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 d.o.e 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 consultant, 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 sproule. 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 sproule 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 equilibrate 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 production, over 10 million barrels a day. the world use s moniz moniz quadrennial. >> he has to be. >> what are redoing for him? >> the key has to be economic development and providing other opportunities.

and i might just mention, mr. mckinley, i'm happy to say here that recently senator manchin asked me to come to west virginia and i would be happy to join him and you and come to west virginia and try to understand the situation and what we can do. >> 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 general counsel. i would have thought not, but -- >> my concern is that we have been trying to set a standard in this bill in previous legislation on cross border electric transmission, natural gas pipelines, and crude oil pipelines.

in this case, department of energy would have the authority over electric transmission. >> wires. >> and whether department of energy would use the nepa process to approve those cross border. >> again, my assumption is that again, the two principles are there, environmental impact, the nepa process, certainly for the part of the united states, and the determination of public interest. those are the two requirements and two principles i would uphold. >> i am out of time. i appreciate, under d.o.e. if we pass this bill with this particular section in it, would have that authority, and i wanted to see what the regulatory process would be in the d.o.e. >> i would be happy to discuss that.

>> the time is expired. are you saying it under that section it would not require nepa review? >> it does require nepa review. that's what i was wondering. there's been confusion on the legislation we've done separately that nepa review is not required. i want to make sure folks understand it is in this bill. >> it is. >> it was in the previous bill we passed out of the house last session. >> right. >> on cross border issues, not just for d.o.e. thank you. >> i recognize the gentleman from illinois mr. shimkus. >> thank you. your department was really developed and instituted based upon our nuclear heritage, as you know. and also focused on our nuclear future. you have to deal with a lot of legacy issues, not part of the hearing, but the introduction is to let you know i appreciate the support i receive from your

professionals down at savannah river which i visited yesterday and the contractors there and they took good care of me, and i just want to put that on the record. now to the qer, it devotes an entire chapter to improve north american energy integration, but makes no mention of issues belying permitting in general or keystone xl pipeline in particular, some of the questions mr. green was alluding to. do you agree that, and i quote, ad hoc or siloed permitting process, closed quotation, as the qer puts it, creates significant uncertainty? >> yes, it certainly can in many cases. >> has the inability to render a decision on keystone pipeline impacted other energy projects in canada? do you know? >> i am not aware of it. >> can you check back with us? obviously there might be, otherwise i wouldn't be asking this question. >> well, only in the sense that

olive seen discussions about other pipelines to take out things east or west, for example. >> right. i think the public and as a whole, i don't think they really -- sometimes i put up the transmission system on a map just to identify how many cross border pipelines and transmission lines we already have, both north and south. >> i think it is like 74 pipelines or something. >> right. and obviously curious if we have problems with one and the debate is will we have problems with the future or is this uncertainty slowing down the process. and so part of the legislation which the chairman is pointing to talks about this cross border

energy infrastructure language. in the committees energy, diplomacy discussion draft, would it attempt to address unnecessary delays in permitting of cross border pipelines and transmission lines, have you looked at this and is there room for improvement when we're talking about pipelines or wires? >> well, obviously as was stated, the pipelines as you know are not in our jurisdiction, the wires are, and i think it is going pretty straightforwardly. i might add that just the projects discussed in the last five years for new transmission lines would total about 5 gig a watts of capacity coming into the northeast. >> we had a hearing a week ago i think on really the natural gas desert of the new england states, we had the governor of maine here which would address

pipeline infrastructure and probably cross border also with them. i mean, i think a lot of people would shake their head, understanding we still heat with fuel oil in some major states in our union where access to natural gas pipelines might help them transition, especially with the abundance we seem to have having now with our production. >> if i may just. >> you may. >> a week and a half ago we did approve for potential fta reexport a project to canada, natural gas project. >> the energy diplomacy discussion draft also talks about improving the process for permitting major energy projects. do you agree it would bring greater clarity and predictability to the process and help in the diplomacy part?

>> clarify if we did what? >> the balancing impacts with environmental consideration action especially in energy diplomacy, shimkus is lithuanian, people have heard that, i toured the l and g terminal, energy diplomacy for friends around the world, whether japan or eastern european countries is critical to give them choices of energy. so the question is cost benefit analysis, how can you expedite it. your quadrennial review addresses this a little bit. >> again as i said earlier, the whole issue of energy security is -- we are looking at in a broader sense than the traditional way, and by the way maybe not here but if you would like, we would be happy to come to your office and talk about work on ukraine specifically. >> that would be of great interest to many members.

>> we are trying to expedite these positions. >> this time the chair recognizes miss castro for five minutes. >> thank you, mr. chairman, good morning, mr. secretary. i would like to you elaborate on transmission storage distribution beyond what you've already testified to because america's energy infrastructure is aging, it is not well matched with the new sources of supply, it is exposed to increasingly dangerous extreme weather events associated with climate change such as sea level rise. in my neck of the woods, we are concerned about more intense electrical storms, drought and wildfires. i know you're sensitive to the potential for cyber and physical attacks as well. and part of america's policy now is to encourage the new clean energy supplies and greater energy efficiency such as the availability of rooftop solar that holds great promise for powering households and businesses across the country,

and growing energy efficiency sector that will rely on smart meters, smart grid, distributed generation. these run completely counter to about well energy assurance grants for states. maybe you need to go into greater detail on the microgrids. i've never heard of a synca phaser. what else must we be looking for in order to modernize america's grid and infrastructure going forward? >> well, in terms of the grid including both the transmission and distribution systems, i think one major theme is that we need to really push forward on what we just barely started, and that is real integration of information technology into the grid and all of the associated requirements to take the data to be analyzed of course.

synca phasers are a part of that. we can discuss that some other time. but sensor control systems, coupling information technology into distributed information technology that can be developed on the liability side for example. that is really i would say the overarching theme, more and more information technology integration into the system. the -- that does of course potentially exacerbate another thing you mentioned, which is the cyber risk that we have to stay ahead of. i would say there, under the leadership of our deputy secretary, we head something called the energy sector coordinating council which has eei and a number of ceos that meet three times a year to discuss these kinds of risks to the infrastructure, to the grids

especially. on the grid, there are some other issues besides those i mentioned, such as the role of potentially d.c., long distance d.c. transmission where that's much more prevalent in other parts of the world right now. but again, i.t. i would say number one in terms of where we have to go. >> back on your energy assurance grants, would they be only open to states or local communities and businesses be able to tap into those grants? >> i think there is still really a lot of program design to do. we'd be happy to talk with the members about that. i think the way we've been envisioning it is principlefully through the states but hoping the states to be competitive with work with localities and tribes in the appropriate states, for example. but that's all a detailed program design -- >> i hope you'd open to up to local collaboratives or regional

collaboratives. sometimes you have recalcitrant states. there's an unwritten state policy in florida right now, you can't even say climate change. than doesn't bode well for our ability to compete for those grants. >> we'll take that under consideration. >> great. >> because it's been raised before in terms of cities wanting to be able to be direct applicants. >> absolutely. there's been some discussion today about experts of oil and gas. how much -- you've used a number today. how much right now is america importing of petroleum and gas? >> i think we're still importing close to 7 million barrels a day of crude oil. although we are net exporters of about 2.5 million barrels of oil products. so our net imports are maybe 4.5 million barrels. >> doesn't the export heavy focus run counterto america to america's

policy mission to reduce carbon pollution? >> frankly i think in our current situation where we are still major importers relaxation of export is probably likely to, more or less, just swap around different oil qualities in different places as opposed to lead to tremendously increased production or demand. that's my view. >> so, you do not think that exporting additional carbon fuels would exacerbate the problem of carbon pollution? >> i think the key is that even as we are producing more and this debate is going on in terms of exports, i think the important thing is -- and we satisfy this -- is keep your eye on the ball for reducing oil dependence. and that means we are aggressive on efficient vehicles. we are aggressive in terms of

developing low carbon fuel alternatives like next generation bio fuels, and we are aggressive in supporting the of mo toward electification of vehicles with clean electricity supplying those vehicles. and if you look at it, we are i think succeeding. for example, in the last i think it's -- some number of years maybe a decade -- even as our population is increased, as our gdp is increased, 13%, we have actually decreased petroleum fuel use. >> gentle lady's time is expired. gentlemen from pennsylvania mr. pitts, for five minutes. >> thank you mr. chairman. thank you, mr. secretary, for coming today. chairman upton mentioned his interest in ukraine and the meetings over there with the ukrainian parliament eu

getting resources over there. you said something that you're doing a lot with ukraine. would you care to elaborate, please? >> i'd be pleased to. starting in middle of 2014 the g-7 energy ministers together with the eu met to discuss energy security issues and that included specifically the russia/ukraine situation. out of that came a commitment to work with ukraine for that winter and so d.o.e. led a team of several u.s. agencies, plus canadian experts that went to ukraine several times and guided them to a winter contingency plan for energy. so that occurred. including, by the way, a tabletop exercise at the level

of the deputy prime minister. then we are back there helping them again look forward to next winter. but other things as well. for example, we pointed out the dependence not only on natural gas, but on russian nuclear fuel. you may have seen now, that's led to westinghouse now has a contract to be a fuel supplier for the russian reactors in ukraine. this has caught the attention of some. breaking a monopoly, again. so we are working in a number of ways to help ukraine on the energy situation. >> thank you. the department of energy has made progress on a few lng export applications. but the fact of the matter is that more than 30 applications still await final decision from d.o.e. i realize that you decided to recon figure

reconfigure the process to go first, but the process as a whole remains complicated, unpredictable, especially for u.s. allies who are unfamiliar with the bureaucratic process and ferc. . >> i expect -- i don't think it is going to be an impediment because today we are at 8 1/2 bcf per day approved for non-fda countries. >> would the transpacific partnership or the transatlantic trade and investment partnership clear the way for automatic lng export approvals? >> i think that will depend on the specifics of how it is negotiated. but it may very well provide fta status to more countries.

in which case the approval is more or less automatic. although i would caution -- because this statement is also often raised with regard to ttp and europe. the reality is that the market prices probably have a bigger impact than whether you are labeled fta or non-fta. >> do you support the provisions within the discussion draft which would effectively give d.o.e. 60 days to act on an application following the ferc environmental review? >> we've made our statements very clear on that particularly in a hearing in the senate that we, frankly find it unnecessary. we have been acting quite quickly. it's workable. we've said it's workable. we can work with it. but we don't think it is necessary. >> u.s. oil production has risen rapidly in the last several years and imports are falling.

in fact only about one-quarter of the petroleum consumed in the u.s. is imported from foreign countries which is the lowest level in 30 years. when asked about lifting the ban on oil exports, you made the point that the u.s. still imports oil, which is fact. but given our role in the global market, would it make sense to both import and export oil? >> well again, i imagine we're going to meet our needs. and so if we right now export a barrel, we're going to import a barrel to replace it. as i said earlier, the only real issue in terms of the exports is whether that would lead to any material increase of production. as opposed to just, in effect swapping oil. there could be some issues there in terms of oil quality. for example the mexicans have specifically petitioned for a swap in which we would send

light oil to mexico in return for heavier oil coming back. that's an example of a swap. but i have to say, it is not as though we have not been able to absorb all of the oil production today in the united states. it's been -- so -- anyway. >> thank you. my time's expired. >> recognize gentle lady from california for five minutes. >> thank you, mr. chairman, for holding this hearing. i thank you mr. secretary for your testimony. the discussion of our nation's energy infrastructure is very important, and as is is the administration's work on the quadrennial energy review. i'm particularly interested in the pipeline safety aspect of it. over my years on this committee i have referenced very many times the santa barbara oil spill of 1969. that oil spill had tremendous local and national ramifications giving birth to our modern environmental movement in many ways and changing much of the

way our nation as a whole has viewed the environment and oil development. sadly, the santa barbara community was recently hit with another terrible oil spill along the coast. on may 19th, more than 100,000 gallons of crude oil spilled from the ruptured plains all american pipeline along ot treasured coast just north of the santa barbara. the oil quickly flowed under the highway, on to the beach and into the ocean where the oil slick spread south for miles along the coastline. while the exact causes of this spill are still being investigated, it is already clear that woefully inadequate federal pipeline safety standards have played a significant role. it turns out that the plains all american pipeline is the only federally regulated pipeline in santa barbara county. also the only transmission pipeline in the county that does not have an automatic shutoff valve built in to its system. and this is not a coincidence. every other comparable oil

pipeline in santa barbara county has an automatic shutoff valve because the county has required it. but the federal pipeline and hazardous materials safety administration or fphmsa, does not make this a requirement of operators. while a shutoff valve may not have prevented a spill, it certainly could have minimized it. plains was actually allowed to squirrel away tens of millions of dollars into what they called a contingency fund for when their pipeline would inest xwli fail. inevitably fail. yet they weren't even required to install basic spill prevent text noll gizchnologyies technologies. this defies common sense. this is just example of lax safety standards. my constituents are understandably angry and i share their anger. with all due respect for my seat mate, mr. green, who isn't here right now, oil and gas

development at its core is dangerous and dirty business. the mere fact that plains and other companies have oil spill contingency funds shows that there is no such thing as a safe pipeline. spills do happen. and they will continue to happen as long as we depend on fossil fuel for our energy needs. we obviously cannot end this dependence overnight, but we clearly need to take bigger and bolder actions to achieve the clean energy future that we all know is needed. secretary moniz, i appreciate the president's and your strong commitment to preserving renewable energy. objects of. request er are important. we cannot modernize our infrastructure without preparing for new challenges but we must also do everything in our power to make sure this infrastructure is as safe as possible. congress has repeatedly directed for stronger standards and yet phmsa has done very well.

a draft rule development would help but phmsa first began taking comment on this rule nearly five years ago and nothing has been published so far. in 2 dhou0001 congress enacted legislation specifically directing them to require a rule to require automatic shut involve values. still not even a proposal yet alone a final rule. i find this really inexcusable. i know d.o.e. does not have correct control over this agency. transportation does. or rule making. but what's the point of replacing aging pipelines and building new ones if they're all built using ineffective and outdated safety standards? the pipeline that burst in my district was not even 30 years old. so age is clearly not the only factor here. so mr. secretary, my question for you -- i appreciate if you can get back to me because i've taken most of this time but what is the administration going to do now to ensure -- there's a

lot of attention focused on this topic -- to ensure that a new pipeline infrastructure is as safe as possible? >> well again as you said phmsa obviously is in the department of transportation. i'm certainly happy to talk with secretary fox and get back to you. but obviously the qer focus is we've got to rebuild infrastructure in a way that is reliable and resilient. i would say this is an example of resilience by having the kinds of safety systems in place that maybe cannot avoid but dramatically limit the impacts. some this is just part of why we need this discussion, i think. >> thank you very much. >> this time right now gentleman from ohio for five minutes. >> thank you, mr. chairman. mr. secretary, welcome back to the committee. it is always good to have you here. if i could just follow up with the gentleman from pennsylvania, mr. pitts was asking and you

mentioned about the swap for light versus heavy with mexico. maybe some folks don't understand why you have to have a swap. why is that? do you have to swap light for heavy crude? >> i just mentioned that that's what the mexicans have petitioned for because i think in the currently we do not have authorities for exporting oil directly to mexico. so they recommend -- so my understanding is, it isn't d.o.e. but it is my understanding they asked for this kind of swap. i believe department of commerce, i believe. >> another issue not only has this subcommittee taken up but also especially the telecom subcommittee in regards to signer is attacks and physical attacks that could occur to our infrastructure in this country. and it is really not only a growing concern but a great concern we all have as to what could happen. the committee's discussion to draft an energy reliability and

security emergency measures to project the bulk power system from grid security emergencies. are you generally supportive of the d.o.e. having grid security emergency authority? >> well, i believe we have that -- we have the authorities but only under emergency conditions. >> let me ask. what other grid security recommendations you make to this committee that we should consider at this time? >> well, i don't know what is appropriate for statutory direction but i think utilities, for example, on physical security. many of them have taken significant steps since the california incident. they're not always advertised for obvious reasons, but they have been doing that. similarly, by the way, many of the utilities but the reason we need to really complete a study on the transformer issues

whether it's because of a physical attack or just wear and tear, a number of utilities have really moved in terms of their back-up there but it is not uniform. of course we have very, very different utility structures organizational structures. so it's very different for ious versus co-ops, et cetera. so i think there is some -- that's an example where maybe after a study some statutory action could be called for in terms of how do we provide appropriate resilience to the low probability but very high consequence of not having access to big transformers. >> let me ask this. how concerned are you about electromagnetic pulse against the grid system? >> well that's another risk that we identified. there are studies on that. national academy has studied that. i would say it is once again,

an example of a probably low probability but significant consequence possibility. >> when you say a low probability, what percent probability -- >> i'm not going to give a number. just it's low. but again, there has been hardening done by many to keep transformers, et cetera. >> thank you. could you explain the importance of information sharing and public/private partnerships as it relates to securing the electric grid? >> i'm sorry. >> yeah. could you explain the importance of information sharing and public/private partnerships as it relates to securing the electric grid? >> oh. i think that's very important. once again the energy sector coordinating council that our deputy secretary heads is part of that public/private partnership. i have to say, groups like that have been excellent part flersers

in partners. in terms of information sharing, just one example. there is a lot of information sharing in terms of reliable operations, et cetera. but one area i would highlight that this council does is, including through provide roging selective security clearances sharing cyber threat data with the private sector. >> okay. and finally, the very short period of time i have in analyzing recent power plant retirements, the qer mentions market factors, low cost of natural gas and changing coal price prz drivings driving factories behind requirements. would you agree things like the proposed are clean air power plant also played a role in the retirement of some of our electric generating units? >> well, certainly things like mercury restrictions obviously raise costs. that's always the cost calculation.

but again, i think by far the dominant issue over these last years has been gas prices of $250 and for certainly inefficient coal plants, even the variable cost is beat by natural gas combined cycle. >> mr. chairman, i yield back. >> this time the chair recognizes the gentleman from vermont, mr. welch. >> thank you very much. i have one comment and four questions. i think i'll ask them all four so you can answer them. . comment you've been getting praised for being a great secretary of energy and sideline as a nuclear negotiator. but i don't think people know that you do the best imitation of louie tiant his wind-up, delivery and pitch. i think you should give a demonstration. >> including the look to god. >> the look to god. the whole thing. but the questions, one with be this committee's been doing great work on energy efficiency.

energy efficiency in vermont has been fully embraced and it has led to our transmission company velco, being able to avoid about $400 million in exof expenses associated with transmission lines. so i want your comment on what we can do as a committee and the federal government can do to help get the benefits of avoided cost. second, we've been trying to get real-time information on electricity rates in new england in significant part because our rates are very high. and your department has been helpful trying to get real-time information in all the states in canada and mexico, but has been having real challenges in actually getting that information. i'm curious to know what you find is the reasons why it is so tough to get that, and what the department and ferc can do to reduce the electricity bills for new englanders. third, this is a smaller issue, but quite important. we have some bio mass stove manufacturers and the standards

evolved. one of those stove companies is hearthstone. they're having a real hard time getting basically an answer on what the standards are so that they can comply. so we need some help on that. they have a great product. but if they don't get a real definition of what the standard is, then it makes it tough for them to stay out there in the market and he's been having an awful hard time with that. small company but important company in real jobs to vermonters. then finally net metering. that's tough because you have to have net metering if you really want to deploy energy efficiency. on the other hand, it obviously has an impact on the economic model. vermont has gone in a different direction than most states led by green mountain power, our biggest utility to embrace and promote expansion in net metering. what could we do at the federal government to help that process that's going to help deploy energy efficiency, but also deal

with the economic realities of many of our big power producers. thank you. >> great. well, thank you. so the four questions -- actually, the third question on the emission standards of bio mass stoves i think is something that we'll get back to you on because i just don't know the answer right now. but that's one thing we can take care of. on the energy efficiency and vermont -- well as you know i was in vermont with the delegation and vermont has done a fabulous job in terms of efficiency with novel, novel business models for supplying energy. but i would say the main thing, the recommendation in the qer be relevance to that, and to a certain extent to the net metering discussion as well is that we need to develop -- and at d.o.e. we will really start delving into this much more.

we need to devise a much better way of valueing all the services that can be provided in electricity system. efficiency. storage. diversity. capacity. power quality. there are all of these issues. and when we have the traditional business model and it was basically one way from a central plant to a house, well, it kind of all got lumped together. but now with much more diversity, with storage coming in this some cases, distributed generation, we know that energy efficiency -- this involves another hot issue right now that's in the courts, is to what extent does end use efficiency come back all the way to the wholesale market, which ferc is engaged in. so i think this issue of valuing all the services is really core.

and that's something that we want to over the next months really work hard on. and that's something that needs dialogue with the members. so that's i think an absolute critical recommendation. in terms of electricity prices and real-time prices, i would just note that the eia has in fact not so long ago launched a new product which has much more real-time data being collected from the isos and rtos and combined together so that one can research it and one can understand how prices are moving. >> this time recognize the gentleman from west virginia mr. mckinley, for five. >> thank you, mr. chairman. thank you again for coming before us. in the last week during the

break, i returned to west virginia and was on overload of negative information coming at us in west virginia. the first newspaper i got when i got back there was "dark day for miners." they had just announced that 2,268 coal mine pentagon jobs were lost. 2,268 families now are looking for jobs as a result of this. then soon thereafter we got another power plant closed down. the camera power plant. even though ferc has said -- and they've testified before us that the concern they have is that we're going to have rolling blackouts in the midwest if we don't start replacing these power plants but we're continuing to shut these power plants down. then there was another one that went on to say just in one community, one small community, that they're going to lose $61 million in wages as a result of

this. i'm dealing with all of this crisis. when you add the additional losses, these 2,268, now we're up to -- and i believe the chairman mentioned it earlier today, that we have now lost in west virginia 45% of our coal miners are unemployed since 2012. just in three years. three years we've lost 45% of our coal miners are looking for work. last friday i met with the coal association. i could see there. they said there's going to be further contraction as a results of policies that are happening nationally so they're very concerned about what's going on with it. this loss of the camera and other power plants, it challenges, you well know the grid stability that we have this dependability. but it goes beyond that. you know that. and that is what about property

taxes? what about the local income tax that people are going to pay? you can take away the power plant but now you are affecting the schools. you're affecting how our community operates with this happening. so my first question of two questions would be, what is -- what would you suggest that would -- to the coal industry to reverse this decline? >> well mr. mckinley first of all, of course we all feel for whatever reason, when there are these major disruptions in communities, it is obviously something that we need to pay attention to. and administration does have some programs to look at some retraining, particularly in the overlap areas with natural gas production. the power plus plan that's been put forward. but i recognize that these don't

address 45% of a workforce so they help in the right direction, but they certainly do not "solve the problem." >> well, if we keep in mind, too, mr. secretary, you know something? that coal miners, average age is going to be in their 50s. what are we going to retrain them? my second question since unfortunately you don't have a quick answer either on this as to stop the hemorrhaging, but the second question -- so if you're sitting in the kitchen with this 55-year-old that just lost his job. he's been working 30 years in a coal mine. what do you tell him? >> well, look. i'm completely with you. this is a very, very difficult. it's very difficult. i think in the end, it's about having to try to produce some other economic opportunities. revitalization. some retraining. and -- >> but these are real -- you

understand these are real people that are really lost their job. >> yes, i understand. and the following is not on the right time scale for you but i've said previously, i think in front of this committee as well that we do have many programs, many different kinds of programs, that are addressing the issue of a future of coal, even in a low-carbon world. but that's not going to solve that gentleman's problem tomorrow. i completely agree with that. >> so in the 23 -- what do we tell him? he's got a mortgage payment. got a let care bill. what are we doing for him? >> the key has to be economic development. and providing other opportunities and i might just mention, mr. mckinley, i'm happy to say it here recently senator man manchin has asked me to come to west virginia and i'd be happy to join him and you and come to west virginia and try to understand the situation and what we can do. >> thank you, mr. secretary. >> at this time recognize

gentleman from new york, mr. ingle, for five minutes. >> thank you very much mr. chairman secretary moniz, thank you for your testimony today and thank you for all your good work in so many things. we really appreciate it. i'd like to join everyone in applauding your efforts -- >> i'm having a hard time hearing you. >> i'll do this. generally not so hard to hear new yorkers talk. just try to talk a little louder and not slur my words. i want to applaud your efforts and the efforts of everybody involved in producing the first report of the qer task force. i believe it really establishes a very sensible blueprint making our electric grid more resilient and to identify and improve vulnerabilities in our current energy transmission distribution system. as you know super storm sandy swept through my district and

the surrounding region in october 2012 knocking out power to over 8 million people and causing a several fuel supply and distribution problems. some new yorkers in my district waited more than two weeks for their lights to turn back on and struggled the whole time to keep their families safe and warm. so as a result i am particularly focused on the ability of our grid and our entire energy transmission and distribution system to withstand future shocks and also to recover quickly from any outage that might occur. so could you please discuss how we're better prepared today than we were in 2012 for a storm like sandy, and how the suggestions in the qer would build upon the improvements we've made in particular please touch on the establishment of the northeast reserve and the potential expansion of distributed generation through the rev initiative in new york. >> thank you. well, first, on the regional

gasoline reserve, as you know, that has been established with a million barrels. distributed in three locations from the new york harbor area up to portland maine. and that complement to the heating oil reserve that was established some years back. i might point out that one of the recommendations, by i way which i would put in front of the committee is that it would be very useful if the authorities for using those reserves could be harmonized because they are quite different and this would not help in terms of a coordinated response in terms of an issue. so that successfully put in place the -- it is paid for as well for 4 1/2 years of operation. and i might add, we are currently now about one-third of the way through to using the

remainder of the money to repurchase 4.2 million barrels of crude oil to go back into the reserve. because we took out 5 million. so it will be 4.2 crude 1 million gasoline, and 4 1/2 years of operations on the reserve. secondly with regard to the grid and resiliency again i'd like to highlight what we consider to be one of the most important recommendations, and that is the -- actually two recommendations. one is to support in our fy 16 budget request state assurance grants to allow planning for hardening infrastructure. and then -- and this is a case we have to find out working with you -- how to raise the revenue, how to raise the resources, but to establish

several billion dollars for competitive resilience ya projects that could include things like microgrids. but design for resiliency of the energy system. >> thank you. let me ask one more question. the qer report also recommends ways to further integrate the energy infrastructures of the u.s., canada and mexico. and the idea is to enhance market opportunities, energy security and sustainability. some transmission lines already sent hydropower from quebec to the northeast united states and the potential exists obviously for more capacity on more transmission lines in the region. could you please talk about what role, if any these transmission lines should play in our energy future? >> i think these are very important. of course, one that was approved recently was the champlain hudson line that would take power to new york.

from -- hydropower. and there are a variety of projects for 4 to 5 giga watts of additional hydropower. this would obviously be clean energy and to meet our needs. >> thank you. thank you, mr. chairman. >> chair recognizes the gentleman from virginia, mr. griffith, for five minutes. >> thank you very much, mr. chairman. i do appreciate that. let me reference the comments made by mr. mckinley of west virginia. we've had hundreds of layoffs in my district alone. of course in my neighboring state of west virginia and kentucky, there have been thousands. and it has been devastating. you reference natural gas in relationship to the closing of some of the coal fired power plants as one of the factors. of course it is one of the

factors. but other -- the regulations coming in -- also yesterday we closed down another facility in my district. it was paid for by the rate payers. wouldn't cost them any additional. it was only being used at this point for peak periods. that's now gone. clinch river facility in my district had three egus, they are converting 2 of the 3 over to natural gas. however, the third one is not going to be converted. the two-thirds that used to be there will produce about half of the electricity. i'm just concerned that in the peak periods of use, now that they're gone, how are they going to be replaced in southwest virginia and in other parts of the footprint? >> of course i don't know well enough the exact geography and the distribution of power plants. clearly --fy talk more broadly, one of the issues clearly is the

continuing build-out of the transmission system power around effectively. i might say that i was a little bit surprised, frankly with the data that came out in the qer that the spending on transmission in the country has actually reached $14 billion, $15 billion per year with a continuous increase basically over the last 10 to 15 years. so we actually don't think that any significant increase in resources will be required. the issue will be to make sure that the lines are configured of course to make sure energy gets to all of the various places. >> and i get that. that brings up natural gas pipelines in talking about all of this. they're building them in my district with great opposition from many people who don't like the pipeline cons sent. they're also building them in the district just to the north

of mine. pipelines are going everywhere. i notice in the qer you note the need for pipeline replacements for existing pipelines and that you suggest a d.o.e.-run grant program designed to allow states to receive funds to aid in improvements to the pipeline infrastructure. i support improving our current system for existing pipelines. . i'm interested in learning more about the details. what new authorities do you all think you need at d.o.e. or do you want to create this program and will you be providing language to the committee so we can see about putting that into the appropriate bill? how do you envision the d.o.e. replacement program working? where would -- how would the funding get to the existing states? would it be the existing funding? you going to come up with new funding? where is the money going to come from. what's the timeline and how would the states apply, et cetera. throw all those out at you at

once. i would be glad to go back over and review them but i don't want my time to run out. >> be laep to get back to you on the detail. on the reforce issue you were very clear that we do put -- we had about a half a billion dollars proposed in the fy 16 budget to discuss various qer recommendations. but there were another $15 billion of need identified which we were very clear we have to have a discussion in terms of where can those resources come from. that's over many years but still, so specifically the funding for the acceleration of natural gas distribution infrastructure replacement is not in our budget. so that's one of those cases. and we have in the past of course had many examples of raising resources in various ways. for major infrastructure projects. i think that's the discussion we need to have with the congress, are we prepared to find these

mechanisms for a significant push on energy infrastructure. >> as we transition then and we use more natural gas, then it would seem that at some point that funding is going to have to come forward, which means it is going to be passed on to the rate payer, and yet another expense added on to one of their energy bills. >> what we've seen today -- by the way, at least for these years i have a place in d.c. and on my bill there is a specific surcharge on there for replacement of the natural gas distribution pipe. what we are saying is we think this needs to be accelerated. i'll be clear, i guess it's washington gas -- whoever it is -- the surcharge is for a 40-year replacement program. that seems like an awfully long time. so what we're arguing is we need to shorten these -- utilities

are typically doing this. many, many decades to keep the rate hit low. we're saying geez, we need to accelerate this. what we are proposing is funding that would go to help low-income households absorb the rate hit. >> gentleman's time's expired. right now recognize the gentleman from ohio, mr. johnson, for five minutes. >> thank you. mr. chairman, and thank you mr. secretary for being with us again here today. at the risk of piling on, i want to associate myself also with the concerns already mentioned regarding the coal industry. my district is a district and a state heavily dependent upon the coal industry. not only for reliable energy, affordable energy but also the jobs that it represents. i was on a trip to europe just a couple of weeks ago and one of

the statements that one of our european colleagues in the energy sector made was that over the last 20 years or so, they have led america in shutting down much of their coal industry in an effort to reduce their carbon emissions. but some of those european countries when we ask them what their energy profile looked like, they're returning to a higher percentage of a use of coal. when i questioned them about that, i said, why is that the case and how do you think you're going to be able to reach this 40% reduction by 2030? this official said look, we've learned. our rate payers, our businesses and our residential customers have learned -- have said they are no longer willing to pay the exorbitant high prices for energy. you know the idea is you make coal so expensive by taxing the

carbon emissions, that renewables and other alternative forms of energy are more economically attractive. they're going back to coal. i don't know why america, mr. secretary, why we have to learn this lesson the hard way that coal still provides the most reliable affordable energy on the planet. so let me get off of this subject because i have some others i want to talk to you about. you expressed a willingness to come to west virginia were senator manchin and representative mckinley. can you swing through ohio during your time in the region? i'd love to take to you talk to some of our coal mining coal operators and some of the manufacturers who are being asked to idle their plants because there's not enough energy on the grid to meet the peak demand. and that's today. that doesn't even count for what's coming. >> if i may, make a suggestion that might be useful, we have a

very, very excellent person named dave foster who is really thekreecreateor of our job strategy counsel. perhaps a meeting with those of you with kind of anticipate latch an connections in coal just to brainstorm about what might be other ways of going. i'd be happy to do that. >> can you help facilitate that? >> yeah. happy to do that. >> my office will be in touch. >> certainly the two of you and mr. mckinley would be among those. >> all right. we'd like to do that. let me move quickly to these other questions. in march william o'keefe, the ceo of marshall institute penned an editorial in the "washington times" where he notes that the council of economic advisors annual economic report for 2015 details the beneficial effects for lng exports. that lng exports would bring for domestic employment, geopolitical security and energy industry and the environment. he also makes the point that

unless we act soon we're going to lose many of these benefits. he says while the america policymakers procrastinate other countries are stepping up to meet these needs. the united states has an incentive not to wait. our window of opportunity is closing. with that in mind, what are your thoughts not only on lng exports, but are there any specific steps and policies we should be putting in place today to realize this opportunity before it is lost? >> i have to say first of all, we are not procrastinating. again, we have now approved -- by the way, this is separate from the conditional approval that we made last week for the alaska project because that's a separate gas source. but for the lower 48 we've approved roughly 8.5 billion cubic feet per day to non-trade agreement countries. we have no other applications to work on at the moment.

and just to give a scale i mean the largest lng exporter in the world is gunner. and they are at about 10 billion cubic feet per day. >> i hear you, mr. secretary. then why does the rest of the world -- why are they still urging america to get into the lng export market on a global basis? why does the rest of the world and the oil and gas industry think that we're not participating in the global export? >> i think, first of all, there is a lot of misunderstanding, to be honest. number one. number two, clearly they're sitting there with $12, $15 gas, and they see us at $2.50. they think that looks pretty good. now of course, by the time it reaches them when you add $6, or $7 for the supply chain, it is not going to be our prices. but still beats their prices. so clearly they have an

interest. they want to see that. well, the fact is that if you look at the economic studies that have been done, not by d.o.e., by others, in terms of what they expect to be our real export market, very few of them come in above 10 bcf a day given competition in various parts of the world. all i know is that's for the private sector to sort out. we have approved, we have studies that take us up to a potential 12 bcf per day. earlier it was pointed out we've commissioned another study that would even look at 20 bcf a day. in the meantime we've approved 8.5. the projects are being built. the first cargos will get on the water probably the beginning of 2016. then we're going to start exporting. another issue is -- and a lot of our european friends say, you

know, they want the gas. i might just point out, as an aside, no value judgments -- there are a lot of places a in the world that don't want to develop their own indigenous resources but would like others. okay. well, that's fine. but we do not direct where cargos go. we approve export licenses to non-fta countries. and those are commercial contracts. frankly, it is a constitutional issue in terms of our not doing that. >> mr. chairman, my time has expired. i would submit to our committee and to the secretary there's a big disconnect somewhere. because the experts tell us that our price is going to rise when we get into the global export market. we haven't seen that. we've heard that the global market price is going to come down. we haven't seen that. so i don't know where the disconnect is but there pea a big disconnect somewhere.

>> thank you. at this time i'm going to recognize the gentleman from missouri, mr. long, for five minutes. >> thank you mr. chairman. mr. secretary, the discussion draft provides the department of energy with some new responsibilities beyond your current mission. for example, we direct the department to study the feasibility of establishing a federal strategic transformer reserve and arm the department of energy with new authority to address certain grid security emergencies, which i think is foremost in everyone's mind as far as grid security. do you believe the department of energy has the expertise and capability to meet these new duties? >> well, yes, sir. first of all, on the transformer reserve, we are moving forward to study that. we have one study already from

our -- from our western organization. but we're moving forward on that and will depending on the study, engage then in the appropriate public/private partnership to make sure we are secure. with regard to grid security emergencies, again we already do a lot of this. we work under the fema umbrella. we are the lead agency for energy infrastructure, and so for example you may have read about the typhoon going through guam a couple of weeks ago, i think it was? well, we had people -- we had a person in guam as part of the fema response. we're already doing this. now additional authorities could be helpful. >> okay. in your testimony you mentioned that one of the key energy objectives is enhancing energy

reliability. what impact do you think that the proposed clean power plant will have on energy reliability and transmission issues? >> well, again, first of all we do -- we analyze these issues but of course we don't have a final rule yet to know how to analyze it. but what we have done to date and what we have done in terms of technical analysis around the proposal of last year again suggests that the liability will be quite manageable. but we have to wait to get the final rule before we can really do the -- >> so you don't think the proposed plan will have a big effect? >> well as i mentioned earlier one example of something that we did, there was an issue around the projected significant increase of natural gas for the power sector versus coal. and when we looked at the

infrastructure issues of the gas delivery, we just did not find there was likely to be any significant challenge. there would be some work to do, but not a significant challenge. >> we, with mr. griffith from virginia a while ago you had a discussion about money to the states and things. and with this quadrennial energy review, provide financial assistance and grants and investment plans for electric reliability and efficiency. can you discuss a little bit of some of the criteria, regardless of where the money is coming from, because we know there is a shortage of money. but can you discuss some of the criteria the department of energy will require for the states to receive this financial assistance? assuming, again, there would be money there. >> the money issue is relevant and i must say, i was very, very disappointed in the appropriations mark which did not give -- provide any funding

for either the reliability or the assurance grants. which i think is short-sided, to be perfectly honest because i think the states need to have this kind of planning capability. we would provide technical assistance. in terms of program design that remains to be done but what we envision will be ultimately proposals around things like microgrids, for example. for reliability and resilience. we would see again the integration of i.t. and smart grids as providing those services. and as i said, we hope in the reliability and assurance arenas to then have funding for competitive cost share grants. >> would the criteria be the same from state to state or would it change across the country? >> i think the criteria, while it still remains to be worked out completely but the criteria

would be around enhanced reliability and resilience. that's the criteria. >> i understand that but i'm just -- my question was whether it be the same from state to state across the country or different states would face different criteria. >> i think the same criteria but the way the projects would be structured would look very different depending upon the regional and state resources. >> okay. i'm passed my time. if i had any time left, i yield back. >> this time i recognize the gentleman from texas, mr. flores but also just warranted to make a comment you really taking the leadership with the republican study group on the forum on oil exports and have an opportunity to examine that more thoroughly today. so thank you. >> thank you, mr. chairman. i hope secretary moniz will send someone to the discussion this afternoon. of course i want to talk about exports like my friend mr. barton did. one of the things you talked about is that one of the good

reasons for the ability to have oil exports is because you have a better matching of the qualities of grades that are needed by refineries and different geographical areas around the world. you didn't go quite far enough, i don't think, because one of the things that happens when you have that better matching is you have economic efficiency and economic efficiency releases additional capital, and that additional capital, based on my experience with 30 years in the business, would go back into re-investment which stimulates the production. so next time you're answering that question, if you go all the way through that economic cycle, i think that it would be helpful. the next thing has to do with -- i guess i'd call it a safety valve question. as you know there are multiple versions or proposals for oil exports out there, and some of them include giving the president the authority to -- the ability to suspend oil exports in the situation where we had some sort of an energy

crisis, or if its's deemed in the natural interest. or to be able to use the strategic petroleum reserve under those same circumstances. and so with those two safety valve features in place doesn't that make it more compelling to allow oil exports? >> well, again, obviously the more flexibilities are always welcome. but i think the fundamentals of the oil export question are those that we discussed earlier i think. and i agree with you, of course in terms of your economic argument. >> one of the things that was interesting about timing, while your agency and others were working on the qer the administration was also involved in negotiations with iran. in early april your agency estimated that a deal with -- with a deal in place and the sanctions lifted, iran might start selling a stockpile of 30 million barrels or more later this year to raise its output by

700,000 barrels a day by the ends of 2016. this would come at a time when we will already have a global glut of crude oil. so my first question is performed to better understand the implications of the entry of iranian oil on the global markets on global supply and demand -- global supply and prices rather. >> first of all, you stated the basic conclusion that one would see over some year or two years, certainly several hundred thousand barrels per day probably of increased production. that would go into the 95 billion barrel a day or so pool. the -- there are so many uncertainties in that time scale, in particular on the demand side. for example, a recovery european economy would put substantial then pressure on supply side. clearly the nuclear negotiation is quite independent of that dynamic. that's about nuclear weapons

issues that we think are important to block. >> i do understand the independent nature of the two discussions. however, the impact is the same. so i mean, the outcomes are the same. >> it's also supply and demand. >> exactly. exactly. and so i guess under these circumstances, doesn't it seem like the president would have an increasingly difficult time justifying lifting the sanctions on iranian oil at the same time keeping the sanctions on domestic oil in place where domestic oil can't be old abroad. >> we import 78 billion a day of crude oil. we're not an net exporter. we're an importer. >> we're on trackton to be an exporter. >> that's quite a few years away. even if you add in oil products, we're still at 4.5 million barrel as day. >> no additional questions. thank you. >> this time recognize the

gentleman from oklahoma, mr. mullen for five minutes. >> thank you, mr. chairman. and secretary, thank you for being with us again today. i know i believe this is the second time you've been in front of this panel >> more than that. >> well, i mean, this year. and if i'm not mistaken, at least this is the second time you and i have had the opportunity to visit. and last time we spoke we talked about the lack of infrastructure with the power plants as far as the coal fire plants that are coming down. we have a report from southwest power pole there's going to be 12,900 mega watts lost just in their area. and just while ago when you were being questioned i believe by mr. long, you said that you didn't see any significant challenges to meet those needs. but yet, where is the power

going to come from? if we're going to lose 12,000 just in my region, then where is the extra power going to be -- going to be made? where is it going to be produced? the gas lines aren't there. we are seeing four years to take a permit to simply get a permit to install a gas line. unless there's power plants that are being built that i'm not aware of in my region, then i believe there is going to be a significant challenge to meet the power needs. >> well, again, first of all, let me emphasize that i did state that what we have seen to date. but we of course await a final rule. secondly, of course, demand -- now i'm talking nationally, not in any particular specific region. >> but specifically speaking, the coal fire plants are in a

specific region. >> sure. every plant -- >> i understand that. but we have 12,900 mega watts being lost in one region. and you said that you didn't see any significant challenges in meeting those needs. where is that extra power going to come from. >> first of all i made it clear when i discussed the natural gas transmission pipes. there will be local issues that have to be resolved in some places with new infrastructure. but if you look -- again all i can do is look at the broad picture nationally and note that first of all, electricity demand nationally is not going up. it's essentially flat. we're build significant amount of natural gas and wind in particular capacity. >> so it's okay because -- >> it has plenty of wind. >> but it's okay to bring the power down because we don't need it right now? i mean that's like saying -- >> i did not say that. all i said was we are building

substantial capacity even as our demand is flat. and secondly -- >> we're losing power. you're saying we're building significant capacity? what are we build it in? wind cannot replace what we have here. you can have miles and miles and miles of wind farms which we have in oklahoma which i frankly don't think is very pretty. i think it leaves a lot bigger footprint than anything else. but we're losing 12,900 megawatts in one area. i'm going back to what you said with the gentleman from missouri when you said you don't see significant challenges meeting those needs. so what i think i hear you saying, correct me if i'm wrong, that it's okay that we lose it because our increase for electricity isn't -- the need isn't there so it's okay that we lose it. is that what i'm understanding? >> no. what i'm saying is that -- first of all we have about 68,000 megawatts of wind.

but what i'm saying is there will obviously all of the local planning authorities will have to be planning. but at the level we're not seeing the likelihood of enormous challenges. we're being cautious. we have to wait for the final rule to come into place. >> you're moving guard with it. mr. secretary, you're over the department of energy and you're saying that the local areas need to get together. what is d.o.e.'s specific plan to meet this need? is there not a need? just saying we're going to let them go down and let everybody else figure it out, it's not our problem? >> the private sector obviously build power plants. >> but you guys are the ones that pick winners and losers. >> no.

>> yeah it is because you said coal is going out, wind is the new thing. >> obviously there's a responsibility of government whether statutory or regulatory to set certain rules of the road in terms of environmental protection. second et cetera. so -- >> so if i'm hearing it correctly, there is no plan. we're going to drop the power and let everybody else figure it out. >> the gentleman's time has expired. >> no more or no less of a plan that there has been. >> mr. pompeo of kansas is recognized for five minutes. >> thank you for your patience today. we're getting close to the end and a lot of the questions have been asked. do you believe that the american taxpayer has received good value for the tens of billions of dollars that have been spent on carbon captured technologies today? yes or no. >> well first of all, i don't

think there's tens of billions of dollars. so it's quite a bit less than that. >> whatever the number is, do you think we've gotten good value for that? >> i think the answer is yes it would have proved to have been very well spent. >> we disagree. yes or no. do you agree with the french foreign minister who said that the global climate change agreement should be worded in a way that does not require congressional approval? yes or no. >> i'm not aware of that statement. >> so do you think -- i'll ask it more directly. >> currently obviously the climate action plan that we're executing is based on administrative authorities to get an economy wide approach would require legislation. >> the government that you're a part of is negotiating an greet at this year, intends to enter

into an agreement. they've made it clear. do you believe that the agreement that the united states enters into ought to be submitted for congressional approval? >> i think we need to see what the nature of the agreement is. there are many agreements -- >> so i can't get you to say yes that you think a climate agreement should be approved by congress? >> i think it depends -- >> i'll take it as a no. it seems to me that the only country you're currently advocating to export crude oil is iran. is that right? >> excuse me. >> you're sitting in negotiations that saying with ear going to free up the iranians to export their crude products but you won't advocate for americans to be able to export their crude products. >> the situations are different we're a large importer. >> the situations are identical. it would benefit each country greatly to be able to access their products and sell their

products around the world and both consumer and exporters would benefit in both countries if it's opened up. do you agree with that or disagree? >> obviously for iran -- >> it's a simple question, mr. secretary. it's not a trick question. >> if iran has sanctions lifted, it helps their economy. >> and it would help ours too. >> i said earlier the only issue on oil exports in the united states of large scale relevance is whether or not there is a is a significant increase in as a result. in the current oil market that might be a difficult case to make. >> you think no more supply will be lost. we've been through that.