[Senate Hearing 114-344]
[From the U.S. Government Publishing Office]
S. Hrg. 114-344
ENERGY ACCOUNTABILITY AND REFORM LEGISLATION
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
JUNE 9, 2015
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho RON WYDEN, Oregon
MIKE LEE, Utah BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona DEBBIE STABENOW, Michigan
STEVE DAINES, Montana AL FRANKEN, Minnesota
BILL CASSIDY, Louisiana JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado MAZIE K. HIRONO, Hawaii
ROB PORTMAN, Ohio ANGUS S. KING, JR., Maine
JOHN HOEVEN, North Dakota ELIZABETH WARREN, Massachusetts
LAMAR ALEXANDER, Tennessee
SHELLY MOORE CAPITO, West Virginia
Karen Billups, Staff Director
Patrick J. McCormick III, Chief Counsel
Kellie Donnelly, Deputy Chief Counsel
Brianne Miller, Professional Staff Memeber
Angela Becker-Dippman, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
Scott McKee, Democratic Professional Staff Member
C O N T E N T S
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OPENING STATEMENTS
Page
Murkowski, Hon. Lisa, Chairman, and a U.S. Senator of Alaska..... 1
Cantwell, Hon. Maria. Ranking Member, and a U.S. Senator from
Washington..................................................... 23
WITNESS
Orr, Hon. Lynn, Under Secretary for Science and Energy, U.S.
Department of Energy........................................... 62
McAleer, Hon. Colleen, Commissioner, Port of Port Angeles, Port
Angeles, Washington............................................ 106
Augustine, Norman, Board Member, Bipartisan Policy Council....... 114
Harbert, Hon. Karen, President and Chief Executive Officer,
Institute for 21st Century Energy.............................. 119
Highley, Duane, President and Chief Executive Officer, Electric
Cooperatives of Arkansas....................................... 131
Mills, Mark, Senior Fellow, Manhattan Institute.................. 137
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
ABB, Inc., et al
Letter for the Record........................................ 237
Advanced Energy Management Alliance
Statement for the Record..................................... 239
American Public Power Association
Statement for the Record..................................... 244
American Rivers
Letter for the Record........................................ 255
American Sportfishing Association, et al
Letter for the Record........................................ 257
Augustine, Norman
Opening Statement............................................ 114
Written Testimony............................................ 116
Responses to Questions for the Record........................ 197
Boeing Company
Statement for the Record..................................... 258
Cantwell, Hon. Maria
Opening Statement............................................ 23
American Energy Innovation Council: A Business Plan for
America's Energy Future.................................... 25
Cassidy, Hon. Bill
New York Times article dated May 30, 2015 entitled ``E.P.A.
Proposal Will Put Bigger Trucks on a Fuel Diet''........... 148
Colorado Oil & Gas Association
Letter for the Record........................................ 262
Coons, Hon. Chris
Statement for the Record..................................... 263
Council of Industrial Boiler Owners
Letter for the Record........................................ 268
Domestic Energy Producers Alliance
Statement for the Record..................................... 272
Dresser-Rand Corporation
Statement for the Record..................................... 274
Edison Electric Institute
Statement for the Record..................................... 279
Energy Storage Association
Statement for the Record..................................... 288
Harbert, Hon. Karen
Opening Statement............................................ 119
Written Testimony............................................ 121
Responses to Questions for the Record........................ 200
Hatch, Hon. Orrin G.
Statement for the Record..................................... 294
Health Physics Society
Statement for the Record..................................... 296
Health Physics Society, Barbara Hamrick
Letter for the Record........................................ 298
Highley, Duane
Opening Statement............................................ 131
Written Testimony............................................ 133
Responses to Questions for the Record........................ 205
Independent Petroleum Association of America
Statement for the Record..................................... 301
Industrial Energy Consumers of America
Letter for the Record........................................ 305
Louisiana Oil & Gas Association
Letter for the Record........................................ 306
Mandan, Hidatsa & Arikara Nation
Statement for the Record..................................... 307
McAleer, Hon. Colleen
Opening Statement............................................ 106
Written Testimony............................................ 109
Responses to Questions for the Record........................ 192
Mills, Mark
Opening Statement............................................ 137
Written Testimony............................................ 139
Responses to Questions for the Record........................ 209
Modesto Irrigation District and Turlock Irrigation District of
California
Letter for the Record........................................ 332
Motor & Equipment Manufacturers Association
Letter for the Record........................................ 158
Murkowski, Hon. Lisa
Opening Statement............................................ 1
``Rendering Vital Assistance: Allowing Oil Shipments to U.S.
Allies'' dated June 9, 2015................................ 3
National Association of Manufacturers
Statement for the Record..................................... 336
National Association of Royalty Owners
Statement for the Record..................................... 338
National Mining Association
Letter for the Record........................................ 340
National Stripper Well Association
Statement for the Record..................................... 343
New Mexico Oil & Gas Association
Letter for the Record........................................ 345
North Dakota Petroleum Council
Letter for the Record........................................ 347
Ohio Oil and Gas Association
Letter for the Record........................................ 348
Oil Industry
Letter for the Record........................................ 349
Oklahoma Independent Petroleum Association
Letter for the Record........................................ 350
Orr, Hon. Lynn
Opening Statement............................................ 62
Written Testimony............................................ 64
Responses to Questions for the Record........................ 175
Pennsylvania Independent Oil & Gas Association
Letter for the Record........................................ 352
Permian Basin Petroleum Association
Letter for the Record........................................ 353
Petroleum Association of Wyoming
Letter for the Record........................................ 355
PJM Interconnection, L.L.C.
Statement for the Record..................................... 356
Small Business & Entrepreneurship Council
Letter for the Record........................................ 362
South Texas Energy & Economic Roundtable
Letter for the Record........................................ 364
Sportsmen for Responsible Energy Development
Letter for the Record........................................ 365
SunEdison, Inc.
Statement for the Record..................................... 367
Texas Alliance of Energy Producers
Statement for the Record..................................... 371
Texas Independent Producers and Royalty Owners Association
Statement for the Record..................................... 373
Texas Oil & Gas Association
Letter for the Record........................................ 374
Union of Concerned Scientists
Letter for the Record........................................ 375
U.S. Department of the Interior
Statement for the Record..................................... 377
Ute Indian Tribe
Statement for the Record..................................... 395
Voith Turbo
Letter for the Record........................................ 418
Western Governors' Association
Letter for the Record........................................ 419
The Wilderness Society
Letter for the Record........................................ 421
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The text for each of the bills which were addressed in this hearing can
be found on the committee's website at: http://www.energy.senate.gov/
public/index.cfm/hearings-and-business-meetings?ID=8B5BD69E-E1ED-4440-
A902-6A2B0CD24B1B
ENERGY ACCOUNTABILITY AND REFORM LEGISLATION
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TUESDAY, JUNE 9, 2015
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 9:37 a.m. in Room
SD-366, Dirksen Senate Office Building, Hon. Lisa Murkowski,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM
ALASKA
The Chairman. Good morning. I call to order the Energy
Committee hearing this morning. Welcome to you all. We are here
today to consider our fourth and final legislative hearing
related to the broad energy bill that we have been assembling.
When we first started this process some weeks ago we were
not sure exactly how these hearings were going to go, but I am
very pleased with the strong participation from our members,
the generally collegial spirit that has marked our discussions
and really the number of bills that we have been able to
consider throughout this process.
Counting the 42 different bills we are reviewing today, the
Committee will have reviewed a total of 114 bills over the past
several weeks. That is a significant accomplishment, and the
work that went into it, I think, will provide us with a better
understanding of the many ideas for our nation's energy policy
as we sit down to craft our larger bill.
Our focus today is on a crucial area that does not always
receive the attention that it deserves, and that is
accountability and reform of our energy laws and programs.
This is an authorizing committee, and we are responsible
for conducting oversight of the Federal agencies within our
jurisdiction. Since the last major energy bill was passed back
in 2007, we have conducted numerous oversight hearings. Many of
us have also discharged oversight responsibilities through
initiatives within our own offices. In addition, a number of
studies and reports on agency activities have been released
from both the Federal Government and third party entities.
Many of the bills included in this hearing reflect members'
hard work on oversight as well as our desire to ensure that
Federal agencies are operating effectively, efficiently and
with the highest degree of accountability. We will also be
taking stock of our own actions here at the Committee in the
coming weeks. In particular, we will be evaluating the
accumulation of authorizations, programs, studies, reports and
other contributions to the U.S. code we have made over the
course of the years. In many cases what made policy sense years
ago has perhaps become outdated, been rendered duplicative or
is serving to bury Federal agencies in requirements they cannot
reasonably be expected to meet. Before all is said and done I
intend to make sure that we fix those issues, and we will
continue working closely with the agencies to be sure that we
have done a good job.
I think as far as all of the issues that we have taken up,
the various policy aspects of this larger, broader energy bill,
an area that, I believe, deserves very, very close attention is
what we already have on the books, and is it doing that which
we intended it to. So this opportunity for scrutiny and
oversight is critically important.
With a total of 42 bills, today's hearing covers a wide
range of topics. We are looking at things like addressing
energy exports, permitting, our national labs, electric grid
reliability, manufacturing and loan programs, just to mention a
few of them.
One topic of particular importance is the ability of the
United States to export its oil. As the members of this
Committee know, our nation is now the top oil producer in the
world. Included in today's hearing is a bipartisan bill that I
have introduced to lift our outdated oil exports ban. Lifting
the ban will bring an array of benefits to our nation, more
jobs, more revenues, more production, more security and more
diplomatic leverage on the international stage. You do not
necessarily have to take my word for it, you can also look at
the growing list of experts and studies that agree with this
analysis.
In support of this bill today, I am releasing a report that
has been prepared by the Committee staff that is entitled,
``Rendering Vital Assistance: Allowing Oil Shipments to U.S.
Allies.''
[The information referred follows:]
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I would recommend it to each of the Committee members here.
As with the other white papers that we have released, it is
imminently readable. It is factually stable and sound and
really lays it out in a very clean and forthright measure. The
report further develops an argument that I have been making
that even while Congress works to remove the export ban, the
Administration already has authority exclusively delegated to
it, by Congress, to allow for greater oil exports.
In addition to this opportunity to modernize our nation's
energy policies, we will spend time looking at interagency
coordination on the so-called energy water nexus, protecting
electric grid reliability during agency rulemakings, reforming
the innovative, but at times mismanaged, loan programs at DOE,
making sure our national labs are operating in the most
effective manner, ensuring greater cooperation between the
states and feds on energy development, as well as lowering
energy costs in regions that face above average prices.
We have a great panel before us this morning, with a great
breadth of knowledge and experience to speak on these and many
other topics. I thank you all for the time you have taken to be
here with us this morning, and I am grateful for your input.
With that, I will turn to my Ranking Member, Senator Cantwell.
Good morning.
STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM WASHINGTON
Senator Cantwell. Thank you, Madam Chair, Thank you for
calling this hearing and gathering such a strong group of
witnesses across a broad array of issues in the general
categories of discussion of energy accountability and reform
proposals. Accountability in energy markets starts with data,
arming consumers and industry, policy makers, and regulators,
with information about our energy systems and markets that help
all of us make smart decisions. This is particularly important
at this point in time when our energy systems are in major
transition--as outlined by Secretary Moniz in the Quadrennial
Energy Review.
One of the legislative proposals before us today, S. 1420,
the Energy Market Act of 2015, would boost the Energy
Information Administration's (EIA) ability to collect data on
energy traders and the kinds of entities engaged in both the
physical and financial energy markets. It would establish the
Office of Financial Market Analysis at EIA, along with an
interagency working group on energy markets that would span the
Department of Energy and FERC, along with regulators at the
Securities Exchange Commission, Commodity Futures Trading, and
the Department of Treasury.
I bring this up because there are some in the House that
think ``reform'' and ``accountability'' mean actually rolling
back important consumer protections. This is particularly a
concern because this Committee in a bipartisan fashion, crafted
legislation in response to the Western energy crisis that we
were able to implement. It has been good legislation and worked
well for consumers and businesses in Washington, California,
Nevada, and Oregon.
Last week, the head of the enforcement at FERC testified
that current proposals pending in the House would hinder the
agency's effort to pursue market manipulation cases. Since the
Committee led the effort to put this in place, a ban on market
manipulation in 2005 in the Energy bill, FERC has returned
almost $1 billion to consumers and the U.S. Treasury for market
infractions and unjust profits.
It would seem that the House proposal is more motivated to
help Wall Street banks and their attorneys who have complained
that FERC is being too tough on them.
I find it ironic that at the same time our colleagues in
the House cannot find their way forward to vote on
reauthorizing the EXIM bank. The House is also now trying to
undermine the appropriate actions of FERC and energy market
regulators to protect consumers from market manipulation.
So when we talk about accountability, I hope my colleagues
will agree holding industry accountable to just and reasonable
rates and markets free of manipulation is just what the
American consumers want us to do.
In our role as an authorizing committee, it is also our job
to review existing Federal programs to assess, as my colleague
said, what is working and not working, and whether the agencies
within our purview have set the right priorities.
Judging by the number of proposals before us today, it
seems obvious that prioritizing innovation and investment in
the kinds of technologies that will grow jobs and our economy
is something we should be able to agree on.
The American Energy Council, which I think we will hear
about from Mr. Augustine, has suggested we ought to triple our
current annual investment in energy-related research and
technology.
[The information refereed to follows:]
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That is because today the Federal commitment to energy
research and development is less than one-half of one percent
of what consumers in this nation spend every year in energy.
U.S. research and development needs the proper investment in
order to help us diversify our energy sources in the future and
keep consumer costs down.
We will hear from Mr. Augustine that China is expected to
surpass us in research and development in the next five years
and now the United States ranks 29th among developing nations
with Federal research and development. So I hope, if we are
holding ourselves accountable, we will look at how we compare
to the rest of the world.
The House recently passed a version of the America Competes
Act that would actually cut ARPA-E funding research in half, so
I do not think that is how we compete. In fact, one of my
constituents, Bill Gates, and the CEO of Cummings Engineering,
led a charge in 2010 to say that ARPA-E should actually be
increased in a significant way if we are going to usher in the
innovation and job growth that is going needed to advance our
energy market. The Department of Energy needs to make sure that
we are collaborating on a variety of issues with ARPA-E, and it
seems to me that my colleagues in the House seem intent in
rolling back the clock.
One of top scientific advisor for President Roosevelt, who
was a key figure in launching the Manhattan Project, said,
``Advances in science when put to practical use mean more jobs,
higher wages, and shorter hours ... but to achieve these
objectives--to secure a high level of employment, to maintain a
position of world leadership-the flow of new scientific
knowledge must be both continuous and substantial.'' I could
not agree more.
We have one of our witnesses here today from the Northwest,
Commissioner Colleen McAleer, from the Port of Port Angeles.
The Commissioner and her colleagues at the port are working on
innovation in composite materials that help improve fuel
efficiency whether you are talking about aerospace or you are
talking about automobiles, and that market is expected to grow
to $26 billion by next year.
How the Department of Energy's Advanced Manufacturing
Office and its laboratories who work with economic development
and translate their scientific capabilities into real world
economics value is something that we need to talk about today
in helping us move our energy efforts forward.
It is also important and very timely that we talk about our
investment in cyber security. Last week we discovered over
4,000,000 Federal employees' personnel files were hacked. The
breach only underscores the persistent and constantly evolving
threat from cyber. So it is very important that we talk this
morning about that particular issue, as it relates to the grid,
because it is a target. The Department of Energy has an
underappreciated role in addressing this threat and has piloted
ways to engage industry in technology development, and
information sharing on the security supply chain. I hope that
we will be able to talk about research and development and
efforts for enhanced grid security on today's agenda.
So again, thank you, Madam Chair, and I thank the witnesses
for being here today to talk about this broad subject area that
we have before us.
The Chairman. Thank you, Senator Cantwell.
Let us begin with our witnesses. Welcome to each of you. We
will have an opportunity for five minutes of testimony from
each of you. Your full statements will be included as part of
the record. Once you have all given your initial opening
statements, we will move to the Committee members for
questioning.
This morning we have the Honorable Lynn Orr, who is the
Under Secretary for Science and Energy at the U.S. Department
of Energy. Next to him we have Ms. Colleen McAleer, who is
Commissioner at Port of Port Angeles in Washington State. Mr.
Norm Augustine has appeared before this Committee many times.
Welcome, Mr. Augustine, as a member of the Bipartisan Policy
Center. We also have the Honorable Karen Harbert, who is the
President and CEO of the Institute for the 21st Century Energy.
Mr. Duane Highley is the President, CEO and Chief Affordability
Officer for the Electric Cooperatives of Arkansas, welcome.
Finally, we have Mr. Mark Mills, who is Senior Fellow of the
Manhattan Institute for Policy Research. Welcome to each of
you.
Deputy Secretary Orr, if you would like to start the panel
off this morning, we welcome your comments. Thank you.
STATEMENT OF HON. LYNN ORR, UNDER SECRETARY FOR SCIENCE AND
ENERGY, U.S. DEPARTMENT OF ENERGY
Dr. Orr. Thank you very much, Chairman Murkowski, Ranking
Member Cantwell and members of the Committee. I appreciate the
opportunity to testify today on behalf of the Department of
Energy regarding energy accountability and reform legislation.
As I know you know, the United States energy landscape is
undergoing a period of rapid transition. We're now the largest
combined producer of oil and gas in the world, and our oil
imports are the lowest they've been in over 40 years. Natural
gas use in power generation has significantly increased, and
U.S. liquefied natural gas exports are scheduled to start
within a year. Wind and solar power generation have grown
dramatically, vehicles have reached historical levels of
efficiency and ethanol is now ten percent of U.S. gasoline
supply.
While these dramatic changes have created enormous
opportunities, they also pose a set of challenges and
opportunities for energy policymakers, investors, non-
governmental organizations and industry. These opportunities
and challenges come in many forms. And addressing them will
require action by many parties including Congress, the private
sector and the public sector. And the need for action is urgent
as the impacts of climate change threaten our economy,
environment and national security.
To work to combat these impacts, the Department of Energy
is leading efforts to move to a low carbon future in support of
the Administration's all of the above approach to energy and
climate action plan. The Department carries out this work by
collaborating with some of the nation's best innovators and
businesses to support high impact applied research development
and demonstration activities. This includes the experts at
DOE's 17 national laboratories which carry out cutting edge
research and development to advance the nation's most complex
challenges in science, energy, national security and
environmental management.
With Congress' support the Department implements a range of
strategies aimed at reducing U.S. reliance on oil, saving
American families and businesses money, creating jobs and
reducing pollution. In the last year we've seen some important
accomplishments across the Department's technology portfolio
that highlight this all of the above approach.
Let me just name a few. We've sequestered, geologically,
ten million metric tons of CO2 through DOE-supported projects.
We have two commercial-scale, cellulosic ethanol facilities
supported by DOE grants or loan guarantees that have now begun
operations. We've commissioned one of the world's largest
battery storage systems at the Tehachapi Wind Energy Storage
Project, and we've successfully completed the first five-year
program at the Consortium for Advanced Simulation of Light
Water Reactors, CASL, which continues to work toward design and
licensing support of small modular nuclear reactors with
advanced safety features.
So as Under Secretary for Science and Energy, my job is to
coordinate DOE's scientific research efforts and our portfolio
of applied energy research and development as we transition to
a low carbon future. My office is working to enhance the
productive links amongst the science and energy programs as we
build and execute the Department's research, development,
demonstration and deployment activities.
Now this is particularly important because fundamental
science underpins absolutely everything we do in the energy
sector, and the world of energy applications is rich with
opportunity to put the science to work and also for energy
applications to illuminate the opportunities for science that
could have game changing impact.
Senator Cantwell's quote of Vannevar Bush resonated with me
the investments we make in fundamental science will pay off in
all kinds of ways that we don't foresee exactly right now but
are fundamental to our ability to compete in the global world
that's ahead of us.
The Committee is taking on a yeoman charge of a broad range
of 42 bills today, the majority of which have some kind of
connection to the Department of Energy. I'd be happy to try to
answer your questions to the extent that I can this morning. I
appreciate the ongoing bipartisan efforts to address our
nation's energy challenges, and I look forward to working with
the Committee.
[The prepared statement of Dr. Orr follows:]
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The Chairman. Thank you, Dr. Orr.
Commissioner McAleer, welcome.
STATEMENT OF HON. COLLEEN McALEER, COMMISSIONER, PORT OF PORT
ANGELES, PORT ANGELES, WASHINGTON
Ms. McAleer. Thank you.
Chairman Murkowski, Ranking Member Cantwell and
distinguished members of the Committee, good morning and thank
you for allowing me to speak before you.
My name is Colleen McAleer. I'm a combat veteran, mother of
two boys, and a small business owner, but I offer my testimony
today in my capacity as the Commissioner for the Port of Port
Angeles. We are located in Clallam County in the northern
portion of the state's, Washington State's, Olympic Peninsula.
Today I will talk to you about the effort we've
spearheaded, the Composite Recycling Technology Center, or
CRTC, where industry, small business, academia and government
converge to reduce energy use and costs and strengthen U.S.
manufacturing.
Carbon fibers replacing other materials in products that
benefit from high strength to weight ratios. It's a $26 billion
global industry and growing. Light weight carbon fiber
composites reduce the weight of a product, thus reducing the
energy consumption; however, they are expensive to produce and
do not deteriorate creating long term disposal issues.
Twenty-seven million pounds end up in U.S. landfills each
year, two million from Washington State alone. Our port is well
on its way to providing a solution to this problem through a
public/private partnership, the Composite Recycling Technology
Center.
Our port has headed an effort to recycle the production
scrap of carbon fiber manufacturing processes, a first of its
kind recycling center. Their research efforts in the U.S. and
Europe address so-called end-of-life carbon fiber recycling, a
more complex and energy intensive process, but we will first
focus on the low hanging fruit of recycling and repurposing
production scrap.
Carbon fiber products already reduce energy consumption by
reducing weight in industries from transportation to sporting
goods. Recycling carbon fiber composites will drastically
reduce the energy required for manufacturing them. The recycled
carbon fiber composite in the CRTC approach will use only six
percent of the energy required to produce the comparable virgin
carbon fiber fabrics.
In my rural, economically distressed county, we have
several manufacturers that use advanced composites and are
dealing with this very issue today. They make yachts, cutters,
snowboards, aerospace parts and more.
Also located in the county is the Pacific Northwest
National Labs, Marine Science Lab. It has permitted in water
facilities to test carbon fiber wave and tidal technologies.
Last year our community was an integral part of the West Coast
application for the $70 million, Department of Energy award for
our Composites Institute.
Our multi-state team lost the competition to Tennessee, but
the program represented a compelling solution for industry and
small business so we have carried on without the DOE funding on
a smaller scale.
Our Port has received a preliminary award of $4 million
from the U.S. Department of Commerce, Economic Development
Administration, Washington State and Clallam County.
In addition the Port has provided the space for the
facility and committed $1.5 million in cash for its development
and advanced manufacturing program in the works since 2012. The
25,000 square foot facility will be a shared equipment center
that serves four functions. It will accept uncured scrap carbon
fiber and remake it into a useable form. It will manufacture
and sell secondary repurposed products. It will serve as a
workforce training space for local colleges. Most importantly,
it will serve as an industrial scale, shared equipment space
for entrepreneurs and universities.
These functions will create a locally trained workforce,
drive accelerated technology transfer with a national reach and
deliver a significant economic impact to our struggling county.
I sit on the Executive Board of our state's Center of
Excellence for Aerospace and Advanced Manufacturing. I often
hear business owners say they can't find employees with the
needed skill sets. This Center of Excellence has aggressively
coordinated with the state's technical and community colleges
to address this very issue.
Washington State community colleges deliberately designed
their curriculum to match the local employer's requirements. In
fact, colleges often buy equipment identical to that used by
manufacturers in their facilities. Standardization through
certification programs serve two constructive purposes. First
it develops the certification programs employers need. Second,
it enables employers to readily hire qualified workers.
At the CRTC we have a parallel workforce training effort.
Peninsula College is relocating their advanced manufacturing
composites program and equipment to our facility. The CRTC will
house the business innovators and their future workers. The
CRTC will accelerate commercialization of technologies from the
lab to the manufacturing floor. Small businesses will lease the
CRTC lab space to develop proprietary products at our shared
equipment center. They will also have access to CRTC material
and process experts accelerating their development process. We
believe the reduced costs and resident expertise will produce
innovation and induce capital investments in carbon fiber
technologies.
Mervin Manufacturing, a local company with $13 million in
annual exports, makes skis, skateboards and surfboards and
several brands of snowboards from virgin carbon fiber. They
intend to further innovate in the Center's maker space in order
to replace that virgin carbon fiber with recycled carbon fiber
for their snowboard bindings, skateboards and surfboard fins.
We currently have five major universities from three
corners of the country that intend to send researchers and
students to the Center. They intend to demonstrate and
commercialize their technologies to the CRTC community.
At Washington State University we intend to leverage the
Composite Material Engineering Center. It has a 35-year history
in commercializing composite wood products like the plastic
lumber materials used in decking. We are finalizing an
agreement with Washington State University to test the CRTC
products for certification and the construction industry at
their facility.
CRTC efforts will re-shore jobs back to the United States.
As an example Batson Enterprises is a local, wholesale supplier
of fishing rods. The current purchase component, composite and
aluminum parts overseas in order to keep their overall costs
competitive. By partnering with the CRTC for product
development using our recycled carbon fiber, Batson Enterprises
will be able to manufacture those components with higher
quality materials that were formally cost prohibitive.
The CRTC will be a small step in bringing back American
manufacturing. We can't and don't want to compete with foreign
countries on their labor costs. Recycled carbon fiber lowers
material costs allowing companies to profit while paying a
living wage.
The Chairman. Ms. McAleer, you need to wrap up.
Ms. McAleer. I thank the Committee for considering this
legislation supporting carbon fiber recycling, and I look
forward to your questions.
The Chairman. Thank you.
Ms. McAleer. Thank you.
[The prepared statement of Ms. McAleer follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Mr. Augustine?
STATEMENT OF NORMAN AUGUSTINE, BOARD MEMBER, BIPARTISAN POLICY
COUNCIL
Mr. Augustine. Well, thank you, Chairwoman Murkowski and
Ranking Member Cantwell, members of the Committee for the
opportunity to speak on a subject that I consider to be
extremely important.
By way of background I'm a member of the Board of Directors
of the Bipartisan Policy Council, and I co-chair the American
Energy Innovation Council. The latter consists of seven
members, CEOs of major firms, not in the energy business but
who are in the research and development businesses. And we're
very concerned about the lack of investment in America in
energy research.
The names of my colleagues are in the written statement and
I will try to reflect our collective views, although today my
remarks will, in fact, be my own.
Energy research is obviously critical. It drives the
economy to a large degree. It certainly has major environmental
impacts. It impacts the world's geopolitical situation,
certainly including national security.
We've had great examples of successes. Most recently one
would have to think of the impact of the combination of 3D
seismics and of horizontal drilling and hydraulic fracking
which have had the effect, as I see it, of buying us time that
we did not expect to have to be able to work on long term
solutions. However, to find long term solutions we have to
invest in energy R and D, and that raises the question of who
shall invest?
One obvious answer might be industry should invest in R and
D since it's one of the beneficiaries. When the Government cut
back in overall R and D, their share from, well the
Government's share from two-thirds to one-third, industry
increased its share from one-third to two-thirds. The problem
is that industry will invest in D by and large, but not R, and
there are several reasons for that. One is that research, R,
tends to be very long term in terms of its payoff. Today the
average shareholder owns their stock four months; when I first
went into business that was eight years. It has an enormous
impact in discounting the future payoffs when shareholders view
new company's investments. Furthermore in research the funder
may not be the long term beneficiary of the results of that
research because of the unpredictability of research. And
finally, particularly in the energy area, there are major
capital investments that firms hold and if the firms are not
highly motivated to or take those investments and replace them
with new equipment.
Let me state openly that I'm not a fan of heavy Government
involvement in the free enterprise system. On the other hand I
do recognize that there are some things that the private sector
can't do, shouldn't do or won't do, and certainly energy R and
D is one of them.
As you heard earlier today however, the Government ranks
29th in the share of research conducted within a nation's
borders that's funded by the Federal Government. We've dropped
from first to tenth in R and D intensity overall. We've dropped
from first to seventh at basic research in the world. China is
about to pass us in both research intensity and value of
research, and we spend more on potato chips in this country
than we spend on clean energy research.
The national labs play a very critical role. They conduct
high payoff, high risk research that industry is discouraged
from undertaking. They conduct long term research. They can
conduct very large, costly products that only Government can
afford, and they also can supply major research equipment. But
this research at the laboratories is of no value if it's not
translated to industry. And frankly, in my view, we do a very
poor job today of translating that investment in the labs into
industry. The DOE is taking major steps to try to improve this,
but there are many impediments in the way that we need to
remove.
You, Madam Chairman, mentioned a number of bills before
this Committee. It's large indeed. I would just like to
highlight two that I think are terribly important. One is the
America Competes Act that, particularly the Senate version,
that really underpins all we do in this area. The second is
funding of ARPA-E. ARPA-E has been highly successful but it is,
frankly, being starved.
The bad news is that we're under-investing in energy
research. The good news is that we could triple what we invest
in energy research and it would barely show in the overall
Federal budget.
Thank you very much.
[The prepared statement of Mr. Augustine follows:]
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The Chairman. Thank you, Mr. Augustine.
Ms. Harbert, welcome.
STATEMENT OF HON. KAREN HARBERT, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, INSTITUTE FOR 21ST CENTURY ENERGY
Ms. Harbert. Thank you.
Thank you, Chairman Murkowski, Ranking Member Cantwell,
members of the Committee for soliciting our input today. I
applaud your efforts putting together a multi-title energy bill
in today's world which is very difficult, so we applaud your
efforts.
I can't address, obviously, all 42 of the bills today. Let
me highlight a few. I'll start with the one that, I think, will
have the most profound impact on our energy landscape which is
lifting the ban on oil exports which is truly a relic of the
1970's and the era of oil embargo and a very different energy
landscape.
In today's era of energy abundance unconventional shale oil
and gas is a tremendous economic stimulus and catalyst. Shale
energy has already added 2.1 million jobs to our economy during
the deepest, darkest points of our recession. It has stimulated
a tremendous amount of revenue, and it is slated to add $1.6
trillion of Government revenue over the next ten years and to
create an additional two million jobs by 2025.
If, on top of that, we lift the oil export ban we would
support an additional 400,000 jobs, grow GDP and increase
Government revenue by an additional $1.3 trillion in the next
15 years while still ensuring that gasoline remains affordable
to the American consumer. So it's clearly an economic win, but
it's also a geopolitical win or wins, I might say.
We will be importing oil. We will be importing less oil
from countries that don't share our values and are benefiting
from our financial resources we send them to buy their oil. We
have seen Russia and what it has done to the Ukraine. We have
seen Russia's stranglehold on the energy supply to Europe, and
we can break that stranglehold by adding more molecules into
the market. And of course, new stable supply from America, from
a reliable supply of energy, will choke the opportunity from
non-state actors to use energy to fund their operations. And we
know that ISIS and ISIL is using oil to fund their operations,
directly threatening our national security. So it's a win/win/
win, and the time to act is now.
Of course, as you pointed out in your report this morning,
the executive branch could act now while Congress is still
debating this. Staying on production for a moment, we support
the Protecting State Rights Act. Between 2009 and 2014 oil
production grew less than 1 percent on Federal lands and yet is
up 90 percent on State and private lands.
BLM admits that it takes them 227 days to process an oil
permit and yet in the states, it takes 30, so clearly the
Federal process is less efficient than the states. So adding an
unneeded layer of Federal permitting and regulatory process
over the state process will be as dis-incentivizing investment
on Federal lands, slow jobs and revenue growth. State primacy
is important, and this legislation will preserve that.
We oppose the deficit reduction through Fair Oil Royalties
Act because it's an arbitrary proposal to change a law that
Congress passed in 1995 to stimulate investment in frontier
deep water leases when prices were low and exploration
expensive. So predicating a company's ability to enter new
leases today on agreeing to higher prices for things they've
already agreed to with the Government, ex post facto, violates
the concept of sanctity of contracts and possibly even the
Constitution.
We do support the bill to make DOE the coordinator for
clean coal projects. They've proven challenging, economically
and engineeringly challenged; however, the regulatory obstacles
are even more daunting requiring permits from every element of
the Federal Government. Designating DOE as the lead agency
makes sense that potentially we might get more of these
projects built even in the face of massive challenges to the
domestic coal industry.
Regarding the Energy Loan Improvement Act, we greatly
support returning the loan program to its original intent that
Congress laid out in the Energy Policy Act and require
applicants to have some skin in the game and pay the subsidy
cost. That way we will ensure more bankable projects and avoid
the problems of the 2009 stimulus package which let people off
the hook and we saw many companies go bankrupt.
We also support the America Competes Act.
We also support the Advanced Grid Storage Act with some
changes. The intent to focus DOE funds on grid storage is a
very important element of our electricity sector
transformation, and DOE should be spending more time and
attention in that area. Yet we would like to not see the Davis-
Bacon provisions included.
Lastly, without the work force to lead America's 21st
century economy, we will not succeed. We have a growing skills
gap and are facing the great shift change where 50 percent of
energy professionals today can retire in the next ten years. So
we support efforts like Senate bill 1422 which will make
collaboration between industry, academic institutions, State
governments, a priority to grow our energy workforce and focus
on STEM skills.
I will especially note the Department of Veterans' Affairs
efforts to put veterans into the workforce as a model we should
likely emulate.
So thank you very much for the opportunity to testify
today.
[The prepared statement of Ms. Harbert follows:]
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The Chairman. Thank you, Ms. Harbert.
Mr. Highley, welcome.
STATEMENT OF DUANE HIGHLEY, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, ELECTRIC COOPERATIVES OF ARKANSAS
Mr. Highley. Good morning.
Chairman Murkowski, Ranking Member Cantwell and all members
of the Committee, thank you for inviting me to testify today. I
serve as President and CEO of Arkansas Electric Cooperative, a
non-profit, power supply system which serves 17 retail
distribution systems, who in turn, serve about one million
Arkansans. And I report to a democratically-elected board
representing the customers that we serve.
The Electric Cooperatives of Arkansas are members of the
National Rural Electric Cooperative Association, NRECA, which
is a service organization of over 900, not-for-profit electric
utilities serving 42 million Americans in 47 states.
Collectively electric cooperatives account for 11 percent of
all electric energy served in the United States that serve
about 75 percent of the land mass of the United States in
selling that 11 percent of the electric energy.
Electric cooperatives are governed by our member owners,
and we reflect the values of our membership. I answer to our
owners to justify every expense. Our mission is to keep their
power reliable and affordable and to do that in a way that's
responsible to the environment and the communities we serve
because we reflect their values of stewardship for the land.
Today I'd like to offer testimony on behalf of Arkansas
Electric Cooperatives and NRECA focusing on two bills.
First, Senate 1068 titled CyberSecurity Emergency
Authority. We agree that when the Government has knowledge of
an imminent threat to the bulk power system the Secretary of
Energy should have authority to order action to avert or
mitigate. I serve as co-chair of the Electric Subsector
Coordinating Council which serves as the principle policy
liaison between leadership and industry and our Government
counterparts at DOE, DHS, FERC, FBI and others. NRECA agrees
with your proposal for the Government to engage with the ESCC
and the owners and operators of the system to the extent
possible prior to taking action. By working together and
sharing threat information we have been able to improve
reliability and resiliency of the grid. We believe that the
cost recovery provision of S. 1068 is unnecessary and
duplicates current provisions of the Federal Power Act, namely
Sections 205 and 206 of the act which allows FERC to determine
just and reasonable rates.
While we do not oppose those that use cost-based rates
having the ability to recover costs for their actions that
might be taken under this bill, we do not support those that
use market-based rates to have the same ability. Market-based
entities recover higher revenues during periods of scarcity
while cost-based entities do not. Those entities that chose to
pursue higher market-based revenues also agreed to bear the
many risks that go along with that decision.
Moving to Senate 1221 titled Bulk Power System Reliability
Impact Statement. I'm glad to see this bill requiring Federal
agencies to effectively look before they leap and reach out to
experts for feedback on proposed regulations. The electric grid
is the most complex machine created by man, and it has taken
decades to develop the levels of reliability and affordability
that we now take for granted.
This bill requires experts on the operation of the bulk
power system to provide feedback on proposed Federal
regulations that may impact reliability and affordability. As
currently written this bill proposes to use reliability
coordinators under the Electric Reliability Organization to
create the required reliability impact Statements. However, it
would be more appropriate to conduct those reports within NERC,
the North American Electric Reliability Corporation.
In 2007, FERC approved mandatory national reliability
standards for administration by NERC. NERC has the subject
matter experts on staff with an overview of the entire North
American power supply system, and they have created the
standard setting system and independent governance and
established process for stakeholder input across all sectors
which makes NERC uniquely qualified to analyze reliability
impacts and issue reports such as their seasonal, annual and
long term reports or their special assessment of the clean
power plan. We welcome collaboration with NERC to inform
agencies of the impact of their proposed regulations.
I'd like to add a comment on the Department of Energy
emergency orders. In some instances to protect reliability DOE
must issue a must run emergency order to a generator. This
requires the generator to run even though it may not be
economic for it to run. Many cooperatives are not subject to
FERC jurisdiction under Section 202 of the Federal Power Act.
However, they comply voluntarily with these emergency orders to
preserve grid reliability. In some instances complying with a
``must run'' order may cause a generator to violate
environmental laws or regulations resulting in exposure to
third-party lawsuits or agency penalties.
S. 1222, the Continuity of Electric Capacity Resources Act,
contemplates establishing liability protection for these
actions. We would like to work with the Committee to ensure
that both voluntary and mandatory compliance with an emergency
order is protected.
Thank you for inviting me to testify.
[The prepared statement of Mr. Highley follows:]
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The Chairman. Thank you, Mr. Highley.
Mr. Mills, welcome to the Committee.
STATEMENT OF MARK MILLS, SENIOR FELLOW, MANHATTAN INSTITUTE
Mr. Mills. Thank you, Madam Chairman, and thank you for the
invitation to testify before you and your Committee. And I,
like all the panel members here, commend the Promethean effort
to take on so much legislation.
I'd like to reinforce the comments you made in your opening
remarks about the fact that so much of what we're dealing with
is outdated and give some context to four classes of
legislation that are being considered specifically the
regulation of the oil and gas industry, particularly the shale
oil and gas industry, the regulation to control and constraint
on exports, the importance of grid reliability and cyber
security as they are interrelated and also the vital importance
of long term R and D.
The fact is that it would make as much sense as a context
for Congress in 1985 when the Energy Policy and Conservation
Act was amended, it would have made as much sense for Congress
today to think and stay mired in the facts that they had in
1985 as it would have been for Congress in 1985 to forge
legislation based on the facts of 1955 which, of course, would
make no sense.
Let me highlight how profound the changes are in the
landscape that we're dealing with. I mean, it's unremarkable to
note how much the non-energy landscape has changed in the last
30 years.
Thirty years ago President Reagan has just begun his second
term as President. The Soviet Union was still extant. The
Internet was still almost a decade in the future and Apple was
a small public company. It was only four years old, and the
word cyberspace had just been invented the year before by a
science fiction writer. So the words cyber security were not
even in the political lexicon.
We have changed the law to policies that have evolved from
these profound alterations in the landscape of the economy and
technology of America, but it's remarkable how little policies
have changed on the energy domains despite profound changes in
the energy landscape.
My fellow panelists have outlined and you, Chairman
Murkowski and the members, all know how much the United States
has changed its energy landscape. I think we still fail to
fully appreciate how different the world really is.
It's not just that the United States is no longer the
world's largest, fastest-growing energy consumer. We don't even
talk in terms of, which we did in 1985, peak oil and the idea
of the imminent end of the very availability of oil and gas. We
now have debates about whether we should export oil and gas.
That, by itself, illustrates how profound the change has been
in the energy landscape.
Let me add one other feature of the energy landscape that
typically gets ignored. Thirty years ago the information part
of our economy was very small. In today's GDP the information
part of our economy, that's everything from data centers to
digital movies to manufacturing software and microprocessors,
that part of our economy now is 300 percent bigger than the
transportation part of our GDP. This is a profound change. It's
the part of our economy that's utterly and totally dependent on
electricity. This makes the grid reliability and the inherent
stability and affordability of electricity more important today
than any time in history.
So in general we live in a world that has, compared to 1985
when we forged, sort of, the anchoring legislation that we deal
with today, there's two billion more people in the world. The
world's economy is about $30 trillion bigger than then, and we
consume 30 million more barrels of oil per day than we did in
1985.
Let me summarize, sort of, very quickly four implications
of this profoundly different landscape.
The first, of course, relates to the psychology of
legislation that was anchored in ideas of dependency and oil
disappearing. We now no longer have to think in those terms. We
can now begin to think in terms of influence. We should be
forging policies with respect to oil and gas in how we can
influence the world in positive ways, and this has direct
relevance to legislation that inhibits or bans the export of
natural gas and hydrocarbons.
Second, the issue of grid reliability, I think, is of utter
and critical importance, particularly not just because the
United States is more electrified than it's ever been in
history, but also because of the integration of information
technologies, the internet of things and the very foundational
merging of the cyber infrastructure with our energy
infrastructure. I would say that cyber security on the grid is
a profoundly and critical social issue.
Lastly, I would like to reinforce Mr. Augustine's
observations about the vital importance of basic research. I am
a big fan, like Mr. Augustine, of the increase of Federal
support for basic research. I am also am not a fan of increased
involvement of the Federal Government in industrial projects.
In fact, I would suggest and like to reinforce the critical
importance of basic research and having the Government step in
where the private sector does not want to and cannot in many
cases. And I believe we could find the money by simply
reallocating the Government spending of money on capital
projects that are better left to the private sector and
spending the money at both the national labs and in
universities on basic research.
With that, I'll end my remarks, and I thank you very much
for the opportunity to testify.
[The prepared statement of Mr. Mills follows:]
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The Chairman. Thank you, Mr. Mills. I appreciate your
comments at the end, because in my view you have summarized
exactly why this Committee needs to take on this Promethean
task, as you have described it. I think we forget just working
in the day-to-day how outdated our policies are in the energy
sector. While this is a big task for us to do a larger, broader
bill that is more all encompassing, the reason it needs to
happen is because it is so outdated.
As outdated as it is to us, it is the policymakers who are
holding back the opportunities--whether it is for job creation
that Ms. Harbert talks about or whether it is our opportunities
to influence around the globe. We need to be the one to take up
the heavy burden and the work and make it happen, so I
appreciate your very articulate summary.
I am going to start with you because you mentioned the
opportunities within a changing policy to make sure that we are
moving forward with the research and development that will lead
to the infrastructure and the technologies of the future. Is
there a linkage between allowing exports whether oil or gas or
both and sending the right signals to build new infrastructure,
to get that moving? Because a big part of what we are dealing
with is how do you then translate that into the financing, like
loan programs, or is there a linkage there between oil exports,
gas exports and advancing infrastructure?
Mr. Mills. Well the short answer, Madam Chairman, is of
course there is. The production of oil and gas is
geographically specific, of course, but the infrastructure
needed to transport and move oil and gas to global markets
covers many more of the states of the Union and the access to
the global markets for a product will profoundly stimulate
long-term and short-term investment.
I think that if the United States took the posture of
saying to the world that we are reorienting our foundational
energy policy toward selling to the world, not being insular,
not becoming independent, but becoming a player on the world
stage, this would stimulate profound reactions in the private
sector. And if we did not constrain the private market's
ability to invest based on market access to buyers around the
world, we would see incredible increase in the building of
pipelines and ports.
Obviously all the regular regulations pertaining to how you
can build these from an environmental perspective would
pertain, but those are not constraints compared to the banning
of the ability of the private market to function and invest
capital to sell to world markets.
The Chairman. I appreciate that.
Ms. Harbert, it has been suggested to me that the reason
that I would support lifting the oil export ban is because I
come from a producing state, and I think many forget that
actually there is an exemption that currently allows Alaska to
export our oil. In fact earlier in the month of May we moved
about 975,000 barrels to South Korea. So that is not
necessarily my pitch. I think it is because, I know it is
because this is an outdated policy that needs to be revamped.
Can you give me your assessment as to why lifting the oil
export ban actually helps those states that do not produce oil?
What is the benefit to them?
Ms. Harbert. Sure. I mean, if we lift this oil export ban
it does allow all 48 states to be in the business. If you are a
producing state, you benefit in one way. But 30 percent of
these jobs, the 400,000 jobs that I mentioned, are in the
supply chain and that does not mean that they are located in
Texas or Oklahoma. In fact, the state that has the most to gain
from this is the State of Illinois because they will be
resident to more of supply and service industry to servicing
the export industry. So it truly means that every state has an
equity in getting this done and benefiting from the jobs, the
revenue and the investments.
You know, as long as we can export and we keep energy
affordable here at home it has a secondary effect as well as
more people invest here because we have affordable energy. And
the Gulf of Mexico is a huge beneficiary of that as well.
The Chairman. I am going to reserve other questions for the
next round because I have a lot to talk about, but I know that
we have good participation amongst our colleagues here this
morning. We are going to skip Senator Cantwell until she comes
back and go to Senator Franken.
Senator Franken. Thank you, Madam Chair.
Mr. Augustine, welcome back. Your testimony emphasizes the
critical role for the Federal Government in energy research.
You note the important role played in your testimony in hydro-
fracking technology, and I think the history of the Federal
Government's involvement in hydro-fracking is very telling.
The Eastern Gas Shales Project was an initiative that the
Federal Government began back in 1976 before hydro-fracking was
even a mature industry. That initiative included dozens of
pilot demonstration projects for test drilling and fracturing
methods. This was instrumental in the development of the
commercial extraction of natural gas from shale which
previously that had just been not economically feasible.
Another tool that is used in fracking, micro seismic
imaging, was originally developed by the Sandia National
Laboratory in New Mexico, a Federal energy laboratory.
Thank you for emphasizing it and having emphasized it the
last time you testified. It is why it is so important that we
invest in game-changing technologies including energy storage
which will allow us to incorporate more renewables. It will
give utility customers more control over their energy use. It
will help them keep the lights on in case of a grid outage.
I have introduced the Advancing Grid Storage Act which will
dedicate R and D funding so our scientists and engineers can
have the resources they need to innovate and bring down the
costs of these technologies. My bill also provides technical
assistance and loans to those who want to deploy energy storage
systems.
Mr. Augustine, can you give us some of your recommendations
as to what this Committee can do to support the development and
deployment of more reliable, efficient and cost effective
energy technologies including those, things like energy
storage?
Mr. Augustine. Senator, thank you for the question.
I would certainly go back and cite the very points you make
where the Federal Government has and can and should, in my
view, support the early phase research that is high risk such
as was done in hydraulic fracking the companies just didn't do.
And so the Federal Government, I think, deserves a great deal
of credit for taking on those kinds of tasks.
When it comes to energy storage I could think of very few
areas where a breakthrough would be more significant than in
energy storage. Energy storage limits us today in terms of the
efficiency of the grid, automotive electrification, even mobile
pocket devices. Energy storage is really on a critical path,
and the gains we've made have been disappointing to be very
candid. Disappointing in part because it's a tough problem in
chemistry and physics. Disappointing in part because we just
haven't invested in that area. So I think the first thing we
need to do is to increase our investment.
Secondly, we need to have much better connections between
the research labs, the government labs and industry where
candidly we don't do a good job today.
Senator Franken. Thank you.
Mr. Orr, can you talk about how research at our national
labs has contributed to the development of advanced energy
storage systems?
Dr. Orr. Senator, thanks for that question.
It's an opportunity for me to point out that we have quite
a lot going on in the energy storage area. Perhaps the most
visible is the Joint Center for Energy Storage Research at
Argonne Lab. It's a collaboration of both university and lab
folks working on the chemistries that are beyond lithium ions
to make batteries have higher energy density and good power
delivery and lower weight and addressing the kinds of safety
problems. So it's a big center, one of our energy hubs.
We have a variety of energy frontier research centers.
These are funded out of the Office of Science, and they really
focus on the fundamentals of chemistry, electro chemistry, in
particular, nano structure materials, understanding the
fundamentals of material properties that will go into making
better batteries. So providing the underpinning there. On the
applied side we have work in our Vehicle Technology Office that
works on batteries for applications in vehicles, and then we
have quite a lot of work in our Office of Electricity that's
aimed at the grid storage kinds of settings.
What's so interesting about the energy storage area is that
it applies on a variety of scales from the cell phone up to the
grid, on a variety of time scales from the short term
variations from a wind turbine to the day/night variations or
even to the winter/summer kinds of variations. And it can be a
very important contributor to a stable grid in operating with
lots of intermittent distributed generation in the future.
Senator Franken. Thank you.
Madam Chair, I am very cognizant I am through my time, but
I just want to emphasize that if you think about what a game
changer fracking has been and how much of that came out of the
Federal Government research and know what a game changer
storage is going to be that we would be really negligent if we
did not invest in storage.
Thank you.
The Chairman. Who would have thought storage could be so
exciting? It really is.
Senator Franken. You want to know how excited I am?
The Chairman. I can hear it in your voice.
Senator Franken. Oh, thank you. [Laughter.] Because
otherwise I was going to take up more time. [Laughter.]
The Chairman. Senator Gardner?
Senator Gardner. We can see the excitement too, just so you
know, we can see it.
Senator Franken. For those listening on the radio.
[Laughter.]
Senator Gardner. Thank you, Madam Chair, for hosting this
hearing today and thanks to the witnesses for your time today.
I wanted to follow up, Mr. Augustine, a little bit with one
of your comments in response to a question and talking about
working with the private sector, research development.
Senator Alexander and I and others on this Committee and
beyond are working on reauthorization of the America Competes
legislation. His focus, of course, is on energy. In Colorado we
are very proud of the work at the National Renewable Energy
Laboratory is pursuing and undertaking.
The legislation, though, that represents his efforts on
energy represent the legislation that we will be moving through
the Commerce Committee, through NIST and NASA and other
programs on research and development that will drive the energy
sector, that will drive economic opportunity, that will drive
this real, new invigoration of research across this country.
Could you talk about what would happen if we fail to
reauthorize some of these major research and development type
of programs? What would happen at DOE? What it would mean for
the future of this country, energy future, and what it would
mean domestically and globally?
Mr. Augustine. Well the impact would be immense, and you
mentioned Senator Alexander's contribution. It was he who
really caused the Gathering Storm study to be established that
led to the creation of ARPA-E and much of the research that's
being funded in DOE today.
When one looks at the impact of not continuing this kind of
support currently the impact on the economy, on jobs, is
currently immense, and the impact on national security. The
fact that we no longer are so dependent upon a cartel of
nations for much of our energy.
In fact, geopolitically most of the traffic through the
Hormuz Straits are going to go from West to East now, rather
than East to West which places a whole different view on the
national security implications.
So I think everything from jobs, to the broad economy, to,
of course, the provision of energy itself on the natural
environment. These are all considerations that your question
impacts profoundly.
Senator Gardner. Thank you.
Mr. Orr, I do not know if you would like to add to that at
all?
Dr. Orr. I would just endorse everything that Mr. Augustine
said that our ability to deliver scientific research is well
supported in the Senate version of the America Competes Act,
and we are certain that we can put to work in a good way the
additional support for science. That underpins everything. And
the innovative approach that ARPA-E has brought to challenging
ourselves to do, to think of out of the box ways to solve game
changing energy problems. Those are all things that can
contribute in a very big way to the future of the country.
Senator Gardner. Thank you. Ms. Harbert, a question for
you.
Colorado is in the leading edge of regulations when it
comes to oil and gas development. It continues to make sure
that we are responsibly enacting policies to protect the
environment while also allowing our economy to thrive with the
production of abundant and affordable energy.
Last week we had the EPA's Draft Report that confirmed
hydraulic fracturing has not impacted our drinking water
resources. We also have a BLM rule that is moving forward, and
we had the BLM testifying before this Committee. They could not
cite a single incident that led to the BLM rule even though we
have states like Colorado that are putting their, kind of,
stringent regulations forward.
We talked a little bit about the variance process before
this Committee. It is important to Colorado since that is the
mechanism the BLM is going to choose to address duplication in
a state like Colorado where efforts are being undertaken by the
state as well as the BLM to regulate hydraulic fracturing.
About 3 weeks ago, I understand, Colorado had its first
meeting with the BLM to discuss the memorandum of understanding
and the variance process. What we have been told is that BLM is
still waiting for guidance and a template to the variance
request from Washington and then there is little chance that
the state could have a variance in place by June 24th when the
BLM regulations are going to go into effect.
What does this mean for industry and production and during
this variance request processing, that period as we wait for
Washington's guidance and the ultimate approval variance?
Ms. Harbert. Well, thank you, Senator Gardner for that
question, and let me say that states have been leading on this
effort and you have some of the best environmental permitting
regulations in the country in Colorado. And there are some of
your neighbors who do as well. And we should recognize that.
The Federal process by BLM's own statistics is not as good
as yours. So adding an inferior process on top of a superior
process doesn't sound like good policy or good regulation. In
talking with BLM and looking at their regulatory process and
looking at the actual regulation, we entered into the record
the fundamental question of why do we need this? They were
supposed to actually answer that in the final regulation, and
they did not.
So it is clear that this is ultimately going to end up at
the courts because they have not justified why this process is
needed. And in the interim they're going to leave states like
Colorado and investors in limbo not knowing what rules to
follow which is not good for Coloradans. It's not good for the
industry, and it's not good for continued production. So
they're introducing a whole other level of uncertainty that is
needless and unjustified.
Senator Gardner. Thank you, Madam Chair.
The Chairman. Thank you, Senator Gardner.
Senator Heinrich?
Senator Heinrich. Thank you, Madam Chair for holding this
hearing, and I certainly look forward to working with you and
my colleagues on crafting bipartisan energy legislation.
I had thought I would take a couple of minutes to speak
briefly about a few of the bills on today's agenda that I hope
to see, hope will have broad support, and I think should be
considered by the Committee.
The first is S. 1407, the Public Land Renewable Energy
Development Act sponsored by Senators Heller, Tester, Risch,
and myself. This bill would direct the BLM to identify areas
that are ideal for wind and solar development, places with a
high potential for development and low conflicts, with
sensitive wildlife habitat, water resources and other land
uses. It directs the revenues from the royalties on renewable
energy projects to permit processing costs, habitat projects
and to the states and counties where these solar and wind
projects would be located. The bill has a very long history of
bipartisan support, and I certainly thank the Committee for
including it on the agenda.
The second bill is S. 1434 which promotes the development
of energy storage, something that I am the primary sponsor of
and I have been working with Senator King on as a co-sponsor.
We have heard a lot about energy storage today, but it is a
rapidly developing field with the potential to really
dramatically impact the operation of both intermittent and
conventional power generation as well as the way that the
transmission system and even local distribution are managed. I
think as the cost of storage has declined we are going to
continue to see the deployment on both sides of the meter, grow
increasingly rapidly. I know a number of my colleagues share my
interest in storage, and there are several related bills on
today's agenda. My hope would be that the Committee will
include a very strong storage provision that promotes the large
scale development of this important technology.
S. 1422, the Energy Workforce for the 21st Century Act, is
a bill that I introduced with Senator Booker. The bill is a
companion to the bipartisan effort led by Congressman Bobby
Rush in the House. In addition to expected base line growth in
employment, nearly half of skilled technicians, utility line
workers and engineers in the energy industry may retire and
need to be replaced in the next ten years due to the aging out
of the workforce. Now these two factors will open the door to
millions of future well paying STEM jobs. S. 1422 directs DOE
to establish a program to improve education and training for
energy workers, and the bill is aimed at aligning future energy
workforce needs and increasing the participation of women and
minorities throughout the energy sector.
I think I would like to turn now to DOE's national
laboratories and specifically to technology transfer. An issue
that is particularly important to my state but touches many of
our colleague's states as well. I am pleased that Mr. Augustine
from the Bipartisan Policy Center is here as a witness today.
He certainly has very broad experience in both the public and
private sectors and interest in innovative technologies. I
think my colleagues know he is currently a member of the
Commission to review the effectiveness of all of DOE's national
labs. One of the topics the Commission is considering is tech
transfer and partnering with industry as one important part of
the overall mission of the national labs, and I think I will
end with a question.
Mr. Augustine, I know your Commission's work is not
complete, but I would love to hear your perspective on what you
view as some of the challenges that you cited in your testimony
and some of your conversation related to commercializing
innovative technologies and the difficulties that small
businesses have in particular with engaging with the national
labs on those issues?
Mr. Augustine. First of all let me comment on how important
this is because we invest, I think, something like $15 billion
in the national labs every year some to carry out basic
missions, but others to support things that would have to be
implemented in industry. So what we get out of that $15 billion
or a share of it depends on how well we translate new knowledge
into the business community.
There are many inhibitors today to answer your question
that particularly affect small business. Small business, by and
large, doesn't have the resources to know what's going on at 17
different national labs. And it's partly, I think, the burden
of the labs to help those small businesses know what's going on
at the labs. Second, the process of setting up joint efforts
between business and the labs is very bureaucratic. I talk to
people in small businesses who just throw up their hands and
say, we give up. It is just too hard. We'll try it by
ourselves. Then there are just broader matters that have to
deal with both big companies and small companies. The best way
to translate knowledge, technology, in my experience, has been
to move people back and forth in and out of the government,
into universities, into the labs. And well meaning conflict of
interest laws today make it extremely difficult to do that. So
those are just a few of the examples that I would cite.
Senator Heinrich. Thank you, Madam Chair.
The Chairman. Thank you.
Senator Cassidy?
Senator Cassidy. Thank you, Madam Chair.
Let me first speak to Senate bill 1181, the Energy
Technologies Access and Accountability Act, which I am
introducing and which is somewhat similar to Senator Stabenow's
Senate bill 1449 which modifies the definition of a vehicle
under the Advanced Technology Vehicle Manufacturing Program
(ATVMP) to include commercial trucks in the case of both our
bills and in the case of mine, United States flag vessels.
Now this allows, obviously, energy transportation to be
converted to natural gas. It is my understanding that until
March of this year the ATVMP had not issued a new loan for four
years, and many have begun to question the usefulness of the
program. This bill would modify the program to include
commercial trucking and maritime vessel manufacturing where
investment in new fuel type vehicles are needed the most and
where the technology and implementation of these vehicles
stands ready.
As one example, here is the New York Times article about
EPA requiring 18-wheelers to run more fuel efficiently.
Obviously natural gas would be a more fuel efficient way, so
this is a meeting of a lot of factors that could really jump
start.
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So with that kind of statement, Mr. Orr, the program has
not issued any new loans in four years. Under its current
parameters is there enough interest to completely disperse the
remaining $16 billion in loan authority?
Dr. Orr. Thanks, Senator, for that question.
You know that we did issue a loan associated with aluminum
sheet, high strength, low weight aluminum for vehicle
applications this year. The loan program's office is actually
not in my part of DOE, but and I'm sort of--so I'm a bit of an
external watcher. I don't have a window on the projects that
are in review now, but I'd be happy to look into that and work
with your office.
Senator Cassidy. Now do you feel qualified to comment if
there is potential for the trucking industry and the maritime
industry if more loans were made available? Is there potential
for us to help them jump start, moving to a more fuel efficient
standard or type of engine and would this loan program be
beneficial in that regard?
Dr. Orr. So I'd say in a variety of ways vehicle efficiency
for trucks is actually a quite important area.
We do have a super truck, one program, in our Vehicle
Technologies Office aimed at increasing fuel efficiency by 50
percent in trucks. And in fact the work that was done under
that program actually exceeded the goal by quite a bit. There
was one manufacturer that got to 115 percent. So that's kind of
a doubling from five to ten miles per gallon in a big truck,
and we're just embarking now on a super truck two program that
will enhance that further.
Senator Cassidy. You get more BTU per carbon from natural
gas than you do from oil or diesel or from oil, so it sounds
like you think there is still upside in terms of how we can
improve the efficiencies of these vehicles.
Dr. Orr. I do. Yes, I do.
Thank you.
Senator Cassidy. And is there potential? Of course, I have
a bias, but do you agree that if these loan programs are made
available it would facilitate the development of these higher
standards?
Dr. Orr. I think the loan programs can contribute. Those
tend to come a bit at the later stage after the research part
of it is farther along.
Senator Cassidy. Natural gas engines are actually somewhat
developed. I mean, the city buses in DC, I think, work on
compressed or on liquefied natural gas.
Dr. Orr. There are plenty that work on compressed natural
gas. Frequently that's done for air quality kinds of reasons.
The overall efficiencies in the engines are roughly the same,
but there's an opportunity for both research and then, of
course, the deployment side as well.
Senator Cassidy. I see.
Finally, what has the DOE been doing to create the
infrastructure because when you speak about other countries
having compressed natural gas vehicles and also having an
infrastructure to fill up the tank whereas we do not, is DOE
doing anything to facilitate that infrastructure development?
Dr. Orr. There has been work that has gone into, mostly
it's been in, kind of, fleet applications, again, largely for
air quality reasons. And to be honest, I'm not sure how much
we're doing in that area right now. But I can certainly follow
up with your staff.
Senator Cassidy. Okay, thank you, I yield back.
The Chairman. Senator Cantwell?
Senator Chairman. Thank you, Madam Chair.
Mr. Orr and Ms. McAleer, if I could continue.
Mr. Orr, I mentioned both cyber security and this issue of
carbon fiber. Obviously carbon fiber is very important from an
energy perspective because it is a lighter weight material, so
both the auto and aero industries are scoring big victories in
the marketplace by utilizing carbon fiber.
So the question becomes what else can DOE do to help with
research and development and how to transition this material
into other uses? What other opportunities are available? How
big is that opportunity?
On cyber security, obviously, this past week's events are
very jarring. I think DOE's role is somewhat underplayed, and I
believe DOE has a major role in helping us.
In 2011, we had the Grid Cybersecurity Act before this
Committee. We actually reported it out of Committee a couple
years ago, but it did not pass the full Senate. The bill's
focus was on hardening our grid and making sure that we are
doing everything to protect our nation's energy infrastructure.
So on those research and development issues what do you think
we need to do?
Dr. Orr. Well certainly the idea of light weighting and
carbon fiber materials is a very important component of our
Vehicle Technologies Office. One of the principle ways you can
increase the efficiency of vehicle transport is to provide the
same strength but with a lighter weight materials. So we have
an active program in that area, and we're very interested in
pursuing it going forward.
On the cyber security area, we take our responsibility in
this area quite seriously. And it goes well beyond the grid,
but it certainly is very important for the grid. You might be
aware that in the last few years at the Department we have put
together a series of cross cutting research efforts that are
meant to attack big, hard problems with all the expertise that
we have available within the agency--one of those is the cyber
security area.
So we are very much interested in fulfilling our
responsibility there. This is an area where the national labs
really have very deep and appropriate expertise for us to apply
to a problem of national interest.
Senator Chairman. Do we have that appropriately funded?
Dr. Orr. Well, we have requested quite significant support
for our cyber security effort in the FY'16 budget, and we're
looking forward to pursuing it with all the strength we can.
Senator Chairman. Okay, thank you.
Ms. McAleer, your challenge is looking at the scalability,
right? What are some of the R and D issues for scaling up the
industry to make it more economic?
Ms. McAleer. Yes, Senator Cantwell.
We have found that working first and foremost with carbon
fiber prepared materials is the low hanging fruit, and we can
move forward in accepting those materials and then creating
products. However, the end of life issues with carbon fiber
products is much more complex. But even just working with the
carbon fiber pre-impregnated material scraps is a challenge in
that it comes in all sorts of different formats, sometimes it's
in a pristine format and other times it's a wad of waste.
And so in order to really fulfill the full potential of
this very valuable, high value material, we need to educate the
manufacturers so that when they create their manufacturing
floor spaces that they will also consider how do they take
advantage of the scrap material that they're creating so that
it can be put into a more productive use.
Senator Cantwell. Well it is amazing that we have to sit
here. I mean, we really are ushering in a new era of carbon
fiber just as we speak, and there are so many applications for
this material, everything from bridges to aerospace.
At the same time we really do need to usher in this era of
recycling research, because we know it is going to be a highly
used material. Figuring out how to increase the value of carbon
fiber by recycling is critical. My understanding of the process
is heating up the material then allows us to reuse it in other
ways, so I certainly hope we can get some answers from DOE on
this.
Thank you.
Ms. McAleer. Thank you.
The Chairman. Senator Alexander?
Senator Alexander. Thanks, Madam Chairman.
I want to congratulate Chairman Murkowski on her effort to
incorporate such a wide range of legislation in the bill and
thank her for this hearing.
I also would like to point out the leadership of Senator
Gardner who is a newer member of the Senate, but who is taking
an active interest in America Competes along with Senators
Murkowski, Cantwell, Coons, Feinstein, Heinrich and me. We are
all very interested in that legislation, and I want to talk
about that in just a minute.
Mr. Augustine, Senator Murkowski has in her bill, I
believe, because I am co-sponsoring it, a provision that says
the Congress should wait until after the Commission on national
labs has finished its work and then the Department should make
a report to us about what it recommends we do. Do you think it
is a wise idea to wait until after the Commission has completed
its report before we take any action to reform the
laboratories?
Mr. Augustine. Senator, I think that there are some things
that one would not need to wait to do that are fairly evident,
so I would not make a blanket statement that one ought to wait
on everything. But I do think that our Commission is putting
forth a great deal of effort. We visited all the labs. We're
very near to completing our work, so I think for many of the
issues it probably is worth waiting that brief period of time.
Senator Alexander. Yes. I have seen how valuable the work
you did was on America Competes years ago, and you basically
gave us a plan that was recommended by a number of reputable
people. It was a big help to Democrats and Republicans here
because we could follow your blueprints.
I, for one, think what we should do is wait until we see
your report, and then I look forward to working with Senator
Murkowski and Senator Cantwell and others to deal with that.
Dr. Orr, Senator Bingaman sent me to Japan when I was a new
Senator to take a look at Japan's computer. I flew all the way
to Yokohama and did that, but there was not much to see, just a
big box. But it got me involved in exascale computing, and ever
since one area of agreement between the Congress and the
Administration has been the priority on exascale computers. Now
we have some big computers already today. What can we do with
exascale computing that we cannot do with computers that we
have today and why is it important that we fund them properly?
Dr. Orr. Senator Alexander, that's a question that we've
thought a lot about and one that, I think, is very important.
We certainly appreciate all your leadership over the years in
helping us maintain the United States' lead in high performance
computing.
The Department of Energy has really contributed a lot at
various stages when we really needed an advance in
capabilities. The ability to replace weapons testing with very
high performance computing really led to an advance in
computing capability, but then that spread across the entire
scientific base.
The exascale computing initiative is the next version of
that. It will let us simulate the properties, the materials, to
do materials by design, to do processes at very detailed
scientific scales in a way that we can't do now because the
problems are too hard. They're important for the detectors in
all the basic science facilities. It's really important across
the whole fundamental scientific base.
So we're, as you know, investing in the next round toward
exascale. I just had a chance to participate in the
announcement about the CORAL computing effort that involves Oak
Ridge and Argonne. We're well on the way, and if we have the
support we will maintain U.S. leadership. If we don't do that,
then the competing work in China and elsewhere will take over
the lead.
Senator Alexander. Thank you.
I want to use my last 20 seconds simply to once again
congratulate Mr. Augustine and his team for keeping our eye on
the ball about the importance of energy research that Senator
Franken mentioned.
The American Association for the Advancement of Sciences
recommended a four percent increase each year on the route
toward doubling energy research. Now that is over 20 years, but
at least it does double it over that period of time.
The legislation by Senators Murkowski, Cantwell, Gardner,
Coons, Feinstein, Heinrich and I would authorize that. I want
us to think back ten years ago what we had, I think, nearly 35
Republicans and 35 Democrats and legislation that was
introduced by the Majority Leader and the Minority Leader to
begin America Competes.
I am delighted with that kind of leadership from the
Chairman and the Ranking Member of our Committee and all of the
effort by the other Senators, and I am glad to see that you are
still chugging along and urging us to do what we ought to do
about energy research.
Thank you, Madam Chairman.
The Chairman. Thank you, Senator Alexander.
Senator Stabenow?
Senator Stabenow. Thank you, Madam Chair, to you and our
Ranking Member. We have a lot of great opportunities, I think,
working together on this. I want to echo Senator Alexander and
what so many of you have said about energy research. It needs
to be a top, top priority.
Mr. Augustine, thank you and thanks to all of you on the
Committee and Mr. Orr as well.
There are two bills I would like to bring to the
Committee's attention, one specifically on research and one
that would focus on how we take what we learn through research
and actually apply it which is really important in terms of
leveraging jobs and manufacturing in America.
One is the Building Better Trucks Act, S. 1449. I was just
outside the Committee room plotting and planning with Senator
Cassidy on how we might bring together his bill and mine that
are very similar in terms of expanding the opportunity to focus
the advanced vehicle loan program on medium and heavy duty
trucks where we know the energy efficiency is and real
opportunities there for jobs as well. Then also S. 1408 which
is a bill that I have put forward a number of times that has
actually come out of the Committee in the past and is now being
introduced by my colleague, Senator Peters, from Michigan
joined by Senator Alexander and myself, that deals with
research.
Before proceeding I would like to ask that a letter that we
will be delivering be put in the record, Madam Chair, Ranking
Member, from the Motor and Equipment Manufacturers Association
supporting both these bills.
Senator Cantwell [presiding]: Without objection.
Senator Stabenow. Thank you.
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Senator Stabenow. The Building Better Trucks Act would
basically build on what we did in 2007. Under the previous
Administration I authored what has been now dubbed the ATVM
Program that would create opportunities for loans to upgrade,
expand and create manufacturing in the United States for
advanced fuel efficiency vehicles. It was important as we were
increasing CAF standards to make sure that the building of
those new vehicles was in the United States, not overseas. In
fact, we have brought jobs back to the United States as a
result of that program. So the question is now as we go forward
and look at the need to do the same, not just for small
vehicles, but medium and heavy duty vehicles, how do we take
that same approach for trucks?
The Building Better Trucks Act would do two things. It
would allow manufacturers of medium and heavy duty vehicles and
their components to qualify for loans. As we know right now
trucks on the roads account for seven percent of vehicle
traffic and they consume 25 percent of our fuel. So when we can
tackle energy efficiency around larger vehicles that is a very
smart thing to do on a lot of different fronts. The second
thing is we would clarify that suppliers can also qualify for
the program. As has been said already by members of the panel,
we have a situation where there are actually more jobs in the
supply chain than in actual assembly whether it is automobiles,
trucks, or any other kind of manufacturing capacity. It is the
supply chain, and we want to make sure that we are supporting
the supply chain as well. We have 700,000 people nationwide,
everywhere from Michigan, Ohio, Indiana, Tennessee, Kentucky,
Texas, Alabama, South Carolina, Georgia, all over the country,
working as a result of focusing on the supply chain.
Madam Chair, in the past the ATVM, I know, including from
myself, has had some criticism that it was not working as well
as it should. I want to thank Secretary Moniz for addressing
those issues. We now have reports that are much, much more
positive from GAO and so on. In fact, the good news is that in
March the Department issued a loan to Alcoa to upgrade and
expand its Tennessee aluminum mill to produce specialized
aluminum used to reduce weight and improve fuel economy in a
number of different cars and trucks including, I have to say,
the Ford F150 truck which they are now taking 700 pounds of
steel out of weight and using aluminum which is very exciting.
The ATVM program is a very important part of that. Madam Chair,
I really want to work with you on this. Senator Cassidy and I
are very interested in working together and working with you on
how we could use this program to expand what we need to do
around large vehicles.
Finally, I would just say that the Vehicle Innovation Act
authorizes R and D efforts through the DOE's Vehicle
Technologies Office and is very much, again, involved and
focused on our medium and heavy duty, commercial trucks, and
how we can come together to support new research and
development on technologies that will have a very big bang for
the buck in terms of efficiency of larger vehicles. It is an
area that really needs to be focused on, and I am looking
forward, Madam Chair, to working with you as we move forward on
the energy bill that will address a lot of different energy
efficiency issues.
Thank you.
The Chairman [presiding]: Thank you, Senator Stabenow.
Senator Daines?
Senator Daines. Thank you, Chairman Murkowski and Ranking
Member Cantwell, and thanks for having this hearing on this
most important piece of legislation.
I certainly support your efforts here on examining a series
of bills that foster a far more robust, all of the above energy
strategy, developing a more diversified portfolio from an
energy viewpoint for the U.S.
In my home State of Montana coal is an important piece of
that energy mix. It powers over half of our electricity. It
generates thousands of jobs. It generates over $100 million a
year in tax revenues that helps our infrastructure, helps fund
our schools, our teachers. Though these are all good paying
jobs, the tax revenue and affordable electricity seemed to be
under threat under this current Administration. I think the
legislation like Senate bill 1221, the Bulk Power System
Reliability Impact Statement Act, is critical to ensure Federal
agencies are accountable for their actions and the impacts that
Federal actions have on affordable electricity reliability.
Moreover I am also glad the Committee is considering Senate
bill 15, offered by Senator Hatch, and the other measures that
prohibit duplicitous and unnecessary Federal regulations on
energy development on Federal lands and allow the states to
lead.
I also commend Senator Murkowski and others on this
Committee for taking the lead and strengthening global
dependence on American made energy by facilitating energy
exports.
I would also like to voice my support for the Public Lands
Renewable Energy Development Act as well. In addition to the
wealth of conventional fuels, Montana has immense potential for
wind, for solar, for biomass, for geothermal energy
development. This bill would facilitate that production while
ensuring a firm partnership between states as well as
supporting conservation.
My first question is for Mr. Highley. Mr. Highley, why is
it important for Federal agencies to look before they leap in
promulgating regulations for the energy sector? It is actually
two questions. That would be the first one. The second is can
you provide some examples of Federal agencies and Federal
actions where the public would have been better served if these
agencies had deliberated on the impact on grid reliability in a
meaningful fashion prior to issuing the regulations?
Mr. Highley. Well, thank you for the question.
And why it's important to look before you leap is because
the electric grid is the most complex machine yet created by
man. It didn't get created overnight. It took decades and
decades to get it built to the level it is.
Every device on the grid has to operate in exact
synchronism with every other device, and changes to that should
not be made lightly. It's possible for a well-meaning
regulatory body to come up with something that sounds like a
great idea but that jeopardizes reliability and the integrity
of the grid. So that's the reason for asking for this expert
level review prior to issuing the regulations.
Now I've seen it on the state level where well-meaning
regulators have had a new idea on how to regulate the grid and
issued regulations that cause us to have to go back and change
the rules. I can't give you a lengthy list, but I'm sure we
could provide you with one to your office.
One that comes to mind currently is the Clean Power Plan
and the impacts that could occur with the rapid loss of
generation in 2020 based on some of the timelines in the
proposed rule. When we see the final rule, if those timelines
are still there, we are greatly concerned about reliability
impacts. Having that feedback from people who know how the grid
works would be very helpful in crafting those kinds of
regulations.
Senator Daines. Thank you, Mr. Highley.
Mr. Mills, there are places like developing countries in
Asia that do not have access to electricity and sources of
energy production generated from Federal and Indian lands like
in my home State of Montana that have the potential to meet
this rising global energy demand. I believe U.S. coal
represents about 12 percent of the world's demand, so 88
percent comes from other sources.
Energy produced from the Powder River Basin coal is cleaner
than other types of coal as well as creating good paying,
American jobs, creating sources of revenue in places where it
is needed most on Indian Reservations. So my question is do you
think it is important that American coal which is developed in
a cleaner and more environmentally sound fashion than other
types of coal be prepared to meet international demands for
energy?
Mr. Mills. Well Senator, that's a terrific question and one
that most people I've encountered don't like the answer to. The
answer is yes, it's critically important.
The world has nearly a billion people who don't have access
to electricity, and they want cheap electricity. There are many
ways to make electricity but the cheapest way, globally, on
average, is using burning coal.
In fact something on the order of 75 percent all the net
increase in electricity supply in the last two decades has come
from coal, and it will continue to come from coal according to
every forecast, the majority of the supply to the world for new
electricity.
The United States has an opportunity to participate in that
market both for economic benefit but, as you say, I think very
correctly, since the world will use coal and will use more of
it, we can provide it in the most environmentally benign and
safe fashion and benefit ourselves and our allies and friends
around the world.
Senator Daines. Thank you, Mr. Mills.
The Chairman. Senator King?
Senator King. Thank you, Madam Chair.
First I want to complement the Vice Chair, how she so
felicitously worked the phrase, ``One of my constituents, Bill
Gates'' into her opening statement. [Laughter.] One of my
constituents, Stephen King, would appreciate the way you did
that. [Laughter.] This hearing has been a valentine to
research. All of us have talked about how important it is and
everything else. I want to point out that the sequester will
hit the research budget of the Department of Energy.
There is a fantasy around here that we are fixing the
sequester by dealing with it in the Defense budget with the
overseas contingency money which is a trick wrapped up in a
gimmick borrowed from future generations of Americans and we do
not need to worry about the sequester otherwise. It is going to
take direct aim at exactly what all of you have said is one of
the crucial priorities of this country. That is not a question.
That is just a statement. But I think some of our colleagues
think, okay, we fixed the sequester because we have got this
gimmick in the Defense bill, but now it is okay everywhere
else.
Well, everywhere else includes the exact programs that we
are talking about today. I think that is an important point for
this Congress to understand that there is a real problem in
national security with leaving the sequester in place. Not only
energy research but little items like the FBI or the border
patrol are also affected by the sequester. So that is just sort
of a general observation.
Mr. Highley, cyber security. We are going to have a serious
cyber attack. The next Pearl Harbor is going to be cyber. Would
not one way to defend against that in your industry be to air
gap your system control, your system control computers, isolate
them physically from the rest of the system? I do not care if
people hack your emails, but I do care if they hack your grid
control. Is that an option? We have got to do something.
Defense is not going to work.
Mr. Highley. In fact, we are already seeing Pearl Harbor,
and we are already under attack in the electric sector. That is
why through NERC we have the mandatory and enforceable
standards for cyber security that are ordered by FERC and
promulgated by NERC, the North American Electric Reliability
Corporation, that we have to adhere to.
We're currently coming into CIP Version 5, Cyber Security
Standards, Version 5, and going to Version 7 we can already see
that coming. It does require us to----
Senator King. But whatever----
Mr. Highley. Have air gaps, as you've discussed for control
systems.
Senator King. But we have Einstein three which was supposed
to protect OPM, and they got hacked last week.
Mr. Highley. Yeah.
Senator King. I do not believe you are ever going to be
able to protect yourself fully by defensive cyber technology.
Mr. Highley. Agreed. We can never be 100 percent protected.
I would say that, so far, we have never seen a loss of electric
service because of a cyber attack. With that said, we practice
defense in depth in the utility industries. So we have
redundancy, redundancy, redundancy, and it's been proven
throughout the years in terms of physical attacks and physical
forces of nature we'll practice that same defense in depth on
the cyber side.
Senator King. Well, I just think that is an area, I mean,
we keep getting these warning shots.
Mr. Highley. Yes.
Senator King. Movie studios, they are all serious, but when
it is the gas pipeline system or the electric grid or the
finance system, how long is it going to take until we
understand the significance?
Mr. Highley. We see it not as a matter of if, but when, and
we want to be in close working relationship with the
Government. I serve as co-chair on the Electric Subsector
Coordinating Council and that's another means we have of
sharing information at the highest level of government on
these----
Senator King. I would point out that if we have greater
distribution of distributed energy, that is customers making
their own energy and interacting with the grid, that in itself
would be a national security plus. You are nodding. Would you
say yes?
Mr. Highley. I agree, yes.
Senator King. Thank you.
Ms. Harbert, quick question. You have testified about the
advantages of exporting oil and how it is going to stimulate
investment. I am honestly a little confused about that because
there is a world price for oil. If the price for oil is the
same everywhere why does exporting, is it the difference
between Brent and WTI? That is about $4 this morning. Is that
what we are talking about here that is going to stimulate all
of this investment? Otherwise, if you sell a commodity for $5
and it is going to be $5 in the future what difference does it
make where you are selling it?
Ms. Harbert. Well, I think it's important to know that, I
mean, obviously when you get back to basic economics, more
supply will bring down the price. And we will see the world oil
market price, not only its increase, but the volatility be
reduced by American supply on the market.
And the infrastructure investment that I'm talking about is
to be able to move all of this natural gas and oil around our
country. We're going to have to build a lot of infrastructure,
and those are good paying jobs. It's good investment, good
property taxes, and good state property taxes.
Senator King. I understand that, but I do not understand
what the incentive is to export oil if you get $62 for it this
morning in Europe and you get $62 in Galveston. What?
Ms. Harbert. Well we want to produce it and we want to sell
it. Right now we're running out of storage and we're running
out of opportunity to sell it here because our refining
capacity is set up to refine the heavy oils that we have been
importing for so long. We're producing the light, sweet stuff
that other refineries around the world are set up to accept.
Senator King. So it is a question of refining capacity and,
in effect, customers here in the U.S.?
Ms. Harbert. And if we aren't allowed to sell that and
people stop producing it has two effects. We will import more
from Venezuela, from other places, and we will see our own
production slow down and prices go up.
Senator King. Fine.
Thank you, Madam Chair.
The Chairman. A perfect segway for me to sell my latest
white paper, ``Rendering Vital Assistance, Allowing Oil
Shipments to U.S. Allies.'' It speaks very directly to some of
the questions that you have raised, Senator King. So I will
make sure all members of the Committee have our latest,
greatest edition.
Senator King. I always try to set up the Chair. [Laughter.]
The Chairman. Thank you. It is so appreciated.
Did you say you are related to Stephen King or was that
just? [Laughter.]
Senator King. I keep saying I am trying to get him to adopt
me. I said I will not even have to change my monogram, but so
far it has not worked. [Laughter.]
The Chairman. Thank you, Senator King.
Deputy Secretary Orr, let me ask you about some of the
financing opportunities, the loan opportunities, through the
Department of Energy.
In Alaska we have several different loan and investment
programs that are designed to help facilitate renewable energy
and energy efficiency programs throughout the state. We have
the Alaska Energy Authority, the Alaska Industrial Development
and Export Authority as well as the Alaska Housing Finance
Corporation, that again, are designed to help build out
renewable energy projects and get so many of our small villages
off of diesel. Many of these projects are really just so very
small that it is difficult to take advantage of DOE's loan
programs.
Has DOE considered whether state entities, like the
financing institutions that I have just named, whether it is
AEA or ADA, could be a recipient of DOE loan guarantees as an
aggregator of qualifying projects? Because right now we just do
not fit. It does not work for us. Is this something that we
could look to, to work with DOE to help better facilitate some
of these programs for smaller communities? It is not just
Alaska, it is other areas as well.
Dr. Orr. Certainly you raise a very good question, Senator,
and that is how we address the needs of isolated communities
whether they're in the far North or on islands or well, you
have some of those as well. So it truly is an important area
and one that we take seriously.
I hasten to point out that I'm not in charge of the Loan
Programs Office, but I understand from them that there's no
prohibition for state or local or tribal entities to
participate in the program. So I believe it would be possible
for the state, for example, to make a proposal to the Loan
Programs Office. How that would get evaluated, I'm not really
sure. But, it, I think, it's not prohibitive.
The Chairman. Well, it might be something that we want to
look at just to make sure that, again, there are no obstacles
built into the law that would prohibit that.
Another area that we are looking at is oftentimes, in order
to be eligible for many of these programs, there is a
distinction between innovative technology and commercial
technology. The commercial technology is different there, but
again, you may have proven technology that works everywhere
else in America but in a remote, isolated, small village, it is
really cutting edge or innovative. I want to look to see if
there are obstacles in the law, particularly in Section 1703,
that perhaps would allow for greater opportunities there for
us.
I want to talk quickly about the regulatory side and what
we have with the overlap between State and Federal. As I
mentioned in my opening comments, I think that this is one area
where we have very good intentions here in the Congress in
terms of putting on regulations or some level of oversight, but
we have not seen how many things we have smothered underneath
it that now, even though we know where we want to go with it,
we are inhibited from doing.
Alaska is a pretty good example of what we have been doing
to produce oil over the decades. We have not only produced more
than 17,000,000,000 barrels of oil but the collection of
royalties that we have done over the years. Excuse me, only
29.1 million barrels have been Federal, everything else that we
have done has been state, state lands, state production, and
therefore state regulation. But when we turn to the Federal
lands our BLM lands or any other agency, they have their own
rules. They have their own measure for production, and they
have their own accounting for royalties, for inspecting, meters
and operations.
In many cases the State laws are clearly superior to the
Federal laws, and yet, what we have is this duplication of
effort, a redundancy that really does not insure greater
protection to the taxpayer. All it does is create a more
complicated and complex operating environment.
So I have introduced a bill, Senate bill 1230, that would
require the Secretary of Interior, after getting a request from
a governor, to direct the BLM or the Federal land managers to
enter into an agreement with the State to create a consistent
operating environment. This is not about going around
environmental standards in any way shape or form, but it is
looking to leverage our Federal and State resources and improve
the investment climate on our Federal lands. We are not looking
to reduce standards, but what we are hoping is that the State
programs that have proven themselves to be sufficient to
fulfill the oversight and the enforcement responsibilities of
the BLM, that they can effectively lead.
So I would like to ask you, Mr. Mills, or you, Ms. Harbert.
In terms of inconsistent and duplicative regulations between
State and Federal jurisdictions and the impact that they then
have on investment, I think you heard Senator Gardner mention
it as related to the fracking in places like Colorado. What can
we be doing to, again, insure that we have good standards in
place because that is what we want but an assurance that we do
not have an overlap and a duplicative process that does not
contribute to better value? Mr. Mills?
Mr. Mills. Well, Madam Chairman, that's a critical issue.
In my work with small businesses and right now in my capacity
as an advisor to venture funds and doing a lot of venture
capital I interact with a lot of small businesses, and what I
find is that those businesses are the ones who will tell you
quickly the single biggest problem they face in expanding their
business. It's not taxation. It's not finding skilled
employees. It's regulations.
And in the oil and gas business and the shale business it's
populated by thousands of small and midsized enterprises, so
the friction that's created is very real. It's very expensive
and it slows development, and yet we have the evidence of how
big an impact it is. There's a lot of shale on Federal land. We
know how much the shale oil and gas production has not
increased on Federal land and how much it has increased on
State lands. It is a very simple metric not because the shale
doesn't exist, but because you're comparing, as my colleagues
have pointed out, permits that take days and weeks to permits
that take years.
If you're a small business employing 20 people, you can't
wait and pay for their salaries for a permit that takes a year.
You will go where the permit takes 40 days. No one in that
business community is looking to avoid the permitting
requirements. They just want them to be clear and expeditious.
The Chairman. I think this is where the great frustration
is. It is not as if the states are not doing a good job, in
fact, in many cases states are doing an exemplary job of
regulating. Somehow or other we have gotten to the point where
unless it is regulated by the Feds it is just not good. I am
not quite sure how we got there, but I want to change that
dynamic. I think the states have done good jobs, continue to do
good jobs and I think that we need to recognize that. Yet so
many of our policies say unless it is Federal oversight on top
of what the states are doing we cannot trust you. We have got
to get away from this lack of trust of what our states have
been doing.
Senator Manchin?
Senator Manchin. Thank you, Madam Chairman. Thank all of
you for your expert testimonies.
I come from the State of West Virginia, as you know, and we
have a challenge right now as I think the Government is in
denial that they need the products that we produce. I really
believe that.
So what I am going to ask is very simply, the EIA
Department of Energy, as you know, basically says that well the
next what, 30 plus years through 2040 or 25 years, that we are
going to be using fossil fuels and about 65 percent of the
makeup of our energy mix is going to be from fossil fuels.
Is there anyone here, just very quickly a yes or no, that
does not agree with that? Do you not believe that we are going
to be using natural gas, coal and oil for at least the next 25
years in order to basically fuel the grid and keep the lights
on, if you will? Is there anyone that does not agree with that?
Is there anyone that believes that we can do it with a new
energy source or through renewables by eliminating all fossil?
So all of you are in agreement that we are going to have to use
fossil?
Okay, then I would say that if that is the case and there
is no new energy source, I keep thinking commercial hydrogen.
Wouldn't that be wonderful? Commercial hot water vapor? I would
be all in if they had it, but they do not.
I am living in the real world right now, and West Virginia
is getting absolutely plummeted by the overreach of this
Administration. I cannot explain it. We are not going to be
able to provide the reliable energy you have always received
from our little state, and most of the East Coast will be shut
down if little West Virginia quits producing. People do not
know that.
We are trying to make it. We have wind and solar. We are
trying everything, but we know that a majority of that is
coming from our coal, and it is so in doubt now because of the
uncertainty.
Mr. Orr, I will go to you. $8 billion since 2008 has been
sitting on the Department of Energy's table in EIA for clean
coal technology. None of it has gone out. Would you not think
something is wrong when the private sector will not step up to
use this money to find the new technology because they just do
not have faith that this Government really wants them to find
anything?
Dr. Orr. So, Senator, thanks for the question.
The program that you're talking about is a solicitation for
loan guarantees associated with fossil energy that are tests of
new and innovative approaches to using fossil energy but with
an effort to make it cleaner and with lower greenhouse gas
emissions.
Again, that's in the Loan Programs Office which is actually
not in the part that I look after, but I do talk to the folks
there and I understand from them that they're pleased at the
response to the solicitation. These are big complicated
projects.
Senator Manchin. We are looking in, sir, I did not mean to
cut you short. We are looking into it also and they might be
pleased with it, but no one has stepped to the table yet. The
way it is structured, there is an awful lot of capital at risk.
If you looked at energy stocks, they have gone down to
basically junk stock, if you looked at them recently. So you
have no confidence, basically. Financial institutions are
shutting down everything.
This Government has not stepped forward, this
Administration, and said oh, wait a minute, I cannot replace
34, 35, 36 percent of the energy that coal produces, right? I
don't have it. Yet we are decimating it. You are not going to
be able to produce it, and you have got FERC taking low cost.
They do not take reliability into consideration anymore. It is
all low cost generation, so they are going to the lowest cost.
Ask any utility company today, any CO, ``Are you satisfied with
your portfolio?'' They will all say ``No, I'm not.''
We are not diversified enough. We have got our eggs in one
basket. We are going to get smacked hard, and the country is
going to be in jeopardy, but for some reason there is a blind
eye to all of this.
I will say that Secretary Moniz has been more receptive
than anybody. This is not Democratic. I am a Democrat and this
is a Democratic Administration. This is not Democrat and
Republican. It is just common sense. If there is a fuel already
ready to go, let me know. But I cannot get anybody to step up.
We have got NETL, the National Energy Technology Lab. If we
could partner up with NETL and we had our research institutions
with the private sector involved to push in and was able to
restructure how that money went out, we would get you some
answers.
I will give you an example. We do fracking. You know now in
West Virginia we have some of the largest plays of shale gas,
and we have more to come. We have got a lot of hydrocarbons
coming out, propane, ethylene, but we are only recovering five
percent, five percent. That is 95 percent left in the ground.
Yet we have no research going on that basically would allow us
to do enhanced recovery other than oil. All we are using,
basically, is CO2. So we cannot offset the cost of knowing the
collection on these utilities that could basically sell that
get enhanced gas recovery or hydrocarbons that would pay for it
and make it financially feasible. Nobody cares about that. They
are afraid they are going to find an answer. Well, it would be
different. You are going to use it for 25 more years, why not
work with us?
I do not know if anyone, Mr. Augustine, all of you, Mr.
Mills, I know you are there and you are watching it happen. It
is just a shame.
I am on a rampant here, but I am going to keep going. I see
that basically there is eight billion tons of coal being burnt
in the world. If you quit burning every lump of coal in America
today there would still be seven billion tons being burned,
more than ever in the history of the world.
There is going to be 1,200 new coal-fired plants in the
world built in the next four to five years, and I will
guarantee you where they are being built there is not going to
be oversight that they put all the new technology on, 450 or
500 will be built in India, 350, 400 in China. It goes on and
on. Yet we are worried about the climate. I am worried about
the climate. I am not a denier. I think seven billion people
have contributed, and we have a responsibility. But we are not
doing anything, basically, to curtail to our trading policies
that they should use the technology that we have already
developed. In 20 years we have taken out more pollution in
America than ever in history of particulates, SOX and NOX, you
know. Now with MERC we have MATS.
We can do those things, but the carbon capture
sequestration and using it because of the energy it takes to
pull it off of the clear stream is just about broke, and it
will break financially, the energy markets, to where they know
it is infeasible.
So when they make the statement, ``Go ahead and build it,
we'll break you.'' Look at the Kemper plan that Southern
Company did, $2 billion over, maybe even more than $2 billion
over, on cost overrun. They cannot afford to commercialize that
program. No one will step forward and do it.
So this is the frustration I see. I come from West Virginia
and they look at me and say, ``Oh, he doesn't care about the
climate.'' I am as much an environmentalist as anybody sitting
here. I want clean air, and I want clean water, as clean as I
feasibly can make it. But I also have to have a job and work in
this environment.
We just need help from people with you all with the
expertise. It is not one size fits all. When commercial
hydrogen comes on board, sign me up. West Virginia will figure
out a way to make it. Until then, use me the best you can.
Does anybody want to comment on all that tirade that I
just--I am just so frustrated, but I want to find out if there
is a way the Department of Energy will work with us? Mr. Mills,
you observe a lot and you might want to say something, comment
on this?
Mr. Mills. Well I would just first use that old expression,
second the emotion on your eloquent defense of hydrocarbons,
fossil fuels.
But there's interesting irony here. We've talked about how
the Department of Energy was involved in the basic research in
shale, hydraulic fracturing in the early days in basic research
and seismic imaging. What we've learned in the shale industry
is any of the shale players will tell you, is that the
morphology of the shales are very complex.
And the reason we only extract five percent, maybe ten
percent at best in many cases, is that it's a very complicated
environment which is another way of saying it is amenable to
basic research. The one place the Department of Energy could
play a role is in the underlying science and modeling using
exascale computers and petaflop computers to figure out what is
going on so we can extract the other 95 percent, and if we did
that in a few years we'd double American production again and
really change the world.
Dr. Orr. I agree that there are very interesting research
questions involving, for example, the flow in shales. And I'll
say that we would be happy to work with your office and you as
we think about how to demonstrate and employ CCS and other
technologies that will help.
Senator Manchin. Secretary Moniz has offered to come to
West Virginia, and he will be the first official in that type
of environmental realm, if you will, that has been willing to
come and sit down and be on the front line.
Now they have flown to China, and they fly all over the
world. West Virginia sometimes might be too difficult for a
four or five hour drive to get there, but we are working on
that because they need to see the front line of defense.
Our little state works its tail off. They are trying, but
boy, I will tell you, the uncertainty right now. At this point
in time it would be hard for me to say that we are going to be
able to produce the energy that you all sitting right here
depend on every day from my little state.
Dr. Orr. Well I would say that I have been to West Virginia
and I would be more than happy to come back. Maybe I will tag
along with the Secretary when he comes.
Senator Manchin. Why don't you come with him when he comes?
Dr. Orr. I would.
Senator Manchin. Is there anyone else who would like to
chime in on this?
Gang, let me tell you we are all in this together. That is
all I can tell you. We are in this together, and we are going
to find a solution for it, and it is not one size fits all. If
there is nothing else right now that this country demands it is
affordable, reliable and dependable energy. We are not going to
have it if we go down the path we are going right now in the
grid system. It is not capable of diversifying itself quick
enough to do it.
Thank you, Madam Chairman. I am so sorry.
The Chairman. No, Senator Manchin. I think many of us feel
your pain. Having been one who has accepted the invitation to
visit your state and see all that you do, I know and I
understand. I know what you are capable of and I know the pride
that the people of West Virginia have in producing something
that this country needs. So thank you and thank you for your
advocacy.
Another coal producer, Senator Barrasso.
Senator Barrasso. Thank you very much, Madam Chairman.
Thank you for holding today's hearing. I am encouraged that the
Committee is actually looking to increase transparency and
accountability at the Department of Energy.
We need transparency and accountability, especially with
respect to the Department of Energy's management of the public
stockpile of excess uranium. Since 2009 the Department has
repeatedly violated its own written policy and the Federal law
when managing the public's excess uranium. As a result the
Department of Energy has failed to obtain a fair return on this
uranium for American taxpayers.
For example, the Government Accountability Office found
that the Department of Energy's transfers of excess uranium in
2012 may have cost taxpayers up to $195 million. Now the
Department of Energy's mismanagement has also contributed to
volatility in the uranium market and has led to job losses in
states like my home State of Wyoming. In April we learned that
employment among U.S. uranium producers fell by 32 percent
between 2013 and 2014. Employment among U.S. uranium producers
is now at the lowest level since 2006.
Now there is a third reason why we need transparency and
accountability with respect to the Department of Energy's
management of excess uranium, specifically, the decision by two
principle beneficiaries of the Department of Energy's excess
uranium to hire Daniel Poneman, former Deputy Secretary of
Energy. I am referring to the Traxis Group which appointed Mr.
Poneman to its Board of Directors in December of 2014, and
Centrus Energy Corporation, formerly known as USEC, which
appointed Mr. Poneman as President and CEO in March of this
year.
I am deeply troubled by the decision of these private
companies to hire Mr. Poneman. Mr. Poneman led the Department
of Energy when the agency violated Federal law with respect to
excess uranium transactions which benefited specifically these
two companies.
Last month I, along with Senators Markey, Cornyn and
Heinrich introduced S. 1428. Madam Chairman, you talk about a
bipartisan group, that is it.
The Chairman. That is good.
Senator Barrasso. The Excess Uranium Transparency and
Accountability Act. This bipartisan bill would require the
Department of Energy to maximize the value of the public
stockpile of excess uranium. Our bill would also require that
DOE give the American public a say in how it will manage this
excess uranium. Finally the bill would codify the Department of
Energy's recent announcement that it will not transfer more
than 2,100 metric tons of uranium in calendar year 2016 and
thereafter.
These are common sense reforms that will help the
Department fulfill its legal obligations going forward. These
reforms will ensure the Department manages our excess uranium
on behalf of the American public, not two private corporations
which the Department of Energy favors. So I encourage all
Committee members to support the bill.
I do have a question for Dr. Orr, specifically. My bill
would require the Department of Energy to make decisions
related to the management of the public's excess uranium
inventory through the rulemaking process. The rulemaking
process would require the Department to be responsive to the
public's comments about the excess uranium inventory. Do you
think it is reasonable for Congress to require the Department
of Energy to give the American public a say in how the
Department manages our stockpiles of excess uranium?
Dr. Orr. Senator, thanks for the question.
As you know I'm pretty new to this process so I just have
had an opportunity to observe the end part of it as we made, as
the Secretary made the determination this year. And as I know
you know, it's a balancing act with the capturing value for the
taxpayers of the uranium, the excess uranium that we hold and
at the same time not doing damage to the markets.
This last time around we did offer a big opportunity for
public comment, and we really do appreciate all the comments
that were made on all sides of the issue. It really is an
important part of that balancing act. And we look forward to
doing that in the future, kind of, regardless of whether we do
it with a change in the rules.
Senator Barrasso. Well, yes, thank you, but the Department
of Energy is not making its decision through the rulemaking
process. Isn't that correct?
Dr. Orr. As I understand it it is not a formal rulemaking
process, but we did engage in a process that was essentially
parallel that very much attempted to do exactly the same kind
of thing.
Senator Barrasso. So it is not really required that DOE be
responsive to public comment, but I think it is reasonable. Let
us say it is not an unreasonable request or requirement. I
would like to see the Department support it.
Dr. Orr. Yeah. If you look at what we did this last time
around I think you can see that we thought that was a
reasonable way to take into account public comment and to
balance the various interests.
Senator Barrasso. Thank you.
Thank you, Madam Chairman.
The Chairman. Thank you, Senator Barrasso.
I have a laundry list of other measures that relate to some
of the specific bills that I have introduced. I think you are
aware that I have been working on an energy water nexus bill
for some time. Again, an area that, I think, oftentimes we do
not stop to think about. But you cannot have the energy we need
unless we have water, and we cannot have the water unless we
have energy. So making sure that we are paying attention to the
connection to the nexus is important to me.
We have had good conversation here in Committee today about
the need to do more when it comes to advancing our research and
building out these technologies. The R and D side, making sure
that we are doing what government is best suited to do. I am a
big believer in ARPA-E and what it can do.
I am looking forward to working with Senator Alexander and
Senator Cantwell and others on the America Competes Act. Again,
I join Senator Alexander in thanking you, Mr. Augustine, for
your leadership in that area. I think it is key for us.
I have a bill that would allow for a prize bill to again
give that encouragement to those imagineers that are out there
that can really help us find some of these solutions that move
us forward rather than the fix for today but that might lock us
into that.
I think we have had some good discussion on cyber security
today. Although I will say that in my state and in many of the
rural parts of the country, you have utilities that are
municipally owned or cooperatives that are very small, and they
look to what may be coming their way in terms of ways that they
can provide for a level of protection or resiliency when it
comes to cyber. It is extraordinarily daunting in terms of
where those resources might be and how they can actually get
things to scale if you are a small and, again, a remote utility
that is not connected to others. So some of these challenges,
again, as we work to build out legislation that will move us
forward, are part of the challenge in front of us.
I am pleased that we have had some good discussion and an
opportunity to hear from you all on the importance, the
significance, of utilizing our energy resources as assets, as
an opportunity to again move from this mind set of energy
scarcity to how we operate, how we move as a nation where we
have energy abundance. Not just on the fossil fuel side, but
how that abundance can also translate to our renewable energy
future. Making sure that we put the right signals in place and
again, developing policies that are helpful rather than
duplicative, redundant or costly.
So we have a big task in front of us, our Promethean task.
I think we need to rename this. I am glad you didn't refer to
Sisyphus. [Laughter.] Although sometimes I feel like that is
what we are doing is pushing that rock up the hill. That may,
in fact, be where we are, but, you know, you don't know until
you try.
Again, this is an area that is so long overdue in terms of
needed reform. Know that this Committee is going to continue to
work aggressively to build policies that are not Reagan era,
that are not taking us back in time, but really allow us to
move into the future.
I thank you for the time that you have given the Committee
this morning, for your thoughts and your reflections. I would
ask that if you have additional comments on any of the matters
that have been raised today, feel free to provide those to the
Committee as we will be working to assemble broader legislation
in the weeks ahead.
The Chairman. And with that, we stand adjourned.
[Whereupon, at 11:53 a.m. the hearing was adjourned.]
APPENDIX MATERIAL SUBMITTED
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