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[Senate Hearing 114-334]
[From the U.S. Government Publishing Office]

                                                       S. Hrg. 114-334

    HOW SMALL BUSINESSES ARE SUPPORTING AMERICA'S ENERGY RENAISSANCE

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

                             FIELD HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                          AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 2, 2015

                               __________

    Printed for the Committee on Small Business and Entrepreneurship
    
    
 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

         Available via the World Wide Web: http://www.fdsys.gov
         
         
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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                    ONE HUNDRED FOURTEENTH CONGRESS

                              ----------                              
                   DAVID VITTER, Louisiana, Chairman
              BENJAMIN L. CARDIN, Maryland, Ranking Member
JAMES E. RISCH, Idaho                MARIA CANTWELL, Washington
MARCO RUBIO, Florida                 JEANNE SHAHEEN, New Hampshire
RAND PAUL, Kentucky                  HEIDI HEITKAMP, North Dakota
TIM SCOTT, South Carolina            EDWARD J. MARKEY, Massachusetts
DEB FISCHER, Nebraska                CORY A. BOOKER, New Jersey
CORY GARDNER, Colorado               CHRISTOPHER A. COONS, Delaware
JONI ERNST, Iowa                     MAZIE K. HIRONO, Hawaii
KELLY AYOTTE, New Hampshire          GARY C. PETERS, Michigan
MICHAEL B. ENZI, Wyoming
                  Zak Baig, Republican Staff Director
                 Ann Jacobs, Democratic Staff Director
                            
                            
                            
                            
                            
                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Vitter, Hon. David, Chairman, and a U.S. Senator from Louisiana..     1

                               Witnesses

Joey Jarreau, Owner, Southside Machine Works, Lake Charles, LA...    10
Bryan Galley, Owner, Bryan Galley Builders, Inc., Lake Charles, 
  LA.............................................................    14
Neil Aspinwall, Chancellor, SOWELA Technical College, Lake 
  Charles, LA....................................................    20
Patricia Outtrim, Vice President, Governmental and Regulatory 
  Affairs, Cheniere Energy, Inc., Houston, TX....................    24

          Alphabetical Listing and Appendix Material Submitted

Aspinwall, Neil
    Testimony....................................................    20
    Prepared statement...........................................    22
Galley, Bryan
    Testimony....................................................    14
    Prepared statement...........................................    17
Jarreau, Joey
    Testimony....................................................    10
    Prepared statement...........................................    12
Outtrim, Patricia
    Testimony....................................................    24
    Prepared statement...........................................    27
Vitter, Hon. David
    Opening statement............................................     1
    Prepared statement...........................................     4

 
    HOW SMALL BUSINESSES ARE SUPPORTING AMERICA'S ENERGY RENAISSANCE

                              ----------                              

                         MONDAY, MARCH 2, 2015

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                  Lake Charles, LA.
    The Committee met, pursuant to notice, at 12:30 p.m., in 
Police Jury Meeting Room, Calcasieu Parish Police Jury, 1015 
Pithon Street, Hon. David Vitter, Chairman of the Committee, 
presiding.
    Present: Senator Vitter.

 OPENING STATEMENT OF HON. DAVID VITTER, CHAIRMAN, AND A U.S. 
                     SENATOR FROM LOUISIANA

    Chairman Vitter. Good afternoon, everybody, and welcome. 
I'm really glad you could be here.
    I'm Senator David Vitter, Chair of the Senate Small 
Business Committee. As the new chair of that committee, one of 
the first things I wanted to do was bring the committee to 
Louisiana and bring it to the real world, not just in 
Washington. So that's what today is about, reaching out to all 
of you. Also, we have four expert witnesses from here in 
Louisiana talking about energy jobs and everything those mean 
to our economy.
    I was going to be joined here by Congressman Charles 
Boustany. Charles and I work really well together, particularly 
on this issue of energy jobs. Unfortunately, he's stuck 
traveling. He was in Salt Lake City this weekend and got backed 
up in terms of traveling back. He sends his apologies. He's not 
going to be able to make it.
    Let me explain how the program is going to work. This is a 
Small Business Committee field hearing on energy jobs. I'll 
make some opening comments about our main topic, energy jobs, 
here today. Then we'll hear from our four witnesses who are 
going to talk about how small businesses are supporting 
America's energy renaissance, particularly here in Louisiana. 
They will each testify and make comments for about 5 minutes 
each, and then we'll have an exchange with follow-up, comments, 
questions, discussion between me and all of them. So that's how 
the program will work.
    Again, thank you for being here and part of it.
    Let me start off, as I suggested, with some opening 
comments.
    As I said, this is a field hearing of the Senate Small 
Business Committee. As I took over the chairmanship of that 
committee in this Congress, the first thing I wanted to do was 
bring the committee to the real world, including Louisiana. So 
we're here to hear from all of you and also to talk about how 
small businesses are supporting America's energy renaissance.
    We're going to focus on just that. There's a lot going on 
in Southwest Louisiana in particular as a result of capital 
investments being made in the region. And we're also going to 
try to identify ways that small businesses are contributing and 
capitalizing on these developments.
    You know, throughout a really slow economic recovery since 
the Great Recession, one strong point of all of the recovery 
has been energy jobs, oil and gas jobs and related jobs. It's 
estimated that nearly 1 million Americans work directly in the 
oil and gas industry. A total of 10 million jobs are associated 
in that industry.
    And were it not for those jobs, all about American energy, 
we'd still be in a technical recession now as a nation. So if 
you back that out of the picture, we'd still be in a recession.
    Of course, here in Louisiana, we're a big player in all of 
that, and that's all to the good. It's estimated that Louisiana 
will receive roughly $80 billion in new and expanding 
development in the next few years. Our witnesses in a little 
bit will talk about some of that great economic activity. With 
that comes really good-paying jobs and opportunities 
stimulating our economy and quality of life.
    Right now, our workforce is about 2.3 million working 
adults. Over 1 million of these do not have a college degree or 
post-secondary credential. Another 600,000 don't have a high 
school diploma. So part of our challenge in taking advantage of 
this growth is getting people trained up, Louisianans trained 
up to directly participate in this economic growth.
    Beyond the workforce challenges, I'm concerned about an 
over-zealous Federal Government regulatory environment, 
particularly EPA. That's the biggest thing that could put the 
brakes on a lot of this positive activity, if EPA continues to 
overshoot the mark in terms of overly zealous regulation in 
some of their new regulations and standards that could shut 
down some of this activity.
    Fundamentally, what businesses need to thrive is a strong, 
restrained regulatory system that doesn't impede growth, and 
certainly that's what I aim to support at the Federal level 
while I'm still there.
    We have four great witnesses to talk about our topic, how 
small businesses are supporting America's energy renaissance. 
I'm going to introduce them in a few minutes when we get to 
their testimony.
    Now to our witnesses and the official Small Business 
Committee field hearing.
    We have four great witnesses who are going to talk about 
our topic today, how small businesses are supporting America's 
energy renaissance. And during the program, if possible, we're 
going to have our slides rotate. We're going to have some 
slides that are relevant to this topic rotate on the two 
screens behind me in just a minute.
    Let me introduce our four witnesses, and then they'll each 
speak in the order I've introduced them.
    First, Joey Jarreau is the owner of Southside Machine 
Works. That was established in 1978 to service local industries 
on the Gulf Coast. It specializes in industrial machinery, 
welding, coated fabrication, metalizing, and more. Right now, 
because of the energy activity in the area, Southside Machine 
Works in Lake Charles operates 24 hours a day, seven days a 
week. So, as busy as they can be.
    Next will be Bryan Galley. He's the owner of Bryan Galley 
Builders, a small building and contracting business located in 
Lake Charles. He established this business in 1995 and has 
worked to build homes for families in Southwest Louisiana ever 
since.
    Next we'll hear from Dr. Neil Aspinwall, who served as the 
Chancellor at Southwest Louisiana Technical Community College 
since 2012. During his 27 years in education, Neil has served 
in a wide variety of leadership roles, most recently as the 
Vice President of Enrollment and Student Services with the 
University System of Georgia at Waycross College. Dr. Aspinwall 
holds a Bachelor's degree in Education, a Master's and 
Specialist's degree in School Administration Supervision, and a 
Doctorate in Educational Administration.
    And fourth and finally, but certainly not least, is 
Patricia Outtrim, Vice President of Governmental and Regulatory 
Affairs at Cheniere Energy. In this role, Patricia is 
responsible for all government and regulatory affairs while 
also overseeing the environmental, health and safety groups. 
She has over 26 years' experience in project management, 
including site selection, development, hazard risk assessment, 
and code compliance. Prior to joining Cheniere, she was 
President of Project Technical Liaison Associates and assisted 
in the site development permitting expansion or reauthorization 
of seven of the LNG import terminals currently operating in the 
U.S.
    Thanks to all of you for being here today to offer your 
insight, and we'll go in the order that I introduced you all.
    [The prepared statement of Chairman Vitter follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
   STATEMENT OF JOEY JARREAU, OWNER, SOUTHSIDE MACHINE WORKS

    Mr. Jarreau. Good afternoon. My name is Joey Jarreau. On 
behalf of my business partners and our employees, I'd like to 
thank you for inviting us to speak today.
    Southside Machine Works, Inc. was established by our 
founder, Kenneth Guillory, in 1977. The company consisted of 
the owner and one other employee. The machine shop was opened 
with the idea of supporting the oil field and petrochemical 
industry in the Lake area. As the industries in the Lake area 
expanded, so did Southside Machine. In 1984, a full-service 
fabrication shop was added to our existing facility. Today our 
company, which began as a two-man show, employs 73 full-time 
workers.
    Over 50 percent of our workforce has been with us for over 
five years, with 40 percent having been employed more than 10. 
Many of our employees started with us as their first job and 
have grown into career machinists and welders. Last year alone, 
we were able to add 13 full-time positions. All of these 
employees receive an attractive salary and benefits package, 
including health insurance with 100 percent of their premiums 
paid by our company.
    One of our greatest difficulties has been trying to find 
enough of these young people interested in learning and 
developing a trade. For some time, schools have been focused 
more on college preparation instead of job skills training. We 
have started to see some signs this trend may be reversing as 
more and more college graduates seem to struggle to find work.
    Another area of concern as a small business has been the 
constant uncertainty of the tax code. In a business our size, 
it is difficult to plan asset acquisition when tax laws are 
frequently left to expire, only to be readdressed at the end of 
the calendar year. The Section 179 deduction in particular has 
been a significant benefit to our company as we have 
continually reinvested in an attempt to grow our organization. 
Our ability to plan ahead is hindered by these uncertainties.
    We are appreciative of programs like the Domestic 
Production Activities Deduction that allows some tax relief for 
manufacturing done in the United States. There are also state 
incentive programs that recognize the importance of 
manufacturing in overall economic development. While thankful 
for programs such as these, given the option, we would forego 
these special-treatment items in favor of a lower and more 
simplified tax structure for all businesses.
    We are strong believers that regulation is important to the 
safety of our facilities, the health of our environment, and 
the overall good of our society. However, government regulation 
often seems slow, constantly changing, and difficult to 
decipher. It is as if many of these regulations are generated 
in a vacuum by people that do not have to live under the 
regulations and therefore do not always have the ability to 
foresee the unintended consequences of their efforts.
    We are proud members of the Southwest Louisiana business 
community. We take great pride in the service we provide to our 
industry partners and our ability to transition within the 
marketplace. From our early days of oilfield services, to our 
work with energy-producing companies, to the latest endeavors 
into the liquefied natural gas arena, we have believed in order 
to succeed and grow our company we must evolve. As the energy 
industry continues to change, we believe it is adaptable small 
businesses like ours that will ultimately walk side by side 
with the large energy-producing companies in an effort to bring 
America to greater energy independence.
    [The prepared statement of Mr. Jarreau follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Chairman Vitter. Thank you very much, Joey.
    Next we'll hear from Bryan Galley, owner of Bryan Galley 
Builders.

 STATEMENT OF BRYAN GALLEY, OWNER, BRYAN GALLEY BUILDERS, INC.

    Mr. Galley. Good afternoon, and thank you for the 
invitation to speak on this important topic. My name is Bryan 
Galley, and I am the owner of Bryan Galley Builders, a small 
construction business specializing in residential building. I 
am a graduate of McNeese, and my company has been operating 
since 1990. I've served as a member on our local and state 
homebuilders associations and as past president of our local 
board. I am honored to have this opportunity to address the 
committee today as a small business owner, a stakeholder in our 
local housing market, and a proud lifelong resident of 
Calcasieu Parish. In the next few minutes, I hope to convey to 
you some of the challenges my and other small businesses face, 
particularly in the housing industry. I'll offer some broad 
suggestions as to how stakeholders in the community can help 
small businesses meet the challenge and propel our economy 
forward.
    While my business does not work directly with our local 
energy sector, it is tied to the regional surge in population 
and growth stemming in part from the energy sector's 
development. The size of my construction operation is 
reflective of the industry in our region, which is comprised 
mostly of small business builders. My employees and others in 
the industry are particularly sensitive to the pressures and 
opportunities brought on by the recent and expected investments 
in our region.
    The nature of the construction industry is such that the 
businesses must be flexible and adapt to the demands of the 
market as they come and go. For example, the structure of my 
business has changed since Hurricane Rita from a roughly 30-
person payroll to a group of about 10 core employees who 
coordinate our work through a variety of subcontractors. It 
seemed that shortly after we emerged from the post-storm 
rebuilding process and recovered from the housing bubble 
bursting in 2008, energy sector investments brought sharp 
demands to our industry. As is the case for so many small 
businesses in the area, my goal is to help meet these demands 
and seize the opportunity to profit from them. However, I am 
cautious and I seek to do that in a way that is sustainable in 
the long-term both for my business and for our region as a 
whole.
    As the Lake Charles area sees property values increasing, 
businesses like mine must work with smaller spaces and be more 
creative with design. Often this requires an even greater focus 
on environmental concerns such as erosion, energy efficiency, 
and other areas subject to government regulation. This allows 
us to build with an eye toward the region's vulnerability to 
storms and flood zones, etc. While this is incredibly 
important, it also drives up the costs for local builders and 
increases the need for coordination with our permitting offices 
and police juries. Higher costs, combined with time pressure to 
supply the housing in demand, makes the Lake Charles 
construction industry a challenging sector to serve well and 
profitably.
    Another major obstacle to success in my industry is the 
lack of skilled workers in the area available to complete 
construction projects. As I mentioned before, my company 
operates primarily by coordinating subcontractors, and workers 
in nearly every skill set within the construction industry--
carpentry, masonry, framing, painting, etc.--are all 
increasingly hard to come by. When you do find a crew that is 
experienced and consistent in their work product, you are 
competing with numerous other building projects for their time 
and focus. This causes hang-ups and inefficiencies in our 
construction schedules.
    Further, the high demand and low supply of trade workers in 
our industry puts pressure on subcontractors to utilize 
undocumented workforce and risk illegality to be able to meet 
the production demands of our industry. This shadow of the law 
is a reality and a burden on our local businessmen.
    I'm going to try to move forward a little quick. I'm a 
little long in this.
    While comprehensive immigration reform may not be a 
possibility in the short-term, I would like to see our 
government set up programs to address the issue in the present. 
We must respond to the reality that undocumented workers are 
both contributing to our economy and also straining our 
taxpayers' infrastructure without necessarily supporting it 
through their own payroll tax payments.
    Of course, this is only a tangential issue and a symptom of 
the larger problem, our lack of skilled workforce, as Mr. 
Aspinwall from SOWELA and Mr. Jarreau from Southside have 
discussed or will discuss. Our society has given higher status 
and praise to college graduates, but our region really has a 
pressing need for trade workers with specific blue-collar skill 
sets. We should give recognition to those skilled workers who 
have excelled in their trades and made our community's economic 
development possible. We should hold them up as examples to be 
followed.
    I would like to see our government officials and community 
leaders set up further incentives for young people to seize on 
the opportunity to make a good living in trades in our 
community.
    Real quick, because I think this is very important to the 
building sector, in addition to manpower, our local housing 
industry needs appropriate financial investment to meet the 
demands of our growing population. I am a professional 
contractor, but I have also made personal investments in 
residential developments. I can tell you it's a lengthy lag 
time from when I invest funds until we are able to reap profit 
from that investment. Small business owners with relatively 
high tax burdens are often hesitant to truly invest further. 
This could become a problem as our area's housing needs 
increase. Government officials should anticipate this need and 
prevent a deficit in housing by implementing programs that give 
incentives, whether through tax breaks or other support, for 
those who invest in the residential and commercial building 
community.
    Finally, as a small businessman and a Calcasieu resident, I 
would ask our government officials and community leaders to 
address the issue of energy sector development with an 
appropriate dose of caution and healthy skepticism. I am as 
proud and excited as everyone else to see our economy grow and 
prosper, but I also have serious concerns for the pressure this 
puts on our infrastructure. I recognize that tying our local 
economy to the oil and gas sectors ties us even more closely to 
the global markets. This makes us very vulnerable to market 
changes far outside our control.
    We have already seen this in Sasol's management decision to 
postpone certain project development in response to the recent 
plunge in oil prices. We must proceed with the goal of 
harnessing the economic opportunity of the energy sector, but 
also nourish and diversify our economy in other areas alongside 
it.
    I hope my layman's perspective is helpful today as we move 
forward with this discussion, and I welcome your questions.
    [The prepared statement of Mr. Galley follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Chairman Vitter. Thanks very much, Bryan. I appreciate it.
    Next we'll hear from Dr. Neil Aspinwall with SOWELA.

   STATEMENT OF NEIL ASPINWALL, CHANCELLOR, SOWELA TECHNICAL 
                       COMMUNITY COLLEGE

    Dr. Aspinwall. Thank you, Senator Vitter, for giving me the 
opportunity to speak. It may seem out of place for the 
chancellor of a technical community college to be testifying at 
a hearing about how small businesses are supporting America's 
energy renaissance. However, I consider SOWELA Technical 
Community College to not only be an institution of higher 
learning but also a small business enterprise. Because of $80-
plus billion in planned industrial expansions in the 
petrochemical and LNG/GTL energy sector in Southwest Louisiana, 
SOWELA has been given the opportunity and responsibility to 
provide the training programs and services needed to produce 
the workforce necessary to help construct these massive 
industrial expansions.
    According to the Louisiana Workforce Commission, the number 
of annual completers required to fill the occupations of 
highest need for the energy sector expansion in the region are 
construction crafts field, 9,360 jobs; industrial production, 
4,955 jobs; and welding, 4,810 jobs.
    Since 2012, SOWELA has begun to design, create, implement, 
and/or expand training programs requested by industry to help 
them meet the demands of the burgeoning energy sector 
expansions. Programs focusing on skill crafts such as 
pipefitting, millwright, welding, insulators, scaffolding, 
concrete forming, machining, sheet metal, electrician, lab 
analysis, and non-destructive testing have been added to the 
instructional program options at the College. Enrollment in 
high-demand programs directly related to the energy sector such 
as Process Technology and Industrial Instrumentation have 
literally doubled in enrollment in the past couple of years.
    Furthermore, due to industry demands and to place students 
into the energy workforce quicker, SOWELA had to be 
entrepreneurial and create a compressed PTech program to 
provide the opportunity for students to earn an Associate of 
Applied Science degree in just 16 weeks. The first FastTrack 
PTech class contained 18 students, two of which had Associate's 
degrees, 12 who held Bachelor's degrees, two who held Master's 
degrees, and one who had already earned a Doctorate degree. So 
as you can see, these energy sector jobs are highly sought-
after positions that have and will continue to attract 
individuals to the region for better employment opportunities.
    SOWELA is concentrating on the energy sector workforce 
needs of the regional economy. However, according to the 
``Energy Sector Jobs to 2030: A Global Analysis,'' published by 
the Institute for Sustainable Futures in 2009, the 2020 global 
energy sector is expected to employ an estimated 10.5 million 
workers. By 2030, global sector energy jobs are expected to 
grow by an additional 800,000 workers, totaling an estimated 
11.3 million employees.
    The energy sector, comprised of small, medium, and large 
businesses, will experience significant and steady demand for 
skilled workers over the next 15 years on a regional, state, 
national, and global level. Therefore SOWELA, as one of these 
small business enterprises, must be prepared with the programs, 
services, and financial resources necessary to help produce 
this massive workforce.
    However, meeting the workforce demands of the expanding 
energy sector is a very daunting task which is going to require 
strategic efforts on the part of many collaborative partners. 
SOWELA has developed training partnerships with the Plumbers 
and Steamfitters Union, the secondary school systems in the 
five-parish region, and the Associated Builders and 
Contractors. Many of the short-term training programs focusing 
on the craft skills are non-credit, which makes them 
unavailable for Federal financial aid. Since 84 percent of 
community college students work, and 60 percent work more than 
20 hours per week, our students cannot afford to quit their 
jobs and take advantage of skills training programs in which no 
financial aid is available.
    Fortunately, various private industries such as CB&I, 
Praxair, Bechtel, and Capital One have stepped forward to 
provide scholarships for students seeking entry into these 
programs. Furthermore, one of our strongest partners is the 
Regional Workforce Investment Board who helps certify our 
training programs and ensure that the programs are eligible for 
Federal, state, and local dollars. The Workforce Investment 
Boards have enabled many individuals to gain access to the 
training programs necessary to enable them to take advantage of 
the employment opportunities available in the booming energy 
sector fields of the region.
    SOWELA is one of the 13 colleges in the Louisiana Community 
and Technical College System, and a major part of the mission 
at each college is workforce development. We have a golden 
opportunity to shape the future of Louisiana and the nation as 
a whole by producing the workforce needed to ensure that 
America continues to produce the energy necessary to fuel an 
economy that will provide financial and economic stability, 
vitality, and prosperity for generations to come.
    Thank you.
    [The prepared statement of Dr. Aspinwall follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Chairman Vitter. Thank you very much, Dr. Aspinwall.
    And now we'll wrap up in terms of testimony with Pat 
Outtrim with Cheniere.

 STATEMENT OF PATRICIA OUTTRIM, VICE PRESIDENT OF GOVERNMENTAL 
         AND REGULATORY AFFAIRS, CHENIERE ENERGY, INC.

    Ms. Outtrim. Senator Vitter, thank you for the opportunity 
to make these comments today. I'd like to provide an update on 
our progress at the Sabine Pass LNG terminal under construction 
in Cameron Parish and help the committee better understand that 
our capacity to export natural gas as LNG is supporting new 
jobs and economic growth locally and in Louisiana and across 
the country.
    I will also discuss the staffing and permitting challenges 
created by these new projects.
    The Sabine Pass Liquefaction Project represents what is 
likely the largest energy infrastructure project in Louisiana 
and U.S. history. Cheniere is spending $12 billion constructing 
the first four LNG trains. Our investment will rise to $20 
billion pending regulatory approvals and a final investment 
decision for Trains 5 and 6 at the site. We began construction 
in August 2012, and at year end 2014, Trains 1 and 2 are 81 
percent complete, and Trains 3 and 4 are 54 percent complete. 
We anticipate producing LNG from Train 1 as early as late 2015, 
this year, with commercial operations beginning in 2016. 
Additional trains at the facility will start service about 
every six to nine months thereafter.
    The scale of construction on the Liquefaction Project is 
enormous. Approximately $3 billion are being invested in 
equipment and goods made here in the United States for the four 
LNG trains under construction, sourced from 54 manufacturers 
located in 17 U.S. states. Each day over 4,000 workers arrive 
at the Sabine Pass site, increasing the population of Cameron 
Parish by nearly 60 percent. We anticipate spending $2 billion 
in wages during the course of construction on those first four 
trains.
    Two local businesses that have been favorably impacted by 
the Sabine Pass expansion are Alfred Miller and Bayou 
Construction. Bayou Construction, whose ownership and employees 
are from the Johnson Bayou area, increased their workforce by 
30 percent last year, and their revenue doubled due to the 
project. Bayou Construction expects to have similar increases 
this year, with 40 personnel working at the site. Alfred Miller 
is a 67-year-old family-owned business located in Lake Charles. 
The precast panels that are made in Lake Charles are part of 
several of the buildings on site. Alfred Miller hired 
additional construction and engineering manpower to service the 
$30 million in contracts from the Sabine Pass expansion.
    A recent study by Loren C. Scott & Associates estimates 
that construction of the plant's six trains would grow U.S. 
business sales by $46 billion over eight years and would 
support an average of over 30,000 jobs nationwide through 2019. 
Business sales in the Lake Charles region will expand by over 
$7.3 billion over eight years, while an average of 6,391 jobs 
will be created for Louisiana residents through 2019. To put 
this impact in perspective, there are 14 parishes in Louisiana 
that employ fewer than 6,391 residents.
    Construction-related business activity in Sabine is 
expected to generate over $230 million in additional taxes and 
fees through 2019, nearly equal to all corporate income tax 
collections for the State of Louisiana in the 2012 fiscal year.
    We anticipate employing 560 workers to operate the six-
train Sabine Pass facility. By 2019, Sabine Pass plant 
operations would support over 2,750 new jobs in the Lake 
Charles region, representing a 3 percent jump in Lake Charles 
employment, and would grow regional business sales by nearly 
$900 million. By 2019, 7,500 new jobs would be created in the 
State of Louisiana, and nearly $2.9 billion in economic impacts 
for the state.
    The project represents one of the many examples of how the 
U.S. energy renaissance is generating new economic and 
employment opportunities across the country. Many of the new 
jobs created by the energy boom require specialized training 
for skills in the craft trades, such as welding and 
pipefitting, training that does not necessarily fit the four-
year college model. Building these skills through training our 
youth and veterans will require cooperation and outside-the-box 
thinking among industry and community stakeholders. Cheniere is 
evaluating ways to help address these challenges and prepare 
our workforce for the new job opportunities of tomorrow.
    For America to take full advantage of its growing energy 
resources, we also need regulatory certainty for the new 
infrastructure required to gather, process, and transport 
supplies to market. With respect to LNG, the U.S. has in place 
a robust regulatory process to evaluate the safety, 
environmental, and community impacts of LNG projects. The 
Department of Energy has authority to issue a license to export 
or import natural gas, and the Federal Energy Regulatory 
Commission is the lead Federal agency that coordinates all 
Federal and state agencies during the NEPA review process, as 
directed under Section 313 of the Energy Policy Act.
    The FERC review begins with a minimum six-month pre-filing 
process, and then public meetings are held, and detailed 
engineering and environmental analyses are packaged in 13 
resource reports that make up the completed application. An 
additional 12 to 30 months are required by FERC to review the 
application and to complete an environmental assessment or an 
environmental impact statement.
    There are approximately 40 permits and consultations 
required in total before FERC can provide authorization to 
commence construction. These application review times have 
trended toward the longer timeframe. FERC, in particular, is 
manpower constrained as their reviews of natural gas and power 
projects include several sectors experiencing significant 
growth, including natural gas pipelines, LNG, power 
transmission, and hydroelectric facilities.
    The NEPA analysis conducted by FERC is a rigorous 
evaluation that ensures the safety of the public and 
environment, but it's a time-intensive and expensive process. 
The regulatory review for an LNG project can take up to three 
years, and a sponsor must spend up to $100 million to receive 
all necessary permits. Furthermore, as more LNG project 
applications are filed at FERC and those approved go into 
construction, more demands are being placed on FERC staff to 
review projects and oversee construction.
    The regulatory process must keep pace with the growth 
America is experiencing in its oil and gas fields to avoid 
wasting a golden economic and strategic opportunity for the 
country. Section 313 of the EPAct provides that FERC ensure 
expeditious completion of LNG project reviews and provides for 
timelines. Delays in these projects can cost hundreds of 
millions of dollars. Therefore, it is important that these 
timelines be adhered to by state and Federal agencies. At the 
same time, it is important for Congress to ensure that these 
agencies are provided the resources necessary to complete 
reviews of pending LNG and infrastructure projects.
    Thank you.
    [The prepared statement of Ms. Outtrim follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Chairman Vitter. Thank you, Pat.
    Thanks to all four of you for your testimony.
    By the way, this entire record will be shared with the 
Small Business Committee folks in Washington as part of our 
ongoing discussions.
    Let's get to discussion coming out of your testimony. I 
want to start with Mr. Galley and Mr. Jarreau. You all are the 
small business folks here, right? This is the Small Business 
Committee discussion, so I want to start with you.
    One of these slides up here talks about $63 billion of new 
activity in this part of the state. What has that felt like in 
terms of your businesses in the last few years? What has it 
done to your specific businesses? Number one. And number two, 
what are some of the biggest impediments to you being fully 
able to take advantage of that in terms of business and job 
growth?
    Mr. Galley. Well, in my business, what we've seen over the 
past several years is people, of course, building more homes 
and trying to put in more places to build homes. But what we've 
also seen is folks that are interested in doing multi-family 
building, more duplexes, more density building that have 
visited with me particularly as far as doing those projects. As 
you go forth, where do you build them? Who will let you build 
them in that spot? How are you going to finance them? And once 
you work through all of that, then we all have time tables. As 
I said in my opening testimony, we really need help with this 
problem with blue-collar workers, as I said. There's something 
to be said for a great carpenter or a great mason. It's very 
proud work. It's very hard work.
    But I think we have to start at an early level, whether 
it's in high school. I think we really, really need to look at 
some of our vocational classes and make sure that those true 
champions that are there, that want to come, that come from 
generations of that type of work, we should make them 
understand that it's proud work and it's good work.
    Chairman Vitter. Bryan, let me back up. Just in terms of 
your activity, if you compared, say, a couple of years ago to 
next year or the year after, your projections, what sort of 
increase do you expect to see?
    Mr. Galley. I see it could easily be just twofold.
    Chairman Vitter. A 100 percent increase for you. And what 
I'm hearing is one of the biggest barriers you have is just 
getting the right skilled folks.
    Mr. Galley. We're working as hard as we can and we can't 
keep up right now, you know? So what do you do?
    Chairman Vitter. Joey, you want to add to that?
    Mr. Jarreau. Sure. Echoing what he said, we sort of feel 
like--no offense, but by the time we get to our community 
college level, it's almost too late, you know? We feel like the 
bulk of the people that funnel into our business, they're 
starting families at 20 years old.
    You did mention it's hard for them to basically stop 
working to go back to school, you know? I know a lot of the 
guys we have that have been there for an extended period of 
time, a lot of the skills that they got were straight out of 
high school. They got them in high school. They came out kind 
of with that mindset and that ability to walk into a job with 
some of those skills already, and I think that's even more 
important today.
    As far as the actual expansion in the Lake area, other than 
we've noticed our industry partners kind of--I don't want to 
say panic, but going into that mode of, okay, let's solidify 
our contracts with our vendors to be sure that as this 
expansion comes on and things get busier, that we have those 
set people ready to take care of our business still.
    So we've seen a lot of that. We don't do a lot of new 
construction type work. Typically what we do is more repair and 
kind of after-the-fact stuff. So really, until they kind of get 
everything here and start putting it together and realize, 
okay, that doesn't fit, that doesn't work, that's kind of where 
we get more involved. So we definitely see it expanding our 
business.
    We have been working--really started a couple of years ago 
adding more facility, adding more staff, with the idea that 
that's where we're headed. The biggest impediments for us have 
been finding those good employees, and then also, like I 
mentioned, when the tax debate is happening at the first of 
every year, it seems like you always hear, well, Section 179 is 
not that important to businesses. But to a business our size, 
it really is. It makes a significant impact, because without 
that Section 179, every project costs me 30 percent more in 
taxes.
    So that's been to us probably the biggest headache, is kind 
of sitting around trying to figure out, okay, can we afford to 
do a little bit more depending on what that tax structure is 
going to be, and how in that context starting over is not a way 
to--we couldn't run our business that way.
    Chairman Vitter. So again, back up a little bit. In terms 
of your business, because of the nature of it, have you seen 
significant growth yet, or is that a little down the line?
    Mr. Jarreau. I think it's more down the line. I mean, we've 
seen some significant growth in our business really in the last 
five years.
    Chairman Vitter. What sort of percentage growth over the 
last five years?
    Mr. Jarreau. I'd say we've been probably around 5 percent 
growth per year, actually. And it's kind of a managed growth 
for us, which is good. We try to keep it where we can handle 
our customers the way they deserve and we like to handle them.
    But I don't know that I can tie it directly--like I said, 
other than a couple of our big partners kind of saying, okay, 
we want to lock you into doing a little bit more work for us so 
that we know you're there when we're going to need you later 
down the road, I don't think any of the new construction 
necessarily has definitely--you know, I can attribute it to 
that.
    Chairman Vitter. But you would see an impact a little 
further down the line?
    Mr. Jarreau. Oh, there's no doubt.
    Chairman Vitter. When that stuff is under way?
    Mr. Jarreau. Absolutely.
    Chairman Vitter. More fully under way.
    Mr. Jarreau. Absolutely. Like I said, we do more of a 
service industry. We're more of a service business, kind of an 
after-the-fact kind of thing. We're not really construction. So 
obviously, all of our business is involved in going into local 
facilities and working with them on repairs, maintenance, that 
type of stuff. And obviously, with more facilities, there would 
be a definite impact to that business.
    Chairman Vitter. In terms of impediments, I'm hearing again 
a skilled workforce, but also certainty in terms of the tax 
environment, the regulatory environment, etc.
    Mr. Jarreau. Absolutely. I mean, just this week, two 
different things came across. One was the capitalization vs. 
repair regulations, and there was another one I wrote down but 
didn't bring with me. But it seems like there's constantly 
regulation coming out, and then they're like, oh, wait, that 
doesn't work. So we back it up, and we're constantly spending 
time either with consultants that have been there trying to 
help us figure out how to manage the newest regulations that 
are coming out that three weeks later are gone, and they're 
replacing it with something else. It just seems like for a 
small business that doesn't have a full-time staff, sitting 
around just to decipher what the government is doing this week, 
it's tough.
    Chairman Vitter. Absolutely.
    Well, on that note, Pat, let me turn to you. I think I 
heard right, but I want to emphasize it for everybody to focus 
on. Just on the pure permitting regulatory side, before you all 
started really putting a shovel in the ground, you had to spend 
$100 million, right?
    Ms. Outtrim. That's correct, sir.
    Chairman Vitter. $100 million. I know it's a big project. I 
know you're a big entity. But still, a tenth of a billion 
dollars for pieces of paper before you really started 
productive activity.
    Ms. Outtrim. That's before you make final investment 
decisions. So it's a $100 million gamble, because you don't 
know if you're going to get those permits.
    Chairman Vitter. So, describe how much of your company's 
time and energy is on the pure government regulatory side and 
what a burden, essentially, that is.
    Ms. Outtrim. I would say--I mean, for my group, it's 100 
percent because it's all permitting, and that's not a huge 
group in our company. But I would say it's probably between 10 
percent and 20 percent of the work that's done. In the early 
stages, as a development company, of course, it was more. It 
was a greater percentage than that. But it is all-encompassing, 
and it's a three-year process that starts fairly slowly, and 
you have to develop all of your engineering work in order to be 
able to provide that to the agencies.
    The state agencies have done a very good job and worked 
very diligently to try to move the timelines along. The Federal 
agencies are working diligently as well, but they seem to get 
further and further behind, and so it's taking longer and 
longer. And you're spending, for every day you delay a permit, 
you're spending millions of dollars because you've got 
engineers that are working, you've got a lot of momentum behind 
that whole process. And so there's a lot of money that goes out 
the door on a daily basis, and it's a day-to-day delay on 
actually putting LNG in a ship and being able to sell 
something.
    Chairman Vitter. Now, at the Federal level, I assume part 
of the problem in terms of delays and complications is you 
really have two different processes, FERC and DOE, and it's 
never exactly clear who goes first, how it works, how they 
intersect. Is that fair to say?
    Ms. Outtrim. Well, until DOE kind of defined their process 
last year, it was definitely ``Who's on First'' and who goes 
first. They have now defined that process, that FERC will 
complete their NEPA analysis, and DOE participates in that, as 
EPAct 2005 requires, so that's defined. And then DOE is going 
to issue their permit after FERC finishes their permit.
    The problem is that both of those permits could happen 
simultaneously and probably shave a couple of months off the 
permitting process. But DOE wants FERC to finish completely 
first and then they will issue their permit. So there are 
definitely efficiencies that could be had with a little bit 
different look at what the actual permitting requirements are.
    Chairman Vitter. Let me just make the comment, based on 
that, $100 million for permits, for pieces of paper before 
you're putting a shovel in the ground, imagine how that 
translates--now, I know it's not the same level of burden, but 
imagine what that means to a truly small business like Mr. 
Jarreau's or Mr. Galley's. It's not going to be $100 million, 
but that same level of burden can absolutely kill, bankrupt a 
truly small business.
    Ms. Outtrim. Well, and we are--Cheniere, I like to say 
we're a small business doing big things. I mean, we went from a 
200-person firm to a 600-person firm. So although we're larger 
than some smaller businesses, we're still not a huge business. 
So it is a huge burden, and it is a very big burden for smaller 
businesses. Ten or 20 percent of their workforce, that's just 
not productive and not income-producing.
    Chairman Vitter. Dr. Aspinwall, we've been talking a lot 
about skilled labor and the need to grow that and develop that. 
As you know, there is an effort to start at an earlier stage 
than you, and I agree with this effort. In my opinion, we 
really need to even the playing field and right the balance at 
the high school level, or even before, in terms of making sure 
kids understand all sorts of opportunities. Yes, four-year 
colleges, but also skills training.
    I think over the last 30 years we've sent out this implicit 
message in America that if you're not getting a college degree, 
you're second class, and that's just wrong. It's nowhere more 
wrong than in Southwest Louisiana where, if you have the right 
skill sets, you can be a 21-year-old right out of high school 
making $55,000 a year, in four years making $95,000.
    One effort at the high school level to rebalance that is 
this program called Jump Start, to have more exposure to 
vocation and skills training at the high school level. How 
would you broadly rate how that's going, how quickly, how fully 
it's going at the high school level?
    Dr. Aspinwall. I think the new Jump Start program is off 
kind of to a slow start, and I can tell you some progress that 
has been made probably in the last couple of months, and that's 
how our state community college system, meeting with the state 
superintendent and meeting with the superintendents at the 
local school level, and what we're trying to do is work out an 
MOU so those Jump Start courses and their new diploma track 
system, they can utilize more of the community college system 
to begin doing that training.
    And the comments you made about for the past 30 years I 
think we have gotten away from the skilled craftsman, we have 
emphasized too much what I call a four-year college degree. I'm 
a product of the university system, and I have two sons. By the 
time both of them were 10 or 11 years old, they knew they had 
to go to college. But the message I was sending to them was 
that you have to go get a four-year degree.
    So I think we have to redefine what we mean when we say 
college. College naturally is a four-year degree, but it also 
is an Associate's, a diploma, a certificate, it's a continuing 
education, anything that's going to get you those workforce 
skills that's going to allow you to get into the workforce and 
get a meaningful job and begin to pay taxes and contribute to 
the economy.
    So, yes, I think we're beginning to turn the corner, so to 
speak, and reemphasize some of those technical skills 
trainings, and when you come to a community technical college, 
you are coming to college. The parents have to understand that, 
that you are getting a college education even if it's less than 
a four-year degree, and it's going to lead to a good career and 
a good job.
    Chairman Vitter. Absolutely.
    I'll go back to our two true, true small business guys, Mr. 
Jarreau and Mr. Galley. Right now, for your skilled workforce, 
what are your best sources to go to? Where do you find the most 
effectively?
    Mr. Galley. Well, like I said, we went from a 30-hand 
payroll to using a lot of subcontractors. So we try to recruit 
the best subcontractors. We do a lot of high-end construction, 
so we need people who are sensitive to quality. So word of 
mouth, been with us a long time. They tend to train a lot of 
their employees at the work site, from the helpers and laborers 
to trying to learn the craft, and they do a good job of that, 
but the numbers aren't as much as we need.
    So that's how we do it, you know? We try to grow them right 
there on the job site if we can, if that makes sense.
    Chairman Vitter. Joey, what about you all?
    Mr. Jarreau. I'd say a lot of the same things. We actually 
get a lot of guys from the surrounding area, not even just Lake 
Charles. The Kinder area seems big for us. We do a lot of word-
of-mouth recruiting. We do a lot of training on-site. Sometimes 
our employee list looks like a family tree because you'll have 
this one's cousin and brother, because they're people who will 
have a good, hard work ethic that will come in.
    Just one little guy who came to work for us four years ago, 
he came to work for us making $15 an hour a couple of years out 
of high school. Today he's making $34 an hour, but he came in 
with that mindset and that ability to get that. I don't know if 
he got it in high school or it's just the family tree, but 
typically the guys that are with us, we're kind of bringing 
them in sometimes as floor sweepers, starting there and kind of 
building them up. Sometimes they come in with a little bit of 
skills and we work with them. But most of it, we're pretty much 
training in-house our long-term guys.
    Mr. Galley. Can I add to that real quick?
    Chairman Vitter. Sure.
    Mr. Galley. I think another thing that's really--I know 
it's not scientific, but I think just work ethic. If we can get 
them there on time and keep them there, by God, that's half the 
battle. I don't know where you teach that, but that's cowboy 
logic. Just get there and we'll get it done.
    Chairman Vitter. I don't know what it is now, but it used 
to be sort of basic life skills and values.
    Mr. Galley. Well, I think it's the world we live in. When I 
was 18 years old, by God, you had to go to work, okay? Today, 
for some reason, they seem to have everything they need not 
working. So I don't know where it's coming from, but I don't 
have that answer.
    Chairman Vitter. I know at Cheniere you all make a 
determined effort to make clear the opportunities you have for 
Southwest Louisiana business, small business typically. How do 
you do that, and are the Cheniere opportunities and other 
companies with a similar effort, how do small businesses best 
engage with you or look into those opportunities?
    Ms. Outtrim. Well, there are two ways of doing that. During 
construction, Bechtel is our primary contractor. So they would 
go to the Bechtel Web site and register through the Bechtel Web 
site for opportunities to work with Bechtel and Bechtel 
subcontracts. Then we have our Web site available as well, and 
as we go into operations, we will use a lot of subcontracts--
maintenance, everything from yard work to fence maintenance and 
all kinds of different subcontractors. So that's the best way 
to get hold of us.
    Chairman Vitter. Good, good.
    Dr. Aspinwall, I know, as you were saying in your 
testimony, you'll have a lot of pretty new regional projects 
based specifically on developments here, what's going on on the 
ground, new employers, new projects. Why don't you mention some 
of those and what you have found works best in terms of making 
sure you connect directly to what's going on in the real world 
and what employers actually need?
    Dr. Aspinwall. Well, one of the things we tie our success 
and our existence on is maintaining contact with the business 
and industry world. For instance, Joey here, Joey helped 
recently, in the last year, develop a new mill program and 
machinist program for us, because that's one of those programs 
we didn't have. But industry was saying you need to develop a 
program like this that you can produce these workers. So if we 
keep those close ties with business and industry and have those 
on our advisory committee, then the expertise that they have to 
tell us this is what you're doing right, this is what you're 
doing wrong, and this is what you need to change, so we have 
that direct tie to the business and industry.
    We also look at, with this great expansion, we're not 
producing fast enough. So we've had to compress a number of our 
programs and make sure that the students can come in on a 
shorter period of time and get out and get into the workforce.
    But one of the problems we've run into is that we know that 
this energy expansion in our area, it seems to one day move 
very fast and the next day it slows down. So what we have to be 
conscious of is not to over-produce, because one of the things 
that will kill us is--for instance, we can't train enough 
welders. We've expanded our welding program about four times. 
But many or some of the companies that we're contracting with, 
when it gets time for their students to enter the workforce, 
the workforce has slowed down and there are no jobs for them. 
There will be eventually.
    So we have to regulate our program, because if we train 
them and they leave us as an institution of higher learning and 
there are no jobs, it kills our program. So there are a number 
of things we have to watch out for.
    Chairman Vitter. Go ahead.
    Mr. Jarreau. We were talking about SOWELA, and one of the 
greatest things that I think has happened there in the last 
couple of years is it used to be they kind of had a program and 
they taught somebody a skill or what they thought was the skill 
that they needed, and then they kind of came out and it didn't 
always match up. I think what Dr. Aspinwall has done that's 
been amazing is they have actually got machinist supervisors 
and plans in place to come in and say, okay, you help us 
develop a program and let us know what you need, and I think 
that's going to pay big rewards in the end.
    Chairman Vitter. Absolutely.
    And, Dr. Aspinwall, a related issue that you also mentioned 
in your testimony, Federal programs--for instance, student 
loans, Pell Grant--those are really mostly designed for four-
year colleges. What are some of the top changes we need to make 
so that they're more broadly designed for any post-secondary 
education, including your programs, including union programs or 
ABC skills training programs, etc.?
    Dr. Aspinwall. Well, you know, the experimental Pell 
program that was in existence, that's one of those programs 
that looks at shorter--say, 600-contact-hour programs that 
allow students to receive Federal financial aid from some of 
those, because a number of our non-credit compressed programs 
are maybe six, eight, seven months in length. So if we can have 
some experimental Pell money and allow these students to access 
that money, one of the things that has been done in the last 
year, and we appreciate your help, is the ability to benefit. 
That option has come back for students who now can use or have 
access to Federal money.
    But it is a big hindrance to a number of our students who, 
most of them work, trying to get the finances necessary to come 
and take advantage of these maybe short-term programs to allow 
them to move into a higher-income bracket.
    Chairman Vitter. And I've actually heard of instances where 
a particular skills training program is artificially lengthened 
just because of the Federal requirement for students to be able 
to get that Pell Grant or other financial aid. Well, that's 
crazy, if they can actually be getting it done more quickly and 
getting into a job.
    Okay. Any closing thoughts or comments from anyone? Then 
we're going to start wrapping up.
    No one?
    [No response.]
    Chairman Vitter. Well, thanks to all of you for being here 
today. You really are the meat of our program and the meat of 
our discussion about energy jobs and taking advantage of those 
opportunities and how small business is a big part of that.
    Everybody, let's give them a round of applause.
    [Applause.]
    Chairman Vitter. Thank you.
    As I said, this record and transcript will be shared with 
the full committee and others in the Senate. I appreciate you 
all being part of it.
    Let me repeat the apology of Congressman Boustany. He was 
going to be here today and be a full part of this discussion. 
Unfortunately, he got trapped out of state by weather and 
travel back-ups. So he sends his regrets.
    Thanks to all of you for coming out.
    Also, when I'm stuck in Washington, I do telephone town 
halls and contact you by phone. I'll continue to do that to 
benefit from your ideas and comments and questions. So please 
follow up.
    In addition, in the meantime, don't just wait for the next 
event. Please don't hesitate to contact me and my staff, 
including here in Lake Charles, with any comments or questions 
about what we need to be focused on. All of my contact 
information is on a handout I think you have, blue column on 
the left, and please use all of that contact information on a 
regular basis.
    With that, we're adjourned.
    Thanks very much for being here today.
    [Whereupon, at 2:00 p.m., the hearing was adjourned.]
  

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