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37–164 PDF 2007

S. HRG. 110–112

CURRENT ENERGY LEGISLATION

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY

OF THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

ON

S. 645 S. 838

S. 1089 S. 1203

H.R. 85 H.R. 1126

MAY 22, 2007

(

Printed for the use of the 

Committee on Energy and Natural Resources 
(II)

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

JEFF BINGAMAN, New Mexico, Chairman

DANIEL K. AKAKA, Hawaii 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

KEN SALAZAR, Colorado 

ROBERT MENENDEZ, New Jersey 

BLANCHE L. LINCOLN, Arkansas 

BERNARD SANDERS, Vermont 

JON TESTER, Montana 

PETE V. DOMENICI, New Mexico 

LARRY E. CRAIG, Idaho 

CRAIG THOMAS, Wyoming 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

JIM DEMINT, South Carolina 

BOB CORKER, Tennessee 

JEFF SESSIONS, Alabama 

GORDON H. SMITH, Oregon 

JIM BUNNING, Kentucky 

MEL MARTINEZ, Florida

ROBERT M. SIMON, Staff Director 

SAM E. FOWLER, Chief Counsel 

FRANK MACCHIAROLA, Republican Staff Director 

JUDITH K. PENSABENE, Republican Chief Counsel 

SUBCOMMITTEE ON ENERGY

BYRON L. DORGAN, North Dakota, Chairman

DANIEL K. AKAKA, Hawaii 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

ROBERT MENENDEZ, New Jersey 

BERNARD SANDERS, Vermont 

JON TESTER, Montana 

LISA MURKOWSKI, Alaska 

LARRY E. CRAIG, Idaho 

RICHARD BURR, North Carolina 

JIM DEMINT, South Carolina 

BOB CORKER, Tennessee 

JEFF SESSIONS, Alabama 

JIM BUNNING, Kentucky 

MEL MARTINEZ, Florida

JEFF BINGAMAN and PETE V. DOMENICI are Ex Officio members of the Subcommittee 
(III)

C O N T E N T S 

STATEMENTS 

Page

Hill, David, General Counsel, Department of Energy .......................................... 6

Murkowski, Hon. Lisa, U.S. Senator from Alaska ................................................ 1

Pearce, Drue, Federal Coordinator, Office of the Federal Coordinator, Alaska 

Natural Gas Transportation Projects, Department of the Interior .................. 2

Tester, Hon. Jon, U.S. Senator from Montana ...................................................... 1

Thomas, Hon. Craig, U.S. Senator from Wyoming ............................................... 11

(1)

CURRENT ENERGY LEGISLATION 

TUESDAY, MAY 22, 2007

U.S. SENATE, SUBCOMMITTEE ON ENERGY, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. 

The subcommittee met, pursuant to notice, at 2:34 p.m., in room 

SD–366, Dirksen Senate Office Building, Hon. Jon Tester presiding. 

OPENING STATEMENT OF HON. JON TESTER, U.S. SENATOR 

FROM MONTANA 

Senator TESTER. The hearing will come to order. I want to wish 

everyone a good afternoon and thank you for being here today. 

We’re here to hear half a dozen energy bills dealing with issues 

that will enhance our domestic energy programs from coal, renewable fuels, and natural gas supply; to reauthorize appropriations to 

help our steel and aluminum industries remain competitive; to help 

them focus on reduction of greenhouse gas emissions; to promote 

international collaboration with Israel in renewable and alternative 

energy programs; and to enhance technology transfer for increasing 

energy efficiency in the housing and construction sector. 

We have two distinguished witnesses here with us today. I want 

to thank you both for being here. With that, Senator Murkowski, 

if you have any opening statements we would love to hear them. 

STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR

FROM ALASKA 

Senator MURKOWSKI. Thank you, Senator Tester. Appreciate 

that. Appreciate the hearing this afternoon. I would like to take the 

opportunity to welcome to the committee Drue Pearce. Drue is the 

former president of the Alaska State Senate, the former Alaska 

representative at the Interior Department, and now the coordinator 

for the Alaska Gas Pipeline Coordinator’s Office. 

She’s here to testify on a bill that Senator Stevens and I have 

introduced, to make a few technical corrections in the operations of 

the office—this office intended to get our gas line project built to 

move Alaska’s huge supplies of North Slope natural gas to markets 

in the lower 48. 

It was back in 2004 that here in the Congress we approved two measures in $18 billion loan guarantee, as well as expedited permitting and a streamlined court review in the project, a second incentive that provided two tax incentives for accelerated depreciation tax deductions for the cost of the gas conditioning plant. 
2

After the Federal incentives passed here in the Congress, the 

State then moved forward several years back to move towards negotiations with leaseholders of Prudhoe Bay for the oil and gas reserves, intending to reach an agreement. 

That was not successful, and this year, with a new governor in 

place, the process was restarted. The Alaska legislature just this 

last week approved the Alaska Gas Inducement Act. We look forward to good, positive movement as a result of that legislation, but 

we recognized that it was going to be necessary to have an Office 

of Federal Coordinators. 

The office has reached an agreement on how we’ll oversee the 15 

Federal agencies that will play a role in getting the pipeline built. 

It’s transferred money to get the office running. It has a $2 millionplus appropriations request to fully fund the operations in this next 

year. 

But we also recognize that there are some minor improvements 

that are needed in the ’04 Act to get this office quickly up and running to assist the State and get this gas line built so that we can 

get Alaska’s gas to the lower 48. 

The changes are a waiver to personnel rules so the coordinator 

can quickly hire the expertise when it becomes clearer exactly what 

type of project will be proposed by the successful pipeline applicant; 

a provision to allow the office to assess fees for reviewing the plans, 

issuing the permits, and overseeing construction of the project; and 

a clarification on the traditional review provisions that are all pretty minor but very important that they pass quickly, given the 

State’s timeframe for action by fall. 

I do appreciate the prompt hearing on the bill by the chairman. 

We recognize the need for more domestic natural gas. We anticipate that there may be some tweaks to this bill that this hearing 

might uncover, but I would like to think that we can move through 

them very quickly, and I appreciate the opportunity to get this 

issue underway. Thanks, Mr. Chairman. 

Senator TESTER. Yes, thank you, Senator Murkowski. We’ll now 

hear from the witnesses. I want to thank you both for being here. 

As I said before, Senator Murkowski did a more than adequate job 

of introducing you, Ms. Pearce. 

We also have with us here David Hill, General Counsel of the 

U.S. Department of Energy, and he’s here to provide testimony. 

Ms. Pearce, since you are testifying on one bill and Mr. Hill’s on 

the other five, I think you should just rock and fire and have at 

it. 

STATEMENT OF DRUE PEARCE, FEDERAL COORDINATOR, OFFICE OF THE FEDERAL COORDINATOR, ALASKA NATURAL 

GAS TRANSPORTATION PROJECTS, DEPARTMENT OF THE 

INTERIOR 

Ms. PEARCE. Thank you, Mr. Chairman and members for this opportunity to speak for the subcommittee, and I want to thank you, 

Senator Murkowski, for your interest both in my agency, and your 

firm commitment to construction of the pipeline to commercialize 

Alaska’s North Slope gas. 

Today, I am presenting the administration’s preliminary views 

on the bill. We believe there are several technical corrections that 
3

should be made. We have made those available to the committee 

and we look forward to working with you to address those concerns. 

Marketizing our vast Alaskan North Slope natural gas resources, 

estimated at at least 200 TCF, is an important step in ensuring the 

Nation’s energy demands are met. This isn’t an Alaska project, Mr. 

Chairman; it’s a North American project, with benefits flowing to 

consumers and industrial customers in the lower 48, as well as to 

our Canadian energy allies. 

The State of Alaska did take an important step last week in 

helping to move this enormous project forward. The legislature enacted Governor Palin’s Alaska Gas Line Inducement Act, better 

known as the GIA, providing inducements for the construction of 

a pipeline. The Governor plans to have an RFP on the street July 

1 and will license the project in the first quarter of 2008. 

The Office of the Federal Coordinator has a variety of responsibilities, including coordination of the Federal regulatory process 

to eliminate delays in what is expected to be a $25 billion-plus 

project. We will closely coordinate with the State of Alaska. We 

also are responsible for coordination with Canada. 

I am meeting for the third time with Minister Jim Prentice, Canada’s Minister of Indian Affairs Northern Development, as well as 

Chair of the Cabinet Committee on Energy Security, this week during his trip to the District of Columbia. 

Our office is small, presently staffed only by me, the Federal coordinator. I have supplemented the office during startup with personnel details from the Department of the Interior. The OFC will 

remain a small office, with as few as five or six professionals, pending selection of a project by the State of Alaska. 

Once a project is selected, it’s crucial that we be able to quickly 

hire personnel from the limited pool of individuals with the qualifications necessary to efficiently carry out the functions of the OFC. 

Our staff will be concentrated in Washington and Alaska. 

The amendment provides the OFC authority to appoint and terminate personnel without regard to provisions of the law governing 

appointments in the competitive service. The OFC is a temporary 

agency. We sense that 1 year after construction of a project our 

staffing levels and employee skill needs will vary depending upon 

the project phase. 

The personnel authorities embodied in the bill are used for small 

agencies, especially those with fixed lifespans like ours. The cost 

reimbursement authorities are there because given the regulatory 

nature of our role, it’s appropriate to assess costs to the project proponent for our services. 

This approach has been adopted by the Federal Government for 

other projects, such as the first model reimbursement authority 

used by the Department of the Interior when the Trans-Alaska 

Pipelines right-of-way grant was renewed just 4 years ago. 

The reimbursement will reduce the cost of constructing this important energy link to the Federal taxpayer. 

The Office of the Federal Coordinator is open for business and 

excited about the prospect for the future of a natural gas pipeline 

to deliver clean natural gas to North American markets. We plan 

to have an important role in ensuring a timely, safe, and environ-
4

mentally friendly project gets built in an efficient and effective 

manner. 

I appreciate the committee’s interest in streamlining the agency’s 

operations and look forward to working with you on the technical 

changes to the bill that we have brought forward. Thank you very 

much for your time today, and I’d be happy to answer any questions. 

[The prepared statement of Ms. Pearce follows:]

PREPARED STATEMENT OF DRUE PEARCE, FEDERAL COORDINATOR, OFFICE OF THE

FEDERAL COORDINATOR FOR ALASKA NATURAL GAS TRANSPORTATION PROJECTS

Thank you Mr. Chairman and Committee Members for this opportunity to speak 

before the Subcommittee. The Legislation before the Committee has not gone 

through the Administration’s formal interagency policy review process, and therefore I will be presenting the Administration’s preliminary views on the bill. However, there are several aspects of the bill that will need technical correction or modification to conform to policies that apply more generally elsewhere in the government and we look forward to working with Committee to address those concerns. 

For over thirty years there have been sustained efforts to bring Alaska natural 

gas to the marketplace both in Alaska and the 48 contiguous states. This effort is 

more important than ever to help assure adequate natural gas supplies for the 

United States as the country develops a comprehensive energy solution to take this 

great country through the century. Technology and conservation will be an ever important part of managing our energy needs. However, in the interim, certainty of 

supply is critical. Marketizing the vast Alaskan North Slope natural gas resources 

is an important step in assuring energy demand is met. 

Recently, the State of Alaska has taken an important step in helping to secure 

a pipeline to transport natural gas to the American people. The State legislature 

enacted Governor Palin’s legislation, the Alaska Gasline Inducement Act (AGIA), 

providing inducements, including financial contributions, for construction of the 

pipeline. This is an important complement to the inducements provided by the 

United States in ANGPA and previously in the Alaska Natural Gas Transportation 

Act of 1976 (ANGTA). 

Despite the fact that efforts have been underway for thirty years to encourage private sector construction of a pipeline project from Alaska through Canada into 

upper Midwestern markets, timely permitting still remains critical to the success 

of any project of this magnitude. Estimates now place the cost of one potential 

project, a nearly 3,000 mile pipeline, at $30 Billion. Regulatory delays or excessive 

litigation can spell certain doom in the effort to bring this vast natural gas reserve 

to domestic markets. First gas will not even be shipped until ten years at the earliest after the initial private investment. Congress recognized these concerns and 

took several steps to facilitate the permitting process including expedited and 

streamlined judicial review in the United States Circuit Court of Appeals for the 

District of Columbia, required timelines for FERC’s issuance of the certificate of 

public convenience and establishment of the Office of the Federal Coordinator. 

The Office of the Federal Coordinator has a variety of responsibilities, including 

coordination of federal participation with the expectation that the federal regulatory 

process will be streamlined and delay eliminated and, in coordination with the state 

of Alaska, responsibility for monitoring and oversight of construction. The OFC also 

is vested with authority for implementation of ANGTA authorities, for which a right 

of way has been issued and is subject to renewal/expiration in 2010. Other federal 

agencies also have roles. It is anticipated that no fewer than 18 federal agencies will 

participate in the decision process. For instance, the Department of Energy is responsible for federal loan guarantee implementation and the Federal Energy Regulatory Commission is responsible for pipeline (National Environmental Protection 

Act (NEPA) compliance and issuance of the certificate of public convenience. 

The OFC currently is a small office permanently staffed only by the Federal Coordinator. The Federal Coordinator has supplemented OFC staff resources by personnel details from the Department of the Interior. The OFC plans to remain a 

small office, with as few as five or six professionals pending selection of a project 

by the state of Alaska. The composition of the team necessary for proper functioning 

of the OFC is highly dependent on the nature of the project selected by the state 

of Alaska. Upon project selection, it is crucial that the OFC be able to quickly hire 

personnel from the limited pool of individuals with the qualifications necessary to 
5

efficiently carry out the functions of the OFC. OFC staff will be concentrated in 

Washington D.C. and Alaska. 

PERSONNEL AUTHORITIES

This amendment provides the OFC authority to appoint and terminate personnel 

without regard to the provisions of Title 5 of the United States Code governing appointments in the competitive service. The OFC is a temporary agency which sunsets one year after construction of a project. The staffing levels and employee skill 

sets will vary depending upon the project phases. For instance, the skill sets needed 

during the permitting phase differ substantially from those necessary during the 

construction phase. The office will maintain staffing at a core level pending identification of a specific project for construction by the state of Alaska. Not until a 

project is identified will it be prudent to more fully staff the OFC. Project staff for 

a pipeline only project may be very different from a project composed of a pipeline 

and liquefaction facilities. In addition, there is a limited field of qualified applicants 

available to assist the OFC given the specialized nature of the potential projects and 

the OFC role. These limitations combined with the need for timely efforts by the 

OFC make it useful to be able to hire and terminate certain staff outside the regular 

federal hiring process in order to remain responsive to project demands. The bill 

would address those concerns with a blanket exemption from standard personnel 

hiring procedures that apply to most other Federal agencies. While this type of exemption would be advantageous for hiring of certain highly-qualified staff, and is 

sometimes granted to agencies to fill positions with special skills, it is rare for an 

exemption to extend to an entire organization. 

This authority is sometimes used for small agencies, especially those with limited 

roles or fixed life spans. For instance, other agencies with this authority include the 

Denali Commission and the Vietnam Memorial Commission. 

This amendment also gives the OFC authority to obtain the temporary or intermittent services of experts or consultants pursuant to already existing authority 

contained in 5 U.S.C. § 3109(b). This authority allows for the hire of necessary staff 

resources on a temporary or intermittent basis to deal with short term staffing, particularly with regard to technical matters and short term needs. It is anticipated 

that a variety of technical and professional services will be required on a temporary 

or intermittent basis given the specialized nature of the project to be constructed 

and the OFC functions. 

Personnel hired pursuant to this authority may be compensated at a rate not to 

exceed the maximum rate of basic pay authorized for senior-level positions under 

5 U.S.C. § 5376. 

COST REIMBURSEMENT AUTHORITIES

Given the regulatory coordination, monitoring and oversight role of the OFC, it 

is appropriate to assess costs to the project proponent for these services. This same 

approach has been adopted by the federal government for other projects, such as 

with the Federal Land Policy and Management Act of 1976 (FLPMA, 43 U.S.C. 

§ 1734). Cost reimbursement authority would provide supplemental funds to offset 

the cost to the federal government of the OFC and reduce costs to the federal taxpayer. 

We understand that the intention of the amendment is to grant the OFC discretion to establish or change reasonable filing and service fees, charges and commissions and to allow the OFC to require deposits of payments and provide refunds in 

the same manner as currently is authorized for the Secretary of the Interior under 

FLPMA. 

We have concerns, however, that the language as drafted would not provide such 

parallel authority to the OFC but would, in fact, result in stripping the similar authority granted to the Secretary of the Interior in FLPMA. We have developed 

amended language that will address this issue and will provide it to the Committee. 

Because we do not want to disrupt the Department of the Interior’s land management program under FLPMA, this issue must be addressed. 

CLOSING

This concludes my remarks on the proposed amendments to ANGPA. To summarize, the Administration has not completed its full review of the bill and looks forward to further discussions with you and your staff. The preceding comments represent the Administration’s preliminary views on the bill. The Office of the Federal 

Coordinator is open for business and is excited about the prospects for the future 

of a natural gas pipeline to deliver clean natural gas to domestic markets from Alaska reserves. The Alaska state legislature has taken a big step in assisting by pas-
6

sage of Governor Palin’s Alaska Gasline Inducement Act. We anticipate that the 

Governor will select a project in early 2008. The Office of the Federal Coordinator 

will play an important role in assuring a timely, safe and environmentally friendly 

project. Thank you for your interest in this project so important to our Nation’s energy infrastructure.

Senator TESTER. I think what we’ll do is hold off on questions 

until after Mr. Hill makes his presentation. I’d like to welcome 

Senator Thomas to the committee. 

Mr. Hill. 

STATEMENT OF DAVID HILL, GENERAL COUNSEL, 

DEPARTMENT OF ENERGY 

Mr. HILL. Mr. Chairman, Senator Murkowski, members of the 

committee, thank you for inviting me to testify today. My name is 

David Hill, and I am the General Counsel of the United States Department of Energy. I am pleased to be able to present comments 

on five bills before the committee today and ask that my full written statement be included in the record. I will only briefly summarize that statement here. 

First, as to S. 645, we support this bill. It will ensure that lowsulfur coals are fully able to participate in the Clean Coal Power 

Initiative. We believe that the change in this bill is in the best interests of this Nation’s energy policy. 

Second, as to S. 838, we do not support that bill as currently 

written. The department agrees that it is important for us to cooperate with Israel on energy security and energy supply matters, 

and that doing so will advance the energy security of both nations. 

However, we believe that existing bilateral arrangements already 

work well. We also believe that any bilateral work should not be 

solely funded by the United States Government, and that the 

amount of funding authorized by this bill should not be taken from 

other important work of DOE’s Office of Energy Efficiency and Renewable Energy. 

Third, as to S. 1203, that bill would authorize an additional assistant secretary position at the Department of Energy. DOE currently is authorized to have seven assistant secretaries and we believe that number is sufficient; however, the department does not 

oppose increasing the authorized number of assistant secretaries at 

the Department of Energy if Congress sees fit to do so. 

Fourth, H.R. 85 would amend section 917 of the Energy Policy 

Act of 2005, which established advanced energy efficiency technology transfer centers. The Department recently issued a funding 

opportunity announcement under section 917, and applications 

under that announcement are due on July 3, 2007. 

We believe that H.R. 85 is unnecessary because section 917 of 

the 2005 Energy Policy Act already allows extension services to 

participate and the center is authorized by that section. 

We also are already engaged in a number of activities, such as 

work with a number of industrial assessment centers that coordinate the demonstration and application of advanced energy methods and technologies. 

Finally, H.R. 1126 would reauthorize and modify the Steel and 

Aluminum Energy Conservation and Technology Competitiveness 

Act of 1988. We generally support the change in direction of the 
7

Act to focus on technologies that would renounce greenhouse gas 

emissions. 

However, the bill maintains an industry-specific focus that we 

believe is not the best way to advance industrial energy efficiency. 

Instead, DOE is focusing its efforts on process energy efficiency improvements that can bring crosscutting benefits across various industries, including steel and aluminum, among other industries. 

Thank you, Mr. Chairman. At this time, I would be glad to answer any questions the committee may have. 

[The prepared statement of Mr. Hill follows:]

PREPARED STATEMENT OF DAVID R. HILL, GENERAL COUNSEL, DEPARTMENT

OF ENERGY

Chairman Dorgan, Senator Murkowski, and members of the Committee, my name 

is David Hill, and I am the General Counsel of the U.S. Department of Energy (Department or DOE). I want to thank you for the opportunity to appear today and 

offer preliminary comments on five energy-related bills that Congress is considering. 

The bills before the Committee today each make valuable contributions to our national discussion on energy security, but in some cases could benefit from further 

review, discussion and modification. The Department looks forward to working with 

the Committee to resolve these issues. I would like to discuss elements of each bill, 

as well as present some of the DOE activities that are already underway in the 

areas addressed by the bills. 

S. 645

S. 645 modifies the technical criteria in the Energy Policy Act of 2005 for the 

Clean Coal Power Initiative. The Department supports the proposed change because 

it would reduce a bias in the current requirement that favors a particular coal type, 

while still maintaining a stringent sulfur dioxide emission standard for the R&D 

program. The practical effect of the change will be to allow slightly less strict SO2

requirements for power plants burning low sulfur coals. Nevertheless, even with the 

proposed change, the SO2 emission requirement for these lower sulfur coal-fueled 

power plants would remain as stringent, or more stringent, than the allowable emissions rate for higher sulfur coals. 

S. 838

S. 838 addresses U.S.-Israeli cooperation on research, development, and commercialization of alternate energy, improved energy efficiency and renewable sources. 

The Department has serious concerns with this legislation as drafted. While cooperation with Israel to encourage cooperation on alternative and renewable energy 

sources could be beneficial, we believe that the bill should stress the need for true 

bilateral cooperative and interactive research, rather than research funded solely by 

the U.S. Government. In that regard, the Department already collaborates on a 

number of issues, and DOE has an umbrella agreement with the Israeli Ministry 

of National Infrastructures. We believe that existing bilateral arrangements serve 

both countries well, and we oppose the creation of additional burdensome organizational requirements, such as S. 838’s Section 4 International Energy Advisory Board 

provisions. 

An Israeli initiative centered on energy security, environmental stewardship, and 

global climate change, similar to the President’s Advanced Energy Initiative, would 

benefit Israel by helping ensure adequate and reliable supplies of energy for that 

country. The Department could assist Israel in developing that plan and in fact, 

DOE’s Office of Energy Efficiency and Renewable Energy (EERE) already has engaged in initial discussions with our Israeli counterparts on these issues. 

Finally, S. 838 could have a significant adverse financial impact on EERE’s budget. The bill would authorize $20 million annually for seven years for the projects 

authorized by this bill. We do not support taking this amount of funding away from 

other important EERE programs. In comparison, EERE’s budget for the Asia Pacific 

Partnership, which encompasses six countries, including India and China, the two 

fastest growing economies and largest emitters of carbon, has a total annual budget 

of $7.5 million. Allocating $20 million out of currently authorized funding for a single country would shift scarce resources away from the Department’s efforts to develop and commercialize advanced technologies that lessen our dependence on oil 
8

and provide for energy security. The goals of S. 838, as well as efforts to assist 

Israel in developing its own national energy action plan, can be achieved with substantially less funding. 

I do note that the bill authorizes DOE to accept contributions from private sources 

to carry out that Act. This could mitigate the need for appropriations to carry out 

this Act although some modifications would be necessary to make the bill workable. 

Again, I stress that the Department values its current collaboration with Israel, 

and seeks to build upon this already productive relationship. We believe, however, 

that the time for action is now, for both the United States and Israel. Putting action 

plans into place that are focused on alternative sources of energy is a goal that our 

nations can and must share, and we would urge the Committee to adopt legislation 

that supports that goal. 

S. 1203

S. 1203 expands the authorized number of Assistant Secretaries at the Department of Energy from seven to eight. The Department believes it already has a sufficient number of authorized assistant secretaries, but we do not oppose Congress increasing the number if it sees fit to do so. S. 1203 also would preserve the President’s and Secretary of Energy’s discretion to determine whether to appoint individuals to fill all of the authorized assistant secretary positions, to determine how best 

to manage the Department’s mission, and to determine the portfolios for the assistant secretaries and other Departmental officials. At this time, the President and the 

Secretary have made no decision whether an individual would be nominated for the 

additional assistant secretary position should it be authorized, or what the responsibilities of any such official would be. 

H.R. 85

Turning to H.R. 85, this bill targets the demonstration and commercial application of advanced energy methods and technologies, a goal that effectively summarizes what we as a Nation must do to successfully move innovative products and 

processes from the laboratory into everyday use. This bill amends Section 917 of the 

Energy Policy Act of 2005 (EPACT), which established ‘‘Advanced Energy Efficiency 

Technology Transfer Centers.’’ EERE recently announced a solicitation under Section 917. It is our belief that extension services, which are added here, already can 

participate in the Centers. In addition, there are some technical issues which require further review and discussion, and we look forward to working with the Committee to resolve these minor concerns. 

The Department also is addressing the challenge of successful technology transfer 

by, among other things, supporting a robust and widespread regional and local outreach effort to ensure the adoption and commercial application of industrial and 

building energy system technologies and practices. For example, in coordination 

with the Department’s Golden Field Office, we are instituting a new method of 

project management, called Stage Gating that incorporates the demonstration of 

technologies in the last stage of Federal development as part of deployment/technology transfer for commercialization. Through our Industrial Technologies Program, EERE works through Congressionally established Industrial Assessment Centers to provide energy evaluations and to help deploy advanced energy methods and 

technologies to small- and medium-sized companies. Recently we have broadened 

this effort by establishing a Memorandum of Understanding (MOU) with the Manufacturing Extension Partnership (MEP) program of the Department of Commerce’s 

National Institute of Science and Technology (NIST). The MEP program consists of 

59 main centers across the Nation, and will significantly increase our ability to deploy advanced energy methods and technologies to thousands of manufacturing facilities and buildings. 

EERE is currently establishing working relationships with the various types of 

centers I have mentioned to coordinate the demonstration and application of advanced energy methods and technologies. Key to this coordinated effort will be the 

integration of deployment activities with EERE’s state partnerships. Any kind of regionally focused efforts would need state involvement to leverage state-sponsored 

energy programs. 

Thus, given the activity level already underway with a broad range of centers, it 

would not seem that the establishment of the additional centers would be needed. 

There is much to work with to advance our technology transfer goals, and our focus 

at the Department is on the successful support, use, and coordination of our tools 

at hand. 
9

H.R. 1126

H.R. 1126 would reauthorize and modify the Steel and Aluminum Energy Conservation and Technology Competitiveness Act of 1988. The Department generally 

supports the change in direction to develop technologies which reduce greenhouse 

gas emissions. However, while the bill does reauthorize provisions to encourage energy efficiency in these important industries, it also maintains an industry-specific 

focus that the Department believes is not the best way to advance industrial energy 

efficiency as a whole. DOE has restructured its Industrial Technologies Program to 

focus on process energy efficiency improvements that will bring more cross-cutting 

benefits and with wider application to a broader spectrum of manufacturing industries, including steel and aluminum. 

Another concern is the reauthorization of recoupment schemes. Although well-intentioned and attractive on the surface, they can ultimately serve as a disincentive 

to industry, and have been difficult to execute in practice. Although the Department 

supports continued research and development that will contribute to reducing energy costs for these industries, the Department also wants to pursue initiatives that 

address newer, high energy growth industries and next generation manufacturing 

technologies. 

Again, thank you for the opportunity to present the Department of Energy’s comments on these bills. The Department looks forward to working with the Committee 

on these bills, and on the many other important energy matters facing our Nation. 

This concludes my prepared remarks. I would be happy to answer any questions the 

Committee may have.

Senator TESTER. Well, I appreciate both of your comments. Senator Murkowski, I’ll let you lead off with questions. 

Senator MURKOWSKI. Thank you. Ms. Pearce, the first question 

I think really is the obvious question. I know the answer, but I 

think for the record it is important that I ask and allow you to 

state clearly for the record why we need the Office of Pipeline Coordinator at this point in time. 

As I mentioned in my comments, right now the State has not approved the pipeline builder. That builder—either the gas producers 

or an independent pipeline company—until they can show the ability to finance the cost of this project, we don’t have anything actually underway. 

So can you tell the committee some of the work that needs to be 

done at this point in time, at the Federal level, to be ready for the 

oversight of this enormous project? 

Ms. PEARCE. Yes. Senator and Mr. Chairman, there are probably 

two primary areas that I’ll discuss here very briefly. 

The first is a gap analysis that needs to be done at the Federal 

level, including an analysis of whether or not all of the agreements 

are in place in the Federal agency to move expeditiously when 

FERC has an application before it, because Congress gave FERC 

a finite amount of time—18 months—to complete an EIS on an 

enormous project. 

We can’t wait until that application comes in the door before we 

ensure that the agencies are ready to move forward in a cooperative manner. 

Perhaps more importantly, though, we have the responsibility to 

directly oversee the cooperative efforts with the State of Alaska 

and work closely with the newly created pipeline coordinator at the 

State level to set up probably associate offices and work together 

on the permitting. 

The right-of-way, of course, was in the United States, across both 

State and Federal lands in somewhat of a patchwork method. So 

we’ll be working directly with the Alaskans in doing that gap analysis. 
10

Minister Prentice and I will be talking further tomorrow about 

setting up some immediate organizations and applicable relationships where they don’t yet exist between the appropriate Canadian 

agencies, at both the Federal and provincial level, and State and 

Federal agencies. Obviously, we don’t want a pipeline to come to 

the border between Alaska and Canada and suddenly change the 

stipulations and the rules for the pipelines. A lot of coordination is 

going to happen. We are already embarking upon that gap analysis. 

In addition to that, we’ve already begun working with the State 

of Alaska, which has questions for our Federal agencies about some 

of the specifics of the Federal legislation that Congress passed in 

doing the enabling legislation. 

As they move through drafting the RFP, which they plan to have 

on the streets on July 1, they will be working with the Department 

of Energy, the Department of the Treasury, with us, and with 

FERC on specifics of things like probably most importantly, the 

loan guaranty. 

The State of Alaska’s RFP and how it is worded can have an effect on the eventual cost to Federal taxpayers of the loan guaranty. 

So we need to begin coordinating those efforts today and not wait 

for an application to come in the door. We are already embarked 

upon doing those things. 

Senator MURKOWSKI. Well, I appreciate that and recognize that 

with the extent of this project, we don’t start at the last moment 

and assume that we’re going to be on top of things. 

I need you to project into the crystal ball just for a moment, 

based on the work that has been done to this point in time, if everything goes perfectly, how quickly could we see gas flowing to the 

United States? 

Ms. PEARCE. The most optimistic estimate—and this is based on 

producers’ estimates of the amounts of time that they would need 

if they’re the eventual licensee for a pre-application process—the 

most optimistic first gas in the pipe would be 2017. 

I think more realistically we’re looking at 2018 as optimistic. 

Senator MURKOWSKI. The sooner the better. 

Ms. PEARCE. The sooner the better. 

Senator MURKOWSKI. Mr. Hill, I have just one quick question for 

you, if I may, and this is as it relates to H.R. 1126. I understand 

that in the original Steel and Aluminum Conservation and Technology Competitive Act, the industry participants were granted an 

intellectual property special exemption that favored industry participants over university research partners in retaining the intellectual property. 

If this bill is enacted, would the special exemption finding still 

apply, and does the department plan to review whether this special 

exemption is still warranted? 

Mr. HILL. I have to admit, Senator, I don’t know whether or not 

that particular finding would still apply to the reauthorization. I’d 

be glad to get back to you on that. 

Senator MURKOWSKI. Could you do that? 

Mr. HILL. I will do that. 

Senator MURKOWSKI. I appreciate that. Thank you. Thank you, 

Mr. Chairman. 
11

[The information follows:]

To implement the Steel and Aluminum Energy Conservation and Technology 

Competitiveness Act of 1988, the Department of Energy (DOE) required title to new 

inventions made by universities and DOE National Laboratories performing the research under each project under the program to be transferred to a holding company. The holding company was then required to provide royalty-free licenses to 

such new inventions to the industrial participants in each project. The industrial 

participants in each project were required to provide at least 20% direct cost sharing 

in the project and were obligated to repay the Government one and a half times the 

Federal expenditure in the project from the net proceeds from commercialization of 

the technologies developed in the project. If H.R. 1126 is enacted, the special exemption would no longer apply; however, DOE would undertake a new review to determine whether such a special intellectual property requirements are appropriate for 

the new program. The new review would involve consultation with industry, the 

university community, and the National Laboratories.

STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR

FROM WYOMING 

Senator THOMAS. Thank you, Mr. Chairman. Sorry I was late. I 

appreciate your having this hearing. I wanted to comment just a 

little bit on the amendment that I have here. As you know, we introduced this with ten original cosponsors, Chairman Bingaman 

and Ranking Member Domenici, and two more Senators have 

signed on since. 

The remedy is a sulfur removal disadvantage of Western coal, 

contained in the Energy Policy Act of 2005. The administration and 

DOD both support the idea. The Clean Cool Power Initiative, CCPI, 

authorizes in section 404 of the Energy Policy an alternative sulfur 

dioxide removal measurement for certain coal classification 

projects. 

It instructs the Secretary to establish milestones to be able to remove at least 99 percent of the sulfur dioxide. I’m simply saying 

this is there because low-sulfur coal in the West has such a smaller 

amount of sulfur, that to take 99 percent out of 5 percent is almost 

impossible. 

So this alternative criteria sets up a different alternative, but it 

will achieve an emissions standard that’s no less—and in some 

cases greater—than that which achieved with the 99 standard 

using the coals. This alternative is also consistent with the Internal 

Revenue Code. I think it’s something that we could do and hurry 

along our development of energy. So Mr. Hill, I have introduced 

that this would alter the 220 coals to eliminate the disadvantage 

that occurs. Are there a number of other goals in this CCPI program? 

Mr. HILL. Thank you, Senator Thomas. Yes. That provision of the 

Energy Policy Act of 2005 also establishes requirements, both for 

coal gasification facilities and for non-gasification facilities in terms 

of NOX removal, mercury removal, and efficiency goals. Those are 

different, depending on whether or not it’s a gasification project or 

some other kind of a coal——

Senator THOMAS. How is this program moving along? 

Mr. HILL. It’s actually moving along well. There are currently 

nine active projects, CCPI projects, that are out there. Three of 

those are operating, five are planned, and one is currently being 

negotiated. I anticipate that there will be another solicitation of another CCPI. 
12

Senator THOMAS. Where are those located? 

Mr. HILL. They’re in a number of States, and I can run down the 

list if you’d like me to. The Great River Energy Project is in Underwood, North Dakota. The NewCo Project is in Baldwin, Illinois. 

The University of Kentucky Project is in Ghent, Kentucky. The 

Western Greenbrier Project is in Rainelle, West Virginia. The 

Toxicon Project is in Marquette, Michigan. The WMPI Project is in 

Gilberton, Pennsylvania. Those are all first-round CCPI projects. 

Senator THOMAS. Good. 

Mr. HILL. Then the second-round CCPI projects—the Mesaba 

Project is in Minnesota, the Pegasus Project is in Jewett, Texas, 

and the Southern Company Project will be in Orlando, Florida. 

Senator THOMAS. I see. Thank you. Well, I appreciate your support and I hope that this would encourage more of the CCPI 

projects in the West where the coal is very abundant. So thank 

you, sir. 

Mr. HILL. Thank you, sir. 

Senator SMITH. Thank you, Mr. Chairman. Mr. Hill, thank you 

for being here, and Ms. Pearce. Dave, does the Department provide 

funding for existing bilateral agreements with Israel now? 

Mr. HILL. Our Office of Policy and International Affairs currently 

works with—as well as our Office of Energy Efficiency and Renewable Energy—is currently working with Israel on a number of different projects. 

I don’t know that there are specific research, bilateral research, 

projects with Israel, but my understanding is that there are individuals from both of those offices that are working with individuals 

from Israel. 

Senator SMITH. Do you think that Israel can offer assistance to 

us on renewable energy issues? 

Mr. HILL. I think we benefit when we’re working with other 

countries on matters of energy security, whether it’s renewable energy projects, alternative energy, or things concerning energy security in general. 

So I think we do. The United States always can gain when we 

are working, either on a bilateral or a multilateral basis, with 

other countries. 

Senator SMITH. I take it your objection to S. 838 is just simply 

the level of funding. What level of funding do you think is necessary? 

Mr. HILL. There are a couple of parts about it that we’re concerned about, Senator Smith. One is research projects that are focused on a particular country. We think that while working on a 

bilateral basis can be useful, that research projects oftentimes—

like with the Asia Pacific work that we’re doing—should be focused 

on a number of different countries if we can. 

I don’t have a specific number in mind that I think would be useful if the Department or if the Congress decided to enact this bill 

into law, but we’d be glad to continue to work with your staff on 

that matter. 

Senator SMITH. What are your thoughts on: we don’t want to 

spend any more than this rate, but we do want to do what’s appropriate? It’s an ally, and obviously they’re in an area of the world 

that has a lot of energy. 
13

They don’t, and they’re looking for alternatives, and perhaps we 

can get something out of it. But I think we need to be involved in 

it. 

Mr. HILL. They are a very important ally; you’re right, Senator 

Smith. We are currently working with them on a number of matters and, of course, would welcome the opportunity to continue the 

opportunity to continue with Israel. 

Senator SMITH. Great. Thank you. 

Senator THOMAS. Mr. Hill, kind of following along those lines, 

we’ll start out with what would you recommend we do if we want 

to encourage a partnership with Israel in energy fields, whether it’s 

in business or research or academia? I think Senator Smith had 

some good points. So what do we do, if not this bill? 

Mr. HILL. We currently do have arrangements in place where we 

can work with Israel, as well as with other countries. I do think 

that there are opportunities to expand our working relationship 

with Israel, even under existing frameworks. 

I also think that in terms of working with Israel, one of the 

things that we already are currently working with, with that nation, are efforts that really focus on their ability, that are focused 

on advancing that nation’s energy security. 

I think whether or not any of those require additional legislative 

authorization—I’m not so sure they do—but we’d obviously be glad 

to discuss that further with the committee. 

Senator THOMAS. Okay. With S. 645, it talks about relating sulfur dioxide emissions to Btus. It sounds like a good idea to me. 

Does this mean you’d be using that as a standard then, and not 

having two standards? 

Mr. HILL. Well, the way the bill is currently drafted, it allows the 

standard either to be based on the percentage removal or on the 

emissions in pounds of SO2 per million Btus. So it could be either 

of those. 

Again, depending on the sulfur content of the coal itself, the actual emission rate will be higher or lower depending on which of 

those you pick and depending on what the sulfur content of the 

coal is. 

What Senator Thomas was talking about, for example, in the lignite; with a 1 percent sulfur content, a 99 percent removal rate actually takes you down to below .03, and it’s actually about a 0.029 

emission rate. Yet, a 99 percent with a 5 percent sulfur content cumulous coal is actually at 0.08. 

We think this amendment is a good thing because it would allow 

different coals of different sulfur contents to participate in the program. 

Senator THOMAS. So you don’t anticipate simplification by going 

with just one standard; you anticipate running double standards on 

this, depending on what you’re dealing with or where you’re dealing with it. 

Mr. HILL. Yes, sir. 

Senator THOMAS. That’s fine. With H.R. 1126, it looks as if about 

2000, with the Industries of the Future, the $65 million projected 

with the $9.2 million for 2008, is—I mean, it looks like you’re trying to phase out the program. Is that accurate? 

Mr. HILL. This is on H.R. 1126? 
14

Senator THOMAS. Yes, The information I have is that it’s Industry of the Future, the funding for this program is going from $65 

million in 2000 to a proposed $9.2 million in 2008. For the Steel 

and Aluminum Programs, $21.8 million in 2000, Fiscal Year 2000 

and 2008 is proposed to be about $3.3 million. 

I’m just curious; isn’t it a time where conservation tends to be 

the low-hanging fruit here? I’m just wondering what the thought 

process was on it. 

Mr. HILL. The department really has focused its energy efficiency 

efforts and their transfer efforts on crosscutting through various industries. We currently have the solicitation out under section 917. 

Again, the purpose of that is to promote technology transfer and to 

get energy efficiency technologies and conservation into the marketplace. 

Our efforts in terms of research, as well, are really focused on 

trying to—at crosscutting, not just with a specific industry focus on 

steel or aluminum or things like that in H.R. 1126, but more crosscutting. 

Senator TESTER. So if I heard you right, you’re saying the dollars 

are available in other programs? Is that what you said? 

Mr. HILL. Well, our efforts in terms of the——

Senator TESTER. It’s okay if you say no, because it just tells us 

where we’re at. 

Mr. HILL. Well, I don’t——

Senator TESTER. Here’s the issue I have. It’s the U.S. competitiveness. I mean, energy is a huge factor when you talk about competitiveness in the world marketplace, and I’m just wondering if 

you think that’s the right direction to go? It may be the right direction to go. I just find it curious in this point in time, where conservation efforts are the easiest thing to do. 

Mr. HILL. We certainly think conservation efforts are very important. We think that the H.R. 1126 which focuses on the steel or 

aluminum industries—we think rather than focusing an authorization that is focused on those specific industries, that the program 

and our efforts are better focused on technologies that can have a 

broad crosscutting effect over various industries. 

Senator TESTER. Okay, thank you. Further questions, anybody? 

Senator Murkowski. 

Senator MURKOWSKI. Just one, very quickly, and this is to follow 

up on S. 838, that Senator Smith spoke to. As I understand, the 

United States and Israel have had some very longstanding cooperative collaborative relationships in research through the Binational 

Industrial Research and Development Foundation, the Binational 

Science Foundation, yet you’ve indicated that at least from the Department of Energy’s perspective, your preference is not to direct 

to one country but rather look to regions. 

Is this a perspective that is unique to the Department of Energy? 

Mr. HILL. No. Thank you for the question, Senator. We certainly 

do have a number of agreements with different nations where we 

are working bilaterally with them on various areas. All I meant to 

say was in terms of authorizing particular amounts of research 

money to particular nations, we don’t really view that as being necessary. 
15

That, rather, we have existing both bilateral and multilateral 

agreements with a number of different countries, some of which resulting in specific bilateral work with one country, others of which 

result in multilateral work. 

We’d prefer the ability to still work on that basis, just case-bycase, as it presents itself. 

Senator MURKOWSKI. If the funding were there from Israel’s perspective, or perhaps from the private sector, would the objection 

still remain the same? 

Mr. HILL. That does mitigate one of our concerns, and I do note 

that the bill itself allows for private contributions to be supplied to 

pay for some of the costs of that program. I do think there would 

need to be some technical changes to the bill in order to make 

those funds available and to actually offset the cost of the program. 

So again, we’d be glad to work with the committee. 

Senator MURKOWSKI. Thank you. Thank you, Mr. Chairman. 

Senator TESTER. Senator Thomas, any further questions? Senator 

Smith? Senator Salazar? All right. Well, with that, I again want to 

thank the panelists for being here today. I really appreciate your 

time and your answers to the questions. 

Senator SALAZAR. I do have a comment, Mr. Chairman. 

Senator TESTER. Yes, Senator Salazar? 

Senator SALAZAR. You know, it’s remarkable that the Senator 

from Montana so quickly ascended to the chairmanship of the committee. Congratulations. I was Number 101 for the last year, so I’m 

glad to see that the new 100 ascended so quickly. 

Senator TESTER. No comment. This hearing is adjourned. 

[Whereupon, at 3:08 p.m., the hearing was adjourned.]

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