[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

                               __________
                               
                               
                               
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                       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:]
    
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    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:] 
    
    
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    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:] 
    
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    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

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