    [Senate Hearing 114-382]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-382

                     CHALLENGES AND OPPORTUNITIES FOR SMALL
         BUSINESSES ENGAGED IN ENERGY DEVELOPMENT AND ENERGY INTENSIVE
                                 MANUFACTURING

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

                                     HEARING

                                   BEFORE THE

                          COMMITTEE ON SMALL BUSINESS
                              AND ENTREPRENEURSHIP
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JULY 14, 2015

                                   __________

        Printed for the Committee on Small Business and Entrepreneurship

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

             Available via the World Wide Web: http://www.fdsys.gov

                                   ___________

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                COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                        ONE HUNDRED FOURTEENTH CONGRESS

                                  ----------

                       DAVID VITTER, Louisiana, Chairman
                 JEANNE SHAHEEN, New Hampshire, Ranking Member
    JAMES E. RISCH, Idaho                MARIA CANTWELL, Washington
    MARCO RUBIO, Florida                 BENJAMIN L. CARDIN, Maryland
    RAND PAUL, Kentucky                  HEIDI HEITKAMP, North Dakota
    TIM SCOTT, South Carolina            EDWARD J. MARKEY, Massachusetts
    DEB FISCHER, Nebraska                CORY A. BOOKER, New Jersey
    CORY GARDNER, Colorado               CHRISTOPHER A. COONS, Delaware
    JONI ERNST, Iowa                     MAZIE K. HIRONO, Hawaii
    KELLY AYOTTE, New Hampshire          GARY C. PETERS, Michigan
    MICHAEL B. ENZI, Wyoming
                    Meredith West, Republican Staff Director
                   Robert Diznoff, Democratic Staff Director

                                C O N T E N T S

                                  ----------

                               Opening Statements

                                                                       Page

    Vitter, Hon. David, Chairman, and a U.S. Senator from Louisiana..     1
    Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire..........     6

                                   Witnesses

    Mr. Toby Mack, President & CEO, Energy Equipment and
      Infrastructure Alliance, Washington, DC........................     9
    Dr. Neil Aspinwall, Chancellor, SOWELA Technical Community
      College, Lake Charles, LA......................................    16
    Ms. Kateri Callahan, President, Alliance to Save Energy,
      Washington, DC.................................................    22
    Mr. Tyson Slocum, Director, Public Citizen Energy Program,
      Washington, DC.................................................    29

              Alphabetical Listing and Appendix Material Submitted

    American Sustainable Business Council
        Letter dated July 13, 2015...................................    84
    Aspinwall, Neil
        Testimony....................................................    16
        Prepared statement...........................................    19
        Responses to questions Submitted by Senator Enzi.............    87
    Callahan, Kateri
        Testimony....................................................    22
        Prepared statement...........................................    24
    Mack, Toby
        Testimony....................................................     9
        Prepared statement...........................................    11
        Responses to questions Submitted by Senator Enzi.............    88
    Shaheen, Hon. Jeanne
        Opening statement............................................     6
        FY14 Scorecard Summary by Prime Spend Subk and Plan Progress
          Scores 2015................................................    50
    Slocum, Tyson
        Testimony....................................................    29
        Prepared statement...........................................    31
    Vitter, Hon. David
        Opening statement............................................     1
        Letter Dated May 8, 2015, from the Small Business
          Administration Office of Advocacy..........................     3
        Hearings on ``Non-Jurisdictional'' Issues under Democratic
          Leadership.................................................     8
        Report titled ``Macroeconomic Impacts of LNG Exports from the
          United States''............................................    55
        Report titled ``Updated Macroeconomic Impacts of LNG Exports
          from the United States''...................................    60
        Report titled ``The 2015 Economic Report of the President''..    61
        Article titled ``Democrats Increasingly Backing Oil and Gas
          Industry''.................................................    70
        Report titled ``What They're Saying: Labor Groups Support LNG
          Exports''..................................................    75

                          CHALLENGES AND OPPORTUNITIES
                          FOR SMALL BUSINESSES ENGAGED
            IN ENERGY DEVELOPMENT AND ENERGY INTENSIVE MANUFACTURING

                                  ----------

                             TUESDAY, JULY 14, 2015

                          United States Senate,
                            Committee on Small Business
                                          and Entrepreneurship,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 2:35 p.m., in
    Room 428A, Russell Senate Office Building, Hon. David Vitter,
    Chairman of the Committee, presiding.
        Present: Senators Vitter, Fischer, Gardner, Ernst, Enzi,
    Shaheen, Markey, and Coons.

     OPENING STATEMENT OF HON. DAVID VITTER, CHAIRMAN, AND A U.S.
                         SENATOR FROM LOUISIANA

        Chairman Vitter. Good afternoon, everybody. I will call the
    committee to order.
        We are here for an important hearing entitled, ``Challenges
    and Opportunities for Small Businesses Engaged in Energy
    Development and Energy Intensive Manufacturing.'' This hearing
    is particularly important and timely because of the
    significance of the energy industry to our economy and how many
    small businesses are involved.
        Before the drop in the price of oil relatively recently,
    energy jobs in America were the difference between our being in
    recovery and actually remaining in a recession. Were it not for
    those energy-related jobs, we would still be in a technical
    recession. Thankfully, that is not the case because of these
    significant jobs.
        And, as I said, it is also important and why we are talking
    about it in this Small Business Committee that many energy-
    related businesses are small entities. To quantify that, I will
    use my home state of Louisiana as an example. A majority of
    Louisiana businesses in four of the five energy-defined sectors
    had less than 20 workers. Specifically, businesses with fewer
    than 20 employees made up about 77 percent of the oil and gas
    extraction businesses, 71 percent of oil and gas operations
    businesses, over 68 percent of oil and gas wells businesses,
    and about 57 percent of oil and gas field machinery and
    equipment-related businesses. These illustrate just how
    important the industry and the sector is to small business.
        The purpose of this hearing is to delve a little deeper
    into opportunities and challenges that these small businesses
    face in the energy sector. One of our witnesses, Toby Mack, is
    President of the Energy Equipment and Infrastructure Alliance,
    which represents the shale supply chain, and he will speak to
    that phenomenon, including LNG exports.
        The opportunities from this new era of American energy
    abundance are tremendous, but there are also challenges. One
    long-term challenge is that the demand for skilled workers is
    outpacing their availability, and so the question becomes how
    do we help train our workers to step into these high-skill,
    high-demand jobs in the energy sector.
        Part of the answer lies with our community and technical
    colleges that are stepping up to provide tailored programs and
    services for that training. Our second witness, Dr. Neil
    Aspinwall, Chancellor of Southwest Louisiana Technical
    Community College, will discuss some of these challenges and
    opportunities in depth.
        And, of course, there are other challenges, as well. I have
    been very outspoken about the Obama Administration's energy and
    environmental regulations, which are overly burdensome, in my
    opinion, and really hold down a lot of great potential industry
    sector job creation. This committee recently held a hearing to
    examine how the EPA violated the Regulatory Flexibility Act by
    certifying that its rule to redefine Waters of the United
    States will not have a significant economic impact on a
    substantial number of small entities. And in particular, if you
    will remember, we heard testimony from the Small Business
    Administration's Office of Advocacy and it was very clear on
    that point.
        Now, while EPA did not make as blatant of a mistake when it
    came to its proposed federal implementation plan for regulating
    carbon emissions, I think it clearly fell short there, as well.
    EPA's efforts were so inadequate, in fact, that they earned a
    rare letter of rebuke from the SBA's Office of Advocacy, which
    I will insert into the record. If there is no objection, and
    hearing none, we will insert that into the record.
        [The letter follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Vitter. There are many other examples of the EPA's
    refusal to responsibly consider small business impacts, and we
    have talked about those on other occasions, as well.
        For all of these reasons, and because of all aspects of
    this hearing, I am working with others on a small business
    energy bill and will be finalizing that in the coming days.
    But, certainly, today's discussion will help shape that
    legislative solution to reduce federal burdens for small
    businesses specifically involved in the energy sector. I
    believe that is important to fully maximize the job creation
    potential of this important sector of our economy.
        And now, I want to welcome and turn to Senator Shaheen, the
    committee's Ranking Member.

      OPENING STATEMENT OF HON. JEANNE SHAHEEN, RANKING MEMBER, A
                    U.S. SENATOR FROM NEW HAMPSHIRE

        Senator Shaheen. Thank you very much, Chairman Vitter.
        Welcome, everyone. Welcome to our witnesses. I look forward
    to this opportunity to discuss the energy challenges that face
    small businesses. I do have some concern that we may get into
    some energy issues that are under the jurisdiction of the
    Senate Energy and Natural Resources Committee, but nonetheless,
    small businesses are facing critical cost issues because of
    energy challenges, and so we should have a good discussion.
        Having owned and operated a small business, like I am sure
    all of us know, every cost counts and every cost has to be
    managed as smartly as possible, and this is certainly true for
    energy consumption. We are seeing in New Hampshire, where I am
    from, that rising costs of energy are having a real impact on
    the business environment.
        Now, as I think about energy, I think about energy
    efficiency, because it is the cheapest, fastest way to address
    our nation's energy needs. I have joined with Senator Rob
    Portman to advance major legislation to ramp up energy
    efficiency in manufacturing, in buildings, and in the federal
    government. I think this is a particularly important way to
    address energy because it is something that we can all agree
    on, regardless of what part of the country we are from or what
    particular area of energy we support, whether it is fossil
    fuels or solar and wind. Everybody benefits from energy
    efficiency.
        We had the opportunity to bring Shaheen-Portman to the
    floor last year, but despite overwhelming support, it was not
    able to advance because of disputes over an unrelated partisan
    amendment. However, the President did sign into law a mini-
    version of the bill earlier this year, which we think helps
    provide significant efficiency savings.
        Every small business, whether in manufacturing, in retail
    services, or even agriculture, can benefit from energy
    efficiency. But, of course, there is a problem, and that is
    that small businesses, especially in energy-intensive sectors,
    face unique challenges and barriers when it comes to addressing
    their energy needs and increasing their energy efficiency. I
    think the Small Business Administration can play an important
    role, particularly when it comes to the financing that they
    often need to be more energy efficient.
        Today, I have introduced legislation that will ensure that
    small businesses who want to undertake energy efficiency
    projects can qualify for the 504 loan program. As members of
    this committee, we know that the 504 program helps small
    businesses purchase their own real estate or equipment. That
    makes it easier for them to invest in expanding their
    companies. By helping small businesses take full advantage of
    energy efficiency, we reap a wide range of benefits, everything
    from reducing costs, to enhancing competitiveness, to reducing
    greenhouse gas emissions.
        So, again, I want to welcome our witnesses, and I want to
    take this opportunity to give a special welcome to Kateri
    Callahan, who is President of the Alliance to Save Energy and
    who I have had the great opportunity to work with now for
    almost six years ago. For more than a decade as President of
    the Alliance, Kateri has provided extraordinary national
    leadership in the field of energy efficiency and I look forward
    to her testimony today and to her continued efforts to help
    businesses become more efficient.
        Thank you, Mr. Chairman.
        Chairman Vitter. Great. Thank you, to our Ranking Member.
        Regarding the jurisdiction issue, let me just note that
    this committee has always, on a bipartisan basis, had hearings
    on a number of topics that were not within our narrow technical
    jurisdiction, including certainly energy discussions and
    hearings. And, just for instance, under Senators Landrieu and
    Kerry, two previous Chairs, there were five energy discussions
    like that, and I will just submit that list for the record.
        [The information follows:]
        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        But, I know we will have a productive discussion.
        Let me introduce our four witnesses and then they will
    testify, in turn.
        Toby Mack is President and CEO of the Energy Equipment and
    Infrastructure Alliance based in Washington, D.C.
        Dr. Neil Aspinwall is Chancellor of Southwest Louisiana
    Technical Community College in Lake Charles, Louisiana.
        Kateri Callahan is President of the Alliance to Save Energy
    in Washington, D.C.
        And Tyson Slocum is Director of the Energy Program at
    Public Citizen.
        Welcome to all of you, and we will be eager to hear from
    all of you in turn, starting with Mr. Mack.

    STATEMENT OF TOBY MACK, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
              ENERGY EQUIPMENT AND INFRASTRUCTURE ALLIANCE

        Mr. Mack. Thank you, Chairman Vitter and Ranking Member
    Shaheen, for the opportunity to comment on the impact of energy
    development on small business.
        EEIA is an organization of companies, trade associations,
    and labor unions that represent the businesses and workers of
    the shale oil and gas supply chain. Policies that support
    increased production will result in a great number of new,
    high-paying jobs and strong growth in the supply chain,
    especially for its small businesses.
        Equipment, products, and services provided in support of
    shale energy operations come from all 50 states. They are found
    in 60 different industries in six major sectors. These are
    depicted on the diagram included in my written statement, which
    appears as this. They are, briefly, equipment and machinery,
    construction, logistics, materials and supplies, information
    technology, and professional services.
        To illustrate the supply chain, I offer the example of a
    piece of construction equipment used to prepare a production
    site or build energy facilities such as pipelines, storage, or
    an LNG processing plant. Consider what goes into making that
    machine. There is raw steel, fabricated steel plate, and
    forgings; the machine tools that cut, bend, machine, and weld
    components; buckets, teeth, and attachments; a high-horsepower
    engine and transmission; hydraulic cylinders and components;
    steel sprockets and tracks or huge rubber ties; electronic
    controls and components; plus hoses, valves, filters, gaskets,
    lubricants, and fuel.
        To obtain these components, the machine's manufacturer has
    thousands of its own suppliers, and their suppliers have
    suppliers, and so on down the line until you get to raw
    material. The vast majority of these businesses are smaller
    local and regional firms. They are all essential to building
    the machine, and they are ultimately dependent on energy
    production to create the demand for it and the jobs that go
    with it.
        Now, let us turn to the supply chain's economic and
    employment dimensions. EEIA estimates that there are at least
    120,000 energy supply chain businesses, more than 100,000 of
    which are small. According to IHS, in 2015, the shale supply
    chain workforce consists of 615,000 jobs, growing to 757,000 by
    2025. Output in 2015 is $173 billion, growing to $206 billion
    by 2025.
        Energy supply chain workers earn, on average, $79,000 per
    year, vs. $68,000 for all American workers. For every direct
    job in energy production, three jobs are created in the supply
    chain, and, in fact, six more are created in the communities
    where workers live and shop.
        Consider the new supply chain jobs created when additional
    natural gas is produced for export. IHS reports that supply
    chain industries will have 515,000 jobs supporting shale gas
    production in 2015, growing to 655,000 jobs by 2020. EEIA
    estimates that shale gas production at 44 billion cubic feet
    per day in 2015, to reach almost 60 billion cubic feet per day
    by 2020. This calculates to about 11,000 supply chain jobs for
    each new BCF per day.
        Recent approvals of applications to export LNG anticipate
    that between now and 2020, capacity will reach about 10 BCF per
    day, requiring that much additional natural gas production from
    shale. Thus, we can look forward to over 100,000 new supply
    chain jobs to be generated by LNG exports alone over the next
    five years. That means $8 billion of additional annual income
    to American workers which will be spent locally as these
    workers consume, pay taxes in, and contribute to their local
    communities.
        Using the SBA estimate that half of American workers are
    employed by small business, we project that over the forecast
    job gains, small businesses will be responsible for creating at
    least half of them.
        Much of this job growth will be concentrated in skill areas
    that require technical training, but not four-year or higher
    degrees. Supply chain companies will be challenged to fill
    positions in high-growth occupations, the need for which will
    as much as double between 2012 and 2025. High-growth
    occupations include truck drivers, construction laborers,
    equipment mechanics, engine technicians, equipment operators,
    machinists, welders, and many more.
        The energy supply chain is truly national and not confined
    to oil and natural gas producing areas. We see this effect by
    looking at the geographic distribution of job gains that occur
    when crude oil production grows. Of the top 15 states by job
    gains if crude oil production were increased for export, 10 are
    states in which little or no crude oil is produced. In fact,
    Illinois, because of the prominence of equipment manufacturing,
    ranks third behind Texas and California in supply chain jobs
    gained.
        In summary, exports of LNG, and, indeed, of all energy
    products, including crude oil, will support additional domestic
    energy production from our large and growing reserves for our
    innovative and increasingly productive energy sector, supported
    by the supply chain's small businesses. American shale energy
    production renaissance has been the principal contributor to
    our emergence from the deep recent recession. It has the
    potential to spur substantially more job creation throughout
    the country, and particularly with small business, if Congress
    adopts policies that facilitate exports. Thank you.
        [The prepared statement of Mr. Mack follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Vitter. Thank you very much, Mr. Mack.
        And now, we will hear from Dr. Neil Aspinwall. Doctor,
    welcome.

       STATEMENT OF NEIL ASPINWALL, CHANCELLOR, SOWELA TECHNICAL
                  COMMUNITY COLLEGE, LAKE CHARLES, LA

        Dr. Aspinwall. Thank you, Mr. Chairman, members of the
    committee.
        Southwest Louisiana has been blessed with an abundance of
    expansion activities related to the petrochemical, liquified
    natural gas, LNG, and gas to liquids, GTL, industry. In fact,
    there are currently 85-plus billion dollars in planned
    industrial expansions directly related to LNG/GTL energy
    sector, and approximately $30 billion in construction is
    already underway.
        These massive and historical expansions in the
    petrochemical industry create the need for highly skilled
    workers for the oil and gas industry. Southwest Louisiana
    Technical Community College, or SOWELA, as it is known, is one
    of the 13 institutions that comprise the Louisiana Community
    and Technical College System, and we have been given the
    opportunity and responsibility to provide the training programs
    and services needed to produce the workforce necessary to help
    construct these massive industrial expansions and operate the
    new petrochemical plants once they begin production.
        According to the Louisiana Workforce Commission, the annual
    completers of workforce programs necessary to fill the
    occupations of highest need for the industry sector expansion
    in the region are: construction crafts field, 9,360 workers;
    industrial production, 4,955 workers; welding, 4,810 workers.
    Since 2012, SOWELA has begun to design, create, implement, and/
    or expand training programs to help meet the demands of these
    oil and gas industrial expansions.
        Programs focusing on skilled crafts such as pipefitting,
    millwright, welding, insulators, scaffolding, concrete forming,
    machining, electrician, lab analysis, and non-destructive
    testing have been added to the instructional program options at
    the college. Enrollment and high-demand programs directly
    related to the oil and gas industry, such as process technology
    and industrial instrumentation, have literally doubled in the
    past couple of years.
        According to the Energy Sector Jobs to 2030, a global
    analysis published by the Institute for Sustainable Futures in
    2009, the 2020 global energy sector is expected to employ an
    estimated 10.5 million workers. By 2030, global energy sector
    jobs are expected to grow by an additional 800,000 workers,
    totaling an estimated 11.3 million employees.
        Therefore, SOWELA Technical Community College, whose
    mission is to provide the skills and training needed to prepare
    the workforce to help grow and sustain the regional, state, and
    national economy, must be prepared with the programs, services,
    and financial resources necessary to help produce this massive
    workforce.
        In order to get the students into the workforce quicker and
    satisfy the hiring demands of industry, many higher education
    institutions are beginning to offer programs in shorter
    condensed formats. In fact, SOWELA created a compressed process
    technology program to provide the opportunity for students to
    earn an Associate of Applied Science degree in just 16 weeks.
    The first FastTrack P-Tech cohort contained 18 students, all of
    which already earned advanced degrees and were placed into the
    workforce within six months after completion. This
    substantiates the fact that these energy sector jobs are highly
    sought after positions that have and will continue to attract
    individuals to the region for better employment opportunities.
        As the workforce needs for the oil and gas industry become
    more acute, the petrochemical industry has requested and SOWELA
    has implemented various short-term training programs, many less
    than six months in length and ranging from 80 to 900 contact
    hours. These programs have been developed in the craft areas,
    such as machining, millwright, electrical, structural welding,
    pipe welding, scaffolding, cement forming, and HVAC, and as an
    example, an individual who enrolls in and successfully
    completes the structural welding program can immediately be
    hired at an hourly wage of at least $26. So, a time commitment
    of six months and a program cost of approximately $2,200 can
    provide the means for an individual to earn a middle class wage
    with great benefits which helps strengthen the local, state,
    and national economies.
        However, this method of placing students into the workforce
    quicker through condensed instructional delivery formats does
    have a downside. Although shorter programs provide skill
    training in predetermined critical competency areas and reduces
    the number of contact hours or seat time a student needs to
    spend in the classroom or lab. It is this reduction in contact
    hours that prevents the programs from being eligible for
    federal financial aid. According to the U.S. Department of
    Education guidelines, these types of short-term condensed
    workforce development programs are not eligible for federal
    financial aid because they are not at least 600 clock hours and
    15 weeks in length.
        But, despite the ease at which these training programs can
    be created and offered and the demand from industry, the
    program costs still present an obstacle that prevents many of
    our citizens from taking advantage of the training needed to
    prepare them for the opportunities available through the
    petrochemical industry expansions. Since 84 percent of
    community college students work, and 60 percent work more than
    20 hours per week, our students cannot afford to quit their
    jobs and take advantage of skills training programs in which no
    financial aid is available.
        SOWELA, as well as other community colleges whose primary
    mission is workforce development, struggles to find options to
    help students cover the costs of enrolling in and completing
    these condensed industry-specific training programs and
    services. Fortunately, various private industries have stepped
    forward to provide scholarships for students seeking entry into
    these programs. Although greatly appreciated and highly sought
    after, these private business and industry scholarships are not
    the long-term solution to sustaining the training programs
    necessary for building the oil and gas industry workforce.
        A more permanent and guaranteed funding source needs to be
    created so that the oil and gas industry and the energy sector
    overall can continue to be competitive and help the national
    economy grow and improve. Legislation on the federal level
    could help provide the funding solution needed, and I hope this
    committee will investigate all options for federal funding
    assistance.
        In closing, SOWELA and the Louisiana Community and
    Technical College System have a golden opportunity to shape the
    future of Louisiana and the nation as a whole by producing the
    workforce needed to ensure that America continues to produce
    the energy necessary to fuel an economy that will provide
    financial and economic stability, vitality, and prosperity for
    generations to come. Thank you.
        [The prepared statement of Mr. Aspinwall follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Vitter. Thank you very much, Doctor.
        And now, we welcome again Ms. Kateri Callahan. Welcome.

       STATEMENT OF KATERI CALLAHAN, PRESIDENT, ALLIANCE TO SAVE
                                 ENERGY

        Ms. Callahan. Thank you, Mr. Chairman and Ranking Member
    and members of the committee. I truly appreciate the
    opportunity to testify to you today on the important role that
    energy efficiency can play in making small businesses more
    productive, more competitive, and greater jobs generators.
        My organization, the Alliance to Save Energy, is a
    nonprofit coalition of 140 different businesses across the
    entire economy and institutions that are dedicated to advancing
    energy efficiency. We were formed way back in 1997 by Senator
    Chuck Percy, a Republican from Illinois, and Hubert Humphrey, a
    Democrat from Minnesota, and we are honored to continue the
    Alliance's history of bipartisan leadership.
        I am particularly proud that three members of this
    committee serve as honorary members of the Alliance. Jeanne
    Shaheen is our first ever elected female Honorary Chair of the
    Alliance. Senator Ed Markey is the longest-serving
    Congressional member on our Board of Directors. And Chris Coons
    is our newly elected First Vice Chair. But, I would also note
    that we are fortunate to have Energy Committee Chair Lisa
    Murkowski, Senator Portman, and Senator Collins providing
    leadership from the other side of the aisle.
        Energy efficiency is America's greatest energy resource.
    Since the 1970s and our founding, we have doubled energy
    productivity. That means we are getting twice as much GDP from
    each unit of energy that we consume, and this translates into
    real savings for America's businesses, whether they are big or
    small.
        But, Americans can do better. We still waste over half of
    the energy that we consume. This means that the opportunity to
    double our energy productivity once again lies before us, and
    the rewards if we achieve that goal are enormous. We could
    reduce our national energy bill by a full $527 billion while
    creating 1.3 million jobs. And we could lower our energy
    imports to represent only seven percent of our total
    consumption.
        And, no sector of the economy has more to gain from energy
    efficiency than small business. As Senator Shaheen said, small
    businesses, and most especially small manufacturers, energy use
    is one of the top costs of doing business. Yet, small
    businesses remain a largely untapped market, as she mentioned,
    when it comes to energy efficiency, and there are two major
    reasons why.
        First is knowledge. Energy is not the core business of most
    small enterprises, notwithstanding those that Mr. Mack talked
    about, and laser-focused entrepreneurs often do not have the
    information about technologies, programs, and incentives that
    could help them to reduce their energy waste.
        The other big problem is capital. Small businesses rarely
    have investment dollars to spare, and the up-front costs for
    energy efficiency upgrades often inhibit investment.
        Fortunately, innovative companies, utilities, and
    government agencies are finding ways to tackle these barriers.
    The Small Business Direct Install programs are a great example
    of how government and businesses are cooperating to eliminate
    barriers and create real value. In New York, these SBDI
    programs have improved the facilities of over 100,000 small
    businesses, reducing their energy operating costs by more than
    a billion, and that is money that is getting poured back into
    the State of New York.
        The programs are themselves being carried out by innovative
    small businesses, like Lime Energy, EnerPath, SmartWatt, and
    welding companies you have probably not heard of, but these
    companies are job generators. Just in New York, these companies
    have hired nearly 200 new employees and also have helped to
    create thousands of indirect jobs.
        Across the nation, state energy offices, the industrial
    assessment centers, the Department of Energy, and small
    businesses are joining together to create these successes. One
    quick example is ECT Industries, which is a four-generation
    family-owned business that took advantage of Wisconsin's Focus
    on Energy Program. ECT put in efficient lighting that reduced
    their energy intensity in lighting by 46 percent. The project
    paid for itself in only eight months and they are saving over
    $55,000 a year in avoided small business costs.
        There are lessons that come from these successful programs
    that can help in scaling up energy efficiency across the entire
    small business sector. First, we need greater outreach to small
    businesses to ensure that they know about the technology,
    resources, and most of all, about the bottom-line benefits to
    cutting energy waste.
        Second, building relationships with business owners and
    developing solutions that fit their specific needs is critical.
        And, finally, leveraging existing resources, from tax
    incentives to loan programs to technical assistance. The
    federal government, through the Small Business Administration,
    the Department of Energy, the Department of Agriculture, and
    other agencies, has a significant role to play. For example,
    the Small Business Administration's Section 504 program that
    Senator Shaheen mentioned can be used as a very effective tool
    for overcoming the first cost and financing issues surrounding
    efficiency upgrades, and we look forward to working with the
    Senator on that program.
        In addition, she has legislation pending, S. 1054, the
    Smart Manufacturing Leadership Act, that would direct the
    Department of Energy to provide assistance to small and medium-
    sized manufacturers in implementing smart manufacturing
    programs that will make them more efficient, more energy
    productive.
        So, in closing, I want to thank the committee for allowing
    me this opportunity to discuss the important role of energy
    efficiency in increasing the competitiveness of our economy's
    backbone, our small businesses and our entrepreneurs. Thank
    you.
        [The prepared statement of Ms. Callahan follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Vitter. Thank you very much, Ms. Callahan.
        And now, we will hear from Tyson Slocum. Welcome.

      STATEMENT OF TYSON SLOCUM, ENERGY PROGRAM DIRECTOR, PUBLIC
                                CITIZEN

        Mr. Slocum. Thank you very much, Chairman Vitter, Ranking
    Member Shaheen, members of the committee. My name is Tyson
    Slocum. I direct the Energy Program at Public Citizen. We are
    one of America's largest consumer advocacy groups and we
    receive most of our funding from individual contributions of
    over 400,000 members across the United States, many of whom
    either own their own small businesses or are employed at small
    businesses.
        So, we have been hearing a lot from certain representatives
    of the natural gas industry that they are in a type of crisis,
    that unless they are able to receive some form of legislative
    or regulatory relief, primarily in the form of being able to
    expedite natural gas exports, LNG exports, that unless they are
    able to get this relief, there are going to be problems ahead.
        But, when I look at the data, when I look at the numbers,
    the natural gas industry has never been doing better, right.
    This past winter, the natural gas industry broke all sorts of
    records in terms of production. We have never produced more
    natural gas every day than we did this winter, and kudos to the
    men and women of the natural gas industry and all the small
    businesses and large businesses associated. We are producing so
    much natural gas that we just passed last year Russia to become
    the largest natural gas producer on the planet.
        So, I can understand why the natural gas industry wants to
    be able to more easily sell natural gas abroad, because the
    last time I checked, natural gas sells for under $3 here in the
    United States, whereas it is double, triple, or even five times
    higher than that in parts of Europe and Asia and elsewhere. So,
    the natural gas industry and its associated small businesses
    that provide important services to them, I can understand why
    they would want to advocate for that.
        But, when I look at there are more small businesses out
    there that are very concerned about the prices they pay for
    natural gas, and there is no question that if we ramp up
    natural gas exports, we are going to see higher domestic prices
    for American consumers and American businesses, and that is not
    just Public Citizen saying that, that is the U.S. Energy
    Information Administration that has come to that very clear
    conclusion.
        So, rather than accelerate the ability of the industry to
    ramp up exports, I would like to see Congress and the executive
    branch work to prioritize the protection of consumers and small
    businesses that are sensitive to natural gas price increases,
    and there are several things that Congress and the executive
    branch can do in this regard.
        One is, in 1975, Congress passed a law called the Energy
    Policy and Conservation Act. That law did many things. One
    thing it did is that it directed the President to ban the
    export of crude oil and natural gas unless the President made a
    public interest determination that it was in the public
    interest to export that. We have got rules that the Department
    of Commerce put together in its short supply regulations that
    significantly limit the ability of the United States to export
    domestically produced crude oil. The Department of Commerce
    never put together rules on natural gas, probably because in
    1975, no one was talking about exporting natural gas. So, I
    think that is something that I think Congress ought to
    communicate, and I know that some members, like Senator Markey,
    have done just that.
        I think that Congress ought to ensure that the public
    interest determinations being made right now by the Department
    of Energy about whether or not to export gas are more concrete,
    meaning that we need to ensure that exports are not going to
    result in higher prices for consumers. Like I said, there is no
    question that allowing and expediting LNG exports is going to
    boost elements of the natural gas production industry and
    associated small businesses that assist them. But, there are a
    lot more small businesses out there that would be harmed by the
    increase in prices, and we need to make sure that a public
    interest definition clearly states that prices cannot go up on
    consumers as a result of exporting natural gas.
        A third thing that Congress can do is revisit efforts back
    in the 2005 Energy Policy Act that I was working on, along with
    a bunch of others, where we called for governors of states
    where LNG facilities are located to be able to have equal say,
    along with FERC, about whether or not a permit for siting an
    LNG facility is granted. I believe that states have a great
    opportunity to hear from their constituents, just as FERC does,
    and they ought to have a prominent role.
        Thank you very much for your time, and I look forward to
    any questions you may have.
        [The prepared statement of Mr. Slocum follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Vitter. Okay. Thank you very much.
        I am going to reserve my time for later and invite Senator
    Shaheen for questions.
        Senator Shaheen. Thank you very much, Mr. Chairman.
        The U.S. industrial sector uses about 30 percent of all
    energy, and it is more energy than is used by any other sector
    of our economy. As we think about how do we address the costs
    of economy for small businesses, I wonder, Ms. Callahan, if you
    could talk about some of the market barriers that exist to
    deploying more energy efficiency in the manufacturing sector
    and why we should think about policies that can help fix these
    roadblocks.
        Ms. Callahan. Thank you very much, Senator. One of the
    things that is interesting about small business and small
    manufacturing, the challenges are really twofold, and the first
    challenge is that while they are huge consumers--they use about
    50 percent, the small businesses, of that energy that is
    consumed--but it is very diffuse and it is used in very, very
    different ways. So, it makes it kind of a tough market to
    tackle. So, that is a big challenge.
        And then the second that is correlated to that is that
    these businesses are focused largely on doing other things, and
    so if they have spare capital or they have access to capital,
    they are tempted to spend it in other ways, and so you need to
    talk to small businesses in terms of, well, if you can save
    $55,000 a year, how many cups of coffee would you have to
    manufacture, or how many dresses would you have to sew and sell
    in order to get that kind of bottom line profit.
        So, it means that you have to get really personal with the
    business owner, the man or the woman that is running the
    business, and understand. So, we are at a point in time where
    we are seeing that be able to happen through these programs
    like SBDI, because the data analytics are getting there. The
    people that are offering services are able to go in on an iPad
    and show folks what kind of savings are going to be realized.
        So, in order to get it more at scale, we have got to be
    able to take it out of the five or six states that are doing
    that kind of work and put it nationwide, and a key to it and
    the data analytics, also, is getting standard offerings for
    financial assistance. So, your program, the 504(b) program, the
    Department of Agriculture's REAP loan program, those kind of
    things are going to be essential, because we have got--banks
    are lining up, but they are not willing to take the risk and
    they do not have the data necessary to do the deals and the
    deal flow. So, we have got to work on that.
        Senator Shaheen. So, you talked a little bit in your
    testimony about ways in which we can help small businesses get
    access to some of the efficiency programs. Do you have any--
    what has been the experience of the Alliance in what is the
    best way to get the attention of small businesses and provide
    that help?
        Ms. Callahan. Again, I think that it is--unfortunately, it
    has to be done at the local level and through local partners
    and one-on-one. But, the role that government can play can be
    in helping to make sure that information, tools, technical
    assistance is provided, and we can train the trainers, if you
    will. So, when you have the small business counselors in
    states, when you have these manufacturing extension
    partnerships, making sure that they understand how to talk to
    folks about energy efficiency, what is available, what the
    resources are that are already there, whether there are state
    tax incentives or, hopefully again someday, federal tax
    incentives, that will allow people to get the job done.
        So, I do think there is a role for federal government, but
    you have got to meet these folks where they live.
        Senator Shaheen. Thank you.
        Mr. Slocum, living in New England, we have some special
    challenges with respect to access to gas, natural gas in
    particular. Right now, we are experiencing real difficulties.
    We have gone from 15 percent dependence on natural gas in New
    Hampshire to almost 50 percent dependence, and getting the gas
    there is challenging.
        So, can you talk about what the projections are for the
    impact on us in New England if we start exporting LNG. Will
    that have an impact on the cost of gas, which is already very
    high?
        Mr. Slocum. Yes, absolutely. There are some exports to
    Canada. You know, we export about a trillion and a half cubic
    feet of gas, which is less than five percent of our total
    annual production, mainly to Canada and Mexico, and there is a
    significant amount of that coming out of the New England area
    as well as other areas.
        New England has a lot of special challenges. I do agree
    that there are some infrastructure constraints. But, there are
    also some power market regulatory problems in New England. For
    example, last year, I, along with the Connecticut Attorney
    General, helped to uncover a billion and a half dollar market
    manipulation by a Cayman Islands private equity firm called
    Energy Capital Partners that intentionally shut down a power
    plant in order to game the New England ISO's capacity auction.
        So, that was a billion and a half dollars in increased
    cost, not because of problems of natural gas infrastructure
    constraints, but because of incredibly poorly written market
    rules. And, so, this is something we are currently involved in
    litigation with the Federal Energy Regulatory Commission to get
    them to actually do something about that issue. But, I think
    that some big challenges with New England in the power market
    lie with the ability to have a more transparent and accountable
    independent system operator there.
        Senator Shaheen. Well, I look forward to hearing some of
    your ideas about the regulatory challenges, because, certainly,
    I think we can benefit from that.
        And, Mr. Chairman, if you would give me just a few more
    seconds to point out that the SBA scorecard on how federal
    agencies are doing in reaching their small business contracting
    goals has just come out, and I note that one of the Departments
    that has been way below its contracting goals and actually
    received an F was the Department of Energy. And, so, I would
    hope that all of us can try and work on that as we think about
    how we encourage small businesses with their use of energy,
    because, certainly, making sure that they get access to those
    contracts is a very important piece of what we need to do.
        Thank you all very much.
        Chairman Vitter. Absolutely, and that will be made part of
    the record.
        [The information follows:]
        [GRAPHIC] [TIFF OMITTED] T0337.005

        Chairman Vitter. Now, Senator Enzi.
        Senator Enzi. Thank you, Mr. Chairman, and thank you for
    holding this timely hearing with a real discussion about how
    the nation's small businesses are accomplishing things in the
    energy sector, how they are stymied by some of the regulations,
    and what can be done to make things more productive and more
    efficient in a timely way.
        I want to thank our distinguished panel, too, for taking
    the time to come and share your expertise. I hope that you will
    be open to written questions. I am the accountant on here and I
    try to reserve my number questions for written questions. That
    way, people do not go to sleep in the audience.
        [Laughter.]
        But, energy is one of the main drivers of our nation's
    economy and it is a major driver of Wyoming's economy. We
    produce 40 percent of the nation's coal, and let me just take a
    moment to let that sink in. That is the sector that we are
    trying to discourage from producing any low-cost energy.
        In fact, in Colorado, there was just an attempt, and
    Senator Gardner was here earlier, a company that got permitted
    and has been producing coal successfully within their permit
    for eight years was just told that they have to redo their
    Environmental Impact Statement because they failed to take into
    consideration the impact where the coal is burned. At the time
    that you apply for a permit for a coal mine, you do not know
    where the coal is going to be burned. You are hoping for
    customers. You are planning on customers. You are counting on
    customers. But, you do not know where they are going to be.
    Now, the power plants themselves have to go through an
    Environmental Impact Statement, and that is where the local
    impacts of burning coal would be taken into consideration and
    have to be ameliorated.
        So, this looks like a major attempt to just shut down all
    energy, and they picked on a small business to begin with,
    which, of course, does not have the resources, probably, to
    fight it. I am hoping that some of the bigger companies will
    join into that.
        But, I am in favor of all of the energy and all of the
    energy efficiency and really believe that we are a country of
    innovators. We can do anything. We can do it better. We have to
    do it better. But, it cannot be better if it gets shut down.
        On the Health, Education, Labor, and Pensions Committee, we
    had a problem with an underground, now two underground mines in
    West Virginia collapsing and taking some lives, and one of the
    things we had discovered during that was that for quite a
    while, the underground mining was going downhill, and when it
    went downhill, nobody invented anything for underground mining,
    let alone safety equipment. So, when the economy came back and
    that was necessary and they started producing it again, they
    did not have the latest equipment for being able to do it.
        In Wyoming, General Electric wanted to do a big project to
    have clean coal, and they postponed it because they said coal
    is going to be done in. There is not going to be any coal
    production. And, so, what use would it be if we found a better
    way to burn coal. Fortunately, the University of Wyoming did
    not buy into that. They have a solar project that will separate
    hydrogen from water, burn it with coal, and make coal better.
        We believe in solar and wind. Denver is the Mile High City.
    You have got to go uphill to get to Wyoming. So, we are high
    plains and the wind really blows. In fact, the wind turbines
    there have to be designed so that when the winds get above 80
    miles an hour, they turn into the wind and shut down.
    Otherwise, the whole tower blows apart.
        But, we are having trouble getting power lines to them. You
    know, the power has to get to a customer before it is of any
    use, and most of our state is federal land and they are not
    interested in getting right-of-ways for power lines or
    pipelines. Of course, that is probably part of the reason why
    there is a problem getting natural gas to New England, getting
    pipelines that would get it there.
        So, I am hoping that out of this we can come up with some
    solutions that will make all business improve and be better.
        I have a question on the export policy. If the price goes
    below the cost of producing natural gas, it will not be
    produced. In fact, we are kind of at that situation right now.
    There will not be more wells, and eventually, we will be back
    in a situation of needing more and we will not have the talent,
    so we will be relying on the community colleges to quickly
    train people to do that, but it is hard to get somebody to go
    into a sector where the jobs have decreased.
        And, I see that I am going to run out of time before I can
    ask the question, so I will submit the questions to you, and I
    have another one on workforce training, too. I watched the
    effect of OPEC, who can manipulate our prices without changing
    their production at all, just rumoring their production. And
    then after they have killed off all of the workers that have
    the technical capability to do what we need to do, they raise
    the price with the same rumors, no change in their production,
    and they make a lot of money off of us.
        I remember when we were saddled with the--we said some
    comments about Saudi Arabia and they cut us off for a while,
    and there are gas lines all over the United States and
    everybody said, we need to have energy independence. Well, we
    are on the verge of energy independence, but we are doing
    everything we can to stifle it.
        I yield. Thank you.
        Chairman Vitter. Thank you very much, Senator.
        Now, Senator Markey.
        Senator Markey. Thank you, Mr. Chairman, very much.
        The Department of Energy has determined that if even less
    than half of all of the LNG that has been approved by the
    Department of Energy to be exported gets exported, it could
    lead to a 50 percent increase in the price of natural gas for
    people in America. It is just supply and demand 101. The less
    supply we have because we send it overseas, the higher the
    prices are going to go here.
        And, of course, if you are an oil company or a natural gas
    company, you want to sell it. Mr. Slocum mentioned this. In
    Europe, it is three or four times higher, the price you can
    get. In Asia, it might be five times higher, the price you can
    get. So, send it to China, they say.
        But, the truth is that the less there is here, is the
    higher the price is going to be for the utility industry, the
    higher the price is going to be for consumers, the higher the
    price is going to be for manufacturers here in the United
    States. We have created 700,000 new manufacturing jobs in the
    United States in the last four years, and there are more on the
    way, but not if you increase by 50 percent the price of natural
    gas. That is the feedstock.
        And, so, Mr. Slocum, can you talk about that and what the
    potential impact could be on the utility and manufacturing and
    consumer sector in America.
        Mr. Slocum. Absolutely, Senator Markey. There is no
    question that if you accelerate or ramp up the rate of
    exporting natural gas overseas, you are forcing U.S. consumers
    in the power sector and the industrial sector and in the
    household sector and in the commercial small business sector to
    compete with foreign markets where the price of natural gas is
    significantly higher than it is in the United States. And, so,
    if you are in the oil and gas industry, you are going to,
    understandably so, prioritize infrastructure investment to move
    your fracked natural gas to LNG terminals for export rather
    than, say, investing in additional pipeline capacity to serve
    power plants in New England or elsewhere.
        And, so, that is why the Energy Information Administration
    concludes that if you significantly increase the rate of
    natural gas exports, it is absolutely going to raise domestic
    prices for American consumers.
        Senator Markey. Now, the more that we use the natural gas
    here in our manufacturing sector, the more likely that the
    products that are created with it will be made here and will be
    exported rather than letting the natural gas get into the hands
    of the Europeans and the Chinese. Then they will sell the
    finished product back to the United States. So, what is that
    relationship, between low-priced natural gas as a feedstock
    into the manufacturing sector of America and the wealth, the
    jobs that are created here?
        Mr. Slocum. Yes. I am a big believer that the dynamic
    features of the U.S. economy are the value added and the role
    of technology in adding to that value. And, simply exporting
    raw materials--I understand that fracking has been an
    unbelievable revolution of technology and industriousness by
    American ingenuity, but at the end of the day, you are simply
    exporting a raw material that there is robust demand for
    domestically to use as a feedstock or to use as a more
    environmentally and climate-friendly fuel in the power sector--
    --
        Senator Markey. So, Mr. Slocum, so a lot of the advocates
    for exporting natural gas or exporting oil--even though we are
    not energy independent, we are talking about exporting oil and
    we are not energy independent. We are still importing five
    million barrels of oil a day. How crazy is that, to export the
    oil we have when we are still importing five million barrels a
    day.
        But, they keep saying, well, it is like any other product.
    It would be like exporting a widget or a computer chip, that
    oil and natural gas should be the same. But, we do not send
    young men and women over to the Middle East to protect the
    widget market or to protect the silicon chip market. We do it
    because we want oil to come in from the Middle East.
        Now, Mr. Slocum, if we just converted seven million big
    trucks and buses over to natural gas vehicles, it would be the
    equivalent of all of the oil which we still import on a daily
    basis from the Persian Gulf. But, if we increase the price by
    50 percent, you know for sure that is not going to happen. So,
    would that not be a high objective that we should have, given
    the headlines above the fold on Iran and Iraq and all the other
    Middle Eastern countries on a daily basis?
        Mr. Slocum. Absolutely. There is no question, even with the
    record amounts of domestic production that the United States
    has had in crude oil, we are still vulnerable to international
    factors, because oil, unlike natural gas, is priced due to
    global benchmarks and what is going on in the Middle East or
    China. And, so, as a result, it would be beneficial, I believe,
    for the U.S. economy, particularly in the transportation
    sector, to see an increased use of natural gas. It has got
    certain environmental benefits relative to petroleum products
    as a transportation fuel. And the bottom line is making sure
    that the transportation sector has access to affordable prices.
        Senator Markey. Massachusetts consumers right now are
    paying $2.76 a gallon for gasoline at the height of the summer
    driving, which is down 95 percent from last summer, 95 percent
    down. Now, what if we start exporting oil out of our country?
    What would that mean for consumers in Massachusetts in terms of
    an increase in the price of gasoline?
        Mr. Slocum. Well, I actually testified before the House
    Small Business Committee last month specifically around oil
    exports, and again, there, the data is very clear that undoing
    this 1975 virtual ban on exporting crude oil will result in
    higher prices for American consumers.
        Senator Markey. So, we finally get a surplus. We finally
    have oil and gas here domestically, and the first thought of
    the oil and gas industry is export it out of the country before
    our consumers, our manufacturers, our utilities get the benefit
    from it. It is just wrong. It is bad policy. It will help our
    economy dramatically if we keep it here at a low price.
        Thank you, Mr. Chairman.
        Chairman Vitter. To balance the record, let me just hit a
    few things. First of all, the Obama Administration's Department
    of Energy has conducted two studies over the last few years
    looking at potential price impacts of exporting LNG and those
    studies have very different conclusions than what Senator
    Markey was describing. So, we will make those part of the
    record.
        [The information follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        [The second study, titled ``Updated Macroeconomic Impacts
    of LNG Exports from the United States'' can be found at http://
    www.nera.com/publications/archive/2014/updated-macroeconomic-
    impacts-of-lng-exports-from-the-united-sta.html.]
        And, also, I would just note and make part of the record
    significant bipartisan support for LNG exports. That includes
    an Obama Administration review and its conclusions regarding
    its benefits. That includes political support from Democrats
    like House Minority Whip Steny Hoyer. And that certainly
    includes labor union support from Laborers International Union,
    AFL-CIO, United Association of Plumbers, Fitters, and HVAC
    Techs, the Building Trades Council, and Insulators and Allied
    Workers Local Union 24. We will submit that for the record.
        [The information follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Okay. Senator Fischer.
        Senator Fischer. Thank you, Mr. Chairman.
        I would like to thank all the panel members for being here
    today. I appreciate your input on this.
        Mr. Mack, as you probably know, Nebraska is very unique. We
    are a 100 percent public power state, and as we look at the
    clean power plan that is out there, we will be hit especially
    hard. Nebraska utilities are going to face reliability issues
    and small businesses are going to see price increases in their
    electricity bill. Can you explain what impact the increases in
    electricity rates would have on energy intensive small business
    operations like manufacturing and agriculture, which are both
    very, very important to my home state of Nebraska.
        Mr. Mack. Thank you, Senator. The increase in the cost of
    electricity that may be experienced because of a number of
    different factors, I think, have to be put in context with the
    dramatic decreases we have seen in electric power generation
    costs over the last several years because of the remarkable
    abundance of natural gas, particularly. If we look back five or
    six years, natural gas was about, I think, $8 or $9 per million
    BTU. Today, it is about $2.75.
        And, so, to the extent that power generation is converted
    to natural gas-fired appliance you are going to see a
    significant benefit to the ratepayers, not just in Nebraska,
    but to everywhere. So, I think the shale revolution and the
    abundance that it has created has had a tremendously beneficial
    impact to companies that depend, companies and people who
    depend on cheap electricity.
        Senator Fischer. As you look at the clean power plan,
    however--are you familiar with that?
        Mr. Mack. Somewhat. Not in great detail, but----
        Senator Fischer. And as we look at those proposed
    regulations, the impact they have, and as I said, especially on
    a state like Nebraska, where we have 100 percent public power,
    we have two-thirds of our electricity supplied by coal-fired
    electric plants, coal from our neighbors in Wyoming, and to
    retrofit those plants, it is going to be a cost, and it will be
    a cost to the owners of those plants who are the citizens of
    Nebraska. We are a public power state. We are going to see
    costs to businesses in the products that they produce and the
    services that they provide. That is going to be passed along to
    consumers, as well. And then when you go home and you turn on
    your light switch and you pay your electric bill in Nebraska,
    you are going to be hit again.
        What is the impact of that on families, when we have
    regulations like that? What is the impact, and what kind of
    decisions do you think we ought to be looking at when we make--
    when we consider changes in policy?
        Mr. Mack. Well, clearly, anything that raises costs of
    electricity to the consumer are not a good thing for either the
    consumer or business or the economy. So, I fully agree that if
    you are in the mode that you are dependent on coal, and we
    certainly think coal is an excellent and plentiful and
    affordable fuel, that that is going to--that is certainly going
    to have an impact on your state and your citizens. So, I
    certainly sympathize with that and I--you know, it is outside
    of our scope to advocate for some of those policies or against
    some of those policies, but we certainly think that any
    policies that increase the availability of all forms of energy
    are going to ultimately have a favorable impact on all
    citizens, all countries--all states, rather, and all companies.
        Senator Fischer. Thank you, Mr. Mack. Thank you, Mr.
    Chairman.
        Chairman Vitter. Thank you.
        I have been reserving my time. I am going to go ahead and
    use it now, if that is okay with members, in part because Dr.
    Aspinwall is going to have to leave for the airport before too
    long and I wanted to get a chance to ask him a couple things.
        Doctor, you see this booming part of our economy back home
    and you see the enormous need it has created for skills
    training in certain areas. You highlighted in your testimony
    the fact that present federal law and federal policy, for
    instance, regarding Pell Grants actually cuts off access to
    tuition support to a lot of the most efficient and most
    productive training programs on the ground now because the
    programs are too short. I mean, essentially, they are too
    efficient. They give people really good skills that lead
    directly to a great job. They just do not take long enough for
    federal bureaucrats' liking.
        Can you expand on that? And, I assume that means you would
    encourage us to re-look at those Pell Grant and other related
    requirements.
        Dr. Aspinwall. Yes. Thank you, Senator. I go back to some
    of my written testimony. Many of the programs that we develop,
    industry have, I would say, requested, that they have demanded
    these. We are having such a strong expansion in such a short
    period of time that we are having trouble supplying the
    workforce, and the reason we are having trouble supplying the
    workforce is we are trying to put them through our standard
    diploma or degree programs that are set up for at least one
    year to two years.
        So, what they have requested us to do is condense those
    programs and only use the competencies that they know they need
    when they get on the job. But, when we do this, by being so
    efficient and effective, then the federal guidelines from the
    Department of Education do not allow for the use of federal aid
    because they are not the correct number of seat hours or
    contact hours and they do not meet a certain length as far as
    weeks and guidelines.
        So that--many of our students, as I said before, they work,
    so if they are working--and 84 percent of community college
    students work--they cannot quit their jobs and come out and
    take advantage of those. So, we still rely on private
    businesses and private industries to provide scholarships, but
    that is not the long-term solution, because after a while, the
    private industries and private business, we are all going to
    them asking for money and those scholarships run out.
        Chairman Vitter. Right.
        Dr. Aspinwall. So--and again, as I said, some of these
    programs, for instance, the welders, they can go through a 450-
    hour program and start out at basically the lowest $26 per
    hour. And before this energy expansion, our welders were making
    $10, $11, $12 an hour. So, the more the need, the acute the
    need gets, the higher the workforce rate gets and the higher
    wages that these companies pay.
        Chairman Vitter. Right. And, just to be clear, the jobs
    that are associated with these accelerated focus programs, they
    are not at the lower end of the spectrum. I mean, they are very
    good paying and good benefit jobs, correct?
        Dr. Aspinwall. Absolutely.
        Chairman Vitter. Can you give us some flavor for what we
    are talking about?
        Dr. Aspinwall. Absolutely. Two of the highest demand jobs
    are process technology and industrial instrumentation, and as I
    said briefly in my written statements, we had to create a
    program that puts students through an Associate of Applied
    Science in just 16 weeks. That is how much we condensed that, a
    two-year program down to 16 weeks. That is an eight-hour-a-day
    program, but those individuals who go through that, they leave
    that program at a minimum salary of around $85,000 a year. That
    is a pretty good return on your investment for around $6,000
    for training.
        Chairman Vitter. Sure. Absolutely. Okay.
        Mr. Slocum, a lot of your testimony is about the price of
    energy related to, say, LNG exports and other export
    opportunities. As I said a minute ago, I disagree with claims
    that we are talking about huge, 50 percent, etc., or even
    double-digit increases, and there are a lot of studies that go
    to that point. But more broadly, would Public Citizen support
    the same sort of rule you enunciated for other American
    produced goods or stock? In other words, if banning exports
    decreases the price to the American consumer, should we ban
    those exports, because surely you can make an argument that
    that would be the case in a wide variety of things, starting
    with, say, food.
        Mr. Slocum. Right. Very good question, Mr. Chairman. I
    think that the unique history and role of energy commodities--
    the 1975 Energy Policy and Conservation Act was passed in
    direct response to acute physical shortages of energy
    commodities, particularly petroleum products, that resulted in
    punishing price increases that threw this country into very bad
    economic times. And, so, I think that there is merit for the
    unique nature of certain energy commodities. The inherent
    volatility of----
        Chairman Vitter. Can I ask you--I do not want to cut you
    off----
        Mr. Slocum. Yes, sir.
        Chairman Vitter [continuing]. But my time is running out.
    Surely, you would agree that our understanding of American
    energy resources has been turned upside down since 1975.
        Mr. Slocum. It has been, and it has been turned upside down
    from just a few years ago.
        Chairman Vitter. Right.
        Mr. Slocum. I mentioned in my written testimony----
        Chairman Vitter. So----
        Mr. Slocum. Yes, sir.
        Chairman Vitter [continuing]. What I am suggesting is,
    surely, the premise that Congress used in 1975, I mean, that
    has completely changed, right? That is out the window.
        Mr. Slocum. For now, but there are a number of variables
    that could happen that we cannot predict, disruptions in supply
    and demand across the globe, disruptions here in the United
    States. That is the thing about commodities, and particularly
    with energy commodities. There is no economist that will be
    able to credibly safely predict what the price of a given
    commodity is going to be in the future because of all of these
    unknown variables that go into affecting the price.
        Chairman Vitter. Sort of like corn, maybe?
        Mr. Slocum. I am an energy policy guy. I do not know as
    much about agricultural markets----
        Chairman Vitter. Should we ban those exports?
        Mr. Slocum. If there is a Congressional or data-driven
    determination that there are acute agricultural shortages that
    threaten the American consumer and the American farmer, then I
    do think we should contemplate that, but it is not my
    understanding that that is the scenario today.
        Chairman Vitter. Okay, well, it is not my understanding
    that is the scenario with energy, thanks to abundant American
    energy, either, but I understand.
        Senator Coons.
        Senator Coons. Thank you, Chairman Vitter. Thank you for
    convening this hearing.
        And thank you to the witnesses for your testimony today. It
    is great to see you, and I appreciate your highlighting the
    important role that energy costs, and in particular energy
    efficiency, play in reducing the bottom line cost that small
    businesses face.
        In your testimony, several of you said that for most small
    businesses, energy usage is their single largest business
    expense. The problem is that many small businesses do not have
    the expertise in-house to really analyze, understand, and
    reduce their energy usage, nor do they have the resources or
    capability to hire an outside energy resource expert. And,
    these would be the types of challenges I think we could address
    through the passage of the bipartisan Shaheen-Portman bill and
    through other legislative means.
        As some of you may know, in Delaware, we have a terrific
    resource that helps small- and medium-sized manufacturers
    reduce their energy costs. It is one of the sites of the DOE-
    sponsored Industrial Assessment Centers. It is run by the
    University of Delaware and is a terrific resource. I have had
    the pleasure of touring some of the Delaware-based
    manufacturers that they have helped and that have received one
    of the more than 100 energy efficiency assessments that the IAC
    has conducted since 2006. These make a big difference in a
    manufacturing company's bottom line, reducing greenhouse gas
    emissions, as well, and helping to train the next generation of
    engineers and scientists in the field.
        Just one quick example. Hirsh Industries, which
    manufactures storage products--I think that is also called
    filing cabinets--for the office and home, they do a great job
    at it, but they saved $217,000 a year in energy costs through
    the IAC review.
        I would also just like to briefly mention, as Co-Chair of
    the Manufacturing Jobs for America Initiative, I am pleased to
    see support among a number of Senators who have introduced
    bills related to energy efficiency and green tech and the
    future of our manufacturing sector. I, in particular, would
    like to call out Senator Shaheen's leadership on the bipartisan
    Smart Manufacturing Leadership Act, and to highlight Senator
    Hirono's Clean Technology Manufacturing and Export Assistance
    Act, and Senator Merkley's Job Creation Through Energy
    Efficient Manufacturing Act. I think it is great a number of
    Senators have recognized the value of being proactive in energy
    efficiency.
        To Kateri Callahan, if I might, great to see you again.
    Just tell me for a minute, if you would, about energy
    efficiency programs at the federal level that also connect with
    state and local resources like the Industrial Assessment
    Centers or the Weatherization Assistance Program. How can we
    make sure that more small and medium businesses are aware of
    these resources, and what sort of long-term and compounding
    benefit do you see them get from an investment in energy
    efficiency of this type.
        Ms. Callahan. Great. Thank you very much for the question.
    I want to back up a little bit to the talk that so many have
    engaged in on the volatility--potential volatility of price of
    natural gas. One thing that has not been mentioned, and you can
    take out the Alliance to Save Energy, maybe I should note, is
    fuel neutral. We do not talk about it. We just want whatever
    you use, to use it smarter.
        One of the ways that small businesses, in particular, I
    think, can insulate themselves from the volatility in the
    marketplace is to become as efficient as possible. Consumers
    and businesses do not care about the per kilowatt hour cost of
    electricity. They care about what their bill is every month.
    So, if they can make investments, lower those bills, become
    more productive and more competitive, that is what is
    important.
        And, I think that the federal programs are connecting in a
    lot of ways. The Department of Energy funds the State Energy
    Offices, which do a lot of this work through either the Energy
    or the Economic Development Offices. As I said earlier,
    Senator, when you were not in the room, we really need the
    federal government to work at the state and local level and
    with partners and trade allies and organizations that are
    working on the ground, because that is the best way to connect
    with the small businesses, to meet them where they live, to
    talk in the terms that they understand about building and
    growing their businesses and generating jobs and adding to the
    bottom line.
        So, the Industrial Assessment Centers are great. You
    mentioned Pennsylvania. My written example has an example in
    Tennessee, working through the University of Tennessee in
    Murfreesboro and a company that was able to compete better than
    all of its competitors during the downturn in the recession
    because of the energy audits that were done there and the
    improvements made. Those are all across the landscape.
        The Department of Agriculture, through its Renewable Energy
    Assistance--or its Rural Energy Assistance Program and loan,
    they are helping out, too.
        I think one thing that really needs to happen at the
    federal level is a convergence and a one-stop shop, if you
    will, of all the different resources that are available. Folks
    try to do that. The SBA has some of that, but more needs to be
    done and we need a central location for small businesses to
    come and get the help that they need.
        Senator Coons. Well, thank you, Kateri, and I will just
    mention, Senator Shaheen has just introduced a bill, the Small
    Business Energy Efficiency Act, that would expand the eligible
    functions for the SBA 504 loans to include energy efficiency
    work studies, retrofits. I have joined as a cosponsor. I think
    it is a great way to expand some of the reach of the SBA into
    this field.
        I have a bipartisan bill with Senator Moran, the Master
    Limited Partnerships Parity Act, that would make accessible an
    existing financing vehicle that is mostly used for pipelines in
    oil and gas, but it would make it accessible for energy
    efficiency investments, as well. I think we have got a lot of
    work to do together to make sure that energy efficiency is part
    of the menu of trying to reduce the total energy costs of
    American manufacturing.
        Thank you all for your appearance today and for your
    testimony. Thank you, Mr. Chairman.
        Chairman Vitter. Thank you very much.
        Thank you all very much, and certainly this discussion will
    inform in a very important way my work and others' work
    regarding energy legislation affecting small businesses.
        I know Senator Markey has additional questions. I am going
    to invite everybody to submit those for the record, because,
    unfortunately, I cannot stay, and at least one of our witnesses
    cannot stay. But, certainly, everyone is invited to expand on
    questions, and, of course, we will get appropriate answers for
    the record.
        Senator Markey. Mr. Chairman, could I just be recognized
    for 30 seconds?
        Chairman Vitter. Sure, 30 seconds.
        Senator Markey. Thank you, Mr. Chairman.
        I could envision a situation where the negotiation between
    Iran and the United States and the other countries in the world
    go sour, it is rejected in Congress, and one of the options is
    to bomb Iran and its nuclear programs, and I could then
    envision the price of oil going to $5 a gallon, $6 a gallon,
    and I could see American oil here and natural gas here
    protecting us against that, that we were not exporting.
        And, as well, in terms of the economic studies, yes, there
    are some studies that say that there are winners and losers,
    but the winners are the oil and gas companies and the losers
    are the manufacturers, the utilities and consumers and the
    natural gas vehicle industry. So, maybe you can say that, whoa,
    well, look at the tremendous job creation over here for oil and
    gas, but look at all the losers that are left in their wake
    because the price of natural gas has gone up so much.
        So, I just wanted to kind of throw that in, and I will
    submit my questions, Mr. Chairman. Thank you for the
    opportunity.
        Chairman Vitter. Okay. Well, I am sure this debate will
    continue, I have no doubt, so I will look forward to it.
        Thank you all very, very much, and the hearing is
    adjourned.
        [Whereupon, at 3:48 p.m., the committee was adjourned.]

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