[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]





        QUADRENNIAL ENERGY REVIEW AND RELATED DISCUSSION DRAFTS

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

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 2, 2015

                               __________

                           Serial No. 114-47


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



      Printed for the use of the Committee on Energy and Commerce
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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. 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
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                     Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               JERRY McNERNEY, California
JOSEPH R. PITTS, Pennsylvania        PAUL TONKO, New York
ROBERT E. LATTA, Ohio                ELIOT L. ENGEL, New York
GREGG HARPER, Vice Chairman          GENE GREEN, Texas
DAVID B. McKINLEY, West Virginia     LOIS CAPPS, California
MIKE POMPEO, Kansas                  MICHAEL F. DOYLE, Pennsylvania
ADAM KINZINGER, Illinois             KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia         JOHN P. SARBANES, Maryland
BILL JOHNSON, Ohio                   PETER WELCH, Vermont
BILLY LONG, Missouri                 JOHN A. YARMUTH, Kentucky
RENEE L. ELLMERS, North Carolina     DAVID LOEBSACK, Iowa
BILL FLORES, Texas                   FRANK PALLONE, Jr., New Jersey (ex 
MARKWAYNE MULLIN, Oklahoma               officio)
RICHARD HUDSON, North Carolina
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
















  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     2
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     3
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     4
    Prepared statement...........................................     6
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     7

                               Witnesses

Ernest Moniz, Secretary, Department of Energy....................     8
    Prepared statement...........................................    11
    Answers to submitted questions...............................   139
Rudolf Dolzer, Advisory Board Member, Association of 
  International Petroleum Negotiators, and Professor of 
  International Law, University of Bonn..........................    59
    Prepared statement...........................................    61
Jason Grumet, President, Bipartisan Policy Center................    66
    Prepared statement...........................................    68
Scott Martin, Commissioner, Lancaster County, Pennsylvania.......    77
    Prepared statement...........................................    80
Gerald Kepes, Vice President, Upstream Research and Consulting, 
  IHS............................................................    88
    Prepared statement...........................................    90
    Answers to submitted questions...............................   162
Alison Cassady, Director of Domestic Energy Policy, Center for 
  American Progress..............................................    97
    Prepared statement...........................................    99
    Answers to submitted questions...............................   167
Emily Hammond, Professor of Law, George Washington University Law 
  School.........................................................   112
    Prepared statement...........................................   114

                           Submitted Material

Statement of The Canadian Electricity Association................   127
 
        QUADRENNIAL ENERGY REVIEW AND RELATED DISCUSSION DRAFTS

                              ----------                              


                         TUESDAY, JUNE 2, 2015

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:04 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Ed 
Whitfield (chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Olson, Barton, 
Shimkus, Pitts, Latta, Harper, McKinley, Pompeo, Kinzinger, 
Griffith, Johnson, Long, Ellmers, Flores, Mullin, Upton (ex 
officio), Rush, McNerney, Engel, Green, Capps, Castor, Welch, 
Loebsack, and Pallone (ex officio).
    Also present: Representative Cramer.
    Staff present: Nick Abraham, Legislative Associate, Energy 
and Power; Gary Andres, Staff Director; Will Batson, 
Legislative Clerk; Sean Bonyun, Communications Director; 
Leighton Brown, Press Assistant; Allison Busbee, Policy 
Coordinator, Energy and Power; Karen Christian, General 
Counsel; Patrick Currier, Counsel, Energy and Power; Graham 
Dufault, Counsel, Commerce, Manufacturing, and Trade; Tom 
Hassenboehler, Chief Counsel, Energy and Power; Peter Spencer, 
Professional Staff Member, Oversight; Dan Schrieder, Press 
Secretary; Jeff Carroll, Democratic Staff Director; Caitlin 
Haberman, Democratic Professional Staff Member; Ashley Jones, 
Democratic Director, Outreach and Member Services; Rick 
Kessler, Democratic Senior Advisor and Staff Director, Energy 
and Environment; John Marshall, Democratic Policy Coordinator; 
and Tim Robinson, Democratic Chief Counsel.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. I would like to call the hearing to order 
this morning. The title today is the hearing on the Quadrennial 
Energy Review and Related Discussion Drafts, including Title 
III, Energy Diplomacy. We will have two panels of witnesses 
this morning. And, of course, on the first panel we have our 
Secretary of Energy, Mr. Moniz, who is no stranger to this 
committee or to Congress. So we appreciate him being with us 
very much, and look forward to his opening statement. And then 
we will have some questions relating to his testimony, as well 
as other issues.
    And at this time, I would like to recognize myself for 5 
minutes for an opening statement.
    Everyone is very much aware that this subcommittee and the 
Congress has been working on a bipartisan energy bill for 
several months now. Many people are even asking, not 
surprisingly, is there enough common ground between our efforts 
and the Obama Administration to enact meaningful energy 
legislation. And I do believe that this question was answered 
with a clear yes when the Department of Energy's first 
installment of its Quadrennial Energy Review was released last 
April. This detailed study focuses on the infrastructure 
implications of America's new energy boom, and many of its 
recommendations overlap with provisions of our draft energy 
bill.
    And so we are excited that Mr. Moniz is here today, so that 
we can explore the perspective of the Department of Energy as 
the country makes dramatic changes in its energy distribution, 
production, transmission system. We have a lot of 
infrastructure needs. We are focusing on the diplomatic 
diplomacy aspects of energy, which is becoming more and more 
important to our friends in the European Union, who find 
themselves reliant on natural gas coming from Russia. And so we 
have many opportunities in the United States to come forth with 
a good energy policy. And I think that most of the provisions 
that we are focused on in this energy bill, democrats and 
republicans agree that they need to be addressed, and one of 
the biggest is infrastructure needs, and trying to improve the 
permitting process, for an example.
    So I look forward to the testimony of all of our witnesses 
today. And we have a real opportunity here and we don't want to 
drop this ball, so we are getting close to the end of drafting 
this legislation, coming up with a final product, and we look 
forward to move it in a meaningful way.
    [The prepared statement of Mr. Whitfield follows:]

                Prepared statement of Hon. Ed Whitfield

    This subcommittee has been working on our bipartisan energy 
bill for several months now, and many have asked whether 
there's enough common ground between our efforts and the Obama 
administration to enact meaningful energy legislation. I 
believe that this question was answered with a clear yes when 
the Department of Energy's first installment of its Quadrennial 
Energy Review (QER) was released last April. This detailed 
study focuses on the infrastructure implications of America's 
new energy boom, and many of its recommendations overlap with 
provisions in our draft energy bill. I welcome Secretary Moniz 
this morning to discuss the QER and look forward to his input 
which is always valued by this subcommittee.
    Since the 1970s, Congress has developed an energy policy 
based on assumptions of declining American energy output and 
increasing import dependence. But that came before the dramatic 
turnaround in oil and natural gas production over the past 
decade, and now we are beginning the task of adjusting our 
energy policy to reflect this new reality. Both the QER and our 
energy bill are largely based on the need to update 
Washington's outdated approach.
    First and foremost, America's energy boom is necessitating 
an infrastructure boom. We need more pipelines and storage 
facilities and all the other elements of the infrastructure for 
oil and natural gas. We also need more electric transmission 
lines and upgrades to the existing infrastructure to ensure 
that our electricity supply is sufficient, reliable, and secure 
against outside attacks.
    Unfortunately, energy infrastructure faces a host of 
permitting delays and other red tape. These impediments may 
have been tolerable in the past when relatively little new 
infrastructure was needed, but now they are holding back the 
full benefits of the energy boom. Both the QER and energy bill 
contain a number of measures addressing infrastructure 
permitting, and both are careful to do so while maintaining 
existing environmental and safety standards.
    The energy boom and the resulting need for infrastructure 
is a good kind of problem to have, because solving it creates 
jobs. However, DOE's existing job training programs don't fully 
reflect the consequences of our changing energy sector, and 
don't focus on the skills currently in demand. The QER contains 
recommendations for updating these programs that are similar to 
the workforce training title in our energy bill authored by Mr. 
Rush.
    The energy growth in the U.S. and across North America also 
necessitates a new approach towards energy geopolitics. The QER 
emphasizes the need for integration of energy infrastructure 
and increased cooperation with Canada and Mexico. We concur 
that a fully integrated North American energy system would 
benefit the U.S. as well as its neighbors. Our recently-
released energy diplomacy discussion draft contains several 
provisions to advance this continent-wide approach and to 
ensure that energy policy decisions take energy security 
considerations into account.
    Beyond North America, we also see the U.S. playing a more 
prominent role in global energy markets. Doing so can help our 
allies and trading partners around the world, weaken the 
position of our energy-exporting adversaries, and add more jobs 
by expanding the market for American energy. The discussion 
draft contains several ideas to enhance America's energy 
standing in the world. This includes the first-ever provisions 
to coordinate with our allies on energy security issues as well 
as provisions to eliminate needless delays in the approval of 
LNG export facilities.
    I would also add that both the QER and the energy bill 
consider ways to update the Strategic Petroleum Reserve to more 
closely fit the energy security challenges of 2015 and beyond.
    Certainly there are also areas of disagreement, and I am 
sure Dr. Moniz will let us know about them. Nonetheless, I 
believe we can put our differences aside and agree on a range 
of energy reforms that will benefit the American people for 
decades to come.

    Mr. Whitfield. And at this time, I would like to recognize 
the gentleman from Illinois, Mr. Rush, for his opening 
statement.

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

    Mr. Rush. I want to thank you, Mr. Chairman, for holding 
this important hearing today on the QER, and--as well as on a 
variety of other energy issues covered in the discussion draft.
    Mr. Chairman, let me first begin by welcoming the Honorable 
and distinguished Secretary of Energy, Mr. Moniz, here to the 
subcommittee today. Welcome, Mr. Secretary. Mr. Secretary, let 
me commend you for the outstanding work you have been involved 
in on a myriad of different issues, all important to the 
American people. Mr. Chairman--Mr. Secretary, you might not 
accept this, you might not--you might think that this is a--not 
something that you see, but in my mind and in the mind of a 
number of my constituents, you are indeed a superstar 
Secretary. We are proud of your work on behalf of our Nation. 
Mr. Secretary, from your leadership in the historic nuclear 
talks with Iran, to establishing the much-needed Minorities and 
Energy Initiative at DOE, to overseeing the development of the 
comprehensive QER, are among your more important 
accomplishments. And I have no doubt that you will go down as 
one of the most significant and effective Energy Secretaries of 
modern time. You see, I am a fan, Mr. Secretary.
    Mr. Secretary, as you may be aware, I have a bill that I 
will soon be introducing that will amend the Department of 
Energy Organization Act to replace the current requirement for 
a biannual energy policy plan with a quadrennial energy review. 
It is my hope that this bill, like its Senate counterpart that 
was recently introduced by Secretary Coons of Delaware and 
Senator Alexander of Tennessee, will attract bipartisan 
support. In fact, Mr. Secretary, I have held off on introducing 
the bill as of yet so that my office can continue to hold talks 
with the majority side in order to find language that both 
sides can agree on. And, Mr. Chairman, I will continue to reach 
across the aisle for support on this nonpartisan issue of 
codifying a quadrennial energy review, and I hope that we can 
find common ground.
    Mr. Chairman, the QER addresses many areas that are also 
covered in the discussion draft of the Comprehensive Energy 
Bill we have all been working on. Issues such as increasing the 
resilience, reliability, and safety of the grid are discussed 
in both packages. Additionally, there are many similarities in 
both the QER and in the discussion draft regarding integrating 
North American energy markets, modernizing the grid, and 
enhancing employment and workforce training. However, Mr. 
Chairman, there is still much work to be done in bridging the 
gap in areas where there are some disagreements, such as in 
signing and permitting and addressing the environmental aspect 
of transportation--or transmission rather, storage, and 
distribution infrastructure. Specifically, in the discussion 
draft before us today, I have some concerns regarding the 
cross-border approval process described in Section 3104. In 
this section, the burden is shifted away from farming companies 
and onto agency officials to issue so-called certificates of 
crossing, unless the official finds the project, and I quote, 
``is not in the public interests of the United States.''
    Another concern that I have, Mr. Chairman, is in Section 
3102, which sets up an interagency taskforce to evaluate North 
American energy flows. However, the task is noticeably missing 
representatives from either the Council of Environmental 
Quality, the Environmental Protection Agency, as well as the 
Departments of Interior or Transportation, among others who may 
weigh in on environmental issues.
    Mr. Chairman, as we move forward with the goal of putting 
forth a truly bipartisan energy bill, it is my hope that the 
majority side will work with us to find common ground on most 
of these issues, and put precedence in doing the right thing 
above doing it quickly.
    Mr. Chairman, I thank you, and I yield back the balance of 
my time.
    Mr. Whitfield. Thank you, Mr. Rush, for that opening 
statement.
    At this time, I would like to recognize the chairman of the 
full committee, Mr. Upton, for 5 minutes.

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

    Mr. Upton. Well, thank you, Mr. Chairman. I just want to 
say in response to Mr. Rush's comments, I look forward to 
working with him and Mr. Pallone, and all of our members on 
both sides of the aisle, to do this right. And appreciate those 
kind words.
    We are delighted to welcome back Secretary Moniz to the 
committee to discuss the first installment of the Quadrennial 
Energy Review that focused on energy transport and 
infrastructure; something we need to do. America's energy 
picture is rapidly changing, and our laws and regulations need 
to change with it. Longstanding concerns about declining 
domestic energy output have been erased by rapidly rising oil 
and natural gas production. 2013 alone, according to the QER, 
the U.S. added 1.2 million barrels per day of production, a 
record increase by one country in 1 year. Domestic production 
of natural gas and related liquids has experienced equally 
dramatic increases. 2014, the U.S. became the world's number 1 
energy-producing nation, and it is time we start acting like 
it.
    Unfortunately, the scarcity mindset is still embedded in 
our national energy policy. Rising energy production requires 
more energy infrastructure; what I have called the architecture 
of abundance. Both the energy legislation and the QER include a 
number of ideas for upgrading and expanding the Nation's energy 
infrastructure. And in light of the recent pipeline spill in 
California, I would add that both aim to ensure that this new 
infrastructure is built with state-of-the-art technologies that 
reduce the environmental and safety risks. But our energy 
abundance can be more than just an economic success story; it 
can be--it, indeed, can be a foreign policy success story as 
well. And that is why recently released discussion draft of our 
energy diplomacy title is so important.
    This--the discussion draft builds on the extensive work 
done by this subcommittee on LNG exports. At numerous hearings 
over the last couple of years, we heard from many of our allies 
around the globe who said they would rather get their natural 
gas from us than the likes of Russia or Iran. That message was 
underscored last month when I led a high-level delegation to 
several of our European allies, including Ukraine, and we came 
away with a profound new understanding of just how vital these 
partnerships can be. In established parts of the EU, leaders 
are coming together to promote a unified energy market because 
of its potential for security, affordability, and innovation. 
In Ukraine, where the commitment to freedom and democracy is 
hard-fought each and every day, their energy aspirations are 
fundamental to their dreams for a peaceful future.
    While our discussion draft encourages North American energy 
cooperation and cross-border infrastructure, opportunities for 
energy diplomacy extend well beyond our own continent. For 
example, there is broad recognition that U.S. LNG exports will 
benefit the U.S. economy, our consumers, and yes, our allies. 
While the same could be said for oil exports, a statutory ban 
has prevented us from pursuing these benefits for the last 4 
decades. And it is time that Congress considers revising the 
ban on crude oil exports.
    As with natural gas, America now has enough oil production 
to make increased exports feasible, especially the lighter 
grades of crude that the QER notes have experienced the most 
rapid supply increases. Economic and foreign policy experts 
across the political spectrum believe that expanding the 
markets for American oil would be a net jobs creator at home, 
while enhancing our geopolitical influence abroad. And at the 
same time, reports from the GAO, CBO, and Energy Information 
Administration all point to reductions in the price of gas as a 
result of increased oil exports. In other words, oil exports 
can be a win for the American people and a win for our allies.
    The energy sector has been the Nation's most significant 
job creator in recent years, but with the drop in oil prices, 
as many as 100,000 energy industry positions have been lost. 
The case for creating more jobs by expanding the market for 
American oil is a key reason why oil exports should be on this 
committee's agenda this year. And while we are not currently 
considering any such provisions in this pending legislation, I 
do look forward to working with my good friend, Mr. Barton, and 
others on both sides of the aisle to ensure that we get the 
policy right.
    I yield back the balance of my time.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    We are delighted to welcome back Secretary Moniz to the 
committee to discuss the first installment of the Quadrennial 
Energy Review that focused on energy transport and 
infrastructure. America's energy picture is rapidly changing, 
and our laws and regulations need to change with it.
    Longstanding concerns about declining domestic energy 
output have been erased by rapidly rising oil and natural gas 
production. In 2013 alone, according to the QER, the U.S. added 
1.23 million barrels per day of production, a record increase 
by one country in one year. Domestic production of natural gas 
and related liquids has experienced equally dramatic increases. 
In 2014, the U.S. became the world's number one energy-
producing Nation--and it's time we start acting like it.
    Unfortunately, the scarcity mindset is still embedded in 
our national energy policy. Rising energy production requires 
more energy infrastructure--what I have called the Architecture 
of Abundance. Both the energy legislation and the QER include a 
number of ideas for upgrading and expanding the nation's energy 
infrastructure. And in light of the recent pipeline spill in 
California, I would add that both aim to ensure that this new 
infrastructure is built with state-of-the-art technologies that 
reduce the environmental and safety risks. But our energy 
abundance can be more than just an economic success story; it 
can be a foreign policy success story as well. That is why the 
recently released discussion draft of our energy diplomacy 
title is so important.
    The discussion draft builds on the extensive work done by 
this subcommittee on LNG exports. At numerous hearings over the 
last two years, we heard from many of our allies around the 
globe who said they would much rather get their natural gas 
from us than the likes of Russia or Iran. That message was 
underscored last month when I led a high-level delegation to 
several of our European allies, including Ukraine, and we came 
away with a profound new understanding of just how vital these 
partnerships can be. In established parts of the EU, leaders 
are coming together to promote a unified energy market because 
of its potential for security, affordability, and innovation. 
In Ukraine, where the commitment to freedom and democracy is 
hard-fought each and every day, their energy aspirations are 
fundamental to their dreams for a peaceful future.
    While our discussion draft encourages North American energy 
cooperation and cross-border infrastructure, opportunities for 
energy diplomacy extend well beyond our own continent. For 
example, there is broad recognition that U.S. LNG exports will 
benefit the U.S. economy, our consumers, and our allies. While 
the same could be said for oil exports, a statutory ban has 
prevented us from pursuing these benefits for the last four 
decades. It's time that Congress considers revising the ban on 
crude oil exports.
    As with natural gas, America now has enough oil production 
to make increased exports feasible, especially the lighter 
grades of crude that the QER notes have experienced the most 
rapid supply increases.
    Economic and foreign policy experts across the political 
spectrum believe that expanding the markets for American oil 
would be a net jobs creator at home while enhancing our 
geopolitical influence abroad. At the same time, reports from 
the GAO, CBO, and Energy Information Administration all point 
to reductions in the price of gasoline as a result of increased 
oil exports. In other words, oil exports can be a win for the 
American people and a win for our allies.
    The energy sector has been the nation's most significant 
jobs creator in recent years, but with the drop in oil prices 
as many as 100,000 energy industry positions have been lost. 
The case for creating more jobs by expanding the market for 
American oil is a key reason why oil exports should be on this 
Committee's agenda this year. And while we are not currently 
considering any such provisions in this pending legislation, I 
look forward to working with Mr. Barton and my colleagues on 
both sides of the aisle to ensure that we get the policy right. 
Thank you.

    Mr. Whitfield. Gentleman yields back.
    At this time, recognize the gentleman from New Jersey, 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 Whitfield and Ranking 
Member Rush.
    Let me begin by welcoming Secretary Moniz back to the 
committee, and congratulating you on completing the first 
installment of the Quadrennial Energy Review. It is a truly 
comprehensive look at our Nation's energy infrastructure, and 
its recommendations will help us chart a path forward in the 
rapidly changing energy sector.
    This installment relates to the transportation, storage, 
and distribution of energy. These TS&D connections between 
suppliers and users can impact our energy reliability and 
security, and affect our ability to meet environmental and 
economic goals. TS&D infrastructure is vulnerable to a wide and 
expanding array of threats from natural disasters to physical 
and cyberattacks, so it is important we thoroughly understand 
these vulnerabilities and how to mitigate their impacts. At the 
same time, its modernization can help achieve meaningful 
greenhouse gas reductions and other environmental goals, while 
enhancing safety, security, and reliability. Ultimately, the 
OER represents the forward-thinking we need to ensure a 
smarter, more resilient, cost-effective, and environmentally 
sound energy system for the future. And I look forward to 
working with you, Mr. Secretary, to translate these important 
ideas into legislation and law.
    I wish I could be as upbeat in discussing the majority's 
Energy Diplomacy Discussion Draft. Rather than building on the 
strong relationships with our North American neighbors, the 
majority has chosen to resurrect controversial legislative 
proposals that have already drawn democratic concerns and 
presidential veto threats. For example, the bill would 
eliminate the current presidential permitting process for 
liquid and gas pipelines, and electric transmission lines that 
cross the U.S. border with Mexico and Canada, and it replaces 
the process with one that effectively rubberstamps permit 
applications and eliminates any meaningful environmental 
review.
    While it now would only take effect after President Obama 
leaves office, and specifically excludes the Keystone Pipeline, 
it still appears to allow TransCanada to avail itself of the 
new process by reapplying with a revised route. The provision 
also limits federal approval and environmental review to the 
small segment of the project that physically crosses the 
national border. It also creates a rebuttal presumption that 
these projects are in the public interest; shifting the burden 
of proof to project opponents. This all but guarantees permit 
approval, and virtually eliminates the opportunity for 
protective permit conditions.
    The draft bill also recycles LNG export language designed 
to address nonexistent delays at the Department of Energy. In 
fact, DOE recently testified, that ``Right now, there are zero 
applicants sitting in front of us for a decision. The last 
application that came out of FERC, we turned that around in 1 
day.'' Nonetheless, the bill would make changes to an otherwise 
successful process.
    And finally, another provision would create a taskforce, 
burdening federal energy regulatory actions with additional red 
tape, and undermining environmental considerations. In fact, it 
speaks volumes that the very agencies tasked with natural 
resource and environmental management, like EPA and DOI, are 
excluded from the taskforce.
    So I hope this committee can start to work towards 
consensus legislation instead of resurrecting problematic 
issues of the past.
    But thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. Gentleman yields back.
    That concludes the opening statements for today. And, Mr. 
Secretary, once again, thank you for joining us. We do look 
forward to your insights on these important issues. And I would 
like to recognize you for 5 minutes for your opening statement.

STATEMENT OF HON. ERNEST MONIZ, SECRETARY, DEPARTMENT OF ENERGY

    Secretary Moniz. Well, thank you, Chairman Upton and 
Whitfield, and Ranking Members Pallone and Rush.
    Mr. Whitfield. I am not sure the microphone is on, but----
    Secretary Moniz. The light is--yes. OK. Start again.
    OK. Well, again, Chairman Upton and Whitfield, and Ranking 
Members Pallone and Rush, distinguished members of this 
subcommittee, thank you for the opportunity to be with you 
again today. And I really appreciate the leadership that this 
committee has shown in working towards comprehensive and 
bipartisan energy legislation that includes many of the topics 
in the QER first installment. I look forward to working with 
you to move these ideas forward, and really appreciate in the 
opening remarks the statements about common ground and the 
opportunities we have to work together.
    As was already stated, the U.S. has reaped enormous 
benefits from our energy revolution the last several years 
which, I point out, includes, of course, hydrocarbon 
production, but also dramatically increased renewables 
deployment to energy productivity gains. This revolution, 
however, has produced changes that are challenging our energy 
infrastructure. And to be direct, we need to modernize and 
transform our energy infrastructures and our shared commodity 
infrastructures. This will require major new investments, and 
we have to get it right.
    We should acknowledge that, while the choices we make and 
the decisions we take today and in the near future are 
critical, we also have to acknowledge that the choices and 
decisions that we fail to take in a timely way are very 
important for generating our infrastructure for the 21st 
century.
    To help guide these investment choices, the QER provides 
recommendations based on a 15-month, multiagency process that 
included 14 public meetings across the country, and 
consultations with Canada and Mexico. The QER focuses on TS&D, 
including the network of pipelines, wires, storage, waterways, 
railroads, and other facilities that form the backbone of our 
energy system.
    I ask the chairman's permission to submit the summary 
version of the QER into the record.
    The full QER is available online, and you have my written 
testimony, so let me just take the opportunity to highlight 
five crucial tasks that we need to take.
    First, our infrastructure and investments can and must 
serve energy security in a broader sense than the oil-centric 
focus of the last several decades. An example is found in the 
definition of energy security that the U.S. and our G7 allies 
developed after the Russian aggression in Ukraine that includes 
seven critical elements in a modern view of energy 
infrastructure. Supply diversification, for sure, but also 
transparent markets, greenhouse gas emissions reductions, 
enhanced efficiency, clean energy, infrastructure 
modernization, and emergency response. This doesn't mean that 
global oil disruptions are not a concern. Indeed, in the 
context of the QER and its recommendations, modernizing the 
SPRO both from a physical distribution standpoint, as well as 
the authorities for its use, is a major area of focus. Through 
its analysis of resilience and infrastructure modernization, 
the QER goes beyond global oil supply disruptions as the single 
focus of energy security policy, leading, for example, to 
recommendations related to regional fuel disruptions, as we 
have seen across the country. More coordinated state planning 
is also essential. And most notably, we feel that state 
planning grants to help states update and expand their 
emergency preparedness and security strategies and exercises to 
enhance electricity reliability, to accommodate several 
changing factors, are all critical. Other ways to improve 
energy security include programs to make our energy 
infrastructures more resilient to a range of hazards and 
vulnerabilities. These are addressed in part through the QER's 
recommendation for a pre-disaster hardening grant program, 
options for transformer reserves, and a systematic program to 
replace aging unsafe natural gas distribution pipes.
    Second, QER and its recommendations underscore the 
indispensable role of states. These really are test beds. We 
need to advance studies such as a new framework for evaluating 
energy services to help things like rate structure development.
    Third, the QER analysis showcases the importance and 
complexity of how our energy revolution challenges our shared 
transport infrastructures. Frankly, when we started the QER, we 
did not anticipate that we would end up with this as a major 
area of focus. However, the dramatic oil production increases 
in unconventional locations, coupled with things like the RFS 
and pending exports of natural gas, have placed strains on 
those transport infrastructures; rail, barge, locks, port 
facilities, and the like. The QER includes recommendations 
focused on innovative funding mechanisms for these 
infrastructures and, for example, recommends a program for port 
connectors being stressed by new energy supplies.
    Fourth, the QER recommends coordinated efforts for skills 
training, and recruitment of works to build and staff our 
modernized energy infrastructure system, and support jobs for 
working families. A national job-driven skills training system 
with rigorous curricular and standards that includes a special 
emphasis on training for veterans, on minorities and energy, is 
critical to our energy future. I might note that yesterday, 85 
minority interns started working at DOE for the summer. I also 
created the Job Strategy Council to look at how we can capture 
the energy sector opportunities that we have for new jobs.
    And finally, fifth, we need to acknowledge the critical 
federal role in incentivizing our energy infrastructure 
investments. While the bulk of the QER recommendations fall 
under this committee's jurisdiction, the Congress has other 
committees with equities in energy infrastructure, especially 
in shared infrastructure and North American energy integration.
    I would just note in closing that the Administration's most 
recent budget request includes a down payment for funding some 
of the QER's key recommendations at about half a billion 
dollars, however, in the current budget environment where 
sequestration has placed artificial caps on spending, DOE's 
programs and the shared infrastructure programs for the Corps 
of Engineers and others, frankly, placed these critical 
programs in competition with very restricted budget 
allocations. And so, for example, the House Appropriations mark 
does not meet our needs for energy infrastructure.
    In closing, Department of Energy and all the agencies that 
developed this report and its recommendations see great 
potential for benefit, and we look forward to working with this 
committee again to find bipartisan ways of advancing our TS&D 
infrastructure.
    Thank you, and I would be pleased to answer questions.
    [The prepared statement of Secretary Moniz follows:]
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
    Mr. Whitfield. Well, thank you, Secretary Moniz.
    And at this time, I will recognize myself for 5 minutes of 
statements and questions.
    We all recognize that the Clean Energy Plan has been at the 
very center of President Obama's initiatives, and I think 
everyone recognizes that the tension between the Obama 
Administration and republicans in the House and Senate, as well 
as elsewhere, has been--many of us feel that the President is 
moving so quickly through regulations without adequate 
communication with the legislative body, and while we all 
recognize the need for an all-of-the-above policy emphasizing 
clean energy, we look at Europe and we see how some policies 
over there in which countries like Germany have made decisions 
to eliminate nuclear energy, has created low wholesale prices, 
extremely high retail prices, and as a result, Europe has some 
real economic problems. So what we want to be sure about in 
America is, we made this mad rush for change, that we do so in 
a way that we can protect the reliability, the affordability, 
so that America can continue to be competitive in the global 
marketplace.
    Mr. McKinley, who left, was just telling me that in West 
Virginia, they have lost 45 percent of their coal jobs. And so 
this economic impact affects all of us, and that is why we are 
trying to move this energy bill. That is why the Quadrennial 
Energy Review is so important to look at all aspects of 
everything because everyone knows that we are fortunate, we 
have an abundant energy supply, natural gas particularly, and 
oil as well, but we have infrastructure needs. And it is very 
difficult to get permits, it takes years, and so as we are 
shutting down coal plants through regulatory orders, we don't 
always have the capability to get the energy product to where 
it needs to go. And so that is what this is all about.
    So one of the things I just wanted to ask you, you were 
talking about the development of this first installment was a 
colossal undertaking with at least 22 agencies involved and 
more than a year of work. And if this is the first installment 
of the QER, will there be a new installment each year for the 
next 3 years, and then the process will begin all over again? 
Is that what your understanding is? Yes, there you go.
    Secretary Moniz. I apologize. So this first installment, 
frankly, did take us a few more months than we had hoped. We 
are now in the process of working across the government to 
settle on the next installment. We would like to get something 
into your hands early next year again, and then again at the 
end of 2016.
    Mr. Whitfield. Yes. Now----
    Secretary Moniz. And clearly, this will be now expanding 
into the supply and demand ends of the energy sector.
    Mr. Whitfield. Yes. My time is already running out here. I 
want to focus on one issue--maybe because I was in the railroad 
industry, but railroads provide a vital transportation network 
for all sorts of commodities in America, and historically 
railroads have generated lots of income from moving coal. And 
the coal shipments have dropped dramatically, even though our 
coal exports are up, despite problems with trying to open up 
coal export facilities in Washington State. But many people are 
genuinely concerned about the financial viability of the 
railroad industry with this extreme reduction in coal 
transportation. Was that discussed in the quadrennial review 
process from your personal knowledge? Was there any discussion 
about that at all?
    Secretary Moniz. Yes, Mr. Chairman. Of course, the 
Department of Transportation would have prime responsibility in 
that area, but there were discussions because we did see in 
some cases, especially in the upper Midwest, some coal 
shortages for a while, but it was not because the trains 
weren't operating, they were just carrying other commodities 
which, my understanding, may have had a higher margin for them.
    So one of the initiatives that we have taken, and the DOE 
EIA is working with the Surface Transportation Board at DOT, 
first of all, to try to get more data and understanding of how 
commodities, including energy commodities are moving on the 
railroads, because it is coal, it is obviously oil, and ethanol 
competing, in a certain sense, with a whole variety of other 
commodities.
    Mr. Whitfield. Yes.
    Secretary Moniz. But I think more data and data 
transparency will be very important----
    Mr. Whitfield. Yes.
    Secretary Moniz [continuing]. For federal and state 
planning.
    Mr. Whitfield. Yes. Because we do have to have a strong 
financial railroad sector just because of the impact it has on 
our entire economy.
    So my time has expired. At this time, I would like to 
recognize Mr. Rush for 5 minutes.
    Mr. Rush. Thank you, Mr. Chairman.
    Mr. Secretary, as I asserted in my opening statement, I 
believe that you will go down as one of the most consequential 
Energy Secretaries of our time. And again, I want to commend 
you on your fine work and the initiatives that you have 
established during your tenure. And as you know, Mr. Secretary, 
when one attempts to change the culture and the practices of 
institutions that have been doing things a certain way for a 
long time, then inevitably there will be resistance and 
apprehension when those entities are asked to change. And it is 
with this in mind, Mr. Secretary, that I ask you to follow up 
with me to gage where we are with some of the initiatives that 
you and I have discussed before in the past. Specifically, I 
would like to discuss with you the issue of inclusiveness and 
outreach at the publicly funded national labs including, but 
not limited to, Argonne and Fermi in my state. And my office 
will be in touch with you to schedule a meeting for some time 
in the very near future between you and I. It is my opinion, 
Mr. Secretary, that they are--Argonne and Fermi specifically, 
are faking and fumbling on the issues of inclusiveness and 
outreach. It seems to me that they are trying to run out the 
clock on you and I. They are not seriously taking our requests 
and our initiatives and our discussion to heart.
    Mr. Secretary, on another issue, I would like to get your 
thoughts and feedback on the QER legislation that was 
introduced in the Senate. And I--as I said before, I will be 
offering a companion bill in the House soon. As you know, Mr. 
Secretary, this bill will simply amend the DOE Organizational 
Act to replace the current requirement for biannual energy 
processing plan with a quadrennial energy review. And can you 
give the subcommittee some feedback on this bill? From your 
understanding, would DOE take the lead in addressing a QER, and 
is there a need for legislation such as what I previously 
discussed?
    Secretary Moniz. Thank you, Mr. Rush. Yes, by the way, on 
the consequential issue, I hope they are positive consequences. 
And I might also at this point say that I think our energy 
policy and Systems Analysis Office did a heroic job in 
marshaling this huge QER forward.
    On your first question, and culture, et cetera, I might add 
that there is a wonderful expression by Peter Drucker, the 
famous management consultant, that culture eats strategy for 
breakfast. We can change rules but it is harder to change 
culture. But I think we are certainly making advances, 
certainly on the issue of minorities and energy, and if you 
know otherwise, I would like to discuss it with you because I 
do see enthusiasm going forward. Argonne, for example, one of 
their initiatives is in terms of making sure that minority 
businesses are quite aware of the opportunities for 
procurement. We also have, and Dot Harris has been a leader in 
our place-based initiative. So a good example is working, in 
this case, in southwest Louisiana with the enormous 
construction going on driven by natural gas, for training 
minorities to get some of those jobs. In terms of research 
collaborations, another example would be our Jefferson Lab, 
working closely with Hampton University. I mentioned the 
interns already. So we are going to keep pushing on all these 
fronts, and I want to work with you on that, and if you find 
problems, let me know because I will be sure to----
    Mr. Rush. I certainly will----
    Secretary Moniz. OK.
    Mr. Rush [continuing]. Mr. Secretary.
    Secretary Moniz. Thank you. Secondly, on the QER and the 
possibility of legislation, let me say that I certainly share 
the driver of this, which is that I think--and by the way, the 
initial reaction to the QER, including in this hearing, I think 
is--suggests that institutionalizing this could really be very 
important for continuing a bipartisan Administration-Congress 
discussion, so I am happy to work with both chambers in terms 
of how that might go forward. I would say that Department of 
Energy, in this first installment, clearly did provide kind of 
the analytical horsepower for it, but I do want to note that 
the Executive Office of the President also played a crucial 
role in being able to convene 22 agencies to come together to 
work on it. So anyway, we would be happy to discuss that 
further.
    Mr. Rush. Thank you.
    Mr. Whitfield. Gentleman's time has expired.
    At this time, recognize the gentleman from Michigan, Mr. 
Upton, for 5 minutes.
    Mr. Upton. Thanks again, Mr. Chairman.
    Mr. Secretary, in my opening I reaffirmed the desire of 
this committee to work with you and the Administration to find 
areas of mutual agreement on some QER legislative 
recommendations, and we look forward to that, and receiving 
technical assistance on some of the other sections of the bill 
as well.
    One of the areas that I wanted to zero-in on is SPRO this 
morning. As I note in your response to the committee yesterday, 
the SPRO was established in 1975 and it is the largest 
government petroleum reserve in the world. It has been used 
successfully on multiple occasions to respond to different 
types of energy supply disruptions. But it is now 2015 and 
global and domestic oil markets have changed significantly, we 
would all recognize that, and SPRO needs to be modernized.
    So as you know, the committee recently voted a--to drawn 
down a limited amount of SPRO oil to pay for our 21st Century 
Cures package beginning in 2018. And as you conduct the ongoing 
study to recommend the new size and role of SPRO going forward, 
would you support an additional change that would allow the 
President to draw down and sell surplus SPRO crude oil in order 
to use the funds to pay for operations and maintenance in line 
with the DOE budget request and potential modernization plans? 
In other words, using what we call mandatory savings to provide 
for the modernization and need improvements that really have to 
take place in the next number of years. And I would imagine 
that would be a pretty small draw down.
    Secretary Moniz. Mr. Chairman, well, first of all, as you 
know, I have some considerable concern about using the SPRO for 
anything other than energy security and resilience issues, for 
which it is intended. Now, first of all, I have to say, the 
issue of what is or might be called surplus, I think, is really 
part of the study going on because we understand that there are 
certain IEA requirements, but that may or may not be the metric 
for us to use. That is the first thing. Secondly, we did 
identify, of course, in the QER, excuse me, needs right now for 
modernizing the SPRO for--well, there are issues of 
maintenance, there are issues of modernization, and the 
particular issues of addressing distribution systems for 
getting SPRO oil onto water, in particular, in an emergency. We 
estimated that as $1 \1/2\ to $2 billion. That is part of the 
discussion with Congress, how to address that. Clearly, what 
you propose would be a case in which, if one were to do that, 
it would be being used, I would argue, for the energy security 
intent of the petroleum reserve.
    Mr. Upton. So as you know, the QER recommends more 
flexibility and anticipatory authority to initiate a SPRO 
drawdown. Do you envision a greater role for SPRO to moderate 
global prices?
    Secretary Moniz. The motivation for recommending somewhat 
greater anticipatory authority is not motivated by a desire to 
use the SPRO to manipulate oil prices. The issue is that the 
current anticipatory authorities are highly restrictive. Up to 
30 million barrels, and only if that keeps you above 500 
million barrels. So there are issues there, and we feel that 
should a larger drawdown be required, or if the SPRO were at 
500 million barrels, one shouldn't have to wait to see the 
consequences on consumers of a spike in global oil prices 
before one can act. So I think that is the spirit, as opposed 
to manipulating oil prices.
    Mr. Upton. So I would note, as the QER discusses, the last 
time SPRO had a major release in reaction to Libya was back in 
2011. Seems like yesterday, but it was 2011. Since then, the 
supply situation has greatly changed for sure, as demonstrated 
in the test sale this last year. If there is an interruption 
somewhere in the world that doesn't impact the supply to U.S. 
refiners, would it make any sense at all to export SPRO crude?
    Secretary Moniz. Well, once again, I would say that that 
should be part of the studies really, that are going on, but I 
might say that it is hard to see how a major global disruption 
would avoid impacting our imports, because again, we still 
import 7 million barrels a day, only because with a major 
disruption, even if that, let's say, country is not directly 
importing to us right now, there would probably be a 
redistribution of the market that would impact our imports. But 
nevertheless, hypothetically, if that were the case, I think 
there would still be an issue of putting SPRO out would have 
the effect of backing our imports that would then equilibrate 
in the global market. So we could discuss that further.
    Mr. Upton. My time has expired. Thank you very much for 
your appearance again today.
    Secretary Moniz. Yes.
    Mr. Whitfield. At this time, recognize the gentleman from 
New Jersey, Mr. Pallone, for 5 minutes.
    Mr. Pallone. Thank you, Mr. Chairman.
    Secretary, climate change, as you know, is real and we are 
already feeling its effects across the country. The damaging 
impacts range from heatwaves and droughts, to reduced crop 
yields and increased wildfires. Every region in the country and 
every part of the globe is affected. I am concerned about 
impacts of extreme weather events and sea level rise that are 
already problems that we have with our energy infrastructure. 
So my question is, the QER outlines a number of findings in 
this area, how is your energy transmission, storage, and 
distribution, or ETS&D infrastructure, vulnerable to the 
impacts of climate change?
    Secretary Moniz. Thank you Chairman Pallone. First of all, 
as the data in the QER show, we have been seeing increasing 
impacts, probably impacting the economy, at the order of $25 
billion a year on average over the last decade. And with rising 
sea level, the effects of storms, major tropical storms, for 
example, are amplified. So we feel it is very important now to 
address the hardening of these infrastructures, not only 
coastal, but coastal is one major issue, and that is why we 
recommend a joint set of initiatives. One is to provide energy 
assurance grants for states to do planning, and to provide a 
basis for the states to then compete for what we recommend as a 
several billion dollar opportunity for these hardening kinds of 
activities. I will give one example. It happens to be in New 
Jersey. It was not part of the recommendations here, but in New 
Jersey, there was the case where we cost-shared with the state, 
a study on implementation of a very significant micro grid to 
protect electrified transportation corridors. The state then 
used that study to compete for Sandy recovery money, and in 
fact, got several hundred million dollars to implement that. 
That is the kind of thing. Do these studies get technical 
assistance, and then have the opportunity to move forward with 
cost sharing major resiliency projects.
    Mr. Pallone. Well, I appreciate your mentioning our New 
Jersey grant because, obviously, we did have a lot of 
vulnerabilities during Super Storm Sandy. We saw a breakdown of 
the infrastructure and services, both electricity and water 
supply.
    But in terms of this competitive grant program that is 
going to promote innovative solutions for infrastructure 
resilience, reliability, security, just give me a little more 
information about how that program would work. I know you 
mentioned the New Jersey program, but what other kinds of 
projects would be eligible for those grants?
    Secretary Moniz. Well, it could be, again, any kind of 
project that hardens infrastructure. The electric grid has 
clearly shown vulnerability to storms. So it could be things 
like I mentioned with micro grids. It could be the use of 
advanced technologies. I could mention some things like 
synchrophasors that would allow system operators to respond 
much more quickly to something that is happening, to protect 
spreading of a blackout, for example. It could be in terms of 
fuels requirements. One of the recommendations that we have in 
there is to expand analyses of what different kinds of regional 
product reserves might do. Now, this is a case where, again, in 
the northeast and New Jersey----
    Mr. Pallone. Right.
    Secretary Moniz [continuing]. We have already moved there, 
but there are issues in California, there are issues in the 
southeast, there could be issues in the upper Midwest. And so 
we recommend that. And there could be opportunities there for 
new resiliency projects.
    Mr. Pallone. All right. Thanks a lot. I do want to applaud 
you for your efforts to strengthen these vulnerable and 
critical energy infrastructures, especially in the face of 
global climate change. So thanks again.
    Thank you, Mr. Chairman.
    Secretary Moniz. If I----
    Mr. Whitfield. At this time----
    Secretary Moniz. If I may, I might just add that this is an 
example of the importance of the broader view of energy 
security, including resilience of our infrastructure.
    Mr. Pallone. Yes, exactly. Thank you.
    Mr. Whitfield. Thank you. At this time, I will recognize 
the gentleman from Texas, Mr. Barton, for 5 minutes.
    Mr. Barton. Well, thank you, Mr. Chairman. And, Mr. 
Secretary, welcome back.
    Mr. Rush and you seem to have a mutual admiration society 
going. Superstar Energy Secretary. I wouldn't go----
    Mr. Rush. Don't get jealous.
    Mr. Barton. Say what?
    Mr. Rush. Do not get jealous.
    Mr. Barton. Do not get jealous? Well, I wouldn't go quite 
so far as superstar, but my daughter has a saying that she 
learned in college, when something is really cool, it is money. 
And it is money. When you say it is money, it means that, man, 
that is hot and it is cool and it is right on the bean. Well, I 
would say Moniz is money. So not superstar but money.
    Now, you know what I am going to----
    Secretary Moniz. I asked for this.
    Mr. Barton. I am going to give you a chance to show just 
how money you are. What do you think I am going to ask you 
right now?
    Secretary Moniz. I don't know but I am covering my wallet.
    Mr. Barton. You heard the chairman's opening statement. He 
talked about oil exports and, as you well know, Mr. Secretary, 
back in the '70s we had the Arab OPEC Embargo, and this 
committee and the Congress passed a lot of legislation to deal 
with that, most of which has been repealed. We had price 
controls on the wellhead natural gas prices, we had price 
controls on crude oil, we had even retail price controls on 
gasoline. We limited what natural gas could be used for. That 
has all been repealed. The only thing that hasn't been repealed 
is the ban on crude oil exports.
    Now, the U.S. is number one in the world in oil production; 
over 10 million barrels a day. World use is somewhere around 
94, 95 million barrels a day. Would you agree that if we were 
to let our domestic oil potentially be exported, that it would, 
at a minimum, keep prices from going up on world markets, and 
it is a possibility that the world oil price might go down? 
Would you agree with that?
    Secretary Moniz. I think the key issue, Mr. Barton, is 
whether or not in a country like ours, that still imports 7 
million barrels a day, the question would be whether that did 
or did not stimulate any appreciable additional production. And 
that would be the issue in terms of global price. Internally, 
there would be an issue as to how rents are shared between, 
say, refiners and producers, but in terms of the economy-wide, 
the real issue was whether there is more production, and 
certainly in today's market, it is hard to imagine that 
happening. Now, in a future market----
    Mr. Barton. I am not a Harvard economics professor----
    Secretary Moniz. Nor am I.
    Mr. Barton [continuing]. But I did go to graduate school, 
and if we want to talk about sharing of rents, our refiners are 
taking those rents and putting them in their pockets today. 
They are not sharing those with the retail consumers. If we let 
the producers have the option of putting that oil on the world 
market, the consumer in the United States could potentially 
benefit from the world price going down, and I think you will 
agree with me that retail gasoline prices are basically set 
based on the world price for crude. You will agree with that.
    Secretary Moniz. Absolutely, yes.
    Mr. Barton. So----
    Secretary Moniz. EIA has confirmed that.
    Mr. Barton. So I have a list here of studies where they 
have looked at what would happen to the price in the United 
States at retail for gasoline, and the Brookings Institute, 
NERA, Resource for the Future, Council on Foreign Relations, 
Bipartisan Policy Center, Baker Institute, Center for Global 
Energy Policy at Columbia University, Energy Policy Research 
Institute, Aspen Institute, Progressive Policy Institute, IHS 
Energy, ICF International Heritage Foundation, American Council 
for Capital Formation, Congressional Budget Office, Energy 
Information Administration, General Accounting Office, Federal 
Reserve Bank, have all concluded that if we allowed our oil to 
be exported, there would be no increase in the domestic price 
of--for gasoline, and in most cases it might go down. Now, 
those aren't oil company hacks; those are bipartisan usually, I 
would say, objective institutes. You have to be aware of some 
of those studies.
    Secretary Moniz. Well, yes. And again, I think they are all 
in agreement with the fundamentals that, again, the issue is 
whether or not such a move would lead to an increase of 
production of any appreciable magnitude. If it doesn't, then 
there is essentially no impact on price.
    Mr. Barton. Yes. My time has expired----
    Secretary Moniz. Yes.
    Mr. Barton [continuing]. But if you will send one of your 
crack aids to the Republican Study Committee Taskforce on 
Energy Seminar this afternoon, you will hear 4 or 5 experts all 
say that if we allow our oil to be exported, U.S. production 
will stabilize and probably go up.
    Secretary Moniz. Again, that is the key issue. We----
    Mr. Barton. Yes.
    Secretary Moniz. I think we all agree on the facts.
    Mr. Barton. OK. Thank you, Mr. Secretary. Thank you, Mr. 
Chairman.
    Mr. Whitfield. At this time, the chair recognizes the 
gentleman from California, Mr. McNerney, for 5 minutes.
    Mr. McNerney. Thank you, Mr. Chairman.
    Mr. Secretary, I do appreciate the big effort that went 
into producing this QER document. Nice work. The document does 
recommend legislation actions. Would you elaborate on 1 or 2 of 
the most urgent actions that would be required?
    Secretary Moniz. Well, certainly, I think one of the very 
important ones, as I already mentioned, is this issue of 
providing funding, particularly for states, to compete for good 
projects that will provide resiliency of infrastructure. I 
think that is a very important one. Another one is we recommend 
a fund that again would allow for competition for accelerating 
the modernization of natural gas distribution infrastructure 
for both environmental and safety reasons. Clearly, the Federal 
Government should not and cannot pay for what may be a quarter 
trillion dollar bill, but what we recommend is acceleration in 
which the Federal Government could help absorb any great 
increase for low income families. Those are two examples of the 
number.
    Mr. McNerney. Very good. One of the things that is 
discussed is the potential for energy storage and grid 
modernization, grid resilience. Do you think that there is a 
short-term potential for that energy storage to be useful in 
grid resilience and in lowering the cost and improving access 
for renewables and so on?
    Secretary Moniz. Yes. Well, in fact, we all know California 
is in the lead, as if often the case----
    Mr. McNerney. Right.
    Secretary Moniz [continuing]. In terms of storage. And 
clearly, except for the places geographically where pumped 
storage is available, we still need to bring down the costs of 
storage, but they are coming down. They could be a game changer 
in terms of large-scale, variable renewables, but also 
distributed storage at the household or commercial enterprise 
level could be another game changer, particularly in terms of 
distributed generation enablement.
    Mr. McNerney. Are we pretty close to having the technology 
available?
    Secretary Moniz. Well, the technology is available. It is 
the cost. And we probably need another factor of two to three 
reduction in the cost to make it wide-spread available.
    Mr. McNerney. Well, thank you. Do you feel that the 
regional grid reliability would be put at risk by the Clean 
Power Plan?
    Secretary Moniz. Well, we don't see any evidence in our 
analyses yet that this could not be managed in a pretty normal 
way. For example, we did a specific analysis in terms of the 
natural gas transmission infrastructure because of the issues 
raised in terms of dramatically expanding gas use in the power 
sector, and that found that while one would probably have some 
regional issues to develop, it was not like we needed a massive 
program because we actually have been building out that 
infrastructure pretty substantially for the last 15 years, and 
frankly, there is overcapacity. So we don't see that as, you 
know, as a particularly difficult issue.
    Mr. McNerney. What would be the best way to deal with the 
regional question then that you just referred to of grid 
reliability?
    Secretary Moniz. I think it would be just in the normal 
process. As the supply distribution is understood in that 
region, the companies would go through the usual FERC process 
for, let's say, interstate gas transmission pipes.
    Mr. McNerney. Well, there seems to be a patchwork of 
transmissions citing initiatives across federal agencies. The 
QER highlights a need to improve coordination between all the 
stakeholders for transmission-permitting processes. Do you 
believe that the Rapid Response Transmission Team has been 
effective, and should its role be expanded?
    Secretary Moniz. I believe that it is--what I would say is 
I think it has really gained traction. It has been--in my view, 
I will be honest, I think it is a little bit slow getting 
going, but I think now the whole pre-application 
standardization has kind of come into play, and I think that we 
do need to, in fact, keep up the pace and, if anything, 
strengthen it, yes.
    Mr. McNerney. OK, thank you.
    Mr. Chairman, I yield back.
    Mr. Whitfield. Gentleman yields back.
    At this time, recognize the gentleman from Texas, Mr. 
Olson, for 5 minutes.
    Mr. Olson. I thank the chair. And welcome, Secretary Moniz.
    My first question is about the Federal Power Act. Under 
Section 202(c), DOE, you, can order a power plant to stay 
running during a grid crisis. In following your order, the 
plant might squeak past their clean air permits. Unfairly, that 
plant can be fined and sued by others for doing so. One 
regulator says go, another says stop. That plant has to decide 
whether they want to acquiesce in a power shortage, maybe a 
brownout or blackout, or cut a check, breaking the permit for 
just a few days, maybe a few hours. I have a bipartisan bill 
with Representative Doyle and Green to fix this in the energy 
package we are working on. This is not about a company riding 
roughshod over environmental laws; we are talking about days or 
hours in a crisis.
    The other week, FERC and NERC endorsed our bill. Your 
predecessor, Secretary Chu, told me in this committee that he 
is ``very supportive'' of the idea. The bill has passed this 
committee three times now, and the whole House twice, in the 
112th and 113th Congress.
    And so my question to you is, can I count on your support 
in the 114th Congress, will you be very supportive of the bill 
like your predecessor?
    Secretary Moniz. And, Mr. Olson, thank you. You have asked 
me this question before, and let me say that the answer is 
basically yes. I know our DOE staff has worked with both sides 
on this, and I think we are quite comfortable with it. Thank 
you.
    Mr. Olson. Great, thank you for that clarification. As you 
know, my home State of Texas has half our southern border, over 
1,200 miles with our neighbor to the south, Mexico, and we know 
how important that relationship with Mexico is for our trade. 
Your QER points out that we trade tens of billions of dollars 
in energy each year with Mexico.
    Secretary Moniz. Sixty-five.
    Mr. Olson. Sixty-five. I like that even better. In fact, 
some of Texas' only power line connections outside of ERCOT 
come from our neighbor to the south, Mexico. You might recall 
that those lines prevented rolling blackouts and brownouts with 
crises in the fall--I am in sorry, in the early winter of 2011 
and August of that same year. My question is, we know this oil 
plays--we know that oil and gas--shale plays don't stop at the 
southern border. The new Administration in Mexico is reforming 
its energy economy, and I think those opportunities will expand 
in the future. Your QER on our energy package will address the 
topic North American energy. I believe better coordination and 
trade will be critical in the years ahead. My question is, can 
you please tell me what you see as the next major opportunities 
for North American energy and where that relationship is 
headed?
    Secretary Moniz. In particular, I would say actually last 
week, I spent four, I want to emphasize, workdays in Mexico 
with Western Hemisphere and other energy ministers. The energy 
reform in Mexico, I think, offers tremendous opportunities for 
us. Clearly, in the hydrocarbon sector. We know that. Our 
companies are going to Mexico in the current auctions, and are 
prepared to offer lots of technical assistance to get engaged 
in the shale plays as well. However, in discussions with 
Minister Joaquin, the Energy Minister of Mexico, he has 
emphasized something that I agree with, and that is that the 
reform of the electricity sector may actually offer 
qualitatively new opportunities because the reform, I think, 
will bring our systems of regulation, et cetera, and standards 
much more into alignment, as we have with Canada, where we have 
a completely integrated electricity system.
    So we are looking forward to that. It is going to be a 
major focus. We have both a bilateral working group that I 
chair on the American side with the--it is a multiagency group, 
with the Minister of Environment in Mexico, Minister Guerra. 
And then I also am one of the three chairs of Canada, U.S. 
Mexico trilateral energy ministers, and we are already well 
along into a trilateral data cooperation. And just last week, 
we have a release that went out, I would be happy to get it to 
you----
    Mr. Olson. Yes, thank you.
    Secretary Moniz [continuing]. Where the three of us 
announced that we are now going to expand the cooperation----
    Mr. Olson. Right.
    Secretary Moniz [continuing]. With a full agenda laid out, 
which will include things like emissions and hydrocarbon 
production, and energy infrastructure issues. So it is a very, 
very active----
    Mr. Olson. Thank you, sir. I am out of time. I want to 
extend an invitation to come down and see the work at MIT in 
your current position, the Petra Nova Project in Thompsons, 
Texas, the only viable carbon capture and ancillary recovery 
project in the whole world. Come down and see it. You will love 
it.
    I yield back.
    Mr. Whitfield. At this time, recognize the gentleman from 
Texas, Mr. Green, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. Mr. Secretary, you will 
get an overdose of Texas.
    I see my colleague, Joe Barton, is not here, but I don't 
know if our members heard that his mom passed away last week, 
and----
    Secretary Moniz. Sorry.
    Mr. Green [continuing]. I just wanted to express regret to 
Joe.
    Mr. Secretary, welcome back. According to the DOE Web site, 
for projects that cross the U.S. international border, DOE must 
comply with NEPA requirements to consider environmental 
consequences of a proposed project. Mr. Secretary, are you 
familiar with that requirement?
    Secretary Moniz. Yes, yes.
    Mr. Green. When making cross-border decisions, does DOE 
adhere to NEPA regulations and guidelines set forth by the 
Council on Environmental Quality?
    Secretary Moniz. Yes.
    Mr. Green. Does this include cumulative indirect impacts?
    Secretary Moniz. I am sorry, Mr. Green----
    Mr. Green. Does that----
    Secretary Moniz [continuing]. Can you modify the question?
    Mr. Green. When making these decisions, does DOE adhere to 
NEPA regulations and guidelines set forth by CEQ, and you said 
yes, but does that analysis include cumulative and indirect 
impacts? Does the NEPA process include that?
    Secretary Moniz. I guess I am not quite sure if that is 
actually part of the NEPA process or not.
    Clearly, there are, in general, when we make public 
interest determinations, cumulative impacts are part of that.
    Mr. Green. OK. CEQ requires an environmental impact for 
major federal actions significantly affecting the quality of 
human environment. It is reasonable to conclude that DOE would 
require an environmental impact for a cross-border project, an 
EIS?
    Secretary Moniz. Absolutely. We always require an EIS, yes.
    Mr. Green. Would DOE consider approval of a cross-border 
project a major federal action? I am getting down to the 
whole----
    Secretary Moniz. Yes. Yes, all right.
    Mr. Green. CEQ has determined that NEPA applies to 
significant federal actions and can't be avoided by segmenting 
a project. So that means that a project coming across from 
Texas to Mexico, not just a cross-border crossing but the 
project itself, would DOE decision-making on cross-border 
segments of a cross-border project require compliance with 
NEPA?
    Secretary Moniz. Certainly. We always require, yes, NEPA 
compliance.
    Mr. Green. The discussion draft in the bill would eliminate 
the presidential permit process and grant cross-border 
decision-making to DOE for electric transmission facilities. If 
this draft would become law, the DOE will be charged with 
promulgating a rule to implement the granted decision-making. 
Is it reasonable to conclude that any DOE issues, new 
regulations, these regulations, would include NEPA requirements 
about a cross-border project?
    Secretary Moniz. Well, if I might take a step back. I think 
there are two principles that we would always insist upon. One 
is proper environmental review----
    Mr. Green. Yes.
    Secretary Moniz [continuing]. And secondly would be a 
judgment that this is in the public interest. I think those are 
the two basic principles.
    Mr. Green. OK. There is language in Section 3104 of the 
bill that would limit the department's ability to fully comply 
with NEPA requirements. Do you believe that that language is 
needed?
    Secretary Moniz. Well, again, clearly, I think we need to 
make sure that the environmental requirements are met. So if 
the proposal would curtail that, then obviously I would not 
support it.
    Mr. Green. OK. Are you familiar with what is called the 
federal NEPA small handle issues?
    Secretary Moniz. No, I am not.
    Mr. Green. OK. If federal small handle issues relate to how 
much federal control should be exercised over a private 
project, specifically whether a full NEPA review is required, 
when the federal agencies control only a small segment in an 
otherwise private project. Courts have determined if an 
otherwise private project cannot proceed without federal 
permits, then federal agencies are required to satisfy NEPA 
requirements.
    Mr. Secretary, is it possible for a cross-border project to 
proceed without a presidential permit under current law now?
    Secretary Moniz. I really had better check that with my 
general counsel.
    Mr. Green. OK.
    Secretary Moniz. I would have thought not, but I am----
    Mr. Green. Well, my concern is that we have been trying to 
set a standard in this bill and previous legislation on cross-
border electric transmission, natural gas pipelines, and of 
course, crude oil pipelines. And in this case, the Department 
of Energy would have the authority over electric transmission--
--
    Secretary Moniz. Wires.
    Mr. Green [continuing]. And whether Department of Energy 
would use the NEPA process to approve those cross-border----
    Secretary Moniz. Yes. Well, again, my assumption is that, 
again, the two principles are there. The environmental impact, 
which is the NEPA process, certainly for the part in the United 
States, and the determination of public interest. Those are the 
two requirements and the two principles that I would uphold.
    Mr. Green. Well, I am out of time, but I know DOE, if we 
pass this bill with this particular section in it----
    Secretary Moniz. Yes.
    Mr. Green [continuing]. Would have that authority, and I 
just wanted to see what the regulatory process would be with 
DOE.
    And I yield back, Mr. Chairman.
    Secretary Moniz. OK, and I would be happy to discuss that.
    Mr. Whitfield. The gentleman's time has expired, but are 
you saying that under 3104, our legislation would not require a 
NEPA review?
    Mr. Green. It does require a NEPA review.
    Mr. Whitfield. OK, because I----
    Mr. Green. And that is what I was wondering, because there 
has been some confusion on our legislation that we have done 
separately that NEPA review is not required----
    Mr. Whitfield. Yes.
    Mr. Green [continuing]. And I want to make sure folks 
understand that it is in this bill----
    Mr. Whitfield. It is required.
    Mr. Green [continuing]. It was in the previous bill we 
passed out of the House last session----
    Mr. Whitfield. Right.
    Mr. Green [continuing]. And on cross-border issues, not 
just for DOE.
    Secretary Moniz. OK.
    Mr. Green. Thank you, Mr. Chairman for clarifying.
    Mr. Whitfield. Thank you.
    At this time, I will recognize the gentleman from Illinois, 
Mr. Shimkus, for 5 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. Mr. Secretary, 
welcome.
    Your department really was developed and instituted based 
upon our nuclear heritage, as you know, and also is focused on 
our nuclear future, and then you have to deal with a lot of 
legacy issues. That is not really part of the hearing, but the 
introduction is just to let you know I appreciate the support I 
receive from your professionals down at Savannah River, which I 
visited yesterday, and the contractors there, and they took 
good care of me----
    Secretary Moniz. Great.
    Mr. Shimkus [continuing]. And I just want to put that on 
the record.
    Now to the QER. The QER devotes an entire chapter to 
improving North American energy integration, but makes no 
mention of issues belying cross-border presidential permitting 
in general, or the Keystone XL Pipeline in particular. It is 
kind of some of the questions I think Mr. Green was alluding 
to. Do you agree that the, and I quote, ``ad hoc or siloed 
permitting process'', as the QER puts it, creates significant 
uncertainty?
    Secretary Moniz. Yes, it certainly can in many cases, yes.
    Mr. Shimkus. Has the inability to render a decision on 
Keystone Pipeline impacted other energy projects in Canada? Do 
you know of----
    Secretary Moniz. I am not aware of it, but--yes.
    Mr. Shimkus. Yes. And can you check back with us? 
Obviously, there might be, otherwise I wouldn't be asking this 
question.
    Secretary Moniz. Well, only in the sense that, obviously, I 
have seen discussions about other pipelines to take out things 
east or west, for example, but----
    Mr. Shimkus. Right. I think the public as a whole, I don't 
think they really--sometimes I put up the transmission system 
on a map just to identify how many cross-border pipelines and 
transmission lines we already have, both north and south, and--
--
    Secretary Moniz. Yes, I think it is like 74 pipelines or 
something.
    Mr. Shimkus. Right. And obviously, just curious, we have 
problems with one, and the debate is will we have problems with 
the future or has this uncertainty kind of slowed down the 
process.
    And so part of the legislation which the chairman is 
pointing to talks about this cross-border energy infrastructure 
language, in the committee's energy diplomacy discussion draft, 
would attempt to address unnecessary delays in the permitting 
of cross-border pipelines and transmission lines. Have you 
looked at this, and is there room for improvement when we are 
talking about pipelines or wires?
    Secretary Moniz. Well, obviously, as was already stated, 
the pipelines, as you know, are not in our jurisdiction, the 
wires are, and I think it is going pretty straightforwardly. I 
might add that just the projects discussed over the last 5 
years for new transmission lines would total about 5 gigawatts 
of additional capacity coming into the northeast.
    Mr. Shimkus. Yes, and we had a hearing just a week ago, I 
think, on really the natural gas desert of the New England 
States, we had the Governor of Maine here, which would address, 
obviously, pipeline infrastructure and probably cross-border 
also with them. I think a lot of people would kind of shake 
their head understanding that we still heat with fuel oil in 
some major states in our union, where access to natural gas 
pipelines might help them transition----
    Secretary Moniz. Yes.
    Mr. Shimkus [continuing]. Especially with the abundance 
that we seem to be having now with our production.
    Secretary Moniz. If I may just----
    Mr. Shimkus. You may.
    Secretary Moniz. About a week and a half ago, we did 
approve for potential FTA re-export a natural gas project to 
Canada.
    Mr. Shimkus. The energy diplomacy discussion draft also 
talks about improving the process for permitting major energy 
projects. Do you agree that it would bring greater clarity and 
predictability to the process, and help in this energy 
diplomacy part?
    Secretary Moniz. Could you clarify? If we did what exactly?
    Mr. Shimkus. Well, the formulation of coordinated 
procedures and criteria balance energy security impacts with 
environmental consideration. So you have to--especially in 
energy diplomacy, Shimkus is ethnically Lithuanian, a lot of 
people here have heard that before. I have toured the LNG 
Terminal. This energy diplomacy for our friends around the 
world, whether it is Japan or whether it is the eastern 
European countries, is really critical to give them choices of 
energy. And so the question is cost benefit analysis, and how 
can you expedite it, and I think your quadrennial review 
addresses this a little bit.
    Secretary Moniz. Well, again, as I said earlier, the whole 
issue of energy security is we are looking at it in a broader 
sense than the traditional way. And by the way, maybe not here, 
but if you would like we would be happy to come to your office 
and discuss the work on Ukraine specifically, since that seems 
to be an interest potentially.
    Mr. Shimkus. That would be of great interest to many many 
members of the----
    Secretary Moniz. We would be happy to do that----
    Mr. Shimkus. Thank you.
    Secretary Moniz [continuing]. But anyway, we are trying to 
expedite these issues.
    Mr. Whitfield. At this time, the chair recognizes the 
gentlelady from Florida, Ms. Castor, for 5 minutes.
    Ms. Castor. Thank you, Mr. Chairman. Good morning, Mr. 
Secretary.
    I would like you to elaborate a little bit more on the 
transmission, storage, and distribution, beyond what you have 
already testified to, because America's energy infrastructure 
is aging, it is not well-matched with the new sources of 
supply, it is exposed to increasingly dangerous extreme weather 
events associated with climate change, such as sea level rise. 
In my neck of the woods, we are concerned about more intense 
electrical storms, and then drought and wildfires. And I know 
you are sensitive to the potential for cyber and physical 
attacks as well. And part of America's policy right now is to 
encourage these new clean energy supplies, and greater energy 
efficiency such as the availability of rooftop solar that holds 
great promise for powering households and businesses across the 
country, and our growing energy efficiency sector that will 
rely on smart meters, a smart grid distributed generation, but 
these run completely counter to the traditional electric 
utility model. Now, you have testified already today about, 
well, energy assurance grants for states. Maybe you need to go 
into greater detail on the micro grids. I have never heard of a 
synchrophasor. What else really must we be looking for to 
modernize America's grid and infrastructure going forward?
    Secretary Moniz. Well, in terms of the grid, including both 
the transmission and distribution systems, I think one major 
theme is that we need to really push forward on what we have 
just barely started, and that is real integration of 
information technology into the grid and all of the associated 
requirements to take the data to be analyzed, of course. 
Synchrophasors are a part of that. We can discuss that some 
other time.
    Ms. Castor. OK.
    Secretary Moniz. But sensors, control systems, coupling 
information technology into distributed decision-making so that 
the grid can respond quickly if there is something developing 
on the reliability side, for example. So that really is, I 
would say, the overarching theme, more and more information 
technology integration into that system. That does, of course, 
potentially exacerbate another thing you mentioned which is the 
cyber risk that we have to stay ahead of. And I would say 
there, I just might add that under the leadership of our deputy 
secretary, we head something called the Energy Sector 
Coordinating Council which has EEI and a number of CEOs that 
meet three times a year to discuss these kinds of risks to the 
infrastructure, to the grids especially. On the grid, there are 
some other issues besides those I mentioned, such as the role 
of potentially long-distance DC transmission where that is much 
more prevalent in other parts of the world right now, but 
again, IT, I would say, number 1 in terms of where we have to 
go.
    Ms. Castor. And back on your energy assurance grants, would 
they be open only to states, or would local communities and 
businesses be able to tap into those grants?
    Secretary Moniz. There is still really a lot of program 
design to do, and we would be happy to talk with the members 
about that. I think the way we have been envisioning it is 
principally through the states, but hoping that the states, to 
be competitive, would be working with localities and tribes in 
the appropriate states, for example. But that is all a detailed 
program design that----
    Ms. Castor. I would hope you would open it up to local 
collaboratives or regional collaboratives. Sometimes you have 
recalcitrant states--there is an unwritten state policy in 
Florida right now, you can't even say climate change, so that 
doesn't bode well for our ability to compete for those grants. 
And I have----
    Secretary Moniz. OK, we will take that under consideration.
    Ms. Castor. Great.
    Secretary Moniz. Yes, it has been raised before in terms of 
cities wanting to be able to have--be direct applicants.
    Ms. Castor. Absolutely. There has been some discussion 
today about exports of oil and gas. You have used a number 
today, how much right now is America importing in petroleum and 
gas?
    Secretary Moniz. I think we are still importing close to 7 
million barrels a day of crude oil----
    Ms. Castor. OK.
    Secretary Moniz [continuing]. Although we are net exporters 
of about 2 \1/2\ million barrels of oil products. So our net 
imports are maybe 4 \1/2\ million barrels.
    Ms. Castor. Doesn't the export heavy focus run counter to 
America's policy imperative to reduce carbon pollution?
    Secretary Moniz. Well, as I said, frankly, I think in our 
current situation where we are still major importers, 
relaxation of export is probably likely to more or less just 
swap around different oil qualities in different places, as 
opposed to lead to tremendously increased production or demand. 
That is my view.
    Ms. Castor. So you do not think that exporting additional 
carbon fuels would exacerbate the problem of carbon pollution--
--
    Secretary Moniz. I think the----
    Ms. Castor [continuing]. Across----
    Secretary Moniz. I think the key is that even as we are 
producing more, and this debate is going on in terms of 
exports, I think the important thing is, and we satisfy this, 
is keep your eye on the ball for reducing oil dependence. And 
that means we are aggressive on efficient vehicles, we are 
aggressive in terms of developing low carbon fuel alternatives, 
like next generation biofuels, and we are aggressive in 
supporting the move towards electrification of vehicles with 
clean electricity supplying those vehicles. So----
    Mr. Whitfield. Gentlelady's time--no, go ahead.
    Secretary Moniz. No, I was just going to say, and if you 
look at it, we are, I think, succeeding. For example, in the 
last--I think it is 5--I forget, some number of years, maybe a 
decade, even as our population has increased, as our GDP has 
increased 13 percent, we have actually decreased petroleum fuel 
use.
    Mr. Whitfield. OK. Gentlelady's time has expired.
    At this time, recognize the gentleman from Pennsylvania, 
Mr. Pitts, for 5 minutes.
    Mr. Pitts. Thank you, Mr. Chairman. Thank you, Mr. 
Secretary, for coming today.
    Chairman Upton mentioned his interest in Ukraine and the 
meetings over there with the Ukrainian Parliament, the EU, 
getting resources over there. You said something that you are 
doing a lot with Ukraine. Would you care to elaborate please?
    Secretary Moniz. I would be pleased to. Starting in the 
middle of 2014, the G7 energy ministers together with the EU 
met to discuss energy security issues, and that included 
specifically the Russia-Ukraine situation. Out of that came a 
commitment to work with Ukraine for that winter. And so DOE led 
a team of several U.S. agencies, plus Canadian experts, that 
went to Ukraine several times and guided them to a winter 
contingency plan for energy. So that occurred. Including, by 
the way, a tabletop exercise at the level of the deputy prime 
minister. Then we are back there helping them again look 
forward to next winter, but other things as well. For example, 
we pointed out the dependence not only on natural gas, but on 
Russian nuclear fuel. And you may have seen now that has led to 
Westinghouse now has a contract to be a fuel supplier for the 
Russian reactors in Ukraine. This has caught the attention of 
some, breaking a monopoly again. So we are working in a number 
of ways to help Ukraine on the energy situation.
    Mr. Pitts. Thank you. The Department of Energy has made 
progress on a few LNG export applications, but the fact of the 
matter is that more than 30 applications still await final 
decision from DOE. And I realize that you decided to 
reconfigure the process to allow FERC to go first with its 
environmental review, but the process as a whole remains 
complicated, unpredictable, especially for U.S. allies who are 
unfamiliar with the bureaucratic process between DOE and FERC. 
My question is, when will DOE finalize its follow-on economic 
study of exports in the 12 to 20 billion cubic feet per day 
range?
    Secretary Moniz. I can't give you an exact date, but I 
expect it quite soon. So I don't think it is going to be an 
impediment because today, we are--8 \1/2\ I think BCF per day. 
Approved for non-FTA countries.
    Mr. Pitts. Would the transpacific partnership or the 
transatlantic trade and investment partnership clear the way 
for automatic LNG export approvals?
    Secretary Moniz. I think that will depend on the specifics 
of how it is negotiated, but it may very well provide FTA 
status to more countries, in which case the approval is, you 
know, more or less automatic. Although I would caution, because 
this statement is also often raised with regard to TTIP and 
Europe, that the reality is that the market prices probably 
have a bigger impact than whether you are labeled FTA or non-
FTA.
    Mr. Pitts. Do you support the provisions within the 
discussion draft which would effectively give DOE 60 days to 
act on an application following the FERC environmental review?
    Secretary Moniz. Well, we have made our statements very 
clear on that, in particular, in a hearing in the Senate, that 
we, frankly, find it unnecessary. We have been acting quite 
quickly. It is workable. We have said it is workable. We can 
work with it, but we don't think it is necessary.
    Mr. Pitts. U.S. oil production has risen rapidly in the 
last several years, and imports are falling. In fact, only 
about \1/4\ of the petroleum consumed in the U.S. is imported 
from foreign countries, which is the lowest level in 30 years. 
When asked about lifting the ban on oil exports, you have made 
the point that the U.S. still imports oil, which is a fact, but 
given our role in the global market, would it make sense to 
both import and export oil?
    Secretary Moniz. Well, again, I imagine we are going to 
meet our needs, and so right now, if we export a barrel, we are 
going to import a barrel to replace it. So as I said earlier, 
the only real issue in terms of the exports is whether that 
would lead to any material increase of production as opposed to 
just, in effect, swapping oil. There could be some issues there 
in terms of oil quality. For example, the Mexicans have 
specifically petitioned for a swap in which we would send light 
oil to Mexico in return for heavier oil coming back. That is an 
example of a swap. But I have to say it is not as though we 
have not been able to absorb all of the oil production today in 
the United States. It has been--so anyway----
    Mr. Pitts. Thank you. My time has expired.
    Mr. Whitfield. Gentleman's time has expired.
    At this time, recognize the gentlelady from California, 
Mrs. Capps, for 5 minutes.
    Mrs. Capps. Thank you, Mr. Chairman, for holding this 
hearing. And I thank you, Mr. Secretary, for your testimony.
    The discussion of our Nation's energy infrastructure is 
very important, and as is the Administration's work on the 
Quadrennial Energy Review. I am particularly interested in the 
pipeline safety aspect of it. Over my years on this committee, 
I have referenced very many times the Santa Barbara oil spill 
of 1969. That oil spill had tremendous local and national 
ramifications, giving birth to our modern environmental 
movement, in many ways, and changing much of the way our Nation 
as a whole has viewed the environment and oil development. 
Sadly, the Santa Barbara community was recently hit with 
another terrible oil spill along the coast. On May 19, more 
than 100,000 gallons of crude oil spilled from the ruptured 
Plains All American Pipeline along the treasured Gaviota Coast 
just north of Santa Barbara. The oil quickly flowed under the 
highway, onto the beach, and into the ocean, where the oil 
slick spread south for miles along the coastline. While the 
exact causes of this spill are still being investigated, it is 
already clear that woefully inadequate federal pipeline safety 
standards have played a significant role. It turns out that the 
Plains All American Pipeline is the only federally regulated 
pipeline in Santa Barbara County. It is also the only 
transmission pipeline in the county that does not have an 
automatic shutoff valve built into its system, and this is not 
a coincidence. Every other comparable oil pipeline in Santa 
Barbara County has an automatic shutoff valve because the 
county has required it, but the federal Pipeline and Hazardous 
Material Safety Administration, or PHMSA as it is called, does 
not make this requirement of pipeline operators. While an 
automatic shutoff valve may not have prevented this spill, it 
certainly could have minimized it. Plains was actually allowed 
to squirrel away tens of millions of dollars into what they 
called a contingency fund for when their pipeline would 
inevitably fail, yet they weren't even required to spend a 
fraction of that amount on installing basic spill prevention 
technologies. This, to me, defies commonsense, and it cannot be 
allowed to continue. And this is just one example of lax safety 
standards. My constituents are understandably angry, and I 
share their anger. With all due respect for my seatmate, Mr. 
Green, who appropriately isn't here right now, oil and gas 
development at its core is dangerous and dirty business. The 
mere fact that Plains and other companies have oil spill 
contingency funds shows that there is no such thing as a safe 
pipeline. Spills do happen, and they will continue to happen as 
long as we depend on fossil fuel for our energy needs. We 
obviously cannot end this dependence overnight, but we clearly 
need to take bigger and bolder actions to achieve the clean 
energy future that we all know is needed.
    Secretary Moniz, I appreciate the President's and your 
strong commitment to pursuing renewable energy. The objectives 
of QER are important. We cannot build a clean energy future 
without modernizing our infrastructure and preparing for new 
challenges, but we must also do everything in our power to 
ensure that this infrastructure is as safe as possible. 
Congress has repeatedly directed PHMSA to strengthen its 
standards, and yet PHMSA has done very little. The QER 
specifically mentions a draft PHMSA rule in development that 
would help strengthen some of these standards, but PHMSA first 
began taking comment on this rule nearly 5 years ago, and 
nothing has been published so far. And in 2011, Congress 
enacted legislation explicitly directing PHMSA to issue a rule 
requiring automatic shutoff valves on new pipelines by January 
of last year. Still not even a proposal let alone a final rule. 
I find this really inexcusable. I know DOE does not have direct 
control over this agency, Transportation does, or rulemaking, 
but what is the point of replacing aging pipelines and building 
new ones if they are all built using ineffective and outdated 
safety standards? The pipeline that burst in my district was 
not even 30 years old, so age is clearly not the only factor 
here.
    So, Mr. Secretary, my question for you, and I would 
appreciate if you can get back to me because I have taken most 
of this time, but what is the Administration going to do now to 
ensure--there is a lot of attention focused on this topic, to 
ensure that a new pipeline infrastructure is as safe as 
possible?
    Secretary Moniz. Well, again, as you said, PHMSA obviously 
is in the Department of Transportation, and I would certainly 
be happy to talk with Secretary Fox and get back to you, but 
obviously, the QER focus is, we have to rebuild infrastructure 
in a way that is reliable and resilient, and I would say this 
is an example of resilience by having the kinds of safety 
systems in place that maybe cannot avoid but can dramatically 
limit the impacts. So this is just part of why we need this 
discussion, I think.
    Mrs. Capps. Thank you very much.
    Secretary Moniz. Thank you.
    Mr. Whitfield. At this time, recognize the gentleman from 
Ohio, Mr. Latta, for 5 minutes.
    Mr. Latta. Thank you, Mr. Chairman. And, Mr. Secretary, 
welcome back to the committee. It is always good to have you 
here.
    If I could just follow up what the gentleman from 
Pennsylvania, Mr. Pitts, was asking, and you mentioned about 
the swap--the light versus heavy with Mexico. Maybe some folks 
might not understand why you would have to have a swap. Why is 
that? That you would have to swap light for heavy crude. Is----
    Secretary Moniz. I just mentioned that that is what the 
Mexicans have petitioned for because, I think in the--
currently, we do not have authorities for exporting oil 
directly to Mexico, my understanding is it isn't at DOE, of 
course, but my understanding is they asked for this kind of 
idea of a swap.
    Mr. Latta. Thank you.
    Secretary Moniz. Which is under consideration, I believe, 
at the Department of Commerce, I believe.
    Mr. Latta. OK, thanks very much. Another issue not only has 
this subcommittee taken up but also especially the Telecom 
Subcommittee, in regards to cyberattacks and physical attacks 
that could occur to our infrastructure in this country. And so 
it is not only a growing concern but a great concern that we 
all have as to what could happen. The committee's discussion 
draft on energy reliability and security provides the Secretary 
of Energy the authority to take emergency measures to protect 
the bulk power system from grid security emergencies. Are you 
generally supportive of the DOE having grid security emergency 
authority?
    Secretary Moniz. Well, I believe we have the authorities, 
but only under emergency conditions.
    Mr. Latta. Well, let me ask, what other grid security 
recommendations you would make to this committee that we should 
consider at this time?
    Secretary Moniz. Well, I don't know what is appropriate for 
statutory direction, but I think utilities, for example, on 
physical security. Many of them have taken significant steps 
since the California incident. They are not always advertised 
for obvious reasons, but they have been doing that. Similarly 
by the way, many of the utilities--but the reason we need to 
complete a study on the transformer issues, whether it is 
because of a physical attack or just wear and tear, a number of 
utilities have really moved in terms of their backup there, but 
it is not uniform. And, of course, we have very, very different 
utility structures, organizational structures, so it is very 
different for IOUs versus co-ops, et cetera. So I think that is 
an example where, maybe after a study, some statutory action 
could be called for in terms of how do we provide appropriate 
resilience to the low probability but very high consequence of 
not having access to big transformers.
    Mr. Latta. Let me ask this. How concerned are you about 
electromagnetic pulses against the grid system?
    Secretary Moniz. Well, that is another risk that we 
identified. There are studies on that. The National Academy has 
studied that. I would say it is, once again, an example of a 
probably low probability but significant consequence 
possibility.
    There has been----
    Mr. Latta. When you say low probability, how--what percent 
probability would you put that at?
    Secretary Moniz. Well, I am not going to give a number, but 
it is just--it is low.
    Mr. Latta. OK. Well, because----
    Secretary Moniz. But again, there has been hardening done 
by many to keep transformers, et cetera.
    Mr. Latta. OK, thank you. Could you explain the importance 
of information sharing and public-private partnerships as it 
relates to security the electric grid?
    Secretary Moniz. I am sorry, could you----
    Mr. Latta. Yes. Could you explain the importance of 
information sharing and public-private partnerships as it 
relates to securing the electric grid?
    Secretary Moniz. I think that is very important. Once 
again, the Energy Sector Coordinating Council that our deputy 
secretary heads is part of that public-private partnership. And 
by the way, I have to say groups like EEI have been just 
excellent partners in that. And in terms of information-
sharing, just one particular example, there is a lot of 
information-sharing in terms of reliable operations, et cetera, 
but one area I would highlight that this council does is 
including through providing selective security clearances 
sharing cyber threat data with the private sector.
    Mr. Latta. OK. And finally, in the very short period of 
time I have, in analyzing recent power plant retirements, the 
QER mentions market factors, low cost of natural gas, and 
changing coal prices as the driving factors behind the 
retirements. Would you agree that environmental regulations 
like the Mercury Air Toxics Standard and the proposed Clean Air 
Power Plan also played a role in the retirement of some of our 
electric generator units?
    Secretary Moniz. Well, certainly, things like mercury 
restrictions obviously raise costs, and that is always the cost 
calculation. But again, I think by far the dominant issue over 
these last years has been gas prices of $2.50. And for 
certainly inefficient coal plants, even the variable cost is 
beat by natural gas combined cycle.
    Mr. Latta. Thank you. Mr. Chairman, my time has expired. I 
yield back.
    Mr. Whitfield. At this time, the chair recognizes the 
gentleman from Vermont, Mr. Welch.
    Mr. Welch. OK, thank you very much.
    I have one comment and four questions, so I will go 
lickety-split. And I think I will ask them all four so you can 
answer them.
    The comment, you have been getting praised for being a 
great Secretary of Energy, and sideline as a nuclear 
negotiator, but I don't think people know that you do the best 
imitation of Luis Tiant, his windup, delivery, and pitch. And I 
think all members should ask for a demonstration. But----
    Secretary Moniz. Including the look to God.
    Mr. Welch. The look to God. The whole thing.
    But the questions, one, this committee has been doing great 
work on energy efficiency. And energy efficiency in Vermont has 
been fully embraced, and it has led to our transmission 
company, VELCO, being able to avoid about $400 million in 
expenses associated with transmission lines. So I want your 
comment on what we can do as a committee and the Federal 
Government can do to help get the benefits of avoided cost.
    Second, we have been trying to get real-time information on 
electricity rates in New England, in significant part because 
our rates are very high, and your department has been helpful 
trying to get real-time information in all the states, and 
Canada and Mexico, but has been having real challenges in 
actually getting that information. And I am curious to know 
what you find is the reason why it is so tough to get that, and 
what the department and FERC can do to help reduce the 
electricity bills for New Englanders.
    Third, this is a smaller issue but quite important. We have 
some biomass stove manufacturers, and the standards evolve. One 
of those stove companies is Hearthstone, and they are having a 
real hard time getting basically an answer on what the 
standards are so that they can comply. So we need----
    Secretary Moniz. For efficiency?
    Mr. Welch [continuing]. Some help on that. Yes, that is 
right. So they have a great product, but if they don't get a 
real definition of what the standard is then it makes it tough 
for them to stay out there on the market, and he has been 
having an awful hard time with that. Small company, but 
important company, and real jobs to Vermonters.
    And then finally, net metering. That is tough because you 
have to have net metering if you really want to deploy energy 
efficiency. On the other hand, it obviously has an impact on 
the economic model. Vermont has gone in a different direction 
than most states, led by Green Mountain Power, our biggest 
utility, to embrace and promote expansion in net metering. What 
could we do at the Federal Government to help that process that 
is going to help deploy energy efficiency, but also deal with 
the economic realities of many----
    Secretary Moniz. Yes.
    Mr. Welch [continuing]. Of our big power producers? Thank 
you.
    Secretary Moniz. Great. Well, thank you, Mr. Welch. So the 
four questions--well, actually, the third question on the 
emission standards of biomass stoves I think is something that 
we will get back to you on because I just don't know the answer 
right now, but that is one we can take care of.
    On the energy efficiency in Vermont, well, again, we are--
and as you know, I was in Vermont with the delegation, and 
Vermont has done a fabulous job in terms of efficiency, with 
novel, novel business models for supplying energy. But I would 
say there, the main thing, the recommendation in the QER of 
relevance to that, and to a certain extent to the net metering 
discussion as well, is that we need to develop, at at DOE we 
will start really delving into this much more, we need to 
devise a much better way of valuing all the services that can 
be provided in the electricity system. Efficiency, storage, 
diversity, capacity, power quality, there are all of these 
issues, and when we had the traditional business model and it 
was basically one way from a central plant to a house, well, it 
kind of all got lumped together. But now with much more 
diversity, with storage coming in in some cases, distributed 
generation, we know that energy efficiency, this involves 
another hot issue right now that is in the courts, is to what 
extent does end-use efficiency come back all the way to the 
wholesale market, which FERC is engaged in. So I think this 
issue of valuing all the services is really core, and that is 
something that we want to, over the next months, really work 
hard on, and that is something that needs dialog with the 
members. So that is, I think, an absolute critical 
recommendation.
    And on terms of electricity prices and real-time prices, I 
would just note that the EIA has, in fact, not so long ago, 
launched a new product which has much more real-time data being 
collected from the ISOs and the RTOs and combined together so 
that one can research it and one can understand how prices are 
moving.
    Mr. Whitfield. Gentleman's time has expired.
    At this time, recognize the gentleman from West Virginia, 
Mr. McKinley, for five.
    Mr. McKinley. Thank you, Mr. Chairman. And thank you again 
for coming before us.
    In the last week, during the break, I returned to West 
Virginia and was on overload of negative information coming at 
us in West Virginia. The first newspaper I got when I got back 
there was, dark day for miners. They just announced that 2,268 
coalmining jobs were lost. 2,268 families now are looking for 
jobs as a result of this mining--then soon thereafter we got 
another power plant closed down, the Kammer Power Plant. Even 
though FERC has said that--and they have testified before us--
the concern that they have is that we are going to have rolling 
blackouts in the Midwest if we don't start replacing these 
power plants, but we are continuing to shut these power plants 
down. And then there was another one that went on to say, just 
in one community, one small community, they are going to lose 
$61 million in wages as a result of this.
    So I am dealing with all of this crisis. When you add the 
additional losses, these 2,268, now we are up to--and I believe 
the chairman mentioned it earlier today, that we have now lost 
in West Virginia 45 percent of our coalminers are unemployed 
since 2012. Just in 3 years. Three years 45 percent of our 
coalminers are looking for work.
    Now, last Friday I met with the Coal Association and I 
could see there, they said there is going to be further 
contraction as a result of what policies that are happening 
nationally. So they are very concerned about what is going on 
with it. This loss of the Kammer and other power plants, it 
challenges, you well know, the grid stability that we have, 
this dependability. It also goes beyond that, and that is what 
about property taxes, what about the local income tax that 
people are going to pay? You can take away the power plant but 
now you are affecting the schools, you are affecting how a 
community operates with this happening.
    So my first question of two questions would be to the coal 
industry to reverse this decline?
    Secretary Moniz. Well, Mr. McKinley, first of all, of 
course, we all feel, for whatever reason, when there are these 
major disruptions in communities, it is obviously something 
that we need to pay attention to. And the Administration does 
have some programs to look at some retraining, particularly in 
the overlap areas with natural gas production, the Power Plus 
Plan that has been put forward, but I recognize that these 
don't address 45 percent of a workforce. So they help in the 
right direction, but they certainly do not ``solve the 
problem.''
    Mr. McKinley. Well, but keep in mind too, Mr. Secretary, 
you know that coalminers average age is going to be in their 
50s. What are we going to retrain them--my second question, 
since I didn't--and, unfortunately, you don't have a quick 
answer either----
    Secretary Moniz. No.
    Mr. McKinley [continuing]. On this as to how to stop the--
--
    Secretary Moniz. We----
    Mr. McKinley [continuing]. Hemorrhaging. But the second 
question, so if you are sitting in the kitchen with this 55-
year-old that just lost his job, he has been working 30 years 
in a coalmine, what do you tell him?
    Secretary Moniz. Well, look, again, I am completely with 
you. This is a very, very difficult. I think in the end, it is 
about having to try to produce some other economic 
opportunities. Revitalization, some retraining, and----
    Secretary Moniz. But these are real--you understand, these 
are real people that have----
    Secretary Moniz. Yes, and I----
    Mr. McKinley [continuing]. Really lost their job----
    Secretary Moniz. I understand.
    SAnd the following is not on the right timescale for you, 
but I have said previously, I think in front of this committee 
as well, that we do have many programs, many different kinds of 
programs, that are addressing the issue of a future of coal, 
even in a low-carbon world, but that is not going to solve that 
gentleman's problem tomorrow. I completely agree with that.
    Mr. McKinley. So in the 2 what do we tell him?
    Secretary Moniz. I think the key----
    Mr. McKinley. He has a mortgage payment----
    Secretary Moniz. He has to be----
    Mr. McKinley [continuing]. He has a healthcare bill, what 
are we doing for him?
    Secretary Moniz. The key has to be economic development and 
providing other opportunities. And I might just mention, Mr. 
McKinley, that--and I am happy to say it here, that recently 
Senator Manchin has asked me to come to West Virginia, and I 
would be happy to join him and you and come to West Virginia 
and try to understand the situation and what we can do.
    Mr. McKinley. Thank you, Mr. Secretary.
    Secretary Moniz. Yes.
    Mr. Whitfield. At this time, recognize the gentleman from 
New York, Mr. Engel, for 5 minutes.
    Mr. Engel. Thank you very much, Mr. Chairman. Secretary 
Moniz, than you for your testimony today, and thank you for all 
your good work in so many things. We really appreciate it.
    I would like to join everyone in applauding your efforts--
--
    Secretary Moniz. I am having a hard time hearing you.
    Mr. Engel. I will do this. This is better.
    Secretary Moniz. Thank you. Thank you, that is better.
    Mr. Engel. OK. Generally not so hard to hear New Yorkers 
talk. I will just try to talk a little louder and not slur my 
words.
    I want to applaud your efforts and the efforts of everybody 
involved in producing the first report of the QER Taskforce. I 
believe it really establishes a very sensible blueprint, making 
our electric grid more resilient, and to identify and improve 
vulnerabilities in our current energy transmission and 
distribution system.
    As you know, Super Storm Sandy swept through my district 
and the surrounding region in October 2012, knocking out power 
to over 8 million people, and causing several fuel supply and 
distribution problems. Some New Yorkers in my district waited 
more than 2 weeks for their lights to turn back on, and 
struggled the whole time to keep their families safe and warm. 
So as a result, I am particularly focused on the ability of our 
grid and our entire energy transmission and distribution system 
to withstand future shocks, and also to recover quickly from 
any outage that might occur.
    So could you please discuss how we are better prepared 
today than we were in 2012 for a storm like Sandy, and how the 
suggestions in the QER would build upon the improvements we 
have made? In particular, please touch on the establishment of 
the northeast reserve and the potential expansion of 
distributed generation through the REV Initiative in New York.
    Secretary Moniz. Thank you. Well, first on the regional 
gasoline reserve. As you know, that has been established with a 
million barrels, distributed in three locations from the New 
York Harbor area, up to Portland, Maine, and that complement to 
the heating oil reserve that was established some years back. I 
might point out that one of the recommendations, by the way--
which I would put in front of the committee is that it would be 
very useful if the authorities for using those reserves could 
be harmonized because they are quite different, and this would 
not help in terms of a coordinated response in terms of an 
issue. So that is successfully put in place. It is paid for as 
well for 4 \1/2\ years of operation. And I might add, we are 
currently now about \1/3\ of the way through to using the 
remainder of the money to repurchase 4.2 million barrels of 
crude oil to go back into the reserve, because we took out 5 
million, so it will be 4.2 crude, 1 million gasoline, and 4 \1/
2\ years of operations of the reserve.
    Secondly, with regard to the grid and resiliency, again, I 
would like to highlight what we consider to be one of the most 
important recommendations, actually, two recommendations, one 
is to support, in our fiscal year 2016 budget request, state 
assurance grants to allow planning for hardening 
infrastructure. And then, and this is a case we have to find 
out working with you, how to raise the revenue, how to raise 
the resources, but to establish several billion dollars for 
competitive resiliency projects. That could include things like 
micro grids, but designed for resiliency of the energy system.
    Mr. Engel. Thank you. Let me ask one more question. The QER 
report also recommends ways to further integrate the energy 
infrastructures of the U.S., Canada, and Mexico, and the idea 
is to enhance market opportunities, energy security, and 
sustainability. Some transmission lines already send hydropower 
from Quebec to the northeast United States, and the potential 
exists, obviously, for more capacity on more transmission lines 
in the region. Could you please talk about what role, if any, 
these transmission lines should play in our energy future?
    Secretary Moniz. Well, I think these are very important. Of 
course, one that was approved recently was the Champlain Hudson 
line that would take power to New York from--hydropower. And 
there are a variety of projects for 4 to 5 gigawatts of 
additional hydropower that could be available to the northeast 
and upper Midwest. This, obviously, would be clean energy to 
meet our needs.
    Mr. Engel. Thank you. Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    Mr. Whitfield. Chair now recognizes the gentleman from 
Virginia, Mr. Griffith, for 5 minutes.
    Mr. Griffith. Thank you very much, Mr. Chairman. I do 
appreciate that.
    Let me reference the comments made by Mr. McKinley of West 
Virginia. We have had hundreds of layoffs in my district alone. 
Of course, in my neighboring State of West Virginia and 
Kentucky, there have been thousands, and it has been 
devastating.
    You referenced natural gas in relationship to the closing 
of some of the coal-fired power plants as one of the factors. 
Of course, it is one of the factors, but the regulations coming 
in also, yesterday we closed down the Glen Lyn facility in my 
district. It was paid for by the ratepayers. Wouldn't cost them 
any additional. It was only being used at this point for the 
peak periods. That is now gone. The Clinch River facility in my 
district had three EGUs, three electric generation power 
plants. They are converting two of the three over to natural 
gas, however, the third one is not going to be converted, and 
the \2/3\ that used to be there will produce about \1/2\ of the 
electricity.
    I am just concerned that in the peak periods of use, now 
that they are gone, how are they going to be replaced in 
southwest Virginia and in other parts of the AEP footprint?
    Secretary Moniz. Well, of course, I don't know well enough 
the exact geography and the distribution of power plants. If I 
talk more broadly, one of the issues, clearly, is the 
continuing build-out of the transmission system to move power 
around effectively. And I might say that I was a little bit 
surprised, frankly, with the data that came out in the QER that 
the spending on transmission in the country has actually 
reached $14, $15 billion per year with a continuous increase, 
basically, over the last 10 to 15 years. So we actually don't 
think that any significant increase in resources will be 
required. The issue will be to make sure that the lines are 
configured, of course, to make sure that energy gets to all the 
various places.
    Mr. Griffith. And I get that, and that brings up natural 
gas pipelines. And talking about all of this, and they are 
building them in my district, with great opposition from many 
people who don't like the pipeline concept. They are also 
building them in a district just north of mine. Pipelines are 
going everywhere. But I noticed in the QER you note the need 
for pipeline replacements for existing pipelines, and that you 
suggest a DOE-run grant program designed to allow states to 
receive funds to aid in improvements to pipeline 
infrastructure. I support improving our current system for 
existing pipelines, and I am interested in learning more about 
the details. What new authorities do you all think you need at 
DOE, or do you want at DOE in order to create this program, and 
will you be providing language to the committee so that we can 
see about putting that into the appropriate bill? How do you 
envision the DOE replacement program working? How would the 
funding get to the existing states? Would it be the existing 
funding or are you going to come up with new funding? Where is 
the money going to come from? What is the timeline, and how 
would the states apply, et cetera? I throw all those out at you 
at once. I will be glad to go back and review them but I don't 
want my time to run out.
    Secretary Moniz. I think we will have to get back to you 
with a lot of the detail, but let me make several points. First 
of all on the resources issue, we were very clear that we had 
about half a billion dollars proposed in the fiscal year 2016 
budget to address various QER recommendations, but there were 
another $15 billion of need identified, which we were very 
clear we have to have a discussion in terms of where can those 
resources come from. That is over many years, but still. So 
specifically, the funding for the acceleration of natural gas 
distribution infrastructure replacement is not in our budget. 
So that is one those cases. And we have in the past, of course, 
had many examples of raising resources in various ways for 
major infrastructure projects. I think that is the discussion 
we need to have with the Congress, are we prepared to find 
these mechanisms for a significant push on energy 
infrastructure.
    Mr. Griffith. And as we transition then and we use more 
natural gas, then it would seem that at some point that funding 
is going to have to come forward, which means it is going to be 
passed on to the ratepayer, and yet another expense added on to 
one of their energy bills.
    Secretary Moniz. Right, and what we are seeing today, by 
the way, at least for these years, I have a place in D.C., and 
on my bill there is a specific surcharge on there for 
replacement of the natural gas distribution pipe. What we are 
saying is we think this needs to be accelerated. I will be 
clear, I guess it is Washington Gas, I don't know, whoever it 
is, the surcharge is for a 40-year replacement program. That 
seems like an awfully long time. So what we are arguing is we 
need to shorten these--utilities are typically doing this many, 
many decades to keep the rate low. We are saying, geez, we need 
to accelerate this. And what we are proposing is funding that 
would go to help low-income households absorb the rate hit.
    Mr. Whitfield. Yes. Gentleman's time has expired.
    At this time, recognize the gentleman from Ohio, Mr. 
Johnson, for 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman. And thank you, Mr. 
Secretary, for being here with us again today.
    At the risk of piling on, I want to associate myself also 
with the concerns already mentioned regarding the coal 
industry. My district is a district and a state heavily 
dependent upon the coal industry, not only for reliable energy, 
affordable energy, but also the jobs that it represents.
    I was on a trip to Europe just a couple of weeks ago, and 
one of the statements that one of our European colleagues in 
the energy sector made was that, over the last 20 years or so, 
they have led America in shutting down much of their coal 
industry in an effort to reduce their carbon emissions, but 
some of those European countries, when we ask them what their 
energy profile looked like, they are returning to a higher 
percentage of a use of coal. And when I questioned them about 
that, I said why is that the case and how do you think you are 
going to be able to reach this 40 percent reduction by 2030, 
and this official said, look, we have learned, our ratepayers, 
our businesses and our residential customers, have said they 
are no longer willing to pay the exorbitant high prices for 
energy. The idea is you make coal so expensive by taxing the 
carbon emissions that renewables and other alternative forms of 
energy are more economically attractive. They are going back to 
coal. I don't know why America, Mr. Secretary, why we have to 
learn this lesson the hard way; that coal still provides the 
most reliable, affordable energy on the planet.
    And so let me get off of this subject because I have some 
others I want to talk to you about. You expressed a willingness 
to come to West Virginia with Senator Manchin and 
Representative McKinley. Can you swing through Ohio at the same 
time----
    Secretary Moniz. We can try to do that.
    Mr. Johnson [continuing]. That you are in the region, and I 
would love to take you to talk to some of our coalmining 
cooperators and some of the manufacturers who are being asked 
to idle their plants because there is not enough energy on the 
grid to meet the peak demand. And that is today. That doesn't 
even count for what is coming.
    Secretary Moniz. If I may make a suggestion that might be 
useful. We have a very, very excellent person named Dave Foster 
who is really the creator of our Job Strategy Council. Perhaps 
a meeting with those of you with kind of Appalachian 
connections in coal, just to brainstorm around what might be 
other ways of going. I would be happy to do that.
    Mr. Johnson. Can you help facilitate that?
    Secretary Moniz. Yes, I would----
    Mr. Johnson. Good.
    Secretary Moniz [continuing]. Be happy to do that.
    Mr. Johnson. Well, my office will be in touch and we will--
--
    Secretary Moniz. Certainly, the two of you and Mr. McKinley 
would be among those.
    Mr. Johnson. All right. We would like to do that.
    Let me move quickly to these other questions. In March, 
William O'Keefe, the CEO of Marshall Institute, penned an 
editorial in the Washington Times where he notes that the 
Council of Economic Advisors' annual economic report for 2015 
details the beneficial effects that LNG exports would bring for 
domestic employment, geopolitical security in the energy 
industry and the environment. He also makes the point that 
unless we act soon, we are going to lose many of these 
benefits. He says, while the American policymakers 
procrastinate, other countries are stepping up to meet these 
needs. The United States has an incentive not to wait. Our 
window of opportunity is closing.
    So with that in mind, what are your thoughts not only on 
LNG exports, but are there any specific steps and policies we 
should be putting in place today to realize this opportunity 
before it is lost?
    Secretary Moniz. Well, I have to say first of all that we 
are not procrastinating. Now, we have approved--and by--this is 
separate from the conditional approval that we made last week 
for the Alaska project, because that is a separate gas source, 
but for the lower 48 we have approved roughly 8 \1/2\ billion 
cubic feet per day to non-Free Trade Agreement countries. We 
have no other applications to work on at the moment. And just 
to give a scale, I mean the largest LNG exporter in the world 
is Qatar, and they are at about 10 billion cubic feet per day. 
Now, the first cargos----
    Mr. Johnson. I hear you, Mr. Secretary. Then why does the 
rest of the world, why are they still urging America to get 
into the LNG export market on a global basis? Why does the rest 
of the world----
    Secretary Moniz. Well----
    Mr. Johnson [continuing]. And the oil and gas industry 
thing that we are not participating in the global export?
    Secretary Moniz. I think that, first of all, there is a lot 
of misunderstanding, to be honest, number one. Number two, 
clearly, they are sitting there with $12, $15 gas, and they see 
us at $2.50, and they think that looks pretty good. Now, of 
course, by the time it reaches them, when you add $6 or $7 for 
the supply chain, it is not going to be our prices, but it 
still beats their prices. So clearly, they have an interest. 
They want to see that. Well, the fact is that if you look at 
the economic studies that have been done, not by DOE, by 
others, in terms of what they expect to be our real export 
market, very few of them come in above, say, 10 BCF per day, 
given competition in various parts of the world. So all I know 
is that is for the private sector to sort out.
    We have studies that take us up to a potential 12 BCF per 
day. Earlier it was pointed out we have commissioned another 
study that would even look at 20 BCF per day, but in the 
meantime, we have approved 8 \1/2\. The projects are being 
built. The first cargos will get on the water probably the 
beginning of 2016, and then we are going to start exporting.
    Another issue is, and a lot of our European friends say, 
they want the gas, I might just point out as an aside, no value 
judgments, there are a lot of places in the world that don't 
want to develop their own indigenous resources but would like 
ours. OK, well, that is fine, but we do not direct where cargos 
go. We approve export licenses to non-FTA countries, and those 
are commercial contracts. Frankly, it is a constitutional issue 
in terms of our not doing that.
    Mr. Johnson. Mr. Chairman, my time has expired.
    Mr. Whitfield. Gentleman----
    Mr. Johnson. I would submit to our committee and to the 
Secretary, there is a big disconnect somewhere because the 
experts tell us that our price is going to rise when we get 
into the global export market. We haven't seen that. We have 
heard that the global market price is going to come down. We 
haven't seen that. So I don't know where the disconnect is, but 
there is a big disconnect somewhere.
    Mr. Whitfield. Yes. Thank you.
    At this time, I am going to recognize the gentleman from 
Missouri, Mr. Long, for 5 minutes.
    Mr. Long. Thank you, Mr. Chairman.
    And, Mr. Secretary, the discussion draft provides the 
Department of Energy with some new responsibilities beyond your 
current mission. For example, we direct the department to study 
the feasibility of establishing a federal strategic transformer 
reserve, and arm the Department of Energy with new authority to 
address certain grid security emergencies, which I think is 
foremost in everyone's mind as far as grid security. Do you 
believe the Department of Energy has the expertise and 
capability to meet these new duties?
    Secretary Moniz. Well, yes, sir. First of all, on the 
transformer reserve, we are moving forward to study that. We 
have one study already from WAPA, our western organization, but 
we are moving forward on that and will, depending on the study, 
engage then in the appropriate public-private partnership to 
make sure that we are secure.
    With regard to grid security emergencies, again, we already 
do a lot of this. We work under the FEMA umbrella. We are the 
lead agency for energy infrastructure. And so, for example, you 
may have read about the typhoon going through Guam a couple of 
weeks ago I think it was, well, we had a person in Guam as part 
of the FEMA response for energy infrastructure. So we are 
already doing this. Now, additional authorities could be 
helpful.
    Mr. Long. OK. In your testimony, you mention that one of 
the key energy objectives is enhancing energy reliability. What 
impact do you think that the proposed Clean Power Plan will 
have on energy reliability and transmission issues?
    Secretary Moniz. Well, again, first of all, we analyze 
these issues, but of course, we don't have a final rule yet to 
know how to analyze it. But what we have done to date and what 
we have done in terms of technical analysis around the proposal 
of last year, again, suggests that reliability will be quite 
manageable, but we have to wait to get the final rule before we 
can really do the----
    Mr. Long. So you don't think the proposed plan will have a 
big effect?
    Secretary Moniz. Well, as I mentioned earlier, one example 
of something that we did, there was an issue around the 
projected significant increase of natural gas for the power 
sector versus coal, and when we looked at the infrastructure 
issues of the gas delivery, we just did not find that there was 
likely to be any significant challenge. There would be some 
work to do, but not a significant challenge.
    Mr. Long. With Mr. Griffith from Virginia a while ago, you 
had a discussion about money to the states and things, and with 
this Quadrennial Energy Review recommend providing state 
financial assistance, which I think you all spoke about a few 
minutes ago, and grants and investment plans for electric 
reliability and efficiency. Can you discuss a little bit of 
some of the criteria, regardless of where the money is coming 
from, because we know there is a shortage of money, but can you 
discuss some of the criteria the Department of Energy will 
require for the states to receive this financial assistance?
    Secretary Moniz. Well----
    Mr. Long. Assuming, again, there would be money there.
    Secretary Moniz. Yes, well, the money issue is relevant, 
and I must say I was very, very disappointed in the 
appropriations mark, which did not provide any funding for 
either the reliability or the assurance grants, which I think 
is shortsighted, to be perfectly honest, because I think the 
states need to have this kind of planning capability. We would 
provide technical assistance. Now, in terms of program design, 
that remains to be done, but what we envision will be 
ultimately proposals around things like micro grids, for 
example, for reliability and resilience. We would see, again, 
the integration of IT and smart grids as providing those 
services. And as I said, we hope in the reliability and 
assurance arenas to then have funding for competitive cost-
share grants.
    Mr. Long. Would the criteria be the same from state to 
state or would it change across the country?
    Secretary Moniz. I think the criteria--well, that still 
remains to be worked out completely, but the criteria, no, 
would be around enhanced reliability and resilience. That is 
the criteria.
    Mr. Long. I understand that but I am just--my question was 
whether it would be the same from state to state across the 
country or whether different----
    Secretary Moniz. I think----
    Mr. Long [continuing]. Different states would----
    Secretary Moniz. No, I think----
    Mr. Long [continuing]. Face different criteria.
    Secretary Moniz. I think the same criteria, but the way the 
projects would be structured would look very different 
depending upon the regional and state resources.
    Mr. Long. OK. I am past my time so if I had any time I 
would yield back. But thank you again for your testimony. Mr. 
Chairman----
    Mr. Whitfield. Yes, at this time, I am going to recognize 
the gentleman from Texas, Mr. Flores, but I also just want to 
make a comment that we really appreciate your taking the 
leadership with the Republican Study Group on the forum on oil 
exports, and have an opportunity to examine that more 
thoroughly today, so----
    Mr. Flores. Well, thank you.
    Mr. Whitfield [continuing]. You are recognized for 5 
minutes.
    Mr. Flores. Thank you, Mr. Chairman. I hope Secretary Moniz 
will send someone to the discussion this afternoon.
    Of course, I want to talk about exports like my friend, Mr. 
Barton, did. One of the things you talked about is that there--
one of the good reasons for the ability to have oil exports is 
because you have a better matching of the qualities of grades 
that are needed by the refineries in different geographical 
areas around the world. And you didn't go quite far enough, I 
don't think, because one of the things that happens when you 
have that better matching is you have economic efficiency, and 
economic efficiency releases additional capital, and that 
additional capital, based on my experience is--with 30 years in 
the business, would go back into reinvestment, which stimulates 
the production. So next time you are answering that question, 
if you would go all the way through that economic cycle I think 
that it would be helpful.
    The next thing has to do with, I guess I would call it a 
safety valve question. As you know, there are multiple versions 
of--or proposals for oil exports out there, and some of them 
include giving the President the ability to suspend oil exports 
in the situation where we had some sort of an energy crisis, or 
if it is deemed in the national interest, or to be able to use 
the strategic petroleum reserve under those same circumstances. 
And so with those two safety valve features in place, doesn't 
that make it more compelling to allow oil exports?
    Secretary Moniz. Well, again, obviously, more flexibilities 
are always welcome, but I think the fundamentals of the oil 
export question are those that we discussed earlier, I think. 
And I agree with you, of course, in terms of your economic 
argument.
    Mr. Flores. OK. One of the things that was interesting 
about timing is, while your agency and others were working on 
the QER, the Administration was also involved in negotiations 
with Iran, and in early April your agency estimated that with a 
deal in place and the sanctions lifted, Iran might start 
selling us a stockpile of 30 million barrels or more later this 
year, and raise its output by $700,000--700,000 barrels a day 
by the end of 2016. This would come at a time when we would 
already have a global gut of crude oil.
    And so my first question is this. What analysis, if any, 
has DOE performed to better understand the implications of the 
entry of Iranian oil into the global markets on global supply 
and demand--global supply and prices, rather?
    Secretary Moniz. Well, I think, first of all, you have 
stated the basic conclusion: that one would see over some year 
to 2 years, certainly, several hundred thousand barrels per 
day, probably of increased production. That would go into the 
95 million barrel per day or so pool. There are so many 
uncertainties in that timescale; in particular, on the demand 
side. For example, a recovering European economy would put 
substantial then pressure on the supply side. Clearly, the 
nuclear negotiation is quite independent of that dynamic. That 
is about nuclear weapons issues that we think are important to 
block.
    Mr. Flores. Well, no, I do understand the independent 
nature of the two discussions, however----
    Secretary Moniz. Yes.
    Mr. Flores [continuing]. The impact is the same. So I mean 
the outcomes are the same.
    Secretary Moniz. Well, it is all supply and demand and, you 
know----
    Mr. Flores. Exactly.
    Secretary Moniz. Right.
    Mr. Flores. Exactly. And so I guess under these 
circumstances, doesn't it seem like the President would have an 
increasingly difficult time justifying lifting the sanctions on 
Iranian oil, and at the same time keeping the sanctions on 
domestic oil in place, where domestic oil can't be sold abroad?
    Secretary Moniz. Well, I think the big difference is that 
we import 700 million barrels a day of crude oil. We are not a 
net exporter. We are an importer.
    Mr. Flores. Right, but we are on track to be in a position 
to export, so it makes sense to lift the sanctions.
    Secretary Moniz. Well, that is quite a few years away. We 
are still--even if you add in oil products, we are still at 4 
\1/2\ million products a day.
    Mr. Flores. OK.
    Secretary Moniz. So----
    Mr. Flores. I have no additional questions. Thank you. I 
yield back.
    Mr. Whitfield. At this time, recognize the gentleman from 
Oklahoma, Mr. Mullin, for 5 minutes.
    Mr. Mullin. Thank you, Mr. Chairman. And, Secretary, thank 
you for being with us again today. I believe this is the second 
time you have been in front of this panel.
    Secretary Moniz. More than that.
    Mr. Mullin. Well, but this year, if I am not mistaken. At 
least this is the second time you and I have had an opportunity 
to visit. And the last time we spoke, we talked about the lack 
of infrastructure with the power plants as far as the coal-
fired plants that are coming down. We have a report from 
Southwest Power Pool there is going to be 12,900 megawatts lost 
just in their area. And just a while ago while you were being 
questioned, I believe by Mr. Long, you said that you didn't see 
any significant challenges to meet those needs, but yet where 
is the power going to come from?
    Secretary Moniz. Well----
    Mr. Mullin. If we are going to lose 12,000 just in my 
region, then where is the extra power going to be made, or 
where it is going to be produced? The gas lines aren't there. 
We are seeing 4 years to take a permit, to just simply get a 
permit to install a gas line. Unless there are power plants 
that are being built that I am not aware of in my region, then 
I believe there is going to be a significant challenge to meet 
the power needs.
    Secretary Moniz. But first of all, let me emphasize that I 
did state that what we have seen to date, but we, of course, 
await a final rule. Secondly, of course, demand--now, I am 
talking nationally, not in any particular specific region----
    Mr. Mullin. Well, specifically speaking, the coal-fired 
plants are in a specific region.
    Secretary Moniz. No, no, sure. Well, every plant----
    Mr. Mullin. I understand that, but we have 12,900 megawatts 
being lost in one region, and you said that there was--you 
didn't see any significant challenges in meeting those needs. 
Where is that extra power going to come from?
    Secretary Moniz. Well, I mean, first of all, I made it very 
clear that I--the same when I discussed the natural gas 
transmission pipes, there will be local issues that have to be 
resolved in some places with new infrastructure, all I can do 
is look at the broad picture nationally and note that, first of 
all, electricity demand nationally is not going up, it is 
essentially flat. We are building a significant amount of 
natural gas and wind, in particular, capacity----
    Mr. Mullin. So it is OK because----
    Secretary Moniz [continuing]. Annually----
    Mr. Mullin [continuing]. The numbers aren't going up----
    Secretary Moniz. And Oklahoma, by the way----
    Mr. Mullin [continuing]. It is OK----
    Secretary Moniz [continuing]. Has plenty of wind.
    Mr. Mullin. Yes, but it is OK to bring the power down 
because we don't need it right now? I mean----
    Secretary Moniz. I----
    Mr. Mullin [continuing]. That is like saying----
    Secretary Moniz. I did not----
    Mr. Mullin [continuing]. Let's----
    Secretary Moniz. I did not say that. All I said was that we 
are building substantial capacity even as out demand is flat, 
and secondly----
    Mr. Mullin. Where is the building----
    Secretary Moniz [continuing]. We have substantial----
    Mr. Mullin [continuing]. We are losing power, you are 
saying we are building significant capacity. What are we 
building it in? Because power cannot replace--or wind cannot 
replace what we have here. You can have miles and miles and 
miles of windfarms, which we have in Oklahoma, which I, 
frankly, don't think is very pretty, I think it leaves a lot 
bigger footprint than we do in anything else, but that is 
another topic, but we are losing 12,900 megawatts in one area. 
I am going back to what you said----
    Secretary Moniz. Right.
    Mr. Mullin [continuing]. With the gentleman from Missouri--
--
    Secretary Moniz. Yes.
    Mr. Mullin [continuing]. When you said you don't see 
significant challenges meeting those needs. So what I think I 
hear you saying, now, correct me if I am wrong, that it is OK 
that we lose it because our increase for electricity isn't--the 
need isn't there so it is OK that we lose it. Is that what I am 
understanding?
    Secretary Moniz. No, what I am saying is that, first of 
all, we have about 68,000 megawatts of wind, but what I am 
saying is that there will, obviously, all the local planning 
authorities will have to be planning, but at the macro level, 
we are not seeing the likelihood of enormous challenges. We are 
being cautious. We have to wait for the final rule to come into 
place.
    Mr. Mullin. But you guys are already moving forward with 
it. And, Mr. Secretary, you are over the Department of Energy, 
and you are saying that the local communities, local areas, 
need to get together. What is DOE's specific plan to meet this 
need? Is there not a need----
    Secretary Moniz. Well----
    Mr. Mullin [continuing]. It is just saying we are going to 
let them go down----
    Secretary Moniz. I mean----
    Mr. Mullin [continuing]. And let everybody else figure it 
out, it is not our problem?
    Secretary Moniz. Look, first of all, in our system, the 
private sector obviously builds the power plants, builds----
    Mr. Mullin. But you guys are the ones that pick winners and 
losers.
    Secretary Moniz. No.
    Mr. Mullin. Yes, it is, because----
    Secretary Moniz. The----
    Mr. Mullin [continuing]. You have said coal is going out, 
wind is the new thing.
    Secretary Moniz. Obviously, there is a responsibility of 
government, whether statutory or regulatory, to set certain 
rules of the road in terms of environmental protection, et 
cetera, et cetera. The private sector and typically state 
regulatory bodies then respond to that. So----
    Mr. Mullin. So if I am hearing correctly----
    Secretary Moniz [continuing]. That is the way it works.
    Mr. Mullin [continuing]. There is no plan. We are just 
going to drop the power and let everybody else figure it out.
    Secretary Moniz. There----
    Mr. Whitfield. Gentleman's time has expired.
    Secretary Moniz. They are no more----
    Mr. Mullin. I yield back. Thank you.
    Secretary Moniz [continuing]. Or no less plan than there 
always has been.
    Mr. Whitfield. Yes. Mr. Pompeo of Kansas is now recognized 
for 5 minutes.
    Mr. Pompeo. Great, thank you, Mr. Chairman. And thank you 
for your patience today. You have been with us a long time. We 
are getting toward the end and so a lot of the questions have 
been asked. And so maybe I will open the aperture just a little 
bit, starting with this. Do you believe that the American 
taxpayer has received good value for the tens of billions of 
federal dollars that have been spent on carbon capture 
technologies to date, yes or no?
    Secretary Moniz. Well, first of all, I don't think it is 
tens of billions of dollars, so it is quite a bit less than 
that.
    Mr. Pompeo. OK, whatever the number is, sir----
    Secretary Moniz. But the----
    Mr. Pompeo [continuing]. Do you think we have gotten good 
value for----
    Secretary Moniz. Yes.
    Mr. Pompeo [continuing]. That?
    Secretary Moniz. But I think the answer is that, yes, it 
will prove to have been very, very well spent.
    Mr. Pompeo. Great, thank you. I think they look more like 
slender than success, so we disagree. Yes or no, do you agree 
with French Foreign Minister who has said that the global 
climate change agreement that is being negotiated this year 
should be worded in a way that does not require congressional 
approval? Yes or no.
    Secretary Moniz. I am not aware of that statement.
    Mr. Pompeo. So----
    Secretary Moniz. The----
    Mr. Pompeo [continuing]. Do you think--I will ask it more--
--
    Secretary Moniz. The----
    Mr. Pompeo [continuing]. Directly----
    Secretary Moniz. If I may say, the--currently, obviously, 
the Climate Action Plan that we are executing is based upon 
administrative authorities to get an economy-wide approach 
eventually, but it will require legislation.
    Mr. Pompeo. The government that you are a part of is 
negotiating an agreement this year, at the end of the year, it 
intends to enter into an agreement, they have made that very 
clear. Do you believe that the agreement that the United States 
enters into ought to be submitted for congressional approval?
    Secretary Moniz. I think we need to see what the nature of 
this agreement is. There are many agreements----
    Mr. Pompeo. So I can't get you to say----
    Secretary Moniz [continuing]. That are political 
agreements.
    Mr. Pompeo [continuing]. Yes, that you think that a climate 
agreement should be approved by Congress.
    Secretary Moniz. I think it very much depends upon what the 
nature of the agreement is.
    Mr. Pompeo. I will take that as a no. Today, we have had a 
lot of questions about crude exports. It seems to me that the 
only country that you are currently advocating to export crude 
oil is Iran. Is that right?
    Secretary Moniz. Excuse me?
    Mr. Pompeo. Well, you are sitting in a set of negotiations 
where we are going to free-up the Iranians to export their 
crude products, but you won't advocate for Americans to be able 
to export their crude products. Is that----
    Secretary Moniz. As I said earlier, the situations are 
completely different, and we are a large importer of oil.
    Mr. Pompeo. The situations are identical. It would benefit 
each country greatly to be able to access foreign markets and 
sell their products at market prices around the globe, and both 
consumers and exporters would benefit from those in both 
countries if they are opened up. Do you agree with that or 
disagree?
    Secretary Moniz. Obviously, for Iran----
    Mr. Pompeo. I mean it is a simple question----
    Secretary Moniz. Obviously----
    Mr. Pompeo [continuing]. Mr. Secretary.
    Secretary Moniz [continuing]. If Iran----
    Mr. Pompeo. It is not a trick question.
    Secretary Moniz [continuing]. Had sanctions lifted, it 
helps their economy.
    Mr. Pompeo. And if we lifted ours----
    Secretary Moniz. And it indeed helps us----
    Mr. Pompeo [continuing]. It would help ours too.
    Secretary Moniz [continuing]. On the nuclear weapons side. 
As I said earlier, the only issue on oil exports in the United 
States of large-scale relevance is whether or not there is a 
significant increase in production as a result, and I have 
said, in the current oil market, that may be a difficult case 
to make.
    Mr. Pompeo. Right. You don't believe in supply and demand 
when it comes to crude--which you think no more supply will be 
lodged. So we have been through that. In 18 months there will 
be a new President, although maybe not a new Secretary of 
Energy. One never knows. Your QER was prepared based on this 
President's vision of greenhouse gases, their impact around the 
world, and America's role in diminishing them. If the next 
President comes in and has a different view with respect to 
that, tell me what remains of the value of the QER work that 
you all did.
    Secretary Moniz. Essentially, all of it. The QER is really 
aimed clearly at facilitating more clean energy, but it is 
about energy security, resilience of our infrastructure, it is 
about North American energy, it has huge, huge implications for 
our energy infrastructure, independent of the climate issues.
    Mr. Pompeo. Yes, I just have a different view of what is in 
the QER. When I stare at it, I see the analysis and I 
appreciate that. I agree with your analysis of the requirements 
for increased infrastructure. We don't disagree there. But it 
seems to me most of what is in the QER was aimed at federal 
intervention in the marketplace. You have several references to 
classic market failure with respect to public goods and 
negative externalities. I think much of the conclusions in the 
QER about how that infrastructure will be ultimately built out, 
and who will decide which infrastructure will be built out, is 
heavily dependent on this President's vision for climate change 
and how the United States can impact that. And I just think it 
was a wonderful exercise, I am glad we did the work with 
respect to infrastructure, but I think the conclusions drawn on 
the QER will need to be revisited immediately by the next 
Administration.
    With that, I yield back, Mr. Chairman.
    Mr. Whitfield. Gentleman yields back.
    And that concludes our questions. We have one additional 
member though, Mr. Cramer of North Dakota, who is a member of 
the Energy and Commerce Committee, he is not in this particular 
subcommittee, but he has been so focused on these issues that 
he sat here for 2 \1/2\ hours with us, and we are going to give 
him the opportunity to ask 5 minutes of questions.
    Mr. Cramer. Yes, well, thank you, Mr. Chairman. And thanks 
to my colleagues for the indulgence.
    You know what, it doesn't only take one good North Dakotan 
to represent the entire state, so I spread myself fairly thin, 
Mr. Secretary. So I thank the members. And I also, Mr. 
Secretary, want to thank you not only for being here, but for 
at least agreeing to, if not joyfully, although I think you are 
a joyful person, to holding one of the listening sessions in 
North Dakota. I know it was a late request, and it was a late 
addition to the agenda for you and Secretary Fox and others, 
but I thoroughly enjoyed the time that you were out there.
    And I notice in the QER, there is a lot of reference to 
things that you learned last August in North Dakota, especially 
as it pertains to the transportation infrastructure, and some 
of the challenges particularly reflected are the challenges for 
the railroads that move multiple commodities, as you know. And 
you heard quite clearly, and I think, again, indicated in the 
report quite clearly, that there were challenges, but at the 
same time, one of the things I want to do, I think, is to bring 
the record up-to-date. Last August, we were following on two 
record winters and two bumper crops, we had two seasons in a 
row that strained the infrastructure for sure for agricultural 
commodities. I think one of the bigger challenges was the fact 
that not only was it a record crop or a bumper crop, but it was 
a late harvest, due to weather, it was also a late and a very 
wet harvest. And so there was a consolidation of all of those 
commodities. And the additional moisture creating other 
transportation problems like the movement of propane, for 
example, for grain drying. That perfect storm created 
incredible stress on the infrastructure, along with, of course, 
700,000 or so barrels per day of oil being moved by rail. So 
there was a lot of criticism last August. There is a fair bit 
of that reflected in the report, but just in the last 10 
months, the storm has sort of shifted, and I want to stress 
some of those points, but also encourage you and the team to 
continue to monitor it on a very regular basis, because some of 
the things that were identified have worked. The STB's weekly--
the requirement for the weekly reports, for example, by the 
class 1 railroads has been very helpful in transparency, 
allowed better planning. A warmer winter with a more 
traditional harvest season, and, frankly, lower commodity 
prices have created more normalcy. And during which time, and I 
can be the railroad's worst nightmare, but I also want to 
acknowledge when they have done their part, and I have to say 
for BNSF, which is obviously, our largest railroad by far, they 
have invested mightily in personnel, locomotive, energy, cars, 
and certainly double-tracking much of the Bakken region and 
much of the Upper Midwest. And I want to be sure that the 
record is clear, but I also want to, again, encourage you to 
remain flexible and update the report regularly to acknowledge 
that this robust infrastructure does exist. And it is my hope 
and my expectation that that additional and more robust rail 
infrastructure actually enhances all commodities.
    I also think it is worth noting that because of the STB 
reports, we have noticed that they are pretty well caught. Not 
just pretty well caught up, but caught up to the point where 
there is extra capacity. And much like the electrical grid, it 
doesn't hurt to have a little extra capacity, but it also 
creates opportunity for growth.
    So, I would only probably ask that, for you to comment on 
my comments if you would like to, but again, express my 
appreciation for your attention to the issues.
    Secretary Moniz. Well, thank you. And we certainly 
appreciated, by the way, your participation in the QER field 
hearing in North Dakota, along with your Senate colleagues.
    First of all, I think you have put your finger on really 
what was the main driver of our discussion on this subject in 
the QER, and that was the need for more data. To be perfectly 
honest, the railroads have not always been the most transparent 
in terms of data availability. And I think that has certainly 
been improved, and certainly, the issues around coal, for 
example, have been certainly relieved. There are other issues, 
as we know, in terms of oil by rail that are being addressed, 
and I might say that with the Department of Transportation we 
have now launched the next phase of the study of relevance to 
crude properties and rail.
    Mr. Cramer. Yes.
    Secretary Moniz. It will take about 18 months before we are 
ready with that. But I think you are absolutely right. We have 
had some progress on the data front and EIA, by the way, is 
playing a role in there as well.
    Mr. Cramer. Yes, they are. Yes.
    Secretary Moniz. So it is great.
    Mr. Cramer. Well, thank you. And thank you again, Mr. 
Chairman.
    Mr. Whitfield. Well, thank you.
    And that concludes the first panel. Secretary Moniz, thank 
you very much for your testimony and answers to our questions, 
and we look forward to continuing to work with you on many 
pressing issues as we move forward. And thanks again for your 
leadership. And Mr. Rush will be notifying you of the formation 
of the fan club, and we will be getting together soon with 
that.
    Mr. Rush. Yes.
    Secretary Moniz. Well, thank you, Mr. Chairman. Thank you, 
gentlemen.
    Mr. Rush. Mr. Chairman, we will have our first meeting 
relatively soon.
    Secretary Moniz. OK.
    Mr. Whitfield. And there will be a huge crowd there, so.
    I would like to call up the second panel of witnesses at 
this time. And I want to thank them for their patience. I know 
many of them came from long distances.
    On our second panel today we have Mr. Rudolf Dolzer, who 
flew all the way to the U.S. from Bonn, Germany, to testify. 
And we appreciate him being here. We have Mr. Jason Grumet, who 
is the President of the Bipartisan Policy Center. And we have 
Mr. Gerald Kepes, who is Vice President, Upstream Research and 
Consulting. We have Ms. Alison Cassady, who is the Director of 
the Domestic Energy Policy for the Center for American 
Progress. We have Ms. Emily Hammond, who is Professor of Law at 
George Washington University Law School. And I am going to call 
on my colleague, Mr. Pitts of Pennsylvania, to introduce one of 
our witnesses as well.
    Mr. Pitts. Thank you, Mr. Chairman. I am very pleased to 
introduce Mr. Scott Martin, a County Commissioner from 
Lancaster County, Pennsylvania, formerly chairman of that 
commission, and also active in the statewide Association of 
County Commissioners. An outstanding commissioner who I am very 
pleased could travel down from Pennsylvania to be with us 
today.
    Thank you, Mr. Chairman.
    Mr. Whitfield. Thank you. And, Mr. Martin, thank you for 
being with us.
    Once again, I want to thank all of you. We really look 
forward to your testimony. And I am sorry that there was such a 
delay in your testifying. We had to reschedule a little bit. 
But, Mr. Dolzer, I think you came the longest distance--from 
Bonn, Germany, and I think you were in the German Parliament at 
the time, and you are a professor also at the University of 
Bonn, and so we genuinely appreciate your making this effort. 
And I am going to recognize you to start off with for 5 
minutes. And then after everyone has concluded, we will have 
some questions for some of you. So, Mr. Dolzer, you are 
recognized for 5 minutes.

STATEMENTS OF RUDOLF DOLZER, ADVISORY BOARD MEMBER, ASSOCIATION 
   OF INTERNATIONAL PETROLEUM NEGOTIATORS, AND PROFESSOR OF 
INTERNATIONAL LAW, UNIVERSITY OF BONN; JASON GRUMET, PRESIDENT, 
BIPARTISAN POLICY CENTER; SCOTT MARTIN, COMMISSIONER, LANCASTER 
 COUNTY, PENNSYLVANIA; GERALD KEPES, VICE PRESIDENT, UPSTREAM 
   RESEARCH AND CONSULTING, IHS; ALISON CASSADY, DIRECTOR OF 
DOMESTIC ENERGY POLICY, CENTER FOR AMERICAN PROGRESS; AND EMILY 
  HAMMOND, PROFESSOR OF LAW, GEORGE WASHINGTON UNIVERSITY LAW 
                             SCHOOL

                   STATEMENT OF RUDOLF DOLZER

    Mr. Dolzer. Thank you, Chairman Whitfield, Ranking Member 
Rush, members of the committee. My name is Rudolf Dolzer, I am 
a German national who, all together, has lived about 8 years in 
the United States. In Germany, I became a law professor. 
Subsequently, I was director general of the Federal Office of 
the Chancellor and the Chancellor Kohl. This is where my gray 
hair come from. And then I was appointed three times to the 
German Parliament's Commission of Inquiry. We have that in 
Germany, you can be appointed to Parliament without the right 
to vote.
    In the U.S., I studied in Spokane, Washington, at Gonzaga 
University. Then I studied for a longer period at the Harvard 
Law School. I later taught at five U.S. universities; the last 
time in Dallas in Texas. In Houston, I am a member of the 
Advisory Board of the Association of Independent Petroleum 
Negotiators. A month ago, I published a larger study of 
international cooperation in global energy affairs.
    Mr. Chairman, the era of abundance, as you say, opens up 
new opportunities of leadership for the United States, and the 
world is looking at the United States. This reminds us also, at 
least me, that energy is not just about energy, it is about 
foreign affairs, it is about national security, it is about 
finances. But ultimately, energy has its own characteristics 
and dynamics and, this is my first major point, foreign 
affairs, national security, and also issues such as trade must 
be folded into the fabrics of energy politics and not the other 
way around. This is also my view as regards climate change.
    Energy politics, Mr. Chairman, and when I look at your 
draft on energy diplomacy, energy politics also calls for 
arrangements of its own when it comes to international 
cooperation. Title III of the present bill represents an 
innovative modern approach, also from an international point of 
view. This Title may even be strengthened by a transatlantic 
trade and investment partnership. Again, trade is not just one 
aspect of energy. Recent events, and this has been addressed 
this morning, in Russia and Ukraine, and Europe in general, 
have underlined that energy independence will require safe 
energy supplies, and will require political foresight and a 
robust long-term strategy. Together, we must understand the 
nature of that issue.
    This is not well known, Europe as a whole will, in the 
coming decade become more vulnerable as our resources dwindle, 
in particular in Norway. So this is Europe as a whole. The 
forums as proposed in your bill will serve to provide a common 
basis, but I propose that we go further and establish a more 
advanced concept which I call the Transatlantic Energy Agenda. 
We need to update and broaden existing arrangements with the 
new involvement, I think of parliaments and of the private 
sector. We have longstanding arrangements for cooperation in 
foreign affairs, in national security, in agriculture, for 
example. For energy, arrangements of this kinds are lacking at 
the moment, and I think that ought to change. We need more 
exchange, we need better exchange, we need to know what we are 
doing, and we need exchange about best practice.
    America's abundance also lends itself to strengthening of 
regional partnerships. In Europe, we have particular experience 
in this respect. Since 2009, the European Union has the 
competence to deal with the establishment of a single market, 
but the member states have retained their sovereign powers to 
determine the energy mix. The French made sure that no one 
touches their right to work with atomic power. This is a very 
complex jurisdictional situation which we have in Europe. We 
now have a set of rules promoting competition in Europe with 
liberalization with unbundling. We have less progress, and I 
think this is of interest here so far with regard to internal 
and cross-border connections to overcome isolated domestic 
markets.
    The key concept which has been worked out in the last 24 
months has been the idea of project of common interests, as it 
is called. The new rules call, and I think this is of interest 
here, for a much more rapid process of approving permits. So 
far, that time, don't be astonished, took about 10 years or 
more to have a permit for a trans-border arrangement. This is 
now going down to 3 \1/2\ years at a maximum, according to the 
new law. Also member states now must introduce one-step 
authorities instead of the multitude of institutional 
arrangements we have had so far.
    Now, the funds needed for a single energy market will be 
considerable, but I think the advantage will justify the cost. 
Costs in terms of secure supply, new infrastructure urgently 
needed, more options for the customers, better negotiating 
position on the international level. When you negotiate with 
Russia or the OPEC or Venezuela, I think the larger your 
market, the better it is. In North America, I think a new 
taskforce by the NAFTA countries, similar to the European 
Commission, might help to elaborate a unified energy strategy.
    Mr. Chairman, I conclude. In the past, energy issues have 
at times been a bone of contention between the United States 
and Europe; sometimes a bitter contention. I think your bill 
with Title III has the promise and the hallmarks of a new era 
of cooperation, with tangible benefits on both sides of the 
Atlantic.
    Thank you very much for your attention. I very much 
appreciate this opportunity to express my views before your 
important committee. Thank you very much.
    [The prepared statement of Mr. Dolzer follows:]
    
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    Mr. Whitfield. Well, thank you, Dr. Dolzer.
    And our next witness, as I said, is Mr. Jason Grumet, who 
is the President of the Bipartisan Policy Center. And thank you 
very much for being with us. You are recognized for 5 minutes.

                   STATEMENT OF JASON GRUMET

    Mr. Grumet. Well, thank you very much, Chairman Whitfield, 
Mr. Rush, and the resilient members of the committee. On behalf 
of the Bipartisan Policy Center, it is a pleasure to join you 
in this important discussion on the economic and policy 
architecture governing our Nation's energy abundance.
    My testimony can be summarized into 3 main points. First, I 
want to applaud the committee for focusing on significant 
opportunities to strengthen North American energy integration 
and collaboration. North American energy security and self-
sufficiency are, in fact, realistic goals that must be 
vigorously pursued, and not taken for granted.
    My second point, Mr. Chairman, is that increased North 
American cooperation is a critical component of a larger effort 
to promote economic growth through efficient markets, to 
enhance North America's role in global energy trade, and to 
project U.S. power and global interests.
    And my third point is that we must seize the opportunity to 
translate this strength of abundance into a long-term and 
sustainable energy strategy, and not allow this strength to 
result in unintended complacency.
    In short, Mr. Chairman, this committee and Congress has the 
disorienting challenge of managing success, which is a new 
problem for our Nation when it comes to energy policy, and I 
think it creates real opportunities that we need to discuss.
    So let me begin by saying a little bit about the energy 
integration and collaboration. I believe the provisions in this 
legislation that promote data quality and sharing, that 
coordinate planning and improve permitting and siting, are all 
essential to achieving the promise of North American energy 
security.
    The opportunities are particularly pronounced in the case 
of Mexico. While U.S. companies have much to gain in increased 
trade with Mexico, it is hard to overstate the importance of 
energy production to the Mexican economy, and the broader U.S.-
Mexican relationship. Even after years of decline, energy 
production remains a key source of high-paying jobs, and is 
responsible for actually \1/3\ of the Mexican Government's 
overall activities. If modernization efforts succeed, energy 
production could be a significant driver of Mexican economic 
development and individual opportunity. And the implications 
here are quite broad. The Bipartisan Policy Center believes 
that we must reform our Nation's broken immigration system. And 
while this hearing is not the place to discuss the challenges 
and intricacies of protecting the southern border or enhancing 
our legal immigration, there is no question that improved 
economic opportunity in Mexico is an essential component of 
successful and lasting immigration reform.
    Let me turn now to the issue of siting. While our 
technology for producing energy has evolved dramatically over 
the last decades, our permitting policies date back to the 
1950s and 1960s, and are poorly matched to our rapidly evolving 
needs. We commend the committee's substantive efforts to make 
the cross-border permitting process more transparent and 
predictable. BPC also commends the committee's political 
judgment in crafting this provision to exempt the still-pending 
Keystone decision. It is time to have a broad-based bipartisan 
energy debate that is explicitly beyond Keystone, and it is 
encouraging to see the committee working diligently to avoid a 
focus on symbolic disagreements in favor of producing an agenda 
that can secure broad bipartisan support and become law.
    I would like to now move to the second point, which is a 
focus on the component that North America plays in the larger 
global picture. Our Nation has made, I think some very good 
progress of late supporting LNG exports, but as was discussed 
earlier, current restrictions on crude oil are undermining out 
commitment to efficient markets, they diminish our ability to 
promote free trade and fair trade, and they empower our 
adversaries who seek to use energy as a weapon. I cannot build 
upon Mr. Barton's string site of studies except to agree that 
there has been a spate of recent analyses that all conclude 
that adding a reliable supply of crude to the global market 
will continue to exert downward pressure and actually protect 
U.S. consumers.
    My final point is on the challenge of how we use this 
abundance to promote our long-term sustainability and security 
needs. There is a broad critique of the abundance agenda that 
must be grappled with if we are going to secure the broad-based 
support for an effective national energy policy. The concern is 
that stable, low-cost supplies of oil and gas are undermining 
investment in the diverse array of technologies our Nation and 
the world will require over the next century to meet global 
demand, to protect our security interests, and to confront the 
risks of climate change. This legitimate concern, however, 
leads to very different policy pathways. The Bipartisan Policy 
Center believes that additional action must be taken to 
confront climate change, but we reject the idea that we should 
pursue a low-carbon future by erecting and undermining barriers 
to the resurgence of oil and gas production. Perpetuating 
inefficient markets and creating transportation and 
infrastructure bottlenecks in the hope of somehow reducing 
global reliance on fossil fuels is not an effective climate 
change strategy, and if anything, it will result in increased 
emissions. Instead, as we vigorously pursue the benefits of 
abundance, we must be equally determined in conducting the 
research and creating the incentives to develop and 
commercialize the next generation of energy breakthroughs. From 
carbon capture and storage, to utility-scale solar, to next 
generation biofuels, advanced nuclear energy storage, and an 
array of energy-saving technologies, we must find ways to 
encourage greater investment, despite the current low price 
environment.
    America's hydrocarbon renaissance has given us the gift of 
time. The question before the committee and Congress is what do 
we do with this time.
    In closing, the Bipartisan Policy Center looks forward to 
continuing to work with the committee as you build an 
architecture for abundance that grows our economy, enhances our 
security, and confronts domestic and global environmental 
threats.
    Thank you.
    [The prepared statement of Mr. Grumet follows:]
    
    
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    Mr. Whitfield. Thank you.
    And our next witness, who has already been introduced, but 
is Mr. Scott Martin, who is a County Commissioner, Lancaster 
County, Pennsylvania. Thanks for being with us, and you are 
recognized for 5 minutes.
    Mr. Martin. Thank you, Mr. Chairman. Just for the record, 
it is Lancaster, not Lancaster.
    Mr. Whitfield. What did I say?
    Mr. Martin. Lancaster, that is what--you said like Burt 
Lancaster.
    Mr. Whitfield. OK.
    Mr. Martin. That is in Lancaster County, so----
    Mr. Whitfield. Well, I am going to----
    Mr. Martin [continuing]. We will have Mr. Pitts work with 
you on that one.
    Mr. Whitfield. I am going to let you and Mr. Pitts work 
that out.
    Mr. Martin. All right, well, thank you, Mr. Chairman.
    Mr. Whitfield. But thanks for letting me know.

                   STATEMENT OF SCOTT MARTIN

    Mr. Martin. You are welcome. Thank you, Mr. Chairman, and 
members of the subcommittee. It is an honor to be here. Again, 
I serve on the Lancaster County Board of Commissioners.
    The United States must work to develop a coherent, logical, 
and clear national energy strategy. I applaud Chairman Upton 
for his architecture of abundance legislative framework that 
will hopefully stimulate a wide-ranging and bipartisan debate 
on the need for a long-term national energy agenda based upon 
economic development, commonsense regulations, a modern and 
safe energy infrastructure, greater efficiencies, increased 
exports, especially with LNG, to support our foreign policy 
goals, environmental sensitivity, minimal government 
involvement, and utilization of free market economic 
principles.
    There are certainly many positive developments and trends 
in energy, however, there are also numerous challenges and 
issues that urgently need to be addressed. The longer we wait 
to address and solve these issues will only make them more 
difficult, expensive, complicated, and controversial.
    One of the most pressing priorities is energy independence. 
Of course, energy independence can only be achieved through new 
and recoverable sources. The required infrastructure exists, 
the regulatory environment is not hostile, excuse me, capital 
is available to finance the expansion in both domestic and 
international markets are functioning properly. Thankfully, due 
to horizontal hydraulic fracturing, known as fracking, and the 
discovery of vast new oil and gas reserves, America is now the 
world's largest oil and natural gas producer. As they should, 
energy prices have been decreasing. The United States is 
increasingly able to export large amounts of LNG around the 
world, and especially to European countries. The volatile and 
tense situation in Ukraine demonstrates very clearly why we 
need to build the Keystone XL Pipeline, greatly accelerate the 
permitting of LNG export facilities, and work to expedite the 
building of pipelines and compressor stations.
    As noted above, a significant technological improvement has 
been the use of fracking and extracting natural gas from shale. 
The use of fracking in Pennsylvania, and the construction of 
necessary infrastructure, has had widespread and significant 
economic development impacts. Some of these include 96 percent 
of new energy hires were from the Appalachian area, 45,000 new 
building trade jobs in that same region, 243,000 new energy 
jobs in Pennsylvania, over $1 billion invested by the shale 
industry in road and infrastructure improvements, and including 
energy industry grants to community college and trade schools 
to train the workers needed by extraction companies in the 
Marcellus Shale region, with an average core wage of $68,000 a 
year.
    This increased shale gas production in Pennsylvania has 
also saved the average Pennsylvania family between $1,200 to 
$2,000 annually in energy savings costs. Businesses and other 
institutional energy users have also benefitting from the 
greatly increased availability of cheap natural gas. The 
Pennsylvania National Guard and Army Reserve components of Fort 
Indiantown Gap, the Garden Spot Public School District, and the 
Shady Maple Companies, all in our area, have experienced 
significant savings in their energy bills after switching to 
natural gas.
    Cheaper energy will further a developing industrial and 
manufacturing renaissance in America. In brief, lower energy 
costs create more disposable income, and hence, greater 
aggregate demand. Decreased transportation costs lead to lower 
prices, and American products are more globally competitive. 
The domestic oil and gas revolution can only be successful 
long-term if the necessary pipelines are quickly built and 
brought online. The Williams Company has proposed to build 180 
mile interstate pipeline, known as the Atlantic Sunrise 
Project, from northern Pennsylvania and connect it to their 
main U.S. gas pipeline that travels from Texas to the 
northeast. The actual connection point would be in southern 
Lancaster County. Thirty-seven miles of the proposed pipeline 
would go through my county, and we are talking about a $2.6 
billion economic impact throughout the construction of this 
project. Williams has been very cooperative and easy to work 
with as various concerns have come up. Over 100 route changes, 
which is more than \1/2\ of the original route, have been made 
based on stakeholder input. Williams is also committed to 
making the pipeline open access so that potential customers in 
Lancaster County could directly access the pipeline.
    As you can imagine, a project of this size does generate 
controversy and opposition. One early controversy was the 
proposed routing of the pipeline through a protected and 
environmentally sensitive area parallel to the Susquehanna 
River. The Board of Commissioners, working with several local 
organizations, went to Williams and expresses strong concerns 
regarding this route. Williams quickly found a new route and 
completely moved away from the sensitive areas, and did so with 
Native American sites and water source areas.
    Lancaster County has five significant pipelines running 
through our county. Many property owners are not even aware of 
the pipelines that cross their land. Based upon discussions 
with local farmers having existing pipelines on their property, 
Williams, including with their major U.S. pipeline, has been 
very responsive to their needs.
    Lancaster County is one of the leaders in agricultural 
production, not only in Pennsylvania but across the county, but 
we also preserve more farmland than any other county in the 
United States, with over 100,000 acres preserved. Needless to 
say, the county ordinances that govern our farmland 
preservation program have allowed pipelines since inception. 
Since November of 2014, there have been two elections where the 
proposed pipeline was in a de facto manner on the ballot, and 
the voters were very clear in rejecting efforts to stop the 
proposed pipeline, including an effort to have two townships 
adopt a community-based ordinance that would essentially 
declare that federal and state laws do not apply in these 
municipalities. I believe that many of these voters clearly 
recognize that this pipeline represents the concept of a 
greater good being served.
    In closing, I want to again emphasize how incredibly 
important the ongoing energy revolution is to the future of the 
United States, and indeed, the world. While renewables, greater 
efficiencies, clean coal, next-generation nuclear, and a secure 
and smart grid are vitally important, it is really the 
virtually unlimited supply of clean, recoverable natural gas 
from shale that will lead America into the future.
    Thank you.
    [The prepared statement of Mr. Martin follows:]
    
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    Mr. Whitfield. Thank you, Mr. Martin.
    And our next witness is Mr. Gerald Kepes, who is Vice 
President of Upstream Research and Consulting. And, Mr. Kepes, 
thanks for being with us, and you are recognized for 5 minutes.

                   STATEMENT OF GERALD KEPES

    Mr. Kepes. Thank you, Mr. Chairman. Members, thank you for 
having me here.
    Mr. Whitfield. Did you turn your microphone on?
    Mr. Kepes. I will do that. How about that? Does that come 
across? OK. Apologize for that.
    Mr. Chairman, members, thank you very much. I am actually 
very pleased to be in front of you today because in my world, 
which is----
    Mr. Whitfield. Mr. Kepes, forgive me for interrupting. 
Would you mind taking Ms. Cassady's microphone and try that 
one?
    Mr. Kepes. Push that again. Thank you very much. Again, my 
apologies. I hope this doesn't eat into my 5 minutes here.
    Mr. Chairman, members, thank you. I am very pleased to be 
here today because the world that I usually am in is the 
business world, in the exploration and production business. I 
am a geologist. I have been in and around the oil and gas 
industry for 30 years, so you can decide whether that makes me 
objective or not on this business, but I think I am fairly 
knowledgeable. And I am also representing the work and analysis 
and experience of my colleagues at my company.
    What I really want to talk today about is competitiveness 
of the E&P sector, and more than the volumes that have been 
produced, the new supplies from shale, just as important for 
you to think about is the incredible competitiveness of the 
energy industry right here. And the reason is that competitive 
basically means cost and efficiency, and reaction to market 
conditions. So, for example, as we look at this low oil price 
period, which has many benefits for the economy, consumers, et 
cetera, at one point clearly, perhaps the Saudis and others 
thought that the U.S. oil industry was just a phenomenon of 
high oil prices. That is not the case. In other words, many 
thought that this industry, the shale oil and gas industry, 
could survive only with high oil and gas prices. That is not 
the case. So that is actually one of my first points today. 
This is not a high oil price phenomenon. But we have had low 
natural gas prices for about 6 years right now, and shale gas 
production has sustained and, in fact, grown. That is 
critically important. And why is that so important? Because 
when it comes to thinking about energy diplomacy and the idea 
that we can export the volumes that we have, because we will 
match or meet the internal requirements, it is not just about 
volumes. What we are really exporting is competitiveness. And I 
want to make that point, is that anything that you might 
consider in terms of these energy diplomacy objectives or 
goals, which are actually quite admirable, they will be 
sustainable and viable as long as this competitiveness exists 
because it is not just offering to send supplies somewhere, the 
marketplace is what is pulling them. Whether it is the Ukraine 
or parts of Europe or Mexico, as I will talk about next here, 
which is a great example, they wouldn't be doing this if these 
supplies exported from U.S. shores were not competitive and a 
lower-priced alternative to other factors. This is particularly 
important because if we define very simply what energy security 
is, which is really, we would argue, reliable supply at 
affordable prices.
    So let's take Mexico. Right now, there is a lot of interest 
in Mexico because of the opening of the E&P sector, that is 
exploration and production, because of the fact that we have 
had over 70 years of a monopoly of the state oil company, 
PEMEX, going to be reversed. But that is actually not the 
biggest issue going on. The bigger issue is the fact that 
Mexico is going to be importing a lot more natural gas from the 
United States. I am sure the committee knows that right now, 
they import about 2 billion cubic feet a day. That number could 
go up to 5 or 6 billion cubic feet a day within the next 10 
years. It is a bigger impact because, two things. One, all this 
will draw more much gas-fired power generation if the reforms 
work in the midstream and downstream in Mexico, and we hope 
that they will. That should result in lower energy prices for 
the entire economy. We don't know yet if it is 10 percent lower 
or if it is 30 percent lower, but the impact of that on the 
Mexican economy competitiveness, this is actually the big 
picture. It is not so much the oil side, what I am trying to 
say, it is the gas side and what we are about to do right 
there. That is a very important factor.
    Now, it is said, and it is quite true, that Mexico has 
substantial natural gas resources, but in this case, the 
decision that they made was, if they tried to develop their own 
natural gas resources right now, it is so expensive that it 
made far more sense to import less expensive U.S. natural gas. 
That is a choice for competition, it is a choice for 
competitiveness, and again, if you want to look at it from an 
energy policy program for the U.S., a tremendous success, 
because as this goes forward, that competitiveness, that lower 
price and efficiency is what is going to have a larger impact 
on the Mexican economy, and a huge contributor to what has 
already been troubled at times, but a very successful U.S.-
Mexican relationship.
    So those are the arguments I want to put in front of you. 
That, one, shale production is not a high-priced phenomenon. 
Also intrinsic to the supply volumes that we have, which is 
important, is the competitiveness of that. One, that if it is 
going to be part of U.S. energy diplomacy initiatives, then 
that competitiveness needs to continue. That is going to 
undergird all of that in order for it to be successful. And 
finally, U.S. infrastructure processes and regulations, 
naturally, have to be equally competitive in order to allow 
this to be sustained.
    Thank you very much for giving me the time.
    [The prepared statement of Mr. Kepes follows:]
    
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    Mr. Whitfield. Well, thank you, Mr. Kepes.
    And our next witness is Alison Cassady, who is the Director 
of Domestic Energy Policy for the Center for American Progress. 
And thank you very much for being with us, and you are 
recognized for 5 minutes.

                  STATEMENT OF ALISON CASSADY

    Ms. Cassady. Thank you, Chairman Whitfield, Ranking Member 
Rush, and members of the subcommittee, thank you for the 
opportunity to testify today. My name is Alison Cassady, and I 
am Director of Domestic Energy Policy for the Center for 
American Progress. CAP is a nonprofit organization dedicated to 
improving the lives of Americans through progressive ideas and 
action.
    Before I jump into my more specific comments on the energy 
diplomacy discussion draft, I would like to highlight a topic 
that is not a subject of today's hearing, but I think should 
be, and that is climate change which, to me, is the most urgent 
and challenging energy diplomacy issue of our time.
    Climate change has become a priority in international 
relations because the climate science is so clear. A failure to 
act on climate change risks severe, irreversible impacts on a 
global scale. As the committee considers the Nation's energy 
policy and its interaction with the rest of the world, CAP 
urges you to put climate change front and center of any policy 
that you develop. We can no longer afford to separate energy 
policy from climate policy.
    So with that introductory context in mind, I am going to 
jump into a few thoughts on Section 3104 of the discussion 
draft about cross-border energy projects.
    As you all know, under current law, entities wanting to 
construct or operate a cross-border pipeline or transmission 
line are required to obtain a presidential permit. This section 
of the bill eliminates that requirement, and instead requires 
the relevant federal agency to issue a certificate of crossing; 
that is, unless the agency finds that the cross-border segment 
of the project is not in the public interest of the United 
States.
    And I have a few concerns about this approach. First, the 
new process presumes that the project is in the public 
interest, placing the burden of proof on concerned stakeholders 
to demonstrate that it is not, instead of asking the applicant 
to make the affirmative case that it is. Second, under the new 
process, the applicant only needs to obtain federal approval 
for the portion of the project that physically crosses the U.S. 
border, even if the project itself spans hundreds of miles. And 
finally, the new process limits environmental review under NEPA 
to just the cross-border section of the project. To me, this 
makes little sense since we all know that these types of 
projects can have environmental impacts well beyond the border. 
For a truly transcontinental project, such as a pipeline that 
runs through numerous states down to the Gulf Coast, the 
current presidential permitting process is the only venue for 
the public and stakeholders to examine and understand the 
potential impacts of the whole project that is under 
consideration. Under the process established by this bill, the 
review would be fragmented, it would be state-by-state, and no 
one except the project applicant would ever examine the project 
as a whole.
    I also have a few concerns about Section 3106, which is the 
LNG export section. This section sets a 30-day deadline upon 
the completion of an environmental review for the DOE to issue 
a final decision on any application to export natural gas to a 
non-free trade county. The United States is well on track to 
becoming a new exporter of natural gas. To date, the DOE has 
issued final authorizations to 6 facilities to export up to 8.6 
billion cubic feet per day of LNG. That is more than 10 percent 
of daily U.S. natural gas consumption, and that is on top of 
what we already export to free trade countries like Mexico.
    The existing DOE permitting system appears to be working. 
It puzzles me, therefore, why we need a bill that would seek to 
fast-track new DOE permit approvals. To be clear, CAP does not 
oppose LNG exports in principle, but we have concerns about 
placing an artificial deadline on agency review of permit 
applications. Congress should not preclude DOE from taking the 
time it needs to make a considered and well-informed decision, 
particularly on the most difficult projects. The stakes are 
simply too high for natural gas consumers here in the United 
States. Last year, the Energy Information Administration 
concluded that increased LNG exports lead to increased natural 
gas prices. And these higher natural gas prices create economic 
winners and losers. Certainly, natural gas producers and 
employees of natural gas producers would be the clear winners, 
but, for example, manufacturers that use natural gas as a 
feedstock would face much higher energy costs.
    In short, the decision to export significant volumes of 
natural gas, even to our allies, is a complex one that should 
not be made lightly given the potential consumer impacts here 
in the United States. This decision is made even more 
complicated given the growing demand here at home for natural 
gas in both the electricity sector and the transportation 
sector. So if the United States overcommits to natural gas 
exports via long-term 20-year contracts, consumers here could 
pay the price, and that is why a deliberative process is so 
important.
    With that, I will end my testimony, and be happy to answer 
any questions.
    [The prepared statement of Ms. Cassady follows:]
    
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    Mr. Whitfield. Thank you, Ms. Cassady.
    And our next witness is Ms. Emily Hammond, who is Professor 
of Law at George Washington University Law School. And thank 
you for joining us, and you are recognized for 5 minutes.

                   STATEMENT OF EMILY HAMMOND

    Ms. Hammond. Thank you, Chairman Whitfield, Ranking Member 
Rush, and the distinguished members of the subcommittee. I 
appreciate the opportunity to testify today.
    In my testimony, I would like to highlight several concerns 
that undermine the discussion draft's important goal of a 
unified energy policy. These concerns relate specifically to 
Sections 3102, 3104, and 3106. In short, those provisions fail 
to properly account for the reliability, fuel diversity, and 
environmental implications of energy policy, and they also fail 
to adequately permit the energy agencies to undertake their 
work in a participatory, deliberative, and well-reasoned 
manner.
    Let me start with the Interagency Taskforce. Despite that 
the lines between energy and the environment no longer truly 
exist--excuse me, the composition of the taskforce has 
significant gaps that will hinder rather than help the 
development of a comprehensive energy policy. Most critical is 
the absence of agencies with environmental expertise. But other 
key agencies like those whose missions relate to jobs, to the 
economy, and to transportation, are also omitted from the 
taskforce. As demonstrated by the QER, which we heard about 
this morning, all of these agencies can successfully work 
together toward unified energy policies, and administrative law 
will show that when agencies collaborate in this way, they are 
more successful, and that they tend to have broader stakeholder 
support, and they have reduced vulnerability to judicial 
challenges.
    For the same reasons, the criteria for the Interagency 
Taskforce as planned should include environmental issues, and 
especially climate change. Failing to do so will only deepen 
the current dysfunctions in our energy regulatory system and in 
the energy markets.
    Second, the authorization for cross-border infrastructure 
projects does not make clear how DOE would implement its 
authority differently from how it currently does under the 
presidential permit framework. Currently procedures do account 
for environmental issues, and those should be retained. I note 
as well that the provisions striking portions of the Federal 
Power Act, and in particular Section 202(f), threaten to 
undermine important backstop authority that the Federal Power 
Act retains for FERC that allow it to ensure grid reliability 
for intrastate projects that cross international boundaries. I 
urge the subcommittee to carefully reexamine the striking 
provisions of this section.
    Finally, the 30-day deadline for DOE action on LNG 
applications is of concern. Even if DOE is able to act quickly 
in some circumstances, it needs more flexibility, given the 
very complex issues at stake. Imposing a rigid deadline 
actually threatens more delay. First, deadline suits, which are 
contemplated by the discussion draft, tend to impose additional 
delays even if those suits are successful. And second, with 
stakes so high and such engaged stakeholders, judicial 
challenges are inevitable. All right, we can easily predict 
lawsuits no matter DOE's decision, and if DOE is rushed in 
making its determination, the record is less likely to be 
carefully developed, the agency's reasoning may not be clear, 
and once again, it is likely to be more vulnerable to judicial 
remand and imposition of even further delays.
    To summarize, the relationship between energy and the 
environment must be considered as the United States seeks a 
uniform energy policy. Careful attention to administrative 
procedure and its role in promoting good government must also 
accompany any new energy statutes. If we move forward with U.S. 
energy policy with these principles in mind, we can make 
substantial improvements for the future.
    Thank you again for the opportunity to testify today, and I 
look forward to your questions.
    [The prepared statement of Ms. Hammond follows:]
    
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    Mr. Whitfield. Well, thank you, Ms. Hammond.
    And that concludes the opening statements. I just want to 
make an announcement that we are expecting some votes around 
1:30 or so. There are only six members here, so we each get 5 
minutes. That will be 30 minutes. I think that we can make it 
through and give you all an opportunity to respond if we go 
efficiently and quickly.
    So I am going to recognize myself for 5 minutes, make sure 
I get mine in, Bobby, and then we will go from there.
    Ms. Cassady and Ms. Hammond both made comments about 
climate change, and certainly, that is something we are very 
much concerned about, but I would like to remind everyone that 
within the Federal Government, just the U.S. Federal 
Government, there are 68 different initiatives on climate 
change. There has been a total of about $36, $37 billion spent 
by the U.S. Government alone each year just on climate change. 
So the differences that we are having with President Obama, 
truthfully, is that he views it as the most important issue 
facing mankind, and some of us have different views that a job, 
access to healthcare, clean water, affordable energy, economic 
growth are very important also. So I appreciate your comments--
and now Mr. Pallone is coming in so that is another person, so 
I am going to have to hurry. OK. I wanted to make that comment.
    Now, Dr. Dolzer, in France, they have a large percentage of 
their electricity produced from nuclear. Germany made the 
decision, I guess, to stop all production of energy by nuclear. 
Is that still the policy in Germany?
    Mr. Dolzer. That is the policy. We decided 3 days after the 
Fukushima events in 2010 to phase-out. We had an earlier change 
in 2000, then we had another change in 2009, and Fukushima is 
still the key event in Germany. At the moment, my prediction 
is--the current situation is that \1/2\ of the nuclear plants 
have already been phased out after 2011, and the rest, eight of 
them are still in operation. They will be phased out by 2021.
    Mr. Whitfield. And, of course, you all have been--in 
Germany, they have been moving very quickly to renewable 
energy: wind, solar, whatever. So what has the result been? I 
mean has it affected your reliability? Has it affected the 
retail prices of electricity or not?
    Mr. Dolzer. It has affected the price of the consumer 
considerably. I think the price went up by about 30 percent for 
electricity for the private households.
    Perhaps one conclusion is, and I am not here taking any 
particular position, if you change policies to it in a 
pragmatic manner without too much momentary intervention, I 
think the change in Germany has forced us to react very 
quickly. It had some rather unintended consequences. At the 
moment, we are the main importer of U.S. coal. Now, of course, 
this is a little bit odd and awkward to have more coal----
    Mr. Whitfield. I was told that last year----
    Mr. Dolzer [continuing]. As a consequence----
    Mr. Whitfield [continuing]. Two-thirds of U.S. coal exports 
went to Europe.
    Mr. Dolzer. Correct. So we are supporting West Virginia. A 
consequence of our decision to phase-out nuclear was de facto 
to promote coal. For the moment, my prediction is this policy 
will not change. None of the major political parties, including 
the one to which I belong, intends to change. However, I think 
if I listen to--correct to what my wife tells me, opposition 
among the people is growing to this policy. The question is, is 
that affordable, what we are doing at the moment in the long-
run. Germany has many issues, as most other states. We need 
more schools, we need better universities, we need more 
streets, and the question is can we focus our budget in the way 
we did on one issue alone, which is----
    Mr. Whitfield. Yes. When you--in your testimony, when you 
were talking about Europe being more vulnerable, is that what 
you were referring to?
    Mr. Dolzer. That is correct. The----
    Mr. Whitfield. The policy about the renewables and the push 
for----
    Mr. Dolzer. The policy about renewables, together with the 
policy of phasing out nuclear power means that we need more 
energy in the future as regards gas. We have a very special 
situation; we can get more gas from Russia, from Iran, from 
Algeria, or at the moment from Norway, but Norway is about to 
peak. In other words, our choices are not considerable. And 
here I would like to come back for a moment to U.S. policy. The 
U.S. has criticized us, of course, for being dependent too much 
on Russian gas. Correct. Almost 40 percent. At the same time 
now, of course, in an era of abundance, the Europeans would 
hope that the United States allows for more gas to be exported 
to Europe in a situation where we need stronger support with 
our alternatives. And I think even small additional imports 
from the United States would help on a symbolic manner. In 
other words, the position in Europe that you hear quite often 
is, on the one hand the U.S. criticizes that we are too 
dependent on Russia or Iraq or----
    Mr. Whitfield. Yes, OK.
    Mr. Dolzer [continuing]. Whoever, on the other hand, the 
U.S. does not allow and facilitate----
    Mr. Whitfield. Yes.
    Mr. Dolzer [continuing]. Exports to Europe. I think this is 
a position that may be reconsidered.
    Mr. Whitfield. OK. At this time, I am going to recognize 
Mr. Rush for 5 minutes.
    Mr. Rush. I want to thank you, Mr. Chairman. Mr. Chairman, 
I just want to take a moment to welcome back to the committee 
Ms. Cassady. She served for many, many years as an expert 
staffer under our former chairman, Henry Waxman, and she was on 
this side of the table, and now she is on that side of the 
table. But I just wanted to welcome her back. So good to see 
you again, and you are continuing your outstanding work. So 
thank you so very much.
    I want to ask you a question, and also Ms. Hammond. It is 
in response to some of the comments of the chairman. In your 
opinion, and both of your--if you will respond, are energy and 
environmental issues inherently related, and why is it so very, 
very important that any kind of comprehensive energy policy 
also integrate environmental concerns in that policy? And do 
either of you have any specific----
    Ms. Cassady. I would just add to that, the energy 
infrastructure decisions we make today will last decades. So we 
decide to build a pipeline today or build a new energy 
production facility, we are locking in decades of new emissions 
or not, and that is why it is very important to consider, 
whenever we are considering energy policy, we should consider 
climate policy as well, and think through how will this energy 
project affect our transition negatively or positively toward a 
zero carbon future.
    Mr. Rush. I yield back.
    Mr. Whitfield. Gentleman yields back.
    Because we now have called votes, I am going to reduce the 
amount of time to 3 minutes for everyone so that, hopefully, we 
can give everybody a chance.
    So, Mr. Olson, you are recognized for 3 minutes.
    Mr. Olson. Thank you, Chairman. I am with you.
    Welcome to our witnesses. I apologize you got behind an 
energy superstar, and now votes in a hearing coming in this 
hearing room about 2 o'clock, so I have one question for you, 
Mr. Grumet. It is about Mexico.
    As you mentioned in your testimony, Mexico is on the verge 
of a revolution for energy. Changes, changes, changes. I moved 
to Texas in 1972. I saw the stronghold OPEC had on America 
firsthand. 1979, I had just gotten my license. I was sent down 
to get in line for gasoline. Gasoline dependent upon, you have 
a long line, get gas depending upon the last digit of your 
license plate. If it was an even date, go on an even day, even 
number. Long lines. Gas prices doubled. They had a stronghold 
on us. Now, with all the street production in America, our 
neighbor to the north, Canada, and Mexico, I see a vision of 
OPEC going away, replaced by NAPEC. North American Petroleum 
Exporting Countries.
    My question is, sir, what is the one thing Congress can do 
to help make that reality, make NAPEC head of OPEC?
    Mr. Grumet. Thank you for that question, and I will note 
that usually you put the warm-up band before the rock star, so 
you might want to do that--all right, I am back. I think you 
make a very important point. We used to look at our headlines, 
and OPEC was having a meeting and there would be a chill 
through the land. Now, they can meet or not meet, it doesn't 
matter much to us if, in fact, we seize the opportunity of 
abundance. And I think our opportunities with Mexico are 
profound. We have to give a lot of credit to President Nieto 
for trying to reverse 60 years of an investment policy that 
basically discouraged first world technology. I think the 
opportunities to spend a lot of time working with Mexico on 
something that is pedestrian but incredibly important, and that 
is data quality. The ability to have North American energy 
security depends on having good data, shared analysis, shared 
understandings, and a transparency across our analytical 
platforms. That is a very boring but incredibly difficult and 
important thing to do. Our energy administration here is the 
gold standard, and I think we really should spend a lot of 
time, it is going to require some resources if we want Mexico 
to join us. If we had that shared data foundation and we have 
thoughtful laws that, as our colleagues have suggested, provide 
time for environmental deliberation, but then actually require 
a decision, I think we can have an integrated energy system 
that will raise both----
    Mr. Olson. So shared data, number one. We need to have that 
in Congress. That is the best we can do right now?
    Mr. Grumet. I think that is something you could actually 
get done right now, that would be very true.
    Mr. Olson. That is even better. I like that.
    Yield back, sir.
    Mr. Whitfield. Gentleman yields back.
    At this time, recognize the gentleman from New Jersey for 3 
minutes, Mr. Pallone.
    Mr. Pallone. Thank you, Mr. Chairman.
    I just wanted to follow up on a few statements made earlier 
today about Section 3104. This provision makes an end run 
around the National Environmental Policy Act, and would 
eliminate meaningful review of the environmental impacts of 
proposed cross-border energy projects. And this section 
dramatically narrows the scope of environmental review to only 
the cross-border segment of the energy project, the tiny 
portion that physically crosses a national boundary.
    So, Ms. Cassady, does limiting NEPA review to just a small 
sliver of a cross-border energy project make any sense to you, 
and what are some of the drawbacks of looking at just the 
cross-border segment of a pipeline or transmission line?
    Ms. Cassady. Thank you for the question. No, it doesn't 
make much sense to me simply because if you look at the more 
controversial pipeline and other projects that we have examined 
over the last few years, the controversy has never been around 
the impacts at the border. We all know, even the best-
constructed, highest technology pipeline, an accident can 
happen. And those pipelines span hundreds of miles, they pass 
through sensitive ecosystems, over aquafers, over private and 
public lands. The purpose of an environmental review is to make 
sure that policymakers have all of the facts about the 
potential impacts of the project over the entire course of the 
project, not just the small part at the border, in order to 
better understand how to mitigate those potential impacts. So 
in order to understand the potential consequences of a project, 
we need to look at it in its entirety and not just at the 
border.
    Mr. Pallone. How about the legislation's presumption that 
cross-border projects are in the public interest, how would 
looking at just the cross-border segment impact an agency's 
ability to determine whether or not a project is in the public 
interest?
    Ms. Cassady. The presumption of approval stacks the deck 
against a stakeholder who has legitimate concerns about whether 
or not a project is in the public interest. It forces the 
concerned stakeholder to make the case that it is not in the 
public interest, rather than forcing the applicant to make the 
case that it is. And that is just a higher burden of proof. And 
the way the bill is written, since it is so focused on a very 
narrow part of the proposal and doesn't look at all of the 
potential impacts, it is going to be much harder for a 
concerned stakeholder to make the case that this tiny little 
part of the project is not in the public interest.
    Mr. Pallone. Well, thank you. I think these energy 
infrastructure projects are a lot more than just a border 
crossing: they are going to last for decades, and fundamentally 
NEPA requires us to look before we leap, and that is just basic 
common sense. So we should not be carelessly narrowing or 
creating loopholes in the law, and I think we need to 
understand the impact of these projects before they are 
constructed so that we can protect public health and safety and 
the environment, and I think ignoring the impacts is not going 
to make them disappear. So thank you again.
    Thank you, Mr. Chairman.
    Mr. Whitfield. At this time, recognize the gentleman from 
Pennsylvania, Mr. Pitts, for 3 minutes.
    Mr. Pitts. Thank you, Mr. Chairman.
    Mr. Martin, Lancaster County doesn't have any wells of 
Marcellus Shale being drilled in it. Probably the nearest well 
is 100 miles away. But how is Lancaster County benefitting from 
Marcellus Shale, the boom that you mentioned, even if there are 
no wells being drilled in the county?
    Mr. Martin. Well, first and foremost, what we have seen is, 
one, Pennsylvania putting forth an impact fee with monies that 
were distributed back not only to well counties, but also to 
counties who end up having pipelines. Those kinds of funds that 
are coming back are used to conserve open space, preserve ag 
preservation easements, and also really replace structurally 
deficient bridges. But we are also seeing the economic impact 
as well here. We have IT companies that do data mappings of 
pipelines and wells that have grown dramatically. Engineering 
firms. One of the larger engineering firms in the Marcellus 
Shale region, Virtue Engineering, more than doubled in size. 
Over a 2-year period, they bought an additional 75 vehicles.
    I used in my testimony examples of the Pennsylvania 
National Guard or Shady Maple. Shady Maple saving over 170--it 
is a smorgasbord, if anyone has ever been to one, I highly 
recommend it. $175,000 a year in energy costs, which then 
Garden Spot School District saw, which is in the same area, and 
said we are going to tape in, and they are going to realize 
those savings.
    Now, we would like to see more of it. Unfortunately, about 
\1/2\ of Pennsylvanians do not have access to that natural gas, 
but given the premise of the open access nature of pipelines, 
you will start to see more of these entities like the 
Pennsylvania National Guard at Fort Indiantown Gap, and others, 
who are able to tap in and be able to realize that savings. And 
where we expect to see most of it, and where we hear from a lot 
of our constituents, is especially in the area of 
manufacturing, especially those who are heavily reliant on 
energy to do that. We have companies that spend over $3 million 
a year in energy costs, but they are nowhere near the nearest 
pipeline. So I think we will see further opportunities coming 
forth.
    But I just want to add, Congressman, two of the great 
things I see is, you are now able to get an education in 
Pennsylvania in the petroleum and gas industry that you had to 
go to like Texas Tech to used to be able to get. They are 
investing in areas--I think $2 \1/2\ million dollar grant from 
the industry to Lackawanna Community College. Two-year program, 
cost for that 2 years about $22,000. And when they are coming 
out of that program, the starting rate is like $68,000. So 
those are the types of things that you are seeing. These are 
good middle-class jobs that not only use your head but also use 
your hands. And we are seeing that grow, and that is something 
we hopefully continue to see grow not only through Lancaster 
County, but throughout Pennsylvania.
    Mr. Pitts. Thank you very much, my time has expired.
    Mr. Whitfield. At this time, recognize the gentleman from 
Texas, Mr. Green, for 3 minutes.
    Mr. Green. Thank you, Mr. Chairman. I appreciate hearing 
from the county commissioner. My accent gives me away, but 
obviously, every school in Texas has energy courses, from our 
community colleges all the way up to not only Texas Tech and 
Lubbock, but UT and A&M and University of Houston, and 
everywhere else.
    Ms. Cassady, I want to welcome you back to the committee. I 
know you are familiar with the NEPA regulations promulgated by 
the Council on Environmental Quality, not only from your work 
on the committee, but with the center. Under NEPA, an agency is 
specifically prohibited from segmenting projects, known as 
piecemealing. The Code of Federal Regulations states proposals 
or parts of proposals which are related to each other closely 
enough to be, in effect, a single course of action are 
evaluated. The discussion draft requires the State Department 
to promulgate rules on cross-border pipelines, and you heard 
Secretary Moniz say that the agencies are required to do it.
    Ms. Cassady, wouldn't the federal agency in charge of the 
environmental review be charged with the NEPA review that 
satisfies these CEQ regulations, and looking at the whole 
project?
    Ms. Cassady. My understanding of the bill is that the NEPA 
review only applies to the cross-border segment of the pipeline 
project or the transmission line, and so the federal approval 
only applies to that portion as well. Therefore, NEPA would 
only apply to that portion. There would be state-by-state 
reviews if it was passing through a state. In terms of federal 
review, it just applies to the cross-border segment.
    Mr. Green. Well----
    Ms. Cassady. That is my understanding of the legislation.
    Mr. Green. Shouldn't the cross-border review--so much of 
our NEPA process is also done by other federal agencies and a 
party to it. For example, if you have a pipeline coming from 
Texas in Eagle Ford to Mexico, that cross-border pipeline, 
state law covers it on the property that is not federal, but it 
may be crossing federal lands, and so the NEPA process would 
come into play on that. But granted, the cross-border, which is 
international, and of course, as taxpayers we own our part of 
the border, then they would do it. But you don't think that the 
bill calls for them to look at the whole project? And it may 
not be one agency doing it, but there will be other agencies 
doing a NEPA process on what they are required to do in that 
pipeline, from whether it be at Eagle Ford, of course, into 
Mexico. That is what worries me because I know, and my 
colleague from New Jersey said that the NEPA process is not 
covered. I think it is, because if it is not the Department of 
Energy, for example, for electricity transmission, it would be 
another federal agency if they had the authority in there, or 
in some cases, state agencies. So the NEPA process would be 
included.
    And, Mr. Chairman, I know I am almost out of time, and we 
are almost out of time for----
    Mr. Whitfield. Well, Mr. Green, that is our view as well, 
and we would love for our staff to sit down with Ms. Cassady in 
more detail, but it is our understanding that this does not 
change the NEPA process.
    Mr. Green. Yes. Now, I have to admit, in my few seconds, I 
have a problem with the State Department. We have a company in 
Texas who was--a Canada pipeline that was dormant, they wanted 
to change the name because they bought it, and their goal was 
to not only bring crude oil from Canada, but it was also to 
attach into the United States from Bakken, and the State 
Department decided they needed to review what was on the U.S. 
property.
    Now, I want a federal agency looking at it, but the State 
Department shouldn't be deciding whether a pipeline out of 
Bakken is good or not because, granted, we are getting crude 
oil in trains into Houston, Texas, because our refiners do 
that. It is so much safer and easier to put a pipeline in there 
than it is bring those 100-car trains full of crude oil from 
Canada.
    Mr. Whitfield. Gentleman's time has expired.
    Recognize the gentlemen from Virginia, Mr. Griffith, for 3 
minutes.
    Mr. Griffith. Thank you very much. I appreciate it.
    All right, I will take anybody who can answer this, and I 
suspect it will be Mr. Grumet or Ms. Cassady, or Ms. Hammond.
    Are you all familiar with the regulations relating to 
production of electricity in Mexico by coal? And no is a fine 
answer. If you don't know, you don't know. Nobody knows. 
Because the reason I ask that question is it is part of our 
proposal here, and one that I am interested in, has electric 
transmission facilities, it is not just pipelines. And one of 
my concerns is that we are putting coalminers out of work in 
Appalachia. Like Lancaster, down our way it is not Appalachia, 
it is Appalachia, and we are putting coalminers out of work in 
Appalachia, but if we allow electric transmission lines to 
cross over from Mexico using not-as-good a coal, with not-as-
good a process, in not-as-clean plants, what gain have we made 
environmentally? And I think this is a case where, while Ms. 
Cassady and I are not going to agree on much, we might actually 
agree on that, that that ought to be a concern.
    Mr. Grumet, do you have any thoughts on that at all?
    Mr. Grumet. I mean you make a very important point, and Dr. 
Dolzer's testimony referred to it as well, right. Electrons and 
molecules don't have a lot of concern about arbitrary political 
boundaries, and that is why we actually have to have a shared 
solution that brings the technology of the United States to 
bear on the issues in Mexico. We have to have shared 
agreements. And I am not going to try to get into a lengthy 
conversation about regional climate action in 60 seconds, but--
--
    Mr. Griffith. Well----
    Mr. Grumet [continuing]. I think there is a real 
opportunity to actually lift the Mexican system so that it 
actually has parity with the U.S.
    Mr. Griffith. And I certainly don't mind lifting up the 
Mexican system, but I am reminded of the old NASA study that 
shows it takes 10 days for the air to get from the middle of 
the Gobi Desert to the eastern shore of Virginia, so if we are 
going to eliminate coal, waiting another 30 or 40 years on Asia 
just really means we are putting our people out of work and we 
are not really doing that much for the overall northern 
hemisphere----
    Mr. Grumet. All I will say is----
    Mr. Griffith [continuing]. Air.
    Mr. Grumet [continuing]. That we fundamentally have to find 
a way to burn coal in a way that meets our security interests 
and our environmental interests, and there is one way we can do 
that if we invest the resources to get it done. We are not 
doing that right now, so----
    Mr. Griffith. And I agree with you completely. We can do 
more and we should do more. I look forward to working with you 
on clean coal technologies.
    I yield back.
    Mr. Whitfield. And there are no other questions. So thank 
all of you once again for your patience, and we look forward to 
maintaining contact with you and continuing to work with you as 
we try to bring this legislation to the committee.
    I am also asking unanimous consent that a statement from 
the Canadian Electricity Association be submitted for the 
record. And without----
    Mr. Rush. No objection.
    Mr. Whitfield. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Whitfield. Is this it? OK. And we are going to keep the 
record open for 10 days for any additional material that may 
need to be submitted.
    And once again, that will conclude today's hearing. Thank 
you all for your interest. And, Mr. Dolzer, thanks for coming 
all the way from Germany.
    [Whereupon, at 1:42 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    
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