[Senate Hearing 115-318] [From the U.S. Government Publishing Office] S. Hrg. 115-318 PENDING LEGISLATION ======================================================================= HEARING BEFORE THE SUBCOMMITTEE ON ENERGY OF THE COMMITTEE ON ENERGY AND NATURAL RESOURCES UNITED STATES SENATE ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION on S. 186 S. 1799 S. 1059 S. 1860 S. 1337 H.R. 1109 S. 1457 __________ OCTOBER 3, 2017 __________ [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Printed for the use of the Committee on Energy and Natural Resources Available via the World Wide Web: http://www.govinfo.gov _________ U.S. GOVERNMENT PUBLISHING OFFICE 27-432 WASHINGTON : 2018 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 CORY GARDNER, Colorado JOE MANCHIN III, West Virginia LAMAR ALEXANDER, Tennessee MARTIN HEINRICH, New Mexico JOHN HOEVEN, North Dakota MAZIE K. HIRONO, Hawaii BILL CASSIDY, Louisiana ANGUS S. KING, JR., Maine ROB PORTMAN, Ohio TAMMY DUCKWORTH, Illinois LUTHER STRANGE, Alabama CATHERINE CORTEZ MASTO, Nevada ------ Subcommittee on Energy CORY GARDNER, Chairman JAMES E. RISCH JOE MANCHIN III JEFF FLAKE RON WYDEN STEVE DAINES BERNARD SANDERS LAMAR ALEXANDER AL FRANKEN JOHN HOEVEN MARTIN HEINRICH BILL CASSIDY ANGUS S. KING, JR. ROB PORTMAN TAMMY DUCKWORTH LUTHER STRANGE CATHERINE CORTEZ MASTO Colin Hayes, Staff Director Patrick J. McCormick III, Chief Counsel Brianne Miller, Senior Professional Staff Member and Energy Policy Advisor Angela Becker-Dippmann, Democratic Staff Director Sam E. Fowler, Democratic Chief Counsel Scott McKee, Democratic Professional Staff Member C O N T E N T S ---------- OPENING STATEMENTS Page Gardner, Hon. Cory, Subcommittee Chairman and a U.S. Senator from Colorado....................................................... 1 Manchin III, Hon. Joe, Subcommittee Ranking Member and a U.S. Senator from West Virginia..................................... 2 WITNESSES Danly, James, General Counsel, Federal Energy Regulatory Commission..................................................... 7 McNamee, Bernard, Deputy General Counsel, U.S. Department of Energy......................................................... 15 ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED American Chemistry Council: Statement for the Record..................................... 3 Danly, James: Opening Statement............................................ 7 Written Testimony............................................ 9 Responses to Questions for the Record........................ 29 Edison Electric Institute: Letter for the Record........................................ 33 Gardner, Hon. Cory: Opening Statement............................................ 1 Inhofe, Hon. James M.: Statement for the Record..................................... 35 Manchin III, Hon. Joe: Opening Statement............................................ 2 Markey, Hon. Edward J.: Statement for the Record..................................... 36 McNamee, Bernard: Opening Statement............................................ 15 Written Testimony............................................ 17 Northeast Public Power Association: Letter for the Record........................................ 38 Oklahoma Utilities: Letter for the Record........................................ 39 __________ The text for each of the bills which were addressed in this hearing can be found on the Committee's website at: https://www.energy.senate.gov/ public/index.cfm/hearings-and-business-meetings?ID=4E54A5F4-134D-4D11- B6DC-41D3A59AFA06 PENDING LEGISLATION ---------- TUESDAY, OCTOBER 3, 2017 U.S. Senate, Subcommittee on Energy, Committee on Energy and Natural Resources, Washington, DC. The Subcommittee met, pursuant to notice, at 2:31 p.m. in Room SD-366, Dirksen Senate Office Building, Hon. Cory Gardner, Chairman of the Subcommittee, presiding. OPENING STATEMENT OF HON. CORY GARDNER, U.S. SENATOR FROM COLORADO Senator Gardner [presiding]. The Subcommittee will come to order. Good afternoon, everyone. Thank you for being here. The Subcommittee comes together today for a legislative hearing on a variety of legislation. As always, I appreciate the opportunity to work with the Subcommittee's Ranking Member, Senator Manchin, to address key topics in the energy space. This legislative hearing will allow us the opportunity to receive testimony from and ask questions of key personnel from the two agencies that would be responsible for implementing the changes laid out in the various pieces of legislation before us today. My bill, the Responsible Disposal Reauthorization Act, would extend the life of a uranium mill tailings disposal site in Western Colorado through 2048. This disposal site, itself, is a former uranium and vanadium mill that produced roughly 2.2 million tons of tailings during its 20-year operation. Those mill tailings were made available for use in the 1950s and 1960s as fill material and sometimes mixed with concrete and mortar. We continue to find and remediate sites with these tailings mixed in them, and we need a safe and secure place to store them which is what the Grand Junction Disposal Site provides. The site is a valuable asset to the Department of Energy (DOE) which should continue to be used until it is full. I am proud to be an original co-sponsor of Senator Heinrich's Energy Technology Maturation Act, a bill that would further the Department of Energy's ability to commercialize the technology that results from their R&D programs. Without an emphasis on this commercialization, we risk leaving too many great ideas on the shelves of our national labs. DOE needs a variety of tools at their disposal to get these worthwhile technologies to market, and this bill adds a few more of those to the toolbox. The Ranking Member's bill, Capitalizing on American Storage Potential, looks to expand the eligibility of regional energy storage projects for the loan guarantee program. We will also be discussing Senate bill 186, the Fair Ratepayer Accountability Transparency and Efficiency Standards Act; S. 1457, the Advanced Nuclear Technologies Act; S. 1860, the Parity Across Reviews Act; and H.R. 1109, to amend Section 203 of the Federal Power Act, a bill very similar to S. 1860. I would like to welcome our two witnesses today, Mr. James Danly and Mr. Bernard McNamee. I will first turn to Senator Manchin, for his opening comments. STATEMENT OF HON. JOE MANCHIN III, U.S. SENATOR FROM WEST VIRGINIA Senator Manchin. Thank you, Chairman Gardner, and I want to thank you for holding this hearing and thank you all for being here today. I would like to also thank our witnesses from the Department of Energy and FERC. It is very important to have you both here before us. The proposals before Congress, before the Committee, cover a range of energy and electrical issues but I want to highlight two, in particular, which Chairman Gardner has just briefly gone over. Senate bill 1799, the Energy Technology Maturation Act, led by Senators Heinrich and Chairman Gardner, will help the national laboratories work with the private sector to commercialize innovative energy technology. I was happy to co- sponsor this bill and look forward to ensuring it helps the National Energy Technology Laboratory, we know it as NETL, in Morgantown, West Virginia, as it works to bring the technology, the development around coal, rare earth elements and natural gas to market. I would also like to briefly discuss my bill which is Senate bill 1337, the Capitalizing American Storage Potential Act which I introduced with my friend, Senator Capito, also from West Virginia. I ask consent that this statement from the American Chemistry Council, in support of Senate bill 1337, be submitted to the record. Senator Gardner. Without objection. [The information referred to follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Senator Manchin. West Virginia and the greater Appalachian region has an extraordinary opportunity in its hands. The quad states of West Virginia, Ohio, Pennsylvania and Kentucky possess certain attributes that make the region a prime location for an energy storage hub. The region's shale formations, the Marcellus and Utica, contain abundant wet natural gas and natural gas liquids (NGL) like ethane, butane and propane. In order to access the vast resources of natural gas in Appalachia, we must also remove and separate out the NGLs. NGLs, like ethane, are the building blocks of thousands of other consumer products that you and I use every day, including clothing and footwear, electronics, food packaging and aerospace equipment. I would also note that as cars become more fuel efficient they must become lighter which means the increased use of plastics out of manufacturing and the increased portions of NGLs. The environmental benefits are notable. A reliable supply of these products is a critical piece of the consumer product's supply chain and, therefore, our national economy. Coupled with expanding energy infrastructure in the region, geologic storage, which is naturally occurring, a storage hub for NGLs will play a role in attracting much needed manufacturing investment and associated economic activity. The development and construction of a hub to store these high-value products in underground geological formations could ultimately lead to a petrochemical manufacturing hub and a revitalization of the area's manufacturing center. In fact, a report released earlier this year by the American Chemistry Council estimated that the development of a storage hub would drive up to $36 billion in new investment, 68,706 direct and indirect jobs and about $2.9 billion in annual tax revenues. West Virginia is a state that is rich in natural resources, and I believe the Appalachian storage hub offers an excellent chance for geographic diversification of our manufacturing sector. Additionally, the hub will help insulate our nation from supply disruptions due to ongoing extreme weather events in the Gulf, and I don't think we have to elaborate on that. It is just horrible. Senate bill 1337 highlights the importance of federal support and partnerships to innovative projects like this one. This bill reflects the role that the government can play in revitalizing the Appalachian region by further clarifying the scope of eligibility for the Title 17 loan program. Mr. Chairman, you know as well as I do, the importance of R&D funding, particularly funding that partners the public and private sectors. While I recognize the fiscal challenges we face, I believe that it is important, very important, that we work hard to ensure that effective programs are sustained. I look forward to discussing this bill today because a storage hub is an efficient utilization of our natural energy resources and will lead to economic development and greater energy security. I have been working diligently with the stakeholders involved, as well as with Secretary Perry, who visited West Virginia this summer to learn more about this opportunity and continues to work with us on it right now. I look forward to working in a bipartisan way to find opportunities for this Committee to support that effort, and I want to thank the Chairman for being so kind and working with me. Mr. Chairman. Senator Gardner. Thank you, Senator Manchin. Mr. Danly is our first witness. He is the General Counsel for the Federal Energy Regulatory Commission. We will begin with your testimony. STATEMENT OF JAMES DANLY, GENERAL COUNSEL, FEDERAL ENERGY REGULATORY COMMISSION Mr. Danly. Chairman Gardner, Ranking Member Manchin, I very much appreciate the opportunity to come today to testify. My name is James Danly, and I am the General Counsel of the Federal Energy Regulatory Commission. Before I begin, I just want to mention that I'm coming here as a staff witness and the views that I present today are not those of the Commission as a body or those of any individual commissioner. I've been asked to appear in order to testify on three bills today. The first two would modify Section 203 of the Federal Power Act, and the third would modify Section 205 of the Federal Power Act. The first two bills, as I said, modify Section 203. Section 203 of the Federal Power Act subjects to the Commission's approval a number of different types of financial transactions among jurisdictional entities. These bills together seek to amend Section 203 in order to establish a $10 million cap for the ``merge or consolidate'' subsection of Section 2013. Right now, there is no such limit. The value of these bills is that they would both bring that ``merge or consolidate'' subsection into conformity with the remaining subsections of Section 203 and they would help relieve an administrative burden on the agency and relieve regulatory burden on the jurisdictional entities that are seeking to conduct these relatively small transactions. In my view, exempting the transactions that are below this reasonable $10 million threshold does not present any problem for market power or rate prices going forward. The third bill, which modifies Section 205, is another matter. Ordinarily, when a public utility seeks to amend its tariff it has to make a filing under Section 205 with a 60-day time limit. In the almost invariable course of the Commission's activity the Commission takes action, one way or another, within that 60 days on that filing to amend the tariff. In exceptionally rare circumstances the Commission does not act within those 60 days and the tariff filings, the tariff changes go into effect by operation of law. This bill seeks to alter Section 205 so as to allow for parties agreed in the 205 proceeding to seek rehearing should they not like the outcome of the rates going into effect by operation of law. As the Subcommittee considers whether or not to adopt this legislation, I would urge it to keep in mind several points. The first one is that even as Section 205 is currently constituted there is still redress available for aggrieved parties under Section 206. Second, the legislation may not produce the intended relief that, I believe, the Subcommittee is looking for. It may not provide, as a practical matter, the relief that, I think, the bill might be thought to. And I can get into details with that, if you're interested, in questions. And lastly, I think that the language of the bill might be a little bit overbroad to accomplish that narrow goal. So, with that, I just want to thank you for the chance to speak about these bills, and I look forward to any questions you might have. [The prepared statement of Mr. Danly follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Senator Gardner. Thank you, Mr. Danly. Mr. McNamee, the Deputy General Counsel for Energy Policy at the Department of Energy, thank you for joining us. STATEMENT OF BERNARD McNAMEE, DEPUTY GENERAL COUNSEL, U.S. DEPARTMENT OF ENERGY Mr. McNamee. Thank you, Senator. Chairman Gardner, Ranking Member Manchin and members of the Subcommittee, I am the Deputy General Counsel for Energy Policy at the Department of Energy and it's a privilege and honor to represent the Department here today. I just want to thank you for the opportunity to testify before you on behalf of the Department. The Department of Energy is an agency tasked with a number of important responsibilities, many of them you already know, but among them are assuring the nuclear readiness, overseeing the nation's energy supply, carrying out the environmental cleanup from the nuclear mission and managing the Department's 17 national labs. In support of the Administration's goals of establishing energy dominance and economic competitiveness, the Department's energy and science programs are focused on research and development across the variety of technologies and variety of fuel sources. By carefully setting priorities and focusing on the most promising research, the Department and its national laboratories will continue to support the world's best enterprise of scientists and engineers. These are the great men and women who create the innovations that help drive American prosperity, security and competitiveness for the next generation. I've been asked to testify on multiple bills today which the Administration continues to review. They are: Senate bill 1059, the Responsible Disposal Reauthorization Act; Senate bill 1337, the Capitalization on America's Storage Potential Act; Senate bill 1457, the Advanced Nuclear Energy Technologies Act; and Senate bill 1799, the Energy Technology Maturation Act. I look forward to discussing these bills in further detail and answering your questions. The Department also appreciates the ongoing bipartisan efforts to address our nation's energy challenges and looks forward to working with the Subcommittee and the entire Committee on legislation on today's agenda and into the future. Our nation will achieve our economic, energy and environmental goals by ensuring that the United States continues to be a leader in energy technology, development and delivery and by unleashing America's ingenuity to unlock our natural resources. Through research and development, collaboration at all levels of government and the private sector, the Department of Energy and our national labs aim to support America's energy renaissance. The Administration looks forward to continuing to work with Congress on the legislation to enhance U.S. competitiveness and job creation as a whole. I would ask that my written testimony be entered into the record. I thank you for the opportunity to be here and look forward to your questions. Thank you. [The prepared statement of Mr. McNamee follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Senator Gardner. Thank you. Your written testimony will be entered into the record. Thank you for that. Thank you both for being here today. Senator Heinrich, Senator Manchin and I have already bragged about your legislation in our opening comments. Did you want to make a few opening comments here? We will get to you in questions in a little bit, but do you want to make an opening statement? Senator Heinrich. I will keep it short and just say, I sure appreciate you holding this hearing and we are excited to get this legislation moving. Thank you for participating and being a co-sponsor, both you and the Ranking Member. Thank you very much. Senator Gardner. We will start with our questions. Mr. McNamee, in your testimony you talked about the Grand Junction disposal site, that it is the only active site managed by the Department of Energy's Office of Legacy Management and that it collects low-level radioactive waste, primarily from the local area. Could you talk about the assessment that went behind the support of finding the cost effectiveness of extending the facility authorization for another 25 years is appropriate? Is it appropriate, in your judgment, to extend the facility use period? Mr. McNamee. The Department has not taken a specific position on the bill for the actual disposal site itself. As you're aware, there's about--there's sufficient space in order to keep that site available and taking what has been on average, about 2,700 cubic yards of material a year and it could be extended for up to 85 years. So your legislation is within that time period. Senator Gardner. Great. I understand that it has about 250,000 cubic yards of additional material that the site could accommodate, so thank you. Mr. McNamee. That's correct. Senator Gardner. I want to turn to the Heinrich/Manchin/ Gardner legislation. The bill under discussion would expand the authorization for the Department of Energy and its national labs to focus on the commercialization of innovative technologies, as we have discussed. Could you talk a little bit more about the effectiveness of the existing Technology Commercialization Fund program at DOE and what we have seen from that existing fund? Mr. McNamee. The existing fund has available to it, under the way that Congress has structured funding, about $20 million a year in order to provide funding. And it is focused currently on providing a way to bring the technologies that's being developed by the labs and the other national entities under DOE in order to help not only create the innovation but also giving an opportunity for the private sector. And that has been under this Administration, particularly Secretary Perry, trying to make sure that there's more access. This bill enhances that approach making sure that, especially, small businesses would have access to that technology and have an ability to tap into certain funds in order to bring that to market. Senator Gardner. Is that one of the biggest challenges the current fund has, that inability or perhaps not quite as robust ability to have the participation from the private sector partnerships that you have just described? Mr. McNamee. I don't have the specific information about the challenges they've had, in that sense, but clearly, being able to make sure that small businesses have access to the great technology and insights that the labs have is an important thing. And so, therefore, this legislation is consistent with that. Senator Gardner. Thank you. Senator Manchin. Senator Manchin. Thank you, Mr. Chairman. Mr. McNamee, on the proposed Appalachian storage hub, it is a regional hub providing storage for natural gas liquids. I think you are familiar with what we are trying to accomplish. It is in a quad state--West Virginia, Pennsylvania, Ohio and Kentucky. I have been encouraged by Secretary Perry's interest in the project. He came to West Virginia and we went over the entire project, the opportunities we might have. And the storage hub promotes the efficient utilization of the natural resources, energy resources, we have. So I would like to give you a chance today to provide the Committee with a DOE perspective on that hub, if you all had a chance to go in depth on it? And for the security of our nation? And the other part of my question is going to be--it has been a very busy hurricane season, as we have seen, and every time we hear of a hurricane even coming close to the coast in the Southwest, we know gasoline prices, shortages-- there will be every excuse in the world and every reason in the world to start changing the flow of energy. This would stabilize, I believe, the entire country. Your insight on that would be very much appreciated. Mr. McNamee. Thank you, Senator Manchin. You're correct that the idea of this energy hub has created great interest. As you mentioned, Secretary Perry, I believe in July, attended a conference dealing with this in Morgantown, West Virginia. Senator Manchin. Right. Mr. McNamee. And clearly the energy renaissance that has taken place in this country has been phenomenal in terms of not only in its gas production, but its natural gas production and especially in the Utica and Marcellus shale production. What's happened in this area of the country, especially where your legislation and where the discussion about the energy hub would be, would be in the center of one of the major centers for that and also expand from it, centers that are usually perceived for this sort of activity in the Southwest United States. The---- Senator Manchin. Did you all consider the protection as far as the natural geographical location and protection from the severe weather storms that we are having? Mr. McNamee. Yes, sir. It clearly, that even being in this central location of the country away from the hurricane centers, makes a large difference. It also makes a difference that the resource is there and so there's not as much transportation cost. Senator Manchin. Right. Mr. McNamee. You know, through the pipelines or otherwise and that will also provide--I believe as I've understood it, that the theory behind this hub is also that it will attract other businesses to the area in order to create an economic engine to provide new jobs to a region that's been so hard hit. Senator Manchin. Right. Mr. McNamee. You know, because of the challenges on environmental issues and coal issues. Senator Manchin. Yes. It would be a win/win for all of us. Mr. Danly, if I may. Last week, as a follow-up to a report that was released in August, Secretary Perry sent a proposal to FERC directing FERC to write a rule which will enhance reliability and resilience of our electric grid by more appropriate valuing of the central reliability services that many plans and financial straits offer but are not compensated for. Do you know? It is especially timely because we have seen several recent natural disasters putting the grid in danger. I know how close we came in January 2014 during the Polar Vortex--the frigid temperatures resulted in a record of 141,132 megawatts called up on in PJM to meet the demand. We came close to lights out and we have had them testify before us before, all the different carriers, and PJM especially. Following the winter of 2014, AEP reported that nearly 90 percent of its coal plants that were scheduled for retirement ran during the vortex. That means without that, the lights would have gone off. So we keep talking about the reliability that we have to have in the grid system. I am curious what FERC intends to do following the order and what are the Commission's next steps? Mr. Danly. Thank you, Senator. You're right. Last week under Section 403 the Secretary exercised his privilege to initiate a rulemaking. Today, the Commission issued a notice, a schedule notice, that invited comments and reply comments. Right now the Commission is internally reviewing the Notice of Proposed Rulemaking (NOPR) that was put forward by the Secretary. We're reviewing the options that are available and we are in the process of building the record by soliciting these comments and reply comments. Once they're assembled we're going to review them and take the appropriate action within the 60-day timeframe established by the NOPR. Senator Manchin. I know FERC is very much aware of the baseload plants and basically I think we have baseload today, and the definition of baseload means uninterruptible power, that is going to be coal and nukes. Natural gas plants are coming on strong replacing a lot of the baseload plants. Natural gas is considered a baseload today in our grid delivery, in the delivery system to the grid, but it is still interruptible and it can still have some concerns with that. I do not know how you all are weighing that on potential disasters we may have or with blackouts or terrorist attacks or cyberattacks and things of that sort? Mr. Danly. It would be premature at this point, with the Notice of Proposed Rulemaking only having come out on Friday and us noticing the request for comments to assemble the record at this point, for me to even imagine what the method of approach in the subject is going to be. Rest assured the Commission is diligently working and reviewing the rulemaking proposal, and it is attempting to assemble as many comments as it can. Senator Manchin. Thank you. Thank you, Mr. Chairman. Senator Gardner. Thank you, Senator Manchin. Senator Heinrich. Senator Heinrich. Mr. McNamee, as you know DOE's recent staff report on power markets actually concluded that the grid is currently operating reliably. I was surprised by Secretary Perry's directing FERC to implement cost-based rates in fully competitive markets for bulk power in what is an apparent attempt to subsidize both nuclear- and coal-fired generation. What was the basis for the Secretary to conclude that there is an urgent need based on reliability given the outcome of that report and its conclusions? Mr. McNamee. Thank you, Senator. As you know, the reasons for issuing the NOPR were stated by the Secretary, both in his letter and the preamble to the NOPR. But to your specific question, the difference was pointed out both in the letter and in the grid study about the difference between reliability and resiliency. And so, as discussed in the NOPR and identifying both from the grid study, the staff report by DOE, comments by NERC and others, there is a difference between reliability and resiliency and that the conclusions in those commentaries, both the staff report and by NERC, observed and to be honest, FERC has had a technical conference trying to deal with some of the resiliency issues, to identify that there are issues about fuel security being able to be available, not just today, but during extreme events. That's the driving thrust and the difference between reliability and resiliency, sir. Senator Heinrich. Mr. Danly, what has been FERC's approach to addressing long-term issues of grid reliability and resiliency? Does FERC pick generation technologies and fuels in competitive markets or is that a matter best left to state and local officials? Mr. Danly. Senator, historically, FERC has not decided what fuel would be used. Our job is to, or I should say, the Commission's job is to ensure that when the electricity is generated we can make certain that the wholesale markets produce just and reasonable rates. Senator Heinrich. I think that is a very reasonable approach. I would just want to warn all of my colleagues, I think if you want to go down this slope of picking winners and losers without letting the markets make those decisions, it may take you places you did not expect to go. Senator Gardner. Thank you, Senator Heinrich. We will go another round here. We both have additional questions. Mr. Danly, I want to talk a little bit about the Section 205 issue that you brought up and a question of whether it actually provides the kind of relief that, I think, was intended by the legislation, whether or not the expansion might be a little too broad and not get to the relief that they are looking for. Regarding Senate bill 186, is it possible that this legislation could limit the delegation of authority of the FERC Commissioners to staff in the event of a loss of a quorum? Mr. Danly. I'm sorry, can you say that again? Senator Gardner. Is it possible that Senate bill 186 could limit the delegation authority of the FERC Commissioners to staff in the event of a loss of a quorum? Mr. Danly. I have not thought about that subject specifically, Senator, but I don't see why delegation orders aren't still possible given this bill, if it's passed. Senator Gardner. Okay. I understand that the proposed bill tries to resolve some infrequent situations of an activity at FERC, but would you talk a little bit about how the incentives for action or inaction would be different under the proposed law versus current law---- Mr. Danly. Um. Senator Gardner. ----and would we end up with additional split decisions as a result? Mr. Danly. Right. So, the--thank you. The reason why this may not practically affect the relief that I think the bill is aiming toward is that should we have a case of a deadlock and that be the reason for inaction and therefore, the reason for the rates going into effect by operation of law, like we did in the ISO New England Forward Capacity Auction rate case which everybody here presumably remembers pretty well. The likelihood of the party, the aggrieved party, seeking rehearing and then getting an order on rehearing is virtually zero. If you have a deadlock in the first instance, you're likely to have a deadlock in the second. Though it is important that we have procedures for review, both in the form of rehearing at the Commission and then judicial review after the fact, the under--courts that sit in review of agency decisions have to review an order of that agency that sets out the reasoning that the agency has for the decision. Even if we were to afford the possibility of a rehearing which would not produce an order under these circumstances and even if it managed to get into a Court of Appeals, which it likely wouldn't given the precedent from the DC Circuit, the Court of Appeals would simply remand back to the agency anyway because there would be no reasoning upon which to base its review of the action. So I simply believe it to be, probably, not a promise of relief to the parties who are aggrieved by the rates that go into effect. Senator Gardner. Thank you. Mr. McNamee, nuclear energy made up roughly 20 percent of the utility scale generation in the U.S. in 2016. It is a no- carbon-footprint source of energy, a reliable source. How important is it to the energy security of the United States that we continue the research and development of nuclear sector technology? Mr. McNamee. Thank you, Senator. You're correct that nuclear is an important part of both the reliability of the--reliability and resiliency--of the electric grid, as demonstrated in the staff report. But I think your question also goes further in discussing it more broadly and its best we, in regards to the legislation before you talked about it, advanced nuclear technology, that we don't take a particular position on this legislation. It is clear that the Department has been very robust in trying to develop advanced nuclear reactors and making sure that America continues to be a leader in nuclear technology. That is something, you know, whether it be small nuclear reactors or the various types of water reactors, it's something that's important that the Department is engaged in every day. I understand that this legislation's intent is to advance that as well. Senator Gardner. Thank you, Mr. McNamee. Mr. McNamee, again, the 2005 Energy Policy Act amended the Federal Power Act in an attempt to reduce the 203 review workload of FERC by streamlining its review structure and raising the monetary threshold that triggered the reviews which had not been changed from the $50,000 level it was set at in 1935. Can you explain how unclear language in 2005, in the Energy Policy Act (EPAct 2005), actually had the opposite effect of increasing the workload? Mr. McNamee. I believe, Senator, that might be more appropriate for my colleague to answer. Senator Gardner. Mr. Danly? Mr. Danly. You're asking about the amendment for 203 to make the $10 million threshold? Senator Gardner. Correct. Mr. Danly. As written before there was a single provision rather than the split provisions for the different types of transactions in Section 203, and with EPAct 2005 that was split into different sections and a $10 million threshold was applied to each of the sections with the exception of the ``merge or consolidate'' section which is the one that's at issue here. When that happened, we had before had a $50,000 threshold for everything because it was a single provision with that single value. And now, every one of the different types of transactions are subject to a threshold of $10 million except for ``merge or consolidate.'' The effect after the Commission gave its reading of what the statutory language meant was that there was no minimum conception whatsoever from ``merge or consolidate'' and this would be a step in bringing the entirety of 203 back to the effective regime we had in the previous version which was to allow a threshold for all of the different types of transactions subject to Commission approval. Senator Gardner. Mr. Danly, Mr. McNamee, we have run out of Senators here, so thank you very much for your time and testimony today on the legislation before us. We will keep the record open until tomorrow, close of business, if any member wishes to submit questions for the record, and we ask for your timely response should additional questions be submitted. Thank you, to both of you, for your time and testimony today. With that, the Committee is adjourned. [Whereupon, at 3:00 p.m. the hearing was adjourned.] APPENDIX MATERIAL SUBMITTED ---------- [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]