles. It is a broad one 
on the pipeline landscape. I have a few specifics about siting.
    First, what trends do you see in pipeline construction and 
what does this tell you about the future of natural gas?
    Ms. Miles. We have seen a tremendous increase in the 
workload before us, both for natural gas pipelines as well as 
for liquefied natural gas facilities, at least doubling in the 
number of projects that are before us, in some cases tripling 
in the capacity that would move through those pipelines, and 
similar increases in interest in liquefied natural gas 
projects.
    Mr. Olson. Mr. Minzner, care to comment, sir?
    Mr. Minzner. Nothing to add to Ms. Miles.
    Mr. Olson. That is oK. That is fine.
    Again, Ms. Miles, as FERC is a lead agency for siting 
natural gas pipelines that cross across State lines, you all 
are responsible for sending the schedule and coordinating all 
the various environmental permits, is that correct?
    Ms. Miles. Yes, that is correct.
    Mr. Olson. Would you prefer to review those various 
permits, like Clean Water Act permits and all the other boxes 
that need to be checked, done concurrently on the order they 
are submitted as opposed to successively? Do you prefer that, 
concurrently as opposed to successively?
    Ms. Miles. The more that we can work at the same time in 
gathering information and reviewing that information, working 
together on our environmental documents, yes, that is a good 
thing.
    Mr. Olson. Concurrently versus successive, oK, great.
    Are you aware of any situations where a State agency, 
acting pursuant to a Federal delegated authority, has failed to 
meet the schedule established by FERC? Anytime this happened, a 
State agency not meeting your schedules? Are you aware of that?
    Ms. Miles. I am sorry, I am not prepared to answer that 
today, but I would be happy to get back to you on it.
    Mr. Olson. Thank you.
    Mr. Minzner, I would ask you to swing at that one, sir.
    Mr. Minzner. I also don't know the answer to that question, 
but I would second Ms. Miles' comment, to the extent that we 
can collaboratively with other agencies, that is an important 
and valuable thing for us to do.
    Mr. Olson. Final question about LNG. I have heard that FERC 
has slipped past in some deadlines recently on some LNG export 
terminals. As you all know, the first export of LNG to 
scheduled to happen later this month, maybe early March, at 
Sabine Pass in Louisiana, right next to Texas, my own State.
    With a weak Commander-in-Chief, the best tool we have to 
hurt OPEC, Iran, ISIS, and Russia is taking their money from 
our energy, getting on the global market, selling our natural 
gas to our allies.
    What is FERC doing to address the energy exports in a 
timely manner, to make sure we get that energy on the market 
now and hurt OPEC, hurt Russia, hurt ISIS, and hurt Iran?
    Ms. Miles. As with all the projects before us, both LNG and 
pipeline projects, we work to expedite them as best we can. 
Well, for LNG projects, they are required to use our prefiling 
process. We think that is a very good opportunity for all the 
agencies, tribes, as well as the company, to look at what 
issues and what information is needed. So that when the 
application is filed, it is a complete application and we are 
able to go as quickly as we can to our environmental analysis 
of the project.
    Mr. Olson. Yes, please, please expedite because another 
project right across the river from Sabine Pass is having some 
problems moving forward with the permitting process. So, 
please, please do that, because, then, that is the biggest tool 
we have to battle the guys who don't like us, again, OPEC, 
ISIS, Iran, and Russia.
    I yield back. Thank you.
    Mr. Whitfield. The gentleman yields back.
    At this time the Chair recognizes the gentleman from 
California, Mr. McNerney, for 5 minutes.
    Mr. McNerney. I thank the chairman, and I thank the 
witnesses this morning.
    Ms. Miles, what, if anything, would be missed by relying on 
aerial surveying in lieu of ground surveys?
    Ms. Miles. I think the issue that we have is we need to 
make sure that we and the other agencies who have Federal 
permits that need to be carried out have the information they 
need in order to do that. For some resource areas, as I have 
said, it may require an on-the-ground survey. So, it can be 
done sequentially with an aerial survey first, as long as the 
data is collected before the certification or at least before 
construction occurs.
    Mr. McNerney. Well, in your opinion, can ground surveying 
be completely eliminated in any conditions?
    Ms. Miles. I do not believe right now that ground surveys 
in some instances could be eliminated.
    Mr. McNerney. Although in your experience, though, there 
are some common causes for delayed--or what are some of the 
common causes for delays in construction time, start times?
    Ms. Miles. The certificates that are issued will include 
requirements for the company to get any outstanding permits. I 
don't have data across the board, but in some projects we are 
needing to do water quality certification, have that 
certification from the agencies or Endangered Species Act 
consultation completed.
    Mr. McNerney. Well, are there any areas in which FERC can 
help improve the permitting, licensing, and construction 
processes?
    Ms. Miles. I think what we are trying to do is to work 
during the prefiling. In pipelines, also, it is not a 
requirement that companies use the prefiling process, but we do 
encourage the large pipelines to do so, and they have been 
doing it routinely. It is during that prefiling process that 
both we and the companies are working with not only us, but the 
other agencies that are involved. Many, many agencies are 
cooperating agencies with us in our environmental document, and 
that is a very valuable thing to do.
    Mr. McNerney. I mean, so you are saying that the value is 
in the pre-application process, the work together cooperatively 
to find some of the hotspots and fix those beforehand. But what 
is the difference in terms of ultimate time between the initial 
application and the licensing if you take into account the 
time, the pre-licensing time?
    Ms. Miles. As long as the application that is filed is 
complete, then we are able to move quite quickly to the 
environmental document. I am not quite sure----
    Mr. McNerney. I mean, ultimately, if you want to get a 
permit, how much time do you save by going through a pre-
permitting process as opposed to just going into it and 
wrestling with FERC during the permitting process?
    Ms. Miles. Our experience is that most projects move more 
quickly if they have used the prefiling process. There are some 
that it is not necessary on, where there aren't a lot of 
issues. But, where there are, it is a valuable thing to use.
    Mr. McNerney. OK. Thank you.
    Mr. Minzner, you mentioned that FERC has tools to protect 
consumers and the public interest if a serial merger is taking 
place. How often does FERC use those tools and have they ever 
been used when reviewing actions under Section 203?
    Mr. Minzner. Well, our primary tool, when looking at 
actions under 203, is, in fact, the merger authority. The broad 
set of tools I referred to involves FERC's overall authority of 
the rates, terms, and conditions of the services of public 
utilities.
    One of the goals of the Section 203 and the merger approval 
is to ensure that a merger does not have an effect on 
competition or rates. That is one mechanism that FERC carries 
out its statutory mission to ensure that electric rates are 
just and reasonable.
    The other tools are other mechanisms. The Commission is 
constantly looking at the rates that are filed by electric 
utilities that operate in Commission markets. It has an active 
program of reviewing the market-based rates. It is also 
continually looking at the mitigation efforts in the organized 
wholesale markets. So, it is something the Commission does 
routinely as it is looking at the behavior of public utilities.
    Mr. McNerney. Can you answer briefly how many enforcement 
actions did FERC take in 2015?
    Mr. Minzner. I am not aware of the number of enforcement 
actions the Commission has taken in 2015. We will have to get 
back to you with that.
    Mr. McNerney. Thank you, Mr. Chairman.
    Mr. Whitfield. At this time the Chair recognizes the 
gentleman from Illinois, Mr. Shimkus, for 5 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman.
    I just have one issue. It is on, I think, the last bill 
noticed. Hopefully, I will be here for the second panel for Mr. 
Marsan's testimony.
    But I want to weave the story about language of law, 
congressional intent, and, then, obviously, agency 
implementation, or lack thereof, which is a thing that we 
always talk about here and that our public always harasses 
about, because we have the language of law. We have Members who 
are present in the Conference Committee. We have the record, 
but, then, somehow through agency or Commission activities, 
things don't handle. And then, you fall into litigation and 
lawsuits and all this other stuff.
    So, let me go back to the 2005 energy bill. Again, Mr. 
Marsan has it, I think, properly identified in his testimony. 
He is on the second panel. And I was lucky to serve on the 
Conference Committee for the passage of that bill, led by at 
that time Chairman Barton.
    The sole purpose of one of the revisions was to update the 
pricing of the cost of doing a project from decades ago to a 
$10 million threshold where, if it is under that, Commission 
involvement was not needed. We upped that dollar amount to what 
they needed to be, based upon $10 million. So, I think the 
original threshold was $50,000 40 years ago. That was the 
intent. That is what we did. The law was passed.
    Now it seems that on the equation line there is a debate 
about purchases versus divestitures, and that our argument 
would be that the intent of the legislation in the 2005 energy 
bill was to set a new threshold for a dollar amount when the 
Commission should be involved. We don't think you all are doing 
that. That is why I think we have the last bill in this series 
of bills listed for the hearing, to address that.
    We sought to address this issue in H.R. 8 last year, and we 
appreciate that we are staying committed, this committee, to 
make this simple fix once and for all on this piece of 
standalone legislation. We are just trying to really, 
unfortunately, fix something we don't think needs to be fixed, 
based upon Commission reading into intent of the language of 
law that was never meant to be intended by those who served on 
the Conference Committee.
    Do you understand the weaving of the question and do you 
have any comments to that?
    Mr. Minzner. Yes, Congressman. I am not aware of any 
published legislative history in 2005.
    Mr. Shimkus. Well, I can tell you what it is.
    [Laughter.]
    I was there. Some of us were there.
    Mr. Minzner. Yes, you are correct that, prior to that 
legislation, Section 203 contained a $50,000 figure that the 
Commission had interpreted through its regulations as applying 
to all the provisions of Section 203. As a result of the change 
in EPAC 2005, and the statute was broken into subsections, 
three of which contained a $10 million figure, and the one that 
we are discussing today currently does not. You are correct, 
the Commission has interpreted that as not imposing any de 
minimis threshold for mergers and consolidations. Obviously, 
this would add that provision into the statute and put us in a 
situation where the same financial threshold applies to all 
provisions under Section 203, which was the case prior to EPAC 
2005. Then, of course, it was $50,000 rather than $10 million.
    Mr. McNerney. Thank you. That is, actually, a great answer 
because I think, in answering that, you identified the problem. 
Three of the provisions were accepted under the $10 million, 
and the Commission by themselves decided that one did not. We 
would argue that it was always the congressional intent for $10 
million to be that. So, I would hope that our colleagues would 
ask questions as we move this forward and get this fixed in an 
area that we probably shouldn't have needed to fix.
    With that, Mr. Chairman, thank you, and I yield back.
    Mr. Whitfield. The gentleman yields back.
    At this time the Chair recognizes the gentleman from New 
York, Mr. Tonko, for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair.
    Ms. Miles and Mr. Minzner, thank you for being here today.
    Ms. Miles, at what point during the natural gas pipeline 
application process are data from surveying used?
    Ms. Miles. The data that is gathered would be used in our 
environmental document.
    Mr. Tonko. So, your prefiling?
    Ms. Miles. Once the application is filed, we would be 
looking to make sure that we have all the data that we need to 
analyze the issues that have been raised. And then, that would 
be analyzed in that document and made available to the public 
to comment on it.
    Mr. Tonko. OK. Thank you. Today is FERC able to accept 
aerial survey data?
    Ms. Miles. Yes, we are.
    Mr. Tonko. And what about the Army Corps of Engineers or 
any of our State environmental agencies?
    Ms. Miles. I am not able to speak for them. I understand 
that they do accept it differently, but I have not experienced 
that. So, I am not able to speak for them.
    Mr. Tonko. OK. I appreciate that. I understand that FERC is 
the coordinating agency on these projects, but it seems to me 
that this bill is really about the data that other agencies, 
including non-Federal agencies, are willing to accept as they 
work on their studies as part of the application process. I 
think it would be important to hear from those agencies also.
    Ms. Miles, this bill allows aerial data to be verified by 
ground surveys after the fact, is that correct?
    Ms. Miles. Yes, after the certification would be issued, 
then where there is a need to verify the data by ground survey, 
that would be done then, before construction could begin.
    Mr. Tonko. OK.
    Ms. Miles. And the license would spell that out. I mean, 
the certification would spell out exactly what is needed for 
which resources.
    Mr. Tonko. OK. And do you foresee the potential for 
problems or delays if an agency decides that it needs this data 
to be verified much later in the process?
    Ms. Miles. As I said in my testimony, there are some cases 
where it has the potential to delay or add additional expense 
if there is more analysis or perhaps even a rerouting of the 
pipeline at a later date.
    Mr. Tonko. Thank you. And when a natural gas pipeline 
application is finalized and submitted, about how long does it 
take for FERC to make a decision on any given project?
    Ms. Miles. I am sorry, could you restate the question, 
Congressman?
    Mr. Tonko. Sure. When a natural gas pipeline application is 
finalized and submitted, about how long does it take for FERC 
to make its decision on a project?
    Ms. Miles. That does vary from project to project, but our 
record shows that we have issued about 92 percent of our 
projects within 1 year from the filing of the application.
    Mr. Tonko. So, pretty much an average of perhaps less than 
a year?
    Ms. Miles. Yes.
    Mr. Tonko. And since 2005, FERC has authorized a lot of 
natural gas pipeline infrastructure, over 10,000 miles of 
interstate transmission pipeline. Am I right in that 
assumption, in that fact?
    Ms. Miles. I would need to check that fact.
    Mr. Tonko. OK. This bill is a solution, I believe, in 
search of a problem. FERC is able to process applications 
currently at an appropriate speed while allowing for public 
discussion and thorough environmental review. My fear is that a 
transition to primarily aerial surveying would alter that 
dynamic and it would promote expediency at the expense of 
property owners' rights. So, with that, I think we should be 
somewhat concerned with these proposed changes and err on the 
side of property owners and their rights.
    I thank you both again for your testimony today.
    With that, Mr. Chair, I yield back the balance of my time.
    Mr. Whitfield. The gentleman yields back.
    At this time the Chair recognizes the gentleman from Ohio, 
Mr. Latta, for 5 minutes.
    Mr. Latta. Well, thank you, Mr. Chairman, for today's 
hearing, and thank you very much to our witnesses for being 
with us today. We appreciate your testimony today.
    I know some of the questions, it is kind of like it might 
sound a little bit redundant, but we are just kind of asking, 
not quite asking the same questions the same way, but just with 
a little bit different twist.
    Ms. Miles, I would ask you the first few questions. Do you 
think that the changes in H.R. 3021 work to balance 
environmental concerns while allowing FERC to more effectively 
fill its mission as the lead agency under Section 7 of the 
Natural Gas Act?
    Ms. Miles. I think the changes, as I have said, the 
changes, we are accepting aerial survey data at present. 
However, the companies are tending to do on-the-ground survey 
when they have access, and that is the key.
    Mr. Latta. So, when you are saying you are accepting it 
right now, FERC doesn't have any objection right now for 
allowing aerial surveys for that information to come before you 
then?
    Ms. Miles. We do not.
    Mr. Latta. OK. Would FERC object to a State agency using 
aerial survey data to issue a conditional Clean Water Permit 
when it is required for a FERC certificate?
    Ms. Miles. I am not able to speak for the other agency.
    Mr. Latta. OK. And does FERC have any reason to oppose H.R. 
3021?
    Ms. Miles. I don't think there is a reason to oppose. We 
have mentioned what could possibly be a problem if we get a 
majority of the survey data through aerials late in the 
process.
    Mr. Latta. OK. Thank you.
    Mr. Minzner, if I could turn to you, regarding the Fair 
Rates Act, in those situations when filings have taken effect 
under Section 205 without a Commission order, how does the 
Commission handle the rehearing requests of those parties that 
have sought rehearing?
    Mr. Minzner. Under the current structure of the Federal 
Power Act, my view and the stated view of the Commission is 
that rehearing does not lie. So, the rehearing conditions are 
simply dismissed. That has happened twice. So, rehearing is 
just not acted on.
    Mr. Latta. If the Commission dismisses these rehearing 
requests, what recourse do the parties have? Can they appeal 
the decision to the court of appeals?
    Mr. Minzner. Our position is, under the current version of 
the Federal Power Act, there is no opportunity for rehearing if 
the rates take effect as a matter of law. And because rehearing 
is a prerequisite to appellate review, there is no appellate 
review, either.
    Mr. Latta. Thank you.
    And you note in your testimony that the Fair Rates Act 
would have significant benefits. Please explain on these 
benefits, particularly with respect to the parties seeking 
rehearing before the Commission and, also, parties seeking a 
redress in the court of appeals.
    Mr. Minzner. Rehearing and appellate review are important 
ways where individuals and entities that have not succeeded at 
the administrative stage could seek review of administrative 
action. It is an important procedural protection, and the 
primary benefit is that it would allow individuals who disagree 
with the action of the agency to seek redress in the court of 
appeals.
    Mr. Latta. Thank you.
    Mr. Chairman, I am going to yield back the balance of my 
time.
    Mr. Whitfield. OK. The gentleman yields back.
    At this time the Chair recognizes the gentlelady from 
California, Mrs. Capps, for 5 minutes.
    Mrs. Capps. Thank you, Mr. Chairman, for holding this hear 
and, also, to today's witnesses for your testimonies.
    We all agree that we need to ensure a regulatory landscape 
that successfully addresses energy needs across this Nation. 
But decisions we make regarding our Nation's energy 
infrastructure could have both positive and negative impacts on 
our local economies, on public health, and environmental 
safety.
    Some of these impacts have been seen, unfortunately, 
negatively in my District. Some of you may know that in May of 
last year an oil pipeline ruptured near the coast in my 
District, resulting in a spill that both polluted the land and 
the adjoining water. This oil fouled our beaches, and they are 
key for recreation and tourism in the area, marred the pristine 
landscape, threatening the health of local plants and animals 
as well as the economy of the region. Questions about the 
safety of local seafood forced fisheries to close, resulting in 
lost wages, uncertainty in this industry, which is critical to 
the economy and culture of California's central coast.
    Now cleanup efforts have remediated much of the immediate 
impact and fisheries have reopened, but we still have no idea 
what the long-term impacts will be. While I know that the AIR 
Survey Act that we are discussing today is focused on natural 
gas pipelines, the fact is that extraction, storage, and 
transportation of fossil fuels, whether oil or natural gas, 
this is a dirty and dangerous business.
    The ongoing Aliso Canyon natural gas leak just south of my 
District is a clear example of this danger. Not only is the 
methane from this leak significantly increasing the region's 
greenhouse gas emissions, it is leading to adverse health 
impacts and it is forcing the relocation of nearby residents.
    So, we must prioritize the health of our constituents, the 
safety of the environment, make sure we are working to ensure 
these priorities. One way to do that, of course, is to continue 
the push toward adopting clean renewable energy. And while we 
do that, we must also ensure that we are doing all we can to 
ensure safest practices for the development and operations of 
our Nation's energy infrastructure until we can fully replace 
fossil fuels.
    Utilizing all the tools available to us when making 
decisions regarding public health and environmental safety 
makes a great deal of sense. However, I have several concerns 
regarding the replacement of one method with another when they 
may be fundamentally unable to produce the same results.
    My question to you, Mrs. Miles, it touches on what many 
have been asking about, but I want to zero-in on the detail. 
Are aerial surveys able to identify all of the same details as 
ground surveys? For example, would aerial surveys be able to 
unequivocally state whether endangered or threatened species 
are present or if the landscape is a seasonal wetland, 
something of this nature?
    Ms. Miles. Thank you, Congresswoman.
    As I said, aerial surveys are not able to identify some 
particular resources in the detail that is needed to do an 
analysis and make a finding. Some of those that we have found 
that is the case to be, endangered species, cultural resources, 
and it could be wetlands also.
     Mrs. Capps. Thank you.
    You know, my fear is that the language in this bill 
requires different survey methods to be given equal weight and 
allows for one method to functionally replace the other, 
regardless of equivalency. Furthermore, while I appreciate that 
this discussion addresses one aspect of the energy 
infrastructure development, it is only the beginning of a much 
larger conversation we must have in this committee regarding 
not only pipeline siting, but also pipeline safety and 
supporting renewable energy technologies.
    Mr. Chairman, I do look forward to continuing to work with 
you and other efforts to improve our Nation's energy 
infrastructure.
    Thank you very much, and I have no further questions. I 
will yield back.
    Mr. Whitfield. The gentlelady yields back.
    At this time the Chair recognizes the gentleman from West 
Virginia, Mr. McKinley, for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman.
    Director Miles, if I could focus back on the five 
hydroelectric projects, there doesn't seem to be any real issue 
with those. So, I just wanted to look a little bit more. Is 
this common to seek an extension? How common is that to occur 
for an extension under the Section 13?
    Ms. Miles. I don't have any statistics on it, but we do get 
some requests.
    Mr. McKinley. So, I am curious whether this is becoming 
more problematic. Do we need to do some things here to 
streamline the process to do that? You don't have any opinion 
on that then?
    Ms. Miles. No. The one thing that I do see that is 
happening is we are issuing a lot more licenses for original 
construction of hydropower at existing dams. Years ago, 10 
years ago, we were doing all relicensing.
    Mr. McKinley. Right.
    Ms. Miles. So, there is a lot of interest now in adding 
hydropower at existing dams, so there are more projects out 
there to go through the task of getting to construction.
    Mr. McKinley. Director, if we didn't pass this, what would 
happen to the license? Would they have to start all over again?
    Ms. Miles. Well, we would be required to terminate that 
license. It would expire. They would have to begin again. If 
the data is available and current enough, we would try to use 
as much as we possibly could, but we would need to go through 
the process with another public comment period.
    Mr. McKinley. So, essentially, it would delay the 
hydroelectric, it would delay the whole project, would it not?
    Ms. Miles. It would delay construction, yes, to go through 
that process.
    Mr. McKinley. And I can remember about 3 years ago we had a 
representative of FERC here talking about, if we didn't start 
replacing some of the coal-fired power plants, particularly in 
the Mid-Atlantic, that we were going to see some rolling 
brownouts by next summer, mid-2017. So, I think it is very 
imperative that we keep moving to try to make that replacement 
as long as it is available.
    I thank you for your testimony and I hope people will 
consider without any more question pushing these five projects.
    Thank you very much. I yield back the balance of my time.
    Mr. Whitfield. The gentleman yields back.
    At this time the Chair recognizes the gentleman from Texas, 
Mr. Green, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman and the ranking member, 
for holding the hearing.
    I want to thank our witnesses for being here.
    Ms. Miles, it is clear from today's hearing that FERC has a 
lot on its plate. Currently, natural gas exports, pipelines, 
the LNG, and hydropower liability all fall under FERC. In 
addition, if the House passed H.R. 8, it would expand FERC's 
permitting authorities to most of these sectors.
    In your position as Director of the Office of Energy 
Projects, most of these issues fall in your office. Has the 
increased activity of the last few years affected your office? 
Have you required additional experts or have you been able to 
make do with the existing personnel?
    Ms. Miles. We regularly review our resources to make sure 
they match with our tasks before us, and we discuss with the 
Chairman any needs for additional. We also use our contracting 
availability to help us with the peaks and valleys that are an 
inevitability of applications for pipelines, LNG, and 
hydropower projects.
    Mr. Green. OK. We are on the horizon of another 
appropriations season. Does the Office of Energy Projects 
posses the resources to handle additional responsibility and 
activities or do you anticipate additional needs?
    Ms. Miles. I think we are managing as we are able, and that 
is something that I talk about with our Chairman. It comes in 
as our budget requests.
    Mr. Green. OK. FERC occupies such a unique role of 
coordinating with all the Federal agencies and State. Can you 
identify for us the top challenges facing the projects your 
office handles? What slows down the projects the most?
    Ms. Miles. As I have said before, I think one of the most 
important things for the gas projects, and, actually, for the 
hydro projects also, is using our prefiling process, that it 
can be extremely valuable if everyone is active during that 
time.
    The other thing that is very important is that the 
information that is needed for us to move forward and for other 
agencies also to do their permitting is collected during that 
prefiling stage. So that when the application is filed, it is 
complete and we are able to notice and go right to our 
environmental document.
    Mr. Green. Let me follow up on that. Is there a particular 
Federal agency or State agency that doesn't respond as timely? 
Because I know prefiling helps a lot, but it still can be 
slowed down by agencies not getting back the information for 
you.
    Ms. Miles. Right. I think we work really well to bring all 
the agencies to the table during this prefiling time and have 
regular conversations with them. Things vary from project to 
project in different parts of the country. So, I can't speak to 
any one in particular.
    Mr. Green. OK. I know from Texas, obviously, we always have 
a lot of natural gas pipelines and cross-border with Mexico 
because we are actually selling more gas to Mexico. I was just 
wondering if it was a particular problem.
    As you know, this can be challenging and potentially when 
dealing with State and local officials that possess different 
points of view than the Commission or the applicants. What 
remedial steps can FERC take as the coordinating agency if 
State and local officials do not cooperate in a timely fashion?
    Ms. Miles. Well, we try to work with them. If someone is 
not able to come to the table, to bring them to the table, so 
they do participate. If not, we certainly make sure they 
understand how to participate in the process. And then, we keep 
the process moving along.
    Mr. Green. So, is there any problem with any individual 
State that they may not get back with you as quick as they can 
or participate?
    Ms. Miles. I can't speak to any in particular agency that 
that is the case. On one project every now and then we will 
have to work a little harder at it.
    Mr. Green. And could the same be said about a Federal 
agency, because you have to also coordinate all the Federal 
agencies along with the State?
    Ms. Miles. Yes, many, many of the Federal agencies and 
State agencies who are carrying out Federal authorizations are 
cooperating agencies with us in our environmental document. 
That is a very good way to have a simultaneous look at effects 
on all resources. So, we encourage that, and most agencies are 
very interested in doing that.
    Mr. Green. OK. Thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. The gentleman yields back 16 seconds.
    At this time I recognize the gentleman from Virginia, Mr. 
Griffith, for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman.
    Ms. Miles, I have listened to your testimony in regard to 
H.R. 3021, the Pompeo bill. I think what you are saying makes a 
lot of sense. I like aerial surveying in the first place, but I 
do think that some of my friends on the other side aisle have 
raised some issues, and you have touched on it a little bit as 
well in regard to being able to identify everything on the 
ground. You have indicated that there ought to be something 
before construction, if we use an aerial survey, because you 
can't spot salamanders and certain small creatures or 
understory plants necessarily. You might spot areas that look 
like they might have that growth, but you can't do it.
    Is there anything in the bill that we need to change to 
make sure we get to where you want? I want to see the aerial 
surveying be equal, at least in the initial stages, as you have 
indicated you are fine with. But is there anything in the 
language that is currently proposed that we ought to change or 
look at in order to assure that we are also making sure that we 
don't overlook some important ecological asset?
    Ms. Miles. I am not looking at the bill this moment.
    Mr. Griffith. Yes, ma'am.
    Ms. Miles. We would be happy, staff would be happy to work 
with the committee on that.
    I think the one thing that I have commented on is that, 
where ground access is available, currently, we are finding 
that the companies--and they want to also--are providing that 
data. So, that is an important point.
    Mr. Griffith. And I agree with that. It is also good if you 
are trying to figure out where you want to a line. I think it 
is quick. Particularly, you may see some problems if you are 
looking at siting a gas pipeline, that you can do that 
sometimes a lot faster in the air than you can on the ground. 
So, there are advantages and disadvantages, I suppose, to both.
    In regard to H.R. 2984, Ms. Miles, I am not going to ask 
you to comment, the Fair Rates Act. I would just have to say to 
Mr. Kennedy that I have a lot of constituents who are willing 
to dig coal, ship it to you by train or truck. We can lower 
your electric prices. We don't even need FERC action. What we 
may need is a little EPA action. But if we were allowed to, we 
could take care of your high rates for you.
    Mr. Kennedy. You are a good man, my friend.
    [Laughter.]
    Mr. Griffith. With that, Mr. Chairman, I yield back.
    Mr. Whitfield. Thanks, Mr. Griffith.
    At this time I recognize the gentleman from Vermont, Mr. 
Welch, for 5 minutes.
    Mr. Welch. Thank you very much, Mr. Chairman, and thank you 
for being here and helping us.
    I want to just talk a little bit about the Kennedy bill. It 
seems like it is just our linguistic mistake that there can be 
no appeal when the statute essentially was designed to give the 
ratepayers an opportunity to appeal. Are there any policy 
reasons that would suggest that what the Kennedy bill is 
proposing would in any way interfere with the capacity of FERC 
to carry out its responsibilities? I guess I will ask you that, 
Mr. Minzner.
    Mr. Minzner. Well, the bill is aimed at a situation that, 
while it has occurred, is relatively unusual. It has not been a 
common occurrence that rates have changed without a Commission 
order.
    Mr. Welch. No, I get that, but it happens. So, the way it 
is working around here is that a lot of times we don't get the 
new person appointed, so we can have a two-two situation, not 
just in FERC, but otherwise. The problems we have in trying to 
get a person confirmed, or the Senate has, shouldn't be the 
ratepayer problem, I think is the point of the bill.
    What I am asking you is that, if this bill were passed, 
and, then, it meant that if it were a two-two decision, 
ratepayers would be able to do what they are now entitled to do 
if it were a three-two decision or a five-zero decision. Would 
that in any way compromise the responsibilities of FERC?
    Mr. Minzner. I think the only difficulty I foresee with the 
bill is one of reviewability or administrative functionality at 
the court of appeals. Right now, when an action goes up to the 
DC Circuit, they review the Commission order and they review 
the action. The DC Circuit may have a more difficult challenge 
if there is nothing to review from the Commission, but----
    Mr. Welch. I don't understand it. If there is a two-two 
decision, there is a two-two decision, right?
    Mr. Minzner. That is not exactly right, Congressman. There 
is no Commission action because it is two-two. It is not a 
situation like you might see from the U.S. Supreme Court where 
there is an actual opinion with two votes on either side. Here 
it just takes effect and there isn't a decision, and that would 
be the difficulty in administrative review. The court of 
appeals wouldn't have anything to look at. I do think that is a 
difficulty that could be overcome, if you were concerned about 
that.
    Mr. Welch. Right, by writing a decision or having the two 
write their decision and the two write theirs. So, there would, 
then, be something to review.
    Mr. Minzner. When it has happened in the past, there is 
simply no Commission order. There is nothing on either side.
    Mr. Welch. No, I get that, and I think the effort here is 
to try to provide that opportunity. Because it just seems kind 
of bizarre, whichever side of the case you are on, that you 
have got a statutory right to appeal unless it is deadlocked at 
two-to-two. So, all right.
    Let me just go on to the second thing. Anyway, Mr. Kennedy, 
thank you for that legislation, which I hope we can all 
support.
    The Supreme Court decision on demand response, from my 
point of view, is a tremendous tool that is going to help FERC 
try to help ratepayers keep their costs down. Can you talk, Ms. 
Miles, I guess, a little bit about that, or Mr. Minzner, and 
how you see that as being a useful tool for FERC in trying to 
address ratepayer concerns? And that is commercially and 
individual.
    Mr. Minzner. Sure, I can answer that question. The Supreme 
Court largely agreed with the Commission's argument that there 
is Commission jurisdiction to allow demand response to 
participate in the wholesale electric markets, and that is 
something the Commission has done in the past. In my view, 
demand response can be an effective tool at helping keep rates 
down by allowing the opportunity to avoid paying high-priced 
energy at peak times.
    Mr. Welch. Right. Our largest utility, Mr. Chairman, Green 
Mountain Power, is a strong supporter of demand response, and 
our utility users seem to be very happy with it. That includes 
some of our major companies. So, keep up the good work on that.
    Mr. Minzner. Thank you.
    Mr. Welch. Thank you. And I yield back, Mr. Chairman.
    Mr. Whitfield. The gentleman yields back.
    At this time the Chair recognizes the gentleman from Ohio, 
Mr. Johnson, for 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman, and I want to thank 
the panel for being with us today as well.
    I represent a District in eastern/southeastern Ohio that 
borders the Ohio River, the Muskingum River. We have got a lot 
of hydropower potential there.
    I want to kind of take off on something that Representative 
McKinley said. Given that so many projects miss the 2-year and 
4-year statutory deadlines, often due to issues that are beyond 
the project's control and the applicant's control, perhaps it 
makes sense to update the Federal Power Act to either provide 
FERC with greater discretion on setting those deadlines, maybe 
more flexible deadlines, or to increase the number of years 
that an applicant can have to commence construction. Does FERC 
have an opinion on that?
    Ms. Miles. Speaking only for myself, given that, however, 
the Chairman and former Chairmen have said up to 10 years was 
all right, if FERC had that authority to just do it itself, 
then folks would not need to come to Congress.
    Mr. Johnson. Right, right. OK. Well, that is good to know 
because we certainly need to work that because, with the 
plethora of Federal regulations and environmental studies and 
all kinds of things that applicants have to go through, it has 
lengthened out these project timelines to get all of this stuff 
approved. So, I appreciate that.
    Ms. Miles, as you are aware, the committee is keenly 
interested in supporting new energy infrastructure projects. 
One of the opportunities we see is in the hydropower sector, 
specifically adding generation to existing nonpowered dams. We 
have some of those in Ohio. That is what we are talking about 
as part of today's hearing.
    So, these low-impact, renewable, and clean energy 
resources--that is what they are--are important. Yet, we 
continue to hear of problems getting projects approved, 
financed, and built, particularly in comparison to other energy 
projects.
    So, what is your view on these opportunities with 
hydropower adding power generation to existing dam structure 
and what is the reason we have not seen more of these type 
projects built?
    Ms. Miles. My view is that there is a lot of hydropower 
potential in the U.S. at existing dams. I think the Department 
of Energy has issued reports to that effect.
    Mr. Johnson. What is the holdup?
    Ms. Miles. I think that we have worked very hard with the 
other agencies who need to issue permits on those projects to 
be able to move them through the process expeditiously while 
being thorough and fair in addressing all resource areas.
    Mr. Johnson. Do you see it as a FERC issue? Is it a Corps 
issue? Is there anything that FERC can do and, more 
importantly, is there anything Congress can do that would help 
move these projects along more quickly?
    Ms. Miles. I think that the issue is really trying to work 
through these things simultaneously or everybody working at it 
together. That does vary, depending on agencies that we are 
working with at some of these projects.
    Mr. Johnson. Let me make sure I understand what you are 
saying. So, you are saying that--and I am paraphrasing--so, you 
are saying that sometimes these projects become serial agency 
to agency to agency rather than parallel agencies----
    Ms. Miles. Correct.
    Mr. Johnson [continuing]. Moving things along 
collaboratively? How do we solve that problem?
    Ms. Miles. Well, we have been working with the other 
agencies where we----
    Mr. Johnson. So, you do think it needs to be solved?
    Ms. Miles. That is an issue. Frankly, I mean, we have 
worked with the Corps of Engineers quite a lot on this. We have 
a Memorandum of Understanding for how we will work together, 
and we are in the process right now of working further with 
them on how to have our processes work well together.
    Mr. Johnson. But it is clearly still a slow process.
    And my time is up. I am going to have to yield back.
    Is it safe to say you agree that we need to do better 
collaboration between the agencies to parallel these things 
where we can? Is that what I am hearing you say?
    Ms. Miles. Yes.
    Mr. Johnson. OK.
    Ms. Miles. At projects where that is not happening now, 
yes.
    Mr. Johnson. All right. Thank you very much, and I yield 
back.
    Mr. Whitfield. The gentleman yields back.
    At this time the Chair recognizes the gentleman from Texas, 
Mr. Flores, for 5 minutes.
    Mr. Flores. Well, thank you, Mr. Chairman.
    Ms. Miles, we talked a few minutes ago about the 
electricity rates of the Northeast being among the highest in 
the country. Can you tell me why that is? What is the reason 
for that?
    Ms. Miles. I can't speak to that. Do you want to speak to 
it?
    Mr. Minzner. I can speak to it only in the most general 
sense. The electric rates vary across the country for a wide 
range of reasons. I don't think there is a specific reason.
    Mr. Flores. What would the top two or three reasons be?
    Mr. Minzner. It is really a mix of the location, 
generation, and load across the country. So, it is, frankly, 
the intersection of supply and demand of energy.
    Mr. Flores. OK. So, part of it could be the fuel sources 
that they are restricted to use, correct? I mean, Mr. Griffith 
sort of touched on this a few minutes ago. If there were more 
infrastructure to get natural gas pipelines in the Northeast, 
they could have natural-gas-fired electricity generation. 
Wouldn't they be better off? Wouldn't that solve a lot of the 
rate issues?
    Mr. Minzner. I am not sure I can speak specifically to 
that.
    Mr. Flores. Ms. Miles, can you speak to that?
    Ms. Miles. I can't, either.
    Mr. Flores. Well, I was going to say I can answer it for 
you. The answer is yes. And so, I think that is the reason the 
aerial survey bill is very important to look at. I do agree you 
have got to have ground surveys as well, but I think the aerial 
surveys help with the initial siting, and so forth.
    This is something I think you need to take a look at. How 
can the Northeast, how can New England be helped with their 
electricity rates? And the best thing is for better 
infrastructure. So, I would ask you to think about that as you 
are going through your permitting planning process in the 
future.
    Thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. The gentleman yields back.
    At this time the Chair recognizes the gentleman. Mr. 
Barton, did you want to ask questions?
    Mr. Barton. No.
    Mr. Whitfield. OK. Mr. Hudson of North Carolina is 
recognized for 5 minutes.
    Mr. Hudson. Thank you, Mr. Chairman, and thank you for 
holding this important hearing.
    Thank you to our panel for participating.
    I am proud to be a cosponsor of Representative Pompeo's 
bill to amend Section 203 of the Federal Power Act, as well as 
Representative Kennedy's Fair Rates Act. I am also glad to see 
Representative Foxx's bill move forward regarding the Kerr 
Scott Hydropower Project in Wilkes County, North Carolina. 
These are common-sense bills, and, Mr. Chairman, I appreciate 
your bringing them before this subcommittee.
    To get to my questions, I would like to build on the line 
of questioning my colleague Mr. Johnson raised dealing with 
hydroelectric power. Ms. Miles, you note in your testimony that 
FERC has generally taken the position of not opposing 
legislation that would extend the commencement of construction 
deadlines no further than 10 years from the date that license 
in question was issued. So, because each of the hydro bills 
before us today provides for commencement of construction 
deadlines that do not exceed 10 years from the dates the 
respective licenses were issued, is it true that FERC does not 
oppose any of these bills?
    Ms. Miles. Yes, we do not; I do not.
    Mr. Hudson. Thank you.
    Historically, hydropower has played a primary energy 
storage role with hydro pump storage currently providing 97 
percent of energy storage in the U.S. What is your view on the 
energy storage and pump storage in particular?
    Ms. Miles. Pump storage does provide considerable grid 
scale storage, and it can be very valuable. We have noticed an 
increase in applications for pump storage projects, especially 
in areas where there is a lot of wind and solar projects.
    Mr. Hudson. Well, what are the market issues that need to 
be addressed to support development of new pump storage and 
what can FERC do, either by itself or working with State PUCs 
and the ISOs, RTOs?
    Ms. Miles. I am not really able to speak to market issues. 
Our primary responsibility is to analyze the projects that come 
before us in a very thorough, fair, and scientifically sound 
way, and to have a process that allows us to do that.
    Mr. Hudson. I appreciate that.
    Have there been any issues working with State PUCs and 
others that could be addressed or better handled, either 
through your agency or things that we could do to support that?
    Ms. Miles. The State PUCs typically are not involved with 
us as we do the environmental review and licensing of those 
kinds of projects, action on those kinds of projects.
    Mr. Hudson. OK. Would you agree that FERC has a significant 
level of expertise and experience in analyzing environmental 
effects of hydro projects under its jurisdiction?
    Ms. Miles. Yes.
    Mr. Hudson. Does FERC currently employ biologists and other 
scientific experts to provide guidance on analyzing the 
environmental effects of hydro projects?
    Ms. Miles. Yes. Our resources, we have experts in each 
resource area that we analyze.
    Mr. Hudson. What is the number and experience of the staff 
administering the licensing and regulation of hydro projects, 
the number of PhDs, master's degrees, et cetera?
    Ms. Miles. I can't give you the specific number, but many 
of our staff have master's degrees; some have PhDs.
    Mr. Hudson. And if you could provide us that list?
    Ms. Miles. The list of which do? Certainly.
    Mr. Hudson. That would be great. And master's degrees, just 
what the expertise levels are.
    Ms. Miles. Certainly.
    Mr. Hudson. That would be great.
    Regarding the FERC hydropower licenses generally, do you 
agree that the licensing processes could be shortened if the 
Commission had the ability to set enforceable deadlines and 
coordinate the other Federal and State approval involved?
    Ms. Miles. I didn't come prepared really to testify on--I 
think you are getting at H.R. 8. However, I have spoken in the 
past that enforceable deadlines can be a valuable, can be--I am 
going to move back and say I didn't come prepared, but we would 
be happy to answer questions.
    Mr. Hudson. OK. I would appreciate that, if you can provide 
us with an answer.
    Ms. Miles. Sure.
    Mr. Hudson. All right. Mr. Chairman, that exhausts my line 
of questioning. I would yield back. Thank you.
    Mr. Whitfield. The gentleman yields back.
    At this time the Chair recognizes the gentleman from 
Mississippi, Mr. Harper, for 5 minutes.
    Mr. Harper. Thank you, Mr. Chairman.
    And thanks to you, witnesses, for being here.
    Just to comment, Ms. Miles, I believe you addressed it 
earlier with Mr. Johnson, but just as a side note, it is my 
understanding that four new hydro projects have been approved 
in Mississippi, and we appreciate FERC's diligence in those 
matters.
    Mr. Minzner, you state in your testimony that the 
legislation to amend Section 203 of the Federal Power Act could 
ease the administrative burden on the Commission staff and the 
regulatory burden on the industry without a significant 
negative impact on the Commission's regulatory 
responsibilities. Can you please elaborate or briefly expand on 
these potential benefits of the legislation?
    Mr. Minzner. Thank you, Congressman. On the burden side, 
certainly every 203 filing requires review by Commission staff 
and action by the Commission through some sort of order. A de 
minimis threshold would mean that, for those falling below the 
$10 million level the Commission would not need to take that 
action. And similarly, on the side of industry, they would not 
need to make the initial filing, which would ease their burden.
    In terms of the effect on the regulatory program, the 
filings that come in for mergers or consolidations of smaller 
facilities, those below the $10 million, are ones that are less 
likely to impose potential consequences on rates or on 
competition.
    Mr. Harper. Great. Thank you.
    With the interest of time, Mr. Chairman, I will yield back.
    Mr. Whitfield. The gentleman yields back.
    At this time I want you all to know we are not trying to 
discriminate against Mr. Kennedy. He is a member of the Energy 
and Commerce Committee, but he is not a member of this 
subcommittee. Even though we are considering one of his bills 
today, he has patiently waited until everyone else has asked 
questions. So, at this time we will recognize Mr. Kennedy for 5 
minutes.
    Mr. Kennedy. Mr. Chairman, thank you very, very much. I 
appreciate the opportunity to join you and squat in on the 
Energy and Power Subcommittee.
    I appreciate the kind words from my colleagues on the other 
side of the aisle on the offer for both purchasing of coal, Mr. 
Griffith, very well noted. Thank you. And to the rest of my 
colleagues as well, thank you.
    Mr. Minzner, a couple of questions for you, sir, to begin 
with. You mentioned in your testimony that Section 205 of the 
Federal Power Act includes a 60-day clock for review in which 
FERC will take action. Can you discuss what requirements the 
Commission has within those 60 days and does FERC have an 
affirmative requirement to actually act?
    Mr. Minzner. The statute does not require the Commission to 
act. However, the Commission typically does take action on the 
filing by approving it, denying it, or requesting additional 
information from the utility. The consequences, though, if the 
Commission does not act in that time period, is the rates do 
take effect.
    Mr. Kennedy. And I know you are well aware, obviously, of 
what happened in New England in 2014 with that Capacity Auction 
No. 8 done by the Commission. You mentioned in your testimony 
and response to questions that that is an exceedingly rare 
occurrence. Does that only occur when there are four 
Commissioners present or has it happened when there is an even 
number--or excuse me--an odd number of Commissioners as well?
    Mr. Minzner. Rates have taken effect not solely as a result 
of a two-two split of the Commission. In fact, under the 
Federal Power Act, the situation you mentioned, ISO New 
England, I believe is only the second time that I am aware of 
that it has happened as a result of a two-two split. It has 
happened under other occasions, though.
    Mr. Kennedy. Can you just shine some light on what those 
other occasions, if you can recall what those other occasions 
were?
    Mr. Minzner. We don't know the reason for all of them. On 
one occasion, the Commission stated that the rates took effect 
inadvertently because of Commission failure to act.
    Mr. Kennedy. OK. Given that the Commission is currently 
down to four Commissioners, what tools does the Commission have 
to avoid a deadlock on any rate change filed across the 
country? I realize that most changes are noncontroversial and 
unlikely to result in a deadlock anyway, but this outcome is 
certainly, obviously, not impossible. Before we can, hopefully, 
get this bill across the finish line, what options are 
available to FERC to provide proper access to administrative 
and judicial review for ratepayers? There is, as you are well 
aware, an auction set to take place in New England next week. 
Given the fact that there are four--another Commission has 
noticed his intent to retire; no other nomination is currently 
in the pipeline--what, if any, tools does FERC have to make 
sure we don't end up in the same place?
    Mr. Minzner. I know the Commission staff and the 
Commissioners are very dedicated to working collaboratively to 
reaching outcomes that can have the support of the majority of 
the Commissioners. I think certainly the Commission has 
endeavored to do that in the past and has effectively managed 
to reach a majority vote on almost every occasion.
    Mr. Kennedy. But there is nothing--and I appreciate that 
and I understand that--but has there been any specific policy 
change internal to FERC where, with four Commissioners, in the 
advent of a hearing having to go through with four 
Commissioners, and that notice being put forth, that there 
would be some sort of review? Provided that this bill doesn't 
make it to the President's desk by the time that those 
Commission results are near, do the auction results need to be 
certified?
    Mr. Minzner. In my view, under the current version of the 
Federal Power Act, if the Commission does not act as a result 
of a two-two split or otherwise, there would not be rehearing 
or appellate review available under the current statutory 
framework. Other than working to reach consensus and a majority 
vote, I am not aware of other internal policy changes.
    Mr. Kennedy. OK. Thank you. I yield back.
    Mr. Whitfield. The gentleman yields back, and that 
concludes the questions for the first panel.
    Ms. Miles and Mr. Minzner, thank you for being with us. We 
look forward to working with you, as we continue our efforts on 
all of this legislation.
    At this time I would like to call up the witnesses on the 
second panel, if you all would come and have a seat.
    I know that Mr. Kennedy is going to be introducing one of 
our witnesses. So, I will call on him to make that introduction 
at this time.
    Mr. Kennedy. Thank you, Mr. Chairman.
    Mr. Chairman, I am pleased to introduce a fellow member of 
Massachusetts that has come down on relatively short notice to 
join us here today, Mr. Bottiggi, who runs the Braintree Power 
Plant, a municipal power plant, who has a deep knowledge in how 
our energy systems work in Massachusetts, how our capacity 
markets work, and the intricacies surrounding the increase of 
cost that we have seen in recent history in Massachusetts. He 
is one of the few people I have found, Mr. Chairman, on this 
planet that can actually explain this in language that people 
understand, for which I am eternally grateful.
    So, we are grateful to have you here. I look forward to 
your testimony and the light that you can shine on how things 
are working and how they are not working in Massachusetts and 
across the country.
    Thank you.
    Mr. Whitfield. Well, thank you very much for that 
introduction.
    I will at this time introduce the other members of this 
panel.
    First, we have Mr. Timothy Powell, who is the Director of 
Land, GIS and Permits at the Williams Company.
    We have Mr. Edward Lloyd, who is the Evan Frankel Clinical 
Professor of Environmental Law at Columbia University School of 
Law. He is here today on behalf of the New Jersey Conservation 
Foundation and the Stony Brook-Millstone Watershed Association.
    We also have Mr. Bill Marsan, who is the Executive Vice 
President and General Counsel and Corporate Secretary of the 
American Transmission Company.
    We have Mr. Tyson Slocum, who is the Energy Program 
Director of Public Citizen, Inc.
    And then, we have Mr. Jeffrey Leahey, who is the Deputy 
Executive Director for the National Hydropower Association.
    We thank all of you for taking time in your very busy 
schedules for being with us today. I am going to call on each 
one of you, and you will be given 5 minutes for your opening 
statements. Be sure and pull the microphone close, and make 
sure the microphone is on.
    Mr. Powell, we will recognize you first for your opening 
statement for 5 minutes.

 STATEMENTS OF TIM POWELL, DIRECTOR OF LAND, GIS AND PERMITS, 
 THE WILLIAMS COMPANY, ON BEHALF OF THE INTERSTATE NATURAL GAS 
ASSOCIATION OF AMERICA; EDWARD LLOYD, EVAN M. FRANKEL CLINICAL 
PROFESSOR OF ENVIRONMENTAL LAW, COLUMBIA LAW SCHOOL, ON BEHALF 
 OF THE NEW JERSEY CONSERVATION FOUNDATION AND THE STONY BROOK-
    MILLSTONE WATERSHED ASSOCIATION; BILL BOTTIGGI, GENERAL 
MANAGER, BRAINTREE ELECTRIC LIGHT DEPARTMENT, ON BEHALF OF THE 
NORTHEAST PUBLIC POWER ASSOCIATION; BILL MARSAN, EXECUTIVE VICE 
 PRESIDENT AND GENERAL COUNSEL, AMERICAN TRANSMISSION COMPANY; 
 TYSON SLOCUM, ENERGY PROGRAM DIRECTOR, PUBLIC CITIZEN, INC., 
    AND JEFFREY LEAHEY, DEPUTY EXECUTIVE DIRECTOR, NATIONAL 
                     HYDROPOWER ASSOCIATION

                    STATEMENT OF TIM POWELL

    Mr. Powell. Thank you, sir.
    Mr. Chairman, Ranking Member, and members of the 
subcommittee, my name is Tim Powell, and I am the Director of 
Land, GIS and Permits for the Williams Companies. I am also 
appearing today on behalf of the Interstate Natural Gas 
Association of America, the industry association representing 
the interstate natural gas pipeline industry.
    Mr. Chairman, I appear today to support House Resolution 
3021, introduced by Representative Pompeo and cosponsored by 
Representatives Mullin, Schrader, and Meeks, which endeavors to 
address a permitting challenge facing jurisdictional pipelines, 
which I shall explain. We thank the committee for including a 
version of that language as part of H.R. 8.
    FERC has long served as the lead agency for considering 
pipeline applications, pursuant to the Natural Gas Act. In 
Section 313 of the Energy Policy Act, this committee and this 
Congress instructed Federal and State agencies involved in the 
process to cooperate with the FERC and comply with the 
permitting schedule established by the Commission.
    However, the permit process followed by some Corps of 
Engineer Districts and corresponding State agencies, pursuant 
to their Clean Water Act responsibilities, can cause them to 
fail to meet the FERC schedule, resulting in permit delays. 
This is most notable in the agency's deeming they have 
insufficient field survey data to initiate their review. These 
processes are not required by the Clean Water Act and could be 
modified to better conform with the FERC schedule. That is the 
goal of this legislation.
    Often, the first time an affected landowner has face-to-
face contact with the company is when an agent is knocking on 
their door and asking that landowner to sign a form giving the 
company permission to begin performing field surveys. These 
data are used to support the NEPA review, identify the least-
damaging alternative, determine constructability, and obtain 
other permits and approvals, such as those required by the 
Clean Water Act.
    Many landowners elect to participate in the process, but 
some elect to exercise their right to deny permission. In my 
experience, Williams receives approximately 70 to 80 percent 
survey permission prior to the certificate filing.
    For various reasons, the remaining landowners either delay 
survey approval or outright deny it. Williams and other INGAA 
member companies fully respect each landowner's right to decide 
if and how they participate in the project. The problem is that 
some Corps of Engineer Districts and State agencies with 401 
water quality certification responsibility will require an 
applicant to conduct up to 100 percent full survey in order to 
deem a permit application complete. In other cases, the Corps 
and responsible State agency will begin processing 
applications, but will not make a decision without 100 percent 
field survey. This approach is not required and, indeed, in 
some cases the agencies will accept the best-available data and 
move forward with condition permit decisions.
    If any agency is to require a percentage of field survey 
beyond which the company can obtain in order to deem an 
application complete, the company is placed in a classic Catch-
22 situation. The FERC process anticipates that companies will 
submit applications for Federal approvals prior to or 
concurrent with the application for a certificate. Typically, 
the time between a certificate filing and an order is around 1 
year. This is the same timeline that an agency administering 
the 401 water quality certification has to act once they deem 
an application complete. These two timelines can only align if 
the 404 application is deemed complete and runs in parallel to 
the certificate proceeding.
    The solution is to direct all other agencies involved in 
issuing Federal authorizations to accept data gathered by means 
other than on-the-ground surveys. If the agency elects, any 
permits issued based on remote sensing could be conditioned 
upon ground survey verification once access has been obtained. 
This is an important point and bears emphasizing.
    If the agency deems it necessary, no ground disturbance 
would occur on remote-sense tracks prior to verifying that data 
by on-the-ground survey. Non-field-survey data-gather methods 
may include satellite photography, sensors attached to fixed-
wing aircraft, helicopter aerial photography, previous mapping, 
or by studying the area from accessible locations.
    The proposal solution has a number of obvious benefits. It 
allows pipeline companies and regulators to assess likely 
impacts and make informed decisions, aligns the certificate 
proceeding with other Federal reviews, and allow FERC to 
effectively fulfill its lead agency mandate while minimizing 
the adversarial relationship between landowners and the 
pipeline company, when agencies require more ground survey than 
property owners want to provide.
    In summary, Mr. Chairman, we believe the legislation being 
discussed is a win/win for all involved in the permitting 
process and we urge its adoption.
    [The prepared statement of Mr. Powell follows:]
    
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    Mr. Whitfield. Thank you very much.
    Mr. Lloyd, you are recognized for 5 minutes for your 
opening statement.

                   STATEMENT OF EDWARD LLOYD

    Mr. Lloyd. Thank you, Mr. Chairman and Ranking Member, and 
members of the committee.
    I take a different view than the last witness. 
Unfortunately, I don't think the aerial surveys are going to 
solve the problem that we all want to solve. Scientists for the 
New Jersey Conservation Foundation have looked at 1,000 plant 
and animal species in New Jersey that would have to be surveyed 
under the Endangered Species Act and other rare and specified 
species. We found that less than 1 percent of those species can 
be identified with aerial surveys.
    So, the problem is that, if we begin to rely on aerial 
surveys, especially in the prefiling process, we are going to 
have to go back and verify. To me, at the end of the day, it is 
going to delay the process, not expedite it.
    I think all of us want the best data we can have. The 
problem is that aerial surveys, by and large, are not going to 
get us the data that we need to do the proper analysis by the 
agency. Of the 1,000 species we looked at, there were only 1 
percent that actually could be identified by aerial surveys. 
So, it means we are going to have to go on the ground and 
ground-truth it.
    If we don't do it upfront, it could lead to having to 
revisit it. If we go to verification, then we have to revisit 
those surveys, and we may have to change the pipeline route. It 
is not efficient for any of us.
    So, we would suggest that the aerial surveys are really not 
solving a problem and, in fact, may create more delay and drain 
more resources from the agency.
    The other thing I wanted to mention is the impact on 
landowners. In New Jersey we have already experienced the use 
of aerial surveys. We have had a number of complaints from 
landowners that they have been disturbing, especially in rural 
areas, livestock and the peaceful privacy of homeowners. So, 
aerial surveys can have unintended negative consequences for 
homeowners, and I think we have to be very careful about how 
quickly we want to authorize those aerial surveys in place of 
the ground surveys, which give us much better data and, in 
fact, I think the data that is needed for the agency.
    Finally, I just want to mention what we have seen, as this 
committee has heard this morning, a proliferation of pipeline 
proposals. There are now 80 pending proposals before FERC. We 
would highly recommend that FERC begin to look at these, 
instead of as individual pipelines, look at these on a regional 
basis.
    I think a programmatic environmental impact statement is 
one way to address that, where, again, it would save agency 
resources if we look at these pipelines together on a 
programmatic basis. Then, there may be additional individual 
pipeline analyses we need to do, but the programmatic EIS would 
enhance our decisionmaking process, would enhance FERC's 
ability to make these analyses, and it would save resources for 
the companies and for FERC.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Lloyd follows:]
    
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    [Additional information submitted by Mr. Lloyd has been 
retained in committee files and also is available at http://
docs.house.gov/meetings/IF/IF03/20160202/104387/HHRG-114-IF03-
Wstate-LloydE-20160202-SD088.pdf.]
    Mr. Whitfield. Thank you.
    Mr. Bottiggi, you are recognized for 5 minutes.

                   STATEMENT OF BILL BOTTIGGI

    Mr. Bottiggi. Chairman Whitfield, Ranking Member Rush, and 
members of the committee, thank you for inviting me to speak at 
today's hearing. I also wish to extend a particular thanks to 
Congressman Kennedy for his work bringing attention to the 
problems with the forward-capacity market in New England and 
for inviting me to speak today.
    I am Bill Bottiggi, the General Manager of the Braintree 
Electric Light Department. Braintree Electric is a nonprofit 
municipal utility owned by the residents of Braintree, 
Massachusetts. Our service territory is limited to just the 
town of Braintree, and we have been providing highly reliable 
electric service at the lowest reasonable rates since 1892 to 
the residents and businesses in Braintree.
    Braintree Electric belongs to the Northeast Public Power 
Association, NEPPA, which represents municipal utilities in six 
New England States. I am testifying on behalf of NEPPA, but my 
views today are my own.
    Braintree Electric also belongs to the American Public 
Power Association, which I am on the board of directors. These 
remarks are also a top priority of the American Public Power 
Association and the 48 million customers that they serve.
    My remarks today will be focused on the forward-capacity 
market and the Fair Rates Act, H.R. 2984. Deregulation. In the 
1990s in New England, in Massachusetts, deregulation of 
electric utility markets occurred, transitioning the 
historically vertically integrated utility markets, the 
utilities, to a centralized competitive market for wholesale 
power. The belief was that forcing investor-owned utilities to 
sell their generation assets would result in the private 
development of new high-efficient generation in a competitive 
market, driving down the cost of electricity.
    Thousands of megawatts of generation, all natural gas, was 
built in the early 2000s. Surprisingly, though, the existing 
generation which was purchased from the investor-owned 
utilities did not retire as expected, and that created a large 
surplus of generation in New England.
    The primary revenue stream at the time--this was before the 
forward-capacity markets started--was payments for the 
electricity that the generators produced. With a surplus of 
generating capacity, some plants were not running frequently 
enough to provide their owners with the revenue they needed to 
cover their fixed costs. As a result, there were several 
bankruptcies. A lot of the new plants declared bankruptcy 
because they had the high debt service to cover, and they 
weren't getting the revenue they needed to cover that.
    So, ISO New England recognized the markets were not working 
and implemented the forward-capacity market, starting in 2007, 
with FERC approval. Unlike the energy market, where power 
plants bid their marginal cost into ISO New England, and the 
ISO called them the cheapest units to run first, these markets 
provided capacity payments to the generators in exchange for 
having a physical resource available to run, for just being 
there.
    Capacity prices were set, and are still set today, based on 
the need for new generation. With a surplus of generation 
capacity, prices stayed low, capacity prices stayed low from 
the first auction held in 2007 through the seventh auction held 
in 2013. It is a forward auction, so that seventh auction is 
taking place starting in June of 2016 for 1 year.
    Meanwhile, municipal utilities--Braintree Electric is one 
of them--were carved out from deregulation in the 1990s, and we 
were allowed to self-supply our own generation. We were left 
vertically integrated. We didn't have to sell our power plants. 
We were allowed to provide our own capacity to our own 
customers.
    Self-supply allowed municipal utilities to build 
generation. That way, we could cover our own capacity needs. 
Braintree Electric built 115 megawatts of quick-start, gas-
fired oil backup generation in 2009 under this self-supply 
provision, giving us price certainty for our capacity for a 
long time in the future.
    This provided us and other municipal utilities with our 
ability to cover our own capacity cost. So, we weren't 
dependent on the forward-capacity auction, which creates a lot 
of variability in capacity cost, as you have seen in my written 
testimony.
    Unfortunately, as our needs for capacity have grown, in the 
future, currently, we are unable to self-supply from capacity. 
In 2013, ISO New England petitioned the FERC, who removed the 
right for municipal utilities like Braintree Electric to 
provide their own capacity, their own self-supply. They thought 
we exerted too much buyer-side market power.
    So, where are we today? In 2014, the eighth forward-
capacity auction was held, and that was the first auction where 
new generation was needed. That big surplus that was created at 
the start of deregulation was gone. Part of that was Vermont 
Yankee, Brayton Point, Norwalk Harbor, and many other older 
plants finally were retiring for reliability reasons and 
environmental reasons.
    These retirements in that one auction cycle totally 4300 
megawatts of electricity, and only 1500 megawatts of new 
generation cleared that auction. So, that created an imbalance, 
driving up the cost-to-capacity payments to an administrated 
cap by ISO New England to $15 a kilowatt month. As a reference, 
previous to that, it was $3 a kilowatt month. So, prices jumped 
in one auction fivefold, from $3 to $15, which is what 
Congressman Kennedy referenced has happened in that auction, 
Forward-Capacity Auction No. 8.
    Some believe the closure of Brayton Point manipulated the 
market, causing the shortage of capacity, driving up capacity 
payments for all generation, including the fleet of plants, in 
addition to Brayton Point, that was also owned by that same 
company.
    All told, capacity starting in 2018 will cost New England 
consumers $4 billion a year, up from $1 billion a year in 2016. 
So, from 2016 to 2018, prices are quadrupling. That translates 
into $21 a month on the average residential electric bill, just 
for the capacity portion, not all the other components that 
have gone up as well.
    This dramatic increase demonstrates how dysfunctional the 
market is and should have presented an opportunity for the FERC 
to investigate the last-minute closure of Brayton Point. As we 
have been discussing earlier today, due to FERC's vacancy, the 
one Commissioner vacancy, they were unable to investigate 
because they had that two-two tie in the vote, and it was 
ordered a rule of law and the rate was enacted.
    So, the Fair Rates Act is an important piece of legislation 
because it would make the same administrative review procedures 
currently approved by the Commission applicable to rates that 
just take effect by law, by operation of law. Many of us would 
like to see an investigation into what happened in the eighth 
forward-capacity auction, and those in public power would like 
to see the capacity markets fundamentally reformed, including 
our right to self-supply, so we could provide our own 
generation to our own customers.
    However, this, while it is a narrow step, is a critical 
first step. This bill will ensure that, if the FERC is 
deadlocked again in the future over questionable rates, the 
problem does not reoccur in New England or other regions. With 
this Act, ratepayers will now have an avenue to challenge 
unfair rates.
    In conclusion, I want to thank Congressman Kennedy for 
introducing the bill and the committee for holding this hearing 
on what can be a confusing topic, a confusing subject, on 
behalf of Braintree Electric, NEPPA, and APPA, and myself. I 
hope the committee will continue to examine mandatory capacity 
markets throughout New England and the rest of the country.
    Thank you, sir.
    [The prepared statement of Mr. Bottiggi follows:]
    
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    Mr. Whitfield. Thank you.
    Mr. Marsan, you are recognized for 5 minutes.

                    STATEMENT OF BILL MARSAN

    Mr. Marsan. Thank you. Mr. Chairman, Ranking Member Rush, 
and members of the subcommittee, thank you for the opportunity 
to testify today in support of legislation to amend Section 203 
of the Federal Power Act and make the law work as intended.
    I am Executive Vice President/General Counsel to American 
Transmission Company. We construct, own, and operate electric 
transmission property in Wisconsin and the upper peninsula of 
Michigan, as well as hold ownership interest in transmission 
property in California.
    ATC is a transmission-only utility which was formed in 
2001, when other utility companies transferred their 
transmission assets to create the new company. This formative 
transaction was subject to Section 203 of the Power Act. 
Subsequent to our formation, ATC has continued to acquire 
utility properties, subject to FERC's Section 203 regulation.
    The Energy Policy Act of 2005 amended Section 203 to 
increase the dollar threshold from $50,000 to $10 million on 
FERC's authority to preapprove dispositions by public utility 
of jurisdictional utility facilities. FERC's regulations and 
orders implementing this change have failed to account for 
congressional intent.
    Specifically, FERC has relied on apparent oversight in the 
text of the statute to reverse its own decades-old application 
of the minimum monetary threshold. Finally, the new Section 203 
eliminated the monetary threshold entirely for acquisitions or 
mergers of jurisdictional facilities.
    This has led to some absurd results. For example, FERC has 
required preapproval, pursuant to Section 203, for the $1 
purchase of 10 miles of depreciated transmission line, as well 
as the purchase of an electrical disconnect switch and 
associated wiring for $10. Conversely, the sellers of the same 
equipment I just described were not required to make any 
filings with FERC at all.
    FERC's interpretation requires prior approval for the 
acquisition of utility property that has any monetary value 
attached to it or no monetary value at all. FERC's 
interpretation frustrates the intent of the amendment to 
Section 203 and EPAC 2005. Congress intended to reduce the 
regulatory burden on utilities by raising the threshold of FERC 
preapproval, and Congress did this with good reason.
    Public utilities regularly buy and sell utility assets that 
have minimal impact on the bulk electric system and do not 
affect FERC's ability to regulate. The prior threshold of 
$50,000 made no sense in 2005 and let alone today's economy.
    Congress sensibly raised the threshold to $10 million in 
order to spare utilities the administrative cost of the 
preapproval process for small transactions while maintaining 
FERC's oversight on transactions with a potential to impact 
utility operations and rates.
    FERC's current interpretation of Section 203 has imposed a 
new and unnecessary regulatory burden on public utilities. It 
has also increased the risk that public utilities will be 
targeted by the FERC Office of Enforcement for violations of 
Section 203. At least one such FERC enforcement action for 
failure to receive preapproval for relatively de minimis 
acquisitions has been resolved, and it is reasonable to expect 
more.
    FERC has refused requests to revise its regulations to 
conform with the intent of EPAC 2005 and has made it clear that 
only a statutory change to Section 203 will force a shift in 
FERC policy.
    On December 3rd, 2015, the House passed H.R. 8, the North 
American Energy Security and Infrastructure Act of 2015. 
Section 3222 of H.R. 8 clarifies Section 203 to expressly 
include a monetary threshold of greater than $10 million for 
FERC preapproval of mergers and acquisitions of jurisdictional 
utility property, just as Congress intended when it passed EPAC 
2005.
    This change would serve at least three important purposes. 
It would make Section 203 internally consistent. It would give 
clear instruction to FERC about this preapproval authority. And 
it would relieve an unnecessary regulatory burden on public 
utilities.
    The bill before the subcommittee today adopts the language 
of Section 3222 of H.R. 8 as a standalone measure. ATC strongly 
supports this legislation.
    On behalf of ATC, I want to thank the subcommittee for 
inviting me to testify, and I stand ready to answer any 
questions the members may have. Thank you.
    [The prepared statement of Mr. Marsan follows:]
    
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    Mr. Whitfield. Thank you very much.
    Mr. Slocum, you are recognized for 5 minutes.

                   STATEMENT OF TYSON SLOCUM

    Mr. Slocum. Thank you very much, Chairman Whitfield, 
Ranking Member Rush, members of the committee.
    My name is Tyson Slocum, and I direct the Energy Program at 
Public Citizen. Public Citizen is a national nonprofit, 
nonpartisan consumer advocacy organization funded in part by 
the more than 400,000 members and supporters we have across the 
country.
    In my capacity as Energy Program Director, I serve on the 
United States Commodity Futures Trading Commission Energy and 
Environmental Markets Advisory Committee, and I also frequently 
intervene and comment in a number of FERC proceedings.
    So, I am here to talk about two pieces of legislation. One 
is the bill that would exempt from FERC review any merger or 
consolidation under $10 million, and the second is the Fair 
Rates Act, H.R. 2984.
    On the legislation that would extend a $10 million 
threshold to exempt mergers and consolidations, on the face of 
it, that might seem reasonable. But, when you understand the 
way that energy markets operate, you quickly understand that it 
is not necessarily the dollar value of a transaction, but what 
the impact of that facility has on the operation of an energy 
market. With power facilities, these are known as what is known 
as pivotal suppliers.
    In two landmark market manipulation cases that I have 
brought before FERC that are still under review, it was either 
one power plant in the case of New England or a very small 
collection of power plants that, had it been a merger or 
consolidation, very likely would have been under that $10 
million threshold.
    And so, it is very important that Congress retain the 
language that was plainly included in the Energy Policy Act of 
2005 because, remember, the Energy Policy Act of 2005 repealed 
one of the landmark utility regulations in this country, the 
public utility holding company, after 1935. As part of that 
agreement to repeal that longstanding utility regulation, 
Congress was very aware of the need to ensure that FERC had 
full authority over all mergers and consolidations. That is why 
they explicitly did not include that threshold dollar figure in 
the plain language of the Energy Policy Act of 2005.
    On the second piece of legislation, the Fair Rates Act, 
H.R. 2984, this is a great piece of legislation that directly 
addresses a market manipulation case that I brought before FERC 
in 2014 that has been much talked about at today's hearing, the 
2014 forward-capacity auction in ISO New England.
    We made an allegation in our FERC filing that a Cayman-
Islands-based private equity firm named Energy Capital Partners 
had acquired a fleet of power plants in New England, and six 
weeks after closing on that transaction, announced the 
retirement of one of them. That retirement moved the New 
England market from a surplus to a deficit, thereby triggering 
a significant price increase by about $1 billion in that 
auction.
    We filed our market manipulation complaint saying that 
their actions were the subject of market manipulation and that 
the resulting rates were unjust and unreasonable. As has been 
explained, FERC deadlocked two-to-two on my complaint. And so, 
they did not set for hearing whether or not to consider if the 
rates were lawful. Instead, they issues this notice that the 
rates had become effective by operation of law.
    We asked for rehearing. FERC denied our rehearing. We, 
then, filed a petition to review in Federal court. FERC made a 
motion to dismiss. The court did not grant FERC's motion to 
dismiss, and we have filed initial briefs and reply briefs, and 
the court is actively considering this reviewability question.
    It is clear that the Fair Rates Act of H.R. 2984 would help 
alleviate this problem if it were to occur in the future. That 
is why Public Citizen supports that legislation.
    Thank you.
    [The prepared statement of Mr. Slocum follows:]
    
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    Mr. Whitfield. Thank you.
    Mr. Leahey, you are recognized for 5 minutes.

                  STATEMENT OF JEFFREY LEAHEY

    Mr. Leahey. Thank you, Chairman Whitfield, Ranking Member 
Rush, and members of the subcommittee.
    I am Jeffrey Leahey, Deputy Executive Director of the 
National Hydropower Association, and I am pleased to be here to 
discuss legislation to reinstate and extend the deadline for 
the commencement of construction for five licensed hydropower 
projects and how these projects demonstrate new growth 
potential we see in the hydropower industry.
    The U.S. hydropower fleet is made up of 2200 plants with a 
capacity of almost 80 gigawatts. These plants provide roughly 7 
percent of all electricity and close to half of all renewable 
electricity, making hydropower the largest provider of 
renewable power in the United States.
    Hydropower's contributions to the electric grid are many: 
baseload power, peaking power, load following, energy storage, 
reliability, and more. Because of the need for more of these 
services, the industry has grown in recent years. In fact, the 
U.S. experienced a net capacity increase of 1.4 gigawatts from 
2005 to 2013, and that is to power over half-a-million homes.
    A prime growth area is on existing infrastructure, such as 
nonpower dams and conduits. The projects today showcase these 
opportunities. Two would add generation to Bureau of 
Reclamation dams, two to Army Corps of Engineers dams, and 
another dam owned by New York City. They are all small 
projects, ranging from 4 to 15 megawatts, and together, they 
will add 51.7 megawatts to the system, enough to power close to 
21,000 homes.
    Of the 80,000 dams in the United States, only 3 percent 
have electric-generating facilities. The vast majority were 
built for other purposes, water supply, navigation, irrigation.
    The Department of Energy recognized this untapped potential 
of nonpower dams and in 2012 released a report of these 
projects. The map you see on the screen depicts the size and 
locations of the top prospects.
    The study showed 12 gigawatts of total potential, with 8 
gigawatts available at the top 100 sites alone. Eighty-one of 
the top 100 sites were located on Corps of Engineers dams. 
These types of projects, including the five here today, are 
some of the lowest-impact developments in the energy sector. No 
new dams need to be built, and the projects aim to utilize 
existing flows. What better way to maximize the benefit of this 
infrastructure by also generating renewable carbon-free power?
    These projects can face a variety of obstacles that push 
back construction timelines, thus, requiring the action that 
the subcommittee is taking today. Speaking generally, these 
include delays in post-licensing construction approvals, 
refinements in project design, negotiations on power purchase 
agreements, and others.
    To begin, hydropower has the most complex development 
timeline of any renewable resource. It can take 10 years or 
longer from the start of licensing through construction to 
being placed in service. It also requires considerable upfront 
financial commitment from the developer for the studies needed 
for Federal and State approvals.
    Water is a public resource, and NHA recognizes the need for 
thorough review of new project applications. However, the 
overall process can also be a factor for delays in moving to 
start of construction. For example, when adding generating 
facilities to nonpowered Federal dams, FERC may issue a 
license; yet, that project cannot start construction until it 
receives additional approvals from the Federal dam owner. If 
there are unanticipated delays for those approvals, no work can 
commence.
    NHA notes that the House passed H.R. 8 and the Senate is 
debating is S. 2012, energy bills that contain bipartisan 
provisions to address inefficiencies and improve coordination 
in the hydropower process. We note the Water Resources Reform 
and Development Act of 2014 provided direction to the Corps to 
prioritize hydro development and complete permitting in a 
timely and consistent manner.
    Also, S. 2012 specifically aims to address the issue at 
hand today. It contains a provision allowing applicants to 
receive an extension of the commence construction deadline for 
up to 8 additional years. NHA strongly supports all of these 
efforts.
    Further, design changes for projects at Federal facilities 
can result from discussions with the Federal owners as 
developers move to construction. Working cooperatively, 
developers must show the final construction plans will not 
interfere with the original purposes of the Federal dam and, 
also, not harm its integrity.
    There have been instances where design changes were 
proposed post-licensing and pre-construction that differed from 
the design that was originally licensed. As such, more 
consultation was needed between the developer FERC and the 
Federal owner to approve these changes.
    Lastly, industry members also report difficulty securing 
power purchase agreements. In testimony before the subcommittee 
last year, Cube Hydro, a developer, stated that regulatory 
uncertainty and risk of delays can negatively impact acquiring 
PPAs, and that failure to obtain one, in turn, inhibits the 
ability to obtain project financing. This can include post-
licensing financing to cover construction costs, which can also 
impede the ability to meet the start construction deadline.
    To conclude, hydropower projects have a critical role to 
play in meeting our Nation's energy, climate, and economic 
development objectives. The five projects the subcommittee 
considers today are prime examples of the tremendous growth 
potential at existing water infrastructure across the country.
    It is NHA's hope that the time granted by these extensions 
allow the projects to complete the process and protect the 
significant investment of time and financial resources, both by 
the developers and also the Federal Government.
    I thank the subcommittee for inviting me to testify, and I 
look forward to answering your questions.
    [The prepared statement of Mr. Leahey follows:]
    
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    Mr. Whitfield. Thank you, Mr. Leahey, and thank all of you 
for your opening statements.
    At this time I will recognize myself for 5 minutes of 
questions.
    Mr. Bottiggi and Mr. Slocum, let me ask you, the Cayman 
Group that purchased these power plants in the Northeast, how 
many did they purchase and what did they pay for it? What was 
the purchase price?
    Mr. Slocum. I can't remember the exact number of power 
plants. I believe it was a deal that included, I think, five or 
six total power plants in two different geographic markets in 
PJM and in ISO New England.
    I don't know if there was a public purchase price. Because 
Energy Capital Partners is a private equity firm, it doesn't 
have to submit Securities and Exchange Commission filings. But 
it was most likely in excess of $10 million, and it also was 
not a merger; it was a disposition.
    Mr. Whitfield. So, FERC did approve the acquisition?
    Mr. Slocum. Yes, sir.
    Mr. Whitfield. And so, Brayton Point is the plant that was 
closed? Is that the one you refer to in your testimony?
    Mr. Bottiggi. Yes, sir. That was a 1500-megawatt, coal-
fired power plant.
    Mr. Whitfield. Now, Mr. Slocum, you said market 
manipulation. If it is coal, I would think environmental had 
something to do with it as well.
    Mr. Bottiggi. Well, the low price of natural gas has put 
pressure on coal-fired electricity.
    Mr. Whitfield. Right.
    Mr. Bottiggi. So, it was closed for economic reasons----
    Mr. Whitfield. Yes.
    Mr. Bottiggi [continuing]. Is what they claimed.
    Mr. Whitfield. But the EPA regulation on existing coal 
plants also makes a big difference.
    Mr. Bottiggi. Right.
    Mr. Whitfield. But, whatever the reason, they closed that 
down and that created a shortage of supply, is that correct?
    Mr. Slocum. Yes, sir.
    Mr. Bottiggi. Correct.
    Mr. Whitfield. And so, that contributed to these higher 
rates?
    Mr. Bottiggi. It did.
    Mr. Whitfield. Now, on the capacity markets, I am certainly 
not an expert on capacity markets, and I know it is pretty 
complicated, but it is my understanding there are two areas of 
the country that have mandatory capacity markets, is that 
correct?
    Mr. Slocum. Yes.
    Mr. Whitfield. OK. And one of them is ISO New England, and 
one, is it PJM?
    Mr. Slocum. Yes, sir.
    Mr. Whitfield. OK. Now why do they feel like they are 
necessary, say, in New England, these mandatory capacity 
markets, but they are not necessary in other parts of the 
country?
    Mr. Bottiggi. In other parts of the country where there are 
no Regional Transmission Authorities, RTOs, which ISO New 
England is one of them, they still use a cost-of-service model 
to finance power plants. A utility will still be vertically 
integrated and will still own their own capacity, their own 
power plants. So, they will develop and construct a power plant 
and go to the State regulators, and the State regulators will 
review the cost structure. As long as it is just and 
reasonable, they will pay the utility the full cost to 
construct and maintain that power plant.
    Mr. Whitfield. And did I understand that the ISO New York 
has not allowed you to self-supply anymore? Is that correct?
    Mr. Bottiggi. ISO New England, correct.
    Mr. Whitfield. I mean ISO New England.
    Mr. Bottiggi. Yes, correct. We are grandfathered for our 
existing power plants, municipal utilities are, but if we want 
to build a new plant in the future now, we can't build it just 
on the backs of our own ratepayers to satisfy our own----
    Mr. Whitfield. So, when you were talking about reforming 
the capacity markets, were you primarily focusing on the 
ability to self-supply or is there other area of reform you 
were referring to?
    Mr. Bottiggi. Well, the forward-capacity market for all 
utilities, for all generation in New England, setting aside 
self-supply for the moment, what happens is, if an old power 
plant is still in existence, like many still are, when an 
auction clears like the 8 forward-capacity auction, new 
generation gets paid that very high price. It was $15 a 
kilowatt month. But existing generation gets an average price. 
So, in this case, existing generation went from being paid $3 a 
kilowatt month to $7 a kilowatt month. Putting that in dollar 
terms--we have an old power plant, so I am familiar with the 
numbers--we currently get about $2.5 million a year in capacity 
payments. It is really value because we self-supply.
    Mr. Whitfield. Right.
    Mr. Bottiggi. It is $2.5 million a year, and it costs us 
about $2.5 million a year to maintain that plant. So, just to 
have it sit there is a break-even proposition.
    After FCA 8 went through, if we were an independent 
generator, that $2.5 million for our old power plant jumps to 
$6 million a year. So, it is a windfall for the old plants that 
are just hanging around.
    The next auction in 2019, when FCA 9 cleared--and this will 
happen--that old power plant that we have would go from $2.5 
million to $6 million, now to $9.5 million a year we are going 
to get just for sitting there, just for hanging around. So, 
that is why this $1 billion in 2016 is jumping to $4 billion in 
2018.
    Mr. Whitfield. Yes. OK. Well, I wish we could talk more 
about this. My time has expired.
    So, Mr. Rush, you are recognized for 5 minutes.
    Mr. Rush. Thank you, Mr. Chairman.
    Mr. Slocum, the bill amending Section 203 that would exempt 
mergers or consolidation of facilities with a value of less 
than $10 million from FERC's merger review authority has been 
portrayed as a very innocuous bill that would simply correct a 
drafting error from EPAC 2005 language. However, in your 
testimony you take a decidedly different view on this 
legislation. You are stating that, even with mergers or 
consolidations under $10 million, it is possible that--and I am 
quoting you--``a single facility or contract has the ability to 
be a pivotal supplier in a given market, providing the owner 
with an ability to unilaterally charge unjust and unreasonable 
rates.'' End of quote.
    Can you give an example of how allowing this exemption from 
FERC review of mergers under $10 million might result in unjust 
and unreasonable rates?
    Mr. Slocum. Yes, sir. Let's take this Brayton Point 
facility that has been the subject of parts of this hearing. As 
the chairman pointed out, that was not a merger and it also was 
in excess of $10 million. But let's assume, theoretically, that 
the Brayton Point facility was a standalone company that Energy 
Capital Partners was going to merge with in order to combine 
the two companies into one. It is likely that, because of the 
age of the Brayton Point facility, that that transaction could 
have been valued at less than $10 million. And therefore, FERC, 
under this proposed legislation, would not be able to review 
that transaction. And that would be a problem because, as we 
identified in our market manipulation complaint, that single 
facility was what economists term ``a pivotal supplier'' in 
that market, and therefore, not allowing FERC the discretion to 
look at that kind of transaction I think is problematic.
     It is important to note that it isn't like FERC is a 
difficult place to submit a merger application. I cannot find 
in the last 20 years a single merger consolidation proposal 
that FERC has rejected outright. So, this is not necessarily a 
difficult process.
    I understand that the $10 million threshold sounds like it 
is a reasonable proposal, but there are a number of examples 
where instituting this threshold would deny FERC the 
opportunity to review pivotal supplier transactions.
    Mr. Rush. Well, Mr. Minzner from the first panel indicated 
that FERC has other tools at its disposal to protect consumers, 
even in a situation where a series of mergers take place, but 
not individually meet the $10 million standard. What do you 
think about that statement?
    Mr. Slocum. Well, I think that in the case of the 
transaction of the Energy Capital Partners' acquisition of a 
portfolio of power plants, FERC approved that transaction. And 
yet, the result of that transaction was that one entity was 
able to utilize the capacity of one power plant to have a 
billion-dollar swing in energy prices.
    And so, in this case, FERC reviewed the transaction, 
approved it, and then, did not have safeguards in place. Even 
after we brought our market manipulation complaint, FERC still 
did not rule on it because they deadlocked two-to-two.
    So, at its core, the Federal Power Act is all about 
reviewing transactions. We think it is very important that FERC 
retain the ability to be able to review any and all mergers and 
consolidations of facilities under its jurisdiction.
    Mr. Rush. I want to thank you, Mr. Chairman.
    Mr. Whitfield. Mr. Marsan, you look like, did you want to 
say something?
    Mr. Marsan. Thank you, Mr. Chairman.
    I don't think anything that Mr. Slocum is saying frustrates 
the intent of Section 203. As he stated, he is bringing a 
complaint for market manipulation right now, and FERC still 
has, as the general counsel stated, market power authority over 
all rates. And folks like Mr. Slocum and other citizens who 
want to bring a contest to market suggesting market power can 
do so, and FERC has full authority to review that. So, I don't 
think any change to Section 203 frustrates FERC's ability to 
monitor these things.
    Mr. Whitfield. The gentleman's time has expired.
    At this time, Mr. Flores, you are recognized for 5 minutes.
    Mr. Flores. Thank you, Mr. Chairman.
    Mr. Powell, a couple of quick questions for you.
    Mr. Powell. Yes, sir.
    Mr. Flores. Would allowing an agency to utilize aerial data 
and to condition a permit on a followup ground survey interfere 
in any way with the integrity of the environmental review?
    Mr. Powell. No, sir, I don't believe that it would. It is 
very common practice, even today. Landowners routinely deny 
survey permission. That is very common in every proceeding. 
FERC uses its conditional authority to require us to go back 
and close any gaps that those other agencies administering 
those Federal reviews require.
    Mr. Flores. OK. Well, let's go ahead and build on that. In 
Mr. Lloyd's testimony, the testimony appears to be driven by 
his dissatisfaction with the FERC public interest review rather 
than any substantive criticism of H.R. 3021, outside of the 
notion that, for some reason, that FERC wouldn't require air 
survey data to be verified by a ground survey.
    So, two parts to this. In your experience with these 
permitting decisions, do you have any reason to believe that an 
agency would ignore the authority provided in H.R. 3021, which 
states very clearly--and I quote--``An agency accepting aerial 
survey data may require, as a condition of approval, that such 
aerial survey data be verified through the use of ground survey 
data before the construction or extension of a facility that is 
subject of such application.''? Unquote. Do you have any reason 
to believe that FERC or any other agency would ignore that 
authority that is provided in H.R. 3021?
    Mr. Powell. I would say, as a general rule, no. I think 
there might be some specific places where, I would say 
particularly a State agency that is administering 401, might 
because they may want 100 percent before they would deem the 
application complete, which is why this legislation is that 
important.
    Mr. Flores. OK. Good. Do you think that Mr. Lloyd's 
concerns are well-founded, given that it is verified by a 
ground survey?
    Mr. Powell. Not in my experience, sir.
    Mr. Flores. OK.
    Mr. Powell. As a matter of practice, prior to prefiling, 
applicants approach the regulatory agencies, the Fish and 
Wildlife Service or the State agency administering their listed 
species program, the SHPO--I'm sorry--State Historic 
Preservation Office, and discuss which species should be 
considered in a particular project, what the survey protocol 
should be for those resources. As you might imagine, most 
species don't occur across all geographies.
    And so, it tends to be a very small subset of the overall 
list, and they tend to be unique to specific habitats, which 
you can identify by and large. You may not be able to determine 
specifically whether the individual is there today, but you can 
very much limit the area that requires resurvey, as a general 
rule. There are other species that are more broadly distributed 
and you would need to do that.
    Mr. Flores. OK. I have got a little bit of time left. Do 
you have any general comments on anything that has been said 
about FERC's environmental review process today?
    Mr. Powell. Well, I think FERC's environmental review 
process is very good.
    Mr. Flores. OK.
    Mr. Powell. They strongly encourage applicants to work with 
the landowners, and we do that. We do that throughout the 
process. We do that all the way to the very end of a process. 
We want to obtain survey permission, and we want to do the 
required surveys to complete the record. There is really no 
benefit to us to having an incomplete record that late in the 
project. So, we do very diligently try to get that, but what is 
needed is a solution.
    There are going to generally be some landowners that are 
going to say no, and we need a mechanism where a regulatory 
agency can't say, well, this one individual said no. Therefore, 
I don't have to review your permit, and I can wait until after 
the certificate and after the order and after imminent domain, 
until you can gain access. And, oK, now my regulatory review 
clock starts. And that happens.
    Mr. Flores. OK. Thanks, Mr. Powell. I thank the rest of the 
witnesses for their testimony.
    Mr. Chairman, I yield back the balance of my time.
    Mr. Whitfield. The gentleman yields back.
    Mr. McNerney is recognized for 5 minutes.
    Mr. McNerney. I thank the chairman, and I thank the 
witnesses this morning.
     Mr. Slocum, what would be the practical effects of the 
merger legislation?
    Mr. Slocum. The practical effects would be that any merger 
or consolidation under $10 million would not be subject to FERC 
review.
    Mr. McNerney. So, you think there would be a rush of 
unquestioned mergers at that point?
    Mr. Slocum. I don't know if there would be a rush, but I 
think that, theoretically and practically, you could have a 
merger or consolidation structured in a way to ensure that you 
get under that threshold amount.
    Mr. McNerney. OK.
    Mr. Slocum. And particularly as we see a lot of older 
generation, whether they are older nuclear power plants or 
older coal-fired units, that for a variety of reasons, by 
themselves are not worth very much, but as part of a larger 
portfolio could be extremely valuable. We just think that it is 
not prudent policy to not allow FERC to review those 
transactions when they are first proposed.
    Mr. McNerney. Thank you.
    Mr. Leahey, in your testimony you mention that S. 2012 
contains provisions to extend construction timelines to 8 
years. What are some of the biggest obstacles that prevent 
construction post-licensing?
    Mr. Leahey. Sir, thank you. As I mentioned in my testimony, 
particularly on these pieces of infrastructure, these existing 
dams that are owned by the Federal facilities, once FERC issues 
the license for the project, there still may be supplemental 
permits that are required to get either from the Bureau of 
Reclamation or from the Army Corps of Engineers. Delays in that 
permitting process can, then, cause those delays that require 
the applicants or the licensees to come back to Congress 
individually.
    The cases before you also have a variety of other issues 
that come up post-licensing. In one of the cases, I believe it 
was getting easements for purposes of the transmission line. In 
others, there were unexpected issues that resulted when work 
started at the dam. So, a variety of things can pop up post-
licensing that could cause those delays.
    Mr. McNerney. Mr. Lloyd, would you please explain----
    Mr. Whitfield. Your microphone.
    Mr. McNerney. Oh, thank you. We lost power or something. I 
will speak up.
    Can you please explain if an aerial surveying can 
effectively identify the full range of critical mass in the 
environment and cultural resources on the ground from such a 
distance?
    Mr. Lloyd. Unfortunately, I think the answer is no. The 
data that we have looked at shows that often endangered species 
are underground. Often, if you have to delineate a wetland, you 
have to do digging in the ground to find out the kind of soils 
that are there. I wish I could tell you the aerial surveying 
would solve the problem, but for a large number of species that 
we have looked at it will not solve the problem.
    If I may, our experience has been that FERC is not getting 
enough environmental data to adequately do its job. What we are 
finding is, when a State permitting agency has to come in and 
do permits, they have to look at those permits in a much more 
granular way, generate a lot more environmental data. It 
enables them to make a better decision. We think that that 
information ought to be in front of FERC when FERC makes its 
decision in the first place, and that that would help the 
process, not harm it.
    Mr. McNerney. Well, another one of the things you mentioned 
is that some folks might be offended by aerial activities. What 
about drones, unmanned drones? How is that going to fit into 
this?
    Mr. Lloyd. I don't think we have experienced it yet. We 
have had concerns about helicopters and low-flying aircraft. To 
be honest with you, given where the technology is going in this 
country, I think drones may be the next step. We may all need 
to look at that to see whether that is not an invasion of the 
use of private property by using drones to go over private 
property.
    Mr. McNerney. I mean, in my career prior to coming to 
Congress, I did a survey of a competitor's equipment. I don't 
think they would have been too happy if they had known about 
it, but they didn't have any way to stop me.
    [Laughter.]
    Is that the kind of thing we are talking about?
    Mr. Lloyd. It is the kind of thing we are talking about. 
Landowners in New Jersey have already experienced adverse 
impacts from helicopters. As I have said, I expect that drones 
might be even more invasive, and I don't think we have 
addressed that issue at all as yet.
    Mr. McNerney. All right. Thank you, Mr. Chairman.
    Mr. Whitfield. Well, I think that concludes our questions, 
except for our friend Mr. Kennedy. So, we will recognize him 
for 5 minutes as well.
    Mr. Kennedy. Thank you, Mr. Chairman. I appreciate the 
time, and I appreciate the witnesses being here and your 
testimony. And if you guys stick around for me, I will ask you 
a couple of questions as well.
    Mr. Bottiggi I heard also say that the market rules are 
vital to ensuring reliability. I was wondering if you could 
share your take on that? Are capacity markets the only way to 
make sure that new generation gets built?
    Mr. Bottiggi. Electric utilities have been around since the 
1800s, including Braintree Electric, and we think we have 
provided very reliable service in that 120 years. Capacity 
markets have been around since 2007. So, there was a way to do 
it before the capacity markets. I do not think they are vital. 
I think generators have to be paid enough revenue to cover 
their costs, but paying this windfall to old generation I don't 
believe is necessary.
    Mr. Kennedy. So, I was interested in analyses that showed 
that over 90 percent of new generating capacity has been 
constructed under bilateral contracts or utility ownership, but 
not solely for sale in the capacity markets run by RTOs. What 
do you think this finding says about the ability of capacity 
markets to achieve the needed generation mix to meet the 
reliability and policy goals?
    Mr. Bottiggi. The forward-capacity market as we experience 
it, in my opinion, drives short-term decisionmaking. A long-
term decision for a utility is 40 years, whether it is 
electrical infrastructure or generation assets. So, the RTOs 
drive utilities to make short-term or the owners of generation 
to make a fairly short-term decision. Seven years now is what 
you get paid for capacity if you clear the auction as a new 
resource. That is a short-term decision.
    Those same decisions, that same short-term window is only 1 
year. Each year is a new market for existing generation. So, 
the nuclear power plants that are closing in New England, 
Vermont Yankee, Pilgrim Nuclear Power Plant, and, then, in New 
York, FitzPatrick, they are all basing that decision on a 
short-term window.
    When you get out of the RTO markets and you get down South 
and they are still building generation under the old cost-of-
service model, that long-term view of the world that you need 
for these major expenses, that is why those assets are being 
built down there and they aren't being built in New England.
    Mr. Kennedy. You mentioned that Braintree has been able to 
self-supply its capacity, but that auction was taken away for 
further generation. What does that mean for your ratepayers 
going forward and how does the current ratemaking process for 
Braintree work within the structure of capacity markets? 
Finally, with regard to that, in your opinion, how critical is 
a review by the Federal regulator to ensure that rates are, in 
fact, just and reasonable?
    Mr. Bottiggi. Braintree Electric being a municipal utility, 
for the most part, is not regulated. We set our own rates. I 
report to a three-member light board. The rates that we control 
within town, like our distribution system, we are not 
regulated. The capacity markets are regulated at the State and 
regional level in New England by ISO New England.
    When deregulation occurred, since we were allowed to stay 
vertically integrated and own our own generation, the next step 
was, when the capacity markets was started, the ISO New England 
agreed you can self-supply your own generation. You don't get 
paid for it as a generator and your load doesn't pay for it. 
You are revenue-neutral. So, off we went and I built the 115-
megawatt new state-of-the-art gas turbines that way.
    The ISO was led to believe that we had market power, the 
little municipal utilities had market power over New England. 
We only have a few hundred megawatts of generation in this 
33,000 megawatts of generation, but they were convinced that 
that gave us market power to manipulate the system. So, they 
took that self-supply option away from us.
    Flash forward to today. We have an old combined-cycle power 
plant, about 40 years old now, that we would like to replace 
with new modern generation. If we could self-supply, I could go 
to the town, borrow money, general obligation bonds at a very 
low rate, build a new power plant. Our ratepayers would pay off 
the debt service, and we would provide that capacity for our 
own needs.
    Since we can't self-supply, we need to bid against other 
private companies into the forward-capacity market in order to 
try to replace that old generation. It is much harder to do. We 
have been at it for 3 years. We would be well underway 
replacing that generation now if we knew we could with 
certainty get paid, will get credit for that capacity.
    Mr. Kennedy. Thank you.
    Chairman, I yield back.
    Mr. Whitfield. I think we need to spend more time on these 
capacity markets.
    [Laughter.]
    Mr. Bottiggi. I can come back.
    [Laughter.]
    Mr. Whitfield. Mr. Rush, do you have additional questions?
    Mr. Rush. Thank you, Mr. Chairman. I do have an additional 
question for Mr. Lloyd.
    Mr. Lloyd, recent studies have suggested that many of the 
States in the Northeast region do not require new natural gas 
infrastructure to meet their energy needs. According to Post-
2014 State-of-the-Market Report, the Northeast is a net 
exporter of natural gas, as in the summer of 2014 the attorney 
general of Massachusetts commissioned a study that determined 
the New England States do not need new infrastructure to meet 
their energy needs.
    Given the Northeast region is a net exporter of natural 
gas, is there a risk of overbuilding natural gas infrastructure 
in the Northeast? And how does FERC's policy of certification 
of new interstate natural gas pipeline facilities address the 
possibility of overbuilding?
    Mr. Lloyd. Thank you, Congressman.
    I think there is a risk of overcapacity, and this goes 
directly to the FERC process. As I said, it has got 80 
pipelines pending in front of it right now. Many of them are in 
the Northeast. They are looking at those pipelines on an 
individual basis and they are assessing the need for those 
pipelines by looking at whether those pipelines have a contract 
for gas.
    Now we have some examples where the companies contracting 
for gas are related corporate entities to the companies that 
are building the pipelines. So, there is self-dealing going on 
there, and it doesn't appear that FERC is going beyond just 
looking at the contract.
    So, what we are seeing, I don't think FERC is adequately 
examining all of the infrastructure at once. They are looking 
at it pipeline-by-pipeline. And then, we don't have an 
opportunity to look at what is the infrastructure that we 
actually need in the Northeast. Do we need 12 pipelines, for 
instance, crossing the Delaware River or could we meet our 
needs with far fewer pipelines?
    As you pointed out, because the Northeast, and New Jersey 
in particular, are net exporters of gas now, it is a real 
question about whether there is a need for gas. And if we build 
the new infrastructure, the danger is we are going to be taking 
gas from the existing infrastructure and we are going to end up 
with wasted assets.
    And we have experienced this. If I may, we experienced this 
in New Jersey with the nuclear industry where, in fact, we 
began to look at three nuclear power plants. We spent a billion 
dollars in looking at those plants and never built any of them.
    Now the good news is, because we didn't build them, there 
was no environmental impact. The bad news is, because we didn't 
have a mechanism in place, a regulatory mechanism in place to 
review those expenses before the utilities made them, the 
ratepayers ended up paying them.
    I fear that we may face the same situation with natural gas 
infrastructure where we are building pipelines that ultimately 
we may not need. And then, we will have to pay for those 
investments in one way or the other.
    Mr. Rush. Thank you, Mr. Chairman.
    Mr. Whitfield. Let me just ask a question. We have had a 
lot of hearings on the supply of gas in the Northeast. I was 
not aware that the Northeast is considered a net exporter of 
natural gas. Is that the case or is that not the case?
    Mr. Lloyd. As the congressman said, the attorney general of 
Massachusetts did just an analysis and said that they were a 
net exporter. This was, as I understand it, in regard to 
pipelines that were proposed to serve Massachusetts.
    We have had the same experience in New Jersey where, in 
fact, we have no net need for gas right now. One of the bases 
that the companies are justifying the pipeline is redundancy, 
but this is a question I think that FERC needs to address: 
should we have a redundant supply in New Jersey, in the 
Northeast, or anywhere? And I don't think FERC has mechanisms 
in place to examine that.
    One way we have suggested that they might get at that is 
through a programmatic environmental impact statement which 
would look at a number of pipelines, not just one pipeline, and 
see what, in fact, the overall need is. And perhaps it would 
lead to a decision that assures that we have adequate supply 
for the Northeast and for New Jersey, but also assure that we 
are not overbuilding, to leave ratepayers with a bill that they 
may not want to pay.
    Mr. Whitfield. Did you have a comment on that, Mr. Powell?
    Mr. Powell. No, sir.
    Mr. Whitfield. OK.
    Mr. Powell. I am not expert on market.
    Mr. Whitfield. OK.
    Mr. Rush. Mr. Chairman, if I might respectfully request 
that you ask the attorney general of Massachusetts----
    Mr. Whitfield. I am going to go up there and see him.
    [Laughter.]
    Mr. Rush. Well, take me with you.
    Mr. Whitfield. I will.
    [Laughter.]
    I have been wanting to go up there to Braintree, anyway.
    [Laughter.]
    I do want to ask one additional last question for Mr. 
Marsan because in his written testimony he said that, since 
enactment of the Energy Policy Act of 2005, that FERC has been 
interpreting I think Section 203 to mean that any acquisition 
of any utility property, that they would have to get 
preapproval. I was just curious if you might just give us a 
couple of examples of that which you consider particularly 
maybe egregious.
    Mr. Marsan. Correct. I can speak from my own experience on 
this. I will just give you three of our own company's 
transactions we have had to seek 203 approval for: a 12-
kilovolt line and land rights for $1,513; a relay for $2,802, 
and miscellaneous substation equipment, $2,874.
    Mr. Whitfield. I'm sorry, would you just turn your 
microphone on, so that our transcriber can hear?
    Mr. Marsan. OK. Can you hear me better now?
    OK. I will just go through those again: $1,513 for a 12-
kilovolt line and land rights; $2,802 for relays, and $2,874 
for miscellaneous substation equipment. So, in each of those 
cases we had to take the expense of drafting a 203 application, 
the legal fees and such associated with it, file it with FERC. 
FERC had to do their due diligence, as the general counsel of 
FERC stated before, on transactions that would have no impact 
whatsoever on the grid.
    Mr. Whitfield. Well, thank you very much for that, and 
thank you all for your testimony. We look forward to additional 
contact with you, as we try to decide what we are doing with 
this legislation.
    I also would ask unanimous consent that we enter into the 
record a letter of support from Advanced Hydro Solutions, a 
statement for the record from Clark Canyon Hydro, a statement 
from Congressman Zinke in support of H.R. 2080 and 2081, and a 
statement of record from the American Rivers. I think you all 
have seen this.
    Mr. Rush. No objection, Mr. Chairman.
    Mr. Whitfield. No objection?
    [The information appears at the conclusion of the hearing.]
    Mr. Whitfield. So, that will conclude today's hearing, and 
the record will remain open for 10 days.
    We look forward to working with you all. Thank you very 
much for your time and your testimony.
    That concludes today's hearing.
    [Whereupon, at 12:42 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    Today we will examine eight bills as part of our ongoing 
bipartisan work to strengthen our domestic energy 
infrastructure to help keep costs affordable and reliable for 
consumers and job-creators.
    Three of these bills make process changes at the Federal 
Energy Regulatory Commission (FERC), the result of which will 
be more streamlined agency oversight of the Nation's natural 
gas infrastructure and electricity system. Specifically, they 
will allow greater use of aerial survey data in natural gas 
infrastructure approvals, create a new process for public 
challenges to certain electric rate changes previously not 
subject to redress, and raise the monetary threshold for FERC 
jurisdiction over electricity acquisitions which will help 
facilitate increases in transmission capacity for the utilities 
that need it. These are small but important changes that will 
help yield a more effective regulatory process at FERC, and 
ultimately a more affordable and reliable supply of energy 
delivered to folks in Michigan and across the country.
    Five of the bills before us today extend the licenses of 
hydroelectric power projects. Renewable hydropower is a 
critical component of our all-of-the-above energy strategy, and 
its benefits are many. Hydro is cheap and reliable and has 
minimal environmental impacts. Each of these hydroelectric 
projects will create many high-paying construction jobs and 
expand the electricity supply for the communities directly 
served. They are precisely the kinds of power projects that 
both sides of the aisle can, and should, get behind. But as the 
law currently stands, the FERC licenses for these five projects 
have or will soon expire before construction has started, and 
for reasons outside the control of the companies undertaking 
them. These bills would extend the licenses and allow 
construction to commence in the future.
    All eight of these bills are steps in the right direction 
for American energy, and I urge my colleagues to support them.


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