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monmouth illinois. and then mayor nutter speaks at philadelphia university. energy secretary ernest moniz testified before the house

energy and commerce subcommittee on tuesday about the administration's quadrennial energy review. the qer provides policy recommendations for modernizing u.s. energy infrastructure. this is 2 1/2 hours. i'd like to call the hearing to order this morning and the title today is the hearing on the quadrennial energy review and related session drafts including title 3 energy diplomacy. we'll have two panel of witnesses this morning. on the first panel we have secretary of energy mr. moniz who is no stranger to this committee.

so we appreciate him being with us. we look forward to his testimony and other issues. at this time i'd like to recognize myself for five minutes for an opening statement. everyone is very much aware that this subcommittee and the congress has been working on a bipartisan energy bill for several months now. many people are even asking not surprisingly, is there enough common ground between our efforts and the obama administration to enact meaningful energy legislation. and i do believe that this question was answered with a clear "yes" when the department of energy's first installment of its quadrennial energy review was released last april. this detailed study focuses on the infrastructure implications

of america's new energy boom and many of its recommendations overlap with provisions of our draft energy bill. and so we are excited and mr. moniz is here today so that we can explore the prospective of the department of energy as the country makes dramatic changes in its energy distribution transmission system. we have a lot of infrastructure needs. we're focusing on the diplomatic diplomacy aspects of energy which is becoming more and more important to our friends in the european union who find themselves reliant on natural gas coming from russia and so we have many opportunities in the united states to come forward with a good energy policy and i

think democrats and republicans agree that they need to be addressed and one of the biggest is infrastructure needs in trying to approve the permitting process, for an example. so i look forward to the testimony of all of our witnesses today and we have a real opportunity here and we don't want to drop this ball. we're getting close to the end of drafting this legislation, coming up with a final product and we look forward to moving it in a meaningful way. at this time i'd like to recognize the gentleman from california, mr. rush, for his opening statement. >> thank you mr. chairman for holding this important meeting on the qer as well as on a variety of other issues covered. mr. chairman let me first begin by welcoming secretary of energy

mr. moniz here to the subcommittee. welcome, mr. secretary. let me commend you for the outstanding work. you have been involved in a myriad of different issues, all important to the american people. mr. chairman mr. secretary you might not accept this and you might not -- you might think that this is not something that you seek but, in my mind and in the mind of a number of my constituents, you are, indeed, a superstar secretary. i am real proud of your work on behalf of our nation. mr. secretary from your literature and historic nuclear talks with iran and the minorities on energy initiative to overseeing the development of the comprehensive qer are among

your more important accomplishments and i have no doubt you would go down as one of the secretaries of modern time. you see, i'm a fan mr. secretary. and to replace the current requirement for energy plan with quadrennial energy review. it is my hope that this bill, like the senate counterpart that was recently introduced by secretary coons of delaware and senator alexander of tennessee will attract bipartisan support. in fact, mr. secretary, i have held off on introducing the bill

as of yet so that my office can continue to hold talks with the majority side in order to find language that both sides can agree on. and, mr. chairman i will continue to reach across the aisle for support on this nonpartisan issue of quantifying a quadrennial energy review and i hope that we can find common ground. mr. chairman the qer addresses many areas that also are covered in the discussion draft of the comprehensive energy bill we have all been working on. issues such as increasing the resilience reliability and safety on the grid and. [ indiscernible ] regarding

modernizing the grid and enhancing the employment and workforce training. however, mr. chairman, there is still much work to be done in bridging the gap in areas where there are some disagreements, such as inciting and addressing the transmission of storage and distribution infrastructure. specifically in a discussion draft before today i have some concern regarding the approval process described in section 3104. in this section, the burden has shifted away from private companies and onto agency officials to issue so-called crossing unless the official finds a project and, i quote is

not in the public interest of the united states. another concern that i have, mr. chairman, is in section 3102 which sets up an interagency task force to evaluate north american energy flows. however, is missing is representatives from the council on environmental quality, the environmental protection agency as well as the departments of interior or transportation among others, who may weigh in on environmental issues. mr. chairman as we move forward with the goal of putting forth a truly bipartisan energy bill, it is my hope that a majority side will work with us as to find common ground on most of these issues and put precedence in

doing the right thing above doing it quickly. mr. chairman, i thank you and i yield back the balance of my time. >> thank you, mr. rush for that opening statement. at this time i'd like to recognize the chairman of the full committee, mr. upton for five minutes. >> thank you, mr. chairman. i want to say in response to mr. rush's comments, i look forward to working with him and mr. pallone and all of our members on both sides of the aisle to do this right. i appreciate those kind words. we're delighted to welcome back secretary moniz to discuss the first stallment of the quadrennial energy review that focused on energy transport and infrastructure, something we need to do. our laws and regulations need to change with it. long-standing concerns about the declining domestic energy output have been erased by a rapidly rising oil and natural gas production. 2013 alone, according to the

qer, the u.s. added 1.2 million barrels per day a record increase by one country in one year. domestic production and natural gas from related liquids has experienced equally dramatic increases. this became the number one energy producing nation. it's time that we start acting like it. unfortunately, rising energy production requires more energy infrastructure. what i have called the architecture of abundance. both the energy legislation and the qer included number of ideas for upgrading and expanding the nation's energy infrastructure. and in light of the recent pipeline spill in california, i would add that both aim to ensure that this new infrastructure is built with state-of-the-art technologies that reduce the environmental and safety risk. energy abundance can be more than just an economic success story. it indeed can be a foreign

policy success story as well. and that's why recently released discussion draft of our energy diplomacy title is so important. the discussion draft builds on the extensive work built by this subcommittee. at numerous hearings over the last couple of years we heard from our allies around the globe who said they would rather get their natural gas from us than the likes of russia or iran. that message was underscored last month when i led a high-level delegation to ukraine and came away with a profound understanding of how these partners can be. leaders are coming together to promote a unified energy market because of the potential for security, affordability and innovation. in ukraine, where the commitment to freedom and democracy is hard fought each and every day, their energy aspirations are fundamental to their dreams for a peaceful future.

while our discussion draft encourages north american energy cooperation and cross-border infrastructure, opportunities for energy diplomacy, extends well beyond our own continent. for example, there is broad recognition that the exports will benefit the u.s. economy, our consumers and, yes our allies. while the same could be said for oil exports, a statutory ban has prevented us from pursing these benefits for the past four decades and it's time that congress considers revising the ban on crude oil exports. as with natural gas, america now has enough oil production to make increased exports feasible. especially the crude that the qer notes have experienced the most rapid supply increases. economic and foreign policy experts across the political spectrum believe that it would be a net jobs creator at home and influence abroad and at the same time, reports from the gao,

cbo and energy information administration all point to reductions in the price of gas as a result of increased oil exports. in other words, oil exports can be a win for the american people and a win for our allies. the energy sector has been the nation's most significant job creator in recent years. but with the drop in oil prices as many as 100,000 energy positions have been lost. the case for creating more jobs by expanding the market for american oil is a key reason why oil exports should be on this committee's agenda this year. and while we're not currently considering any such provisions in this pending legislation, i do look forward to working with my good friend mr. barton and others, on both sides of the aisle to ensure that we get the policy right. i yield back the balance of my team. >> gentleman yields back. this time, recognize the gentleman from new jersey mr. pallone, for five minutes.

>> thank you, chairman whitfield and ranking member rush. let me start by welcoming secretary moniz on back to the committee and the first installment of the quadrennial energy review. it's a truly comprehensive look at our nation's infrastructure and its recommendations will help us chart a path forward in the rapidly changing energy sector. this installment relates to the transportation and storage distribution of energy. these ts and d connections between suppliers and users can impact our energy rely yeah built and security and affect our ability to meet environmental and economic goals. ts and d infrastructure is vul ner ner rabl to cyberattacks and it's important to know how to mitigate their impacts. at the same time this modernization could reach other environmental goals while

enhancing safety security and re reliability. we need to ensure a smarter more resilient and environmentally sound energy system for the future and i look forward to, working with you, mr. secretary to translate these important ideas into legislation and law. i wish i could be as upbeat in discussing the energy diplomacy discussion draft. rather than building on the strong relationships with our north american neighbors, the na majority has chosen to resurrect proposals have tha have already drawn democratic concerns and presidential veto threats. for example, the bill would eliminate the current presidential permitting process for liquid and gas pipelines and electric transmission lines that cross the u.s. border with mexico and canada and replaces the process with one that effectively rubber stamps permit applications and eliminates any meaningful environmental review.

now it would only take effect after president obama leaves office specifically excludes the keystone pipeline. it still appears to allow transcanada to avail itself of the new process by reapplying with the revised route. the provision limits federal approval and environmental review to the small segment of a project that physically crosses the national border and creates a presumption that these projects are in the public interest shifting the burden of proof to opponents to project opponents. this all but guarantees permit approval and eliminates the opportunity for protective permit conditions. the draft bill also recycles lng export language designed to address nonexistent delays at the department of energy. in fact doe recently testified and i quote, that right now there are zero applicants sitting in front of us for a decision. the last application that came out, we turned that around in one day. nonetheless, the bill would make

changes to an otherwise successful process. and finally, another provision would create a task force burdening federal energy regulatory actions with additional red tape and environmental considerations. in fact, it speaks volumes that the agency is task with natural resource and environmental management like epa owe doi are excluded from the task force. i hope this committee can work towards consensus legislation instead of resurrecting problematic issues of the past. but thank you, mr. chairman. i yield back. >> gentleman yields back. that concludes the opening statements for today and mr. secretary, thank you for joining us. we do look forward to your insights on these important issues and i'd like to recognize you for five minutes for your opening statement. >> thank you chairman upton and whitfield and ranking members pallone and rush. >> i'm not sure the microphone

is on. >> yep. okay. >> start again. >> okay. well again, chairman upton and whitfield and ranking members pallone and rush distinguished members of this subcommittee, thank you for the opportunity to be with you again today. i really appreciate the leadership that this committee has shown in working towards comprehensive and bipartisan energy legislation that includes many of the topics in the qer first installment. i look forward to working with you to move these ideas forward and really appreciate in the opening remarks the statements about common ground and the opportunities we have to work together. as was already stated the u.s. has reaped enormous benefits from our energy revolution which i point out includes carbon production and renewables deployment to energy productivity gains. this has produced changes that

are challenging our energy infrastructure and to be direct, we need to modernize and transform our energy sectors and shared commodity infrastructures. this will require major new investments and we have to get it right. we should acknowledge that while the choices we make and the decisions we take today and in the near future are critical, we also have to acknowledge that the choices and decisions that we fail to take in a timely way are very important for generating our infrastructure for the 21st century. to help guide these investment choices, the qer provides recommendations based on the 15th month multiagency process that included 14 public meetings across the country and consultations with canada and mexico the. qer focuses on ts and d, including the network of railroads and other facilities that formed the backbone of our energy system. i asked the chairman's

permission to submit the summary version of the qer into the record. the full qer is available online and you have my written testimony. so let me just take the opportunity to highlight five crucial tasks that we need to take. first, the infrastructure investments and energy security in a broader sense than the oil centric focus of the last several decades. an example is found in the definition of energy security that the u.s. and our g-7 allies developed after the russian aggression in ukraine that includes seven critical elements in a modern view of energy infrastructure. supply diversification, for sure, but also transparent markets, greenhouse gas emission reduction, infrastructure modernization and energy response. this doesn't mean that oil disruption is not a concern. indeed modernizing the sproe, as well as the authorities for

the use is a major area of focus. through its analysis of resilience and modernization, the qer goes beyond the single focus of security policy leaving, for example recommendations for fuel disruptions as we have seen across the country. more coordinated state planning is also essential and, most notably, we feel that state planning grants to help states update and expand their emergency preparedness and security exercises to enhance reliability, to accommodate several changing factors are all critical. other ways to improve energy security include programs to make our energy infrastructures more resilient to range of hazards and vulnerabilities. these are addressed in part for the qe's recommendation of a predisaster hardening grant program, transformer reserves and systematic program to ensure

unaging natural gas distribution pipes. second qer and its recommendations underscore the indispensable role of states. these really are test beds. we need to advance studies such as a new framework for evaluating energy services to help things like rate structure development. third, the qer analysis showcases the importance of complexity of how our energy revolution challenges our shared transport infrastructures. frankly, when we started the qer, we did not anticipate that we would end up with this as a major area of focus. however, the dramatic oil production increases in unconventional locations coupled with things like the rsf and impending exports of natural gas have placed strains on those transport infrastructures, rails, bars, locks, port facilities and the like. the qer includes recommendations

focused on innovative funding mechanisms for these infrastructures and, for example, recommends a program for port connectors being stressed by new energy supplies. fourth, the qer recommends coordinated efforts for skills training and recruitment of workers to build and staff our modernized energy infrastructure system and support jobs for working families a national job driven skills system with standards that include a special emphasis on training for veterans on minorities in energy is critical to our energy future. i might note that yesterday, 85 minority interns started working at d.u.e. for the summer. i will look at how we can capture the energy sector opportunities that we have for new jobs. and finally, we need to acknowledge the critical federal role in incentivizing our investments. while the bulk of the qer recommendations fall under this

committee's jurisdiction the cross has other equities and infrastructure especially in shared infrastructure and north american energy integration. i would just note in closing that the administration's most recent budget request includes a down payment for funding qer at $500 million and sequestration has placed artificial caps on spending and the corps of engineers and others, frankly placed these critical problems in competition with very restricted budget allocations. for example, the house appropriations mark does not meet our needs for energy infrastructure. in closing, the department of energy and all the agencies that developed this report and it is recommendations see great potential for benefit and we look forward to working with this committee again to find a bipartisan ways of advancing our

ts and d infrastructure. i would be pleased to answer questions. >> thank you secretary moniz. and at this time i'll recognize myself for five minutes of statements and questions. we all recognize that the clean energy plan has been at the very center of president obama's initiatives and i think everyone recognizes that the tension between the obama administration and republicans in the house and senate as well as elsewhere has been -- many of us feel that the president is moving so quickly through regulations without adequate communication with the legislative body. and while we all recognize the need for an all-of-the-above policy, we look at europe and see how some policies over there and which countries like germany

made decisions to eliminate nuclear energy has created extremely high retail prices and, as a result, europe has some real economic problems. so what we want to be sure about in america, we made this mad rush for change and we do so in a way that we can protect the reliability, the affordability so that america can continue to be competitive in the global marketplace. mr. mckinley, who left, was just saying that in west virginia they've lost 45% of their coal jobs. this economic impact affects all of us and that's why we're trying to move this energy bill and that's why this quadrennial bill is so important, to look at all aspects of everything.

because everyone knows that we're fortunate we have an abundant energy supply and natural gas and oil as well but we have infrastructure needs and it takes years and so as we're shutting down coal plants through regulatory orders we don't always have the capability to get the energy product to where it needs to go. and so that's what this is all about. so one of the things i need to ask you the first installment was a colossal undertaking with 22 agencies involved and more than a year of work. and if this is the first installment of the qer, will there be a new installment each year for the next three years and then the process will begin all over again?

is that what your understanding is? >> no. i apologize. so this first installment it frankly took a few more months than we had hoped. we're now in the process of working across the government to settle on the next installment we would like to get something into your hands early next year again and then again at the end of 2016. >> now -- >> and clearly this will be now expanding into the supply and demand ends of the energy sector. >> yeah. and my time is already running out here. i want to focus on one issue because -- maybe because i was in the railroad industry, but railroads provide a vital transportation network for all sorts of commodities in america.

and historically railroads have generated lots of income from moving coal. and the coal shipments have dropped dramatically, even though our coal exports are up despite problems of trying to open up coal export facilities in washington state. but many people are genuinely concerned about the viability of the railroad industry with this extreme reduction in coal transportation. was that discussed in the quadrennial review process, from your personal knowledge? was there any discussion about that at all? >> yes mr. chairman. of course, the department of transportation would have prime responsibility in that area. but there were discussions because we did see, in some cases, especially in the upper midwest, some coal shortages for a while. it was not because the trains weren't operating. they were just carrying other

commodities, which, my understanding, may have had a higher margin for them. so one of the initiatives that we have taken and the doe eia is working with the surface transportation board at d.o.t. is to first of all get more data and understanding of how commodities, including energy commodities, are moving on the railroads because it is coal. it's obviously oil. and it's an ethanol competing in a certain sense with a whole variety of other commodities. but i think more data and data transparency will be very important for federal and state planning. >> because we do have to have a strong financial railroad sector just because of the impact it has on our entire economy. my time's expired. at this time, i'd like to recognize mr. rush for five minutes. >> thank you mr. chairman. mr. secretary, as i asserted in

my opening statement i believe you will go down as one of the most consequential energy secretaries of our time and i want to commend you on your fine work and the initiatives that you have established during your tenure. and as you know mr. secretary one of the attempts to change the culture and the practices of institutions and they have been doing ways for a long time and inevitably there would be resistance and apprehension when those entities are asked to change. and if it is with this in mind to discuss with me the initiatives that you and i have discussed before in the past specifically, i would like to

discuss with you the issue inclusiveness and outreach of the publicly funded national labs including but not limited to argon and berming in my state. and my office would be in touch with you to schedule a meeting for sometime in the very near future between you and i. it is my opinion mr. secretary that argon and berming specifically are fumbling on the issues of inclusiveness and outreach. it seems to me that they are trying to run out the car on you and i. they are not seriously taking our requests and our initiatives to heart. mr. secretary on another issue, i'd like to get your thoughts and feedback on the qer

legislation that was introduced in the senate. and i -- as i said before, i will be offering a companion bill in the house soon. as you know, mr. secretary, this bill would simply amend the d.o.e. organizational act to replace the current requirement for a biannual energy plan for a quadrennial energy review. can you give the subcommittee some feedback on this bill from your understanding would d.o.e. take the lead in drafting a qer and is there a need for a legislation such as what i previously discussed? >> thank you mr. rush. by the way, on the consequential

issues i hope there are positive consequences and at this point i'd say that our energy policy and systems analysis office did a heroic job in marshalling this huge qer forward. on your first question and culture, et cetera i might add that there's a wonderful expression by peter drucker, the famous management consult stantant, we can change rules but it's hard to change culture. but i think we are certainly making advances, certainly on the issue of minorities and energy and if you know otherwise, i'd like to discuss it with you. i do see enthusiasm going forward. argan, for example, one of their initiatives is in terms of making sure that minority businesses are quite aware of the opportunities for procurement. we also have a leader in our place-based initiatives.

a good example is working with southwest louisiana with the enormous construction going on driven by natural gas for training minorities to get some of those jobs. in terms of research collaborations, another example would be our jefferson lab working closely with hampton university. i mentioned the interns already. we're going to keep pushing on all of these fronts and i want to work with you on that and if you find problems let me know because i will be sure to -- >> i certainly will, mr. secretary. >> okay. thank you. >> secondly on the qer and the possibility of legislation let me say that i certainly share the driver of this which is that i think -- and by the way, the initial reaction to the qer including in this hearing, i think it suggests that institutionalizing this could really be very important for continuing a bipartisan administration congress discussion. so i'm happy to work with both

chambers in terms of how that might go forward. i would say that the department of energy in this first installment clearly did provide kind of the analytical horsepower for it. but i do want to note that the executive office of the president also played a crucial role in being able to convene 22 agencies to come together to work on it. so, anyway, we'd be happy to discuss that further. >> okay. my time has expired. this time right now is the gentleman from michigan, mr. upton, for five minutes. >> thank you again, mr. chairman. mr. secretary, in my opening i spoke about the willingness to work with you and your committee on qer recommendations and we look forward to that. receiving technical assistance on some of the other sections of the bill as well. one of the areas that i wanted to zero in on is sprow. as i noticed in your response to the committee yesterday, it was

established in 1975 and it's the largest government petroleum reserve in the world. it's been used successfully on multiple occasions to respond to different types of energy supply disruptions. but it is now 2015 and global and domestic oil markets have changed significantly. we would all recognize that and sproe needs to be modernized. the committee recently voted to draw down a limited amount of sproll oil to pay for our 21st century cure package beginning in 2018. as you conduct the ongoing study to recognize the new study going forward, would you support an additional change that would allow the president to draw down in self-surplus crude oil in order to use the funds to pay for operations in maintenance in line with the d.o.e. budget

request and modernization plans? in other words using what we call mandatory savings had for needed improvements that have to take place in the number of years? and i would imagine that would be a pretty small drawdown. >> mr. chairman first of all as you know i have considerable concern about using the sproule for anything other than energy security and resilience issues for which it is intended. now, the issue of, first of all, of what is or might be called surplus is really part of the study going on because we understand there are certain iae requirements but that might not be the metric for us to use. that's the first thing. secondly, we did identify, of course, in the sproule -- in the

qer, excuse me -- needs right now for modernizing the sproule for -- well, there is issues of maintenance. there are issues of modernization and, in particular issues of addressing distribution systems for getting sproule oil onto water in particular, in an emergency. clearly, what you've proposed is if one were to do that, it would be being used i would argue, for the energy security intent of the petroleum reserve. >> so, as you know the qer recommends more flexibility and anticipatory authority to initiate a sproule drawdown. >> the motivation for

recommending anticipatory authority is not motivated by a desire to use the sproule to manipulate the oil prices. the current anticipatory authorities are highly restrictive, up to 30 million barrels and only if that keeps you above 500 million barrels. so there are issues there and we feel that, should a larger drawdown be required or if the sproule were at 500 million barrels, one shouldn't have to wait to see the consequences on consumers of a spike in global oil prices before one can act. so i think that's the spirit as opposed to manipulating oil prices. >> the qer discusses the last time spoure had a release in

reaction to libya was in 2011. seems like yesterday but it was in 2011. since then the supply has greatly changed, for sure, as demonstrated in the test sale this last year. if there is an interruption somewhere in the world that doesn't impact the supply to u.s. refiners would it make any sense at all to export sproule crude? >> once again, i would say that that should be part of the study -- studies really that are going on. but i might say that it's hard to see how a major global disruption would avoid impacting our imports. because again, we still import 7 billion barrels a day. only because with a major disruption, even if that -- let's say country -- is not directly importing to us right now, there would probably be a

redistribution of the market that would impact our imports. nevertheless hypothetically if that were the case i think there would still be an issue of putting sproule out would have the effect of backing out imports that would ee kwil great in the market. >> my time is up. >> gentleman from new jersey mr. pallone, for five minutes. >> thank you mr. chairman. secretary, climate change as you know is real and we're already feeling its effects across the country, the damaging impacts range from heatwaves and droughts to increased wildfires and everyone is affected. i'm concerned about impacts of extreme weather events and sea level rise under already problems that we have with our energy infrastructure. so my question is, the qer outlines a number of findings in this area. how is your energy transmission

and storage and distribution vulnerable to the impacts of climate change? >> thank you mr. pallone -- chairman pallone. first of all, as the data in the qer show we have been seeing increasing impacts probably impacting the economy on in the last decade and with the rising sea level, the effects of storms, major tropical storms for example, are amplified. so we feel it is very important now to address the hardening of these infrastructures, not only coastal but coastal is one major issue. that's why we recommend a joint set of initiatives. one is to provide energy assurance grants for states to do planning and to provide a

basis for the states to then compete for what we recommend as a several billion dollar opportunity for these kinds of activities. i'll give you one example. it happens to be in new jersey. it was not out of the recommendations here but in new jersey there was the case where we cost shared with the state a study on implementation of a very significant microgrid to protect electrified transportation corridors. the state then used that study to compete for sandy recovery money and, in fact, several hundred million dollars to implement that. that's the kind of thing. do these studies get technical assistance and then have the opportunity to move forward with cost sharing major resilience in projects. >> i appreciate your mentioning our new jersey grant because you know, obviously we did have

a lot of vulnerabilities during superstorm sandy. we saw a breakdown of infrastructure and services in terms of water supply. in terms of the grant program that is going to promote innovative solutions for resilience and reliability and security, just give me a little more information about how that program would work. i know you mentioned the new jersey program but what other kinds of projects would be eligible for those grants? >> well, it could be again any kind of project that hardens infrastructure. the electric grid is -- has clearly shown vulnerability to storms. so it could be things that, like i mentioned with microgrids it could be the use of advanced technologies. i could mention some things like

synchro phasers to prevent a blackout for example. one of the recommendations that we have in there is to expand analyses of what -- the different kinds of regional product reserves might do. now, this is a case where, again, in the northeast in new jersey, we've already moved there. but there are issues in california, there are issues in the southeast. there could be issues in the upper midwest and so we recommend that and there could be opportunities there for new resiliency projects. >> all right. thanks a lot. i do want to applaud you for your efforts to strengthen you know, these vulnerable and critical energy infrastructures especially in the face of global climate change. so thanks again. thank you, mr. chairman. >> at this time -- >> if i might just add, this is an example of the importance of the broader view of energy

security, including resilience of our infrastructure. >> exactly. thank you. >> thank you. >> at this time recognize the gentleman from texas, mr. martin, for five minutes. >> thank you mr. chairman and mr. secretary welcome back. mr. rush and you seem to have a mutual admiration relationship going on. >> do not get jealous. >> what? >> do not get jealous. >> well i wouldn't go quite so far as superstar but my daughter has a saying that she learned in college when something's really cool, it's money. and i would say -- it's money. when you say it's money, it means that man that's hot and it's cool and it's right on the bean. i would say moniz is money. so not superstar but money. now, you know what i'm going -- i'm going to i have go you a chance to show just how money

you are. what do you think i'm going to ask you right now? >> i don't know but i'm covering my wallet. >> you heard the chairman's opening statement. he talked about oil exports and, as you well know, mr. secretary, back in the '70s we had the opec embargo and this committee and the congress passed legislation most of which has been repealed. we had price controls on the well head natural gas prices price controls on crude oil, we had even retail price controls on gasoline. we limited what natural gas could be used for. that's all been repealed. the only thing that hasn't been repealed is the ban on crude oil exports. now, the u.s. is number one in

the world in oil productionproduction. over ten million barrels a day. world uses somewhere around 94 95 million barrels a day. would you agree that if we were to let our domestic oil potentially be exported that it would at minimum keep prices from going up on world markets and it is a possibility that world oil prices might go down. would you agree with that? >> i think the key issue, mr. martin is whether or not in a country like ours that still imports 7 million barrels a day, the question would be whether that did or did not stimulate any appreciable additional production. that would be the issue in terms of global price. internally there wouldn't be an issue on how rents were shared between refiners and producers,

but in terms of the economy wide, the real issue is whether there's more production and certainly in today's market it is hard to imagine that happening. in a future market -- >> i am not a harvard economics professor. >> nor am i. >> but i did go to graduate school, you want to talk about sharing of rents our refiners are taking those rents and putting them in their pockets. they're not sharing those with the retail consumers. if we let the producers have the option of putting that oil on the world market the consumer in the united states could potentially benefit from oil prices going down. i think you'll agree with me that retail gas prices are basically set based on the world price for crude. you'll agree with that. >> absolutely, yes, confirm that. >> so i have a list here of

studies where they've looked at what the price, what would has been to the price in the united states in retail for gasoline. and brookings institute, resource for the future, foreign relations, center for global energy policy at columbia university, energy policy research institute, aspen institute, progressive policy institute, icf international heritage foundation american council for capital formation congressional budget office, energy information administration, general accounting office, federal reserve bank have all concluded that if we allowed our oil to be exported there would be no increase in domestic price for gasoline and in most cases it might go down. now those aren't oil company hacks. those are bipartisan usually i

would say objective institutes. are you aware? you have to be aware of some of those studies. >> yes. i think they're all in agreement with the fundamentals that again the issue is whether or not such a move would lead to an increase of production of any appreciable magnitude. if it doesn't, there's essentially no impact on price. >> my time is expired but if you'll send one of your crack aides to the republican study committee taskforce on energy seminar this afternoon, you'll hear four or five experts all say if we allow our oil to be exported, u.s. production will stabilize and probably go up. >> that's the key issue i think we all agree on the facts.

>> the document does recognize legislative actions. would you elaborate on one or two important ones? >> this issue of providing funding, particularly for stays to compete for good projects that provide resiliency of infrastructure. that's an important one. another one is we recommend a fund that would allow for competition for accelerating natural gas distribution structure for environmental and safety reasons. clearly federal government cannot and should not pay a

quarter trillion dollar bill. but what we recommend is acceleration in which the federal government could help absorb any rate increase for low income families. >> one thing is talking about grid resilience. do you think there's a short term potential for that energy storage to be useful and resilience in lowering the cost improving access for renewables and so on? >> we all know california is in the lead as is often the case in terms of storage and clearly except for the places geographically where pumped storage is available we still need to bring down the cost of storage. but they're coming down. they could be a game changer in

terms of large scale variable renewables but also distributed storage at the household or commercial enterprise level to be another game changer, particularly in terms of distributing generation enablement. >> are we close to having technology available? >> well, technology is available, it is the cost. we probably need another factor of two to three reduction in cost to make it widespread available. >> thank you. do you feel the regional grid reliability would be put at risk by the clean power plan? >> we don't see any evidence in our analyses that this couldn't be managed. for example, we did a specific analysis in terms of the natural gas transmission infrastructure because of the issues raised in terms of dramatically expanding gas use in the power sector and

that found that while one would probably have some regional issues to develop that it was not like we needed a massive program because we actually have been building out that infrastructure pretty substantially the last 15 years, and frankly it is over capacity. so we don't see that as, you know, as particularly difficult issue. >> what would be the best way to deal with the regional question then that you just referred to of grid reliability? >> i think it would be in the normal process as the supply distribution is understood in that region, the companies would go through the usual process for interstate gas transmission pipes. >> seems to be a patch work of transmission citing initiatives. qer highlights need coordination for transmission for many processes. do you believe the rapid

response transmission team has been effective and should its role be expanded? >> i believe that it is -- i would say it has gained traction. in my view i'll be honest, i think it is slow getting going but i think now the preapplication standardization has come into play and i think that we do need to in fact, keep up the pace. >> thank you, mr. chairman i yield back. >> gentleman yields back. recognize the gentleman from texas, mr. olson for five minutes. >> thank the chair. welcome secretary moniz. my first question is about the federal power act, under section 202 c d.o.e. you, can order a power plant to stay running during a grid crisis. following your order, the plant might squeak past the clean air permits, unfairly that plant

can't be fined and sued by others for doing so. one regulator says go another says stop. that plant has to decide whether they want to acquiesce in a power shortage maybe rather a blackout, or breaking the permit a few days, maybe a few hours. i have a bipartisan bill with representative doyle and greene to fix this in the energy package we're working on. this is not about coming rough shod over environmental laws, we are talking days or hours in a crisis. the other week ferk and nerk endorsed our bill. your predecessor, secretary chu told me that he is quote, unquote very supportive of the idea. the bill has passed this

committee three times now, the whole house twice. 112th 113th congress. my question is can i count on your support in the 114th congress. will you be very supportive of the bill like your predecessor? >> mr. olson, thank you, you asked me this question before, let me say that the answer is basically yes. i know our d.o.e. staff has worked with both sides on this. and i think we're quite comfortable with it. thank you. >> thank you for that clarification. as you know, my home state of texas has half our southern border over 1200 miles with our neighbor to the south, mexico. and you know how important that relationship with mexico is for our trade. your qer points out that we trade tens of billions of dollars in energy each year with

mexico. >> 65. >> i like that even better. in fact, some of texas only power line connections come from our neighbor to the south mexico. you may recall those rolling blackouts and brownouts with crises in the fall, i'm sorry early winter of 2011 and august that same year. my question is we know this -- that oil gas shale place don't stop at the southern border. the new administration in mexico is reforming the energy economy. i think those opportunities will expand in the future. your qer will address the topic of north american energy. better coordination trade will be critical in years ahead. my question is can you please tell me what you see as the next major opportunity for north

american energy and where that relationship is headed. >> in particular i would say actually last week i spent four work days in mexico with western hemisphere and other energy ministers. the energy reform in mexico i think offers tremendous opportunities for us. clearly in the hydrocarbon sector, we know that. our companies are going to mexico in the current auctions and are prepared to offer lots of technical assistance to get engaged in shale plays as well. however, in discussions with minister joaquin, energy minister of mexico he emphasized something i agree with and that is that the reform of the electricity sector may actually offer quantitative new opportunities because the reform i think will bring our systems of regulation et cetera and

standards much more into alignment as we have with canada where we have a completely integrated electricity system. so we are looking forward to that. it is going to be a major focus. we have both a bilateral working group that i chair on the american side with the -- it is a multi agency group -- with the minister of environment in mexico. and then i also am one of three chairs of canada, u.s. mexico tri-lateral energy ministers. we are well along into a tri-lateral data cooperation. just last week we have a release that went out happy to get it to you. >> thank you. >> where it was announced we are going to expand cooperation, the

full agenda laid out, which will include things like emissions, hydrocarbon production and energy infrastructure issues. it is very active. >> thanks, i am out of time. the only viable carbon capture enhancement project in the world, come see it you'll love it. i yield back. >> i recognize mr. greene for five minutes. >> thank you, mr. chairman mr. secretary, you'll get an overdose of texas. i see my colleague joe barton is not here i don't know if the members heard his mom passed away last week. i just wanted to express regret to joe. mr. secretary, welcome back. the website for the international border comply with requirements to consider environmental consequences of proposed projects. mr. secretary, are you familiar with that requirement? >> yes.

>> when making cross border decisions, d.o.e. adhere to these regulations and guidelines set forth by council on environmental quality? does this include cumulative impacts? >> i'm sorry -- clarify the question. >> when making these decisions, d.o.e., the regulations and guidelines set forth, you said yes, does that include cumulative and indirect impacts? does that process include that? >> i guess i am not quite sure if that's part of the nepa process or not. clearly there are in general when we make public interest determinations cumulative impacts are part of that. >> okay. requires environmental impact for major federal action

significantly effecting quality of human environment. is it reasonable to conclude d.o.e. would require environmental impact for a cross border project? >> absolutely. we always require that, yes. >> would d.o.e. consider cross border project a major federal action. i am getting down to the whole -- >> yes, all right. >> ceq determined nepa applies significant federal actions and can't be avoided by segmenting a project, so that means that a project coming across from texas to mexico not just across border crossing, but the project itself, would d.o.e. decision making on cross border segments of a cross border project require compliance with nepa. >> certainly. i mean we always require compliance. >> the discussion draft would eliminate the permit process

grant cross border decision making to d.o.e. for electric transmission facilities. if this draft becomes law d.o.e. is charged with promulgating a rule to implement granted decision making. is it reasonable to conclude any d.o.e. issues, new regulations would include nepa requirements about the cross border project? >> if i may take a step back i think there are two principles we insist upon. one is proper environmental review, second would be judgment that this is in the public interest. i think those are the two basic principles. >> there's language in section 3104 of the bill that would limit the department's ability to fully comply with nepa requirements. do you believe that language is needed? >> again clearly i think we need to make sure the environmental requirements are met so if the

bill, if the proposal would curtail that then obviously i would not support it. >> are you familiar with what's called federal nepa small handle issues? >> no, i'm not. >> if federal small handle issues relate to how much federal control should be exercised over private projects, specifically whether full nepa review is required when the federal agents control only a small segment in otherwise private project courts determined if an otherwise private project cannot proceed without federal permits, then federal agencies are required to satisfy nepa requirements. mr. secretary is it possible for cross border project to proceed without a presidential permit under current law now? >> i really better check that with my gen