<DOC>
[110 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:37164.wais]
S. Hrg. 110-112
CURRENT ENERGY LEGISLATION
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ENERGY
of the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
ON
S. 645 S. 838
S. 1089 S. 1203
H.R. 85 H.R. 1126
__________
MAY 22, 2007
Printed for the use of the
Committee on Energy and Natural Resources
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37-164 PDF WASHINGTON DC: 2007
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota LARRY E. CRAIG, Idaho
RON WYDEN, Oregon CRAIG THOMAS, Wyoming
TIM JOHNSON, South Dakota LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana RICHARD BURR, North Carolina
MARIA CANTWELL, Washington JIM DeMINT, South Carolina
KEN SALAZAR, Colorado BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
JON TESTER, Montana MEL MARTINEZ, Florida
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
Frank Macchiarola, Republican Staff Director
Judith K. Pensabene, Republican Chief Counsel
------
Subcommittee on Energy
BYRON L. DORGAN, North Dakota, Chairman
DANIEL K. AKAKA, Hawaii LISA MURKOWSKI, Alaska
RON WYDEN, Oregon LARRY E. CRAIG, Idaho
TIM JOHNSON, South Dakota RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana JIM DeMINT, South Carolina
MARIA CANTWELL, Washington BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey JEFF SESSIONS, Alabama
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
JON TESTER, Montana MEL MARTINEZ, Florida
Jeff Bingaman and Pete V. Domenici are Ex Officio members of the
Subcommittee
C O N T E N T S
----------
STATEMENTS
Page
Hill, David, General Counsel, Department of Energy............... 6
Murkowski, Hon. Lisa, U.S. Senator from Alaska................... 1
Pearce, Drue, Federal Coordinator, Office of the Federal
Coordinator, Alaska Natural Gas Transportation Projects,
Department of the Interior..................................... 2
Tester, Hon. Jon, U.S. Senator from Montana...................... 1
Thomas, Hon. Craig, U.S. Senator from Wyoming.................... 11
CURRENT ENERGY LEGISLATION
----------
TUESDAY, MAY 22, 2007
U.S. Senate,
Subcommittee on Energy,
Committee on Energy and Natural Resources,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:34 p.m., in
room SD-366, Dirksen Senate Office Building, Hon. Jon Tester
presiding.
OPENING STATEMENT OF HON. JON TESTER, U.S. SENATOR FROM MONTANA
Senator Tester. The hearing will come to order. I want to
wish everyone a good afternoon and thank you for being here
today.
We're here to hear half a dozen energy bills dealing with
issues that will enhance our domestic energy programs from
coal, renewable fuels, and natural gas supply; to reauthorize
appropriations to help our steel and aluminum industries remain
competitive; to help them focus on reduction of greenhouse gas
emissions; to promote international collaboration with Israel
in renewable and alternative energy programs; and to enhance
technology transfer for increasing energy efficiency in the
housing and construction sector.
We have two distinguished witnesses here with us today. I
want to thank you both for being here. With that, Senator
Murkowski, if you have any opening statements we would love to
hear them.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Senator Tester. Appreciate
that. Appreciate the hearing this afternoon. I would like to
take the opportunity to welcome to the committee Drue Pearce.
Drue is the former president of the Alaska State Senate, the
former Alaska representative at the Interior Department, and
now the coordinator for the Alaska Gas Pipeline Coordinator's
Office.
She's here to testify on a bill that Senator Stevens and I
have introduced, to make a few technical corrections in the
operations of the office--this office intended to get our gas
line project built to move Alaska's huge supplies of North
Slope natural gas to markets in the lower 48.
It was back in 2004 that here in the Congress we approved
two measures in $18 billion loan guarantee, as well as
expedited permitting and a streamlined court review in the
project, a second incentive that provided two tax incentives
for accelerated depreciation tax deductions for the cost of the
gas conditioning plant.
After the Federal incentives passed here in the Congress,
the State then moved forward several years back to move towards
negotiations with leaseholders of Prudhoe Bay for the oil and
gas reserves, intending to reach an agreement.
That was not successful, and this year, with a new governor
in place, the process was restarted. The Alaska legislature
just this last week approved the Alaska Gas Inducement Act. We
look forward to good, positive movement as a result of that
legislation, but we recognized that it was going to be
necessary to have an Office of Federal Coordinators.
The office has reached an agreement on how we'll oversee
the 15 Federal agencies that will play a role in getting the
pipeline built. It's transferred money to get the office
running. It has a $2 million-plus appropriations request to
fully fund the operations in this next year.
But we also recognize that there are some minor
improvements that are needed in the '04 Act to get this office
quickly up and running to assist the State and get this gas
line built so that we can get Alaska's gas to the lower 48.
The changes are a waiver to personnel rules so the
coordinator can quickly hire the expertise when it becomes
clearer exactly what type of project will be proposed by the
successful pipeline applicant; a provision to allow the office
to assess fees for reviewing the plans, issuing the permits,
and overseeing construction of the project; and a clarification
on the traditional review provisions that are all pretty minor
but very important that they pass quickly, given the State's
timeframe for action by fall.
I do appreciate the prompt hearing on the bill by the
chairman. We recognize the need for more domestic natural gas.
We anticipate that there may be some tweaks to this bill that
this hearing might uncover, but I would like to think that we
can move through them very quickly, and I appreciate the
opportunity to get this issue underway. Thanks, Mr. Chairman.
Senator Tester. Yes, thank you, Senator Murkowski. We'll
now hear from the witnesses. I want to thank you both for being
here. As I said before, Senator Murkowski did a more than
adequate job of introducing you, Ms. Pearce.
We also have with us here David Hill, General Counsel of
the U.S. Department of Energy, and he's here to provide
testimony.
Ms. Pearce, since you are testifying on one bill and Mr.
Hill's on the other five, I think you should just rock and fire
and have at it.
STATEMENT OF DRUE PEARCE, FEDERAL COORDINATOR, OFFICE OF THE
FEDERAL COORDINATOR, ALASKA NATURAL GAS TRANSPORTATION
PROJECTS, DEPARTMENT OF THE INTERIOR
Ms. Pearce. Thank you, Mr. Chairman and members for this
opportunity to speak for the subcommittee, and I want to thank
you, Senator Murkowski, for your interest both in my agency,
and your firm commitment to construction of the pipeline to
commercialize Alaska's North Slope gas.
Today, I am presenting the administration's preliminary
views on the bill. We believe there are several technical
corrections that should be made. We have made those available
to the committee and we look forward to working with you to
address those concerns.
Marketizing our vast Alaskan North Slope natural gas
resources, estimated at at least 200 TCF, is an important step
in ensuring the Nation's energy demands are met. This isn't an
Alaska project, Mr. Chairman; it's a North American project,
with benefits flowing to consumers and industrial customers in
the lower 48, as well as to our Canadian energy allies.
The State of Alaska did take an important step last week in
helping to move this enormous project forward. The legislature
enacted Governor Palin's Alaska Gas Line Inducement Act, better
known as the GIA, providing inducements for the construction of
a pipeline. The Governor plans to have an RFP on the street
July 1 and will license the project in the first quarter of
2008.
The Office of the Federal Coordinator has a variety of
responsibilities, including coordination of the Federal
regulatory process to eliminate delays in what is expected to
be a $25 billion-plus project. We will closely coordinate with
the State of Alaska. We also are responsible for coordination
with Canada.
I am meeting for the third time with Minister Jim Prentice,
Canada's Minister of Indian Affairs Northern Development, as
well as Chair of the Cabinet Committee on Energy Security, this
week during his trip to the District of Columbia.
Our office is small, presently staffed only by me, the
Federal coordinator. I have supplemented the office during
startup with personnel details from the Department of the
Interior. The OFC will remain a small office, with as few as
five or six professionals, pending selection of a project by
the State of Alaska.
Once a project is selected, it's crucial that we be able to
quickly hire personnel from the limited pool of individuals
with the qualifications necessary to efficiently carry out the
functions of the OFC. Our staff will be concentrated in
Washington and Alaska.
The amendment provides the OFC authority to appoint and
terminate personnel without regard to provisions of the law
governing appointments in the competitive service. The OFC is a
temporary agency. We sense that 1 year after construction of a
project our staffing levels and employee skill needs will vary
depending upon the project phase.
The personnel authorities embodied in the bill are used for
small agencies, especially those with fixed lifespans like
ours. The cost reimbursement authorities are there because
given the regulatory nature of our role, it's appropriate to
assess costs to the project proponent for our services.
This approach has been adopted by the Federal Government
for other projects, such as the first model reimbursement
authority used by the Department of the Interior when the
Trans-Alaska Pipelines right-of-way grant was renewed just 4
years ago.
The reimbursement will reduce the cost of constructing this
important energy link to the Federal taxpayer.
The Office of the Federal Coordinator is open for business
and excited about the prospect for the future of a natural gas
pipeline to deliver clean natural gas to North American
markets. We plan to have an important role in ensuring a
timely, safe, and environmentally friendly project gets built
in an efficient and effective manner.
I appreciate the committee's interest in streamlining the
agency's operations and look forward to working with you on the
technical changes to the bill that we have brought forward.
Thank you very much for your time today, and I'd be happy to
answer any questions.
[The prepared statement of Ms. Pearce follows:]
Prepared Statement of Drue Pearce, Federal Coordinator, Office of the
Federal Coordinator for Alaska Natural Gas Transportation Projects
Thank you Mr. Chairman and Committee Members for this opportunity
to speak before the Subcommittee. The Legislation before the Committee
has not gone through the Administration's formal interagency policy
review process, and therefore I will be presenting the Administration's
preliminary views on the bill. However, there are several aspects of
the bill that will need technical correction or modification to conform
to policies that apply more generally elsewhere in the government and
we look forward to working with Committee to address those concerns.
For over thirty years there have been sustained efforts to bring
Alaska natural gas to the marketplace both in Alaska and the 48
contiguous states. This effort is more important than ever to help
assure adequate natural gas supplies for the United States as the
country develops a comprehensive energy solution to take this great
country through the century. Technology and conservation will be an
ever important part of managing our energy needs. However, in the
interim, certainty of supply is critical. Marketizing the vast Alaskan
North Slope natural gas resources is an important step in assuring
energy demand is met.
Recently, the State of Alaska has taken an important step in
helping to secure a pipeline to transport natural gas to the American
people. The State legislature enacted Governor Palin's legislation, the
Alaska Gasline Inducement Act (AGIA), providing inducements, including
financial contributions, for construction of the pipeline. This is an
important complement to the inducements provided by the United States
in ANGPA and previously in the Alaska Natural Gas Transportation Act of
1976 (ANGTA).
Despite the fact that efforts have been underway for thirty years
to encourage private sector construction of a pipeline project from
Alaska through Canada into upper Midwestern markets, timely permitting
still remains critical to the success of any project of this magnitude.
Estimates now place the cost of one potential project, a nearly 3,000
mile pipeline, at $30 Billion. Regulatory delays or excessive
litigation can spell certain doom in the effort to bring this vast
natural gas reserve to domestic markets. First gas will not even be
shipped until ten years at the earliest after the initial private
investment. Congress recognized these concerns and took several steps
to facilitate the permitting process including expedited and
streamlined judicial review in the United States Circuit Court of
Appeals for the District of Columbia, required timelines for FERC's
issuance of the certificate of public convenience and establishment of
the Office of the Federal Coordinator.
The Office of the Federal Coordinator has a variety of
responsibilities, including coordination of federal participation with
the expectation that the federal regulatory process will be streamlined
and delay eliminated and, in coordination with the state of Alaska,
responsibility for monitoring and oversight of construction. The OFC
also is vested with authority for implementation of ANGTA authorities,
for which a right of way has been issued and is subject to renewal/
expiration in 2010. Other federal agencies also have roles. It is
anticipated that no fewer than 18 federal agencies will participate in
the decision process. For instance, the Department of Energy is
responsible for federal loan guarantee implementation and the Federal
Energy Regulatory Commission is responsible for pipeline (National
Environmental Protection Act (NEPA) compliance and issuance of the
certificate of public convenience.
The OFC currently is a small office permanently staffed only by the
Federal Coordinator. The Federal Coordinator has supplemented OFC staff
resources by personnel details from the Department of the Interior. The
OFC plans to remain a small office, with as few as five or six
professionals pending selection of a project by the state of Alaska.
The composition of the team necessary for proper functioning of the OFC
is highly dependent on the nature of the project selected by the state
of Alaska. Upon project selection, it is crucial that the OFC be able
to quickly hire personnel from the limited pool of individuals with the
qualifications necessary to efficiently carry out the functions of the
OFC. OFC staff will be concentrated in Washington D.C. and Alaska.
personnel authorities
This amendment provides the OFC authority to appoint and terminate
personnel without regard to the provisions of Title 5 of the United
States Code governing appointments in the competitive service. The OFC
is a temporary agency which sunsets one year after construction of a
project. The staffing levels and employee skill sets will vary
depending upon the project phases. For instance, the skill sets needed
during the permitting phase differ substantially from those necessary
during the construction phase. The office will maintain staffing at a
core level pending identification of a specific project for
construction by the state of Alaska. Not until a project is identified
will it be prudent to more fully staff the OFC. Project staff for a
pipeline only project may be very different from a project composed of
a pipeline and liquefaction facilities. In addition, there is a limited
field of qualified applicants available to assist the OFC given the
specialized nature of the potential projects and the OFC role. These
limitations combined with the need for timely efforts by the OFC make
it useful to be able to hire and terminate certain staff outside the
regular federal hiring process in order to remain responsive to project
demands. The bill would address those concerns with a blanket exemption
from standard personnel hiring procedures that apply to most other
Federal agencies. While this type of exemption would be advantageous
for hiring of certain highly-qualified staff, and is sometimes granted
to agencies to fill positions with special skills, it is rare for an
exemption to extend to an entire organization.
This authority is sometimes used for small agencies, especially
those with limited roles or fixed life spans. For instance, other
agencies with this authority include the Denali Commission and the
Vietnam Memorial Commission.
This amendment also gives the OFC authority to obtain the temporary
or intermittent services of experts or consultants pursuant to already
existing authority contained in 5 U.S.C. 3109(b). This authority
allows for the hire of necessary staff resources on a temporary or
intermittent basis to deal with short term staffing, particularly with
regard to technical matters and short term needs. It is anticipated
that a variety of technical and professional services will be required
on a temporary or intermittent basis given the specialized nature of
the project to be constructed and the OFC functions.
Personnel hired pursuant to this authority may be compensated at a
rate not to exceed the maximum rate of basic pay authorized for senior-
level positions under 5 U.S.C. 5376.
cost reimbursement authorities
Given the regulatory coordination, monitoring and oversight role of
the OFC, it is appropriate to assess costs to the project proponent for
these services. This same approach has been adopted by the federal
government for other projects, such as with the Federal Land Policy and
Management Act of 1976 (FLPMA, 43 U.S.C. 1734). Cost reimbursement
authority would provide supplemental funds to offset the cost to the
federal government of the OFC and reduce costs to the federal taxpayer.
We understand that the intention of the amendment is to grant the
OFC discretion to establish or change reasonable filing and service
fees, charges and commissions and to allow the OFC to require deposits
of payments and provide refunds in the same manner as currently is
authorized for the Secretary of the Interior under FLPMA.
We have concerns, however, that the language as drafted would not
provide such parallel authority to the OFC but would, in fact, result
in stripping the similar authority granted to the Secretary of the
Interior in FLPMA. We have developed amended language that will address
this issue and will provide it to the Committee. Because we do not want
to disrupt the Department of the Interior's land management program
under FLPMA, this issue must be addressed.
closing
This concludes my remarks on the proposed amendments to ANGPA. To
summarize, the Administration has not completed its full review of the
bill and looks forward to further discussions with you and your staff.
The preceding comments represent the Administration's preliminary views
on the bill. The Office of the Federal Coordinator is open for business
and is excited about the prospects for the future of a natural gas
pipeline to deliver clean natural gas to domestic markets from Alaska
reserves. The Alaska state legislature has taken a big step in
assisting by passage of Governor Palin's Alaska Gasline Inducement Act.
We anticipate that the Governor will select a project in early 2008.
The Office of the Federal Coordinator will play an important role in
assuring a timely, safe and environmentally friendly project. Thank you
for your interest in this project so important to our Nation's energy
infrastructure.
Senator Tester. I think what we'll do is hold off on
questions until after Mr. Hill makes his presentation. I'd like
to welcome Senator Thomas to the committee.
Mr. Hill.
STATEMENT OF DAVID HILL, GENERAL COUNSEL, DEPARTMENT OF ENERGY
Mr. Hill. Mr. Chairman, Senator Murkowski, members of the
committee, thank you for inviting me to testify today. My name
is David Hill, and I am the General Counsel of the United
States Department of Energy. I am pleased to be able to present
comments on five bills before the committee today and ask that
my full written statement be included in the record. I will
only briefly summarize that statement here.
First, as to S. 645, we support this bill. It will ensure
that low-sulfur coals are fully able to participate in the
Clean Coal Power Initiative. We believe that the change in this
bill is in the best interests of this Nation's energy policy.
Second, as to S. 838, we do not support that bill as
currently written. The department agrees that it is important
for us to cooperate with Israel on energy security and energy
supply matters, and that doing so will advance the energy
security of both nations.
However, we believe that existing bilateral arrangements
already work well. We also believe that any bilateral work
should not be solely funded by the United States Government,
and that the amount of funding authorized by this bill should
not be taken from other important work of DOE's Office of
Energy Efficiency and Renewable Energy.
Third, as to S. 1203, that bill would authorize an
additional assistant secretary position at the Department of
Energy. DOE currently is authorized to have seven assistant
secretaries and we believe that number is sufficient; however,
the department does not oppose increasing the authorized number
of assistant secretaries at the Department of Energy if
Congress sees fit to do so.
Fourth, H.R. 85 would amend section 917 of the Energy
Policy Act of 2005, which established advanced energy
efficiency technology transfer centers. The Department recently
issued a funding opportunity announcement under section 917,
and applications under that announcement are due on July 3,
2007.
We believe that H.R. 85 is unnecessary because section 917
of the 2005 Energy Policy Act already allows extension services
to participate and the center is authorized by that section.
We also are already engaged in a number of activities, such
as work with a number of industrial assessment centers that
coordinate the demonstration and application of advanced energy
methods and technologies.
Finally, H.R. 1126 would reauthorize and modify the Steel
and Aluminum Energy Conservation and Technology Competitiveness
Act of 1988. We generally support the change in direction of
the Act to focus on technologies that would renounce greenhouse
gas emissions.
However, the bill maintains an industry-specific focus that
we believe is not the best way to advance industrial energy
efficiency. Instead, DOE is focusing its efforts on process
energy efficiency improvements that can bring crosscutting
benefits across various industries, including steel and
aluminum, among other industries.
Thank you, Mr. Chairman. At this time, I would be glad to
answer any questions the committee may have.
[The prepared statement of Mr. Hill follows:]
Prepared Statement of David R. Hill, General Counsel, Department
of Energy
Chairman Dorgan, Senator Murkowski, and members of the Committee,
my name is David Hill, and I am the General Counsel of the U.S.
Department of Energy (Department or DOE). I want to thank you for the
opportunity to appear today and offer preliminary comments on five
energy-related bills that Congress is considering. The bills before the
Committee today each make valuable contributions to our national
discussion on energy security, but in some cases could benefit from
further review, discussion and modification. The Department looks
forward to working with the Committee to resolve these issues. I would
like to discuss elements of each bill, as well as present some of the
DOE activities that are already underway in the areas addressed by the
bills.
S. 645
S. 645 modifies the technical criteria in the Energy Policy Act of
2005 for the Clean Coal Power Initiative. The Department supports the
proposed change because it would reduce a bias in the current
requirement that favors a particular coal type, while still maintaining
a stringent sulfur dioxide emission standard for the R&D program. The
practical effect of the change will be to allow slightly less strict
SO<INF>2</INF> requirements for power plants burning low sulfur coals.
Nevertheless, even with the proposed change, the SO<INF>2</INF>
emission requirement for these lower sulfur coal-fueled power plants
would remain as stringent, or more stringent, than the allowable
emissions rate for higher sulfur coals.
S. 838
S. 838 addresses U.S.-Israeli cooperation on research, development,
and commercialization of alternate energy, improved energy efficiency
and renewable sources. The Department has serious concerns with this
legislation as drafted. While cooperation with Israel to encourage
cooperation on alternative and renewable energy sources could be
beneficial, we believe that the bill should stress the need for true
bilateral cooperative and interactive research, rather than research
funded solely by the U.S. Government. In that regard, the Department
already collaborates on a number of issues, and DOE has an umbrella
agreement with the Israeli Ministry of National Infrastructures. We
believe that existing bilateral arrangements serve both countries well,
and we oppose the creation of additional burdensome organizational
requirements, such as S. 838's Section 4 International Energy Advisory
Board provisions.
An Israeli initiative centered on energy security, environmental
stewardship, and global climate change, similar to the President's
Advanced Energy Initiative, would benefit Israel by helping ensure
adequate and reliable supplies of energy for that country. The
Department could assist Israel in developing that plan and in fact,
DOE's Office of Energy Efficiency and Renewable Energy (EERE) already
has engaged in initial discussions with our Israeli counterparts on
these issues.
Finally, S. 838 could have a significant adverse financial impact
on EERE's budget. The bill would authorize $20 million annually for
seven years for the projects authorized by this bill. We do not support
taking this amount of funding away from other important EERE programs.
In comparison, EERE's budget for the Asia Pacific Partnership, which
encompasses six countries, including India and China, the two fastest
growing economies and largest emitters of carbon, has a total annual
budget of $7.5 million. Allocating $20 million out of currently
authorized funding for a single country would shift scarce resources
away from the Department's efforts to develop and commercialize
advanced technologies that lessen our dependence on oil and provide for
energy security. The goals of S. 838, as well as efforts to assist
Israel in developing its own national energy action plan, can be
achieved with substantially less funding.
I do note that the bill authorizes DOE to accept contributions from
private sources to carry out that Act. This could mitigate the need for
appropriations to carry out this Act although some modifications would
be necessary to make the bill workable.
Again, I stress that the Department values its current
collaboration with Israel, and seeks to build upon this already
productive relationship. We believe, however, that the time for action
is now, for both the United States and Israel. Putting action plans
into place that are focused on alternative sources of energy is a goal
that our nations can and must share, and we would urge the Committee to
adopt legislation that supports that goal.
S. 1203
S. 1203 expands the authorized number of Assistant Secretaries at
the Department of Energy from seven to eight. The Department believes
it already has a sufficient number of authorized assistant secretaries,
but we do not oppose Congress increasing the number if it sees fit to
do so. S. 1203 also would preserve the President's and Secretary of
Energy's discretion to determine whether to appoint individuals to fill
all of the authorized assistant secretary positions, to determine how
best to manage the Department's mission, and to determine the
portfolios for the assistant secretaries and other Departmental
officials. At this time, the President and the Secretary have made no
decision whether an individual would be nominated for the additional
assistant secretary position should it be authorized, or what the
responsibilities of any such official would be.
H.R. 85
Turning to H.R. 85, this bill targets the demonstration and
commercial application of advanced energy methods and technologies, a
goal that effectively summarizes what we as a Nation must do to
successfully move innovative products and processes from the laboratory
into everyday use. This bill amends Section 917 of the Energy Policy
Act of 2005 (EPACT), which established ``Advanced Energy Efficiency
Technology Transfer Centers.'' EERE recently announced a solicitation
under Section 917. It is our belief that extension services, which are
added here, already can participate in the Centers. In addition, there
are some technical issues which require further review and discussion,
and we look forward to working with the Committee to resolve these
minor concerns.
The Department also is addressing the challenge of successful
technology transfer by, among other things, supporting a robust and
widespread regional and local outreach effort to ensure the adoption
and commercial application of industrial and building energy system
technologies and practices. For example, in coordination with the
Department's Golden Field Office, we are instituting a new method of
project management, called Stage Gating that incorporates the
demonstration of technologies in the last stage of Federal development
as part of deployment/technology transfer for commercialization.
Through our Industrial Technologies Program, EERE works through
Congressionally established Industrial Assessment Centers to provide
energy evaluations and to help deploy advanced energy methods and
technologies to small- and medium-sized companies. Recently we have
broadened this effort by establishing a Memorandum of Understanding
(MOU) with the Manufacturing Extension Partnership (MEP) program of the
Department of Commerce's National Institute of Science and Technology
(NIST). The MEP program consists of 59 main centers across the Nation,
and will significantly increase our ability to deploy advanced energy
methods and technologies to thousands of manufacturing facilities and
buildings.
EERE is currently establishing working relationships with the
various types of centers I have mentioned to coordinate the
demonstration and application of advanced energy methods and
technologies. Key to this coordinated effort will be the integration of
deployment activities with EERE's state partnerships. Any kind of
regionally focused efforts would need state involvement to leverage
state-sponsored energy programs.
Thus, given the activity level already underway with a broad range
of centers, it would not seem that the establishment of the additional
centers would be needed. There is much to work with to advance our
technology transfer goals, and our focus at the Department is on the
successful support, use, and coordination of our tools at hand.
H.R. 1126
H.R. 1126 would reauthorize and modify the Steel and Aluminum
Energy Conservation and Technology Competitiveness Act of 1988. The
Department generally supports the change in direction to develop
technologies which reduce greenhouse gas emissions. However, while the
bill does reauthorize provisions to encourage energy efficiency in
these important industries, it also maintains an industry-specific
focus that the Department believes is not the best way to advance
industrial energy efficiency as a whole. DOE has restructured its
Industrial Technologies Program to focus on process energy efficiency
improvements that will bring more cross-cutting benefits and with wider
application to a broader spectrum of manufacturing industries,
including steel and aluminum.
Another concern is the reauthorization of recoupment schemes.
Although well-intentioned and attractive on the surface, they can
ultimately serve as a disincentive to industry, and have been difficult
to execute in practice. Although the Department supports continued
research and development that will contribute to reducing energy costs
for these industries, the Department also wants to pursue initiatives
that address newer, high energy growth industries and next generation
manufacturing technologies.
Again, thank you for the opportunity to present the Department of
Energy's comments on these bills. The Department looks forward to
working with the Committee on these bills, and on the many other
important energy matters facing our Nation. This concludes my prepared
remarks. I would be happy to answer any questions the Committee may
have.
Senator Tester. Well, I appreciate both of your comments.
Senator Murkowski, I'll let you lead off with questions.
Senator Murkowski. Thank you. Ms. Pearce, the first
question I think really is the obvious question. I know the
answer, but I think for the record it is important that I ask
and allow you to state clearly for the record why we need the
Office of Pipeline Coordinator at this point in time.
As I mentioned in my comments, right now the State has not
approved the pipeline builder. That builder--either the gas
producers or an independent pipeline company--until they can
show the ability to finance the cost of this project, we don't
have anything actually underway.
So can you tell the committee some of the work that needs
to be done at this point in time, at the Federal level, to be
ready for the oversight of this enormous project?
Ms. Pearce. Yes. Senator and Mr. Chairman, there are
probably two primary areas that I'll discuss here very briefly.
The first is a gap analysis that needs to be done at the
Federal level, including an analysis of whether or not all of
the agreements are in place in the Federal agency to move
expeditiously when FERC has an application before it, because
Congress gave FERC a finite amount of time--18 months--to
complete an EIS on an enormous project.
We can't wait until that application comes in the door
before we ensure that the agencies are ready to move forward in
a cooperative manner.
Perhaps more importantly, though, we have the
responsibility to directly oversee the cooperative efforts with
the State of Alaska and work closely with the newly created
pipeline coordinator at the State level to set up probably
associate offices and work together on the permitting.
The right-of-way, of course, was in the United States,
across both State and Federal lands in somewhat of a patchwork
method. So we'll be working directly with the Alaskans in doing
that gap analysis.
Minister Prentice and I will be talking further tomorrow
about setting up some immediate organizations and applicable
relationships where they don't yet exist between the
appropriate Canadian agencies, at both the Federal and
provincial level, and State and Federal agencies. Obviously, we
don't want a pipeline to come to the border between Alaska and
Canada and suddenly change the stipulations and the rules for
the pipelines. A lot of coordination is going to happen. We are
already embarking upon that gap analysis.
In addition to that, we've already begun working with the
State of Alaska, which has questions for our Federal agencies
about some of the specifics of the Federal legislation that
Congress passed in doing the enabling legislation.
As they move through drafting the RFP, which they plan to
have on the streets on July 1, they will be working with the
Department of Energy, the Department of the Treasury, with us,
and with FERC on specifics of things like probably most
importantly, the loan guaranty.
The State of Alaska's RFP and how it is worded can have an
effect on the eventual cost to Federal taxpayers of the loan
guaranty. So we need to begin coordinating those efforts today
and not wait for an application to come in the door. We are
already embarked upon doing those things.
Senator Murkowski. Well, I appreciate that and recognize
that with the extent of this project, we don't start at the
last moment and assume that we're going to be on top of things.
I need you to project into the crystal ball just for a
moment, based on the work that has been done to this point in
time, if everything goes perfectly, how quickly could we see
gas flowing to the United States?
Ms. Pearce. The most optimistic estimate--and this is based
on producers' estimates of the amounts of time that they would
need if they're the eventual licensee for a pre-application
process--the most optimistic first gas in the pipe would be
2017.
I think more realistically we're looking at 2018 as
optimistic.
Senator Murkowski. The sooner the better.
Ms. Pearce. The sooner the better.
Senator Murkowski. Mr. Hill, I have just one quick question
for you, if I may, and this is as it relates to H.R. 1126. I
understand that in the original Steel and Aluminum Conservation
and Technology Competitive Act, the industry participants were
granted an intellectual property special exemption that favored
industry participants over university research partners in
retaining the intellectual property.
If this bill is enacted, would the special exemption
finding still apply, and does the department plan to review
whether this special exemption is still warranted?
Mr. Hill. I have to admit, Senator, I don't know whether or
not that particular finding would still apply to the
reauthorization. I'd be glad to get back to you on that.
Senator Murkowski. Could you do that?
Mr. Hill. I will do that.
Senator Murkowski. I appreciate that. Thank you. Thank you,
Mr. Chairman.
[The information follows:]
To implement the Steel and Aluminum Energy Conservation and
Technology Competitiveness Act of 1988, the Department of Energy (DOE)
required title to new inventions made by universities and DOE National
Laboratories performing the research under each project under the
program to be transferred to a holding company. The holding company was
then required to provide royalty-free licenses to such new inventions
to the industrial participants in each project. The industrial
participants in each project were required to provide at least 20%
direct cost sharing in the project and were obligated to repay the
Government one and a half times the Federal expenditure in the project
from the net proceeds from commercialization of the technologies
developed in the project. If H.R. 1126 is enacted, the special
exemption would no longer apply; however, DOE would undertake a new
review to determine whether such a special intellectual property
requirements are appropriate for the new program. The new review would
involve consultation with industry, the university community, and the
National Laboratories.
STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR
FROM WYOMING
Senator Thomas. Thank you, Mr. Chairman. Sorry I was late.
I appreciate your having this hearing. I wanted to comment just
a little bit on the amendment that I have here. As you know, we
introduced this with ten original cosponsors, Chairman Bingaman
and Ranking Member Domenici, and two more Senators have signed
on since.
The remedy is a sulfur removal disadvantage of Western
coal, contained in the Energy Policy Act of 2005. The
administration and DOD both support the idea. The Clean Cool
Power Initiative, CCPI, authorizes in section 404 of the Energy
Policy an alternative sulfur dioxide removal measurement for
certain coal classification projects.
It instructs the Secretary to establish milestones to be
able to remove at least 99 percent of the sulfur dioxide. I'm
simply saying this is there because low-sulfur coal in the West
has such a smaller amount of sulfur, that to take 99 percent
out of 5 percent is almost impossible.
So this alternative criteria sets up a different
alternative, but it will achieve an emissions standard that's
no less--and in some cases greater--than that which achieved
with the 99 standard using the coals. This alternative is also
consistent with the Internal Revenue Code. I think it's
something that we could do and hurry along our development of
energy. So Mr. Hill, I have introduced that this would alter
the 220 coals to eliminate the disadvantage that occurs. Are
there a number of other goals in this CCPI program?
Mr. Hill. Thank you, Senator Thomas. Yes. That provision of
the Energy Policy Act of 2005 also establishes requirements,
both for coal gasification facilities and for non-gasification
facilities in terms of NO<INF>X</INF> removal, mercury removal,
and efficiency goals. Those are different, depending on whether
or not it's a gasification project or some other kind of a
coal----
Senator Thomas. How is this program moving along?
Mr. Hill. It's actually moving along well. There are
currently nine active projects, CCPI projects, that are out
there. Three of those are operating, five are planned, and one
is currently being negotiated. I anticipate that there will be
another solicitation of another CCPI.
Senator Thomas. Where are those located?
Mr. Hill. They're in a number of States, and I can run down
the list if you'd like me to. The Great River Energy Project is
in Underwood, North Dakota. The NewCo Project is in Baldwin,
Illinois. The University of Kentucky Project is in Ghent,
Kentucky. The Western Greenbrier Project is in Rainelle, West
Virginia. The Toxicon Project is in Marquette, Michigan. The
WMPI Project is in Gilberton, Pennsylvania. Those are all
first-round CCPI projects.
Senator Thomas. Good.
Mr. Hill. Then the second-round CCPI projects--the Mesaba
Project is in Minnesota, the Pegasus Project is in Jewett,
Texas, and the Southern Company Project will be in Orlando,
Florida.
Senator Thomas. I see. Thank you. Well, I appreciate your
support and I hope that this would encourage more of the CCPI
projects in the West where the coal is very abundant. So thank
you, sir.
Mr. Hill. Thank you, sir.
Senator Smith. Thank you, Mr. Chairman. Mr. Hill, thank you
for being here, and Ms. Pearce. Dave, does the Department
provide funding for existing bilateral agreements with Israel
now?
Mr. Hill. Our Office of Policy and International Affairs
currently works with--as well as our Office of Energy
Efficiency and Renewable Energy--is currently working with
Israel on a number of different projects.
I don't know that there are specific research, bilateral
research, projects with Israel, but my understanding is that
there are individuals from both of those offices that are
working with individuals from Israel.
Senator Smith. Do you think that Israel can offer
assistance to us on renewable energy issues?
Mr. Hill. I think we benefit when we're working with other
countries on matters of energy security, whether it's renewable
energy projects, alternative energy, or things concerning
energy security in general.
So I think we do. The United States always can gain when we
are working, either on a bilateral or a multilateral basis,
with other countries.
Senator Smith. I take it your objection to S. 838 is just
simply the level of funding. What level of funding do you think
is necessary?
Mr. Hill. There are a couple of parts about it that we're
concerned about, Senator Smith. One is research projects that
are focused on a particular country. We think that while
working on a bilateral basis can be useful, that research
projects oftentimes--like with the Asia Pacific work that we're
doing--should be focused on a number of different countries if
we can.
I don't have a specific number in mind that I think would
be useful if the Department or if the Congress decided to enact
this bill into law, but we'd be glad to continue to work with
your staff on that matter.
Senator Smith. What are your thoughts on: we don't want to
spend any more than this rate, but we do want to do what's
appropriate? It's an ally, and obviously they're in an area of
the world that has a lot of energy.
They don't, and they're looking for alternatives, and
perhaps we can get something out of it. But I think we need to
be involved in it.
Mr. Hill. They are a very important ally; you're right,
Senator Smith. We are currently working with them on a number
of matters and, of course, would welcome the opportunity to
continue the opportunity to continue with Israel.
Senator Smith. Great. Thank you.
Senator Thomas. Mr. Hill, kind of following along those
lines, we'll start out with what would you recommend we do if
we want to encourage a partnership with Israel in energy
fields, whether it's in business or research or academia? I
think Senator Smith had some good points. So what do we do, if
not this bill?
Mr. Hill. We currently do have arrangements in place where
we can work with Israel, as well as with other countries. I do
think that there are opportunities to expand our working
relationship with Israel, even under existing frameworks.
I also think that in terms of working with Israel, one of
the things that we already are currently working with, with
that nation, are efforts that really focus on their ability,
that are focused on advancing that nation's energy security.
I think whether or not any of those require additional
legislative authorization--I'm not so sure they do--but we'd
obviously be glad to discuss that further with the committee.
Senator Thomas. Okay. With S. 645, it talks about relating
sulfur dioxide emissions to Btus. It sounds like a good idea to
me. Does this mean you'd be using that as a standard then, and
not having two standards?
Mr. Hill. Well, the way the bill is currently drafted, it
allows the standard either to be based on the percentage
removal or on the emissions in pounds of SO<INF>2</INF> per
million Btus. So it could be either of those.
Again, depending on the sulfur content of the coal itself,
the actual emission rate will be higher or lower depending on
which of those you pick and depending on what the sulfur
content of the coal is.
What Senator Thomas was talking about, for example, in the
lignite; with a 1 percent sulfur content, a 99 percent removal
rate actually takes you down to below .03, and it's actually
about a 0.029 emission rate. Yet, a 99 percent with a 5 percent
sulfur content cumulous coal is actually at 0.08.
We think this amendment is a good thing because it would
allow different coals of different sulfur contents to
participate in the program.
Senator Thomas. So you don't anticipate simplification by
going with just one standard; you anticipate running double
standards on this, depending on what you're dealing with or
where you're dealing with it.
Mr. Hill. Yes, sir.
Senator Thomas. That's fine. With H.R. 1126, it looks as if
about 2000, with the Industries of the Future, the $65 million
projected with the $9.2 million for 2008, is--I mean, it looks
like you're trying to phase out the program. Is that accurate?
Mr. Hill. This is on H.R. 1126?
Senator Thomas. Yes, The information I have is that it's
Industry of the Future, the funding for this program is going
from $65 million in 2000 to a proposed $9.2 million in 2008.
For the Steel and Aluminum Programs, $21.8 million in 2000,
Fiscal Year 2000 and 2008 is proposed to be about $3.3 million.
I'm just curious; isn't it a time where conservation tends
to be the low-hanging fruit here? I'm just wondering what the
thought process was on it.
Mr. Hill. The department really has focused its energy
efficiency efforts and their transfer efforts on crosscutting
through various industries. We currently have the solicitation
out under section 917. Again, the purpose of that is to promote
technology transfer and to get energy efficiency technologies
and conservation into the marketplace.
Our efforts in terms of research, as well, are really
focused on trying to--at crosscutting, not just with a specific
industry focus on steel or aluminum or things like that in H.R.
1126, but more crosscutting.
Senator Tester. So if I heard you right, you're saying the
dollars are available in other programs? Is that what you said?
Mr. Hill. Well, our efforts in terms of the----
Senator Tester. It's okay if you say no, because it just
tells us where we're at.
Mr. Hill. Well, I don't----
Senator Tester. Here's the issue I have. It's the U.S.
competitiveness. I mean, energy is a huge factor when you talk
about competitiveness in the world marketplace, and I'm just
wondering if you think that's the right direction to go? It may
be the right direction to go. I just find it curious in this
point in time, where conservation efforts are the easiest thing
to do.
Mr. Hill. We certainly think conservation efforts are very
important. We think that the H.R. 1126 which focuses on the
steel or aluminum industries--we think rather than focusing an
authorization that is focused on those specific industries,
that the program and our efforts are better focused on
technologies that can have a broad crosscutting effect over
various industries.
Senator Tester. Okay, thank you. Further questions,
anybody?
Senator Murkowski.
Senator Murkowski. Just one, very quickly, and this is to
follow up on S. 838, that Senator Smith spoke to. As I
understand, the United States and Israel have had some very
longstanding cooperative collaborative relationships in
research through the Binational Industrial Research and
Development Foundation, the Binational Science Foundation, yet
you've indicated that at least from the Department of Energy's
perspective, your preference is not to direct to one country
but rather look to regions.
Is this a perspective that is unique to the Department of
Energy?
Mr. Hill. No. Thank you for the question, Senator. We
certainly do have a number of agreements with different nations
where we are working bilaterally with them on various areas.
All I meant to say was in terms of authorizing particular
amounts of research money to particular nations, we don't
really view that as being necessary.
That, rather, we have existing both bilateral and
multilateral agreements with a number of different countries,
some of which resulting in specific bilateral work with one
country, others of which result in multilateral work.
We'd prefer the ability to still work on that basis, just
case-by-case, as it presents itself.
Senator Murkowski. If the funding were there from Israel's
perspective, or perhaps from the private sector, would the
objection still remain the same?
Mr. Hill. That does mitigate one of our concerns, and I do
note that the bill itself allows for private contributions to
be supplied to pay for some of the costs of that program. I do
think there would need to be some technical changes to the bill
in order to make those funds available and to actually offset
the cost of the program. So again, we'd be glad to work with
the committee.
Senator Murkowski. Thank you. Thank you, Mr. Chairman.
Senator Tester. Senator Thomas, any further questions?
Senator Smith? Senator Salazar? All right. Well, with that, I
again want to thank the panelists for being here today. I
really appreciate your time and your answers to the questions.
Senator Salazar. I do have a comment, Mr. Chairman.
Senator Tester. Yes, Senator Salazar?
Senator Salazar. You know, it's remarkable that the Senator
from Montana so quickly ascended to the chairmanship of the
committee. Congratulations. I was Number 101 for the last year,
so I'm glad to see that the new 100 ascended so quickly.
Senator Tester. No comment. This hearing is adjourned.
[Whereupon, at 3:08 p.m., the hearing was adjourned.]