```

[Senate Hearing 114-344]
[From the U.S. Government Publishing Office]

                                                          S. Hrg. 114-344

              ENERGY ACCOUNTABILITY AND REFORM LEGISLATION

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

                                 HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 9, 2015

                               __________
                               
                               
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                        Printed for the use of the
               Committee on Energy and Natural Resources
               
                                            
                               __________
                               
                               
                      U.S. GOVERNMENT PUBLISHING OFFICE
95-281                       WASHINGTON : 2016                      
________________________________________________________________________________________               

For sale by the Superintendent of Documents, U.S. Government Publishing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, gpo@custhelp.com.  
               
               
               
               
               
               
               
               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho                RON WYDEN, Oregon
MIKE LEE, Utah                       BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
STEVE DAINES, Montana                AL FRANKEN, Minnesota
BILL CASSIDY, Louisiana              JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               MAZIE K. HIRONO, Hawaii
ROB PORTMAN, Ohio                    ANGUS S. KING, JR., Maine
JOHN HOEVEN, North Dakota            ELIZABETH WARREN, Massachusetts
LAMAR ALEXANDER, Tennessee
SHELLY MOORE CAPITO, West Virginia
                     Karen Billups, Staff Director
                Patrick J. McCormick III, Chief Counsel
                 Kellie Donnelly, Deputy Chief Counsel
               Brianne Miller, Professional Staff Memeber
            Angela Becker-Dippman, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
           Scott McKee, Democratic Professional Staff Member
                            
                            
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Murkowski, Hon. Lisa, Chairman, and a U.S. Senator of Alaska.....     1
Cantwell, Hon. Maria. Ranking Member, and a U.S. Senator from 
  Washington.....................................................    23

                                WITNESS

Orr, Hon. Lynn, Under Secretary for Science and Energy, U.S. 
  Department of Energy...........................................    62
McAleer, Hon. Colleen, Commissioner, Port of Port Angeles, Port 
  Angeles, Washington............................................   106
Augustine, Norman, Board Member, Bipartisan Policy Council.......   114
Harbert, Hon. Karen, President and Chief Executive Officer, 
  Institute for 21st Century Energy..............................   119
Highley, Duane, President and Chief Executive Officer, Electric 
  Cooperatives of Arkansas.......................................   131
Mills, Mark, Senior Fellow, Manhattan Institute..................   137

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

ABB, Inc., et al
    Letter for the Record........................................   237
Advanced Energy Management Alliance
    Statement for the Record.....................................   239
American Public Power Association
    Statement for the Record.....................................   244
American Rivers
    Letter for the Record........................................   255
American Sportfishing Association, et al
    Letter for the Record........................................   257
Augustine, Norman
    Opening Statement............................................   114
    Written Testimony............................................   116
    Responses to Questions for the Record........................   197
Boeing Company
    Statement for the Record.....................................   258
Cantwell, Hon. Maria
    Opening Statement............................................    23
    American Energy Innovation Council: A Business Plan for 
      America's Energy Future....................................    25
Cassidy, Hon. Bill
    New York Times article dated May 30, 2015 entitled ``E.P.A. 
      Proposal Will Put Bigger Trucks on a Fuel Diet''...........   148
Colorado Oil & Gas Association
    Letter for the Record........................................   262
Coons, Hon. Chris
    Statement for the Record.....................................   263
Council of Industrial Boiler Owners
    Letter for the Record........................................   268
Domestic Energy Producers Alliance
    Statement for the Record.....................................   272
Dresser-Rand Corporation
    Statement for the Record.....................................   274
Edison Electric Institute
    Statement for the Record.....................................   279
Energy Storage Association
    Statement for the Record.....................................   288
Harbert, Hon. Karen
    Opening Statement............................................   119
    Written Testimony............................................   121
    Responses to Questions for the Record........................   200
Hatch, Hon. Orrin G.
    Statement for the Record.....................................   294
Health Physics Society
    Statement for the Record.....................................   296
Health Physics Society, Barbara Hamrick
    Letter for the Record........................................   298
Highley, Duane
    Opening Statement............................................   131
    Written Testimony............................................   133
    Responses to Questions for the Record........................   205
Independent Petroleum Association of America
    Statement for the Record.....................................   301
Industrial Energy Consumers of America
    Letter for the Record........................................   305
Louisiana Oil & Gas Association
    Letter for the Record........................................   306
Mandan, Hidatsa & Arikara Nation
    Statement for the Record.....................................   307
McAleer, Hon. Colleen
    Opening Statement............................................   106
    Written Testimony............................................   109
    Responses to Questions for the Record........................   192
Mills, Mark
    Opening Statement............................................   137
    Written Testimony............................................   139
    Responses to Questions for the Record........................   209
Modesto Irrigation District and Turlock Irrigation District of 
  California
    Letter for the Record........................................   332
Motor & Equipment Manufacturers Association
    Letter for the Record........................................   158
Murkowski, Hon. Lisa
    Opening Statement............................................     1
    ``Rendering Vital Assistance: Allowing Oil Shipments to U.S. 
      Allies'' dated June 9, 2015................................     3
National Association of Manufacturers
    Statement for the Record.....................................   336
National Association of Royalty Owners
    Statement for the Record.....................................   338
National Mining Association
    Letter for the Record........................................   340
National Stripper Well Association
    Statement for the Record.....................................   343
New Mexico Oil & Gas Association
    Letter for the Record........................................   345
North Dakota Petroleum Council
    Letter for the Record........................................   347
Ohio Oil and Gas Association
    Letter for the Record........................................   348
Oil Industry
    Letter for the Record........................................   349
Oklahoma Independent Petroleum Association
    Letter for the Record........................................   350
Orr, Hon. Lynn
    Opening Statement............................................    62
    Written Testimony............................................    64
    Responses to Questions for the Record........................   175
Pennsylvania Independent Oil & Gas Association
    Letter for the Record........................................   352
Permian Basin Petroleum Association
    Letter for the Record........................................   353
Petroleum Association of Wyoming
    Letter for the Record........................................   355
PJM Interconnection, L.L.C.
    Statement for the Record.....................................   356
Small Business & Entrepreneurship Council
    Letter for the Record........................................   362
South Texas Energy & Economic Roundtable
    Letter for the Record........................................   364
Sportsmen for Responsible Energy Development
    Letter for the Record........................................   365
SunEdison, Inc.
    Statement for the Record.....................................   367
Texas Alliance of Energy Producers
    Statement for the Record.....................................   371
Texas Independent Producers and Royalty Owners Association
    Statement for the Record.....................................   373
Texas Oil & Gas Association
    Letter for the Record........................................   374
Union of Concerned Scientists
    Letter for the Record........................................   375
U.S. Department of the Interior
    Statement for the Record.....................................   377
Ute Indian Tribe
    Statement for the Record.....................................   395
Voith Turbo
    Letter for the Record........................................   418
Western Governors' Association
    Letter for the Record........................................   419
The Wilderness Society
    Letter for the Record........................................   421

----------
The text for each of the bills which were addressed in this hearing can 
be found on the committee's website at: http://www.energy.senate.gov/
public/index.cfm/hearings-and-business-meetings?ID=8B5BD69E-E1ED-4440-
A902-6A2B0CD24B1B

 
              ENERGY ACCOUNTABILITY AND REFORM LEGISLATION

                              ----------                              

                         TUESDAY, JUNE 9, 2015

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:37 a.m. in Room 
SD-366, Dirksen Senate Office Building, Hon. Lisa Murkowski, 
Chairman of the Committee, presiding.

  OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM 
                             ALASKA

    The Chairman. Good morning. I call to order the Energy 
Committee hearing this morning. Welcome to you all. We are here 
today to consider our fourth and final legislative hearing 
related to the broad energy bill that we have been assembling.
    When we first started this process some weeks ago we were 
not sure exactly how these hearings were going to go, but I am 
very pleased with the strong participation from our members, 
the generally collegial spirit that has marked our discussions 
and really the number of bills that we have been able to 
consider throughout this process.
    Counting the 42 different bills we are reviewing today, the 
Committee will have reviewed a total of 114 bills over the past 
several weeks. That is a significant accomplishment, and the 
work that went into it, I think, will provide us with a better 
understanding of the many ideas for our nation's energy policy 
as we sit down to craft our larger bill.
    Our focus today is on a crucial area that does not always 
receive the attention that it deserves, and that is 
accountability and reform of our energy laws and programs.
    This is an authorizing committee, and we are responsible 
for conducting oversight of the Federal agencies within our 
jurisdiction. Since the last major energy bill was passed back 
in 2007, we have conducted numerous oversight hearings. Many of 
us have also discharged oversight responsibilities through 
initiatives within our own offices. In addition, a number of 
studies and reports on agency activities have been released 
from both the Federal Government and third party entities.
    Many of the bills included in this hearing reflect members' 
hard work on oversight as well as our desire to ensure that 
Federal agencies are operating effectively, efficiently and 
with the highest degree of accountability. We will also be 
taking stock of our own actions here at the Committee in the 
coming weeks. In particular, we will be evaluating the 
accumulation of authorizations, programs, studies, reports and 
other contributions to the U.S. code we have made over the 
course of the years. In many cases what made policy sense years 
ago has perhaps become outdated, been rendered duplicative or 
is serving to bury Federal agencies in requirements they cannot 
reasonably be expected to meet. Before all is said and done I 
intend to make sure that we fix those issues, and we will 
continue working closely with the agencies to be sure that we 
have done a good job.
    I think as far as all of the issues that we have taken up, 
the various policy aspects of this larger, broader energy bill, 
an area that, I believe, deserves very, very close attention is 
what we already have on the books, and is it doing that which 
we intended it to. So this opportunity for scrutiny and 
oversight is critically important.
    With a total of 42 bills, today's hearing covers a wide 
range of topics. We are looking at things like addressing 
energy exports, permitting, our national labs, electric grid 
reliability, manufacturing and loan programs, just to mention a 
few of them.
    One topic of particular importance is the ability of the 
United States to export its oil. As the members of this 
Committee know, our nation is now the top oil producer in the 
world. Included in today's hearing is a bipartisan bill that I 
have introduced to lift our outdated oil exports ban. Lifting 
the ban will bring an array of benefits to our nation, more 
jobs, more revenues, more production, more security and more 
diplomatic leverage on the international stage. You do not 
necessarily have to take my word for it, you can also look at 
the growing list of experts and studies that agree with this 
analysis.
    In support of this bill today, I am releasing a report that 
has been prepared by the Committee staff that is entitled, 
``Rendering Vital Assistance: Allowing Oil Shipments to U.S. 
Allies.''
    [The information referred follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    I would recommend it to each of the Committee members here. 
As with the other white papers that we have released, it is 
imminently readable. It is factually stable and sound and 
really lays it out in a very clean and forthright measure. The 
report further develops an argument that I have been making 
that even while Congress works to remove the export ban, the 
Administration already has authority exclusively delegated to 
it, by Congress, to allow for greater oil exports.
    In addition to this opportunity to modernize our nation's 
energy policies, we will spend time looking at interagency 
coordination on the so-called energy water nexus, protecting 
electric grid reliability during agency rulemakings, reforming 
the innovative, but at times mismanaged, loan programs at DOE, 
making sure our national labs are operating in the most 
effective manner, ensuring greater cooperation between the 
states and feds on energy development, as well as lowering 
energy costs in regions that face above average prices.
    We have a great panel before us this morning, with a great 
breadth of knowledge and experience to speak on these and many 
other topics. I thank you all for the time you have taken to be 
here with us this morning, and I am grateful for your input. 
With that, I will turn to my Ranking Member, Senator Cantwell.
    Good morning.

 STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Madam Chair, Thank you for 
calling this hearing and gathering such a strong group of 
witnesses across a broad array of issues in the general 
categories of discussion of energy accountability and reform 
proposals. Accountability in energy markets starts with data, 
arming consumers and industry, policy makers, and regulators, 
with information about our energy systems and markets that help 
all of us make smart decisions. This is particularly important 
at this point in time when our energy systems are in major 
transition--as outlined by Secretary Moniz in the Quadrennial 
Energy Review.
    One of the legislative proposals before us today, S. 1420, 
the Energy Market Act of 2015, would boost the Energy 
Information Administration's (EIA) ability to collect data on 
energy traders and the kinds of entities engaged in both the 
physical and financial energy markets. It would establish the 
Office of Financial Market Analysis at EIA, along with an 
interagency working group on energy markets that would span the 
Department of Energy and FERC, along with regulators at the 
Securities Exchange Commission, Commodity Futures Trading, and 
the Department of Treasury.
    I bring this up because there are some in the House that 
think ``reform'' and ``accountability'' mean actually rolling 
back important consumer protections. This is particularly a 
concern because this Committee in a bipartisan fashion, crafted 
legislation in response to the Western energy crisis that we 
were able to implement. It has been good legislation and worked 
well for consumers and businesses in Washington, California, 
Nevada, and Oregon.
    Last week, the head of the enforcement at FERC testified 
that current proposals pending in the House would hinder the 
agency's effort to pursue market manipulation cases. Since the 
Committee led the effort to put this in place, a ban on market 
manipulation in 2005 in the Energy bill, FERC has returned 
almost $1 billion to consumers and the U.S. Treasury for market 
infractions and unjust profits.
    It would seem that the House proposal is more motivated to 
help Wall Street banks and their attorneys who have complained 
that FERC is being too tough on them.
    I find it ironic that at the same time our colleagues in 
the House cannot find their way forward to vote on 
reauthorizing the EXIM bank. The House is also now trying to 
undermine the appropriate actions of FERC and energy market 
regulators to protect consumers from market manipulation.
    So when we talk about accountability, I hope my colleagues 
will agree holding industry accountable to just and reasonable 
rates and markets free of manipulation is just what the 
American consumers want us to do.
    In our role as an authorizing committee, it is also our job 
to review existing Federal programs to assess, as my colleague 
said, what is working and not working, and whether the agencies 
within our purview have set the right priorities.
    Judging by the number of proposals before us today, it 
seems obvious that prioritizing innovation and investment in 
the kinds of technologies that will grow jobs and our economy 
is something we should be able to agree on.
    The American Energy Council, which I think we will hear 
about from Mr. Augustine, has suggested we ought to triple our 
current annual investment in energy-related research and 
technology.
    [The information refereed to follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    That is because today the Federal commitment to energy 
research and development is less than one-half of one percent 
of what consumers in this nation spend every year in energy. 
U.S. research and development needs the proper investment in 
order to help us diversify our energy sources in the future and 
keep consumer costs down.
    We will hear from Mr. Augustine that China is expected to 
surpass us in research and development in the next five years 
and now the United States ranks 29th among developing nations 
with Federal research and development. So I hope, if we are 
holding ourselves accountable, we will look at how we compare 
to the rest of the world.
    The House recently passed a version of the America Competes 
Act that would actually cut ARPA-E funding research in half, so 
I do not think that is how we compete. In fact, one of my 
constituents, Bill Gates, and the CEO of Cummings Engineering, 
led a charge in 2010 to say that ARPA-E should actually be 
increased in a significant way if we are going to usher in the 
innovation and job growth that is going needed to advance our 
energy market. The Department of Energy needs to make sure that 
we are collaborating on a variety of issues with ARPA-E, and it 
seems to me that my colleagues in the House seem intent in 
rolling back the clock.
    One of top scientific advisor for President Roosevelt, who 
was a key figure in launching the Manhattan Project, said, 
``Advances in science when put to practical use mean more jobs, 
higher wages, and shorter hours ... but to achieve these 
objectives--to secure a high level of employment, to maintain a 
position of world leadership-the flow of new scientific 
knowledge must be both continuous and substantial.'' I could 
not agree more.
    We have one of our witnesses here today from the Northwest, 
Commissioner Colleen McAleer, from the Port of Port Angeles. 
The Commissioner and her colleagues at the port are working on 
innovation in composite materials that help improve fuel 
efficiency whether you are talking about aerospace or you are 
talking about automobiles, and that market is expected to grow 
to $26 billion by next year.
    How the Department of Energy's Advanced Manufacturing 
Office and its laboratories who work with economic development 
and translate their scientific capabilities into real world 
economics value is something that we need to talk about today 
in helping us move our energy efforts forward.
    It is also important and very timely that we talk about our 
investment in cyber security. Last week we discovered over 
4,000,000 Federal employees' personnel files were hacked. The 
breach only underscores the persistent and constantly evolving 
threat from cyber. So it is very important that we talk this 
morning about that particular issue, as it relates to the grid, 
because it is a target. The Department of Energy has an 
underappreciated role in addressing this threat and has piloted 
ways to engage industry in technology development, and 
information sharing on the security supply chain. I hope that 
we will be able to talk about research and development and 
efforts for enhanced grid security on today's agenda.
    So again, thank you, Madam Chair, and I thank the witnesses 
for being here today to talk about this broad subject area that 
we have before us.
    The Chairman. Thank you, Senator Cantwell.
    Let us begin with our witnesses. Welcome to each of you. We 
will have an opportunity for five minutes of testimony from 
each of you. Your full statements will be included as part of 
the record. Once you have all given your initial opening 
statements, we will move to the Committee members for 
questioning.
    This morning we have the Honorable Lynn Orr, who is the 
Under Secretary for Science and Energy at the U.S. Department 
of Energy. Next to him we have Ms. Colleen McAleer, who is 
Commissioner at Port of Port Angeles in Washington State. Mr. 
Norm Augustine has appeared before this Committee many times. 
Welcome, Mr. Augustine, as a member of the Bipartisan Policy 
Center. We also have the Honorable Karen Harbert, who is the 
President and CEO of the Institute for the 21st Century Energy. 
Mr. Duane Highley is the President, CEO and Chief Affordability 
Officer for the Electric Cooperatives of Arkansas, welcome. 
Finally, we have Mr. Mark Mills, who is Senior Fellow of the 
Manhattan Institute for Policy Research. Welcome to each of 
you.
    Deputy Secretary Orr, if you would like to start the panel 
off this morning, we welcome your comments. Thank you.

  STATEMENT OF HON. LYNN ORR, UNDER SECRETARY FOR SCIENCE AND 
               ENERGY, U.S. DEPARTMENT OF ENERGY

    Dr. Orr. Thank you very much, Chairman Murkowski, Ranking 
Member Cantwell and members of the Committee. I appreciate the 
opportunity to testify today on behalf of the Department of 
Energy regarding energy accountability and reform legislation.
    As I know you know, the United States energy landscape is 
undergoing a period of rapid transition. We're now the largest 
combined producer of oil and gas in the world, and our oil 
imports are the lowest they've been in over 40 years. Natural 
gas use in power generation has significantly increased, and 
U.S. liquefied natural gas exports are scheduled to start 
within a year. Wind and solar power generation have grown 
dramatically, vehicles have reached historical levels of 
efficiency and ethanol is now ten percent of U.S. gasoline 
supply.
    While these dramatic changes have created enormous 
opportunities, they also pose a set of challenges and 
opportunities for energy policymakers, investors, non-
governmental organizations and industry. These opportunities 
and challenges come in many forms. And addressing them will 
require action by many parties including Congress, the private 
sector and the public sector. And the need for action is urgent 
as the impacts of climate change threaten our economy, 
environment and national security.
    To work to combat these impacts, the Department of Energy 
is leading efforts to move to a low carbon future in support of 
the Administration's all of the above approach to energy and 
climate action plan. The Department carries out this work by 
collaborating with some of the nation's best innovators and 
businesses to support high impact applied research development 
and demonstration activities. This includes the experts at 
DOE's 17 national laboratories which carry out cutting edge 
research and development to advance the nation's most complex 
challenges in science, energy, national security and 
environmental management.
    With Congress' support the Department implements a range of 
strategies aimed at reducing U.S. reliance on oil, saving 
American families and businesses money, creating jobs and 
reducing pollution. In the last year we've seen some important 
accomplishments across the Department's technology portfolio 
that highlight this all of the above approach.
    Let me just name a few. We've sequestered, geologically, 
ten million metric tons of CO2 through DOE-supported projects. 
We have two commercial-scale, cellulosic ethanol facilities 
supported by DOE grants or loan guarantees that have now begun 
operations. We've commissioned one of the world's largest 
battery storage systems at the Tehachapi Wind Energy Storage 
Project, and we've successfully completed the first five-year 
program at the Consortium for Advanced Simulation of Light 
Water Reactors, CASL, which continues to work toward design and 
licensing support of small modular nuclear reactors with 
advanced safety features.
    So as Under Secretary for Science and Energy, my job is to 
coordinate DOE's scientific research efforts and our portfolio 
of applied energy research and development as we transition to 
a low carbon future. My office is working to enhance the 
productive links amongst the science and energy programs as we 
build and execute the Department's research, development, 
demonstration and deployment activities.
    Now this is particularly important because fundamental 
science underpins absolutely everything we do in the energy 
sector, and the world of energy applications is rich with 
opportunity to put the science to work and also for energy 
applications to illuminate the opportunities for science that 
could have game changing impact.
    Senator Cantwell's quote of Vannevar Bush resonated with me 
the investments we make in fundamental science will pay off in 
all kinds of ways that we don't foresee exactly right now but 
are fundamental to our ability to compete in the global world 
that's ahead of us.
    The Committee is taking on a yeoman charge of a broad range 
of 42 bills today, the majority of which have some kind of 
connection to the Department of Energy. I'd be happy to try to 
answer your questions to the extent that I can this morning. I 
appreciate the ongoing bipartisan efforts to address our 
nation's energy challenges, and I look forward to working with 
the Committee.
    [The prepared statement of Dr. Orr follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    The Chairman. Thank you, Dr. Orr.
    Commissioner McAleer, welcome.

 STATEMENT OF HON. COLLEEN McALEER, COMMISSIONER, PORT OF PORT 
               ANGELES, PORT ANGELES, WASHINGTON

    Ms. McAleer. Thank you.
    Chairman Murkowski, Ranking Member Cantwell and 
distinguished members of the Committee, good morning and thank 
you for allowing me to speak before you.
    My name is Colleen McAleer. I'm a combat veteran, mother of 
two boys, and a small business owner, but I offer my testimony 
today in my capacity as the Commissioner for the Port of Port 
Angeles. We are located in Clallam County in the northern 
portion of the state's, Washington State's, Olympic Peninsula.
    Today I will talk to you about the effort we've 
spearheaded, the Composite Recycling Technology Center, or 
CRTC, where industry, small business, academia and government 
converge to reduce energy use and costs and strengthen U.S. 
manufacturing.
    Carbon fibers replacing other materials in products that 
benefit from high strength to weight ratios. It's a $26 billion 
global industry and growing. Light weight carbon fiber 
composites reduce the weight of a product, thus reducing the 
energy consumption; however, they are expensive to produce and 
do not deteriorate creating long term disposal issues.
    Twenty-seven million pounds end up in U.S. landfills each 
year, two million from Washington State alone. Our port is well 
on its way to providing a solution to this problem through a 
public/private partnership, the Composite Recycling Technology 
Center.
    Our port has headed an effort to recycle the production 
scrap of carbon fiber manufacturing processes, a first of its 
kind recycling center. Their research efforts in the U.S. and 
Europe address so-called end-of-life carbon fiber recycling, a 
more complex and energy intensive process, but we will first 
focus on the low hanging fruit of recycling and repurposing 
production scrap.
    Carbon fiber products already reduce energy consumption by 
reducing weight in industries from transportation to sporting 
goods. Recycling carbon fiber composites will drastically 
reduce the energy required for manufacturing them. The recycled 
carbon fiber composite in the CRTC approach will use only six 
percent of the energy required to produce the comparable virgin 
carbon fiber fabrics.
    In my rural, economically distressed county, we have 
several manufacturers that use advanced composites and are 
dealing with this very issue today. They make yachts, cutters, 
snowboards, aerospace parts and more.
    Also located in the county is the Pacific Northwest 
National Labs, Marine Science Lab. It has permitted in water 
facilities to test carbon fiber wave and tidal technologies. 
Last year our community was an integral part of the West Coast 
application for the $70 million, Department of Energy award for 
our Composites Institute.
    Our multi-state team lost the competition to Tennessee, but 
the program represented a compelling solution for industry and 
small business so we have carried on without the DOE funding on 
a smaller scale.
    Our Port has received a preliminary award of $4 million 
from the U.S. Department of Commerce, Economic Development 
Administration, Washington State and Clallam County.
    In addition the Port has provided the space for the 
facility and committed $1.5 million in cash for its development 
and advanced manufacturing program in the works since 2012. The 
25,000 square foot facility will be a shared equipment center 
that serves four functions. It will accept uncured scrap carbon 
fiber and remake it into a useable form. It will manufacture 
and sell secondary repurposed products. It will serve as a 
workforce training space for local colleges. Most importantly, 
it will serve as an industrial scale, shared equipment space 
for entrepreneurs and universities.
    These functions will create a locally trained workforce, 
drive accelerated technology transfer with a national reach and 
deliver a significant economic impact to our struggling county.
    I sit on the Executive Board of our state's Center of 
Excellence for Aerospace and Advanced Manufacturing. I often 
hear business owners say they can't find employees with the 
needed skill sets. This Center of Excellence has aggressively 
coordinated with the state's technical and community colleges 
to address this very issue.
    Washington State community colleges deliberately designed 
their curriculum to match the local employer's requirements. In 
fact, colleges often buy equipment identical to that used by 
manufacturers in their facilities. Standardization through 
certification programs serve two constructive purposes. First 
it develops the certification programs employers need. Second, 
it enables employers to readily hire qualified workers.
    At the CRTC we have a parallel workforce training effort. 
Peninsula College is relocating their advanced manufacturing 
composites program and equipment to our facility. The CRTC will 
house the business innovators and their future workers. The 
CRTC will accelerate commercialization of technologies from the 
lab to the manufacturing floor. Small businesses will lease the 
CRTC lab space to develop proprietary products at our shared 
equipment center. They will also have access to CRTC material 
and process experts accelerating their development process. We 
believe the reduced costs and resident expertise will produce 
innovation and induce capital investments in carbon fiber 
technologies.
    Mervin Manufacturing, a local company with $13 million in 
annual exports, makes skis, skateboards and surfboards and 
several brands of snowboards from virgin carbon fiber. They 
intend to further innovate in the Center's maker space in order 
to replace that virgin carbon fiber with recycled carbon fiber 
for their snowboard bindings, skateboards and surfboard fins.
    We currently have five major universities from three 
corners of the country that intend to send researchers and 
students to the Center. They intend to demonstrate and 
commercialize their technologies to the CRTC community.
    At Washington State University we intend to leverage the 
Composite Material Engineering Center. It has a 35-year history 
in commercializing composite wood products like the plastic 
lumber materials used in decking. We are finalizing an 
agreement with Washington State University to test the CRTC 
products for certification and the construction industry at 
their facility.
    CRTC efforts will re-shore jobs back to the United States. 
As an example Batson Enterprises is a local, wholesale supplier 
of fishing rods. The current purchase component, composite and 
aluminum parts overseas in order to keep their overall costs 
competitive. By partnering with the CRTC for product 
development using our recycled carbon fiber, Batson Enterprises 
will be able to manufacture those components with higher 
quality materials that were formally cost prohibitive.
    The CRTC will be a small step in bringing back American 
manufacturing. We can't and don't want to compete with foreign 
countries on their labor costs. Recycled carbon fiber lowers 
material costs allowing companies to profit while paying a 
living wage.
    The Chairman. Ms. McAleer, you need to wrap up.
    Ms. McAleer. I thank the Committee for considering this 
legislation supporting carbon fiber recycling, and I look 
forward to your questions.
    The Chairman. Thank you.
    Ms. McAleer. Thank you.
    [The prepared statement of Ms. McAleer follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    The Chairman. Mr. Augustine?

STATEMENT OF NORMAN AUGUSTINE, BOARD MEMBER, BIPARTISAN POLICY 
                            COUNCIL

    Mr. Augustine. Well, thank you, Chairwoman Murkowski and 
Ranking Member Cantwell, members of the Committee for the 
opportunity to speak on a subject that I consider to be 
extremely important.
    By way of background I'm a member of the Board of Directors 
of the Bipartisan Policy Council, and I co-chair the American 
Energy Innovation Council. The latter consists of seven 
members, CEOs of major firms, not in the energy business but 
who are in the research and development businesses. And we're 
very concerned about the lack of investment in America in 
energy research.
    The names of my colleagues are in the written statement and 
I will try to reflect our collective views, although today my 
remarks will, in fact, be my own.
    Energy research is obviously critical. It drives the 
economy to a large degree. It certainly has major environmental 
impacts. It impacts the world's geopolitical situation, 
certainly including national security.
    We've had great examples of successes. Most recently one 
would have to think of the impact of the combination of 3D 
seismics and of horizontal drilling and hydraulic fracking 
which have had the effect, as I see it, of buying us time that 
we did not expect to have to be able to work on long term 
solutions. However, to find long term solutions we have to 
invest in energy R and D, and that raises the question of who 
shall invest?
    One obvious answer might be industry should invest in R and 
D since it's one of the beneficiaries. When the Government cut 
back in overall R and D, their share from, well the 
Government's share from two-thirds to one-third, industry 
increased its share from one-third to two-thirds. The problem 
is that industry will invest in D by and large, but not R, and 
there are several reasons for that. One is that research, R, 
tends to be very long term in terms of its payoff. Today the 
average shareholder owns their stock four months; when I first 
went into business that was eight years. It has an enormous 
impact in discounting the future payoffs when shareholders view 
new company's investments. Furthermore in research the funder 
may not be the long term beneficiary of the results of that 
research because of the unpredictability of research. And 
finally, particularly in the energy area, there are major 
capital investments that firms hold and if the firms are not 
highly motivated to or take those investments and replace them 
with new equipment.
    Let me state openly that I'm not a fan of heavy Government 
involvement in the free enterprise system. On the other hand I 
do recognize that there are some things that the private sector 
can't do, shouldn't do or won't do, and certainly energy R and 
D is one of them.
    As you heard earlier today however, the Government ranks 
29th in the share of research conducted within a nation's 
borders that's funded by the Federal Government. We've dropped 
from first to tenth in R and D intensity overall. We've dropped 
from first to seventh at basic research in the world. China is 
about to pass us in both research intensity and value of 
research, and we spend more on potato chips in this country 
than we spend on clean energy research.
    The national labs play a very critical role. They conduct 
high payoff, high risk research that industry is discouraged 
from undertaking. They conduct long term research. They can 
conduct very large, costly products that only Government can 
afford, and they also can supply major research equipment. But 
this research at the laboratories is of no value if it's not 
translated to industry. And frankly, in my view, we do a very 
poor job today of translating that investment in the labs into 
industry. The DOE is taking major steps to try to improve this, 
but there are many impediments in the way that we need to 
remove.
    You, Madam Chairman, mentioned a number of bills before 
this Committee. It's large indeed. I would just like to 
highlight two that I think are terribly important. One is the 
America Competes Act that, particularly the Senate version, 
that really underpins all we do in this area. The second is 
funding of ARPA-E. ARPA-E has been highly successful but it is, 
frankly, being starved.
    The bad news is that we're under-investing in energy 
research. The good news is that we could triple what we invest 
in energy research and it would barely show in the overall 
Federal budget.
    Thank you very much.
    [The prepared statement of Mr. Augustine follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    The Chairman. Thank you, Mr. Augustine.
    Ms. Harbert, welcome.

STATEMENT OF HON. KAREN HARBERT, PRESIDENT AND CHIEF EXECUTIVE 
           OFFICER, INSTITUTE FOR 21ST CENTURY ENERGY

    Ms. Harbert. Thank you.
    Thank you, Chairman Murkowski, Ranking Member Cantwell, 
members of the Committee for soliciting our input today. I 
applaud your efforts putting together a multi-title energy bill 
in today's world which is very difficult, so we applaud your 
efforts.
    I can't address, obviously, all 42 of the bills today. Let 
me highlight a few. I'll start with the one that, I think, will 
have the most profound impact on our energy landscape which is 
lifting the ban on oil exports which is truly a relic of the 
1970's and the era of oil embargo and a very different energy 
landscape.
    In today's era of energy abundance unconventional shale oil 
and gas is a tremendous economic stimulus and catalyst. Shale 
energy has already added 2.1 million jobs to our economy during 
the deepest, darkest points of our recession. It has stimulated 
a tremendous amount of revenue, and it is slated to add $1.6 
trillion of Government revenue over the next ten years and to 
create an additional two million jobs by 2025.
    If, on top of that, we lift the oil export ban we would 
support an additional 400,000 jobs, grow GDP and increase 
Government revenue by an additional $1.3 trillion in the next 
15 years while still ensuring that gasoline remains affordable 
to the American consumer. So it's clearly an economic win, but 
it's also a geopolitical win or wins, I might say.
    We will be importing oil. We will be importing less oil 
from countries that don't share our values and are benefiting 
from our financial resources we send them to buy their oil. We 
have seen Russia and what it has done to the Ukraine. We have 
seen Russia's stranglehold on the energy supply to Europe, and 
we can break that stranglehold by adding more molecules into 
the market. And of course, new stable supply from America, from 
a reliable supply of energy, will choke the opportunity from 
non-state actors to use energy to fund their operations. And we 
know that ISIS and ISIL is using oil to fund their operations, 
directly threatening our national security. So it's a win/win/
win, and the time to act is now.
    Of course, as you pointed out in your report this morning, 
the executive branch could act now while Congress is still 
debating this. Staying on production for a moment, we support 
the Protecting State Rights Act. Between 2009 and 2014 oil 
production grew less than 1 percent on Federal lands and yet is 
up 90 percent on State and private lands.
    BLM admits that it takes them 227 days to process an oil 
permit and yet in the states, it takes 30, so clearly the 
Federal process is less efficient than the states. So adding an 
unneeded layer of Federal permitting and regulatory process 
over the state process will be as dis-incentivizing investment 
on Federal lands, slow jobs and revenue growth. State primacy 
is important, and this legislation will preserve that.
    We oppose the deficit reduction through Fair Oil Royalties 
Act because it's an arbitrary proposal to change a law that 
Congress passed in 1995 to stimulate investment in frontier 
deep water leases when prices were low and exploration 
expensive. So predicating a company's ability to enter new 
leases today on agreeing to higher prices for things they've 
already agreed to with the Government, ex post facto, violates 
the concept of sanctity of contracts and possibly even the 
Constitution.
    We do support the bill to make DOE the coordinator for 
clean coal projects. They've proven challenging, economically 
and engineeringly challenged; however, the regulatory obstacles 
are even more daunting requiring permits from every element of 
the Federal Government. Designating DOE as the lead agency 
makes sense that potentially we might get more of these 
projects built even in the face of massive challenges to the 
domestic coal industry.
    Regarding the Energy Loan Improvement Act, we greatly 
support returning the loan program to its original intent that 
Congress laid out in the Energy Policy Act and require 
applicants to have some skin in the game and pay the subsidy 
cost. That way we will ensure more bankable projects and avoid 
the problems of the 2009 stimulus package which let people off 
the hook and we saw many companies go bankrupt.
    We also support the America Competes Act.
    We also support the Advanced Grid Storage Act with some 
changes. The intent to focus DOE funds on grid storage is a 
very important element of our electricity sector 
transformation, and DOE should be spending more time and 
attention in that area. Yet we would like to not see the Davis-
Bacon provisions included.
    Lastly, without the work force to lead America's 21st 
century economy, we will not succeed. We have a growing skills 
gap and are facing the great shift change where 50 percent of 
energy professionals today can retire in the next ten years. So 
we support efforts like Senate bill 1422 which will make 
collaboration between industry, academic institutions, State 
governments, a priority to grow our energy workforce and focus 
on STEM skills.
    I will especially note the Department of Veterans' Affairs 
efforts to put veterans into the workforce as a model we should 
likely emulate.
    So thank you very much for the opportunity to testify 
today.
    [The prepared statement of Ms. Harbert follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    The Chairman. Thank you, Ms. Harbert.
    Mr. Highley, welcome.

   STATEMENT OF DUANE HIGHLEY, PRESIDENT AND CHIEF EXECUTIVE 
           OFFICER, ELECTRIC COOPERATIVES OF ARKANSAS

    Mr. Highley. Good morning.
    Chairman Murkowski, Ranking Member Cantwell and all members 
of the Committee, thank you for inviting me to testify today. I 
serve as President and CEO of Arkansas Electric Cooperative, a 
non-profit, power supply system which serves 17 retail 
distribution systems, who in turn, serve about one million 
Arkansans. And I report to a democratically-elected board 
representing the customers that we serve.
    The Electric Cooperatives of Arkansas are members of the 
National Rural Electric Cooperative Association, NRECA, which 
is a service organization of over 900, not-for-profit electric 
utilities serving 42 million Americans in 47 states. 
Collectively electric cooperatives account for 11 percent of 
all electric energy served in the United States that serve 
about 75 percent of the land mass of the United States in 
selling that 11 percent of the electric energy.
    Electric cooperatives are governed by our member owners, 
and we reflect the values of our membership. I answer to our 
owners to justify every expense. Our mission is to keep their 
power reliable and affordable and to do that in a way that's 
responsible to the environment and the communities we serve 
because we reflect their values of stewardship for the land.
    Today I'd like to offer testimony on behalf of Arkansas 
Electric Cooperatives and NRECA focusing on two bills.
    First, Senate 1068 titled CyberSecurity Emergency 
Authority. We agree that when the Government has knowledge of 
an imminent threat to the bulk power system the Secretary of 
Energy should have authority to order action to avert or 
mitigate. I serve as co-chair of the Electric Subsector 
Coordinating Council which serves as the principle policy 
liaison between leadership and industry and our Government 
counterparts at DOE, DHS, FERC, FBI and others. NRECA agrees 
with your proposal for the Government to engage with the ESCC 
and the owners and operators of the system to the extent 
possible prior to taking action. By working together and 
sharing threat information we have been able to improve 
reliability and resiliency of the grid. We believe that the 
cost recovery provision of S. 1068 is unnecessary and 
duplicates current provisions of the Federal Power Act, namely 
Sections 205 and 206 of the act which allows FERC to determine 
just and reasonable rates.
    While we do not oppose those that use cost-based rates 
having the ability to recover costs for their actions that 
might be taken under this bill, we do not support those that 
use market-based rates to have the same ability. Market-based 
entities recover higher revenues during periods of scarcity 
while cost-based entities do not. Those entities that chose to 
pursue higher market-based revenues also agreed to bear the 
many risks that go along with that decision.
    Moving to Senate 1221 titled Bulk Power System Reliability 
Impact Statement. I'm glad to see this bill requiring Federal 
agencies to effectively look before they leap and reach out to 
experts for feedback on proposed regulations. The electric grid 
is the most complex machine created by man, and it has taken 
decades to develop the levels of reliability and affordability 
that we now take for granted.
    This bill requires experts on the operation of the bulk 
power system to provide feedback on proposed Federal 
regulations that may impact reliability and affordability. As 
currently written this bill proposes to use reliability 
coordinators under the Electric Reliability Organization to 
create the required reliability impact Statements. However, it 
would be more appropriate to conduct those reports within NERC, 
the North American Electric Reliability Corporation.
    In 2007, FERC approved mandatory national reliability 
standards for administration by NERC. NERC has the subject 
matter experts on staff with an overview of the entire North 
American power supply system, and they have created the 
standard setting system and independent governance and 
established process for stakeholder input across all sectors 
which makes NERC uniquely qualified to analyze reliability 
impacts and issue reports such as their seasonal, annual and 
long term reports or their special assessment of the clean 
power plan. We welcome collaboration with NERC to inform 
agencies of the impact of their proposed regulations.
    I'd like to add a comment on the Department of Energy 
emergency orders. In some instances to protect reliability DOE 
must issue a must run emergency order to a generator. This 
requires the generator to run even though it may not be 
economic for it to run. Many cooperatives are not subject to 
FERC jurisdiction under Section 202 of the Federal Power Act. 
However, they comply voluntarily with these emergency orders to 
preserve grid reliability. In some instances complying with a 
``must run'' order may cause a generator to violate 
environmental laws or regulations resulting in exposure to 
third-party lawsuits or agency penalties.
    S. 1222, the Continuity of Electric Capacity Resources Act, 
contemplates establishing liability protection for these 
actions. We would like to work with the Committee to ensure 
that both voluntary and mandatory compliance with an emergency 
order is protected.
    Thank you for inviting me to testify.
    [The prepared statement of Mr. Highley follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    The Chairman. Thank you, Mr. Highley.
    Mr. Mills, welcome to the Committee.

  STATEMENT OF MARK MILLS, SENIOR FELLOW, MANHATTAN INSTITUTE

    Mr. Mills. Thank you, Madam Chairman, and thank you for the 
invitation to testify before you and your Committee. And I, 
like all the panel members here, commend the Promethean effort 
to take on so much legislation.
    I'd like to reinforce the comments you made in your opening 
remarks about the fact that so much of what we're dealing with 
is outdated and give some context to four classes of 
legislation that are being considered specifically the 
regulation of the oil and gas industry, particularly the shale 
oil and gas industry, the regulation to control and constraint 
on exports, the importance of grid reliability and cyber 
security as they are interrelated and also the vital importance 
of long term R and D.
    The fact is that it would make as much sense as a context 
for Congress in 1985 when the Energy Policy and Conservation 
Act was amended, it would have made as much sense for Congress 
today to think and stay mired in the facts that they had in 
1985 as it would have been for Congress in 1985 to forge 
legislation based on the facts of 1955 which, of course, would 
make no sense.
    Let me highlight how profound the changes are in the 
landscape that we're dealing with. I mean, it's unremarkable to 
note how much the non-energy landscape has changed in the last 
30 years.
    Thirty years ago President Reagan has just begun his second 
term as President. The Soviet Union was still extant. The 
Internet was still almost a decade in the future and Apple was 
a small public company. It was only four years old, and the 
word cyberspace had just been invented the year before by a 
science fiction writer. So the words cyber security were not 
even in the political lexicon.
    We have changed the law to policies that have evolved from 
these profound alterations in the landscape of the economy and 
technology of America, but it's remarkable how little policies 
have changed on the energy domains despite profound changes in 
the energy landscape.
    My fellow panelists have outlined and you, Chairman 
Murkowski and the members, all know how much the United States 
has changed its energy landscape. I think we still fail to 
fully appreciate how different the world really is.
    It's not just that the United States is no longer the 
world's largest, fastest-growing energy consumer. We don't even 
talk in terms of, which we did in 1985, peak oil and the idea 
of the imminent end of the very availability of oil and gas. We 
now have debates about whether we should export oil and gas. 
That, by itself, illustrates how profound the change has been 
in the energy landscape.
    Let me add one other feature of the energy landscape that 
typically gets ignored. Thirty years ago the information part 
of our economy was very small. In today's GDP the information 
part of our economy, that's everything from data centers to 
digital movies to manufacturing software and microprocessors, 
that part of our economy now is 300 percent bigger than the 
transportation part of our GDP. This is a profound change. It's 
the part of our economy that's utterly and totally dependent on 
electricity. This makes the grid reliability and the inherent 
stability and affordability of electricity more important today 
than any time in history.
    So in general we live in a world that has, compared to 1985 
when we forged, sort of, the anchoring legislation that we deal 
with today, there's two billion more people in the world. The 
world's economy is about $30 trillion bigger than then, and we 
consume 30 million more barrels of oil per day than we did in 
1985.
    Let me summarize, sort of, very quickly four implications 
of this profoundly different landscape.
    The first, of course, relates to the psychology of 
legislation that was anchored in ideas of dependency and oil 
disappearing. We now no longer have to think in those terms. We 
can now begin to think in terms of influence. We should be 
forging policies with respect to oil and gas in how we can 
influence the world in positive ways, and this has direct 
relevance to legislation that inhibits or bans the export of 
natural gas and hydrocarbons.
    Second, the issue of grid reliability, I think, is of utter 
and critical importance, particularly not just because the 
United States is more electrified than it's ever been in 
history, but also because of the integration of information 
technologies, the internet of things and the very foundational 
merging of the cyber infrastructure with our energy 
infrastructure. I would say that cyber security on the grid is 
a profoundly and critical social issue.
    Lastly, I would like to reinforce Mr. Augustine's 
observations about the vital importance of basic research. I am 
a big fan, like Mr. Augustine, of the increase of Federal 
support for basic research. I am also am not a fan of increased 
involvement of the Federal Government in industrial projects.
    In fact, I would suggest and like to reinforce the critical 
importance of basic research and having the Government step in 
where the private sector does not want to and cannot in many 
cases. And I believe we could find the money by simply 
reallocating the Government spending of money on capital 
projects that are better left to the private sector and 
spending the money at both the national labs and in 
universities on basic research.
    With that, I'll end my remarks, and I thank you very much 
for the opportunity to testify.
    [The prepared statement of Mr. Mills follows:]
    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 
    
    The Chairman. Thank you, Mr. Mills. I appreciate your 
comments at the end, because in my view you have summarized 
exactly why this Committee needs to take on this Promethean 
task, as you have described it. I think we forget just working 
in the day-to-day how outdated our policies are in the energy 
sector. While this is a big task for us to do a larger, broader 
bill that is more all encompassing, the reason it needs to 
happen is because it is so outdated.
    As outdated as it is to us, it is the policymakers who are 
holding back the opportunities--whether it is for job creation 
that Ms. Harbert talks about or whether it is our opportunities 
to influence around the globe. We need to be the one to take up 
the heavy burden and the work and make it happen, so I 
appreciate your very articulate summary.
    I am going to start with you because you mentioned the 
opportunities within a changing policy to make sure that we are 
moving forward with the research and development that will lead 
to the infrastructure and the technologies of the future. Is 
there a linkage between allowing exports whether oil or gas or 
both and sending the right signals to build new infrastructure, 
to get that moving? Because a big part of what we are dealing 
with is how do you then translate that into the financing, like 
loan programs, or is there a linkage there between oil exports, 
gas exports and advancing infrastructure?
    Mr. Mills. Well the short answer, Madam Chairman, is of 
course there is. The production of oil and gas is 
geographically specific, of course, but the infrastructure 
needed to transport and move oil and gas to global markets 
covers many more of the states of the Union and the access to 
the global markets for a product will profoundly stimulate 
long-term and short-term investment.
    I think that if the United States took the posture of 
saying to the world that we are reorienting our foundational 
energy policy toward selling to the world, not being insular, 
not becoming independent, but becoming a player on the world 
stage, this would stimulate profound reactions in the private 
sector. And if we did not constrain the private market's 
ability to invest based on market access to buyers around the 
world, we would see incredible increase in the building of 
pipelines and ports.
    Obviously all the regular regulations pertaining to how you 
can build these from an environmental perspective would 
pertain, but those are not constraints compared to the banning 
of the ability of the private market to function and invest 
capital to sell to world markets.
    The Chairman. I appreciate that.
    Ms. Harbert, it has been suggested to me that the reason 
that I would support lifting the oil export ban is because I 
come from a producing state, and I think many forget that 
actually there is an exemption that currently allows Alaska to 
export our oil. In fact earlier in the month of May we moved 
about 975,000 barrels to South Korea. So that is not 
necessarily my pitch. I think it is because, I know it is 
because this is an outdated policy that needs to be revamped. 
Can you give me your assessment as to why lifting the oil 
export ban actually helps those states that do not produce oil? 
What is the benefit to them?
    Ms. Harbert. Sure. I mean, if we lift this oil export ban 
it does allow all 48 states to be in the business. If you are a 
producing state, you benefit in one way. But 30 percent of 
these jobs, the 400,000 jobs that I mentioned, are in the 
supply chain and that does not mean that they are located in 
Texas or Oklahoma. In fact, the state that has the most to gain 
from this is the State of Illinois because they will be 
resident to more of supply and service industry to servicing 
the export industry. So it truly means that every state has an 
equity in getting this done and benefiting from the jobs, the 
revenue and the investments.
    You know, as long as we can export and we keep energy 
affordable here at home it has a secondary effect as well as 
more people invest here because we have affordable energy. And 
the Gulf of Mexico is a huge beneficiary of that as well.
    The Chairman. I am going to reserve other questions for the 
next round because I have a lot to talk about, but I know that 
we have good participation amongst our colleagues here this 
morning. We are going to skip Senator Cantwell until she comes 
back and go to Senator Franken.
    Senator Franken. Thank you, Madam Chair.
    Mr. Augustine, welcome back. Your testimony emphasizes the 
critical role for the Federal Government in energy research. 
You note the important role played in your testimony in hydro-
fracking technology, and I think the history of the Federal 
Government's involvement in hydro-fracking is very telling.
    The Eastern Gas Shales Project was an initiative that the 
Federal Government began back in 1976 before hydro-fracking was 
even a mature industry. That initiative included dozens of 
pilot demonstration projects for test drilling and fracturing 
methods. This was instrumental in the development of the 
commercial extraction of natural gas from shale which 
previously that had just been not economically feasible.
    Another tool that is used in fracking, micro seismic 
imaging, was originally developed by the Sandia National 
Laboratory in New Mexico, a Federal energy laboratory.
    Thank you for emphasizing it and having emphasized it the 
last time you testified. It is why it is so important that we 
invest in game-changing technologies including energy storage 
which will allow us to incorporate more renewables. It will 
give utility customers more control over their energy use. It 
will help them keep the lights on in case of a grid outage.
    I have introduced the Advancing Grid Storage Act which will 
dedicate R and D funding so our scientists and engineers can 
have the resources they need to innovate and bring down the 
costs of these technologies. My bill also provides technical 
assistance and loans to those who want to deploy energy storage 
systems.
    Mr. Augustine, can you give us some of your recommendations 
as to what this Committee can do to support the development and 
deployment of more reliable, efficient and cost effective 
energy technologies including those, things like energy 
storage?
    Mr. Augustine. Senator, thank you for the question.
    I would certainly go back and cite the very points you make 
where the Federal Government has and can and should, in my 
view, support the early phase research that is high risk such 
as was done in hydraulic fracking the companies just didn't do. 
And so the Federal Government, I think, deserves a great deal 
of credit for taking on those kinds of tasks.
    When it comes to energy storage I could think of very few 
areas where a breakthrough would be more significant than in 
energy storage. Energy storage limits us today in terms of the 
efficiency of the grid, automotive electrification, even mobile 
pocket devices. Energy storage is really on a critical path, 
and the gains we've made have been disappointing to be very 
candid. Disappointing in part because it's a tough problem in 
chemistry and physics. Disappointing in part because we just 
haven't invested in that area. So I think the first thing we 
need to do is to increase our investment.
    Secondly, we need to have much better connections between 
the research labs, the government labs and industry where 
candidly we don't do a good job today.
    Senator Franken. Thank you.
    Mr. Orr, can you talk about how research at our national 
labs has contributed to the development of advanced energy 
storage systems?
    Dr. Orr. Senator, thanks for that question.
    It's an opportunity for me to point out that we have quite 
a lot going on in the energy storage area. Perhaps the most 
visible is the Joint Center for Energy Storage Research at 
Argonne Lab. It's a collaboration of both university and lab 
folks working on the chemistries that are beyond lithium ions 
to make batteries have higher energy density and good power 
delivery and lower weight and addressing the kinds of safety 
problems. So it's a big center, one of our energy hubs.
    We have a variety of energy frontier research centers. 
These are funded out of the Office of Science, and they really 
focus on the fundamentals of chemistry, electro chemistry, in 
particular, nano structure materials, understanding the 
fundamentals of material properties that will go into making 
better batteries. So providing the underpinning there. On the 
applied side we have work in our Vehicle Technology Office that 
works on batteries for applications in vehicles, and then we 
have quite a lot of work in our Office of Electricity that's 
aimed at the grid storage kinds of settings.
    What's so interesting about the energy storage area is that 
it applies on a variety of scales from the cell phone up to the 
grid, on a variety of time scales from the short term 
variations from a wind turbine to the day/night variations or 
even to the winter/summer kinds of variations. And it can be a 
very important contributor to a stable grid in operating with 
lots of intermittent distributed generation in the future.
    Senator Franken. Thank you.
    Madam Chair, I am very cognizant I am through my time, but 
I just want to emphasize that if you think about what a game 
changer fracking has been and how much of that came out of the 
Federal Government research and know what a game changer 
storage is going to be that we would be really negligent if we 
did not invest in storage.
    Thank you.
    The Chairman. Who would have thought storage could be so 
exciting? It really is.
    Senator Franken. You want to know how excited I am?
    The Chairman. I can hear it in your voice.
    Senator Franken. Oh, thank you. [Laughter.] Because 
otherwise I was going to take up more time. [Laughter.]
    The Chairman. Senator Gardner?
    Senator Gardner. We can see the excitement too, just so you 
know, we can see it.
    Senator Franken. For those listening on the radio. 
[Laughter.]
    Senator Gardner. Thank you, Madam Chair, for hosting this 
hearing today and thanks to the witnesses for your time today.
    I wanted to follow up, Mr. Augustine, a little bit with one 
of your comments in response to a question and talking about 
working with the private sector, research development.
    Senator Alexander and I and others on this Committee and 
beyond are working on reauthorization of the America Competes 
legislation. His focus, of course, is on energy. In Colorado we 
are very proud of the work at the National Renewable Energy 
Laboratory is pursuing and undertaking.
    The legislation, though, that represents his efforts on 
energy represent the legislation that we will be moving through 
the Commerce Committee, through NIST and NASA and other 
programs on research and development that will drive the energy 
sector, that will drive economic opportunity, that will drive 
this real, new invigoration of research across this country.
    Could you talk about what would happen if we fail to 
reauthorize some of these major research and development type 
of programs? What would happen at DOE? What it would mean for 
the future of this country, energy future, and what it would 
mean domestically and globally?
    Mr. Augustine. Well the impact would be immense, and you 
mentioned Senator Alexander's contribution. It was he who 
really caused the Gathering Storm study to be established that 
led to the creation of ARPA-E and much of the research that's 
being funded in DOE today.
    When one looks at the impact of not continuing this kind of 
support currently the impact on the economy, on jobs, is 
currently immense, and the impact on national security. The 
fact that we no longer are so dependent upon a cartel of 
nations for much of our energy.
    In fact, geopolitically most of the traffic through the 
Hormuz Straits are going to go from West to East now, rather 
than East to West which places a whole different view on the 
national security implications.
    So I think everything from jobs, to the broad economy, to, 
of course, the provision of energy itself on the natural 
environment. These are all considerations that your question 
impacts profoundly.
    Senator Gardner. Thank you.
    Mr. Orr, I do not know if you would like to add to that at 
all?
    Dr. Orr. I would just endorse everything that Mr. Augustine 
said that our ability to deliver scientific research is well 
supported in the Senate version of the America Competes Act, 
and we are certain that we can put to work in a good way the 
additional support for science. That underpins everything. And 
the innovative approach that ARPA-E has brought to challenging 
ourselves to do, to think of out of the box ways to solve game 
changing energy problems. Those are all things that can 
contribute in a very big way to the future of the country.
    Senator Gardner. Thank you. Ms. Harbert, a question for 
you.
    Colorado is in the leading edge of regulations when it 
comes to oil and gas development. It continues to make sure 
that we are responsibly enacting policies to protect the 
environment while also allowing our economy to thrive with the 
production of abundant and affordable energy.
    Last week we had the EPA's Draft Report that confirmed 
hydraulic fracturing has not impacted our drinking water 
resources. We also have a BLM rule that is moving forward, and 
we had the BLM testifying before this Committee. They could not 
cite a single incident that led to the BLM rule even though we 
have states like Colorado that are putting their, kind of, 
stringent regulations forward.
    We talked a little bit about the variance process before 
this Committee. It is important to Colorado since that is the 
mechanism the BLM is going to choose to address duplication in 
a state like Colorado where efforts are being undertaken by the 
state as well as the BLM to regulate hydraulic fracturing.
    About 3 weeks ago, I understand, Colorado had its first 
meeting with the BLM to discuss the memorandum of understanding 
and the variance process. What we have been told is that BLM is 
still waiting for guidance and a template to the variance 
request from Washington and then there is little chance that 
the state could have a variance in place by June 24th when the 
BLM regulations are going to go into effect.
    What does this mean for industry and production and during 
this variance request processing, that period as we wait for 
Washington's guidance and the ultimate approval variance?
    Ms. Harbert. Well, thank you, Senator Gardner for that 
question, and let me say that states have been leading on this 
effort and you have some of the best environmental permitting 
regulations in the country in Colorado. And there are some of 
your neighbors who do as well. And we should recognize that.
    The Federal process by BLM's own statistics is not as good 
as yours. So adding an inferior process on top of a superior 
process doesn't sound like good policy or good regulation. In 
talking with BLM and looking at their regulatory process and 
looking at the actual regulation, we entered into the record 
the fundamental question of why do we need this? They were 
supposed to actually answer that in the final regulation, and 
they did not.
    So it is clear that this is ultimately going to end up at 
the courts because they have not justified why this process is 
needed. And in the interim they're going to leave states like 
Colorado and investors in limbo not knowing what rules to 
follow which is not good for Coloradans. It's not good for the 
industry, and it's not good for continued production. So 
they're introducing a whole other level of uncertainty that is 
needless and unjustified.
    Senator Gardner. Thank you, Madam Chair.
    The Chairman. Thank you, Senator Gardner.
    Senator Heinrich?
    Senator Heinrich. Thank you, Madam Chair for holding this 
hearing, and I certainly look forward to working with you and 
my colleagues on crafting bipartisan energy legislation.
    I had thought I would take a couple of minutes to speak 
briefly about a few of the bills on today's agenda that I hope 
to see, hope will have broad support, and I think should be 
considered by the Committee.
    The first is S. 1407, the Public Land Renewable Energy 
Development Act sponsored by Senators Heller, Tester, Risch, 
and myself. This bill would direct the BLM to identify areas 
that are ideal for wind and solar development, places with a 
high potential for development and low conflicts, with 
sensitive wildlife habitat, water resources and other land 
uses. It directs the revenues from the royalties on renewable 
energy projects to permit processing costs, habitat projects 
and to the states and counties where these solar and wind 
projects would be located. The bill has a very long history of 
bipartisan support, and I certainly thank the Committee for 
including it on the agenda.
    The second bill is S. 1434 which promotes the development 
of energy storage, something that I am the primary sponsor of 
and I have been working with Senator King on as a co-sponsor. 
We have heard a lot about energy storage today, but it is a 
rapidly developing field with the potential to really 
dramatically impact the operation of both intermittent and 
conventional power generation as well as the way that the 
transmission system and even local distribution are managed. I 
think as the cost of storage has declined we are going to 
continue to see the deployment on both sides of the meter, grow 
increasingly rapidly. I know a number of my colleagues share my 
interest in storage, and there are several related bills on 
today's agenda. My hope would be that the Committee will 
include a very strong storage provision that promotes the large 
scale development of this important technology.
    S. 1422, the Energy Workforce for the 21st Century Act, is 
a bill that I introduced with Senator Booker. The bill is a 
companion to the bipartisan effort led by Congressman Bobby 
Rush in the House. In addition to expected base line growth in 
employment, nearly half of skilled technicians, utility line 
workers and engineers in the energy industry may retire and 
need to be replaced in the next ten years due to the aging out 
of the workforce. Now these two factors will open the door to 
millions of future well paying STEM jobs. S. 1422 directs DOE 
to establish a program to improve education and training for 
energy workers, and the bill is aimed at aligning future energy 
workforce needs and increasing the participation of women and 
minorities throughout the energy sector.
    I think I would like to turn now to DOE's national 
laboratories and specifically to technology transfer. An issue 
that is particularly important to my state but touches many of 
our colleague's states as well. I am pleased that Mr. Augustine 
from the Bipartisan Policy Center is here as a witness today. 
He certainly has very broad experience in both the public and 
private sectors and interest in innovative technologies. I 
think my colleagues know he is currently a member of the 
Commission to review the effectiveness of all of DOE's national 
labs. One of the topics the Commission is considering is tech 
transfer and partnering with industry as one important part of 
the overall mission of the national labs, and I think I will 
end with a question.
    Mr. Augustine, I know your Commission's work is not 
complete, but I would love to hear your perspective on what you 
view as some of the challenges that you cited in your testimony 
and some of your conversation related to commercializing 
innovative technologies and the difficulties that small 
businesses have in particular with engaging with the national 
labs on those issues?
    Mr. Augustine. First of all let me comment on how important 
this is because we invest, I think, something like $15 billion 
in the national labs every year some to carry out basic 
missions, but others to support things that would have to be 
implemented in industry. So what we get out of that $15 billion 
or a share of it depends on how well we translate new knowledge 
into the business community.
    There are many inhibitors today to answer your question 
that particularly affect small business. Small business, by and 
large, doesn't have the resources to know what's going on at 17 
different national labs. And it's partly, I think, the burden 
of the labs to help those small businesses know what's going on 
at the labs. Second, the process of setting up joint efforts 
between business and the labs is very bureaucratic. I talk to 
people in small businesses who just throw up their hands and 
say, we give up. It is just too hard. We'll try it by 
ourselves. Then there are just broader matters that have to 
deal with both big companies and small companies. The best way 
to translate knowledge, technology, in my experience, has been 
to move people back and forth in and out of the government, 
into universities, into the labs. And well meaning conflict of 
interest laws today make it extremely difficult to do that. So 
those are just a few of the examples that I would cite.
    Senator Heinrich. Thank you, Madam Chair.
    The Chairman. Thank you.
    Senator Cassidy?
    Senator Cassidy. Thank you, Madam Chair.
    Let me first speak to Senate bill 1181, the Energy 
Technologies Access and Accountability Act, which I am 
introducing and which is somewhat similar to Senator Stabenow's 
Senate bill 1449 which modifies the definition of a vehicle 
under the Advanced Technology Vehicle Manufacturing Program 
(ATVMP) to include commercial trucks in the case of both our 
bills and in the case of mine, United States flag vessels.
    Now this allows, obviously, energy transportation to be 
converted to natural gas. It is my understanding that until 
March of this year the ATVMP had not issued a new loan for four 
years, and many have begun to question the usefulness of the 
program. This bill would modify the program to include 
commercial trucking and maritime vessel manufacturing where 
investment in new fuel type vehicles are needed the most and 
where the technology and implementation of these vehicles 
stands ready.
    As one example, here is the New York Times article about 
EPA requiring 18-wheelers to run more fuel efficiently. 
Obviously natural gas would be a more fuel efficient way, so 
this is a meeting of a lot of factors that could really jump 
start.
    [The information referred to follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    So with that kind of statement, Mr. Orr, the program has 
not issued any new loans in four years. Under its current 
parameters is there enough interest to completely disperse the 
remaining $16 billion in loan authority?
    Dr. Orr. Thanks, Senator, for that question.
    You know that we did issue a loan associated with aluminum 
sheet, high strength, low weight aluminum for vehicle 
applications this year. The loan program's office is actually 
not in my part of DOE, but and I'm sort of--so I'm a bit of an 
external watcher. I don't have a window on the projects that 
are in review now, but I'd be happy to look into that and work 
with your office.
    Senator Cassidy. Now do you feel qualified to comment if 
there is potential for the trucking industry and the maritime 
industry if more loans were made available? Is there potential 
for us to help them jump start, moving to a more fuel efficient 
standard or type of engine and would this loan program be 
beneficial in that regard?
    Dr. Orr. So I'd say in a variety of ways vehicle efficiency 
for trucks is actually a quite important area.
    We do have a super truck, one program, in our Vehicle 
Technologies Office aimed at increasing fuel efficiency by 50 
percent in trucks. And in fact the work that was done under 
that program actually exceeded the goal by quite a bit. There 
was one manufacturer that got to 115 percent. So that's kind of 
a doubling from five to ten miles per gallon in a big truck, 
and we're just embarking now on a super truck two program that 
will enhance that further.
    Senator Cassidy. You get more BTU per carbon from natural 
gas than you do from oil or diesel or from oil, so it sounds 
like you think there is still upside in terms of how we can 
improve the efficiencies of these vehicles.
    Dr. Orr. I do. Yes, I do.
    Thank you.
    Senator Cassidy. And is there potential? Of course, I have 
a bias, but do you agree that if these loan programs are made 
available it would facilitate the development of these higher 
standards?
    Dr. Orr. I think the loan programs can contribute. Those 
tend to come a bit at the later stage after the research part 
of it is farther along.
    Senator Cassidy. Natural gas engines are actually somewhat 
developed. I mean, the city buses in DC, I think, work on 
compressed or on liquefied natural gas.
    Dr. Orr. There are plenty that work on compressed natural 
gas. Frequently that's done for air quality kinds of reasons. 
The overall efficiencies in the engines are roughly the same, 
but there's an opportunity for both research and then, of 
course, the deployment side as well.
    Senator Cassidy. I see.
    Finally, what has the DOE been doing to create the 
infrastructure because when you speak about other countries 
having compressed natural gas vehicles and also having an 
infrastructure to fill up the tank whereas we do not, is DOE 
doing anything to facilitate that infrastructure development?
    Dr. Orr. There has been work that has gone into, mostly 
it's been in, kind of, fleet applications, again, largely for 
air quality reasons. And to be honest, I'm not sure how much 
we're doing in that area right now. But I can certainly follow 
up with your staff.
    Senator Cassidy. Okay, thank you, I yield back.
    The Chairman. Senator Cantwell?
    Senator Chairman. Thank you, Madam Chair.
    Mr. Orr and Ms. McAleer, if I could continue.
    Mr. Orr, I mentioned both cyber security and this issue of 
carbon fiber. Obviously carbon fiber is very important from an 
energy perspective because it is a lighter weight material, so 
both the auto and aero industries are scoring big victories in 
the marketplace by utilizing carbon fiber.
    So the question becomes what else can DOE do to help with 
research and development and how to transition this material 
into other uses? What other opportunities are available? How 
big is that opportunity?
    On cyber security, obviously, this past week's events are 
very jarring. I think DOE's role is somewhat underplayed, and I 
believe DOE has a major role in helping us.
    In 2011, we had the Grid Cybersecurity Act before this 
Committee. We actually reported it out of Committee a couple 
years ago, but it did not pass the full Senate. The bill's 
focus was on hardening our grid and making sure that we are 
doing everything to protect our nation's energy infrastructure. 
So on those research and development issues what do you think 
we need to do?
    Dr. Orr. Well certainly the idea of light weighting and 
carbon fiber materials is a very important component of our 
Vehicle Technologies Office. One of the principle ways you can 
increase the efficiency of vehicle transport is to provide the 
same strength but with a lighter weight materials. So we have 
an active program in that area, and we're very interested in 
pursuing it going forward.
    On the cyber security area, we take our responsibility in 
this area quite seriously. And it goes well beyond the grid, 
but it certainly is very important for the grid. You might be 
aware that in the last few years at the Department we have put 
together a series of cross cutting research efforts that are 
meant to attack big, hard problems with all the expertise that 
we have available within the agency--one of those is the cyber 
security area.
    So we are very much interested in fulfilling our 
responsibility there. This is an area where the national labs 
really have very deep and appropriate expertise for us to apply 
to a problem of national interest.
    Senator Chairman. Do we have that appropriately funded?
    Dr. Orr. Well, we have requested quite significant support 
for our cyber security effort in the FY'16 budget, and we're 
looking forward to pursuing it with all the strength we can.
    Senator Chairman. Okay, thank you.
    Ms. McAleer, your challenge is looking at the scalability, 
right? What are some of the R and D issues for scaling up the 
industry to make it more economic?
    Ms. McAleer. Yes, Senator Cantwell.
    We have found that working first and foremost with carbon 
fiber prepared materials is the low hanging fruit, and we can 
move forward in accepting those materials and then creating 
products. However, the end of life issues with carbon fiber 
products is much more complex. But even just working with the 
carbon fiber pre-impregnated material scraps is a challenge in 
that it comes in all sorts of different formats, sometimes it's 
in a pristine format and other times it's a wad of waste.
    And so in order to really fulfill the full potential of 
this very valuable, high value material, we need to educate the 
manufacturers so that when they create their manufacturing 
floor spaces that they will also consider how do they take 
advantage of the scrap material that they're creating so that 
it can be put into a more productive use.
    Senator Cantwell. Well it is amazing that we have to sit 
here. I mean, we really are ushering in a new era of carbon 
fiber just as we speak, and there are so many applications for 
this material, everything from bridges to aerospace.
    At the same time we really do need to usher in this era of 
recycling research, because we know it is going to be a highly 
used material. Figuring out how to increase the value of carbon 
fiber by recycling is critical. My understanding of the process 
is heating up the material then allows us to reuse it in other 
ways, so I certainly hope we can get some answers from DOE on 
this.
    Thank you.
    Ms. McAleer. Thank you.
    The Chairman. Senator Alexander?
    Senator Alexander. Thanks, Madam Chairman.
    I want to congratulate Chairman Murkowski on her effort to 
incorporate such a wide range of legislation in the bill and 
thank her for this hearing.
    I also would like to point out the leadership of Senator 
Gardner who is a newer member of the Senate, but who is taking 
an active interest in America Competes along with Senators 
Murkowski, Cantwell, Coons, Feinstein, Heinrich and me. We are 
all very interested in that legislation, and I want to talk 
about that in just a minute.
    Mr. Augustine, Senator Murkowski has in her bill, I 
believe, because I am co-sponsoring it, a provision that says 
the Congress should wait until after the Commission on national 
labs has finished its work and then the Department should make 
a report to us about what it recommends we do. Do you think it 
is a wise idea to wait until after the Commission has completed 
its report before we take any action to reform the 
laboratories?
    Mr. Augustine. Senator, I think that there are some things 
that one would not need to wait to do that are fairly evident, 
so I would not make a blanket statement that one ought to wait 
on everything. But I do think that our Commission is putting 
forth a great deal of effort. We visited all the labs. We're 
very near to completing our work, so I think for many of the 
issues it probably is worth waiting that brief period of time.
    Senator Alexander. Yes. I have seen how valuable the work 
you did was on America Competes years ago, and you basically 
gave us a plan that was recommended by a number of reputable 
people. It was a big help to Democrats and Republicans here 
because we could follow your blueprints.
    I, for one, think what we should do is wait until we see 
your report, and then I look forward to working with Senator 
Murkowski and Senator Cantwell and others to deal with that.
    Dr. Orr, Senator Bingaman sent me to Japan when I was a new 
Senator to take a look at Japan's computer. I flew all the way 
to Yokohama and did that, but there was not much to see, just a 
big box. But it got me involved in exascale computing, and ever 
since one area of agreement between the Congress and the 
Administration has been the priority on exascale computers. Now 
we have some big computers already today. What can we do with 
exascale computing that we cannot do with computers that we 
have today and why is it important that we fund them properly?
    Dr. Orr. Senator Alexander, that's a question that we've 
thought a lot about and one that, I think, is very important. 
We certainly appreciate all your leadership over the years in 
helping us maintain the United States' lead in high performance 
computing.
    The Department of Energy has really contributed a lot at 
various stages when we really needed an advance in 
capabilities. The ability to replace weapons testing with very 
high performance computing really led to an advance in 
computing capability, but then that spread across the entire 
scientific base.
    The exascale computing initiative is the next version of 
that. It will let us simulate the properties, the materials, to 
do materials by design, to do processes at very detailed 
scientific scales in a way that we can't do now because the 
problems are too hard. They're important for the detectors in 
all the basic science facilities. It's really important across 
the whole fundamental scientific base.
    So we're, as you know, investing in the next round toward 
exascale. I just had a chance to participate in the 
announcement about the CORAL computing effort that involves Oak 
Ridge and Argonne. We're well on the way, and if we have the 
support we will maintain U.S. leadership. If we don't do that, 
then the competing work in China and elsewhere will take over 
the lead.
    Senator Alexander. Thank you.
    I want to use my last 20 seconds simply to once again 
congratulate Mr. Augustine and his team for keeping our eye on 
the ball about the importance of energy research that Senator 
Franken mentioned.
    The American Association for the Advancement of Sciences 
recommended a four percent increase each year on the route 
toward doubling energy research. Now that is over 20 years, but 
at least it does double it over that period of time.
    The legislation by Senators Murkowski, Cantwell, Gardner, 
Coons, Feinstein, Heinrich and I would authorize that. I want 
us to think back ten years ago what we had, I think, nearly 35 
Republicans and 35 Democrats and legislation that was 
introduced by the Majority Leader and the Minority Leader to 
begin America Competes.
    I am delighted with that kind of leadership from the 
Chairman and the Ranking Member of our Committee and all of the 
effort by the other Senators, and I am glad to see that you are 
still chugging along and urging us to do what we ought to do 
about energy research.
    Thank you, Madam Chairman.
    The Chairman. Thank you, Senator Alexander.
    Senator Stabenow?
    Senator Stabenow. Thank you, Madam Chair, to you and our 
Ranking Member. We have a lot of great opportunities, I think, 
working together on this. I want to echo Senator Alexander and 
what so many of you have said about energy research. It needs 
to be a top, top priority.
    Mr. Augustine, thank you and thanks to all of you on the 
Committee and Mr. Orr as well.
    There are two bills I would like to bring to the 
Committee's attention, one specifically on research and one 
that would focus on how we take what we learn through research 
and actually apply it which is really important in terms of 
leveraging jobs and manufacturing in America.
    One is the Building Better Trucks Act, S. 1449. I was just 
outside the Committee room plotting and planning with Senator 
Cassidy on how we might bring together his bill and mine that 
are very similar in terms of expanding the opportunity to focus 
the advanced vehicle loan program on medium and heavy duty 
trucks where we know the energy efficiency is and real 
opportunities there for jobs as well. Then also S. 1408 which 
is a bill that I have put forward a number of times that has 
actually come out of the Committee in the past and is now being 
introduced by my colleague, Senator Peters, from Michigan 
joined by Senator Alexander and myself, that deals with 
research.
    Before proceeding I would like to ask that a letter that we 
will be delivering be put in the record, Madam Chair, Ranking 
Member, from the Motor and Equipment Manufacturers Association 
supporting both these bills.
    Senator Cantwell [presiding]: Without objection.
    Senator Stabenow. Thank you.
    [The information referred to follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Senator Stabenow. The Building Better Trucks Act would 
basically build on what we did in 2007. Under the previous 
Administration I authored what has been now dubbed the ATVM 
Program that would create opportunities for loans to upgrade, 
expand and create manufacturing in the United States for 
advanced fuel efficiency vehicles. It was important as we were 
increasing CAF standards to make sure that the building of 
those new vehicles was in the United States, not overseas. In 
fact, we have brought jobs back to the United States as a 
result of that program. So the question is now as we go forward 
and look at the need to do the same, not just for small 
vehicles, but medium and heavy duty vehicles, how do we take 
that same approach for trucks?
    The Building Better Trucks Act would do two things. It 
would allow manufacturers of medium and heavy duty vehicles and 
their components to qualify for loans. As we know right now 
trucks on the roads account for seven percent of vehicle 
traffic and they consume 25 percent of our fuel. So when we can 
tackle energy efficiency around larger vehicles that is a very 
smart thing to do on a lot of different fronts. The second 
thing is we would clarify that suppliers can also qualify for 
the program. As has been said already by members of the panel, 
we have a situation where there are actually more jobs in the 
supply chain than in actual assembly whether it is automobiles, 
trucks, or any other kind of manufacturing capacity. It is the 
supply chain, and we want to make sure that we are supporting 
the supply chain as well. We have 700,000 people nationwide, 
everywhere from Michigan, Ohio, Indiana, Tennessee, Kentucky, 
Texas, Alabama, South Carolina, Georgia, all over the country, 
working as a result of focusing on the supply chain.
    Madam Chair, in the past the ATVM, I know, including from 
myself, has had some criticism that it was not working as well 
as it should. I want to thank Secretary Moniz for addressing 
those issues. We now have reports that are much, much more 
positive from GAO and so on. In fact, the good news is that in 
March the Department issued a loan to Alcoa to upgrade and 
expand its Tennessee aluminum mill to produce specialized 
aluminum used to reduce weight and improve fuel economy in a 
number of different cars and trucks including, I have to say, 
the Ford F150 truck which they are now taking 700 pounds of 
steel out of weight and using aluminum which is very exciting. 
The ATVM program is a very important part of that. Madam Chair, 
I really want to work with you on this. Senator Cassidy and I 
are very interested in working together and working with you on 
how we could use this program to expand what we need to do 
around large vehicles.
    Finally, I would just say that the Vehicle Innovation Act 
authorizes R and D efforts through the DOE's Vehicle 
Technologies Office and is very much, again, involved and 
focused on our medium and heavy duty, commercial trucks, and 
how we can come together to support new research and 
development on technologies that will have a very big bang for 
the buck in terms of efficiency of larger vehicles. It is an 
area that really needs to be focused on, and I am looking 
forward, Madam Chair, to working with you as we move forward on 
the energy bill that will address a lot of different energy 
efficiency issues.
    Thank you.
    The Chairman [presiding]: Thank you, Senator Stabenow.
    Senator Daines?
    Senator Daines. Thank you, Chairman Murkowski and Ranking 
Member Cantwell, and thanks for having this hearing on this 
most important piece of legislation.
    I certainly support your efforts here on examining a series 
of bills that foster a far more robust, all of the above energy 
strategy, developing a more diversified portfolio from an 
energy viewpoint for the U.S.
    In my home State of Montana coal is an important piece of 
that energy mix. It powers over half of our electricity. It 
generates thousands of jobs. It generates over $100 million a 
year in tax revenues that helps our infrastructure, helps fund 
our schools, our teachers. Though these are all good paying 
jobs, the tax revenue and affordable electricity seemed to be 
under threat under this current Administration. I think the 
legislation like Senate bill 1221, the Bulk Power System 
Reliability Impact Statement Act, is critical to ensure Federal 
agencies are accountable for their actions and the impacts that 
Federal actions have on affordable electricity reliability.
    Moreover I am also glad the Committee is considering Senate 
bill 15, offered by Senator Hatch, and the other measures that 
prohibit duplicitous and unnecessary Federal regulations on 
energy development on Federal lands and allow the states to 
lead.
    I also commend Senator Murkowski and others on this 
Committee for taking the lead and strengthening global 
dependence on American made energy by facilitating energy 
exports.
    I would also like to voice my support for the Public Lands 
Renewable Energy Development Act as well. In addition to the 
wealth of conventional fuels, Montana has immense potential for 
wind, for solar, for biomass, for geothermal energy 
development. This bill would facilitate that production while 
ensuring a firm partnership between states as well as 
supporting conservation.
    My first question is for Mr. Highley. Mr. Highley, why is 
it important for Federal agencies to look before they leap in 
promulgating regulations for the energy sector? It is actually 
two questions. That would be the first one. The second is can 
you provide some examples of Federal agencies and Federal 
actions where the public would have been better served if these 
agencies had deliberated on the impact on grid reliability in a 
meaningful fashion prior to issuing the regulations?
    Mr. Highley. Well, thank you for the question.
    And why it's important to look before you leap is because 
the electric grid is the most complex machine yet created by 
man. It didn't get created overnight. It took decades and 
decades to get it built to the level it is.
    Every device on the grid has to operate in exact 
synchronism with every other device, and changes to that should 
not be made lightly. It's possible for a well-meaning 
regulatory body to come up with something that sounds like a 
great idea but that jeopardizes reliability and the integrity 
of the grid. So that's the reason for asking for this expert 
level review prior to issuing the regulations.
    Now I've seen it on the state level where well-meaning 
regulators have had a new idea on how to regulate the grid and 
issued regulations that cause us to have to go back and change 
the rules. I can't give you a lengthy list, but I'm sure we 
could provide you with one to your office.
    One that comes to mind currently is the Clean Power Plan 
and the impacts that could occur with the rapid loss of 
generation in 2020 based on some of the timelines in the 
proposed rule. When we see the final rule, if those timelines 
are still there, we are greatly concerned about reliability 
impacts. Having that feedback from people who know how the grid 
works would be very helpful in crafting those kinds of 
regulations.
    Senator Daines. Thank you, Mr. Highley.
    Mr. Mills, there are places like developing countries in 
Asia that do not have access to electricity and sources of 
energy production generated from Federal and Indian lands like 
in my home State of Montana that have the potential to meet 
this rising global energy demand. I believe U.S. coal 
represents about 12 percent of the world's demand, so 88 
percent comes from other sources.
    Energy produced from the Powder River Basin coal is cleaner 
than other types of coal as well as creating good paying, 
American jobs, creating sources of revenue in places where it 
is needed most on Indian Reservations. So my question is do you 
think it is important that American coal which is developed in 
a cleaner and more environmentally sound fashion than other 
types of coal be prepared to meet international demands for 
energy?
    Mr. Mills. Well Senator, that's a terrific question and one 
that most people I've encountered don't like the answer to. The 
answer is yes, it's critically important.
    The world has nearly a billion people who don't have access 
to electricity, and they want cheap electricity. There are many 
ways to make electricity but the cheapest way, globally, on 
average, is using burning coal.
    In fact something on the order of 75 percent all the net 
increase in electricity supply in the last two decades has come 
from coal, and it will continue to come from coal according to 
every forecast, the majority of the supply to the world for new 
electricity.
    The United States has an opportunity to participate in that 
market both for economic benefit but, as you say, I think very 
correctly, since the world will use coal and will use more of 
it, we can provide it in the most environmentally benign and 
safe fashion and benefit ourselves and our allies and friends 
around the world.
    Senator Daines. Thank you, Mr. Mills.
    The Chairman. Senator King?
    Senator King. Thank you, Madam Chair.
    First I want to complement the Vice Chair, how she so 
felicitously worked the phrase, ``One of my constituents, Bill 
Gates'' into her opening statement. [Laughter.] One of my 
constituents, Stephen King, would appreciate the way you did 
that. [Laughter.] This hearing has been a valentine to 
research. All of us have talked about how important it is and 
everything else. I want to point out that the sequester will 
hit the research budget of the Department of Energy.
    There is a fantasy around here that we are fixing the 
sequester by dealing with it in the Defense budget with the 
overseas contingency money which is a trick wrapped up in a 
gimmick borrowed from future generations of Americans and we do 
not need to worry about the sequester otherwise. It is going to 
take direct aim at exactly what all of you have said is one of 
the crucial priorities of this country. That is not a question. 
That is just a statement. But I think some of our colleagues 
think, okay, we fixed the sequester because we have got this 
gimmick in the Defense bill, but now it is okay everywhere 
else.
    Well, everywhere else includes the exact programs that we 
are talking about today. I think that is an important point for 
this Congress to understand that there is a real problem in 
national security with leaving the sequester in place. Not only 
energy research but little items like the FBI or the border 
patrol are also affected by the sequester. So that is just sort 
of a general observation.
    Mr. Highley, cyber security. We are going to have a serious 
cyber attack. The next Pearl Harbor is going to be cyber. Would 
not one way to defend against that in your industry be to air 
gap your system control, your system control computers, isolate 
them physically from the rest of the system? I do not care if 
people hack your emails, but I do care if they hack your grid 
control. Is that an option? We have got to do something. 
Defense is not going to work.
    Mr. Highley. In fact, we are already seeing Pearl Harbor, 
and we are already under attack in the electric sector. That is 
why through NERC we have the mandatory and enforceable 
standards for cyber security that are ordered by FERC and 
promulgated by NERC, the North American Electric Reliability 
Corporation, that we have to adhere to.
    We're currently coming into CIP Version 5, Cyber Security 
Standards, Version 5, and going to Version 7 we can already see 
that coming. It does require us to----
    Senator King. But whatever----
    Mr. Highley. Have air gaps, as you've discussed for control 
systems.
    Senator King. But we have Einstein three which was supposed 
to protect OPM, and they got hacked last week.
    Mr. Highley. Yeah.
    Senator King. I do not believe you are ever going to be 
able to protect yourself fully by defensive cyber technology.
    Mr. Highley. Agreed. We can never be 100 percent protected. 
I would say that, so far, we have never seen a loss of electric 
service because of a cyber attack. With that said, we practice 
defense in depth in the utility industries. So we have 
redundancy, redundancy, redundancy, and it's been proven 
throughout the years in terms of physical attacks and physical 
forces of nature we'll practice that same defense in depth on 
the cyber side.
    Senator King. Well, I just think that is an area, I mean, 
we keep getting these warning shots.
    Mr. Highley. Yes.
    Senator King. Movie studios, they are all serious, but when 
it is the gas pipeline system or the electric grid or the 
finance system, how long is it going to take until we 
understand the significance?
    Mr. Highley. We see it not as a matter of if, but when, and 
we want to be in close working relationship with the 
Government. I serve as co-chair on the Electric Subsector 
Coordinating Council and that's another means we have of 
sharing information at the highest level of government on 
these----
    Senator King. I would point out that if we have greater 
distribution of distributed energy, that is customers making 
their own energy and interacting with the grid, that in itself 
would be a national security plus. You are nodding. Would you 
say yes?
    Mr. Highley. I agree, yes.
    Senator King. Thank you.
    Ms. Harbert, quick question. You have testified about the 
advantages of exporting oil and how it is going to stimulate 
investment. I am honestly a little confused about that because 
there is a world price for oil. If the price for oil is the 
same everywhere why does exporting, is it the difference 
between Brent and WTI? That is about $4 this morning. Is that 
what we are talking about here that is going to stimulate all 
of this investment? Otherwise, if you sell a commodity for $5 
and it is going to be $5 in the future what difference does it 
make where you are selling it?
    Ms. Harbert. Well, I think it's important to know that, I 
mean, obviously when you get back to basic economics, more 
supply will bring down the price. And we will see the world oil 
market price, not only its increase, but the volatility be 
reduced by American supply on the market.
    And the infrastructure investment that I'm talking about is 
to be able to move all of this natural gas and oil around our 
country. We're going to have to build a lot of infrastructure, 
and those are good paying jobs. It's good investment, good 
property taxes, and good state property taxes.
    Senator King. I understand that, but I do not understand 
what the incentive is to export oil if you get $62 for it this 
morning in Europe and you get $62 in Galveston. What?
    Ms. Harbert. Well we want to produce it and we want to sell 
it. Right now we're running out of storage and we're running 
out of opportunity to sell it here because our refining 
capacity is set up to refine the heavy oils that we have been 
importing for so long. We're producing the light, sweet stuff 
that other refineries around the world are set up to accept.
    Senator King. So it is a question of refining capacity and, 
in effect, customers here in the U.S.?
    Ms. Harbert. And if we aren't allowed to sell that and 
people stop producing it has two effects. We will import more 
from Venezuela, from other places, and we will see our own 
production slow down and prices go up.
    Senator King. Fine.
    Thank you, Madam Chair.
    The Chairman. A perfect segway for me to sell my latest 
white paper, ``Rendering Vital Assistance, Allowing Oil 
Shipments to U.S. Allies.'' It speaks very directly to some of 
the questions that you have raised, Senator King. So I will 
make sure all members of the Committee have our latest, 
greatest edition.
    Senator King. I always try to set up the Chair. [Laughter.]
    The Chairman. Thank you. It is so appreciated.
    Did you say you are related to Stephen King or was that 
just? [Laughter.]
    Senator King. I keep saying I am trying to get him to adopt 
me. I said I will not even have to change my monogram, but so 
far it has not worked. [Laughter.]
    The Chairman. Thank you, Senator King.
    Deputy Secretary Orr, let me ask you about some of the 
financing opportunities, the loan opportunities, through the 
Department of Energy.
    In Alaska we have several different loan and investment 
programs that are designed to help facilitate renewable energy 
and energy efficiency programs throughout the state. We have 
the Alaska Energy Authority, the Alaska Industrial Development 
and Export Authority as well as the Alaska Housing Finance 
Corporation, that again, are designed to help build out 
renewable energy projects and get so many of our small villages 
off of diesel. Many of these projects are really just so very 
small that it is difficult to take advantage of DOE's loan 
programs.
    Has DOE considered whether state entities, like the 
financing institutions that I have just named, whether it is 
AEA or ADA, could be a recipient of DOE loan guarantees as an 
aggregator of qualifying projects? Because right now we just do 
not fit. It does not work for us. Is this something that we 
could look to, to work with DOE to help better facilitate some 
of these programs for smaller communities? It is not just 
Alaska, it is other areas as well.
    Dr. Orr. Certainly you raise a very good question, Senator, 
and that is how we address the needs of isolated communities 
whether they're in the far North or on islands or well, you 
have some of those as well. So it truly is an important area 
and one that we take seriously.
    I hasten to point out that I'm not in charge of the Loan 
Programs Office, but I understand from them that there's no 
prohibition for state or local or tribal entities to 
participate in the program. So I believe it would be possible 
for the state, for example, to make a proposal to the Loan 
Programs Office. How that would get evaluated, I'm not really 
sure. But, it, I think, it's not prohibitive.
    The Chairman. Well, it might be something that we want to 
look at just to make sure that, again, there are no obstacles 
built into the law that would prohibit that.
    Another area that we are looking at is oftentimes, in order 
to be eligible for many of these programs, there is a 
distinction between innovative technology and commercial 
technology. The commercial technology is different there, but 
again, you may have proven technology that works everywhere 
else in America but in a remote, isolated, small village, it is 
really cutting edge or innovative. I want to look to see if 
there are obstacles in the law, particularly in Section 1703, 
that perhaps would allow for greater opportunities there for 
us.
    I want to talk quickly about the regulatory side and what 
we have with the overlap between State and Federal. As I 
mentioned in my opening comments, I think that this is one area 
where we have very good intentions here in the Congress in 
terms of putting on regulations or some level of oversight, but 
we have not seen how many things we have smothered underneath 
it that now, even though we know where we want to go with it, 
we are inhibited from doing.
    Alaska is a pretty good example of what we have been doing 
to produce oil over the decades. We have not only produced more 
than 17,000,000,000 barrels of oil but the collection of 
royalties that we have done over the years. Excuse me, only 
29.1 million barrels have been Federal, everything else that we 
have done has been state, state lands, state production, and 
therefore state regulation. But when we turn to the Federal 
lands our BLM lands or any other agency, they have their own 
rules. They have their own measure for production, and they 
have their own accounting for royalties, for inspecting, meters 
and operations.
    In many cases the State laws are clearly superior to the 
Federal laws, and yet, what we have is this duplication of 
effort, a redundancy that really does not insure greater 
protection to the taxpayer. All it does is create a more 
complicated and complex operating environment.
    So I have introduced a bill, Senate bill 1230, that would 
require the Secretary of Interior, after getting a request from 
a governor, to direct the BLM or the Federal land managers to 
enter into an agreement with the State to create a consistent 
operating environment. This is not about going around 
environmental standards in any way shape or form, but it is 
looking to leverage our Federal and State resources and improve 
the investment climate on our Federal lands. We are not looking 
to reduce standards, but what we are hoping is that the State 
programs that have proven themselves to be sufficient to 
fulfill the oversight and the enforcement responsibilities of 
the BLM, that they can effectively lead.
    So I would like to ask you, Mr. Mills, or you, Ms. Harbert. 
In terms of inconsistent and duplicative regulations between 
State and Federal jurisdictions and the impact that they then 
have on investment, I think you heard Senator Gardner mention 
it as related to the fracking in places like Colorado. What can 
we be doing to, again, insure that we have good standards in 
place because that is what we want but an assurance that we do 
not have an overlap and a duplicative process that does not 
contribute to better value? Mr. Mills?
    Mr. Mills. Well, Madam Chairman, that's a critical issue. 
In my work with small businesses and right now in my capacity 
as an advisor to venture funds and doing a lot of venture 
capital I interact with a lot of small businesses, and what I 
find is that those businesses are the ones who will tell you 
quickly the single biggest problem they face in expanding their 
business. It's not taxation. It's not finding skilled 
employees. It's regulations.
    And in the oil and gas business and the shale business it's 
populated by thousands of small and midsized enterprises, so 
the friction that's created is very real. It's very expensive 
and it slows development, and yet we have the evidence of how 
big an impact it is. There's a lot of shale on Federal land. We 
know how much the shale oil and gas production has not 
increased on Federal land and how much it has increased on 
State lands. It is a very simple metric not because the shale 
doesn't exist, but because you're comparing, as my colleagues 
have pointed out, permits that take days and weeks to permits 
that take years.
    If you're a small business employing 20 people, you can't 
wait and pay for their salaries for a permit that takes a year. 
You will go where the permit takes 40 days. No one in that 
business community is looking to avoid the permitting 
requirements. They just want them to be clear and expeditious.
    The Chairman. I think this is where the great frustration 
is. It is not as if the states are not doing a good job, in 
fact, in many cases states are doing an exemplary job of 
regulating. Somehow or other we have gotten to the point where 
unless it is regulated by the Feds it is just not good. I am 
not quite sure how we got there, but I want to change that 
dynamic. I think the states have done good jobs, continue to do 
good jobs and I think that we need to recognize that. Yet so 
many of our policies say unless it is Federal oversight on top 
of what the states are doing we cannot trust you. We have got 
to get away from this lack of trust of what our states have 
been doing.
    Senator Manchin?
    Senator Manchin. Thank you, Madam Chairman. Thank all of 
you for your expert testimonies.
    I come from the State of West Virginia, as you know, and we 
have a challenge right now as I think the Government is in 
denial that they need the products that we produce. I really 
believe that.
    So what I am going to ask is very simply, the EIA 
Department of Energy, as you know, basically says that well the 
next what, 30 plus years through 2040 or 25 years, that we are 
going to be using fossil fuels and about 65 percent of the 
makeup of our energy mix is going to be from fossil fuels.
    Is there anyone here, just very quickly a yes or no, that 
does not agree with that? Do you not believe that we are going 
to be using natural gas, coal and oil for at least the next 25 
years in order to basically fuel the grid and keep the lights 
on, if you will? Is there anyone that does not agree with that? 
Is there anyone that believes that we can do it with a new 
energy source or through renewables by eliminating all fossil? 
So all of you are in agreement that we are going to have to use 
fossil?
    Okay, then I would say that if that is the case and there 
is no new energy source, I keep thinking commercial hydrogen. 
Wouldn't that be wonderful? Commercial hot water vapor? I would 
be all in if they had it, but they do not.
    I am living in the real world right now, and West Virginia 
is getting absolutely plummeted by the overreach of this 
Administration. I cannot explain it. We are not going to be 
able to provide the reliable energy you have always received 
from our little state, and most of the East Coast will be shut 
down if little West Virginia quits producing. People do not 
know that.
    We are trying to make it. We have wind and solar. We are 
trying everything, but we know that a majority of that is 
coming from our coal, and it is so in doubt now because of the 
uncertainty.
    Mr. Orr, I will go to you. $8 billion since 2008 has been 
sitting on the Department of Energy's table in EIA for clean 
coal technology. None of it has gone out. Would you not think 
something is wrong when the private sector will not step up to 
use this money to find the new technology because they just do 
not have faith that this Government really wants them to find 
anything?
    Dr. Orr. So, Senator, thanks for the question.
    The program that you're talking about is a solicitation for 
loan guarantees associated with fossil energy that are tests of 
new and innovative approaches to using fossil energy but with 
an effort to make it cleaner and with lower greenhouse gas 
emissions.
    Again, that's in the Loan Programs Office which is actually 
not in the part that I look after, but I do talk to the folks 
there and I understand from them that they're pleased at the 
response to the solicitation. These are big complicated 
projects.
    Senator Manchin. We are looking in, sir, I did not mean to 
cut you short. We are looking into it also and they might be 
pleased with it, but no one has stepped to the table yet. The 
way it is structured, there is an awful lot of capital at risk. 
If you looked at energy stocks, they have gone down to 
basically junk stock, if you looked at them recently. So you 
have no confidence, basically. Financial institutions are 
shutting down everything.
    This Government has not stepped forward, this 
Administration, and said oh, wait a minute, I cannot replace 
34, 35, 36 percent of the energy that coal produces, right? I 
don't have it. Yet we are decimating it. You are not going to 
be able to produce it, and you have got FERC taking low cost. 
They do not take reliability into consideration anymore. It is 
all low cost generation, so they are going to the lowest cost. 
Ask any utility company today, any CO, ``Are you satisfied with 
your portfolio?'' They will all say ``No, I'm not.''
    We are not diversified enough. We have got our eggs in one 
basket. We are going to get smacked hard, and the country is 
going to be in jeopardy, but for some reason there is a blind 
eye to all of this.
    I will say that Secretary Moniz has been more receptive 
than anybody. This is not Democratic. I am a Democrat and this 
is a Democratic Administration. This is not Democrat and 
Republican. It is just common sense. If there is a fuel already 
ready to go, let me know. But I cannot get anybody to step up.
    We have got NETL, the National Energy Technology Lab. If we 
could partner up with NETL and we had our research institutions 
with the private sector involved to push in and was able to 
restructure how that money went out, we would get you some 
answers.
    I will give you an example. We do fracking. You know now in 
West Virginia we have some of the largest plays of shale gas, 
and we have more to come. We have got a lot of hydrocarbons 
coming out, propane, ethylene, but we are only recovering five 
percent, five percent. That is 95 percent left in the ground. 
Yet we have no research going on that basically would allow us 
to do enhanced recovery other than oil. All we are using, 
basically, is CO2. So we cannot offset the cost of knowing the 
collection on these utilities that could basically sell that 
get enhanced gas recovery or hydrocarbons that would pay for it 
and make it financially feasible. Nobody cares about that. They 
are afraid they are going to find an answer. Well, it would be 
different. You are going to use it for 25 more years, why not 
work with us?
    I do not know if anyone, Mr. Augustine, all of you, Mr. 
Mills, I know you are there and you are watching it happen. It 
is just a shame.
    I am on a rampant here, but I am going to keep going. I see 
that basically there is eight billion tons of coal being burnt 
in the world. If you quit burning every lump of coal in America 
today there would still be seven billion tons being burned, 
more than ever in the history of the world.
    There is going to be 1,200 new coal-fired plants in the 
world built in the next four to five years, and I will 
guarantee you where they are being built there is not going to 
be oversight that they put all the new technology on, 450 or 
500 will be built in India, 350, 400 in China. It goes on and 
on. Yet we are worried about the climate. I am worried about 
the climate. I am not a denier. I think seven billion people 
have contributed, and we have a responsibility. But we are not 
doing anything, basically, to curtail to our trading policies 
that they should use the technology that we have already 
developed. In 20 years we have taken out more pollution in 
America than ever in history of particulates, SOX and NOX, you 
know. Now with MERC we have MATS.
    We can do those things, but the carbon capture 
sequestration and using it because of the energy it takes to 
pull it off of the clear stream is just about broke, and it 
will break financially, the energy markets, to where they know 
it is infeasible.
    So when they make the statement, ``Go ahead and build it, 
we'll break you.'' Look at the Kemper plan that Southern 
Company did, $2 billion over, maybe even more than $2 billion 
over, on cost overrun. They cannot afford to commercialize that 
program. No one will step forward and do it.
    So this is the frustration I see. I come from West Virginia 
and they look at me and say, ``Oh, he doesn't care about the 
climate.'' I am as much an environmentalist as anybody sitting 
here. I want clean air, and I want clean water, as clean as I 
feasibly can make it. But I also have to have a job and work in 
this environment.
    We just need help from people with you all with the 
expertise. It is not one size fits all. When commercial 
hydrogen comes on board, sign me up. West Virginia will figure 
out a way to make it. Until then, use me the best you can.
    Does anybody want to comment on all that tirade that I 
just--I am just so frustrated, but I want to find out if there 
is a way the Department of Energy will work with us? Mr. Mills, 
you observe a lot and you might want to say something, comment 
on this?
    Mr. Mills. Well I would just first use that old expression, 
second the emotion on your eloquent defense of hydrocarbons, 
fossil fuels.
    But there's interesting irony here. We've talked about how 
the Department of Energy was involved in the basic research in 
shale, hydraulic fracturing in the early days in basic research 
and seismic imaging. What we've learned in the shale industry 
is any of the shale players will tell you, is that the 
morphology of the shales are very complex.
    And the reason we only extract five percent, maybe ten 
percent at best in many cases, is that it's a very complicated 
environment which is another way of saying it is amenable to 
basic research. The one place the Department of Energy could 
play a role is in the underlying science and modeling using 
exascale computers and petaflop computers to figure out what is 
going on so we can extract the other 95 percent, and if we did 
that in a few years we'd double American production again and 
really change the world.
    Dr. Orr. I agree that there are very interesting research 
questions involving, for example, the flow in shales. And I'll 
say that we would be happy to work with your office and you as 
we think about how to demonstrate and employ CCS and other 
technologies that will help.
    Senator Manchin. Secretary Moniz has offered to come to 
West Virginia, and he will be the first official in that type 
of environmental realm, if you will, that has been willing to 
come and sit down and be on the front line.
    Now they have flown to China, and they fly all over the 
world. West Virginia sometimes might be too difficult for a 
four or five hour drive to get there, but we are working on 
that because they need to see the front line of defense.
    Our little state works its tail off. They are trying, but 
boy, I will tell you, the uncertainty right now. At this point 
in time it would be hard for me to say that we are going to be 
able to produce the energy that you all sitting right here 
depend on every day from my little state.
    Dr. Orr. Well I would say that I have been to West Virginia 
and I would be more than happy to come back. Maybe I will tag 
along with the Secretary when he comes.
    Senator Manchin. Why don't you come with him when he comes?
    Dr. Orr. I would.
    Senator Manchin. Is there anyone else who would like to 
chime in on this?
    Gang, let me tell you we are all in this together. That is 
all I can tell you. We are in this together, and we are going 
to find a solution for it, and it is not one size fits all. If 
there is nothing else right now that this country demands it is 
affordable, reliable and dependable energy. We are not going to 
have it if we go down the path we are going right now in the 
grid system. It is not capable of diversifying itself quick 
enough to do it.
    Thank you, Madam Chairman. I am so sorry.
    The Chairman. No, Senator Manchin. I think many of us feel 
your pain. Having been one who has accepted the invitation to 
visit your state and see all that you do, I know and I 
understand. I know what you are capable of and I know the pride 
that the people of West Virginia have in producing something 
that this country needs. So thank you and thank you for your 
advocacy.
    Another coal producer, Senator Barrasso.
    Senator Barrasso. Thank you very much, Madam Chairman. 
Thank you for holding today's hearing. I am encouraged that the 
Committee is actually looking to increase transparency and 
accountability at the Department of Energy.
    We need transparency and accountability, especially with 
respect to the Department of Energy's management of the public 
stockpile of excess uranium. Since 2009 the Department has 
repeatedly violated its own written policy and the Federal law 
when managing the public's excess uranium. As a result the 
Department of Energy has failed to obtain a fair return on this 
uranium for American taxpayers.
    For example, the Government Accountability Office found 
that the Department of Energy's transfers of excess uranium in 
2012 may have cost taxpayers up to $195 million. Now the 
Department of Energy's mismanagement has also contributed to 
volatility in the uranium market and has led to job losses in 
states like my home State of Wyoming. In April we learned that 
employment among U.S. uranium producers fell by 32 percent 
between 2013 and 2014. Employment among U.S. uranium producers 
is now at the lowest level since 2006.
    Now there is a third reason why we need transparency and 
accountability with respect to the Department of Energy's 
management of excess uranium, specifically, the decision by two 
principle beneficiaries of the Department of Energy's excess 
uranium to hire Daniel Poneman, former Deputy Secretary of 
Energy. I am referring to the Traxis Group which appointed Mr. 
Poneman to its Board of Directors in December of 2014, and 
Centrus Energy Corporation, formerly known as USEC, which 
appointed Mr. Poneman as President and CEO in March of this 
year.
    I am deeply troubled by the decision of these private 
companies to hire Mr. Poneman. Mr. Poneman led the Department 
of Energy when the agency violated Federal law with respect to 
excess uranium transactions which benefited specifically these 
two companies.
    Last month I, along with Senators Markey, Cornyn and 
Heinrich introduced S. 1428. Madam Chairman, you talk about a 
bipartisan group, that is it.
    The Chairman. That is good.
    Senator Barrasso. The Excess Uranium Transparency and 
Accountability Act. This bipartisan bill would require the 
Department of Energy to maximize the value of the public 
stockpile of excess uranium. Our bill would also require that 
DOE give the American public a say in how it will manage this 
excess uranium. Finally the bill would codify the Department of 
Energy's recent announcement that it will not transfer more 
than 2,100 metric tons of uranium in calendar year 2016 and 
thereafter.
    These are common sense reforms that will help the 
Department fulfill its legal obligations going forward. These 
reforms will ensure the Department manages our excess uranium 
on behalf of the American public, not two private corporations 
which the Department of Energy favors. So I encourage all 
Committee members to support the bill.
    I do have a question for Dr. Orr, specifically. My bill 
would require the Department of Energy to make decisions 
related to the management of the public's excess uranium 
inventory through the rulemaking process. The rulemaking 
process would require the Department to be responsive to the 
public's comments about the excess uranium inventory. Do you 
think it is reasonable for Congress to require the Department 
of Energy to give the American public a say in how the 
Department manages our stockpiles of excess uranium?
    Dr. Orr. Senator, thanks for the question.
    As you know I'm pretty new to this process so I just have 
had an opportunity to observe the end part of it as we made, as 
the Secretary made the determination this year. And as I know 
you know, it's a balancing act with the capturing value for the 
taxpayers of the uranium, the excess uranium that we hold and 
at the same time not doing damage to the markets.
    This last time around we did offer a big opportunity for 
public comment, and we really do appreciate all the comments 
that were made on all sides of the issue. It really is an 
important part of that balancing act. And we look forward to 
doing that in the future, kind of, regardless of whether we do 
it with a change in the rules.
    Senator Barrasso. Well, yes, thank you, but the Department 
of Energy is not making its decision through the rulemaking 
process. Isn't that correct?
    Dr. Orr. As I understand it it is not a formal rulemaking 
process, but we did engage in a process that was essentially 
parallel that very much attempted to do exactly the same kind 
of thing.
    Senator Barrasso. So it is not really required that DOE be 
responsive to public comment, but I think it is reasonable. Let 
us say it is not an unreasonable request or requirement. I 
would like to see the Department support it.
    Dr. Orr. Yeah. If you look at what we did this last time 
around I think you can see that we thought that was a 
reasonable way to take into account public comment and to 
balance the various interests.
    Senator Barrasso. Thank you.
    Thank you, Madam Chairman.
    The Chairman. Thank you, Senator Barrasso.
    I have a laundry list of other measures that relate to some 
of the specific bills that I have introduced. I think you are 
aware that I have been working on an energy water nexus bill 
for some time. Again, an area that, I think, oftentimes we do 
not stop to think about. But you cannot have the energy we need 
unless we have water, and we cannot have the water unless we 
have energy. So making sure that we are paying attention to the 
connection to the nexus is important to me.
    We have had good conversation here in Committee today about 
the need to do more when it comes to advancing our research and 
building out these technologies. The R and D side, making sure 
that we are doing what government is best suited to do. I am a 
big believer in ARPA-E and what it can do.
    I am looking forward to working with Senator Alexander and 
Senator Cantwell and others on the America Competes Act. Again, 
I join Senator Alexander in thanking you, Mr. Augustine, for 
your leadership in that area. I think it is key for us.
    I have a bill that would allow for a prize bill to again 
give that encouragement to those imagineers that are out there 
that can really help us find some of these solutions that move 
us forward rather than the fix for today but that might lock us 
into that.
    I think we have had some good discussion on cyber security 
today. Although I will say that in my state and in many of the 
rural parts of the country, you have utilities that are 
municipally owned or cooperatives that are very small, and they 
look to what may be coming their way in terms of ways that they 
can provide for a level of protection or resiliency when it 
comes to cyber. It is extraordinarily daunting in terms of 
where those resources might be and how they can actually get 
things to scale if you are a small and, again, a remote utility 
that is not connected to others. So some of these challenges, 
again, as we work to build out legislation that will move us 
forward, are part of the challenge in front of us.
    I am pleased that we have had some good discussion and an 
opportunity to hear from you all on the importance, the 
significance, of utilizing our energy resources as assets, as 
an opportunity to again move from this mind set of energy 
scarcity to how we operate, how we move as a nation where we 
have energy abundance. Not just on the fossil fuel side, but 
how that abundance can also translate to our renewable energy 
future. Making sure that we put the right signals in place and 
again, developing policies that are helpful rather than 
duplicative, redundant or costly.
    So we have a big task in front of us, our Promethean task. 
I think we need to rename this. I am glad you didn't refer to 
Sisyphus. [Laughter.] Although sometimes I feel like that is 
what we are doing is pushing that rock up the hill. That may, 
in fact, be where we are, but, you know, you don't know until 
you try.
    Again, this is an area that is so long overdue in terms of 
needed reform. Know that this Committee is going to continue to 
work aggressively to build policies that are not Reagan era, 
that are not taking us back in time, but really allow us to 
move into the future.
    I thank you for the time that you have given the Committee 
this morning, for your thoughts and your reflections. I would 
ask that if you have additional comments on any of the matters 
that have been raised today, feel free to provide those to the 
Committee as we will be working to assemble broader legislation 
in the weeks ahead.
    The Chairman. And with that, we stand adjourned.
    [Whereupon, at 11:53 a.m. the hearing was adjourned.]

                      APPENDIX MATERIAL SUBMITTED

                              ----------                              

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 

                                   [all]
```