[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                 OVERSIGHT OF FERC: ENSURING ITS ACTIONS 
                 BENEFIT CONSUMERS AND THE ENVIRONMENT

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON ENERGY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 12, 2019

                               __________

                           Serial No. 116-44
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                           


      Printed for the use of the Committee on Energy and Commerce

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                        energycommerce.house.gov
                        
                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
40-586 PDF                  WASHINGTON : 2020                     
          
--------------------------------------------------------------------------------------                      
                        
                    COMMITTEE ON ENERGY AND COMMERCE

                     FRANK PALLONE, Jr., New Jersey
                                 Chairman
BOBBY L. RUSH, Illinois              GREG WALDEN, Oregon
ANNA G. ESHOO, California              Ranking Member
ELIOT L. ENGEL, New York             FRED UPTON, Michigan
DIANA DeGETTE, Colorado              JOHN SHIMKUS, Illinois
MIKE DOYLE, Pennsylvania             MICHAEL C. BURGESS, Texas
JAN SCHAKOWSKY, Illinois             STEVE SCALISE, Louisiana
G. K. BUTTERFIELD, North Carolina    ROBERT E. LATTA, Ohio
DORIS O. MATSUI, California          CATHY McMORRIS RODGERS, Washington
KATHY CASTOR, Florida                BRETT GUTHRIE, Kentucky
JOHN P. SARBANES, Maryland           PETE OLSON, Texas
JERRY McNERNEY, California           DAVID B. McKINLEY, West Virginia
PETER WELCH, Vermont                 ADAM KINZINGER, Illinois
BEN RAY LUJAN, New Mexico            H. MORGAN GRIFFITH, Virginia
PAUL TONKO, New York                 GUS M. BILIRAKIS, Florida
YVETTE D. CLARKE, New York, Vice     BILL JOHNSON, Ohio
    Chair                            BILLY LONG, Missouri
DAVID LOEBSACK, Iowa                 LARRY BUCSHON, Indiana
KURT SCHRADER, Oregon                BILL FLORES, Texas
JOSEPH P. KENNEDY III,               SUSAN W. BROOKS, Indiana
    Massachusetts                    MARKWAYNE MULLIN, Oklahoma
TONY CARDENAS, California            RICHARD HUDSON, North Carolina
RAUL RUIZ, California                TIM WALBERG, Michigan
SCOTT H. PETERS, California          EARL L. ``BUDDY'' CARTER, Georgia
DEBBIE DINGELL, Michigan             JEFF DUNCAN, South Carolina
MARC A. VEASEY, Texas                GREG GIANFORTE, Montana
ANN M. KUSTER, New Hampshire
ROBIN L. KELLY, Illinois
NANETTE DIAZ BARRAGAN, California
A. DONALD McEACHIN, Virginia
LISA BLUNT ROCHESTER, Delaware
DARREN SOTO, Florida
TOM O'HALLERAN, Arizona
                                 ------                                

                           Professional Staff

                   JEFFREY C. CARROLL, Staff Director
                TIFFANY GUARASCIO, Deputy Staff Director
                MIKE BLOOMQUIST, Minority Staff Director
                         Subcommittee on Energy

                        BOBBY L. RUSH, Illinois
                                 Chairman
SCOTT H. PETERS, California          FRED UPTON, Michigan
MIKE DOYLE, Pennsylvania               Ranking Member
JOHN P. SARBANES, Maryland           ROBERT E. LATTA, Ohio
JERRY McNERNEY, California, Vice     CATHY McMORRIS RODGERS, Washington
    Chair                            PETE OLSON, Texas
PAUL TONKO, New York                 DAVID B. McKINLEY, West Virginia
DAVID LOEBSACK, Iowa                 ADAM KINZINGER, Illinois
G. K. BUTTERFIELD, North Carolina    H. MORGAN GRIFFITH, Virginia
PETER WELCH, Vermont                 BILL JOHNSON, Ohio
KURT SCHRADER, Oregon                LARRY BUCSHON, Indiana
JOSEPH P. KENNEDY III,               BILL FLORES, Texas
    Massachusetts                    RICHARD HUDSON, North Carolina
MARC A. VEASEY, Texas                TIM WALBERG, Michigan
ANN M. KUSTER, New Hampshire         GREG WALDEN, Oregon (ex officio)
ROBIN L. KELLY, Illinois
NANETTE DIAZ BARRAGAN, California
A. DONALD McEACHIN, Virginia
TOM O'HALLERAN, Arizona
LISA BLUNT ROCHESTER, Delaware
FRANK PALLONE, Jr., New Jersey (ex 
    officio)
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     1
    Prepared statement...........................................     3
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................     3
    Prepared statement...........................................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     6
    Prepared statement...........................................     7
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     8
    Prepared statement...........................................    10

                               Witnesses

Neil Chatterjee, Chairman, Federal Energy Regulatory Commission..    11
    Prepared statement...........................................    14
    Answers to submitted questions...............................    96
Cheryl A. LaFleur, Commissioner, Federal Energy Regulatory 
  Commission.....................................................    19
    Prepared statement...........................................    21
    Answers to submitted questions...............................   105
Richard Glick, Commissioner, Federal Energy Regulatory Commission    29
    Prepared statement...........................................    31
    Answers to submitted questions...............................   110
Bernard L. McNamee, Commissioner, Federal Energy Regulatory 
  Commission.....................................................    45
    Prepared statement...........................................    47
    Answers to submitted questions...............................   120
    Additional material submitted for the record.................   129

                           Submitted Material

Letter of June 12, 2019, from American Chemistry Council, et al., 
  to Mr. Rush, et al., submitted by Mr. Sarbanes.................    87
Letter, undated, from Andrew Hudson, Founder, 198 Methods, to 
  House Committee on Energy and Commerce, submitted by Mr. 
  Sarbanes.......................................................    90
Letter of June 10, 2019, from Jim Matheson, Chief Executive 
  Officer, National Rural Electric Cooperative Association, to 
  Mr. Rush and Mr. Upton, submitted by Mr. Sarbanes..............    94

 
   OVERSIGHT OF FERC: ENSURING ITS ACTIONS BENEFIT CONSUMERS AND THE 
                              ENVIRONMENT

                              ----------                              


                        WEDNESDAY, JUNE 12, 2019

                  House of Representatives,
                            Subcommittee on Energy,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:30 a.m., in 
room 2322, Rayburn House Office Building, Hon. Bobby L. Rush 
(chairman of the subcommittee) presiding.
    Members present: Representatives Rush, Peters, Doyle, 
Sarbanes, McNerney, Tonko, Loebsack, Butterfield, Welch, 
Schrader, Kennedy, Veasey, Kuster, Barragan, O'Halleran, Blunt 
Rochester, Pallone (ex officio), Upton (subcommittee ranking 
member), Latta, Rodgers, Olson, McKinley, Kinzinger, Griffith, 
Johnson, Flores, Walberg, Duncan, and Walden (ex officio).
    Also present: Representative Long.
    Staff present: Jeffrey C. Carroll, Staff Director; Adam 
Fischer, Policy Analyst; Waverly Gordon, Deputy Chief Counsel; 
Omar Guzman-Toro, Policy Analyst; Rick Kessler, Senior Advisor 
and Staff Director, Energy and Environment; Brendan Larkin, 
Policy Coordinator; John Marshall, Policy Coordinator; Elysa 
Montfort, Press Secretary; Lisa Olson, FERC Detailee; Alivia 
Roberts, Press Assistant; Tim Robinson, Chief Counsel; Tuley 
Wright, Energy and Environment Policy Advisor; Justin Discigil, 
Minority Press Secretary; Theresa Gambo, Minority Financial and 
Office Administrator; Peter Kielty, Minority General Counsel; 
Ryan Long, Minority Deputy Staff Director; Mary Martin, 
Minority Chief Counsel, Energy, and Environment and Climate 
Change; Brandon Mooney, Minority Deputy Chief Counsel, Energy; 
Brannon Rains, Minority Legislative Clerk; and Peter Spencer, 
Minority Senior Professional Staff Member, Environment and 
Climate Change.

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

    Mr. Rush. I am going to call the subcommittee to order. And 
the Chair recognizes himself for 5 minutes for the purposes of 
an opening statement. And I want to begin by thanking all of 
the FERC Commissioners for appearing before the subcommittee 
this morning for the purposes of discussing critical issues 
related to the governance of the Nation's electric grid.
    In the last oversight hearing this subcommittee held last 
year, I made it clear that I did not support FERC putting its 
proverbial thumb on the scale to ambiguously prop up coal and 
nuclear facilities as the 2017 DOE Notice of Proposed 
Rulemaking proposed. In that same hearing, I also stated that 
elected officials in the States should have the authority to 
choose the type of energy sources within their own portfolios 
and that would mostly benefit their own constituents.
    To this point, we are seeing my home State of Illinois as a 
national leader in enacting legislation to promote renewables 
and nuclear power as safe and reliable and carbon-free sources 
of energy. And the bipartisan Future Energy Jobs Act, which was 
passed in 2016, along with a more recent proposal by Governor 
Pritzker of Illinois, will move my State towards a cleaner, 
greener, more sustainable energy future. And I for one do not 
want to see FERC stand in the way of that progress.
    Why don't you all come on in, please.
    Mr. Upton. Maybe we should take the Judiciary Committee's 
room and swap them. What do you think?
    Mr. Rush. Well, let's take the Judiciary's jurisdiction and 
when we take their room? All right.
    You all please come on in so they can close the door, all 
right.
    The bipartisan Future Energy Jobs Act that was passed in 
2016, along with a more recent proposal by the Governor of 
Illinois, Pritzker, will move my State forward towards a 
cleaner, greener, more sustainable energy future. And I do not 
want to see FERC stand in the way of that progress. However, 
FERC's ruling on PJM capacity market will undo this historic 
progress and make it harder to achieve my State's energy goals.
    It is extremely important that the Commission wants to 
unveil a market structure that allows for individual States to 
make decisions regarding the makeup of their particular 
portfolios, energy portfolios, that helps to address climate 
change, provides reliable energy, and keeps prices affordable.
    One of the biggest challenges facing FERC is how to 
integrate more renewable energy and distributing energy 
resources into the grid and putting them on the road to help 
accomplish these goals. Consumers are demanding this type of 
change, and it is important that FERC works as a partner to 
make this happen, rather than as another obstacle standing in 
the way.
    I applauded the Commission's storage and distributed energy 
resources, DER, Notice of Proposed Rulemaking issued back in 
November 2016, and Order 841 issued in February 2018 directing 
RTOs and ISOs to upgrade and update market rules so that 
storage could participate. However, we are now in 2019, and it 
is past time now for the Commission to issue a final decision 
on this particular issue.
    I look forward today to engaging FERC on these important 
issues, including allowing States to dictate every energy 
portfolio that they deem would be beneficial to their 
constituents, allowing more States to integrate more renewables 
into the grid through transmission and finding a way for 
distributed energy resources to participate in capacity markets 
and making sure that consumers' voices are heard and respected 
throughout the RTOs.
    How the Commission moves forward is utterly 
important.I21[The prepared statement of Mr. Rush follows:]

                Prepared Statement of Hon. Bobby L. Rush

    I want to thank all of the FERC Commissioners for appearing 
before the subcommittee this morning to discuss critical issues 
related to the governance of the Nation's electric grid.
    In the last oversight hearing this subcommittee held last 
year, I made it clear that I did not support FERC putting its 
thumb on the scale to ambiguously prop up coal and nuclear 
facilities as the 2017 DOE NOPR proposed.
    In that same hearing I also stated that elected officials 
in the States should have the authority to choose the type of 
energy sources within their portfolios that would most benefit 
their constituents.
    To this point, we have seen my home State of Illinois act 
as a national leader in enacting legislation to promote 
renewables and nuclear power as safe, reliable, carbon-free 
sources of energy.
    The bipartisan Future Energy Jobs Act, passed in 2016, 
along with more recent proposals by Governor Pritzker, would 
move my State towards a cleaner, greener, more sustainable 
energy future, and I do not want to see FERC stand in the way 
of that progress.
    However, FERC's ruling on the PJM capacity market would 
undo this historic progress and make it harder to achieve my 
State's clean energy goals.
    It is extremely important that the Commission works to 
unveil a market structure that allows for individual States to 
make decisions regarding the makeup of their energy portfolios 
that helps to address climate change, provides reliable energy, 
and keeps prices affordable.
    One of the biggest challenges facing FERC is how to 
integrate more renewable energy and distributed energy 
resources into the grid and putting forth rules of the road to 
help accomplish these goals.
    Consumers are demanding this type of change and it is 
important that FERC works as a partner to make this happen, 
rather than as another obstacle standing in the way.
    The Commission must make sure that consumer voices are 
heard throughout the regional transmission organizations and 
that the interests of the public are protected through the 
agency's decisions.
    I applauded the Commission's Storage and Distributed Energy 
Resource (DER) Notice of Proposed Rulemaking (NOPR) issued back 
in November 2016, and Order 841 issued in February 2018, 
directing RTOs and ISOs to update market rules so that storage 
could participate.
    However, we are now in June 2019, and it is past time for 
the Commission to issue a final decision on this issue.
    So I look forward to engaging with the Commissioners on 
these important issues, including allowing States to dictate 
energy portfolios that benefit their constituents, integrating 
more renewables into the grid through transmission, finding a 
way for distributed energy resources to participate in the 
capacity markets, and making sure that consumer voices are 
heard and respected throughout the regional transmission 
organizations.
    How the Commission moves forward on each of these issues 
will have a dramatic impact on the Nation's energy portfolio 
and our ability to combat climate change moving forward and I 
will be watching closely to how the agency responds to each of 
these issues.
    Now, let me recognize my friend and colleague from 
Michigan, Ranking Member Upton, for his opening statement.

    Mr. Rush. And I want to now yield 5 minutes to my friend 
from Michigan, the ranking member, for his opening statement.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well, thank you, Mr. Chairman. And this is an 
important hearing to examine FERC's budget and priorities for 
fiscal year 2020. I want to extend a warm welcome to all of our 
Commissioners. It has been about a year since FERC testified 
before the committee, and in that time the Commission has dealt 
with its share of challenges, and certainly the change in 
leadership due to the passing of former Chairman McIntyre. A 
good guy by all accounts.
    Chairman Chatterjee has performed admirably, that is for 
sure, stepping back into the role of Chairman of FERC. The 
Commission also has received a new member, Commissioner Bernard 
McNamee--welcome--who brings a wealth of experience in State 
and Federal energy policy matters.
    You know, as members of the Energy and Commerce Committee, 
we are closely monitoring the shifts occurring across our 
energy landscape, so that we are prepared to confront the 
challenges and take full advantage of the opportunities that 
lay ahead. Under my chairmanship of the full committee and 
continuing under Chairman Walden, we have worked on a 
bipartisan basis to remove unnecessary barriers to growth, 
streamline the path for the permitting process for energy 
projects, and encourage innovation and technological 
development, and I know that will continue under Chairman 
Pallone and Chairman Rush.
    FERC has many important responsibilities to help us 
navigate the changes that we are seeing with our generation 
resources mix and to ensure the resilience and security of our 
energy systems, including the import-export terminals, natural 
gas pipelines, and electric transmission facilities. FERC has 
also had a responsibility to oversee energy markets, ensure 
just and reasonable rates, advise on State energy policies, and 
oversee the development of mandatory electric reliability, and 
security standards for the bulk power system.
    As we have learned, managing this wide array of issues is 
no simple task. Building new pipelines and electric 
transmission facilities has become increasingly challenging. 
And while FERC as the lead agency has established a process to 
allow for thorough environmental reviews and meaningful 
stakeholder input, we have started to see this process strained 
by States that are not performing their federally delegated 
responsibilities in perhaps a timely fashion.
    We are also seeing big changes on the generation side with 
the decline of coal and nuclear coinciding with the rise of 
natural gas and renewables, which is placing pressure on State 
and regional resource planning. Many of the issues we discussed 
at our hearing last year are still actively under consideration 
at FERC, including fuel security and grid resiliency, grid 
storage, pipeline permitting, and market reforms.
    I look forward to today's hearing to receive an update on 
progress in these areas. I also look forward to discussing 
physical and cyber security for our grid and pipeline network, 
which is an issue that all of us care deeply about. While FERC 
has authority to approve mandatory cybersecurity reliability 
standards for the bulk power system, the regulatory framework 
for pipelines may have gaps that should be examined. Given the 
interdependency of our gas pipelines and the electric systems, 
we need to make sure that we are doing everything that we can 
do to remain secure.
    The last point: I would ask unanimous consent that Mr. Long 
from Missouri be able to sit in--not a member of the 
subcommittee, but obviously a member of the full committee--be 
able to sit in on this and be able to submit questions as well.
    Mr. Rush. Yes, seeing no objection, so ordered.
    Mr. Upton. And with that, Mr. Chairman, I yield back.
    [The prepared statement of Mr. Upton follows:]

                 Prepared Statement of Hon. Fred Upton

    Thank you, Mr. Chairman, for holding this hearing to 
examine FERC's budget and priorities for fiscal year 2020. I 
would also like to extend a warm welcome to our FERC 
Commissioners. It has been about a year since FERC testified 
before the Committee, and in that time, the Commission has 
dealt with its share of challenges, and sadly, a change in 
leadership due to the passing of former Chairman Kevin 
McIntyre.
    By all accounts, Chairman Chatterjee has performed 
admirably, stepping back into the role of Chairman of FERC. The 
Commission has also received a new member, Commissioner Bernard 
McNamee, who brings a wealth of experience in State and Federal 
energy policy matters.
    As members of the Energy and Commerce Committee, we are 
closely monitoring the shifts occurring across our energy 
landscape, so that we are prepared to confront the challenges 
and take full advantage of the opportunities that lay ahead.
    Under my chairmanship of the full committee, and continuing 
under Chairman Walden, we have worked on a bipartisan basis to 
remove unnecessary barriers to growth, streamline the 
permitting process for energy projects, and encourage 
innovation and technological development. I hope that we can 
continue this important work under Chairman Pallone and 
Chairman Rush.
    FERC has many important responsibilities to help us 
navigate the changes we are seeing with our generation resource 
mix, and to ensure the resilience and security of our energy 
systems, including import/export terminals, natural gas 
pipelines, and electric transmission facilities. FERC also has 
a responsibility to oversee energy markets, ensure just and 
reasonable rates, advise on State energy policies, and oversee 
the development of mandatory electric reliability and security 
standards for the bulk power system.
    As we have learned, managing this wide array of issues is 
no simple task. Building new pipelines and electric 
transmission facilities has become increasingly challenging. 
While FERC, as the lead agency, has established a process to 
allow for thorough environmental reviews and meaningful 
stakeholder input, we have started to see this process strained 
by States that are not performing their federally delegated 
responsibilities in timely fashion. We are also seeing big 
changes on the generation side, with the decline of coal and 
nuclear coinciding with the rise of natural gas and renewables, 
which is placing pressure on State and regional resource 
planning.
    Many of the issues we discussed at our hearing last year 
are still actively under consideration at FERC, including fuel 
security and grid resiliency, grid storage, pipeline 
permitting, and market reforms. I look forward to today's 
hearing to receive an update on progress in these areas.
    I also look forward to discussing physical and 
cybersecurity for our grid and pipeline network, which is an 
issue that I care deeply about. While FERC has authority to 
approve mandatory cybersecurity reliability standards for the 
bulk power system, the regulatory framework for pipelines may 
have gaps that should be examined. Given the interdependency of 
our gas pipelines and the electric systems, we need to make 
sure we are doing everything we can to remain secure.
    With that, I would like to thank the Commissioners for 
appearing before us today, I will yield back the balance of my 
time.

    Mr. Rush. I want to thank the gentleman for yielding back. 
Before I bring the chairman of the full committee on, I want to 
take a moment to introduce to those who are gathered here a 
very resourceful and very dedicated group of young people here 
from Illinois, including from my district. The Illinois 
Environmental Council is with us this morning, and they are 
here to advocate for 100 percent clean energy.
    So please recognize them as they stand, the Illinois 
Environmental Council.
    [Applause.]
    Mr. Rush. OK, thank you very much.
    The Chair now recognizes the chairman of the full 
committee, Mr. Pallone, for 5 minutes.

OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Chairman Rush. I would like to 
begin by thanking the Commissioners for being here today and 
for their collective work at the Federal Energy Regulatory 
Commission.
    FERC's decisions and rulemakings have a large impact on our 
Nation's energy and environmental future. The Commission's 
activities directly affect electric and gas consumers across 
the United States, both the costs to ratepayers and the 
reliability of electric grid systems. They also affect the 
environment, particularly in the form of greenhouse gas 
emissions. And I am interested in learning how FERC intends to 
address greenhouse gas emissions in natural gas pipeline 
permitting approvals. To date, FERC's efforts to account for 
greenhouse gas emissions in the pipeline review process leaves 
much to be desired, in my opinion.
    In 2017, the DC Circuit found in the Sabal Trail decision 
that FERC cannot ignore the indirect effects of projects it 
approves, including emissions from downstream use. And I know 
FERC has great analysts who are up to the task of accounting 
for greenhouse gas emissions, but they need to be empowered to 
ensure that these impacts are fully considered. This is 
particularly concerning, because FERC seems more than willing 
to approve any pipeline, even though the Natural Gas Act 
directs the Commission to only approve projects that are in the 
public convenience and necessity.
    And I am also concerned that FERC looks at each pipeline 
project in a vacuum without regard to any other pipeline 
application. This could result in two pipelines running right 
next to each other. And I think we can all agree that it is 
just not a smart or responsible way of planning our system, 
particularly when people's private property could be taken by a 
pipeline company. The bottom line is that this whole process 
needs a more thoughtful strategy of planning and broad-ranging 
analysis.
    On the electric side, it has been roughly 20 years since 
the implementation of wholesale markets. Though I had my doubts 
in the past, it is now clear that these markets have promoted 
competition in generation, ensuring lower prices and a reliable 
bulk power system. And this is good for consumers, and it has 
also been good for the environment. New technologies can 
deliver, store, manage, and reduce power needs with a near 
instantaneous response to dispatch signals.
    And I would particularly like to applaud the Commission's 
work on Order 841, integrating storage resources into wholesale 
power markets. I look forward to hearing more about the 
distributed energy resource aspect of that effort. Innovation 
and technology are leading the way, and FERC can and should be 
a partner in that effort.
    I also think it is important we look at Order 1000, which 
governs how transmission is planned and developed and how the 
costs are allocated. Chairman Chatterjee recently said it was 
not working as intended, and I agree, particularly regarding 
consideration of nontransmission alternatives when looking at 
new system investments and interregional transmission planning, 
and I would like to hear about your plans to lead the 
Commission in addressing the shortcomings.
    I also want to say that I am not happy with the way RTOs 
are assessing their transmission needs, and in my experience in 
New Jersey, it is potentially resulting in the construction of 
unnecessary projects. And, finally, we need greater scrutiny of 
wholesale capacity markets. Frankly, the current state of 
affairs is a mess, especially in the PJM market where New 
Jersey participates. PJM participants are currently left in the 
lurch of both an old and new capacity market design, and the 
result of this uncertainty is higher electricity bills. It is 
vital that we figure this out immediately.
    [The prepared statement of Mr. Pallone follows:]

             Prepared Statement of Hon. Frank Pallone, Jr.

    I'd like to begin by thanking the Commissioners for being 
here today, and for their collective work at the Federal Energy 
Regulatory Commission.
    FERC's decisions and rulemakings have a large impact on our 
Nation's energy and environmental future. The Commission's 
activities directly affect electric and gas consumers across 
the United States--both the costs to ratepayers and the 
reliability of the electric grid and system.
    They also affect the environment, particularly in the form 
of greenhouse gas emissions. I'm interested in learning how 
FERC intends to address greenhouse gas emissions in natural gas 
pipeline permitting approvals. To date, FERC's efforts to 
account for greenhouse gas emission in the pipeline review 
process leaves much to be desired.
    In 2017, the DC Circuit found in the Sabal Trail decision 
that FERC cannot ignore the indirect effects of projects it 
approves, including emissions from downstream use. I know FERC 
has great analysts who are up to the task of accounting for 
greenhouse gas emissions, but they need to be empowered to 
ensure these impacts are considered fully.
    This is particularly concerning because FERC seems more 
than willing to approve any pipeline even though the Natural 
Gas Act directs the Commission to only approve projects that 
are in the public convenience and necessity. I am also 
concerned that FERC looks at each pipeline project in a vacuum, 
without regard to any other pipeline application. This could 
result in two pipelines running right next to each other. I 
think we can all agree that's just not a smart or responsible 
way of planning our system--particularly when people's private 
property could be taken by a pipeline company.
    The bottom line is that this whole process needs a more 
thoughtful strategy of planning and broadranging analysis.
    On the electric side, it has been roughly 20 years since 
the implementation of wholesale markets. Though I had my doubts 
in the past, it's now clear that these markets have promoted 
competition in generation, ensuring lower prices and a reliable 
bulk power system. This is good for consumers and it's been 
good for the environment.
    New technologies can deliver, store, manage and reduce 
power needs with a near instantaneous response to dispatch 
signals. I would particularly like to applaud the Commission's 
work on Order 841, integrating storage resources into wholesale 
power markets. I look forward to hearing more about the 
distributed energy resource aspect of that effort. Innovation 
and technology are leading the way and FERC can and should be a 
partner in that effort.
    I also think it's important we look at Order 1000, which 
governs how transmission is planned and developed, and how the 
costs are allocated. Chairman Chatterjee recently said it was 
not working as intended. I agree, particularly regarding 
consideration of nontransmission alternatives when looking at 
new system investments and interregional transmission planning. 
I'd like to hear about your plans to lead the Commission in 
addressing the shortcomings. I also want to say that I'm not 
happy with the way RTOs are assessing their transmission needs 
and, in my experience in New Jersey, it is potentially 
resulting in the construction of unnecessary projects.
    Finally, we need greater scrutiny of wholesale capacity 
markets. Frankly, the current state of affairs is a mess, 
especially in the PJM market where New Jersey participates. PJM 
participants are currently left in the lurch of both an old and 
new capacity market design. The result of this uncertainty is 
higher electricity bills. It is vital that we figure this out 
immediately.
    And with that I would like to yield the balance of my time.

    Mr. Pallone. So I have some time left, and I would like to 
yield the balance of my time to Mr. Kennedy.
    Mr. Kennedy. Mr. Chairman, I want to thank the chairman for 
yielding and thanks to the subcommittee for hosting this 
hearing and thank the Commissioners, everybody, for being here.
    I would like to add one more area of focus to today's 
conversation and something that is particularly important to 
me: RTO governance and transparency into the stakeholder 
process in our wholesale markets. Focus on RTO governance is 
not only essential to good governance, but also critical to 
accountability. Too often, parties involved in the energy 
markets can just simply pass the buck and responsibility to 
others, but the result is often the same. Consumers end up 
paying more, and no one is held accountable.
    I am not suggesting FERC is the sole responsible party 
here, but the Commission is invaluable in upholding the 
stability and reliability of a system when it works properly, 
and you are also the enforcers when the system breaks down. So 
I look forward and to continue to work with all of you on all 
of this, and I yield back the time to the chairman. Thank you.
    Mr. Pallone. And I yield back. Unless someone else wants 
the remaining time, I will yield back, Mr. Chairman.
    Mr. Rush. The Chair thanks the gentleman for yielding. The 
Chair now recognizes Mr. Walden, the ranking member of the full 
committee, for 5 minutes for the purposes of his opening 
statement.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. Good morning, Mr. Chairman. I want to thank our 
witnesses for being here today, the Commissioners. We really 
appreciate the tough challenges you face. We have a couple of 
projects in Oregon that are under review at different levels, 
both State and Federal approvals, and I am observing that and 
watching that, and we appreciate what you do to allow public 
input on those projects. I think that is really an important 
part of this.
    And so, we thank you and we recognize the tough challenges 
you face in trying to figure out what is best for the country. 
And to that point, you know, a lot has changed in the energy 
picture. We know that. I am old enough to remember when we 
thought we were going to run out of natural gas and oil, and we 
are all on watch for what do we do then? And now through 
innovation and technology we have discovered we can become a 
net exporter of energy and really lead the world, and we can do 
it in an environmentally smart way, and we can replace more 
polluting sources around the world if we can get our natural 
gas into markets.
    We can also stick it to Putin, let me be direct and clear 
here. It is a geopolitical force as well. I have met with 
leaders of foreign countries who beg us--beg us--to get our 
natural gas into market so they have a competitor to Gazprom. 
And when natural gas does get into the market, guess what, the 
prices go down and we quit funding Russia, or they do. So I 
think there are important international issues here as well 
that America needs to look at. They may not all be in your 
statutory process, but they are important for America going 
forward, and so I think that is an important piece.
    We are on the breakthrough of major battery storage. I met 
with some folks from some of our national labs this morning 
about research they are doing to capture carbon, perhaps with a 
film that could capture carbon at $30 a ton, which would be 
remarkable if they are able to take it from a computer process 
into a reality in the marketplace, and we think about how 
transformative that could be to reduce carbon emissions and 
continue to provide baseload energy.
    My region, hydropower. This committee did a lot of work on 
hydropower licensing for small scale. We believe in it. It is 
carbon free. It is there. It is an enormous resource, but we 
also need to make sure we have got transmission capacity. And I 
know you all focus on the grid, on its reliability and security 
and safety and adequacy. We do too. We try to address those 
issues. I would love to know more about the choke points in the 
country, you know, you have the Northeast heating oil issue.
    We have situations where we are importing foreign gas into 
the Northeast, I think maybe even from Gazprom. And we have 
fights over transmission lines in the Northeast. We have fights 
over pipelines in the Northeast, and even access to America's 
great energy reserves there. I would love to know what that 
means to consumer prices. It is not my part of the world, but 
it is our country, and so I would love to know what that means 
for consumers when pipelines are blocked, power lines are 
blocked, and access to American energy is blocked. Does that 
make them pay more or less to keep their homes warm in the 
winter and cool in the summer?
    So those are issues I think are important as we move 
forward on renewable energy development. We have a couple 
projects in my part of the world. Swan Lake, which is a closed 
loop hydro project. There is another one out of Goldendale 
where we can use surplus capacity from renewable energy to pump 
water uphill and then bring it back down through a hydro system 
and have a closed loop process. That is a great battery in and 
of itself. We have solar projects and we see the price of solar 
and wind coming down and being very competitive in the 
marketplace. And so, what I would love to hear from you is, 
what does the future look like? What is working, what is not? 
Where are the choke points in America, and what should we do 
about it? And then how safe and secure is the grid?
    And I would tell you at the outset, we also have a surprise 
medical billing hearing going on with Mr. Pallone and my bill 
downstairs, so I will be coming and going, because that 
actually matters to consumers a whole bunch and oftentimes is 
much more expensive than their energy bill, so we are trying to 
fix that as well. But we thank you for the work that you are 
doing. We know it is tough, but it is very important.
    [The prepared statement of Mr. Walden follows:]

                 Prepared Statement of Hon. Greg Walden

    Good morning and welcome to our FERC Commissioners. I look 
forward to today's hearing to examine FERC's budget proposal 
and priorities for the year ahead.
    The Federal Energy Regulatory Commission plays an integral 
role in the safety, security, and economic prosperity of all 
Americans, given its responsibility for overseeing our Nation's 
energy infrastructure.
    Through authorities provided by Congress, namely the 
Federal Power Act and the Natural Gas Act, the Commission 
regulates the interstate transmission of electricity, natural 
gas, and oil; reviews proposals to build LNG terminals and 
interstate natural gas pipelines; and, oversees the licensing 
of hydropower projects.
    As members of this committee know, the Nation's energy 
landscape continues to shift, driven by large increases in the 
domestic production of crude oil and natural gas, continued 
technological innovation, existing market and regulatory 
structures, and evolving consumer preferences.
    The U.S. is becoming a net exporter of energy, with growing 
natural gas pipeline exports and LNG exports. We're also seeing 
big shifts in the fuels used to generate electricity, with coal 
and nuclear plants closing at a record pace, and a growing 
share of new natural gas power plants, and intermittent 
renewables such as wind and solar coming online--the long-term 
implications of which are yet to be fully understood. 
Meanwhile, energy efficiency continues to improve, keeping our 
consumption relatively flat, even though our economy continues 
to grow.
    These broad trends present both challenges and 
opportunities. FERC is on the front lines of all of this, with 
an important mission to ensure safe, reliable, and secure 
energy for consumers.
    As policymakers, we need to be realistic about the 
challenges we face. To maximize our Nation's energy abundance, 
we need to modernize and expand our infrastructure of pipelines 
and electric transmission facilities. We need new export 
capacity for our surplus energy supplies to keep our prices at 
home low and stable while improving the energy and security of 
our allies. We need to modernize our grid and examine the state 
of our energy markets to ensure consumers are benefiting. We 
also need to strengthen our protections against emerging cyber 
and physical threats to our energy infrastructure to ensure 
they remain resilient and reliable.
    For these projects to get built, we need to make sure FERC 
has the tools it needs to carry out its regulatory 
responsibilities. The Commission already has a lot on its plate 
with the difficult task of coordinating a broad range of 
stakeholders and balancing a wide range of factors, such as 
property rights, environmental impacts, State and Tribal 
interests, and consumer protections.
    In my home State of Oregon, we're dealing with these issues 
with the Jordan Cove LNG project and the Swan Lake closed loop 
hydro project. Being on the front lines, I can appreciate how 
complex the FERC process can be, and understand the importance 
of getting it right.
    While the challenges may sound daunting, I am excited about 
the opportunities that lay ahead. As we modernize our 
infrastructure, we have the opportunity to integrate new 
technologies and services to benefit consumers. We are already 
seeing this with ``smart grid'' technologies that help deliver 
electricity more reliably and efficiently and restore power 
more quickly after an outage. I am also excited about ways to 
take advantage of the advances in digital and information 
technologies to provide consumers with greater control and 
choice when it comes to energy consumption.
    With our 12-part ``Powering America'' hearing series in the 
last Congress, we took a close look at solutions to harden and 
modernize our energy infrastructure. I expect today's hearing 
will give Members another opportunity to explore these 
important issues. With that, I'd like to thank the 
Commissioners for appearing before us today, and I look forward 
to their testimony.

    Mr. Walden. With that, Mr. Chairman, I would yield back the 
balance of my time.
    Mr. Rush. The Chair wants to thank the ranking member for 
yielding back. And the Chair would like to remind Members that, 
pursuant to committee rules, all Members' written opening 
statements shall be made part of the record.
    And now it is my privilege to introduce our panel of 
witnesses for today's hearing. The Honorable Neil Chatterjee is 
the Chairman of FERC, and he is a witness--at the witness table 
today, and I certainly want to welcome the Chairman.
    Next will be the Honorable Cheryl A. LaFleur, Commissioner 
for FERC. Then next to her is the Honorable Richard Glick, who 
is also a Commissioner at FERC. And last but not least, the 
Honorable Bernard L. McNamee, who is also a Commissioner. And I 
want to thank each and every one of you for appearing before us 
today, and we certainly want to congratulate you on your past 
accomplishments, and we look forward to hearing from your 
testimony at today's hearing.
    And at this time, the Chair now wants to recognize each 
Member for 5 minutes to provide your opening statement. But as 
a part of what we do here, I would like to explain the lighting 
system, which you probably don't need any explanation for, but 
it is written here, and I am going to read it. In front of you 
is a series of lights. The light will initially be green at the 
start of your opening statement. The light will turn yellow 
when you have 1 minute remaining. Please begin to wrap up your 
testimony at the occasion of the yellow light. The light will 
turn red when your time has expired, and please conclude your 
statement, and then the light will turn to red.
    Chairman Chatterjee, you are now recognized,. After being 
fully instructed on the lighting system, you are finally 
recognized for 5 minutes for the purposes of an opening 
statement.

    STATEMENTS OF NEIL CHATTERJEE, CHAIRMAN, FEDERAL ENERGY 
 REGULATORY COMMISSION, AND CHERYL A. LaFLEUR, RICHARD GLICK, 
     AND BERNARD L. McNAMEE, COMMISSIONERS, FEDERAL ENERGY 
                     REGULATORY COMMISSION

                  STATEMENT OF NEIL CHATTERJEE

    Mr. Chatterjee. Thank you, Chairman Rush, Ranking Member 
Upton, and members of the subcommittee. I really appreciate the 
opportunity to be here before you today to discuss the 
importance work that we are doing at the Federal Energy 
Regulatory Commission. As was mentioned, my name is Neil 
Chatterjee and I am the Chairman of FERC. I appreciate the 
subcommittee's attention to the major energy issues facing our 
Nation and the role that FERC plays in addressing those issues 
for the American people.
    This is an exciting and transformational period for our 
Nation's energy landscape. I take very seriously the 
responsibility to work with my colleagues to ensure that all 
Americans have reliable and affordable energy supplies. Today, 
I will focus my remarks on two of my priorities: the 
Commission's efforts to allow for storage resources to better 
participate in the wholesale electric markets, and our focus on 
the importance of security measures to protect from cyber and 
physical threats to the Nation's bulk power system. I will also 
address FERC's efforts to reform our regulations under the 
Public Utility Regulatory Policies Act of 1978, or PURPA, an 
issue I know many of you have been following closely.
    Over the last decade or more, our country has seen many 
changes in the energy industries that FERC regulates. As such, 
it is essential for FERC to remain vigilant about these changes 
and respond to them in ways that enhance competition in the 
electricity markets, support the resilience of the bulk power 
system, and lower costs to consumers. One of these recent 
transformations we have seen is the improvement in electric 
storage technologies. I want to highlight the Commission's 
work, which I am extremely proud of, regarding the 
participation of electric storage resources in wholesale 
electricity markets as an example of how FERC is responding to 
our ever-evolving energy landscape.
    Traditionally, a variety of factors have created challenges 
to storage resources participation in the wholesale electric 
markets. Because of this, in 2018 FERC issued Order 841 to 
remove barriers to the participation of electric storage 
resources in the capacity, energy, and ancillary services 
markets operated by the Regional Transmission Organizations and 
Independent System Operators.
    FERC is now evaluating the December 2018 filings that RTOs 
and ISOs made to implement Order 841. As a result of this 
order, I expect an increase in the deployment of storage 
resources, which should result in greater reliability and lower 
prices for customers by enhancing competition. This is but one 
example of how FERC is proactively addressing shifts in the 
energy industries that we regulate and ensuring the emerging 
technologies can serve an integral role in wholesale electric 
markets.
    In addition to our work to reduce barriers for storage 
resources, FERC is evaluating barriers to the participation of 
distributed energy resource aggregations in markets operated by 
RTOs and ISOs. Last year, FERC staff held a technical 
conference to gather more information regarding the 
participation of distributed energy resource aggregations in 
wholesale electricity markets as well as to discuss more 
broadly the potential effects of distributed energy resources 
on the bulk power system. FERC is currently considering the 
record as we determine how to move forward.
    Another priority I would like to discuss today is cyber and 
physical security. As you are aware, America's critical 
infrastructure is increasingly under attack by foreign 
adversaries. The Department of Homeland Security and FBI have 
issued multiple public reports describing cyber intrusion 
campaigns by foreign government actors against our critical 
infrastructure, including the electric grid. Physical and cyber 
attacks on our critical infrastructure systems have the 
potential to create significant, widespread and potentially 
devastating effects that threaten the health, safety, and 
economic prosperity of the American people whom we serve. This 
evolving threat landscape demonstrates the importance of an 
unwavering focus on the security of the Nation's critical 
energy infrastructure.
    Of course, these issues are of paramount concern to us all, 
including the subcommittee, and I appreciate the subcommittee's 
attention to this crucial subject, including efforts to examine 
legislative solutions like those that recently moved to the 
markup process. At FERC we have and continue to address cyber 
and physical security risks as consistent with section 215 of 
the Federal Power Act, which grants us the authority to approve 
and enforce mandatory Reliability Standards developed by the 
North American Electric Reliability Corporation.
    We have also taken up voluntary initiatives with Federal, 
State, and industry partners. In 2018, FERC issued two 
significant order that improved bulk power system security. 
First, at our October 2018 Commission Meeting, we approved 
NERC's proposed reliability standards to address supply chain 
threats. This action is particularly significant given that 
these specific threats to the energy sector continue to grow. 
Second, at our July 2018 Commission Meeting, we approved a 
final rule directing NERC to expand reporting requirements for 
critical systems. That final rule directed NERC to develop a 
standard that requires registered entities to report successful 
and attempted intrusions into critical systems to NERC's 
Electricity Information Sharing and Analysis Center as well as 
to DHS. NERC recently filed a new reliability standard to 
satisfy the directive, which is currently pending before the 
Commission.
    But FERC does not just approve reliability standards. Since 
2016, FERC has conducted audits of industry's compliance with 
cybersecurity reliability standards, the goal of which is not 
only to assess compliance with the reliability standards, but 
also to learn and share best practices.
    Seeing that I am about to get the light, I am just going to 
say that it is time to bring PURPA into the 21st century. Major 
changes to PURPA should come from Congress, but we have some 
tools available to us at the Commission, and we are currently 
working to utilize those tools. Thank you.
    [The prepared statement of Mr. Chatterjee follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Rush. I want to thank you, Chairman Chatterjee. You 
have passed the lighting test for this morning.
    Now the Chair recognizes Ms. LaFleur for 5 minutes for the 
purposes of an opening statement.

                 STATEMENT OF CHERYL A. LaFLEUR

    Ms. LaFleur. Thank you, Chairman Rush, Ranking Member 
Upton, Chairman Pallone, Ranking Member Walden, and members of 
the subcommittee. I am Cheryl LaFleur. I have been a 
Commissioner at FERC for almost 9 years, and I have been 
honored to appear before you several times.
    Today I will comment on three major issues that are shaping 
our work. The first is resource selection in the Nation's 
competitive markets. In the 20 years since their creation, 
organized wholesale power markets have grown to serve more than 
two-thirds of Americans. These markets save customers money by 
dispatching resources over a large footprint, facilitating 
innovative technologies, and shifting investment risk from 
consumers to shareholders.
    In recent years, markets have been roiled by low-cost gas 
generation and renewables. These lower-cost resources have 
significantly decreased wholesale prices to the benefit of 
customers, but have also threatened the financial viability of 
certain existing resources, particularly coal and nuclear 
plants. Many States have sought either to retain resources that 
are not thriving in the market or to support new resources that 
the market would not select. These efforts have triggered a 
debate about how wholesale market design should be adapted in 
response.
    FERC is encouraging regional solutions to adapt capacity 
markets to State initiatives. We approved such a proposal for 
ISO New England, have an open proceeding to consider changes to 
the PJM market, and are watching New York ISO consider ways to 
use carbon pricing to incorporate State climate goals in its 
market structure.
    Second, once we have selected resources, how do we pay for 
them? Until recently, it was accepted without question that 
electric power was priced on volume, since a major component of 
its cost was the fuel you had to burn to make it. With low gas 
prices, zero marginal cost renewables, and change in load 
curves, the traditional cost structures that supported 
resources may no longer work. We have seen this trend most 
famously with the so-called duck curve in California, where 
solar resources generate too much energy in the middle of the 
day and resources needed when the sun goes down are not making 
enough money to stay in business.
    Similar trends are appearing in other regions. To help 
adapt, market operators and others are considering new ways to 
pay for power, with the focus not just on volume but on 
services such as ramping, scarcity pricing, reserves, and 
essential reliability services. FERC has also taken steps to 
ensure that new resources like storage can compete to provide 
these services.
    Finally, infrastructure to deliver resources to customers. 
Electric transmission is needed to support the reliability of a 
changing grid, particularly for location-constrained 
renewables. The Commission's issuance of Order 1000 in 2011 
anticipated the growing need for transmission. I believe the 
planning and cost allocation tenets of Order 1000 are sound; 
however, the introduction of competitive transmission that it 
required has been much more difficult than anticipated. In 
addition, the growth of domestic natural gas and gas-fired 
generation has led to considerable build-out of the Nation's 
gas pipeline network. I have called for reconsideration of how 
FERC determines the needs for pipelines, looking at a regional 
look.
    I also believe we must do a better job assessing the 
climate impacts of pipeline and LNG projects. Starting in 2016, 
FERC began disclosing more information on a project's climate 
impacts in our orders and environmental documents in response 
to the growing debate in our dockets. I strongly supported this 
decision. However, in May 2018, the Commission reversed course 
and elected to remove much of the greenhouse gas information 
from orders going forward.
    Since June 2018, I have tried to reconcile my disagreement 
with the Commission's revised policy with my obligation to 
consider pipelines one by one under the Natural Gas Act. Where 
I otherwise conclude a pipeline is needed, I have done my own 
greenhouse gas calculation and analysis to weigh against the 
pipeline benefits. I believe the Commission, the public, and 
the regulated community would be better served if we 
proactively addressed these issues before the courts require us 
to do so.
    It has been a tremendous honor to serve on FERC and to work 
with this committee. Thank you very much, and I yield my time 
to Commissioner Glick.
    [The prepared statement of Ms. LaFleur follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Rush. Commissioner Glick, you are recognized for 5 
minutes, and you have 30 seconds remaining from----

                   STATEMENT OF RICHARD GLICK

    Mr. Glick. Thank you, Commissioner LaFleur.
    Thank you, Mr. Chairman, Ranking Member Upton, and members 
of the subcommittee, and thank you for the opportunity to 
testify this morning.
    FERC has sometimes been referred to as a sleepy little 
agency, but the fact is that many of the actions we take have a 
significant impact on the everyday lives of Americans. The 
Commission is entrusted with protecting the public interest by 
regulating swaths of the U.S. energy industry. FERC's exercise 
of this responsibility has significant consequences for the 
prices of energy, the ability of public utilities to reliably 
and safely serve consumers and the environment.
    The American electric sector is in the midst of a dramatic 
transformation to a less carbon-intensive, more distributed 
electric generation fleet. This transformation is good for 
consumers, the economy, and the environment. As the cost of 
newer, cleaner technologies continue to decline, consumers are 
seeing the benefits. The two fastest-growing occupations 
nationwide are solar PV installers and wind turbine service 
technicians, and more than 3 million American men and women now 
are employed in the clean energy industry in the United States. 
This clean energy transformation will also have a lasting 
positive impact on the environment and climate change.
    Consumers are increasingly demanding that their energy 
comes from renewable or zero-emission sources, and businesses 
are delivering consumers what they want. Dozens of 
corporations, including some of the largest in the country, 
have announced or already achieved the goal of procuring all of 
their electricity needs from zero emissions or renewable 
resources. Although FERC is not a climate regulator, the 
Commission's actions have substantial consequences for climate 
change.
    As Chairman Chatterjee mentioned a second ago, for example, 
many wholesale market roils that were designed for a grid 
composed mostly of conventional generation facilities can pose 
unintended barriers to newer technologies' full participation 
in wholesale markets. And by helping to create a level playing 
field for all resources, the Commission can indirectly 
facilitate newer technologies' participation in wholesale 
electric markets. Indeed, the Commission did just that earlier 
last year when it issued a final rule that requires RTOs and 
ISOs to eliminate barriers to the participation of electric 
storage resources in the wholesale electric markets.
    The Notice of Proposed Rulemaking that led to the final 
rule on electric storage also proposed reforms to remove 
barriers to aggregated distributed energy resource 
participation in wholesale markets. The Commission in April 
2018, conducted a 2-day technical conference to gather 
additional information on this matter. I believe the time has 
come for the Commission to also eliminate barriers to 
distributed energy resources.
    The Commission's energy future, energy infrastructure 
permitting responsibilities can also affect emissions. FERC has 
authority over the licensing of certain hydroelectric 
facilities as well as the siting of interstate natural gas 
pipelines and facilities used to import or export liquefied 
natural gas. Under the Natural Gas Act, FERC must make a public 
interest determination before issuing a certificate for an 
interstate natural gas pipeline or an LNG facility. Because 
environmental effects factor directly into the public interest 
standard, the Commission must analyze the environmental impacts 
of a proposed interstate natural gas pipeline.
    Unfortunately, the Commission has chosen to treat 
greenhouse gas emissions differently than all other aspects of 
its environmental reviews and, in my opinion, effectively 
ignored its statutory obligation to examine those emissions' 
impacts on the public interest. Indeed, last year, the majority 
of Commissioners announced a new policy that chose to ignore 
reasonably foreseeable upstream and downstream greenhouse gas 
emissions in almost all cases. This policy prevents the 
Commission from performing the public interest analysis that 
Congress required and the DC Circuit has told us that we have 
to do. Just last week, the DC Circuit admonished the Commission 
for this approach, and I hope to work with my colleagues to 
revisit the Commission's approach in light of the court's 
guidance.
    Chairman Rush and Ranking Member Upton, thank you again for 
the opportunity to appear before the subcommittee. I look 
forward to answering your questions and the questions of your 
colleagues.
    [The prepared statement of Mr. Glick follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Rush. The Chair wants to thank the Commissioner.
    And now the Chair recognizes Commissioner McNamee for 5 
minutes. And Commissioner, see if you can beat him, because he 
had 1 minute, 27 seconds remaining, so.

                STATEMENT OF BERNARD L. McNAMEE

    Mr. McNamee. I will do my best. Thank you, Chairman Rush 
and Ranking Member Upton. And I also want to thank Chairman 
Pallone and Ranking Member Walden, everybody on the committee 
for having me. As you know, this is my first time appearing 
before you. My name is Bernie McNamee. I just joined the 
Commission 6 months ago, and it has been a great joy to be able 
to work with my colleagues here and everybody at the FERC 
staff.
    As you have heard from my fellow Commissioners, there are a 
number of important items that the Commission deals with. You 
all know this, but it is important to the Commission, the 
energy industry, consumers, and the Nation.
    First of all, I want to talk a little bit about LNG 
facilities. In 2017, the United States became a net exporter of 
natural gas, and FERC has played a role in this accomplishment 
by authorizing the construction of liquefied natural gas 
facilities pursuant to section 3 of the Natural Gas Act and 
pursuant to the National Environmental Policy Act. After 2 
years in which no new LNG facility was approved, the Commission 
now has approved, in a 3-month period, four LNG projects with a 
total estimated export capacity of 8 billion bcf a day. I am 
happy to say that I was able to play a part with my fellow 
Commissioners in finding a compromise in order to move these 
projects forward. And it also was an example of, if we look at 
the law and the facts we can usually come to a resolution of 
the issues for the benefit of the American people.
    And currently the Commission has 10 LNG export applications 
pending before it, and four LNG expert facility proposals are 
in the prefiling process. We will address each of these 
applications that come before us based on the law and the 
facts.
    More generally, since 2009, the United States has been the 
world's top producer of natural gas. Just think about that, 
when we used to wish that we could have energy independence and 
now we are a net exporter. This natural gas is transported 
across the United States using over 300,000 miles of interstate 
natural gas pipeline, and in 2018 over 13 billion cubic feet a 
day, or 689 miles, of Commission jurisdictional approved 
pipeline capacity entered service. Moreover, in 2018, the 
Commission authorized 44 new projects, representing 9.3 bcf a 
day, and 676 miles of new pipeline capacity.
    And we have heard some issues about how are we approving 
these. As you know, the Commission issued a notice of inquiry 
in order to examine whether or not we should be changing our 
certificate policy. The Commission has received over 3,000 
comments, and my colleagues, our staffs, and the Commission are 
all working through these comments.
    I also want to touch on how the Commission is trying to 
implement the tax cuts that you implemented under the Tax Cuts 
and Jobs Act of 2017. The Commission issued its Order 849 to 
determine whether natural gas pipeline rates should be adjusted 
to account for those tax cuts. And the Commission is dealing 
with a review, and so far, there have been 21 rate settlements 
between pipelines and their shippers and 11 weight reduction 
filings. The Commission has also initiated six section 5 show-
cost proceedings to see about reducing rates, trying to ensure 
that the tax cuts you ordered into the code are flowing through 
the customers.
    Next, I want to talk a little bit about the electric 
markets. The transformation of the electric grid through the 
markets and competition has been amazing. Two-thirds of the 
Nation's load is served under an RTO or an ISO, and Congress 
and FERC should be proud of this achievement. Because of 
competition, new energy sources can participate in the market, 
and customers are seeing the benefits. But there are also 
legitimate concerns, many of the things that you have dealt 
with in your time here in Congress. They include debates about 
the role of the different resources, capacity markets, price 
formation, environmental goals, State energy policy goals, 
Federal policy goals, market manipulation, affordability, and 
of course the overarching goal, making sure the lights turn on 
when the switch is flipped.
    There are also a number of other issues. We are trying to 
deal with PURPA, Order 1000, distributed energy resources, 
hydroelectric power, return on equity, transmission 
investments, and the specific tariffs that come before us. Each 
of these is important to each one of us here on the Commission, 
and we take them seriously, and we need to deal with them.
    I will finally touch on one thing that is brought up by a 
number of my fellow Commissioners and which I find very 
important as well, and that is energy storage. I was not on the 
Commission when the energy storage issue was issued, Order 841, 
but I agree with its portions of it that promote the use of 
energy storage resources at the grid, at the transmission 
level, and the bulk power system. But as you may know, I issued 
a concurrence in dissent focused on the jurisdictional issue. I 
do not believe that Congress provided the Commission under the 
Federal Power Act the authority to regulate the distribution 
facilities that are needed for those certain types of 
distribution or energy resource batteries to be able to connect 
behind the meter or at the distribution level.
    So this was a position that I looked at seriously, 
especially after comments filed by the National Association of 
Regulatory Utility Commissioners and the National Rural 
Electric Cooperative Association. In the end, I did say that I 
didn't think we have jurisdiction, but I also believe that we 
should have at least considered an opt out. Thank you very 
much.
    [The prepared statement of Mr. McNamee follows:]
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    Mr. Rush. I want to thank all of the Commissioners for 
their opening statement, and we have now concluded the time for 
opening statements. We will move into Members' questions. Each 
Member will have 5 minutes to ask questions of these witnesses, 
and I will start by recognizing myself for 5 minutes for the 
purposes of an opening--for questioning the Commissioners.
    Commissioner LaFleur, one of my concerns that I have stated 
earlier is that consumer voices are often overlooked, ignored, 
or cut out on the RTO process entirely. I understand that the 
role of the consumer varies between the different RTOs, but how 
do we ensure that consumers' voices are always heard and their 
interests are being protected consistently no matter what 
region they live in?
    And I would like for all the Commissioners to weigh in this 
question also.
    Ms. LaFleur. Well, thank you, Congressman, Chairman Rush. 
That is an important question. As you noted, all of the six 
RTOs and ISOs that are under the Commission's jurisdiction have 
stakeholder processes that were approved by the Commission some 
years ago, and they all include a consumer segment. It varies 
in the different States, whether it is the Attorneys General, 
the Citizens Utilities board as in your State, or sometimes 
municipal concerns are in the consumer segment in the various 
RTOs, and they have a vibrant role in participating in the 
dockets.
    But I also think this Commission has a role. When we see 
tariff proposals come before us, our obligation is to make sure 
they are just and reasonable to the end consumer that is going 
to be paying the bills at the end of the day. But we have heard 
a lot recently about potential ways to relook at Order 719 and 
improve stakeholder processes ,and I think we should be alert 
to ways to do that.
    Mr. Chatterjee. If I could weigh in on that as well, 
Chairman Rush. You have identified a very important issue, and 
I think, you know, transparency and ensuring the consumers' 
voices are heard is critical. That is why we have our rules in 
place. I think it is so important that stakeholders and 
consumers have their voices heard on these issues, because 
these issues have implications for consumers.
    I think the best way for consumers to have their voices 
heard, you know, go back to our rule. We can look at changes we 
can make, but we also need to make sure that consumers' 
concerns are met as they arise, with an eye towards ensuring 
consumers' voices are being heard as they come up through the 
process. And this is something that my colleagues and I will 
continue to look at and be vigilant on, because I think that 
transparency and accountability, these are very, very complex 
matters, and I think it is important that consumers are 
protected.
    Mr. Rush. Commissioner Glick?
    Mr. Glick. Thank you, Mr. Chairman. You know, one of the 
things that has been very enlightening since I have been at the 
Commission for a little over a year now is just the amount of 
frustration there has been with RTO governance around the 
country. And it is not just consumer groups, it is other 
stakeholders as well who have been very frustrated with. And I 
think it is worth it for the Commission to take a look at how 
the governance process works and how the various stakeholders 
get to participate.
    I would say that Congress in the late 1970s, early 1980s 
passed legislation creating an Office of Public Participation 
at FERC that I think would help provide for some consumer input 
at the Commission. As I understand it, Congress never did fund 
that Office, but I think it would be helpful if Congress did 
fund it, and I think that would be one way for consumers to 
participate in some of the decisionmaking processes we engage 
in.
    Mr. Rush. Commissioner----
    Mr. McNamee. Just briefly. I think that you are talking 
about the importance of----
    Mr. Rush. Commissioner McNamee, I am sorry.
    Mr. McNamee. That is quite all right. I think you touch on 
what is so very important, is that in our entire system of 
government, people want to be heard. And I know that we all 
take very seriously our obligation to understand that every 
person that files something in the Commission, that that case 
is important to them and that they need to be heard. And I 
think we always need to be vigilant to make sure that we are 
paying attention to what consumers want, what stakeholders 
want, every participant wants, in order to make sure that we 
are at least considering and hear their concerns even though 
sometimes it won't always be the result any particular 
individual or group wants. Thank you.
    Mr. Rush. I am going to yield back the remainder of my time 
and now recognize the ranking member of the great State of 
Michigan, Mr. Upton, for 5 minutes.
    Mr. Upton. Thank you, Mr. Chairman. It is the great State 
of Michigan, so that is good we put that adjective in there.
    Mr. Chairman Chatterjee, first, I want to say to all four 
of you, I appreciate your interaction with all of us. This is 
something that is so important. We appreciate the relationships 
that we have.
    For me, we know that rogue hackers and state-sponsored 
adversaries continue to launch cyber attacks at our Nation's 
energy infrastructure virtually every single day. And as you 
know, under the EPAct 2005, Congress gave FERC the authority to 
oversee the reliability of the electric grid including the 
authority to approve mandatory cybersecurity reliability 
standards. The current framework for setting cyber standards 
for the grid seems to be working pretty well, I think, but FERC 
does not have the authority over pipelines. And even though we 
are increasingly relying on natural gas pipelines to keep our 
power plants running--and I know in my congressional district 
we are expecting to break ground on a new Indeck facility in 
one of my communities back home.
    So the question is, should Congress be concerned about the 
lack of cyber oversight for pipelines, and I would note that 
TSA, in a hearing that we had a couple weeks ago, has less than 
a handful of folks--anybody here from TSA? Didn't think so--
less than a handful of folks out of their 50,000 employees that 
oversee pipelines. They did refuse despite bipartisan efforts 
to try to get them to testify before the committee, but what 
are your thoughts about the involvement of cyber and the 
relationships that you might have with other agencies as well?
    Mr. Chatterjee. Thank you, sir, for the question and also 
for your leadership on this issue, and particularly during the 
time that you chaired the committee. I think this is a very 
serious issue, and I think it is exacerbated by the increasing 
interdependence between gas and electricity generation in this 
country. Twenty years ago, if a single gas pipeline went out, a 
generator might not have flinched. Today, you might have eight 
or nine generators depending on a single gas pipeline, and a 
physical or cyber attack on such a pipeline could have 
catastrophic cascading effects. And our adversaries know this.
    I think TSA does a remarkable job on things like the safety 
of our aviation fleet, our highways, our rail, transportation 
area, but they need to put a greater focus on securing these 
pipelines because of this increasing interdependence for 
electricity. Since you, Senator Cornyn, Senator Cantwell, and a 
number of others have come out on this issue, Commissioner 
Glick and I have also been very vocal about our concerns in 
this area.
    We have seen some progress from both TSA and industry. I 
have met multiple times with the TSA Administrator Pekoske, and 
he has assured me that TSA is taking this seriously and they 
are going to commit more resources to it. I have also seen 
industry react positively and come forward and make the 
commitment that they will make the requisite investments in 
this area, but we have to remain vigilant on it. I think both 
TSA and industry need to follow through on the commitments that 
they are making. And if they don't, I think it is incumbent 
upon us at the Commission and you all to keep the pressure on.
    Mr. Upton. Well, we want to help you do that. Any other 
Commissioner wish--Commissioner Glick?
    Mr. Glick. Mr. Upton, as the Chairman said, we wrote a 
joint op-ed on this issue, and I share the Chairman's concerns. 
I would say that I continue to have serious concerns about the 
TSA's ability here. And I read the GAO Report recently that I 
think expressed some serious concerns about their resources and 
their efforts in the program. And I am not entirely sure what 
their plans are. We just need to see what their plans are in 
terms of responding.
    But we had a technical conference on cybersecurity just a 
few months ago and a TSA witness participated, and I asked her 
about the success rate of their voluntary guidance. And they 
said, ``Well, our hope is to have a success rate of 80 
percent.'' Eighty percent doesn't cut it. We need to have the 
success rate of a hundred percent. And again, the TSA does a 
wonderful job on airports and other transportation, but I think 
the pipeline industry, I think we need to see that moved. I 
would actually recommend the Department of Energy, which is, as 
you know, the lead energy sector agency for cybersecurity.
    Mr. Upton. Commissioner LaFleur?
    Ms. LaFleur. Thank you, Congressman. I was in the electric 
industry when the mandatory standards were first handed down 
after the 2005 act, and we did not exactly welcome them. Our 
attitude was, we already do this, right, why do we need 
mandatory standards? But I believe they have definitely 
improved the reliability and security of the grid, and I 
actually think most people in the industry would concede that 
now too.
    I think, although I know the pipeline industry is not 
calling for mandatory standards, I think the cybersecurity of 
the pipeline grid is so important that it would be worthwhile 
for Congress to require some sort of mandatory authority. It 
doesn't have to be at FERC. It could be at TSA and give them 
the resources, it could be at DHS. It could be at DOE. I am not 
in the business of looking for more responsibilities at FERC, 
that is up to you all. But I do think a structure with some 
teeth to it would be very helpful.
    Mr. Upton. Thank you, Mr. Chairman. I yield back.
    Mr. Rush. I want to thank the gentleman. And now the Chair 
recognizes Mr. Peters for 5 minutes.
    Mr. Peters. Thank you. Thank you to the Commissioners for 
your work and for being here today. I want to just mention 
climate change, which is exacerbating natural disasters. For 
California that means more intense wildfires each year, with a 
huge impact on personal safety, communities' health, and the 
economy. The Midwest has seen flooding. The South has seen 
hurricanes. The Northeast has a cold snap, polar vortex 
conditions.
    So I want to talk a little bit about how we are managing 
the electric system and planning for that. How is FERC looking 
at accounting for climate change in the design of wholesale 
markets and in grid investments? Let's start with the Chairman, 
if I could.
    Mr. Chatterjee. Thank you for your question, Congressman. 
And, look, similarly, I share your concerns about climate 
change and the impacts of climate change. I am a conservative, 
I grew up in coal country. But I believe that climate change is 
real, that man has an impact, and that we need to take steps to 
mitigate emissions. I have been very proud of the work that the 
Commission has played in really helping the U.S. become a 
leader in emissions reductions. And if you look at the 
statistics, the U.S. has been a leader in emissions reductions. 
Power sector emissions in the U.S. are at 1990s levels, and I 
think that is due to a couple of things. The markets that FERC 
oversees, we are allowing breaking down barriers to access so 
that newer technologies can be----
    Mr. Peters. And how is that happening? I want to be very 
specific about what actions you are taking with respect to 
market design.
    Mr. Chatterjee. Yes, sir. So, I think the market works. 
Competition works. Consumers are demanding cleaner energy 
sources, those sources are dropping in price and are able to 
compete and that----
    Mr. Peters. Is there anything specifically that FERC is 
doing?
    Mr. Chatterjee. I could point to Order 841, the order we 
did on battery storage to break down barriers to entry to allow 
battery storage to be compensated for all of the attributes it 
provides. That is going to lead to an increased deployment, we 
think a dramatic increase in the deployment of battery storage 
technology which will have a direct and, I think, significant 
impact on mitigating carbon emission.
    Mr. Peters. There was a resilience docket that you opened 
with the coal, nuclear NOPR was denied back in, I think, 
January 2018. You haven't taken any action on the resilience 
docket yet, is that correct? And when can we expect that?
    Mr. Chatterjee. That is correct. We don't make projections 
on timing. It is a very complex docket. When Secretary Perry 
proposed the rulemaking in the fall of 2017, the action that he 
was asking for, compensating plants for having onsite fuel, we 
all found collectively that our record did not support that 
action. Now, a year and a half later, we have a far more robust 
record and we are looking at these very complex challenges.
    I think the next step ought to be--and I don't want to get 
in front my colleagues--but to engage the RTOs and the ISOs and 
the States on fuel security, to look at this very serious 
issue. But what I can assure you we will not do is, as the 
chairman said at the onset, we are not going to put our thumb 
on the scale for one fuel source or the other. We are going to 
look very seriously at these markets and the future of our 
grid.
    Mr. Peters. Ms. LaFleur, do you have any thoughts on this 
question?
    Ms. LaFleur. Yes, I certainly agree that the Commission has 
a responsibility to make sure that the resource rules and the 
markets are adapted to new resources and not just the 
traditional resources that existed when the markets were built.
    And I think we have done a lot over the last decade on 
demand response, variable energy, renewables, storage and so 
forth, but beyond that what we are seeing now is that, since 
there has not been--in other environmental issues that the 
Nation confronts, if Congress passes a law and says you have to 
reduce sulfur dioxide or whatever, then all the power plants 
have to conform and the cost of doing that gets priced into the 
market. Because there is not any national climate legislation, 
as you know, it is being handled on a State by State basis.
    And that is the issue that I mentioned earlier, that the 
markets are working to figure out how they can run a regional 
market with multiple States with all different climate 
policies, but I think it is essential that they do, and the 
markets have to be adapted. If that is where climate action is 
going to happen on the State level, we have to adapt the 
markets to function in that environment.
    Mr. Peters. Are you saying that you think that a Federal 
standard, a low-carbon fuel standard or something like that 
would be helpful in getting----
    Ms. LaFleur. Absolutely. I think that it is a global issue. 
It should be addressed at the highest level possible. And if we 
had a Federal standard, whether we were deciding whether a 
pipeline was consistent with the standard or whether a tariff 
in the market was consistent, we would have a benchmark to look 
at. Do they have enough allowances? Does this work with their 
standards? And it would be far more compatible because the 
Nation's electric grid is not State by State, it is big, big 
regions.
    Mr. Peters. OK. Just a quick question for Commissioner 
Glick, I don't have a lot of time. But I am interested in 
hydropower as a valuable zero-emission energy source. You 
mentioned it in the testimony. Really quickly, how do you think 
we increase hydropower facilities with pump storage 
capabilities?
    Mr. Glick. Well, pump storage can play a very important 
role, and I think our storage rule didn't just apply to battery 
storage, it applied to pump storage and other forms of storage 
as well. I think what we need to do and what we are doing, I 
think, is through our licensing process consider proposals for 
pump storage products and approve them, assuming they are in 
the public interest.
    And I think----
    Mr. Peters. OK, I am out of time. I am sorry. I don't want 
to take my colleagues' time, but if you want to give me 
anything in writing on that, that would be helpful too.
    Mr. Glick. Will do, sir.
    Mr. Peters. Mr. Chairman, I yield back.
    Mr. Rush. The chairman thanks the gentleman. The Chair 
recognizes now Mrs. McMorris Rodgers for the purposes--no, Mr. 
Latta. I am sorry. Mr. Latta. Mr. Latta.
    Mr. Latta. Thank you, Mr. Chairman, and thanks for holding 
today's hearing and thanks to our witnesses for being with us 
today. It is very, very important that you are here.
    Chairman, if I could ask some questions of you this 
morning, you recently mentioned that you would like to see FERC 
to do more to consider landowners affected by pipeline 
projects, saying, ``It is not a landowner's responsibility to 
be tracking FERC's filings.'' Would you tell the committee what 
you see FERC doing, and tell us if there is anything that you 
need from Congress at this time?
    Mr. Chatterjee. Yes, absolutely. And thank you for the 
question, Congressman. I think energy infrastructure is 
important. We need it for our economy, for our security, for 
the reliability of the grid, but we have to be mindful that 
landowners, you know, need to understand what their rights are, 
need to understand what options there are for mitigation, for 
restoration and the like. And I don't think the Commission nor 
project sponsors have done a good enough job in communicating 
these things to landowners.
    And so, as we opened a review of our 1999 certificate 
policy statement, which is our process for evaluating pipeline 
applications, that was one area that I zeroed in on, is what 
can we do to ensure that landowners' rights are taken into 
consideration and they are aware of what options are available 
to them. And that is something that we are looking to do. We 
are actively meeting with stakeholders to figure out where we 
can make improvements.
    I have seen some improvements from project sponsors. 
Project sponsors, since I have made this clarion call, have 
come to the Commission and shown me the lengths that they go to 
and the investment that they make in communicating with the 
landowners. And that is a step in the right direction, but I am 
hoping that we at the Commission can do our part to ensure that 
landowners----
    Mr. Latta. Do you have any specific examples right now that 
what FERC has been doing?
    Mr. Chatterjee. So we are in the process right now--it may 
not seem that significant, but it really is--in just updating 
our website and ensuring that, you know, information is more 
easily disseminatable to people who, as I stated, it is not 
their job. It is not their responsibility to track these very 
complex filings. They shouldn't know--a need to know and track 
these proceedings, and we need to make this information more 
readily available to them and get it out proactively.
    Mr. Latta. OK, thank you. Let me follow up with another 
question to you. The reliability and resiliency of the bulk 
electric system requires support from generation and 
transmission assets. Given the ever-adapting nature of 
electricity supplies, would you talk about the importance of 
the transmission assets to the future reliability and 
resilience regardless of the type of fuel?
    Mr. Chatterjee. Yes, sir. I think there is no question that 
we are experiencing rapid transition in our energy landscape. 
And I think as the grid adapts and as we move towards the grid 
of the future, I fundamentally believe that transmission will 
be the key, and we have to make sure that we get, at the 
Commission, get transmission policy right to ensure that that 
grid of the future is in place.
    We currently have two open proceedings, two notice of 
inquiries that we opened a few months ago to look at how we 
calculate ROEs, return on equities, for these investments as 
well as our incentives policy. What types of transmission 
should we be incenting? And I think for me, a current approach 
is to evaluate, put out incentives based on the risks of a 
particular project. I don't know if that is the smartest 
approach to ensuring that the grid of the future that we need 
is built, and so we are going to look to see what are the smart 
investments that need to be made to ensure that that 
transmission system is in place so we can maintain the 
reliability and resilience of the grid.
    Mr. Latta. OK. Well, thank you. One more question. You 
mentioned in your testimony that in October of last year, FERC 
approved new mandatory reliability standards to bolster supply 
chain risk management protections for the Nation's bulk 
electric system. Would you expand on this and other activities 
that FERC is undertaking, especially on the supply chain and 
critical infrastructure?
    Mr. Chatterjee. Yes. Thank you, sir. I mean, the supply 
chain is something that we all need to, you know, be focused 
on, because again it is a challenge for FERC because we don't 
have jurisdiction in some of these areas and so we have to be 
coordinated and work with NERC and others to stay ahead on 
this. The reality is cybersecurity and the reliability of the 
grid, this is the new reality that we must contend with. And 
while we are the beneficiaries, consumers are the 
beneficiaries, America is the beneficiaries of this tremendous 
evolution and technological innovation, that innovation comes 
with a downside risk, and that is increasing vulnerability to 
threats from bad actors and on the cyber side.
    And I think it is incumbent that we are partners with NERC, 
Congress, the Department of Energy, and across the Federal 
Government work together because we do have criss-crossing 
jurisdictions in some areas and we need to ensure that those 
lines of communication are in place so that we cannot just have 
standards, because I believe standards to be the floor not the 
ceiling of what we can do, I think if we all work together 
because our adversaries are continually evolving, and we have 
to evolve to stay one step ahead of them.
    Mr. Latta. Well, thank you very much, Mr. Chairman. My time 
has expired, and I yield back.
    Mr. Rush. The Chair thanks the gentleman. The Chair now 
recognizes Mr. Doyle for 5 minutes. I am sorry. Mr. Pallone is 
here, the chairman of the full committee. Mr. Pallone for 5 
minutes.
    Mr. Pallone. Thank you. Thank you, Chairman.
    In his opening statement, Mr. Kennedy raised concerns about 
regional transmission organization, RTO, governance, and I 
share many of his concerns. FERC Order 719 directs RTO 
procedures and practices to be inclusive, to fairly balance 
diverse interests, and to ensure adequate consideration of 
minority positions. And that Order 719 was issued in 2008, and 
it provides stakeholders process requirements for RTOs to 
follow, but to my knowledge there has not been a comprehensive 
review by FERC of each RTO stakeholder process to ensure 
compliance with the requirements of Order 719.
    So, Chairman Chatterjee, I just would say it is time to 
review the requirements and to review RTO compliance. And I 
want to know if you agree and, if so, would you consider taking 
action on this matter in the immediate future?
    Mr. Chatterjee. Thank you for the question, Mr. Chairman. 
We were discussing earlier, this is something that we 
continually hear from people around the country, concerns about 
ensuring that consumers' voices are heard, that the process is 
transparent, that people are aware of what is transpiring 
within the RTOs and the ISOs. And yes, it has been a decade 
since we looked at Order 719.
    I do think, you know, going back to the rule is one option, 
but, you know, looking with an eye towards ensuring consumers' 
voices are heard as they come up through the process is another 
manner in which to do this. I think, particularly as new 
technologies come into play and we look to break down barriers 
to entry, we need to ensure that these new voices have an 
opportunity to be heard at the RTOs and the ISOs, and certainly 
it is something I am committed to working towards.
    Mr. Pallone. Well, I appreciate that and, you know, want to 
continue working with you. I also want to reiterate what I said 
in my opening statement regarding concerns with the process by 
which RTOs assess their transmission infrastructure needs. We 
must provide greater incentives for nontransmission 
alternatives so that companies are not building unnecessary 
infrastructure that increases costs to ratepayers.
    So let me ask Commissioner Glick, do you believe that in 
certain cases nontransmission alternatives can be used to 
increase reliability while also limiting costs to ratepayers?
    Mr. Glick. Thank you, Mr. Chairman. Absolutely, they do. 
And as a matter of fact, you know, in the Commission's Order 
1000 issued several years ago, it requires transmission 
planners and the various RTOs and the ISOs around the country 
to consider nontransmission alternatives. What I think is 
missing is that I think there is an incentive for utilities 
many times to build more transmission, because if you build, 
you invest something that costs a lot of capital----
    Mr. Pallone. Exactly. And that is what I hear from my 
consumers.
    Mr. Glick. So I think what we need to do, and Chairman 
Chatterjee earlier mentioned that we have a new incentives 
process at FERC looking at our incentives policy, and I think 
what we need to do is incentivize using newer technologies and 
nontransmission alternatives, but also using our existing grid 
more efficiently rather than--sometimes we can do that rather 
than build a line. We need to encourage utilities to look into 
those types of investments.
    Mr. Pallone. Oh, this is music to my ears, I want to be 
honest with you. Now let me see if I can get a climate question 
in. In May 2018, FERC issued a new policy that eliminated from 
consideration most upstream and downstream greenhouse gas 
emissions. Just last week, the DC Circuit in the Broad Run case 
flatly rejected the core legal arguments that form the basis 
for that policy.
    So let me just ask Commissioner Glick and LaFleur, not much 
time left, but do you think the Court's decision in Sabal Trail 
and Broad Run require FERC to reform how it considers upstream 
and downstream greenhouse gas emissions? I guess I will start 
with Ms. LaFleur since I haven't asked you.
    Ms. LaFleur. Yes, the Sierra Club case and the Sabal Trail 
definitely changed the rules that apply to the Commission, or 
made clear what they were. It specifically related to 
downstream emissions, and I think the Commission has been too 
stinting in its interpretation. I dissented in our order on 
remand because I think we have only taken the court's guidance 
to heart when it is a specific power plant exactly like the 
situation in the Sabal Trail pipeline. And I think the 
implications of the decision go much broader. And as 
Commissioner Glick testified earlier, a couple weeks ago we got 
another decision from the DC Circuit that made clear that FERC 
is a legally relevant cause of the downstream emissions, and we 
should be looking at them.
    Mr. Pallone. Mr. Glick?
    Mr. Glick. Mr. Chairman, I would just say that there has 
been some question recently as to whether the Commission has 
the authority to look at reasonably foreseeable greenhouse gas 
emissions, and I think the two court cases, including the one 
last week have, I think, put that question to bed. I think we 
clearly have that authority.
    Mr. Pallone. Quickly, how does FERC's analysis of a 
project's greenhouse gas emissions relate to the requirement of 
the Natural Gas Act to only approve projects that are in the 
public convenience and necessity?
    Mr. Glick. Well, when we consider the public interest, we 
also look at the environmental impacts of the pipeline, for 
instance, wetlands or migratory birds or anything like that. 
And if we find that the impacts of the environment are too 
adverse, then we won't consider the project to be in the public 
interest. Here, we are actually ignoring what impacts the 
project might have on climate change.
    Mr. Pallone. Thank you. Thank you, Mr. Chairman.
    Mr. Rush. The Chair now recognizes Mrs. McMorris Rodgers 
for 5 minutes.
    Mrs. McMorris Rodgers. Thank you, Mr. Chairman. I 
appreciate everyone being here and for your work at FERC. I am 
from Washington State. And if you are not aware, my district in 
Washington State is very dependent upon hydropower, and I 
believe that we should be embracing what hydropower can provide 
for us as we continue to move towards a 21st century clean 
energy future.
    You know, in Washington State right now, our carbon 
emissions are actually up, and some of that is--one of the big 
drivers is because of the--from power plants, more dependence 
on power plants. And I look at this and I think there is so 
much more capacity for hydroelectricity, even in Washington 
State as well as across the country. The National Hydropower 
Association did a report a few years ago highlighting that we 
could double hydropower in America without building a new dam, 
because only 3 percent of the dams actually produce 
electricity.
    So there is huge infrastructure investment there, and as 
the largest renewable with lots of potential, I just believe 
that we should be doing more. It is renewable. It is reliable. 
It is affordable. We enjoy some of the lowest electricity rates 
in the country because of hydropower. Last Congress, I had 
introduced the Hydropower Policy Modernization Act, which would 
have modernized the hydropower licensing review process. Just 
to put this in perspective, it takes on average 10 years to 
relicense a hydropower facility in America today. You can 
compare that to a natural gas facility at 18 months, I believe 
that we can do better.
    This legislation passed the House with bipartisan support, 
and I would like just to use this opportunity today to ask 
about the FERC process for licensing, relicensing of hydropower 
projects. It is my understanding that there are hundreds of 
hydropower projects scheduled to come up for relicensing before 
the Commission in the next 10 years. While Congress has passed 
some improvements for the licensing of new projects, we haven't 
yet passed the significant reforms for the existing projects 
across this country.
    This lack of action and its impact on our existing 
hydroelectric facilities is why I continue to advocate for us 
addressing the relicensing of hydropower in America. I have 
concerns that the uncertainty in the cost as currently 
associated with hydro relicensing, particularly for the smaller 
projects, may result in fewer relicensing efforts and will lead 
to a loss of flexible generation, less reliable grid. 
Hydropower provides the largest natural batteries in the 
country also. There are lots of benefit.
    So I wanted just to ask the Chairman and the others, do you 
agree that this lack of effort to address and improve our 
relicensing process is of concern and, if so, what are some of 
the areas you would recommend that we work on to reduce the 
duplication of effort, unnecessary delays, and undue cost?
    Mr. Chatterjee. Thank you for the question and for your 
support of this. I agree with you on the significance of hydro 
and the concern about the licensing process. We have been 
working very hard on it. We issued a final rule establishing an 
expedited licensing process for original hydropower licenses 
for certain facilities at existing nonpower dams and for 
closed-loop pump storage projects. We are fully aware that 
another wave is coming, and we have alerted the licensees far 
in advance to give them time to work on their applications.
    I also share your concern that a number of the relicenses 
are small projects, which have the downside of them possibly 
having limited resources and expertise on relicensing but the 
upside of the amount of actual work and paperwork not being as 
much as for a larger facility with bigger upsides, and so we 
are taking these things into consideration. I also want to 
note, existing licensees can continue to operate under 1-year 
extension if their relicensing isn't done by the time that 
their license expires, so no one is shut down if they are not 
relicensed before expiration. But to answer your question, you 
know, we totally understand and have undertaken a flexible 
approach to approving requests for license term modifications 
to facilitate coordinated relicensing of projects that are 
located in the same sections as river basin, where 
periodically----
    Mrs. McMorris Rodgers. Excuse me. Excuse me, real quick. I 
appreciate that. I have very little time left. But would you 
also just speak very quickly to how hydropower could benefit 
the grid?
    Mr. Chatterjee. It is a reliable, clean source of energy, 
and as we look to continue to squeeze carbon emissions out of 
the grid, I think hydro can play an incredibly important role.
    Mrs. McMorris Rodgers. Thank you. Thank you so much.
    Mr. Rush. The Chair now recognizes Mr. Doyle for 5 minutes.
    Mr. Doyle. Thank you, Mr. Chairman. And welcome to our FERC 
Commissioners, we appreciate you being here.
    Last year, FERC determined that PJM's capacity auction 
structure was unjust and unreasonable with regards to the 
State-supported resources such as renewables or nuclear. And in 
response, PJM submitted a proposal that has been pending for a 
year. FERC suggested alternatives to this structure but has not 
yet released any details for an acceptable mechanism. FERC 
permitted PJM to delay its capacity auction from May of 2019 
and hold it this August instead. That decision on a rule was 
supposed to come in January, but now it is June and we still 
haven't seen a rule.
    So either a rule is going to be published right before 
August, which won't give auction participants enough time to 
adjust, or a decision will not be published and participants 
will have to take part in an auction under rules that FERC has 
found to be unjust and unreasonable. That raises lots of 
concerns and uncertainty. I am interested in hearing what the 
Commissioners say. When do you intend to issue this rulemaking, 
and what tools does FERC have to provide some clarity to this 
situation?
    And, Mr. Chairman, I will start with you.
    Mr. Chatterjee. Sir, so I have to be, and my colleagues and 
I all have to be very careful here. This is a pending contested 
matter, and our rules prevent us from discussing internal----
    Mr. Doyle. Well, I understand it is a pending case, but the 
reality is that you are creating a considerable amount of 
uncertainty here. PJM's capacity auction in May of 2018 
procured 160,000 megawatts of capacity at a value of $9 
billion. That is a lot of risk for companies to take in.
    Mr. Chatterjee. Sir, we completely understand. At a very 
macro level, again not getting into the specifics of the matter 
before us, this is a vexing challenge. Because you have a 
situation where, two things that I think we all believe in, 
States' rights and the markets, are colliding. We all want 
these markets to succeed and to function and work properly, and 
we want to respect States' rights.
    But we are coming to a point where actions that States are 
taking to make decisions about their local energy futures are 
impacting the markets, and trying to figure out how to sort 
through that while ensuring just and reasonable rates has 
proven to be very, very challenging. And so, while I can't 
speak against the specifics or timing, please understand we 
take this very seriously. We understand the need for clarity 
and to calm the markets, and we are working as diligently as we 
can.
    Mr. Doyle. Well, let me ask Commissioner LaFleur and Glick, 
are there any things that FERC can do to provide some guidance 
to PJM and provide some clarity if that is the situation, if we 
are not going to have a rule?
    Ms. LaFleur. Well, I also can't comment on the merits of 
what is before us, but I am deeply, deeply troubled by the 
delay. And I had dissented in the initial order because I 
thought it would put PJM in an impossible situation, and I am 
afraid that is exactly what has come to pass. And I have been 
using my world-class powers of nagging to be a nag about it, 
but so far we have not gotten an order out. I think we have a 
lot of tools at our disposal, but we have to agree on them and 
use them.
    Mr. Doyle. Commissioner Glick?
    Mr. Glick. I have spent a lot of time in the private 
sector, and one thing I learned from working there is that you 
need regulatory certainty. Companies can't make investments 
without knowing where the government is going, so I think it is 
incumbent upon us to make a decision and act. Obviously, I 
can't talk about timing or the nature of it, but I do want to 
point out that you mentioned that, if the auction is held under 
the current rule, it may be considered unjust and unreasonable. 
So I am not entirely sure how the auction can go forward until 
there is some more clarity from FERC.
    Mr. Doyle. Well, let's hope that is sooner rather than 
later. This is June.
    Commissioner Glick, let me ask you. Capacity markets don't 
consider the impact of carbon on the atmosphere in each 
generator's bid. Do you think capacity market rules should be 
rewritten to reflect this, and how do we protect States' rights 
in the process?
    Mr. Glick. Well, I think, in general, if capacity markets 
are run properly, I think that the most competitive resources 
will succeed. And I think in this case, and lately we have seen 
lower greenhouse gas-emitting technologies will certainly do 
well in those markets, I will say that I think that--I am not 
entirely sure if FERC has the authority to require capacity 
markets to take into account emissions, greenhouse gas 
emissions, but----
    Mr. Doyle. Do you think they should?
    Mr. Glick. Well, I think if Congress gave us the authority 
we should--we certainly can consider, and I know that PJM and 
New York are two ISOs and RTOs right now that are considering 
imposing some sort of carbon pricing regime. And I think we 
could consider that and maybe approve that, assuming it is just 
and reasonable. But I am not sure if we can do that on our own 
authority right now.
    Mr. Doyle. Well, I see my time is running out, but I would 
encourage you to please provide some clarity to what is going 
on with PJM. I don't know how they can hold an auction in 
August without a rule or without some direction from the 
Commission. I would urge that.
    Mr. Chairman, thank you. I yield back.
    Mr. Rush. The Chair now recognizes Mr. Olson for 5 minutes.
    Mr. Olson. I thank the Chair, and welcome to our four FERC 
witnesses. A special howdy to a native-born Texan, Commissioner 
McNamee. Howdy.
    Mr. McNamee. Howdy.
    Mr. Olson. I want to start with a question to you, Mr. 
Chatterjee, that is very important to the people I work for in 
Texas 22 and my entire State. As you know, Houston is the heart 
of the American energy economy. We aren't just powering 
America, we are now powering the entire world. And as American 
energy becomes more dominant, that role keeps increasing for 
soon-to-be the third-largest city in America. We are going to 
overtake Chicago within 2 years.
    Sorry, Mr. Chairman, but those are the facts.
    Mr. Rush. Don't bet on it.
    Mr. Olson. FERC knows that fact and that there is a need 
for FERC to adjust to that reality. I think it is high time 
that we have Commission staff right there in Houston, Texas, 
down where they are needed. You seem to agree. At the annual 
CERAWeek a couple months ago in Houston, you told the Houston 
Chronicle, ``A Houston office makes a lot of sense.'' Can you 
talk about why a regional office in Houston makes sense, what 
are your plans to make it happen, and how can I help?
    Mr. Chatterjee. Yes, sir. Thank you for the question and 
for your leadership in this area. How this all came about, 
there was a period last summer where I became genuinely 
concerned that we didn't have the staff and the resources in 
place to consider the number of LNG applications that were 
before us. And I truly believed there was a chance that we 
could miss this incredible American moment where U.S. LNG 
exports could benefit the economy, could benefit the 
environment by lowering global carbon emissions, and have 
geopolitical significance for America. But I was worried that 
FERC would miss our deadlines.
    And so we frantically worked to hire the lawyers and the 
engineers that were necessary to streamline the bureaucracy. We 
had an MOU with PHMSA which enabled us to earlier this year we 
have now approved four LNG applications. We hadn't in 2 years; 
we have done four. That is very significant, and it is due to 
this hard work. But I want to make sure that as the next wave 
of applications comes through that we have the infrastructure 
in place to continue to consider them, because we are 
responsible not just for reviewing new applications but for 
existing approved facilities as well.
    The expertise is in and around the Houston area. As you 
mentioned, you guys are the epicenter of the energy universe. 
That is where the schools are training the engineers and the 
lawyers who will do this work. And so, perhaps, you know, 
attracting and retaining the kind of talent we need to process 
this can be very difficult. Maybe having an office in Houston, 
which is something that we are actively working towards and 
hope to have an announcement on soon, would give us that venue 
to get the talent where it is, identify the people on the 
ground, and make sure that America continues to take advantage 
of this incredible opportunity.
    Mr. Olson. You brought up LNG, and that is my next 
question. Like you, I was worried a few years ago. FERC was 
being overwhelmed by applications for LNG export projects. You 
had some problems. Not your fault, but hey, getting somebody 
through the Senate, confirmed, delays, explosive permits, as 
you mentioned, manpower. And as you know, speed is the key to 
approval. We have to have quick approval to make these things 
viable. Companies need to line up financing. They need to lock 
in buyers. These delays could have hurt our jobs right here in 
America. They could have hurt our allies who are craving our 
liquefied natural gas that are being stuck right now with gas 
from Mr. Putin.
    But you and your colleagues turned that ship around through 
some challenging seas. We have now seen some key projects 
approved. You mentioned four. We have American liquefied 
natural gas going to India, Japan, South Korea, Poland, 
Lithuania, China, just to mention a few. We are exporting 
liquid American freedom. Can you talk about your challenges, 
how you got those approvals headed out the door, and what is 
next for LNG export rounds?
    Mr. Chatterjee. Thank you, sir. So I mentioned some of the 
procedural things we did, the MOU with PHMSA, hiring people, 
cutting through bureaucracy, streamlining the process, but the 
most significant thing that we did because we had a timeline in 
which we needed to consider these applications and there are 
four of us at the Commission that have, you know, very strong 
views and we consider each application on a case-by-case basis, 
but I think one of the things that I am most proud of is 
myself, Commissioner LaFleur, and Commissioner McNamee came 
together to overcome what had been the biggest obstacle to our 
approving these projects, once we go through our application 
analysis, which was how to account for greenhouse gas 
emissions.
    And Commissioner LaFleur didn't get everything she wanted 
but was willing to compromise. Commissioner McNamee gave some 
things up that he was reluctant to do but was willing to 
compromise. And the three of us came through and were able to 
negotiate a bipartisan compromise that enabled these projects 
to move forward, which is so important for America. And I am 
very proud of it, because it is an example of people putting 
the public good ahead of partisan interests. And as far as I 
know, I think we are the only three people in the Federal 
Government to have successfully negotiated a climate 
compromise, and it is a big deal for America on LNG, and it is 
something I am proud of.
    Mr. Olson. You all are the model for America in the future. 
My time is expired. I yield back.
    Mr. Chatterjee. Thank you, sir. Can I quote you on that?
    Mr. Olson. Sure. It is public.
    Mr. Rush. The Chair now recognizes Mr. McNerney for 5 
minutes.
    Mr. McNerney. I thank the chairman, and I thank the 
Commissioners this morning.
    Commissioner LaFleur, you mentioned some interesting 
comments about how to pay for selected resources in your 
statements. Would you expand on your comments and include how 
it might affect reducing greenhouse gases?
    Ms. LaFleur. Yes. What we are seeing is that right now many 
States, including your own, have taken a pledge to do all they 
can at the State level to mitigate the impact of climate 
change, and they are doing it by in many cases selecting, 
requiring either carbon targets or percentages of clean 
resources or carbon-free resources. And they are also doing it 
in some cases by subsidizing carbon-free resources that would 
otherwise be retiring.
    What we are finding is that in regions with multistate 
markets, when different States have different rules it is 
difficult for the markets to accommodate that. And that is why 
we have been doing a lot of work in our dockets, as in the ISO 
New England docket, to put in place new rules where States 
can--because other resources are bidding into the markets 
without any subsidy or in States that don't have any carbon 
rules, then how do we fairly price all of this. That has been a 
significant issue.
    Mr. McNerney. Thank you.
    Commissioner Glick, do you feel that the electric grid can 
both expand service, say, to the transportation sector and 
reach 80 percent of penetration with renewable sources, and if 
so, how soon do you think we can do that?
    Mr. Glick. I don't want to make a prediction about what 
year that might occur, but I am certainly confident that we can 
do it. I think there have been a number of studies both at NREL 
and various RTOs around the country that show that much greater 
penetrations of renewable energy are possible with very limited 
changes to transmission, for instance, and do it reliably.
    I will give you examples. Iowa, Kansas, Oklahoma, all three 
of them already currently have more than 30 percent of wind 
power just on their grid. SPP, one of the RTOs in the region, 
has, I think, had a couple times where they were over 60 
percent renewables just at one particular time and no 
reliability problem. California ISO, I think 76 percent, if I 
am not mistaken, 1 day earlier this year. So there are enormous 
possibilities there, and I think they can be done relatively 
quickly, but I can't give you an exact actual year.
    Mr. McNerney. Thank you. That is pretty exciting if we can 
reach 80 percent with renewables, you know, in a reasonable 
time frame.
    Chairman Chatterjee, the FERC has approved the natural gas 
pipelines and LNGs, and that sounds good. But if only 2 percent 
of the natural gas escapes through to the atmosphere, then we 
are going to be in worse shape than if we used coal. So are you 
taking leakage into consideration? Are you putting in high 
standards for the pipelines that are going in and for LNG? I 
mean, this is a pretty serious issue in my mind.
    Mr. Chatterjee. I understand, sir, and we take very 
seriously our responsibility to evaluate the safety and 
environmental considerations of the energy infrastructure that 
we consider, and we look at each project on a case-by-case 
basis. What I can say is, you know, the U.S. is currently at 
1990s levels when it comes to carbon emissions in the power 
sector. I think that it is direct----
    Mr. McNerney. But it is not just carbon. I mean, natural 
gas emissions are very much stronger in terms of greenhouse gas 
effects than carbon.
    Mr. Chatterjee. But, sir, I think we are seeing market 
forces and the deployment of clean energy----
    Mr. McNerney. But the question is, are you putting high 
standards in for these pipelines?
    Mr. Chatterjee. I believe we have the highest environmental 
standards and will continue to enforce them.
    Mr. McNerney. Thank you. Also, regarding cybersecurity, Mr. 
Latta and I introduced H.R. 359, the Enhancing Grid Security 
Through Public-Private Partnerships Act. Would you speak about 
how this and other cyber legislation would add the better 
defense at the grid?
    Mr. Chatterjee. So I am not familiar with the specifics of 
the legislation. Can you just give me a sort of top line on 
what it would achieve?
    Mr. McNerney. Well, it uses public and private resources to 
give grid, the electricity companies, the resources they need 
to implement cyber measures.
    Mr. Chatterjee. I would like to look at it more closely, 
but again, based on that description it is certainly something 
that I am interested in. As I mentioned earlier, the 
cybersecurity, I believe ensuring the reliability of the grid 
is the most important job that my colleagues and I play. 
Cybersecurity is a real threat, and we all have to remain 
vigilant on it. And I applaud you for your legislation.
    Mr. McNerney. Briefly, what reliability gaps still exist 
that could be addressed by legislation?
    Mr. Chatterjee. So, look, we have to constantly remain 
vigilant in ensuring the reliability of the grid. I do believe 
that the U.S. grid is the most reliable on the planet, but we 
are increasingly facing threats from hostile actors, and we 
need to do what we can. We discussed it earlier, the potential 
vulnerabilities to the cybersecurity or physical security of 
our pipeline infrastructure. That is certainly an area where we 
need greater focus.
    Mr. McNerney. All right. Thank you, Mr. Chairman.
    Mr. Rush. The Chair now recognizes the ranking member of 
the full committee, Mr. Walden, for 5 minutes.
    Mr. Walden. Thank you, Mr. Chairman. Again, to all of you, 
thanks for your service to the country and thanks for being 
here today to help us do our proper oversight. Under my 
chairmanship of the full committee, we prioritized policies 
that I think were both good for consumers and the environment. 
And we said they weren't mutually exclusive, either. You can do 
both. In the last Congress, in fact, this committee passed more 
than a dozen bills signed into law to give FERC new authorities 
and streamline existing processes to encourage new hydropower 
development and bring more accountability to the ratemaking 
process.
    So what I would like to know is, what is the status on 
FERC's implementation of these bills, which were incorporated 
into the America's Water Infrastructure Act of 2018? And so, I 
might go to Chairman Chatterjee. If you can, can you give me an 
update on what you are finding, what you are implementing, what 
is working, what is not, what do we need to do improve upon? 
Because I think hydro, to Mr. McNerney's point on some of the 
other sources of energy, hydro, we know, has no emissions to 
it. And so, we would like to know how you are doing 
implementing this.
    Mr. Chatterjee. Thank you for the question and for your 
leadership on this issue as chair of the committee. You know, 
over the past few Congresses, this committee has pushed an 
infrastructure legislative reform initiative that included 
hydropower licensing reform. When it comes to implementation of 
these, where the provisions further details into the 
regulations that FERC was directed to promulgate pursuant to 
the America's Water Infrastructure Act of 2018, we are working 
on it. I think that shared decisionmaking in the regulation of 
hydropower projects has complicated the Commission's efforts to 
timely and efficiently process applications.
    Mr. Walden. Right.
    Mr. Chatterjee. In particular, these large, complex 
relicense applications in certain regions. And therefore, I 
totally support the efforts that you all have made to 
streamline the hydropower review process. Having said that, the 
committee already attempts to set schedules for agencies, but 
none of that overrides these agencies' independent authority 
for the processes under their own statutes.
    Statutory requirements give other agencies a significant 
role in the licensing process, thus limiting our Commission's 
control of the cost, timing, and efficiency of licensing, but 
it is something that we take very seriously are working 
towards.
    Mr. Walden. But in terms of implementing, the regulations 
to implement these laws, what should we look for in terms of 
timing on that?
    Mr. Chatterjee. We don't like to make predictions on 
timing, but please know that we are taking it very seriously.
    Mr. Walden. All right, good, because we----
    Ms. LaFleur. We vote.
    Mr. Walden. Yes.
    Mr. Chatterjee. Commissioner LaFleur reminds me that we did 
vote this out at our April open meeting.
    Mr. Walden. April, OK.
    Ms. LaFleur. I believe it was April, yes.
    Mr. Walden. Yes. I know you are all juggling a lot like we 
are, so we appreciate that.
    Ms. LaFleur. We made it by days in the statutory deadline 
to get the regs out. The staff did a great job.
    Mr. Walden. Well, now I am going to give you a gold star. I 
think you are the only agency that has met things--well, 
anyway.
    So I mentioned in my opening about constriction points and 
bottlenecks, and I know the Northeast suffers from it. And I am 
just curious, you know, we did 11 hearings on electricity 
issues and grid modernization pricing, electricity markets, 
because we are concerned on the electricity side especially 
about this, but we know it is more than that. And I just wonder 
what kind of barriers you have identified to the development 
and deployment of new technologies that will harden the grid, 
reduce emissions, and allow for new transmission 
infrastructure. What are you seeing on the ground around the 
country that we need to be aware of that is holding back our 
ability to get more less-emitting energy sources onto the grid?
    Mr. Chatterjee. So what we have seen is just, you know, 
there are some obstacles in place in the various RTOs and the 
ISOs to new entrants, to new technologies in that, you know, 
legacy incumbents have procedural processes in place that they 
can use to prevent some of these new technologies from being 
compensated for the attributes that they provide.
    And so, I think, I point to Order 841 on battery storage 
that we were able to pass in 2018 and that we just dealt with 
on rehearing as a major breakthrough to enable battery storage 
technology to be compensated for all of the attributes and 
resources it provides in terms of energy capacity and ancillary 
services. We are now currently working on distributed energy 
aggregators to see similarly what barriers to entry there could 
be for these resources and the attributes that they could 
provide. And we will take the same careful, thoughtful, and 
legal approach that we did in addressing battery storage in 
considering that docket.
    Mr. Walden. Good, because I know some of that is starting 
to come to fruition. There is a project in my district that is 
going to be, I think, 300 megawatts now. I was told of one out 
of Texas, I think, where it is 300 megawatt hours, which is 
different. They can deal with the duck curve and maybe have 4 
hours of storage. So are you seeing more and more of those 
sorts of combined projects coming to fruition since that order?
    Mr. Chatterjee. I can let my colleague----
    Mr. Walden. Yes, anybody that wants to----
    Ms. LaFleur. I think we are seeing more proposals to 
develop storage and renewables----
    Mr. Walden. Good.
    Ms. LaFleur [continuing]. In tandem, almost like we 
developed nuclear and pump storage together in the '60s. And on 
your other question on the choke points, I would say one of the 
biggest issues we have is the difficulty of building long-line 
transmission between regions----
    Mr. Walden. Yes.
    Ms. LaFleur [continuing]. For the location-constrained 
renewables like the wind in the Midwest. And there are a number 
of reasons, but I think the State control of siting and the 
difficulty of going across multiple States is one of them. 
There was a company called Clean Line that tried to build 
HVDC----
    Mr. Walden. Right.
    Ms. LaFleur [continuing]. And almost--they hit one State on 
every line, now somebody is trying to take a couple of their 
routes. But I think that is the thing where Congress could 
maybe restore backstop siting would be really helpful.
    Mr. Walden. All right. My time has expired. Thank you, Mr. 
Chairman. And thanks to all of you.
    Mr. Rush. The Chair now recognizes Mr. Tonko for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chairman.
    I welcome all of our Commissioners here today. I believe 
all of our Federal agencies need to do more to consider how to 
best address climate change. I believe an approach that is 
science-based, evidence-based is essential. Commissioner 
LaFleur mentioned earlier that it is difficult with climate 
processes that are different in each of the States or regions. 
We need a national approach. It is time for us to get into 
gear.
    That being said, Commissioner Glick, I was very happy to 
see a recent Law Review article about FERC and climate change. 
Commissioner, do you believe FERC can and should be doing more 
under its existing obligations to consider climate change? I 
know we heard from a couple of our Commissioners. I would like 
to hear from you.
    Mr. Glick. Well, as I mentioned earlier, the Commission is 
not an emissions regulator. Obviously, that is up to EPA and 
the States and other branches of the Federal Government. But I 
do think there are a lot of things that we do, and that was the 
purpose of that article that I jointly wrote with one of my 
advisors, is that there are a lot of things that we do that 
have a significant impact. And the Chairman mentioned 
eliminating barriers to newer technology storage, distributed 
energy resources, wind, solar. That certainly would be very 
helpful. Building more transmission to access remotely located 
renewable resources, certainly another benefit.
    And then, as we discussed earlier, just our analysis when 
we consider the public interest, whether it be a hydroelectric 
license or a natural gas pipeline or LNG facility, we are 
supposed to consider the environmental impacts, and I think we 
definitely need to take greenhouse gas emissions into account.
    Mr. Tonko. Thank you. And I would like to focus on a few 
areas where barriers for market participation exist, many of 
which, in my view, are inhibiting our electricity systems 
transition to one that is cleaner.
    Chairman Chatterjee, I would like to thank you for your 
leadership in ensuring that storage can compete in markets. As 
RTOs seek to comply with Order 841, how important is it that 
energy storage resources will actually be able to participate 
effectively in all markets, including capacity markets?''
    Mr. Chatterjee. Yes, I can't say enough how bullish I am on 
the future of energy storage. And I say this frequently, and 
people roll their eyes because they think it is a cliche, but I 
think energy storage is a game changer and I think it has the 
capacity to fundamentally alter the way that we generate, 
distribute, and consume power in this country. And I think the 
point of Order 841 was to ensure that storage technologies 
could be compensated for energy for capacity and for ancillary 
services. I am optimistic and hopeful that that will lead to a 
rapid and exponential increase in the deployment of these 
resources.
    I think increasingly seeing storage coupled with renewable 
resources like solar could address some of the intermittency 
and reliability concerns and will really accelerate the 
deployment of clean energy technologies, which is good for 
America, which is good for the economy, and is good for the 
environment.
    Mr. Tonko. Well, I would encourage our Commissioners to 
make certain the rule is implemented as was intended by all the 
Commissioners and enable the greatest participation possible 
for these resources. Similarly, I would encourage the 
Commission to move forward with finalizing the aggregated DER 
rule. As I recall, in February 2018, the FERC organization 
found it needed more information, and I believe there was a 
technical conference--was it in April of 2018? Now we are in 
June of 2019. There was a need to break down market barriers 
for DERs 3 years ago, and there is now an ample record.
    So what can we expect here? When will this be finalized? Is 
there other information that you are waiting for? What is the 
update on the DER rule?
    Mr. Chatterjee. Sir, if I could just speak to that. So we 
had originally, in 2016, under Chairman Bay's leadership, 
considered both the storage rule and DERs together. As some of 
the newer members--myself, Commissioner Glick--came to the 
Commission, we realized that both rulemakings were further 
behind than we thought they were in the process prior to our 
confirmation. We were further ahead on storage than we were on 
DER. And so we made the decision, since storage was ready, to 
move forward with it despite the fact that we still had more 
work to do on DER.
    I made a commitment to Commissioner Glick at that time 
that, as long as I was serving on the Commission, as Chair or 
not, that I would not allow DER to languish. We continue to 
work on it. There are some legal questions that we need to 
answer. I don't want to make a prediction on timing. We don't 
do that. But please know that we are all working diligently 
towards addressing that.
     Mr. Tonko. So there is no more information, you are just 
going through the----
    Mr. Chatterjee. We have some complex legal questions that 
we are currently wrestling with. I don't like to comment on our 
internal deliberations, but there are some complex legal 
challenges. I do believe we have sufficient record, it is just 
we made some additional things to address some legal questions.
    Mr. Tonko. OK. I would just hope that we could complete 
that as soon as possible, because it is so important to the 
future of the industry. Thank you.
    With that I yield back, Mr. Chair.
    Mr. Rush. The Chair now recognizes Mr. McKinley for 5 
minutes.
    Mr. McKinley. Thank you, Mr. Chairman.
    Earlier this year, Secretary Moniz, former Secretary Moniz, 
came out with a statement that he was saying that we just don't 
have enough battery backup in the long term. He says there is 
nowhere near enough to back up the power on the high-voltage 
grids in the long term. Now building off that, the supply chain 
for battery development is becoming more and more dependent on 
foreign sources. And ``60 Minutes'' just came out with this 
report on Sunday talking about, for example, rare earths and 
our dependency on something where China is dominating 80 
percent of the rare earths. But yet for battery storage, we are 
relying on Chile, Argentina, the blood diamonds of Congo to get 
our cobalt, and we are also in Asia.
    So we are becoming more and more reliant on other--because 
we don't want it in our backyard. We don't want to harvest 
these minerals in our backyard. How is that going to interact 
our ability to sustain or to develop this battery storage 
capability, if we are depending on other Nations? So, Mr.--
Secretary Chatterjee, could you tell us a little bit about that 
please?
    Mr. Chatterjee. Thank you for the question, sir. So as to, 
you know, critical minerals and their availability, that is 
outside the purview of the Commission. I do have some 
familiarity with it during my time in Congress. I recall 
legislation being introduced in the Senate to address the very 
questions that you raise. I will say from our standpoint as an 
economic regulator, I can't speak to the supply chain and what 
component parts go into battery technology. Our role doesn't 
fit there.
    But what we do is, you know, enable the--in our oversight 
of the markets to enable these technologies to be deployed in 
markets, and so the market demand is going to be there because 
of some facilitations that we have done through our 
rulemakings. But I leave it to others to speak to the dynamics 
of the component parts----
    Mr. McKinley. I hope we can get back and have more of a 
conversation about this, because I think it is going to be 
something that we are going to have to address, and I would 
like to understand what Congress can do to help expedite that. 
But let's continue on that, because I have a high regard for 
former Secretary Moniz when he was with DOE and now in his role 
speaking out.
    He is continuing to say--he said it first in 2013 and he 
said it again earlier this year that we need to be spending 
more time and focus on carbon capture and nuclear energy. Now 
he said that in '13. And so, from '13 to '19, during the 6-year 
period of time, coal utilization went from 40 percent down to 
23 percent, and in that same time, nuclear power, they are 
going to be over 10 percent of their capacity is going to be 
lost.
    So my question in part, given that what we were just 
talking about, about battery storage, if we don't have the 
capability of being able to have battery storage now, what is 
going to happen--what is the challenge to the grid for 
dependability, reliability, and resilience if we are losing 
more coal production and we are losing more nuclear and we 
don't have battery storage? What is the impact?
    Mr. Chatterjee. Sir, so thank you for the question, and 
again, you and I have had numerous conversations about this and 
you are very passionate about it. I, like you, come from coal 
country, and I have seen firsthand the devastation that occurs 
in communities when the plants and the mines that feed them 
shut down. Similarly, because of my concern about carbon 
mitigation, I am worried about the retirement of nuclear 
generation.
    What we are doing at the Commission is closely examining 
whether, in fact, some of the concerns that you raise could 
come to fruition, whether the premature retirement of some of 
these units, could they lead potentially to--depending on the 
deployment of other technologies and other resources--to an 
impact on the reliability and the resilience of the grid. Thus 
far, as I mentioned earlier, when Secretary Perry submitted his 
NOPR, our record did not support taking action in that area. We 
currently have a far more robust record in front of us as we 
examine the question of resilience. We are going to be very, 
very careful about it, to look to see what the energy 
transition, its impacts are going to have, but any action we 
may or may not take has to be based on the record, has to be 
based on the evidence, and we will very, very thoughtfully and 
carefully examine that record.
    Mr. McKinley. In the closing seconds I have, I would just 
like--maybe it is the elephant in the room. We don't have a 
fifth Commissioner. Would having a fifth Commissioner, would 
that expedite some of the rules that have been sitting there 
for--we heard earlier, some of the time that they haven't--no 
action has been taken. Would a fifth Commissioner move things 
along?
    Mr. Chatterjee. I think the Commission is always strongest 
when it has a full complement of five Commissioners. That 
said--and I want to see five full Commissioners here. But I 
point to the bipartisan agreement that my colleagues and I 
reached on LNG as well as on battery storage that were 3-1 
votes that had different combinations of us, and I think that 
is a great example of how we are continuing to get our work 
done despite the fact that we are in a 2-2 environment.
    Mr. McKinley. Thank you. I yield back.
    Mr. Chatterjee. Thank you.
    Mr. Rush. The Chair now recognizes Mr. Welch for 5 minutes.
    Mr. Welch. Thank you, Mr. Chairman. I will start with a 
man-bites-dog story. The largest utility in Vermont has a lot 
of dams, and they are going through relicensing and they tell 
me that working with FERC is tremendous. So I don't know how 
that happened, but maybe you ought to get the word out to some 
of your other agencies.
    Second, I want to thank Commissioner LaFleur for coming to 
Vermont. We appreciated having you, and someday your colleagues 
may show similar good judgment. Third, I want to talk about 
battery storage technology. Last week, I visited a company in 
South Burlington, Vermont, called Dynapower, and it is by most 
standards a small company, a couple of hundred people, big by 
Vermont. But it is doing cutting-edge work on battery storage.
    And we have talked a little bit about the incredible 
benefit to reduce peak demand, and I want to thank you for your 
Order 841, which was a great step in integration of storage 
into the wholesale markets, but we do have some issues. In PJM 
there is a proposed method to use a 10-hour duration test, as I 
understand it, to qualify energy storage for capacity market 
participation. This is what I learned from the Dynapower folks. 
But most commercial and industrial facilities which could 
provide really good resources to the grid do not require a 10-
hour duration system, and the cost would be prohibitive. And 
MISO transmission service charges are being inappropriately 
applied to storage. It charges at the instruction of the grid 
operator.
    So there are similar examples, I guess, in NYISO in the 
Southwest Power Pool. So on one hand, I thank you very much for 
your work on Order 841, but we really want to ensure that 
storage can undertake market operations that fully realize the 
value of their flexibility. So I will start with you, Mr. 
Chairman. Can you comment on your view on how these efforts and 
how FERC intends to support full use of the storage resources, 
which, in addition to saving money and reducing carbon 
emissions, is just a tremendous growing part?
    Mr. Chatterjee. Sure. As I have stated repeatedly, I am 
very proud of the rule, and I think it is a tremendous 
achievement. And I think the implementation challenges that you 
are pointing to demonstrate the sheer gravity of the rule and 
its implications and how really significant it may be. I think 
we may look back and say that Order 841 was, you know, a 
foundational block of transitioning our energy future.
    So, as the compliance filings come in, as the various RTOs 
and ISOs sort through some of the complexities that you are 
referring to, we will consider those compliance filings as they 
come in. And I think my colleagues will all do our part to 
ensure that the rule is implemented.
    Mr. Welch. Well, you know, I appreciate that, because there 
has got to be practical adjustments made as a result of what is 
going on in the field.
    Do you want to comment on that, Commissioner LaFleur?
    But thank you for that.
    Ms. LaFleur. Yes. I can't comment on the specific PJM 
dispute that you mentioned because I believe that is pending. 
But your questions and what you hear from the battery 
manufacturer show that the devil is really in the details. It 
is easy to say we want the market rules to be fair to storage, 
but figuring out where all the landmines are where the rules 
have been written for other resources requires the various 
storage providers to come in and tell us and requires detailed 
work at HRTO. A few years ago, when we did Order 755 on 
frequency regulation, we had a company called Beacon Power in 
upstate New York come in and tell us they weren't getting paid 
right for the timing following the signal. And we had to get 
really picky-dicky----
    Mr. Welch. Right.
    Ms. LaFleur [continuing]. In like explaining how to change 
the rules. But we later did change the frequency. That is just 
one small example.
    Mr. Welch. Well, that is great. I don't have much more 
time, but, you know, it is very reassuring to hear that, 
because you do the rule and then it is out in the field and 
then there has got to be information back from the field. And 
when, like, for instance, if Dynapower gets back to you with 
real-world information, you will pay attention to that, is what 
you are telling me, and that is really reassuring.
    The one final question, you know, a number of us, we are 
interested in distributed energy resources, and we wrote a 
letter. I had a letter on the topic to FERC and I appreciated 
your response. That was some time ago, and it appears we share 
a goal. But my question is this: For 2\1/2\ years since the 
original proposed rule and over a year since the technical 
conference on DER was held, in recognizing this timeline, what 
is FERC's plan to finalize the rule on DER participation and 
wholesale markets, Commissioner?
    Mr. Chatterjee. Yes, thank you for the question. I will be 
very brief. Congressman Tonko asked the same. We originally 
were doing DERs and battery storage together. When we came--
when Commissioner Glick and I were confirmed to the Commission, 
we saw that storage was further ahead than DERs, so we severed 
the two dockets and completed storage, because we didn't want 
to delay it while we sorted through the complexities of DERs.
    We are now actively working towards it. I made a commitment 
to Commissioner Glick that we would not allow DERs to languish, 
and I intend to honor that. And so, there are some complex 
legal issues that have arisen, and we are just sorting through 
whether that will require more process or not.
    Mr. Welch. I yield back.
    Mr. Rush. The Chair now recognizes Mr. Griffith for 5 
minutes.
    Mr. Griffith. Thank you very much, Mr. Chairman. They have 
called the votes, and so I will try to rifle through what I 
have. But first, I have to say congratulations to you, 
Commissioner McNamee. The Commissioner and I have worked 
together for many years at the State level, and I am now glad 
to be able to work with you at the Federal level as we go over 
a lot of issues. I appreciate the Commission's work on 
executing the rulemaking process for the Promoting Closed-Loop 
Pumped Storage Hydropower Act, which was my bill from last 
session. I also appreciate the Commission-led workshop on 
closed-loop pump storage.
    That being said, Chairman McIntyre had a review going on 
about current pipeline approval processes based on the FERC 
1999 standing policy. I would hope that you all would continue 
that. Chairman Pallone of this committee mentioned earlier 
about having two pipelines, you know, going side by side and 
the Commission doesn't look at that. That is one of the reasons 
why I introduced the Pipeline Fairness and Transparency Act. 
Maybe you need two pipelines going side by side or close 
together, or maybe you don't, but the Commission ought to be 
able to look at that.
    And I will tell you that one of the concerns that comes up 
there is affecting how landowners' rights are being considered. 
And I appreciate your comments earlier this year, and speaking 
with Commissioner McNamee I know he is concerned about some of 
these issues too, that people at least get heard and know that 
somebody's listening, because it has seemed that sometimes 
there is some deafness, or in the past has been some deafness 
there.
    And I received this this morning from a constituent, and I 
am just going to rattle it off and then give you whatever time 
we have got left: ``Landowners dealing with the siting of 
natural gas pipelines are frustrated, and we have no property 
rights in the current FERC process. There are lots of 
assurances that our rights are respected, and the companies 
advertise that they will work with landowners. However, our 
experience has proved all that to be patently untrue.
    ``My experience is that they won't consider the needs of my 
family's existing business, a farm of over 117 years. We have 
asked repeatedly that they move the pipeline to the edges of 
our fields so that we can fully respect the pipeline as we go 
about our business. They insist on bisecting nine fields and 
will destroy the terraces in one of our fields. They have the 
opportunity to move the line within our property, thus not 
affecting anyone else, but they won't.''
    And the concern that--and she is getting hit twice. She 
lives in my district near the Mountain Valley Pipeline, and her 
property is a family farm that she hopes to retire to that is 
being dissected by the Atlantic Coast Pipeline. And so, these 
are the concerns that people have out there. I know you can't 
fix everything, but she wants to know, and I do too. What are 
the FERC Commissioners doing to understand landowners' rights, 
to make landowners believe that they see the documents that we 
file? I mean, you all see--and to hear the statements that we 
make in hearings, and that those needs are being considered. 
And I know that you have some thoughts on that. Chairman, if 
you could very quickly.
    Mr. Chatterjee. Yes, sir. So I mentioned earlier, we are 
trying to make some improvements to our website and our 
process. We do have a Landowner Hotline so that the Commission 
can be made aware of these kinds of considerations. I think we 
need to do better. We can do better. I think energy 
infrastructure is critical, it is important, but we have to 
ensure that we are respectful of landowners and their 
considerations and their rights.
    I also think it is incumbent upon project sponsors to be 
more responsive. You know, the landowner and the project 
sponsor are going to have, you know, a long-term relationship, 
and I think it is important that project sponsors be responsive 
and be respectful of these landowners' considerations.
    Mr. Griffith. Yes. And I don't know the lay of the land, 
but when a farmer is telling me a family farm that is over a 
100-and-some years in the family, you could move it on their 
property, it may be a little bit more expensive, but it seems 
to me that would be a reasonable accommodation.
    Mr. Chatterjee. And one thing that you have expressed to me 
in the past that I take very seriously is, we need to do a 
better job at the Commission of hearing out peoples' concerns. 
And if that means--if landowners are seeking, you know, public 
comment and opportunity to present their considerations to the 
Commission, we need to be responsive to that. My understanding 
is that you have been frustrated because in the past, maybe a 
few years ago, we weren't as responsive to that. I want you to 
know that you have a commitment from me that we are going to 
take those kinds of things seriously.
    Mr. Griffith. I appreciate that, and I yield back.
    Mr. Chatterjee. Thank you.
    Mr. Rush. The Chair now recognizes Ms. Kuster for 5 
minutes.
    Ms. Kuster. Thank you very much, Mr. Chair. And we have 
been called to vote, so I will make my remarks short. But I 
want to join my colleague in a bipartisan concern. We have this 
very same issue in my district in New Hampshire with a pipeline 
and lots of obvious concerns by homeowners, by towns, by--one 
town where it was on the map to cross a small stream in that 
community 12 times, I just had the impression that these people 
hadn't even come to New Hampshire or at least gotten out of the 
truck to see it. It was proposed to go right between two 
schools that were a couple of hundred yards apart, so--and I 
would invite my Republican colleague to join us.
    I am joining Congresswoman Jan Schakowsky and Joe Kennedy 
today, introducing legislation to establish an Office of Public 
Participation at the FERC to elevate the voices of average 
Americans and ensure that they have a seat at the table when 
FERC makes approval decisions. We can only ask so much of you 
if it is not within your purview to take that into 
consideration. So that was the main concern I wanted to raise.
    The second thing, though, is about the issue of climate 
change. And in New Hampshire, as in districts all across this 
country, I believe that climate change poses a very real and 
existential threat to human life, and I think we can look no 
further than the Trump administration's own national climate 
assessment, outlining that, without dramatic reductions in 
greenhouse gas pollution, our economy will lose hundreds of 
billions of dollars in the coming decades, and not to mention 
the irreversible impact on human health and environment.
    So I just want to ask you, Commissioner LaFleur, my 
constituents voice concerns repeatedly. This is on a daily 
basis. We get emails and calls and letters about the dramatic 
expansion of natural gas infrastructure because of the 
contribution to greenhouse gas emissions. I understand your 
tenure on the FERC is coming to a close, but do you believe the 
damaging effects of climate change should be more strongly 
considered when FERC approves fossil fuel projects?
    Ms. LaFleur. Thank you for the question and yes, I do. I 
think that first of all we should make sure that all of the 
pipelines that we are approving are truly needed by looking at 
the regional need. I happen to think New England, where there 
are a lot of gas restraints, might need more gas, although they 
are doing well with the import in the winter so far. But in 
addition to making sure things are truly needed, I think that 
we should take into account in our balancing the impact of the 
downstream combustion of the gas when it is used.
    And I have tried to do that on my own by doing some of 
those figures, and my concurrence isn't saying no, for example, 
in the two colocated pipelines that Congressman Griffith talked 
about. I had dissented because I thought they were too close 
together, but I think it would behoove the Commission to have a 
process to more squarely consider it.
    Ms. Kuster. Thank you very much.
    And, Commissioner McNamee, I understand FERC's 
responsibility to approve energy projects that are in the 
public interest. Do you believe that mitigating the damaging 
effects of climate change are in the public interest and the 
interest of future generations of Americans?
    Mr. McNamee. I think, I believe that climate change is 
something that we all need to be concerned about. I think the 
issue about how FERC addresses the issue of climate change and 
greenhouse gas emissions really has to originate first in our 
organic statute about the authority, and that is the Natural 
Gas Act and how that is supposed to be used to interpret public 
interest.
    Ms. Kuster. Do you interpret that law is giving you any 
leeway on taking into account the damaging impacts of----
    Mr. McNamee. Well, I can tell you that I--what I do is I 
also look at our obligations underneath, but to take a look at 
all the environmental issues, including climate change, when I 
make a decision. I don't think it would be appropriate because 
it is a legal issue that comes before us about what does the 
statute specifically mean, but I do--I can say that we do take 
a serious look. I personally take a serious look at the issues 
of greenhouse gas emissions, particularly pursuant to our NEPA 
responsibilities.
    Ms. Kuster. Great, thank you very much. I yield back.
    Mr. Rush. The Chair thanks the gentlelady.
    Votes are occurring on the floor, and the subcommittee will 
stand in recess until immediately after the votes have 
concluded.
    [Recess.]
    Mr. Kennedy [presiding]. The committee will come back into 
order, and the Chair recognizes Mr. Flores from Texas for 5 
minutes.
    Mr. Flores. So, thank you. I appreciate all of our FERC 
Commissioners for joining us today.
    I have a question for Commissioner Glick. You have 
dissented against approval of some recent energy infrastructure 
projects that are integral to our country's energy security, 
national security, and economic opportunity including the Port 
Arthur LNG export project in my home State of Texas. These 
critical energy infrastructure projects create well-paying jobs 
at home, they help our allies in Europe diversify their energy 
security, and they reduce the impact of dirtier fuels that are 
replaced by clean LNG.
    In your dissents and in testimony today, you mentioned the 
need to explore possible mitigation measures with respect to 
greenhouse gas emissions, and I would like to know more about 
what you mean by this. My first question is this: Do you have a 
mitigation standard by which future energy projects could earn 
your approval?
    Mr. Glick. Well, thank you for the question, Mr. Flores. It 
is actually a very important issue. And, you know, if you go 
back and look at all of our approvals--and Port Arthur is a 
good example--we found other environmental concerns, for 
instance, wetlands, loss of wetlands associated with the 
project or migratory birds, for instance, in some cases.
    Mr. Flores. Do you have a mitigation standard?
    Mr. Glick. And what we did in those cases, we actually 
mitigated those losses essentially. So I don't know if I have a 
single standard, but one potential option, certainly, a company 
could buy renewable energy credits and could certainly use 
renewable energy or zero emissions like nuclear power to 
liquefy the natural gas. There is a variety of options for the 
company.
    Mr. Flores. OK. Well, if you have more, go ahead and 
supplementally advise that. My next question is this, is what 
your mitigation expectations might be and, more importantly, 
what are the costs of those mitigation measures, including the 
following: What is the impact on project delay costs; what is 
the impact on lost jobs; what is the impact on balance of trade 
payments; what is the environmental impact while the 
prospective consumers using your dirtier fuel that would have 
been replaced by the fuel that you are dissenting coming from 
the project against which you are dissenting; and then the 
lossed tax revenue to the Federal Government as well as impact 
on the deficit?
    Mr. Glick. Those are all relevant points, and I think that 
we are required to consider what is in the public interest, and 
all those issues need to be considered as well. But if we find 
an environmental impact to be significant, we have to figure 
out whether that impact can be mitigated or not, and in this 
case in the LNG facilities, we specifically said we are not 
going to consider that. And that is where I think the 
Commission erred and courts have agreed so far.
    Mr. Flores. OK. What I would like to get you to do is 
supplementally advise as to what the cost of the mitigation is 
because of the dissent, if you would.
    Mr. Glick. I will try my best.
    Mr. Flores. OK, thank you.
    Chairman Chatterjee, I have a question for you. This has to 
do with the power markets. In Texas, ERCOT allows large 
consumers to participate in a power market that drives 
competition, innovation, and efficiency. It has also brought 
more renewable into the Texas grid. It is my understanding that 
our neighboring RTO, the Southwest Power Pool, has only one 
large consumer, and that is Walmart, which joined a while back, 
and Texas has about 170 consumer members by comparison.
    FERC recently ruled regarding a fee at SPP that some 
considered to be a hefty barrier to participating in the 
market, while the good news is ERCOT is not subject to FERC 
jurisdiction and most Texans want to keep it that way. Texas 
consumers are benefiting by having that other 170 large voices 
as part of the market, and I think the country can learn from 
the experience of ERCOT.
    So what--are other RTOs opening up their membership to more 
diverse consumer technology interests to help drive up choice, 
to improve efficiency, to improve the implementation of 
additional renewable energy sources into their grids, and to 
additional clean energy supply?
    Mr. Chatterjee. So, obviously as you referenced, 
Congressman, we don't--ERCOT is not jurisdictional to us, so I 
don't have as much visibility into what goes on in Texas. I 
learned my lesson, don't mess with Texas, but----
    Mr. Flores. That is a good idea.
    Mr. Chatterjee [continuing]. Each of the different RTOs and 
ISOs have various different, you know, governance approaches as 
well, these are just different organizations. So what I can 
speak to is that all of these entities can and should learn 
from each other, including from ERCOT.
    Mr. Flores. OK. That actually answers my second question, 
is that should the other RTOs move in the same direction that 
ERCOT has and that the SPP has been blocking but now they are 
starting to move that direction?
    Mr. Chatterjee. There are different challenges and 
opportunities in different parts of the country. I am not 
certain--there are no one-size-fits-all approaches, but we can 
all do better to learn from each other.
    Mr. Flores. Right, OK.
    And, Chairman Glick, we will provide the rest of our 
questions supplementally.
    Mr. Glick. Thank you.
    Mr. Flores. Thank you. I yield back the balance of my time.
    Mr. Kennedy. The Chair thanks the gentleman from Texas and 
recognizes himself for 5 minutes for questions. I want to thank 
the chairman, the real chairman, for holding the important 
hearing, and for all of our Commissioners for being here today.
    As I mentioned in my opening statement a little bit 
earlier, I am increasingly concerned about the regional 
transmission organizations, or RTOs, and their governing 
structures. My State benefits from the wholesale market 
competition at ISO New England, and that means that it is 
affected by the decisions made by NEPOOL, the sole formal 
stakeholder advisory group for ISO New England. However, my 
fellow citizens and I have no idea who makes decisions or how 
they are made at NEPOOL, because unless you are a member you 
can't even observe any meeting or proceeding, let alone talk 
about it publicly.
    Other RTOs are benefiting from governance structures that 
enjoy slightly more transparency, still I believe that more has 
to be done. Transparent and fair representation in governance 
is good governance. All parties from generators to ratepayers 
to regulators deserve this. In addition, regional markets 
operated by the nation's RTOs continue to grow in size and 
complexity.
    Mr. Glick, you pointed out earlier your experience in the 
private sector and about the importance of stability. In my 
region, for example, ISO England has now run 14 different 
forward capacity auctions under 14 separate sets of rules. 
Finally, RTO rules are also increasingly, or increasingly, 
effectively create new public policies. Some regional grid 
operators are debating whether to adopt new rules to compensate 
fuel security, yet RTOs are governed by industry stakeholders, 
many of them who have an incentive to earn revenues through 
higher prices in these markets.
    So beginning with Commissioner LaFleur and Commissioner 
Glick, are you concerned about certain stakeholder groups that 
have an outsized amount of power in some RTOs with the current 
structures of governance? Ms. LaFleur?
    Ms. LaFleur. I do think these are important issues. I was 
on the Commission when we did the 719 compliance orders, and we 
looked at the stakeholder processes of each RTO and basically 
found them acceptable. They had different sets of stakeholder 
bodies and so forth. But I agree with what I have heard said 
earlier, that it is probably a good time for a relook. I think 
that initially the transmission owners probably batted above 
their weight because they were the ones that had to decide to 
go into the RTOs, and so the RTOs were so grateful to have 
them, they seemed to have a louder voice.
    I would say recently we have been hearing more from the 
generation sector, because with all of the changes in resources 
they are on the hot seat, and no group should have more power 
than their role in the stakeholders, so I think we have to be 
vigilant toward it, and it is probably worth a relook.
    Mr. Kennedy. Should the public have more access, even just 
as a passive observer?
    Ms. LaFleur. Well, you know, we have a case pending 
rehearing on press access to NEPOOL which we, the Commission 
,ruled that we didn't have jurisdiction over under the--from 
the CAISO case. But I think most members of the public can't 
afford to take the time off from work to go to all of the 
stakeholder meetings of their RTOs, so bodies that represent 
them, be they consumer groups to the----
    Mr. Kennedy. Madam Chair, or excuse me, Commissioner, that 
the press that is also the----
    Ms. LaFleur. I can't comment on that because that is still 
pending.
    Mr. Kennedy. Right, understood.
    Ms. LaFleur. But I think Mr. Glick wrote separately, so I 
will let him talk.
    Mr. Glick. Yes. I certainly can't comment on the existing 
proceeding which is on rehearing----
    Mr. Kennedy. Of course.
    Mr. Glick [continuing]. But I will say what we did 
previously, which is that Commissioner LaFleur is exactly 
correct. We actually said we didn't have the jurisdiction, and 
that is because the courts have told us that we only have 
jurisdiction over practices affecting jurisdictional rates.
    Having said that, I wrote separately, because I agree with 
you, Congressman Kennedy, that transparency is a very important 
element of appropriate RTO functioning. And to the extent that 
we are keeping the press out or keeping people out from knowing 
what is actually happening behind the closed doors, we aren't 
actually having the type of transparency and we are not 
engaging in the independence that RTOs and ISOs are supposed to 
represent.
    Mr. Kennedy. Thank you. And only a minute left here, so a 
little bit quickly. But, Chairman Chatterjee, has the 
Commission considered reforms to RTO governance to ensure that 
the public interest is better represented in these 
organizations?
    Mr. Chatterjee. Absolutely. Congressman, I agree with the 
concerns that you are raising and want to associate myself with 
the comments of my colleagues. I believe in consumer 
protections, in transparency. The one thing that I would 
caution is, as I mentioned in speaking with Congressman Flores, 
each of these different RTOs and ISOs is a completely different 
entity with different structures. And so, I am not certain a 
one-size-fits-all approach could work here.
    What we currently do to address these matters is as--again, 
we can't speak to it, because it is on rehearing at NEPOOL--but 
when these matters come up, we take them up on a case-by-case 
basis. And I think we all have to be vigilant in ensuring that 
this transparency and consumer protection are in place. I just 
have to caution that a one-size-fits-all approach might not 
work.
    Mr. Kennedy. Understood. I will close with my last 2 
seconds by commending my colleague, Jan Schakowsky, who has 
been a champion for consumers throughout her career. And she is 
introducing a Public Engagement at FERC Act which would ensure 
that FERC establishes the Office of Public Participation and 
Consumer Advocacy, which I think a few of you have mentioned 
already.
    I am over time. I will recognize the gentleman from 
Michigan for 5 minutes.
    Mr. Walberg. I thank the chairman. We hang around long 
enough, we move up, don't we? But thanks to the----
    Mr. Kennedy. Give me 35 years, and we will get there. Thank 
you.
    Mr. Walberg. Thanks to the panel as well. You have hung 
around longer than any of us, I think, so I appreciate you 
being here.
    Chairman Chatterjee--no, you have been here long enough. I 
am going to give you all a question and see if you can answer 
it. If anybody can tell me what was playing on the radio at the 
top of the charts at this point in 1978. Do you remember?
    Mr. Chatterjee. Well, ``Star Wars'' was in theaters.
    Mr. Walberg. Talking about the charts.
    Mr. Chatterjee. I know people were probably listening to it 
on their Walkman or record player.
    Mr. Walberg. Paul McCartney and the Wings, ``With a Little 
Luck.'' And I remember that because I was hoping to graduate 
from graduate school about that time, with a little luck, and 
it did take place. Just using that a bit here, because with a 
little luck--and a little push--from both Congress as well as 
FERC, we could shake it up and bring our energy laws into the 
21st century and lower costs for consumers. And that is, I 
think, at least for most of us up here, that is what it is 
about, with the quality.
    Three years ago, FERC held a technical conference to 
discuss what needed to be done to modernize the rules 
implementing PURPA, a law passed in 1978, with a little luck. 
This issue is incredibly important in many areas of the 
country, especially mine, because customers are paying billions 
of dollars in, I believe, unnecessary costs right now for PURPA 
contracts. It started with a great idea, did what it was 
supposed to do, but it is time for some improvement.
    FERC's current rules encourage the uneven, unplanned, and 
uneconomic development of QFs and provide subsidies that 
promote QFs at the expense of customers, of system reliability, 
and more competitive, cost-effective generation resources. For 
example, Consumers Energy in my district currently has over 
2,000 megawatts worth of PURPA contracts for 20-year terms 
pending in the queue. These would lock in prices around $54 per 
megawatt hour compared to the 5-year average of $34 per 
megawatt hour that could be purchased from the MISO market. If 
Consumers is forced to buy all of this power at these above-
market rates, it equates to Michigan customers paying more than 
$1\1/2\ billion over the life of the 20-year contracts, 
significant dollars.
    I have introduced H.R. 1502, as you know, the PURPA 
Modernization Act, to help address these issues. But there are 
several issues that don't need to be addressed, I believe, 
through statutory change. The Commission could simply act and 
amend the rules, I believe. FERC's 1-mile rule, for instance, 
which developers game to force legally enforceable obligations 
onto utilities is written into FERC's regulations.
    Mr. Chairman, yes or no, is this something that FERC could 
address on its own?
    Mr. Chatterjee. Yes.
    Mr. Walberg. Often developers will split projects into 
smaller megawatt projects in order to come in under the 20-
megawatt threshold for organized markets. FERC has already 
reinterpreted the threshold for noncompetitive entry into these 
markets from 80 megawatts to 20. In light of developers gaming 
this rule, could FERC lower this threshold on its own?
    Mr. Chatterjee. Yes, we could.
    Mr. Walberg. That is good to know. Does it make sense to 
allow utilities to competitively bid renewables to set PURPA-
avoided cost, and is there any help or guidance FERC could give 
to States to help come up with more accurate avoided cost 
calculations to better follow the spirit and the intent of 
PURPA?
    Mr. Chatterjee. I don't want to get into any internal 
deliberations or conversations I am having with my colleagues, 
but it is something that we could do within our ranks.
    Mr. Walberg. So it is capable of doing that.
    Mr. Chatterjee. Yes, sir.
    Mr. Walberg. It comes down to the willingness to do these 
things. Well, these are important. I mean, they are key 
components of my legislation, but relief is needed before I 
think Congress will be capable in its processes of acting on 
it. So I would truly encourage FERC to push as far as you can 
into bringing PURPA into the 21st century, into something that 
truly does do what it was intended to do and has done well, but 
now is doing well at an expense that is unnecessary, and so I 
appreciate that. To quote Paul McCartney and the Wings again, 
``There is no end to what we can do together.'' I won't sing it 
for you. But I look forward to working with you to modernize 
our current state of affairs. Thank you. I yield back.
    Mr. Sarbanes [presiding]. The gentleman yields back. I am 
going to yield myself 5 minutes for a few questions.
    Commissioner Glick--and first of all, thank you all for 
staying as long as you did, and you saw from the earlier 
attendance here at the hearing there is a lot of interest.
    Commissioner Glick, in your testimony you talk about how 
the environmental effects factor directly in the public 
interest standard at the Commission and is supposed to meet 
under the Natural Gas Act, and I certainly agree with that. 
There are public-interest and environmental-interest 
considerations under the Federal Power Act as well.
    Unfortunately, my view is the Commission doesn't always 
give those interests the sufficient weight that they deserve in 
the decisionmaking that happens, and I am aware of several 
examples, actually, in the case of the relicensing of the 
Conowingo Dam. States have a very important role to play in the 
licensing of projects that FERC considers, but too often it 
seems that FERC is siding with project applicants at the 
expense of State concerns for broader public and environmental 
interests.
    So could you just speak quickly to what you think the 
Commission can do to ensure that these broader public interests 
like climate change, environmental quality, and so forth get 
the appropriate consideration?
    Mr. Glick. Well, as you mentioned, we have a very broad 
public-interest standard in terms of our hydroelectric 
licensing responsibilities as well, so I think certainly on 
climate change, we certainly need to take that into account, 
the zero emissions qualities of hydropower, for instance.
    But on those other environmental issues that you mentioned, 
it is my understanding, the way the process works, whether it 
be the State agencies pursuant to section 401 of the Clean 
Water Act or various, the resources agencies, the Fish and 
Wildlife Service, for instance, they actually have the ability 
and the authority to impose conditions on those licensing 
processes, and we have to include those conditions in our 
licenses.
    Mr. Sarbanes. Well, I hope those continue to get the 
attention, as I say, that is warranted in terms of making sure 
the process lands in the right place. As you are aware, I am 
sure, Exelon Corporation applied for a new 50-year hydropower 
license to operate the Conowingo facility in August of 2012. 
After extensive discussions between the State and Exelon and 
several iterations of applications to the Maryland Department 
of the Environment, the State of Maryland issued a water 
quality certificate to Exelon in April of last year. 
Unfortunately, as you probably also know, the situation is 
still not resolved. Exelon has opposed the conditions that 
Maryland attached the water quality certificate. But early on 
in this project, FERC denied several study requests that 
Maryland made, denials that actually created delays and 
additional haggling between the State and Exelon.
    The Federal Power Act requires applicants to submit 
``satisfactory evidence'' to demonstrate that an applicant has 
complied with State laws. And my concern is that the 
administration's proposed policy changes on State oversight of 
water quality certification could weaken our efforts to achieve 
clean water in the Chesapeake Bay. How would you describe the 
appropriate role of State participation in FERC licensing in 
light of what I have just described?
    Mr. Glick. Well, I don't want to speak specifically about 
the Conowingo Dam, because that is a pending matter, I think, 
before the Commission. But I think we have the responsibility 
to actually defer to the States under section 401 of the Clean 
Water Act.
    Mr. Sarbanes. Well, thank you for that. I think overall the 
Commission could probably be doing more to cooperate with 
States, really view it as a collaborative effort and ensure 
that licensees provide sufficient information early in the 
licensing process to support State decisions and ensure 
projects are operated in compliance with State law. The 
Commission's mandate to give equal consideration--I will repeat 
that--equal consideration to natural resources and 
environmental quality should translate into greater support for 
ensuring that older hydropower projects are held to modern 
environmental standards. And I know that can be tricky, but it 
is really critical that that happen.
    And so, let me just close by saying that the State of 
Maryland also has been working with neighboring States and the 
States within the Susquehanna River Basin to improve water 
quality conditions in the Chesapeake Bay. We really take that 
as our signature charge, in a sense, on the environmental front 
because we are aware the watershed meets the Bay, and we take 
that very seriously. All of the States continue to work on 
programs to reduce sediment and nutrient inputs into the 
watershed. The Conowingo facility has to be part of that 
solution as well.
    And this relicensing provides that once-in-a-generation 
opportunity to get it right, to address the sediment issues 
associated with the dam and the facility's operation. So we 
have to address that issue, and if we don't address it, we are 
going to be putting the health in the entire Chesapeake Bay in 
jeopardy. It is impossible to overstate how critical this 
project is to the Bay. So as a member of the Maryland 
delegation, as somebody who takes that charge extremely 
seriously, I ask you to give that real consideration. I yield 
back the balance of my time.
    The Chair recognizes Mr. Veasey from Texas.
    Mr. Veasey. Thank you, Mr. Chair. I want to thank you and 
the witnesses for appearing before the subcommittee today to 
discuss the critical role FERC has in ensuring our energy 
markets are operating fairly. I would like to discuss the 
Department of Energy coal and nuclear bailout proposal that 
would have resulted in higher energy bills for consumers. And 
in late 2017, the Trump administration revised a plan to force 
consumers to buy power from coal and nuclear plants on the 
decline, claiming that the costly and legally dubious plan was 
necessary due to fuel threats faced by our power grid.
    While FERC unanimously opposed the plan, when asked 
yesterday in an event hosted by Edison Electric about providing 
incentives to failing plants, the Secretary suggested asking 
the question of FERC instead. And so, given the nature of 
today's hearing and the witnesses we have before us today, I 
would like to follow Secretary Perry's suggestion and ask you 
to respond to these questions.
    Is providing incentives to failing coal and nuclear plants 
a priority for FERC at this time?
    Mr. Chatterjee. Thank you for the question, Congressman. So 
as you mentioned, in the fall of 2017, Secretary Perry 
submitted a Notice of Proposed Rulemaking asking that certain 
plants, baseload plants, be compensated for having the 
attribute of having onsite fuel. At FERC we are a record-based, 
evidence-based agency, and we examined the record and we 
determined that we did not--the record did not support taking 
the action that Secretary Perry had suggested. In the process 
of voting down the Notice of Proposed Rulemaking from DOE, we 
opened a new docket to do a thorough examination of grid 
resilience, and now about 18 months later we have a far more 
robust understanding and record of what the potential 
challenges that may arise from the premature retirements of 
these baseload plants.
    My colleagues and I need to sort through what, if any, 
actions need to be taken. I think, from my vantage point, the 
next step ought to be engagement with the RTOs and the ISOs and 
the States to see what they are seeing in terms of fuel 
security and what is working, what potential, you know, risks 
are on the horizon. But I will assure you, should the 
Commission take any action--and I am not saying it is certain 
we will take any action--should the Commission take any action, 
it would be fuel-neutral, technology-neutral based on the 
evidence in the record before us without any political 
influence.
    Mr. Veasey. I know also in an earlier interview, Secretary 
Perry was quoted as saying that the Department of Energy was 
pretty much done with the idea of providing funding for 
resilience as it awaits its input from stakeholders. And in 
January of last year, FERC initiated a new proceeding to 
examine the resilience of the bulk power system. Can you share 
any of your findings pursuant to this proceeding?
    Mr. Chatterjee. So that is the proceeding that I was 
referring to, sir. All I will say is Secretary Perry raised a 
very serious question. And I do think over the past year and a 
half, the concept of resilience and this question about what 
the energy transition means for the security and stability of 
the grid is one that we are having in energy circles. And I 
think that is productive, and I think that we will continue to 
engage in this kind of productive dialogue.
    But at this time, I am not going to speak to any potential 
actions the Commission may or may not take, because my 
colleagues and I need to still further determine what the next 
steps should be in reviewing the record that is before us in 
this new proceeding.
    Mr. Veasey. When do you estimate there will be further 
reviews or actions?
    Mr. Chatterjee. So, again, I think I myself and my team 
have worked our way through the record. I have come to the 
conclusion that I would like to see some further engagement 
with the RTOs and the ISOs in the States, but I need to--I 
don't want to get ahead of my colleagues or Commission staff. I 
need to confer with my colleagues to see if they agree if 
further examination in this area is necessary.
    Mr. Veasey. Thank you. I yield back.
    Mr. Sarbanes. The gentleman yields back. I don't think we 
have any additional Members, so that concludes our panel. I 
want to thank you all.
    I request unanimous consent to enter the following items 
into the record: a letter from associations representing 
commercial, industrial, and residential ratepayers and public 
interest groups; a letter from the 198 Methods; a letter from 
the National Rural Electric Cooperative Association.
    And again, let me thank our witnesses. I know you have been 
here for quite a while. We thank you for participating in 
today's hearing.
    I want to remind Members that, pursuant to committee rules, 
they have 10 business days to submit additional questions for 
the record to be answered by the witnesses who have appeared. 
And I ask each witness to respond promptly to any such 
questions that you may receive. We appreciate that.
    At this time, the subcommittee is adjourned.
    [Whereupon, at 1:34 p.m., the subcommittee was adjourned.]
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